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A $9 million federal grant is going toward the creation of a tracking system.
An appeals court has barred California officials from cutting funding to foster care group homes.
The 9th Circuit U.S. Court of Appeals on Monday ruled that federal law requires that the state Department of Social Services pay for the entire cost of housing, clothing, feeding and otherwise caring for about 7,000 children placed in foster care.
California had been paying about 80 percent of the costs over the last several years and moved to reduce funding to about 70 percent of the program's cost next year.
The court ruled that the state's compensation to the providers violated the federal Child Welfare Act because the amount was so low, the Los Angeles Times reported.
"I hope this is the biggest win for foster kids ever," California Alliance of Child and Family Services executive director Carroll Schroeder told the paper.
The department is reviewing the decision and considering its next step, which could include an appeal to the U.S. Supreme Court, said a spokeswoman for the state.