Feds Allow Adoption Savings To Cover Title IV-E Match Requirements

A subtle change in child welfare policy, made shortly before the world went indoors, will allow child welfare agencies to use a calculation called “adoption savings” discount on matching certain spending requirements on federal funds. 

The Children’s Bureau amended the Child Welfare Policy Manual in late February to permit the use the savings as claimable for the non-federal share of certain federal funding. This eases the amount of actual cash states must put up to match federal funds.

What does “adoption savings” mean as a term of art? Here goes. 

Title IV-E is the entitlement through which billions of dollars are sent to child welfare agencies around the country. The money flows for three core services: family preservation (recently added under the Family First Prevention Services Act), foster care payments and adoption subsidies. 

In 2008, President George W. Bush (R) passed the Fostering Connections to Success and Increasing Adoptions Act, which among other things gave states the option to extend foster care to 21 and to provide guardianship payments akin to adoption subsidies. The law also started to chip away at the income eligibility standards written into the IV-E entitlement, which limit federal funding to only children from families with income below the 1996 definition of poverty. 

Foster care payments are still tied to that income test. But the Fostering Connections Act began a phase out of income tests for adoption subsidies, starting with the oldest teens in care and gradually working toward newborns. Right now, any child in foster care older than 2 is eligible for federal adoption subsidy. 

There was a wrinkle. States were required to record the amount of savings captured by the feds shouldering more of the burden on adoption payments, and then demonstrate that level of additional state spending on child welfare services. In other words, the law said: “we’ll pay for more of the subsidies, you put the savings into making your system better somehow.”

In this recently announced policy change, Children’s Bureau is expanding the use of the adoption savings. States can spend it on additional services still, but they can also count it as part of the non-federal match for any of the optional parts of Title IV-E. This includes:

  • Guardianship payments to relative caregivers
  • Kinship navigators, which offer direct and referral support to relative caregivers
  • Foster care supports for youth between ages 18 and 21
  • Substance abuse, mental health and parenting services meant to prevent the use of foster care

For each of those optional programs, states must come up with a non-federal match as high as 50 percent. 

There are two reasons this policy change is worth noting. First, a recent study of the adoption savings captured by states shows that it is a decent chunk of change. In fiscal 2017, state and tribal agencies combined showed just north of $171 million in one year. The savings could rise over time as newborns and very young children are phased in under Fostering Connections. 

Second, if this recession hits as hard as expected, states will soon grapple with big revenue shortfalls, especially states that rely heavily on sales tax dollars. New York, in its first budget amidst coronavirus, has already made deep cuts to its kinship supports. With tough budget choices coming up and programs on the chopping block, an easement in matching these federal programs will help keep states interested. 

One weird wrinkle on this change is that the Family First Prevention Services Act, which passed in 2018, requires the Government Accountability Office to study whether states are using the money they save from the adoption de-link to serve adoptive families. Since the optional elements of Title IV-E do not relate to adoption (unless you count guardianship as an equivalent), it seems like this shift would steer more of the savings away from that specific part of the child welfare continuum.

John Kelly can be reached at jkelly@chronicleofsocialchange.org.

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John Kelly, Editor in Chief, The Chronicle of Social Change
About John Kelly, Editor in Chief, The Chronicle of Social Change 1205 Articles
John Kelly is editor-in-chief of The Chronicle of Social Change. Reach him at jkelly@chronicleofsocialchange.org.