This report is part of the Urban Institute's Assessing the New Federalism project, a multi-year effort to monitor and assess the devolution of social programs from the federal to the state and local levels. Alan Weil is the project director. The project analyzes changes in income support, social services, and health programs and their effects. In collaboration with Child Trends, the project studies child and family well-being.
The project has received funding from The Annie E. Casey Foundation, the W.K. Kellogg Foundation, The Robert Wood Johnson Foundation, The Henry J. Kaiser Family Foundation, The Ford Foundation, The John D. and Catherine T. MacArthur Foundation, the Charles Stewart Mott Foundation, The David and Lucile Packard Foundation, The Commonwealth Fund, the Stuart Foundation, the Weingart Foundation, The McKnight Foundation, The Fund for New Jersey, and The Rockefeller Foundation. Additional funding is provided by the Joyce Foundation and The Lynde and Harry Bradley Foundation through a subcontract with the University of Wisconsin at Madison.
The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.
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Introduction
Child welfare services are designed to ensure the safety of children. As such, they span a broad range of activities, including supporting and preserving families, investigating reports of abuse or neglect, protecting victimized children, and assisting children temporarily or permanently removed from their parents' homes. Primary responsibility for delivering child welfare services rests with the states or local governments, which use funds from federal, state, and local sources. Federal funding accounts for a substantial proportion of the total available funds, but state officials and child welfare researchers charge that these funds come with spending restrictions that are major barriers to effective service delivery.
Recent legislation to devolve more financial and operational responsibility for social service delivery to the states will probably increase states' flexibility in financing social services, including child welfare services and other programs such as child care and Temporary Assistance for Needy Families (TANF). Unfortunately, because there is little systematic information on either the amount of funding available for child welfare services generally or the allocation of that funding across specific services, it is difficult to track changes that take place as devolution proceeds.
To begin to fill this data gap and to provide a baseline from which to assess changes in the way states finance child welfare services, the Urban Institute conducted a survey of all 50 states and the District of Columbia on child welfare funding sources and expenditures. (For the purposes of this report, we considered the District of Columbia as a state, for a total survey sample of 51 states.) All but two states provided some data, and 33 were able to identify nearly all requested spending on child welfare services. This paper presents the results of that survey.1 State-specific data are provided in the Supplemental Report for this paper.
The Child Welfare System and Devolution
Within broad federal guidelines, each state has its own definition of child abuse and neglect, its own legal and administrative procedures, and its own programs to address the needs of vulnerable children. Federal child welfare financing comes through almost 40 separate programs,2 with Titles IV-B and IV-E of the Social Security Act being the primary sources of funding specifically allocated to child welfare services. Title IV-B provides federal matching funds for a wide range of child welfare activities, but it is subject to a relatively low funding cap. Title IV-E is an open-ended entitlement reimbursing states for a portion of certain costs associated with foster care and adoptive placements. Moreover, states receive IV-E reimbursement only for certain income-eligible children, approximately half of states' foster children on average. Child welfare administrators and other experts alike criticize this funding combination as inflexible, making it difficult for states to design service interventions that meet their individual needs. Experts also suggest that this funding structure constitutes a financial incentive for states to place children in foster care rather than provide services to keep families intact.
Acknowledging the pitfalls of such funding rigidity and responding to dramatic recent increases in Title IV-E spending, Congress has begun considering ways to give states increased fiscal flexibility and responsibility. As part of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), for example, Congress debated a proposal to create a Child Protection Block Grant for all federal child welfare funds. Though this was defeated, many experts believe that Congress will reconsider this option in the future. PRWORA authorized the Department of Health and Human Services to grant waivers to up to 10 states to experiment with some of their Title IV-E funds as a type of block grant.3 In 1997, this authorization was expanded to an additional 10 states per year between 1998 and 2002. (Not all states will receive a waiver, as individual states may apply for and receive multiple waivers.)
Federal devolution of fiscal authority for other social programs is also likely to affect states' financing of child welfare services. PRWORA made few changes to federal child protection programs. However, it allocated a sizable portion of federal funding as block grants for low-income populations, significantly increasing states' flexibility to define their own social policies and programs. This devolution and the associated changes will have a significant impact on child welfare financing by affecting child welfare agencies' access to social services and emergency funds. For example, PRWORA eliminated the federal Emergency Assistance Program, rolling these program funds into the TANF block grant, and reduced funding for the Social Services Block Grant.4 How states will use this increased fiscal flexibility and how the decisions they make will affect child welfare financing is, of course, uncertain, but this inevitable uncertainty is aggravated by the lack of reliable data.
Notes
1. A copy of the survey is included in appendix A. The methodology used to design the survey, collect the data, and analyze the results is described in appendix B.
2. U.S. House of Representatives, Committee on Ways and Means, 1998 Green Book, Washington, DC, 1998.
3. Like many block grants, these waivers provide states with increased fiscal discretion and increased flexibility in determining who is eligible for services. However, unlike most other grants, states granted Title IV-E waivers have to maintain the entitlement funds for previously eligible children and must continue to ensure that general protections for these children are upheld.
4. For a detailed discussion of the effects of PRWORA on child welfare financing, see Rob Geen and Shelley Waters, The Impact of Welfare Reform on Child Welfare Financing (Washington, DC: The Urban Institute, 1997).
Note: This report is also available in the PDF format, which many users find more convenient when printing.
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