Child Welfare Financing: An Issue Overview
Released: 2005-04-06T00:00:00

Summary:
Child welfare programs are designed to protect children from abuse or neglect. Services maybe offered to stabilize and strengthen a child's own home. If this is not a safe option for the child,however, he or she may be placed in foster care while efforts to improve the home are made. Inthose instances where reuniting the child with his or her parents is found to be impossible, a childwelfare agency must seek a new permanent (often adoptive) home for the child.
In FY2003, the most recent year for which complete data are available, the federalgovernment provided states with some $6.9 billion in funding dedicated to child welfare purposes. Most of this funding is authorized under Title IV-B and Title IV-E of the Social Security Act. Apartfrom these dedicated federal child welfare funds, however, states also use non-dedicated federalfunds--including the Temporary Assistance for Needy Families (TANF) block grant, Medicaid, andthe Social Services Block Grant--to meet child welfare needs. The most recent data available (forstate fiscal year 2002) suggests that states spent at least $4.8 billion in non-dedicated funds for childwelfare purposes. While non-dedicated funding streams have increased resources to child welfareagencies, current legislative and administrative proposals may jeopardize their continued use forchild welfare.
The way that the federal government distributes dedicated child welfare money to states hasbeen criticized as inflexible, out of sync with federal child welfare policy goals, and antiquated. Because most dedicated federal child welfare funding (about 65% in FY2003) may be used only forfoster care, critics charge that states have inadequate funds to prevent removal of children from theirhomes or to allow children to be reunited with their parents. In addition, a state's ability to claimmost of the dedicated child welfare funds is directly related to the number of foster and adoptivechildren it assists who meet the income, family structure, and other program rules of the nowdefunct Aid to Families with Dependent Children (AFDC) program (as that program existed on July16, 1996).
Attention to federal child welfare financing has focused almost exclusively on dedicated childwelfare funding streams and is driven in part by the belief that the current structure hampers theability of state child welfare agencies to achieve positive outcomes for children. This assumptionis not easy to prove. However, it is possible to say that the AFDC link, which ties federal fundingin foster care and adoption assistance to increasingly antiquated income standards, over time, willerode the share of program costs for which states may seek federal reimbursement.
Recent proposals to alter how dedicated federal child welfare funds are distributed included somethat would link eligibility for federally supported foster care and adoption assistance to TANF incomerules and others that would remove income restrictions entirely. The latter proposals, which wouldgreatly expand the number of children for whom the federal government would be committed toproviding support, have typically sought to cap (or block grant) some or all of what is now open-endedfederal funding for foster care and adoption assistance and/or to reduce the share of costs paid for eacheligible child by the federal government. This report will not be updated.

subsections: section_title: Appendix A
subsections: section_title: Congressional Interest in Child Welfare, Selected Legislation
paragraphs: Titles referenced in this table are a part of the SocialSecurity Act
Source: Congressional Research Service (CRS).
section_title: Appendix B
subsections: section_title: Recent and Proposed Funding For Child Welfare--Funds Distributed on a Discretionary or Competitive Basis
paragraphs: Source: Table prepared by the Congressional Research Service (CRS).
section_title: Appendix C--Federal Funds Dedicated to Child Welfare, Distribution by State
paragraphs:  Table C-1. Dedicated Federal Child Welfare Funding Available for Services FY2001-FY2004, byState
(by fiscal year, in millions of dollars)
Source: Table prepared by the Congressional Research Service (CRS). Program funding amounts to each states are the "actual" amounts awarded eachstate for the given fiscal year as reported in the U.S. Department of Health and Human Services (HHS), Administration for Children and Families (ACF)Budget Justifications to Congress (FY2003 through FY2006). Due to rounding, the sum of each state's grants may not equal the displayed total of thosegrants.
NA = Not Applicable.
a. Indiana and Pennsylvania did not meet all the required state plan assurances and so were not eligible to receive CAPTA state grants. The statuteprovides that all funds appropriated are to be distributed, by formula, among eligible states. Funds that would otherwise go to Indiana andPennsylvania were therefore distributed among all the other states.
b. New York chose not to receive Promoting Safe and Stable Families (PSSF) funds in FY2001-FY2003. For FY2001 the statute did not provide forre-allotment of that money. Thus the $20.9 million that was allotted to New York was returned to the federal treasury. (This is the reason thatthe total funds distributed in FY2001 is shown as $284 million rather than the $305 million that was appropriated.) P.L. 107-133 provided forre-allotment of any unclaimed PSSF funds beginning with FY2002.
c. Tribes eligible to receive Child Welfare Services funding receive an amount based on their population and which is drawn out of the initial allotmentof the state in which the tribe is located. The program authorizations for both the Promoting Safe and Stable Families and CAPTA'sCommunity-Based Grants provide for certain funds to be set aside for eligible tribes prior to allotment of remaining funds to eligible states. Tribesare not eligible to receive CAPTA's state grants.
d. As used here, the territories refer to--American Samoa, Guam, the Northern Mariana Islands, Puerto Rico and the Virgin Islands. Each of thesejurisdictions received some funding under each one of the programs included in this table.
e. Other generally refers to technical assistance and/or program evaluation and support. In the case of Promoting Safe and Stable Families, it also includesa set-aside for Court Improvement grants. The totals for these court grants ranged in value from $10 million to just over $13 million betweenFY2001 and FY2004. There are no set asides for program evaluation, technical assistance or other purposes included in the program authorizationsfor Child Welfare Services or CAPTA state grants.
 Table C-2. Dedicated Federal Child Welfare Funding for the Foster Care Program, FY2001-FY2003, byState
(by fiscal year in millions of dollars)
Source: Table prepared by the Congressional Research Service (CRS). Based on annual expenditure file prepared by the U.S. Department of Health andHuman Services (HHS). This file includes federal share of state claims as made by each state, including certain claims which may subsequently bedisallowed. If a state is shown as receiving a negative amount of dollars for a given kind of claim this means that an adjustment in federal funding wasmade in the given fiscal year for prior claims.
Note: Title IV-E of the Social Security Act does not authorize tribes to receive direct Foster Care funding from the federal government. Tribes that wishto receive such Title IV-E funds must seek these funds through an agreement with the state (or states) in which they are located. With regard to theterritories, Title IV-E permits American Samoa, Guam, Puerto Rico and the Virgin Islands to directly operate Title IV-E Foster Care programs. It doesnot give this authority to the Northern Mariana Islands. Of the territories, only Puerto Rico is currently operating a Title IV-E Foster Care program.
a. These data include the portion of child support monies collected on behalf of children receiving Title IV-E foster care maintenance payments and whichare reimbursed to the federal government. For FY2001-FY2003 the federal share of child support collections ranged from $27 million to $32million.
b. States report to HHS any costs associated with their demonstration projects (waivers) under a separate expenditure category. Demonstration projectsmust be cost neutral to the federal government. Thus "demonstration" claims are those that would previously have been made under the fostercare maintenance or foster care administration categories. The exact distribution of these claims--if there were not a demonstration in place--cannot be known. For purposes of this table only, all demonstration claims are included in the foster care maintenance payment columns.
c. HHS reports state claims related to the State Automated Child Welfare Information System (SACWIS) (both for development and operation) separatelyfrom administration claims. For purposes of this table only, SACWIS claims are included in the total Administration costs.
d. Puerto Rico began making claims for Title IV-E Foster Care in FY1999. It has not yet developed the necessary cost allocation plan that should allowit to receive program administrative and training claims.
 Table C-3. Dedicated Federal Child Welfare Funding for the Adoption Assistance Program, FY2001-FY2003, byState
(by fiscal year in millions of dollars)
Source: Table prepared by the Congressional Research Service (CRS). Based on annual expenditure file prepared by the U.S. Department of Health andHuman Services (HHS). This file includes federal share of state claims as made by each state, including certain claims which may subsequently bedisallowed. This file is believed to be the best estimate of annual federal expenditures under the Title IV-E adoption assistance program.
Note: Title IV-E of the Social Security Act does not authorize tribes to receive direct Adoption Assistance funding from the federal government. Tribesthat wish to receive such Title IV-E funds must seek these funds through an agreement with the state (or states) in which they are located. With regardto the territories, Title IV-E permits American Samoa, Guam, Puerto Rico and the Virgin Islands to directly operate Title IV-E Adoption Assistanceprograms. It does not give this authority to the Northern Mariana Islands. Of the territories, only Puerto Rico is currently operating a Title IV-E AdoptionAssistance program.
a. States report to HHS any costs associated with their demonstration projects (waivers) under a separate expenditure category. Demonstration projectsmust be cost neutral to the federal government. Thus "demonstration" claims are those that would previously have been made under the adoptionassistance subsidy or administration categories. The exact distribution of these claims--if there were not a demonstration in place--can not beknown. For the purposes of this table only, all demonstration reported demonstration claims are included in the adoption subsidy columns.
b. Puerto Rico began making claims for Title IV-E Adoption Assistance in FY1999. As of FY2003 it had not yet developed the necessary cost allocationplan that should allow it to receive program administrative and training claims.
 Table C-4. Dedicated Federal Child Welfare Funding for Independent Living, FY2001-FY2003, byState
(by fiscal years in millions of dollars)
Source: Table prepared by the Congressional Research Service (CRS). Program funding amounts to each states are the "actual" amounts awarded eachstate for the given fiscal year as reported in the U.S. Department of Health and Human Services (HHS), Administration for Children and Families (ACF)Budget Justifications to Congress (FY2003-FY2006).
Note: Title IV-E of the Social Security Act does not authorize tribes to receive any funding from the federal government. With regard to the territories,Title IV-E permits American Samoa, Guam, Puerto Rico and the Virgin Islands to directly receive Title IV-E funds. It does not give this authority to theNorthern Mariana Islands. Of the territories, only Puerto Rico currently receives Title IV-E funds.
a. Education and Training Vouchers were not authorized in FY2001. This voucher program was established by P.L. 107-133 (signed into law in Jan.2002), which authorized the funding for them beginning with FY2002. The program received its first funding for FY2003.
b. The statute provides that the U.S. Department of Health and Human Services must reserve 1.5% of the funds appropriated for the Chafee Foster CareIndependence Program and the Education and Training Vouchers for "evaluation, technical assistance, performance measurement, and datacollection activities."
section_title: Appendix D--Actual Distribution of Foster Care Funds and Hypothetical Distributions of Capped Foster Care Funds
paragraphs: The purpose of the hypothetical distributions shown in this Appendix is not to suggest that funding should be capped or that any of the hypothetical distributionsshown in this Appendix are the appropriate way to distribute funds or that theFY2003 funding level is an appropriate one to use. Rather, these hypotheticaldistributions are included to illustrate the critical importance of the factors used todistribute capped funds, how those factors may change over time, and, for thosedistribution methods referencing past (historical) expenditures, the significance of theyear or years selected.
Table D-1 shows actual funding level and distribution of Title IV-E FosterCare funds to each state for FY1999-FY2003. (FY2003 is the most recent Title IV-Eexpenditure data available.)
Table D-2 shows the actual distribution of Title IV-E Foster Care funds toeach state for FY2003 along with five hypothetical distributions. Total funding foreach of the hypothetical distributions is the FY2003 federal funding level, howeverthe distribution is based on a state's relative share of certain child populations. Theseare -- (1) all children in the nation (including Puerto Rico) as shown by the 1990census; (2) all children in the nation (including Puerto Rico) as shown by the 2000census; (3) all children in foster care as of the last day of FY2001; (4) all children infoster care as of the last day of FY2003; and (5) the average number of all foster carechildren for FY2001-FY2003.
These hypothetical distributions demonstrate both the significance of the kindof factors used to determine how states receive funds and the way these factors canchange with time.
Table D-3 shows the actual distribution of Title IV-E Foster Care funds toeach state for FY2003 and shows five hypothetical distributions. The total fundingfor each of these hypothetical distributions is the FY2003 federal funding level,however the distribution (or relative share of the funds) is based on the state's relativeshare of all federal foster care claims in (1) FY1999; (2) FY2000; (3) FY2001; (4)FY2002 and (5) average distribution of average funding for FY1999-FY2003.
These hypothetical distributions demonstrate the variation in level of claimsmade by states from year to year and thus emphasize the significance of the year ortime period selected if funds were to be based on historical distributions.
 Table D-1. Actual Distribution of Federal Title IV-E Foster Care Funds, FY1999-FY2003
(dollars in millions)
Source: Table prepared by the Congressional Research Service (CRS) based on annual expenditure file for foster care prepared by the U.S. Departmentof Health and Human Services (HHS). This file includes federal share of state claims as made by each state, including ceratin claims which maysubsequently be disallowed. This file is believed to provide the best estimate of annual federal expenditures under the Title IV-E foster care program.
Note: These data include the portion of child support monies collected on behalf of children receiving Title IV-E foster care maintenance payments andwhich are reimbursed to the federal government. The federal share of child support collections ranged from $25 million in FY2000 to $32 million inFY2003; comparable data are not available for FY1999.
 Table D-2. Actual Distribution of Title IV-E Foster Care Funds, FY2003 and Hypothetical Distribution of Funds (atthe FY2003 Funding Level), Based on a State's Share of Certain Child Populations
($ in millions)
Source: Table prepared by the Congressional Research Service (CRS).
 Table D-3. Actual and Hypothetical Distribution of Title IV-E Foster Care Funds, Based on HistoricalExpenditures
($ in millions)
Source: Table prepared by the Congressional Research Service (CRS).