This past December, Child Trends released a new survey of state child welfare spending based on 2016 state fiscal years. The biennial survey indicates that overall spending in combined federal, state and local child welfare dollars remained somewhat stable from the past survey (based on 2014) with spending up by 5 percent. But over ten years the trend line is down for federal spending while state spending remained the same. Combined all spending at the federal, state and local level spending is just under $30 billion. Approximately $13.5 billion was from federal funds. As has been consistent with past surveys the single biggest source of funds (55 percent) comes from Title IV-E foster care, adoption assistance and kinship care with TANF providing over 20 percent, SSBG at 11 percent, Title IV-B funds at four percent and Medicaid at six percent.

As has been consistent throughout nearly two decades of surveys there is no pattern between states regarding how they fund child welfare with different combinations of IV-E, TANF, SSBG and Medicaid or whether they rely on less or more federal funds. Some states may be wholly reliant on one funding source while others have a mix. These inconsistent patterns cannot be determined by state size, region, economic characteristics or other patterns. Likely it is more driven by political decisions in budgeting over many legislatures, governors and years. For example, in some years, a state may dump most of their Title IV-E funds (it requires a state match) and substitute TANF and or SSBG which are fixed block grants without a state match.

In terms of federal support, between 2014 and 2016 there were variations in federal spending with significant reductions in the two child welfare flexible funds through Child Welfare Services (Title IV-B part 1) and Promoting Safe and Stable Families (Title IV-B part 2). These reductions and the ten-year reductions were driven by federal budget cuts through sequestration and other changes in funding such as reauthorizations that lost funding. The two Title IV-B programs decreased by 6 percent from $570 million to $536 million between 2014 to 2016. The cuts are even bigger when compared to 2006. These two flexible funding sources, that can be used for virtually any services currently funded by waivers, stood at $748 million.

Medicaid funding also continued to decline by 1 percent extending a decade’s long pattern. The Medicaid funding surveyed here are dollars that were spent by child welfare agencies through the Medicaid program so these figures do not include Medicaid coverage for children who may be in foster care but are served directly through Medicaid (i.e. doctors and hospital service.). Typical of this child welfare Medicaid spending is case management, rehabilitative services and therapeutic foster care.

States were aided by the enactment of the 2008 Fostering Connections to Success Act (PL 110-351) which states used to expand adoption assistance funding (de-linking eligibility from AFDC), extending foster care to 21 and the expansion of kinship care through Title IV-E.

Overall Title IV-E funding provided the biggest source of federal funds at approximately $7.5 billion. This includes Adoption Assistance, Foster Care, Kinship Care and the $140 million in fixed Chaffee funds. Spending levels do not match federal levels since this survey is based on the varying state fiscal year and not the federal fiscal year. States reported that 51 percent of children in foster care are eligible and covered by federal IV-E foster care funds. This is higher than the coverage rate reported in the 2019 HHS budget which set the figure closer to 40 percent. The states used the more accurate “days of coverage” rather than numbers of children covered. Either way half or less of children in foster care are covered by the prime federal funding source.

One new question dealt with juvenile justice spending. Eighteen states reported that the child welfare agency passed through Title IV-E dollars to a juvenile justice agency. That totaled $62 million in 2016. Thirty-eight percent of these funds were for foster care maintenance payments. These figures do not necessarily include child welfare dollars spent by the child welfare agency on children involved with juvenile justice.