The latest details on the Administration’s budget includes a continuation of last year’s optional waiver that would convert Title IV-E foster care into a block grant on a state by state basis. The goal is that converting foster care funds into a fixed five-year block grant would allow states to spend money on primary prevention while also covering children in foster care.
According to the budget document, a state would receive a block grant allocation including payments for administration, based on a standardized formula to keep the proposal cost neutral. Like some current fixed allocations under the expiring waivers, allocations would be set for a five-year period and with the ability to carry over unspent funds to subsequent fiscal years.
The waiver would require the state to still meet the new residential care requirements under the Family First Act although its unclear how that is enforced in a block grant structure. The proposal does not require a state to take the Family First Act services option and a state using flexible IV-E funds requiring an annual locked-in state match would be unlikely to allocate new state matching dollars to leverage the new Family First Act funding.
Currently a total of 25 jurisdictions operate a child welfare demonstration project. Four states are operating waivers originally approved in FY 2006 (California, Florida, Indiana and Ohio). Nineteen states, the District of Columbia, and one tribe are operating projects approved under the 2012 waiver. Most of the demonstrations involve using a capped allocation (block grant) and most are not statewide.
For states losing a waiver, if they are spending those waiver dollars on foster care placements, as several states are, those dollars are likely to be replaced by going back to the original funding structure under Title IV-E foster care—especially in those states that have experienced significant increases in foster care populations. Some states are likely to oppose that because of the require documentation of eligibility for children in care as opposed to the lack of eligibility determination inherent in a block grant structure.
The NAS Study, A Roadmap to Reducing Child Poverty (2019) concluded about black grants:
“Block grants that are adequately funded and sustained over time, and that provide for countercyclical relief, may serve local populations well by providing more fiscal flexibility for state and local governments. However, block grants that are inadequately funded, fail to be sustained, or lack provisions for countercyclical adjustment have resulted in reduced support for low-income families and increased poverty. In addition, most block grants require only limited reporting and almost no evaluation, which decreases the likelihood that their funds will be used for their intended purposes.”
A Child Trends survey of state child welfare spending, released earlier this year based on 2016 data, indicated that the overwhelming use of Title IV-E waiver dollars has been for services that can be currently paid for under the current Title IV-E law.
According to the survey of 24 states providing data just 10 percent of waiver funding is being spent on services and activities not normally reimbursable. According to the report 73 percent of waiver spending was for children eligible under Title IV-E foster care and for eligible services (foster care maintenance and administrative services) and another 16 percent was spent on eligible services (foster care maintenance and administrative services) but the child/family was not eligible under the current Title IV-E income limitations.
According to the Administration’s budget justification:
“The Child Welfare Flexible Funding Option proposal would increase the flexibility of title IV-E agencies to use funds to provide services, including those that focus on prevention and addressing the impacts of the opioid crisis through innovative and targeted services to families struggling with addiction. These funds would be in addition to the prevention funds through FFPSA that are time-limited and only triggered when a child becomes a candidate for foster care.”
