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Home > Advocacy > No Caps on Kids! Campaign > The Administration's Foster Care Cap Proposal


The Administration's Foster Care Cap Proposal

The President's FY 2006 budget announced a new legislative proposal that would give all states an option to participate in an alternative financing system for Title IV-E Foster Care. The details of that proposal are not yet complete and legislation has not yet been introduced to implement the proposal. From congressional testimony and other presentations made by officials from the U.S. Department of Health and Human Services in prior years, some of the details of this proposal have emerged.

Program Description

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 than the current open-ended entitlement funding. The current foster care entitlement is based on the number of children eligible for federal reimbursement under the Title IV-E Foster Care program. Eligibility for Title IV-E Foster Care is linked to a states' 1996 AFDC standards. The Title IV-E Foster Care program provides funding for approximately 47-57% of all children in foster care nationwide.

Under the proposed option:
  • States would receive annual grants over a five-year period. This proposal would be budget-neutral for the federal government. Funding would equal the projected change in the federal foster care expenditures from 2004 through 2008. The U.S. Congressional Budget Office and the Office of Management and Budget make these projections. The estimates 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. States could roll over unused funds into the next 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, including 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 47% to 57% of all children in foster care nationally are supported with federal funds. This rate, referred to as a penetration rate, differs by state.

  • 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 (Temporary Assistance for Needy Families) block grant. To qualify for this relief, a state would have to meet a national and state target increase in foster care caseload. Qualifying states would have to match federal funds.

  • 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.

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