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Copyright © February 2001. The Urban Institute. All rights reserved. Except for short quotes, no part of this book may be reproduced in any form or utilized in any form or by any means, electronic or mechanical, including photocopying, recording, or by information storage or retrieval system, without written permission from The Urban Institute.
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About the Series
Assessing the New Federalism is a multiyear Urban Institute project designed to analyze the devolution of responsibility for social programs from the federal government to the states, focusing primarily on health care, income security, employment and training programs, and social services. Researchers monitor program changes and fiscal developments. In collaboration with Child Trends, the project studies changes in family well-being. The project aims to provide timely, nonpartisan information to inform public debate and to help state and local decisionmakers carry out their new responsibilities more effectively.
Key components of the project include a household survey, studies of policies in 13 states, and a database with information on all states and the District of Columbia, available at the Urban Institute’s Web site (http://www.urban.org). This paper is one in a series of occasional papers analyzing information from these and other sources.
Executive Summary
The nation’s child welfare system is the safety net for children who have been abused or neglected. Child welfare services encompass a range of activities, including investigating reports of abuse and neglect, counseling children and family members to keep the family intact, protecting children who may need to be temporarily or permanently removed from home, and working with children and parents to reunify families or to seek a permanent placement for the children if reunification is not possible. Given recent changes to child welfare financing and service delivery brought about by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and the Adoption and Safe Families Act of 1997, there is a need to track spending for child welfare services to determine how these changes have affected and will continue to affect the services children and families receive.
This report documents states’ total child welfare spending from federal, state, and local sources in state fiscal year (SFY) 1998; changes in total spending since SFY 1996; changes in federal, state, and local spending since SFY 1996; states’ spending on contracted services in SFY 1998; and how these funds were used for out-of-home placements, adoption, administration, or other services.
Data and Methods
This report uses data from the 1997 and 1999 Child Welfare Surveys to examine child welfare spending in SFYs 1996 and 1998. The Urban Institute Child Welfare Survey used a standardized definition of child welfare expenditures to make the data as comparable as possible across states. States were asked to provide the expenditure data for the programs, case management, administration, and operation of their child welfare systems. These data included staffing and administrative expenses and expenditures on services provided by another agency under contract to the child welfare agency. States were asked to provide expenditure data from federal, state, and local resources and to categorize how the funds were used (e.g., for out-of-home placements or adoption).
Findings
- States expended at least $15.6 billion on child welfare services in SFY 1998. Total spending on child welfare services increased 3 percent between SFY 1996 and SFY 1998.
- Child welfare funding is unstable. Several states reported drastic increases or decreases in spending from federal, state, or local sources. One reason for these changes may be reporting issues. Another reason is the volatility of child welfare funding. Child welfare spending is reactive. A state’s spending may change not only because of changes in caseload size, but also because of state legislative mandates, gubernatorial changes, state initiatives, court orders or consent decrees, or as a reaction to a well-publicized child death from abuse or neglect.
- Welfare reform’s impact on child welfare financing is not clear. Although individual funding streams may have been affected by welfare reform, the overall impact on child welfare funding is not known.
- States are increasing their claims for title IV-E funds. Spending from title IV-E increased 22 percent, while the IV-E-eligible caseload is estimated to have increased 11 percent during the same period.
- Little funding continues to be targeted for prevention services. While at least $1.5 billion from all sources was expended on other services, which includes prevention services, we identified $9.4 billion that was spent on maintenance payments and services for children in out-of-home placements.
- States’ heavy reliance on nontraditional federal funds for child welfare continues. Expenditures for child welfare services from the Temporary Assistance for Needy Families block grant, the Social Services Block Grant, and Medicaid represent 39 percent of all federal funds expended in SFY 1998. States expended a combined total of $2 billion from these funds.
- Within out-of-home placements, the focus of state-only funds seems to have shifted. In SFY 1996, states’ expenditures on residential care, which is the most costly type of out-of-home care, were greater than on family foster care. In SFY 1998, it appears spending for family foster care increased, while spending on residential care decreased.
- Reliance on local spending appears to be increasing. Local spending increased 19 percent between SFY 1996 and SFY 1998, although local spending still constitutes only 13 percent of total spending.
- States expended at least $3.4 billion on contracted services in SFY 1998. Expenditures on contracted services represented 36 percent of total child welfare expenditures.
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Disclaimer: The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.
