An Introduction to Child Welfare Funding, and How States Use It

Child welfare agencies in the United States are charged with ensuring the safety, permanency, and well-being of children who have been abused or neglected, and those who are at risk of abuse or neglect. The services provided by states and by counties vary widely, and include services for children and families to prevent abuse and neglect, child protective services such as family assessments and investigations, providing payments and supports for out of home placements such as foster care or kinship care, and adoption and guardianship services and supports for children and families.

How child welfare agencies pay for those services varies, too. In state fiscal year (SFY) 2012, the year for which the most recent funding information is available, states spent more than $28.2 billion, from federal, state, and local sources, on child welfare activities. Of that amount, about $12.7 billion were federal funds, and of those federal funds, nearly $6.5 billion were from Title IV-E.¹ Title IV-E of the Social Security Act is the largest federal funding stream for child welfare activities. States can apply for Title IV-E waivers, which allow them to use IV-E funds more flexibly.

This report examines key child welfare financing decisions, based on interviews with child welfare agency officials in 10 states (Colorado, Florida, Illinois, Indiana, Massachusetts, Michigan, Ohio, Texas, Utah, and Wisconsin) about the hows, whys, challenges, and successes of their child welfare financing structures and decisions. We selected states that represent a significant proportion of the total national child welfare expenditures and have a current or previously approved Title IV-E waiver. Their strategies and concerns can inform state and federal discussions on how to ensure that the children, youth, and families involved in the child welfare system are safe and healthy.