The family support system designed to keep children safe at home and out of foster care has been in crisis since late spring, following threats of budget cuts, problems with contract administration and changes in policy at the city's Administration for Children's Services (ACS). Despite an influx of emergency funding, the number of families taking part in preventive service programs, which provide families in crisis with everything from counseling and case management to drug treatment and housekeeping, was down nearly 30 percent in September compared with two years ago, ACS data show. The number of children taking part in preventive programs dropped by nearly one-quarter in just the last year. And new enrollments have also plummeted, with the latest figures showing a 30 percent decline since September 2009. Advocates fear a dramatic reversal of a core city policy long intended to protect kids from neglect and abuse while parents receive help to cope with extreme poverty, domestic violence, mental illness and other difficulties.

The disclosure comes in the wake of the September death of a malnourished, medically fragile 4-year-old Brooklyn girl, Marchella Pierce, whose mother has been charged with assault, drug possession and endangering the welfare of a child. The family had been receiving preventive services from the nonprofit Child Development Support Corporation, but the agency apparently stopped monitoring the family when its contract with ACS ended in June.

Preventive service programs have been hit by a triple whammy of budget cuts, operational errors and strategic planning decisions that many advocates describe as both short-sighted and dangerous. Community-based organizations in Brooklyn and the Bronx report that parents seeking help are being placed on waiting lists, despite their urgent needs for services. "It's a train wreck," says Michael Arsham, executive director of the Child Welfare Organizing Project, a self-help and advocacy organization of parents involved with the child welfare system. "The provider community is in chaos."

Preventive services were originally on the city's chopping block last spring. In anticipation of a budget squeeze, and as part of a plan to provide more intensive services over shorter periods of time, the agency planned for a reduction of 2,400 (out of about 11,000) preventive service slots.

But by April, when ACS finished evaluating proposals from nonprofit organizations seeking new contracts, 600 more slots had fallen to budget cuts. Nine agencies were told they wouldn't be awarded contracts with the city, and many more were instructed to shrink their services and begin closing or transferring cases.

Administrators at preventive service agencies describe the period of caseload reduction as disorganized and painful. "It's not possible to cut 3,000 cases without putting children in danger," says Robert Gutheil, the executive director of Episcopal Social Services of New York, which was slated to lose nearly 50 slots at its Bronx preventive service site. "You have no choice but to reduce intake, which means only those with the most glaringly obvious problems are going to get any attention. Just as night follows day, we're going to have horror stories."

More than two months into the caseload cuts, a whole new layer of chaos hit the system when ACS announced it had made a mistake in scoring the contract proposals, and that its award recommendations, which had sent agencies scrambling in the first place, would be rescinded. Meanwhile, in June, the City Council announced it would restore funding for 2,900 of the 3,000 lost preventive service slots.

ACS sent a memo to its nonprofit providers, asking them to ramp back up to their previous service levels. But by that time, many agencies were well into shut-down mode. Several had laid off staff, some had terminated leases and many had announced to clients they were cutting back on services.

"It's more than fair to say that hundreds of families fell out of the system," says Sophine Charles, a program director at Steinway Child and Family Services, which was scheduled to close after it didn't receive a contract award from ACS. "Now we're required to go back to our original utilization rates, but it's starting from scratch. How do you hire staff when your funding is only secure for the next eight months?"

In late September, ACS announced its new, rescored contract award recommendations, which will go into effect in July 2011. No one knows yet whether those groups will receive funding for the 2,900 slots that were restored by the City Council for the current fiscal year, which ends in June 2011. ACS has tried to help nonprofit agencies plan for the future by telling them how many additional slots they can expect to operate if preventive service funding is restored again next year. Officials say they are committed to working with agencies to keep services available in the meantime. But service providers say they are stuck in the same dilemma they faced in June: If they ramp services back up now, they may well have to cut them, drastically and quickly, next year.

In fact, the mayor's office announced further preventive cuts in late November, this time to ACS homemaking services for families at risk of having children placed in foster care.

Public Advocate Bill de Blasio has launched an inquiry into preventive service reductions, linking the cuts to Pierce's death. In a letter to ACS Commissioner John Mattingly, de Blasio called on the agency to review every case that was closed during the April-to-July reduction period. "The heartbreaking circumstances surrounding Marchella Pierce's death raise troubling questions about ACS policies and practices and the possibility of systemic problems that could leave an untold number of children at risk," he wrote.

Mattingly has since said that the provider agency plans to review a sample of the cases affected by program closures. "While the closedown process does not appear to be the primary contributing factor in this child's death, it does raise the question of how carefully these closures or transfers are occurring," he testified at the council hearing.