The $2 Billion Question: Why Haven’t We De-Linked?

Every time I explain federal child welfare financing to someone for the first time – whether it be a student or a Congressional staffer – I have the same experience.

I start by saying that the federal government doesn’t actually run a child welfare system, but instead establishes requirements and standards for state and county-based systems and then provides funding to put those standards into practice.

“That makes sense,” they say, “just like with education, right?”


Then, I summarize the various federal child welfare programs, both mandatory and discretionary, and the services they fund. The biggest federal program, I explain, is an entitlement program that supports state foster care systems.

“Ok, I get it. Go on.” Great, they’re still following me.

At some point, though, we have to get into the process for determining eligibility for federal foster care funding. That’s when the wheels come off.

I point out that in order for foster children to qualify for federal support, their parents’ household income has to be low enough that they would have been eligible for the Aid to Families with Dependent Children (AFDC) program, a welfare benefit program that ended in 1996.

That is, the federal government doesn’t pay for foster care for an abused or neglected child unless that child’s parents – whose care they were removed from – were so poor that their total household income is lower than the non-inflation adjusted poverty standard as it existed in 1996.

“Wait, what?” Blank stare. “That makes no sense,” they respond.


There are few child welfare policy issues more perplexing than the persistence of the 1996 income standards that determine Title IV-E eligibility. Title IV-E of the Social Security creates the entitlement that pays for foster care. The fact that the income eligibility standard has not even been indexed for inflation in 20 years means that fewer and fewer children entering foster care receive federal assistance every year.

Fifteen years ago, 52 percent of children coming into foster care were IV-E eligible. Now only about 42 percent are, and that number continues to decrease every year.

From a fiscal standpoint, inaction to address this erosion of eligibility has cost state and county child welfare systems billions of federal dollars over the past two decades. Meanwhile, states spend hundreds of millions of dollars each year on the administrative costs related to verifying birth parent income. That’s money that would be much better spent on programs and services for children and families.

So why haven’t child welfare advocates been able to convince Congress to fix this issue, especially when the advocacy community has scored a number of significant victories expanding the scope of programs and services covered by Title IV-E? The de-link has the potential to vastly increase the money to support those programs and services.

It would seem that demanding that the federal government adequately resource the only system charged with protecting children from abuse would be an easy point of consensus. Yet I have always been shocked at the child welfare advocacy community’s passivity. In my 10 years as a Congressional staffer, child welfare advocates were the only group that ever came in to ask for no new money.

To be fair, de-linking IV-E could be costly or complicated, or both. But that doesn’t mean it can’t be done. As a community, we’re terrible negotiators, and too easily cave to the pressure to present “budget-neutral” policy proposals.

Push the envelope. Fight back. The child welfare system is under-resourced and we should be reminding policymakers of that every day and refusing to accept the notion that there can be no new money to provide better care for abused and neglected children.

Secondly, complexity should not be used as an excuse to do nothing. Yes, states have different IV-E eligibility levels, and the rate at which they are reimbursed also varies greatly. But as the Government Accountability Office pointed out a few years ago, there are at least 14 ways that IV-E could be “de-linked” from the 1996 income standard. We should be having a much more robust policy debate about some of these ideas.

But in recent years, I’ve also concluded that it’s neither cost nor complexity that are the primary barrier to a solution. I believe it is a deep divide within the advocacy community itself about something more ideological: the pursuit of a de-link has become a casualty in the ongoing battle between family preservation and foster care.

Ten years ago, the advocacy community was nearly unanimous in their support for addressing IV-E eligibility. Nowadays I often hear advocates say things like, ‘Well, even if we could get that extra funding, we wouldn’t want to spend it on foster care anyway.’

The focus seems to have shifted almost exclusively toward preventing entry into foster care, with little advocacy being devoted to actually improving the continuum of care for children in out-of-home care.

While all of us agree that no child should spend a day longer in foster care than necessary, there seems to be a growing disagreement about the appropriate role of foster care within the continuum.

Despite the fact that caseloads have declined nationally by 30 percent over the past 15 years, many in the advocacy community still seem to believe that most children are being brought into foster care unnecessarily and simply due to poverty-generated issues. In recent trips to D.C., I’ve repeatedly heard the same story about children being placed in foster care solely because their parents lacked a washing machine.

I can’t say whether a child has ever been taken into foster care because their parents didn’t have a washing machine. But if you look at the data, it’s hard to see any evidence of there being a pattern of foster care entry due solely to material deprivations of poverty.

To begin with, neglect is much easier to substantiate, so while three-quarters of maltreatment victims are classified as suffering from “neglect,” this doesn’t at all mean that children haven’t also experienced abuse. In fact, when you ask children who are in foster care about their experiences, they report much higher rates of abuse than are indicated by administrative data, and much more severe impacts of neglect.

And furthermore, it is ludicrous to deny that serious neglect can be just as dangerous to children as physical abuse. A few years ago, Chapin Hall at the University of Chicago initiated CalYOUTH, a comprehensive five-year study in California to track outcomes for transition-age foster youth. The findings have not, in my opinion, received enough attention.

  • Most youth reported serious problems in their parents’ homes prior to their entry into foster care, including drug abuse, alcohol abuse, domestic violence, parental criminal involvement, and/or mental illness.
  • Substantial percentages of youth reported suffering various forms of serious abuse and/or neglect prior to their entry to foster care.
  • Shockingly high percentages of female foster youth reported being raped or sexually molested prior to entering foster care, either by a parent/caregiver or by someone else.

Again, many of these self-reported rates of abuse, especially sexual abuse, are much higher than those frequently cited in studies of administrative data. And youth don’t report rates of victimization anywhere near as high while in foster care.

Moreover, despite being frequently criticized in the media and even in the advocacy community, the foster care system received positive reviews from the youth participating in the CalYOUTH study themselves.

Among the findings:

  • 57 percent of the youth surveyed agreed that they were “lucky” to be placed in foster care (25 percent neither agreed nor disagreed, and 18 percent disagreed).
  • 58 percent of these youth agreed that they were generally satisfied with their experiences in the foster care system (20 percent neither agreed nor disagreed, and 23 percent disagreed).

These were all youth in foster care at the age 17, who had not attained permanency, and were therefore most likely to have had negative experiences such as multiple placement changes, failed permanency plans and group home placements.

This isn’t to say that the foster care system is not in need of serious reform; it is. But it continues to play a critical role in the child welfare continuum, and efforts should be focused on improving and not demonizing it.

Which brings us back to the de-link.

As we approach the 20th anniversary of the freeze on income standards for IV-E eligibility, the advocacy community should redouble its efforts to demand a solution. Not only will finally de-linking IV-E prevent further erosion of funding in the future, it has the potential to inject considerable resources into the system now, which can be used to improve our child welfare system so that it produces better outcomes.

There is no shortage of potential uses for additional funding: Better foster parent recruitment, training and retention, better support of relatives, and the expansion of post-permanency services. The important thing is that we re-prioritize the need to convince Congress to pass a de-link, and stop fighting about the role of foster care or where we happen to think the money should go.

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. Sean,
    Thanks for this thoughtful and balanced look at the IV-E financing issues. We would make much more progress if both sides of the prevention vs. foster care issue viewed the matter with the same balance perspective that you employed.

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