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The move comes at a time when the number of children in foster care in Cook County has dropped, giving other agencies a better chance to take over the massive caseload with minimal disruption. State officials vowed that they are "doing everything possible" to keep wards with their current foster parents.

But experts said that losing an agency like Catholic Charities, which has a long history of finding foster homes for children around the nation and monitoring their progress, is an ominous sign.

"For them to be pulling out of the business in a major city like Chicago is a major challenge for the field," said Mark Courtney, faculty associate at the Chapin Hall Center for Children at the University of Chicago. "It doesn't bode well for the public-private partnership that has existed in child welfare for 100 years. That's a big deal."

Walter Ousley, chief operating officer for Catholic Charities, said the agency tried to find other insurers to cover the foster care operations, but none was willing to take on the risk. It took months for Catholic Charities to decide to shut down its foster care program, he said, and the decision is final.

"This is permanent. There is no way we can dismantle this infrastructure and then recreate it," Ousley said. "It's the most painful decision I've had to make in 34 years."

Catholic Charities has 156 employees in its foster care program, and Ousley said he hopes to help most of them find jobs with whatever agencies pick up the caseload, keeping as many as possible working with the children they now serve. A state official said the Department of Children and Family Services would hold a job fair for the displaced workers.

State and federal funds that go to workers and foster parents will be redistributed through whatever agencies take over the caseload, likely a mix of public and private entities already caring for foster children in Illinois.

Catholic Charities supplemented those funds with $1.7 million in annual private fundraising. Ousley was unsure how that money would be used, saying it depends on what the donors want.

Catholic Charities established its foster care program in Chicago in 1921, four years after the agency was founded and 43 years before its advocacy prompted the state to take on foster care, leading to the creation of DCFS.

"It's a very sad day in child welfare in Illinois," McEwen said. "It's those kinds of losses that are going to have a greater impact on the system in the long run, I believe."

"The system always reels when an agency closes ... A huge agency closing is going to cause more than a ripple. It's more like a tsunami," said Cook County Public Guardian Robert Harris. "It saddens me to see any bastion of child welfare pull out of what they have been doing for a century. That is like the passing of an era."

Benjamin Wolf, an attorney with the American Civil Liberties Union of Illinois that oversees DCFS' performance under a federal consent decree, said it always raises questions about future care when a well-regarded agency decides to discontinue a major program.

Ousley said the turning point came last summer when the agency's insurance company began to review its contract after Catholic Charities settled a $12 million lawsuit alleging that three children were abused by their foster parents.

In 1995 a boy and two girls, ages 1, 2 and 3, were placed in the care of foster parents licensed by Catholic Charities, said the plaintiff's attorney, Christopher Hurley. Two years later, they were removed from the home after teachers discovered cigarette burns on the boy's legs and lower body. Later, the children testified that they were forced to eat off the floor and were not allowed to use a toilet, bathtub or shower.

Catholic Charities agreed to the settlement five years after the suit was originally filed. But the agency and its insurance carrier disagreed on the amount the company should pay out, delaying the resolution and ultimately forcing Catholic Charities to pay part of the settlement. Ousley would not name the insurance carrier.

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