Indiana's child protection agency is restoring about $10 million in funding to boost in-home programs and services, three years after asking providers of those services to cut their rates by 10 percent.

Indiana's Department of Child Services said Wednesday it would "reinvest" the money for reimbursement rate increases for about 300 providers of in-home services that include therapy, parenting skills, child development and other educational services.

The agency said the contract adjustments will result in increases ranging from 8 percent to 15 percent in the rates DCS pays the providers. The funding will come from the 2012 and 2013 budgets.

DCS spokeswoman Stephanie McFarland told the South Bend Tribune that DCS cut its rates in 2009 amid statewide budget reductions and a weak economy with the hope that eventually it would be able to raise the rates.

"And that's what they're doing, making good on their commitment to these community-based providers," she said.

McFarland said the state's Office of Management and Budget recently authorized the agency to release the money.

Cathy Graham, executive director of IARCCA in Indianapolis, which represents about 100 agencies that offer services to the state's children, said Wednesday that about half of those member agencies will benefit from the new rates.

"Everyone is very pleased. It's a good step," she said. "It's good progress."

Over the last few years, DCS has cut the rates it pays to providers across the board, negotiating contracts with companies directly. That shift has re-emphasized the agency's philosophy of keeping children at home or with relatives rather than with foster families or in residential treatment.

McFarland said the agency continues to see short-term and long-term success in keeping children safely in their own homes or relatives' homes, rather than placing them in residential facilities.

Graham said that as DCS has focused more on home-based treatment, those providers — especially in rural areas with fewer providers — struggled with the rate cuts at a time when gas prices and increased staffing cuts took a toll.

She said some of those agencies reported that they would no longer be financially able to provide those services.

DCS officials had been negotiating with a group called Indiana Coalition of Family-Based Services, also an IARCCA member agency, Graham said.

"We appreciate that DCS listened and did something about that," she said.

IARCCA has federal litigation against DCS that's still pending regarding the cuts in residential treatment and foster care services, Graham said.

About half the agencies affected by the lawsuit have reached new agreements with DCS on 2012 rates, while the other half are in the appeals process or are meeting individually with DCS rate review staff.

Those cuts are still a concern, Graham said, and IARCCA and others hope to be able to testify this summer on rate and policy changes to a study committee charged with examining DCS changes, which the General Assembly mandated in March.

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