ASPF Issue Brief: Federal Foster Care Financing

This paper provides an overview of the program's funding structure and documents several key weaknesses. It concludes with a discussion of the administration's legislative proposal to establish a more flexible financing system. The program's documentation requirements are burdensome. There are four categories of expenditures for which states may claim Federal funds, each matched at a different rate. Differing claiming practices result in wide variations in funding among states. The average annual amount of federal foster care funds received by states ranges from $4,155 to $33,091 per eligible child, based on three year average claims from FY2001 through FY2003.

The current funding structure has not resulted in high quality services. Strengths and weaknesses of states? child welfare programs are identified through federal monitoring visits called Child and Family Services Reviews. States reviewed have ranged from meeting standards in 1 to 9 of the 14 outcomes and systemic factors examined (the median was 6).

• States? Title IV-E claiming bears little relationship to service quality or outcomes
  
   
• The current funding structure is inflexible, emphasizing foster care
  
   
• The financing structure has not kept pace with a changing child welfare field

The proposed Child Welfare Program Option offers substantial benefits. The Child Welfare Program Option, first proposed in HHS's Fiscal Year 2004 budget request and currently included in the President's Fiscal Year 2006 budget request, would give states a choice between the current Title IV-E program and a five-year capped, flexible allocation of funds equivalent to anticipated Title IV-E program levels. It would allow innovative state and local child welfare agencies to eliminate eligibility determination and claiming functions and redirect funds toward services and activities that more directly achieve safety, permanency, and well-being for children and families.