Section 14. Child Welfare, Foster Care, Adoption Assistance

                               BACKGROUND

    Child welfare services focus on improving the conditions of
children and their families and on improving or providing
substitutes for functions the parents have difficulty in
performing. Many private, nonprofit and government entities
work to provide a range of child welfare services to families
in need. The primary responsibility for child welfare services
in the government, however, rests with the States. Each State
has its own legal and administrative structures and programs
that address the needs of children and there are many
differences among the States. The Federal Government has also
been involved in efforts to improve the welfare of children in
specific areas of national concern since the early 1900's.
Numerous Federal programs provide support for such services
today, including several programs under titles IV-B and IV-E of
the Social Security Act. In addition, services relating to
child welfare may be provided at State discretion under the
social services block grant program (title XX of the Social
Security Act).\1\
---------------------------------------------------------------------------
    \1\At the Federal level, programs that fund child welfare services
(in addition to those under titles IV-B, IV-E and XX) include Head
Start, and several programs that provide funding directed at specific
problems, such as child abuse, homelessness, runaways, and teenage
pregnancy.
---------------------------------------------------------------------------

    Child welfare services encompass a broad range of
activities, including child protection, care of the homeless
and neglected, child social and nutritional development, and
children in out-of-home care. The services provided may be
supportive (e.g., help the family cope with problems or provide
protection for children while the family learns to perform
appropriate parenting roles); supplementary (e.g., provide
financial assistance); or substitutive (e.g., foster care).\2\
---------------------------------------------------------------------------
    \2\This typology is adapted from Kadushin, Alfred, and Judith A.
Martin. Child Welfare Services. Macmillan Publishing Co., New York,
1988. pp. 26-28.
---------------------------------------------------------------------------

    It is generally agreed that it is in the best interests of
children to live with their families. To this end, experts
emphasize the value of preventive and rehabilitative services
intended to help families stay together whenever possible, and
emphasize the need to limit the duration of foster care
placements by returning children to their homes whenever
appropriate and finding permanent living arrangements for
children who cannot be returned home.
    This philosophy is reflected in the Federal programs
authorized under titles IV-B and IV-E which support services to
promote the welfare of children. Title IV-B authorizes funds to
States for a broad range of child welfare services, including
family preservation and family support services, and title IV-E
authorizes the foster care, independent living, and adoption
assistance programs. The child welfare and foster care programs
are intended to operate in consort to help prevent the need for
out-of-home placement of children and, in cases where such
placement is necessary, to provide protections and permanent
placement for the children involved. In addition, funding is
provided under the foster care program to assist States with
the maintenance costs of low-income (AFDC-eligible) children in
foster care. The independent living program is intended to help
States facilitate the transition of older children from foster
care to independent living; and the adoption assistance program
is primarily to help States support the adoption of AFDC- or
SSI-eligible children with ``special needs'' such as ethnic
background, age, membership in a sibling group, or a mental or
physical handicap.

  THE ADOPTION ASSISTANCE AND CHILD WELFARE ACT OF 1980
             (P.L. 96-272) AND SUBSEQUENT AMENDMENTS

    Federal assistance to enable States to make maintenance
payments for children who were not living with a parent and had
been placed elsewhere by a child welfare agency--that is, who
were living in foster care--first became available under what
was then called the Aid to Dependent Children (ADC) program
(title IV-A of the Social Security Act) in 1961.
    Foster care under title IV-A of the Social Security Act was
amended in 1980 by Public Law 96-272. This legislation
continued AFDC foster care as a required Federal matching grant
program, but transferred it to a newly created title IV-E. It
also changed the funding mechanism for this program and the
child welfare services program under title IV-B, providing
linkages between the two to encourage less reliance on foster
care placement and greater use of services aimed at preventing
placement and encouraging family rehabilitation. The
entitlement nature of AFDC foster care was retained, but under
title IV-E its open-endedness was potentially limited by a
provision that was contingent on the funding level of title IV-
B. The legislation specified a number of protections to help
prevent inappropriate placements or long-term stays in foster
care, and a number of programs were established to provide
services to specialized foster care populations. Under title
IV-E, a new Federal matching grant program for payments to
parents who adopt a child with special needs was also
established and permanently authorized. Funding for adoption
assistance is on an open-ended entitlement basis.
    The foster care and adoption assistance programs were
amended in the 99th Congress, under the Consolidated Omnibus
Budget Reconciliation Act of 1985 (COBRA, P.L. 99-272). This
legislation also established a new entitlement program under
title IV-E to help States facilitate the transition of children
age 16 and over from AFDC foster care to independent living.
The program is called the independent living program.
    During the 99th Congress, legislation was also enacted as
part of the Tax Reform Act of 1986 (P.L. 99-514) that amended
the adoption assistance program under title IV-E to provide for
Federal matching funds for the one-time adoption expenses of
children with special needs, whether or not the children are
eligible for AFDC or SSI payments.
    During the 100th Congress, legislation was enacted to
expand the independent living program to include children ages
16 or over who are in any foster care situation and to provide
services for specified children for 6 months after foster care
payments or foster care ends (P.L. 100-647).
    During the first session of the 101st Congress, legislation
was enacted as part of the Omnibus Reconciliation Act of 1989
(P.L. 101-239) to increase the authorization level of the IV-B
program from $266 million to $325 million; and to extend the
independent living program through 1992, increase the
entitlement ceiling from $45 million to $50 million for fiscal
year 1990, $60 million for fiscal year 1991, and $70 million
for fiscal year 1992, and establish a State match beginning for
fiscal year 1991.
    During the second session of the 101st Congress, the
Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508) made
several minor amendments to the child welfare, foster care and
adoption assistance programs. Among other things, these
amendments now require States to distinguish between
traditional administrative costs and child placement costs
which previously had been classified as administrative costs,
and give States the option of providing independent living
services to foster children up to age 21.
    The 103rd Congress enacted significant child welfare
amendments, contained in the Omnibus Budget Reconciliation Act
of 1993 (P.L. 103-66), which are designed to buttress the goals
of Federal child welfare programs of strengthening family life
for children and ensuring more children in the child welfare
system a stable, permanent home on a timely basis. This
legislation created a new capped entitlement under title IV-B
for a broad range of services to families (including foster,
adoptive and extended families), termed ``family preservation''
and ``family support'' services. The legislation also includes
a set-aside for grants to State courts for assessments and
improvements of judicial child welfare proceedings. Public Law
103-66 authorizes a 3-year enhanced match to States for
planning, designing, developing or installing child welfare
data collection systems. The legislation permanently authorizes
the independent living program, and also permanently authorizes
a 75 percent matching rate for certain State training expenses.

                  FEDERAL CHILD WELFARE PROGRAMS TODAY

    The Social Security Act contains the primary sources of
Federal funds available to States for child welfare, foster
care, and adoption activities. These funds include both
nonentitlement authorizations (under which specific
appropriations are made for a program, effective for 1 year, a
fixed number of years, or permanently) and authorized
entitlements (under which the Federal government has a binding
obligation to make payments to any person or unit of government
that meets the eligibility criteria established by law). The
programs include the title IV-B child welfare services program,
the title IV-E foster care program, the title IV-E adoption
assistance program, and the title XX social services block
grant program. Table 14-1 lists these programs, as well as the
independent living program, and their funding environments.
    Table 14-2 provides data on the level of Federal funds
which have been used by or allocated to States under titles IV-
B, IV-E and XX for fiscal years 1983 through 1993, and DHHS
projections for fiscal years 1994 through 1999. Under the title
XX social services block grant program, States have discretion
over what portion of their allocation they will spend on child
welfare, foster care and adoption activities, as well as a
range of other activities not directly focused on children. As
this table shows, detailed data on child welfare services
spending by States under the title XX program are not
available.
    In addition to the funds allocated to the States or
available on an entitlement basis, approximately $10.9 million
was appropriated for fiscal year 1994 for research and
demonstration activities and for direct Federal grants to
public and private entities for child welfare staff training,
authorized under section 426 of title IV-B.
    Funds available to States from the title IV-B child welfare
program and title XX social services program may be used for
services to families and children without regard to their
eligibility for AFDC. Federal matching funds for foster care
maintenance payments under title IV-E are only provided in
those cases where the child would have been eligible for AFDC
if still in the home. All children determined to have ``special
needs'' related to their being adopted, as defined under title
IV-E, are eligible for reimbursement of certain nonrecurring
costs of adoption under the title IV-E adoption assistance
program. However, only AFDC- or SSI-eligible ``special needs''
children are eligible for federally matched adoption assistance
payments available under title IV-E. Funds available to States
for the title IV-E independent living program may be used for
services which facilitate the transition of children from
foster care to independent living, regardless of whether or not
they receive AFDC foster care assistance.
    Table 14-3 provides data on participation under the title
IV-B, IV-E and XX programs. As this table demonstrates, only
limited data are available on participation in these programs.
Table 14-4 shows the Congressional Budget Office projections
for Federal foster care and adoption assistance for 1994
through 1999 under current law. Between 1994 and 1999, the
federally funded foster care caseload is projected to increase
from 245,000 to 298,000 (22 percent). Total IV-E foster care
costs are expected to increase 56 percent, from $2,670,000 in
1994 to $4,176,000 in 1999. Over the same time period, the
adoption assistance caseload is projected to increase from
91,000 to 143,000 (57 percent), while total adoption assistance
costs are estimated to increase from $308 million to $530
million (72 percent).

   TABLE 14-1.--FUNDING ENVIRONMENT OF THE FEDERAL PROGRAMS WHICH
     SUPPORT FOSTER CARE, CHILD WELFARE, AND ADOPTION SERVICES
------------------------------------------------------------------------
                                                     Federal support of
       Program          Budgetary classification           total
------------------------------------------------------------------------
Title IV-E Foster
 Care Program:
    Foster care        Authorized entitlement....  Open-ended Federal
     assistance                                     match at Medicaid
     payments.                                      rate.
    Placement          Authorized entitlement....  Open-ended Federal
     services and                                   match of 50
     administrative                                 percent.\1\
     costs.
    Training expenses  Authorized entitlement....  Open-ended Federal
                                                    match of 75 percent.
Title IV-E Adoption
 Assistance Program:
    Adoption           Authorized entitlement....  Open-ended Federal
     assistance                                     match at Medicaid
     payments.                                      rate.
    Nonrecurring       Authorized entitlement....  Open-ended Federal
     adoption                                       match of 50
     expenses.                                      percent.\2\
    Placement          Authorized entitlement....  Open-ended Federal
     services and                                   match of 50 percent.
     administrative
     costs.
    Training expenses  Authorized entitlement....  Open-ended Federal
                                                    match of 75 percent.
Title IV-E             Authorized entitlement....  100 percent Federal
 Independent Living                                 funding, with a
 Program.                                           funding ceiling.\3\
Title IV-B Child
 Welfare Services
 Program:
    Child welfare      Nonentitlement              Federal match of 75
     services           authorization.              percent, total
     (subpart 1).                                   capped at State
                                                    allotment.
    Family             Authorized entitlement....  Federal match of 75
     preservation and                               percent, with a
     family support                                 funding ceiling.\4\
     (subpart 2).
Title XX Social        Authorized entitlement....  100 percent Federal
 Services Block Grant                               funding, with a
 Program.                                           funding ceiling.
------------------------------------------------------------------------
\1\75 percent matching is available from fiscal year 1994 through fiscal
  year 1996 for certain costs related to data collection.
\2\The Federal Government reimburses 50 percent of up to $2,000 of
  expenditures for any one placement.
\3\Beginning for fiscal year 1991, States are required to provide 50
  percent matching for any Federal funding claimed that exceeds $45
  million.
\4\Program authorized through fiscal year 1998.


TABLE 14-2.--FEDERAL FUNDING FOR CHILD WELFARE, FOSTER CARE, AND ADOPTION ACTIVITIES UNDER TITLES IV-B AND IV-E OF THE SOCIAL SECURITY ACT, 1983-99,
                                                                UNDER CURRENT LAW\1\
                                                                [In millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Title IV-E foster care State                  Title IV-E adoption assistance
                                                  Title IV-                claims                State use             State claims             Title XX
                                                   B child  ----------------------------------- of FC funds ----------------------------------    SSBG
                   Fiscal year                     welfare                            Adminis-   for IV-B,                           Adminis-   program
                                                   services   Total\2\  Maintenance   tration,      CWS       Total\3\  Assistance   tration,     (CWS
                                                                          payments    training  (transfers)              payments    training   portion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1983............................................      156.3      394.8       276.9       117.9        32.6        12.6        11.3        1.3        N/A
1984............................................      165.0      445.2       297.8       147.4        32.2        25.7        20.2        5.5        N/A
1985............................................      200.0      546.2       355.3       190.9        19.6        41.8        31.6       10.2        N/A
1986............................................      198.1      605.4       391.6       213.8        14.9        55.0        40.6       14.4        N/A
1987............................................      222.5      792.6       479.7       312.9        11.3        73.7        53.9       19.8        N/A
1988............................................      239.4      891.1       548.3       342.8         5.1        97.1        74.1       23.0        N/A
1989............................................      246.7    1,153.1       646.0       507.1         1.6       110.5        86.2       24.3        N/A
1990............................................      252.6    1,473.2       835.0       638.2         5.3       135.7       104.9       30.8        N/A
1991............................................      273.9    1,819.2     1,030.4       788.8         0.9       175.3       130.3       45.0        N/A
1992............................................      273.9    2,232.8     1,203.8     1,029.0         0.0       219.6       161.4       58.2        N/A
1993............................................      294.6    2,547.0     1,365.0     1,182.0         N/A       272.4       197.3       75.1        N/A
1994 (estimate).................................      294.6    2,606.5     1,447.0     1,159.5         N/A       325.0       235.0       90.0        N/A
1995 (estimate).................................      294.6    2,914.0     1,413.0     1,501.0         N/A       378.0       274.0      104.0        N/A
1996 (estimate).................................      294.6    3,384.0     1,684.0     1,700.0         N/A       420.0       304.0      116.0        N/A
1997 (estimate).................................      294.6    3,647.0     1,866.0     1,781.0         N/A       457.0       331.0      126.0        N/A
1998 (estimate).................................      294.6    3,997.0     2,049.0     1,948.0         N/A       492.0       357.0      135.0        N/A
1999 (estimate).................................      294.6    4,378.0     2,252.0     2,126.0         N/A       528.0       383.0      145.0        N/A
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Funding for family preservation and family support services under subpart 2 of title IV-B is not included in this table.
\2\Total includes administration and training expenditures, as well as maintenance payments, but does not include transfers to the title IV-B child
  welfare services program. Differences in total due to rounding.
\3\Total includes administration and training expenditures, maintenance payments, and nonrecurring payments. Differences in total due to rounding.
Source: Department of Health and Human Services.


 TABLE 14-3.--PARTICIPATION IN CHILD WELFARE, FOSTER CARE, AND ADOPTION ACTIVITIES UNDER TITLES IV-B, IV-E,
                      AND XX OF THE SOCIAL SECURITY ACT, 1983-99, UNDER CURRENT LAW\1\
----------------------------------------------------------------------------------------------------------------
                                      Title IV-                 State use                               Title XX
                                       B child    Title IV-E   of FC funds   Title IV-E   Title IV-E      SSBG
             Fiscal year               welfare    foster care   for IV-B,   independent    adoption     program
                                       services   assistance       CWS         living     assistance      (CWS
                                                  payments\2\  (transfers)   program\3\   payments\2\   portion)
----------------------------------------------------------------------------------------------------------------
1983................................         NA       97,370           NA   ...........        5,309          NA
1984................................         NA      102,051           NA   ...........       11,581          NA
1985................................         NA      109,122           NA   ...........       16,009          NA
1986................................         NA      110,586           NA   ...........       21,989          NA
1987................................         NA      118,549           NA       20,182        27,588          NA
1988................................         NA      132,757           NA       18,931        34,698          NA
1989................................         NA      156,871           NA       44,191        40,666          NA
1990................................         NA      167,981           NA       44,365        44,024          NA
1991................................         NA      202,687           NA       45,284        54,818          NA
1992................................         NA      222,315           NA       57,360        66,197          NA
1993................................         NA      232,668           NA       57,918        78,044          NA
1994\3\.............................         NA      245,800           NA           NA        90,800          NA
1995\3\.............................         NA      256,400           NA           NA       102,500          NA
1996\3\.............................         NA      267,200           NA           NA       110,200          NA
1997\3\.............................         NA      278,200           NA           NA       116,300          NA
1998\3\.............................         NA      289,300           NA           NA       121,000          NA
1999\3\.............................         NA      300,900           NA           NA       125,800          NA
----------------------------------------------------------------------------------------------------------------
\1\Participation data on family preservation and family support activities under subpart 2 of title IV-B are not
  included in this table.
\2\Average monthly number of recipients.
\3\Estimate.

Source: Department of Health and Human Services.


   TABLE 14-4.--CBO BASELINE PROJECTIONS FOR THE FEDERAL FOSTER CARE AND ADOPTION ASSISTANCE PROGRAMS
                                    [By fiscal year, In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                        1994         1995         1996         1997         1998         1999
----------------------------------------------------------------------------------------------------------------
Foster care:
    Title IV-E caseload
     (thousands)..................          245          257          268          278          288          298
    Average monthly maint. payment
     (Federal share)..............         $502         $527         $554         $582         $612         $644
    Federal costs (millions):
      Maintenance payments........        1,438        1,552        1,763        1,943        2,116        2,299
      Administrative and child
       placement services.........        1,135        1,354        1,491        1,518        1,626        1,727
      Training....................           97          104          118          131          142          150
                                   -----------------------------------------------------------------------------
        Total claims..............        2,670        3,010        3,372        3,593        3,884        4,176
                                   =============================================================================
Adoption assistance:
    Title IV-E caseload
     (thousands)..................           91          103          113          123          133          143
    Average monthly payment.......         $211         $217         $223         $230         $237         $245
    Federal costs (millions):
      Maintenance payments........          230          267          302          339          378          419
      Administrative and child
       placement services.........           70           75           80           86           91           96
      Training....................            9           10           11           12           14           15
                                   -----------------------------------------------------------------------------
        Total claims..............          308          351          393          437          482          530
                                   =============================================================================
Independent living: Federal costs.           70           70           70           70           70          70
                                   =============================================================================
Total costs.......................        3,025        3,355        3,757        4,049        4,371        4,710
----------------------------------------------------------------------------------------------------------------
Note.--Numbers may not add to totals due to rounding.

Source: Congressional Budget Office, March 1994 baseline.

             THE TITLE IV-B CHILD WELFARE SERVICES PROGRAM

Subpart 1: Grants to States for child welfare services

    The child welfare services program under subpart 1 of title
IV-B permanently authorizes 75 percent Federal matching grants
to States for services that protect the welfare of children.
These services are to address problems that may result in
neglect, abuse, exploitation or delinquency of children;
prevent the unnecessary separation of children from their
families and restore children to their families, when possible;
place children in adoptive homes if restoration is not
possible; and assure adequate foster care when children cannot
return home or be placed for adoption. There are no Federal
income eligibility requirements for the receipt of the child
welfare services.

   TABLE 14-5.--TITLE IV-B CHILD WELFARE SERVICES: STATE-BY-STATE
                            ALLOCATIONS
                        [In thousands of dollars]
------------------------------------------------------------------------
                                           Fiscal years
                         -----------------------------------------------
                             1987       1992       1993         1994
                            actual    actual     actual    appropriation
------------------------------------------------------------------------
Alabama.................      4,783      5,432      5,798        5,798
Alaska..................        417        614        675          675
Arizona.................      3,344      4,418      4,781        4,781
Arkansas................      2,838      3,273      3,496        3,496
California..............     20,445     27,289     30,049       30,049

Colorado................      2,772      3,558      3,845        3,845
Connecticut.............      2,081      1,942      2,066        2,066
Delaware................        570        717        764          764
District of Columbia....        386        431        448          448
Florida.................      9,105     11,773     12,946       12,946

Georgia.................      6,622      7,737      8,386        8,386
Hawaii..................        656      1,180      1,281        1,281
Idaho...................      1,304      1,581      1,734        1,734
Illinois................      9,932     11,338     12,157       12,157
Indiana.................      5,572      6,709      7,115        7,115

Iowa....................      2,861      3,364      3,566        3,566
Kansas..................      2,150      2,885      3,083        3,083
Kentucky................      4,154      4,883      5,192        5,192
Louisiana...............      5,106      6,350      6,750        6,750
Maine...................      1,313      1,443      1,533        1,533

Maryland................      3,440      3,924      4,256        4,256
Massachusetts...........      2,714      4,336      4,567        4,567
Michigan................      8,888     10,196     10,860       10,860
Minnesota...............      3,937      4,753      5,093        5,093
Mississippi.............      3,519      4,177      4,438        4,438

Missouri................      4,958      5,798      6,218        6,218
Montana.................        978      1,136      1,212        1,212
Nebraska................      1,641      1,996      2,137        2,137
Nevada..................        775      1,170      1,326        1,326
New Hampshire...........        950      1,028      1,078        1,078

New Jersey..............      5,424      4,936      5,308        5,308
New Mexico..............      1,642      2,291      2,493        2,493
New York................     13,529     14,490     15,530       15,530
North Carolina..........      6,432      7,771      8,326        8,326
North Dakota............        750        942        983          983

Ohio....................     10,402     12,283     13,053       13,053
Oklahoma................      3,332      4,144      4,428        4,428
Oregon..................      2,586      3,283      3,576        3,576
Pennsylvania............     10,038     11,905     12,650       12,650
Rhode Island............        888      1,025      1,070        1,070

South Carolina..........      4,015      4,747      5,101        5,101
South Dakota............        853      1,038      1,107        1,107
Tennessee...............      5,001      5,933      6,329        6,329
Texas...................     16,243     21,845     23,688       23,688
Utah....................      2,555      3,196      3,478        3,478

Vermont.................        632        713        750          750
Virginia................      4,907      5,891      6,322        6,322
Washington..............      3,774      5,169      5,668        5,668
West Virginia...........      2,226      2,454      2,565        2,565
Wisconsin...............      4,672      5,639      6,033        6,033

Wyoming.................        101        703        751          751
American Samoa..........        N/A        175        183          183
Guam....................        304        376        395          395
Northern Marianas.......        110        124        127          127
Puerto Rico.............      3,671      7,094      7,532        7,532
Virgin Islands..........        202        311        328          328
                         -----------------------------------------------
Total...................    222,500    273,911    294,624      294,624

------------------------------------------------------------------------
NA: Not applicable; jurisdiction not eligible under statute.
Totals may differ from sum of State amounts because of rounding.

Source: Department of Health and Human Services.

    Requirements in Public Law 96-272 limited the use of title
IV-B funds for child day care, foster care maintenance payments
and adoption assistance payments to the 1979 title IV-B
appropriation of $56.6 million. In addition, States are
required to implement certain foster care protections for all
children in foster care in order to be eligible for child
welfare services funding over specified levels. (The foster
care protections are described later in this section.)
    The authorization level for the child welfare services
program was $266 million annually since fiscal year 1977. The
authorization level has been increased to $325 million under
Public Law 101-239 beginning for fiscal year 1990.
Appropriations for the program increased from $163.6 million in
fiscal year 1981 to $294.6 million in fiscal year 1994 (see
table 14-2).
     Child welfare services funds are distributed to States on
the basis of their under-21 population and per capita income.
Because of minimal reporting requirements under the program,
there are no reliable national or State-by-State data on the
exact number of children served, their characteristics, or the
services provided. Table 14-5 details the State-by-State
distribution of child welfare services funds for selected
fiscal years.

Subpart 2: Grants to States for family preservation and community-based
        family support services

    Grants to States for family preservation and family support
services are authorized as a capped entitlement under subpart 2
of title IV-B. States currently have the flexibility to expend
their child welfare services grant funds available under
subpart 1 of title IV-B for family support and preservation
services, but few States use a significant share of such funds
for these two categories of services. Entitlement funding is
authorized for 5 years, at the following ceiling levels: $60
million in fiscal year 1994; $150 million in fiscal year 1995;
$225 million in fiscal year 1996; $240 million in fiscal year
1997; and either $255 million in fiscal year 1998, or the
fiscal year 1997 level adjusted for inflation, whichever is
greater.
    From these ceiling amounts, $2 million in fiscal year 1994
and $6 million in each of fiscal years 1995-1998 are reserved
for use by the Secretary of HHS in funding research, training,
technical assistance and evaluation of family preservation and
support activities. In addition, $5 million in fiscal year 1995
and $10 million in each of the subsequent 3 fiscal years are
reserved for a grant program for State courts (described
below). Finally, 1 percent of the family preservation and
family support entitlement is reserved for allotment to Indian
tribes. Table 14-6 shows State allotments of family
preservation and family support entitlement funds in fiscal
year 1994, and estimated State allotments for fiscal years
1995-1998.
    After these set-asides are made, remaining entitlement
funds are allocated among States according to their relative
shares of children receiving food stamps, subject to a 25
percent nonfederal match. States must submit a State plan to
HHS, and must use at least 90 percent of their funds for two
categories of services: family preservation services; and
community-based family support services, with no more than 10
percent of funds used for administrative costs. States must
devote ``significant'' portions of their allotments to each of
the two categories of services. The Federal statute does not
specify a percentage or minimum amount of funds that must be
used for either family preservation or family support. However,
in its program guidance to States issued on January 18, 1994,
HHS stated that allocations of less than 25 percent to either
type of service will require a strong rationale. (Final
regulations will be published by HHS in summer or fall, 1994.)
    Family preservation services are intended for children and
families (including extended and adoptive families) that are at
risk or in crisis. Services include programs to help reunite
children with their biological families, if appropriate, or to
place them for adoption or another permanent arrangement;
programs to prevent placement of children in foster care,
including intensive family preservation services; programs to
provide follow-up services to families after a child has been
returned from foster care; respite care to provide temporary
relief for parents and other caregivers (including foster
parents); and services to improve parenting skills.
    Family support services are intended to reach families
which are not yet in crisis and to prevent crises, such as
child abuse or neglect, from occurring. Family support services
are generally community-based activities to promote the well-
being of children and families, to increase the strength and
stability of families (including adoptive, foster and extended
families), to increase parents' confidence and competence, to
provide children with a stable and supportive family
environment, and to enhance child development. Examples include
parenting skills training, respite care to relieve parents and
other caregivers, structured activities involving parents and
children to strengthen their relationships, drop-in centers for
families, information and referral services, and early
developmental screening for children.
    States must submit a fiscal year 1994 application to HHS no
later than June 30, 1994, and a 5-year plan covering fiscal
years 1995-98 by June 30, 1995. States may spend up to $1
million of their fiscal year 1994 allotment for planning and
development of their 5-year plan, with no required non-Federal
match.
    The Secretary of HHS is required to evaluate family
preservation and family support programs and to submit interim
evaluation findings to Congress by December 31, 1996, and final
evaluation findings by December 31, 1998.
    As stated above, a portion of the entitlement funds is
reserved for a grant program to the highest State courts to
assess and improve certain child welfare proceedings. The court
set-aside equals $5 million in fiscal year 1995 and $10 million
in each of fiscal years 1996-1998. A 25 percent nonfederal
match is required in each of the last 3 fiscal years.
    Courts will use grant funds to assess their procedures and
effectiveness in determinations regarding foster care
placement, termination of parental rights, and recognition of
adoptions. Courts also will use these grant funds to implement
changes found necessary as a result of these assessments.

                TABLE 14-6.--TITLE IV-B FAMILY PRESERVATION AND FAMILY SUPPORT SERVICES
                                     [Fiscal year 1994 State allotments]\1\
                              [Estimated State allotments fiscal years 1995-98]\2\
----------------------------------------------------------------------------------------------------------------
                                     Fiscal year    Fiscal year     Fiscal year     Fiscal year     Fiscal year
               State                    1994      1995 allotment  1996 allotment  1997 allotment  1998 allotment
                                     allotment
----------------------------------------------------------------------------------------------------------------
Alabama...........................    $1,199,639      $2,880,911      $4,344,445      $4,646,141      $4,957,838
Alaska............................        77,754         186,726         280,936         301,139         321,341
Arizona...........................     1,005,253       2,414,096       3,632,104       3,893,294       4,154,484
Arkansas..........................       577,604       1,387,105       2,086,955       2,237,031       2,387,107
California........................     6,925,694      16,631,924      25,023,389      26,822,863      28,622,330

Colorado..........................       616,481       1,480,468       2,227,423       2,387,600       2,547,778
Connecticut.......................       444,311       1,067,004       1,605,350       1,720,793       1,836,236
Delaware..........................       105,524         253,413         381,271         408,688         436,106
District of Columbia..............       194,386         466,814         702,341         752,847         803,353
Florida...........................     2,615,879       6,281,986       9,451,497      10,131,169      10,810,840

Georgia...........................     1,555,088       3,734,514       5,618,724       6,022,775       6,426,826
Hawaii............................       194,386         466,814         702,341         752,847         803,353
Idaho.............................       155,509         373,451         561,872         602,278         642,683
llinois...........................     2,504,802       6,015,235       9,050,160       9,700,970      10,351,781
Indiana...........................       938,606       2,254,046       3,391,302       3,635,175       3,879,049

Iowa..............................       427,649       1,026,991       1,545,149       1,656,263       1,767,377
Kansas............................       372,110         893,616       1,344,481       1,441,164       1,537,848
Kentucky..........................     1,083,007       2,600,822       3,913,040       4,194,433       4,475,826
Louisiana.........................     1,888,321       4,534,767       6,822,737       7,313,370       7,804,003
Maine.............................       244,371         586,852         882,942         946,436       1,009,930

Maryland..........................       760,882       1,827,244       2,749,162       2,946,858       3,144,554
Massachusetts.....................       960,822       2,307,396       3,471,569       3,721,215       3,970,861
Michigan..........................     2,304,862       5,535,083       8,327,752       8,926,614       9,525,475
Minnesota.........................       655,358       1,573,831       2,367,891       2,538,170       2,708,448
Mississippi.......................     1,155,208       2,774,210       4,173,910       4,474,062       4,774,214

Missouri..........................     1,149,654       2,760,873       4,153,843       4,452,552       4,751,261
Montana...........................       133,293         320,101         481,605         516,238         550,871
Nebraska..........................       233,263         560,177         842,809         903,416         964,024
Nevada............................       161,063         386,789         581,939         623,787         665,636
New Hampshire.....................        94,416         226,738         341,137         365,669         390,200

New Jersey........................     1,132,992       2,720,860       4,093,642       4,388,022       4,682,402
New Mexico........................       455,419       1,093,679       1,645,484       1,763,813       1,882,142
New York..........................     4,043,228       9,709,736      14,608,684      15,659,216      16,709,749
North Carolina....................     1,160,762       2,787,548       4,193,976       4,495,572       4,797,167
North Dakota......................        99,970         240,076         361,204         387,178         413,153

Ohio..............................     2,782,496       6,682,112      10,053,503      10,776,466      11,499,429
Oklahoma..........................       694,236       1,667,194       2,508,359       2,688,739       2,869,119
Oregon............................       510,957       1,227,055       1,846,152       1,978,912       2,111,672
Pennsylvania......................     2,360,401       5,668,459       8,528,421       9,141,713       9,755,004
Rhode Island......................       188,832         453,477         682,274         731,337         780,400

South Carolina....................       805,313       1,933,945       2,909,697       3,118,937       3,328,178
South Dakota......................       127,739         306,764         461,538         494,728         527,918
Tennessee.........................     1,327,378       3,187,674       4,795,983       5,140,869       5,485,755
Texas.............................     5,376,160      12,910,748      19,424,733      20,821,595      22,218,457
Utah..............................       294,356         706,890       1,063,544       1,140,025       1,216,506

Vermont...........................       105,524         253,413         381,271         408,688         436,106
Virginia..........................       927,499       2,227,371       3,351,168       3,592,155       3,833,143
Washington........................       938,606       2,254,046       3,391,302       3,635,175       3,879,049
West Virginia.....................       572,050       1,373,768       2,066,888       2,215,521       2,364,154
Wisconsin.........................       821,975       1,973,957      2,969,897,       3,183,467       3,397,037

Wyoming...........................        77,754         186,726         280,936         301,139         321,341
American Samoa....................        90,857         122,095         149,102         154,893         160,684
Guam..............................       129,726         219,181         296,518         313,102         329,687
Northern Mariana..................        80,428          96,047         109,551         112,446         115,342
Puerto Rico.......................     1,442,746       3,498,785       5,276,321       5,657,497       6,038,672

Virgin Islands....................       117,401         188,397         249,776         262,938         276,101
                                   -----------------------------------------------------------------------------
Totals:...........................    57,400,000     137,500,000     206,750,000     221,600,000     236,450,000

Set Asides:
    Indians (1%)..................       600,000       1,500,000       2,250,000       2,400,000       2,550,000
    T, TA & Eval..............     2,000,000       6,000,000       6,000,000       6,000,000       6,000,000
    Courts........................             0       5,000,000      10,000,000      10,000,000      10,000,000
                                   -----------------------------------------------------------------------------
      Subtotal....................     2,600,000      12,500,000      18,250,000      18,400,000      18,550,000
                                   =============================================================================
Total for fiscal year.............   $60,000,000    $150,000,000    $225,000,000    $240,000,000    $255,000,000
----------------------------------------------------------------------------------------------------------------
\1\Fiscal year 1994. State allotments are based on the statutory formula using Food Stamp data (section 433(c)).
  Allotments for the territories and insular areas are based on the title IV-B formula (section 433(b)). The
  table also includes the set-asides for grants to Indian Tribes and State courts, and grants for research,
  evaluation, and training and technical assistance (section 403(d)).
\2\Fiscal years 1995-98. State allotments for these years should be used only for planning purposes. They are
  based on current information and will need to be revised when future Food Stamp data and appropriations are
  known.

Source: Department of Health and Human Services.

                THE TITLE IV-E AFDC FOSTER CARE PROGRAM

    The AFDC foster care program under title IV-E is a
permanently authorized entitlement program that provides open-
ended matching funds to States for the maintenance payments
made for AFDC-eligible children in foster care family homes,
private nonprofit child care facilities, or public child care
institutions housing up to 25 people. The program is required
of States participating in the AFDC program (all States
participate). The Federal matching rate of total expenditures
for a given State is that State's Medicaid matching rate, which
averages about 57 percent nationally. States may claim open-
ended Federal matching at a rate of 50 percent for their child
placement services and administrative costs for this program.
States also may claim open-ended Federal matching at a rate of
75 percent for State training expenditures (for training of
personnel employed or preparing for employment by the State or
local agency administering the program, and training of foster
and adoptive parents).
    States are required to provide foster care maintenance
payments to AFDC-eligible children removed from the home of a
relative if the child received or would have been eligible for
AFDC prior to removal from the home and if the following apply:
(1) the removal and foster care placement were based on a
voluntary placement agreement\3\ or a judicial determination
that remaining in the home would be contrary to the child's
welfare and reasonable efforts were made to eliminate the need
for removal or to return the child to his home; and (2) care
and placement of the child are the responsibility of specified
public agencies. Children in the AFDC foster care program are
eligible for Medicaid; the State in which the child resides is
responsible for providing the Medicaid coverage.
---------------------------------------------------------------------------
    \3\``Voluntary placement'' is defined as ``out-of-home placement of
minor, by or with participation of a State agency, after the parents or
guardian of the minor have requested the assistance of the agency and
signed a voluntary placement agreement.'' ``Voluntary placement
agreement'' is defined as ``a written agreement, binding on the parties
of the agreement, between the State agency, any other agency acting on
its behalf, and the parents or guardians of a minor child which
specifies, at a minimum, the legal status of the child and rights and
obligations of the parents or guardians, the child, and the agency
while the child is in placement'' (sec. 472(ff)).
---------------------------------------------------------------------------

    The maintenance payments under the title IV-E foster care
program are for the costs of food, shelter, clothing, daily
supervision, school supplies, general incidentals, liability
insurance for the child, and reasonable travel to the child's
home for visits.

Foster care expenditures and participation rates

    The average estimated monthly number of children in AFDC
foster care has more than doubled between 1983 and 1993, from
97,370 in fiscal year 1983 to 232,668 in fiscal year 1993 (see
table 14-3). Table 14-7 provides a State-by-State breakdown of
estimated fiscal year 1993 foster care expenditures. Note that
California and New York account for almost half of the
estimated fiscal year 1993 expenditures. More detailed data on
foster children and their characteristics are described later
in this section.
    State claims for child placement services and
administrative costs for the title IV-E foster care program
have increased considerably since 1981. Current HHS regulations
give the following examples of allowable child placement
services and administrative costs for the foster care program:
referral to services, preparation for and participation in
judicial determinations, placement of the child, development of
the case plan, case reviews, case management and supervision,
recruitment and licensing of foster homes and institutions,
rate setting, and a proportionate share of agency overhead. As
discussed later, many of these activities are required of
States (i.e., they are foster care ``protections''). Table 14-7
provides a State breakdown of foster care expenditures in
fiscal year 1993 between maintenance payments and
administration and training expenditures. A more detailed
discussion of growth in child placement services and
administrative costs is contained later in this section.

          TABLE 14-7.--FEDERAL FOSTER CARE EXPENDITURES UNDER TITLE IV-E, FISCAL YEAR 1993\1\
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                                       Child
                                                                 Child                               placement
                                               Maintenance     placement                           services and
                    State                        payments    services and    Training    Total    administration
                                                            administration                         as percent of
                                                                                                       total
----------------------------------------------------------------------------------------------------------------
Alabama......................................       $1.51          $3.06       $0.11       $4.68         65.38
Alaska.......................................        1.99           2.42        0.00        4.41         54.88
Arizona......................................        7.81           9.42        0.74       17.97         52.42
Arkansas.....................................        2.29           4.90        2.56        9.75         50.26
California...................................      232.18         227.57       18.31      478.06         47.60

Colorado.....................................        4.90          14.42        0.95       20.27         71.14
Connecticut..................................        4.90          10.35        0.65       15.90         65.09
Delaware.....................................        0.35           0.92        0.07        1.34         68.66
District of Columbia.........................        4.40           6.80        0.00       11.20         60.71
Florida......................................       14.63          28.90        2.35       45.88         62.99

Georgia......................................        8.48          14.28        1.74       24.50         58.29
Hawaii.......................................        0.78           2.13        0.00        2.91         73.20
Idaho........................................        0.72           1.39        0.04        2.15         64.65
Illinois.....................................       73.88          40.37        3.34      117.59         34.33
Indiana......................................       22.92          14.73        0.00       37.65         39.12

Iowa.........................................        7.40           5.83        0.43       13.66         42.68
Kansas.......................................        7.44          10.61        1.32       19.37         54.78
Kentucky.....................................       12.73          16.98        4.35       34.06         49.85
Louisiana....................................       16.56          10.90        1.10       28.56         38.17
Maine........................................        7.20           1.32        0.92        9.44         13.98

Maryland.....................................       23.82          17.38        3.40       44.60         38.97
Massachusetts................................       26.49          30.56        0.35       57.40         53.24
Michigan.....................................       47.41          54.36        1.50      103.27         52.64
Minnesota....................................       18.71          12.40        1.89       33.00         37.58
Mississippi..................................        1.56           2.22        0.31        4.09         54.28

Missouri.....................................       12.71          14.68        1.68       29.07         50.50
Montana......................................        3.26           1.31        0.01        4.58         28.60
Nebraska.....................................        5.38           3.19        1.59       10.16         31.40
Nevada.......................................        1.61           1.20        0.07        2.88         41.67
New Hampshire................................        3.67           3.61        0.09        7.37         48.98

New Jersey...................................       11.88          13.27        0.15       25.30         52.45
New Mexico...................................        3.56           1.21        0.69        5.46         22.16
New York.....................................      416.04         345.53       17.66      779.23         44.34
North Carolina...............................       14.25           3.24        0.14       17.63         18.38
North Dakota.................................        2.49           2.44        0.48        5.41         45.10

Ohio.........................................       44.82          43.24        3.92       91.98         47.01
Oklahoma.....................................        5.09           2.63        0.47        8.19         32.11
Oregon.......................................        7.27           6.79        0.02       14.08         48.22
Pennsylvania.................................      125.88          48.26        6.32      180.46         26.74
Rhode Island.................................        3.19           4.77        0.12        8.08         59.03

South Carolina...............................        4.72           3.45        0.65        8.82         39.12
South Dakota.................................        1.27           1.26        0.04        2.57         49.03
Tennessee....................................        9.14           5.34        1.29       15.77         33.86
Texas........................................       38.48          32.09        1.61       72.18         44.46
Utah.........................................        3.03           2.80        0.13        5.96         46.98

Vermont......................................        4.18           2.37        0.10        6.65         35.64
Virginia.....................................        4.46           6.57        2.36       13.39         49.07
Washington...................................        8.07          11.59        0.23       19.89         58.27
West Virginia................................        2.24           1.59        0.44        4.27         37.24
Wisconsin....................................       18.90          23.68        0.00       42.58         55.61
Wyoming......................................        0.75           0.30        0.00        1.05         28.57
                                              ------------------------------------------------------------------
    Total....................................    1,307.40       1,130.63       86.69    2,524.72         44.78
----------------------------------------------------------------------------------------------------------------
\1\Does not include $22 million in disputes and reconciliations.
Totals may differ from sum of State amounts because of rounding.

Source: Department of Health and Human Services.

Foster care payment rates

    Table 14-8 shows each State's basic family foster care
maintenance rates that are paid out on a monthly basis, as
determined in an annual survey conducted by the American Public
Welfare Association (APWA). States are allowed to set them at
any level; thus, the rates vary widely. For instance, in 1993
the minimum basic monthly rate for a 16-year-old foster child
in the State of Ohio was $203 compared with $593 in the State
of Connecticut and $621 in the State of Alaska. New York City
had a monthly payment rate of $547. The nationwide average for
this age group was $393 per month compared with $318 for 2-
year-olds and $336 for foster children that were 9 years of
age.
    The 1980 legislation stipulated that title IV-E foster care
payments may be made for children in public institutions,
whereas previously under title IV-A payments were limited to
children in private nonprofit institutions or foster family
homes. These public institutions may accommodate up to 25
children. Facilities operated primarily for the detention of
delinquents, including forestry camps and training schools, are
noneligible institutions. It is generally agreed that the costs
associated with institutional care are substantially higher
than the cost of family foster care. The North American Council
on Adoptable Children (NACAC) estimates that for 1990, the
daily costs associated with basic family foster care were
between $8 and $15 (up to $30 for a child with special needs).
Comparatively, residential foster care was estimated on average
to cost $100 a day per child.


                            TABLE 14-8.--FOSTER CARE BASIC MONTHLY MAINTENANCE RATES FOR CHILDREN AGES 2, 9, AND 16
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Age 2                               Age 9                              Age 16
                    State                    -----------------------------------------------------------------------------------------------------------
                                               1987     1991     1992      1993    1987     1991     1992      1993    1987     1991     1992      1993
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama.....................................      168      181      199      205      188      202      222      229      198      213      234      241
Alaska......................................      428      561      588      588      478      499      523      523      565      592      621      621
Arizona.....................................      223      247      295      295      223      247      284      284      282      305      362      362
Arkansas....................................      175      195      300      300      190      210      325      325      220      240      375      375
California..................................      294      345      345      345      340      400      400      400      412      484      484      484

Colorado....................................      235      296      302      313      266      296      302      313      318      352      359      372
Connecticut.................................      268      386      497      515      302      424      506      524      350      478      572      593
Delaware....................................      264      301      301      301      266      304      304      304      342      391      391      391
District of Columbia........................      304      304      304      437      304      304      304      437      317      317      361      526
Florida.....................................      233      296      296      296      233      296      296      296      293      372      372      372

Georgia.....................................      300      300      300      300      300      300      300      300      300      300      300      300
Hawaii......................................      194      529      529      529      233      529      529      529      301      529      529      529
Idaho.......................................      138      198      198      198      165      205      205      205      204      278      278      278
Illinois....................................      233      268      295      311      259      299      329      326      282      325      358      377
Indiana.....................................      226      281      405      405      245      330      462      462      280      398      518      518

Iowa........................................      159      198      258      308      201      243      289      322      285      300      356      382
Kansas......................................      187      304      305      304      245      304      305      304      280      386      386      386
Kentucky....................................      248      265      263      263      263      288      285      285      300      333      330      330
Louisiana...................................      199      283      283      298      232      316      316      331      265      349      349      364
Maine.......................................      244      296      296  .......      250      304      304  .......      291      353      353  .......

Maryland....................................      285      535      535      535      285      535      535      535      303      550      560      550
Massachusetts...............................      362      410      410      415      362      410      410      415      433      486      486      492
Michigan....................................      315      332      354      354      315      332      354      354      395      416      442      442
Minnesota...................................      285      341      358      377      285      341      358      377      375      442      464      487
Mississippi.................................      130      145      175      175      150      165      205      205      160      175      250      250

Missouri....................................      174      209      212      212      212      255      259      259      232      281      286      286
Montana.....................................      283      307      318      322      283      307      318      322      354      384      402      406
Nebraska....................................      210      222      326      326      210      291      393      394      210      351      463      461
Nevada......................................      275      281      281      281      275      281      281      281      330      337      337      337
New Hampshire...............................      200      200      200      324      251      251      251      354      354      354      354      418

New Jersey..................................      203      244      256      264      215      259      272      280      253      305      320      320
New Mexico..................................      236      258      258      258      247      270      270      270      259      281      281      281
New York....................................      312      353      353      367      375      424      424      441      434      490      490      510
New York City...............................      342      386      386      401      403      455      455      473      465      526      526      547
North Carolina..............................      215      265      265      265      215      265      265      265      215      265      265      265

North Dakota................................      240      260      260      265      287      312      312      318      345      416      416      424
Ohio........................................      240      289      297      203      270      328      342      203      300      366      381      203
Oklahoma....................................      300      300      300      300      360      360      360      360      420      420      420      420
Oregon......................................      200      285      295      305      234      295      306      317      316      363      378      391
Pennsylvania................................      558      303      330      306      558      319      392      357      558      377      450      459

Rhode Island................................      223      274      270      273      223      274      270      273      275      335      330      334
South Carolina..............................      138      182      182      182      158      209      209      209      208      275      275      275
South Dakota................................      188      237      237      251      230      291      291      308      276      349      349      370
Tennessee...................................      139      255      225      336      190      226      226      262      224      267      267      385
Texas.......................................      243      420      554      476      243      420      554      476      274      420      554      476

Utah........................................      198      300      300      310      198      300      300      310      225      300      300      310
Vermont.....................................      210      371      321      321      249      371      321      321      268      447      397      386
Virginia....................................      193      246      246      251      244      288      288      294      309      365      365      372

Washington..................................      184      270      278      278      227      332      342      342      268      392      405      405
West Virginia...............................      161      161      161      161      202      202      202      202      242      242      242      242
Wisconsin...................................      163      231      231      240      224      257      257      267      284      324      324      337
Wyoming.....................................      300      400      400      400      300      400      400      400      330      400      400     400
                                             -----------------------------------------------------------------------------------------------------------
Average monthly rates.......................      239   294.35   310.25   318.53      263   313.94   331.00   336.14      307   365.31   385.90  392.98
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Most States and/or counties supplement these basic rates with additional payments.

Source: American Public Welfare Association, March 1994.

Exclusion of foster children from AFDC assistance units

    The Deficit Reduction Act of 1984 (P.L. 98-369) required
that certain blood-related, adoptive parents or siblings must
be included in the family unit if the family applies for income
assistance under the AFDC program. Because there was no
statutory exclusion for foster care recipients, AFDC operating
policy required that their income be included with the family's
when the family's eligibility was determined. Enacted in 1986
by Public Law 99-514, section 478 of title IV-E stated that a
foster child who is receiving maintenance payments funded under
title IV-E may not be considered a family member during the
time the family receives AFDC, and that the child's income in
the form of maintenance payments, and other income and
resources, must be excluded from the family's as well.
    The Omnibus Budget Reconciliation Act of 1990 (P.L. 101-
508) repealed section 478 and added a new section 408 to title
IV-A stipulating that foster children receiving maintenance
payments under title IV-E or under State or local programs are
not considered family members for purposes of AFDC. Similarly,
the law now specifies that children receiving adoption
assistance payments under either title IV-E or State or local
law are not considered family members for AFDC purposes, unless
the family would lose benefits as a result.

               THE TITLE IV-E INDEPENDENT LIVING PROGRAM

    In 1986, title IV-E was amended by Public Law 99-272
(Consolidated Omnibus Budget Reconciliation Act of 1985) to
include section 477, which established the independent living
program to assist youth who would eventually be emancipated
from the foster care system. Several surveys conducted during
the mid-1980s showed that a significant number of homeless
shelter users had been recently discharged from foster care.
The program's services were designed to assist adolescent youth
who are not provided the benefits believed to come from
reunification with their original family, or placement in an
adoptive home.
    An annual entitlement amount of $45 million was established
for 1987 and 1988 to provide States with the resources to
establish and implement services to assist AFDC-eligible
children age 16 and over make a successful transition from
foster care to independent adult living when they become
ineligible for foster care maintenance payments at age 18. The
same amount was made available the following year and the
program was expanded under Public Law 100-647. States could now
provide independent living services to all youth in foster care
aged 16 to 18 (not just title IV-E-eligible youth) and States
could claim followup services provided to youth up to 6 months
after their emancipation from substitute care. Under Public Law
101-508, States have the option of serving individuals up to
age 21 in the independent living program. Funds are allocated
on the basis of each State's relative share of children
receiving IV-E foster care in 1984.
    Public Law 101-239 increased the amount of Federal
entitlement funds available to the States for the independent
living program to $50 million for fiscal year 1990, $60 million
for fiscal year 1991, and $70 million for fiscal year 1992.
Beginning in fiscal year 1991, States are required to provide
50 percent matching for any Federal funding claimed that
exceeds the original $45 million funding level. In 1993,
Congress permanently extended the authority for independent
living, under Public Law 103-66.
    Section 477 of title IV-E instructed HHS to carry out a
study of the program's effectiveness. Under contract with HHS,
Westat, Inc. completed the first phase of the study in 1989 and
the second phase in 1992. The first phase is a purely
descriptive assessment of the needs of youth emancipated from
foster care between January 1, 1987 and July 31, 1988; States'
development of independent living programs to serve these
youth; and the proportion of youth served.
    The first report found that independent living services
offered by the States generally fall into the following
categories: basic skills training (including health promotion,
housekeeping, money management, decisionmaking, and food and
nutrition management); education initiatives (including private
tutoring, and GED and college preparation); and employment
initiatives (including job training and placement, and personal
presentation and social skills). In addition, 14 States held
teen conferences designed to bring these foster care youth
together for workshops to provide them with supportive
contacts, teach them independent living skills, focus on self-
esteem building, and help prepare them for their impending
emancipation from foster care.
    The report concluded that emancipated youth were a troubled
population. In the study population, two-thirds of 18-year-olds
did not complete high school or a GED and 61 percent had no job
experience. In addition, 38 percent had been diagnosed as
emotionally disturbed, 17 percent had a drug abuse problem, 9
percent had a health problem, and 17 percent of the females
were pregnant. The group also lacked placement stability.
During the time they were in foster care 58 percent experienced
at least three living arrangements and approximately 30 percent
of the youth had been in substitute care for an average of 9
years. The report found evidence that Public Law 99-272 has
influenced States to develop policies for services that
adolescents should receive before their emancipation from
foster care. Of the 49 States that responded, 22 had such a
written policy before the law was enacted. By 1988, when the
study was concluded, an additional 18 States had initiated the
process of developing similar policies. (By 1990, all States
had an independent living program plan.)
    Of the total 34,600 youth emancipated from foster care
during the study period, 31 percent received services through
their State's formalized independent living program, 29 percent
received nonformalized (but related) services, and 40 percent
received no independent living services at all.
    The second phase of the Westat report was released in 1992,
and follows up on youths who had been emancipated from foster
care during the period from January 1987 and July 1988.
Interviews were conducted with these youths between November
1990 and March 1991 about their experiences after leaving
foster care. The second phase report suggests six major
findings.
    First, the type of skills encouraged by the independent
living program was positively related to outcomes, particularly
when combined training was provided in money management,
credit, consumer education and employment. To achieve the best
results, Westat said, skill training should be closely targeted
to the outcome it is intended to improve (e.g., maintaining a
job, becoming a high school graduate, avoiding young
parenthood, having access to medical care when needed, etc.),
and should be provided in combination with other skill areas.
    Second, Westat found that young people were better off
according to several measures if they completed high school
before leaving foster care, rather than after discharge,
regardless of whether they received skill training.
    Third, Westat found that the status of older foster care
youth 2\1/2\ to 4 years after discharge is ``adequate at best''
and services are needed for this population to improve their
outcomes. For example, Westat reported that only 54 percent of
the study population had completed high school, 49 percent were
employed at the time of the interview, 38 percent maintained a
job for at least 1 year, 40 percent were a cost to the
community in some way at the time of the interview (receiving
public assistance, incarcerated, etc.), 60 percent of the young
women had given birth to a child, 25 percent had been homeless
for at least one night, their median weekly salary was $205,
and only 17 percent were completely self-supporting.
    Fourth, Westat reported that extended family members were
an important resource to former foster care youth. The majority
had continuing contact with either parents or extended family
members and 54 percent had gone to live with extended family
members after discharge.
    Fifth, Westat found that becoming a young mother, which had
happened to 60 percent of the women in the study group, was
associated with poorer outcomes. For example, only 47 percent
of young mothers had completed high school while 67 percent of
those women in the study group who had not had children
completed high school. Of mothers, 21 percent completed further
schooling after foster care discharge, compared with 50 percent
of nonmothers. At the time of the interviews, 34 percent of
mothers were employed, compared with 55 percent of nonmothers,
and 23 percent of mothers had held a job for more than a year,
compared with 33 percent of nonmothers.
    Finally, 61 percent of the women in the study group who had
given birth to children were a cost to the community, compared
with 22 percent of those who had not had children.
    Westat's last finding was that 30 percent of the study
group had faced barriers to obtaining health care when needed,
primarily as a result of lack of money or health insurance.

 TABLE 14-9.--TITLE IV-E--INDEPENDENT LIVING FEDERAL AWARDS--FISCAL
                             YEAR 1993
                        [In thousands of dollars]
------------------------------------------------------------------------
                                                                 Total
                            State                                awards
------------------------------------------------------------------------
Alabama......................................................      1,038
Alaska.......................................................         13
Arizona......................................................        359
Arkansas.....................................................        280
California...................................................     12,879

Colorado.....................................................        826
Connecticut..................................................        778
Delaware.....................................................        209
District of Columbia.........................................        702
Florida......................................................      1,018

Georgia......................................................      1,134
Hawaii.......................................................         18
Idaho........................................................        110
Illinois.....................................................      2,906
Indiana......................................................      1,020

Iowa.........................................................        464
Kansas.......................................................        737
Kentucky.....................................................        792
Louisiana....................................................      1,073
Maine........................................................        584

Maryland.....................................................      1,238
Massachusetts................................................        656
Michigan.....................................................      4,082
Minnesota....................................................      1,178
Mississippi..................................................        514

Missouri.....................................................      1,336
Montana......................................................        244
Nebraska.....................................................        449
Nevada.......................................................        159
New Hampshire................................................        330

New Jersey...................................................      2,371
New Mexico...................................................        214
New York.....................................................     11,953
North Carolina...............................................        972
North Dakota.................................................        198

Ohio.........................................................      2,952
Oklahoma.....................................................        640
Oregon.......................................................        960
Pennsylvania.................................................      4,785
Rhode Island.................................................        325

South Carolina...............................................        598
South Dakota.................................................        193
Tennessee....................................................        650
Texas........................................................      1,842
Utah.........................................................        209

Vermont......................................................        305
Virginia.....................................................        875
Washington...................................................        848
West Virginia................................................        335
Wisconsin....................................................      1,603

Wyoming......................................................         46
                                                              ----------
    Total....................................................     70,000
------------------------------------------------------------------------
Source: Department of Health and Human Services.

               THE TITLE IV-E ADOPTION ASSISTANCE PROGRAM

    The title IV-E adoption assistance program is an open-ended
entitlement program required of States that participate in AFDC
(all States participate). The program is permanently authorized
under title IV-E and allows States to develop adoption
assistance agreements with parents who adopt eligible children
with special needs. Federal matching funds are provided to
States that, under these agreements, provide adoption
assistance payments to parents who adopt AFDC- or SSI-eligible
children with special needs. In addition, the program
authorizes Federal matching funds for States that reimburse the
nonrecurring adoption expenses of adoptive parents of special
needs children (regardless of AFDC or SSI eligibility).

Definition of special needs

    A special needs child is defined in the statute as a child
with respect to whom the State determines there is a specific
condition or situation, such as age, membership in a minority
or sibling group, or a mental, emotional, or physical handicap,
which prevents placement without special assistance. Before a
child can be considered to be a child with special needs, the
State must determine that the child cannot or should not be
returned to the biological family, and that reasonable efforts
have been made to place the child without providing adoption
assistance. States have considerable latitude in defining
special needs eligibility criteria and individually determining
whether a child is eligible. For example, some States add
religion or not being able to place the child without subsidy
to the definition of special needs.

Adoption assistance agreements and payments

    An adoption assistance agreement is a written agreement
between the adoptive parents, the State IV-E agency, and other
relevant agencies (such as a private adoption agency)
specifying the nature and amount of assistance to be given.
Under the adoption assistance agreement, States may make
monthly adoption assistance payments for AFDC- and SSI-eligible
children with special needs who are adopted.
    Adoption assistance payments are based on the circumstances
of the adopting parents and the needs of the child. No means
test can be used to determine eligibility of parents for the
program; however, States do use means tests to determine the
amount of the payment. Payments may be adjusted periodically if
circumstances change, with the concurrence of the adopting
parents. However, the payments may not exceed the amount the
family might have received on behalf of the child under AFDC
foster care for foster family care. Adoption assistance
payments may continue until the child is age 18, or, at State
option, age 21 if the child is mentally or physically
handicapped. In addition, payments are discontinued if the
State determines that the parents are no longer legally
responsible for the support of the child. Federally subsidized
payments may start as soon as an agreement is signed and the
child has been placed in an adoptive home. Parents who have
been receiving adoption assistance payments must keep the State
or local agency informed of circumstances that would make them
ineligible for payments, or eligible for payments in a
different amount.
    The Federal matching rate for the adoption assistance
payments is based on each State's Medicaid matching rate (which
ranges from 50 to 83 percent depending on State per capita
income, and averages about 57 percent nationally). States may
also claim open-ended Federal matching for the costs of
administering the program (50 percent) and for training both
staff and adoptive parents (75 percent).
    Not all families of adopted IV-E eligible children with
special needs actually receive adoption assistance payments.
(The adoptive parents' circumstances may be such that an
adoption subsidy is not needed or wanted.) Adopted AFDC or SSI
eligible children with special needs are also eligible for
Medicaid if an adoption assistance agreement is in effect,
whether or not adoption assistance payments are being made.
Therefore, there are some IV-E eligible children with special
needs for whom adoption assistance payments are not made but
who are eligible for Medicaid.\4\
---------------------------------------------------------------------------
    \4\States also have the option under the Medicaid program to
provide Medicaid coverage for other special needs children (those not
eligible for AFDC or SSI) who are adopted if they have been identified
as a special category of medically needy children under a State's
Medicaid program. Pursuant to the 1985 budget reconciliation
legislation, effective October 1, 1986, a child for whom an adoption
assistance agreement is in effect is eligible for Medicaid from the
State in which the child resides regardless of whether the State is the
one with which the adoptive parents have an adoption assistance
agreement.
---------------------------------------------------------------------------

    The structure of adoption subsidy programs varies across
States. Some States offer basic maintenance payments and also
allow additional payments for certain activities (such as
family counseling) or for certain groups of children (such as
children with severe handicaps). Other States offer one level
of payment to everyone with no special allowances. Some States
allow parents to request changes in payment levels on a regular
basis if circumstances change for a child, and others allow
very little change once the adoption agreement is signed. Some
States start payments as soon as placement is made, and others
not until the adoption is finalized. Also, payments may not
start immediately upon adoption finalization but may be written
into agreements to start at a later date if it is thought that
the child's circumstances will warrant payments as the child
gets older.
    Not all children who receive adoption subsidies from States
are eligible for Federal IV-E funds. The American Public
Welfare Association (APWA) estimates that at the end of 1990
(the latest year for which data are available), approximately
52 percent of the estimated 99,000 children nationwide whose
families received adoption subsidies were IV-E eligible. The
non-IV-E children's adoption subsidies are paid solely by the
State in which their adoption agreement was signed. States
differ in whether comparable IV-E children and non-IV-E
children receive similar adoption subsidy amounts.
    More detailed data on adoptive children and their
characteristics are presented later in this section.

Nonrecurring adoption costs

    The adoption assistance program also authorizes Federal
matching funds for States to pay the one-time adoption expenses
of parents of special needs children (regardless of AFDC or SSI
eligibility). To qualify, the children must be covered by an
adoption assistance agreement. Effective January 1, 1987,
parents may receive reimbursement of up to $2,000 for these
nonrecurring adoption expenses under the adoption assistance
program, and States may claim 50 percent Federal matching for
these payments. Qualified adoption expenses are defined as
reasonable and necessary adoption fees, court costs, attorney
fees, and other expenses which are directly related to the
legal adoption of a child with special needs. States vary in
the maximum amount they allow parents to receive under this
provision. (See table 14-10 for State-by-State data on maximum
reimbursement rates.) Regulations for the program were not
published until 1988. Prior to January 1987, up to $1,500 of
nonrecurring costs of adopting a child with special needs could
be claimed as a tax deduction. The 1986 tax reform legislation
repealed the adoption expense deduction.
    By May 1991, the majority of States had implemented
programs to reimburse parents for nonrecurring adoption
expenses. However, average reimbursements have not equaled the
$2,000 Federal cap, with the average payment being $664 in
1992. According to the American Public Welfare Association,
most States report that actual repayment of nonrecurring
adoption expenses has not created the degree of financial or
administrative burden initially feared by most States. One
reason is that a lower number of applicants and eligible
children have been served than initially expected. This is
partially due to lower numbers of requests being processed by
nonpublic agency adoption sources, which do not process special
needs adoptions at the same volume as public agencies. A second
reason is that the expenses claimed have not been excessively
costly to reimburse because many items are already covered
under the States' adoption programs.

                 TABLE 14-10.--STATE REIMBURSEMENT OF NONRECURRING ADOPTION COSTS, 1992
----------------------------------------------------------------------------------------------------------------
                                    Has your                          Estimated
                                     State                 Estimated   average
                                  implemented    Maximum    average    payment
             State                    the        payment    payment     as of      Major reimbursement cost(s)
                                 reimbursement             as of May    April
                                    program?                  1991       1992
----------------------------------------------------------------------------------------------------------------
Alabama........................  Yes..........     $1,000       $350       $412  Attorney fees.
Alaska.........................  Yes..........      2,000      1,200        829  Attorney fees.
Arizona........................  Yes..........      2,000      2,000      1,596  Agency fees.
Arkansas.......................  Yes..........      1,500        100        500  Legal fees.
California.....................  Yes..........        400        400        400  Agency fees.

Colorado.......................  Yes..........        800        250        250  Legal fees especially filing.
Connecticut....................  Yes..........        750         90         90  Probate court fees.
Delaware.......................  Yes..........      2,000        300        300  Legal fees.
District of Columbia...........  No/1/........      2,000  .........  .........  ...............................
Florida........................  Yes..........      1,000        400        400  Attorney fees, hotel cost for
                                                                                  intrastate placement.

Georgia........................  Yes..........        700        400        400  Legal fees.
Hawaii.........................  Yes..........      2,000        N/A        N/A  ...............................
Idaho..........................  Yes..........      2,000        N/A        350  Attorney fees.
Illinois.......................  Yes..........      1,500        N/A        N/A  ...............................
Indiana........................  Yes..........      1,500        635  .........  ...............................

Iowa...........................  Yes..........      (\2\)        700        700  Legal fees.
Kansas.........................  Yes..........      2,000        N/A        N/A  ...............................
Kentucky.......................  Yes..........      1,000        378        378  Attorney fees.
Louisiana......................  Yes..........      1,000        400        600  Legal costs.
Maine..........................  No\3\........  .........  .........  .........  ...............................

Maryland.......................  Yes..........      2,000        N/A      2,000  Home study by private agency.
Massachusetts..................  Yes..........      2,000        400  .........  ...............................
Michigan.......................  No\4\........      2,000  .........  .........  ...............................
Minnesota......................  Yes..........      2,000      2,000      2,000  Agency fees, esp. for
                                                                                  interstate adoptions,
                                                                                  transportation.
Mississippi....................  Yes..........      1,000        500        500  Attorney fees.

Missouri.......................  Yes..........      2,000        N/A      \5\45  Legal fees.
Montana........................  Yes..........      2,000      1,000      1,000  Attorney fees, home study by
                                                                                  private agency.
Nebraska.......................  Yes..........      1,500        N/A  .........  ...............................
Nevada.........................  Yes..........        250        250        250  Legal fees.
New Hampshire..................  Yes..........      2,000      2,000      2,000  Home study.

New Jersey.....................  Yes..........      2,000        N/A        850  Home study, legal fees.
New Mexico.....................  Yes..........      2,000        500        500  Legal fees.
New York.......................  Yes..........      2,000        500        500  Legal fees.
North Carolina.................  Yes..........   \6\2,000        N/A        176  Legal fees.
North Dakota...................  Yes..........      2,000        350        540  Legal fees, home study by
                                                                                  private agency.

Ohio...........................  Yes..........      2,000        761        672  Legal fees.
Oklahoma.......................  Yes..........      2,000      2,000        350  Attorney fees.
Oregon.........................  Yes..........      2,000        300     \7\450  Legal fees.
Pennsylvania...................  Yes..........      2,000        N/A     \8\700  ...............................
Rhode Island...................  Yes..........      1,000        N/A        902  Home study by private agency.

South Carolina.................  Yes..........      1,500        750        750  Legal fees.
South Dakota...................  Yes..........      1,500        650        650  Legal fees and travel.
Tennessee......................  Yes..........      2,000        700        700  Legal fees.
Texas..........................  Yes..........      1,500        N/A        N/A  ...............................

Utah...........................  Yes..........      2,000        327        327  Attorney fees.
Vermont........................  Yes..........      2,000      1,500      1,500  Home study by private agency.
Virginia.......................  Yes..........      2,000        280     \9\396  ...............................
Washington.....................  Yes..........      1,500        655        780  Legal fees.
West Virginia..................  No\10\.......      2,000  .........  .........  ...............................
Wisconsin......................  Yes..........      2,000        486        468  Agency fees or home study by
                                                                                  private agency.
Wyoming........................  Yes..........      2,000        350        350  Legal fees.
                                --------------------------------------------------------------------------------
      Average..................  .............      1,651        682        664  ...............................
----------------------------------------------------------------------------------------------------------------
\1\District of Columbia: Legislation is necessary to authorize reimbursement for costs; amount indicated is the
  proposed amount.
\2\Iowa: Any expenses over $500 that fall under special services category, e.g., supplies, equipment,
  counseling, must be submitted to department for approval. The department has not set a ceiling on the amount
  available under the reimbursement program.
\3\Maine: Legislation recently enacted for summer 1992 implementation.
\4\Michigan: Legislation has been enacted. Implementation scheduled for the near future.
\5\Missouri: Low cost of legal fees is due to successful efforts to secure pro bono legal representation.
\6\North Carolina: Program effective date was 7/1/91.
\7\Oregon: Private agencies have raised their fees to $2,000.
\8\Pennsylvania: The average payment amount indicated is for the first quarter of fiscal year 1992, October 1,
  1991, through December 31, 1991.
\9\Virginia: The estimated average payment is for the period 6/91 through 3/92.
\10\West Virginia: Implementation target date is September 1992.

Note: Legal fees include attorney fees, court costs, and birth certificate; Agency fees include training, home
  study, attorney and court costs, and post placement supervision.

Source: American Public Welfare Association, Administrators of the Interstate Compact on Adoption and Medical
  Assistance.

Adoption assistance expenditures

    The number of children on whose behalf monthly adoption
assistance payments are made and the Federal expenditures for
these payments have increased significantly since the program
began. In fiscal year 1981, only 6 States participated in the
program, with payments being made for an average of 165
children per month. In fiscal year 1993, 50 States plus the
District of Columbia participated, and served an average
monthly number of 78,044 children (see table 14-11).

    TABLE 14-11.--ADOPTION ASSISTANCE STATE CLAIMS, FISCAL YEARS 1990-93, AND AVERAGE NUMBER OF CHILDREN
                              RECEIVING ADOPTION ASSISTANCE, FISCAL YEAR 1993
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                Fiscal year
                                                          ------------------------------------------------------
                                                                                                          1993
                      Name of State                                                                     Average
                                                              1990       1991       1992       1993     monthly
                                                             Claims    Claims     Claims      Claims   number of
                                                                                                        children
----------------------------------------------------------------------------------------------------------------
Alabama..................................................       $384     $1,054     $1,064     $1,195        229
Alaska...................................................        170        360        590        839        185
Arizona..................................................      1,182      1,338      1,661      3,117        552
Arkansas.................................................        507        582        676      1,241        241
California...............................................     19,742     27,747     30,228     36,623     10,860

Colorado.................................................        774      1,177      1,120      1,961        554
Connecticut..............................................      1,137      1,529      2,634      3,652        865
Delaware.................................................        251        330        374        413        171
District of Columbia.....................................        772      (191)        820      1,269        226
Florida..................................................      5,354      5,357      7,974      8,257      2,890

Georgia..................................................      1,076      1,341      2,064      3,146        849
Hawaii...................................................         81         47        160        243         60
Idaho....................................................        294        330        364        570        143
Illinois.................................................      4,643      4,376      5,691      7,558      3,637
Indiana..................................................      1,636      2,540      4,021      5,711      1,390

Iowa.....................................................        996      2,878      2,745      2,923      1,134
Kansas...................................................        539        725        878      1,576        968
Kentucky.................................................      2,206      2,692      2,927      3,052        694
Louisiana................................................      1,481      2,746      5,829      7,656      1,026
Maine....................................................        984      1,229      2,294      2,646        427

Maryland.................................................      1,005      1,219      1,679      2,385        358
Massachusetts............................................      3,618      5,010      6,232      7,134      1,379
Michigan.................................................     11,881     14,202     17,538     21,868      6,299
Minnesota................................................      1,101      1,462      1,707      4,003        816
Mississippi..............................................        351        398        416        410        236

Missouri.................................................      1,695      2,470      5,452      4,674      2,447
Montana..................................................        192        603        530        631        173
Nebraska.................................................        665        767        992      1,179        481
Nevada...................................................        162        204        249        333         79
New Hampshire............................................        295        438        623        600        349

New Jersey...............................................      2,844      4,157      5,031      6,009      2,047
New Mexico...............................................      1,178      1,609      1,817      1,798        575
New York.................................................     33,336     39,200     44,422     57,520     14,934
North Carolina...........................................        739        836      1,092      1,748        912
North Dakota.............................................        172        250        353        466         94

Ohio.....................................................      9,608     14,167     18,850     22,964      5,901
Oklahoma.................................................      1,069      1,161      1,632      1,960        401
Oregon...................................................        969      1,547      2,371      2,804      1,481
Pennsylvania.............................................      2,960      4,263      5,437      6,820      2,730
Rhode Island.............................................      3,069      3,353      3,612      4,399        500

South Carolina...........................................      1,568      1,766      2,063      2,235        549
South Dakota.............................................         50        492        544        555        230
Tennessee................................................      1,345      2,010      2,098      3,573        617
Texas....................................................      4,546      5,233      6,744      9,142      2,634
Utah.....................................................        376        447        668        748        205

Vermont..................................................      1,147      1,248      1,749      2,009        313
Virginia.................................................      1,014      1,655      1,961      2,291      1,104
Washington...............................................        620      2,055      4,007      1,987      1,652
West Virginia............................................        197        230        257        285         67
Wisconsin................................................      3,714      4,565      5,290      6,171      1,365
Wyoming..................................................         45         79        112         60         15
                                                          ------------------------------------------------------
      Total..............................................    135,740    175,283    219,642    272,409     78,044
----------------------------------------------------------------------------------------------------------------
Totals may differ from sum of State amounts because of rounding.

Source: Department of Health and Human Services.

    Federal expenditures for the assistance payments portion
have increased from less than $400,000 in fiscal year 1981 to
an estimated $235 million in fiscal year 1994, and are expected
to be $274 million in fiscal year 1995.
    U.S. Department of Health and Human Services (HHS) data
indicate that expenditures for child placement services and
administration for the adoption assistance program have
increased significantly in recent years, as with the title IV-E
foster care program. In fiscal year 1981, claims totaled
$100,000; in fiscal year 1994 they will total an estimated $90
million and are expected to be $104 million in fiscal year
1995. States may claim matching funds for the following
placement service and administrative activities: recruitment of
adoptive homes, placement of the child in the adoptive home,
home studies of the prospective adoptive home, case planning,
case management, and case review activities during the
preadoptive period.

                PROTECTIONS FOR CHILDREN IN FOSTER CARE

    PROTECTIONS LINKED TO TITLE IV-B CHILD WELFARE SERVICES FUNDING

    To encourage States to use their title IV-B allocations to
fund services to help keep families together and prevent the
placement of children in substitute care, the 1980 legislation
requires that if the title IV-B appropriation exceeds the
Federal appropriation in 1979 ($56.5 million) States may not
use any of these funds in excess of their allocation of $56.5
million for foster care maintenance payments, adoption
assistance, or work-related child care. Appropriations for
title IV-B have consistently exceeded this amount.
    Further, if the appropriation for the title IV-B program
exceeds $141 million in any year, States are not eligible for
any of their allotment above this amount unless certain
protections have been implemented: (1) a one-time inventory of
children in foster care more than 6 months, to determine the
appropriateness of (and necessity for) the current foster care
placement, whether the child should be returned to his parents
or freed for adoption, and the services necessary to achieve
this placement goal; (2) a statewide information system from
which the status, demographic location, and placement goals of
every child in care for the preceding 12 months can be
determined; (3) a case review system to assure procedural
safeguards for each child in foster care, including a 6-month
court or administrative review and an 18-month dispositional
hearing to assure placement in a setting that is the least
restrictive (most family-like) setting available, in close
proximity to the original home, and in the best interest of the
child; (4) a reunification program to return children to their
original homes. These provisions are contained in section 427
of the act.
    In addition to the procedures specified above, States must
implement a preplacement preventive service program if the
title IV-B appropriation amount is $325 million for 2
consecutive years. If all these procedures and programs are not
implemented by a State, its allotted amount of title IV-B funds
is reduced to its share of the $56 million it received in
fiscal year 1979. Through fiscal year 1994, the amount
appropriated to title IV-B has never been sufficient to trigger
this provision.
    The review process for enforcing compliance with these
provisions is discussed later in this section.

   MANDATORY PROTECTIONS FOR FOSTER CHILDREN FUNDED UNDER TITLE  IV-E

    The 1980 legislation also strengthened the State plan
requirements for title IV-E foster care or adoption assistance
payments to emphasize protections for foster children
originating from families eligible for AFDC at the time of
placement. By law, for children receiving payments under the
title IV-E State plan, States must establish: (1) by fiscal
year 1984, specific goals as to the maximum number of children
in care more than 24 months, and a description of the steps
they will take to meet these goals; (2) a case plan review
system to be conducted every 6 months on each child in foster
care including:
  --a written document describing the child's placement and its
        appropriateness;
  --a plan, if necessary, for compliance with requirements made
        by judicial determination;
  --a plan of services to be provided to improve family
        conditions and facilitate the reunification of the
        child with his or her family, or--if this is not
        possible--to provide for a permanent placement and/or
        otherwise serve the needs of the child during the time
        it is placed in foster care; and
(3) beginning in fiscal year 1984, that case plans must show
that reasonable efforts have been made prior to placement to
prevent the need for placement or to return the child home if
removed. As of the same date, eligibility for Federal matching
funds for cases involving a judicial placement requires a
determination by the court that these efforts have been met.
    As a result of legislation passed in the 101st Congress, a
foster child's case record must now include his or her health
and education records. Beginning in fiscal year 1990, the names
and addresses of the child's health and educational providers
must be recorded as well as the child's grade level
performance, school record, and assurances that the child's
placement takes into account the proximity of the school in
which the child was enrolled at the time of placement. In
addition, a record of the child's immunizations, known medical
problems, required medications, and other relevant information
must be included.
    The 1980 law also provided sanctions for noncompliance with
these State plan requirements and mandated an independent audit
of States' title IV-E programs (including adoption assistance)
in an administrative review. The review process is described
later.

                   ``REASONABLE EFFORTS REQUIREMENT''

    Public Law 96-272 includes the requirement that reasonable
efforts must be made to prevent the placement of a child in
foster care, and to reunify a foster child with his or her
parents. The Social Security Act specifies the requirement in
two separate provisions. First, in order for a State to be
eligible for title IV-E funding, its State plan must specify
that reasonable efforts will be made prior to the placement of
a child in foster care to prevent the need for foster care and
make it possible for the child to eventually return home (sec.
471 (a)(15)). Second, for each child entering foster care after
October 1, 1983, a judicial determination must be made that
there were reasonable efforts to prevent placement in
substitute care (sec. 472(a)(1)).
    A 1984 policy announcement issued by ACYF (ACYF-PA-84-1)
and a subsequent Federal regulation issued by the Department in
1986 (45 CFR 1356-7), do not define the term ``reasonable
efforts''; instead this definition has been left to States.
State compliance with Federal reasonable efforts provisions are
audited in title IV-E reviews by HHS.
    According to a 1987 American Bar Association (ABA)
publication by Debra Ratterman, G. Diane Dodson, and Mark A.
Hardin, a total of 21 States had statutes addressing the
judicial determination of reasonable efforts as of 1986. The
ABA reports that States have continued to develop statutory
guidelines since 1986. The ABA report found that State agencies
also play a role in defining reasonable efforts through their
interpretation of State court requirements to provide
preplacement preventive services.
    In addition to placement, adherence to reasonable effort is
a requirement for the termination of parental rights in many
States. For example, New York's statute specifies ``diligent
efforts,'' which require that prior to the termination of
parental rights an authorized agency must: consult and
cooperate with the parents of a child in developing a plan for
the provision of appropriate services, make suitable
arrangements for the parents to visit the child, provide
services and other assistance to the parents, inform the
parents at appropriate intervals of the child's health, and
make suitable arrangements with a correctional facility if one
of the parents is incarcerated and visiting with the child
would be in the best interest of the child.
    The interpretation of reasonable efforts varies
substantially from State to State. According to the 1987 ABA
report, the State of Florida defines reasonable efforts as
``the exercise of ordinary diligence and care by the
division.'' Definitions which go further also differ in
fundamental ways. For example, Arkansas statutes state that
``reasonable efforts means the exercise of reasonable diligence
and care by the responsible State agency to utilize available
services related to meeting the needs of the juvenile and the
family,'' but the definition of reasonable effort in the State
of Missouri ``assumes the availability of a reasonable program
of services to children and their families.''
    However, there is anecdotal evidence that at least some
jurisdictions are not interpreting the requirement in the best
interest of the families and children it is designed to
protect. Representatives of the ABA report that in some cities
the placement of children in foster care and the termination of
parental rights is routinely ordered by court judges without
reviewing (or in some cases requiring) documentation that
reasonable efforts were adhered to by the placement agency.
Because in these cases there is no review of agency practices,
families that could benefit from preplacement prevention
services may not receive them and children may be unnecessarily
placed in foster care.
    An assessment of the New York City Child Welfare
Administration conducted by the New York State Department of
Social Services and published in May 1989, found that in a
review of 46 cases in which placement occurred, seven did not
document that reasonable efforts were followed. Of the
remaining cases, 24 contained adequate documentation, and in 15
cases, reasonable efforts were deemed unnecessary because the
child was determined to be in immediate danger, and emergency
placement was granted.
    As a result of the lack of definition of the term
``reasonable efforts'' in either the Federal statute or the
Federal regulations, Federal courts are more and more becoming
a source of direction for defining reasonable efforts in
individual cases. Nationwide, foster children, parents, and
advocacy groups have brought suits against State and local
child welfare systems challenging their failure, in whole or in
part, to make reasonable efforts to preserve or reunify
families. Litigation efforts have been designed to force reform
of inadequate child welfare systems. Federal courts are also
becoming increasingly involved in the child welfare system,
although this has traditionally been an area that has been
within exclusive State jurisdiction. Many of the child welfare
suits brought against government officials address significant
issues that affect the constitutional and statutory rights of
children. The result of much of this litigation has been the
imposition of governmental liability for action as well as
inaction in the administration of child welfare agencies, and
increased Federal judicial intervention in the operation of
child welfare agencies.
    Federal courts are becoming increasingly involved in
interpreting the reasonable efforts requirement, and in the
administration of the child welfare system. On March 25, 1992,
the U.S. Supreme Court decided in Suter v. Artist M., an
Illinois case, that the reasonable efforts requirement of the
Adoption Assistance and Child Welfare Act does not confer a
private right, on the child beneficiaries of the act, to
enforce its provisions under 42 U.S.C. 1983, which is a general
law creating a right to sue a State official or agency for
``deprivation of any rights, privileges, or immunities secured
by the Constitution and laws.'' Moreover, the Court also
decided that the beneficiaries of the act--abused and neglected
foster children--could not enforce its provisions through an
implied right of action under the act itself.
    The plaintiffs, abused and neglected children in State
custody, brought suit under the Adoption Act and under 42
U.S.C. 1983 alleging that the State social services agency
failed to (1) make ``reasonable efforts'' to prevent the
removal of children from their homes, (2) make ``reasonable
efforts'' to reunify children who have been removed from their
homes with their families, (3) notify appropriate agencies when
a child is mistreated while placed in another home, and (4)
develop case plans to assure proper services are provided to
children while in placement. The defendants in the case, State
officials, questioned the appropriateness of involvement by the
Federal judiciary in the resolution of child welfare disputes,
and in the operation of child welfare systems.
    Both the district court and the seventh circuit court of
appeals held that ``reasonable efforts'' requirements of the
Adoption Act conferred enforceable rights on the child
beneficiaries which were sufficiently specific to be
enforceable in an implied cause of action directly under the
Adoption Act or in an action brought under 42 U.S.C. 1983. The
Supreme Court reversed, and construed the ``reasonable
efforts'' requirement to impose only a generalized duty on the
State, to be enforced not by the child beneficiaries, but by
the Secretary of Health and Human Services either through the
reduction or elimination of payments or the denial of
reimbursements for lack of compliance. The Court found that the
Adoption Act does not create any rights, privileges, or
immunities within the meaning of section 1983, and fails to
provide the ``unambiguous notice'' that is necessary before
States receiving Federal grants can be subjected to suit.

     DETERMINING STATE COMPLIANCE WITH FEDERAL REVIEW
                           REQUIREMENTS

    As described earlier, section 427 of title IV-B specifies
the child protections that must be in place in order for a
State to receive its allotment of appropriated title IV-B funds
in excess of $141 million. Over time, these ``incentive funds''
have grown in importance, rising from just 10 percent ($15.3
million) of the total amount appropriated for title IV-B in
1982, to 52 percent ($153.6 million) of the appropriation for
1994.

                       REQUIRED CHILD PROTECTIONS

    In 1980, following the enactment of Public Law 96-272, HHS
identified a total of 18 child protections required by section
427 of title IV-B. In what came to be known as ``427 reviews,''
the caseload of each State receiving incentive funds is
examined to determine compliance with these child protections.
States are not required to initiate this review process, but
all States have elected to undergo reviews in order to receive
the substantial incentive funds. The HHS reviews require the
following:
  --that the case plan for each child include a:
          (1) description of the type of home or institution in
        which the child is to be placed;
          (2) discussion of the appropriateness of the
        placement;
          (3) plan to achieve placement in the least
        restrictive (most family-like) setting;
          (4) plan for placement in close proximity to the
        parents' home, consistent with the best interest and
        special needs of the child;
          (5) statement of how the responsible agency plans to
        carry out the voluntary placement agreement or judicial
        determination;
          (6) plan for ensuring that the child will receive
        proper care;
          (7) plan for providing services to the parents,
        child, and foster parents to improve conditions in the
        parents' home and facilitate the return of the child to
        the home, or into a permanent placement;
          (8) plan for services to address the needs of the
        child while in foster care;
          (9) discussion of the appropriateness of services
        provided;
  --that the status of each child in foster care be reviewed
        periodically but no less frequently than once every 6
        months by a court or administrative review (see
        protections 14 and 15) to determine the:
          (10) continuing necessity for and appropriateness of
        placement;
          (11) extent of compliance with the case plan;
          (12) extent of progress made toward alleviating or
        ``mitigating'' the causes of foster placement;
          (13) likely date the child may be returned home or
        placed for adoption or provided legal guardianship;
  --that all administrative reviews must:
          (14) be open to the participation of the parents;
          (15) be conducted by a panel of appropriate persons,
        at least one of whom is not responsible for the case
        management of, or the delivery of services to, the
        child or parents;
  --that procedural safeguards that pertain to parental rights
        are followed when:
          (16) the child is removed from the parents' home;
          (17) a change is made in the child's placement;
          (18) any determination of the parents' visitation
        privileges is made.

    TABLE 14-12.--REQUIREMENTS OF SECTIONS 427 AND 475 AND HHS'S
                    COMPLIANCE REVIEW COMPONENTS
------------------------------------------------------------------------
        Requirement              Description         Review component
------------------------------------------------------------------------
Inventory, sec. 427(a)(1).  Includes all          Administrative review.
                             children in foster
                             care under State
                             responsibility for
                             6 months preceding
                             the inventory.
                            State determines
                             appropriateness of
                             and necessity for
                             current foster
                             placement.
                            Whether a child can
                             or should be
                             returned to parents
                             or be freed for
                             adoption.
                            Services necessary
                             to facilitate
                             either the return
                             of a child or the
                             child's placement
                             for adoption or
                             legal guardianship.

Statewide information       Includes status,      Administrative review.
 system, sec. 427(a)(2)(A).  demographic
                             characteristics,
                             location, and
                             placement goals of
                             foster children in
                             care the preceding
                             12 months.

Service program, sec.       To help children      Administrative review.
 427(a)(2)(C).               where appropriate,
                             return to families
                             or be placed for
                             adoption or legal
                             guardianship.

Case plan, sec.             A written document    Major requirement of
 427(a)(2)(B).               that includes:        case record review.
                            a plan to achieve     Protection 3.
                             placement in the
                             least restrictive
                             (most family-like)
                             setting available.
                            a plan for placement  Protection 4.
                             in close proximity
                             to the parents home
                             consistent with the
                             best interest and
                             special needs of
                             the child (sec.
                             475(5)(A)).
                            a description of      Protection 1.
                             type of home or
                             institution in
                             which a child is to
                             be placed.
                            a discussion of       Protection 2.
                             appropriateness of
                             placement.
                            a statement of how    Protection 5.
                             the responsible
                             agency plans to
                             carry out the
                             voluntary placement
                             agreement or
                             judicial
                             determination made
                             in accordance with
                             sec. 472(a)(1).
                            a plan for ensuring   Protection 6.
                             that the child will
                             receive proper care.
                            a plan for providing  Protection 7.
                             services to the
                             parents, child, and
                             foster parents to
                             improve conditions
                             in the parents home
                             and facilitate the
                             return of the child
                             home or permanent
                             placement.
                            a plan for services   Protection 8.
                             to address the
                             needs of a child
                             while in foster
                             care.
                            a discussion of       Protection 9.
                             appropriateness of
                             services provided.
                            where appropriate     Not part of 427
                             for a child 16 or     review.
                             over, a description
                             of programs and
                             services to prepare
                             for transition to
                             independent living.
Case reviews, sec.          Status of each child  Major requirement of
 427(a)(2)(B).               is reviewed           case record review.
                             periodically but
                             not less frequently
                             than once every 6
                             months by a court
                             or administrative
                             review to
                             determine:
                            continuing necessity  Protection 10.
                             for and
                             appropriateness of
                             placement.
                            extent of compliance  Protection 11.
                             with case plan.
                            extent of progress    Protection 12.
                             made toward
                             alleviating or
                             ``mitigating''
                             causes of foster
                             placement.
                            likely date child     Protection 13.
                             may be returned
                             home or placed for
                             adoption or
                             provided legal
                             guardianship.
                            Administrative
                             review means:
                            open to               Protection 14.
                             participation of
                             the parents.
                            conducted by panel    Protection 15.
                             or appropriate
                             persons, at least
                             one of whom is not
                             responsible for the
                             case management of,
                             or the delivery of
                             services to, the
                             child or parents.

Dispositional hearing,      To be held:
 sec. 427(a)(2)(B) and      in family or          Major requirement of
 sec. 475(5).                juvenile court or     case record review.
                             other court of
                             competent
                             jurisdiction or by
                             administrative body
                             approved by the
                             court.
                            no later than 18      Major requirement of
                             months after the      case record review.
                             original placement
                             (and periodically
                             thereafter during
                             care).
                            to determine future   Major requirement of
                             status of the child   case record review.
                             (return to parent,
                             continue foster
                             care for special
                             period on permanent
                             or long-term basis,
                             placement for
                             adoption).
                            to determine          Effective Oct. 1,
                             transition services   1988.
                             needed for a child
                             16 or older (added
                             effective October
                             1, 1988).

Procedural safeguards,      Applied to:
 sec. 427(a)(2)(B) and      parental rights       Protection 16.
 sec. 475(5).                pertaining to
                             removal of child
                             from parent's home.
                            a change in child's   Protection 17.
                             placement.
                            any determination of  Protection 18.
                             parents' visitation
                             privileges.
------------------------------------------------------------------------
Source: GAO/PEMD-89-17 ``Implementation and Effects of Foster Care
  Reforms,'' and HHS.

                   HHS SECTION 427 REVIEW PROCEDURES

    As outlined in pertinent ACYF Policy Information Questions
(PIQs), and in the ``Section 427 Review Handbook'' published by
the Department in August 1988, the 427 review process of a
State's foster care system (administered by the Administration
for Children, Youth, and Families (ACYF), consists of two
phases: (1) the administrative review, and (2) the survey of
case records. The process is initiated when a State ``self-
certifies'' after determining that it is in compliance with the
18 protections on the basis of the State's understanding of the
statute. An administrative review is then conducted to
determine if all policy and procedural systems necessary to
implement the child protections are in place at a Statewide
level. Specifically the administrative review verifies that the
State has:
  --conducted an inventory of the children in foster care;
  --implemented a statewide information system;
  --established a service program designed to assist foster
        children return home, or be placed for adoption or
        legal guardianship;
  --instituted a case review system.
    If the State has fully implemented these administrative
components, the review process proceeds to the case record
survey stage.
    Three separate case record surveys are conducted in each
State (an initial, subsequent, and triennial review) by a team
composed of Federal and State personnel. Each of these reviews
demands a higher level of compliance, and a State must have
successfully passed the preceding review before proceeding to
the next one. If a State does not meet the standards
established for any review, the review is conducted each
succeeding year until the State passes.
    The initial review is conducted for the fiscal year in
which the State certifies its eligibility. If a State meets the
requirements of the initial review, a subsequent review is
conducted the following fiscal year. Three years after
successful passage of the subsequent review, a triennial review
is conducted. Every 3 years following successful passage of
this highest level of compliance, it is Departmental policy to
re-review State practices. However, a State which has passed
two successive section 427 triennial reviews will now be on a
5-year review cycle (quinquennial review). States that fall
into this category will be reviewed every fifth fiscal year
following the fiscal year of the last successfully completed
review.
    For a case to successfully pass an initial, subsequent, or
triennial review, the case record must include:
    --a written case plan;
  --an official record documenting that timely periodic reviews
        were held at least once every 6 months by a court or by
        an administrative review; and that
  --a timely dispositional hearing was held by a court or
        court-appointed body no later than 18 months after the
        placement of the child, and periodically thereafter
        (time period determined by State) to determine the
        future status of the child;
    Initial reviews require evidence that 13 of the 18 child
protections (listed earlier) be present in 66 percent of the
case records sampled, and subsequent reviews require this in 80
percent of the cases sampled in a State. Triennial reviews
require evidence of 15 of the 18 child protections in 90
percent of the cases sampled.
    If a State is found out of compliance, ACYF issues a
disallowance against the State's allotment of incentive funds
for the coming fiscal year. States may appeal the disallowance
to the HHS Departmental Appeals Board (DAB). There is a
moratorium on the collection of funds disallowed under section
427 and certain funds disallowed under title IV-E resulting
from on-site Federal financial reviews. Both moratorium
provisions expire on September 30, 1994.
    According to HHS, virtually all funding disallowances
(resulting from sampled cases found not in compliance during
periodic reviews) occur as a result of States not holding
periodic reviews and dispositional hearings within the time
frame specified in the statute. Table 14-13 summarizes the
outcomes of section 427 reviews since 1981. As of March 1994,
46 States or jurisdictions were in compliance as of their most
recent reviews, 4 States had decisions pending, and 2 States
had been denied.

                               TABLE 14-13.--CHILDREN'S BUREAU, CHILD WELFARE DIVISION, 427 REVIEW STATUS REPORT
                                                                    [In fiscal years]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                  State                      1981     1982     1983     1984     1985     1986     1987     1988     1989     1990     1991       1992
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama...................................  .......  .......       AI       AS  .......  .......       AT  .......  .......       AT  .......  .........
Alaska....................................  .......  .......  .......  .......  .......  .......       AI       DS       DS        W        D         AS
Arizona...................................       AI       AS  .......  .......       AT  .......  .......       Nd       AT  .......  .......  .........
Arkansas..................................       AI       DS       AS  .......  .......       AT  .......  .......       AT  .......  .......  .........
California................................  .......  .......       AI       AS  .......  .......       AT  .......  .......        D        P  .........

Colorado..................................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .......  .........
Connecticut...............................       AI       AS  .......  .......       DT       DT       DT       DT       DT       DT       DT  .........
Delaware..................................  .......       AI       AS       AS  .......  .......       AT  .......  .......       AT  .......  .........
District of Columbia......................  .......  .......       DI       DI       AI       AS  .......  .......       AT        P       DT  .........
Florida...................................  .......       AI       DS       AS  .......  .......       AT  .......  .......       AT  .......  .........

Georgia...................................  .......       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .........
Hawaii....................................  .......  .......  .......  .......  .......  .......  .......       AI       AS  .......  .......         AT
Idaho.....................................  .......       Al       AS  .......  .......       AT  .......  .......       AT  .......  .......  .........
Illinois..................................       AI       AS  .......       DT        P  .......  .......  .......  .......  .......        P  .........
Indiana...................................  .......  .......       AI       AS  .......  .......       AT  .......  .......       AT  .......  .........

Iowa......................................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .......  .........
Kansas....................................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .......  .........
Kentucky..................................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .......  .........
Louisiana.................................  .......  .......       DI       AI       AS  .......  .......       AT  .......  .......       AT  .........
Maine.....................................        W        W       AI       AS  .......  .......       AT  .......  .......       AT  .......  .........

Maryland..................................       AI       DS       DS        P        P       AS  .......  .......  .......  .......  .......  .........
Massachusetts.............................        W  .......  .......  .......  .......  .......  .......        A  .......  .......  .......  .........
Michigan..................................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .......  .........
Minnesota.................................  .......       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .........
Mississippi...............................        W       AI       AS  .......  .......       AT  .......  .......       AT       AT  .......  .........

Missouri..................................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .......
Montana...................................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .......  .........
Nebraska..................................        W       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .........
Nevada....................................        W       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .........

New Hampshire.............................  .......       DI       AI       DS        W       DS       DS       AS  .......  .......       AT  .........
New Jersey................................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .......  .........
New Mexico................................  .......       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .........
New York..................................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .......  .........
North Carolina............................  .......       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .........

North Dakota..............................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .......  .........
Ohio......................................       DI       DI       DI       DI       AI       AS  .......  .......       AT  .......  .......  .........
Oklahoma..................................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .......  .........
Oregon....................................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......       AT  .........
Pennsylvania..............................  .......  .......       AI       AS  .......  .......       AT  .......  .......       AT  .......  .........

Puerto Rico...............................       DI        W  .......  .......  .......  .......  .......  .......  .......  .......       AI         SP
Rhode Island..............................       DI       AI       DS       AS  .......  .......       AT  .......  .......        D       AT  .........
South Carolina............................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .......  .........
South Dakota..............................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .......  .........
Tennessee.................................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .......  .........

Texas.....................................  .......       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .........
Utah......................................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .......  .........
Vermont...................................       DI       AI       DS        W        W       AS  .......  .......       AT  .......  .......  .........
Virginia..................................       AI       DS       DS       AS  .......  .......       AT  .......  .......       AT  .......  .........
Washington................................       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......       AT  .........

West Virginia.............................       AI       AS  .......  .......       DT       DT       DT       DT        P       PT  .......  .........
Wisconsin.................................  .......       AI       AS  .......  .......       AT  .......  .......       AT  .......  .......  .........
Wyoming...................................       AI       DS       DS       De  .......  .......  .......  .......  .......       AS  .......  .........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: A--Approved, D--Denied, I--Initial review, S--Subsequent review, T--Triennial review, W--Withdrew, C--Certified, P--Decision pending, De--
  Decertified, Nd--No decision.

Source: Department of Health and Human Services.

               FEDERAL REVIEW PROCEDURES UNDER TITLE IV-E

    In addition to the review procedures described above to
assure compliance with section 427(b), HHS reviews expenditures
made under the title IV-E foster care and adoption assistance
programs. Section 471(a)(13) of title IV-E requires, as a
component of State plans under title IV-E, that States arrange
for periodic and independent audits of their activities under
both titles IV-B and IV-E, to be conducted at least once every
3 years. In addition, section 471(b) allows the Secretary of
HHS to withhold or reduce payments to States upon finding that
a State plan no longer complies with State plan requirements,
or, in the State's administration of the plan, there is
substantial failure to comply with its provisions. The
Secretary must first provide reasonable notice and opportunity
for a hearing.
    In practice, the Secretary may disallow expenditures for
Federal reimbursement under title IV-E as a result of several
review procedures, including audits conducted pursuant to
section 471(a)(13). Disallowances may result from audits
conducted by the HHS inspector general, regional office reviews
of quarterly expenditure reports submitted by States as part of
the claims reimbursement process, or Federal financial reviews.
    Financial reviews consist of two stages and are based on a
statistically valid sample of between 200 and 300 payment units
in the State. In stage I, 50 payment units of the total sample
are reviewed. If the stage I review indicates that the State's
systems are operating accurately and proper payments are being
made, a stage II review is not conducted. However,
disallowances of ineligible claims may be made during a stage I
review, based only on the individual payments reviewed. If
State systems do not appear to be operating properly or if the
stage I review indicates errors in excess of established error
rates, a stage II review is conducted. A minimum of 150 payment
units, in addition to the 50 reviewed during stage I, will be
reviewed. Disallowances will be made based on extrapolation
from the sample to the universe of claims submitted for payment
during the period reviewed.
    Title IV-E reviews are conducted retrospectively, after
conclusion of the fiscal year. However, States are not
generally reviewed annually, and States may be reviewed for
more than one fiscal year at a time. States may appeal
disallowances to the departmental appeals board.

     RECENT TRENDS AFFECTING CHILD WELFARE POPULATIONS AND
                               PROGRAMS

    Data on social problems that are a common focus of child
welfare services--such as incidence and causes of child abuse
and neglect, and trends in foster care caseloads--are sometimes
used to show the need for both child protection and preventive
services for families. Although these data do not represent the
absolute number of children or families in need of services,
they are often used to suggest trends in the need for services.

                        CHILD ABUSE AND NEGLECT

    The number of reported cases of child abuse and neglect has
more than quadrupled since 1976, according to available data.
Between 1976 and 1987, the American Association for Protecting
Children (AAPC), a division of the American Humane Association
(AHA), was funded by HHS to collect data and provide analyses
on reports of child abuse and neglect. In 1987, HHS ceased
funding this activity. Since 1982, the National Committee for
the Prevention of Child Abuse (NCPCA) has conducted an annual
50-State survey to monitor trends on child abuse and neglect
reports. These surveys, however, are limited in scope compared
with the data formerly collected by the AAPC.
    According to the AAPC, reports of child abuse and neglect
grew dramatically from 670,000 in 1976 to 2.9 million in 1992.
Reports of child sexual abuse also grew from 6,000 in 1976 to
132,000 in 1986 (the last year for which AAPC sexual abuse data
are available). Further, the NCPCA estimates that in 1992, more
than 3 children per day (1,261 in total) died as a result of
child abuse or neglect.
    It is not clear whether the actual incidence of child abuse
has increased over the years or whether there is only more
reporting. Depending on the source, approximately 40-55 percent
of reported cases of child abuse and neglect are eventually
substantiated. However, it is generally believed that the above
numbers do not represent the total amount of abuse and neglect
that occurs, since many incidents are believed not to be
reported.

                            SUBSTANCE ABUSE

    There is widespread speculation that a significant portion
of the increase in child abuse and neglect and foster care
caseloads resulted from the introduction of crack cocaine into
the country during the mid-1980s. The availability of crack has
been linked to the abuse of children of all ages. According to
a 1990 publication by the House Subcommittee on Human
Resources, Ways and Means, New York City officials blame the
introduction of crack for the threefold increase in that city's
child abuse and neglect cases involving parental substance
abuse between 1986 and 1988. However, the biggest impact that
crack has had on the child welfare system is the large
increases in very young infants entering the foster care system
at birth as a result of prenatal drug usage, drug toxicity at
birth, and abandonment at the time of birth in the hospital
(boarder babies). Drug-exposed infants also often enter
substitute care shortly after they are born as a result of a
diagnosed failure to thrive, or parental abuse and neglect.
    The National Association for Perinatal Addiction Research
and Education (NAPARE) estimated in 1988 that 11 percent of all
pregnant women use illegal drugs. A 1990 General Accounting
Office (GAO) study conducted for the Senate Finance Committee
reported that the actual number of drug-exposed infants born
each year is unknown, although the study noted that the two
most widely cited estimates are 100,000 and 375,000. An HHS
office of the Inspector General (OIG) 1989 survey of 12 cities
found that 30 to 50 percent of drug-exposed infants enter
foster care. New York City has reported a 268 percent increase
in referrals of drug-exposed infants to the child welfare
system, from 1986 to 1989.
    Data from a five-State foster care archive show how
increasing numbers of drug-exposed infants are stretching State
child welfare systems to their limits.\5\ Data for California,
Illinois, Michigan, New York, and Texas indicate that the most
striking change in the characteristics of children entering
foster care in the mid-to-late 1980s is the increase in the
number of infants who were admitted into care.
---------------------------------------------------------------------------
    \5\``The Multi-State Foster Care Data Archive: Year One Results,''
Chapin Hall Center for Children, data presented at a conference in
Washington, D.C., Nov. 5, 1993.
---------------------------------------------------------------------------

    Researchers have divided the period from 1983-92 into 3
discrete periods: 1983-86 (the period before admissions began
to surge); 1987-89 (the period of most rapid growth); and 1990-
92 (when caseloads in several States began to decline). Between
1983 and 1986, about 16 percent of first admissions into foster
care in these 5 States were of children younger than 1 year of
age. However, children under the age of 1 represented almost 23
percent of first admissions during the period 1987-89, and 24
percent of first admissions from 1990-92.
    Looking at individual States included in the data archive,
researchers found that the proportion of infants entering
foster care nearly doubled in New York, from 16 percent of
first admissions in 1983-86 to 28 percent in 1990-92. Infants
entering foster care in Illinois increased as a percentage of
first admissions from 16 percent in 1983-86 to 28 percent in
1990-92, and in Michigan, from 17 percent to 20 percent during
the same time periods.
    This rise in infant admissions is likely to result in
larger foster care caseloads in the future, regardless of
whether overall admissions begin to decline. Researchers in the
five-State data archive found that infants who are placed in
foster care tend to remain in care longer than children placed
at older ages. Data for each of the five States indicated that
duration of care generally decreased with age of placement.
    Not only do younger children spend the longest length of
time in foster care, but historically many children that are
admitted and discharged from foster care eventually reenter
care. During 1989, 15 percent of New York's admissions into
foster care was comprised of children reentering care. A 1988
Illinois study by researchers Dr. Mark Testa and Dr. Robert
George found that nearly 40 percent of the earliest cohorts of
foster children that are reunified with their parents
eventually reenter substitute care.

                    TRENDS IN FOSTER CARE CASELOADS

    The incidence of all children in the United States who are
in foster care has ranged from 3.9 per 1,000 in 1962 to 5.9 per
1,000 in 1990. Especially between 1987 and 1988, the incidence
of children in foster care grew very substantially, increasing
from 4.2 to 4.8 per 1,000 in 1988. The incidence has continued
to grow sharply, rising to 5.2 per 1,000 in 1989 and to 5.9 per
1,000 in 1990.
    The number of children in Federally assisted AFDC/title IV-
E foster care has grown significantly in the years since the
program was created. The number grew from 1962 to 1976, then
decreased slightly from 1976 to 1983. Since 1983, the number of
foster children funded under title IV-E has increased steadily.
In 1972, approximately 22 percent of the total foster care
population was funded under title IV-E. By 1992, this
proportion increased to 50 percent (See table 14-14).
    More detailed information is available on these trends from
a number of State data systems. Currently, some of the most
interesting data are from a multi-State data archive, in which
California, Illinois, Michigan, New York and Texas are
participating. According to a first-year report from the
archive presented at a conference in Washington in November
1993, a total of 204,157 children were in foster care in these
5 States as of Dec. 31, 1992 (of which California and New York
accounted for 70 percent). The 5-State figure represented
almost half of the nation's total number of foster children, as
estimated by the American Public Welfare Association's
voluntary data collection system.
    All five States have seen tremendous growth in their foster
care populations during the period from 1988-92. In fact, in
every State expect Michigan, the number of children in care had
doubled during the time period. Specific growth rates were as
follows: California, 143 percent; Illinois, 135 percent;
Michigan, 67 percent; New York, 125 percent; and Texas, 124
percent. The most intense growth in all five States was between
the years 1987-89, when the caseload grew by almost 40 percent.
Specifically in New York, the foster care population increased
by 66 percent between 1987 and 1989. However, since then,
growth in foster care caseloads has returned to the levels
observed prior to 1987, except in Illinois and Texas. In fact,
in Illinois, the foster care population grew by an additional
42 percent during the period from 1990-92.
    When researchers separated the primary urban area in each
of the five States from the balance of the State, they
determined that 75 percent of the caseload growth during the
decade from 1983-92 occurred in these urban areas. In fact, New
York City and Cook County were responsible for virtually all of
the foster care caseload growth in New York State and Illinois,
respectively. Both of these urban areas experienced a tripling
of their foster care populations during the time period. Since
1990, the growth rate in New York City has slowed, but there
has not been a similar decline in the growth rate in Cook
County.
    Total caseload size is a function of both the number of
children entering care (admissions) and the number of children
leaving care (discharges). When looking at admissions and
discharges, researchers in the five-State data archive found
somewhat different patterns in each of the States. For example,
the number of Illinois' admissions had been stable during the
period from 1983-86, but increased by 34 percent from 1987-92.
Throughout this entire period, the number of children
discharged in Illinois stayed constant; therefore, the number
of discharges did not offset the increase in admissions,
resulting in overall growth in the total caseload.
    In New York, both admissions and discharges grew from 1983-
85, but discharges outnumbered admissions so that overall
caseload size declined during that period. However, from 1985-
87, discharges decreased by almost 8 percent while admissions
grew by 34 percent, resulting in significant caseload growth.
Admissions grew by an additional 28 percent from 1987-89.
During this period, discharges also grew but only by 16 percent
so that the overall caseload continued to increase. Since 1989,
the number of admissions in New York has declined and
discharges have grown, so that by 1992, the total size of the
foster care population declined.
    Texas and Michigan have been growth in both their numbers
of admissions and discharges during the decade from 1983-92.
However, admissions have exceeded discharges in both States
during the period, resulting in overall growth. In California,
admissions grew until 1989, and have since declined each year,
along with a rapid increase in the number of discharges from
1988-90, resulting in a drop in the growth rate.
    Researchers in the five-State data archive also looked at
the length of time children stayed in foster care, and found
that, for children placed between 1988 and 1992, the median
duration was about a year and a half in California, Illinois
and New York. The median duration was about 1 year in Michigan
and less than 9 months in Texas. However, certain groups are
more likely to stay in care longer. Specifically, the
researchers found that children from urban areas in each of the
States had significantly longer durations, and that black
children in four of the five States stayed longer than all
other racial or ethnic groups. Further, children placed as
infants stayed in care longer than older children.

TABLE 14-14.--U.S. FOSTER CARE AND AFDC/IV-E FOSTER CARE POPULATION,
   TOTAL AFDC CHILDREN, AND U.S. POPULATION AGES 0 TO 18, 1962-93
------------------------------------------------------------------------
                      U.S. foster   AFDC/IV-E
                          care     foster care   Total AFDC      U.S.
                       population    children     children    population
        Year            (end of      (average     (average    ages 0-18
                         fiscal      monthly      monthly     (calendar
                       year)\1\     number)\2\   number)\3\   year)\4\
------------------------------------------------------------------------
1962................      272,000          989    2,781,000   69,864,000
1963................      276,000        2,308    2,921,000   71,164,000
1964................      287,000        4,081    3,075,000   72,406,000
1965................      300,000        5,623    3,243,000   73,520,000
1966................      309,400        7,385    3,369,000   73,179,000
1967................      309,600        8,030    3,558,000   73,429,000
1968................      316,200        8,500    4,013,000   73,396,000
1969................      320,000       16,750    4,591,000   74,000,000
1970................      326,000       34,450    5,494,000   73,516,000
1971................      330,400       57,075    6,963,000   73,665,000
1972................      319,800       71,118    7,698,000   72,369,000
1973................           NA       84,097    7,965,000   72,243,000
1974................           NA       90,000    7,824,000   72,070,000
1975................           NA      106,869    7,928,000   71,402,000
1976................           NA      114,962    8,156,000   70,500,000
1977................           NA      110,494    7,818,000   69,699,000
1978................           NA      106,504    7,475,000   67,003,000
1979................           NA      103,771    7,193,000   68,307,000
1980................   \5\302,000      100,272    7,320,000   67,913,000
1981................   \5\274,000      104,851    7,615,000   67,571,000
1982................   \6\262,000       97,309    6,975,000   67,118,000
1983................   \6\269,000       93,360    7,051,000   66,768,000
1984................   \6\276,000      102,051    7,153,000   66,863,000
1985................   \6\276,000      109,122    7,165,000   66,797,000
1986................   \6\280,000      110,749    7,294,000   66,932,000
1987................   \6\300,000      118,549    7,381,000   67,221,000
1988................   \6\340,000      132,757    7,326,000   67,709,000
1989................   \6\383,000      156,658    7,370,000   67,877,000
1990................   \6\407,000      167,981    7,744,000   67,246,000
1991................   \6\429,000      202,687    8,498,000           NA
1992................   \6\442,000      222,315    9,199,000           NA
1993................           NA      232,668    9,548,000           NA
1994 (estimate).....           NA      245,800    9,690,000           NA
------------------------------------------------------------------------
\1\Data from Child Welfare Research Notes #8 (July 1984), published by
  Administration for Children, Youth, and Families, HDS, HHS. This note
  cites as sources of data for the foster care population: annual
  reports from 1962-72 of the Children's Bureau and the National Center
  for Social Statistics, Social and Rehabilitation Services; National
  Study of Social Services to Children and their Families, published by
  ACYF in 1978, for 1977 data; and the Office of Civil Rights, HHS,
  report, ``1980 Children and Youth Referral Survey: Public Welfare and
  Social Service Agencies'' for 1980 data.
\2\Incomplete data based on voluntary reporting prior to 1975.
\3\Includes foster children 1971-1981.
\4\U.S. Census Bureau, Population Division, unpublished data (1962-
  1980); U.S. Department of Commerce, Bureau of the Census, Statistical
  Abstract of the United States 1985, 1990.
\5\Data were collected using a variety of methodologies and may not be
  comparable with each other or with other years.
\6\VCIS data supplied by the American Public Welfare Association.

                      INCREASE IN ``KINSHIP'' CARE

    In recent years, States appear to have increased their use
of ``kinship'' foster care, in which foster children are placed
with their own relatives. Little reliable national data are
available to document this trend, but some State reporting
systems and national surveys support the conclusion that
kinship care is growing as a form of foster care.
    In its annual survey of State foster care reimbursement
rates, the American Public Welfare Association (APWA) asked a
series of questions about kinship care in late 1992. While many
States could not distinguish relative placements from other
foster care placements, at least 26 States indicated that they
had experienced an increase in their use of kinship care during
the last 3 years.
    Children placed for foster care with relatives grew from 18
percent to 31 percent of the total foster care caseload during
the period from 1986 through 1990 in 25 States that supplied
information to the Inspector General of HHS. Kinship care is
growing most rapidly in urban areas; for example, almost half
of New York City's foster care population are children in
kinship care. It appears that most of the recent growth in
foster care in some parts of the country may actually have been
growth in kinship care.
    Kinship care providers most often are grandparents, and
frequently are single grandmothers. As their numbers have
increased in recent years, grandparent caregivers in many
States and cities have organized into support groups, and are
beginning to press for financial support and services at the
State and Federal level. These groups often also include
grandparents and relatives of children who are not necessarily
under State custody, but who would be at risk of needing foster
care in the absence of their relatives.
    Many of the children who live in kinship homes receive
federally subsidized public assistance, either through Aid to
Families with Dependent Children (AFDC) or the Federal foster
care program under title IV-E of the Social Security Act. At
the end of 1992, an estimated 442,000 children were in foster
care nationwide, and almost half participated in title IV-E, at
a Federal cost in fiscal year 1993 of $2.6 billion. However, it
is not known how many foster children are in kinship care, or
how many kinship care children receive AFDC instead of foster
care subsidies. Further, there is no explicit Federal policy
regarding which program is more appropriate for kinship
children and their caretakers.
    State policies and practices governing the implementation
of Federal programs vary widely. Particularly with regard to
kinship families, these differences in State policies have a
direct impact on family income and Federal costs. For example,
eligibility for federally subsidized foster care payments is
limited to licensed foster care providers. However, some States
routinely license relatives as foster care providers, making
them eligible for Federal foster care subsidies, while other
States do not usually license relatives, leaving them eligible
only for AFDC.
    Under both AFDC and the Federal foster care program, States
establish their own payment levels, and, in almost all States,
foster care subsidies are significantly higher than AFDC
payments. On average, foster care benefits for one child,
payable in 1992, were 50 percent higher than the maximum AFDC
benefit for one person, available as of January 1993.
    Both title IV-E and AFDC are open-ended entitlements, with
costs shared by the Federal and State governments. The Federal
Government reimburses States for at least half of eligible
spending under both programs; thus, Federal costs would
increase if kinship families currently receiving AFDC were made
eligible for the higher foster care subsidies under title IV-E.
At the same time, some kinship families already are receiving
Federal title IV-E subsidies, which raises the issue of equity
for kinship families nationwide, or alternatively, the
appropriateness of any families receiving it.
    Additional Federal issues include the effect of Federal
policies on child protection and permanency planning for
children in kinship care, the adequacy of information about
kinship care, and the relative roles of the Federal and State
governments in establishing kinship care policy.
    Little national information is available about kinship
providers or the children in their care, although some research
has been conducted on kinship care in certain States and
cities. For example, several studies have produced information
about the demographic characteristics of kinship providers.
While the results of these studies vary, collectively they
generate a picture of kinship providers as predominantly
female, disproportionately minority, generally low-income, and
with low educational attainment.
    Two recent studies on the children in kinship care suggest
that children placed with relatives are similar in many
respects to children in traditional foster care. One difference
found in both studies was racial composition; children in
kinship care were more likely to be black than foster children
living with non-relatives. Limited research available also has
found that children placed with relatives tend to remain in
care longer than children placed in non-relative foster care.

          NATIONAL DATA ON FOSTER CARE AND ADOPTION ASSISTANCE

    The primary source of national data on foster care is the
Voluntary Cooperative Information System (VCIS) conducted by
the American Public Welfare Association (APWA). This voluntary
survey was begun by APWA with support from the U.S. Department
of Health and Human Services (HHS) in 1982. VCIS data are
available covering foster care activities in fiscal year 1982
through fiscal year 1990. In addition, some preliminary data
are available from the VCIS on the total numbers of children in
care through fiscal year 1992.
    For fiscal year 1990, 41 States and Puerto Rico responded
to the voluntary survey. However, not all States and
jurisdictions were able to respond to every question in the
survey; therefore, the data are incomplete for many items, and,
according to APWA, should be considered ``rough'' national
estimates. It also should be noted that definitions of some
terms varied among States and that reporting periods were not
identical among States. Although all data are reported as
applicable to fiscal year 1990, States were able to use either
the Federal fiscal year or their own annual reporting period or
fiscal year, which fell between July 1989 and December 1990.
    The VCIS data report on all children in substitute care
under the management and responsibility of the State child
welfare agency, including: foster family care (relative and
nonrelative), group homes, child care facilities, emergency
shelter care, supervised independent living, nonfinalized
adoptive placements, and any other arrangement considered 24-
hour substitute care by the State agency. No distinctions are
made among these different forms of substitute care. Finalized
adoptions are not included in the VCIS data; however,
nonfinalized adoptions are reflected in the data.
    Federal legislation in 1986 set in motion a process that
will result in a mandatory Federal data collection system for
foster care and adoption assistance. Once operational, the new
data collection system will replace the VCIS. Development of
this data collection system is discussed later in this section.
    The VCIS data currently provide the most complete, albeit
limited, picture of foster care children and their
circumstances. At least one other study is useful in
identifying major trends and in supplementing the VCIS
findings.
    The National Black Child Development Institute (NBCDI)
reported in 1989 on the results of a 2\1/2\-year study of black
children in foster care in five major cities (Detroit, Houston,
Miami, New York, and Seattle).\6\ This study attempted to
develop more detailed information than obtained through the
VCIS system, such as information on children's education and
health status, characteristics of their biological families,
and specific reasons for placement. Readers should keep in mind
that the NBCDI study focused only on black children, and took
place only in five cities. Further, NBCDI identified several
methodological limitations in its study. Data were collected
primarily by volunteers and thus were subject to varying
interpretations. Reporting periods varied among cities, and the
definition of foster care used in the NBCDI survey, as in the
VCIS reports, was the broadest possible and included all forms
of 24-hour substitute care. Nonetheless, the NBCDI report is
useful in supplementing other data and in drawing a general
picture of the circumstances of a significant portion of the
children in foster care.
---------------------------------------------------------------------------
    \6\Who Will Care When Parents Can't? A Study of Black Children in
Foster Care. National Black Child Development Institute, Washington,
DC, 1989.
---------------------------------------------------------------------------

                 NUMBER OF CHILDREN IN SUBSTITUTE CARE

    No precise figure is currently available on the number of
children in foster (or substitute) care at a given point in
time. However, there are estimates of the number of children in
substitute care. As mentioned above, readers should keep in
mind that not all children described as being in substitute
care are living in foster family homes, but may be in other
forms of substitute care such as group homes or residential
institutions, emergency shelters, or, if older teens, living
alone with supervision.
    Although the most recent complete VCIS data are for fiscal
year 1990, VCIS data are also available on the total estimates
of children in foster care through 1992. These numbers indicate
dramatic increases in the second half of the 1980's, from
273,000 children at the beginning of 1986 to an estimated
442,000 children by the end of 1992 (see table 14-15).
    In addition to the number of children reported as being in
care on the first and last days of the fiscal year, the numbers
of children who entered and left care during the year and a
cumulative total number of children served throughout the year
also were estimated by APWA, as shown below. As with all VCIS
data, these numbers should be read carefully because not all
States responded to all data questions; national figures are
estimates based on State reports.

                 TABLE 14-15.--NUMBER AND MOVEMENT OF SUBSTITUTE CARE CHILDREN, 1982-92
----------------------------------------------------------------------------------------------------------------
                                                            Start of   Entered     Total                 End of
                           Year                               year       care      served   Left care     year
----------------------------------------------------------------------------------------------------------------
1982.....................................................    273,000    161,000    434,000    172,000    262,000
1983.....................................................    263,000    184,000    447,000    178,000    269,000
1984.....................................................    272,000    184,000    456,000    180,000    276,000
1985.....................................................    270,000    190,000    460,000    184,000    276,000
1986.....................................................    273,000    183,000    456,000    176,000    280,000
1987.....................................................    280,000    222,000    502,000    202,000    300,000
1988.....................................................    312,000    199,000    511,000    171,000    340,000
1989.....................................................    347,000    222,000    565,000    182,000    383,000
1990.....................................................    379,000    238,000    617,000    210,000    407,000
1991.....................................................    412,000    224,000    636,000    207,000    429,000
1992.....................................................    421,000    238,000    659,000    217,000   442,000
----------------------------------------------------------------------------------------------------------------
Source: APWA.

    The following table shows the number of children in
substitute care, by State, based on VCIS data collected by
APWA.

  TABLE 14-16.--STATE SUBSTITUTE CARE POPULATIONS FOR FISCAL YEARS
            1990, 1991, AND 1992, BASED ON VCIS DATA\1\
------------------------------------------------------------------------
                                                     Fiscal years
                    State                     --------------------------
                                                1990     1991      1992
------------------------------------------------------------------------
Alabama......................................    4,420    4,383    4,133
Alaska.......................................    3,852    1,942    1,496
Arizona......................................    3,379    3,618    3,909
Arkansas.....................................    1,351    1,326    1,981
California...................................   79,482   80,880   83,849

Colorado.....................................    3,892    5,519    4,390
Connecticut..................................    4,121    4,202    4,252
Delaware.....................................       NA      655      638
District of Columbia.........................    2,313       NA    2,152
Florida......................................   10,664   10,235    9,928

Georgia......................................   15,179   15,500   16,999
Guam.........................................       NA       NA       89
Hawaii.......................................    1,659    1,600    1,214
Idaho........................................      548      877    1,235
Illinois.....................................   20,753   23,776   29,542

Indiana......................................    7,492    8,126    8,455
Iowa.........................................    3,425    4,609    3,606
Kansas.......................................    3,976    7,112    7,838
Kentucky.....................................    3,810    6,422    6,966
Louisiana....................................    5,379    5,799    5,722

Maine........................................    1,745    1,814    1,944
Maryland.....................................    6,473    4,859    5,816
Massachusetts................................   11,856   13,232   13,147
Michigan.....................................    9,000   11,282   11,121
Minnesota....................................    7,310    7,898    7,895


Mississippi..................................    2,832    2,830    3,169
Missouri.....................................    8,241    7,143    8,171
Montana......................................    1,224    1,494    1,691
Nebraska.....................................    1,543    2,660    2,985
Nevada.......................................    2,566    1,563    1,664

New Hampshire................................    1,505    2,095    2,630
New Jersey...................................    8,879    8,451    8,024
New Mexico...................................    2,042    2,304    2,118
New York.....................................   63,371   65,171   62,705
North Carolina...............................    7,170    9,619   10,275

North Dakota.................................      393      695      759
Ohio.........................................   18,062   17,298   17,099
Oklahoma.....................................    3,435    3,803    2,892
Oregon.......................................    4,261    3,996    4,031
Pennsylvania.................................   16,665   17,508   18,491

Puerto Rico..................................    1,961    3,194    2,796
Rhode Island.................................    2,680    3,311    2,755
South Carolina...............................    3,286    3,698    5.066
South Dakota.................................      567      613      674
Tennessee....................................    4,971    5,217    5,312

Texas........................................    6,698    7,200    9,965
Utah.........................................    1,174    1,405      895
Vermont......................................    1,063    1,088    1,162
Virginia.....................................    6,217    6,590    6,305
Virgin Islands...............................      183       NA       NA

Washington...................................   13,302   13,956   11,327
West Virginia................................    1,997    1,997    2,315
Wisconsin....................................    6,037    6,403    6,812
Wyoming......................................      484      605      907
------------------------------------------------------------------------
\1\Numbers of children in substitute care at the end of State fiscal
  year.

Source: APWA/VCIS.

    Table 14-17 lists the average monthly number of children in
foster care who received Federal funding under title IV-E for
the years 1986, 1990, 1992, and 1993. These figures are lower
than VCIS estimates because they do not include the substantial
number of children who were not determined eligible for Federal
funding (i.e., they were not from AFDC-eligible homes). In
1993, there were 110 percent more children in foster care than
in 1986 and nearly 39 percent more children in foster care in
1993 than in 1990.

            TABLE 14-17.--TITLE IV-E FOSTER CARE AVERAGE MONTHLY NUMBER OF CHILDREN, 1986-93
                                                 [In thousands]
----------------------------------------------------------------------------------------------------------------
                                                                   Fiscal years                 Percent change
                        State                        -----------------------------------------------------------
                                                        1986      1990      1992      1993     1986-93   1990-93
----------------------------------------------------------------------------------------------------------------
Alabama.............................................     1,450       965       887       810       -44       -16
Alaska..............................................         8       347       347       303     3,573       -13
Arizona.............................................       481       866     1,541     1,771       268       105
Arkansas............................................       434       323       573       715        65       122
California..........................................    23,901    40,286    45,542    48,526       103        21

Colorado............................................     1,440     2,011     2,632     2,521        75        25
Connecticut.........................................     1,104     2,006     1,658     1,482        34       -26
Delaware............................................       289       125       248       183       -37        47
Dist of Col.........................................       928       593       318       657       -29        11
Florida.............................................     1,374     3,454     4,180     4,191       205        21

Georgia.............................................     1,893     2,647     3,226     3,254        72        23
Hawaii..............................................        46        41       148       368       700       792
Idaho...............................................       435       138       185       225       -48        63
Illinois............................................     4,378     9,340    10,977    11,349       159        22
Indiana.............................................     1,310     1,822     2,214     2,541        94        40

Iowa................................................       940     1,189     1,368     1,502        60        26
Kansas..............................................     1,076     1,113     1,344     1,371        27        23
Kentucky............................................     1,613     1,536     1,724     1,797        11        17
Louisiana...........................................     2,274     2,618     2,705     2,784        22         6
Maine...............................................       655       774       952     1,000        53        29

Maryland............................................     1,511       803     2,656     3,073       103       283
Massachusetts.......................................     1,018     3,695     5,713     7,904       676       114
Michigan............................................     6,823     8,218     9,001     8,672        27         6
Minnesota...........................................     1,574     2,100     2,660     3,607       129        72
Mississippi.........................................       627       723       871       868        38        20

Missouri............................................     2,114     2,410     4,608     4,555       115        89
Montana.............................................       281       364       501       557        98        53
Nebraska............................................       799     1,036     1,238     1,291        62        25
Nevada..............................................       222       462       508       621       179        34
New Hampshire.......................................       249       414       505       526       111        27

New Jersey..........................................     3,840     2,816     3,202     4,115         7        46
New Mexico..........................................       601       729       756       875        46        20
New York............................................    17,188    31,036    55,361    53,475       211        72
North Carolina......................................     1,411     3,561     2,763     2,985       112       -16
North Dakota........................................       256       308       442       402        57        31

Ohio................................................     4,166     5,164     6,201     6,546        57        27
Oklahoma............................................       885       894     1,465     1,379        56        54
Oregon..............................................     1,313     2,218     1,882     1,882        43       -15
Pennsylvania........................................     7,058     8,823    15,478    15,020       113        70
Rhode Island........................................       434       433       676       673        55        55

South Carolina......................................       946     1,209     1,572     1,652        75        37
South Dakota........................................       302       219       191       225       -26         3
Tennessee...........................................     1,031     1,876     3,850     6,533       534       248
Texas...............................................     2,917     3,595     4,602     4,920        69        37
Utah................................................       283       385       469       454        61        18

Vermont.............................................       500       860       798     1,145       129        33
Virginia............................................     1,795     1,878     2,175     1,778        -1        -5
Washington..........................................       983     2,751     2,632     2,484       153       -10
West Virginia.......................................       759     1,166       873     1,017        34       -13
Wisconsin...........................................     2,620     5,562     5,795     5,987       129         8

Wyoming.............................................        53        85       102        97        83        14
                                                     -----------------------------------------------------------
Totals..............................................   110,586   167,981   222,315   232,668       110        39
----------------------------------------------------------------------------------------------------------------

             CHARACTERISTICS OF CHILDREN IN SUBSTITUTE CARE

    Much of the demographic data collected on children in
substitute care through the VCIS reflect three different
groupings: children entering care during the study period, all
children remaining in care at the end of the period, and
children who left care during the period. The following
sections will summarize these data. Again, readers should keep
in mind that different numbers of States provided information
for each data element; therefore, comparisons should be made
cautiously.
    Age.--The following table shows the age breakdown of
children entering care, in care, and leaving care during fiscal
year 1990. APWA's analysis of these data with comparable
information from previous years shows gradual increases in the
percentages of younger children entering foster care from
fiscal year 1982 through fiscal year 1990.

 TABLE 14-18.--AGES OF CHILDREN ENTERING, IN, AND LEAVING SUBSTITUTE
                       CARE, FISCAL YEAR 1990
                              [In percent]
------------------------------------------------------------------------
               Age range                  Entering   In care    Leaving
------------------------------------------------------------------------
All ages...............................        100        100        100
Under 1 year...........................       16.1        4.9        5.2
1 to 5 years...........................       26.1       31.1       26.5
6 to 12 years..........................       26.2       32.3       25.6
13 to 18 years.........................       31.1       29.7       39.3
19 years and older.....................         .4        1.7        3.2
Age unknown............................         .1         .3         .2
Median age (years).....................        7.8        8.6       10.3
Number of States reporting.............         22         23        23
------------------------------------------------------------------------
Source: APWA.

    Gender.--Children of both genders are placed at roughly
equal rates. The VCIS data report that 51 percent of children
in substitute care in fiscal year 1990 were male. A comparison
of this finding with data from previous years found no
significant change since the study was begun in fiscal year
1982.
    Race/Ethnicity.--Although a significant portion of the
children in foster care are white, black children are
overrepresented in the foster care population. The following
table indicates the racial composition of children who entered
substitute care during fiscal year 1990, who were in care at
the end of fiscal year 1990, and who left substitute care
during fiscal year 1990. APWA's comparison of these data with
comparable information from previous years indicates a decrease
in the percentage of white children in foster care since fiscal
year 1982, and increases in the percentages of black children
and hispanic children.

 TABLE 14-19.--RACE/ETHNICITY OF CHILDREN ENTERING, IN, AND LEAVING
                       CARE, FISCAL YEAR 1990
                              [In percent]
------------------------------------------------------------------------
            Race/ethnicity               Entering    In care    Leaving
------------------------------------------------------------------------
White..................................       47.2       39.3       49.9
Black..................................       30.8       40.4       29.4
Hispanic...............................       13.7       11.8       12.8
Other..................................        4.6        4.3        4.7
Unknown................................        3.7        4.2        3.2
Number of States reporting.............         23         31        25
------------------------------------------------------------------------
Source: APWA.

    Disability/Health Status.--Based on reports from 16 States,
APWA found that 13 percent of children in substitute care at
the end of fiscal year 1990 had one or more disabling
conditions.
    The National Black Child Development Institute did not
specifically address the issue of disability but did determine
that 75 percent of the black children in its five-city study
were reported as ``healthy'' or ``having no health problems.''
The NBCDI also attempted to gather information on the
children's mental health but determined that for 80 percent of
the children under age 6, mental health assessments were either
not conducted or were not included in the child's record.
Mental health assessments were conducted and included in the
records for 41 percent of the 6- to 12-year-olds, and for 56
percent of the children between 13 and 18 years of age. The
NBCDI did not report the results of these assessments, however.
    School assessments of children in the NBCDI study, to the
extent that they were available, indicated that 7 percent of
the total population (including children not yet of school age)
were found to have an educational disability and 1 percent were
mentally retarded. Of the total population of foster children
included in the study, school assessments were not applicable
for 41 percent (this group included children not yet of school
age), and were not included in the child's record for another
16 percent of the total. Of the remainder of children, 20
percent were assessed by schools as average, 3 percent were
assessed as above average, and 12 percent were considered below
average.
    Family Characteristics.--The NBCDI study attempted to
gather information on the characteristics of biological
families of the children who were placed in foster care. These
data must be read cautiously because they are based on a small
sample and information on each factor was not necessarily
included in all records examined by NBCDI. Thus, while these
data cannot necessarily be used to generalize about the
families of all black children in foster care, the information
is nonetheless interesting and is among the only recent
national information on biological families of foster children.
    The NBCDI study found that mothers of black foster children
in the five-city survey were, on average, 23 years old when
their children were born and 29 years old when their children
were placed in substitute care. Fathers of foster children had
an average age of 28 when their children were born and an
average age of 34 when their children were placed in care.
    Information on the educational level of mothers of foster
children was not available in 45 percent of cases. Of those for
whom information was available, about 47 percent of mothers had
attended some high school, and another 31 percent had high
school or equivalency diplomas. About 10 percent of mothers had
gone through 8th grade or less, and another 10 percent had
attended some college or technical school. College graduates
comprised 2 percent of the mothers.
    A large number of parents or primary caregivers were
reported as having health problems, according to the NBCDI
research. Information was not available for 15 percent of the
parents or primary caregivers. Moderate or major health
problems were reported for 48 percent of parents or primary
caregivers, another 6 percent had minor health problems, and 46
percent were reported as healthy. Of particular significance
was the type of health problem or illness experienced by
parents. Among primary caregivers with a health problem,
substance abuse was reported as the problem in 78 percent of
cases. Again, it should be remembered that this finding is
based on a small sample in five cities.
    Almost half--46 percent--of black foster children in the
NBCDI study came from single-parent families. Another 12
percent came from families with both parents present. About 9
percent of children came from extended families with a parent
present and other relatives, and an equal number lived in
extended families with relatives but without a parent present.
Ten percent of children came from ``augmented'' families with a
parent present and other adults who were not relatives, and 2
percent were from augmented families with no parent present.
About 5 percent of children were from blended or stepfamilies,
and 6 percent of children in the NBCDI study group had been
living in hospitals before placement in foster care.
    Mothers were the head of household for 62 percent of the
study children before they had been placed in foster care. In
13 percent of cases, fathers were the head of household, and
grandparents were household heads in another 10 percent of
cases. For the remainder, the head of household was another
relative, a family friend, or a stepparent.
    The majority of foster children in the NBCDI study came
from households receiving public assistance. AFDC was the
primary source of income for 65 percent of the cases, and
earnings were the primary source of income for 28 percent.
Another 6 percent of households received their primary income
from Social Security or Supplemental Security Income.
    Finally, the NBCDI collected information on the average
number of siblings of children in foster care. The children in
the study group in the 5 cities had an average of 2.2 siblings,
although these brothers and sisters did not necessarily live
with the child or family at the time of placement.

                REASONS FOR PLACEMENT IN SUBSTITUTE CARE

    For fiscal year 1990, the VCIS data report the reasons
children were placed in substitute care in 19 States. The
majority of children--71.1 percent--were placed in substitute
care either for their protection or because their parent was
unable or unavailable to care for them.

 TABLE 14-20.--REASONS CHILDREN ENTERED SUBSTITUTE CARE, FISCAL YEAR
                                1990
------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Protective service...........................................       50.2
Parent condition or absence..................................       20.9
Status offense/delinquent....................................       11.3
Relinquishment of parental rights............................         .8
Handicap of child............................................        1.9
Other........................................................       12.5
 Unknown.....................................................       2.4
------------------------------------------------------------------------
Source: APWA.

    The National Black Child Development Institute categorized
reasons for placement differently in its study, but its overall
finding was similar to that of APWA; the majority of children
were placed in out-of-home care primarily for their own
protection. Neglect was the cause in 41 percent of cases, and
abuse was the cause in 26 percent of the cases. Another 8
percent of children had been abandoned, and ``inability of
parent'' was cited in 5 percent of cases. In 17 percent of the
cases, children were placed through a voluntary agreement
between the parents and the placement agency.
    The NBCDI attempted to obtain more detailed reasons for
children entering substitute care. Parent-related or
environmental reasons were reported in almost all cases studied
by NBCDI, although these were not necessarily the primary cause
of placement. Multiple causes were often reported for each
case; therefore, the following percentages total to more than
100 percent.
    The most frequently reported parent-related factor was drug
abuse in the family, reported in 36 percent of cases, followed
by alcoholism, reported in 20 percent of cases. These figures
cannot necessarily be added to achieve a total for substance
abuse, since drug abuse and alcoholism may both have been
reported for the same case. Other parental factors included
mental illness (reported in 14 percent of cases) and
incarceration (reported in 11 percent of cases).
    Environmental factors included inadequate housing (reported
in 30 percent of cases), and homelessness or living in a
shelter (reported in 11 percent). Again, these numbers should
not be added because both factors may have been reported for
the same case. Poverty was reported as an environmental factor
contributing to a child's placement in 25 percent of the cases.
    Child-related factors contributing to foster care placement
were reported in roughly a third of the cases looked at by
NBCDI in the five cities. Again, it should be remembered that
these factors, like the parental and environmental factors
described above, were not necessarily the primary cause for
placement, but more likely were one of several factors
resulting in the child's removal from home. When child-related
causes were reported, the most frequently reported factor was
emotional or behavioral problems of the child, cited in 62
percent of cases. The next most common factor was the child
running away, reported in 24 percent of cases. In 12 percent of
cases with child-related factors as categorized by NBCDI, the
children were boarder babies in hospitals. Antisocial behavior
on the part of the child was cited in 11 percent of cases with
reported child-related factors.

                            PERMANENCY GOALS

    The following table indicates the permanency planning goals
for substitute care children in fiscal year 1990, according to
reports from 26 States. As the table shows, family
reunification was the permanency goal for more than half the
children in care.

TABLE 14-21.--PERMANENCY PLANNING GOALS FOR CHILDREN IN CARE, FISCAL
                             YEAR 1990
------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Family reunification.........................................       60.1
Long-term foster care........................................       12.0
Adoption.....................................................       15.1
Independent living...........................................        5.2
Guardianship.................................................        3.1
Care and protection in substitute care.......................        2.2
Unknown......................................................       2.3
------------------------------------------------------------------------
Source: APWA.

    Comparing the data in table 14-21 with earlier years shows
a significant increase in family reunification as a permanency
goal. Family reunification was the goal for 39.2 percent of
children in fiscal year 1982, according to VCIS data, compared
with 60.1 percent of substitute care children in fiscal year
1990, as indicated in the above table.
    The NBCDI study also looked at permanency plans for black
children in its study group and found that reunification with
parents (usually the mother) was the most prevalent permanency
goal (42 percent of the children in substitute care), followed
by other relative placement (17 percent). Adoption was the
permanency goal for another 17 percent of children in care in
the NBCDI study; long-term foster care was the goal for 8
percent; and independent living was the permanency goal for 9
percent of children.
    For those children still in care for whom family
reunification was a goal, the NBCDI study attempted to
determine what barriers to reunification existed. Multiple
barriers were identified; therefore, the following percentages
total to over 100 percent because more than one barrier was
identified in many cases. The leading reported barrier to
reunification was lack of cooperation from the parent (46
percent), followed by inadequate housing (34 percent). Drug
addiction of the parent was identified in 30 percent of cases,
and a lack of parenting skills was identified in 26 percent of
cases. Lack of finances was cited in 22 percent of cases, and
parents' whereabouts were unknown in 20 percent. Mental
instability of parents was reported in 15 percent of cases;
legal barriers were cited in 11 percent; and alcoholism of
parents was reported in 10 percent of cases.

           LIVING ARRANGEMENTS OF CHILDREN IN SUBSTITUTE CARE

    The VCIS data for fiscal year 1990 contain information on
the living arrangements of substitute care children in 28
States. The following table shows that the majority of
substitute care children were living in foster family homes,
although a significant percentage were living in either group
homes, residential treatment centers, or emergency shelters.

 TABLE 14-22.--LIVING ARRANGEMENTS OF CHILDREN IN CARE, FISCAL YEAR
                                1990
------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Foster family homes..........................................       74.5
Nonfinalized adoptions.......................................        2.7
Group homes/residential treatment/emergency shelters.........       16.4
Independent living...........................................         .5
Other........................................................        5.6
Unknown......................................................        .3
------------------------------------------------------------------------
Source: APWA.

    While the NBCDI study did not collect data on the living
arrangements of black children in substitute care, the issue of
relative caretakers was explored. Relatives were considered as
possible placements for children in 73 percent of cases
reviewed by NBCDI in the 5 cities. Of those relatives
considered as resources, 57 percent actually provided some
assistance, and of these, 68 percent provided foster homes for
related children.
    When viewed as a percentage of all substitute care children
in the NBCDI study, relatives served as foster parents for
somewhat less than 30 percent of children. In 13 percent of
cases where relatives provided assistance, they served as legal
guardians but not necessarily as foster parents. Relatives most
commonly providing assistance to substitute care children were
grandparents, who accounted for 53 percent of the relatives
providing aid.
    The VCIS data for fiscal year 1990 included some limited
information on children placed in unlicensed/unpaid relatives'
homes. Only 7 States could provide actual data on such
children, but a total of 9 States said that such children were
included in their counts of children placed in substitute care.
In the 7 States that reported data, 19.3 percent of their
caseload lived in unlicensed/unpaid relatives' homes, ranging
from 7.4 percent in one State to 32.6 percent in another.

         NUMBER AND DURATION OF PLACEMENTS WHILE IN FOSTER CARE

    The VCIS collected data on the number of placements
experienced by children in care at the end of fiscal year 1990,
during the preceding 3 years. As the table below shows, more
than half the children in care at the end of fiscal year 1990
had experienced more than one placement, according to data from
15 States.

 TABLE 14-23.--NUMBER OF PLACEMENTS DURING PREVIOUS THREE YEARS, FOR
          CHILDREN IN CARE AT END OF FISCAL YEAR 1990\1\
------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
1 placement..................................................       42.6
2 placements.................................................       27.5
3 to 5 placements............................................       23.6
6 or more placements.........................................        6.1
Unknown......................................................         .2
------------------------------------------------------------------------
\1\Includes current placement.
Source: APWA.

    A comparison of these data with previous years, while not
strictly comparable due to differences in the number of States
reporting, suggests a trend toward more multiple placements
between fiscal year 1982 and fiscal year 1990. Specifically, a
total of 43.1 percent of children in care at the end of fiscal
year 1982 had been in more than one placement, compared with
57.2 percent at the end of fiscal year 1990.
    The NBCDI study calculated the average number of placements
experienced by black children in its study group, including
both children still in care at the end of the study period and
children who had been discharged from substitute care during
the study period. The average number of placements reported by
NBCDI was 2.2 per child. However, in two of the study cities--
Miami and Seattle--children are usually placed in a temporary
setting before being transferred to a more permanent foster
home, potentially inflating the average number of placements
reported.
    The following table indicates the length of time in
continuous care experienced by children who remained in care at
the end of 1990.

 TABLE 14-24.--LENGTH OF TIME IN CONTINUOUS CARE, FISCAL YEAR 1990
                              [In percent]
------------------------------------------------------------------------
                                                               Children
                                                                in care
------------------------------------------------------------------------
0 to 6 months...............................................        17.8
6 to 12 months..............................................        14.8
1 to 2 years................................................        23.9
2 to 3 years................................................        15.8
3 to 5 years................................................        16.9
5 years or more.............................................        10.2
Unknown.....................................................          .6
Median (years)..............................................         1.7
Number of States............................................          22
------------------------------------------------------------------------
Source: APWA.

    A comparison with fiscal year 1982 data on length of stay
for children remaining in care at the end of the year indicates
that the percentage of children in care for 5 or more years has
decreased from 18.2 percent to 10.2 percent, and the percentage
of children in care 6 months or less is somewhat less in 1990
as it was in 1982 (21.7 percent), although it had increased
slightly in the interim years. Fiscal year 1982 data were
reported for 26 States.
    The NBCDI study also examined the length of time black
children spent in substitute care and found that children in
its study group spent an average of 13 months in care, although
this average fluctuated widely from 7 months in Houston to 26
months in Miami. This variation may be due to the manner in
which the information was collected. The NBCDI study also
explored the issue of caseworker turnover, and found that
children in its study group had an average of 2.5 caseworkers
during their tenure in foster care.

                   OUTCOMES FOR CHILDREN LEAVING CARE

    Data are available from the VCIS from 24 States on the
outcomes for children who left care during fiscal year 1990.
The following table indicates that two-thirds of children were
reunified with their families.

TABLE 14-25.--OUTCOMES FOR CHILDREN WHO LEFT CARE, FISCAL YEAR 1990
------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Reunified....................................................       66.6
Adopted......................................................        7.7
Reached age of majority/emancipated..........................        6.5
Other\1\.....................................................       15.7
Unknown......................................................        3.5
------------------------------------------------------------------------
\1\``Other'' includes such reasons as running away, marriage,
  incarceration, death, discharge to another agency, or legal
  guardianship established.

Source: APWA.

    A comparison of these data with earlier years indicates
that family reunification significantly increased from 49.7
percent in fiscal year 1982 to 66.6 percent in fiscal year
1990.
    When evaluating these data on outcomes for children leaving
care, it should be remembered that a portion of these children
will likely return to substitute care at some point. For
example, 15 percent of children entering care in fiscal year
1990 were reentrants.
    Of those black children in the NBCDI study who were
discharged during the study period, 55 percent were reunified
with their families and another 23 percent were placed with
relatives. Legal guardianship was established for 8 percent of
the children, and 7 percent were adopted. Independent living
for older children was established for 4 percent, and in 2
percent of cases, children left without authorization.

            CHARACTERISTICS OF CHILDREN IN ADOPTIVE CARE\7\

    National data on the characteristics of children for whom
adoption assistance payments are made are not available.
However, APWA's Voluntary Cooperative Information System (VCIS)
is the primary source of data on the national child welfare
system, and publishes the only comprehensive data estimates on
the adoption of special needs children who at some time have
been part of the substitute care system.\8\ Not all of the
children described in VCIS data are the beneficiaries of
adoption subsidies. VCIS collects information from States and
compiles it in an annual report, with data available from
fiscal years 1982 through 1990. APWA notes that the data in its
reports should be treated as rough estimates given the
voluntary nature of the information, and the fact that not all
States report data on all questions, or conform to the same
data definitions.
---------------------------------------------------------------------------
    \7\Children in adoptive care have had a finalized adoption, are in
a nonfinalized adoptive home, or are awaiting adoptive placement.
    \8\Substitute care is defined as a living arrangement in which
children are residing outside of their own homes under the case
management and planning responsibility of the primary State child
welfare agency or of child placing agencies under contract to the
primary agency. Living arrangements can include foster family or
adoptive foster homes (both relative and nonrelative), group homes,
child care facilities, emergency shelter, supervised independent
living, nonfinalized adoptive home placements, and all other
arrangements regarded as 24-hour substitute care by the State agency.
---------------------------------------------------------------------------

    VCIS collects information on adoptions related to
substitute care children only. VCIS divides children in
adoptive care into those with finalized adoptions, awaiting
adoptive placement, or residing in nonfinalized adoptive homes.
Children in the latter two categories are included in VCIS's
definition of substitute care. VCIS collects data on the age,
race/ethnicity, special needs status, and relation to adoptive
parents of these children. The numbers below represent national
estimates that APWA calculated based on data received from
reporting States. Not all of the children described below were
adopted with subsidies.

  TABLE 14-26.--FINALIZED ADOPTIONS AND CHILDREN AWAITING ADOPTIVE
                    PLACEMENT, FISCAL YEAR 1990
                            [In percentages]
------------------------------------------------------------------------
                                                              Children
                                              Finalized       awaiting
                                            adoptions\1\      adoptive
                                                            placement\2\
------------------------------------------------------------------------
Age:
    0 to 1 year...........................        \3\4.5         \3\4.0
    1 to 5 years..........................          49.7           36.2
    6 to 12 years.........................          37.4           43.2
    13 to 18 years........................           7.7           15.8
    19 years and older....................            .2             .7
    Unknown...............................            .5             .1
Race/ethnicity:
    White.................................       \4\50.8        \6\44.3
    Black.................................          29.2           42.8
    Hispanic..............................          13.3            7.0
    Other.................................           4.5            3.7
    Unknown...............................           2.2            2.2
Special needs status:
    1 or more special needs...............       \5\66.7        \7\71.7
    No special needs......................          33.3           27.9
    Unknown...............................             0             .4
Time awaiting adoptive placement:\8\
    0 to 6 months.........................  .............          19.4
    6 to 12 months........................  .............          12.4
    1 to 2 years..........................  .............          21.4
    2 years or more.......................  .............          46.3
    Unknown...............................  .............           .5
------------------------------------------------------------------------
\1\Data reported on the number of finalized adoptions which took place
  during fiscal year 1990.
\2\Data reported on the number of children awaiting placement at the end
  of fiscal year 1990.
\3\Data provided by 20 States.
\4\Data provided by 27 States.
\5\Data provided by 19 States.
\6\Data provided by 25 States.
\7\Data provided by 18 States.
\8\Data provided by 16 States.

Source: American Public Welfare Association.

    VCIS reported that 17,000 children had a finalized adoption
in fiscal year 1990, and 18,000 were placed in a nonfinalized
adoptive home. Another 20,000 were still in substitute care and
awaiting adoptive placement at the end of fiscal year 1990. Of
the adoptions that were finalized in fiscal year 1990, the 2
largest age groups of children were between 1 and 5 years of
age (49.7 percent) and between 6 and 12 years of age (37.4
percent). About half of these children (50.8 percent) were
white, while 29.2 percent were black. Two-thirds of these
children had one or more special needs that could pose barriers
to adoption.
    Less than half (41.5 percent) of the children whose
adoptions were finalized in fiscal year 1990 were adopted by
people completely unrelated to them. Another 47.2 percent of
the children were adopted by nonrelative foster parents. Seven
percent were adopted by relatives.
    The composition of children awaiting adoptive placement is
somewhat different from children whose adoptions were
finalized. These children are generally older and include a
greater percentage of black children (42.8 percent versus 29.2
percent of finalized children). In addition, of the children
awaiting adoptive placement, 46.3 percent had been waiting for
2 or more years.

 TABLE 14-27.--PROPORTION OF SPECIAL NEEDS CHILDREN IN FOSTER CARE,
            AWAITING ADOPTION, AND ADOPTED, 1984 TO 1990
------------------------------------------------------------------------
             Status                 1984      1985      1988      1990
------------------------------------------------------------------------
Number of children in foster
 care...........................   276,000   276,000   340,000   406,000
(Percent with special needs)....        22        18        22        13
Number of foster children
 awaiting adoption..............    17,000    16,000    18,000    20,000
(Percent with special needs)....        43        51        64        72
Number of foster children
 adopted........................    20,000    16,000    19,000    17,000
(Percent with special needs)....        57        62        59        67
------------------------------------------------------------------------
Source: ``State Child Welfare Abstracts 1980-1985,'' Maximus Inc.
  prepared for Office of Social Services Policy, Assistant Secretary for
  Planning and Evaluation, HHS, December 1987; VCIS data.

             TRENDS IN CHILD WELFARE AND FOSTER CARE COSTS

    Given the trends in foster care caseloads and the Federal
requirements of Public Law 96-272, it is not surprising that
funding for the title IV-E foster care program has increased
significantly from 1981 to 1994. Based on administration
estimates for fiscal year 1994, Federal title IV-E expenditures
increased 744 percent (from $308.8 million to $2,606 million).
Although the program has not been fully funded since 1981,
funding for the title IV-B child welfare services program
increased by 80 percent from 1981 to 1994 ($163.6 million to
$294.6 million). Funding for the title XX social services block
grant, which States may use for child welfare services, has
actually fallen in nominal terms.
    According to a 1990 analysis of 31 State child welfare
plans by the American Public Welfare Association, it appears
that the Federal Government contributes more than 40 percent
(42.6 percent in 1990) of child welfare costs, including the
costs of foster care. State plans indicate that the remaining
child welfare costs are paid by State, local and private
sources. As stated above, Federal child welfare funding sources
primarily include the title IV-B child welfare services
program; title IV-E foster care, adoption assistance and
independent living programs; and title XX social services.
State and other nonfederal spending is used to meet title IV-B
and title IV-E matching requirements, plus other child welfare
costs such as 100 percent of the expense of maintaining non-
AFDC-eligible children in foster care.

        TITLE IV-E PLACEMENT, ADMINISTRATIVE AND TRAINING COSTS

    In recent years an increasing proportion of title IV-E
costs has been expended on child placement services,
administration, and training. Table 14-28 shows HHS and CBO
estimates of title IV-E expenditures through fiscal year 1999.
It should be noted that expenditures for services and
administration include expenditures on behalf of children who
are ``candidates'' for foster care, as well as children who are
actual recipients of foster care maintenance benefits. In other
words, funds are expended on behalf of certain children before
and during the time a title IV-E eligibility determination is
made; as a result, Federal reimbursement is provided for
administration and services for some children who, ultimately,
are determined not eligible for title IV-E maintenance
payments.
    Table 14-29 shows Federal foster care expenditures by State
in 1982, 1986, 1991, and 1993. Between 1982 and 1993, total
foster care expenditures increased from $374 million to $2,525
million (575 percent). Over this time period, foster care
maintenance costs increased from $301 million to $1,307 million
(334 percent). Because of the large increase in placement costs
relative to maintenance costs, the share of total cost
represented by maintenance costs decreased between 1986 and
1993. Over this time period, the total cost of foster care
increased an average of 317 percent.

   TABLE 14-28.--PROPORTION OF TITLE IV-E FOSTER CARE EXPENDITURES
SPENT ON CHILD PLACEMENT, ADMINISTRATION AND TRAINING, FISCAL YEARS 1983-
                               99\1\
------------------------------------------------------------------------
                                Total
                               Federal      Placement,      Placement,
                              title IV-E  administration  administration
        Fiscal year          expenditure   and training    and training
                                 (in       expenditures    proportion of
                              millions)    (in millions)      total
------------------------------------------------------------------------
Actual:
    1983...................       $394.8        $117.9         0.30
    1984...................        445.2         147.4         0.33
    1985...................        546.2         190.9         0.35
    1986...................        605.4         213.8         0.35
    1987...................        792.6         312.9         0.39
    1988...................        891.1         342.8         0.38
    1989...................      1,153.1         507.1         0.44
    1990...................      1,473.2         638.2         0.43
    1991...................      1,819.2         788.8         0.43
    1992...................      2,232.8       1,029.0         0.46
    1993...................      2,547.0       1,182.0         0.46
HHS Estimate:
    1994...................      2,606.5       1,159.5         0.44
    1995...................      2,914.0       1,501.0         0.52
    1996...................      3,384.0       1,700.0         0.50
    1997...................      3,647.0       1,781.0         0.49
    1998...................      3,997.0       1,948.0         0.49
    1999...................      4,378.0       2,126.0         0.49
CBO Estimate:
    1994...................      2.670.0       1,232.0         0.46
    1995...................      3,010.0       1,458.0         0.48
    1996...................      3,372.0       1,609.0         0.48
    1997...................      3,593.0       1,649.0         0.46
    1998...................      3,884.0       1,768.0         0.46
    1999...................      4,176.0       1,877.0         0.45
------------------------------------------------------------------------
\1\Does not include transfers to title IV-B.

Sources: Based on data from HHS and CBO.


                                            TABLE 14-29.--FEDERAL FOSTER CARE EXPENDITURES, 1982-93
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Total expenditures (dollars in      Maintenance costs (dollars in millions)    Maintenance cost     Percentage
                                                   millions)                ------------------------------------------ as a percentage of    growth in
              State                -----------------------------------------                                                 total             total
                                                                   1993\1\     1982      1986      1991      1993\1\  -------------------- expenditures,
                                      1982      1986       1991                                                          1986      1993       1986-93
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama...........................      2.19      2.09       5.16      4.68      2.12      1.83      1.43        1.51      87.6      32.3         124
Alaska............................      0.48     (0.03)      3.50      4.41      0.48    (0.04)      1.43        1.99     133.3      45.1          NA
Arizona...........................      1.29      2.80      11.43     17.98      1.24      1.24      3.72        7.81      44.3      43.4         542
Arkansas..........................      0.45      0.68       4.85      9.75      0.42      0.50      1.76        2.29      73.5      23.5       1,334
California........................     59.00    136.68     354.69    478.06     52.02     81.75    185.50      232.18      59.8      48.6         250
Colorado..........................      1.06      2.32       7.45     20.28      1.03      2.29      4.48        4.90      98.7      24.2         774
Connecticut.......................      1.51      3.55      25.59     15.90      1.51      2.32      8.13        4.90      65.4      30.8         348
Delaware..........................      0.34      0.29       1.35      1.35      0.32      0.39      0.57        0.35     134.5      25.9         366
District of Columbia..............      7.88      5.65       4.70     11.20      6.24      3.82      2.69        4.40      67.6      39.3          98
Florida...........................      1.93      3.90      25.36     45.88      1.80      2.88     10.98       14.63      73.8      31.9       1,076
Georgia...........................      5.01      8.26      24.13     24.51      2.04      4.69      7.39        8.48      56.8      34.6         197
Hawaii............................      0.03      0.08       1.24      2.91      0.03      0.06      0.09        0.78      75.0      26.8       3,538
Idaho.............................      0.26      0.26       1.20      2.15      0.24      0.24      0.28        0.72      92.3      33.5         727
Illinois..........................      7.29     14.24      67.45    117.59      6.26     14.24     40.36       73.88     100.0      62.8         726
Indiana...........................      0.88      1.08       7.13     37.65      0.86      0.84      2.49       22.92      77.8      60.9       3,386
Iowa..............................      1.43      2.66       9.26     13.66      0.91      1.74      3.56        7.40      65.4      54.2         414
Kansas............................      3.24      3.79      12.95     19.37      2.85      2.98      6.36        7.44      78.6      38.4         411
Kentucky..........................      1.30      5.93      30.69     34.06      1.26      4.97     11.98       12.73      83.8      37.4         474
Louisiana.........................      5.59     11.93      26.12     28.55      4.83      6.11     14.67       16.56      51.2      58.0         139
Maine.............................      2.20      3.48      12.26      9.44      2.14      2.05      4.79        7.20      58.9      76.3         171
Maryland..........................      2.96      9.72      28.95     44.61      2.78      4.03     14.23       23.82      41.5      53.4         359
Massachusetts.....................      2.91      5.32      29.47     57.40      2.83      2.87     17.01       26.49      53.9      46.2         979
Michigan..........................     25.34     46.16     128.27    103.28     18.72     35.17     52.49       47.41      76.2      45.9         124
Minnesota.........................      4.42      8.37      24.87     33.00      3.93      5.22     12.60       18.71      62.4      56.7         294
Mississippi.......................      0.89      0.83       2.16      4.08      0.82      0.76      1.07        1.56      91.6      38.2         392
Missouri..........................      2.07     13.49      29.30     29.08      1.94      5.45     14.29       12.71      40.4      43.7         116
Montana...........................      1.26      1.40       5.87      4.58      0.83      0.97      2.47        3.26      69.3      71.2         227
Nebraska..........................      1.77      3.11       7.16     10.17      1.36      1.87      3.73        5.38      60.1      52.9         227
Nevada............................      0.37      0.39       2.54      2.88      0.35      0.36      0.92        1.61      92.3      55.9         638
New Hampshire.....................      0.82      1.27       5.05      7.37      0.58      0.79      1.97        3.67      62.2      49.8         480
New Jersey........................      2.04     16.89      16.30     25.30      1.95      8.49      8.07       11.88      50.3      47.0          50
New Mexico........................      0.21      2.67       6.28      5.46      0.21      1.44      3.04        3.56      53.9      65.2         104
New York..........................    149.80    162.91     515.79    779.23    109.86    113.95    366.10      416.04      69.9      53.4         378
North Carolina....................      1.89      2.34       8.65     17.64      1.79      2.18      6.55       14.25      93.2      80.8         654
North Dakota......................      0.81      0.99       3.82      5.42      0.77      0.79      1.90        2.49      79.8      45.9         447
Ohio..............................      3.70     24.78      52.52     91.97      3.27      8.10     26.40       44.82      32.7      48.7         271
Oklahoma..........................      1.91      3.63      11.64      8.20      1.81      2.07      8.21        5.09      57.0      62.1         126
Oregon............................      4.98      7.35      14.01     14.07      3.41      4.39      6.91        7.27      59.7      51.7          91
Pennsylvania......................     33.57     34.13     118.45    180.45     31.27     26.02     82.02      125.88      76.2      69.8         429
Rhode Island......................      0.99      2.30       5.74      8.08      0.99      1.48      2.54        3.19      64.3      39.5         251
South Carolina....................      0.53      2.49       9.70      8.82      0.48      1.71      4.74        4.72      68.7      53.5         254
South Dakota......................      0.77      0.60       2.01      2.57      0.73      0.58      1.07        1.27      96.7      49.4         328
Tennessee.........................      1.74      1.86      19.63     15.77      1.66      1.82     11.23        9.14      97.8      58.0         748
Texas.............................      5.62     11.37      54.76     72.18      5.33      7.21     28.54       38.48      63.4      53.3         535
Utah..............................      0.45      1.01       3.85      5.96      0.38      0.49      2.05        3.03      48.5      50.8         490
Vermont...........................      1.10      2.35       6.59      6.65      0.69      1.25      4.32        4.18      53.2      62.9         183
Virginia..........................      2.93      3.23      12.48     13.39      2.55      2.76      5.09        4.46      85.4      33.3         315
Washington........................      3.15      3.84      16.14     19.89      1.62      1.48      6.10        8.07      38.5      40.6         418
West Virginia.....................      1.45      8.62       7.61      4.27      1.45      4.57      5.69        2.24      53.0      52.5         (50)
Wisconsin.........................      9.94     12.14      32.20     42.59      8.20      8.23     15.81       18.90      67.8      44.4         251
Wyoming...........................      0.08      0.16       0.92      1.06      0.08      0.16      0.60        0.75     100.0      70.8         563
                                   ---------------------------------------------------------------------------------------------------------------------
      Total.......................    373.83    605.36   1,819.24  2,524.80    301.24    391.56  1,030.42    1,307.40      64.7      51.8         317
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Does not include disputes and reconciliations.
Totals may differ from sum of State amounts because of rounding.

Source: Department of Health and Human Services.

         EXPLAINING GROWTH IN FEDERAL FOSTER CARE EXPENDITURES

    Some have argued that programs funded under title IV-E are
becoming more expensive for the Federal Government because a
growing number of States are transferring costs they had
traditionally paid for themselves to the Federal Government as
administrative expenses. During an April 1987 hearing of the
House Select Committee of Children, Youth, and Families, Sydney
Olsen, the Assistant Secretary for Human Development Services
(HDS) testified ``it appears that States are finding ways to
refinance existing services through these entitlements and that
the growth in administrative cost does not reflect increases in
services or improved management.'' Then-Assistant Secretary
Olsen also expressed concern that the open-ended entitlement of
title IV-E was being exploited by States which were hiring
consultants to help them ``capture'' more available Federal
funds. As evidence, the Assistant Secretary pointed to the high
variability of title IV-E administrative and cost claims among
States.
    In October of 1987, the HHS Office of Inspector General
published a report on the high absolute levels of title IV-E
administrative and training costs and the wide variation of
claims among States. The report found that the administrative
costs associated with the foster care program are much higher
than those associated with similar programs such as AFDC, and
the Medicaid and Food Stamp programs. However, this was
attributed to the fact that regulations implementing Public Law
96-272 expressly defined many activities as allowable
administrative costs that were not reimbursed by the Federal
Government when foster care was part of AFDC. By regulation,
claimable title IV-E administrative costs include:
  --referral to services at time of intake;
  --preparation for, and participation in, judicial
        determinations;
  --placement in foster care;
  --development of a case plan;
  --case reviews;
  --case management and supervision;
  --recruitment and licensing of foster homes and institutions;
        and
  --foster care rate setting.
    The 1987 report also found that much of the variation of
States' administrative cost claims was linked to the degree of
sophistication of each State's accounting practices. Not all
States had sophisticated systems capable of documenting all
allowable costs. Some other States chose to deliberately
underclaim these expenses so that they could transfer
unutilized funds to title IV-B child welfare services. The
report concluded that some of the measures by which HHS
documented the rapidly rising administrative costs associated
with title IV-E were inappropriate:

          * * * some measures of relative State performance
        such as administrative cost per child and the ratio of
        administrative to maintenance costs better reflect
        charges to the Federal Government rather than the costs
        of running the program. Similarly, the use of
        percentage change in administrative cost to measure
        relative growth over time is complicated. Many States
        had an artificially low base in the early years
        (shortly after Public Law 96-272 was enacted) due both
        to their inability to claim all appropriate costs and
        the absence of required program components (page ii).

    The 1987 report also stated that in seven separate studies
HDS had failed to document that States were systematically
transferring ineligible title IV-E administrative costs to the
Federal Government. The report concluded that although HDS did
uncover some random accounting errors ``there was no evidence
found to demonstrate patterns of abuse.'' In fact, OIG did an
audit of the State of Missouri, in which claimed administrative
costs had risen ``precipitously'' and found no serious State
violations of Federal guidelines or regulations. The report
also noted that HDS had presented no information to document
how the consultant accounting and cost claim recommendations to
States violated the regulations.
    In addition, the report noted that the decision by the HHS
Departmental Appeals Board (DAB) concerning the State of
Missouri's title IV-E allowable administrative cost claims,
which was issued shortly before the report's publication, would
further expand the allowable expenses that could be charged as
administration and training. It has been generally accepted
that this has been the case, further strengthening the claim
that administrative expenses include more than program
``overhead.'' The Inspector General's office issued another
report dated August 1990. The report presents the following
specific findings, which generally tend to be consistent with
the findings made in the 1987 report.
    (1) The term ``administrative costs'' is a misnomer. Most
of the activities being funded are not traditional
administrative costs, but are ``important child placement
services''. According to the IG report, administrative costs
grew from $143 million in fiscal year 1985 to $400 million in
fiscal year 1988. However, only 20 percent of the cost increase
is attributable to administration of the program. Nearly 80
percent relates to direct service activities that the IG
classified as ``child placement services''.
    (2) The current procedure used to account for costs does
not allow for examining any correlation between increased
administrative costs and increased services to foster children.
    (3) Cost increases occurred for two primary reasons: the
expanded definition of allowable administrative activities
provided in Public Law 96-272, and a broad interpretation of
that definition by the Departmental Appeals Board. Other
factors contributing to the increases were the States' use of
consultants, a 19-percent increase in the number of title IV-E
children, increases in the number of case workers, and cost-of-
living increases for State employees.
    (4) Variations in costs among States resulted from using
nonhomogeneous cost indicators, a lack of uniformity in
defining and allocating allowable costs, a gradual trend by
States to use consultants for identifying opportunities to
maximize Federal funding sources, and States' revision of cost
allocation plans to capture costs for children who are
``candidates'' for IV-E foster care (but who may not ultimately
receive foster care maintenance payments).
    The report concludes that legislative and administrative
measures are necessary for containing escalating administrative
costs, and outlines various options.

            1990 LEGISLATION RELATED TO ADMINISTRATIVE COSTS

    During the second session of the 101st Congress,
legislation was enacted as part of the Omnibus Budget
Reconciliation Act of 1990 (P.L. 101-508) designed to provide
better information on State reimbursement for administrative
costs. Under the provisions of Public Law 101-508, ``child
placement services'' is added as a separate category for which
States may claim reimbursement, in addition to administrative
costs. Prior to this provision, States claimed reimbursement
for child placement services as administrative costs. The
effect of the amendment, while not changing the type of
services for which States may claim reimbursement, is designed
to provide more specific information on how Federal matching
funds are used.

    FOSTER CARE AND ADOPTION DATA AND INFORMATION COLLECTION SYSTEM

                         LACK OF ADEQUATE DATA

    Historically, there has been a lack of reliable data in the
area of foster care and adoption. In fact, all 50 States did
not even report their average monthly foster care caseload
under the federally assisted program until 1975. Moreover,
States have never been required to collect data on non-
federally-assisted foster care. This lack of data was one of
several concerns that Congress hoped to address with enactment
of the Adoption Assistance and Child Welfare Act of 1980 (P.L.
96-272).
    The 1980 law imposed several requirements on States in
order for them to receive incentive funds under the title IV-B
child welfare services program, including a one-time inventory
of children in foster care and a statewide information system
for tracking children in foster care. Shortly after enactment
of Public Law 96-272, HHS wrote detailed guidelines for the
implementation of these requirements, which were published as
an interim final rule on December 31, 1980. However, HHS
withdrew these regulations the following March, stating that
the Office of Management and Budget (OMB) had not reviewed and
approved certain sections. In 1982, the Department issued a
policy information question (ACYF-PIQ-82-06) which restated the
law's requirement that States have an information system, but
did not specify the system's content. The 1980 regulations were
never re-issued.
    Since 1982, HHS has funded the American Public Welfare
Association (APWA) to conduct a voluntary annual survey of
States, known as the Voluntary Cooperative Information System
(VCIS). The VCIS has been the only source of nationally
aggregated data on the number and characteristics of children
in foster and adoptive care. However, the VCIS is of limited
use for various reasons. For example, not all States
participate fully in the survey, reporting periods are not
consistent among States, and there is a serious time lag
between when data are collected and subsequently published.
Further, data are available only in an aggregated, State-
specific format, preventing the type of analysis that could be
conducted with case-specific data.

        ENACTMENT OF 1986 REPORTING REQUIREMENT AND HHS RESPONSE

    In response to the need for better data collection,
Congress in 1986 approved an amendment to title IV-E (section
479) requiring that an advisory committee be established and
submit a report to Congress and HHS with recommendations for
establishing, administering and financing a system for
collecting data on adoption and foster care in the United
States. This amendment (contained in the Omnibus Budget
Reconciliation Act, P.L. 99-509) required that the Secretary of
HHS issue final regulations for the system by December 31,
1988, and that mandatory data collection be fully implemented
no later than October 1, 1991.
    The advisory committee submitted its final report in 1987,
with detailed recommendations for a mandatory system that would
collect data on all children covered by the protections of
section 427. The advisory committee recommended that the
Federal Government cover all expenses associated with system
start-up and development through September 30, 1991, including
costs of hardware acquisition, and that ongoing operational
costs be funded at the 50 percent Federal matching rate
available for administrative costs.
    In May 1989, HHS responded to the advisory committee's
report by submitting an implementation plan to Congress. This
plan would have required States to collect information only on
children under the responsibility of a State public child
welfare agency (excluding foster and adoptive children placed
privately by private licensed facilities), and would have
required States to finance their data collection systems by
using existing title IV-B funds and claiming 50 percent Federal
matching to the extent allowed as title IV-E administrative
costs.
    On September 27, 1990, HHS published proposed regulations,
based largely on the 1989 report, to implement the data
collection system, which has become known as the Adoption and
Foster Care Analysis and Reporting System (AFCARS). The
population to be covered would have been children under the
responsibility of the State child welfare agency, and financing
would have come from the title IV-E administrative cost match.
States would have been able to claim only that portion of their
costs that related to children eligible for title IV-E,
although the system would have required States to collect data
on non-IV-E children as well.

           OBRA OF 1993 AND FINAL RULES FOR AFCARS AND SACWIS

    In 1993, Congress enacted the Omnibus Budget Reconciliation
Act (P.L. 103-66) which added a new capped entitlement for
family preservation and family support services to the child
welfare programs authorized under title IV-B. As part of this
legislation, Congress also amended section 479, the title IV-E
provision added in 1986 that required establishment of a foster
care and adoption data collection system.
    The 1993 amendment authorizes an enhanced Federal matching
rate to States for certain costs related to data collection for
fiscal years 1994-1996. The statute specifies that this
enhanced match of 75 percent is available for costs of
planning, design, development and installation of statewide
mechanized data collection and information retrieval systems,
including costs of hardware, as long as the systems do the
following: comply with HHS regulations; to the extent
practicable, be able to interface with State child abuse and
neglect data collection systems and with AFDC data collection
systems; and be determined by HHS to provide more efficient,
economical and effective administration of State child welfare
programs.
    The 1993 law provides that ongoing operational costs of
State data collection and information retrieval systems will be
matched at the 50 percent Federal rate available for
administrative expenses under title IV-E. After fiscal year
1996, the enhanced match will expire and all data collection
costs will be matched at the 50 percent rate. Further, the
amendment specifies that States may claim reimbursement for
data collection systems without regard to whether they are used
for foster and adoptive children who are not eligible for title
IV-E assistance.
    On December 22, 1993, HHS published two sets of rules in
the Federal Register: interim final rules for Statewide
Automated Child Welfare Information Systems (SACWIS), issued in
response to enactment of Public Law 103-66; and final rules
implementing AFCARS. Under the interim final rules for SACWIS,
States must develop ``comprehensive'' child welfare data
collection systems, of which AFCARS will be a component, in
order to qualify for Federal funding, including the 75 percent
enhanced match. According to HHS, ``comprehensive'' means that
a State SACWIS system must include child welfare services,
foster care and adoption assistance, family preservation and
support services, and independent living.
    Under the interim final rules, State SACWIS systems must do
the following, at a minimum:
          Meet the AFCARS requirements;
          Provide for electronic data exchange, within the
        State, with data collection systems operated under
        AFDC, Medicaid, child support enforcement and the
        National Child Abuse and Neglect Data System (unless
        not practicable for certain reasons);
          Provide for automated data collection on all children
        in foster care under the responsibility of the State
        child welfare agency, to support implementation of
        section 427 protections and requirements;
          Collect and manage information necessary to
        facilitate delivery of child welfare services, family
        preservation and family support services, family
        reunification services, and permanent placement;
          Collect and manage information necessary to determine
        eligibility for the foster care, adoption assistance
        and independent living programs;
          Support necessary case management requirements;
          Monitor case plan development, payment authorization
        and issuance, review and management including
        eligibility determinations and redeterminations; and
          Ensure confidentiality and security of information in
        the system.
    In addition, optional SACWIS functions could include (if
cost-beneficial) resource management, tracking and maintenance
of legal and court information, administration and management
of staff and workloads, licensing verification, risk analysis,
and interfacing with other automated information systems.
    Under the final AFCARS rules, States will be required to
collect case-specific data on all children in foster care for
whom the State child welfare agency has responsibility for
placement, care or supervision, regardless of their eligibility
for title IV-E. Further, States will be required to collect
data on all adopted children who were placed by the State child
welfare agency, and on all adopted children for whom the State
provides adoption assistance (ongoing payments or for
nonrecurring expenses), care or services either directly or by
contract with other private or public agencies. States will
report data to HHS twice a year, with the first reporting
period being October 1, 1994-March 31, 1995, and the first
transmission of data due no later than May 15, 1995. Penalties
for noncompliance with AFCARS requirements will not be imposed
during the first 6 reporting periods (Oct. 1, 1994-Sept. 30,
1997). Half-penalties will be imposed during the following 2
reporting periods, and full penalties will be imposed on States
out of compliance for the reporting period beginning October 1,
1998.