Child Welfare Financing: Issues and Options

Child Welfare Financing: Issues and Options

Order Code RL31082
CRS Report for Congress
Received through the CRS Web
Child Welfare Financing: Issues and Options
August 13, 2001
name redacted
Specialist in Social Legislation
Christine Devere
Analyst in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

Child Welfare Financing: Issues and Options
Summary
Although child welfare services are primarily a state responsibility, the federal
government helps pay for these activities, providing states about $7 billion in FY2001
for child welfare services, foster care, and adoption assistance. Although there is
widespread frustration with the way these funds are provided from the federal
government to the states, there is currently no consensus on a method of reform.
Most federal funds that are specifically targeted toward child welfare activities
are authorized by Title IV-B or IV-E of the Social Security Act or the free-standing
Child Abuse Prevention and Treatment Act (CAPTA). These statutes authorize a
variety of funding streams. Some are discretionary; others are entitlements. Some
of the entitlements are open-ended (in other words, there is no limit on federal
spending); others are capped. All require states to comply with various programmatic
and procedural rules. In addition, states serve child welfare clients through other,
non-targeted federal programs, such as Temporary Assistance for Needy Families,
Medicaid, and the Social Services Block Grant.
Most proposals to reform federal child welfare financing focus on the two largest
funding streams, which are for foster care and adoption assistance, authorized under
Title IV-E. Controlling for inflation, the federal share of state spending for these two
activities has increased dramatically, from $1.1 billion in FY1987 to $5.3 billion in
FY2000 (in 2000 dollars). Foster care is the larger of the two activities, but adoption
assistance is growing at a faster pace, both in terms of dollars spent and children
served. In fact, the Congressional Budget Office (CBO) projects that the number of
children claimed by states as eligible for adoption assistance will surpass the number
claimed as eligible for foster care, beginning in FY2003.
As federal spending for these activities has grown, the financing structure has
increasingly been seen by lawmakers, administrators, and caseworkers as often
conflicting with the needs of children and families. The system is criticized as
complex, burdensome, and inflexible. Critics assert that the federal eligibility criteria
for foster care and adoption assistance (linked to the former Aid to Families with
Dependent Children) are out-of-date and inappropriate, and the system does not
recognize the growing role of relatives in caring for foster children. On the other
hand, supporters of the system believe its open-ended entitlements provide a safety
net for states and children, and that the complicated federal rules ensure a minimum
level of protection for children. Congress also has allowed states to conduct
demonstrations through waivers, which will help inform lawmakers in the future.
Congress has tentatively discussed reform proposals for a decade, ranging from
expansions of existing entitlements to consolidation into block grants. Elimination of
the AFDC requirement has been proposed repeatedly, and interest also has developed
recently in performance-based funding. Because the current system is complex, all
reform proposals raise complex issues. Also, because the largest parts of the system
are open-ended entitlements, virtually all proposals have budgetary implications.
Moreover, federal enforcement of child welfare laws – administratively and through
the courts – is a related issue of ongoing interest to Congress.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Components of the Current System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Title IV-B of the Social Security Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Child Welfare Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Promoting Safe and Stable Families . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Court Improvement Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Title IV-E of the Social Security Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Foster Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Adoption Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Adoption Incentive Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Foster Care Independence Program . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Child Abuse Prevention and Treatment Act . . . . . . . . . . . . . . . . . . . . . . . . 6
CAPTA State Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Community-Based Family Resource and Support Grants . . . . . . . . . . 7
Trends in Federal Child Welfare Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Federal Spending for Foster Care and Adoption Assistance . . . . . . . . . . . . 8
Distribution of Spending Among Categories . . . . . . . . . . . . . . . . . . . . . . . 10
Foster Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Adoption Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Federal Child Welfare Spending in Six Selected States . . . . . . . . . . . . . . . 12
Projections for Future Child Welfare Spending . . . . . . . . . . . . . . . . . . . . . 16
Prevailing Views of the Current System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Perceived Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Complexity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
The AFDC Connection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Inflexibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Relative Caretakers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Perceived Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Safety Net for States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Mandatory Child Protections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Accountability and Judicial Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . 26
Pre-Suter and Suter-Fix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Post-Suter and Suter-Fix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Unresolved Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Policy Options and Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Severing the AFDC Connection (“De-Linking”) . . . . . . . . . . . . . . . . . . . . 30
Expanding the Entitlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Transfers between Titles IV-B and IV-E . . . . . . . . . . . . . . . . . . . . . . . . . 35
Consolidation (Block Grants) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Performance-Based Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Final Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Appendix A: Summary of Funding Streams . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Appendix B: A Note on Data Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Appendix C: Federal Expenditures and Children by State . . . . . . . . . . . . . . . . 48
Appendix D: Foster Care and Adoption Assistance in Six Selected States . . . . 57
California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
New York . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Illinois . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Pennsylvania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Michigan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Ohio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
List of Figures
Figure 1. Federal Expenditures for Title IV-E Foster Care and Adoption
Assistance, FY1987-FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Figure 2. Average Monthly Number of Children Claimed by States as Eligible
for Federal Reimbursement for Title IV-E Foster Care and Adoption
Assistance, FY1987-FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Figure 3. Distribution of Federal Expenditures for Maintenance
Payments, Administration, and Training for Title IV-E Foster Care,
FY1987-FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Figure 4. Distribution of Federal Expenditures for Assistance
Payments, Administration, and Training for Title IV-E Adoption
Assistance, FY1987-FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Figure 5. Federal Expenditures for Title IV-E Foster Care and Adoption
Assistance for Six Selected State, FY1987-FY2000 . . . . . . . . . . . . . . . . . 13
Figure 6. Total Average Monthly Number of Children Claimed as Eligible
for Federal Reimbursement for Title IV-E Foster Care and Adoption
Assistance for Six Selected States, FY1987-FY2000 . . . . . . . . . . . . . . . . 14
Figure 7. Actual and Projected Federal Expenditures for Title IV-E Foster Care
and Adoption Assistance, FY1987-FY2011 . . . . . . . . . . . . . . . . . . . . . . . 17
Figure 8. Actual and Projected Average Monthly Caseload for Title IV-E
Foster Care and Adoption Assistance, FY1987-FY2011 . . . . . . . . . . . . . . 17
Figure 9. California: Federal Expenditures for Title IV-E Foster Care and
Adoption Assistance, FY1987-FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Figure 10. California: Average Monthly Number of Children Eligible for
Federal Reimbursement for Title IV-E Foster Care and Adoption
Assistance FY1987-FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Figure 11. New York: Federal Expenditures for Title IV-E Foster Care
and Adoption Assistance, FY1987-FY2000 . . . . . . . . . . . . . . . . . . . . . . . 60
Figure 12. New York: Average Monthly Number of Children Eligible for
Federal Reimbursement for Title IV-E Foster Care and Adoption
Assistance FY1987-FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Figure 13. Illinois: Federal Expenditures for Title IV-E Foster Care and
Adoption Assistance, FY1987-FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Figure 14. Illinois: Average Monthly Number of Children Eligible for
Federal Reimbursement for Title IV-E Foster Care and Adoption
Assistance, FY1987-FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Figure 15. Pennsylvania: Federal Expenditures for Title IV-E Foster Care
and Adoption Assistance, FY1987-FY2000 . . . . . . . . . . . . . . . . . . . . . . . 62
Figure 16. Pennsylvania: Average Monthly Number of Children Eligible for
Federal Reimbursement for Title IV-E Foster Care and Adoption
Assistance, FY1987-FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Figure 17. Michigan: Federal Expenditures for Title IV-E Foster Care and
Adoption Assistance, FY1987-FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Figure 18. Michigan: Average Monthly Number of Children Eligible for
Federal Reimbursement for Title IV-E Foster Care and Adoption
Assistance, FY1987-FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Figure 19. Ohio: Federal Expenditures for Title IV-E Foster Care and
Adoption Assistance, FY1987-FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Figure 20. Ohio: Average Monthly Number of Children Eligible for
Federal Reimbursement for Title IV-E Foster Care and Adoption
Assistance, FY1987-FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
List of Tables
Table 1. Distribution of Federal Expenditures for Foster Care and
Adoption Assistance under Title IV-E for All States and Six Selected
States, FY1987 and FY2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table A-1. Current Federal Child Welfare Funding Streams to States . . . . . . . 43
Table C-1. Federal Expenditure and Average Monthly Number of Children
Claimed As Eligible for Foster Care Under Title IV-E for
FY1998-FY2000, by State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Table C-2. Federal Expenditures and Average Monthly Number of
Children Claimed As Eligible for Adoption Assistance Under Title IV-E
for FY1998-FY2000, by State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Table C-3. Distribution of Spending by Category for Foster Care and Adoption
Assistance under Title IV-E for FY2000, by State . . . . . . . . . . . . . . . . . . 54

Child Welfare Financing: Issues and Options
Introduction
Although child protection and child welfare services are primarily state functions,
the federal government helps pay for these activities, providing an estimated $7 billion
in FY2001 for child welfare services, foster care, and adoption assistance.
Increasingly in recent years, the way in which these funds are provided to states has
been seen as inflexible, burdensome, and counterproductive to the interests of children
and families. However, while there is widespread frustration with the current system,
no consensus yet exists on a method of reform.
Today’s system of funding child welfare activities is complex. The current
“system” is actually a patchwork of federal laws, requirements, and programs. States
receive federal funds through various “funding streams” that were established at
different times, generally in response to different concerns. Historically, child welfare
services evolved gradually in most states and much of the impetus for these services
came from private, nongovernmental organizations. While federal funding for some
child welfare services was available as early as 1935, federal funds for foster care only
became available in the early 1960s, and most of the growth in the federal role has
occurred in the past 20 years. Each component of the federal financing system had
its own purpose at the time it was enacted, but no comprehensive or cohesive policy
rationale ties the entire system together. Nonetheless, states have become dependent
on this complicated assortment of federal funds, as they attempt to design and operate
programs that respond to the needs of children and families.

Some federal child welfare funds are discretionary, which means that the amount
of money available to states is determined through the annual appropriations process.
Others are entitlements, which means that states are entitled by law to receive these
funds. Some of the entitlement funds are capped, so that states are entitled to a share
of a fixed amount. Other entitlement funds are open-ended, so that states are entitled
to federal reimbursement for any legally eligible expenditure, with no limit on total
federal spending. Several funding streams use formulas for allocating funds among
states, but the formulas differ. Most funding streams require a nonfederal matching
amount from the states, but the match requirements differ. And finally, virtually all
federal child welfare funds come with programmatic and procedural strings attached,
so that states must comply with numerous federal rules to be eligible to receive federal
funds.
Congress has tentatively discussed proposals to reform federal financing of child
welfare for at least a decade, and the debate is continuing. Ideas have ranged from
expansion of the existing open-ended entitlements to total consolidation of all funding
streams into a single block grant. The notion of connecting funding with state
performance, as measured by various indicators, also has been considered. While no

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comprehensive reform proposal has been enacted, Congress has amended the federal
child welfare laws in recent years to achieve other goals, in some cases further
complicating the overall financing structure.
This report is divided into several sections. First, it describes the existing federal
funding streams for child welfare activities, and second, it presents data on trends in
federal spending under the two largest funding streams; i.e., foster care and adoption
assistance. The third section of the report discusses prevailing views of the system,
focusing on its perceived weaknesses and strengths. Next, the report describes reform
proposals that have been offered in recent years, and identifies various policy issues
raised by these proposals. Some concluding notes are offered at the end.
Components of the Current System
The primary federal statutes that authorize grants to states for child welfare
activities are Titles IV-B and IV-E of the Social Security Act, and the free-standing
Child Abuse Prevention and Treatment Act (CAPTA).1 Most of the focus of
financing reform proposals is on foster care and adoption assistance under Title IV-E,
which are open-ended entitlements to states and represent the largest categories of
federal expenditures. Nonetheless, a discussion of reform proposals requires an
understanding of the full array of federal child welfare programs.
Before states may receive funding for child welfare activities under the Social
Security Act or CAPTA, they must develop and submit state plans to the federal
Department of Health and Human Services (HHS) that meet a detailed series of
requirements. These requirements are outlined in the various statutes and collectively
form the basis of federal child welfare policy. Although the state role is paramount
in child welfare, the federal government significantly influences state behavior by
conditioning the receipt of federal funds on compliance with these requirements.
Specific grants authorized under Titles IV-B, IV-E and CAPTA are briefly
described below.2 This information also is summarized in Table A-1.
1 In addition to these grants, readers should note that several other federal programs provide
funding for child welfare services, although they are not specifically designed as child welfare
programs. These include the Social Services Block Grant (SSBG) to states, Medicaid, and
the Temporary Assistance for Needy Families (TANF) block grant to states. The precise
amount of funds devoted to child welfare activities under these programs is not known, but
research conducted by the Urban Institute produced an estimate of $2 billion in FY1998.
Bess, Roseanna et al., The Cost of Protecting Vulnerable Children II: What Has Changed
Since 1996?, Urban Institute, OP-46, Washington, D.C., February 2001.
2 This report focuses on programs that provide grants to states for ongoing activities.
Additional amounts are provided under CAPTA and Title IV-B of the Social Security Act for
research and demonstration grants, which are awarded to public and private entities at the
discretion of the Secretary of HHS. The Adoption Opportunities and Abandoned Infants
Assistance Acts also authorize grants to public and private entities at the discretion of HHS,
and the Department of Justice administers several small programs to improve the investigation
(continued...)

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Title IV-B of the Social Security Act
Child Welfare Services. Matching grants to states for child welfare services,
defined broadly,3 are authorized under Subpart 1 of Title IV-B. The law permanently
authorizes $325 million annually; however, the amount actually provided is left to the
discretion of the annual appropriations process. A formula determines the share of
appropriated funds that is allocated among each of the states and DC. This formula
is based on the state’s population under age 21 and per capita income, as compared
to all other states. The federal share of state child welfare expenditures is set at 75%
and a 25% nonfederal match is required. States have broad discretion in the use of
these funds and no federal eligibility criteria apply to the children or families served.
To receive funds, states must develop a plan jointly with HHS that satisfies various
requirements, many of which are intended to assure safety and permanency for
children who enter the state’s foster care system. FY2001 appropriation: $292
million.
Promoting Safe and Stable Families.4 Subpart 2 of Title IV-B authorizes
capped matching entitlement grants to states, through FY2001, for four specific
activities: (1) community-based family support services to support and strengthen
vulnerable families before abuse or neglect occurs; (2) intensive family preservation
activities for families in crisis, intended to avoid the need to place children in foster
care; (3) time-limited family reunification services intended to reunite foster children
with their families; and (4) adoption promotion and support services to encourage
adoptions and support families after adoptions are made. No eligibility criteria for
children or families are specified in federal law. The law entitles states to their
portion, determined by a formula, of an amount specified in the authorizing statute
(although this amount must be appropriated each year). The allocation formula is
based on each state’s share of children receiving food stamps, and a 25% nonfederal
match is required. As with the child welfare services program under Subpart 1, states
must develop a plan jointly with HHS to receive funds under this authority. FY2001
appropriation: $305 million. (Of annual appropriations for this program, $10 million
2 (...continued)
and prosecution of child abuse and neglect, under the Victims of Child Abuse Act.
3 The law defines the following as eligible child welfare services: “public social services which
are directed toward the accomplishment of the following purposes: (A) protecting and
promoting the welfare of all children, including handicapped, homeless, dependent, or
neglected children; (B) preventing or remedying, or assisting in the solution of problems which
may result in, the neglect, abuse, exploitation, or delinquency of children; (C) preventing the
unnecessary separation of children from their families by identifying family problems,
assisting families in resolving their problems, and preventing breakup of the family where the
prevention of child removal is desirable and possible; (D) restoring to their families children
who have been removed, by the provision of services to the child and the families; (E) placing
children in suitable adoptive homes, in cases where restoration to the biological family is not
possible or appropriate; and (F) assuring adequate care of children away from their homes,
in cases where the child cannot be returned home or cannot be placed for adoption.”
4 See CRS Report RL30894, Child Welfare: Reauthorization of the Promoting Safe and
Stable Families Program, by (name redacted).

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is reserved for grants to state courts to improve their child welfare procedures,
described below.)
Court Improvement Grants. Of the annual entitlement funds appropriated
for Promoting Safe and Stable Families (see above), $10 million is reserved each year
for grants to the highest court in each state for court improvement activities (i.e., an
assessment of the state court’s weaknesses in handling child welfare cases, and efforts
to address those weaknesses). The statutory language governing the use of these
funds is found in Section 13712 of the Omnibus Budget Reconciliation Act of 1993
(P.L. 103-66) and requires that state courts submit an application to HHS to
participate in the program. Funds are allocated according to state population under
21, and a 25% nonfederal match is required. FY2001 appropriation: $10 million
(reserved from the appropriation for Promoting Safe and Stable Families).
Title IV-E of the Social Security Act
Foster Care. Under Title IV-E, states are entitled to federal reimbursement
for eligible expenditures that they incur on behalf of certain children in foster care.
Eligible expenditures may be for maintenance payments to foster care providers on
behalf of the children, and for related administrative and child placement costs,5
training and data collection costs. Those for whom federal reimbursement is available
are children:
! who would have been eligible for Aid to Families with Dependent
Children (AFDC) (as AFDC existed on July 16, 1996), if they had
been living in their biological home;
! who were removed from their homes pursuant to judicial findings
that continuation in the home would be contrary to their welfare, and
that reasonable efforts had been made to avoid their placement into
foster care;6
! whose care and placement is the responsibility of the state child
welfare agency; and
! who are in licensed foster care settings.
Federal reimbursement for eligible expenditures is made on an open-ended basis;
i.e., there is no ceiling or cap on federal spending for foster care. The federal share
of eligible state expenditures is as follows:
5 These costs are defined in regulation to include: referral to services; preparation for and
participation in judicial determinations; placement of the child; development of the case plan;
case reviews; case management and supervision; recruitment and licensing of foster homes and
institutions; rate setting; and a proportionate share of related agency overhead (45 CFR
1356.60).
6 In some cases, the court may determine that such efforts are not required. In addition,
eligible children may be placed pursuant to a voluntary agreement between the child’s parents
and the state child welfare agency, if certain judicial findings are made.

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! for maintenance payments, the Medicaid matching rate,7 is used to
determine the federal share;
! for specified training costs, the federal share is 75%; and
! for all other administrative costs, including expenditures related to
data collection, the federal share is 50%.
Title IV-E is permanently authorized. To receive funds, states must have a plan
approved by the Secretary of HHS, indicating that their programs comply with a
series of detailed requirements. FY2001 estimated federal spending: $5 billion.
Adoption Assistance. States also are entitled to federal reimbursement
under Title IV-E for eligible expenditures related to adoption assistance for certain
children with special needs. Paralleling the foster care component of Title IV-E,
eligible expenditures may be for assistance payments to adoptive parents, and for
related administrative, training, and data collection costs. Those for whom federal
reimbursement is available are adopted children:
! who would have been eligible for AFDC (as it existed on July 16,
1996) if they had been living with their biological families, or who are
eligible for Supplemental Security Income (SSI);
! for whom reasonable efforts were made to place for adoption
without adoption assistance or medical assistance;8 and
! with special needs as defined by the state.9
The financing structure is the same as for Title IV-E foster care; i.e., federal
reimbursement is made on an open-ended entitlement basis, and the federal matching
rates are equal to the Medicaid match for adoption assistance payments, 75% for
certain training expenditures, and 50% for all other administrative costs.10 FY2001
estimated federal spending: $1.2 billion.
7 Informally referred to as the Medicaid matching rate, the “federal medical assistance
percentage” (FMAP) is inversely related to state per capita income, but may be no less than
50% or more than 83%.
8 Such efforts may not be required if the child is being adopted by foster parents with whom
the child has established a significant bond.
9 Special needs children are those who the state has determined cannot be placed for adoption
without subsidy or medical assistance because of a condition or factor such as the child’s age,
racial or ethnic background, membership in a sibling group, medical condition, or physical,
mental or emotional disability. Within these federal parameters, the states establish specific
definitions.
10 Administrative costs also may include the cost of helping adoptive parents with the non-
recurring, one-time costs of adoption (up to a maximum of $2,000). These costs are eligible
for 50% federal matching, regardless of the income or welfare eligibility status of the child;
however, the child must have special needs as defined by the state.

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Adoption Incentive Payments.11 As an incentive for states to increase their
numbers of foster children and special needs children who are adopted, Section 473A
authorizes payments to states for each additional adoption over a baseline level. The
payments equal $4,000 for each foster child adoption, and $6,000 for each special
needs adoption, above the state’s baseline for each. The law authorizes annual
appropriations for these incentive payments in FY1999-FY2003, for adoptions
finalized in FY1998-FY2002. The law also amends congressional budget rules so that
appropriations for this program – up to $20 million per year – do not count against
the discretionary budget caps; appropriations above that amount are subject to the
discretionary cap. To be eligible for the payments, which are 100% federally funded,
states must submit data on the number of their adoptions to HHS and, for FY2001-
FY2002, must meet requirements regarding health insurance for adopted children.
The payments can be used for any activity authorized under Title IV-B or IV-E.
FY2001 appropriation: $43 million.
Foster Care Independence Program.12 Section 477 permanently
authorizes capped entitlement matching grants to states for activities to improve the
education and employment prospects and the transition to independent living of older
children who are likely to “age out” of foster care, and for those (up to age 21) who
already have left foster care at age 18. Services include various forms of counseling,
assistance with obtaining a high school credential, job placement assistance, and a
limited amount of room and board for 18-20-year-olds. The annual entitlement
ceiling is established in the statute at $140 million, although funds must be
appropriated through the annual appropriations process. States are entitled to their
share of the amount appropriated, according to a formula that is based on the relative
number of foster children in each state in the most recent year for which data are
available. States must first submit an application, containing a plan and certifications
regarding the contents of their program, before being eligible to receive these funds.
The grants are 80% federally funded; i.e., a 20% nonfederal match is required.
FY2001 appropriation: $140 million.
Child Abuse Prevention and Treatment Act13
CAPTA State Grants. Title I of CAPTA authorizes grants to states for
improvements in their child protective service systems; appropriations are authorized
through FY2001. Grant amounts are based on each state’s population of children
under age 18, and require no nonfederal matching amounts. To receive these funds,
states must submit a plan that describes how the funds will be used to improve child
protective services, and that meets numerous requirements, including an assurance
that the state has a system for reporting and investigating suspected cases of child
abuse or neglect. FY2001 appropriation: $21 million.
11 See CRS Report RL30759, Child Welfare: Implementation of the Adoption and Safe
Families Act, by (name redacted).
12 See CRS Report RS20230, Child Welfare: The Chafee Foster Care Independence
Program, by Christine Devere.
13 See CRS Report RL30923, Child Abuse Prevention and Treatment Act: Reauthorization
in the 107th Congress, by (name redacted) and (name redacted).

CRS-7
Community-Based Family Resource and Support Grants. Title II of
CAPTA authorizes grants to states to help develop networks of community-based,
prevention-focused family resource and support programs; appropriations are
authorized through FY2001. States must designate a lead entity (which may be public
or private nonprofit) to receive these funds and must submit an application containing
certain information and assurances about the use of funds. Grant amounts are
determined as follows: 70% of each state’s allotment is based on its population of
children under age 18; and 30% is based on the amount of funds leveraged by each
state from nonfederal sources for use by the lead entity. In addition, each state must
spend an amount, from nonfederal sources, equal to at least 20% of its federal
allotment. (This nonfederal spending may be in cash or in-kind.) FY2001
appropriation: $33 million.
Trends in Federal Child Welfare Spending
Although states receive federal funding for child welfare services from a variety
of funding streams (as outlined above), the bulk of federal child welfare funding is
provided for foster care and adoption assistance under Title IV-E of the Social
Security Act. Proposals to reform child welfare financing have focused on these two
open-ended entitlements. This section illustrates trends in federal spending and in the
population of children claimed as eligible for foster care and adoption assistance under
Title IV-E from FY1987-FY2000, based on data provided by HHS.14 This section
also highlights projected trends in foster care and adoption assistance under Title IV-
E, as estimated by the Congressional Budget Office (CBO).
In general, this section illustrates four main points:
! Nationally, the federal share of total state expenditure claims for
foster care and adoption assistance under Title IV-E has increased
dramatically over the past 14 years, as has the average monthly
number of children who states claim as eligible under both programs.
However, it is important to remember that there is substantial
variation by state.
! While spending overall has increased, national trends indicate that the
states are spending an increasing percentage of foster care funds for
administrative costs and training, while a smaller percentage of the
funds are devoted to foster care maintenance payments. The
distribution of spending for adoption assistance under Title IV-E has
remained relatively constant, with approximately three-quarters of
this funding devoted to adoption assistance payments over the past
14 years.
! The larger states (such as California and New York) continue to play
a major role in explaining national trends in child welfare. However,
14 For a more detailed discussion of these data, as well as limitations of using these data as
provided, please see Appendix B: A Note on Data Limitations.

CRS-8
these states’ share of total federal funding for foster care and
adoption assistance, as well as their share of the total eligible
population, has decreased over time.
! While both foster care and adoption assistance have experienced an
increase in spending and in the number of eligible children, adoption
assistance under Title IV-E is growing more rapidly and more
consistently. In fact, CBO is projecting that, nationally, the number
of children claimed as eligible for adoption assistance will surpass the
number claimed as eligible for foster care beginning in FY2003.
Federal Spending for Foster Care and Adoption Assistance
Figure 1 illustrates the federal share of total state claims for foster care and
adoption assistance under Title IV-E from FY1987-FY2000, controlling for inflation.
For foster care, expenditures include the federal share (based on the appropriate
matching rate) of total state claims for maintenance payments, administrative costs,
training, and beginning in 1994, expenditures for State Automated Child Welfare
Information Systems (SACWIS). Adoption assistance expenditures include the
federal share of total state claims for adoption assistance payments, administrative
costs, and training.
Controlling for inflation, Figure 1 illustrates that the federal share of total state
claims under Title IV-E (foster care and adoption assistance combined) has increased
over the past 14 years, from approximately $1.1 billion in FY1987 to $5.3 billion in
FY2000, an increase of 381%.15 Federal funding for foster care under Title IV-E
increased from $999 million in FY1987 to $4,255 million in FY2000. For adoption
assistance, federal funding has increased more dramatically, from $96 million in
FY1987 to $1,012 million in FY2000, an increase of 949%.
Although both foster care and adoption assistance have seen an increase in
federal and state expenditures, the two categories have experienced different rates of
growth over the years. As Figure 1 illustrates, federal funding for foster care grew
rapidly from FY1987-FY1993, but since FY1993, the rate of growth in federal foster
care expenditures has slowed down with expenditures decreasing in FY1996 and
FY1998 compared to the prior year (controlling for inflation). At the same time,
federal expenditures for adoption assistance have increased more rapidly and more
consistently over the past 14 years. While the federal share of expenditures for foster
care grew 159% from FY1987-FY1993, the federal share of expenditures for
adoption assistance grew 221%. And while federal foster care expenditures grew
65% from FY1993-FY2000, federal expenditures for adoption assistance increased
227% over this period of time.
15 This report uses a Gross Domestic Product (GDP) deflator, calculated using data provided
by the U.S. Department of Commerce, Bureau of Economic Analysis, to control for inflation.

CRS-9
Figure 1. Federal Expenditures for Title IV-E Foster Care and
Adoption Assistance, FY1987-FY2000
(in millions of FY2000 dollars)
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1987
1988 1989
1990 1991
1992 1993 1994
1995
1996 1997 1998
1999
2000
Foster Care
Adoption Assistance
Source: Figure prepared by the Congressional Research Service (CRS) based on data provided by
the U.S. Department of Health and Human Services (HHS). These data reflect information for the
50 states, the District of Columbia, and beginning in FY1999, Puerto Rico.
Figure 2 illustrates the average monthly number of children who were claimed
by states as eligible for federal reimbursement for foster care and adoption assistance
activities under Title IV-E. As one would expect, the number of children who were
claimed by states has increased as federal expenditures have gone up. Also mirroring
the expenditure data, the growth in the average monthly number of children who were
claimed by states as eligible for adoption assistance has been larger than the growth
in the number of children eligible for foster care. Nationally, the number of children
who were claimed as federally eligible for foster care increased from 112,998 in
FY1987 to 305,194 in FY1998, but subsequently decreased to 287,824 in FY2000
(an increase of 155% from FY1987-FY2000).16 The number of children who were
claimed as federally eligible for adoption assistance has increased 728%, from 27,588
in FY1987 to 228,307 in FY2000.
16 These numbers represent children who are claimed by states as meeting the Title IV-E
eligibility criteria; therefore, expenses associated with these children may be reimbursed by
the federal government. The total number of children in foster care (regardless of Title IV-E
eligibility) was 300,000 in 1987 and 581,000 in 1999 (data for 2000 are not yet available).

CRS-10
Figure 2. Average Monthly Number of Children Claimed by States
as Eligible for Federal Reimbursement for Title IV-E Foster Care
and Adoption Assistance, FY1987-FY2000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Foster Care
Adoption Assistance
Source: Figure prepared by the Congressional Research Service (CRS) based on data provided by
the U.S. Department of Health and Human Services (HHS). These data reflect information for the
50 states, the District of Columbia, and beginning in FY1999, Puerto Rico.
Distribution of Spending Among Categories
Foster Care. As federal spending for foster care activities under Title IV-E
increased from FY1987-FY2000, the use of these funds by states changed. Figure
3 illustrates the distribution of the federal share of total state claims for maintenance
payments, administrative costs, and training for foster care under Title IV-E from
FY1987-FY2000.17 As this figure illustrates, compared to FY1987, states were
spending a larger share of federal funds on administration (including child placement
services) and training in FY2000, with a smaller percentage of funds devoted to foster
care maintenance payments. In FY1987, 61% of federal foster care funding was spent
on maintenance payments, a percentage that decreased over time to 47% of spending
in FY2000. At the same time, administrative costs were 37% of federal foster care
spending in FY1987, but accounted for 47% in FY2000 (the same as the percentage
for foster care maintenance payments in FY2000). Training as a percentage of overall
federal foster care spending tripled, from 2% in FY1987 to 6% in FY2000.
17 For purposes of Figure 3, expenditures for the State Automated Child Welfare Information
Systems (SACWIS) were excluded (as they did not begin until 1994). Also excluded are costs
associated with the HHS child welfare waiver experiments, for which a separate expenditure
category appears beginning in FY2000. For a more detailed discussion of data limitations,
see Appendix B.

CRS-11
It is important to remember that “administrative” costs include a very broadly
defined array of services, including the time of caseworkers spent in court, placing
children in out-of-home care, developing case plans, managing and supervising
children’s cases, and recruiting and licensing foster homes and institutional
placements. These activities are directly affected by federal mandates and child
protection requirements, which have become more detailed as Congress has amended
Title IV-E in recent years.
Figure 3. Distribution of Federal Expenditures for Maintenance
Payments, Administration, and Training for Title IV-E Foster Care,
FY1987-FY2000
100%
80%
60%
40%
20%
0%
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Maintenance Payments
Administration
Training
Source: Figure prepared by the Congressional Research Service (CRS) based on data provided by
the U.S. Department of Health and Human Services (HHS). These data reflect information for the
50 states, the District of Columbia, and beginning in FY1999, Puerto Rico.
Adoption Assistance. Unlike the distribution of spending for foster care, the
distribution of federal expenditures for adoption assistance payments, administration,
and training has remained relatively constant, as illustrated in Figure 4. Adoption
assistance payments to families account for by far the largest share of expenditures,
comprising 75% of expenditures in FY1987 and 72% of expenditures in FY2000.
Administrative costs comprised 23% of total federal funding in FY1987 and 24% in
FY2000 and the share of funds devoted to training increased, from 2% in FY1987 to
5% in FY2000.

CRS-12
Figure 4. Distribution of Federal Expenditures for Assistance
Payments, Administration, and Training for Title IV-E Adoption
Assistance, FY1987-FY2000
100%
80%
60%
40%
20%
0%
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Adoption Assistance Payments
Administration
Training
Source: Figure prepared by the Congressional Research Service (CRS) based on data provided by
the U.S. Department of Health and Human Services (HHS). These data reflect information for the
50 states, the District of Columbia, and beginning in FY1999, Puerto Rico.
Federal Child Welfare Spending in Six Selected States
The previous figures illustrate national trends in federal funding for foster care
and adoption assistance under Title IV-E. However, child welfare spending varies
considerably by state.18 This section explores federal child welfare funding in six
selected states - California, New York, Pennsylvania, Illinois, Michigan, and Ohio.19
These were the six largest states in terms of the average monthly number of children
who were claimed as eligible for foster care under Title IV-E in FY1987, accounting
for 58% of the eligible population in that year. Figure 5 illustrates the federal share
of total state claims for these six selected states for foster care and adoption assistance
under Title IV-E for FY1987-FY2000. Figure 6 illustrates the total average monthly
number of children who were claimed as eligible for foster care and adoption
assistance under Title IV-E in these six states for FY1987-FY2000. In general, the
18 Appendix C includes three tables to illustrate this state variation. Appendix Tables C-1 and
C-2 illustrate the federal share of total state claims and the average monthly number of
children claimed as eligible for foster care and adoption assistance, respectively, under Title
IV-E, by state for FY1998-FY2000. Appendix Table C-3 illustrates the distribution of funds
among categories of foster care and adoption assistance under Title IV-E, by state, for
FY2000.
19 These six states are illustrated separately in Appendix D.

CRS-13
trends observed for these six states as a group are similar to those observed nationally
in Figures 1 and 2.
Figure 5. Federal Expenditures for Title IV-E Foster Care and
Adoption Assistance for Six Selected State, FY1987-FY2000
(in millions of FY2000 dollars)
3,000
2,500
2,000
1,500
1,000
500
0
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Foster Care
Adoption Assistance
Source: Figure prepared by the Congressional Research Service (CRS) based on data provided by
the U.S. Department of Health and Human Services (HHS). The six selected states are California,
Illinois, Michigan, New York, Ohio, and Pennsylvania

CRS-14
Figure 6. Total Average Monthly Number of Children Claimed as
Eligible for Federal Reimbursement for Title IV-E Foster Care and
Adoption Assistance for Six Selected States, FY1987-FY2000
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Foster Care
Adoption Assistance
Source: Figure prepared by the Congressional Research Service (CRS) based on data provided by
the U.S. Department of Health and Human Services (HHS). The six selected states are California,
Illinois, Michigan, New York, Ohio, and Pennsylvania.
In addition to reflecting the national trends in federal funding as well as the total
eligible population, these six states also reflect national trends in the distribution of
spending for expenditures for foster care and adoption assistance. Table 1 illustrates
the distribution of the federal share of total state claims for foster care and adoption
assistance under Title IV-E for all the states, as well as the comparable percentage
distribution among these six states (the percentages for all states are illustrated in
Figures 3 and 4).

CRS-15
Table 1. Distribution of Federal Expenditures for Foster Care
and Adoption Assistance under Title IV-E for All States and Six
Selected States, FY1987 and FY2000
1987
2000
Six selected
Six selected
All states
states
All states
states
Title IV-E Foster Care
Maintenance payments
61%
64%
47%
48%
Administration
37%
34%
47%
48%
Training
2%
2%
6%
4%
Total
100%
100%
100%
100%
Title IV-E Adoption Assistance
Assistance payments
75%
76%
72%
71%
Administration
23%
21%
24%
25%
Training
2%
3%
5%
5%
Total
100%
100%
100%
100%
Source: Table prepared by the Congressional Research Service (CRS) using data provided by the
U.S. Department of Health and Human Services (HHS). Detail may not sum to total due to rounding.
Although the trends observed in Table 1 are similar for all states as well as the
six selected states, the distribution of federal funds for the remaining states (that is,
excluding these six states) illustrates a different pattern. Among the remaining states,
foster care maintenance payments comprised a lower percentage of the overall
spending in FY1987 (54%), but an amount comparable to all the states (46%) in
FY2000. However, administration was a larger percentage of overall foster care
spending in FY1987 in the remaining states (45%) and therefore has only slightly
increased over the past 14 years (46% in FY2000). At the same time, training as a
percentage of overall spending for foster care quadrupled among the remaining states,
growing from 2% in FY1987 to 8% in FY2000. For adoption assistance under Title
IV-E, training as a percentage of overall spending among the remaining states
increased from 1% in FY1987 to 5% in FY2000. And, unlike the trends observed for
all the states and for the six selected states, adoption assistance payments in the
remaining states increased from 71% in FY1987 to 73% in FY2000, while
administrative costs as a percentage of overall spending for adoption assistance
decreased from 28% in FY1987 to 23% in FY2000.
The six selected states continue to play a role in explaining trends in child welfare
spending; however, their participation in foster care as well as adoption assistance has
changed over the past 14 years. Cumulatively, these six states accounted for 58% of
the Title IV-E foster care population in FY1987, compared to 55% in FY2000.
These six states also accounted for 68% of the federal share of total state claims for
Title IV-E foster care in FY1987, compared to 58% in FY2000. Similar trends were
observed for adoption assistance. These states’ share of the total population eligible
for adoption assistance fell from 60% in FY1987 to 54% in FY2000, while their share
of the total federal funding for Title IV-E adoption assistance also fell from 64% in
FY1987 to 56% in FY2000.

CRS-16
As the role of these six selected states in influencing national trends in federal
child welfare spending has decreased over time, the role of other states has increased.
It is important to note that foster care and adoption assistance under Title IV-E are
open-ended entitlements and there is no limit on total federal spending. Each state
determines its own payment rates for both foster care and adoption assistance as well
as its own priorities for expenditures on administration and training. Given the
variation among states in payment rates as well as other expenditures, the states with
the largest share of the foster care population will not necessarily be the largest
spenders or have the largest share of federal funds. For example, Pennsylvania was
one of the six largest states in terms of its share of the total population of children
eligible for federal reimbursement under Title IV-E in FY1987. However, five states
with a smaller share of the total foster care population (Texas, Minnesota, Wisconsin,
Maryland, and New Jersey) had a larger share of total federal funding for foster care
under Title IV-E in FY1987.
Projections for Future Child Welfare Spending
As just shown, child welfare spending levels have changed dramatically over the
past 14 years. Figure 7 illustrates the trends in the federal share of total state claims
for foster care and adoption assistance under Title IV-E for FY1987-FY2000, but
also includes the projections for federal spending for these two activities for the next
10 years, as estimated by the Congressional Budget Office (CBO). Figure 8
illustrates the trends in the average monthly number of children eligible for federally
funded foster care and adoption assistance, as well as the projections assumed by
CBO for the next 10 years. These figures illustrate two important points. First, CBO
is projecting that the federal share of expenditures for foster care and adoption
assistance are going to continue to grow (controlling for inflation) over the next 10
years. And, the programs will continue to grow at different rates, with federal
expenditures for adoption assistance growing at a much faster rate than federal
expenditures for foster care under Title IV-E. Second, although historically the
average monthly number of children claimed as eligible under Title IV-E for foster
care has been larger than the number claimed as eligible for adoption assistance,
beginning in FY2003, CBO estimates that the population eligible for adoption
assistance will surpass the foster care population under Title IV-E and will continue
to grow at a much faster rate.
Although not illustrated here, CBO is also projecting that trends in the
distribution of spending under foster care will continue to mirror current trends. That
is, CBO expects that the largest share of federal expenditures for Title IV-E foster
care will be for administration (49% in FY2001 and 51% in FY2011), the share of
overall spending for maintenance payments will continue to fall (46% in FY2001 and
43% in FY2011), and the share of funds devoted to training will remain small (5% in
each of FY2001 and FY2011). CBO also expects that the distribution of spending
under adoption assistance will continue in much the same pattern as currently
illustrated in Figure 4. Adoption assistance payments will continue to comprise the
majority of these expenditures (72% in FY2001 and 76% in FY2011), administration
will decrease slightly as a share of overall spending (23% in FY2001 and 20% in
FY2011), and training will continue to comprise a small share of spending (5% in
FY2001 and 4% in FY2011).

CRS-17
Figure 7. Actual and Projected Federal Expenditures for Title IV-E
Foster Care and Adoption Assistance, FY1987-FY2011
(in millions of FY2000 dollars)
7,000
CBO Projections Begin
6,000
5,000
4,000
3,000
2,000
1,000
0
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Foster Care
Adoption Assistance
Figure 8. Actual and Projected Average Monthly Caseload for
Title IV-E Foster Care and Adoption Assistance, FY1987-FY2011
(in thousands)
700
CBO Projections Begin
600
500
400
300
200
100
0
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Foster Care
Adoption Assistance
Source: Congressional Research Service (CRS). Data for FY1987-FY2000 were provided by the
Department of Health and Human Services (HHS). Projections illustrated for FY2001-FY2011 are
based on data provided by the Congressional Budget Office (CBO).

CRS-18
Prevailing Views of the Current System
Perceived Weaknesses
As federal spending for child welfare activities has grown, the financing structure
has increasingly been seen as interfering with the ability of states to meet the needs of
children and families. The system is often criticized as complex, burdensome for
administrators and social workers, and inflexible. Most discussions of child welfare
financing focus primarily on foster care and adoption assistance under Title IV-E
because they are the largest sources of funding and, as the previous section showed,
have seen dramatic growth. One feature of the current system – the AFDC eligibility
requirement for foster care and adoption assistance – is a particular source of
frustration for many policy makers and administrators, who view it as outdated and
inappropriate. The current system also has no specific provisions to address an
increasingly important form of foster care – care by relative caretakers or “kinship”
foster care.
Complexity. The sheer complexity of the current system is a frequently raised
concern. Although virtually all funds under Titles IV-B, IV-E and CAPTA go to the
state child welfare agency, they are provided through different grants, with different
financing structures, allocation provisions and matching rates. Foster care and
adoption assistance under Title IV-E are further subdivided into three components
each (maintenance or assistance payments, training, and administration), which also
have different matching rates. In addition, states must submit multiple plans and
applications to receive all of the authorized grants, although the requirements
contained in these plans and applications are intended to work together to constitute
a comprehensive federal child welfare policy.20
The financing structure of foster care and adoption assistance is generally
considered the most burdensome by the states. Because these programs operate as
open-ended entitlements, states must document and HHS must determine the
eligibility of every expenditure for reimbursement by the federal government. To be
eligible for federal reimbursement, foster care maintenance payments must be made
on behalf of eligible children. In addition to the AFDC eligibility requirement, which
is discussed in more detail below, states must document that certain judicial findings
were made with regard to the child’s placement in foster care, that the state is
responsible for the child’s placement and care, and that the child has been placed in
a licensed home or facility. Likewise, adoption assistance payments must be made on
behalf of eligible children to be reimbursable by the federal government, but the
eligibility criteria governing children receiving adoption assistance differ from those
governing foster children. Again, children must be eligible for AFDC, as it existed in
20 In practice, HHS requires states to submit a consolidated plan for CAPTA, Title IV-B of
the Social Security Act, and the Foster Care Independence program, with annual progress and
status reports. This consolidated child and family services plan is separate from the Title IV-
E state plan.

CRS-19
their state on July 16, 1996, or be eligible for SSI, but also must have special needs
as determined by their state.21
Expenditures for training and administration under Title IV-E must be “cost-
allocated,” which generally means that only that ratio of expenditures equal to the
state’s ratio of Title IV-E-eligible foster children (i.e., eligible children as a proportion
of the state’s entire foster care caseload) may be reimbursed by the federal
government.22 Cost-allocation is further complicated by an HHS Departmental
Appeals Board (DAB) ruling in 1987, which found that states may be reimbursed for
certain administrative expenditures on behalf of Title IV-E “candidates,” during the
time before it is determined whether such children are actually eligible under the
provisions of Title IV-E.
The AFDC Connection. As described earlier, the AFDC requirement in Title
IV-E limits eligibility for federal foster care and adoption subsidies to those children
who would have been eligible for AFDC, as that program existed in their state on July
16, 1996, if they had been living in their biological home.23 The origin of this
requirement can be traced back to the early 1960s, when federal foster care subsidies
first were authorized as a component of the AFDC program. However, the policy
rationale for the AFDC connection has become increasingly murky over the years, and
especially since 1996, when AFDC was repealed and replaced by the Temporary
Assistance for Needy Families (TANF) block grant.
HHS estimates that about 55% of all foster children are currently claimed by
states as eligible under Title IV-E. Little is known about the differences between
foster children who are Title IV-E-eligible and those who are not. However, it is
generally believed that they are removed from home and placed in foster care for the
same basic reasons; i.e., they have been abused or neglected in their biological home
or otherwise need protection through placement in out-of-home care, under state
responsibility and with judicial oversight. Thus, it can be argued that the income and
welfare eligibility status of their biological parents has nothing to do with their need
for foster care and that AFDC or any other means-tested eligibility criteria is not
relevant. For children receiving adoption assistance, it can be argued that the AFDC
eligibility criterion is even less appropriate, since it ties a child’s eligibility for federal
subsidies to the income and welfare status of biological parents whose parental rights
to that child have been terminated. Furthermore, caseworkers often find it difficult
or awkward to obtain information about income and assets from parents whose
children have just been removed from their homes. And, in the case of abandoned
children, this information often cannot be obtained at all.
21 In January 2001, HHS issued a policy announcement (PA-01-01), which states that children
who are voluntarily placed with or relinquished to a private nonprofit agency, but are not
eligible for Title IV-E foster care maintenance payments, are not eligible for Title IV-E-
subsidized adoption assistance. This is a change from previous policy.
22 State expenditures for HHS-approved SACWIS systems (State Automated Child Welfare
Information Systems) are not subject to cost-allocation rules.
23 Children may also qualify for federally subsidized adoption assistance if they are eligible
for Supplemental Security Income (SSI).

CRS-20
Regardless of whether any means-tested eligibility criteria are appropriate for
foster care or adoption assistance, the specific use of AFDC has been increasingly
questioned in recent years. As stated above, AFDC was repealed in 1996 and
replaced by the TANF block grant. However, for purposes of Title IV-E foster care
and adoption assistance, and also for Medicaid, the eligibility criteria used by states
under AFDC on July 16, 1996, were frozen and retained.24 When AFDC existed,
social workers could determine relatively easily whether a family was receiving
benefits under that program. This process is more difficult under current law, since
a family now receiving welfare under criteria established for TANF might not
necessarily have been eligible for AFDC under the July 1996 criteria. Moreover, there
is no adjustment permitted in the 1996 criteria. Thus, there is concern that fewer
children might be eligible for reimbursement under Title IV-E over time, as the value
of the July 16, 1996, eligibility criteria erodes.25
Because of the eligibility requirements that govern Title IV-E expenditures,
administrators and caseworkers frequently report that the eligibility determination
process is costly, both in staff time and additional administrative expenditures.
However, according to HHS, only about 4% of reimbursement claims for
administrative costs related to foster care in FY1999 were due to the eligibility
determination process.26
Inflexibility. One of the major criticisms of federal child welfare policy is its
inflexibility regarding the use of funds by states. Specifically, critics note that most
federal funds are available to states only after children have been removed from their
homes, and a comparatively small and limited amount of resources are available to
help prevent and treat the conditions that cause children to be removed from home in
the first place. It has been argued that this financing structure actually encourages and
rewards states for removing children from their homes and for placing and keeping
them in foster care. It is further argued that states have no incentive to shorten the
24 The welfare reform law originally established June 1, 1995, as the “look-back” date for
AFDC eligibility criteria for use in determining Title IV-E eligibility. This was subsequently
changed to July 16, 1996, to be consistent with the look-back date for Medicaid. However,
under Medicaid, these criteria may be adjusted for various reasons, including changes in the
Consumer Price Index (CPI), and states may adjust the methodologies they use in counting
income and assets, which has enabled them to liberalize treatment of the July 16, 1996,
eligibility criteria. These adjustments are not authorized for either foster care or adoption
assistance.
25 Many states have changed their eligibility rules for welfare since enactment of TANF. For
example, many states have raised resource eligibility limits from those that existed under
AFDC. Federal law limited AFDC to families with countable resources below $1,000. The
value of one vehicle with an equity value of up to $1,500 was excluded from AFDC countable
resources. Under TANF, many states have raised the resource eligibility limits above $1,000
and exclude more of the value of vehicles (sometimes excluding the entire value of a vehicle).
For TANF resource eligibility limits in effect as of July 1, 2000, see RL30579, Welfare
Reform: Financial Eligibility Rules and Cash Assistance Amounts under TANF, by Craig
Abbey, December 2000, p. 16-20.
26 U.S. Congress. House Ways and Means Committee, 2000 Green Book, October 6, 2000,
p. 664.

CRS-21
length of time that children remain in foster care, because they lose federal matching
funds on behalf of those children when their case is closed, and because they have
only limited federal resources to use for activities to support, preserve, or reunite
families, or to develop and support adoptive placements.27
The most flexible funds provided under current law are available through Subpart
1 of Title IV-B (child welfare services) and adoption incentive payments. Although
Subpart 1 limits the amount of funds that may be used for work-related child care,
foster care or adoption assistance, it imposes no eligibility or other requirements on
the children or families that may be served, nor does it mandate that any particular
type of service be provided. Subpart 1 also contains a very broad definition of child
welfare services (see footnote 3). Likewise, funds provided to states as adoption
incentive payments under Section 473A may be used for any child welfare-related
activity. However, as noted earlier, funding for these programs is relatively small; i.e.,
$292 million for child welfare services and $43 million for adoption incentives in
FY2001.
Grants to states under Subpart 2 of Title IV-B (Promoting Safe and Stable
Families) also are not restricted by federal law as to income or any other characteristic
of families that may be served. However, the law specifies and defines four types of
child welfare services that must be supported with these funds (i.e., community-based
family support, family preservation, time-limited family reunification, and adoption
promotion and support). The law requires that no more than 10% of each state’s
allotment may be used for administrative purposes and that “significant portions” of
the remainder must be used for each of the four specified child welfare activities.
HHS has instructed states that, in general, a minimum of 20% of their allotments must
be used for each of the four activities. In FY2001, this program received $305 million
(from which funds are reserved for court improvement grants, research, technical
assistance, and grants to Indian tribes). Thus, states are technically required to spend
a minimum of $57 million for each of the four authorized activities (20% of the $286
million remaining after set-asides).28
Although states have flexibility in the use of their CAPTA grants, these funds are
generally intended to support the “front-end” of the child welfare system, known as
the “child protective services” (CPS) system. This is the child welfare component that
focuses on prevention, identification, and investigation of child maltreatment reports.
Thus, some of the activities authorized under Title I of CAPTA include intake,
27 On the other hand, state officials maintain that social workers and judges who oversee the
cases of foster children do not consider the availability of federal funds in determining the
appropriate action on behalf of an individual child. Moreover, state plan requirements and
other provisions of federal law – including the adoption incentive payments authorized in 1997
– are intended to protect children from being placed or retained in foster care unnecessarily.
28 On average, states were planning to spend less than 20% for the two newest activities in
FY1999, based on reports submitted to HHS, primarily because they were phasing these new
services in while trying to minimize disruption in ongoing family preservation and family
support programs. (Source: Analysis of States’ 1998 Annual Progress and Services Reports:
The Family Preservation and Family Support Implementation Study, James Bell Associates,
Arlington, Va., March 23, 2001.)

CRS-22
assessment, screening and investigation of abuse and neglect reports; development of
multidisciplinary teams to enhance investigations; case management; development of
risk assessment tools; training for individuals mandated to report child abuse or
neglect; and development of community-based programs intended to prevent child
abuse.
As amended in 1999, the revised independent living program has been
characterized by some observers as a “block grant,” because it provides funds that are
intended to achieve certain outcomes (i.e., to improve the employment and education
prospects and transition to independent living for older foster children), but the law
does not mandate or specify how these outcomes are to be achieved. Thus, funds
may be used flexibly, within the overall goals and for the target population specified
in law.29 The target population is not defined by income, but rather by age (under 21)
and likelihood of remaining in foster care until age 18. Again, this program is
relatively small, with FY2001 funding of $140 million.
Grants to states for foster care and adoption assistance under Title IV-E are the
least flexible funds available from the federal government for child welfare activities.
As already described, these funds are available only for certain categories of
expenditures on behalf of certain categories of foster or adopted children, subject to
a means test. However, they are the largest federal child welfare funding streams in
terms of expenditures (an estimated $6.2 billion in FY2001), and the only ones that
operate with no cap on federal spending. Most reform proposals focus on these two
funding streams and, in particular, foster care.
Relative Caretakers. According to HHS, relatives were functioning as foster
parents for 26% of foster children in 1999. However, with some exceptions, federal
child welfare law does not recognize a distinction between relative caretakers and
other types of foster care providers. Under Title IV-E, two types of subsidies may
be supported with federal funds: (1) foster care maintenance payments for children
who are placed in licensed foster homes or institutions; and (2) adoption assistance
payments for children with special needs. Neither subsidy is explicitly intended for
relative caretakers, although relative caretakers can and do receive both types, if all
necessary conditions are met.
In general, relatives caring for children fall into one of several categories. Many
children live with grandparents or other relatives through informal arrangements that
do not involve the child welfare agency or the court. In such cases, the relatives may
receive no public assistance at all on behalf of the child, or may potentially receive a
TANF benefit if the child is poor. If the relatives themselves are low-income, they
may be eligible to receive a TANF benefit to cover their own needs, although TANF
work and time limit requirements may apply in such cases. While all of these family
arrangements are generically referred to as “kinship care,” they would not necessarily
be considered “kinship foster care.”
29 However, the 1999 amendments limit spending for room and board for 18-20-year-olds to
a maximum of 30% of state allotments.

CRS-23
Some children live with grandparents or other relatives because they were placed
there by the child welfare agency or the court. The state may pay nothing to these
relatives, or they may pay a TANF benefit, or a foster care subsidy, depending on the
circumstances. (Foster care subsidies are almost always higher than TANF benefits.)
However, for the state to claim federal reimbursement under foster care for any
expenses associated with the child, the state has to have legal responsibility for the
child and the caretaker must comply with state licensing requirements. In that case,
under the 1979 Supreme Court Miller v. Youakim30 decision, the state must pay the
same foster care subsidy to the relative caretaker as would be paid to a non-relative
foster care provider. In other words, states may not discriminate in their payment
rates to relative caretakers who are licensed (in cases that otherwise meet Title IV-E
eligibility criteria). However, many relatives are not licensed as foster parents and
therefore, may receive less than their licensed counterparts or nothing at all.
Children who are under state care but are living with relatives, licensed or
otherwise, must be given the same protections as other foster children, under the state
plan requirements of Titles IV-B and IV-E. In other words, reasonable efforts must
be made to reunite them with their parents if safe and appropriate, case plans must be
written and permanency plans must be established, and they must have regular
administrative and judicial reviews. In addition, the law requires states to initiate
procedures to terminate parental rights for children who have been in foster care for
15 of the most recent 22 months. States may make exceptions to this requirement for
three specified reasons, one of which is that the child is living with a relative.31
However, these exceptions must be made on a case-by-case basis, according to HHS
regulations.32
Relatives who adopt their related children may be eligible to receive adoption
assistance, if the child meets all requirements including that they have special needs
as defined by their state. Adoption requires termination of all parental rights (TPR)
of the child’s biological parents.
Some kinship care proponents have argued that current financing rules do not
recognize the unique situations of relative caretakers. For example, relatives caring
for children may need the financial (and social service) support of the state child
welfare agency, but cannot meet licensing requirements for some reason, or don’t
want the ongoing intrusion of social workers and judges continuously reviewing their
case. While adoption may be appropriate for some families, it requires TPR, which
is a legal adversarial process and may not always be in a child’s best interests.
Intermediate arrangements, such as legal guardianship, might be the best option for
30 440 U.S. 125 (1979).
31 The other two exceptions are when the state agency has documented in the child’s case plan
a compelling reason to determine that termination of parental rights would not be in the child’s
best interests, or if the state has not provided necessary services to the family.
32 Federal Register, January 25, 2000. p. 4020-4093.

CRS-24
some children, but no federally assisted subsidy is available (other than possibly
welfare) because the arrangement is not considered either foster care or adoption.33
Perceived Strengths
While many policymakers, administrators, and child advocates have expressed
the concerns raised above, many also defend the current financing system for several
specific reasons. Because foster care is funded on an open-ended entitlement basis,
many believe that Title IV-E is one of the last safety nets for states, providing them
with resources as needed to support abused and neglected children without any
predetermined cap on federal spending. In addition, the current system requires states
to guarantee certain protections for children in (or at risk of being placed in) foster
care, and these protections are further reinforced through the Title IV-E
reimbursement process. And finally, Congress has recently allowed states to conduct
child welfare demonstration projects that provide some flexibility under the current
financing structure and that also will eventually produce evaluation findings to help
inform legislative proposals in the future.
Safety Net for States. For many state officials and child advocates, a crucial
feature of the current federal financing system is the safety net provided to states in
case of unanticipated increases in their foster care caseloads. If the number of
children entering foster care in a particular state goes up, the amount of federal
resources available to that state also goes up, as long as the children and expenditures
meet Title IV-E eligibility criteria. There is no limit on the amount of federal funds
that a state is entitled to receive as partial reimbursement for the costs of serving
eligible children. For example, between 1985 and 1990, the number of children in
foster care rose sharply, from 276,000 to 400,000. The cause of this increase was
generally believed to be the introduction of crack cocaine in the mid-to-late 1980s.
Although the crack epidemic was a phenomenon largely beyond the control of state
governments, the impact of a skyrocketing foster care population was felt acutely at
the state level. While states increased their own spending on foster care during this
period, additional federal support also was available because of the financing structure
of Title IV-E. Federal expenditures for foster care under Title IV-E almost tripled
between 1985 and 1990, from $546 million to $1.5 billion.
The crack epidemic – and its devastating impact on children – is the most recent
and dramatic example of an unexpected change in the environment that can have
staggering fiscal impacts on the child welfare system. Many observers fear such an
event could occur again, and therefore, the existing “safety net” must be maintained.
For example, some child advocates are concerned that a downturn in the economy or
elimination of welfare benefits because of time limits or other requirements of welfare
reform could affect the size of the foster care population, either by causing more
33 States may use their own funds to provide subsidies to relative guardians. In addition,
under federal waiver authority, some states are experimenting with subsidized guardianship
arrangements under Title IV-E. See discussion of waivers on page 26 of this report.

CRS-25
children to enter the system or by hindering efforts to restore families and return
children home.34
Since enactment of the Adoption and Safe Families Act in 1997, states also must
meet timetables intended to move children more quickly toward adoption and not
allow them to linger indefinitely in foster care. For children with special needs, whose
adoptions may require ongoing subsidies throughout their childhoods, states also have
a safety net as a result of the open-ended entitlement nature of adoption assistance
under Title IV-E. As with foster care, if the number of special needs children who are
adopted in a given state increases, the amount of federal resources available to the
state to support these children also increases, if the children meet federal eligibility
criteria. (As discussed earlier, CBO estimates that nationally, children eligible for
federally subsidized adoption assistance will grow at a rapid pace during the next 10
years, outnumbering children federally eligible for foster care by FY2003.) It can be
argued that the current financing structure of the Title IV-E adoption assistance
program is consistent with recent federal initiatives to promote and support adoption.
Mandatory Child Protections. Advocates of the current federal system
point to a series of interrelated provisions, generally known as the law’s mandatory
“child protections,” as one of its most important strengths. These provisions are
intended to avoid the placement of children in foster care unless necessary for their
safety; to ensure that efforts are made to reunify them with their families as soon as
safely possible; and to make sure their foster care placement is the least restrictive,
most family-like setting appropriate for them, geographically close to their natural
family. The federal provisions also require that a written case plan must be developed
for every child in foster care; that a permanency plan must be established for every
child; that the child’s case must be regularly reviewed through both an administrative
and judicial process; and that efforts be made to place the child in accordance with the
permanency plan as expeditiously as possible. These provisions apply to all foster
children, regardless of whether they meet the eligibility criteria of Title IV-E.
Federal child protections are contained in the state plan requirements for Titles
IV-B and IV-E. As explained earlier, for states to be eligible to receive funds under
these authorities, they must have state plans in effect that meet all of the requirements
– including the child protections – contained in federal law. These requirements are
intended to be universal and to protect all children who come into contact with the
state child welfare system. In other words, state plan requirements are not limited in
their coverage to foster children who are eligible for federal subsidies. However,
some of the child protection requirements are reinforced through the Title IV-E
financing mechanism.
34 At the same time, observers note that the safety net operates, for the most part, only after
a crisis has occurred and children are removed from their original homes. Current law
provides a relatively small (and capped) amount of resources to states for their efforts to
provide preventive and supportive services, which might reduce the likelihood of a child’s
placement in foster care or shorten the child’s stay. Moreover, the existing safety net does not
extend to related agencies that interact with the child welfare system (e.g., state courts, law
enforcement, and service providers such as substance abuse or mental health agencies).

CRS-26
For example, as a condition of their plans, states are required to make reasonable
efforts to avoid the need to place children in foster care and to make reasonable
efforts to return a child home if it can be done safely. This requirement applies to all
children who enter the child welfare system (unless a court determines that an
exception exists). However, if a state claims federal reimbursement for expenditures
made on behalf of a particular foster child, the state must document to HHS that
there has been a judicial determination to the effect that remaining in the natural home
would have been contrary to the welfare of that child, and that necessary reasonable
efforts – to avoid placement and to enable reunification – have been made. Without
documentation of these judicial findings, federal reimbursement on behalf of that child
cannot be made.
Waivers. While critics often attack the current system as being inflexible,
Congress in recent years has allowed states the option of designing child welfare
experiments under waivers from federal provisions, subject to the approval of HHS.
Initially, in 1994, Congress authorized HHS to grant waivers to 10 states, and in 1997
expanded this authority to allow 10 additional waivers each year for 5 years (through
FY2002). The demonstration project must be cost-neutral to the federal government
(in terms of expenditures under Titles IV-B or IV-E) and include an evaluation
component. These waivers are allowed for 5 years only, and may not include waivers
of the child protections required under Titles IV-B and IV-E. States have used these
waivers to test various initiatives, such as subsidized guardianship, capped allocations
to local governments that can be used flexibly for various services, and fixed-price
performance-based payments to providers.35 It is anticipated that evaluations of these
waiver demonstrations will help inform future policy decisions made by Congress.
Accountability and Judicial Enforcement
There is general unease about the extent to which federal law holds state child
welfare agencies accountable for their performance. Although the law requires states
to ensure certain protections for children (as described above), federal administrative
enforcement of these protections was minimal for many years. HHS has recently
developed a new system for monitoring state performance and enforcing federal child
welfare law, which was initially mandated by Congress in October 1994 and
subsequently went into effect in March 2000.36 The new system includes extensive
on-site reviews, comparison of state performance against national standards,
opportunity for corrective action, and imposition of penalties. The system has been
enthusiastically received by many, but its effectiveness has not yet been tested.
Pre-Suter and Suter-Fix. In the absence of aggressive enforcement by the
federal government for much of the last 20 years, child advocates have filed litigation
against numerous state and local child welfare agencies. Even now, child advocates
maintain that access to the federal courts remains essential as a final recourse to
35 For information about state waivers, see the U.S. Congress. House Ways and Means
Committee, 2000 Green Book, October 6, 2000, p. 697-705.
36 See CRS Congressional Distribution Memorandum, Child Welfare Review System Final
Regulations, February 7, 2000, by (name redacted).
Also see the HHS web site devoted to this
review system at: [http://www.childwelfarereview.com/].

CRS-27
ensure child protection. Of most relevance to the topic of this report, some advocates
of the current financing structure of Title IV-E – as an open-ended entitlement –
argue that this structure is essential for the law’s provisions to be enforced through
the courts. However, the extent to which even current federal child welfare law
provides this access is a matter in question.
While some of the lawsuits over the last 20 years have been narrow in scope,
many have been class actions alleging a wide array of violations of federal and state
law and seeking comprehensive child welfare reform. Many of these cases also have
alleged constitutional violations. According to Marcia Lowry, who brought many of
the child welfare cases over the past 20 years, initially for the American Civil Liberties
Union and subsequently for Children’s Rights, Inc., the specific state plan
requirements of Titles IV-B and IV-E were critical in many of these cases. Lowry
maintained that the federal law created specific protections and benefits that were
enforceable in federal court.37
The ability of child advocates to enforce the federal child protections through the
courts was challenged in 1992 by the Supreme Court decision in Suter v. Artist M.38
In this case, a class action was filed against the Illinois Department of Children and
Family Services for several violations of federal law, most notably failure to make
reasonable efforts to prevent the need to remove children from their homes and to
reunify children with their families. According to attorneys representing the children,
these violations of the federal child welfare law occurred because the agency had not
promptly assigned caseworkers after the children were placed in state custody.
The district and appeals courts held in favor of the children. However, the
Supreme Court later reversed the appeals court decision and held that the federal law
did not create a right that was enforceable through federal court. Instead, because the
child protections, including the reasonable efforts provision, were contained as state
plan requirements, the law only required that the state have a plan approved by the
Secretary of HHS. It was the responsibility of HHS to enforce the implementation
of that plan through withholding federal funds for noncompliance, as authorized by
Congress. The Court also found that the term “reasonable efforts” was not defined
in law because Congress intended to grant the states wide discretion in their
interpretation of this term. Thus, the Court ruled that the reasonable efforts
requirement did not “unambiguously confer an enforceable right” upon the law’s
beneficiaries, regardless of whether it was included in a state plan.
Congress responded to the Suter decision by enacting legislation in 1994, which
states that in any action brought to enforce a provision of the Social Security Act, that
provision is not considered unenforceable simply because it is a state plan
requirement.39 This new language was intended to ensure that an individual’s right
37 Lowry, Marcia Robinson Child Welfare Impact Litigation in the 1980s, Family Law
Quarterly, summer 1986.
38 503 U.S. 347 (1992).
39 This language was inadvertently enacted twice (in identical versions), as Sections 1123 and
(continued...)

CRS-28
of action under the Social Security Act was neither expanded nor limited by the Suter
decision, with regard to any provision required as a component of a state plan. With
regard to the reasonable efforts portion of the Suter decision, the 1994 provision
states that it is not intended to alter the Court’s decision that the law’s reasonable
efforts requirement does not confer a private right of action.
Post-Suter and Suter-Fix. The environment has changed since the Suter
decision and the enactment of the so-called “Suter fix” in 1994, in that a federal
administrative mechanism now exists to enforce the child protections established in
Titles IV-B and IV-E. Nonetheless, the question remains: To what extent are the
child protections and other requirements of federal child welfare law currently
enforceable through the courts? And, is there any relationship between the financing
structure of federal child welfare programs and the extent to which these provisions
can be enforced through federal court?
With regard to the first question, there was not necessarily consensus among
individuals who were involved in debating the Suter fix legislation in 1994, and since
that time, court decisions have been mixed. For example, the Fourth Circuit Court
of Appeals ruled in April 1997 that certain state plan requirements under Title IV-E
do not confer an enforceable right, for the same reasons cited by the Supreme Court
in the Suter case, and stated that enactment of the Suter fix legislation “does not alter
our view” (White v. Chambliss40). In E.F. v. Scafildi, the U.S. District Court for the
Southern District of Mississippi had reached a similar finding in April 1994, relying
on the Suter decision, and subsequently declined to reconsider the case after the Suter
fix was enacted several months later.41
Likewise, the U.S. District Court for New Jersey ruled in January 2000, in
Charlie and Nadine H. v. Whitman, that specific state plan requirements under Titles
IV-B and IV-E do not confer an unambiguous right and therefore cannot be enforced
in federal court.42 The particular requirements in that case included: a preplacement
preventive services program; case plans and implementation and review of these plans;
placement of children in homes or facilities that comply with nationally recommended
standards; placement of children in the least restrictive, most family-like setting;
proper care of foster children; adherence to a specified timetable for freeing children
for adoption; timely permanency planning and service delivery; regular judicial and
administrative reviews and dispositional hearings; and development of an adequate
child welfare information system. Similarly, the court ruled that certain state plan
provisions of CAPTA – dealing with the prompt investigation of maltreatment reports
and the protection of children – do not confer unambiguous rights enforceable
through the federal courts. Therefore, the children’s claims that these provisions had
39 (...continued)
1130A of the Social Security Act (P.L. 103-382 and P.L. 103-432).
40 112 F.3d 731 (4th Cir. 1997).
41 851 F. Supp. 249 (S.D. Miss. 1994).
42 83 F. Supp. 2d 476 (2000)

CRS-29
been violated were dismissed, although other components of the case were allowed
to continue.43
On the other hand, the U.S. District Court for Tennessee issued an opposite
ruling in October 2000, in Brian A. v. Sundquist.44 In this case, the court ruled that
certain state plan requirements under Titles IV-B and IV-E do confer an unambiguous
right that can be enforced through federal court, specifically the requirements dealing
with case plans and review systems, placement in homes or facilities that comply with
nationally recommended standards, and an adequate child welfare information system.
In April 2001, a magistrate judge of the U.S. District Court for the Southern District
of Florida also ruled that federal child welfare law creates enforceable rights, and
recommended that Bonnie L. v. Jeb Bush go forward to trial.45 And, most recently,
the U.S. District Court for the Eastern District of Wisconsin ruled in Jeanine B. v.
Scott McCallum that Title IV-E provisions established by the Adoption and Safe
Families Act of 1997, intended to speed up the adoption process for children in foster
care, are federal rights that are enforceable in court.46
Unresolved Questions. These conflicting decisions leave unresolved
questions about the extent to which litigation can be brought in federal court to
enforce the statutory provisions of Titles IV-B and IV-E of the Social Security Act.
In general, advocates have expressed concerns about recent trends that illustrate the
reluctance of courts to find that a private right of action exists to enforce statutory
requirements, unless that private right is explicitly established in the statute itself.47
(Most recently, the Supreme Court ruled in Alexander v. Sandoval, a civil rights case,
that private rights of action to enforce federal laws must be created by Congress and
cannot be created by the courts, “no matter how desirable that might be as a policy
matter, or how compatible with the statute.”48) At the same time, it is important to
note that many of the child welfare lawsuits of the past 20 years have alleged
violations of the Constitution and other statutes, in addition to Title IV-B and IV-E
of the Social Security Act, and these cases have moved forward on those grounds.
43 For example, the court found that the Multiethnic Placement Act (MEPA), as amended, did
confer enforceable rights, which were explicitly provided in the statute (Section 475(d)(3) of
the Social Security Act), and allowed the claim that MEPA had been violated to proceed.
44 2000 U.S. Dist. Lexis 18771.
45 Press release, Children’s Rights Inc., New York, April 23, 2001.
46 Ibid. June 25, 2001.
47 Speaking before the American Bar Association in 1999, Marcia Lowry said: “... there has
been a narrowing of the law in some areas, particularly concerning the enforcability of the
federal statutes under which all child welfare systems operate, and how much of these statutes
can be enforced on behalf of the children for whose benefit, presumably, the statutes were
passed.” Likewise, a summary of the national Child Welfare Advocates’ Conference in 1999,
published in Youth Law News, states: “There are also new barriers to litigation, such as
limitations on private rights of action under federal statutes ... .” However, Lowry hailed the
April 2001 ruling in Bonnie L. v. Jeb Bush as providing “greater clarity to unsettled federal
law” and creating “a much stronger basis for enforcing children’s rights in other failing child
welfare systems.”
48 121 S.Ct. 1511 (2001).

CRS-30
The issue of the financing structure of federal child welfare programs – and its
relationship to judicial enforcement – has generally not been explored. In determining
whether these programs create federally enforceable rights under 42 USC 1983,49 the
courts have traditionally looked at several factors. First, the plaintiffs must
demonstrate that they are the intended beneficiaries of the federal statute. Second,
the presumed “right” created by the statute must not be so “vague and amorphous”
that its enforcement would “strain judicial competence.” Third, the statute must
unambiguously impose a binding, or mandatory, obligation on the state. Finally,
Congress must not have precluded enforcement of the statute in court, either by
explicitly denying a private right of action or by establishing another enforcement
mechanism, such as an administrative review system.
In Suter, the Supreme Court found that Congress had provided another
enforcement mechanism (i.e., HHS was authorized to withhold funds if states failed
to comply with their federally approved state plans), and therefore, a private right of
action did not exist. In the Suter-fix law, Congress said this state plan structure did
not necessarily – on its own – preclude a private right of action to enforce the federal
law in court. Recent decisions have generally rested on the other factors identified
above and, as already discussed, the courts have issued conflicting decisions on
whether certain of the state plan requirements under Titles IV-B and IV-E are
sufficiently clear and unambiguous to create an enforceable right. Unless Congress
were to explicitly provide – in the federal statute itself – that the beneficiaries of these
laws may enforce them in federal court, this issue will likely remain unresolved.
Policy Options and Proposals
For at least the last decade, proposals to change the way federal funds are
provided to states for child welfare activities have surfaced in Congress, in response
to the perceived weaknesses described earlier. Ideas have ranged from expansions of
the existing foster care and adoption assistance entitlements to complete consolidation
of all federal child welfare funding streams, with many variations in between. Thus
far, none has been enacted for various reasons, including a lack of comprehensive
information for use in analyzing proposals, concerns about additional federal costs,
and a fear of sacrificing some of the system’s perceived strengths. Nonetheless, the
discussion has gained momentum in recent years and is continuing. The following
reviews some of the options that have been considered and discusses policy issues that
are raised by these proposals.
Severing the AFDC Connection (“De-Linking”)
Even before AFDC was repealed and replaced with the TANF block grant in
1996, there was concern about the use of AFDC as an eligibility criterion for federal
foster care or adoption assistance, for many of the reasons discussed earlier. In 1991,
Representative Downey introduced legislation (H.R. 2571, 102nd Congress) that
would have eliminated the requirement that limits federal reimbursement to states only
49 42 USC 1983 establishes the right of an individual to bring action in court in cases when
that individual is deprived of a federal right, privilege, or immunity.

CRS-31
to AFDC-eligible children, or SSI-eligible children in the case of adoption assistance.
The legislation would have allowed states to claim federal reimbursement for eligible
foster care or adoption assistance expenditures on behalf of children without regard
to their family income.
Because of the potential expense of expanding federal foster care and adoption
assistance to a greater number of children, the 1991 proposal also would have
reduced federal matching rates to states. Foster care maintenance and adoption
assistance payments to parents would have been matched at a 40% federal rate, rather
than the current Medicaid rate, which varies by state but never goes below 50%.
Administrative and child placement costs, currently matched at 50%, would have
received a 25% federal match, and the federal match for training expenses would have
been lowered from 75% to 50%.
The impact of this provision, which ultimately was deleted during a House Ways
and Means Subcommittee markup, would have varied significantly by state because
of two key factors. State matching rates for foster care maintenance and adoption
assistance payments vary because of the use of the Medicaid matching rate; therefore,
the effect of a flat federal matching rate of 40% would be different in each state.
Further, the proportion of each state’s foster care and adoption assistance caseload
that meets the AFDC eligibility criterion varies by state; therefore, the effect of
eliminating this requirement also would be different in each state.
At the time H.R. 2571 was debated, little reliable information was available on
the overall size of each state’s foster care population and the percentage of that
population that was claimed as Title IV-E-eligible. Thus, it was difficult to gauge the
proposal’s impact on each state. Nonetheless, it was clear that some states would be
“winners” and others would be “losers.” For example, it was known that New York
claimed a very high proportion of its foster care caseload as Title IV-E-eligible, so
that elimination of the AFDC requirement would have expanded the eligible
population in that state only slightly, while, at the same time, lowering the state’s
federal matching rates. For some other states, the effect of decreased federal
matching rates would have been outweighed by substantial increases in the population
for whom federal payments could be claimed.
Because of the limited information available, and concerns about state “losers,”
this proposal was dropped and replaced with a provision that would have authorized
HHS to conduct demonstrations in up to five states to test the feasibility of
eliminating income eligibility criteria from foster care and adoption assistance. This
provision was included among others in an omnibus urban aid and tax package (H.R.
11, 102nd Congress) that was pocket-vetoed by then-President Bush in 1992, for
reasons unrelated to child welfare.
During the welfare reform debate, the 104th Congress considered – but did not
enact – proposals to consolidate all federal child welfare funding streams into a block
grant, which would have left decisions about income eligibility requirements to state
discretion. When Congress repealed AFDC and established TANF, the structure of
Title IV-E was maintained but the law was amended to “grandfather” in the eligibility
requirements of AFDC, as they existed prior to the new law’s enactment, for purposes
of foster care, adoption assistance, and Medicaid. Lawmakers decided not to connect

CRS-32
foster care or adoption assistance eligibility to TANF because states have broad
discretion under TANF to define their eligible populations; thus, states could
potentially have defined a greater number of foster children as eligible for TANF and
thereby increased federal spending under Title IV-E.
Proposals to “de-link” AFDC from child welfare surfaced again in 1997, during
the debate that resulted in passage of the Adoption and Safe Families Act (ASFA).
The late Senator John Chafee and others introduced legislation to eliminate the AFDC
and SSI requirement from adoption assistance under Title IV-E (S. 511 and S. 1195,
105th Congress). Unlike the Downey proposal of 1991, these bills would not have
touched the AFDC requirement in foster care, nor would they have changed federal
matching rates. Although the Congressional Budget Office (CBO) never released a
formal estimate, concerns were raised about the proposal’s potential cost. As
discussed earlier, elimination of the AFDC or SSI requirement would expand the
population eligible for federal adoption subsidies, and without any change in the
matching rates, would result in additional federal costs. In response to this concern,
the proposal was changed to become prospective only; in other words, income
eligibility requirements would have continued to apply to children already receiving
adoption assistance, but would have been eliminated for children newly adopted after
the provision’s enactment. While the provision would still have resulted in increased
federal costs, the amount of additional spending would have been less.
The 1997 proposals to de-link adoption assistance grew from two concerns. As
stated earlier, many believe that the income and welfare eligibility status of biological
parents who have lost rights to their child should not be used to determine whether
the federal government will help subsidize adoption assistance for that child. In
addition, there was concern that children who are ineligible for federal adoption
subsidies may not have access to the same assistance and services from their state,
thereby creating a barrier to their adoption. According to the North American
Council on Adoptable Children (NACAC), almost all states have adoption assistance
programs for special needs children who do not meet the income eligibility criteria of
Title IV-E. These programs are primarily paid for by the states themselves, and
provide benefits that are usually – but not always – the same as those subsidized with
federal funds. Prior to the Adoption and Safe Families Act, one of the key differences
was access to Medicaid or other health insurance coverage; however, ASFA contains
provisions to address this issue.50
During the 1997 debate, it was unclear whether the de-linking proposal would
have helped to increase the actual number of special needs adoptions that occurred,
since children who are not eligible for Title IV-E adoption assistance may nonetheless
receive subsidies under a state-funded program. However, the proposal clearly had
fiscal implications for the federal and state governments. The American Public
Human Services Association (APHSA) estimated that one-third of children receiving
adoption assistance were not eligible for Title IV-E subsidies and were supported
entirely with state funds; these children would have become eligible under the original
50 ASFA requires states to provide health coverage to children for whom they have adoption
assistance agreements, and encourages states through incentives to provide coverage to
children living in their borders who have adoption assistance agreements with other states.

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proposal. Thus, federal spending would have increased, and states likely would have
saved money. To ensure that these state savings were used to benefit children, S.
1195 would have required that states use these funds for child welfare services
allowable under Title IV-B or Title IV-E.
Although the Adoption Equality Act was introduced in the 106th Congress (S.
1067, Rockefeller), with similar provisions to the 1997 proposals, the de-linking issue
recently has been subsumed in larger discussions of child welfare financing reform,
including proposals to promote flexible funding. The central issue in the de-linking
debate remains its cost to the federal government. The APHSA has recommended
that income eligibility criteria be eliminated from foster care and adoption assistance,
but that a customized matching rate be developed for each state, taking into account
the federal government’s actual share of each state’s spending under current law.
This proposal would avoid additional federal costs and would not result in state
windfalls. At the same time, this approach would produce different matching rates
for each state, which then would be locked in permanently, regardless of any changes
in the state’s circumstances. Under current law, the Medicaid matching rate varies
by state per capita income and is re-calculated each year.
Legislation has been introduced in the 107th Congress (H.R. 1990/S. 940) that
would eliminate income eligibility criteria from both foster care and adoption
assistance, and also would establish the Medicaid matching rate as the federal
matching rate for all services under Title IV-E (i.e., foster care, adoption assistance,
training, data collection, administration). This proposal also would significantly
expand the range of services that could be reimbursed under Title IV-E (discussed
below).
Expanding the Entitlement51
Current law specifically defines state expenditures that may be reimbursed by the
federal government under Title IV-E, which are limited to the costs of activities
related to certain foster or adopted children. As described earlier, reimbursable
activities are currently limited to foster care maintenance payments, adoption
assistance payments, administration, child placement services, training (for state
agency personnel, foster and adoptive parents, and staff of residential foster care
providers), and data collection. Critics have objected that these allowable uses are
too rigid and limited to activities that are conducted after children have been removed
51 In addition to proposals discussed in this section, legislation is pending in the 107th Congress
(S. 550/H.R. 2335), and similar bills have been proposed in earlier Congresses, to enable
Indian tribes to receive federal reimbursement directly under Title IV-E for expenses
associated with eligible children in their custody, rather than through the states, as under
current law. Moreover, legislation is pending in the 107th Congress to create additional grant
programs under Title IV-B for specific purposes (e.g., substance abuse treatment for child
welfare clients – S. 484/H.R. 1909; improved quality standards and training for child welfare
workers – H.R. 1371). The Administration also has proposed a new independent living
voucher program to help former foster youth with higher education expenses (versions have
been included in S. 685 and H.R. 1990/S. 940).

CRS-34
from home, and provide no resources for states to improve the quality of child welfare
services and potentially reduce the need for foster care.
The previous section discussed the issue of expanding the population of eligible
children on whose behalf federal payments could be made to states under Title IV-E
(i.e., eliminating the AFDC requirement for foster care or adoption assistance). Some
recent proposals would expand the entitlement to allow federal reimbursement for
additional categories of expenditures. For example, S. 511 in the 106th Congress
would have allowed federal reimbursement to states for the costs of training
additional categories of individuals, including court and law enforcement personnel,
and personnel employed by substance abuse prevention and treatment agencies,
mental health providers, domestic violence prevention and treatment agencies, health
agencies, child care agencies, schools, and other child welfare, family service, and
community service agencies. Legislation introduced in the 106th Congress (S. 708,
S. 2271, H..R. 5369) would have expanded the training reimbursement to include
judges, judicial personnel, law enforcement personnel, attorneys, guardians ad litem,
and court-appointed special advocates. A version of this proposal was passed by the
House as part of another bill (H.R. 3073), but no action occurred in the Senate.
S. 511 in the 106th Congress also would have expanded reimbursement to states
under Title IV-E to include two new types of services; i.e., expenditures for children
who are placed with their parent in a residential treatment program (for substance
abuse, domestic violence, homelessness); and expenditures for reunification services
for children and their parents, for up to 1 year after the child’s removal from home.
Reunification services would have been defined to include counseling, substance
abuse treatment, mental health services, services to address domestic violence, and
transportation to and from such services.
In the 107th Congress, H.R. 1990/S. 940 would significantly expand the
categories of services that are reimbursable by the federal government under Title IV-
E. Specifically, this proposal would allow open-ended federal funding for:
preventive, protective and crisis services; permanency services; independent living
services; ongoing payments to relative guardians of former foster children; 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; and training costs for a wide array
of professionals related to the child welfare system, including judicial personnel, and
staff of substance abuse treatment and mental health providers. The federal matching
rate for all services (including training, data collection and administration) would be
the Medicaid matching rate.52
Proposals to expand the entitlement to additional categories of spending raise
obvious budgetary concerns. Congress cannot control spending under Title IV-E –
as an uncapped entitlement – except by tightly defining eligible expenditures. Any
52 Both the Child Welfare League of America and the American Public Human Services
Association have posted their legislative proposals for the 107th Congress, which include
expansions of the Title IV-E entitlement, on their web sites:
[ h t t p : / / w w w . c w l a . o r g / a d v o c a c y / 2 0 0 1 l e g a g e n d a . h t m ] a n d
[http://www.aphsa.org/reauthor/cw.asp]

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expansion of those eligible expenditures results in increased federal spending.
Moreover, states must document and HHS must determine the eligibility of these
expenditures before reimbursement can be made; thus, the administrative burden
associated with this financing structure could be exacerbated if additional categories
of expenditures were made eligible for reimbursement. Expanding the entitlement to
include additional services also raises “supplantation” questions. Specifically, how
does the federal government ensure that states don’t use these new federal resources
to pay for services that they previously were providing with their own funds? In other
words, would expansion of the federal entitlement necessarily result in increased
services, or could it merely result in fiscal relief for the states?
On the other hand, advocates argue that open-ended matching funds for foster
care – in the absence of a comparable source of funds for prevention and treatment
– creates financial incentives to remove children from home, rather than provide
potentially expensive services that might enable the child to remain safely at home.
They maintain that the “safety net” should be expanded to include training and other
supportive services that might reduce the need – and therefore, the spending – for
foster care. While such proposals might result in additional federal spending for child
welfare and related services, they might also be justified by improved outcomes for
children and associated long-term savings to society. Supplantation concerns could
potentially be addressed through maintenance-of-effort provisions, which would
require states to maintain their current level of spending for child welfare services and
use new federal funds to increase the level of services provided. For example, H.R.
1990/S. 940 would require states to maintain spending of their own funds, for the
newly reimbursable categories of services, at the FY2001 level.
Transfers between Titles IV-B and IV-E
When Title IV-E was created in 1980 (P.L. 96-272), establishing permanency
planning and other federal requirements aimed at reducing foster care caseloads, a
complicated feature was included in the law that was intended to produce additional
resources for preventive child welfare services. Incentives were designed to
encourage states to reduce spending on foster care maintenance; if they succeeded,
they could transfer their “unused” foster care funds from Title IV-E into their child
welfare services programs under Title IV-B. Specifically, the 1980 law provided that
if appropriations for Title IV-B increased to certain specified levels, a “ceiling” would
be placed on each state’s foster care spending. Any amounts below that ceiling that
the state did not actually use for foster care could be transferred into its child welfare
services program. It was assumed that resources available to states for preventive and
supportive services would expand as spending for foster care declined, thereby
helping to reduce foster care caseloads even further.
In practice, the Title IV-B appropriation only reached the necessary level in 1
year (FY1981). States could voluntarily choose to operate under a ceiling, but few
did.53 Thus, the potential of this transfer provision was never realized because
appropriations for the child welfare services program never increased as Congress had
53 The maximum ever transferred was $74 million in FY1981. This amount dropped sharply
the following year, and was less than $1 million by FY1991.

CRS-36
envisioned. Moreover, by the middle 1980s, foster care caseloads – and therefore
state foster care expenditures – began to rise. The provision became obsolete and
was eventually repealed.
Legislation introduced in the 106th Congress (H.R. 5292) would have established
a “transfer of funds” demonstration in up to five states for 3 years. States would have
been allowed to transfer “unused” foster care funds, within a baseline amount, from
Title IV-E and use them flexibly for other child welfare services (subject to agreement
on the use of funds with HHS). The House Ways and Means Subcommittee on
Human Resources held hearings, but took no further action on the bill. A major
challenge presented by the proposal was the methodology to be used for determining
each participating state’s “baseline” amount. The legislation provided that HHS and
the individual state would negotiate and agree upon the baseline, which was intended
to be the amount of federal funds, under Title IV-E, the state would have been eligible
to receive during the 3 years of the demonstration, if the state were not participating
in the demonstration. The drafters intended the legislation to be cost-neutral.
However, because the baseline had to be determined by projecting future
expenditures, cost-neutrality could not be assured.
The scope of the bill’s maintenance-of-effort provision also was raised as an
issue during hearings. Specifically, child advocates and state representatives
disagreed about whether states should be required to maintain current levels of child
welfare spending from all sources (including other federal programs such as TANF
and SSBG) or only from targeted child welfare programs, specifically Title IV-B and
Title IV-E of the Social Security Act.
Despite the complex technical and policy challenges raised by this proposal, a
version of it will likely be considered again. A key advocate is the American Public
Human Services Association (APHSA), which includes a “transferability” proposal
among its child welfare recommendations for the 107th Congress.54 Particularly from
a state perspective, the authority to transfer funds from one title to another is
attractive because it potentially provides the state with a flexible source of child
welfare funds (if the state can reduce its actual foster care spending below otherwise
projected levels), but it maintains the open-ended entitlement nature of Title IV-E and
therefore, continues to provide a safety net in case of unexpected increases in the
foster care caseload.
Consolidation (Block Grants)
Many proposals have been made in recent years to consolidate government
programs, and some have been enacted.55 During the 104th Congress, landmark
welfare reform legislation replaced the 61-year-old program of Aid to Families with
Dependent Children with the TANF block grant to states (P.L. 104-193). Early
versions of that legislation also would have consolidated child protection and child
welfare programs into block grants. Although highly controversial in the mid-1990s,
54 See Crossroads: Child Welfare, at: [http://www.aphsa.org/reauthor/cw.asp].
55 See CRS Report RL30818, Block Grants: An Overview, by Eugene P. Boyd and Ben
Canada.

CRS-37
proposals to consolidate certain child welfare programs may resurface in the 107th
Congress.
As originally passed by the House in 1995, H.R. 4 (104th Congress) would have
consolidated 22 funding streams into a single child protection block grant.56 States
would have been allowed to use these funds flexibly, in accordance with several child
welfare “standards,” of which the primary standard was the protection of children.
Other standards were prompt investigation of child maltreatment reports, a
permanency plan and dispositional hearing for all foster children within 3 months of
a fact-finding hearing, and reviews every 6 months for children in temporary foster
care. State programs would have been audited, states would have been required to
submit detailed statistical reports to HHS, and each state would have been required
to establish citizen review panels to oversee their programs.57 States would have
received a single allotment of funds, with their share based on the proportion of funds
they had received under several of the previous programs, including foster care.
As welfare reform evolved in the 104th Congress, the child welfare provisions
became less sweeping. For example, the House-Senate conference version of H.R.
4, which was vetoed by President Clinton, would have created two child welfare-
related block grants, instead of one: a Child Protection Block Grant to replace some
of the Social Security Act programs; and a Child and Family Services Block Grant to
replace CAPTA and related activities. Maintenance payments for foster children and
adoption assistance subsidies were not included in either block grant, and would have
remained open-ended entitlements to states. Under the next House version of welfare
reform (H.R. 3734, 104th Congress), administrative and training costs related to foster
care and adoption assistance also were removed from the block grant, as were
independent living services for older foster children. Ultimately, all child welfare
block grant provisions were dropped from the final welfare reform bill that was signed
into law.
Proponents of child welfare block grants argued that consolidation of categorical
programs and elimination of federal mandates could allow states to design more
comprehensive service systems for children and families, without the constraints of
funding sources tied to specific services. As considered in the 104th Congress, block
grant proposals would have required states to maintain the key features of a child
protection system – such as mandatory abuse and neglect reporting and investigation,
foster care, and permanency planning for foster children – but without the existing
funding structure and mandates, which were characterized as cumbersome.
56 Programs that would have been replaced included everything then authorized under Titles
IV-B and IV-E of the Social Security Act, CAPTA, and a number of related programs, such
as adoption opportunities, abandoned infants assistance, missing children’s assistance grants,
the Victims of Child Abuse Act, and the family unification program under Section 8 of the
Housing Act. Some programs that would have been replaced by the block grant no longer
exist in the same form, such as family support centers under the McKinney Homeless
Assistance Act and crisis nurseries under the Temporary Child Care and Crisis Nurseries Act.
57 Although none of the block grant proposal was enacted, Congress did mandate citizen
review panels as a condition of state funding in the 1996 reauthorization of CAPTA (P.L.
104-395).

CRS-38
Accountability would have been assured through audits and penalties, data collection
and reporting, and citizen review panels that would have allowed the public to assess
the adequacy of child protection systems.
Opponents argued that by enacting block grants, the federal government would
be abdicating its leadership role in the area of child protection, which is an issue of
national concern. While the legislation would have required states to certify that their
programs contained certain features, it was feared that the federal government would
have had limited enforcement authority. With no designated funds for preventive and
supportive services for families, some child advocates were concerned that the
ongoing demand to investigate abuse and neglect reports and remove children from
unsafe homes would have left few resources available for less crisis-driven activities.
Advocates also were concerned that the proposal might have limited the ability of
abused and neglected children to seek protection in the federal courts. Moreover,
block grants were seen as a first step toward reductions in federal spending for child
welfare activities.
After zero growth in the total number of children in foster care in 1985 and a
1.4% increase in 1986, the foster care population rose by 7.1% in 1987 and jumped
up sharply during the next 2 years – by 13.3% in 1988 and 13.8% in 1989. This
sudden and dramatic increase was a recent memory in the mid-1990s when welfare
reform and associated child welfare block grant proposals were being debated,
contributing at least in part to the unease about a potential cap on federal spending.
However, between 1990 and 1998, growth in foster care averaged 4.2% per year and,
in 1999, slowed to the 1986 level of 1.4%. Growth increased somewhat between
1999 and 2000, but was still relatively low at 2.3%. Some child advocates and state
officials maintain that open-ended funding remains essential in case of another
unexpected caseload rise; however, others argue that flexibility in the use of funds is
a more important goal, especially since caseload growth has significantly slowed
down.58
Legislation introduced in the 106th Congress (H.R. 5292, cited above) would
have allowed up to five states to conduct consolidation demonstrations for 3 years,
in which they would have been able to receive a fixed payment that could be used
flexibly for child welfare activities (in essence, a block grant) instead of submitting
claims for reimbursement for eligible expenditures under Title IV-E. The amount of
the fixed payment provided to each state would have been determined through a
negotiation between HHS and the state, and was intended to equal the amount of
Title IV-E funds the state would have been eligible to receive over the 3 years, in the
absence of the demonstration (the same procedure that would have been used for
transferability demonstrations under H.R. 5292, described earlier).
Performance-Based Funding
58 However, as shown earlier in this report, adoption caseloads (in contrast to foster care) have
not slowed their growth, and in fact, have climbed sharply in recent years, a pattern that is
projected to continue.

CRS-39
Discontent with the performance of the nation’s child welfare system, and
concerns about the extent to which states are held accountable for their performance,
have prompted policymakers to consider alternative financing systems that would
more directly reward (or penalize) states for achieving positive (or negative)
outcomes for children. For example, Senator Grassley, along with Senators DeWine
and Landrieu, expressed support in 2000 for legislation (never formally introduced)
that would have established financial incentives for states to return children home or
place them for adoption quickly.59
Specifically, the Grassley proposal would have increased the federal matching
rate for states during a child’s first 18 months in care, and expanded the range of
services eligible for reimbursement (to include respite care, for example). Federal
matching would have dropped after 18 months; however, states would have been
eligible for a bonus for children placed for adoption within 3 years (unless the
adoption disrupted within 2 years, in which case the bonus would have been
recaptured).
In the Adoption and Safe Families Act of 1997, Congress took a small step
toward performance-based funding by establishing adoption incentive payments,
which provide a bonus payment to states for each adoption of a foster child or child
with special needs above a baseline level. Adoptions have increased in the last several
years, and states collectively “earned” more in 1998 and 1999 than Congress initially
appropriated for these payments; however, the extent to which the incentive payments
directly contributed to these additional adoptions is not known.
ASFA made no changes in the basic child welfare financing structure, but two
additional provisions reflect congressional interest in the use of outcome measures as
a way of holding states accountable for their performance. First, the 1997 law
required HHS to develop a set of outcome measures that could be used to assess state
performance and to publish an annual report on each state’s performance with respect
to these measures. As published in the August 20, 1999, Federal Register, the
outcome measures relate to the goals of: (1) reducing the recurrence of abuse or
neglect; (2) reducing the occurrence of abuse or neglect while a child is in foster care;
(3) increasing permanency for children in foster care; (4) reducing time in foster care
prior to reunification, without increasing re-entry into care; (5) reducing time in foster
care prior to adoption; (6) increasing placement stability; and (7) reducing placements
of young children in group homes or institutions.
HHS published the first annual report on state performance (based on data
submitted by states for 1998) in October 2000.60 In addition, some of these outcome
measures are being used as a component of the new HHS review system for
monitoring state compliance with federal law.
59 Press release, Office of Senator Grassley, Washington, D.C., June 7, 2000.
60 Child Welfare Outcomes 1998, Annual Report, U.S. Department of Health and Human
Services, Children’s Bureau, October 2000,
[http://www.acf.dhhs.gov/programs/cb/publications/cwo98/index.html].

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The second ASFA provision required HHS to develop and recommend to
Congress a performance-based financing system for programs authorized by Titles IV-
B and IV-E of the Social Security Act. This system was to be developed in
consultation with state and local public child welfare officials and child welfare
advocates, and be based on state performance with respect to the outcome measures
developed by HHS in response to the mandate described above. The law required
HHS to submit a progress report by May 1998, and a final report by February 1999.
HHS submitted a progress report (but no final report) on this performance-based
incentive financing system, and identified several key issues, including the need for a
carefully designed set of outcome measures that would not result in unintended
consequences, and data collection systems that could provide the information needed
to evaluate state performance against these outcome measures. In its first annual
report on state performance mentioned above, HHS noted that the outcome measures
developed so far do not reflect the full range of a state’s child welfare system, because
all of the necessary data are not collected. Likewise, even for those outcome
measures that have been developed, not all states are yet able to submit the relevant
data. Nonetheless, HHS and the states have made dramatic progress in the last
several years with regard to data collection in the areas of child abuse, foster care, and
adoption assistance, and the quality and comprehensiveness of the data that are
collected is continually improving.
In its progress report, HHS noted that several states are experimenting with
various forms of performance-based funding, either on their own or through federally
approved waivers, which will eventually produce evaluation results. In addition, there
is a growing body of literature on this subject with regard to various forms of human
and social services, in addition to child welfare. Nonetheless, HHS noted that a
number of experts “suggest caution” in the use of performance-based financial
incentives, and stated that additional research and analysis is needed.
Final Notes
As discussed in this report, federal financing for child welfare activities is
complex and considered problematic for various reasons. Some provisions are seen
as outmoded, inefficient, burdensome and bureaucratic, and reportedly inhibit
innovation and creative responses to the changing needs of a vulnerable population.
In fact, the federal financing system isn’t a comprehensive system at all, but rather an
assortment of laws, requirements, and funding streams that evolved over decades, as
Congress attempted to respond to current challenges.
At the same time, as also discussed in this report, federal funds have provided
a safety net to states, as they have struggled to protect and serve children who enter
and remain in the child welfare system for reasons beyond the control of the children
or of the states. And, federal requirements have ensured a minimum level of
protection for these children, by establishing mandates that child welfare agencies
must meet in order to receive federal funds. While no one defends the current system
as perfect, many would argue that federal law has resulted in important procedural

CRS-41
reforms, and in less foster care, shorter stays in foster care, and more adoptions than
would have occurred otherwise.
Nonetheless, frustration with the current system is widespread, and attempts at
reform – incremental or comprehensive – will continue to be debated, raising many
of the issues already addressed in this report. In addition, the following final notes
may be useful in analyzing further attempts at financing reform:
! While reform proposals have not generally been driven by a
motivation to reduce federal spending, budget issues are central to
the debate nonetheless. Most of the funding streams are entitlements
and the largest are open-ended entitlements. Any changes in policy
would likely create additional federal spending that must be paid for
(or, less likely, savings that lawmakers might want to use to finance
other initiatives). Proposals that are intended to be cost-neutral (in
other words, to change policy while maintaining the same level of
federal spending that would have occurred otherwise) face design
challenges. Such proposals would either create winners and losers
among states, or would likely further complicate the system in an
effort to hold each state harmless.
! Recent and projected future trends in child welfare spending and in
the eligible population have important implications for financing
reform proposals. In particular, these trends highlight the
fundamental difference in purpose between foster care (intended as
short-term and temporary protection for children who cannot live at
home) and adoption assistance (which attempts to promote
permanent adoptions for special needs children by providing ongoing
assistance to adoptive parents). States are responding to federal
directives and incentives intended to increase adoptions from foster
care, and the adoption assistance population is projected to grow
significantly in future years. Therefore, proposals to change the way
states receive federal foster care funds may have different goals – and
raise different issues – than proposals to change the financing
structure of adoption assistance.
! Because they are large and open-ended funding streams, foster care
and adoption assistance are typically the focus of financing reform
discussions. However, states receive other child welfare funds from
Titles IV-B and IV-E of the Social Security Act and CAPTA, which
impose additional requirements and have an impact on shaping policy
at the state level. Moreover, federal funds not specifically targeted
toward child welfare also are used to serve child welfare clients (for
example, TANF, Medicaid, SSBG). Thus, an awareness of all
federal dollars that influence state behavior is important in
understanding the implications of proposals that change the way
some of these dollars are provided.
! Regardless of financing structure, monitoring and enforcement of
federal child welfare requirements will remain of concern. Under the

CRS-42
current system, states must submit plans indicating compliance with
these requirements, in order to participate in federal programs, and
some of these requirements are then reinforced through the
expenditure reimbursement process. Even under a block grant
approach, states still could be required to submit similar – or even
more stringent – state plans. However, if Congress chooses to
continue playing a major role in shaping (as well as funding) child
welfare policy at the state level, then federal administrative oversight
will be necessary under any system to ensure actual compliance with
paper requirements. The effectiveness of HHS’ new monitoring
system will be of great interest, as will future court rulings on the
ability of children and families to seek judicial enforcement of federal
requirements.
! Finally, financing reform proposals are inextricably linked with
nonfinancial issues. Proposals to change the federal financing
structure will inevitably raise intergovernmental issues (e.g., federal-
state relations, the role of the private sector), as well as the
traditional child welfare tension between child protection and family
preservation. Thus, policymakers are likely to bring their
philosophical and ideological views about the overall goals and
mission of the child welfare system to the debate over financing
reform.

CRS-43
Appendix A: Summary of Funding Streams
Table A-1. Current Federal Child Welfare Funding Streams to States
Discretionary or
FY2001
Program
Use of funds
State allocation formula
Nonfederal match
entitlement
appropriation
Title IV-B of the Social Security Act
C h i l d W e l f a r e
Eligible services are broadly
Formula grants based on
25% nonfederal match
Discretionary.
$292 million.
Services – Subpart 1
defined in law.
state population under age
(i.e., 75% federal
21 and state per capita
share).
income.
Promoting Safe and
Four types of child welfare
Formula grants based on
25% nonfederal match
Capped entitlement.
$305 million (of which
Stable Families –
services are authorized: (1)
number of children in each
(i.e., 75% federal
$10 million is reserved
Subpart 2
intensive family preservation;
state receiving food stamps.
share).
for Court Improvement
(2) community-based family
Grants, below).
support; (3) time-limited family
reunification; and (4) adoption
promotion and support.
Court Improvement
Funds may be used to conduct
Formula grants based on
25% nonfederal match
Set-aside of capped
$10 million (set-aside
G r a n t s ( S e c t i o n
assessments of state court
state population under age
(i.e., 75% federal
entitlement
of appropriations for
13712 of the Omnibus
proceedings related to child
21.
share).
Promoting Safe and
Budget Reconciliation
welfare and to implement
S t a b l e F a m i l i e s ,
Act of 1993)
recommended changes.
above).
Title IV-E of the Social Security Act
Foster Care
Eligible expenditures include
Reimbursement for a portion
Medicaid matching rate
O p e n - e n d e d
$ 5 , 0 1 3 m i l l i o n
maintenance payments (for
of eligible expenditures.
used for maintenance
entitlement.
( e s t i m a t e d
costs of food, clothing, shelter,
costs (payments to
expenditures).
supervision, school supplies,
foster care providers);
incidentals, liability insurance,
75% federal matching
and travel to the child’s home),
rate for training costs;

CRS-44
Discretionary or
FY2001
Program
Use of funds
State allocation formula
Nonfederal match
entitlement
appropriation
a n d c o s t s r e l a t e d t o
50% federal matching
administration, child placement
rate for all other
services, data collection, and
administrative and child
training, on behalf of eligible
placement costs.
children.
Adoption Assistance
Eligible expenditures include
Reimbursement for a portion
Medicaid matching rate
O p e n - e n d e d
$ 1 , 1 6 0 m i l l i o n
adoption assistance payments
of eligible expenditures.
used for maintenance
entitlement.
( e s t i m a t e d
to adoptive parents, non-
c o s t s ( a s s i s t a n c e
expenditures).
recurring adoption expenses
payments to parents);
(adoption fees, court costs,
75% federal matching
attorney fees), and costs related
rate for training costs;
to administration, child
50% federal matching
placement, data collection, and
rate for all other
training, on behalf of eligible
administrative and child
children.
placement costs.
Adoption Incentive
Funds may be used for any
Grant amounts based on
None.
Discretionary. Statute
$43 million.
Payments
allowable activity (specifically
number of foster child and
provides that up to
including post-adoption
special needs child adoptions
$20 million in annual
services) under Title IV-B or
in a given year, as compared
appropriations are not
IV-E.
with a baseline year.
c o u n t e d a g a i n s t
discretionary budget
caps. ($43 million in
FY2000).
F o s t e r C a r e
Funds may be used for services
Formula grants based on
20% nonfederal match
Capped entitlement.
$140 million.
I n d e p e n d e n c e
to improve the transition to
state foster care population.
(i.e., 80% federal
Program
independent living of foster
share).
youth likely to remain in care
until age 18, and those who
have left at 18 (up to age 21).

CRS-45
Discretionary or
FY2001
Program
Use of funds
State allocation formula
Nonfederal match
entitlement
appropriation
Child Abuse Prevention and Treatment Act
State Grants – Title I
Funds may be used for various
Formula grants based on
None.
Discretionary.
$21 million..
activities to improve state child
state population under age
protective service systems.
18.
Community-Based
Funds may be used for
Formula grants, based on
In their application,
Discretionary.
$33 million.
Family Resource and
community-based, prevention-
state population under age
states must assure they
Support Grants –
focused family resource and
18 and the amount of
will spend an amount
Title II
support services, including
nonfederal funds that states
equal to 20% of their
certain mandatory “core”
have leveraged for this
federal allotment from
services and optional services.
program.
on-federal resources, in
cash or in-kind.
Source: Table prepared by the Congressional Research Service (CRS).

CRS-46
Appendix B: A Note on Data Limitations
For foster care and adoption assistance under Title IV-E of the Social Security
Act, states are eligible for federal reimbursement for eligible expenditures associated
with providing services for eligible children. States are required to submit claims for
expenditures under Title IV-E on a quarterly basis, and then receive reimbursement
from the federal government, based on the appropriate matching rate. The analysis
presented in this report is based on the claims data submitted by the states to the U.S.
Department of Health and Human Services (HHS). There are limitations to using
these data as provided.
First, states can claim federal reimbursement for Title IV-E expenditures for 2
years.61 Therefore, as states submit the quarterly data, they are required to submit any
prior quarter adjustments to claims they have previously made. The data presented
in this report represent the total expenditures claimed by a state for a fiscal year,
which includes all prior quarter adjustments claimed within that fiscal year. These
numbers may reflect current fiscal year quarter adjustments, but they may also reflect
prior fiscal year quarter adjustments. While these adjustments are submitted to HHS,
it is not possible to identify the amounts or the directions of these adjustments using
the data as provided by HHS.
Second, in addition to the prior quarter adjustments, HHS “disallows” some of
the expenditures claimed (that is, they determine that the expenditures are not eligible
for federal reimbursement). These disallowances affect the total state expenditures
in a given year, as HHS may defer reimbursing the states for these expenditures
pending a decision about whether they are eligible for federal reimbursement under
the law. The data in this report for both foster care and adoption assistance under
Title IV-E reflect disallowances reported by HHS for FY1987-FY1998. However,
the data for FY1999 and FY2000 do not include any disallowances. It is possible that
in a subsequent year, disallowances for some of the claims in FY1999 and FY2000
may occur. As disallowances occur, these claims will change.
In addition to the above limitations, the most recent claims data for Title IV-E
foster care (FY2000) and Title IV-E adoption assistance (FY2000) include a separate
category of expenditures made under child welfare waiver demonstrations (as
discussed in the text). These demonstration projects must be cost-neutral to the
federal government (in terms of expenditures under Title IV-E), and therefore this
additional category does not affect the federal share of total state claims for
expenditures under Title IV-E. However, parts of this report examine the distribution
of spending by category for foster care and adoption assistance. The “demonstration”
category may include maintenance payments (assistance payments for adoption
assistance), administration, or training expenditures. However, it is not possible to
determine the amount of expenditures under the demonstration projects devoted to
each of these categories using the data as provided by HHS. Therefore, for purposes
of examining the distribution of spending in each of these categories, the
demonstration expenditures were excluded from the federal share of total state claims
for foster care and adoption assistance. While this may affect the distribution of
61 45 CFR 95.1

CRS-47
spending, thus far expenditures for these demonstrations have been a small component
of overall foster care and adoption assistance spending. For foster care, expenditures
under demonstrations were 3% ($136 million) of the total state claims in FY2000.
For adoption assistance, the federal spending under demonstration projects was
0.01% ($89,898) of total federal spending for adoption assistance in FY2000.
Finally, because this report is based on the claims data submitted by the states,
they represent expenditures claimed by the states as well as the average monthly
number of children claimed as eligible for federal reimbursement for foster care and
adoption assistance. States have primary responsibility for determining the amount
of eligible expenditures as well as the number of children eligible for federal
reimbursement to submit to HHS. These data reflect the average monthly number of
children claimed as eligible for Title IV-E, rather than the actual number of children
eligible. To the extent that states experience difficulty in determining Title IV-E
eligibility for some children, these data would likely underestimate the average
monthly number of children eligible, as well as the total state claims eligible for federal
reimbursement.

CRS-48
Appendix C: Federal Expenditures and Children by State
Table C-1. Federal Expenditure and Average Monthly Number of Children Claimed As Eligible for
Foster Care Under Title IV-E for FY1998-FY2000, by State
($ in thousands)

Average monthly number of children claimed as eligible
Federal expenditures
Percentage change
Percentage change
FY1998-FY2000
State
FY1998
FY1999
FY2000
FY1998-FY2000
FY1998
FY1999
FY2000
(using 2000$)
Alabama
1,230
1,304
1,440
17.1%
$11,963
$13,240
$13,164
6.5%
Alaska
405
487
408
0.9%
10,023
9,418
11,017
6.3%
Arizona
3,078
3,634
3,098
0.6%
46,006
54,316
45,144
-5.1%
Arkansas
1,600
1,624
2,704
69.0%
29,904
32,057
37,129
20.1%
California
79,982
78,222
74,469
-6.9%
832,619
911,802
1,069,940
24.3%
Colorado
3,004
2,653
2,552
-15.0%
34,005
42,548
28,544
-18.8%
Connecticut
4,315
4,528
3,292
-23.7%
84,798
91,777
96,955
10.6%
Delaware
386
378
410
6.1%
7,632
8,306
12,145
54.0%
Dist of Columbia
1,241
1,297
1,960
57.9%
39,289
42,946
36,710
-9.6%
Florida
8,374
8,842
9,394
12.2%
113,237
120,768
146,456
25.1%
Georgia
4,291
4,208
4,190
-2.3%
35,576
42,893
49,446
34.5%
Hawaii
1,186
1,101
1,126
-5.1%
15,285
15,813
18,987
20.2%
Idaho
441
510
568
28.7%
7,780
7,922
6,592
-18.0%
Illinois
32,646
28,592
23,289
-28.7%
274,782
273,267
299,001
5.3%
Indiana
3,741
3,963
3,293
-12.0%
40,144
53,319
39,477
-4.9%
Iowa
2,107
2,810
2,796
32.7%
26,637
29,623
34,152
24.1%
Kansas
775
2,356
2,252
190.6%
12,729
30,892
40,515
208.0%
Kentucky
2,936
3,018
3,161
7.7%
43,041
46,108
52,268
17.5%
Louisiana
3,138
2,908
2,555
-18.6%
52,043
50,136
46,503
-13.5%
Maine
1,659
2,013
2,453
47.8%
28,677
32,183
34,325
15.8%

CRS-49

Average monthly number of children claimed as eligible
Federal expenditures
Percentage change
Percentage change
FY1998-FY2000
State
FY1998
FY1999
FY2000
FY1998-FY2000
FY1998
FY1999
FY2000
(using 2000$)
Maryland
4,785
5,090
5,764
20.5%
97,641
96,728
131,375
30.2%
Massachusettsa
7,464
7,340
3,934
-47.3%
89,746
75,654
66,495
-28.3%
Michigan
8,826
9,338
9,923
12.4%
130,328
135,956
149,574
11.0%
Minnesota
3,805
4,115
4,069
6.9%
59,737
72,595
78,459
27.1%
Mississippi
1,016
1,000
1,034
1.7%
17,829
9,491
12,880
-30.1%
Missouri
5,748
5,620
5,695
-0.9%
64,419
73,619
69,230
4.0%
Montana
857
950
940
9.7%
14,665
7,794
10,623
-29.9%
Nebraska
1,569
1,477
1,643
4.7%
18,909
25,887
23,421
19.8%
Nevada
1,119
1,345
1,334
19.3%
9,785
14,756
15,442
52.7%
New Hampshireb
714
625
791
10.7%
13,449
11,847
9,534
-31.4%
New Jerseyc
5,593
6,124
6,238
11.5%
41,868
45,641
60,411
39.6%
New Mexico
782
1,183
1,505
92.4%
13,138
14,367
16,762
23.4%
New York
40,762
38,049
33,529
-17.7%
340,878
482,037
432,672
22.8%
North Carolina
4,662
4,854
4,118
-11.7%
65,887
64,537
74,587
9.5%
North Dakota
493
486
492
-0.3%
10,448
11,209
11,922
10.4%
Ohio
5,456
4,936
5,074
-7.0%
184,673
207,889
200,739
5.2%
Oklahoma
3,413
4,039
5,111
49.8%
33,141
32,418
33,747
-1.5%
Oregon
3,325
3,193
3,715
11.7%
28,783
31,499
28,906
-2.8%
Pennsylvania
18,586
15,054
12,548
-32.5%
249,832
316,403
306,761
18.8%
Rhode Island
755
629
743
-1.6%
15,209
12,588
12,994
-17.3%
South Carolina
1,350
1,146
1,339
-0.9%
17,828
17,234
14,247
-22.7%
South Dakota
253
340
413
63.3%
3,428
4,598
5,603
58.2%
Tennessee
6,405
6,327
6,290
-1.8%
35,573
25,189
29,136
-20.8%
Texas
6,671
6,757
7,123
6.8%
86,864
86,964
92,501
3.0%
Utah
1,122
730
763
-32.0%
25,746
20,950
21,474
-19.3%
Vermont
1,091
1,151
1,159
6.3%
10,616
11,999
13,690
24.8%

CRS-50

Average monthly number of children claimed as eligible
Federal expenditures
Percentage change
Percentage change
FY1998-FY2000
State
FY1998
FY1999
FY2000
FY1998-FY2000
FY1998
FY1999
FY2000
(using 2000$)
Virginia
3,297
3,260
3,327
0.9%
40,520
44,322
51,919
24.0%
Washington
2,259
2,603
2,694
19.3%
27,040
29,299
33,437
19.6%
West Virginia
792
823
855
7.9%
17,374
17,729
15,099
-15.9%
Wisconsin
5,365
4,037
4,329
-19.3%
80,942
91,654
99,732
19.2%
Wyoming
324
242
311
-4.2%
4,709
2,192
2,387
-50.9%
Puerto Ricod
0
5,110
5,613
9.8%
0
7,281
11,093
49.5%
Total
305,194
302,422
287,824
-5.7%
$3,597,175
$4,011,661
$4,255,319
14.5%
Source: Table prepared by the Congressional Research Service (CRS) based on data provided by the U.S. Department of Health and Human Services (HHS). For purposes of
calculating the percentage change in the federal share of state claims, the 1998 dollars were adjusted for inflation (that is, the percentage change is in terms of 2000 dollars) using
a Gross Domestic Product (GDP) Deflator.
a Estimate used for Third and Fourth Quarter for FY1999.
b To calculate the average monthly number of children eligible for FY2000, the 3rd quarter was computed as an average of the other 3 quarters.
c State estimates used for Fourth Quarter for FY2000.
d The percentage change for Puerto Rico is calculated from FY1999 to FY2000. For purposes of calculating the percentage change in the federal share of state claims, the 1999 dollars
were adjusted for inflation (that is, the percentage change is in terms of 2000 dollars) using a Gross Domestic Product (GDP) Deflator.

CRS-51
Table C-2. Federal Expenditures and Average Monthly Number of Children Claimed As Eligible for Adoption
Assistance Under Title IV-E for FY1998-FY2000, by State
($ in thousands)

Average monthly number of children claimed as eligible
Federal expenditures
Percentage
change
Percentage change
FY1998-FY2000
State
FY1998
FY1999
FY2000
FY1998-FY2000
FY1998
FY1999
FY2000
(using 2000$)
Alabama
367
429
522
42.2%
$2,492
$3,525
$4,261
65.4%
Alaska
625
731
888
42.0%
2,232
2,840
3,807
65.0%
Arizona
1,912
2,161
2,856
49.4%
9,435
11,270
14,781
51.6%
Arkansas
681
688
1,294
89.9%
4,323
5,181
6,562
46.9%
California
21,902
24,786
29,972
36.8%
85,093
108,802
176,646
100.9%
Colorado
2,524
2,992
3,622
43.5%
7,888
10,358
13,934
70.9%
Connecticut
1,317
1,748
1,907
44.8%
12,369
10,341
11,359
-11.1%
Delaware
234
266
322
37.8%
635
862
1,114
69.6%
Dist of Columbia
444
485
536
20.6%
3,273
4,434
4,437
31.2%
Florida
7,713
8,900
9,347
21.2%
29,801
33,428
31,061
0.8%
Georgia
2,687
3,570
4,514
68.0%
11,156
15,193
21,108
83.1%
Hawaii
460
674
901
95.9%
2,026
2,802
3,727
78.0%
Idaho
320
271
418
30.7%
1,313
1,485
1,764
29.9%
Illinois
12,021
16,242
22,095
83.8%
35,494
55,526
39,081
6.5%
Indiana
3,081
3,574
4,228
37.2%
12,421
15,106
17,515
36.4%
Iowa
2,105
2,670
3,138
49.1%
12,238
15,792
18,852
49.0%
Kansas
2,343
2,974
3,392
44.8%
4,147
5,809
8,447
97.1%
Kentucky
1,062
1,148
1,403
32.1%
4,436
5,198
7,326
59.8%
Louisiana
1,640
1,874
1,948
18.8%
17,342
18,129
20,808
16.1%
Maine
693
754
889
28.2%
4,730
4,811
6,867
40.5%
Maryland
1,903
2,179
2,567
34.9%
6,271
8,197
9,358
44.4%
Massachusettsa
3,853
4,552
5,303
37.6%
12,648
17,699
20,067
53.5%

CRS-52

Average monthly number of children claimed as eligible
Federal expenditures
Percentage
change
Percentage change
FY1998-FY2000
State
FY1998
FY1999
FY2000
FY1998-FY2000
FY1998
FY1999
FY2000
(using 2000$)
Michigan
12,790
14,213
15,663
22.5%
52,429
58,439
70,911
30.9%
Minnesota
1,880
2,246
3,115
65.7%
8,314
10,232
14,668
70.7%
Mississippi
369
419
579
57.0%
1,110
1,346
3,396
196.0%
Missouri
3,013
3,341
4,136
37.3%
8,775
10,998
13,460
48.4%
Montana
710
501
608
-14.4%
2,866
2,339
2,762
-6.8%
Nebraskab
683
877
952
39.3%
2,881
3,287
3,860
29.6%
Nevada
343
419
543
58.2%
1,835
1,690
2,022
6.6%
New Hampshireb
298
313
230
-22.8%
745
872
1,139
48.0%
New Jerseyc
3,342
3,788
4,038
20.8%
9,807
15,614
16,394
61.8%
New Mexico
1,376
1,376
1,689
22.8%
4,413
6,180
7,210
58.1%
New York
29,562
32,759
35,295
19.4%
123,605
134,508
150,184
17.6%
North Carolina
2,917
3,506
4,214
44.5%
8,962
11,035
13,170
42.2%
North Dakota
172
202
244
42.0%
827
1,139
1,355
58.6%
Ohio
11,181
12,355
13,674
22.3%
69,112
84,502
89,545
25.4%
Oklahoma
1,453
1,671
2,068
42.3%
6,949
8,008
11,345
58.0%
Oregon
3,346
4,081
4,468
33.5%
8,668
10,776
13,700
52.9%
Pennsylvania
5,003
5,706
6,048
20.9%
22,486
30,211
37,028
59.3%
Rhode Island
965
1,053
1,168
-87.2%
3,958
4,469
5,193
26.9%
South Carolina
1,371
1,679
1,986
21.0%
6,623
9,169
11,523
68.3%
South Dakota
323
363
432
44.9%
890
1,006
1,222
32.9%
Tennessee
1,675
1,790
2,253
33.7%
4,705
6,605
6,860
41.1%
Texas
5,761
6,969
8,229
34.5%
24,454
28,003
34,057
34.8%
Utah
856
950
1,278
42.8%
3,782
3,825
5,463
39.7%
Vermont
585
667
732
25.1%
3,325
3,970
4,665
35.8%
Virginia
1,791
2,011
2,280
27.3%
5,256
7,705
9,180
69.0%
Washington
3,843
4,562
5,619
46.2%
6,812
9,227
12,699
80.4%

CRS-53

Average monthly number of children claimed as eligible
Federal expenditures
Percentage
change
Percentage change
FY1998-FY2000
State
FY1998
FY1999
FY2000
FY1998-FY2000
FY1998
FY1999
FY2000
(using 2000$)
West Virginia
84
386
813
867.9%
4,567
3,189
5,378
13.9%
Wisconsin
2,741
3,211
3,682
34.3%
14,503
17,382
20,251
35.1%
Wyoming
37
68
90
141.9%
123
172
321
153.1%
Puerto Ricod
0
92
124
34.2%
0
54
160
189.1%
Total
168,357
195,243
228,307
35.6% $
694,544 $
842,737 $
1,012,000
41.0%
Source: Table prepared by the Congressional Research Service (CRS) based on data provided by the U.S. Department of Health and Human Services (HHS). For purposes of
calculating the percentage change in the federal share of state claims, the 1998 dollars were adjusted for inflation (that is, the percentage change is in terms of 2000 dollars) using
a Gross Domestic Product (GDP) Deflator.
a Estimates used for Third and Fourth Quarter for FY1999.
b To calculate the average monthly number of children eligible for FY2000, 3 quarters of data were used to estimate the final quarter.
c State estimate used for Fourth Quarter for FY2000.
d The percentage change for Puerto Rico is calculated from FY1999 to FY2000. For purposes of calculating the percentage change in the federal share of state claims, the 1999 dollars
were adjusted for inflation (that is, the percentage change is in terms of 2000 dollars) using a Gross Domestic Product (GDP) Deflator.

CRS-54
Table C-3. Distribution of Spending by Category for Foster Care and Adoption Assistance
under Title IV-E for FY2000, by State
Title IV-E Foster Care
Title IV-E Adoption Assistance
Maintenance
Assistance
State
payments
Administration
Training
Total
payments
Administration
Training
Total
Alabama
28%
57%
14%
100%
29%
57%
14%
100%
Alaska
32%
60%
8%
100%
89%
11%
0%
100%
Arizona
42%
54%
4%
100%
82%
18%
0%
100%
Arkansas
23%
62%
15%
100%
80%
20%
0%
100%
California
38%
57%
5%
100%
58%
33%
9%
100%
Colorado
36%
56%
8%
100%
51%
47%
2%
100%
Connecticut
37%
59%
4%
100%
75%
16%
10%
100%
Delaware
19%
72%
8%
100%
72%
27%
1%
100%
Dist of Columbia
62%
38%
0%
100%
37%
63%
0%
100%
Florida
33%
57%
10%
100%
61%
33%
6%
100%
Georgia
44%
47%
9%
100%
62%
25%
12%
100%
Hawaii
26%
53%
21%
100%
86%
13%
1%
100%
Idaho
25%
73%
2%
100%
64%
36%
0%
100%
Illinois
41%
53%
6%
100%
87%
12%
1%
100%
Indiana
86%
12%
2%
100%
91%
9%
0%
100%
Iowa
63%
32%
5%
100%
86%
12%
1%
100%
Kansas
32%
66%
1%
100%
83%
17%
0%
100%
Kentucky
49%
27%
24%
100%
74%
8%
19%
100%
Louisiana
60%
34%
6%
100%
32%
57%
11%
100%
Maine
87%
6%
7%
100%
78%
10%
12%
100%
Maryland
51%
45%
4%
100%
99%
1%
0%
100%
Massachusetts
35%
65%
0%
100%
84%
16%
0%
100%
Michigan
51%
48%
1%
100%
92%
8%
0%
100%
Minnesota
36%
47%
16%
100%
60%
22%
18%
100%

CRS-55
Title IV-E Foster Care
Title IV-E Adoption Assistance
Maintenance
Assistance
State
payments
Administration
Training
Total
payments
Administration
Training
Total
Mississippi
37%
57%
6%
100%
64%
36%
0%
100%
Missouri
40%
45%
16%
100%
74%
26%
0%
100%
Montana
59%
40%
1%
100%
61%
37%
1%
100%
Nebraska
55%
26%
19%
100%
98%
2%
0%
100%
Nevada
41%
48%
11%
100%
49%
49%
2%
100%
New Hampshire
66%
25%
9%
100%
68%
31%
1%
100%
New Jerseya
56%
41%
3%
100%
71%
29%
0%
100%
New Mexico
27%
50%
23%
100%
72%
28%
0%
100%
New York
61%
39%
0%
100%
92%
7%
0%
100%
North Carolina
41%
45%
14%
100%
90%
6%
4%
100%
North Dakota
39%
52%
9%
100%
73%
27%
0%
100%
Ohio
63%
33%
4%
100%
40%
53%
7%
100%
Oklahoma
44%
48%
8%
100%
69%
26%
4%
100%
Oregon
45%
57%
-2%
100%
81%
19%
0%
100%
Pennsylvania
56%
39%
5%
100%
63%
28%
9%
100%
Rhode Island
43%
50%
7%
100%
76%
18%
7%
100%
South Carolina
55%
29%
16%
100%
57%
26%
17%
100%
South Dakota
51%
48%
1%
100%
90%
10%
0%
100%
Tennessee
57%
29%
14%
100%
81%
18%
1%
100%
Texas
67%
27%
6%
100%
81%
18%
1%
100%
Utah
28%
61%
11%
100%
76%
18%
6%
100%
Vermont
72%
20%
8%
100%
70%
22%
8%
100%
Virginia
37%
55%
8%
100%
68%
4%
29%
100%
Washington
36%
59%
5%
100%
81%
19%
0%
100%
West Virginia
82%
14%
4%
100%
57%
35%
8%
100%
Wisconsin
36%
61%
3%
100%
87%
13%
0%
100%
Wyoming
64%
36%
0%
100%
73%
35%
-7%
100%

CRS-56
Title IV-E Foster Care
Title IV-E Adoption Assistance
Maintenance
Assistance
State
payments
Administration
Training
Total
payments
Administration
Training
Total
Puerto Rico
100%
0%
0%
100%
100%
0%
0%
100%
Total
47%
47%
6%
100%
72%
24%
5%
100%
Source: Table prepared by the Congressional Research Service (CRS) based on data provided by the U.S. Department of Health and Human Services (HHS). Detail may not sum
to total due to rounding. “For purposes of Table C-3, expenditures for SACWIS were excluded. Also excluded are costs associated with the HHS child welfare waiver experiments,
for which a separate expenditure category appears.”
Note: As illustrated in Table C-3, a few states have negative claims for training. As discussed in the report, it is important to note that states may submit claims for expenditures
for 2 years. HHS also “disallows” some of the expenditures claimed by the states for federal reimbursement (that is, they determine the expenditures are not eligible for federal
reimbursement). These disallowances affect the total state claims in a given year, and may result in a “negative” claim by the state. The FY2000 data do not include any disallowances
and may therefore be subject to change.
a State estimate used for fourth quarter for foster care and adoption assistance.

CRS-57
Appendix D: Foster Care and Adoption Assistance
in Six Selected States
The national trends presented in this report mask tremendous variation by state
in child welfare spending. The following figures illustrate for six larger states –
California, New York, Pennsylvania, Illinois, Michigan, and Ohio – federal
expenditures for foster care and adoption assistance from FY1987-FY2000
(controlling for inflation). The average monthly number of children claimed as eligible
by the state for foster care and adoption assistance over this period of time is also
illustrated. To illustrate the large variation in size of spending and eligible populations
by each of these states, these figures are presented using the same scale. These
figures highlight the following:
! California: Of the six selected states, California most closely reflects
the trends observed nationally. The state has experienced an increase
in federal expenditures for both foster care and adoption assistance.
At the same time, the number of children claimed as eligible for
foster care grew from FY1987-FY1998, and subsequently decreased.
In contrast, the number of children claimed as eligible for adoption
assistance has increased more consistently.
! New York: Federal spending for foster care has fluctuated over the
past 14 years, while federal spending for adoption assistance in New
York has increased consistently. After peaking in FY1992, the
number of children claimed as eligible for federal foster care has
decreased, with the state claiming a larger number of children eligible
for adoption assistance than foster care for the first time in FY2000.
! Illinois: Federal spending for foster care in Illinois grew from
FY1987-FY1997, but has since leveled off as the number of children
claimed as eligible for foster care has decreased since peaking in
FY1998. Federal spending for adoption assistance has grown in
Illinois from FY1987-FY1999, but decreased in FY2000. The
number of children claimed as eligible for adoption assistance has
also increased, with the rate of growth increasing in FY1997, to a
population similar to the number of children claimed as eligible for
foster care by FY2000.
! Pennsylvania: Pennsylvania has seem more dramatic fluctuations
in federal foster care spending, as spending increased from FY1987-
FY1995, dropped in FY1996 but subsequently increased (except for
FY2000). At the same time, federal spending for adoption assistance
has grown consistently. The state has also reported more dramatic
fluctuations in the average monthly population, with more children
claimed as eligible for foster care than claimed as eligible for
adoption assistance in every year.
! Michigan: Since FY1991, federal spending for foster care has
remained relatively constant, as has the number of children claimed
as eligible for foster care. Federal spending for adoption assistance
has grown consistently, and the state has claimed a larger number of
children eligible for adoption assistance than foster care since
FY1994.

CRS-58
! Ohio: Federal spending for foster care has increased in Ohio over
the past 14 years, although the number of children claimed as eligible
for foster care has declined since peaking in FY1997. At the same
time, like Michigan, federal spending for adoption assistance has
increased and the state has claimed a larger number of children
eligible for adoption assistance than for foster care since FY1994.

CRS-59
California
Figure 9. California: Federal Expenditures for Title IV-E Foster Care
and Adoption Assistance, FY1987-FY2000
(in millions of FY2000 dollars)
1,200
1,000
800
600
400
200
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Foster Care
Adoption Assistance
Figure 10. California: Average Monthly Number of Children
Eligible for Federal Reimbursement for Title IV-E Foster Care and
Adoption Assistance FY1987-FY2000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Foster Care
Adoption Assistance
Source: Congressional Research Service (CRS) based on data provided by the U.S. Department of
Health and Human Services (HHS).

CRS-60
New York
Figure 11. New York: Federal Expenditures for Title IV-E Foster Care
and Adoption Assistance, FY1987-FY2000
(in millions of FY2000 dollars)
1,200
1,000
800
600
400
200
0
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Foster Care
Adoption Assistance
Figure 12. New York: Average Monthly Number of Children Eligible
for Federal Reimbursement for Title IV-E Foster Care and Adoption
Assistance FY1987-FY2000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Foster Care
Adoption Assistance
Source: Congressional Research Service (CRS) based on data provided by the U.S. Department of
Health and Human Services (HHS).

CRS-61
Illinois
Figure 13. Illinois: Federal Expenditures for Title IV-E Foster Care
and Adoption Assistance, FY1987-FY2000
(in millions of FY2000 dollars)
1,200
1,000
800
600
400
200
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Foster Care
Adoption Assistance
Figure 14. Illinois: Average Monthly Number of Children Eligible for
Federal Reimbursement for Title IV-E Foster Care and Adoption
Assistance, FY1987-FY2000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Foster Care
Adoption Assistance
Source: Congressional Research Service (CRS) based on data provided by the U.S. Department of
Health and Human Services (HHS).

CRS-62
Pennsylvania
Figure 15. Pennsylvania: Federal Expenditures for Title IV-E
Foster Care and Adoption Assistance, FY1987-FY2000
(in millions of FY2000 dollars)
1,200
1,000
800
600
400
200
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Foster Care
Adoption Assistance
Figure 16. Pennsylvania: Average Monthly Number of Children
Eligible for Federal Reimbursement for Title IV-E Foster Care and
Adoption Assistance, FY1987-FY2000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Foster Care
Adoption Assistance
Source: Congressional Research Service (CRS) based on data provided by the U.S. Department of
Health and Human Services (HHS).

CRS-63
Michigan
Figure 17. Michigan: Federal Expenditures for Title IV-E Foster
Care and Adoption Assistance, FY1987-FY2000
(in millions of FY2000 dollars)
1,200
1,000
800
600
400
200
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Foster Care
Adoption Assistance
Figure 18. Michigan: Average Monthly Number of Children Eligible
for Federal Reimbursement for Title IV-E Foster Care and Adoption
Assistance, FY1987-FY2000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Foster Care
Adoption Assistance
Source: Congressional Research Service (CRS) based on data provided by the U.S. Department of
Health and Human Services (HHS).

CRS-64
Ohio
Figure 19. Ohio: Federal Expenditures for Title IV-E Foster Care
and Adoption Assistance, FY1987-FY2000
(in millions of FY2000 dollars)
1,200
1,000
800
600
400
200
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Foster Care
Adoption Assistance
Figure 20. Ohio: Average Monthly Number of Children Eligible for
Federal Reimbursement for Title IV-E Foster Care and Adoption
Assistance, FY1987-FY2000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Foster Care
Adoption Assistance
Source: Congressional Research Service (CRS) based on data provided by the U.S. Department of
Health and Human Services (HHS).

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