Sandwell Children's Trust, which is chaired by former Home Secretary Jacqui Smith, took charge of Sandwell Council's children's services in April this year, three months after the department was handed Ofsted's lowest rating.
Following a monitoring visit last month inspectors found that the social care workforce still relies too heavily on agency staff.
A drive to tackle poor performance has also seen some staff leave but their posts have not been filled. In addition, caseloads are still high, inspectors found.
"Although the number of agency staff is gradually reducing, the workforce is still fragmented, particularly in care management teams," states an Ofsted letter to the trust.
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