Federal Foster Care Financing: How and Why the Current Funding Structure Fails to Meet the Needs of the Child Welfare Field. Proposed Child Welfare Program Option Described

08/01/2005

The President's FY2006 budget once again proposes to create a Child Welfare Program Option which would allow States a choice between the current title IV-E program and a five year capped, flexible allocation of funds equivalent to anticipated title IV-E program levels. This concept was first proposed by the President for FY 2004. While the last Congress did not complete work on child welfare financing, the Administration continues to call for consideration of financing reform. The President's proposal has a number of distinct advantages over both current law as well as in contrast to more traditional block grants that have been considered in the past.

The Child Welfare Program Option would allow States to use title IV-E funds for foster care payments, prevention activities, training and other service-related child welfare activities B a far broader range of uses than allowed under current law. Increased flexibility will empower States to develop child welfare systems that support a continuum of services for families in crisis and children at risk while being relieved of the administrative burden created by current federal requirements, including the need to determine the child's eligibility for AFDC.

Child safety protections under current law would continue under the President's proposal. These include requirements for conducting criminal background checks and licensing foster care providers, obtaining judicial oversight of decisions related to a child's removal and permanency, meeting permanency time lines, developing case plans for all children in foster care, and prohibiting race-based discrimination in foster and adoptive placements.

In contrast to some previous flexible funding proposals, the President's Child Welfare Program Option would be an optional alternative to the current financing system. States desiring the flexibility it would afford could opt in during the initial program year for a five year period. State allocations would be based on historic expenditure levels and would be calculated to be cost-neutral to the federal government over a five year period. A State could choose to receive accelerated, up-front funding in the early years of the program in order to make investments in services that are likely to result in cost savings in later years. The proposal includes a maintenance of effort requirement to ensure that those States selecting the new option maintain their existing level of investment in the program. But those States unwilling to accept the risk and the promise of flexibility could choose to continue operating under current program rules.

To address fears that some future social crisis might create unexpected and unforeseeable child welfare needs, the President has also proposed to allow participating States access to the TANF Contingency Fund if unanticipated emergencies result in funding shortfalls. Specific criteria would govern the circumstances under which States could withdraw funds from this source. This feature, too, responds to concerns expressed in past child welfare financing discussions.

The proposal includes two set asides within the Child Welfare Program Option. The first would provide some Tribes direct access to title IV-E funds. Under current law Tribes may only receive title IV-E funds through agreements with States. Through a proposed $30 million set aside in the CWPO, however, tribes demonstrating the capacity to operate foster care programs could receive direct funding to do so and would be subject to similar program requirements as States.

A second set aside would dedicate a relatively small amount of funds to facilitate program monitoring, technical assistance to support the efforts of State and tribal child welfare programs, and to conduct important child welfare research. These funds will ensure that sufficient resources are available to understand how the new option affects child welfare services and outcomes for children and families, and to support States in their efforts to reconfigure programs to achieve better results.

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