The District government is not close to meeting the demands of a new federal law aimed at reducing the time children spend in foster care, and could face millions of dollars in sanctions unless it moves quickly on a new plan for compliance, the city's receiver for child welfare acknowledged during a D.C. Council hearing yesterday.

Ernestine F. Jones offered little explanation as to why her agency was unable to meet a spring deadline that already was a one-year extension for complying with the new federal adoption law.

The law requires all states and the District to place foster-care children in permanent homes within 15 months of entering the system. In the District's troubled foster-care system, thousands of children spend four to five years bouncing from home to home.

"Because we are in receivership, there was not the capacity to stay on top of these kinds of things," Jones said during the hearing, where she faced several pointed questions from council member David Catania (R-At Large) about her agency's shortcomings. "The capacity to track what was happening with the feds got lost. I needed to figure out the process, and I didn't have the people to tell me."

In a recent letter to Jones, David J. Lett, regional administrator for the U.S. Department of Health and Human Services, said the city faces a "financial penalty of some or all of . . . [federal] foster-care and adoption funds if you continue to fail to enact the . . . provisions" of the 1997 federal adoption law.

Jones said her agency gets nearly $40 million a year from the federal government.

"This a big deal," said Judy Meltzer, the court-appointed monitor of the receivership, who yesterday urged council members to pass emergency legislation next week that would outline a plan for reducing children's stays in the foster-care system and help the city "avoid fiscal sanctions."

The city's child welfare system was placed in receivership after advocates for children filed a class-action lawsuit in 1989 alleging that the city was not protecting thousands of abused and neglected children in its care. The court held that the system violated children's rights, and a federal judge installed the agency's first receiver in 1995.

Jones, who has been the receiver for 20 months, is under pressure to improve services for some of the city's neediest children.

About 3,224 children are languishing in the D.C. foster-care system. Their biological parents either have relinquished or been stripped of their parental rights because at least one parent was using drugs, had inadequate housing or was abusive.

Finding adoptive parents for children who have been physically or sexually abused is one of the most challenging tasks facing foster-care providers. Last week, the Child and Family Services Agency swiftly removed six children in foster care at the Little Blue House -- a temporary home for abused, neglected or abandoned babies and toddlers in the District -- after discovering that one of the children there had a sexually transmitted disease. It is unclear whether the child had the disease before moving to the home or contracted it there.

Social services officials said they could not comment because an investigation is pending.

Concerns about child abuse have been a sticking point in D.C. officials' attempts to forge adoption rules that meet the federal standards.

D.C. Superior Court Chief Judge Eugene N. Hamilton stepped into the debate recently, blasting a plan he said would have made it easier for children's relatives to become foster parents without going through the background checks and court oversight system that monitors other foster parents. He also was concerned that background checks would not be required for other adults who move into a home after a child has been placed there.

Jones and several children's advocates said that the concerns were unfounded and that there would be such checks under the plan.