Block Grants Are Funding Suicide

If you read my first piece in this series on Title IV-E waivers, which are essentially short-term block grants, you can probably guess that I think converting Title IV-E into a block grant would be a terrible idea.

The concept of a child welfare block grant was first pushed by conservative federal policymakers in the 1990’s and early 2000’s.

While child welfare has always been a remarkably bipartisan issue, these proposals historically always originated from the Republican Party, fitting their mantra of cutting spending and reducing the size of the federal government. In fact, there may be no bigger fan of block grants than current Speaker Paul Ryan (R-Wis.), who in recent years has proposed converting Medicaid and the food stamp program into block grants, with each of those proposals projected to cut federal spending for these programs by billions.

Historically, each time a child welfare block grant has been suggested, the child welfare advocacy community has coalesced in opposition and mobilized enough support in Congress to defeat the proposal. The responsive nature of the open-ended entitlement has always been seen as essential to ensuring the government’s ability to respond appropriately to changes in caseload size and composition.

However there have been significant changes in the advocacy community over the past decade, resulting in a dynamic shift in the conversation about child welfare reform, including the development of a split about fundamental issues related to the financing of the system. Consequently, for the first time ever, proposals to create child welfare block grants are originating from within the advocacy community itself.

Because the term “block grant” conjures controversy, modern day advocates supporting a block grant usually avoid the term. Instead you’ll hear phrases like “increased flexibility,” “capped entitlement,” or “making waivers permanent.” But make no mistake, replacing the individual IV-E entitlement with a capped allocation of dollars to states is a block grant.

Proponents of block grants will generally make two arguments in support of their idea.

First, they’ll say that the Title IV-E entitlement incentivizes removal of children into foster care and is too restrictive, so more fiscal flexibility is needed for states and counties to better serve children and families. The idea that federal reimbursements for foster care incentivize removal is a pretty big leap, especially considering out-of-home care is more expensive than keeping families intact, and states continue to bear a considerable portion of the cost even for federally eligible foster children.

Moreover, as I pointed out in my last piece, if you look at how the waiver program has played out, it’s hard to make the case that it has resulted in much innovation or improved outcomes, including successful prevention of entry into foster care.

Next, block grant supporters will point to declining federal IV-E outlays over the past 20 years and say something along the lines of “if we do nothing, we will continue to lose federal funding.” This claim has more veracity, though no advocate is suggesting that the status quo is ideal.

The decline in IV-E funding can be traced to two phenomena:

1) Caseloads have been dramatically reduced across the country over the past two decades.

2) Due to IV-E’s income eligibility restrictions having not been adjusted for inflation in 20 years, the number of children who are eligible is declining.

Whether the first factor– caseload reductions– will continue to be relevant is highly dubious. According to the most recent AFCARS data, foster care caseloads and foster care entries have actually increased over the past five years, which explains why IV-E outlays have similarly increased in recent years. I suspect that we’ve pushed foster care caseloads as low as we can without compromising child safety, especially since there is no data suggesting that maltreatment rates themselves have decreased.

In fact, recent research has established that maltreatment rates are much higher than we’d previously estimated.

The second factor, that fewer and fewer children entering foster care are eligible each year for IV-E, is an absolutely legitimate concern and something I wish the advocacy community would spend more time urging Congress to solve. Federal investment in children should not be based on an outdated income threshold that has no relation to child trauma or need, and Congress should halt the decline in eligibility like it did with the Adoption Assistance Program through the 2008 Fostering Connections Act.

As demonstrated in a recent Government Accountability Office (GAO) report, there are many ways to address this problem without doing away with the IV-E entitlement.

So why is a block grant such a terrible idea? In my opinion, there are three main reasons.

To begin with, block grants inevitably have their budgets slashed over time. This is largely because they lose their “face.” Whereas Title IV-E in its current form has a clearly identifiable population it supports — in this case foster children — block grants do not. Block grants eventually come to be seen as just pots of money distributed to states, not directly for individuals.

When Congress goes looking for cuts, it’s a lot easier to take money away from “states” than from abused and neglected children.

Unsurprisingly, the history of block grants bears this out, especially in the case of two federal programs that fund child welfare services: the Social Services Block Grant (SSBG) and Temporary Assistance for Needy Families (TANF).

Created in 1981 by merging a number of funding streams into a $2.7 billion block grant to states, SSBG has seen its budget shrink to $1.7 billion. In fact, the House has proposed complete elimination of the program multiple times in recent years, calling it duplicative.

The old federal welfare program, Aid to Families with Dependent Children (AFDC), was transformed into the TANF block grant in 1996 and has since been decimated both in terms of funding and functionality. As pointed out in a recent New York Magazine article, TANF’s status as a block grant “means that it does not act as a countercyclical ballast.” In fact, despite rising poverty and public utilization of other safety net programs, TANF rolls actually decreased during and after the recession.

At the time the TANF block grant was created, 68 percent of poor families received assistance. By 2013, just 26 percent did.

Are the experiences of these programs really the model we want for foster care?

Meanwhile, entitlements are the most protected form of federal funding, perhaps explaining why they are an anathema to conservatives determined to cut spending. Entitlement programs provide whatever funding is necessary to support eligible beneficiaries, regardless of federal fiscal and political conditions. They are exempt from the appropriations process, and not subjected to the annual budget battles in Congress.

These protections are not just conceptual. They are written deeply into the structure of federal law.

Several years ago, concerned with rising federal deficits in the wake of the most recent recession, Congress enacted a series of across-the-board cuts known as sequestration. Block grants like SSBG were subjected to the cuts, but entitlements like Title IV-E were not.

That level of protection for the largest federal funding source dedicated to our nation’s most vulnerable children should never be made more vulnerable to politics.

The second reason that block granting IV-E is a terrible idea: By nature, it gives states and localities maximum flexibility in how resources are spent, forcing programs and services to compete against one another for funding from a dwindling source.

This could compromise the ability of child welfare systems across the country to provide a robust continuum of care. In particular, the resources required to provide quality out-of-home care for children and youth who need it would likely be particularly vulnerable, as pressure would build to divert dollars away from foster care toward prevention and early intervention programs designed to keep families intact.

But both prevention and foster care are absolutely necessary, so this is a false choice. One should not come at the expense of the other.

Furthermore, a child welfare block grant would work at odds with recent reforms that expand and defend the rights of children and families. For example, if IV-E were merged into a block grant based on today’s funding levels, it would nullify the federal fiscal incentive to extend foster care up to age 21 or provide support for subsidized guardianship, for instance.

Finally, a block grant would likely undermine critical protections for children conveyed through the entitlement. The IV-E entitlement provides beneficiaries with a legal right to benefits and a private right of action, holding states accountable under federal law for providing services and making them legally vulnerable should they fail to do so.

In recent years in California, two similar lawsuits have successfully used these legal protections to increase the rates paid to service providers and foster parents to ensure that the quality of care they are able to provide to children and youth is not compromised by resource shortfalls. By eliminating the individual entitlement, a block grant would compromise these legal protections currently afforded to children in out-of-home care.

Sean Hughes is a managing partner at the consultancy firm Social Change Partners. Over the next few months, he will write a series of analysis pieces in The Chronicle about child welfare finance reform. We encourage readers to submit their own commentary and analysis on the subject.

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1 Comment

  1. I totally support your opinion. As a matter of fact, I had basically the same column ready to go! Now I’ve got to start from scratch! It is funny because your column on predictive analytics basically reproduced mine, although I don’t think you saw mine first. I guess we are on the same page about a lot of things.

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