Senate Finance Bill in Works to Kill Federal Foster Care Income Test, Ease Transition to Family First Act

Sens. Debbie Stabenow (Mich.) and Sherrod Brown (Ohio), both Democrats serving on the Senate Finance Committee, have introduced legislation that would disconnect federal foster care money from an income test and ease the transition to the looming Family First Act for states. Photos courtesy of Wikipedia.

Two Democrats on the Senate Finance Committee plan to introduce major legislation that would unchain federal foster care dollars from a decades-old income test, and ease the transition toward the Family First Prevention Services Act, Youth Services Insider has learned.

The Family First Transition and Support Act, authored by Sens. Sherrod Brown (Ohio) and Debbie Stabenow (Mich.) will likely be introduced shortly after Congress returns from its current recess, which is scheduled to end April 29. The language has not been finalized, but YSI has obtained draft language and has discussed the bill with people close to its creation. Let’s break this down in three parts.

De-Linking IV-E Foster Care

Title IV-E of the Social Security Act is the entitlement through which federal funds flow to states for payments related to foster care and adoption subsidies. Soon, thanks to the 2018 passage of the Family First Act, IV-E will also be reimbursable for certain services aimed at helping families without the use of foster care.

The foster care prevention funds can be spent on any family, regardless of the income of the parents involved. That will soon be true of the adoption subsidies, which currently require an income test for just the youngest foster youths.

But IV-E foster care payments are still only available for youth whose birth parents meet the poverty standard included in the Aid to Families with Dependent Children program, even though that welfare program has been defunct since 1996. The number of foster youth who are IV-E eligible varies widely from state to state, and overall it has dropped considerably in the past two decades.

For advocates who believe that systems rely too much on foster care, it can be argued that the income eligibility is a rein against even more foster care spending. But there really is no actual constituency in support of the IV-E income test as sound, logical policy.

Having read through the draft bill’s language on de-linkage, the big political question as this moves from a Democrat-only bill to something that might get bipartisan support is the cost involved. Going from a structure that limits the entitlement to less than 50 percent of foster youths to one where 100 percent would be eligible will cost billions of dollars.

The version of Brown-Stabenow that YSI saw does not include any adjustment to balance out the cost of universalizing IV-E foster care. It does require states to spend any savings from de-linkage on family preservation efforts, but YSI doubts that a Congressional Budget Office score would take that into account as much of an offset.

An open-ended expansion of the IV-E entitlement will obviously be a harder sell when it comes time to find Republican support. So can leadership on this bill actually persuade them to go alone with new spending – not unprecedented; the opioid bill last year was all new spending without any so-called “pay-fors” – or are they open to compromise if the GOP insists on neutralizing the cost?

The most straightforward way to render de-linkage cost-neutral would be to lower the per-child federal matching percentage under the entitlement. In other words: Cover way more foster youth, but at a lower rate.

But that could be tricky, because the amount of match varies from state to state. Currently, the IV-E matching rate is pegged to the state’s Federal Medical Assistance Percentage (FMAP), which also dictates the state’s federal Medicaid funding.

A shift in the federal match rates would create winners and losers for sure. In some states, as few as 11 percent of foster youth are IV-E eligible. So a change that would lead to 100 percent of them being eligible could be a huge fiscal boost, even at a lower federal contribution. In states where the IV-E eligible group is in the 60 to 75 percent range, a decrease in the match might mean a net loss in federal support.

In 2013, the Government Accountability Office provided the Senate Finance Committee with a review of 14 different attempts to repeal or replace the IV-E income eligibility scheme. Click here to read those ideas.

Easing Into Family First

The bill includes a litany of short- and mid-term boosts that are aimed at helping states transition under the Family First Act, which was passed in 2018 and mostly takes effect in October of this year. As mentioned, the bill opens up the IV-E entitlement to some front-end prevention services, but it also limits federal support for placing youth into group homes and other “congregate care” settings to just two weeks. (Click here for our full explainer on the Family First Act.)

States are allowed to delay implementing the limits to group care funding until 2021, but if they choose that path, they would forgo access to the new front-end funding until that time. The Department of Health and Human Services (HHS) asked states to alert them last November if they anticipated seeking a delay, but the agency has refused to make the results of that query public.

In the bill, Sens. Brown and Stabenow include changes aimed at making it more attractive for states to jump in right away. Among the provisions:

Promoting Safe and Stable Families (PSSF): The bill hikes funding for PSSF, the main federal fund for family preservation, from about $450 million to $665 million for 2020 and 2021. It also makes fiscal support to relatives caring for youth at risk of entering foster care an allowable cost under PSSF.

That addresses an issue many advocates see as a significant hole in the Family First Act. The law envisions the need for relatives to care for kids in some cases where parents get the front-end services now allowed under IV-E. But it doesn’t provide much in the way of funding to help support those relatives directly, though it does offer the potential for a dramatic expansion of kinship navigator programs.

The Brown-Stabenow bill would also permit PSSF to be used for some of the front-end services not allowed under IV-E in the Family First Act, namely transportation and housing assistance.

Waiver States: Several states are currently operating a Title IV-E waiver project that offers them more flexibility in how they use federal money. Many of these states – Florida, Ohio, New York and California, which combined were home to a quarter of the nation’s foster youth in 2017 – see those waivers as a better deal than the Family First Act.

Those waivers expire in October, and there is already a bill circulating that would provide a two-year extension of them for states that wished to delay on Family First. Brown and Stabenow take another tack: trying to make the fiscal transition to Family First advantageous by loosening the reimbursement structure for waiver states.

Currently, a waiver state must spend dollars and then submit periodic requests for reimbursement. In the lead-up to Family First, waiver states would be allowed to estimate their spending and receive the funds up front. And if the state or county is overpaid in any way, they would work with HHS to remedy and payment discrepancies.

That’s not exactly a blank check to overspend willy-nilly, but does create a more lax atmosphere for states moving from a lot of flexibility to a more regulated structure again.

Foster Parent Recruitment, Congregate Care Licensing: The Family First Act included a laughably tiny pot of money ($8 million) for recruiting more foster parents, which will be important if states are going to reduce their use of congregate care. That might have been because there isn’t a lot of evidence about what works in effectively increasing the pool of foster homes.

This bill puts in $150 million over two years that can be used either for recruiting foster parents, or for helping group settings become licensed as qualified residential treatment programs (QRTP). This designation is a significant exception to the limits on federal funds for congregate care – a child welfare agency could draw IV-E funds for a youth placed in a QRTP for longer than two weeks.

Evidence-Based Practice

Family First’s front-end services are limited to substance abuse, mental health and parenting interventions. And it is further restricted to models of services that are deemed to be promising practices or evidence-based interventions. The list of models that qualify for use under the Family First Act will be decided on by a clearinghouse overseen by Abt Associates. The first slate of approved models is expected to be announced in May.

The clearinghouse process has been slower than originally anticipated, mostly because it got off to a late start. The Brown-Stabenow bill basically tries to make the evidence-based restrictions a little softer in the next few years.

First, there is a requirement that half of all Family First services that a state employs have the highest rating of effectiveness, “well-supported.” Very few of the relevant models have this designation, and this bill would delay that requirement until 2026. This means states could use Family First funds for “promising” or “supported” practices, and the hope is surely that this could help build the evidence base for some of those to eventually attain “well-supported” status.

The bill also offers states a path to work out agreements to use some models before they are officially approved and included in the clearinghouse. It doesn’t establish any new authority, but clarifies that programs that meet the Family First evidentiary standards are eligible for prevention services, regardless if it is included on the clearinghouse.

Presumably, this would require an agreement with the Department of Health and Human Services that the model has been rated as effective by some other entity, and is likely to be included eventually in the clearinghouse.

Long-term, that would seem to jeopardize the integrity of the clearinghouse. If any research body’s declaration of a program’s evidence status will suffice, why have a clearinghouse at all? But in the short-term, the reality is that the clearinghouse is behind schedule and will likely include a dozen or so models when Family First kicks in next October.

This clarification enables states to anticipate the eventual inclusion of programs, which could make early participation in the law more attractive.

Here’s an example. YSI has heard that Kentucky child welfare advocates were disappointed that Sobriety Treatment and Recovery Teams (START) – a substance abuse treatment support program designed specifically for parents involved in child welfare cases –  was not included in the first list of programs being considered by the clearinghouse. START is rated as “Promising” by the California Evidence-Based Clearinghouse.

The Brown-Stabenow bill would clear a path for Kentucky to get approval to draw down funds for that model, even though START has yet to be considered for the clearinghouse.

Finally, the Brown-Stabenow bill ups the amount of funds available for state-directed research and evaluation of potential Family First Act clearinghouse candidates from $6 to $26 million. That could help jump start more work toward establishing a wider pool of evidence-based programs.

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