TOPEKA — Hundreds of Kansas foster children are kept in state custody longer than expected - some for years - but that apparently is not due to the way the state's four foster-care contractors are paid, auditors have concluded.

"Generally, each month, foster care contractors' costs are less than the monthly payments they receive," auditors wrote. "However, the payment structure doesn't appear to have affected children's length of stay in foster care. We identified many other factors that do seem to affect length of stay."

Wards of the state

As of April, Kansas had 5,300 children who were state wards living outside their own homes, most of them with relatives or in foster homes. Children typically come to the foster-care system because they have been abused or neglected by their parents.

The foster care programs cost about $203 million a year, of which the state pays for about $97.5 million. The rest is covered by the federal government through Medicaid or other programs.

Examiners for the Legislative Division of Post Audit were asked to answer two questions:

• Does the state's payment system for its contractors prolong the time children are kept in state custody?
• Is the state's oversight of the foster care contractors adequate?

Auditors noted that the state's payment system for contractors has changed twice since 1997 when foster care was first privatized. But the average time spent in custody for children has not changed significantly, including between 2005 and 2007, when contractors were paid less for their services the longer a child stayed in the system.

Those payment disincentives were done away with after a couple of major contractors were either forced from business or into bankruptcy because of financial problems.

Contractors

The state's foster care contractors have all been non-profit groups. Some of them have religious affiliations. The four current contractors are TFI Services, Inc. (formerly known as The Farm), KVC Behavioral Healthcare, Inc., St. Francis Community Services, and United Methodist Youthville.

Auditors found that all the contractors on average receive payments per child in excess of their costs. The difference between payment and cost ranged from $278 per child per month to $139 per child, depending on the contractor and service region.

Despite those margins, auditors concluded that several other factors most likely explain why many children remain in custody longer than the periods proscribed by federal standards, including:

• Mental health or behavior problems of the child or its family.
• Judges' rulings. Judges decide when a child can be returned to its home and some judges act more quickly than others.
• Substance abuse. Most courts expect parents to meet sobriety standards and submit to random drug tests. Parent failures can slow reunification.

"Hands-off approach"

Auditors also reported that the Kansas Department of Social and Rehabilitation Services has a good system for monitoring the contractors and good written policies, "but doesn't always act to correct problems found while monitoring."

Auditors said the agency had a "hands-off approach to overseeing contractors."

They recommended that agency officials require contractors who do not meet performance standards to develop and implement "region-specific program improvement strategies." The agency should set "firm benchmarks and deadlines for when contractors are required to meet those benchmarks."

Auditors said SRS workers also should be more timely about updating case file information in the agency's computerized Family and Children Tracking System (FACTS).

Contractors and SRS officials were allowed to review the audit report before it was presented today to the Legislature's audit committee.

They did not dispute the audit findings and SRS officials said they would act promptly to implement the recommendations.

"We brought some new leadership. We're looking forward to having some better outcomes," SRS Secretary Rob Siedlecki told the legislators.

He said SRS officials planned to meet July 14 with the foster care contractors to review their proposed improvement plans.