How Are We Spending Child Welfare Dollars?

Executive Briefing | by | February 26, 2016


Athena Mandros
Athena Mandros

In FY2012, the latest year data is available, the United States spent $28.2 billion on child welfare services. Using state estimated expenditures from FY2013, $22.9 billion dollars were traceable to spending on administrative costs and direct service provisions. Of that $22.9 billion, the largest amount was spent on the administrative service related to foster care and the second largest amount was spent on family support services, and independent living services. Spending on all services was as follows:

  • $5.65 billion (24%) on foster care administrative services
  • $5.2 billion (23%) on family support services and independent living services
  • $4.7 billion (21%) on adoption and guardianship services
  • $3.8 billion (17%) on congregate care settings
  • $3.5 billion (15%) on family foster/kinship care

Family Support & Independent Living Services: Family support services include family preservation services, crisis intervention, protective services, and family reunification services. Independent living services are services provided to foster care youth who age out of the foster care system to help them transition successfully to adulthood. The majority of funding for these services comes from state/local funds. In FY2013, total spending totaled $5.2 billion – including $4.7 billion in state/local funds, $413 million in Title IV-B spending, and $102 million in Title IV-E spending.

Adoption & Guardianship Services: The child welfare system is responsible for manages adoption and guardianship services for children who cannot be returned to their biological families. Families that adopt children eligible for Title IV-E receive a subsidy to help offset the cost of the child’s care. Guardianship exists in-between kinship care and adoption in the legal rights allowed to the guardian. The Guardianship Assistance Program is an optional Title IV-E program that provides subsidies to relatives who are committed to permanently caring for a child in the foster care system. In order to be eligible for guardianship subsidies, the child must live with the relative for six months, demonstrate strong attachment to the relative, and the relative must be committed to caring for the child. In FY2013, states estimated they would spend $4.7 billion on adoption and guardianship services.

Family Foster & Kinship Care Vs. Congregate Care: When a child is removed from the biological home, there are a number of out-of-home placement options that are available, including family foster care, kinship care, residential, and group home placements. Federal law requires that states place children in the least restrictive placement possible – defined as the most family-like environment. Even though states are spending more money on congregate care settings (residential and group homes), more than three times as many children are served by family foster/kinship homes than congregate care settings. In FY2013, 324,000 were placed in family foster/kinship homes, with spending estimated at $3.5 billion; while 80,000 children were placed in congregate settings, with spending estimated at $3.8 billion. This gap is expected to widen as states continue to limit their use of congregate care. Proportional to the total foster care population, in 2004, 18% of foster care children were in congregate settings, while in 2014, 14% of foster care children were in congregate settings (see National Look at the Use of Congregate Care in Child Welfare).

As child welfare moves into the future, we should expect to see a shift in funding away from congregate care settings and towards innovative approaches to caring for children who enter the child welfare system. For more on this shift across the country, see:

For more detail on spending on child welfare services, including a state-by-state breakdown of spending by congregate care, family foster care, and other services and supports – as well as a look at family foster care rates, premium and elite circle members can check out, How Are Child Welfare Funds Spent? An OPEN MINDS Market Intelligence Report. The report answers a number of questions including:

  1. How Are Child Welfare Funds Spent?
  2. How Much Do States Spend On Residential & Congregate Care Settings?
  3. How Much Do States Spend On Family Foster & Kinship Care?
  4. How Much Do States Spend On Family Support Services & Independent Living Services?
  5. How Much Do States Spend On Adoption & Guardianship Services?
  6. How Much Do States Spend On The Administration Of The Child Welfare System?

For more, on the complexities of working with the foster care population, join us on June 9 in New Orleans at The 2016 OPEN MINDS Strategy & Innovation Institute, where my colleague Joseph Naughton-Travers, Senior Associate, OPEN MINDS will present, Medicaid Managed Care For The Foster Care Population: A Look At Specialty Plans Serving Complex Children & Youth.


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