Order Code RL31746
Report for Congress
Received through the CRS Web
Child Welfare Issues in the 108th Congress
Updated March 3, 2003
Emilie Stoltzfus
Analyst in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

---

Child Welfare Issues in the 108th Congress
Summary
Child welfare services protect children who have been abused or neglected or
are at risk of maltreatment. These services take various forms, ranging from
counseling and other supports for parents, which are intended to prevent child abuse
and neglect and improve child well-being, to removal of the children from home. At
the most extreme, these services include termination of parental rights and placement
of the children for adoption. States have the primary responsibility for designing and
administering child welfare services. However, the federal government supports
these services with significant funds and requires states to comply with certain
requirements in order to receive this money.
An estimated 879,000 children were the victims of child abuse or neglect in the
year 2000. The majority of these children (63%) experienced neglect (alone or in
combination with another form of maltreatment). Some children who experience
maltreatment are removed from their homes with protective custody given to the
state. On the last day of FY2001 an estimated 542,000 children were living in foster
care (foster family, group, residential or other kind of home or placement setting).
During the first session of the 108th Congress legislation to reauthorize the Child
Abuse Prevention and Treatment Act (CAPTA) and several related programs was
introduced in both the House (H.R. 14) and Senate (S. 342) and has subsequently
been cleared for floor action in both chambers. On February 13, the House passed
H.R. 4, a comprehensive Temporary Assistance for Needy Families (TANF)
reauthorization proposal, which includes provisions to extend and expand the
authority of the Department of Health and Human Services (HHS) to grant child
welfare waivers (through FY2008) and includes several other child-welfare related
proposals. Additional bills related to child welfare that have been introduced in this
Congress, include H.R. 336, which seeks to repeal the current “sunset” provision
related to the adoption tax credit; H.R. 443 and S. 331, which would grant tribes new
authority to operate foster care and adoption assistance programs under Title IV-E
of the Social Security Act; and H.R. 584, which would allow penalty-free withdrawal
of Individual Retirement Account (IRA) funds for some qualified adoption expenses.
The 108th Congress may also debate other child welfare issues, including the
federal financing structure for child welfare services and reauthorization of Adoption
Incentives. In his FY2004 budget, President Bush proposes to offer states an
“alternative financing system for child welfare.” According to Administration budget
documents, states choosing to participate would “face fewer administrative burdens
and would receive funds in the form of flexible grants.” Congress may also consider
reauthorization of Adoption Incentives; funding for incentive payments to states that
increase the number of adoptions out of their child welfare systems was first
authorized for FY1998 and expires with FY2003. The Administration proposes to
reauthorize these incentive funds and to amend the program to especially reward
adoptions of children age 9 or older.
This report describes legislative issues related to child welfare in the 108th
Congress and will be updated as needed.

---

Contents
Child Maltreatment and Children in Foster Care . . . . . . . . . . . . . . . . . . . . . . 1
Child Welfare Issues in the 108th Congress . . . . . . . . . . . . . . . . . . . . . . . . . 3
Child Abuse Prevention and Treatment Act (CAPTA) . . . . . . . . . . . . . 3
Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Adoption Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
TANF Reauthorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Adoption Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Tribal Child Welfare Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Child Welfare Funding Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
For More Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
List of Figures
Figure 1. Estimates of U.S. Children in Substitute Care, 1985-2001, including
Entries and Exits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
List of Tables
Table 1. Proposed and Final Funding for Selected Child Welfare Programs,
FY2002-FY2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

---

Child Welfare Issues in the 108th Congress
Child welfare services are intended to protect children who have been abused
or neglected or are at risk of maltreatment. These services take various forms,
ranging from counseling and other supports for parents, which are intended to
improve child well-being and prevent child abuse and neglect, to removal of the
children from home. At the most extreme, these services include termination of
parental rights and placement of the children for adoption.
States have primary responsibility for delivering child welfare services and
deciding when to intervene in a family’s life to protect the children. The federal
government supports these state efforts with substantial funds. In FY2002, the
federal government provided close to $7 billion in funds dedicated to child welfare
services, primarily for costs related to maintaining the out-of-home placements (i.e.,
foster care or adoption) of children who have been maltreated. In exchange for this
funding (mostly offered under Title IV-B and Title IV-E of the Social Security Act),
states must comply with federal rules intended to protect children who are served by
the child welfare system. States also draw significant federal funds for support of
child welfare services from the Social Services Block Grant (SSBG, Title XX of the
Social Security Act), from the Temporary Assistance for Needy Families block grant
(TANF, Title IV-A of the Social Security Act), and from other sources of federal
funding, such as Medicaid.
Most child welfare and related child abuse programs are administered at the
federal level by the Children’s Bureau of the Department of Health and Human
Services (HHS). The House Ways and Means and the Senate Finance committees
have exercised jurisdiction over the majority of child welfare programs currently
authorized. These include all of the programs provided for under Title IV-B and IV-
E of the Social Security Act. (See Table 1 at the back of this report for a list of these
programs.) The House Education and Workforce, and Senate Health, Education,
Labor, and Pensions Committees have exercised jurisdiction over the Child Abuse
Prevention and Treatment Act. A handful of smaller programs, related primarily to
the court handling of child abuse cases, are administered by the Department of
Justice (DOJ), and some of these are under the jurisdiction of the House and Senate
Judiciary Committees. Likewise, programs for missing and sexually exploited
children are administered by the DOJ. (These Department of Justice programs are
outside the scope of this report.)
Child Maltreatment and Children in Foster Care
In 2000, an estimated 879,000 U.S. children were found to be victims of abuse
or neglect. This number is greater than the estimated 826,000 child maltreatment
victims in 1999 but below the annual estimated highs of more than 1 million child
maltreatment victims recorded through the mid-1990s. For the year 2000, states also

---

CRS-2
reported an increase in the percentage of child victims who experienced neglect, as
compared to other kinds of maltreatment. The percentage of child victims
experiencing neglect rose from 58% in 1999 to 63% in 2000, while the percentage
of physical abuse and sexual abuse victims declined slightly.1
There were an estimated 542,000 children in foster care on the last day of
FY2001 compared to an estimated 572,000 in FY1999 (when the foster care caseload
reached the highest-ever recorded level) and an estimated 537,000 in FY1997. The
size of the foster care caseload rises or falls depending upon both the number of
entries to foster care – children who are removed from their homes in a given year
– and the number of exits in that same year – children reunited with their families,
adopted, emancipated, or placed in another permanent setting. The number of entries
to foster care has outpaced the number of exits for two decades; however, in recent
years the number of entries has remained fairly stable at around 290,000 while the
number of exits increased from 249,000 in FY1998 to 275,000 in FY2000.
Figure 1. Estimates of U.S. Children in Substitute Care,
1985-2001, including Entries and Exits
572,000 556,000
537,000
483,000
542,000
Total cas e load
445,000
414,000
387,000
300,000
276,000
Entr ie s
Exits
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
Source: Data from 1985 to 1996 are from the American Public Human Services Association. Data
from 1997 forward are estimates by the U.S. Department of Health and Human Services based on the
Adoption and Foster Care Analysis Reporting System (AFCARS). The 2000 data are interim; the
2001 data are preliminary. Both numbers may be revised.
Note: The number of children in care is shown for the last day of the given fiscal year. The number
of entries and exits are cumulative totals for the given fiscal year.
1 U.S. Department of Health and Human Services, Administration on Children Youth and
Families, Child Maltreatment 2000, 2002, 23-41.

---

CRS-3
Child Welfare Issues in the 108th Congress
Child Abuse Prevention and Treatment Act (CAPTA). On January 7,
Representative Hoekstra introduced H.R. 14; and on February 11, Senator Gregg
introduced S.342. Both bills have bipartisan co-sponsors and are entitled the
Keeping Children and Families Safe Act of 2003, and both seek to reauthorize
CAPTA through FY2008. On February 12, the Senate Health, Education, Labor and
Pensions Committee ordered S. 342 to be reported to the Senate (without
amendment) and on February 13, the House Education and Workforce Committee
ordered H.R. 14 to be reported to the House (as amended).
As currently written, CAPTA authorizes grants and research funds designed to
improve state and local child protective services, offer services aimed at preventing
child abuse and neglect, and increase knowledge about ways to prevent child
maltreatment or better respond to its occurrence. Although the Act expired with
FY2001, Congress appropriated $81.6 million to continue CAPTA programs in
FY2002 (P.L. 107-116) and, the FY2003 omnibus spending measure (P.L. 108-7)
provides $89.5 (subject to a .65% rescission) for CAPTA. Nearly all of the increased
FY2003 funding is provided for earmarks included under the discretionary grants
portion of the CAPTA appropriation. The President’s FY2004 budget requests $81.7
million for CAPTA.
With certain exceptions, both H.R. 14 and S. 342 follow CAPTA
reauthorization legislation that passed in the House late during the 107th Congress
(H.R. 5601) and was a partial compromise between earlier House-passed legislation
(H.R. 3839) and a bill that had been approved by the Senate Health, Education,
Labor, and Pensions Committee (S. 2998). Both bills would increase the funding
authorization for CAPTA’s grant programs to $200 million and would extend its
program authority through FY2008. Both are also designed to strengthen efforts to
prevent child abuse and neglect, to promote increased sharing of information and
expertise between child protective service agencies and education, health, and
juvenile justice systems, to encourage a variety of new training programs designed
to improve child protection, and to improve communication and collaboration
between child protective services workers and families who are part of a child abuse
and neglect investigation. The proposals would also include for-profits (generally)
among the groups that may seek demonstration grant funds and receive technical
assistance for child maltreatment related programs.
Both proposals would also require states that seek Basic State Grant Funds
under CAPTA to meet several new “assurances,” but they do not include identical
provisions for all of these requirements. Among the requirements that are included
in both bills a state must 1) disclose confidential information to federal, state, and
local government entities (or their agents), if the information is needed to carry out
their lawful duties to protect children; and 2) have provisions to ensure that alleged
child maltreatment perpetrators are promptly informed of the allegations made
against them. Both bills also include a new requirement regarding appropriate
response to children born with, and showing evidence of, prenatal drug exposure.
H.R. 14 would require health care providers involved in delivery of a drug-exposed
newborn to report this to child protective services and also require that a safe plan of
care for the child be developed. By contrast, S. 342 would require a state to have

---

CRS-4
provisions in place to respond to the birth of an infant who was prenatally exposed
to an illegal drug; this response must include development of a safe plan of care for
the child and may include appropriate referrals to child protective services. H.R. 14
would further require states to have procedures for referral of child maltreatment
victims under 3 years of age to the statewide early intervention program (for
developmental assessment) operated under Part C of the Individuals with Disabilities
Education Act (IDEA). S. 342 does not include this requirement.
In addition, H.R. 14 and S. 342 include language that would reauthorize
(through FY2008) and increase the funding authority for two related and also expired
programs, Adoption Opportunities and Abandoned Infants Assistance. A number of
the proposed changes in the Adoption Opportunities program are intended to
eliminate barriers to the adoption of children across state and other jurisdictional
boundaries. Finally, both bills also propose to amend and extend (through FY2008)
the authority of certain programs under the Family Violence and Prevention Services
Act. S. 342 also would require the HHS Secretary to reserve 50% of any funds
appropriated above $150 million for state family violence prevention grants to fund
entities providing services to children who witness domestic violence. (For more
background information and discussion of issues, see CRS Report RL30923, Child
Abuse Prevention and Treatment Act: Reauthorization Proposals in the 107th
Congress).
Waivers. As passed by the House on February 13, H.R. 4, which primarily
reauthorizes TANF, would permit HHS to approve an unlimited number of child
welfare demonstration projects (often called waivers) through FY2008. It would
also prohibit HHS from limiting the number of demonstrations (or waivers) approved
for a single state or from denying a demonstration project simply because the policy
alternative is already being tested (or may be tested) in another state. H.R. 4 also
would require HHS to streamline its child welfare waiver approval process and make
evaluation reports available to states or other interested parties. The full Senate has
not yet taken up TANF reauthorization legislation. (However, S. 5, introduced by
Senator Talent on February 14, contains these same child welfare waiver provisions.)
During the 107th Congress the Senate Finance Committee had approved a bill (H.R.
4737 as reported to the Senate) that sought to extend HHS authority to approve 10
demonstration projects each year (through FY2007) and to prohibit HHS from
limiting the number of demonstration projects (or waivers) approved for a single
state.
Child welfare waivers allow states to use federal funds to test new services
without meeting all of the federal child welfare requirements specified in Title IV-B
and IV-E of the Social Security Act. The proposed demonstration program or service
must be designed to accomplish the same goals as those federal child welfare
programs, must be cost-neutral to the federal government, and must be formally
evaluated. (Further, certain specified federal protections offered to all children in the
public child welfare system may not be waived in any case.) Under current law, HHS
could approve up to 10 demonstration projects (including one or more waivers of
federal rules) in each of FY1998 through FY2002. In the past, HHS has expressed
its preference for approving projects in states not previously granted authority to
operate a demonstration project and for projects that test unique policy alternatives.

---

CRS-5
Financing. The President’s FY2004 budget proposes to offer all states an
alternative method to finance their child welfare system. According to
Administration budget documents, this option is intended to “serve as an incentive
[for states] to create innovative child welfare plans with a strong emphasis on
prevention and family support.” No specific legislative language has yet been
proposed, but the Administration indicates that under this “flexible funding” plan,
states could opt to receive their foster care funding (currently an open-ended
entitlement for costs incurred on behalf of eligible children) as an annual pre-
established grant amount, would be able to use these funds for the full range of child
welfare services – from prevention of the need for removal through foster care
placement and adoption – and would no longer need to determine a child’s federal
foster care eligibility status in order to use federal funds on his or her behalf. At the
same time states would be required to uphold existing child safety protections, agree
to maintain existing levels of state investment in child welfare programs, and
continue to participate in the HHS-administered Child and Family Services Reviews
(to ensure compliance with federal child welfare policy). States experiencing a
“severe foster care crisis” would, under certain circumstances, be able to tap TANF
continency funds to meet this unanticipated need. In addition, the President’s
proposal includes a $30 million set-aside to be available for Indian tribes (tribes are
currently not eligible to directly receive federal foster care funds under Title IV-E of
the Social Security Act) and a one-third of 1% set-aside for monitoring and technical
assistance of state foster care programs.
Currently federal funds dedicated to child welfare (primarily under Titles IV-B
and IV-E of the Social Security Act) go to states through a complex package of
grants, with different allocation formulas, matching requirements, and numerous
rules. States also rely on other more flexible federal funds to support their child
welfare programs. The 1996 welfare reform law that created TANF (P.L. 104-193)
eliminated Emergency Assistance (which had been primarily used by states to
support family preservation), and reduced the SSBG, also a major source of child
welfare funds). However, TANF’s flexible funds, combined with declining
caseloads, allowed states to use TANF dollars for certain child welfare services and
at least through FY2000, this provided a boost to child welfare spending. According
to an Urban Institute survey, in FY2000 states expended some $2.3 billion in TANF
funds (some of which were funneled through SSBG) for child welfare purposes. But
the continued availability of some or all of these TANF funds for child welfare
purposes appears to be jeopardized by changing TANF and state budget priorities
linked to economic recession.2
The 1996 TANF law also maintained a historic connection between federal
child welfare funding and TANF’s predecessor program, Aid to Families with
Dependent Children (AFDC); the law continued to link a state’s entitlement to
federal reimbursement for foster care and adoption assistance costs to whether those
costs can be tied to a child who was removed from a family that was receiving (or
would have been eligible to receive) AFDC – as that program existed in a given state
on July 16, 1996. The 1996 law did not provide a mechanism for adjustment of the
2 Roseanna Bess, Cynthia Andrews, Amy Jantz, Victoria Russell, Rob Geen, The Cost of
Protecting Vulnerable Children III, Urban Institute: Washington, D.C., Dec. 2002, 18.

---

CRS-6
1996 AFDC income-eligibility rules. This concerns states who predict declining
levels of federal foster care and adoption assistance funding due to inflation and the
administrative complexity inherent in using eligibility rules for a program that no
longer exists. Some observers also question the rationale of an income eligibility test
for federal foster care and adoption assistance reimbursements and argue that a
child’s need for protection and care is not limited by family income.
Financing proposals in the recent past. While many observers believe
the current child welfare financing system is counterproductive to the interests of
children and families, no consensus exists on a method of reform. Late in the 106th
Congress, Representative Nancy Johnson introduced H.R. 5292, which would have
authorized “flexible funding” demonstrations, including a block grant approach, in
a limited number of states. Also in 2000, Senator Grassley (with Senators DeWine
and Landrieu) announced a proposal (never formally introduced) that would have
increased federal matching payments for foster care during the first 18 months of a
child’s stay in care, then reduced and eventually eliminated federal matching the
longer the child remained.
In the 107th Congress, H.R. 1990 and S. 940 sought to “de-link” federal foster
care and adoption assistance eligibility from income measures, and S. 2052 would
have given states the option of linking this eligibility to TANF income and resource
standards. H.R. 1990 and S. 940 also sought to allow open-ended federal matching,
under Title IV-E, for a variety of new services, including preventive, protective and
crisis services; permanency services; ongoing payments to relative guardians of
former foster children; independent living services; and living expenses of former
foster youths under the age of 22, (if they are in school or working and participating
in an independent living program). The federal matching rate for all services
(including training, administration, and data collection) would be the Medicaid
matching rate, which varies by state. (For more information, see CRS Report
RL31082, Child Welfare Financing: Issues and Options.)
Adoption Incentives. The 1997 Adoption and Safe Families Act (P.L. 105-
89) created the Adoption Incentives program (Section 473A of the Social Security
Act). Funding authorization for these incentive payments expires with FY2003 and
Congress may consider reauthorization legislation in this session. As part of its
FY2004 budget justification, HHS proposes to reauthorize funding for the program
(through FY2008) and to amend the program to reward adoptions of foster care
children age 9 or older while continuing to offer incentives to states who increase
their total adoptions out of foster care.
Currently the Adoption Incentives program authorizes funds for incentive
payments to states that increased the number of adoptions out of the public foster
care program in each of FY1998-FY2002. Eligible states receive $4,000 for each
foster child whose adoption is finalized above a state’s specified foster child adoption
baseline. States also receive an additional $2,000 for each of those adoptions, which
involved a special needs child who receives federal adoption assistance, and that are
above the state-specified special needs adoption baseline. For adoptions finalized in
1998, the baselines drew on the state’s average number of foster child adoptions (or
special needs adoptions) in FY1995-FY1997. For adoptions finalized in FY1999-
FY2002, the baselines are drawn from the year (beginning with FY1997) in which

---

CRS-7
the state achieved its highest number of foster child adoptions (or special needs
adoptions). States are permitted to use these incentive funds for any purpose
authorized under Title IV-B or Title IV-E of the Social Security Act.
The Administration proposal would maintain two independent adoption
baselines but would replace the current “special needs” baseline with one for children
age 9 or older. For each child adopted out of the foster care system (above the state’s
baseline), the state would receive an incentive payment of $4,000; for each child age
9 or older who is adopted out of the foster care system (above the state baseline for
older children) the state would receive an incentive of $6,000. According to the HHS
Budget justifications, analysis of adoptions from public foster care indicate that older
children remain less likely to be adopted and specifically that once a child waiting for
adoption reaches 8 or 9 years of age, “the probability that the child will continue to
wait in foster care exceeds the probability that the child will be adopted.” In addition,
HHS notes that “older children constitute an increasing proportion of the pool of
children waiting for adoptive families.”
As originally enacted, the law authorized $20 million annually. However, states
have increased adoptions at a rate far greater than this funding level. (There were
some 26,000 adoptions out of the public child welfare system in FY1995 compared
to an estimated 51,000 in FY2000 and an estimated 50,000 in FY2001.) HHS
estimates a total of 238,000 adoptions from the public child welfare system were
completed in the 5 years (FY1998-FY2002) in which the Adoption Incentives
program has authorized rewards for increased adoptions. Along with its
reauthorization request the Department proposes to set a new goal of 300,000
adoptions over 5 years (FY2004-FY2008).
Through FY2002, Congress appropriated a total of $147.7 million for Adoption
Incentive payments of which states have (for adoptions through FY2001) earned
$144.7 million. All states, the District of Columbia, and Puerto Rico have earned an
adoption incentive award in at least 1 year. For adoptions finalized in FY1998, states
earned $42.5 million; for FY1999 adoptions, $51.5 million; for FY2000 adoptions,
$33.2 million and for FY2001 adoptions, $17.5 million. President Bush requested
$43 million in FY2003 funding for this program, this is equal to the program’s
FY2002 funding level and to the amount of Adoption Incentives funding (subject to
the .65% funding rescission) included in FY2003 omnibus spending measure (P.L.
107-8). The President’s FY2004 budget request again includes $43 million for
Adoption Incentives.
TANF Reauthorization. When the 1996 law creating the TANF block grant
was enacted, some child welfare advocates were concerned that work requirements,
time limits, and other changes in the cash welfare system might harm children.
Research on this issue has not been conclusive; however, concerns remain. (See
CRS Report RL31508, Child Welfare and TANF Implementation: Recent Findings.)
The TANF reauthorization debate, which began in the 107th Congress, touches on
certain child welfare-related issues and some child welfare-related measures are
included in the comprehensive TANF reauthorization legislation passed by the House
on February 13 (H.R.4). In addition, several child welfare-related measures were
included in the TANF reauthorization legislation approved in the 107th Congress by

---

CRS-8
the Senate Finance Committee (H.R. 4737, as reported to the Senate). These are
discussed below.
Improve Child Well-Being and Reduce Child Poverty. The 107th
Congress considered several proposals to amend the purposes and/or practice of
TANF to explicitly address the issues of child well-being and child poverty. Because
a majority of children who enter the public child welfare system come from poor
families and a major goal of the system is to ensure and improve their well-being,
these issues are important to child welfare. As passed by the House, H.R. 4 would
make improving child well-being the overarching goal of each of TANF’s four
stated purposes and would amend one of the current law goals to include reducing
family poverty. The TANF reauthorization legislation approved by the Senate
Finance Committee in the 107th Congress would have required states to assess and
discuss child well-being as part of developing individual responsibility plans.
H.R. 4 would also mandate new child well-being-related research and
performance measures. As passed by the House, the legislation would require HHS
to develop “uniform performance measures” to gauge how well states are meeting
TANF goals, and would require the Census Bureau to implement a new survey of
program participation to assess outcomes of continued welfare reform on the
economic and child well-being of low-income families. Further, evaluation of
“fatherhood programs” authorized under H.R. 4 would need to assess program affects
on a range of issues, including child well-being and child abuse and neglect. The
TANF reauthorization legislation approved by the Senate Finance Committee in the
107th Congress would have required HHS to establish child well-being indicators
(including measures related to education, social and emotional development, health
and safety, and family well-being), to establish an Advisory Panel to make
recommendations regarding how the indicators would be assessed, and to assess state
performance using these indicators.
Sanctions. Current TANF law requires states to impose a penalty on
individuals who fail to meet work participation rules, and it allows states to choose
between cutting a family’s entire benefit or reducing some part of the benefit as a
sanction for noncompliance. This means a portion of some states’ caseload consists
of “child-only” cases where, because of failure to meet work or other rules, a parent
(or other adult) is no longer receiving benefits on their own behalf, but the child(ren)
in the family continue to receive aid. As passed by the House, H.R. 4 would limit
this kind of “child-only” case by requiring that after 2 months of an adult failing to
meet established work requirements (without good cause), a state must end the entire
benefit for the family of which the noncomplying adult is a part. Continuing benefits
to the child(ren) in the family, using federal TANF or state Maintenance of Effort
funds, would not be allowed. (H.R. 4 provides an exemption for states whose
constitution or statute would prohibit a full family sanction, but this exemption
would expire within 1 year of enactment of this provision.)
Adoption Tax Credit. On January 27, Representative Camp introduced
legislation (H.R. 336) that would make the current adoption tax credit fully
permanent. As a part of the Economic Growth and Tax Reconciliation Act of 2001
(P.L. 107-16), Congress expanded the adoption tax credit and made it a “permanent”
part of the tax code. However, P.L. 107-16 provides that the tax changes it contains

---

CRS-9
must expire (or “sunset”) in 2010. H.R. 336 would exempt the adoption tax credit
from this sunset provision. The 107th Congress considered identical legislation (H.R.
4800, S. 2643). Although the House passed H.R. 4800, the full Senate did not act on
this matter, and the proposals died with the 107th Congress.
In 2001 Congress doubled the existing credit (from $5,000 to $10,000), made
the full credit available to families with incomes up to $150,000 (previously the
phase-out began at $75,000), and provided for a cost-of-living inflation adjustment
of this credit. As of the 2002 tax year, adoptive parents may claim the $10,000 credit
up to the full amount of their qualified adoption expenses; beginning with tax year
2003, parents who finalize the adoption of children with special needs will be able
to claim this entire credit amount regardless of their actual adoption expenses.
As introduced by Representative Peter King, on February 5, H.R. 584 would
further amend the Internal Revenue Code to ensure that adoptive parents who
withdrew funds from an Individual Retirement Account (IRA) in order to finance an
adoption could do so without penalty. In general individuals would be allowed to
withdraw up to $10,000 for certain adoption expenses (generally those “qualified
adoption expenses” not already covered by the adoption tax credit). Parents who
adopt a “special needs” child could make penalty-free withdrawals on a somewhat
broader basis.
Tribal Child Welfare Issues. As noted above, tribes are currently not
eligible to directly receive federal foster care and adoption assistance funds under
Title IV-E of the Social Security Act, and the President’s FY2004 budget request
proposes to set-aside $30 million for tribes out of an optional child welfare financing
system. On January 29, Representative Camp introduced H.R. 443; and on February
6, Senator Daschle (with eight bipartisan cosponsors) introduced S. 331; the bills are
identical and would grant new authority to tribes to operate foster care and adoption
assistance programs on the same general financing basis currently available to states.
The bill provides that tribal programs would define the service area where their plan
is in effect and would be able to grant approval of foster care homes based on tribal
standards that ensure the safety of children, but would otherwise need to comply with
all federal program provisions that apply to states. (However, the HHS Secretary
could waive any requirement if he found doing so would “advance the best interests
and safety of the children” served by the tribal plan.) Tribes that currently have
agreements with a state to receive some Title IV-E reimbursement could continue
those agreements.
The provisions of H.R. 443 and S. 331 are similar to those reported in the 107th
Congress (H.R. 4737) by the Senate Finance Committee, except that H.R. 4737
included a separate definition of “tribe” for native groups in Alaska and would have
required those Alaska groups to meet the same federal foster care home requirements
that states must meet. The Congressional Budget Office estimated the cost of the
Senate Finance Committee provisions at $12 million for FY2004 and $398 million
over the FY2004-FY2012 period.
As passed by the House on February 13, H.R. 4 set-asides $2 million for
demonstrations projects designed to test the effectiveness of tribes in coordinating
child welfare and TANF services to tribal families at risk of child abuse or neglect.

---

CRS-10
Child Welfare Funding Levels
Table 1 (below) lists proposed and final funding levels for selected child
welfare programs and indicates whether the program receives mandatory or
discretionary funding. On February 13, the House and Senate passed FY03
appropriations legislation (H.J. Res. 2) and on February 20 the President signed the
measure into law (P.L. 108-7).

---

CRS-11
Table 1. Proposed and Final Funding for Selected
Child Welfare Programs, FY2002-FY2004
($ in millions)
Final
Proposed
Final
Proposed
Program
funding
FY2003
funding
FY2004
kind of funding
President’s
Senate
H.R.
President’s
FY2002
request
omnibusa
246b
FY2003c
request
Title IV-B of the Social Security Act
Child Welfare Services
292
292
292
292
292
292
discretionary
Child Welfare Training
7.5
7.5
7.5
7.5
7.5
7.5
discretionary
Promoting Safe & Stable
Families
375
505
505
375
405
505
mandatory + discretionaryd
Mentoring Prisoners’ Children
discretionarye
0
25.0
12.5
0
10.0
50.0
Title IV-E of the Social Security Act
Foster Care
mandatoryf
4,519
4,885
4,885 4,885
4,885
4,939
Adoption Assistance
mandatoryf
1,342
1,585
1,585 1,585
1,585
1,700
Adoption Incentives
43
43
43
43
43
43
discretionary
Foster Care Independence
140
140
140
140
140
140
mandatory
Foster Care Independence
Education and Training
0
60.0
60.0
39.8
42.0
60.0
Vouchers
discretionary
Child Abuse Prevention and Treatment Act
Basic State Grants
22.0
22.0
22.0
22.0
22.0
22.0
discretionary
Discretionary Research and
Demonstration Grants
26.2
26.4
26.4
26.4
34.1
26.3
discretionary
Community-Based Family
Resource and Support Grants
33.4
33.4
33.4
33.4
33.4
33.4
discretionary
Children’s Justice Act Grants
off-budgetg
20.0
NA
NA
NA
20.0
NA
Other Programs (all discretionary funding)
Abandoned Infants Assistance
12.2
12.2
12.2
12.2
12.2
12.1
Adoption Opportunities
27.4
27.4
27.4
27.4
27.4
27.3
Adoption Awarenessh
12.9
12.9
12.9
12.9
12.9
12.9

---

CRS-12
Source: Table prepared by Congressional Research Service (CRS) based on Administration budget
documents and House and Senate documents related to H.J. Res. 2 and H.R. 246.
NA = not applicable
a The numbers in this table do not include funding rescissions that were included in the Senate-
approved FY2003 omnibus spending measure (H.J.Res. 2). As passed by the Senate the funding
cut totaled approximately 3% on most discretionary, domestic, nonmilitary programs.
b H.R. 246 was introduced in the House on January 8, 2003 by Rep. Regula who chairs the House
Appropriations Subcommittee on Labor, Health and Human Services, and Education. There
was no similar bill approved by the House Appropriations Committee for FY2003.
c The numbers in this table do not including funding rescission that were approved as a part of the final
funding legislation (P.L. 108-7). As enacted the funding cut equals .65% on most discretionary,
nonmilitary programs, including all of the discretionary funds shown in this table.
d Before FY2002, all funding for this program was mandatory. P.L. 107-133, which reauthorized the
program through FY2006, set an annual mandatory funding level of $305 million for it and
authorized additional discretionary funding up to $200 million in each fiscal year. Out of the
total final FY2003 funding shown for this program, $100 million is discretionary and therefore
subject to the legislation’s funding rescission. See table note c above for more information on
the funding rescission.
e P.L. 107-133, which was signed into law in January 2002, first authorized this funding.
f The Federal Foster Care and Adoption Assistance Programs are the only two child welfare programs
funded with mandatory (or entitlement) dollars that are also on an “open-ended” basis. This
means there is no annual cap on the amount of federal money that may be spent on these
programs; states may claim reimbursement for a part of all eligible foster care and adoption
assistance related costs. The final funding levels shown in this row are estimated federal
expenditures; the proposed funding levels reflect estimates of what states are expected to claim
for these programs in FY2003.
g These grants are not funded out of the general treasury. Instead, P.L. 98-473 (Victims of Crime Act
of 1984), as amended, provides that up to $20 million annually is to be set-aside for these grants
out of the Crime Victims Fund. That fund is composed of various criminal fines, penalties,
assessments and forfeitures and is administered by the Department of Justice.
h Appropriations shown in this row are for programs authorized under the Children’s Health Act of
2000 (Sections 330F and 330G of Title III of the Public Health Service Act). Section 330F
authorizes Adoption Awareness, which received $9.9 million in both FY2001 and FY 2002.
Section 330G authorizes a Special Needs Adoption Program aimed at improving awareness of
adoption of special needs children. This program did not receiving funding in FY2001 but
received $3 million in FY2002.
For More Information
CRS Report RL30894, Child Welfare: Reauthorization of the Promoting Safe and
Stable Families Program in the 107th Congress, by Emilie Stoltzfus and Karen
Spar.
CRS Report RL31242, Child Welfare: Federal Program Requirements for States, by
Emilie Stoltzfus
CRS Report RS20230, Child Welfare: The Chafee Foster Care Independence
Program.
CRS Report RS21365, The Missing, Exploited and Runaway Children Protection
Act: Appropriations and Reauthorization, by Edith Cooper.
CRS Report RL31655, Missing and Exploited Children: Overview and Policy
Concerns, by Edith Cooper.
Section 11, House Ways and Means Committee Green Book, 2000 edition.

---