The California Department of Social Services has been ordered by the Ninth Court of Appeals to give foster care group homes a 30 percent increase in payments. The federal court sided with the Alliance of Child and Family Services on the interpretation of federal law. The Child Welfare Act of 1980 requires states that accept funding under the act and claim Title IV-E reimbursement pay for the "cost of care" for a foster child. The Alliance filed a lawsuit in 2006, arguing that the rates have not kept up with the rising costs of the goods and services covered under the legislation. The state said it covered 80 percent of the current costs and that was enough to comply. In 2008, the United States District Court of the Northern District of California agreed. The Alliance appealed to the Ninth Court of Appeals, which overturned the ruling, citing the act, the cost calculation system, and two dictionaries. The court declared that the meaning of "cover the cost" is to pay in full, not in part. The new payment requirements were released last week, which will boost payments more than 30 percent.  In one year, the additional amount will be $242 million, which is a significant amount for a state that has higher deficits per capita than any other state. This ruling by a federal court can have huge implications for all states. This is a great time for PCG to step up and consider rate setting strategies for states that will help cover the costs of generally the most difficult and hard-to-place children in the foster care system. PCG can assist our existing and prospective clients with methods that can document and validate actual costs incurred by the provider and passed on to the states.