County weighs $2M transfer as out-of-home placement costs surge

Oneida County was hit last year with an unexpected surge in out-of-home placement costs for children, and so a resolution to transfer $2 million to cover the overage for last year is now headed to the county board.

The county’s executive committee voted March 25 to send the resolution to the full board as a consent agenda item.

The Human Services program deficit has far exceeded projections. The spike is driven largely by rising residential care placement costs, which have pushed the county’s Human Services Residential Care Centers budget to exceed its allocation by nearly 295 percent, according to county officials and budget documents. 

During recent meetings of the executive committee, finance director Tina Smigielski outlined the extent of the overages as she presented the year-end budget transfer requests.

“This is something that the Finance Department completes every year,” Smigielski told the committee, according to the meeting minutes, observing that departments are required to reconcile overages after the close of the fiscal year. 

But this year’s numbers stood out.

Smigielski reported that four departments exceeded their allocations, with Human Services accounting for by far the largest overage. Other overruns included insurance premiums exceeding expectations by $149,260, Circuit Court Branch II by $32,030, and Labor Relations and Employee Benefits by $14,687. 

According to the approved resolution, Circuit Court Branch II was expected to exceed net budget by 26 percent, primarily because the office experienced the passing of a long-serving employee resulting in a paid-time-off bank cash out, continuation of survivor health coverage for a time, and limited-term-employee assistance during a transition period.

The Insurance & Risk business unit is expected to exceed net budget 149 percent.

“Annual premium costs were higher than anticipated, and the amounts charged-back to departments biweekly established at the beginning of the year were insufficient to cover the uptick in insurance costs,” the resolution stated. “In addition, insurance recoveries and dividend refunds were lower than the 2025 budget expectations.”

Finally, the resolution continued, the Labor Relations & Employee Benefits department is expected to exceed budget by 3 percent, driven by insufficient budget available to cover the costs associated with paid-time-off bank cash out, and retiree health coverage and costs associated with the director’s retirement.

It was the scale of the Human Services deficit that drew the most attention, however, especially because, as Smigielski said, the increase in costs for placements was not the trend compared to prior years.

Human Services director Beth Hoerchler told supervisors on March 11 that the increase is not because more children are entering the system, but rather the cost of care is skyrocketing. In fact, Hoerchler said, the number of children placed outside their homes has actually declined from a peak of 101 in October 2020 to approximately 74.

The rising costs are particularly acute in residential treatment placements, which are among the most expensive forms of care. Hoerchler explained that counties typically pursue less restrictive — and less costly — options first, such as kinship care or foster care placements. Those options are also generally considered better for children when appropriate.

“Kinship care is the least expensive and foster care is the next less expensive route,” she said, emphasizing that those placements are also the least restrictive.

However, in more complex or severe cases, children may be placed in residential treatment centers, where costs can escalate and are already described as very expensive.

Limited local control

Human Services officials emphasized that Oneida County has little control over many of the cost drivers associated with out-of-home placements. Human Services financial supervisor Heidi Chavez told the committee that placement costs are largely determined at the state level.

In addition, many placements are ordered by the courts, leaving counties responsible for carrying out — and funding — those decisions.

“A growing number of children are court-ordered to be placed outside of their homes,” according to the resolution authorizing the budget transfer. “Court-ordered placements are the responsibility of the county.” 

Compounding the issue, officials said there are limited funding sources available to offset those costs: “There is little to no funding sources available for these placements,” the resolution states, highlighting a structural challenge faced by counties across Wisconsin. 

Oneida County is not alone in grappling with out-of-home placements costs.

As a January 2025 Legislative Fiscal Bureau report explained, Wisconsin’s child welfare system is county-operated but state-supervised, with counties bearing the bulk of the costs associated with services and out-of-home placements.

“Most costs, including staff costs to screen and respond to reports of abuse or neglect and most maintenance payments for out-of-home care, are borne by the counties,” the report states. 

While the state distributes funding through community aid and children and family aid programs — totaling $310.1 million in 2025 — those allocations often fall short of covering the full cost burden counties face. Human Services officials told executive committee supervisors that counties across the state have increasingly called on the state to provide additional funding to address rising caseloads and escalating placement costs.

Under the county code, departments that exceed their budgets must request transfers to cover overdrawn line items. Those transfers are prepared by the finance director and presented to the executive committee for approval before going to the full county board.

“Oneida County Code Section 3.11 (4)(b)(2) dictates if no funding is otherwise available… budget transfers will be requested by the department heads, prepared by the finance director, and presented to the executive committee,” the resolution states. 

The proposed $2 million transfer is based on preliminary, unaudited figures, and officials cautioned that final numbers could change as the year-end audit progresses.

At earlier meetings, committee members discussed whether to delay action in hopes that additional funding sources might materialize. Chavez indicated that additional funds may still be received to offset part of the deficit, though the amounts were uncertain.

Smigielski initially recommended tabling the resolution to gather more complete information, with the expectation that the issue would be revisited before the April county board meeting.

A growing challenge

The situation underscores the broader challenge in Wisconsin’s child welfare system, in which counties are tasked with carrying out state-mandated responsibilities but often lack sufficient funding or control over key cost drivers.

In Oneida County, that dynamic has translated into the budget shortfall. While such transfers are a routine part of year-end budget management, the size of this year’s adjustment has called attention to the still unaddressed underlying issue — reducing the need for out-of-home placements in the first place.

With placement costs rising, limited funding available, and little local control over key decisions, county officials say the pressure on local budgets is likely to continue, raising broader questions about how the state and counties will share responsibility for one of government’s most sensitive and essential functions.

Beyond the costs, there are the impacts that out-of-home placement has on the children.

In education alone, according to an analysis by the state Department of Public Instruction, 56 to 75 percent of children entering out-of-home care change schools; 38 percent have experienced one or more school changes; 11 percent have experienced two or more school changes.

In addition, DPI asserts, students lose 4 to 6 months of academic progress with each school change. Only 57 percent of Wisconsin children in such care will graduate high school.

Beyond the educational impacts are those negatively affecting the child’s future possibilities. Children placed out of home have higher rates of later homelessness, have difficulty finding employment, and often end up in low-paying, dead-end jobs. Many experience extreme difficulty establishing independence, DPI asserts.

Three-quarters of those placed out of home receive no career counseling, while half receive no job training. Illegal drug use, unexpected pregnancies, and depression and mental illness are all high-risk factors.

Richard Moore is the author of “Dark State” and may be reached at richardd3d.substack.com.