Vulnerable Children in the Ledger: The Challenges Facing Child Welfare Agency Budgets

Every other year at Child Trends, we conduct a survey examining the funding streams that support child welfare services in all fifty-state states, the District of Columbia, and Puerto Rico, the results of which  are featured in a report and through an online database.  The last survey found that, for the first time in nearly 20 years, total spending on child welfare in the U.S. had declined.

Child welfare agencies play a critical role in protecting children and helping families: they are charged with ensuring that children are protected from harm, and have the opportunity to grow up in safe, nurturing, and stable families. State child welfare agencies provide a range of services to children, families, and communities in order to promote the wellbeing of children who have experienced abuse or neglect, or who are at risk of doing so. It’s interesting to look at where and how we, as a country, decide to spend our money, given that we want our kids (and every kid) to be safe and healthy.

A few key things come to mind as we think about the way child welfare systems are funded:

1. Child welfare agencies serve a lot of children and families! Their work is much bigger than just the children who are living in foster care: between October 2012 and September 2013, over 3 million children received child abuse prevention services. The sheer number of children that come to the attention of child welfare agencies is staggering. During that same year, 6.4 million children were referred to child protective services for suspected maltreatment.  More than a million of these children received some type of child welfare services following their referral.
2. Every state is different in terms of how its child welfare systems are structured and how the system is funded. Some states have state-level child welfare agencies; others are run at the county level and only overseen by the state. States also show tremendous variation in their individual financing approaches.  For example, some states use local funds to support their child welfare agencies; others only use state and federal funds.
3. Federal financial support for child welfare is complex! There are several federal funding sources[i] states can use for child welfare services, each with its own eligibility criteria, allowable uses, and state-funding match requirements. Juggling these multiple sources can be a challenge for states. Even how states use the available federal funding sources varies dramatically, as seen in the following state profiles of the breakdown of federal dollars spent on child welfare from the SFY 2012 survey.
4. The biggest chunk of federal money that states use for child welfare services, Title IV-E of the Social Security Act, primarily funds supports for children once they have been removed from their homes (e.g., when they are in foster care or after they have left care) – through things like foster care maintenance payments and corresponding administrative costs, recruiting foster parents, and training staff and foster care providers. However, just over half of the children in foster care are eligible for the Title IV-E foster care program, and this group has been getting smaller over time. One of the many eligibility requirements for this funding stream is that a child in foster care must meet an income test that ties their family’s income level to requirements of the 1996 Aid to Families with Dependent Children (AFDC) program. In other words, for a state to be reimbursed for costs associated with a child being in foster care, the child’s family has to have an income low enough that they would have qualified for the (now-defunct) welfare program based on income level requirements which haven’t been adjusted since 1996. For children whose families have high enough incomes to make them ineligible for the Title IV-E program, states must find alternate sources of funding for expenses like a child’s room and board in foster care.

In addition to preparing for the next round of our survey, it’s an interesting time for child welfare financing. In early May 2015, Senate Finance Committee Ranking Member Ron Wyden, D-Ore., made public draft legislation that would seek to improve the nation’s child welfare system by providing states and tribes with additional flexibility to finance new tools and programs to address the needs of at-risk children and their families. Several organizations, including our child welfare financing survey partners the Annie E. Casey Foundation and Casey Family Programs, have also initiated efforts to reform child welfare financing at the federal level.  These proposals seek to address some of the most common criticisms of the current child welfare finance structure: a lack of flexibility in funding streams /eligibility criteria and low levels of funding availability for prevention services.

Making sure our child welfare systems can meet their responsibilities to our most vulnerable children is essential. We hope our work – painting a clearer picture and building the body of knowledge about how states fund their child welfare programs – will help all children grow up safe and healthy.

[i] Title IV-B of the Social Security Act; Title IV-E of the Social Security Act; TANF -Temporary Assistance for Needy Families; SSBG – Social Services Block Grant