Understanding California’s 2027 Tiered Rate Structure

To better meet the unique needs of foster youth, California is embarking on a significant transformation of its foster care funding model, with a new Tiered Rate Structure (TRS) set to begin on July 1, 2027.

This reform is designed to address historical racial inequities and help break cycles of intergenerational trauma by ensuring that support is based on the individual needs of each child, rather than where they are placed.

A New Approach: Funding Follows the Child

The most innovative aspect of the 2027 system is that funding follows the child. Historically, rates were often tied to the type of placement, such as a group home versus a family setting. Under the new tiered structure, resource families (the term now used for foster families) will receive the same level of funding to support a youth’s assessed needs, regardless of the placement type. This means a youth with the highest level of needs can receive specialized support while staying in a stable, home-based environment.

Understanding the Tiers and Categories of Support

Once the new rate structure is in place, state and county teams will use the Child and Adolescent Needs and Strengths (CANS) assessment to determine a youth’s tier. The tiers are divided as follows:

• Tier 1: Includes approximately 74% of children and youth with foundational support needs.
• Tier 2: Includes youth who require additional support for more complex needs.
• Tier 3 (Ages 0-5) and Tier 3+ (Ages 6+): Reserved for the youth with the highest levels of intensive needs.

To ensure holistic care, the 2027 system introduces three distinct categories of funding:

• Care and Supervision: Standard funding provided across all tiers to support the daily needs of the youth.
• Strengths Building and Maintenance: Also available in all tiers, this funding empowers the youth and resource family to develop a “spending plan” based on the youth’s interests and CANS assessment. This might include activities like music lessons, sports, or other skill-building opportunities that foster a sense of competence and belonging.
• Immediate Needs: Available only for youth in higher tiers (i.e. those not categorized as Tier 1), this funding supports a responsive continuum of care, including High-Fidelity Wraparound services. This ensures that providers can meet urgent requirements in all settings, including relative placements.

Understanding the Context for the 2027 Tiered Rate Structure in California

These state-level changes are coming within a wider, ongoing evolution of foster care and child welfare in California. For one, there is a wider focus on prevention, ensuring youth don’t enter foster care in the first place. This is exemplified by the Family First Prevention Services Act, which was passed in 2018.

And, in instances where youth do need to be placed in foster care, the goal at both the state and federal levels has been to put youth in home settings with people they know. For example, even youth in a kinship care setting are included in the new Tiered Rate Structure. These changes also come on the heels of the State of California largely phasing out group homes or other institutional arrangements for the vast majority of foster youth.

Looking Ahead to 2027

The road to 2027 involves a multi-year implementation plan, including a “Preparation Phase” through June 2026 and an “Early Implementation Phase” starting in July 2026 to ensure all systems are ready for the live launch.

At AFS, we remain committed to keeping our community informed and supported through these changes. By focusing on the individual strengths and needs of our youth, we can continue to build a future where every child has the opportunity to thrive.

In addition, AFS is working closely with our County partners to better understand how to best move forward in light of both the 2027 Tiered Rate Structure changes along with other, wider changes in child welfare. And as part of these wider changes, we are committed to achieving High-Fidelity Wraparaound certification (more on this in future blogs).

To better meet the unique needs of foster youth, California is embarking on a significant transformation of its foster care funding model, with a new Tiered Rate Structure (TRS) set to begin on July 1, 2027.

Follow AFS social and our blog for current information about the 2027 Tiered Rate Structure and other major upcoming changes. In future posts, we will dive into other key topics like CANS assessment and High-Fidelity Wraparound Services, so stay tuned!