State Innovations in Child Welfare Financing. Michigan: Michigan Families


Michigan Families is a IV-E waiver demonstration project that was launched in 1999 and currently operates in 6 of the state’s 83 counties (St. Clair, Monroe, Livingston, Van Buren, Jackson, and Nuwego). The objectives of Michigan Families are to reduce foster care placements, shorten lengths of stay in foster care, and accelerate family reunification. Providers have adopted a wraparound model to deliver services in the home and the community.

When first implemented, the program targeted children who were in foster care or at risk of placement. However, the majority of children served are not in foster care and receive placement prevention services. Because providers have tended to serve lower-risk children who do not meet the criteria established for federal match dollars, recently the state lost a half million dollars in federal reimbursement. The program now has been modified to target only children in foster care.

In five of the six sites, Michigan’s Family Independence Agency (FIA) has contracts with community mental health centers that act as lead agencies, but in one county the FIA is the lead agency. Lead agencies deliver most services directly, but may subcontract with other providers for services that they don’t provide. The FIA retains responsibility for administrative functions — contracts, billing, reimbursement, and training — and oversees the provision of services. Case management is a collaborative effort between the FIA worker and the community and family team at the lead agency. The community team reviews referrals and develops service plans in collaboration with the FIA, the school system, and the family’s informal supports. FIA workers have discretion over placement decisions and maintain the role of making recommendations to the court regarding the case.

Lead agencies are reimbursed $1586 dollars per month per child to provide all services that are needed. This payment rate is based on the state’s average payment for all foster care, including residential and specialized, in 1997. Lead agencies are allowed to deposit any unexpended funds into an agency risk pool. The lead agency can draw from the risk pool to provide higher levels of care that cost more than the monthly reimbursement. Alternatively, unexpended funds may be used to expand the array of services that are provided by the agency. However, 50 percent of unexpended funds that are above 10 percent of the budget is returned to the state. Likewise, costs exceeding 10 percent of the lead agency budget are also shared 50/50.

Flexible funding enables providers to deliver a wider array of services to families in community settings including the provision of in-home services to prevent foster care placement or facilitate reunification. The state had expected agencies to use flexible dollars to provide nontraditional services such as parent mentoring, neighborhood-based services, school-based services, and after-school programs to address families’ unique needs. But generally, lead agencies have delivered more traditional services like parenting classes and substance abuse treatment.

FIA staff review cases that are assigned to the lead agencies quarterly to ensure that appropriate services are provided and that providers are operating in accordance with the wraparound model. No performance standards are currently in place, but the state plans to include standards such as family functioning, length of stay, and recidivism when contracts are renewed. The initiative is being evaluated by a third-party contractor.

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