More than 35,000 children and youth are in California’s foster care system – the most of any U.S. state – but many facilities serving them are facing financial trouble.
As the state prepares to change the way it funds foster care facilities, five students from the USC Price School of Public Policy analyzed the proposed reforms for their practicum project, in which students tackle real-life policy challenges to complete their degrees.
Their findings not only flagged concerns with the new program, but won them The John and Dora Haynes Foundation Recognition Award for Outstanding Performance in the Master of Public Policy Practicum – the USC Price School’s top honor for practicum projects.
The student team worked with the California Alliance of Child and Family Services – a nonprofit advocacy organization – to evaluate the state’s forthcoming Tiered Rate Structure (TRS), set to launch in 2027. Unlike the current structure, which funds providers based on the type of home where a child lives, TRS would provide funding based on the individual needs of a child, categorizing foster youth into four “tiers” of need.
The winning students – Joselle Escobar, Itzel Whyte-Aguayo, Heejin Cho, Devyani Ramamoorthy and Kailyn Wilkerson – interviewed more than a dozen foster care providers and conducted a financial analysis to assess the fiscal impact of TRS and its effect on the quality of care.
“California has long felt that the current system doesn’t take into account the actual needs of each foster child and youth,” said Ramamoorthy, a Master of Public Policy (MPP) student. “This is also a step towards trying to account for historical inequities that may be race- or ethnicity-based.”
The students concluded that the financial impacts of TRS implementation are uncertain, with facilities seeing revenue increases as much as 25% or losses upwards of 15% in some scenarios. Potential losses could be even higher if providers can’t access Wraparound Immediate Needs (WIN) funding, which is reserved for individualized, intensive services and not guaranteed to all providers. Without access to WIN funding, providers are more likely to experience losses as much as 23%, the students concluded.
“What we find is that providers have a lot of uncertainty about what this is going to look like,” said Joselle Escobar, who will earn an MPP. “And we find that, although results are mixed, there are possibilities where foster care providers are less financially stable than they are today.”
Another key finding was concerns over how children’s needs are determined. The new program calls for using the Children and Adolescent Needs and Strengths (CANS) assessment tool to decide a youth’s “tier,” but many organizations noted that its accuracy depends on the clinician. They also questioned its accuracy when applied to diverse populations.
The assessment also relies on interviewing young children who just underwent traumatic experiences and may not provide accurate or complete information to interviewers they’ve never met, noted Wilkerson, a MPP.
“The assessment tool may determine that a child doesn’t seem to have a lot of needs,” Wilkerson said. “But once the kid gets to a foster home and becomes more comfortable, they may realize the child has a lot more needs, and the reimbursement they’re receiving is not sufficient for the child’s needs.”
The USC Price students recommended limiting the use of CANS as the sole driver of tier assignment and reimbursement decisions, and incorporating additional assessment tools where appropriate, such as trauma-informed measures and medical assessments.
Parachuting into the complex world of foster care funding was a challenge for the student team, but they never lost sight of the underlying importance of the policy debate: supporting many of the state’s neediest children and youth. When interviewing foster care providers, the students learned that some facilities were considering closing – or already announced plans to shutter due to financial constraints. Finding a fiscal solution for foster care providers is crucial, as they are often a last resort for vulnerable youth, students said.
“The potential impact of these closures on youth is that there won’t be a placement option if they have complex needs that other organizations can’t meet,” said Whyte-Aguayo, a MPP. “And there could be a higher rate of youth in hotel placements, or in juvenile halls, or other inadequate placements, as a result.”
The practicum also provided real-world experience before the students received their degrees during the USC Price Commencement ceremony. The experience was especially relevant to Cho, a MPP who wants to pursue a career in child policy.
“I was so connected to this policy practicum with my personal experience. I have two baby cousins in Korea, and that’s the reason I chose child policy,” Cho said. “Korea is currently struggling with declining birth rates, and while researching and working as a policy consultant with my teammates, I learned which policies may be best for serving the problem there.”
