Flexible Federal Funding for Child Welfare: “How” Is the Hard Part

Note: This story was updated on July 19

Ten years ago, the voice for a philosophical change to federal foster care financing came from conservative politicians and policy shops that paid attention to child welfare.

Those conservatives who were interested in child welfare services – most notably, Rep. Wally Herger (Calif.) and Wade Horn, who led the Administration for Children and Families for President George W. Bush – wanted more flexibility in the place of the federal IV-E entitlement, which has a myopic focus on foster care-related expenses.

The financing objectives of most child welfare advocacy groups, including the Child Welfare League of America, focused mostly on the issue of IV-E eligibility, which we discussed in a recent piece on finance reform.

But over the course of a decade, things have changed, somewhat.

“There has been a feeling for 25 or more years now, and with growing reception, that the federal entitlement scheme…[is] way too restrictive,” said Ron Haskins, co-director of the Brookings Institution Center on Children and Families and a consultant to Casey Family Programs. “They provide an incentive to put kids in foster care, which most people think is a bad idea.”

To wit:

  • Some of child welfare’s largest private agencies, such as Tennessee’s Youth Villages and New York’s Hillside Family of Agencies, have shifted from residential care-only providers to balanced outfits with contracts for community-based work and family services.
  • The Annie E. Casey Foundation and Casey Family Programs have used their considerable money and influence to push for increased attention to family preservation services.
  • Both houses of Congress have bipartisan participation in the Congressional Caucus on Foster Youth. and the Senate Caucus on Foster Youth. The Senate group is led by Chuck Grassley (R-Iowa) and Mary Landrieu (D-La.), and in the House by Reps. Karen Bass (D-Calif.), Tom Marino (R-Penn.), Michele Bachmann (R-Minn.), and Jim McDermott (D-Wash.)
  • There are now decades of “waiver” projects, many still in progress, that have allowed states to tinker outside the rigidity of IV-E. There have been a mixture of successes and tepid results, but no disasters thus far.

The sum of those parts is a greater consensus on the wisdom of greater flexibility in federal child welfare, said Ron Haskins, a longtime supporter of finance reform.

During the 1996 welfare reform, Haskins was a key player in the switch from the Aid to Families with Dependent Children program to Temporary Assistance for Needy Families as a staff member at the House Ways and Means Human Resources Subcommittee. On a contract from Casey Family Programs, Brookings is halfway through a series of four luncheons led by Haskins meant to foment agreement on a plan for reform.

“I think there will soon be an attempt to put a lot of proposals on the table,” Haskins said.“There may be in the next six to nine months, attempts to get Congress to move.”

As mentioned, this fervor for flexibility was not always the case. Rep. Herger proposed the Child SAFE Act of 2004. The bill would have made all foster youth eligible for federal support, but it would also have turned the IV-E entitlement into a capped, mandatory allocation.

The upside to switching from an entitlement (the safest form of federal money) to mandatory funding (the next safest) was that states would be able to use the money for whatever child welfare services it wanted. Family preservation, drug treatment, permanent housing, foster care, pre- or post adoption services…it would all be in play.

President Bush pushed a similar plan, with an additional caveat: leaving it up to states. They could choose to keep the federal share of their foster care funds protected in the entitlement, or they could accept the capped, flexible allocation.

Those plans were a non-starter back then. The Child Welfare League of America urged its members to vocally oppose the plans, and the Children’s Defense Fund said in a position statement at the time that either plan “puts abused and neglected children in harm’s way” and could “dismantle” foster care.

Today, Haskins sees a different worldview based on the luncheon sessions held by Brookings.

“Outside Congress, there’s growing agreement of the kind of provisions that would be in a finance bill,” Haskins said. “A lot of people think you should have a finance system that gives more flexibility, and pays for preventative services.”

There is a catch here. While support for flexibility has increased, there isn’t much appetite for an elimination of the entitlement structure that protects IV-E from the annual battle over appropriations.

Haskins was blunt about the real mission of the Brookings luncheons:  “Get the knowledgeable community together to see if we can get flexible financing but without a block grant.”

The reason why is obvious, unless you’ve been living in the Gobi Desert since the turn of the decade. Fights over annual spending have nearly caused the federal government to close on a handful of occasions since 2010, and Sequestration whacked five percent off any discretionary spending for fiscal 2013.

From Sean Hughes, a child welfare consultant and member of The Imprint’s Blogger Co-Op:

“IV-E, while flawed, is currently one of the few remaining entitlement programs. This means that regardless of the fiscal or political situation, every single child eligible for funding will receive it. Look at the recent deficit reduction battles and you’ll see why entitlement status is something that should never be conceded.”

Haskins acknowledged there were attendees at the Brookings sessions that “would do everything they can to kill” reform legislation if it ended the IV-E entitlement.

If Republicans controlled the White House and both houses, he said, “you could maybe” get the entitlement eliminated over that opposition.

If trading the entitlement for flexibility is off the table, it essentially leaves two options:

  • Make the entitlement itself more flexible, allowing states to be federally reimbursed through IV-E for more than just foster care.
  • Leave the entitlement intact but downsize it, and put the savings from that into a flexible allocation to states. This could be done perhaps by augmenting Title IV-B, the child welfare services grant program

The former option is probably as odious to spending hawks as ending the entitlement is to child welfare advocates.

“We can’t just give states the ability to just spend on A, B, C, D and E,“ Haskins said. “They will figure out how to build bridges with that.”

The notion that flexibility is even necessary has attained a growing accord. Consensus on how to achieve it might still elude the stakeholders involved.

John Kelly is the editor-in-chief of The Imprint

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