Funding methodology to allocate funding to lead agencies.

(1) As used in this section, the term:

(a) “Core services funding” means all funds allocated to lead agencies. The term does not include any of the following:

1. Funds appropriated for independent living services.

2. Funds appropriated for maintenance adoption subsidies.

3. Funds allocated by the department for child protective investigation service training.

4. Nonrecurring funds.

5. Designated mental health wrap-around service funds.

6. Funds for special projects for a designated lead agency.

7. Funds appropriated for the Guardianship Assistance Program established under s. 39.6225.

(b) “Operational and fixed costs” means:

1. Administrative expenditures, including, but not limited to, information technology and human resources functions.

2. Lease payments.

3. Asset depreciation.

4. Utilities.

5. Administrative components of case management.

6. Mandated activities such as training, quality improvement, or contract management.

(2) The department shall develop, in collaboration with lead agencies and providers of child welfare services, a funding methodology for allocating core services funding to lead agencies which, at a minimum:

(a) Is actuarially sound.

(b) Is reimbursement-based.

(c) Is designed to incentivize efficient and effective lead agency operation, prevention, family preservation, and permanency.

(d) Considers variable costs, including, but not limited to:

1. Direct costs for in-home and out-of-home care for children served by the lead agencies.

2. Direct costs for prevention services.

3. Operational and fixed costs.

(e) Is scaled regionally for cost-of-living factors.

(3) The lead agencies and providers shall submit any detailed cost and expenditure data that the department requests for the development of the funding methodology.

(4) The department shall submit a report to the Governor, the President of the Senate, and the Speaker of the House of Representatives by December 1, 2024, which, at a minimum:

(a) Describes a proposed funding methodology and formula that will provide for the annual budget of each lead agency, including, but not limited to, how the proposed methodology will meet the criteria specified in subsection (2).

(b) Describes the data used to develop the methodology and the data that will be used to annually calculate the proposed lead agency budget.

(c) Specifies proposed rates and total allocations for each lead agency. The allocations must ensure that the total of all amounts allocated to lead agencies under the funding methodology does not exceed the total amount appropriated to lead agencies in the 2024-2025 General Appropriations Act.

(d) Provides risk mitigation recommendations that ensure that lead agencies do not experience a reduction in funding that would be detrimental to operations or result in a reduction in services to children.

(5) By October 31, 2025, and each October 31 thereafter, the department shall submit a report to the Governor, the President of the Senate, and the Speaker of the House of Representatives which includes recommendations for adjustments to the funding methodology for the next fiscal year, calculated using the criteria in subsection (2). Such recommendations must, at a minimum, be based on updated expenditure data, cost-of-living adjustments, market dynamics, or other catchment area variations. The total of all amounts proposed for allocation to lead agencies under the funding methodology for the subsequent fiscal year may not exceed the total amount appropriated in the General Appropriations Act for core services funding in the present fiscal year. The funding methodology must include risk mitigation strategies that ensure that lead agencies do not experience a reduction in funding that would be detrimental to operations or result in a reduction in services to children.

(6)(a) The requirements of this section do not replace, and are in addition to, any requirements of chapter 216, including, but not limited to, submission of final legislative budget requests by the department under s. 216.023.

(b) The data and reports required under subsections (4) and (5) may also include proposed rates and total allocations for each lead agency which reflect any additional core services funding for lead agencies which is requested by the department under s. 216.023.

(7)(a) Beginning with the 2025-2026 fiscal year, the Legislature shall allocate funding to lead agencies through the General Appropriations Act with due consideration of the funding methodology developed under this section.

(b) The department may not change the allocation of funds to a lead agency as provided in the General Appropriations Act without legislative approval. The department may approve additional risk pool funding for a lead agency as provided under s. 409.990.

(8) The department shall provide to the Governor, the President of the Senate, and the Speaker of the House of Representatives monthly reports from July through October 2024 which provide updates on activities and progress in developing the funding methodology.

(9) Notwithstanding the provisions of this section, core services funding shall be allocated as provided in the General Appropriations Act. The department shall develop and report on an alternative tiered funding methodology to allocate funding to lead agencies. The department shall provide additional data and analysis to strengthen the existing proposed funding framework. This enhancement will aim to maximize transparency, drive performance and quality measures, and build on prior provisions and innovative practices.

(a) The methodology must include, but is not limited to, the following components:

1. Administration tier.—A distinct allocation reflecting actual, allowable operational and fixed costs, consistent with federal and state guidelines, including, but not limited to:

a. Salaries and benefits.

b. Information technology.

c. Lease payments.

d. Asset depreciation.

e. Utilities.

f. Administrative components of case management.

g. Mandated activities such as training, quality improvement, or contract management.

2. Prevention tier.—A dedicated prevention tier to incorporate early intervention strategies and services that reduce the need for higher-intensity system involvement which includes, but is not limited to:

a. Family support services.

b. Family-focused prevention programs.

c. Hotline referrals and nonjudicial services.

d. Differential response/child protection team coordination.

3. Core services tier.—A base funding allocation that includes:

a. Direct service delivery costs for case management, foster care, and postplacement services.

b. Pass-through obligations, including, but not limited to:

(I) Funds appropriated for independent living services.

(II) Funds appropriated for maintenance adoption subsidies.

(III) Funds allocated by the department for child protective investigation service training.

(IV) Nonrecurring funds.

(V) Designated mental health wrap-around service funds.

(VI) Funds for special projects for a designated lead agency.

(VII) Funds appropriated for the Guardianship Assistance Program established under s. 39.6225.

4. Performance and quality measures tier.—Funding adjustments or incentives based on performance against outcome-based metrics, which may include, but are not limited to:

a. Maintaining or increasing sibling group placements together.

b. Average yearly caseload of case managers, including only filled positions, at or below 1:14.

c. Increasing finalized adoptions by at least 3 percent over the prior fiscal year.

d. Reducing reentry into foster care within 12 months of case closure.

e. Placement stability and least-restrictive placement rates.

f. Other department-defined measures aligned with federal Child and Family Services Reviews.

5. Innovation tier.—A competitive or direct grant mechanism that allows lead agencies to propose and implement innovative, evidence-informed practices aimed at improving family preservation, child well-being, community partnerships, or service delivery models. Funded projects under this tier must be time-limited and subject to performance benchmarks, be evaluated independently for effectiveness and scalability, and support goals not currently funded through core allocations.

(b) At a minimum, the methodology must be:

1. Cost-based.

2. Actuarially sound.

3. Designed to incentivize efficient and effective lead agency operation, prevention, family preservation, and permanency.

4. Regionally scaled for cost-of-living factors.

(c) The lead agencies and providers shall submit any detailed cost and expenditure data that the department requests for the development of the funding methodology.

(d) By December 1, 2025, the department shall submit a detailed report to the Governor, the President of the Senate, and the Speaker of the House of Representatives. The report must include:

1. A proposed structure and funding methodology for each tier;

2. A summary of stakeholder input;

3. Projected fiscal impacts by community-based care region;

4. Recommended statutory or budgetary changes needed to implement the new methodology; and

5. A plan for phased implementation, including performance tracking and reporting.

(e) The department shall provide to the Governor, the President of the Senate, and the Speaker of the House of Representatives monthly reports beginning July 2025 through November 2025 which provide updates on activities and progress in developing the funding methodology.

(f) This subsection expires July 1, 2026.

(10) Notwithstanding the provisions of this section, core services funding shall be allocated as provided in the General Appropriations Act. The department shall use the tiered funding methodology developed and submitted to the Legislature pursuant to s. 34, chapter 2025-199, Laws of Florida, as the baseline framework for any updates, refinements, or enhancements to the model and shall continue to collect detailed cost, expenditure, and census data from community-based care lead agencies.

(a) Each lead agency shall submit any cost, expenditure, and census data requested by the department to support the continued development and refinement of the tiered funding methodology. Lead agencies shall complete and validate a standardized expenditure report template in the form and manner prescribed by the department.

(b) The department shall conduct ongoing performance monitoring by comparing trends in individual metrics against broader indicators of system health and shall analyze emerging market trends that may impact organizational financial stability. The department’s analysis and reporting shall include a comprehensive explanation of the methodology used to establish residential group home rates, a description of the current rate-setting processes employed by each community-based care lead agency, and recommendations to enhance the fiscal sustainability and transparency of those processes.

(c) Beginning in July 2026 and continuing through November 2026, the department shall provide monthly status reports to the Governor, the President of the Senate, and the Speaker of the House of Representatives detailing activities and progress related to the development of the funding methodology, including preliminary recommendations for adjustments for the subsequent fiscal year.

(d) By December 1, 2026, the department shall submit a final report to the Governor, the President of the Senate, and the Speaker of the House of Representatives that includes recommendations for adjustments to the funding methodology for the next fiscal year. The recommendations shall continue the tiered funding methodology approach while proposing enhancements intended to strengthen operational and financial outcomes.

(e) This subsection expires July 1, 2027.