Children's Monitor Online
A Public Policy Update from the Child Welfare League of America

   
   
Vol. 18, Issue 34: 9/6/2005   
Headlines

Congress Returns to Washington to Make Critical Decisions

Poverty Rates Increase for Fourth Year

Budget Reconciliation Recap

Proposals to Reduce Title IV-E Funding

Proposals to Reduce Medicaid and Other Federal Funding for Child Welfare

TANF Reauthorization as Part of Budget Reconciliation: Impact on Child Welfare

Take Action On Reconciliation

Key Upcoming Dates for Congress



Congress Returns to Washington to Make Critical Decisions

Members of Congress return to work on September 6 to face impending deadlines to construct budget reconciliation legislation that will reduce federal spending on entitlement programs by $35 billion and produce $70 billion in tax cuts.

In addition passing budget reconciliation legislation, Congress must also complete the annual appropriations bills that set the FY 2006 funding level for all discretionary programs. Congress will aim to complete these decisions by October 1, the beginning of the federal fiscal year. it is Congress will likely be forced to pass short-term stopgap measures, however, until all decisions are completed, since other matters, such as the pending Supreme Court nomination, will demand immediate attention.

Unclear is what other matters Congress may complete this year. The reauthorization of TANF and child care is pending, but they may be included as part of the budget reconciliation legislation. Congress may also attempt to complete action on other matters, including reauthorization of the Violence Against Women Act, the Higher Education Act, and Head Start. In addition, Congress may deal with immigration reform and stem cell research.

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Poverty Rates Increase for Fourth Year

On August 30, the U.S. Census Bureau released its annual data on the national poverty rate. The data indicate that for the fourth year in a row, poverty rates have increased, rising from 12.5% in 2003 to 12.7% in 2004. This new data shows that poverty has clearly increased since 2000, when rates were at a low of 11.3%. For children younger than 18, the poverty rate now stands at 17.8%, compared with 16.1% in 2000. Comparing poverty data from 2000 with the new 2004 data shows increases in almost every category: Family poverty rose from 9.6% to 11%; white, non-Hispanic poverty rates increased from 7.5% to 8.6%; black poverty rates rose from 22.1% to 24.7%; and the poverty rate for Hispanics rose from 21.2% to 21.9%. The poverty rates for Asian Americans did decrease between 2000 and 2004, from 10.7% to 9.8%, and the rate for those age 65 and older also declined, from 10.2% to 9.8%. For details of the new census data, go to www.census.gov/hhes/www/poverty/poverty04.html.

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Budget Reconciliation Recap

The budget resolution adopted in last spring requires a reconciliation bill to be reported by specific committees by September 16. The resolution specifically calls on Congress to reduce federal spending on entitlement programs by $35 billion over five years. The resolution also calls for a second reconciliation bill to cut taxes by $70 billion. Committees have a deadline of September 23 for the tax legislation. Congress is also expected to adopt additional tax cut provisions outside of the reconciliation process. Later in the year, Congress may pass a third reconciliation to raise the debt ceiling, if the national debt reaches it legal limit before the end of this session of the 109th Congress.

Although Congress is not required to reduce federal supports for abused and neglected children through changes or cuts to Title IV-E Foster Care and Adoption Assistance or to Medicaid to reach its budget reduction goals, these programs are still under threat. The Administration has sent legislative language to Capitol Hill that would restrict the use of targeted case management and rehabilitative services for children in child welfare. Although the Medicaid Commission did not include these recommendations in its initial report to Congress, the White House is strongly encouraging Congress to include these changes.

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Proposals to Reduce Title IV-E Funding

Optional Title IV-E Foster Care and Adoption Assistance Block Grant

Congress may consider several changes to Title IV-E Foster Care and Adoption Assistance. One of the changes may be to adopt a White House proposal to allow states to receive a capped or fixed amount of Title IV-E maintenance, administration, or training funds. Title IV-E Foster Care and Adoption Assistance is an entitlement program--it is available to anyone who meets the program's strict eligibility criteria. The federal government reimburses each state for a percentage of the overall cost of the program. The current financial eligibility criteria for Title IV-E Foster Care and Adoption Assistance are linked to 1996 state standards under the old AFDC (Aid to Families with Dependent Children) program.

Under the White House proposal, states would receive annual grants over five years. A state would receive funding equal to the projected federal foster care expenditures from 2006 through 2011. 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. States that choose this option would continue to receive this set funding for five years. Once a state chose the option, it could not opt-out during that five-year period.

CWLA opposes including this option in the budget reconciliation bill as a way to reduce federal spending or to address the comprehensive reforms necessary to child welfare financing. If Congress were to include this proposal in the budget reconciliation bill, it would forestall future congressional action needed to address the comprehensive improvements needed.

Rosales v. Thompson

The Rosales v. Thompson decision was issued by U.S. Court of Appeals, Ninth Circuit, which found the HHS interpretation of the federal Title IV-E Foster Care law denied foster care benefits to some children who should qualify under the law. HHS's policy required states to determine Title IV-E eligibility based on the home from which the child is legally removed--typically the child's parent(s). The Rosales decision allows states in the Ninth Judicial Circuit 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 placement just before placement in foster care.

The decision covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington. Since the Rosales decision, the affected states have amended their state plans and are basing Title IV-E claims on the Rosales criteria. According to White House projections, repealing the Rosales decision would reduce federal spending on foster care by $84 million in FY 2006, and an additional $399 million over the next five years.

CWLA opposes including this option in the budget reconciliation bill as way to reduce federal spending, as it would remove eligible children from the rolls.

Title IV-E Administration

Congress may also change the ways states receive reimbursements under Title IV-E for administrative costs. Since these costs have been increasing in recent years, some legislative proposals have suggested capping, or limiting, Title IV-E administrative funds.

Although many assume that Title IV-E administrative costs pay for the cost of office space and utilities, it is in fact far much more than that. Title IV-E Administration provides funding for the time caseworkers spend preparing for and attending court hearings related to children in foster care; meeting with families and children to discuss what needs to be done to achieve permanency for the children; helping foster parents cope with the problems of children in their care; advocating for children in other systems, such as the local schools; and referring children to needed services not provided by the child welfare agency.

CWLA opposes including this option in the budget reconciliation bill as a way to reduce federal spending. Capping Title IV-E Administrative funds would create added pressure for states to fund these services.

Title IV-E Training

Congress may also change the way states receive reimbursements under Title IV-E for training costs. Congress may adopt a recent suggestion to lower the federal reimbursement from 75% to the administrative matching rate of 50%.

CWLA opposes including this option in the budget reconciliation bill as a way to reduce federal spending. Capping Title IV-E Training funds would limit a states ability to provide dedicated funding to the needed workforce training supports.

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Proposals to Reduce Medicaid and Other Federal Funding for Child Welfare

Targeted Case Management

Targeted case management (TCM) is the provision of case management, defined as services that assist eligible individuals in gaining access to needed medical, social, educational, and other services, to a "targeted" population, such as children in the child welfare system.

Under current law, not all children in foster care are eligible for federal foster care assistance through Title IV-E. Through the use of Medicaid TCM, a state can provide the service of case management to the entire foster care population, not just children eligible for Title IV-E funding. Less than half of the foster care population is eligible for Title IV-E funding due to the restrictions on eligibility.

Medicaid TCM cannot be used to pay for the room and board costs for children in foster care; rather, it is used to provide services to children in the child welfare system such as assessing service needs, accessing those services, following up, providing coordination among service providers, and so on. These activities enhance a child's condition and reduces the likelihood that more intensive, and expensive, Medicaid-covered services will be needed in the future.

The President's budget, submitted to Congress in February, proposed changes to "clarify" which services could be claimed under TCM. Restricting the use of Medicaid TCM for these purposes would mean that children might no longer have access to these needed services. Under the Administration's budget proposal, federal Medicaid costs would not be reduced in 2006, but federal Medicaid costs would be reduced by $2.035 billion over the following four year. The legislation that HHS Secretary Michael Leavitt submitted to Congress on August 5 would make these changes effective fiscal year 2007, which starts October 1, 2006.

For more information on the legislative language sent from Secretary Leavitt to Congress, see the August 15 Children's Monitor at www.cwla.org/advocacy/monitoronline.asp, and the No Caps on Kids! section of the CWLA website at www.cwla.org/advocacy/nocapsonkids.htm.

The White House proposal would also reduce federal support for TCM services to no more than a 50% federal matching rate, the same matching rate as Medicaid administrative services. Current practice allows TCM services to be matched at the higher Medicaid service rate, which varies from 50% in one state to as high as 80% in another. The White House calculates this reduced federal matching rate would reduce federal Medicaid spending by $129 million in 2006 and a total of $1.049 billion over five years. The White House proposal would require these changes to take place at the start of fiscal year 2006, which begins October 1, 2005.

Rehabilitative Services

As defined in federal regulation, rehabilitative services include any medical or remedial services recommended by a physician or other licensed practitioner of the healing arts, within the scope of his practice under state law, for maximum reduction of physical or mental disability and restoration of a recipient to the best possible functional level.

The Administration, as outlined in its August 5 letter to Congress, proposes to restrict the use of Medicaid to provide rehabilitative services for children in the child welfare system. HHS is also scrutinizing many states' spending through audits that focus on Medicaid expenditures for rehabilitative services. A reduction in the amount of federal support for the treatment of children would cause states to have to choose between continuing treatment at the same level at a greater cost in state and local dollars, decreasing the amount of treatment children receive, decreasing the number of children receiving treatment, decreasing the per diem reimbursement paid to the providers, or some combination of all of the above.

Most providers already supplement local/state/federal reimbursements that fall short of actual costs. A reduction in federal support for treatment would mean providers would have to choose between altering or reducing their programs; tapping deeper into their donor base, which raises the issue of whether a state is obligated to pay for the care of children in its custody; or both.

While Congress is considering these proposals as part of budget reconciliation, HHS is continuing to administratively scrutinize states' use of TCM and rehabilitative to provide services to children in the child welfare system.

CWLA opposes including a restriction on the use of TCM or rehabilitative services for children in the child welfare system into budget reconciliation efforts designed to reduce overall federal spending. CWLA also opposes reducing the federal reimbursement rate to states for TCM.

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TANF Reauthorization as Part of Budget Reconciliation: Impact on Child Welfare

Many states use Temporary Assistance for Needy Families (TANF) funds to provide child welfare services. Nationally, TANF provided 20% of all federal funds spent on child welfare services in 2002, but some states used much more. Texas, for example, reported that TANF funding represented 41% of the federal funding it spends on child welfare.

Congress and the Administration have debated possible changes to the TANF program since 2002. TANF reauthorization will affect child welfare in several ways. The pending TANF reauthorization bills would continue the $16.5 billion 1996 level of funding for TANF for five additional years. TANF reauthorization is also likely to contain additional work requirements for adult TANF recipients. Although the White House wants Congress to freeze child care funding at its current level, Congress is considering increasing child care funding by only 4% for the next five years.

If the increased work requirements were adopted without increased funding for child care, states would need to divert existing TANF funding to implement these new work requirements. Many states would have to choose between maintaining current child welfare funding or maintaining child care funding, while also trying to implement the new TANF increased work requirements.

CWLA opposes congressional consideration of TANF reauthorization as part of the budget reconciliation process designed to reduce overall federal spending. CWLA is encouraging Congress to consider TANF reauthorization as a free-standing bill. CWLA supports reasonable work requirements for TANF recipients and substantial increases in federal funding for child care to help families attempting to leave TANF, as well as other working families and other families in need including foster parents.

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Take Action On Reconciliation

All members of Congress will have an opportunity to vote on the final budget reconciliation legislation. Members of the Senate Finance Committee and the House Ways and Means Committee are especially key, since those committee members are currently working to assemble recommendations by September 16 that will affect child welfare. Members of the Senate Finance Committee are listed online at http://finance.senate.gov/sitepages/committee.htm, and members of the House Ways and Means Committee at http://waysandmeans.house.gov. In the House, the Energy and Commerce Committee will make decisions on Medicaid changes and cuts. Members of Energy and Commerce Committee are listed at http://energycommerce.house.gov.

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Key Upcoming Dates for Congress

September 16: Deadline for assigned committees to adopt $35 billion in cuts to mandatory programs for budget reconciliation bill

September 23: Deadline for tax-writing committees to adopt tax cuts of $70 billion

October 1: Start of federal fiscal year, target adjournment date


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