Over the last year and a half, a bureaucratic entanglement between Pennsylvania and the federal government has cost the state's foster care program for children almost $170 million.

Now, county governments across the state are worried that the dispute will force them to make drastic cuts to their own programs, curbing services for thousands of children at risk of being removed from their homes.

The federal Administration for Children and Families first put a hold on some of Pennsylvania's money last year, after discovering that the state wasn't following guidelines for reporting reimbursable expenses.

Officials with the state Department of Public Welfare argued that they had been following the same reporting procedures since the 1980s. They promised to make changes, but they decried the federal government's decision to cut off money.

Up until the end of April, the state covered the gap in funding for local foster care services. But state officials are now pleading poverty, and counties -- rural and urban, rich and poor -- must fend for themselves.

"Hopefully, this will get resolved. If it doesn't, we have some real issues," said Marc Cherna, director of the Allegheny County Department of Human Services. "At the end of the day, I'll do everything I can to not cut services."

His options, however, seem limited. The county, already facing lean fiscal times, could lose $8 million this year. Its budget for Children, Youth and Families is $156 million.

About 2,600 children are in foster care at any given moment, while another 6,400 are receiving some type of in-home services that try to keep them out of foster care.

"If you ask the counties to come up with the millions in extra money, the first thing they're going to have to cut is prevention services," said Cathleen Palm, a Pennsylvania child advocate who publishes the Advocates' Agenda.

In rural Greene County, officials are expecting to lose as much as $200,000 in the upcoming fiscal year.

"That's a lot of money for a little county," said Karen Bennet, Greene's human services administrator.

She said she would have to lay off at least one caseworker and leave another position unfilled. The county's Children & Youth Services has a $2.9 million budget and aids more than 350 children.

David J. Lett, regional administrator of the Administration for Children and Families, said he has an obligation to practice "due diligence" when monitoring the spending of billions of dollars in federal money. His office has been working very closely with state officials to make sure the necessary changes are put in place.

"Our elected officials have said that states must follow certain rules if they want federal funding," he said.

Not surprisingly, Pennsylvania's highest-ranking elected officials are coming to the state's defense. Both Gov. Ed Rendell, a Democrat, and U.S. Sen. Rick Santorum, a Republican, have sent letters to Mr. Lett's boss, Health and Human Services Secretary Michael O. Leavitt. They're calling for a resumption of full funding.

Mr. Rendell's letter argues that the federal government has long helped cover the cost of providing services for children in their own homes.

This is where the problem lies, Mr. Lett said. His office authorizes funding for Pennsylvania's claims under the reimbursement program known as Title IV-E, which, nationally, has a budget of $6.7 billion this year.

But IV-E doesn't cover in-home services unless a child faces an immediate risk of being taken away, he said. Pennsylvania must seek reimbursements for those costs under a different federal program.

The dispute dates to March 2003, when Mr. Lett first sent a letter about problems with the reporting of administrative costs to Estelle Richman, the state's public welfare secretary.

Pennsylvania made adjustments, but, in 2004, federal officials noticed several sizeable increases in the claims for one reporting category.

The increases were partly the result of late information from Philadelphia, Ms. Richman said. Still, it was enough to convince federal officials to undertake a more comprehensive look at the state's overall reporting system.

In January 2005, Mr. Lett's office asked for detailed information from Pennsylvania's public welfare office, but the state needed to convert reams of data and took more than a year to deliver the information.

Federal officials then examined a random sample of 200 claims. Only one met reporting requirements, Mr. Lett said.

Other states in his region, which includes Delaware, Maryland, Virginia and West Virginia as well as Washington, D.C., have had similar problems, but Mr. Lett declined to discuss specifics.

Now, his office is helping Pennsylvania overhaul how it makes claims for federal reimbursements.

"This has been our priority for the past three months," he said. "We really do want Pennsylvania to capture every available dollar."

The state, in turn, is helping county officials to adopt to the changes, which take effect this month.

But the federal government isn't ready to start making all payments again. First, Mr. Lett's office wants to undertake more random sample tests in a few months. And, even then, there's no guarantee that federal officials will reimburse all of the $170 million claimed by the state since last year.

That angers state officials, who say they've been as cooperative as possible.

"They did the audit. They showed us the problems. We've fixed them. They haven't given us the money," Ms. Richman said. "We're saying it's unfair and capricious for them to withhold that money."

Mr. Lett notes that the federal government has paid Pennsylvania more than $1 billion to cover foster care costs over the last year and a half, but state and local officials see the remaining money as crucial.

"It's extremely frustrating that we're putting children and families at risk because of posturing by the federal government," Mr. Cherna said.