A decade ago, 1,257 foster kids in Colorado were living in group homes and institutions, the kind of places where children and teens line up for medication and eat at appointed meal times in a cafeteria.

That number now has dropped to 339, a joyful statistic that means hundreds of kids are instead living in homes with relatives and foster families.

The shift is the entire premise behind the Family First Prevention Services Act, a federal law that overhauled child welfare funding and has forced states to redesign programs to put more emphasis on preventing out-of-home placements. After years of planning, the Oct. 1 deadline to follow the law is one week away.

But for state and county child protection officials, the work is not over. While Colorado has managed to steer kids to “kinship” and other family placements, and has ramped up a host of abuse and neglect prevention programs in preparation for Family First, critics say the shift has come so swiftly that Colorado now lacks enough beds at residential centers and psychiatric facilities for the young people with the most acute mental health issues.

More than 20 residential centers have stopped operation in the last decade, in part because they saw government money shifting away from so-called congregate care and into supporting kids in their own homes or in their communities. The shortage of beds has gotten so dire that the state legislature passed a funding package this year to increase daily reimbursement rates to centers willing to take young Coloradans with severe behavioral health issues instead of kids from other states that pay more.

Over time, though, Colorado and other states focused on keeping families intact will have less need for residential beds, say state officials and prevention experts. In one study, the Washington State Institute for Public Policy found that by investing in therapy, including for kids who were at high risk of going into foster care, the state would have a dramatic decrease in the need for prison beds within 10 years. In fact, Washington would no longer need to build a new prison if it instead spent aggressively on prevention, the report said.

Colorado has spent the past several months researching prevention programs now on the approved list, or pending approval, to receive federal and state child welfare funding.

Among the in-home programs expected to get a boost from Family First is multisystemic therapy, which targets kids ages 12-17 who are at high risk of going into the foster or juvenile justice system because of behavioral issues. This includes teens getting in fights at school, joining gangs, stealing or bringing weapons to school. It also includes young people who are depressed or suicidal or who have such severe emotional issues that they are beyond their family’s control.

The program has existed in Colorado for years, but with inadequate funding, said Suzanne Kerns at the Kempe Center for the Prevention and Treatment of Child Abuse and Neglect, on the University of Colorado Anschutz Medical Campus.

Therapists are reimbursed for the hour of in-person therapy through the state Medicaid program. But that nowhere near covers the cost of preparing for the work or traveling to family homes, up to an hour and a half apart in rural areas.

With Family First, mental health centers offering multisystemic therapy can get reimbursed for their actual costs, which in turn, state officials hope, will mean that more centers across the state begin to offer the in-home service.

It’s called multisystemic therapy because the goal is to figure out why the child is acting out – whether it’s family issues, school factors, mental health issues or all of the above. The problems are tackled through personal and family therapy, and sometimes involve school staff. In one case, Kerns said, a therapist asked a school resource officer to chat with a boy on his way to class so the kid would not continue to walk out the back door and leave school each morning.

About two-thirds of referrals to the program, which works with about 600 families per year, come from the child welfare system or the juvenile justice system – after kids are already in trouble. As the program grows under Family First, Kerns hopes that most referrals eventually will come directly from families, school counselors and pediatricians – before child protection or justice officials are involved.

A multisystemic therapist has just three or four families at a time and works with them intensely for about four months, visiting them multiple times each week.

“We want to keep them at home and we want to do it in a way that is sustainable over time,” Kerns said. “How do we really make sure that family is prepared to handle the challenges?”

The track record is remarkable, with about 90% of kids staying with their families at the end of therapy, she said. The therapy – along with about seven other programs now on Colorado’s approved list to receive Family First funding – will not completely end the need for residential treatment beds, but it will reduce it, Kerns said.

“No program is going to 100% mitigate the need for beds,” she said. “There are going to be situations that you can’t wrap your hands around. If I had one wish for Colorado, it’s to try to figure out how to get these programs deployed in the areas that need them most.”

Colorado’s rollout of Family First is a work in progress that will continue throughout the next year, said Minna Castillo Cohen, director of the state Office of Children, Youth and Families. The goal is to achieve the right number of spots for children across the entire “continuum of care,” which ranges from therapy and parenting courses to keep families together, to foster homes, to residential centers, psychiatric facilities and juvenile detention centers.

A major part of the Family First transition involves not only qualifying therapy services to receive federal funding, but requiring residential treatment centers and group homes to meet new federal standards in order to participate.

Residential programs for foster youth have to become “qualified residential treatment programs” to receive federal reimbursement. That means they offer so-called “trauma-informed” treatment that focuses on past trauma, and that they involve siblings and other family members in their treatment plans. Also, they must provide six months of follow-up treatment after a child is released.

So far, just 124 of the state’s residential center beds are shifting to meet the new qualifications by next week’s deadline, with an additional 82 expected to transition within the next few months. Child welfare advocates say that’s not nearly enough to handle the current need.

On the prevention side, Colorado has eight programs – including multisystemic therapy – in position to draw down federal dollars. The list is expected to grow in the coming months, Castillo Cohen said.

The changes are expected to channel an additional $2.1 million per year into the child welfare system for prevention programs, therapeutic foster homes and residential treatment. The state spent $11 million in 2019-2020 to prepare.

“We see Family First as this huge opportunity to shift as a nation and to really build upon the work we’ve done,” Castillo Cohen said. “There are tremendous opportunities to help build services.

“We are so ready for this.”

In the past decade, Colorado has decreased the number of children removed from their families even as the state’s population has increased. In 2011, more than 6,100 children were in out-of-home placements, a number that now hovers around 4,000.

The decline came as the state was allowed to use federal money to pay for in-home services intended to keep families together, a shift from previous decades when state child welfare departments would not receive federal money unless children were taken from their parents and placed in foster care.

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