The nonprofit agencies that serve some of the Central Valley’s most vulnerable youth have found themselves stuck between the proverbial rock and the hardest of decisions.

After the largest insurer of nonprofit foster care agencies across California announced it was pulling out of the market and would not renew policies last year, organizations had a choice to make — find new insurance at a much higher rate, or stop placing youth with foster families.

For some agencies, like longtime Modesto-based nonprofit provider Sierra Vista Child & Family Services, the cost increase was too much. So last November, the organization — which has provided group-home care, foster care and other family services in the region since 1972 — shut down its foster care placement services. The group’s other social services, including its short-term therapeutic foster program, continue to operate as normal.

The decision affected about 20 foster youth, whose cases were transferred to other foster family agencies, nonprofit organizations that oversee foster care placement, in the region. Sierra Vista CEO Andrew Timbie said all the foster kids were able to stay with their respective foster families, making the change less jarring.

But as agencies across the state grapple with how to handle their industry becoming another casualty in California’s insurance crisis, other foster youth may not have the same luck.

“(When the insurer pulled out) it was the final straw,” Timbie said. “I wouldn’t say it’s the sole reason that we stopped placement, but it became the decision that we couldn’t work around. It was kind of an all-or-nothing.”

Insurance Crisis Hits Foster Care System

Foster youth in California are served through their respective county’s agencies or through licensed nonprofit foster family agencies, which train, supervise and work with foster parents who take children into their homes. Until last year, about 90% of the state’s 220 foster family agencies were insured by Nonprofits Insurance Alliance of California (NIAC).

Changes to state law in 2020 and 2024 gave survivors of sexual abuse a way around existing statutes of limitations and allowed them to sue for damages, according to reporting last year by The Imprint. Those changes opened foster family agencies to more lawsuits.

But NIAC officials said it was a massive $25 million award to the three sibling victims of sexual abuse in a 2023 Sonoma County civil ruling, and the precedent it set, that precipitated their exit from the market. A jury found a Santa Rosa-based agency insured by NIAC primarily liable for 60% of the damages, or $15 million. The convicted abuser, Mark Martinez, and his wife, were found liable for the remaining 40%.

NIAC pursued state legislation that would provide new constraints and regulations on claims. After that effort failed, it announced that it would stop renewing policies for foster family agencies.

“What we are seeing, and this is why we left the market, is what happened in the (Martinez case),” said Damien Zillas, senior corporate counsel for NIAC. “We are not seeing an increase in claims. What we are seeing is an increase in claim value.”

Impact on Local Foster Youth

California has some 40,000 foster youth, of which about 9,000 live under the care of foster family agencies. Last year, Stanislaus County had about 440 foster youth, said Jeff Davis, associate director for the Stanislaus County Community Services Agency’s Adult, Child, and Family Services Division. Well more than half of those youth, 57%, were placed with foster family agencies.

While other foster family agencies were able to absorb Sierra Vista’s shutdown of services, the decision to continue providing foster care is no less difficult for those organizations.

“I’m pretty concerned,” Davis said. “If a solution doesn’t come out, I don’t know if these foster family agencies can continue to pay the high price. I’m very concerned that any reduction of the number of homes that we have makes it more difficult and really isn’t great for kids.”

According to surveys conducted by the California Alliance of Child and Family Services, Sierra Vista joins nine other foster family agencies across the state that have closed down their foster placement services. Of those that have remained open, 32% said they have had to lay off staff and 11% have had to close offices and reduce the number of homes and children their organizations serve.

At Aspiranet, which started providing foster care services in Stanislaus County in 1989, the cost of insurance, and therefore of staying in business, has increased by roughly half a million dollars. The organization saw its insurance costs go from $1 million a year ago to $1.5 million when its NIAC policy expired last year. The increase is “not sustainable” for the long-term, said Aspiranet Chief Operating Officer Jeannie Imelio.

So how much longer can the organization — which last year served about 170 foster youth across eight counties, including 36 in Stanislaus County — sustain those cost increases?

“It’s a hard question to answer because we’re so committed to the work we want to do,” Imelio said. “We don’t want to give up hope that there can be a solution. At the same time, we renewed our insurance early in this crisis so we’ve able to take a little bit of a breath. But we don’t know what it’s going to be like when it’s time to renew next December.”

Turlock-based Creative Alternatives has provided foster family services in the region since its founding in 1976. The nonprofit has locations in Stanislaus, Merced and Fresno counties and serves about 120 foster youth. Roughly half of them are in foster family homes affected by the insurance crisis.

Seeking Solutions Amid Rising Costs

To continue those services, Creative Alternatives has patched together new insurance coverage from various sources, but at a cost of $360,000, about double what the agency paid the year before. One of the agency’s deductibles also shot up from $1,000 to $10,000 for the year, a 10-fold increase, said Creative Alternatives Assistant Executive Director Lisa Jacobs.

“It’s a concern,” Jacobs said. “We were able to do it, obviously this year, and we’re not planning on closing the foster family agency this next year.”

She said she is hopeful that more insurers will enter the marketplace, and possibly offer lower rates and better policies. Agencies and their advocates have also lobbied lawmakers in Sacramento for relief. But so far, such legislative efforts have fallen on deaf ears during a tough budget year.

Foster youth advocates, including the California Alliance of Child and Family Services, asked the state to provide $42 million in relief to help pay higher premiums for foster family agencies. But initial budget proposals have not included the increases and would in fact cut funding for services for a hotline used by foster agencies by $13 million.

According to the survey by the Alliance, about 60% of foster family agencies statewide reported that they will not be able to sustain the projected higher costs of insurance by their next renewal date. Of those, 33% said their agencies were at risk of closing entirely and 27% expressed concern that they would have to reduce their capacity.

Without a legislative reprieve, agencies like Creative Alternatives have turned more toward fundraising around other services they provide, including mental health care, family resources and non-public-school education. But without a solution to the insurance increases, some fear that more nonprofit agencies, like Sierra Vista, will shut down their foster care programs. That would mean more pressure on county-run programs to absorb young clients and provide services.

Creative Alternatives Foster Care Director Angie Beringer said ultimately it will be the youth who suffer the most from the insurance crisis, whether through reduced services and support or transfers to county programs.

Indeed, if more nonprofit agencies close, the county will have to take on more case management. Families may also choose to stop fostering youth, Beringer said, limiting the county’s ability to place children in homes.

“So the question is, can the counties absorb that, and do they want to?” Beringer said. … “They created a foster family agency to alleviate the burden on counties, and to prevent further abuse from happening because of the lack of eyesight and oversight on children. So that’s the ultimate question, are we going backwards in the population that we’re serving?”

Families interested in becoming resource homes for foster youth in Stanislaus County can call the Community Services Agency at (209) 558-2110.

This story was produced in collaboration with The Imprint, an independent news outlet focused on the nation’s child welfare and youth justice systems. Senior editor John Kelly contributed reporting. The Imprint is a partner of The Intersection and CVJC.

About the Author

Marijke Rowland is a senior writer covering health equity and mental health in the Modesto and Stockton areas for the The Merced FOCUS news team.