In 2024, the nation’s largest nonprofit insurer announced it would not renew policies for California many foster family agencies after a change in state law made them share liability in sexual abuse cases along with governments and school districts.

Over the next two years, the change sent the system connecting troubled youth with families into “complete upheaval” as dozens of agencies shut down statewide, said Adrienne Shilton, senior vice president of the California Alliance of Child and Family Services.

In 2025, the state helped avert further crisis when legislators made available $31.5 million to help foster agencies bridge the gap for insurance policies that in some cases doubled or tripled, Shilton said. But with no renewal of that money in 2026 and new legislation this year only protecting government agencies from the sexual abuse lawsuits that began the turmoil, Shilton says she’s already seeing shutdowns bubble up again.

Even as the state said no children or family placements were affected in that time, the scramble from agencies and counties to pick up homes lost in the mass of closures severely tested the system’s stability.

Of the 30 agencies that closed in that time — a majority of them in 2025 — other agencies picked up about 70% of the homes connected to those networks. California’s counties absorbed about 30%. However, with county resources already stretched thin, the problem could worsen if the next round of closures mirrors the past two years, Shilton said.

“We’re going to get to a tipping point where there’s going to be a question about if there’s any available capacity at another (foster family agency) to take care of these kids, to support the kids and families,” Shilton said. “That will then fall on the county.”

Fresno, Tulare Counties Hit Especially Hard

After Southern California, the Central Valley was the region most affected by FFA closures, Shilton said. Fresno, Kern, and Tulare counties together lost five foster agencies. Among those: Fresno’s Golden State Family Services, which was the single largest closure in the state, according to data provided to GV Wire by the alliance.

That meant the 93 homes under Golden State had to be picked up by either the county or other agencies. Only 77 of those families went to other agencies or the county, so it’s unclear whether the remainder went to other counties or decided to stop housing youth. The Department of Social Services told Shilton that there were no disruptions in placements.

Kyle Castillo, executive director with Kids Kasa Foster Care said his agency was one of the few with insurance outside of the Nonprofits Insurance Alliance — the insurer that announced mass non-renewals in 2024.

His own insurance rates increased and he’s had to maintain constant communication with his broker to stay ahead of any crises.

“She could call me tomorrow and say, ‘hey, sorry, I’ve shopped you around, but you’re going to have a 300% increase in insurance next year.’ ”

In Tulare County, 22 homes from other closed agencies became county homes, according to Carrie Monteiro, public information officer with the county’s Health & Human Services Agency. She said the county’s strategy helped provide “continuity and stability” for the roughly 200 children between March 2025 and August 2026.

“Overall, the reduction in FFA homes has presented challenges to placement capacity,” Monteiro told GV Wire. “Tulare County CWS has focused on strategies that prioritize placement stability, preserve existing relationships and connections, and minimize disruptions for children and youth whenever possible.”

County and Foster Agencies Currently Have the Capacity: Bugay

Sanja Bugay, director of social services for Fresno County, said the problem in 2024 and 2025 worsened because the state did not adjust reimbursement rates counties pay to foster agencies for their services even in the face of the insurance crisis.

“I heard from FFAs at the time back in ’24 and ’25, ‘hey, the rates are double or triple,'” Bugay said. “That was not factored anywhere.”

The $31.5 million from the state helped bridge costs, but now only about $5.5 million remains in that fund.

Right now, Fresno County has about 1,500 people in the foster system. That number includes roughly 200 young adults 18 to 20 years old getting ready to transition either back home or to homes of their own, Bugay said.

Bugay said Fresno County had the capacity to transition families and children after the slew of foster agency closures, but it required mastering a learning curve as that level of transition was new for staff.

Most pressing for Bugay is finding homes for teens with complex medical or behavioral needs or those who been in the justice system. The county also has trouble finding homes that can accommodate siblings.

As it stands, the county does have the capacity to take care of youth in the system, Bugay said.

Legislative Fixes Only Minor: Shilton

Shilton hoped that the Legislature would approve more money for agencies and make legal changes to offer more protection to foster agencies.

Fallout from AB 218 — the law that extended the statute of limitations on sex abuse cases and opened up liability for government agencies and foster agencies — famously put Los Angeles County on the hook for $4 billion.

This year, legislators put a law on Gov. Gavin Newsom’s desk exempting school districts and counties from damages but not foster agencies. Another law raises evidentiary standards for older cases and includes fines for predatory law firms.

Shilton says one Southern California law firm in particular was paying plaintiffs to come forward with fraudulent claims.

In June, L.A. District Attorney Nathan Hochman petitioned the court to stay payments of the $4 billion settlement after his office found reason to believe many of the claims in the case were fraudulent.

“We believe that fraudulent claims may account for as much as 81 percent of those seeking compensation from the settlement fund,” Hochman said in a statement at the time.

No Solution Could Exacerbate Fresno County Problems

Without help, further closures could put the current stability to the test.

Beyond finding homes for children, foster agencies help with transportation, schoolwork, and finding tutors. They respond to calls.  Some help with adoptions and some are specialized to help with medically fragile youth, Shilton said.

Earlier this year, foster families and county staff spoke about a crisis in Fresno County after a former employee publicly told supervisors that Fresno County’s practices were putting foster youth at risk.

Retired social services worker Lorraine Ramirez told GV Wire in April that families weren’t getting necessary services and that the county was reunifying children with families even against the warnings of county staff.

Supervisors approved an audit of the Department of Social Services Child Welfare System to look at reunification policies and caseloads, on top of a broad set of other factors.

Shilton said without a solution for foster agencies, the problem could worsen.

“There’s not enough capacity in the county to be doing this level of work and support, and I think we’re kind of seeing that play out,” Shilton said.