The well-being of children and families has traditionally been understood as a primary duty of state governments, and state and local governments are the primary administrators of child welfare programs designed to protect children from abuse or neglect. Child welfare caseworkers investigate allegations of child maltreatment and determine what services can be offered to stabilize and strengthen a child’s own home. If remaining in the home is not a safe option for the child—he or she may be placed in foster care while efforts to improve the home are made. In these circumstances, foster care may be provided by a family member, also known as kinship care; caregivers previously unknown to the child; or a group home or institution. In those instances where reuniting the child with his or her parents is found not to be in the best interest of the child, caseworkers must seek a new permanent home for the child, such as an adoptive home or guardianship. Some children remain in foster care until they “age out” of the child welfare system. Such children are transitioned to independent living, generally at the age of 18 years. States use both dedicated and nondedicated federal funds for operating their child welfare programs and providing services to children and families. In fiscal year 2006, the federal government provided states with about $8 billion in dedicated child welfare funds, primarily authorized under Title IV-B and Title IV-E of the Social Security Act. (See app. II.) Nearly all of this funding is provided under Title IV-E, which provides matching funds to states for maintaining eligible children in foster care, providing subsidies to families adopting children with special needs, and for related administrative and training costs. About 9 percent of funding is provided under Title IV-B, which provides grants to states primarily for improving child welfare services, including a requirement that most funds be spent on services to preserve and support families. A significant amount of federal funding for child welfare services also comes from federal funds not specifically dedicated for child welfare— including the Temporary Assistance for Needy Families (TANF) block grant, Medicaid, and the Social Services Block Grant. These and hundreds of other federal assistance programs for children and families, including many that serve low-income populations, are listed in a centralized database administered by the General Services Administration that has a search feature by type of assistance and eligible population. The Congressional Research Service conservatively estimated that the median share of total federal child welfare spending derived from nondedicated federal funding equaled nearly half of all the federal dollars (47 percent) expended by state child welfare agencies, based on state child welfare agency data reported to the Urban Institute for state fiscal year 2002. Despite the large amount of federal funds spent on child welfare from nondedicated sources, the Congressional Research Service reported that attention to federal child welfare financing has focused almost exclusively on dedicated child welfare funding streams and is driven in part by the belief that the current structure hampers the ability of state child welfare agencies to achieve positive outcomes for children. Common charges are that the current structure does not grant states the flexibility needed to meet the needs of children and their families, and encourages states to rely too heavily on foster care. Congress authorized HHS to conduct demonstration projects whereby states were allowed to waive certain funding restrictions on the use of Title IV-B and Title IV-E funds under the condition that the flexible use of funds would be cost-neutral to the federal government. HHS reported that 24 states had participated in demonstration projects across eight child welfare program areas, such as caseworker training and services to caretakers with substance abuse disorders. States were required to conduct an evaluation of project success in terms of both improving children and family outcomes and cost neutrality. As Congress authorized funds for state child welfare programs, it has also required states to enact policies and meet certain standards related to those programs. HHS evaluates how well state child welfare systems achieve federal standards for children through its child and family services reviews. The CFSR process begins with a state assessment of its efforts, followed by an on-site review by an HHS team that interviews various stakeholders in the child welfare system and usually reviews a total of 50 child welfare case files for compliance with federal requirements. After receiving the team’s assessment and findings, the state develops a program improvement plan (PIP) to address any areas identified as not in substantial conformity. Once HHS approves the PIP, states are required to submit quarterly progress reports. Pursuant to CFSR regulations, federal child welfare funds can be withheld if states do not show adequate PIP progress, but these penalties are suspended during the PIP implementation term. HHS provides training and technical assistance to help states develop and implement their PIPs through its training and technical assistance network. This training and technical assistance focuses on building state agency capacity and improving the state child welfare system. Technical assistance providers in this network include HHS’s Children’s Bureau and regional offices, as well as NRCs and the department’s Child Welfare Information Gateway. State child welfare agencies identified three primary challenges as the most important to resolve to improve outcomes for children under their supervision: providing an adequate level of services for children and families, recruiting and retaining caseworkers, and finding appropriate homes for children. HHS, GAO, and child welfare organizations have consistently shown these issues to be long-standing challenges for most states. In addition, state officials identified three challenges of increasing concern: children’s exposure to illegal drugs; increased demand to provide services for children with special needs, such as those with developmental disabilities; and changing demographic trends or needs for cultural sensitivity for some groups of children in care and their families. In responding to our survey, states most frequently identified the following three child welfare challenges as the most important to resolve in order to improve the safety, permanency, and well-being of children under states’ care: providing adequate services to children and families, recruiting and retaining caseworkers, and finding appropriate homes for children. (See fig. 1.) GAO and child welfare organizations have previously reported on the long- standing nature of these challenges. For example, GAO previously reported that gaps in the availability and access to services delayed states’ ability to file for a petition to terminate parental rights—a necessary step in obtaining a permanent home for children who cannot live with their parents—because parents were unable to obtain timely access to substance abuse treatment and other services, such as mental health services and housing. GAO and other organizations have also previously reported that public and private child welfare agencies face a number of challenges recruiting and retaining qualified caseworkers and supervisors. For example, we reported that high caseloads, poor supervision, and the burden of administrative responsibilities have, in some cases, prompted caseworkers to voluntarily leave their employment with child welfare agencies. We also reported difficulties in recruiting adoptive parents for children with special needs. The most important challenges identified by state child welfare agencies are consistent with HHS’s CFSR findings and states’ self-assessments of their programs. For example, according to the Congressional Research Service, HHS reviewers found that 43 states needed improvement in providing accessible services to children and at-risk families in all jurisdictions of the state and 31 states needed improvement in conducting diligent recruitment of foster and adoptive parents. The number of states needing improvement in performance indicators related to child welfare services, recruitment and retention of caseworkers, and placement of children in appropriate homes is shown in table 1. State child welfare agencies identified specific services underlying their challenge to serve children and families, citing constraints on federal funding and limited awareness of services among eligible families as contributing factors. Regarding children, more than half of states reported that they were dissatisfied with the level of mental health services, substance abuse services, housing for foster youth transitioning to independence, and dental care. (See fig. 2.) States also reported that they were dissatisfied with the level of services provided to at-risk families in the child welfare system. These services are needed to help prevent the removal of children from their homes or help facilitate the reunification of children with their parents after removal. Specifically, more than half of states responded that they were dissatisfied with mental health services, substance abuse services, transportation services, and housing for parents of at-risk families. (See fig. 3.) For some types of services, states expressed more dissatisfaction with services available to at-risk families than with services available to children. For example, more states reported dissatisfaction with the level of at-risk family services than with children’s services in the areas of assessment of their service needs, legal services, and advocacy or case management. (See fig. 4.) States we visited reported that funding constraints were among the reasons maintaining an adequate level of services was difficult. For example, while maintenance payments to foster families for children under state care is provided as an open-ended entitlement for federal funding under Title IV-E, federal funding for family support services is capped at a much lower level under Title IV-B. In addition, because the proportion of children in foster care who are eligible for federal support has been declining, states had to provide a greater share of funding at a time when many states were experiencing budget deficits that adversely affected overall funding for social services. In prioritizing funding needs, child welfare officials in 40 states responding to our survey reported that family support services, such as those that could prevent removal of a child or help with reunification of a family, were the services most in need of greater federal, state, or local resources. Officials from 29 states responded that child protective services such as investigation, assessment of the need for services, and monitoring were next in need of additional resources. Officials in a state we visited indicated that some caseworkers and families may be unaware of the array of existing services offered by numerous public and private providers.