Child and Family Services Review. Initially, the Administration for Children and Families (ACF) determined that California had not achieved the target goals for two statewide data indicators. The two indicators - placement stability and reentry into foster care - were reportedly below the national standard.  During the appeal, ACF determined that the state had met the goal for reentry into foster care.  As a result, the outcome of placement stability was not met.  The Department Appeals Board (DAB) ruled on December 4, 2009 that ACF applied data sets and methods to set the standard for California's improvement goal which was inconsistent with applicable regulations and guidance provided by the federal oversight agency.

The Board's decision points out the inconsistencies used by ACF in establishing the data sets for determining a state's substantial conformity or non conformity.  In its decision, the Board reversed ACF's decision to withhold funds for the following reasons:

1. ACF presented no evidence that the 1998 and 1999 data sets were the most recent and complete available.  The regulation required ACF to set national standards for the initial review using AFCARS data from 1998, 1999 and 2000.  ACF's IM 00-11 stated that the "AFCARS reporting periods as described in the preamble and the regulation" were not used for establishing the national standards.
2. Methodologies used to compute the national standard for placement stability and the target goal for improvement were not consistent with ACF's revised information memorandum or with statistical principles.  The Board found that ACF inappropriately ignored or dropped use of data points outlined in the regulations and identified in ACF policies.  It was also determined that ACF did not correctly calculate the amount using the set standard and the specific target improvement goal.
3. ACF did not follow the applicable requirements (or appropriately adjust) the initial placement standard for placement stability applied to California.  Although ACF acknowledged that the agency is bound by the regulations set forth, with limited discretion in establishing or adjusting the national standard, ACF declined to use the AFCARS reporting periods described in the preamble and regulations.  ACF provided no explanation as to why specific data sets would be inappropriate and therefore excluded from the samples selected.

The DAB clearly identified ways in which ACF failed to follow the federal regulations and the agency's own policies in the determination of a penalty for failure to meet the standards outlined for the CFSR process.  This decision was huge in paving a path and setting standards that ACF must follow prior to delivering penalties for non-compliance.