## Facts

- California participates in the federal Child Welfare Act (CWA) funding program and designated the California Department of Social Services (CDSS) to administer its state plan.
- The CWA requires participating states to make “foster care maintenance payments” that “cover the cost of (and the cost of providing)” specified items, including food, clothing, shelter, daily supervision, school supplies, personal incidentals, liability insurance, and reasonable travel for visitation and school stability.
- California set group-home reimbursement rates using a Rate Classification Level (RCL) system based on a mid-1980s cost study, with state-law annual cost-of-living adjustments tied to the California Necessities Index (CNI).
- Beginning in 2001, California stopped fully applying the required annual CNI increases; by 2005, RCL rates covered about 80% of actual costs for the CWA-enumerated components.
- An association of nonprofit child and family service providers sued state officials for declaratory and injunctive relief under 42 U.S.C. § 1983, alleging California’s rates violated the CWA’s “cover the cost” mandate.
- The district court granted summary judgment to the State, reasoning that paying roughly 80% of costs “substantially” complied with the CWA.

## Issues

1. Whether the CWA requirement that foster care maintenance payments “cover the cost” of enumerated items permits a state to reimburse only about 80% of those costs.
2. Whether “substantial compliance” is a valid standard for determining the substantive payment level required by the CWA in this context.

## Decision

- The Ninth Circuit reversed the summary judgment for the State and remanded.
- The court held the ordinary meaning of “cover the cost” is to pay the full cost, not merely a substantial portion.
- Because California’s RCL rates covered only about 80% of the relevant costs, California was not in compliance with the CWA’s payment requirement.

## Legal Principles

- When statutory text requires payments to “cover the cost” of specified items, the natural reading is full coverage of those costs.
- A court may distinguish between administrative enforcement concepts of “substantial compliance” and a statute’s substantive, mandatory obligations.
- A participating state’s discretion in setting rates does not include systematically underfunding the enumerated foster-care maintenance components required by federal law.

## Conclusion

The Ninth Circuit interpreted the CWA’s directive that maintenance payments “cover the cost” of listed necessities as a full-payment requirement and held that California’s approximately 80% reimbursement rate for group homes failed to satisfy the statute, requiring further proceedings under the correct standard.


Cal. All. of Child & Fam. Servs. v. Allenby, 589 F.3d 1017 (9th Cir. 2009)