California’s Gambit Pays Off for Kinship Care

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A threat by California to do an end-run around federal regulations that restricted funding for guardianship programs – even though the threat might have ended guardianship care for 16,000 children – has ended with a policy shift by the Obama administration that could save some states considerable time and money.

With the new change, all guardianship programs can qualify for federal funding, regardless of when they were established, as long as the children involved can otherwise qualify for foster care, adoption and guardianship assistance under Title IV-E of the Social Security Act.

The dispute involved a portion of the Fostering Connections to Success and Increasing Adoptions Act, which was passed in 2008 to help states establish or expand guardianship programs using federal child welfare funds.

But the inclusion of a single word – “prospective” – threatened to turn the intent of the law on its head and add to the financial woes of states, like California, that already had guardianship programs.

Here is how the conflict arose and the solution played out:

 

Growth of GAP

Guardianship assistance programs (GAP) allow states to place a youth in foster care with certain qualified adults, who are given a subsidy to care for the child. Some states require the guardian to be a relative of the child; others allow any adult to potentially qualify.

The payments to guardians are generally less than to foster care homes, and guardians are subject to less monitoring and visitation by case workers.

Research has shown that GAP programs have been effective in connecting foster youths (particularly older ones) with permanent living situations. Evaluations of GAP programs in Illinois, Wisconsin and Tennessee all found significant increases in family permanence and decreases in the average length of time in foster care.

About 37 states operate some form of GAP, according to the Children and Family Research Center at the University of Illinois at Urbana-Champaign. Most pay for it using either state money or funds drawn out of their Temporary Assistance for Needy Families (TANF) block grants. Twelve states have received waivers from the Department of Health and Human Services (HHS) to use federal IV-E foster care funds in a match with state money, the same process by which states are reimbursed by the federal government for all children who are deemed IV-E eligible.

In November 2008, President George W. Bush signed the Fostering Connections act into law. The act includes a provision that allows any state to establish a GAP using federal IV-E funds.  

It was a major victory for proponents of guardianship programs. While TANF funds are subject to federal budget cuts and changing priorities in states, IV-E is a federal entitlement program. Once a state establishes a federal GAP program under the act, the entitlement funds are guaranteed for any IV-E eligible child.

 

A surprising restriction

But a problem arose when HHS wrote its initial program guidelines on Fostering Connections, which it based on the language of the law and the fiscal scoring of the law done by the Congressional Budget Office (CBO). Bills that are projected by CBO to be costly are far less likely to survive all the way to the president’s desk, particularly in the current economic climate.

The law provides that states, in order to start an approved GAP, must enter into a written agreement with the “prospective relative guardian of a child.” When CBO computed the cost of implementing the act, it assumed that these programs would only subsidize new guardianship agreements, because an existing guardian in a state would not be “prospective.”

So when the HHS guidelines were issued on Christmas Eve 2008, they prohibited states from establishing a IV-E GAP that included any of the youths and guardians covered by any existing state-funded program. For the 37 states with existing programs, that would potentially entail keeping a state-funded program going while starting up another program.

California child welfare leaders were particularly frustrated with the rules. The state’s KinGap program was one of the first guardianship programs in the country; it now has 16,000 youth in guardianship. California is also mired in perhaps the worst economic slump of all the states.

Some guardianship advocates around the country believed that once the Obama administration took over in 2009, this particular rule would be rescinded. Thus it was a shock in May when HHS denied a plea on the matter by California Health and Human Services Secretary Kim Belshe.

“That was the first time we realized, wow, they’re going to uphold” the rule, said Amy Lemley, policy director for the San Francisco-based John Burton Foundation, a nonprofit focused on preventing youth homelessness.

 

California’s gamble

As 2010 approached, California made a bold decision. Its Department of Social Services told HHS officials it intended to dissolve its existing GAP program, which under the HHS guidelines would make all of the former guardians eligible for a IV-E GAP six months later.

“We have so many young people in KinGap, so many would be excluded,” said Lemley, who served on a state working group tasked with pushing HHS to change the rules. “It was not an empty threat. These were very serious meetings. We had the administrative and legal processes all set up.”

There was a downside to this move. All of the children in the care of those guardians would have to go back into foster care until the new program was running. And unless the former guardians were licensed to provide foster care, those children would eventually be removed from their guardians’ homes and placed in foster homes, group homes or emergency shelters.

Even if the majority of the guardians could make the transition quickly into becoming foster parents, Lemley said, a tremendous amount of administrative time would be required to make changes in all of the youths’ cases.

California’s gambit was communicated to HHS in a December letter from U.S. Rep. Pete Stark (D) and signed by 31 members of the California congressional delegation.

“This program guidance will penalize California and other states that have taken initiative to create Kin-GAP programs,” states the letter, which was sent to Carmen Nazario, assistant secretary for children and families at HHS. “This guidance will penalize the children who are now in stable homes simply because of the date they were placed with relatives.”

There was nothing to prevent other states from following California’s strategy.

In late January, HHS announced that states could include their current guardianship placements in a IV-E program, provided that the youths in care are IV-E eligible. The rule revision was put in writing and sent to state child welfare agencies on Feb. 18.

Three states – Rhode Island, Pennsylvania and Tennessee – have been approved to operate IV-E GAP. Eleven other states have submitted plans for programs and are awaiting approval. California is in the process of applying. A bill is pending before the California State Assembly to use the $70 million the state will save with the IV-E program to extend foster care to age 21.

Contact: (202) 401-9215, www.acf.hhs.gov.