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Home > Advocacy > CWLA 2007 Children's Legislative Agenda/2007 Hot Topics > 2007 Legislative Hot Topics


2007 Legislative Hot Topics

Child Welfare Financing Reform

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  • Congress needs to take the first step in reforming child welfare financing by replacing the outdated eligibility standard for foster care and adoption assistance. Improving outcomes for abused and neglected children requires reforming child welfare financing, in part by updating eligibility.

CWLA's Call for Reforming Eligibility

The federal government's commitment to children in care and its partnership with state and local programs needs to be substantially strengthened. A number of actions must be included in such a comprehensive reform. Improvements include full funding for prevention and early intervention services; improved access and links between child welfare and Medicaid services; federal support for children in kinship and guardianship placements; easier access to funds for Native American children; and new supports for the child welfare workforce.

The first step in this reform is fixing eligibility for federal funding while maintaining the Title IV-E entitlement. Today, less than half of the children placed in foster care are eligible for federal support and the percentage of covered children is decreasing with each passing year due to the impact of this outdated formula. The same limited eligibility also restricts adoption assistance for families who adopt children from the child welfare system

How Eligibility Is Determined

Title IV-E of the Social Security Act provides some federal assistance to children placed in foster care. Pursuant to Title IV-E, the federal government, under certain circumstances, will help share the cost of services such as food, shelter, clothing, and other basic needs of a child placed with a foster family or in a group home or residential facility. States receive a match based on a formula tied to the state's economic needs. The federal government also shares half the administrative costs, which include important services such as case workers' time spent in court, connecting the child with needed services, placing the child in a safe and nurturing environment, recruiting new foster parents, and licensing and training families.

The federal government provides these shared costs only if that child was removed from a family that would have been eligible for the Aid to Families with Dependent Children (AFDC) cash assistance program, as it existed on July 16, 1996. This link to the now non-existent AFDC program is sometimes referred to as the "look-back" provision because states have to refer to the former program as it existed more than10 years ago.

A Congressional Research Report indicated that "in 1996the median state need standard under AFDC (for a family of three) equaled 60% of the federal poverty level; by 2005 that median was 48%. This means that eligibility for the Title IV-E foster care program may only be established for children removed from families with incomes less than half the federal poverty level (roughly $8,000/year for a family of three)."

Over time, this mechanism to determine foster care and adoption assistance eligibility has eroded the number of children receiving federal support pursuant to this program. This shift places greater pressure on state and local child welfare budgets, including efforts to fund prevention and intervention services. A CWLA analysis indicates that 55% of the children in foster care were eligible for federal assistance in 1998, and by 2004 less than 45% were eligible. If left in place, the current eligibility standard will continue to eliminate more children, bringing into question the federal commitment to protect children who have been abused and neglected and brought into protective care.


Some have suggested that the solution to outdated eligibility is to turn foster care and adoption assistance into a block grant. The glaring failure of a block grant is that it locks in the past 10 years of reduced support for children in need of protection, and subsequently offers little hope for an increased partnership between federal, state, and local governments and the communities most directly affected. Among the various proposals to modernize and update eligibility that have been offered, CWLA's strong preference is to: 1) Eliminate the entire eligibility link and provide support to all abused and neglected children. Few of these children are well off, and this would ensure the federal government's commitment to help all vulnerable children. 2) If a second option is to be considered because of increased cost, we recommend eliminating the link to AFDC by gradually allowing states to cover all children in care. As part of this expanded eligibility, negotiating a reduced match in federal funding could offset some costs. 3) At a minimum, we recommend a final option to replace the AFDC link with a link to an existing program such as Medicaid or the TANF program. This would eliminate the gradual erosion of federal support that now exists, but it does not commit the federal government to a shared commitment to all abused and neglected children.

Read more about CWLA's call for reform, and a review of existing child welfare financing resources and legislative proposals.

CWLA Contact

John Sciamanna

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