New Federal Law Could Mean Cuts for California’s Child Welfare Systems

Layoffs and spending cuts could be on the horizon for some of California’s largest county child welfare systems amidst a major shift in how the federal government finances child welfare.

Earlier this month, a delegation of California county child welfare directors departed Washington, D.C., without a deal to extend a federal waiver that has allowed flexible funds for many of the state’s most populous areas, including Alameda, Los Angeles, Sacramento, San Diego, San Francisco, Santa Clara and Sonoma counties.

That waiver, which applies to the state’s funds from the Title IV-E entitlement that covers child welfare services, expires on September 30. Now, as California ponders a last-ditch legislative proposal to ease the transition away from the waiver system, child welfare systems in those seven California counties are facing considerable uncertainty as they confront a cumulative $320 million shortfall and potential reductions in service starting on October 1.

“We are currently examining what services we can continue to provide without the waiver, what we may want to add under [Family First], and what we must consider reducing or sunsetting,” said Bobby Cagle, director of the Los Angeles Department of Children and Family Services, in an email statement.

“I worry most about the impact on children and families,” said Michelle Callejas, director of Sacramento County’s Child, Family, and Adult Services Department. “Under the waiver, we’ve been able to keep more children safely at home with services and we’ve been getting kids to safety faster and I don’t want to lose the ground we’ve gained.”

Title IV-E has traditionally only been usable for funding related to foster care and adoption, and only for youth deemed eligible using the income level of their parents or caregivers. The waiver offered states and counties the opportunity to receive a capped federal grant to fund their child welfare agencies, and use it to cover ineligible youth or to pay for services that IV-E generally did not cover.

This round of state waivers is set to expire today. At the same time, the Family First Prevention Services Act, signed into law last year by President Trump, is set to take effect.

The law permanently builds in more flexibility to IV-E on the front end, permitting entitlement funds to flow for efforts to prevent the use of foster care in some child welfare cases. But it also restricts the amount of IV-E dollars that states can use for congregate care options such as group homes, shelters and institutions.

States can opt into the new funding arrangement starting on October 1, the day after the waiver system is scheduled to expire. All states must comply with Family First by 2021. A bill floated last week would not extend the waiver system, but it would provide extra money to waiver jurisdictions over the next two years to offset the sudden loss of funding associated with the capped waiver amounts.

While the scope of IV-E has been widened under Family First, many states with waivers believe their total funding under IV-E will decline once the waivers expire. Seven counties in California — representing more than half of all the state’s foster youths — are working under a IV-E waiver.

In its waiver plan, Los Angeles County’s Department of Children and Family Services (DCFS) said it would use the waiver for three strategies: improving the quality of social workers, prevention and aftercare programs designed to keep families from entering the child welfare system and family preservation services.

The county says that it has seen a reduction in the number of children in care and caseloads during L.A.’s 12-year waiver period. DCFS Director Cagle said that ending the waiver as it stands now would mean a loss of $213 million annually in federal funds.

“In the worst-case scenario, we will have to look at hiring freezes or eliminating positions through attrition,” Cagle said. “I hope that day never comes, but if it does, we would see social worker caseloads rise, the number of kinship providers decline, and the number of children placed into foster care go up. These outcomes are the opposite of what Family First intended, and what we are working diligently to avoid.”

It has been difficult to chart the impact of the waiver system in California. In a survey from Child Trends – which found that the overwhelming majority of waiver funds in the 2016 fiscal year was spent on services that would be allowable under the normal Title IV-E rules – California declined to specify how it spent waiver dollars.

In June, an National Council on Crime and Delinquency (NCCD) report funded by the California Department of Social Services discussed preliminary findings of an evaluation study of the waiver in California counties. While the seven counties experienced variation in how their child welfare systems fared during the waiver, the NCCD report cites Sacramento and San Diego as two places where the waiver had a “statistically significant effect” in keeping children in home with their parents and preventing family separation.

“It is hard to imagine a more wide-scale, broad attempt to keep children out of foster care without sacrificing safety,” NCCD’s Elizabeth Harris wrote, in a blog post introducing some of the findings.

Callejas, Sacramento’s child welfare chief, said the county has seen a 29 percent reduction in the number of monthly entries into foster care and 30 percent fewer children placed into out of home care since Sacramento began the waiver process in September 2014. She credited nine family resource centers in helping coordinate prevention services to those families whom the child welfare system wouldn’t otherwise be able to work with.

Funding also goes to Sacramento’s early intervention drug dependency courts, which can now offer services instead of system involvement to some parents with substance abuse issues.

For now, Callejas said that county is assessing which programs are allowable under traditional Title IV-E rules. The nine family resource centers that provide parenting classes, domestic violence classes, in-home services and parenting support are definitely not eligible under current Title IV-E guidelines, she said, though some of that may be possible when California opts in Family First. The county has funding through the end of the year, but changes are likely ahead without a budget deal.

“We’re in a pretty tight fiscal situation,” she said. “It will be challenging; we will work with our providers to slow down our referrals so that we’re not just dropping families from services.”

For Francesca LeRúe, director of Santa Clara County’s Department of Family and Children’s Services, preparing for life after the waiver has been challenging, but she said she is excited to participate in more prevention services under Family First after getting an opportunity to try out some strategies during the waiver over the past five years.

“Participating in the IV-E Waiver allowed Santa Clara to dedicate time to changing the agency culture around engaging with families and trying new, more proactive services and interventions,” LeRúe said.

She pointed to the county’s increasing use of family maintenance services as a way it has developed new capacities that will help during Family First.

“[Family First] is an opportunity to increase these engagement and preventive efforts and continue developing prevention case plans as opposed to relying on court case plans – which means removal has happened,” she said, in an email statement to The Imprint. “This is such a different way to serve the community and it creates greater trust between families and the agency.”

California may yet be waiting for a last-minute solution to its waiver shortfall, similar to the midnight-hour spending plan that birthed the Family First Act. For all the pain that new financing may bring, Callejas says that it has shown some of California’s largest counties that looking outside of traditional approaches to working with the state’s most vulnerable families carries great potential.

“I love that we took the risk and entered the waiver,” she said. “We learned that when you provide services and supports that are effective, even though they’re not funded by traditional means, it works. Our hope is that we continue to work at the federal and state level and continue to think through how do we continue to invest in these critically important services.”

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