Dynamics of Children's Movement Among the AFDC, Medicaid, and Foster Care Programs Prior to Welfare Reform: 1995–1996. Income Maintenance Programs and the Child Welfare System


When poor parenting leads to abuse or neglect, the child welfare system intervenes on behalf of a child and, at the extreme, removes the child from the home of the parents and places him or her in foster care.  The events that lead to state intervention often develop over time; parental stress over job loss or low income may be cumulative or problems with substance abuse may escalate over time to an eventual breaking point.  As researchers, we can most reliably capture the breaking point — when the state intervenes — for the vast majority of children.  To do otherwise — to monitor the quality of parenting — would be invasive and costly.  With welfare reform, there is concern that the new requirements of the parents may inadvertently affect child well-being negatively and thus increase intervention by the child welfare systems.  Our purpose here is to better understand when and how often the child welfare system intervened prior to welfare reform.  Such data offer a baseline of knowledge against which to measure the effects, if any, of welfare reform on the child welfare system.

Although there was political consensus in the mid-1990s that reform of the AFDC program was necessary, there was considerable concern that the changes made might affect children adversely.  National and state policymakers, federal, state, and local administrators, and child advocates expressed concern about the potential negative effects on child well-being of welfare reform — codified in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA).(1)  On the other hand, there was also reason to believe that working and not just receiving a "handout" would have a positive effect on parental self-image and, therefore, on parenting skills.  This, in turn, would lead to improved child well-being.

The intent of welfare reform was to move more people into the workforce and toward greater self-sufficiency.  Federal requirements eliminated the entitlement to cash assistance and instituted lifetime limits on receipt of AFDC, now labeled Temporary Assistance for Needy Families (TANF).(2)  Although the policies vary among the three states included in this study (California, Illinois, and North Carolina — see Appendix of Tables - Table 1 for comparisons), two requirements apply to all states: a parent may now receive TANF for only five years over his or her lifetime, and recipients must be enrolled in a work "activity" after two years.  States can, however, choose to exempt certain individuals or groups (up to 20% of the caseload) and may set their own shorter time limits.  The consequence of a grantee failing to abide by these requirements and others established by the states is loss of cash assistance, and, if the states choose, loss of adult Medicaid coverage.

It is clear that, as a result of welfare reform and an improved economy, the economic situation of many families receiving income assistance has changed.  As time goes on, more parents' economic status will change.  Given time limits and the requirements to work, a significant proportion of the pre-PRWORA caseload will either become employed or be sanctioned and forced to leave income assistance.  For those who are employed, we expect their income to increase.  Positive changes in the lives of low-income children may arise from a parent's increased self-sufficiency, higher income, and future potential.  However, some families will reach their time limits or experience sanctions, reducing their aid and likely reducing household income.  In either case, parents' stress levels are likely to fluctuate with work, causing both improvement in self-esteem and increased challenges related to the work and home environments (e.g., transportation and child care).  Unemployed parents are likely to feel the stress that accompanies concern about providing the basic needs for their children.

If parents' emotional states improve, better parenting, and a reduced need of the child welfare system to intervene, will likely follow.  If their emotional state deteriorates, all else being equal, parental care of children may become less adequate and, in some cases, abusive or neglectful.  The children of these parents may not be safe in their homes.  The child welfare service system will likely respond by intervening more.  The most intrusive response of the child welfare system is to remove a child from his or her parents' custody and place the child in a living arrangement supervised by the child welfare system — foster care.

There may also be an increase in the use of foster care services among the TANF population prior to reaching time limits or incurring sanctions, as families anticipate these events and try to plan for their children.  This could lead to "apparent abandonments," in which parents leave children with relatives who can obtain assistance through foster care or through child-only TANF payments.  We should also be alert to changes in TANF policy that could result in cases that formerly would have been kinship foster care cases becoming covered under TANF.  The distinctions between kinship care in the child welfare system and child-only TANF cases are blurring.  In both cases, children are being taken care of relatives.  In the child welfare case, custody is taken by the state and the reimbursement to the relative caretaker is significantly higher than that of a child-only case.  One trend in the child welfare field currently, is to attempt to reduce the number of children in kinship care by diverting them from formal foster care or moving them into a permanent guardianship status.  There are still, however significant difference in reimbursement to the caretakers.

However, those families that improve earnings via employment or other sources may counterbalance the rate of increase in transitions from TANF to foster care.  Children who are in foster care in the years following welfare reform may also be affected by their parents' economic situation and their parents' psychological response.  Parents' ability to maintain employment is often one signal to juvenile courts and child welfare agencies that they "have gotten their life together."  Parents' inability to keep a job, continued substance abuse, or the lack of satisfactory housing may negatively affect the likelihood of a child being reunified with his or her parents.

There have also been other policy changes that are likely to interact with PRWORA.  In child welfare, the recent Adoption and Safe Families Act (ASFA), which increases incentives for adoption, and Title IV-E waivers to expand the permanency options in the three states under review (IL, CA, and NC), are likely to change foster care dynamics.  Therefore, the transition from foster care to AFDC may also be affected.

One of the biggest concerns for policymakers and welfare administrators is that these interventions will cost society more and result in long-term harm to children.  If more children are entering foster care from income maintenance programs in the years following welfare reform, reforms will have had unintended, serious consequences for children, families, and the state, and the policies may need to be revised or services better targeted.  Also, if fewer children were discharged from foster care because of changes owing to welfare reform, policymakers may want to reconsider certain elements of reform — both in the income maintenance and child welfare arenas.

Therefore, we need to accurately monitor the movement of children from one program to another and to determine what factors affect that flow.  In terms of monitoring the effects of welfare reform on the child welfare system, we do not know exactly when, both in historical terms (how long after welfare reform is implemented) and during the child's experience (before or after income maintenance receipt), the effects will be seen.  When the effects are seen in the service system depends on when the effects in the family manifest themselves, and when the system responds to the new conditions in the family.

From a monitoring perspective, we can only observe the latter — when the system responds.  Methods to capture when parenting changes would be, at the very least, expensive and intrusive, and perhaps, impossible to implement on a large scale.  Therefore, if the response of the child welfare system changes as a result of welfare reform, our analysis may not capture the psychosocial effects of welfare reform on the family.  However, there is no reason to expect that the time to respond to abuse or neglect will be longer or shorter as a result of welfare reform.  If the process of reporting and investigating abuse and neglect changed as a result of welfare reform, we would be concerned about capturing an unrelated outcome in our data.  We know of no reason why this would be true.

In this study, our purpose is to understand better when and how the system-level effects of poor parenting occur prior to welfare reform in order to have a baseline for assessing the effects of reform in addition to simply understanding the careers of children in the service system.  Since the system-level effects of poor parenting may happen before or after an AFDC grant ends, because of the variability in how the stress will manifest itself, we must track children before, during, and after their income maintenance and child welfare experience to capture the effects.  Therefore, the construction of the study population for assessing the system effects is critical.