Fixing Foster Care

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Detroit, Mich.—A national commission’s new recommendations for overhauling the nation’s foster care system hit on some of the most significant problems and the most promising practices in child welfare – both of which are epitomized here in Wayne County.

On the one hand, the county, which includes Detroit, has reduced the number of children in foster care by 800 over a little more than three years, primarily through measures the Pew Commission on Children in Foster Care now recommends as national policy.

But because of the quirks of federal funding mechanisms, such as Title IV-E of the Social Security Act and the Temporary Assistance for Needy Families act (TANF), Wayne County’s child welfare system faces a $32 million deficit.

“The costs for foster care have increased dramatically – 30 percent in the past three years,” says Arthur Carter, director of the Wayne County Department of Children and Family Services. “At the same time, our Title IV-E funds have dropped significantly,” causing the county’s budget crisis.

It’s much the same story around the country. Counties with responsibility for abused or neglected children are struggling to deal with fewer dollars from Title IV-E, which pays for foster care for children from poor families, while trying to find the money to help prevent out-of-home placements for children in the first place.

“The problem is twofold,” said Marilina Sanz, human services lobbyist for the National Association of Counties. “Fewer and fewer children are eligible for federal Title IV-E assistance. Plus, you have increased administrative costs because you have to apply these standards that are not applied to anything else.”

The Pew Commission’s report, released last month, calls for a fundamental funding change: End income eligibility standards for children in foster care in favor of federal funding that could be available to all children at risk of abuse or neglect, whether they are removed from their parents’ homes or not. The report says the current federal system encourages “an over-reliance on foster care at the expense of other services to keep families safely together and to move children swiftly and safely from foster care to permanent families.”

“The real issue with Title IV-E is that funding is restricted for use for children in out-of-home care, so it forces agencies to sometimes remove children in order to get needed services to them,” says Helen Jones-Kelley, executive director of Ohio’s Montgomery County Children Services and one of the 16 Pew Commission members. “It’s a real schizophrenic approach.”

“The nation’s foster care system is unquestionably broken,” says Pew Commission Chairman Bill Frenzel, a former Republican congressman from Minnesota and a guest scholar at the Brookings Institution.

The commission was funded by $3.5 million in grants (over two years) from the Pew Charitable Trusts to the Georgetown University Public Policy Institute. Its recommendations reflect the major problems in foster care and some of the steps being taken to fix them.

Funding Too Complex

The 131-page report focuses on two key areas affecting abused or neglected children: the complex federal funding system and the role of juvenile and family courts. It says federal funds should be available to all children in foster care to help them find permanent homes more quickly, and that judges – especially chief justices of state supreme courts – should become more engaged in the system to help remove roadblocks to permanency.

“Our recommendations call for greater accountability by both child welfare agencies and courts,” says Frenzel, the former ranking Republican on the House Budget Committee. “They give states a flexible, reliable source of federal funding, as well as new options and incentives to seek safety and permanence for children in foster care.”

Aware of the budget challenges facing the federal government and most states, the commission does not call for huge spending increases. Its report does call for $380 million to be added to the $8 billion the federal government gives states and counties each year to pay for the care of abused and neglected children, notes commission member Maura Corrigan, chief justice of the Michigan Supreme Court.

“The goal is not to spend a whole lot of new money, but to redirect federal monies to permit greater flexibility for the states,” Corrigan says.

Nearly half of all federal funding for children in foster care comes from Title IV-E, which pays for children placed in licensed foster homes or institutions, but, for the most part, cannot be used in other ways to prevent kids from entering foster care in the first place.

Also causing considerable trouble is the fact that families are eligible for Title IV-E funding only if their income does not exceed levels set by the 1996 welfare reform law (TANF). Because those income standards have not changed since 1996, and because more working poor families have earned enough money to take them above those limits, fewer children needing out-of-home care can qualify for that federal funding, the Pew Commission says.

In Indiana, for example, the share of foster children eligible for Title IV-E funds has dropped from about 45 percent 10 years ago to 31 percent today, says Cathy Graham, executive director of the Indiana Association of Children and Family Services.

“I think it’s a very difficult job to keep up with all of the Title IV-E requirements,” Graham says. “Some of those [difficulties] are bureaucratic, and some have to do with the safety of the child and the court orders and protections for children.” The child safety mechanisms “are things that we would want to keep.”

“There is a lot of red tape with children on this program, and eliminating that would save some dollars,” Graham says. Costs for Indiana’s child welfare system are mainly borne by the counties, which use property taxes to pay for 67 percent of foster care costs.

Michigan has saved $30 million by using TANF funds to support kids placed with relatives, because Title IV-E won’t pay for placements in unlicensed homes. The state and counties equally share the costs of serving abused, neglected and delinquent children.

Sounds clever. But here’s how this complex scramble for money has left Wayne County in dire straits: Title IV-E has traditionally been used to offset each county’s share of the costs. When TANF is used instead, that money offsets the state’s expenses, not the county’s. TANF also pays little for the administrative costs of supervising kids who are placed with relatives.

In Wayne County, about 75 percent of foster care placements are supervised by private agencies, which are paid through the state. In cases where those agencies place kids with relatives using TANF, the state charges the county for half of the administrative costs. That contributes significantly to the $32 million deficit in the county’s Department of Children and Family Services, says Carter, the agency director.

In an odd twist, Carter says the deficit is likely to result in severe cuts in the county’s innovative juvenile justice programs, which have reduced the state’s training school populations by half, saving the state at least $10 million. That’s because the juvenile justice programs are also run by Carter’s department, which has to cut spending because of the deficit.

As much as anywhere in the country, Wayne County is suffering from a federal funding system that the Pew Commission says is unnecessarily complex. That system includes TANF, Title IV-E and Title IV-B, a more flexible source that provides only 5 percent of all federal funding for children in care.

Thirty-one funding streams from government and foundation sources offer foster care and adoption services for children, according to Corrigan, the Michigan chief justice. “Even veterans of the system have trouble understanding it,” she says.

Several states have been granted waivers by the federal government to use Title IV-E money more flexibly, with varied results. The Pew report recommends that Congress eliminate the cap on the number of waivers that are granted, so that states can address roadblocks in the way of finding permanent homes for kids.

The Right Steps

On average, children in the system go through three different foster care placements. That lack of home stability has lasting consequences, the Pew report says, as foster kids are far more likely than other children to face emotional, behavioral and academic challenges.

“As adults they are more likely to experience homelessness, unemployment and other problems,” the report says.

It also notes high annual turnover rates in the child welfare work force – 20 percent for public agencies and 40 percent for private agencies.

Illinois cut its foster care population in half between 1997 and 2002, more than doubled adoptions from foster care and – because of a federal waiver – implemented a cost-effective, subsidized guardianship program for foster children. New York City also cut its foster care population in half in recent years, and the chief justices in Michigan, New York, Utah and Minnesota have improved outcomes for kids by making abuse and neglect cases a top priority.

Michigan has also implemented several steps that the Pew Commission recommends for family and juvenile courts, including establishing special dockets for children who are missing from their foster care placements and requiring attorneys appointed to represent children – lawyer-guardians ad litem – to visit their child-clients before every quarterly court hearing.
Chief justices should take the lead as “the foremost champions for children in their court systems” to ensure that reforms are enacted by state agencies and legislators, the report says.

It says foster children need better advocacy in the courts, whether by court-assigned lawyers or trained volunteers under the Court Appointed Special Advocate program. Legal representation for children varies among the states, and the report says federal policies and funds should be used to bring the work on behalf of kids to a higher level.

What Impact?

Although special commissions on foster care and child protection have come and gone over the decades, Sanz, of the National Association of Counties, says the Pew report is different and could significantly help kids. “This one really goes at the heart of the financing issues,” she says.

The report was received positively by Congress and many child advocacy groups, such as the Child Welfare League of America.

But Richard Wexler, executive director of the National Coalition for Child Protection Reform, says one Pew proposal “would further engorge the nation’s foster-care bureaucracy at the expense of safe, proven programs to keep families together.” He refers to a proposal to combine $2.5 billion in foster care administrative and training funds, plus an additional $500 million in adoption administrative and training funds, with $700 million available for alternatives to foster care.

“Then everyone would be forced to fight for a piece of the pie,” Wexler says. “On one side will be a huge, powerful ‘foster-care industrial complex’ led by private foster care and residential treatment agencies with blue-chip boards of directors and powerful ties to the political and social establishments in their communities. These agencies’ survival depends on a steady supply of foster children.

“On the other side: advocates for keeping together impoverished families at risk of losing their children to foster care. These families are often falsely stereotyped as sick or brutal, when in many cases, they are merely poor.”

Wexler praised other Pew recommendations, such as creating a national program of subsidized guardianships and letting states keep the savings from reducing their foster care populations and plowing them into safe, proven alternatives to foster care.

Susan Dreyfus, chief operating officer for the Alliance for Children and Families, based in Milwaukee, says the Pew report “will begin a very high-quality, long overdue discussion about the current state of the country’s child welfare system – the level of commitment of resources needed to adequately fund the system, but also the types of policies and funding approaches that are going to be necessary to redesign the current system.”


Carol Emig, Executive Director
The Pew Commission on Children in Foster Care
2233 Wisconsin Ave. NW, Suite 535
Washington, DC 20007
(202) 687-0948
Report available at

Arthur Carter, Director
Wayne County Department of Children and Family Services
640 Temple, 5th Floor
Detroit, MI 48226
(313) 833-3464

Richard Wexler, Executive Director
National Coalition for Child Protection Reform
53 Skyhill Road, Suite 202
Alexandria, VA 22314
(703) 212-2006