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Home > Advocacy > Financing Child Welfare Services > Child Welfare Financing Proposals


Child Welfare Financing Proposals

The child welfare system needs reform. We, as a country, must commit ourselves to do a better job of protecting and caring for our children. CWLA urges Congress to take time to review and act on comprehensive child welfare reform measures that maintain a strong federal responsibility to our most vulnerable children and families. CWLA strongly opposes any measure that limits the federal responsibility to participate fully with the states in meeting this fundamental obligation. We believe that a new, more complete and streamlined approach to shared state and federal funding should be implemented-not the fixed allocation of funds, or block grant, suggested in the White House proposal. While recognizing the inadequacy of the current program, we believe that it is essential to maintain basic Title IV-E entitlements until a more effective financing method is proposed, tested, and proven effective as a viable national alternative. Real reform, including new investments, is required to respond to the needs of the over 500,000 abused and neglected children currently in foster care and to keep all children safe from harm.

The Administration's Foster Care Funding Proposal

The Administration's response to the reforms needed in child welfare include a proposal that would restructure the current Title IV-E foster care program. While legislation has not yet been introduced, some details have emerged through congressional testimony and public comments from Administration officials. 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.

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.

  • 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. However, HHS may waive certain state program requirements that are burdensome to Indian Tribes but do not compromise child safety.

  • 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.
CWLA Key Concerns About The Administration's Foster Care Funding Proposal

The Administration's proposal does not appear to offer the depth of reform or the guarantee of sufficient federal financing necessary nationwide to improve the child welfare system and ensure that all children are protected. The proposal appears to freeze federal resources at a time when there is a great need for significant new investments and reform in our national child welfare system.

CWLA has many concerns about the Administration's proposal:
  • The proposal breaks the link between federal funding based on an entitlement funding formula and transforms it into a fixed amount of funds no longer driven by need or the number of eligible children.

  • The proposal does not address the complex array of federal funding sources for child welfare. Title IV-E foster care, the subject of the Administration's proposal, comprises 38% of all federal child welfare spending. Other federal funding sources include: Title IV-E adoption assistance (10%); the Social Services Block Grant (17%); Temporary Assistance for Needy Families (15%); Medicaid (10%); Title IV-B, Child Welfare Services, and Promoting Safe and Stable Families Program (5%); and SSI and others (5%).

  • The Administration's foster care proposal is cost neutral, setting a five-year cap on spending. The proposal does not recognize the need for any new resources to build a system of care to better protect children and address pressing issues, including supports for the child welfare workforce and substance abuse treatment for families that come to the attention of the child welfare system.

  • A state choosing the foster care option would receive a fixed allocation/block grant based on the current Title IV-E eligibility criteria that link eligibility to 1996 AFDC standards. This means that the allocation/block grant would be based on a declining number of children becoming eligible over the next five years.

  • The proposal would not ensure that funds would be used for prevention services. Current Title IV-E funding does not cover all children in out-of-home care and few, if any states, adequately fund their child welfare systems so as to provide the safety and permanence contemplated by current law. States may have to use the fixed allocation/block funds to cover non-Title IV-E eligible children. There is no guarantee that any funds would be used for prevention services. Federal Title IV-E funding currently supports only 50% of the children in out- of-home care.

  • Adoption assistance eligibility would continue to be linked to foster care eligibility. If the Title IV-E foster care eligibility is removed, determining future eligibility for adoption assistance would be complex and more difficult than it is presently. This may result in reducing the number of federally-supported adoptions from foster care.

  • The role of the cities and counties is not protected in this state option proposal. There is no requirement that the fixed allocation/block grant funds be distributed to local or regional governments will be based on need or eligible children. There is no requirement that a city or county, which may include the bulk of a state's foster care population, will have any input in whether a state chooses this block grant or not.

  • The proposed state maintenance-of-effort is based only on state funds currently used to draw Title IV-E federal funds. Since the financing of child welfare services (adoption, foster care, child protection, and other services) involves a variety of federal, state, and local funds, it appears that states would be able to reduce state spending by billions of dollars and still meet the federal spending requirement necessary to draw down the fixed allocation/block grant.

  • Questions remain about the formula being developed to determine each individual state share of the fixed amount of funding. Will all states that take the fixed allocation/block grant option and project they will have increased costs over the next five years be eligible to receive increased funds? Will the formula be based on historical claim or actual reimbursements? Since the overall total federal allotment is fixed, would some states get less if other states negotiated an increase since certain formulas that benefit one state could result in less funding for another state?

  • In order to access needed additional funds if states experience a dramatic increase in child welfare caseloads (or an increasingly complex caseload with greater needs), the proposal suggests that states could access the TANF emergency fund. The trigger that would allow a state to draw these TANF funds would be based on national and the individual state increases in foster care. These criteria would not necessarily reflect what is happening in a county or city where the bulk of the foster care population might be found. These emergency relief funds would divert funds from TANF. If the same event (a recession for example) caused both cash assistance and foster care caseloads increase, a state may have to choose whether they wanted to fund increases in TANF or foster care.

  • The proposal would combine Title IV-E training funds into the fixed allocation. States would have to choose what, if any, portion of the allocation could be dedicated to training and staff development.

Pew Commission on Children in Foster Care

The Pew Commission on Children in Foster Care has been established to develop recommendations to improve outcomes for children in the foster care system. The Commission was announced on May 7, 2003, as an independent, nonpartisan body with the goal of developing effective and practical recommendations to improve the foster care system. The Commission will focus on recommendations in the areas of improving existing federal financing mechanisms to facilitate fewer foster care entries and faster movement of children from foster care into safe, permanent, and nurturing families. The Commission will also focus on improving court oversight by providing state and local courts with tracking and management tools to help achieve safety and permanency for foster children.

The Commission members are committed to reach consensus on a set of achievable recommendations in these targeted areas and to seek implementation of these recommendations. A final report and recommendations are due to be released in the summer of 2004. CWLA urges Congress to carefully weigh these recommendations as they move forward in making changes to the federal/state partnership in financing child welfare services.

The Child Protective Services Improvement Act (HR. 1534)

The Child Protective Services Improvement Act (HR. 1534), introduced by Representatives Ben Cardin (D-MD), George Miller (D-CA), Charles Rangel (D-NY), Pete Stark (D-CA), Carl Levin (D-MI), and Jim McDermott (D-WA), makes a down payment towards addressing the comprehensive reforms needed. H.R. 1534 provides new funding to help states implement strategies to expand and improve their child welfare system, including the expanded use of child welfare waivers. The legislation will also help public and private child welfare agencies better secure and maintain a stable and well-trained child welfare workforce. New funds are also provided to address the substance abuse treatment needs of families in the child welfare system and to ensure that more children are eligible for federal foster care and adoption assistance. The bill also provides first-time federal assistance to support kinship guardianship as a permanency option for some children.

Title VIII of the Act to Leave No Child Behind (S.448/H.R.936)

Child welfare reform measures are also contained in Title VIII of the Act to Leave No Child Behind, (H.R. 936). That legislation provides additional federal funding for preventive, crisis, permanency, and post-permanency services for children and parents or other caregivers when they first come to the attention of the child welfare system; when children enter foster care; and when children leave care to be united with their families, adopted, or placed permanently with grandparents or other relatives. Title VIII would also expand eligibility for foster care, adoption assistance, and other services.

CWLA Recommendations

CWLA urges Congress to comprehensively review and take action on what is truly needed to build a system of care so that all children are protected and all the needs of America's most vulnerable children and families are met.
  • Eliminate the eligibility link to 1996 AFDC standards so all children in foster care receive federal assistance. Congress has mandated legal and permanency protections for all foster and adopted children, however, federal funding is only available to pay for the costs of children who are eligible for Title IV-E. A reformulation of the federal-state share would have to be determined in order to institute this change.

  • The current law links Title IV-E eligibility to archaic standards that each state had in place under their 1996 AFDC cash welfare system. States are required to maintain the same eligibility standards that existed in July 1996. Since AFDC no longer exists, this continues to be an administrative burden on the states. If the current system remains in place, what is even more critical, is the fact that as time goes by, fewer and fewer children will be eligible for federal foster care and adoption assistance. Based on these standards, only 50% of children in out-of-home placement are currently eligible for the Title IV-E funding. Unless changes are made, some states may be able to serve less than one-third of their children in out-of-home placement through the use of Title IV-E foster care funds.

  • Address the growing child welfare workforce issues that pose challenges to ensuring children's safety and care. A major challenge in reducing the number of children entering or remaining in out-of-home care or waiting for an adoptive family lies in the ability of a well-staffed and well-trained child welfare workforce. Caseworkers must assist families that are experiencing difficult and chronic family problems. They also must achieve the goals of safety and permanency and make lifetime decisions for the child within the ASFA timelines. Yet, the safety and permanency of children is hampered due to large caseloads, caseworker turnover, and minimal training. In addition, extending federal training funds will ensure that workers employed in private agencies are well-trained.

  • Dedicate significant new resources to provide substance abuse treatment for families in the child welfare system. Families in the child welfare system need access to appropriate substance abuse treatment. Up to 80% of the children in the child welfare system have families with substance abuse problems. Resources for substance abuse treatment for families are chronically in short supply. All states report long waiting lists. Alarmingly, over two-thirds of parents involved in the child welfare system need substance abuse treatment, but less than one-third get the treatment they need. To ensure that permanency decisions can be made for children whose families have alcohol and other drug problems, special steps must be taken to begin services and treatment for the family immediately upon a child's entry into foster care or to regain custody of their children.

  • Make available a federally-funded guardianship permanency option to allow states to provide assistance payments on behalf of children to grandparents and other relatives who have assumed legal guardianship of the children for whom they have committed to care for on a permanent basis.

  • Extend and expand the existing child welfare waivers. The U.S. Department of Health and Human Services should collect data on these efforts in order to evaluate their effectiveness.

  • Extend and modify the adoption incentive program to help older youth secure permanent adoptive homes.

  • Adopt the Administration's recommendation to increase funding to $505 million for the Promoting Safe and Stable Families Program and $60 million for the educational and training vouchers for youth aging out of foster care.

  • Restore funding for the Social Services Block Grant. SSBG funding comprises 17% of all federal child welfare funding. Reductions in SSBG funding in recent years has hampered state ability to protect needed services.

  • Provide direct tribal access to Title IV-E funds. Currently, tribes can only access these federal funds through agreements with states.
For more information, contact Liz Meitner, CWLA Vice President of Government Affairs, at 202/942-0257 or

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