Child Welfare Financing: What Do We Fund, How, and What Could Be Improved?

Published date01 November 2020
Date01 November 2020
/tmp/tmp-17YRz9PUCmWvUm/input 970909ANN
The Annals of the American AcademyChild Welfare Financing
Government efforts toward the prevention, detection,
and investigation of child abuse and neglect are carried
out through the United States’ child welfare system—a
complex web of programs that provide family assistance
and promote child safety. Most funding for these
activities is split among federal, state, and local govern-
ments and comprises specific child welfare–related
funding (such as Titles IV-E and IV-B of the Social
Security Act) and non–child welfare funding that is
Child Welfare spent on programs that support poor and disadvan-
taged families (Medicaid and TANF). I provide an
overview of these funding streams that finance the
child welfare system, review the federal legislation
since 1970 that has led to the current funding structure,
What Do We and end with a discussion of how the Family First
Prevention Services Act of 2018 has the potential to
Fund, How, and create better outcomes for children and families by
promoting prevention activities and program support
with strong evidence of success.
What Could Be Keywords: child welfare financing; child abuse and
neglect; child protection; Title IV-E;
Social Security Act; Medicaid; Family
First Prevention Services Act
The United States has a long-standing prob-
lem with children who are abused and
neglected by family members and a public
policy response that has never proven adequate
to solving the problem. Major progress against
the problem is not for want of trying. Both fed-
eral and state governments have developed a
host of programs to prevent abuse and neglect,
to detect it when it occurs, and to deal with its
aftermath. The goals of the nation’s child
Ron Haskins was, until recently, a senior fellow in and
held the Cabot Family Chair in Economic Studies at
the Brookings Institution, where he codirected the
Center on Children and Families. His research focuses
on child and family policy, welfare reform, evidence-
based policy, early childhood education, federal budget,
marriage, child welfare, child support enforcement,
poverty, inequality, and economic opportunity.
DOI: 10.1177/0002716220970909
ANNALS, AAPSS, 692, November 2020

welfare system are to prevent child abuse and neglect and to provide assistance
(including temporary and permanent homes for children) to families involved in
or suspected of maltreatment. To achieve these ends, the child welfare system
has developed as a complex series of programs that serve the purpose of preven-
tion of maltreatment and detection, investigation, treatment, and removal and
placement of children when prevention fails. The constituent programs of the
child welfare system divide responsibilities between the federal government and
the states. The system is financed by federal, state and (in most cases) local dol-
lars; and in most states, local government plays a vital role in planning and con-
ducting the programs.
Among the best sources of information about child protection programs,
spending on the programs, and evidence about the programs’ effects are the
survey of state child welfare programs conducted by the independent, nonprofit
organization Child Trends and various publications by foundations, like Casey
Family Programs and the Annie E. Casey Foundation, that focus considerable
attention and funding on child welfare. Government agencies, such as the
Children’s Bureau within the Administration for Children and Families at the
U.S. Department of Health and Human Services (HHS; 2019) and the
Congressional Research Service (CRS; 2019), also conduct important work to
analyze data provided by state and federal agencies, as do researchers in the pri-
vate sector. The Child Trends state survey, which has been conducted seven
times since 2004, most recently in 2018 (providing results through 2016), is
exceptionally valuable because it collects information on spending by federal,
state, and local agencies. One of the most complete sources of financial informa-
tion from CRS is a fifty-page report, issued in January 2018, that provides an
overview of nearly twenty federal programs focused on child welfare and their
current funding.
In 2018, 7.8 million children were subjects of the 4.3 million child maltreat-
ment referrals received by the child welfare system. Of these, 2.4 million were
screened, meaning that 3.3 percent of all U.S. children were subject to a child
welfare investigation. Child victimization rates rose between 2016 and 2018,
reaching a reported 678,000 children—or 0.9 percent of all children determined
to be victims in 2018. In that year, about 85 percent of victims suffered a single
type of maltreatment: 61 percent were neglected only, 11 percent suffered physi-
cal abuse only, and 7 percent suffered sexual abuse only. The other 15 percent of
victims suffered two or more types of maltreatment (HHS 2020). Moreover, that
the child welfare system is not more than moderately successful is suggested by
annual data on the number of children in foster care. Although the number of
children in foster care declined from around 493,000 to 441,100 between 2007
and 2017, the number increased every year between 2012 and 2017, rising from
about 397,300 to 441,100. The number fell for the first time in 6 years in 2018,
but by fewer than 4,000 children. The total cost of conducting the federal-state
system involving all child welfare activities was around $30 billion nationwide,
with states contributing somewhat more than half the funds and the federal gov-
ernment somewhat less than half (Rosinsky and Williams 2018).

Federal Child Welfare Program Funding by Fiscal Year (FY)
FY 2013 FY 2014 FY 2015 FY 2016 FY 2017
Title IV-E of the Social Security Act
Title IV-B of the Social Security Act
Other programs
SOURCE: CRS (2018).
NOTE: Data in millions of real 2017 dollars.
Overview of Spending by Child Welfare Programs
Although there are a host of minor programs that contribute to this total of $30
billion, the child welfare system features six major sources of funding and a sev-
enth program (the Family First Prevention Services Act) that is just getting
started. I begin with an overview of these programs and the spending on each.
The largest programs include Title IV-E and Title IV-B of the Social Security Act,
the Child Abuse Prevention and Treatment Act (CAPTA) state grants, the
Temporary Assistance for Needy Families (TANF) program, the Social Services
Block Grant (SSBG), and Medicaid. Table 1 provides an overview of federal
funding for these programs. A review of each of these programs provides a broad
understanding of the financing of the child welfare system.
An important distinction is in order at the beginning of our inquiry. The pro-
grams reviewed in this section fall naturally into two groups: one group of pro-
grams is designed and funded exclusively to serve children and families involved
with the child welfare system, and the other group serves children who qualify
for services for reasons other than abuse or neglect. The former group of pro-
grams includes Title IV-B, Title IV-E (and associated programs), and CAPTA; the
latter includes TANF, the SSBG, and Medicaid.
Title IV-E of the Social Security Act
Title IV-E is the biggest of the child welfare programs, both in terms of spend-
ing and the number of children and families receiving support. In 2017, the
program, which primarily pays for out-of-home care, including both foster care
and adoption, received about $8 billion from the federal government. Of this
amount, $7.8 billion was for adoption, foster care, and guardianship payments to
caretakers; $183 million was for payments in the Chafee Foster Care program for
older youth, in large part to help them make the transition to adulthood; and $38
million was for adoption payments and legal guardianship incentive payments.
The major share of this money is spent on monthly maintenance payments for
the care and supervision of eligible children who have been removed from their

homes, most of which goes to foster care or adoptive parents. The rest is spent
on administrative costs, training of staff and foster parents and other providers,
recruitment of foster and adoptive parents, and operation of an automated child
welfare information system (called the Statewide Automated Child Welfare
Information System or SACWIS),1 which the federal government pays for if the
states wish to use the system for improved case management and data tracking.
To make these payments, IV-E is an open-ended entitlement program, meaning
that states can qualify for open-ended federal funding as long as they meet all the
program requirements and meet state matching payments.
The federal requirements for IV-E reimbursement are extensive. The most
restrictive one is that the family must be considered “needy.” The definition of
poor or needy used in the program is eligibility for the now defunct Aid to
Families with Dependent Children’s (AFDC) program. Because that program
was terminated by legislation in 1996, the poverty income required for...

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