ATLANTA, Ga. (Atlanta News First) — State auditors told Georgia lawmakers Thursday that some foster care spending isn’t going where officials expected, as a legislative committee examines rising costs in the state’s child welfare system.

The Joint Study Committee on Evaluating Escalating Costs in Georgia’s Foster Care System heard testimony from auditors and child welfare officials as lawmakers explore why foster care costs have climbed and whether state funding is reaching the providers who need it.

Foster care costs statewide have increased 159% since 2022, according to the committee’s chair, state Sen. Kay Kirkpatrick.

The increase comes on top of a projected foster care budget shortfall of more than $85 million.

But auditors with the Georgia Department of Audits and Accounts testified Thursday that ending the practice did not save the state money — it shifted costs elsewhere. Once a child leaves a hotel placement, auditors said, the state often pays a higher placement rate for that child for years afterward.

State Rep. Esther Panich pressed for answers during the hearing.

“After the General Assembly gave DFCS $81 million last spring, did any of your agencies get their contracts restored, or any services restored,” Panich asked.

According to Together Georgia, a nonprofit that supports foster care providers, the answer was no. Provider billing from the state dropped from $103 million in 2022 to $14 million in 2024, the group said. Auditors also told lawmakers they flagged $34 million in spending, in a category they described as a “catch-all,” that they could not fully explain.

Panich said the discrepancy “really raises some issues” for her.

The state has said it already addressed one of its biggest problems: the practice of “hoteling” foster children, or housing them in hotel rooms or DFCS offices when no other placement is available. That practice dropped from 1,007 children in fiscal year 2022 to 235 in fiscal year 2024, according to Georgia DFCS’s own reporting.

ANF Investigates first exposed the practice of housing foster children in local DFCS offices in a series of investigative reports beginning in 2022, which led to a 2023 state reform law and a federal Senate Judiciary subcommittee inquiry.

Scott Merritt, who runs Murphy-Harpst Children’s Center in Cedartown, said his organization’s costs have risen 50% since 2018, while state reimbursement has increased just 18%.

“If we don’t invest in our kids now, we’re going to have to be spending money on them in the future — and not in good ways,” Merritt said.

Merritt questioned whether his organization can continue providing services under current funding levels.

“Can we continue to provide the services now? Can we continue to remain in operation?” Merritt said.

In a neighboring county, KidsPeace — one of West Georgia’s largest youth care providers — announced this week it is shutting down its residential treatment program in Bowdon and ceasing Georgia operations by the end of 2026, ending more than two decades of service.

KidsPeace President and CEO Michael W. Slack said in a statement that reimbursement rates “have not kept pace with the rising costs and increasing complexity of care.”

“I just don’t know what will happen to the kids if providers continue to close,” Merritt said.

Several other officials and advocates testified before the committee Thursday, offering additional context on what is driving the cost increases.

Juanita Stedman, executive director of Together Georgia and a former Cobb County juvenile court judge, told lawmakers the state has lost more than 30 direct service providers — companies that provide transportation, supervised visitation and drug screening for foster families — since January. She said providers are increasingly required to bill Medicaid for any services that qualify, but said Medicaid does not cover many day-to-day costs, including transporting children to court or supervised family visits.

Stedman also told lawmakers that liability insurance costs for providers have risen 163% since 2019, which she said is contributing to closures and bed shortages statewide.

Gwen Skinner, who oversees children’s programs for the provider Devereux, testified that roughly 27% of Georgia’s psychiatric residential treatment facility beds are currently occupied by children from other states, a practice she said helps providers afford to keep beds open for Georgia children. She said Georgia has 620 such licensed beds statewide, but 38 are currently offline, in part due to staffing shortages tied to reimbursement rates.

Jerry Bruce, director of the state’s Office of the Child Advocate, testified that a lack of well-trained, adequately paid legal representation for parents and children in juvenile court proceedings is also driving up long-term costs, because cases without strong legal advocacy tend to last longer. Bruce cited a pilot program in Chatham County that reduced the median length of time children spent in foster care by 10 months after the county created a dedicated office for child and parent representation.

State auditors also testified that Medicaid claims data showed autism diagnoses among foster children increased roughly 70% during the state’s fiscal years 2022 through 2025, one of several factors they said points to rising complexity of care among children in the system. Auditors said the state’s 20% most costly children in care accounted for the majority of the overall spending increase during that period.

Only about 34% of Georgia’s foster youth are eligible for federal Title IV-E reimbursement, auditors said, due to income-eligibility rules that have not changed since the mid-1990s, meaning the state — not the federal government — absorbs the majority of rising costs.

Lawmakers are set to meet again Oct. 15 as they work to finalize recommendations for the General Assembly to consider during next year’s legislative session. A separate state audit of DFCS’s finances is also expected to be released in the coming weeks.

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