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

Vol. 18, Issue 40: 10/17/2005   

Call Capitol Hill Opposing Budget Reconciliation, Oct. 17-18

Congressional Leadership to Increase Budget Cuts Through Reconciliation

Budget Reconciliation Cuts Jeopardize Supports for Abused, Neglected Children

Key Upcoming Dates for Congress

Call Capitol Hill Opposing Budget Reconciliation, Oct. 17-18

On October 17 and 18, CWLA and advocates from across the country representing a united coalition of human service organizations are promoting a call-in day to demonstrate opposition to budget cuts in key programs. The toll-free number to use on those dates to call members of Congress is 1-800-426-8073. The number has been established through the Coalition on Human Needs ( working with the American Friends Service Committee. For more information about the message to Congress on budget reconciliation, go to

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Congressional Leadership to Increase Budget Cuts Through Reconciliation

Following Hurricane Katrina, congressional leaders agreed to temporarily delay the reconciliation process. Now that Congress has returned from a Columbus Day recess, it has decided to make these decisions to reduce overall federal spending on mandatory or entitlement programs. The targeted amount for these cuts before Hurricanes Katrina and Rita was $35 billion. Support in now growing to raise that total to $50 billion.

House Speaker Dennis Hastert (R-IL) has indicated his support for increasing cuts to entitlement programs from $35 billion to $50 billion. On October 5, House Budget Chair Jim Nussle (R-IA) called on Congress to reopen or amend the FY 2006 budget resolution to require Congress to cut more than the current required $35 billion from entitlement or mandatory programs. Although the Nussle proposal appears to have the support of Speaker Hastert, the House has postponed action on the budget reconciliation until the week of October 24.

In addition these cuts, the House may also impose an across-the-board reduction in all other nonentitlement programs. Debate continues whether all programs should be included in these across-the-board cuts. Representatives Duncan Hunter (R-CA) and Peter King (R-NY), chairs of two key House committees, have objected to including defense and homeland security spending in the across-the-board cuts. Hunter chairs the Armed Services Committee, and King is the new chair of the Homeland Security Committee. If defense and homeland security spending in not included in the across-the-board cuts, the 2% across-the-board cut proposed by Nussle would have to be increased to 4% to reach the intended goal of saving $16 billion by cutting discretionary or nonentitlement spending.

The Senate is also pursuing an agenda of increased budget cuts. Senator Judd Gregg (R-NH), at the direction of Majority Leader Bill Frist (R-TN), is heading up an informal group of Republican senators to come up with further cuts. Senate support for further budget cuts has been complicated on several fronts. Senator Charles Grassley (R-IA), Chair of the Senate Finance Committee, is trying to promote legislation that would temporarily expand Medicaid access for victims of the recent hurricanes. The White House, Senate conservatives, and the House leadership have opposed his efforts. Grassley has suggested that reconciliation might not be able to move forward without this hurricane Medicaid relief. There has been some discussion of combining a reconciliation, that would include the Medicaid hurricane relief bill, with additional cuts to Medicaid and other programs.

The Senate Agriculture Committee tried to pass its part of reconciliation legislation earlier this month, but efforts were postponed until next week. That committee will be looking at ways to reduce federal spending for food stamps.

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Budget Reconciliation Cuts Jeopardize Supports for Abused, Neglected Children

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 Medicaid to reach its budget reduction goals or to pay for hurricane relief efforts, these programs are threatened.

Key areas of concern include:

Repeal of Rosales Decision

The House is likely to include the repeal of a judicial court decision (Rosales v. Thompson) as part of a budget reconciliation bill. The repeal of this court decision has been advanced by the White House and was included in the President's budget recommendations sent to Congress earlier this year. The White House projects the repeal of the Rosales decision would reduce federal spending on foster care by $84 million in FY 2006 and by an additional $399 million over the next five years.

The Rosales decision has resulted in more children becoming eligible for Title IV-E Foster Care and Adoption Assistance. The states affected by this federal judicial decision are Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington. These states have since amended their child welfare state plans and are basing Title IV-E claims on the Rosales criteria.

In Rosales v. Thompson, the U.S. Court of Appeals, Ninth Circuit 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. HHS's policy had required that states determine Title IV-E eligibility based on the home from which the child is legally removed, which is 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 lived in before formal placement into foster care. Many children live with relatives just before placement. For more information on Rosales V. Thompson, go to

Title IV-E Foster Care Optional Block Grant

Congress may consider several changes to Title IV-E Foster Care and Adoption Assistance. One change 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 are entitlement programs, which means it is available to anyone who meets the programs' strict eligibility criteria. The federal government reimburses each state for a percentage of the overall cost of the programs.

The current financial eligibility criteria for Title IV-E Foster Care and Adoption Assistance are linked to states' 1996 AFDC standards. Rather than updating eligibility for IV-E by opening it to all abused and neglected children or linking it to more current programs such as TANF or Medicaid, the White House proposal would allow states to receive annual grants over a locked period for five years. A state would receive funding equal to the projected federal foster care expenditures from 2006 through 2011. States could draw down up to 20% of this five year total in any one year and roll over unused funds into the next year. States that choose this option must continue to receive this set funding for five years. Once a state chooses the option, it would not be able to opt-out during the five-year period.

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

Medicaid Changes

Congress is also considering a number of changes to Medicaid that have been advanced by the White House. These changes would directly affect children in the child welfare system. The pressure to reach the increased budget cutting goal of $50 billion means Congress is now looking even more closely at including these in the final budget reconciliation bill.

The White House proposals now under review on Capitol Hill include restrictions on the use of Targeted Case Management (TCM) services for children in the child welfare system, and reducing the federal share of support for these services. TCM provides case management, which includes services to help eligible individuals gain access to needed medical, social, educational, and other services. A recent report by the Urban Institute demonstrates that children in the child welfare system who receive Medicaid TCM services also have greater access to a variety of health services vital to their well-being. According to the report, through the use of Medicaid TCM, foster children were much more likely to receive physician services, prescription drugs, dental services, therapy, and rehabilitative services than were children not enrolled in TCM. For many states, these TCM funds represent a significant federal source for funding for child welfare services. Based on an earlier Urban Institute report, The Cost of Protecting Vulnerable Children IV, Medicaid (not including the cost of basic health care services) provides at least 11% of all federal child welfare spending nationally. In some states, it represents more than half of all federal child welfare spending.

Legislation sent to Capitol Hill by HHS Secretary Michael Leavitt on August 5 would likely prohibit TCM use for children in the child welfare system. That proposal would also reduce the 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 by state--from 50% in one state to as high as 80% in another. More details on the White House proposals can be found at

Congress is also considering another White House Medicaid proposal 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. 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 or her practice under state law, for maximum reduction of physical or mental disability and restoration of a recipient to the best possible functional level.

Any reductions in the amount of federal support for the treatment of children would force states to choose either continuing treatment at the same level at a greater cost in state/local dollars, decreasing the amount of treatment children receive, decreasing the number of children receiving treatment, decreasing the per diem reimbursement paid to providers, or some combination of these alternatives.

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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Key Upcoming Dates for Congress

Senate, October 19
A week later for House (approximate): Deadline for assigned committees to adopt $35 billion in cuts to mandatory programs for budget reconciliation bill

Senate, October 26
November for House (approximate): Deadline for tax-writing committees to adopt tax cuts of $70 billion

November 1: Presidential Commission on Tax Reform Releases recommendations

November 18: FY 2006 Continuing Resolution Ends

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