Federal Legislation Would Take Last Brake Off Foster Care Steamroller

foster care: Little girl sitting in the car and looking out from the car window



Remember all those celebrations when the vastly overhyped Family First Prevention Services Act made it into law? Even some of those who realized the bill didn’t do much thought that at least Congress finally got it — at least they understood that having a huge open-ended funding “entitlement,” known as Title IV-E, that can be used only for foster care is bad public policy.

As Jerry Milner, associate commissioner of the Children’s Bureau at the Department of Health and Human Services put it last year:

foster care: Richard Wexler (headshot), executive director of National Coalition for Child Protection Reform, smiling balding man with white-gray hair in black top.

Richard Wexler

“I’m not wedded to the entitlement for the very simple reason that the only thing that Title IV-E right now entitles anybody to is a foster care payment. Parents aren’t entitled to a darn thing. Families are not entitled under Title IV-E to get the services they need to live together safely under the same roof as a family unit.”

But never underestimate the ability of the foster care industrial complex to worm its way back into Congress’ good graces and undermine real reform. I don’t know exactly how they did it, but they’ve fooled a couple of Democratic senators, Debbie Stabenow of Michigan and Sherrod Brown of Ohio, into proposing legislation that, in what is reported to be its current form, would wed Congress more firmly than ever to an open spigot of foster care spending. Rep. Karen Bass, California Democrat who co-chairs the Congressional Caucus on Foster Youth, plans to introduce the same bill in the House.

The bill would more than double the amount of money the federal government forks over to states for foster care reimbursement each year. Even worse, this bill would remove the only small brake from what is less a runaway train than a lumbering foster care steamroller that crushes better alternatives for children.

Naturally the bill, which has not yet been formally introduced, isn’t actually called the Let’s Steamroller Alternatives to Foster Care Act. Instead it has one of those Orwellian titles Congress loves, the Family First Transition and Support Act. The language isn’t public yet, but it was leaked to a writer who had demonstrated a great fondness for its key provision: repealing something called “the eligibility lookback.”


To understand this, we need a short detour into the weeds of child welfare finance.

Contrary to what some on the far right say, governments do not, in fact, make money on foster care. (Private agencies often do, but that’s another story.) But federal foster care aid still creates a perverse incentive. That’s because there are circumstances under which it may cost a government less to use foster care than it costs to use safe, proven alternatives. Those circumstances are created by the Title IV-E entitlement. Under Title IV-E states can get back at least half the cost of foster care for every eligible foster child. (Half is the minimum; the actual %age is the same as what a state gets back from the federal government for Medicaid costs.)

But the key word there is “eligible.” Eligibility is based on the income of the birth family. Specifically, the family has to be so poor it would have qualified for the old Aid to Families with Dependent Children program based on the income standard when that program was abolished in 1996.

As a result, about 42% of foster care cases are eligible. But even at that, taxpayers still shell out an estimated $4.8 billion per year for this “care.” And because it’s an open-ended entitlement, states keep collecting this money for every eligible child. That can create an incentive to use foster care instead of options that are cheaper in total dollars but for which the federal government does not chip in.

Even with the slight changes made by Family First, this foster care entitlement dwarfs federal spending on help to keep families together. (Under Family First, a very small number of prevention programs also will be eligible for IV-E reimbursement, but the Congressional Budget Office estimates the restrictions are so great that the impact will be minimal.)


The gap will grow far wider if senators Stabenow and Brown get their way. Their bill eliminates the lookback — something also known in child welfare-speak as “de-linking.” If this bill becomes law in its current form, suddenly every foster care case would be eligible for federal reimbursement. The story disclosing the existence of this nightmare does not estimate how much more that would cost. But if covering 42% of foster children costs $4.8 billion, a reasonable estimate is that covering 100% of foster children would add another $6.6 billion. So suddenly the federal government would be shelling out more than $11 billion per year to help states and localities hold children in foster care.

The bill reportedly specifies that “savings” the states gain by no longer having to pay full price for all these additional foster children must be spent on something the story calls family preservation — though the story does not define that term. And that begs the question: Why not just take the $6.6 billion per year and spend it directly on family preservation?

The Title IV-E funds also are used for “administrative” costs for eligible children. The federal Administration for Children and Families recently decided that means child welfare agencies can be reimbursed for half the cost of providing lawyers for children and parents. So yes, this change would make more money available for that worthy cause — in theory. But there is no guarantee states will actually use funds for this purpose (whereas we know they’ll claim every dollar they can grab for foster care) and any future administration can undo the administrative change that allows funding lawyers for parents and children. On balance, the Stabenow-Brown bill would inflict way too much pain in exchange for this gain.

The good news is that the bill specifies no way to pay for this additional expenditure. That’s good news because it diminishes the chances of the bill getting through Congress. But, again, never underestimate the foster care industrial complex. They may well find something else in the budget — probably something that helps families — and persuade enough members of Congress to cut it because, to them, it’s not nearly as important as their precious foster care entitlement.

Or, sponsors could amend the bill to make the change cost-neutral by making every case eligible but cutting the amount of reimbursement per case.

Why would the child welfare establishment go along with that when it doesn’t seem to gain them anything?

Because, in fact, it gains them plenty.

The best thing about the lookback is this: Remember that 1996 income standard? That never changes. So each year, simply as a result of inflation, the proportion of foster children eligible for federal reimbursement declines ever so slightly. At the rate things are going, in about 70 years or so, the federal government could be out of the business of subsidizing foster care.

And that means, every year, there’s just a little more pressure on the child welfare establishment, and the states, to support real child welfare finance reform.

For example, states might be tempted to support reforms like the plan first put forward during the George W. Bush administration and now revived, to offer states the option of taking their foster care money as a flat grant. States would get the same amount they would expect to receive under the entitlement in the first year, with adjustments each year for inflation, but they could use the money for safe, proven alternatives instead of just for foster care.

That plan got nowhere, thanks to a campaign of fear and smear by groups such as the Child Welfare League of America, the Children’s Defense Fund and the rest of an establishment wedded to the idea that children have a sacred right to be torn from everyone they know and love and consigned to foster care at federal expense — notwithstanding the mountain of research showing that this is usually a really bad idea. Had the reform plan passed and had every state opted in — remember, the plan was purely voluntary — they would have gotten $5 billion more, over the first five years, than they actually received under the status quo.

Or states might fight to continue and expand a program in which they can get individual waivers to do much the same thing. In another indication that Family First was a bad idea, its implementation would force an end to existing waivers, unless bipartisan legislation sponsored by senators Dianne Feinstein D-Calif., and Marco Rubio, R-Fla., becomes law. Their bill would extend the waivers for two years.

But if you eliminate the “lookback,” the incentive for states to move to real reform disappears. The one and only brake comes off the foster care steamroller and it can plow under better options for keeping children safe.


Though this is by far the worst part in the bill, there’s another turkey among its provisions: a new pot of money for the worst form of “care”: group homes and institutions. The money could be used to help them meet the standards required to keep getting federal reimbursement under the Family First Act. This is ludicrous because congregate care is a proven failure and a key goal of Family First is to curb its use.

But, thanks to heavy pressure from the group home industry, the standards the industry must meet already are so ridiculously low — there’s even a presents-for-pimps loophole — that Family First’s provisions on congregate care are likely to backfire, creating a whole new category of federally sanctioned institutionalization. This new bill proposes additional federal aid to help them meet those ridiculously low standards.

The bill also has a couple of sweeteners: There are provisions that modestly increase funding for one of the much smaller pots of federal money available for family preservation and support. Others slightly loosen the requirements for what kinds of prevention programs can qualify for aid under family first.

But none of that makes up for taking the brake off the steamroller.

Richard Wexler is executive director of the National Coalition for Child Protection Reform.  


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