The Cost of Protecting Vulnerable Children III
What Factors Affect States Fiscal Decisions?

Roseana Bess, Cynthia Andrews, Amy Jantz, Victoria Russell, Rob Geen

Child welfare agencies provide a safety net for abused and neglected children and children at risk for abuse and neglect. Some children are able to remain in their homes, while others must be removed and placed in foster care or with relatives until they can return home. Unfortunately, some children cannot return home. These children are either adopted, moved into another permanent placement, or they age out of the system (i.e., they turn 18 or 21 years old and exit the system). Funding for services at all points within the spectrum described above is provided by federal, state, and local governments. In addition to state-specific events, two federal laws were enacted in the 1990s that could affect spending on child welfare services the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 and the Adoption and Safe Families Act (ASFA) of 1997. The Urban Institute saw the need to track how these laws would affect spending on child welfare services.

In 1997, during the first round of the Urban Institute Child Welfare Survey, researchers gathered state fiscal year (SFY) 1996 expenditure data from 48 states and the District of Columbia.1 These data provided a baseline of what was occurring before welfare reform. Our 1997 survey found that total spending in SFY 1996 was $14.7 billion, and that states varied significantly in their spending from federal, state, and local sources (Geen, Waters Boots, and Tumlin 1999; Waters Boots et al. 1999). The survey also found that state child welfare agencies were using a large amount of funds not dedicated to child welfare services (e.g., Medicaid, Temporary Assistance for Needy Families [TANF]) to meet the needs of the children and families they were serving. In addition, the survey found that states were spending relatively little on prevention.

A second round of the Child Welfare Survey in 1999 collected SFY 1998 data and examined changes in spending between SFY 1996 and SFY 1998. Our 1999 survey found that total spending in SFY 1998 was $15.9 billion,2 and that child welfare spending was unstable many states saw relatively large changes in their spending on child welfare during the short time between surveys (Bess, Leos-Urbel, and Geen 2001). The survey also found that states continued to rely heavily on funds not dedicated for child welfare, while spending little money on prevention services. Finally, the 1999 survey found that states reliance on welfare dollars (Emergency Assistance in 1997 and TANF in 1999) dropped considerably compared with the 1997 survey.

This paper presents the findings of the 2001 Urban Institute Child Welfare Survey, which collected SFY 2000 expenditures. In addition to spending by source and by use, changes in spending between SFY 1998 and SFY 2000 and, when possible, between SFY 1996 and SFY 2000 are also presented. This survey was designed to identify changes in child welfare spending following states implementation of ASFA and PRWORA (commonly referred to as welfare reform). While the Urban Institutes 1999 survey captured an early glimpse of the effects of welfare reform on child welfare spending, the 2001 survey sought to examine these effects after states had fully implemented reforms.