Profiting From Foster Care

Dr. Jamie Schwandt
May 31, 2017 · 7 min read

To say the foster care system is broken is an understatement. There are so many problems and it is difficult to decide where to start. However, solutions to these problems tend to focus on the symptoms rather than the root causes. This is evident with the increased number of children in the Kansas foster care system. Without understanding the root causes, our leaders are pushing solutions to either spend more on recruiting foster parents or lowering the requirements to become a social worker.

We should first stop looking at the proverbial tree and look at the forest instead. Essentially, we need to stand back and see the situation as it actually is. Once we do this, we will find that the actual problem is being incentivized.

A couple months ago, three intelligent ladies (Tomi Schwandt, Deanna Rupp, and Lauri Burns) put an idea in the back of my mind. The idea was to follow the money. Let me show you what I found.

Foster Care Contract

Let’s first take a look at the structure of the Kansas foster care system. The Department for Children and Families (DCF) has legal custody of children, yet the system is privatized; meaning, two nonprofit organizations serve as contractors: Saint Francis Community Services (St. Francis) and KVC Behavioral Healthcare (KVC).

DCF serves as the lead agency for the contract with the two organizations. The increased number of foster children can be traced directly to the verbiage in the contract. For example, look at the verbiage in the following amendment to contract ID 37677 (Reintegration, Foster Care and Adoption Services) with St. Francis. Section 5 Billing and Payment (paragraphs 5 & 6).

5. The monthly prospective base rate shall be ($897,345.00) per month. The monthly prospective case rate shall be ($1,710.00) per out of home placement per month.

Here is where the interesting portion resides (I will highlight the first 3 points of paragraph 6).

6. Payments will cease (NO payment will be made) for the service month in which one of the following events occurs.

a. The child is reintegrated with their family, i.e. returns to their home.

b. The child achieves Finalization of adoptive placement.

c. The child is placed in permanent custodianship.

Essentially, there is no incentive for a permanent solution. St. Francis and KVC are only paid when a child enters and remains in foster care. They are not paid when the child is reintegrated with their biological family or when the child is adopted. So, what’s the incentive for the child to be adopted, return home, or attain a permanent solution… there is none.

Even though St. Francis and KVC are nonprofit organizations, they are still driven by the bottom line and they must make money. You can’t blame them for wanting to turn a profit, it’s not their fault the contract was drafted this way. It is unfortunate, but they make money by keeping foster children in the system. This is no different than a large automobile company. Think of Tesla or Ford. They are driven by their bottom line and their bottom line is to sell automobiles. St. Francis and KVC are driven by their bottom line as well; it’s just unfortunate that it happens to be foster children. Not convinced yet?

Trend Analysis

Let’s first start by looking at how much the State of Kansas is budgeted by Fiscal Year (FY) for the foster care contract compared to the total number of children in foster care, children exiting foster care, and the difference between entry and exit into foster care.

As you can see, the total number of foster children in care has increased 33% from FY10 to FY17.[1] Additionally, the total budget for the foster care contract has increased 18% from FY10 to FY17 (increase of $25 million) and the difference between entries into foster care and exits from fostercare has increased by 39% from FY11 to FY17. Note that FY17 data has been estimated.[2]

Let me demonstrate the correlation between the amount of money we budget (or spend) and the increase in the number of foster children. See regression analysis above.

Pushing Wrong Solutions

As you can see, there is a positive correlation between the money we budget (spend) and children in foster care. Essentially, the more we spend, the more we exacerbate the problem. However, we cannot spend our way out of this problem… it will only make it worse. Yet, this is exactly what we are trying to do. Here are a couple solutions put forth by foster care leaders that will only worsen the problem.

1. Campaign to recruit more foster parents. Gov. Sam Brownback and DCF leaders announced a $500,000 campaign to recruit more foster families to combat the rising number of foster children in care. This was in a response to a legislative audit that found the system was not capable of handling the increasing number of children in need of care.[3] I personally do not blame Gov. Brownback, as he is just using the information provided to him by his staff. I actually applaud him for this, I just wish he was receiving good information.

2. Lowering requirements for social workers. DCF Secretary Phyllis Gilmore seeks to lower the standards for social workers to help recruit more of them.[4] Again, this does nothing to solve the problem of an increased number of foster children. However, this is not a bad idea, as I do not see the need or a degree in social work (where another degree would suffice). For example, I have an Ed.D., yet I could not be hired as a social worker.

My Conclusion

So, here is my take on the situation.

Premise #1: The Kansas Department for Children and Families (DCF) is only paying their contractors when a child is in foster care, thus incentivizing the problem.

Premise #2: These incentives are creating the increase in the number of children in and remaining in foster care.

Conclusion: Therefore, DCF is incentivizing an increase in the number of foster children (the same problem they are trying to solve!).

Path To A Solution

This problem will take some time to fix. However, there are a few things we can do (right now) to improve this situation.

1. Amend the contract immediately. We MUST change how the contractors (St. Francis and KVC) are paid. We are currently paying them ONLY when a child is in foster care. Thus, we are incentivizing the problem.

2. Change the incentives to mirror what is in the best interest of the foster child. There is supposed to be a Lifebook and Exit Plan for each foster child. Why not incentivize the contractors and pay them when they meet the goals for the child in their Lifebook or Exit Plan? For example, only pay a percentage of the contract for meeting a child’s goals (which would be outlined in their Lifebook or Exit Plan).

3. Best interest of the child. An example of incentivizing for the best interest of the child would be: a child seeks adoption from foster care. St. Francis or KVC would be incentivized to find the child a good home, instead of simply leaving them in foster care to receive pay for the child. In fact, why not penalize them for leaving the child in care for too long (unless it is in the best interest of the child)?

Or examine if privatization of foster care is in the best interest of the state and its children; thus, removing the need to yield a profit… can we seriously profit from foster children?

We owe it to these kids to get this right. Unlike other children, they do not have family that knows how to or even cares to provide them a safe life filled with opportunities for success. The only thing they have is the foster care system and we have an obligation to ensure they are provided a fighting chance. But first, we must change ourselves and fix a broken system.

“When we are no longer able to change a situation, we are challenged to change ourselves.” — Viktor Frankl


[1] Department for Children and Families: Prevention and Protective Services. Foster Care/Adoption Summary Reports: Removals, Exits and Out of Home Report, SFY10-SFY17, 2017. http://www.dcf.ks.gov/services/PPS/Pages/FosterCareDemographicReports.aspx

[2] Division of the Budget. Comparison Report. FY2010-FY2017, 2017. http://budget.ks.gov/comparis.htm

[3] Ranker, Luke. Overloaded Kansas foster care system sometimes requires children to sleep overnight in offices. Cjonline.com, 2017. http://cjonline.com/news/local/state-government/2017-05-02/overloaded-kansas-foster-care-system-sometimes-requires#

[4] Ranker, Luke. Kansas DCF: Lower requirements for social workers would improve recruiting. Cjonline.com, 2017. http://cjonline.com/news/local/state-government/2017-04-28/kansas-dcf-lower-requirements-social-workers-would-improve

Foster Care University

Revolutionary and radical ideas for transforming the foster care system.

Dr. Jamie Schwandt

Written by

Dr. Schwandt (Ed.D.) is an American author, L6S master black belt, and red teamer.

Foster Care University

Revolutionary and radical ideas for transforming the foster care system.

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