Child Welfare Financing: Issues and Options (CRS Report for Congress)
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| Release Date |
Aug. 13, 2001 |
| Report Number |
RL31082 |
| Report Type |
Report |
| Authors |
Karen Spar and Christine Devere, Domestic Social Policy Division |
| Source Agency |
Congressional Research Service |
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.
