Reauthorizing IV-E Waivers: Flexible Funding as a Step Toward Reform

On March 10 the Senate Finance Committee held a hearing to consider re-establishing IV-E waiver authority and to examine how the waiver program could be expanded and improved.

The legislative authority granting the secretary of the U.S. Health and Human Services (HHS) Department to approve 10 new demonstration projects per year expired in 2006, though seven projects remain open under extension. First Focus has issued a report with specific recommendations entitled Title IV-E waivers: Fostering Innovation and Paving the Way to Reform.

Sen. Max Baucus (D-Mont.), chair of the Senate Finance Committee, said that child welfare experts believe by giving states flexibility in using foster care funds, the demonstration projects have reduced the number of children in foster care by 80,000 during the last 10 years and by 40,000 in the last two years alone. 

In his statement to the committee, Sen. Orrin Hatch (R-Utah) described the current foster care financing system as “unsustainable” and said that flexibility in financing would allow states to develop and implement innovative practices.

Waiver authority was established in 1994, and since then states have used their waiver funds to finance creative approaches in child welfare, including:

• Assisted guardianship and kinship care
• Intensive service options
• Adoption and post permanency services

Crystal Ward Allen, executive director of Public Children Services Ohio, a  nonprofit membership organization, testified before the Senate Finance Committee and cited creative approaches used in Ohio that safely kept children out of foster care and improved Child and Family Service Review outcomes for children.

Waiver projects have resulted in improved safety, permanency, and well-being outcomes for children and have allowed promising approaches to be tested and then shared among the states. However, some states curtailed their efforts because they could not maintain the cost neutrality requirement.

In their report, First Focus recommends re-establishing waiver authority and making the following 3 modifications:

1. Adopt successful elements used by Medicaid and CHIP programs, which include negotiation of waiver terms, eliminating caps, and streamlining extensions.
    
2. Modify the rigorous experimental evaluation design requirements. (Note: HHS has approved some projects using quasi-experimental design, though experimental design, using random assignment, is preferred because of the increased validity of results.)
    
3. Expand waiver models to include youth aging out of care, foster family resiliency, poverty issues, approaches to financing reform, and coordinating services between Medicaid and title IV-E.

For more information, see  http://www.firstfocus.net/library/fact-sheets/title-iv-e-waivers-fostering-innovation-and-paving-the-way-to-reform.

According to the Center for Law and Social Policy (CLASP), waivers can point to promising practices to reduce foster care caseloads, but the demonstration projects must be carefully designed.

Under the current law, the waiver projects must be cost neutral, so if states are using funds other than IV-E to bolster the waiver project, those funds should be counted in order to capture whether the intervention is truly cost neutral. 

In testimony before Congress in July 2011, CLASP stated that waivers are not a substitute for comprehensive reform that might give states a full array of family services to keep children out of foster care.

For the full testimony, see http://www.clasp.org/resources_and_publications/publication?id=0789&list=publications.