The latest report on child well-being paints a discouraging picture for Indiana children, just as questionable state policy decisions raise concerns that dollars to help them have been diverted and will result in even greater despair.

The child well-being figures, from the Annie E. Casey Foundation’s 2010 Kids Count survey, show alarming growth in the percentage of Indiana children living in poverty, an increase of 29 percent between 2000 and 2008. Eighteen percent of children – more than 258,000 – lived in households with annual income below $21,834. Most discouraging of all, the numbers reflect the period before the recession started – meaning today’s figures are likely higher.

Reallocating scarce state resources for increased needs would have been a reasonable approach, but that’s not what state officials have done. On the contrary, they have taken dollars earmarked for children’s services and used them elsewhere.

State Rep. William Crawford, D-Indianapolis, recently questioned one such example. At the end of the 2009 fiscal year, the State Board of Finance transferred $40 million from the Department of Child Services to meet a shortfall in a fund for retired public safety employees. That was followed by almost $45.7 million DCS reverted to the state’s general fund in the 2010 fiscal year to help meet the state budget shortfall. DCS is the chief protection agency for Indiana children; it is responsible for child protective services, child support, foster care, adoption and child abuse prevention.

In a letter to Democratic lawmakers this month, Crawford questioned the effect the 2009 transfer has had and will have on DCS services. The chairman of the House Ways and Means Committee noted that he and other members of the committee asked at the time the 2009-2010 budget was created whether the department wasn’t low-balling its budget request.

“The amount of funding DCS was requesting seemed totally inadequate in terms of the DCS mission and the monumental funding changes that were occurring for DCS as part of the property tax restructuring process,” Crawford wrote.

Yet the “totally inadequate” budget that child services officials requested came before a $40 million transfer to pension funds; before a $45.7 million budget reduction and at the same time an economic meltdown was pushing even more Indiana children into poverty.

State Budget Director Chris Ruhl defended the pension fund transfer, saying that DCS didn’t need it.

“There was no impact on payments or services,” he wrote in response to a recent Indianapolis television news report. “The state has covered its obligations, to police and fire pensions, and to children who are provided services from the Family and Children Fund.”

It might be true that financial obligations were met, but child services providers know there has been an impact on payments and services. The agency’s own figures show that the number of family case managers from December 2008 to May of this year decreased by more than 4 percent even as the monthly number of child abuse reports jumped by almost 35 percent. In response to a lawsuit, a federal court enjoined the state from cutting reimbursements to foster families. The Healthy Families program – a proven deterrent to child abuse – has been the subject of devastating cuts.

The state’s budget crisis is real, but so is the ever-growing number of Indiana children in poverty, along with all of the attendant problems. It might suit Indiana’s immediate needs to move dollars from child services, but the burden it places on children will likely prove more costly in the long run.