Texas needs more foster care spending transparency, state report says

Texas can be more transparent with how much it spends to temporarily house foster children and with what its private contractors are spending to provide foster care services for half of the state, a new state report shows.

The state’s Legislative Budget Board said in its 2026 Strategic Fiscal Review that the Texas Department of Family and Protective Services could shore up financial reporting in those two areas and did not indicate the agency was misspending state dollars. Without detailed expenditure information, it makes it tougher for lawmakers to assess whether the spending is justified, the LBB indicated.

How well Texas’ foster care privatization efforts are going — nearly a decade after it started — is expected to be a major lawmaker focus next year, especially after the state fired its largest foster care contractor this summer and as attorneys for the state work to convince a federal judge to dismiss a 15-year lawsuit that has forced the state to spend hundreds of millions of dollars to fix foster care conditions.

“In our conversations with foster and adoptive parents across Texas, we consistently hear concerns about transparency and oversight of child-placing agencies’ spending and practices,” North Texas advocacy group Building Future Families, which assists foster and adoptive parents, said in a statement about the LBB’s findings.

The state has worked to reduce the number of children without immediate placements by finding more foster homes. While the number of children without an immediate foster home has gone down dramatically — from about 90 a night in 2022 to less than 15 a night this year — costs to temporarily house them are still considerable. Each time the state must place a foster child in temporary housing, it not only pays for the accommodation, such as a hotel room, but overtime for the staff to stay with the child, security and a nurse to administer medication. There’s also food, staff travel and temporary contracts, sometimes with psychiatric hospitals.

“Although the average daily population of Children Without Placement (CWOP) has decreased significantly since fiscal year 2022, the associated costs to oversee CWOP remain significant,” the report stated. “DFPS currently has no regular reporting sufficient to provide an understanding of how associated costs relate to the number of children in CWOP.”

Since 2022, temporary placements for children have cost about $150 million in total with only $35.6 million of that coming from the federal government and the rest from Texas coffers. The Legislature has also spent another $146.7 million on emergency placement housing efforts, the report said.

Then there’s hundreds of millions of dollars being spent on private foster care contractors, since 2017, when the state first began moving foster care placement and child management roles from DFPS to private companies known as Single-Source Continuum Contractors, or SSCCs.

The original legislation that created SSCCs did not require them to report their expenditures.

“This lack of reporting has made it difficult for the Legislature to know how SSCCs are expending funds,” the LBB’s report stated.

The state reports the cost of the contracts it has with its SSCCs. As of November 2025, DFPS reported the combined value of its five large multi-year SSCC contracts is $1.34 billion, the report stated.

The state assigns each SSCC to a multi-county region under a model that is designed to keep abused children who enter the foster care system closer to their schools and family. SSCCs provide homes for children, provide them services and support biological parents to improve conditions in their home so they can regain custody of their children. Today, a little more than 50% of the state’s foster care children are managed and placed by these contractors.

The state’s slow move to private contractors has come with mixed results. DFPS, along with the state’s other health agencies, are under once-in-a-decade Sunset reviews, which will likely bring heavy legislative focus on the agency’s foster care privatization model and how contractors are performing. Earlier this year, DFPS terminated the contract of its largest contractor to date, EMPOWER, which served Dallas and eight other counties, after two children died in a two-year span under the contractor’s watch. Two contractors now serve the region.

The Texas Alliance for Child and Family Services, which represents private foster care contractors, did not return calls for comment on the report.

DFPS spokesperson Marissa Gonzales told the Tribune that the agency is studying the report.

“We’re reviewing it and don’t have anything to add at this time,” she said.

For years, advocacy group Building Future Families has asked lawmakers to create an ombudsman office to handle complaints when either the state or contractors fail to offer support to families. It believes the Legislature needs to establish one when it convenes in January.

Currently, the Texas Health and Human Services Commission has an ombudsman office for complaints made by foster children.

“Families deserve an independent advocate with the power to turn their concerns into action and hold agencies accountable,” the group said.