Federal Foster Care Financing: How and Why the Current Funding Structure Fails to Meet the Needs of the Child Welfare Field. The Financing Structure Has Not Kept Pace with a Changing Child Welfare Field


A great deal has changed in the world of child welfare since the federal foster care program was established. The program initially created in 1961, however, has continued without major revision to its financing structure. The result is a funding stream seriously mismatched to current program needs. The goals of the child welfare system are to improve the safety, permanency and well-being of children and families served. By requiring that the great majority of federal funding for child welfare services be spent only on foster care, the financing system undermines the accomplishment of these goals.

Title IV-E funding was designed with the intention that the program funding would adjust automatically to changes in social need. However, it is difficult to conclude from claims levels that social need has been the driving force behind spending patterns that vary wildly from State to State. Service practices seem to have adjusted to the funding, rather than vice versa. Throughout the program's history, growth far outpaced changes in the population of children being served. And while current growth has slowed considerably, declines in the number of children in foster care have not yet translated into lower program claims. The recent stabilization of the program's funding, however, makes this a good time to re-examine the structure of title IV-E and whether that funding structure continues to meet the needs of the child welfare field. Since the number of children in foster care is expected to be flat or declining for the foreseeable future, there is less short-term risk in potential financing system changes than is the case when needs are rapidly escalating.

Improved preventive and family support services for children and families at risk of foster care placement, therapeutic care and remediation of problems for families with children in foster care, and post-discharge services for families after children leave out of home care, are each essential to the achievement of the child welfare system's goals. Yet these are precisely the services that title IV-E is least able to support. The result has been child welfare systems unable to achieve positive outcomes for children. This weak performance has been documented by Child and Family Services Reviews conducted across the nation. But as States develop and implement Program Improvement Plans, title IV-E funds are largely unavailable to address the challenges.

From complex eligibility criteria based in part on a program that no longer exists, to intricate claiming rules that demand caseworkers' every action be documented and characterized, title IV-E is a funding stream driven toward process rather than outcomes. With the advent of the Child and Family Services Reviews, and systemic improvements initiated in response to the Adoption and Safe Families Act, Congress and the Department of Health and Human Services have made significant strides toward re-orienting child welfare programs to be outcomes focused. Until the funding is structured to support these outcomes, however, improvements may be constrained.

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