Hawaii foster parents will see a boost in the amount the state pays them to care for foster children under an $85 million settlement announced Monday that’s expected to resolve a federal class-action lawsuit and related case filed in state court.

In December 2013 foster parent Raynette Ah Chong filed a lawsuit on behalf of more than 1,000 other foster parents against the state Department of Human Services, claiming that state stipends were woefully inadequate to cover the basic expenses of the foster children they were caring for.

At the time, foster parents received a $529 monthly stipend to cover basics such as food, shelter and personal items.

The state hadn’t increased the stipend in 24 years. If the amount had been adjusted for inflation, it would have come out to $950 a month, according to the Hawaii Appleseed Center for Law and Economic Justice, Honolulu firm Alston Hunt Floyd and Ing, and global firm Morrison Foerster, which represented the foster parents in the litigation.

About six months after the lawsuit was filed, DHS increased the stipend to $576 for children up to the age of 5, $650 for children ages 6 to 11 and $676 for children ages 12 and up.

Under the terms of the settlement, the payments will increase to $649 for children up to age 5, $742 for ages 6 to 11 and $776 for ages 12 and up.

The annual clothing allowance will also increase by between $210 and $426, depending on the age of the child. Under the higher rates, foster parents can receive $810 for children up to the age of 5, $822 for children ages 6 to 11 and $1,026 for children ages 12 and up.

The rate increases are expected to take effect July 1.

DHS has also agreed to pay a separate amount of $35 per month to foster parents for each child they were caring for between July 1, 2013, and June 30, 2014.

Ah Chong, who with her husband, Edward, has fostered more than 100 children over the course of more than two decades, said she was hopeful that the boost in payments will help recruit more parents. She said foster parents have been dropping out of the program because of the low stipend rates.

“We try to help recruit daily, but with the cost of living in Hawaii, it is too high. It costs too much money,” she said at a news conference announcing the settlement. “So people are living on paycheck to paycheck. It’s hard enough for them to survive just alone as themselves or their families. They want to help the state and help the children, but it’s financially a burden.”

The settlement will remain in place for 10 years and is expected to cost the state $8.5 million annually, for a total of $85 million. However, the cost is expected to go higher, as the settlement requires DHS to pursue adjustments to account for inflation.

“There was such a long time period where the rate wasn’t updated,” said Gavin Thornton, co-executive director at Hawaii Appleseed. “During that time the cost of living went through the roof. So this is just a matter of catching up.”

Thornton said the increased stipends are still expected to fall short of covering all the costs of caring for foster kids.

“Foster parents are truly a special breed. They open up their homes and their hearts to children that they don’t even know, that they have never met before,” he said. “They sacrifice their time, they sacrifice their emotional energy, they sacrifice their own families to provide for these children. And they sacrifice financially as well. And this settlement is going to help ensure that that financial burden is eased so that they can provide what is needed for the children in foster care.”

The agreement also requires DHS to better communicate to foster parents that they are eligible to be separately reimbursed for expenses such as clothing, transportation and child care costs.

Between 25 and 50 percent of the costs for reimbursements are picked up by the state, while the federal government covers the rest. Claire Wong Black, at attorney at Alston Hunt Floyd and Ing, said the state was essentially losing federal dollars by not better utilizing the funds.

Only 3 percent of foster families were receiving transportation reimbursements, while two-thirds of foster parents were receiving clothing stipends, she said.

“If you look at the utilization rates, they strongly suggest that the parents don’t know,” she said.

Black encouraged foster parents not receiving such reimbursements to contact their caseworkers.

In a joint news release, DHS Director Rachael Wong and Attorney General Doug Chin applauded the agreement.

“Our children and families are core to the state’s ohana nui (extended family) strategy,” Wong said. “This agreement confirms our shared priority to invest in keiki and their families — biological, foster, hanai or other — and provide them with resources and support to grow in healthy environments and homes.”

Chin said the settlement “ends years of litigation in both state and federal court and demonstrates that parties can work together on investing in the health and well-being of children and families.”

The agreement is subject to court approval, and the funding for the settlement still needs to be appropriated by the Legislature.