For the states that raised objections to parts of the Families First Act, specifically California, New York, Texas and Wyoming, the Child Trends survey gives some perspective.
California and New York which raised serious concerns over the re-structuring both draw-down and spend significant amounts on child welfare. In 2014 California spent slightly more than $4 billion in overall combined federal, state and local spending on child welfare services. $ 2.3 billion came from a variety of federal funding sources and $1.7 billion was spent by the state and local governments.
In 2014, California spent 18% of all federal spending. When you further break that down by the two dedicated child welfare funding sources, Title IV-E and Title IV-B, California spent 22% of the $7.3 billion in federal funds.
California also invested a significant amount of state and local dollars with just under $1.8 billion in combined state and county spending. That amounts to a little more than 11 percent of the total state and local spending for the entire country. California with more than 56,000 children in foster care as of 2015 had about 13% of the foster care population although looking just at foster care does not take into account the amount of funding spent on adoption assistance, child protection and other child welfare services including prevention.
New York spent approximately $2.8 billion in combined federal, state and local dollars in 2014 with just under $1.1 billion was from federal spending. New York spent 8.5 percent of the total federal dollars on child welfare services. When the IV-E and IV-B programs are broken out New York spent approximately 8 percent of the total $7.3 billion spent throughout the U.S. Although New York spent less of total federal funds in 2014 than California, they nearly matched the largest state in their state and local spending with $1.7 billion. For both California and New York, a significant amount of spending came from county governments with state and local spending nearly split evenly between the two branches of government in New York State.
That means that between two of the biggest states in the union, New York and California, 26 percent of total federal spending across the various categories (including flexible find like SSBG and TANF) went to those two states alone and those two states made up over one-fifth (21 percent) of all state and local spending on child welfare services for the entire 50 states, District of Columbia and Puerto Rico.
Texas and Wyoming are much different in their financing with Wyoming one of the smallest states in the Union. Texas, which raised several criticisms of the Families First Act, spent a total of $1.3 billion in combined federal and state funds for child welfare services. Texas’ federal spending represented 5.3 percent of the total federal money spent in 2014. They also drew a little less than 5 percent on the total IV-E and Title IV-B for the nation. Texas’ $658 million in state and local spending represented 4 percent of the national total for state and local spending.
In 2015 Texas had 7% of the nation’s foster care caseload and New York was at 5 percent of the national total.
Wyoming, a much smaller state, represented slightly more than 1 percent of total federal spending and just about 1 percent of the state and local spending for the entire country. The most eye-opening feature about the small state of Wyoming was some of their spending trends between 2012 and 2014. Wyoming reduced their Title IV-E spending by 59% decreasing to $1.5 million. The bigger story for Wyoming may be what they did with their TANF spending. In 2014 they spent just under $15 million in TANF spending which represented an increase of 943 percent between 2012 and 2014.
There are several other factors to consider when looking at the maze of how states finance their child welfare systems. Use of TANF funds may be motivated by several reasons. One reason is that TANF is a fixed block grant with states required to spend the same amount of state dollars (Maintenance of Effort) since 1996. They also receive the same amount of federal TANF funding based on the 1996 law. For some states that can mean a financial benefit by replacing Title IV-E funding (which requires matching state funding) with TANF funding which has been fixed since 1996. Another significant rationale for use of TANF funds (as well as SSBG) is the potential to use funds in more flexible ways, for example in-home and wraparound services.
A challenge for states like New York and California is that to receive the Title IV-E funds at the level they do means a bigger financial commitment. Title IV-E requires a state match based on the Medicaid matching rate. That means that those two big states receive the lowest match at 50 percent. One state dollars is matched by one federal dollar. Approximately a dozen states are at the fifty-fifty match. Other states may receive a federal match of between 51 to more than 75 percent. For a seventy-five percent match state, every Title IV-E dollar would require 25 cents in state spending to 75 cents in federal spending.
States also vary widely in their “penetration rate.” That is the percent of children in foster care that are covered by federal Title IV-E funds. Traditionally New York and California have had higher penetration rates. According to the survey, California indicated its penetration rate was 65 percent while New York’s stood at 60 percent. Both figures are well above the national rate of 51 percent. Several states are well below the 51 percent level. The Texas penetration rate was 61 percent (a significant increase from previous years) and Wyoming was at only 20 percent.
The reasons for the differences in penetration rates also vary. Some of it has to do with how weak a states AFDC eligibility was set at but other critical reasons are the state does not work at meeting all the case and court documenting requirements while other states might just choose to rely on alternate funds (i.e. TANF, SSBG).
