Last week we examined the latest report by Child Trends regarding state child welfare financing: Federal, State and Local Spending to Address Child Abuse and Neglect in SFY 2012 that shows a total just under $13 billion ($12.7 billion) federal funds spent in 2012 on child welfare services—a decrease from two years earlier. The state and local spending includes an additional $15 billion. As indicated in the October 6 article some of the decreased federal spending is the result of the loss of federal stimulus funding provided to the states during the recession (funding ending in FY 2010), reduced caseloads and reduced states funding and spending choices. Title IV-E (foster care, foster care administration, adoption assistance and adoption assistance administration, Chaffee Independent Living) spending decreased but so did the use of federal funding through the TANF, SSBG, and Medicaid. Comparing 2010 to 2012 foster care numbers (see AFCARS Report article above) there were 404,878 children in foster care in 2010 compared to 396,892 in 2012.
A new question included in this report deals with an issue most recently dealt with in HR 4980 (PL 113-183) the Preventing Sex Trafficking and Strengthening Families Act. The new law directs HHS to work with states to determine how much states are realizing in savings due to the expanded eligibility for special needs adoptions that was passed as part of the 2008 Fostering Connections to Success Act. Fostering Connections gradually eliminates the adoption assistance eligibility requirement that tied income eligibility to the old AFDC cash assistance program. Starting in 2010, children 16 or older where covered under Title IV-E adoption assistance if the adoption was for a child considered to be a special needs adoption (as defined by the state) or the child was part of a sibling group or the child had been in care for five years or longer. Under the 2008 law, federal funding expands each year so that in 2011 the eligibility expanded to all child 14 or older, in 2012, 12 years of age or older and so on until by the year 2018 all special needs adoptions that take place in that year are covered/eligible to be covered by the federal adoption assistance program.
The expanded coverage means that states will realize a saving by virtue of the expanded federal funding. In 2008, at the time of the Fostering Connections Act passage, the Congressional Budget Office (CBO) calculated that that the adoption assistance part of the legislation cost $1.5 billion in increased federal spending over ten years. As a result, savings had to be found in other programs areas to assure the bill was “cost-neutral” before it could be adopted by Congress. That same CBO calculation indicated that states would benefit from $487 million in increased federal spending in 2018 when the adoption assistance expansion was fully extended—especially to the youngest adoptees—infants and toddlers. Congress realizing this added language to the 2008 act that directed states to reinvest any state savings back into child welfare services. The expanded adoption assistance spending was to “supplement” and not “supplant” state spending on child welfare services.
After enactment, the HHS guidance in 2009 (ACYF-CB-PI-09-10) was general and non-specific as to requiring any state accounting for the reinvestment. As a result Congress in 2011 amended the re-investment language (PL 112-34) with that year’s reauthorization of the Title IV-B programs. That had little effect so now most recently, with the enactment of HR 4980, Congress has directed HHS to have a formula and for states and HHS to publicize the savings.
The Child Trends survey asked states if they have calculated any savings as a result of the expanded adoption assistance and if so how much. In response, 33 states said they had not calculated any savings as a result of the expanded adoption assistance. Of the 17 states that did have a calculation 5 states indicated there was no savings and of the 12 that did calculate a savings estimate, one state indicated a savings as low as $6000 while one state indicated a savings as much as $2 million.
The new law now directs HHS to come up with a formula for states to use to calculate savings or to work with states on a state formula. There is incentive for states to not find savings since the expanded federal investment might allow a state to reduce their state child welfare dollars but advocates at the national level will argue the $1.5 in expanded federal spending could have been spent in another way (perhaps a specific fund for post-adoption services) if states insist there is no state savings despite an expanded federal investment. In fact with CBO indicating that there would be over $480 million in federal spending in 2018, even if those calculations are dramatically off, it could still be a significant investment in state child welfare spending if effectively implemented. By comparison Title IV-B part 1, Child Welfare Services (CWS) provides less than $270 million a year in federal flexible child welfare funding.
In the coming weeks HHS will provide states will guidance on this part of the new law and other sections. How they craft their reinvestment requirements will be significant. The Child Trends survey now establishes an important marker to measure this reinvestment requirement in future surveys. The Child Trends survey is funded by the Casey Family Programs and Annie E. Casey Foundations and is the latest in a series of regular reports dating back to 1996. Earlier versions were conducted by the Urban Institute.