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Home > Advocacy > Budget Information > FY 2005 Bush Budget and Children


FY 2005 Bush Budget and Children

Child Welfare Financing

Child Welfare Program Option
The President's FY 2005 budget again proposes a new child welfare financing option that would restructure the current Title IV-E foster care program. Under the proposal, each state would have an option to receive a fixed, predetermined allocation, or block grant, of Title IV-E foster care maintenance payments, administrative costs, and training funds rather then the current open-ended entitlement funding provided based on the number of eligible children.

This proposal was included in the President's FY 2004 budget but has yet to be introduced into legislation. The budget documents offer only an overview of the proposal. Many details of the proposal are still unknown.

Under the proposed option:
  • States would receive annual grants over a five-year period. Funding would equal the projected growth in federal foster care expenditures. These projections would be based on the current restrictions which require states to base eligibility on their 1996 AFDC program standards. States would be allowed to draw down up to 20% of this five-year total in any one year.

  • All states would have a set period of time to opt-in, or choose this option. States not choosing this option at that set time could not elect to make that choice at a later date. States that do choose this option must continue to receive this set funding for a period of five years. Once a state chooses the option, it may not opt-out during the five-year period.

  • States choosing the option could spend the funds on foster care and any services now provided under Title IV-E and Title IV-B, Child Welfare Services, and Promoting Safe and Stable Families programs.

  • States could use the funds for any child in the child welfare system, regardless of income. Based on current eligibility, approximately 50% of all children in foster care are supported with federal funds.

  • States choosing the option would have to maintain the same level of state funds now used to draw down federal Title IV-E foster care funds.

  • States would be expected to maintain the protections for children that exist in current law.

  • If a state experienced an unusual increase in their foster care population, a state could draw funds from an emergency fund under the TANF block grant. To qualify for this relief, a state would have to meet a national and state target increase in foster care caseload or unemployment rates.

  • HHS would continue to conduct Child and Family Service Reviews. For states choosing this option, Title IV-E eligibility reviews would be eliminated.

  • A set-aside of $30 million would be established for Indian Tribes or consortia that demonstrate the capacity to operate a Title IV-E program. Indian tribes will have similar program requirements as states.

  • The Title IV-E Adoption Assistance program would remain unchanged. The eligibility for this program would continue to be linked to a state's 1996 AFDC standards.
Restriction on Title IV-E Eligibility: Rosales v. Thompson
The President's FY 2005 budget proposal also indicates that a legislative proposal will be developed to pre-empt the implementation of a 2003 U.S. Court of Appeals, Ninth Circuit ruling in the case of Rosales v. Thompson. The Rosales decision found that the U.S. Department of Health and Human Services' (HHS) interpretation of the federal Title IV-E foster care law denied foster care benefits to some children who should qualify under the law. The President's budget projects such legislation would reduce the cost to the federal government of the foster care program by $77 million in FY 2005 and $375 million over five years.

Title IV-E foster care eligibility is based in part on the amount of income available to the child. Previous to the court ruling, HHS's policy required that states must determine Title IV-E eligibility based on the home from which the child is legally removed, which is typically the child's parent(s). In this case, the parent's income is counted as being available to the child. The Rosales decision allows states to base Title IV-E eligibility for a child on the last home a child resided in before formal placement into foster care. Frequently, a child is living with grandparents or other kinship placements just prior to placement in foster care. Although these relatives or other kinship placements may be providing for the child, their income is not counted as being available to the child.

The Rosales decision allows states in the 9th judicial circuit, which includes Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington, to make Title IV-E claims based on the new clarification of Title IV-E eligibility. Since the Rosales decision, the affected states have amended their state plans and are basing Title IV-E claims on the Rosales criteria. Several other states outside the 9th judicial circuit have also been considering making changes to their state Title IV-E plans based on the Rosales decision.

Child Welfare

Foster Care

The Administration's budget projects that Title IV-E Foster Care mandatory spending will be $4.9 billion. This is an anticipated decrease of $119 million in Title IV-E claims from the FY 2004 level due in part to the implementation of the legislative proposal described above which would preempt the implementation of a court ruling that would have resulted in an increase in federal foster care payments.

Title IV-E foster care funds are used for maintenance payments and administrative costs for approximately 233,000 Title IV-E eligible children per average month. In addition, states use these funds for training and for the operation and development of the Statewide Automated Child Welfare Information Systems (SACWIS), a computer-based data and information collection system.


Title IV-E Adoption Assistance
Federal Title IV-E Adoption Assistance mandatory spending is projected to increase to $1.8 billion, an increase of $70 million over 2004 costs. These funds will be used to provide maintenance payments to adoptive families, administrative payments for the costs associated with placing a child in an adoptive home, and training professionals and adoptive parents. The proposed level of funding will support approximately 375,900 children each month.

Adoption Opportunities Program
The President's budget would maintain funding for the Adoption Opportunities grants at $27 million. The Adoption Opportunities Program is the only federal program created specifically for promoting adoption of U.S. children waiting adoption. The program eliminates barriers to adoption and helps to find permanent families for children who would benefit by adoption, particularly children with special needs. Efforts to increase minority recruitment, find successful ways to move older children into permanent families, and provide post-adoption services were past goals of the program. Today, the program focuses on eliminating barriers to placing children for adoption across jurisdictional boundaries.

Several resources and supports exist under the Adoption Opportunities Program to assist in the adoption of children. For example, the Collaboration to AdoptUsKids recruits homes for children waiting to be adopted through a National Recruitment Campaign and has developed a network of adoptive parent groups. AdoptUsKids also maintains a national Internet photolisting of waiting children. In 2000, 52,000 families received information on how to proceed with adoption. The exchange currently lists 5,500 children waiting to be adopted. The Adoption Opportunities Program has also funded a National Resource Center on Special Needs Adoption, which provides technical assistance and training on current issues in special-needs adoption-such as compliance with federal laws and regulations, permanency planning, and cultural competence-to state, tribal, and other child welfare organizations.

Adoption Incentives
The budget also proposes $32 million for Adoption Incentives, $10 million below the fully authorized level of $43 million. The Adoption Incentives funds are provided to states based on the number of children that are adopted from foster care each year. The payments were reauthorized in 2003 with an added emphasis on promoting the adoption of children age nine and older. In 2004, Congress provided only $7.5 million for this program and allowed HHS to use an addition $27 million of unspent funds from 2003 for a total of $34 million.

Independent Living
The budget contains $200 million for the Independent Living Program. This includes $140 million in mandatory funds, the same as the FY 2004 request, for a variety of services to ease the transition from foster care for youth who will likely remain in foster care until they turn 18 and former foster children between the ages of 18 and 21. Approximately 20,000 young people leave foster care each year at their 18th birthday.

Independent Living Education and Training Vouchers
$60 million of the total funding for Independent Living is proposed for the Education and Training Voucher (ETV) program that was authorized in 2001 (P.L. 106-169). The program was funded for the first time in FY 2003 at $42 million and was increased to $45 million in FY 2004. The voucher program will help older youth leaving foster care get the higher education, vocational training, and other education supports they need to move to self-sufficiency.

Up to $5,000 per year is available to a young person for the cost of education or training. This program expands on states' efforts to provide these services. ETV funds are distributed to the states using the same formula as the Chafee Independent Living Program under the Foster Care Independence Act. If a state does not apply for funds for the ETV program, the funds will be reallocated to one or more state on the basis of their relative need for funds. While states are doing a good job generally of distributing these funds, more older foster youth could take advantage of the vouchers if their availability were more widely known.

Promoting Safe and Stable Families
The President's budget proposes funding the Promoting Safe and Stable Families (PSSF, Title IV-B, Subpart 2) program at $505 million. This represents full funding with $305 million in mandatory (guaranteed) funding and an additional $200 million in discretionary funds that require Congressional approval. Current funding for PSSF is $405 million ($305 million in mandatory funds and $100 million in discretionary funds). This is the third consecutive year the Administration has requested $505 million in funding, yet Congress has never approved the request.

Children of Incarcerated Parents
The Administration requests $50 million for a program that provides mentoring for children with incarcerated parents. This program was authorized in the Promoting Safe and Stable Families Amendment Act of 2001 (P.L. 107-133) and funded for the first time at $10 million in 2003 and at $50 million in FY 2004.

This is a competitive grant program providing grants up to $5 million each. The grant recipients are required to provide services, both directly and in collaboration with other local agencies, and to strengthen and support the families of those young people. This includes connecting the children with their imprisoned parent when appropriate.

Child Welfare Services
Under the President's budget, the Child Welfare Services (Title IV-B, Subpart I) is funded at $292 million. This is represents a restoration of the across-the-board reductions of the last two years. States use these funds to address problems that may result in neglect, abuse, exploitation, or delinquency of children; prevent the unnecessary separation of children from their families and restore children to their families, when possible, place children in adoptive families when appropriate; and assure adequate foster care when children cannot return home or be placed for adoption. There are no federal income eligibility requirements for the receipt of child welfare services.

CAPTA Grants
Child Abuse Prevention and Treatment Act (CAPTA) state grant received its first significant increase in years rising from $22 million in FY 2004 to $42 million, under the President's budget. CAPTA state grants are used to help improve state Child Protective Services (CPS) systems. CAPTA imposes no income or other eligibility requirements for people receiving assistance, and the program is intended to keep children of any age safe from harm. In 2003, Congress reauthorized CAPTA and included a number of new requirements ("including appropriate referrals" to CPS) to address the needs of infants born "affected by illegal substance abuse or withdrawal symptoms resulting from prenatal drug exposure." It requires that hospitals notify CPS, with the caveat that notification does not establish a definition under federal law of what constitutes child abuse, or require "prosecution for any illegal action." The development of a plan of "safe care" for the infant is required.

CAPTA discretionary grants would be reduced from $34 million to $26 million in FY 2004. These grants are non-formula funds used to promote research and program assistance and development. The re-named, Community Based Grants for Prevention of Child Abuse and Neglect would also receive an increase from $33 million to $66 million. These grants develop community-based and prevention focused programs and activities designed to strengthen and support families to prevent child abuse and neglect. Funds are used at the local level for organizations such as family resource programs, family support programs, voluntary home visiting program, respite care programs, parenting education, mutual support programs, and other community programs or networks of such programs that provide activities that are designed to prevent or respond to child abuse and neglect.

Social Services Block Grant (TITLE XX)

The President proposes to fund the Social Services Block Grant (SSBG) at its current level of $1.7 billion. The budget would also permanently restore the amount a state can transfer from the Temporary Assistance for Needy Families (TANF) program to SSBG to 10%. States are able to transfer only 4.25% from TANF to SSBG, but each year Congress temporarily allows states to transfer up to 10%. In FY 2001, $830 million of the SSBG funds were spent on services to children and youth, including adoption, foster care, child protection, independent living, and residential services.

Child Care

The Administration proposes a continued freeze in child care funding. The Child Care and Development Fund (CCDF) is made up of both discretionary and mandatory child care dollars. The "mandatory" or guaranteed funding is now $2.7 billion. Of this total, approximately $1.6 billion flows to the states by formula if a state puts up state dollars as a match. The remaining funds are provided to states without a required match. The President proposes no increase in discretionary child care funding for FY 2005. The Child Care Development Block Grant (CCDBG), the discretionary portion of the child care fund, is currently funded at $2.1 billion.

Congress considered proposals, but was not able to complete action, on legislation to reauthorize child care in 2003. The Administration's reauthorization proposal, as packaged along with TANF, proposes no increase in child care funding for the next five years. The Administration's proposal would continue discretionary funding at the current level of $2.1 billion and also continue the mandatory funding of $2.7 billion for five years.

The demand for child care, however, continues to grow. In 2000, only one in seven of all potentially eligible children were receiving CCDF subsidized child care. With tight state budgets, current child care funding at the state level could be forced to absorb cuts.

The Administration also calls for eliminating funding for the Early Learning Fund. In FY 2004, this program was funded at $33 million. The program funds efforts to coordinate child care and other early education initiatives and has had the strong support of key members of Congress in recent years.

Head Start

The President's budget increases Head Start funding by $169 million, bringing total funding to $6.9 billion. For the second straight year, this increase does not keep pace with inflation once funds are set aside for Early Head Start and services targeted to enhance the quality of programs. This proposed increase is similar to the increase in funding provided in the FY 2003 budget. As a result, it is expected that total Head Start slots will be reduced in 2004 and 2005.

The Administration's budget does not again contain a recommendation included in the FY 2003 budget to shift the administration of Head Start from the U.S. Department of Health and Human Services to the Department of Education. The Administration does propose a nine state "pilot" program. This is similar to the House-passed Head Start reauthorization bill (H.R. 2210) that would allow a nine-state block grant of Head Start. The Senate bill (S. 1940) has rejected this approach and was vote out of the Senate HELP Committee late last year. The bill was approved unanimously with an understanding that both parties would continue to work on their differences. A debate on the Senate floor is expected in the spring.

Temporary Assistance for Needy Families (TANF)

The President's FY 2005 budget continues the recommendations made in the President's FY 2003 and 2004 budgets concerning TANF reauthorization. Since Congress did not complete action on TANF reauthorization legislation in 2003, it will again be considered this year. The House has passed their version of the legislation (H.R. 4) but the Senate has not yet scheduled debate on the version of the legislation adopted by the Senate Finance Committee late last year. The budget indicates the Administration will seek level funding for TANF, including a base amount of $16.5 billion in TANF funds to all 50 states, and approximately $319 million in supplemental grants to 17 states.

The budget indicates that the President's central focus will be on the work requirements in the current TANF law and will emphasize the need to promote marriage. Again, the Administration will propose increasing current work requirements to 40 hour per week, increasing the percentage of a state's cash assistance caseload who must be in work, and spending $1 billion over five years on marriage promotion.

Youth Development

The President's budget includes funding of $999 million for the 21st Century Community Learning Centers program, which is level funding from FY 2004. This program provides opportunities for students and their families to continue learning new skills and discover new abilities after the school day has ended.

Juvenile Justice

As proposed last year, the President's FY 2005 budget proposes eliminating funding for the Juvenile Accountability Block Grant (JABG). Congress rejected the President's proposal last year, however, and appropriated $60 million for JABG in FY 2004. This program was created in 1998 and was reauthorized in 2002. JABG provides funds for implementing graduated sanctions programs, establishing or expanding substance abuse programs, and promoting mental health screening and treatment.

The President's budget includes funding of $37.3 million for the U.S. Department of Justice's local delinquency prevention program (Title V). This is a reduction from $79.5 million in FY 2004. Title V is the only federal funding source specifically targeted toward primary prevention which provides funding for programs aimed at youth who have not had contact with law enforcement but who are at high risk for doing so.

A newly created Juvenile Delinquency Prevention Block Grant that combines a number of previously separate components of the federal juvenile justice system, including gang-free schools, state challenge activities, and mentoring, would receive $39.1 million.

Behavioral Health

The President is proposing $3.6 billion in FY 2005 for the Substance Abuse and Mental Health Administration (SAMHSA), to improve the quality and availability of prevention, early intervention, treatment, and rehabilitation services in order to reduce illness, death, disability, and cost to society resulting from substance abuse and mental illness. This is a net increase of $199 million, or 6%, over FY 2004.

Substance Abuse
Meeting the treatment needs of people who are currently substance dependent continues to be a major priority in the President's budget. The request proposes to double the funds available for SAMHSA to administer the new drug and alcohol treatment voucher initiative, the Access to Recovery State Voucher program. The purpose of the initiative would be to assist more individuals in obtaining drug and alcohol treatment services by increasing treatment capacity and consumer choice by broadening the base of treatment providers to include proprietary and faith-based providers. It is anticipated that this program would provide treatment for 100,000 individuals in FY 2005.

Funding for the Substance Abuse Performance Partnership Block Grant is increased to $1.8 billion, an increase of $53 million over last year. The Substance Abuse Treatment Programs of Regional and National Significance are increased to a funding level of $517 million. The Substance Abuse Prevention Grants, however, will receive an additional cut of $3 million for a total of $196 million for FY 2005. In all, substance abuse programs will receive federal funds of $2.545 billion, a $148 million increase, if the President's budget is approved as is.

Abandoned Infants Assistance
The Abandoned Infants Assistance (AIA) Program is funded at $12.126 million, the same as last year. This program provides demonstration grants for services to infants and young children, many of whom are HIV-infected or drug-afflicted. These infants and young children are medically cleared for discharge from acute hospital settings, but remain hospitalized due to a lack of appropriate out-of-home placement alternatives.

Mental Health
The President's budget includes $913 million for mental health activities for FY 2005, an increase of $51 million. The Mental Health Services Block Grant for states to provide community-based care for adults and children is funded at $436 million. The Children's Mental Health Services Program received recommended funding of $106 million. SAMHSA's Mental Health Programs of Regional and National Significance received a request of $271 million.

In FY 2005, $10 million is provided for a new Samaritan Initiative to reduce chronic homelessness. This initiative will support service providers that better enable access to the full range of services that chronically homeless people need including housing, outreach, and support services such as mental health services, substance abuse treatment, and primary health care. The budget calls for priority to be given to grantees who initiate activities to expand access to mainstream federal programs for those who experience chronic homelessness. The request also includes $55 million for the Projects for Assistance in Transition from Homelessness (PATH), a $5 million increase over FY 2004. These funds will allow grantees to reach out to 154,000 homeless individuals, getting them off the streets and into mental health and substance abuse treatment services, as well as adequate housing.

Also, included in the President's budget is a new proposal for $44 million for State Incentive Grants for Transformation. These new grants will support the development of comprehensive state mental health plans to reduce system fragmentation, and increase services and supports available to people living with mental illness. In the first year, states will establish a planning dialogue across multiple service systems and agencies, such as criminal justice, housing, child welfare, labor, and education. In subsequent years, 85% of funds may be used to support programs at the community level as proposed by the State Plan. The remaining 15% will continue to support state planning and coordination activities.


Medicaid provides a vital health care safety net in every state. It is a lifeline to health care for children, people with disabilities and chronic illness, and low-income elderly people. To broaden coverage to low-income children, Congress enacted the State Children's Health Insurance Program (SCHIP). SCHIP targets uninsured children under 19 with family incomes below 200% of poverty who are not eligible for Medicaid or covered by private insurance. The budget request projects Medicaid mandatory spending to be $183.2 billion for FY 2005. SCHIP funding is projected to be $5.2 billion in FY 2005.

Backing away from any major reform proposal for Medicaid in FY 2005, the President's budget request does mention that the Administration remains supportive of legislation to block grant the program. Last year, the President proposed a "sweeping new plan" to redesign the state-federal partnership that now exists in the Medicaid and SCHIP programs. With the future viability of these programs at stake, governors could not reach agreement on whether to support or reject the plan. The National Governors Association dismantled a Medicaid Working Group because no agreement could be reached.

Another Medicaid budget provision is of concern because it is unclear how it will impact the program. The Administration's new "waste, fraud, and abuse" language made it into the budget with an expected $1.5 billion reduction in federal Medicaid spending in 2005, $23.5 billion over 10 years. Under this initiative, the Administration will attempt to maintain Medicaid "program integrity" by increasing audits of state program financing, and by working on legislation that will restrict states use of inter-governmental transfers and UPL arrangements to draw down federal funds. This proposal is bound to cause significant hardship for state program funding.

In another provision, the budget request proposes to reduce the federal match rate for information and claims processing systems from 90% to 75%. If enacted, this change would reduce federal Medicaid administrative spending by $80 million-right when states will be investing in significant changes to these systems to implement the Medicare prescription drug bill.

Despite estimates that $1.15 billion will expire from the SCHIP program in 2005, the President's budget request does not include any funds or proposal to keep that money in the program. It does, however, include a 5-year extension of Transitional Medical Assistance (TMA), which is set to expire in March if the TANF bill is not passed or extended.

Family Planning
The Family Planning (Title X) program supports a network of more than 4,500 clinics nationwide serving 4.8 million people. The FY 2005 budget request includes $278 million for the Title X family planning program. Family Planning clinics provide access to a wide array of reproductive health and preventive services.

Abstinence Education
In sharp contrast to other funding requests, the President's budget includes a substantial increase in abstinence-until-marriage education for FY 2005, doubling federal funding to approximately $272 million. The budget calls for the consolidation of most abstinence programs under the auspices of the Administration for Children and Families, making the budget for this one pot of money $186 million. Not included, however, is $26 million for the Adolescent Family Life Act's (AFL) abstinence-only programs, which will continue to be run by the Office of Population Affairs, as well as a new $10 million abstinence education campaign called "Responsible Choices" that AFL is slated to coordinate.

Maternity Group Homes
In FY 2005, the budget request is $10 million for Maternity Group Homes, more commonly referred to as Second Chance Homes. These homes are supervised, nurturing residences for teen mothers and their children. They provide the support teen mothers need to become self-sufficient and be good parents, with such services provided as child care, education, job training, counseling, and advice on parenting and lifeskills. This program was just authorized in 2004 so this will be the first year monies are appropriated for it.

Maternal and Child Health
Title V of the Social Security Act, the Maternal and Child Health Services Block Grant is flat funded at $730 million in FY 2005. The block grant supports federal and state partnerships that provide critical services to 27 million women and children. These services include direct health care services for children with special health care needs, the promotion of health and safety in child care settings, and enabling services such as home visiting and nutrition counseling. It also provides support for newborn screening, trauma care, and injury prevention. The budget request also proposes $99 million for the Healthy Start program, the same as the last two years. The Healthy Start program supports community-driven programs to reduce low-birthweight and inadequate prenatal care, both conditions that contribute to infant mortality.

The FY 2005 budget request includes $2.08 billion for the Ryan White HIV/AIDS program. In FY 2004, this program was funded at $2.045 billion. The Ryan White program provides HIV medical care and related supportive services to individuals with HIV/AIDS, including early intervention services to underserved communities.

National Violent Death Reporting System
The Centers for Disease Control and Prevention's (CDC) Injury Prevention Center is funded at $154 million. The National Violent Death Reporting System (NVDRS) receives funding through this Center. NVDRS collects data on deaths and injuries caused by firearms, suicide, and child abuse.

Children with Disabilities
Under the Individuals with Disabilities Education Act (IDEA), the Early Intervention Services Program (Part C) would be funded at $467 million in FY 2005, cut of $19 million from the FY 2004 funding level. Under IDEA, the U.S. Department of Education works with states to ensure that children with disabilities receive an appropriate public education that includes preparing them for employment and independent living, and that all schools are held accountable for the educational results of children needing special education. This program provides early intervention services for infants and their families.

Health Research
The President's FY 2005 budget request includes $28.8 billion for the National Institutes of Health (NIH). NIH is the world's largest and most distinguished organization dedicated to maintaining and improving health through medical research. Of NIH's 27 institutes and centers, those of particular importance to children and their families in the child welfare system include the National Institute of Child Health and Human Development ($1.281 billion); the National Institute of Mental Health ($1.421 billion); the National Institute on Drug Abuse ($1.019 billion); and the National Institute on Alcohol Abuse and Alcoholism ($442 million).


The President's budget request for housing assistance voucher funding is $11.8 billion, which is $1 billion less than is needed to fully fund all currently authorized vouchers and will result in as many as 150,000 fewer vouchers. Moreover, the U.S. Department of Housing and Urban Development wants to transform the Housing Choice Voucher Program into a block grant program to public housing agencies. The proposed budget notes the Administration's intent to continue funding the Family Unification Program, which provides Section 8 vouchers to families with children who have been placed, or are at risk of placement, in foster care primarily because the family lacks adequate housing, and to youth transitioning out of foster care.

Community Service

The President's budget includes $442 million for AmeriCorps which is level funded from FY 2004 when AmeriCorps received a historic funding increase that allowed the program to grow by 50%, from 50,000 members annually to 75,000 members annually. The AmeriCorps program enables Americans of all backgrounds to serve in local communities through programs sponsored by nonprofit organizations.

Child Welfare League of America
February 2004

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