Wyden-ing IV-E: What Comes Next for Child Welfare Financing

As we reported yesterday, Sen. Ron Wyden (D-Ore.) has proposed a major overhaul of the federal “IV-E” entitlement. The legislation would, for the first time, expand the scope of the multi-billion account beyond foster care and permit states to spend more freely on preservation, reunification and kinship support.

Past attempts to do so have failed because they involved an end to the entitlement structure; the cost of flexibility was always certainty. Wyden attempts to preserve entitlement, but constrain new spending enough that it’s politically feasible.

It would be foolish for anyone to think this bill, as presently constituted, is going to become law during this Congress. Wyden is the ranking minority on the Senate Finance Committee. His counterpart, Chairman Orrin Hatch (R-Utah), has yet to weigh in what he’d want out of a comprehensive reform package. The bill is without the endorsement of Hatch or any other Senate Republican.

So right out of the gate, you can expect some horse trading and compromising before it even has a chance to make it out of the Finance Committee.

But Youth Services Insider gets the sense, after discussing the legislation with leadership on the subject in both parties, that there is a real opportunity for some deal on reforming the all important Title IV-E of the Social Security Act. Here are a few thoughts about what looms on the near horizon after the introduction of this bill.

What’s the Score?

How much does the Congressional Budget Office believe Wyden’s legislation will cost? That is the first and perhaps largest question that will likely be answered before the fall, when Hatch indicated he would like to schedule a markup of Wyden’s Bill.

When Wyden circulated a draft in May, the guess YSI heard was it would be in the billions. In case you’ve been backpacking through Asia since 2011: Not a lot of new “billions” are coming into federal discretionary spending.

But Wyden’s staff made some changes to rein in what types of non-foster care services were allowable in the bill. And the child welfare director from Hatch’s own state of Utah, Ann Silverberg Williamson, testified at a hearing this week that the services available through Wyden’s bill could slash spending on foster care and congregate care.

A CBO analyst in attendance at the hearing heard Williamson tell the committee that her agency could keep 34 families together for the price of putting one youth in group care for a year.

Hatch and Group Care

Hatch expressed genuine interest in working on a broader reform package with Wyden. They have co-hosted two Finance Committee hearings on child welfare this summer, and they seem to be in philosophical agreement about two things:

1) IV-E is steering the lion’s share of federal funds into the least optimal outcome.

2) There is a role in the child welfare continuum for group placements but it is a far smaller role than those settings play now.

Hatch has introduced legislation in the past that would forbid states to use federal money in the placement of a youth under 13 into congregate care, while setting a one-year limit on funds for older youths. It will be interesting to see if Hatch pursues myopic legislation on the matter going forward, or if perhaps he’ll seek to make that part of a broader reform package with Wyden.

Per Williamson’s testimony, the inclusion of a group care limit would likely drive down the CBO score. One former Hill staffer who worked on child welfare finance for years told YSI that he thinks the actual savings from group care limits would be marginal, not nearly enough to offset the new reimbursements on family preservation and reunification.

House Support

Rep. Lloyd Doggett (D-Tex.), a member of the Human Resource Subcommittee of House Ways and Means, is expected to introduce a House version of Wyden’s bill once the House comes back into session.

There are Congressmen on both sides of the aisle who are passionate about child welfare, including two Washington State delegates on Ways and Means: Rep. Dave Reichert (R) and Jim McDermott (D). Will the House leadership on child welfare support a Senate framework for entitlement reform?

Endorsers and Negotiations

Brookings Institute fellow and child welfare expert Ron Haskins once told us that no reform legislation would move without major buy-in from the advocacy world. Nobody in Congress, he said, wants to be getting criticized from all sides while trying to do the right thing.

As it stands now, the Wyden bill would seem to have the necessary buy-in. The bill has more than 60 endorsements from national and state-based organizations representing a variety of interests. The Alliance for Strong Families and Communities has been developing its own reform framework, wildly different from Wyden’s, but that didn’t stop the Alliance from supporting his plan.

But as we said earlier, there is zero chance the bill would look exactly this way when it’s in a real position to move. There could be limits on federal spending on group care or even all foster care. The extra hundreds of millions Wyden steers into Title IV-B, the already flexible pot of child welfare money, might get negotiated out.

Would those types of concessions amount to a deal breaker for advocacy groups, a price too high to pay for flexibility in IV-E spending? One child welfare insider who supports the bill as it is told YSI that yes, you would see some supporters fall off the bandwagon if hard limits on some or all foster care placements were included.

Income Test

It was about a year ago that Senate staffers held a big roundtable with child welfare leaders to hear elevator speeches on reform ideas. YSI was on hand for it, and the biggest consensus in the room was that the income eligibility test for federal foster care dollars had to go. As we stated in June of 2013, the eligibility test is friendless.

So it is somewhat surprising that a legislative process aimed at forever changing the scope of IV-E doesn’t address that. Wyden’s bill would not de-link federal foster care dollars from the 1996 income test included in the Aid to Families with Dependent Children program.

Mary Lee Allen, the longtime child welfare expert for the Children’s Defense Fund, made an astute observation to YSI as to why a de-link was not included here. “If you’re really concerned about prevention, you might want to say the first thing out of the box is to make more children eligible for foster care,” she said.

Very true! And Wyden’s bill does not put an income test on the provision of prevention and reunification services under IV-E, so his strategy doubles down on the philosophy. So a system could spend federal money to keep any kid at risk of foster care at home, or spend toward reunification of any foster youth with family. But only a fraction of youth.

That works if your agenda is lowering the use of foster care and increasing efforts at family preservation. And that is definitely what Wyden, and Hatch, have their eyes on. But it is pretty uneven from a policy perspective, which raised some concern about the fairness to kids who do need foster care with some advocates.

“I am happy that they got rid of look back for kids who stay home, but why would you disadvantage the kids who can’t stay at home and are ostensibly facing the toughest life trajectory?” said Carroll Schroeder, the executive director of the California Alliance of Child and Family Services. “At the logic level it doesn’t make sense, at the policy level it doesn’t makes sense.  At the fiscal level it makes sense, but I don’t think it is good policy.”

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