Financing Child Protective Services

Information Request of the Month

Question: How Are State Child Welfare Programs Funded?

Answer: Child Welfare Financing 101

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, specifically, Titles IV-B and IV-E of the Social Security Act. Title IV-B includes the Stephanie Tubbs Jones Child Welfare Services Program and 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 them 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.

Title IV-E

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” by Aid to Families with Dependent Children (AFDC) standards prior to removal, and currently resides in licensed or approved foster care. 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).

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 AFDC.
• They remained in the pre-removal situation.
• They are eligible for Social Security income.
• 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 (de-linking 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 latest Child Trends survey, federal expenditures from the Title IV-E Adoption Assistance Program actually declined for the first time, probably because states no longer receive enhanced reimbursed rates through the American Recovery and Reinvestment Act, and a decrease in the number of eligible children. 

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.

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 further 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. Since passage of the Fostering Connections to Success and Increasing Adoptions Act in 2008, at least nine states and the District of Columbia have enacted provisions related to subsidized guardianship.

Title IV-E Waiver Demonstration Projects, discussed in more detail below, 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.

The Title IV-E John H. Chafee Foster Care Independence Program 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.

Title IV-B, CAPTA, TANF and SSBG

Other federal funding for state child welfare services includes Title IV-B of the Social Security Act, the Child Abuse Prevention and Treatment Act (CAPTA), Temporary Assistance for Needy Families (TANF) and the Social Services Block Grant (SSBG).

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. Some services include preventive intervention to reduce the need for foster care, alternative placements including kinship care or adoption, and reunification efforts to keep the child at home whenever possible.

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.

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. As part of the CAPTA amendments, the Community-Based Grants for the Prevention of Child Abuse and Neglect was created in 2003 to provide states with funding to “develop, operate, expand and enhance community-based, prevention-focused programs to strengthen and support families in order to prevent child abuse and neglect.”

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. 

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. With five policy goals, including reducing and preventing 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.

Medicaid

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.

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.