Ehrlich administration officials rejected yesterday a reform proposal to merge the scattered oversight of privately run group homes into a single agency, arguing that it is better to maintain the current regulatory structure.

Administration officials say they are taking firm steps to improve oversight but that consolidating the licensing and monitoring of the 500 state-funded homes in a single agency would cost too much and would be unwieldy to implement.

"It is not a good idea," said S. Anthony McCann, secretary of the Department of Health and Mental Hygiene, the agency considered the likely home for consolidating the regulatory offices.

The health department and the departments of Human Resources and Juvenile Services license and monitor group homes.

McCann said the state can't afford to hire the staff necessary to undertake a merger and that a unified agency would lack the expertise to meet the needs of the 2,700 foster children, delinquents and medically fragile youths living in the homes.

Lawmakers who support consolidation as key to strengthening oversight denounced the administration's stance as hurtful to children and more costly.

"We are spending more money by having kids uneducated, not nurtured, not protected from abuse and ending up in the adult system," Sen. Delores G. Kelley, a Baltimore County Democrat, said in an interview after the hearing.

Arlene F. Lee, the new executive director of the Governor's Office For Children, urged lawmakers to allow the state agencies involved in overseeing the homes to develop ways to communicate better, rather than merging regulatory roles.

"We need to be thinking more about integration, and that's different than consolidation," she said. "Integration is how they're working together."

The administration response came at a hearing of the Joint Committee on Children, Youth and Families, the second group of lawmakers to take up the issue of oversight of an industry receiving $167 million yearly from the state.

An investigation by The Sun documented that regulators did not know about care, staffing and spending at many group homes.

Children were being mistreated or neglected at some homes without consequences, the newspaper reported. Many homes employed unqualified or poorly trained staff members, including some with criminal records. And several operators enriched themselves, family members and friends.

At yesterday's three-hour hearing, administration officials said they were taking steps to improve oversight. Lee said the administration is working to link state payments to the homes to progress shown by the youths living in them. Last year, Gov. Robert L. Ehrlich Jr. signed a law requiring the measure.

Sen. Robert J. Garagiola and Del. Salima S. Marriott, Democrats who are the joint committee's co-chairs, led lawmakers who kept the focus on consolidation.

Sen. David R. Brinkley, a Frederick County Republican, was skeptical about the argument Human Resources Secretary Christopher J. McCabe gave for opposing consolidation. McCabe said a unified agency would have even more difficulty than his department has in getting staff to communicate with each other.

Legislative policy analysts who testified yesterday described for the committee state oversight that they said is "disjointed," with different agencies applying standards differently and failing to communicate with each other, even when children are at risk.

Advocates for children have long complained that fragmented oversight leads to sloppy regulation of the homes. In 2001, a gubernatorial task force recommended consolidating licensing and monitoring in the health department.

"To have a single agency with a single set of rules makes all the sense in the world," Del. Bobby A. Zirkin, a Baltimore County Democrat who served on the task force, said after the hearing. "It makes for more accountability and oversight."

The task force estimated that consolidation would cost about $4 million. One member, James Filipczak, said in an interview that opponents inflated the estimate to make the proposal seem too expensive.

Filipczak, who retired in 2002 as executive director of a Prince George's County nonprofit company that operates a group home, also disputed the argument that a consolidated agency would lack the expertise to meet the needs of group home residents.

The departments don't have different areas of expertise, Filipczak said, because the young people they supervise share similar issues and live in homes licensed by other agencies.

"It's tougher if you have different staff for different agencies reporting to different supervisors trying to enforce the same regulation," Filipczak said. "And it seems to me in the long run there should be cost savings" with consolidation.