Indiana child welfare agency to need $300M state infusion

The state agency responsible for protecting vulnerable children expects to need a cash infusion of $300 million in the coming months.

That’s according to the operating account summary submitted by the Department of Child Services for a hearing before the Indiana State Budget Committee Tuesday.

The document shows an estimated $300 million is expected to be transferred into the department’s main account for the 2027 fiscal year, which started in July.

Over the year prior, the agency spent nearly $1.3 billion in state dollars and almost $400 million in federal funding — 72% of which was spent on services for children and families.

Director Jennifer Dorfmeyer, who has led the department since April, acknowledged continued challenges for the agency, which has reported such shortfalls in recent years.

While the child welfare caseload has flattened, she said, the cost per case is still going up.

“To address the increased utilization we are seeing, DCS created a service utilization review team to provide the right services at the right time,” Dorfmeyer told the Budget Committee.

In mid-September, the team launched a pilot in two Marion County offices with higher spending, with a third office on track to join next week.

“All referrals are being reviewed prior to approval,” said Dorfmeyer, with an emphasis on individualized service planning over standardized service packages. About 30% of referrals are returned for changes, according to an agency slide deck.

Partial September results show a 19% drop in the average referral cost per case when compared to the average from the three months prior. There’s full data for October showing a decrease of 34% compared to the same three-month average.

The department is also reviewing services with a consulting firm, Milliman, with plans to create a smaller pool of resources for family case managers and clients.

“Many of our existing services are very broad and not addressing the underlying needs to move our families and children into permanency. We also lack services that address high acuity,” Dorfmeyer said. “By evaluating and breaking apart some of our existing services, we feel we can provide more targeted and appropriate services. This would also provide an opportunity to ensure additional funding sources such as Medicaid are identified more easily.”

Another consultant, Myers & Stauffer, is helping the department model proposed changes to the rates paid to providers.

Dorfmeyer also pointed to progress in a performance improvement plan with the feds.

“Every state participates in performance improvement plans in child welfare, so it’s not unusual, and we were actually one of the only states to successfully complete our PIP,” she said.

That included outperforming the federal target on timely initiation, risk assessment, caseworker visits with families and more.

The department still reported high turnover in key positions, like family case managers and attorneys. Training replacements can delay child welfare cases and costs money.

And 16 children in Indiana have not been placed with relatives, foster families or other care.

The Indianapolis Star reported in 2024 that at least 168 children removed from their families spent at least a day living in department offices — with the average being three days and the longest stay lasting more than a month.

Dorfmeyer said she aims to end that practice.

“We utilize Cooper and Isaiah (117) Houses when we can, so they’re not always in the office,” she said. And we also provide bedrooms, beds, things like that in the offices when we have to, but the welcome center is direct, targeted, to keep kids out of the office.”

“My goal in my tenure here is to close the offices to children,” Dorfmeyer said.

Her department was one of the numerous verticals and agencies that presented to the State Budget Committee this week. Budget-writers are busy preparing for the legislative session’s start January.