The Texas Legislative Budget Board (LBB) highlighted a need for more transparent accounting of foster‑care spending in its 2026 Strategic Fiscal Review. While the report did not allege misspending, it warned that without detailed expenditure data, legislators cannot fully evaluate whether the costs of temporary placements and private contractors are justified.
Temporary housing costs remain high
Since fiscal year 2022, the number of children without an immediate foster home has fallen dramatically – from roughly 90 children per night to fewer than 15 this year. However, the cost of placing children in temporary housing, such as hotel rooms, remains substantial. Each placement incurs expenses for accommodation, overtime staff, security, nursing care, food, travel and, in some cases, contracts with psychiatric hospitals.
The LBB report noted that the average daily population of Children Without Placement (CWOP) has declined, yet the associated oversight costs stay significant. From 2022 onward, temporary placements have cost about $150 million, with $35.6 million funded by the federal government and the remainder drawn from Texas coffers. An additional $146.7 million has been spent by the Legislature on emergency placement housing.
Private contractors lack required reporting
Since 2017, Texas has shifted many foster‑care placement and child‑management duties to private firms known as Single‑Source Continuum Contractors (SSCCs). Today, just over half of the state’s foster‑care children are managed by these contractors. The original legislation creating SSCCs did not mandate expenditure reporting, leaving the Legislature in the dark about how funds are used.
According to the LBB, the Department of Family and Protective Services (DFPS) reported that, as of November 2025, the combined value of its five large multi‑year SSCC contracts totals $1.34 billion. The state assigns each contractor to a multi‑county region to keep children closer to their schools and families.
Calls for oversight and an ombudsman
Advocacy group Building Future Families, which assists foster and adoptive parents, said the lack of reporting hampers oversight. The group has repeatedly urged lawmakers to establish an independent ombudsman office to handle complaints when the state or contractors fall short of supporting families.
“Families deserve an independent advocate with the power to turn their concerns into action and hold agencies accountable,” the group said.
State response and upcoming legislative focus
DFPS spokesperson Marissa Gonzales told the Texas Tribune that the agency is reviewing the LBB’s findings but had no further comment at the time of publication.
Lawmakers are expected to scrutinize the foster‑care privatization model during the upcoming Sunset reviews of DFPS and other health agencies. The reviews, which occur once per decade, typically bring heavy legislative attention to agency performance and funding practices.
Earlier this year, DFPS terminated its largest contractor, EMPOWER, after two child deaths occurred under its watch. The contract’s termination underscores the heightened focus on contractor performance and child‑safety outcomes.
Looking ahead
The LBB’s recommendations arrive as the Legislature prepares its 2027 session. Stakeholders, including advocacy groups, private contractors and state officials, are likely to debate how best to balance cost efficiency with the need for robust oversight and transparency in Texas’s foster‑care system.
Original reporting: Texas Tribune (HLL/CB) — read the source article.
