Reorganizes the department of social and health services by creating new, smaller, and more focused agencies who will give the provision of welfare, juvenile, and medical and social rehabilitative services an improved focus and accountability.

Creates the department of children and family services, the department of public welfare, and the department of medical and rehabilitative services.

Declares that it is the intent of the legislature that the combined biennial budgets of the three new agencies created in the act not exceed ninety percent of the department of social and health services' 2007-09 budget, and that future budgets of the new departments be tied to inflation rates.