State official outlines rising CSA costs and proposed budget caps that would reduce reimbursements for some services

Scott Reiner, Executive Director of the State Office of Children's Services, gave a detailed briefing on the Children's Services Act (CSA) budget and drivers of recent spending growth. "In the most recent fiscal year... the census was just over 16,000 children and families and the total combined expenditures were just a hair over $600,000,000," Reiner said, and he described how census rebound after the pandemic and per-service price increases both drive expenditure growth.

Reiner highlighted that private day special education has been the largest single growth driver. "Private day special education is the most costly service, averaging just over $60,000 per child per year," he said, while residential treatment averages about $45,000 and foster care about $20,000 per child annually. For FY25 Reiner reported the distribution of spending: roughly $268 million for private special education, $135 million for foster care, $85 million for community-based services, $50 million for residential treatment, and $40 million for other residential care; he noted Medicaid covers many costs for Medicaid-enrolled children.

Turning to the introduced budget, Reiner said the Department of Planning and Budget forecast required an additional amount to meet FY26 needs and that the governor's introduced budget included increases of roughly 10% in year one and 7% in year two of the biennium. He described two cost-containment amendments in the introduced package: Item 271(u) would limit annual CSA reimbursement growth for private day special education to 2.5% (down from a 5% cap), an action Reiner said would save approximately $3.5 million; a separate amendment would lower the state's average contribution for community-based services from about 83% to 71%, which Reiner said could save about $11 million in the first year and $12 million in the second year if spending patterns remain consistent.

During questions, Delegate Doug Atrean noted interest in piloting public day schools for special education; Reiner answered that state-run separate programs exist in some localities and that moving funding and oversight to the Department of Education may be preferable because CSA lacks a per-student funding structure and different match rates apply. Delegate Deli McLaughlin referenced a JLARC study and urged care because "these are some of the most vulnerable children," emphasizing that cost choices affect service access.

Next steps: staff and the subcommittee will weigh the introduced budget, proposed caps and match changes as part of the biennial appropriations process; no final action on CSA budget items was taken at this meeting.