Funding state child welfare services involves a complicated web of funding streams, including federal, state and local money.
The largest source of funding dedicated to child welfare comes from the federal government via formula grants or as federal reimbursement for eligible programs like foster care.
The largest sources are Titles IV-B and IV-E of the Social Security Act.
Title IV-B includes the Stephanie Tubbs Jones Child Welfare Services Program and the Promoting Safe and Stable Families Program.
Title IV-E includes Foster Care, Adoption Assistance, Guardianship Assistance and the John H. Chaffee Foster Care Independence programs.
While all states may receive these funds to use for their designated purposes, some states have been granted Title IV-E Waivers, which allow for flexible use of Title IV-E funds to operate innovative demonstration projects to improve the safety, permanency and well-being of children in out-of-home care, and in some instances work to prevent the need for foster care altogether.
In addition to Title IV-B and Title IV-E funds, which are dedicated to child welfare services, states also tap other federal funding streams, such as Temporary Assistance for Needy Families (TANF), the Social Services Block Grant (SSBG) and Medicaid. These sources are considered nondedicated, meaning they are not required to be used for child welfare services but may be used for those purposes if the state chooses.
Below is a description of each of these funding streams. For a more detailed look at the issue see the Congressional Research Service’s Child Welfare: An Overview of Federal Programs and Their Current Funding report from January, 2015, the Child Trends, Federal, State and Local Spending to Address Child Abuse and Neglectreport from 2014 and the Child Trends report, Child Welfare Financing SFY 2014: a survey of federal, state and local expenditures, from 2016.
Check out a new brief from Child Trends, An Introduction to Child Welfare Funding and How States Use It, released in January 2016!
Title IV-E constitutes the largest pool of federal funds used by states, totaling just over $6 billion dollars in FY 2012 and nearly $7 billion in FY 2014. States, tribes and territories with approved Title IV-E plans may be reimbursed for the cost of foster care, adoption assistance, or kinship guardianship assistance, in addition to services for older youth who have aged out or emancipated from foster care.
Title IV-E Foster Care Maintenance
The Title IV-E foster care maintenance payments program allows states to be reimbursed by the federal government for maintenance payments made to provide shelter, food and clothing for eligible children.
In addition, it covers administrative costs, training of child welfare staff and foster parents, recruitment of foster parents and data collection. A child is eligible for these payments if he or she entered foster care through a voluntary placement or judicial determination, was considered “needy” according to the former Aid to Families with Dependent Children (AFDC) program standards before removal, and currently resides in licensed or approved foster care.
The AFDC program was a federal entitlement program to low-income, primarily single-parent households, that was replaced by the Temporary Assistance for Needy Families (TANF) program in 1996. Traditionally these payments would cease upon the child’s 18th birthday.
In 23 states and the District of Columbia, however, payments may be continued until the child reaches 21.
This extension was authorized by the Fostering Connections to Success and Increasing Adoptions Act of 2008 (Fostering Connections Act).
In FY 2013, fewer than 159,000 of the 400,000 children in foster care were receiving foster care maintenance payments.
Title IV-E Adoption Assistance
Title IV-E Adoption Assistance funds must be used to place children with adoptive families in a timely manner, provide for financial and medical assistance, reimburse states for associated administrative costs, and train employees and adoptive parents. Children are eligible for adoption assistance funds if they meet one of five criteria:
- They are considered needy, according to the former AFDC.
- They remained in the pre-removal situation.
- They are eligible for Supplemental Security Income (SSI).
- They are the children of minor parents who are receiving Title IV-E foster care maintenance payments.
- They were eligible for adoption assistance previously but their adoptive parents died or had their parental rights terminated.
The Fostering Connections Act increased the overall amount of federal spending on adoption assistance payments to adoptive families by phasing out the income eligibility requirements for those payments over time (delinking eligibility from income). As federal spending on adoption assistance payments was expected to increase and state spending was expected to decline, Congress required states to reinvest any state savings from this change in child welfare programs. However, according to the SFY 2012 Child Trends survey, federal expenditures from the Title IV-E Adoption Assistance Program actually declined for the first time, probably because of a decrease in the number of eligible children, and states no longer receive enhanced reimbursed rates through the American Recovery and Reinvestment Act (ARRA), a federal law that provided temporary assistance to states during the last economic downturn.
Title IV-E Guardianship Assistance
Title IV-E Guardianship Assistance is similar to adoption assistance and foster care maintenance in that it also covers the training of child welfare staff and guardians in addition to administrative expenses.
However, the primary purpose of guardianship assistance is to provide federal reimbursement to kinship guardians, or relatives, who serve as legal guardians and have previously served as foster parents for the child. For the child to be eligible for these payments, he or she must be leaving foster care in exchange for a legal guardianship with relatives and meet four additional criteria:
- The child must be eligible for Title IV-E foster care maintenance payments while residing in a prospective kinship placement for six consecutive months.
- The state must determine that returning home and adoption are not appropriate permanency goals for the child.
- It must be demonstrated that there is a strong attachment between the child and the prospective relative guardian and that the guardian is committed to the guardianship.
- Children age 14 or older must be consulted about the potential placement.
The Fostering Connections Act provides states the option to use federal Title IV-E funds for reimbursement for kinship guardianship assistance payments on behalf of eligible grandparents and other relatives who have assumed legal guardianships of children.
As of FY2014, 32 states and five tribes have incorporated kinship guardianship assistance into their Title IV-E plan.
STATES WITH KINSHIP GUARDIAN ASSISTANCE
The following states offer assistance to family under the Kinship Guardiam Assistance program:
Alabama, Alaska, Arkansas, California, Colorado, Connecticut, District of Columbia, Hawaii, Idaho, Illinois, Indiana, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, Nebraska, New Jersey, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Vermont, Washington, West Virginia and Wisconsin
Title IV-E Waiver Demonstration Projects
Title IV-E Waiver Demonstration Projects allow states to apply for more flexibility in the use of Title IV-E federal reimbursement. These demonstration projects must aim to increase permanency for all children in foster care and/or help children make a successful transition out of care when they reach 18, or in some states, 21; improve child welfare outcomes by focusing on safety and well-being; and prevent child abuse and neglect through early intervention, while also reducing the instances of re-entry into foster care by reducing instances of maltreatment.
Note that the Title IV-E Waiver Demonstration Projects will end in 2019 and have not been authorized to continue.
Currently, 28 states, D.C. and the Port Gamble S’Klallam Tribe in Washington state are operating Title IV-E Waiver Demonstration Projects. The states are: Arizona, Arkansas, California, Colorado, Florida, Hawaii, Idaho, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Nebraska, Nevada, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Washington, West Virginia and Wisconsin.
John E. Chafee Foster Care Independence Program
The Title IV-E John H. Chafee Foster Care Independence Program (CFCIP) funds are designed to help older youth in foster care achieve independence and self-sufficiency. The program targets children who are expected to be in care when they turn 18, those who are 16 or older and are placed in kinship care or adoptive placements, and youth ages 18-21 who have aged out of foster care.
Assistance with education, employment, financial management, housing, emotional support and assured connections to caring adults are just a few of the services to which these funds are dedicated.
In addition to helping foster youth achieve self-sufficiency, CFCIP funds are also used to provide Educational and Training Vouchers to foster youth, up to age 21.
These vouchers may be used for the cost of attendance at an institution of higher education, up to $5000 a year.
Further, the Preventing Sex Trafficking and Strengthening Families Act of 2014 amended the Social Security Act to add that CFCIP funds should be used to “ensure that children who are likely to remain in foster care until 18 years of age have regular, ongoing opportunities to engage in age or developmentally- appropriate activities.”
The act also raised the mandatory funding authority of the Chafee Foster Care Independence Programs to $143 million starting in 2020.
Stephanie Tubbs Jones Child Welfare Services
Title IV-B, Subpart 1 of the Social Security Act, titled the Stephanie Tubbs Jones Child Welfare Services, offers states flexibility in creating or expanding child and family services, in partnership with community-based agencies, to ensure that kids can stay safely at home.
This funding may be used for child protective services, including investigations of child abuse and neglect, caseworker activities, counseling, emergency assistance and arranging alternative living arrangements, in addition to family preservation services, time-limited family reunification services, and family support or prevention services.
Family Connection Grants
Family Connection Grants, first established as part of the Fostering Connections to Success and Increasing Adoptions Act of 2008, support services that help kids in foster care, or those at risk of entering care, to stay connected with their families.
These services are:
- Kinship navigator programs.
- Family finding.
- Family group decision making.
- Residential family treatment.
The Preventing Sex Trafficking and Strengthening Families Act of 2014 appropriated $15 million for FY 2014.
Promoting Safe and Stable Families
Title IV-B, Subpart 2 of the Social Security Act, Promoting Safe and Stable Families, encourages family support and preservation, time-limited family reunification services, and services to support adoption.
This flexible-use funding allows states to develop, establish or expand community-based programs to support family preservation.
Other Federal Funding
Other federal funding for state child welfare services includes the Child Abuse Prevention and Treatment Act (CAPTA), Temporary Assistance for Needy Families (TANF), the Social Services Block Grant (SSBG) and Medicaid.
CAPTA State Grants
The Child Abuse Prevention and Treatment Act (CAPTA) State Grants, first enacted 40 years ago, and re-enacted most recently in 2010, seeks to improve child protective systems with an emphasis on collaboration between child protective services, health, mental health, juvenile justice, education, and other public and private agencies.
CAPTA funds are authorized to help states make improvements to child protective services, such as intake, assessment, screening and investigation of reports of child abuse and neglect; develop, improve, and implement risk and safety assessment tools and protocols; and case management and monitoring processes.
Finally, the statutory authority for the Children’s Justice Act is housed in CAPTA. These grants administered by the U.S. Department of Health and Human Services are available to states and territories to improve the assessment, investigation, and/or prosecution of child abuse and neglect cases.
According to the HHS Report to Congress, states reported their intention to use their CAPTA grant funds to:
- Improve the intake, assessment, screening, and investigation of reports of child abuse or neglect (85%).
- Use the funds develop, improve, and implement risk and safety assessment tools and protocols, including use of differential response (73%).
- Improve case management, ongoing case monitoring, and delivery of services and treatment provided to families (65%).
Temporary Assistance for Needy Families
Temporary Assistance for Needy Families (TANF), Title IV-A of the Social Security Act, provides federal block grants to states.
This flexible funding stream can be used for any purpose, so long as it furthers one of the four main goals of TANF, including providing assistance to families so children can be safely cared for in their own homes. These funds may also be used for foster care or adoption assistance for children who are not Title IV-E eligible.
In addition, up to 10 percent of TANF funds may be transferred to the Social Services Block Grant. The use of these funds is limited to assisting families with incomes below 200 percent of the federal poverty line.
Social Services Block Grants (SSBG)
The Social Services Block Grants (SSBG) allow states to implement locally appropriate social services to increase self-sufficiency and independence, reducing dependence on social services.
SSBG funds can be used for more than child welfare services. With five policy goals, one being the reduction and prevention of child abuse, and 28 service categories, states are allowed to tailor services to meet the needs of their residents.
Categories include foster care, substance abuse, case management, adoptive services, counseling, protective services, housing, employment services and more.
See the SSBG 2014 Annual Report for more on how states use this funding source.
Medicaid is an important source of funding for health services—which can include medically necessary health care and mental health— for children and youth in foster care.
It is an open-ended entitlement. States must provide a match based on their population. Key services include Early and Periodic Screening, Diagnosis and Treatment (EPSDT) and optional targeted case management (limited), rehabilitation services,
Medicaid-funded therapeutic foster care and certain administrative costs. All children eligible for Title IV-E are eligible for Medicaid, and states may extend Medicaid to adopted children or former foster youth ages 18-21 who are not eligible for Title IV-E.
As of Jan. 1, 2014, the Affordable Care Act extends Medicaid coverage for former foster youth up to age 26. Medicaid is an open-ended entitlement equal to each state’s Federal Medical Assistance Percentage (FMAP) rate, between 50-82 percent depending on per capita income.
Adoption and Legal Guardianship Incentive Payments
Adoption and Legal Guardianship Incentive Payments were established in 1997 as part of the Adoption and Safe Families Act. They are designed to encourage states to increase the number of children who were adopted from foster care, adoptions of older children, age 9 or older, and adoptions of children with “special needs” under the age of 9.
The Preventing Sex Trafficking and Strengthening Families Act of 2014 extended funding for the incentive payments through 2016 and revised the instances in which a state may receive Adoption and Legal Guardianship Incentive Payments to include improvements in the rate of children who:
- Are adopted at any age.
- Leave foster care for legal guardianships at any age.
- Are pre-adolescents, defined as between 9 and 13 years of age, and leave foster care for adoption or legal guardianship.
- Are older, defined as 14 years of age or older, and leave foster care for adoption or legal guardianship.
State and Local Funds
State and local funds are typically used to match federal funds or to draw down federal dollars.
The use of state and local funds for child welfare services varies depending on the state and whether it operates a state- or county-run child welfare system.
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