A relatively new government program meant to ease emotional pain in young people, treat serious mental illness and keep disturbed children from needing institutional care has grown from a speck in the budget to more than $800 million in less than 10 years.

The state's share of those costs has soared from $13 million a decade ago to an estimated $400 million next year, with no sign that the trend is abating.

I first checked in on this program - called Early and Periodic Screening, Diagnosis and Treatment - a year ago, when I noted that it could be a poster child for the state's chronic budget shortfall. The program arose from good intentions and smart policy, was mandated by the federal government and expanded by a court order following a lawsuit. And while the counties administer the program, its costs are driven largely by plans drawn up by independent psychiatrists, while the bills are paid mainly by the state and the feds.

Advocates for the program say it is worth every penny because it helps troubled low-income kids deal with problems before they reach a stage that could cause incredible human anguish, and cost the taxpayers even more, down the road. The growth in costs has been rapid, they say, because the state was so woefully underfunding this service until the mid-1990s.

Yet the stunning run-up shocked independent analysts and the Gray Davis administration, which a year ago termed the trend "alarming." But alarming or not, the trend continued, and the cost of the program is on a pace to grow 40 percent in the past three years alone.

Certainly, this screening, counseling and treatment is a bargain even at what it costs today if all the money spent is keeping kids out of mental hospitals, where the cost to taxpayers can run into the hundreds of thousands of dollars per patient per year.

But not everyone served by the program is at risk of hospitalization. And the program's rapid growth raises legitimate questions about whether all of the money is being spent wisely.

A flyer distributed by the Department of Mental Health informing potential clients of the service notes that the program is available to anyone under 21 who is eligible for the state Medi-Cal program and is experiencing "sadness, nervousness or anger that makes your life difficult." Clients are advised that they can "ask for counseling or therapy as often as once a week or more if you think you need it."

More serious cases, where a young person has severe emotional or mental problems and is clearly at risk of hospitalization, are eligible for a special service in which a counselor will spend as much as 16 hours a day by their side. The goal of this one-on-one coaching is to build daily living skills that will help the client live successfully in the community.

But reviews of the program show that the cost-per-client varies widely from county to county, suggesting that doctors are not applying consistent standards for what kind of care is necessary to treat various conditions. And the state has done little to determine whether all of those receiving the treatment are benefiting from it.

Now the administration of Gov. Arnold Schwarzenegger is taking a closer look at the program, and proposing a number of steps to slow its growth. Among them:

* Reviewing rates. The rates paid for services under the program are set by a formula first established in 1989 and automatically increased each year. By basing rates on a survey of actual costs instead, the state believes it could save taxpayers $40 million annually.

* Increased oversight. According to the Department of Finance, the state currently conducts no audits of the payments made under this program. This year, the Department of Mental Health will begin targeted audits of claims, and officials believe those reviews could save about $6 million annually. The savings could be higher if the audits create a deterrent effect.

* Reduced eligibility. Currently, any service in this program deemed "medically necessary" by a doctor or psychiatrist is eligible for reimbursement from the state, according to federal guidelines. The state will seek a federal waiver to narrow that definition. No savings have been projected from this change, but they could be substantial starting in 2005-06.

All of these measures sound sensible. The idea isn't just to cut for cutting's sake. It's to recognize that the state's finances are limited, and will be even if taxes are raised later this year. No matter what the ultimate size of the budget, every dollar spent in one place is a dollar no longer available to provide a service someplace else.

A blank check, it turns out, is not always the most compassionate policy.