Title IV-E Fact Sheet
Alliance for Children and Families

As a valued member of the Alliance for Children and Families, we want to educate you regarding the Administration’s proposed changes in Child Welfare financing that may affect your organization in the months to come. The Alliance Public Policy Office strives to distribute timely briefings regarding policy happenings in Washington DC that will affect the children and families you serve. We also distribute timely information regarding federal funding opportunities for child and family service providers, and alert you to threats to public funds.

There is a growing consensus among national advocacy groups, child welfare providers, as well as many states and policymakers that the current mechanism for funding the nation’s child welfare system needs revision, and must be revamped. Child welfare funding has eroded, and scant attention has been paid to maintaining the funding for children in the foster care system, who often have severe physical and psychological needs. It is imperative that any proposed changes promote and invest in increased prevention and early intervention, while assuring the protection, permanency and well being of our country’s most vulnerable children.

Although there is not yet a formal proposal from the Administration to which advocates for children can respond, the following information will provide background on Title IV-E under current law, and present aspects of the system that are likely to be subject to change.

The intent of this paper is to provide our members with information available today and provide questions and critical issues for organizations to consider as child welfare refinancing is considered. This is just the beginning of the conversation – the Alliance Public Policy office invites feedback and questions regarding this important legislative issue.

What can Alliance members do with this information?
The Alliance Public Policy office encourages members to stay engaged in the discussion regarding potential changes to child welfare refinancing as states are exploring the realities of the proposed ideas. You should be in communication with your state’s child welfare agency and become involved in your states’ decision to exercise this option! Please contact us at 1-800-220-1016 or policy@alliance1.org to receive additional information on this issue, or receive strategic guidance for your organization’s coordinated advocacy efforts. Please keep us informed as this issue moves forward in your state!

Current Financing of Child Welfare
Under current law, states are partially reimbursed for expenses incurred for children deemed eligible, who are in legal custody of the state, or were adopted from the foster care system. Eligibility components include 1) required court documents, 2) the judge’s determination that the child’s prior living situation was contrary to his or her welfare, 3) income under the 1996 AFDC standards, and 4) a finding that reasonable efforts were made to reunify the biological family before removing the child. Currently, each state is entitled to receive funds per each eligible child in their care, and there is no limit on the funds granted to states. Title IV-E also offers reimbursements to states for administration costs, training program costs, and information technology advancement and maintenance.

Proposed Aspects of Child Welfare Financing
• States could opt out of entitlement and use administrative, training, SACWIS and maintenance of effort funds more flexibly. In addition, states would have to make a five-year commitment and receive a set amount of dollars per year, based on an inflation-adjusted projection. Adoption assistance would remain as an entitlement program. The formula for baseline calculations is still being explored.
• Although the funding over the 5-year period must be cost-neutral, states have the option of getting their yearly allotments in even amounts, or “front-ending” the funds – getting a greater amount of funding in the first few years of the proposal, and a smaller amount in the last few years.
• States would have access to a $2 Billion TANF Contingency Fund in the event that they encounter an unforeseen crisis, such as the crack epidemic of the late 1990’s. The state and federal triggers would be distinct from those set in place for states to access the fund through TANF, and could include: a state foster care population increasing more than 15% in two fiscal years, the nationwide foster care population increasing more than 10% in two fiscal years, or the state’s unemployment. States would be able to draw down up to 20% of available funds.
• Child protection standards would remain unchanged; data and reporting requirements through AFCARS would continue under current law. Child and Family Service Reviews of state child welfare agencies would also proceed without change.
• $30 million will be made available as a set-aside for tribal governments.
• The 1996 “lookback” provision would be eliminated for foster care under the Administration’s proposal, but would remain in place for Adoption Assistance.States could use the dollars more flexibly to fund a broader range of activities, including prevention, permanency efforts, case management and training for public and private sector staff.
• Additionally, states would no longer have to submit annual cost-allocation plans, or submit annual IV-E reviews.
• Under the flexible funding option, states could choose between continuing the Medicaid determination process for the foster care population, or declaring that all children in foster care are categorically eligible for Medicaid.

CRITICAL ISSUES AND QUESTIONS:

Will “front-end” funding provide additional dollars for states?
Although states will have greater funds to utilize initially, they will be limited to the capped amount over five years. Thus, it is unlikely that the block granted funds will be sufficient to build the front-end capacity of child welfare systems in addition to sustaining foster care maintenance payments and providing case management to families. As proposed by the Children’s Defense Fund, in order for child welfare systems to improve services and see improvements from increased funding for prevention strategies, states need more flexibility and new investments to make improvements and build a more preventative system.

How will eliminating the 1996 “look back” for foster care simplify the IV-E process if it is still required for Adoption Assistance?
While eliminating the “look back” provision for foster care streamlines the IV-E process, maintaining the provision for Adoption Assistance reverses this movement towards simplification. The Association of Public Human Services Association suggested that an assessment of the child’s household income at removal would have to be completed while the child is in foster care in order to be accurate, even if this information is not needed until the child has been adopted. If the eligibility determinations remain a part of the foster care process, the look-back must be corrected to reflect current TANF eligibility standards. If eligibility determinations are eliminated from foster care, the “look back” provision should be eliminated from adoption determinations as well.

Will states be able to effectively cover services for all children with the block granted funds?
Because the children coming into the foster care system have increasingly complex physical and behavioral health needs, it is unlikely that child welfare costs will be significantly reduced as prevention strategies begin to take effect. The federal government should acknowledge the severe needs of this population, and consider maintaining the entitlement mechanism for specific populations, such as Adoption and Safe Families Act (ASFA), compliant children placed in treatment foster care, group and residential care facilities. Furthermore, the federal commitment to providing research and training dollars to states should be considered distinct from the block of funds for prevention and service provision.

How will child welfare finance reform affect the relationship between states and the federal government?
With the offer of more state flexibility, the federal government is transferring a greater share of responsibility and risk for the child welfare population to the states. The partnership between the federal government and states in providing services to abused and neglected children must be maintained and states should be discouraged from diminishing their investment in the child welfare system once receiving federal dollars. Additionally, Congress should create appropriate and minimum standards in areas such as size of caseloads, to give guidance to participating states to ensure the progress of child welfare reforms. The Children’s Defense Fund recommends that states must carefully weigh the decision to forgo entitlement programs with state match requirements that may help them leverage additional resources within their own state legislatures.

How will this affect states who have not made a concerted effort to maximize IV-E funds?
States who have not been actively pursuing Title IV-E reimbursement need to be especially cautious about choosing the flexible funding option. Since the amount of dollars funded to the states is derived from a baseline of the states’ expenditures, states that have experienced declining penetration rates will most likely receive less funding.

There have been several states that utilized waivers to add subsidized guardianship to their IV-E plans. Will the Administration’s proposal allow states to implement subsidized guardianship programs without a waiver?
Under the proposed plan for block granting IV-E, nothing would preclude a state from adding subsidized guardianship to their IV-E plan. However, because the adoption assistance program is not included in the flexible funding proposal, adding a second permanency option to the states’ IV-E program would effectively erode the state’s block grant funds. The Alliance believes that while reunification and adoption are preferred permanency alternatives for children, we are mindful that for a number of children, due to age, disability, or culture, subsidized guardianship would be a better permanency option.

The adoption assistance formula should be adjusted to allow states full access to the stream of funds to provide subsidized guardianship to children where reunification or adoption have been ruled out as viable options. Under IV-E, children in subsidized guardianship should have full access to Medicaid as do children under adoption assistance. It should be noted that while unintended, the current adoption assistance guidelines that preclude subsidized guardianship as an appropriate permanency option for some children, have a cultural bias.

Have any efforts or legislation been proposed that will address these issues?
The Child Protective Services Improvement Act (HR 1534) was introduced in the House on April 1, 2003 by Representative Ben Cardin (D-MD). This bill aims to improve the ability of the child welfare system to prevent and respond to child abuse, and includes several key ideas, namely aligning the eligibility for foster care and adoption assistance payments with TANF eligibility.

Additionally, Senator Christopher Dodd (D-CT) introduced the “Safe Families” Title of the Act to Leave No Child Behind (S 448) on February 12, 2003. This legislation also attacks problems with the child welfare system, and expands reimbursement to states to include preventative, protective and crisis services, as well as eliminates the AFDC eligibility requirement for Foster Care, and extends the age parameters of the Adoption Assistance payments to 19.

Senator Mike DeWine (R-OH) has also introduced legislation that seeks to strengthen the child welfare system. S. 409, which was introduced on February 13, 2003, grants loan forgiveness to child welfare workers employed by child protection agencies, in hopes of recruiting and retaining quality workers to serve children in great need.

Legislation that fully embodies the principles proposed by the Administration has not been proposed at this time, and only a general outline of the proposal has been explained by Wade Horn, Ph.D., Assistant Secretary of the Administration for Children and Families, in testimony before the House Committee on Appropriations on March 25, 2003. More information on Dr. Horn’s testimony can be found at: www.hhs.gov/budget/testify.html.