Federal Register, Volume 65 Issue 16 (Tuesday, January 25, 2000)

[Federal Register Volume 65, Number 16 (Tuesday, January 25, 2000)]
[Rules and Regulations]
[Pages 4020-4093]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 00-1122]

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Part II

Department of Health and Human Services

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Administration for Children and Families

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45 CFR Parts 1355, 1356 and 1357

Title IV-E Foster Care Eligibility Reviews and Child and Family
Services State Plan Reviews; Final Rule

Federal Register / Vol. 65, No. 16 / Tuesday, January 25, 2000 /
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Parts 1355, 1356 and 1357

RIN 0970-AA97

Title IV-E Foster Care Eligibility Reviews and Child and Family
Services State Plan Reviews

AGENCY: Administration on Children, Youth and Families (ACYF),
Administration for Children and Families (ACF), Department of Health
and Human Services (DHHS).

ACTION: Final Rule.

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SUMMARY: This final rule amends existing regulations concerning Child
and Family Services by adding new requirements governing the review of
a State's conformity with its State plan under titles IV-B and IV-E of
the Social Security Act (the Act), and implements the provisions of the
Social Security Act Amendments of 1994 (Pub. L. 103-432), the
Multiethnic Placement Act (MEPA) as amended by Pub. L. 104-188, and
certain provisions of the Adoption and Safe Families Act (ASFA) of 1997
(Pub. L. 105-89).
In addition, this final rule sets forth regulations that clarify
certain eligibility criteria that govern the title IV-E foster care
eligibility reviews which the Administration on Children, Youth and
Families conducts to ensure a State agency's compliance with statutory
requirements under the Act, and makes other technical changes to the
race and ethnicity data elements in the Adoption and Foster Care
Analysis and Reporting System (AFCARS).

EFFECTIVE DATE: March 27, 2000.

FOR FURTHER INFORMATION CONTACT: Kathy McHugh, Director, Policy
Division, Children's Bureau, Administration on Children, Youth and
Families at (202) 401-5789.

SUPPLEMENTARY INFORMATION:
I. Background
II. Approach
A. Consultation With the Field
B. Analysis and Decision-Making
C. Regulation in Context
III. Discussion of Major Changes and Provisions of the Final Rule
A. Definitions
B. Child and Family Service Reviews
C. Enforcement of Section 471(a)(18) of the Act
D. Reasonable Efforts and Contrary to the Welfare Determinations
and Documentation
E. Case Plans and Case Review Requirements
F. Title IV-E Reviews
G. Special Populations
IV. Section-by-Section Discussion of Comments
V. Impact Analysis
Final Rule

I. Background

Titles IV-B and IV-E of the Social Security Act (the Act) are the
primary sources of Federal funds for State child welfare services,
foster care and adoption assistance. The Adoption Assistance and Child
Welfare Act of 1980 (Pub. L. 96-272), amended title IV-B child welfare
services to institute financial incentives for States to provide
certain protections for children in foster care under section 427 of
the Act. Public Law 96-272 also established Part E of title IV of the
Act, ``Federal Payments for Foster Care and Adoption Assistance.'' The
foster care component of the Aid to Families with Dependent Children
(AFDC) program, which had been an integral part of the AFDC program
under title IV-A of the Act, was transferred to the new title IV-E,
effective on October 1, 1982.
In August 1993, under the Omnibus Budget Reconciliation Act of
1993, Public Law 103-66, Congress again amended title IV-B, creating
two subparts and extending the range of child and family services
funded under title IV-B to include family preservation and family
support services. The family preservation and support services were
designed to strengthen and support families and children in their own
homes, as well as children in out-of-home care.
Later, through the Social Security Amendments of 1994, Congress
repealed section 427 and amended section 422 of the Act to include, as
State plan assurances, the protections formerly required in section 427
of the Act. As a result, ACF is no longer conducting ``427'' reviews to
determine if a State is eligible to receive additional title IV-B,
subpart 1 funds. Besides mandating the Secretary to promulgate
regulations for reviews of State child and family service programs, the
amendments to the Act at section 1123A required the Department to make
technical assistance available to the States, and afforded States the
opportunity to develop and implement corrective action plans designed
to ameliorate areas of nonconformity before Federal funds are withheld
due to the nonconformity.
In 1994, Congress passed the Multiethnic Placement Act (MEPA),
Public Law 103-382, to address excessive lengths of stay in foster care
experienced by children of minority heritage. One factor believed to be
contributing to these excessive lengths of stay in foster care was
State agencie' attempts to place children of minority heritage in
foster and adoptive homes with parents of similar racial or ethnic
backgrounds. The MEPA forbids the delay or denial of a foster or
adoptive placement based on the race, color, or national origin of the
prospective foster parent, adoptive parent, or child involved. At the
same time, Congress added a title IV-B State plan requirement to
section 422(b)(9) of the Act, to compel States to make diligent efforts
to recruit prospective foster and adoptive parents who reflect the
racial and ethnic diversity of the children in the State for whom
foster and adoptive homes are needed.
As originally enacted, section 553 of MEPA permitted States to
consider the cultural, ethnic, or racial background of the child and
the capacity of the prospective foster or adoptive parent to meet the
needs of a child of such background, as one of several factors in
making foster and adoptive placements. In 1996, through section 1808,
``Removal of Barriers to Interethnic Adoptions,'' of the Small Business
Job Protection Act (Pub. L. 104-188), Congress repealed section 553 of
MEPA, believing that the ``permissible consideration'' language therein
was being used to obfuscate the intent of MEPA. Section 1808 of Public
Law 104-188 amended title IV-E by adding a State plan requirement,
section 471(a)(18) of the Act, which prohibits the delay or denial of a
foster or adoptive placement based on the race, color, or national
origin of the prospective foster parent, adoptive parent, or child
involved. Section 1808 of Public Law 104-188 also dictates a penalty
structure and corrective action planning for any State that violates
section 471(a)(18) of the Act.
On November 19, 1997, President Clinton signed the first broad-
based child welfare reform legislation since Public Law 96-272 was
enacted in 1980. The Adoption and Safe Families Act (ASFA) of 1997,
Public Law 105-89, seeks to provide States with the necessary tools and
incentives to achieve the original goals of Public Law 96-272: safety;
permanency; and child and family well-being. The impetus for the ASFA
was a general dissatisfaction with the performance of State' child
welfare systems in achieving these goals for children and families. The
ASFA seeks to strengthen the child welfare system's response to a
child's need for safety and permanency at every point along the
continuum of care. In part, the law places safety as the paramount
concern in the delivery of child welfare

[[Page 4021]]

services and decision-making, clarifies when efforts to prevent removal
or to reunify a child with his or her family are not required, and
requires criminal record checks of prospective foster and adoptive
parents. To promote permanency, ASFA shortens the time frames for
conducting permanency hearings, creates a new requirement for States to
make reasonable efforts to finalize a permanent placement, and
establishes time frames for filing petitions to terminate the parental
rights for certain children in foster care.

II. Approach

A. Consultation With the Field

A Notice of Proposed Rulemaking (NPRM) was published in the Federal
Register on September 18, 1998 (63 FR 50058-50098) with a 90-day public
comment period. We received 176 letters within that period from State
and local child welfare agencies, national and local advocacy groups
for children, educational institutions, and individual social workers.
Other commenters on the NPRM included: Members of Congress, providers
of child welfare services, State and local courts, national and State
associations representing groups of practitioners, Indian tribes, and
local community organizations.
Prior to developing the NPRM, we consulted extensively with the
child welfare field. We conducted a series of focus groups related to
the child and family services reviews with representatives of State
programs and national organizations, as well as with family and child
advocates. In addition, State and Federal teams conducted 12 in-depth
on-site pilots of the child and family services reviews that shaped our
development of the regulation. We also conducted pilots of the title
IV-E eligibility reviews in 12 States during the fiscal years 1995
through 1998. Shortly after the enactment of ASFA, we held focus groups
in Washington, D.C. and in each of the 10 Federal regions to obtain
input from the field on the implementation of the new law.

B. Analysis and Decision-Making

We received a wide range of written comments on the NPRM,
representing a multitude of perspectives on Federal monitoring of State
child welfare programs and meeting title IV-E statutory requirements.
We received widespread support for an outcomes-focused approach to the
child and family services reviews and the inclusion of a program
improvement process subsequent to determinations of substantial
nonconformity, and have thus retained these features in the final rule.
We also received comments expressing concerns about other provisions of
the NPRM.
The major concerns from commenters centered around provisional and
two-tiered licensing systems for foster care homes, objectivity and
clarity of substantial conformity determinations in the child and
family services reviews, the enforcement of the Multiethnic Placement
Act (as amended), documentation of reasonable efforts and other
judicial determinations, and exemptions and exceptions from the
termination of parental rights provisions. We amended and clarified
many aspects of the final rule in response to these major issues and to
other comments. To guide us in maintaining an appropriate balance in
our analysis of the comments and decisionmaking for the final rule we
used several principles. Those principles are to:
Focus on Achieving the Goals of Safety, Permanency and Well-being in
State Child Welfare Systems
We believe that the Adoption and Safe Families Act of 1997 clearly
establishes safety, permanency and well-being as the key goals for
State child welfare systems. We were mindful, therefore, to have
regulatory provisions that would support these statutory goals. For
example, in the NPRM we proposed to prohibit provisional, or less than
full licensure of foster care providers for title IV-E purposes. Many
commenters opposed this prohibition for various reasons. Some were
concerned that since relative caregivers were often granted less than
full licensure, disallowing this practice for title IV-E purposes would
reduce kinship care and the stability it can provide in a child's life.
While we encourage States to consider permanency in kinship care
arrangements, the ASFA clearly requires the safety of the child to be
the paramount concern that will guide all child welfare services. In
addition, the statute on its face requires that a home is fully
licensed or approved as meeting the State's licensing standards for the
purpose of title IV-E eligibility. Therefore, we decided to retain the
proposed prohibition on less than full licensure, in part because the
statute as amended by ASFA compels us to ensure that children are in
safe placements.
We also chose to strengthen our focus on safety, permanency and
well-being in the child and family services reviews in a number of
ways. Many commenters were unclear about how we would measure these
outcomes, so we have strengthened our process for measuring and
determining substantial conformity with the safety and permanency
outcomes in particular, through the statewide assessment. We also heard
concerns that one of the safety outcomes was in fact two separate
outcomes, so we have divided the first safety outcome accordingly. We
believe that these modifications will help clarify our expectations for
States to achieve these outcomes.
Another example of strengthening our focus on permanency is in the
termination of parental rights provisions. Many commenters believed
that certain groups of children in foster care should be exempted from
the application of the provision for States to file a petition to
terminate parental rights. Consistent with the statutory framework and
desire for timely permanency for all children in foster care, we have
clarified that no group of children is to be exempted from the TPR
provision and State or tribal agencies may make exceptions to the TPR
requirements only on a case-by-case basis.
Move Child Welfare Systems Toward Achieving Positive Child and Family
Outcomes While Maintaining Accountability
As we noted in the NPRM, we have dramatically changed the focus of
State program reviews by examining the results that child and family
services programs achieve, rather than the accuracy and completeness of
the case file documentation. Most commenters overwhelmingly supported
this approach as one that would improve the provision of child welfare
services for children and families, and we have thus retained a focus
on outcomes in the final rule.
Some of the comments, however, also suggested that the flexibility
that is inherent in an outcomes-based approach must be properly
balanced with sufficient Federal oversight and State accountability. We
agree that flexibility and accountability must be balanced, and have
strengthened several provisions in the final rule in this respect. For
example, for States who were determined to be out of substantial
compliance on a child and family services review, we proposed to allow
States two years, with a possible extension to three years, to complete
a program improvement plan. Some commenters supported this length of
time as sufficiently flexible to address needed areas of improvement,
while others believed the program improvement period to be too long. In
response, we have clarified that we do not expect States to take the
full two

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years to complete program improvement in all cases, and note that a
State will only be able to extend a program improvement plan to three
years in rare circumstances subject to the approval of the Secretary.
Finally, we will apply penalties for nonconformity as soon as a State
fails to improve on an area of nonconformity within the interval noted
in the program improvement plan, rather than at the conclusion of the
entire plan. We believe that these changes to the final rule properly
focus the State on achieving outcomes while maintaining flexibility and
accountability.
We also believe it necessary to ensure State accountability in the
areas of documentation of reasonable efforts and contrary to the
welfare determinations and requirements related to enforcement of
section 471(a)(18) of the Act. Some commenters were concerned that the
documentation requirements and enforcement of section 471(a)(18) of the
Act were too inflexible. However, we believe that State accountability
and Federal oversight in these critical areas of child and family
protections and anti-discrimination consistent with the statute, will
lead to better outcomes for children and families.
Use Non-Regulatory Resources to Support Federal Statutory and
Regulatory Provisions
As we analyzed the comments, we carefully considered whether
Federal regulations were the appropriate vehicle to address certain
comments. We believe that we can better respond to some comments in a
venue separate from the regulatory process, such as through technical
assistance activities or program guidance.
For instance, some commenters requested regulations on title IV-E
training or programs under title IV-B of the Act. We have very limited
authority to expand the scope of the final rule beyond the issues
presented for public comment in the NPRM, but we are now aware of
certain issues that we may consider for future clarification. Other
commenters asked for specific guidance on working to reunify children
with parents who have substance abuse problems, or guidelines for
judges on reasonable efforts, while others requested information about
``best practices'' in concurrent planning. We are committed to
providing practice level guidance and will provide technical assistance
in a variety of forms rather than in regulation. Other commenters
requested Federal funds to subsidize legal guardianships, or train
courts and their staff. Under current authority, title IV-E funds
cannot be used for these purposes. However, we can direct States to our
resource centers who may have information on seeking non-Federal
funding sources for such initiatives.

C. Regulation in Context

This final rule incorporates many provisions of recently enacted
legislation, including the Adoption and Safe Families Act of 1997, the
Multiethnic Placement Act of 1994 as amended, and the Social Security
Act Amendments of 1994. We received some comments that criticized us
for not focusing on the requirements of ASFA and other amending
legislation. We believe that some commenters were unclear that, to a
large extent, provisions of ASFA, MEPA, etc. amend the Social Security
Act (the Act), and that we refer to the requirements by their citation
in the Act, rather than their citations in the amending legislation. We
believe that this final rule does address the requirements of the
amending legislation in the context of the existing requirements of
titles IV-B and IV-E of the Act.
In addition to the guidance provided by this final rule, we
encourage administrators to use the appropriate statutes as references
in implementing Federal requirements. Also, the final rule amends
existing regulations at 45 CFR part 1355 and 45 CFR part 1356.
Therefore, we encourage the reader to examine and implement the rules
herein in conjunction with existing regulations that have not been
amended.

III. Discussion of Major Changes and Provisions of the Final Rule

Discussed below are some of the major changes and provisions of the
final rule. A more thorough response to the individual comments can be
found in the section-by-section discussion.

A. Definitions

Overall, we received comments that requested greater clarity on
several definitions. We frequently encountered comments that noted that
the Federal definitions did not encompass the variety of State
definitions or practice. Where a definition was not essential to the
proper implementation of the program, we chose to be flexible and leave
definitions to the State's discretion. In particular, we deleted
definitions of a ``full hearing'' and a ``temporary custody hearing''
as the comments revealed that they were limiting and not helpful to
States. We also received comments that requested additional definitions
for terminology used in the statute or in the regulation, e.g.,
``compelling reasons,'' ``aggravated circumstances,'' and ``reasonable
efforts.'' In most cases we chose not to regulate additional
definitions as we do not wish to be more prescriptive and restrict
State flexibility.
The proposed definition of the ``date a child is considered to have
entered foster care'' elicited many comments requesting more clarity
and State flexibility. In response, we have revised the definition to
mirror the statutory language more closely. The ``date a child is
considered to have entered foster care'' is no longer different for
children placed in foster care under voluntary placement agreements,
but more consistently applied. We also have clarified that a State can
use a date earlier than the outside Federal limit set in the statute to
begin the ``clock'' for satisfying the requirements for holding
periodic reviews, permanency hearings, and for the termination of
parental rights (TPR).
We received many comments on the definition of a ``foster family
home'' that urged us to allow provisional licensure and a two-tiered
system of licensing and approval. Despite these comments, we are
prohibiting these practices, consistent with the statute, to ensure
that children receiving title IV-E funds are placed safely in licensed
homes. In recognition that some time may lapse between the date when a
foster family home satisfies all requirements for licensure or approval
and the actual date the license is issued, we will allow States to
claim title IV-E reimbursement during this period, not to exceed 60
days. To accommodate those States where current State practice is not
consistent with the requirements for foster family homes, we will allow
a six-month period for States to bring current foster family homes to
the appropriate licensing standards.

B. Child and Family Services Reviews

We received many comments in response to the proposed child and
family services review process that have helped us strengthen it
significantly from that proposed in the NPRM. In the NPRM and in the
early pilot reviews, we relied heavily on the findings from the on-site
reviews to make determinations about substantial conformity. In the
final rule, we believe we have balanced our use of statewide
quantitative indicators with case-specific qualitative observations in
our decision-making about substantial conformity. Among the major
changes we have made in the child and family review process are the
following: We have strengthened the use of the statewide assessment,
selected particular statewide data indicators to use in determining
substantial

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conformity, more clearly defined the process for reviewing the systemic
factors, clarified the criteria for determining substantial conformity,
increased the frequency of full reviews for States not in substantial
conformity, added a discrepancy resolution process, and added graduated
penalties for continuous nonconformity.
Most of the comments we received, particularly from the States,
strongly favored the change to the results-and outcome-based review
process proposed in the NPRM from the prior emphasis on compliance with
procedural requirements. Similarly, we received very strong support for
proposing a review process that provides time for States to improve
programs and enhance services to children and families rather than one
that imposes immediate penalties for nonconformity with certain
requirements. A number of comments also indicated concerns about the
details of the review process and raised issues about the overall
approach that ACF is taking in reinventing the child and family
services reviews.
Since we did not include all of the details of the reviews in the
proposed rule, we would like to explain the procedures in more detail
prior to addressing the major changes we made to the child and family
services review.
We will review State programs in two areas: (1) Outcomes for
children and families in the areas of safety, permanency, and child and
family well-being; and (2) systemic factors that directly impact the
State's capacity to deliver services leading to improved outcomes. The
outcomes are as follows:
Safety Outcomes
1. Children are, first and foremost, protected from abuse and
neglect.
2. Children are safely maintained in their homes whenever possible
and appropriate.
Permanency Outcomes
1. Children have permanency and stability in their living
situations.
2. The continuity of family relationships and connections is
preserved for children.
Child and Family Well-Being Outcomes
1. Families have enhanced capacity to provide for their children's
needs.
2. Children receive appropriate services to meet their educational
needs.
3. Children receive adequate services to meet their physical and
mental health needs. Each outcome is evaluated by using specific
performance indicators and two outcomes are evaluated using data
indicators as well.
State programs will also be reviewed to determine the extent to
which the State agency has implemented State plan requirements that
build the capacity to deliver services leading to improved outcomes. We
describe such State plan requirements as systemic factors. These
systemic factors include: (1) Statewide information systems; (2) case
review system; (3) quality assurance system; (4) staff and provider
training; (5) service array; (6) agency responsiveness to the
community; and (7) foster and adoptive parent licensing, recruitment
and retention. Each of the systemic factors subject to review is based
on specific State plan requirements. Our review and assessment of the
systemic factors will be based on the extent to which the State is in
conformity with those State plan requirements.
We also want to clarify how the various components of the review
process will inform decisions regarding substantial conformity.
Four sources of information are included in the child and family
services reviews in order to make decisions about substantial
conformity:
Statewide AFCARS and NCANDS data on foster care, adoption
and child protective services, including the State's performance on
statewide data indicators with respect to the national standards for
such;
Narrative information on outcomes and systemic factors;
Case-specific qualitative information and family
interviews on outcomes; and
Interviews with non-case-specific State and local
community representatives on outcomes and systemic factors.
To complete this review effort, several tools will be used,
including:
A field-tested CFSR procedures manual that addresses the
steps to be followed in the reviews and supplements information
included in the rule;
A statewide assessment instrument that directs the
utilization of statewide foster care, adoption and child protection
data to complete a narrative discussion of the outcomes and systemic
factors reviewed, and the State's performance in meeting the standards
for the statewide data indicators;
An on-site intensive review instrument;
Interview protocols for use with State and local
stakeholders; and
A summary of findings and recommendations form that
enables the review team to address each outcome and systemic factor
reviewed. This form, when completed, serves as the report of the review
findings to the State.
There are five steps in the review process, from the point of
initiating the review to assessing penalties where determinations of
nonconformity are made:
Prior to the State beginning work on the statewide
assessment, ACF prepares and transmits data profiles of the State's
foster care and child protective service populations, using AFCARS and
NCANDS data submitted by the State. Some examples of the data included
in the profiles include the length of stay in foster care, foster care
re-entries, and repeat maltreatment rates of children. The data will
indicate whether or not the State meets the national standards for
those statewide data indicators used to determine substantial
conformity.
The State then completes the statewide assessment. This
task requires the State to examine the data relative to the State
programs, goals, and objectives, and consider them in light of the
outcomes for children and families subject to review. The State also
addresses in narrative the systemic issues under review relative to
their influence on the State's capacity to deliver effective services.
Based on the quantitative and qualitative findings of the statewide
assessment, the State and the ACF Regional Office jointly make
decisions about the locations of the on-site review activities and the
types of cases that will be reviewed on-site.
The on-site review is conducted by a joint Federal-State
team that combines both the outcomes and the systemic factors being
reviewed. In reviewing for the outcomes, a sample of cases is reviewed
intensively using information from the case record and interviews with
family members, the caseworker, and service providers involved with the
family. The findings from the sample of cases are combined with the
State's performance on selected Statewide data indicators to make
determinations about substantial conformity on the outcomes. In
reviewing for the systemic factors, interviews are conducted with State
and local representatives, e.g., courts, other agencies, foster
families, and foster care review boards. The information from these
stakeholder interviews is combined with information on the systemic
factors in the statewide assessment to make determinations about
substantial conformity on the systemic factors.
The review team recommends a determination regarding
substantial conformity, for each of the outcomes and systemic factors
reviewed. The basis for the determinations is a

[[Page 4024]]

combination of quantitative and qualitative information from the
statewide assessment and the on-site review related to each outcome and
systemic factor.
States are immediately informed of any penalties
associated with outcome and systemic factors determined not to be in
substantial conformity. Program improvement plans are developed to
address each area of nonconformity and the State has a limited period
of time to successfully complete the program improvement plan before
penalties are actually taken.
A number of the comments we received reflected a need for more
clarity regarding the overall process. As noted earlier, we did not
include all the details of the reviews in the proposed rule, but chose
to regulate only the basic framework of the process, including the
overall approach to the reviews, the standards for substantial
conformity, and the State plan requirements subject to review as
required in section 1123A of the Act. We chose to address specifics
about how the reviews will be conducted, the performance indicators
that will be used to measure outcomes, and some aspects of the process
for determining substantial conformity in a procedures manual we
developed separately from the NPRM. This procedures manual will
supplement the regulation with additional detail that State and Federal
staff will need to conduct the reviews. The procedures manual will be
in final form for the initial reviews to be conducted following
publication of this rule.
While we recognize the need to be clear on the details of the
review process, we also need to maintain the flexibility to make
appropriate changes that support the results-focused approach to
Federal reviews of State programs. Although we have field-tested the
proposed review process extensively in 12 States to date, we believe
that not regulating certain aspects of the review process affords both
the Federal government and the States an ongoing opportunity to benefit
from lessons learned in future reviews and make improvements to the
process where needed.
We have made significant changes to the review protocol in response
to the concerns raised through public comment. The most significant
concerns relate to:
The process and specific criteria for determining
substantial conformity with State plan requirements;
The degree of subjectivity involved in determining
substantial conformity;
The small sample size used in the on-site portion of the
reviews; and,
The amount of penalties associated with nonconformity.
The following addresses the major issues noted above that were the
subject of the majority of the comments and changes to the regulation:
Determining Substantial Conformity With State Plan Requirements
Most of the respondents to the NPRM generally supported a
determination of ``substantial conformity,'' rather than requiring a
determination of conformity on each specific title IV-B and IV-E State
plan requirement. Of particular concern to commenters were:
The standards used to make determinations of substantial
conformity for outcomes;
The process for resolving discrepancies in the aggregate
data from the statewide assessment and the information obtained from
the on-site review; and,
The criteria used to determine substantial conformity for
the systemic factors being reviewed.
Standards used to make determinations of substantial conformity for
outcomes. The primary concerns regarding this issue include a lack of
clarity with respect to how substantial conformity is determined and
the standards that States are expected to meet in achieving substantial
conformity. Commenters particularly requested that we set a more
tangible, objective standard for substantial conformity. In response to
these comments, and concerns raised about the sample size for the on-
site portion of the review, statewide data indicators that are measured
against national standards, in combination with the findings of the on-
site review, will be used to determine substantial conformity.
Statewide data indicators. The following statewide data indicators
will be used in combination with findings of the on-site review to
determine substantial conformity with the outcomes.
Outcome S1: Children are, first and foremost, protected from abuse
and neglect. Data indicators: Repeat maltreatment. Of all children who
were victims of substantiated or indicated child abuse and/or neglect
during the period under review, what percentage had another
substantiated or indicated report within a 12-month period?
Maltreatment of children in foster care. Of all children in foster
care in the State during the period under review, what percentage was
the subject of substantiated or indicated maltreatment by a foster
parent or facility staff?
Outcome P1: Children will have permanency and stability in their
living situations. Data indicators: Foster care re-entries. Of all
children who entered care during the period under review, what
percentage re-entered foster care within 12 months of a prior foster
care episode?
Length of time to achieve the permanency plan.
Of all children who were reunified with their parents or caretakers
at the time of discharge from foster care, what percentage was
reunified in less than 12 months from the time of the latest removal
from home?
Of all children who exited care to a finalized adoption, what
percentage exited care in less than 24 months from the time of the
latest removal from home?
Stability of foster care placement. Of all children served who have
been in foster care less than 12 months from the time of the latest
removal from home, what percentage have had no more than two placement
settings?
Length of stay in foster care. For a recent cohort of children
entering foster care for the first time in the State, what is the
median length of stay in care prior to discharge?
The national standard for each statewide data indicator identified
above will be based on the 75th percentile of all State' performance
for that data indicator, as reported in AFCARS and NCANDS. We
considered using the 90th percentile and the median to establish the
national standard and rejected both because these standards,
respectively, were deemed either too high or too low. This is
illustrated, based on 1998b (April 1-September 30) AFCARS data, and
1997 NCANDS data (available for repeat maltreatment only) in the chart
below.

------------------------------------------------------------------------
Measure Median 75th 90th
------------------------------------------------------------------------
% of children with repeat maltreatment within a 11 7 2
12-month period................................
% of children re-entering foster care........... 20 13 6
% of children reunified in less than 12 months 72 80 88
from latest removal............................
% of children adopted in less than 24 months 16 26 43
from the latest removal........................
% of children in care less than 12 months with 63 77 85
no more than 2 placements......................

[[Page 4025]]

Median length of stay in foster care prior to 18 12 10
discharge (months).............................
------------------------------------------------------------------------
Note: Data for maltreatment of children in foster care is not available
for the purposes of this illustration, but will be available when we
calculate the standard.

We recognize that we have set a high standard. However, we think it
is attainable and that our overall approach for moving States to the
standard through continuous improvement is sound.
We anticipate that the standard for each data indicator based on
AFCARS data will be derived from the 1998b, 1999c (complete Federal
fiscal year) and 2000a (October 1-March 31) reporting periods and the
standard for each data indicator based on NCANDS data will be derived
from the 1997 and 1998 reports. However, if we have more current and
complete data available, for example the 1998 and 1999 NCANDS reports,
we will use these data submissions to develop the standard. By using
multiple reporting periods we will increase the number of States that
participate in setting the standard.
As we considered how to develop the national standard, we noticed
that States with smaller caseloads were clustered in the upper
percentiles with respect to performance on the data indicators. We did
not want States with larger caseloads to be disadvantaged, therefore,
we explored setting multiple standards based on caseload size. We
derived the variable ``number of children in foster care per 10,000
children under 18 years old in the general population'' and used it to
test State performance on certain statewide data indicators. We found
no correlation between the variables. In short, caseload size was not
useful in explaining the variation in State performance with respect to
the national standards, so it was not considered in setting the
national standards.
Because this concept of setting a national standard for data and
basing substantial conformity, in part, on a State's ability to meet
such a standard is untested, we purposely limited the number of
outcomes to which we assigned statewide data indicators. For example,
we did not assign data indicators to Safety Outcome #2 or Permanency
Outcome #2, although we will consider adding indicators to those
outcomes at a later time. We will also consider adding to or revising
the data indicators listed above as needed. For example, we will
consider adding timeliness of initiating investigations of child
maltreatment to the safety outcomes later if there is a broad enough
national data base through NCANDS to support that indicator. In
addition, to date, there are no uniform national data indicators
collected through AFCARS or NCANDS that can be used to review for the
Well-being outcomes.
We expect the statewide data indicators to change over time and,
therefore, did not regulate them. We chose to base the first set of
statewide data indicators on the outcome measures that were developed
in accordance with section 203 of the ASFA for two reasons:
We received many comments requesting that the section 203
measures and the child and family services reviews be consistent with
one another; and,
The section 203 measures were developed in conjunction
with a consultation group and were published in the Federal Register
for public comment.
We would also like to note that many of the data indicators and
performance measures we selected are consistent with and support the
work of ACF in meeting the requirements of the Government Performance
and Results Act of 1993 (GPRA). Under GPRA, Federal agencies are
required to work with the States to establish performance goals and
monitor performance results for all Federal programs. We believe that
the outcomes and data indicators used in the CFSR support one of ACF's
objectives under GPRA to increase the safety, permanency, and well-
being of children and youth.
We have, however, in regulation, retained our authority to add new
data indicators, change existing data indicators, and suspend the use
of data indicators as appropriate. We took a similar approach to
setting the national standards. The standards will not change every
year. Rather, we have retained our authority to periodically review and
revise the standards if experience with the reviews indicates
adjustments are necessary.
Findings from the on-site portion of the review. During the on-site
portion of the review, a set of performance indicators is used to
review the outcome and determine the extent to which the outcome has
been achieved. Since the individual circumstances of each child and
family are unique, the performance indicators serve most effectively as
a guide to help the reviewer gather appropriate information from a
variety of sources. Experience has taught us that reviewing only the
information that is recorded in a written case record is insufficient
for assessing outcome achievement. Therefore, the reviewer explores the
performance indicators through the case record review and through
interviews with the individuals relevant to each case. Some components
of the indicators are quantitative, such as the number of entries into
foster care a child has experienced or the number of reports of
maltreatment that have been received on a child. However, there are
also indicators that are qualitative in nature that help explain the
circumstances behind the numbers, such as reasons for re-entry into
foster care or the nature of the reports of maltreatment received on a
child. Indicators are rated as an area of strength or an area in need
of improvement. For outcomes that have multiple indicators, if all but
one of the indicators are rated as a ``strength,'' the outcome is
determined ``substantially achieved'' in that particular case. We
learned from the pilots that the information gathered in the on-site
review using instruments structured in this way most often led
reviewers to a general consensus regarding the degree of outcome
achievement.
Standard for substantial conformity with the outcomes. For the
outcomes to which statewide data indicators are assigned, a State must
meet both the national standard for the statewide data indicators and
substantially achieve the outcome in 90 percent (95 percent in reviews
subsequent to the initial review) of the cases reviewed on-site to be
considered in substantial conformity. We will resolve any discrepancies
between the Statewide data and the on-site review findings so that
substantial conformity does not rely totally on one or the other
information source. This approach permits on-site exploration of the
reasons why performance with respect to the statewide data indicators
might not be an accurate indicator of statewide performance. Outcomes
for which there are no assigned statewide data indicators must be
substantially achieved in 90 percent (95 percent in reviews subsequent
to the initial review) of the cases reviewed on-site to be considered
in substantial conformity.
Program improvement regarding statewide data indicators. Any State
found not to be in substantial conformity with an outcome must enter
into a program improvement plan. When the national standard is not met
on any of the statewide data indicators used to determine substantial
conformity, States must engage in continuous improvement toward the
national standard in the program improvement plan. This means that ACF
will negotiate with the State to determine how much progress toward
meeting the standard, in terms of absolute percentage points, the State

[[Page 4026]]

will make to successfully complete a program improvement plan. We
retain final authority to determine how much improvement the State must
make. In reviews subsequent to the initial child and family services
review, we will consider prior program improvement efforts, including
continuous improvement in meeting the national standard, when
negotiating the degree of improvement required to successfully complete
a program improvement plan.
Resolving discrepancies in the aggregate data from the statewide
assessment and the information obtained from the on-site review
pertaining to the outcomes. We received a number of comments addressing
this issue, particularly concerning how discrepancies between the two
sets of information will be resolved. New Sec. 1355.33(d) provides more
detailed information on the steps we will take to resolve discrepancies
between the aggregate data and the findings of the on-site portion of
the review. In order to resolve discrepancies between the statewide
assessment and the findings of the on-site portion of the review we
will provide the State the option of either of the following:
The submission of additional information by the State that
will explain or resolve the discrepancy, such as additional data or
analysis of the existing data, or
ACF and the State will review additional cases, but only
for the indicators with a discrepancy that must be resolved. The total
number of cases reviewed may not exceed 150 cases, and will represent a
statistically significant sample with a 90 percent (or 95 percent in
subsequent reviews) compliance rate, a tolerable sampling error of 5
percent, and a confidence coefficient of 95 percent. The conclusions
made from reviewing the additional cases will form the basis for
determining substantial conformity.
Criteria used to determine substantial conformity for the systemic
factors being reviewed. The concerns related to determining substantial
conformity for the systemic factors: (1) Statewide information systems,
(2) case review system, (3) quality assurance system, (4) staff and
provider training, (5) service array, (6) agency responsiveness to the
community, and (7) foster and adoptive parent licensing, recruitment
and retention were similar to those for the outcome areas: A lack of
clarity on how substantial conformity is determined and on the
standards that States are expected to meet in achieving substantial
conformity. In response to these concerns, we have established a
process for rating the State's conformity with State plan requirements
that is based on information obtained from the statewide assessment and
the on-site stakeholder interviews. Information from the statewide
assessment and interviews with stakeholders on-site must support a
determination of substantial conformity. The review team will rate the
State's performance for each systemic factor using a Likert-type scale,
with criteria attached to each rating, based on the total information
obtained from a variety of stakeholders interviewed on-site.
Except for ``information system capacity,'' all of the systemic
factors reviewed have more than one State plan requirement associated
with them that are included in the review process. A State's conformity
with each systemic factor will be rated on a scale of 1-4, based on the
extent to which there are processes in place which meet the State plan
requirements associated with that systemic factor. For example:

----------------------------------------------------------------------------------------------------------------
Not in substantial conformity Substantial conformity
----------------------------------------------------------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
None of the State plan requirements Some or all of the All of the State plan All of the State plan
is in place. State plan requirements are in requirements are in
requirements are in place, and no more place and functioning
place, but more than than one of the as described in each
one of the requirements fails to requirement.
requirements fails to function as described
function at the level in each requirement *.
described in each
requirement *.
----------------------------------------------------------------------------------------------------------------
* For the systemic factor, ``information system capacity,'' if it is determined that a system is in place but
not functioning at the level described in the one State plan requirement reviewed, that factor is rated a
``2'', rather than a ``3''.

The statewide assessment requires the State to evaluate each of the
State plan requirements. Information from that source is used in part
to determine how the State is complying with each State plan
requirement. During the on-site review, selected local and statewide
stakeholders will be interviewed and asked a series of questions that
relate to the State plan requirements. Not every stakeholder
interviewed will be able to address each systemic issue thoroughly.
Thus, for each systemic factor, the review team must use the total
information obtained from all the interviews to evaluate the extent to
which the requirements are being met. Both the information from the
statewide assessment and the stakeholder interviews must indicate that
the State should receive a ``3'' rating or better for that systemic
factor in order for the State to be found in substantial conformity. To
ensure objectivity in the information gathered through stakeholder
interviews, we have amended the regulation at Sec. 1355.33(c)(4)(iv) to
set minimum requirements with respect to the selection of stakeholders
who must be interviewed.
Subjectivity in Determining Substantial Conformity
Many respondents to the NPRM indicated that we needed to strengthen
the rule to assure increased objectivity in making determinations of
substantial conformity. Given the focus of the reviews on qualitative
measures and degrees of outcome achievement, concerns raised included
reviewers making subjective judgments on outcome achievement, holding
States accountable for these judgments, and a lack of clarity on the
standards used to make decisions.
We agree that the need to insure objectivity in the decision-making
process is extremely important. In fact, we realized early in the
design process of the reviews that proposing a results-focused review,
as opposed to the checklist-style reviews of documentation conducted in
the past, would raise concerns about the level of objectivity in the
reviews. However, to design a review process that focuses on results
and outcomes we must evaluate not only what happens to children and
families as a result of the State' interventions, but the circumstances
and mitigating factors that affect both the interventions and the
results. To accomplish this, our review process must utilize both
quantitative and qualitative assessments. We also realize that
determinations regarding outcome

[[Page 4027]]

achievement in the areas of safety, permanency and well-being require
judgments based on the specific circumstances of individual children
and families, and that we need to standardize the criteria for making
those judgments in order to ensure objectivity.
As noted in the NPRM, we included several criteria and procedures
in the pilot reviews that were designed to make the reviews as
objective as possible and to result in consistency among reviewers and
across States in making critical judgments about outcome achievement.
Those measures include:
Using statewide aggregate data and qualitative information
from the statewide assessment to understand and interpret the status of
outcomes and systemic factors;
Applying uniform criteria or performance indicators that
guide reviewers to an accurate conclusion about the extent to which the
outcome is being achieved in each case;
Training State and Federal reviewers in the use of
standardized review instruments and protocols; and,
Using a quality assurance procedure during the course of
the review by requiring local team leaders to review case ratings and
debrief daily with reviewers to ensure that criteria are applied
consistently.
In piloting the reviews, we also determined that the objectivity
and uniformity of the process could be strengthened in several areas.
For example, we learned that the Statewide assessment was prepared
differently among the pilot States and that the manner of collecting
the data for the safety and permanency profiles was not uniform,
particularly in States where AFCARS or NCANDS data were unavailable.
These factors made it difficult to rely upon information in the
statewide assessment.
In regard to case selection, we found that the manner of selecting
cases for the on-site review varied among States in ways that made it
difficult to assure randomness. Through the pilots and the comments we
received on the instruments, we became aware that the protocols used to
review cases could be improved to reflect, more objectively, those
factors that determine conformity with State plan requirements.
In response to these lessons and others, we have strengthened the
provisions for objectivity in the reviews by adding a number of
measures to the final rule and the CFSR procedures manual. We are also
making substantial changes to the content of the instruments used in
the reviews that will assist in making objective determinations and
addressing the relevant areas of State plan conformity.
Most of the comments regarding subjectivity were related to the on-
site review. The comments we received concerning subjectivity in the
review process arise from genuine concerns that States be held
accountable to an objective set of criteria. We also have learned from
the pilot reviews that we must be willing to accept the professional
judgment of reviewers in determining substantial conformity. Where
there are adequate procedures in place to assure consistency and
accuracy in decision-making, as we have described above, we believe
professional judgments will be objective.
We recognize that it is much more difficult to determine whether or
not a child is safe than it is to determine, for example, that a date
on a court order meets specified time frames. Reviewing for outcomes
requires gathering both qualitative and quantitative information,
examining the information within an appropriate context and,
ultimately, making a judgment about how well the outcome is or is not
being achieved. Caseworkers in the field must make these judgments
every day, and children's lives depend upon the accuracy of that
process. A review process that only checks for procedural requirements
and does not evaluate the quality of the decision-making process and
service delivery that we expect of caseworkers is not likely to yield
findings that will help States improve those processes where needed.
Sample Size for On-Site Reviews
In the NPRM, we proposed to review a sample of 30-50 cases. Most of
the comments we received indicated strong concerns that reviewing only
30-50 cases may not be representative of the State' service populations
and would not lead to credible judgments of substantial conformity. A
number of commenters questioned how such a small sample could be
statistically valid and expressed concern over imposing penalties based
on a small sample of cases. Some respondents indicated a fear that we
would be basing decisions about substantial conformity on ``anecdotal''
information in the absence of a much larger sample.
Clearly, to many of the commenters, sample size is a major issue,
and we wish to explain our rationale for making only modest changes to
this feature of the review in the final rule, based on the lessons we
learned in the course of piloting the new review process. We want to
emphasize that two changes also address these concerns about the sample
size: Adding the statewide data indicators and a process to resolve
discrepancies that may include reviewing additional cases.
We found little discrepancy between the statewide data and
the findings from the small sample. We should note that we experienced
minimal disagreement among reviewers (State and Federal) and between
the statewide data and the findings made on the basis of the small
samples in the pilot reviews. The findings of the pilots were similar
to those noted in State quality assurance systems, where those systems
were in place in pilot States. In most situations, the findings
provided State officials with sufficient details about the functioning
of their programs to make improvements where needed and to build on
existing strengths in their programs.
We learned that we cannot make accurate decisions in a
results-focused review by only reviewing documentation in records. We
began by pulling a large sample in the first four pilot States. We
conducted a record review in all the cases, similar to prior reviews,
except we were attempting to capture both qualitative outcome and
quantitative information from the records. In a smaller subsample of
the larger sample, we interviewed the relevant parties and focused less
on record documentation and more on what was actually occurring in each
case. Inevitably, the review team found that the small sample and the
strategy of in-depth analysis through interviews was a more reliable
source of information on outcomes and conformity with applicable
requirements. The information obtained solely from the case records was
often incomplete, not current, and left information gaps. Basically, we
learned that we cannot apply traditional checklist-type reviews of
documentation to determine the quality of decision-making and service
delivery.
We learned that reviewing cases intensely, including all
the relevant interviews, requires a large number of staff resources and
is an extremely time-consuming process. The process of reviewing case
records and conducting multiple interviews in each case reviewed,
combined with other review team activities, allows a reviewer time for
only two cases, possibly three, in one week. Even with a sample size of
50 cases, the process requires a team of approximately 25 reviewers in
order to complete the on-site review in one week. Increasing the sample
to 150 cases or more would mean that either a team of 75 reviewers
would be needed to review a State in one week, or 25

[[Page 4028]]

reviewers would have to remain on-site for three weeks to complete the
review. Either option creates unreasonable expectations for States and
the Federal government in terms of staff resources and cost and,
therefore, does not constitute a cost-effective approach to the
reviews.
As originally proposed in the NPRM, the sample would be comprised
of both in-home and foster care cases. In-home cases do not provide
insight into the State's performance with respect to the permanency
outcomes, meaning that not every case in the sample would inform
decisions regarding substantial conformity for the permanency outcomes.
On the other hand, we need to assure that the sample accurately
captures information on in-home service cases in order to examine the
safety outcomes based on recent practice and for children who never
entered the foster care system.
Therefore, in certain circumstances, the sample size may be
increased to assure that all program areas identified in the statewide
assessment for further review are adequately represented. In addition,
we are requiring, in regulation, that the sample of 30-50 cases include
children who entered foster care in the State during the year under
review.
We have also added provisions to the rule for resolving
discrepancies between the aggregate data and the findings of the on-
site review that address the sample of cases reviewed. We are providing
States the option of resolving such discrepancies through the
submission of additional information, or by ACF and the State reviewing
additional cases that, in combination with the 30-50 cases reviewed on-
site, will be a sufficient number to comprise a statistically
significant sample. ACF and the State will determine jointly the exact
number of additional cases to be reviewed, however, the total number of
cases may not exceed 150. We chose a maximum of 150 cases because it
exceeds the highest number of cases necessary to review a sample that
will be statistically significant with a compliance rate of 90 percent
(or 95 percent for subsequent reviews), a tolerable sampling error of 5
percent and a confidence coefficient of 95 percent. In order to assure
that the sample of cases reviewed in the on-site review and the
additional cases actually comprise one random sample, we will randomly
select the oversample of 150 cases for the on-site review, from which a
subsample of 30-50 cases will be drawn. If the State chooses a review
of additional cases to resolve a discrepancy, those cases will be
selected from the same oversample. In this manner, we believe we will
address concerns about the size of the sample, particularly in cases
where discrepancies in the findings exist and must be resolved.
We recognize that the sample size does not represent a faultless
approach to reviewing State programs, and we fully understand the
varying perspectives on this issue. We must emphasize, however, that
the quality of information gathered from the overall process, and not
the on-site sample in isolation, will benefit children and families by
tracking their outcomes and allowing States to focus on program
improvements where needed.
Penalties Associated With Nonconformity
We have made an important change in the final rule regarding
withholding of funds in situations where States remain in nonconformity
continuously on the same outcomes or systemic factors, and for States
that elect not to engage in a program improvement plan. The final rule
provides for graduated penalties in successive reviews if areas of
nonconformity remain uncorrected. We have also applied the maximum
withholding to those States that do not implement program improvement
plans to correct the areas of nonconformity.
The comments we received on the imposition of penalties raised a
number of issues that we considered in making this change to the rule.
Some comments indicated concerns that the Federal government is not
meeting its stewardship responsibilities by not taking a more
aggressive approach to penalizing States found not to be in substantial
conformity. Other comments indicated that the potential for penalties
is substantial and could have a serious effect on the capacity of
States to administer their programs. We also were encouraged to use the
process for imposing penalties to assure that program improvements are
made when and where they are needed.
We wish to note that we have not proposed an ``all or nothing''
approach to penalizing States. We have been faithful to the statutory
mandate that applicable penalties be commensurate with the extent of
nonconformity. Further, we have designed a review process that is based
on substantial conformity with the requirements, rather than total
compliance without exception, to be consistent with the statutory
mandate. Penalties are attached to each outcome and systemic factor
determined to be in nonconformity. We are providing time-limited
opportunities for States to make needed program improvements prior to
withholding of Federal funds for nonconformity. Only when States fail
to take advantage of program improvement opportunities or complete a
plan successfully will they be faced with an actual loss of Federal
funding as a result of the child and family services reviews.
At the same time, we have taken seriously the stewardship
responsibilities of the Federal government in enforcing conformity with
State plan requirements. These responsibilities are clear and we have
not abandoned them. We intend to withhold Federal funds where States
are not using those funds to achieve their designated purpose. To
clarify that the need to make program improvements will be strongly
enforced, we are strengthening sections of the final rule to assure
that penalties will be taken in a timely and certain manner.
We do not wish to impose penalties in a manner that will impair a
State's ability to provide essential services to children and families.
However, we have a responsibility to assure that State plan
requirements are met and that children and families are served in ways
that will provide for their safety, permanency, and well-being.

C. Enforcement of Section 471(a)(18) of the Act

We received a large response to the section of the regulation that
enforces the Multiethnic Placement Act, as amended. Several commenters
sought practice guidance on how to implement the law. We believe that
we have addressed these issues in other forums through policy issuances
and HHS-funded technical assistance and guides. Other commenters were
concerned that we were not maintaining the partnership approach
exemplified in the child and family services reviews. We have made no
changes to the regulation in response to these comments, since we find
that the statute is definitive in the manner in which we are to
implement corrective action and enforce compliance with section
471(a)(18) of the Act.
In response to other comments, we have:
Clarified that we will consider a State in violation of
section 471(a)(18) when it maintains a policy, practice, law or
procedure that, on its face, clearly violates section 471(a)(18) of the
Act;
Required States to notify ACF upon a final court finding
that the State has violated section 471(a)(18) of the Act;
Allowed States up to 30 days to develop a corrective
action plan to respond to a violation of section 471(a)(18) of the Act
resulting from a

[[Page 4029]]

State's statute, regulation, policy, procedure or practice, and six
months in which to complete the plan;
Clarified which title IV-E funds will be reduced in the
event of a violation of section 471(a)(18) of the Act; and
Added a definition of the term ``entity.''

D. Reasonable Efforts and Contrary to the Welfare Determinations and
Documentation

Many commenters believed that the requirements for reasonable
efforts and contrary to the welfare determinations as proposed were
inconsistent with current State practice. In some instances we agree
that the regulation was unnecessarily restrictive, and have made the
following changes to preserve State flexibility while keeping within
the statute and maintaining the integrity of the program:
Removed the distinction between emergency and non-
emergency removals in the sections of the rule on contrary to the
welfare and reasonable efforts to prevent removal. This change is in
response to concerns that the distinction was artificial.
Allowed States up to 60 days to obtain a judicial
determination with regard to reasonable efforts to prevent removal of a
child from home. This responds to concerns that our proposed policy
restricted the timing for obtaining such a determination to a specific
date rather than within a specified time frame.
Consolidated the requirements regarding reasonable efforts
to reunify the child with the family and efforts to make and finalize
alternate permanent placements into a single requirement to be more
consistent with actual State practice. Within 12 months of the date the
child is considered to have entered foster care, the State is to obtain
a judicial determination that the State agency made reasonable efforts
with respect to the permanency plan that is in effect.
In other areas, we explained why we are maintaining our policy
position rather than changing the regulation in response to commenter'
concerns. We affirmed that judicial determinations regarding contrary
to the welfare and reasonable efforts are inextricably linked to a
child's eligibility for title IV-E. The statute makes these judicial
determinations eligibility requirements which we cannot change despite
the many opposing comments. We also retained the requirement for the
State to make a contrary to the welfare determination in the first
court order sanctioning the removal of the child from the home, because
it is a longstanding critical protection for children and families.
Finally, we are not relaxing the documentation requirements or allowing
nunc pro tunc orders because we wish to preserve the certainty that
these determinations are made in accord with the statute.

E. Case Plans and Case Review Requirements

To clarify our existing policy with regard to the timing of the
case plan, we have amended the regulation to allow States up to 60 days
from a child's removal from the home to develop the case plan. We also
made a significant policy shift in the requirements for subsequent
permanency hearings. We are now requiring subsequent permanency
hearings for all children, including children placed in a permanent
foster home or a preadoptive home. We believe that the ASFA compels us
to ensure, through the protection of a permanency hearing, that
permanency will be achieved for these children.
We received a significant number of requests to limit the TPR
provision to only certain groups of the foster care population. We are
unable to make this change in the regulation, as no statutory authority
exists for doing so, and the clear intent of ASFA was to speed critical
decision-making for all children in foster care. We clarify in the
final rule that the exceptions to the requirement to file a petition
for TPR must be done on a case-by-case basis and added additional
examples of a compelling reason. We also clarify that States must begin
the process of finding and approving an adoptive family for a child
when the State files a petition for TPR.

F. Title IV-E Reviews

We made several changes to strengthen and clarify the title IV-E
reviews. The title IV-E reviews are designed to review the eligibility
of children in foster care and providers receiving title IV-E funds.
Those changes to the final rule include:
Clarifying that when using an alternate sampling
methodology when AFCARS data are unavailable, we will review a six-
month period that coincides with the AFCARS reporting period;
Allowing all State' initial primary reviews to be held at
a 15 percent threshold of ineligible cases regardless of whether or not
the review occurs within the first three years of the final rule;
Providing, on a case-by-case basis, an extension of a
program improvement plan when a legislative change is necessary for the
State to achieve substantial compliance; and
Increasing the initial amount of time to develop a program
improvement plan from 60 days to 90 days for States found not to be in
substantial conformity as a result of a title IV-E foster care
eligibility review.

G. Special Populations

Several issues of note recurred as themes throughout the comments
and the regulation. One was the application of the rules to certain
populations, such as Indian tribal children, adjudicated delinquent
children, and unaccompanied refugee minors. We clarify how in
particular the provisions of the final rule apply to these populations
of children, but also emphasize that overall the statute must apply to
these children as they would any other child in foster care. We have no
statutory authority to exempt any group from provisions such as the
safety requirements or termination of parental rights requirements.
Furthermore, we strongly believe that, while these requirements must
apply to all children, the statute affords the State agency the
flexibility to engage in appropriate individual case planning.
For Indian tribes, numerous other issues were raised with regard to
how title IV-E requirements and, more specifically, the recent
amendments made by the Adoption and Safe Families Act apply to Indian
tribes as sovereign nations. While we are committed to the government-
to-government relationship between the Federal government and Indian
tribes, the foster care program under title IV-E is statutorily
targeted to State agencies, and Indian tribes cannot receive title IV-E
funds directly. Indian tribes can gain access to title IV-E funds on
behalf of title IV-E eligible children if they enter into agreements
with State agencies. Accordingly, Indian tribes must operate within the
parameters of a particular State plan and the specifics of the
agreement. Some commenters also requested that we explain how the
requirements of the Indian Child Welfare Act work in the context of the
ASFA. Although we can affirm that States must comply with ICWA and that
nothing in this regulation supersedes ICWA requirements, we cannot
expound on ICWA requirements since they fall outside of our statutory
authority.

[[Page 4030]]

IV. Section-by-Section Discussion of Comments

Part 1355--General

Section 1355.20 Definitions

This section amends 45 CFR 1355.20 to revise the definitions of
foster care and foster family home and to define new terms used
throughout the regulation.
Child care institution. Comment: Some commenters requested that we
provide more specific guidance or parameters to determine whether a
facility is a ``child care institution'' and offered a variety of
suggestions and recommendations. For example, one commenter asked that
we confirm whether the definition of ``child care institution''
precludes group child care programs from taking steps to assure safety
for foster children, including locking facility doors at night and
taking other reasonable measures to prevent foster children from
leaving the facility without consent.
Response: We understand the desire for more expansive guidance for
determining whether a facility is appropriate for title IV-E eligible
children. We strongly believe that any such guidance should be
developed with input from the field. We have begun this consultation
process by inviting comments on a notice published in the Federal
Register on December 7, 1998 (63 FR 67484). That notice specifically
requested comments on defining appropriate child care facilities in
which children adjudicated delinquent may be placed. Taking into
account the comments received on the Federal Register notice, we are
considering our options for setting forth more expansive guidance for
identifying child care institutions that are appropriate for title IV-E
eligible children.
Comment: One commenter suggested that language such as ``or tribal
licensing authorities'' be inserted after ``State'' to clarify the
definition of ``child care institutions'' on Indian reservations.
Response: We concur with the commenter and have revised the
definition in the final rule to reflect the tribal licensing authority.
Comment: One commenter noted that many ``child care institutions''
care for more than 25 children.
Response: The limit of 25 children, by statute, specifically
applies to public child care institutions and not private facilities.
Therefore, no changes to the final rule are warranted.
Date a child is considered to have entered foster care.
Comment: We received a great number of comments and suggestions
regarding how to define the date a child is considered to have entered
foster care in accordance with section 475(5)(F) of the Act (the date
the State is to use in calculating when to hold periodic reviews in
accordance with section 475(5)(B) of the Act, permanency hearings in
accordance with section 475(5)(C) of the Act, and for complying with
the termination of parental rights (TPR) provision under section
475(5)(E) of the Act). Some commenters wanted us to define the term by
using the date on which the child actually enters foster care and the
agency assumes responsibility for the placement and care of the child.
Others suggested that we define the term based on a variety of other
points in time, such as: The date of a judicial determination that it
was contrary to the child's welfare to remain at home; the date of the
full hearing; the date of the initial shelter care hearing; the date of
removal; or, the date a petition for removal is filed. Many commenters
observed that, by linking the date the child is considered to have
entered foster care to a finding of abuse or neglect and the agency
receiving responsibility for placement and care of the child, we
incorrectly implied that the aforementioned decisions occur at the same
hearing when, in fact, these judicial decisions are often made at
separate hearings.
Response: The time frames for considering when a child has entered
foster care, i.e., the earlier of a judicial finding of abuse or
neglect or 60 days from the date the child is removed from the home,
are statutory. However, nothing precludes a State from using a point in
time that is earlier than that required by statute or regulation, such
as the date the child is physically removed from the home. We have
changed the regulation to reflect this option. Clearly, if a State uses
the date a child is physically removed from the home, the requirements
for holding periodic reviews, permanency hearings, and complying with
the TPR provision within the time frames prescribed would be satisfied.
We also have removed to the reference to the agency's
responsibility for the placement and care of the child so that the
definition more closely follows the statutory language and is
consistent with actual practice.
Comment: One commenter suggested that the time a child spends in
shelter care not be factored into calculating the timing for holding
periodic reviews, permanency hearings, and for complying with the TPR
provision.
Response: Under long-standing Departmental policy, shelter care is
considered a form of foster care (see the definition of ``foster care''
at 45 CFR 1355.20). Shelter care is one of many possible settings in
which children in foster care are placed. Therefore, time spent in
shelter care counts in determining when to hold periodic reviews,
permanency hearings, and for complying with the TPR provision. We have
made no changes to the final rule in response to this comment.
Comment: One commenter requested that we delete the word
``physically'' from the regulatory definition of the date a child is
considered to have entered foster care to adhere strictly to the
statutory language which provides no qualification of the term
``removal.''
Response: While we have deleted the word ``physically'' from the
definition, we have retained the policy on physical removals because it
is consistent with the intent of ASFA regarding expedited permanency.
Linking the definition of the date a child is considered to have
entered foster care to a physical removal ensures that children do not
languish in care awaiting a judicial order that says that the child is
removed from the home.
We have, however, created an exception. Under Sec. 1356.21(k), we
permit constructive removals (i.e., paper removals) to equalize the
situation in relative and nonrelative foster family homes. If a child
is constructively removed from the home, the date he or she is
considered to have entered foster care, absent a finding of abuse or
neglect, is the date that is 60 days from the date of the constructive
removal. We have amended the regulatory text by cross-referencing
Sec. 1356.21(k), which sets the parameters for the acceptable forms of
removals.
Comment: One commenter was concerned about what appeared to be an
inconsistency between the date a child is considered to have entered
foster care and the timing for developing case plans. The outside limit
for considering a child to have entered foster care is 60 days from the
date of removal, while Sec. 1356.21(g)(2) requires case plans to be
developed within 60 days of the State agency `` * * * assuming
responsibility for providing services including placing the child * *
*''
Response: We understand the confusion and have amended the
regulatory language at Sec. 1356.21(g)(2) to state clearly that case
plans must be developed within 60 days of the date the child is removed
from the home.
Comment: We received several comments opposing the manner in which
we applied this definition to

[[Page 4031]]

voluntary placement agreements. In the NPRM, we set the date a child is
considered to have entered foster care for a child placed via a
voluntary placement agreement as the date the voluntary placement
agreement is signed by all relevant parties. Many commenters wanted to
be able to use the date the child actually is placed in foster care
since the child may not enter foster care the same day the agreement is
signed. Some commenters believed we lacked a statutory basis for not
applying section 475(5)(F) of the Act to all children, irrespective of
how they enter foster care.
Response: We concur that it is more appropriate to adopt a
consistent application of section 475(5)(F) of the Act for all
children. We have amended the definition of the date a child is
considered to have entered foster care so that it makes no distinction
for children who enter foster care via a voluntary placement agreement.
Therefore, children placed in foster care via a voluntary placement
agreement will be considered to have entered foster care no later than
60 days after the child is removed from the home.
We want to take this opportunity, however, to note that the purpose
of the 60-day limit at section 475(5)(F) of the Act is to ensure that
periodic reviews, permanency hearings, and application of the TPR
provision are not delayed as a result of contested involuntary
removals. The danger of such a delay often does not exist when children
are removed from their homes pursuant to a voluntary placement
agreement. When children are removed from home via a voluntary
placement agreement, we encourage States to use the date the child is
placed in foster care (rather than 60 days later) as the date for
calculating when to hold periodic reviews, permanency hearings, and for
complying with the TPR provision.
Comment: A few commenters requested guidance on how to apply the
definition to children who are voluntarily relinquished by their
parents for adoption.
Response: The date a child is considered to have entered foster
care according to the statute is the earlier of a judicial finding of
abuse or neglect or 60 days from the date the child was removed from
the home. Typically, there is no finding of abuse or neglect in a
voluntary relinquishment, so the date of entry into foster care would
be no later than 60 days from the date the child was removed from the
home.
Comment: One commenter requested that we specifically clarify, in
regulation, that the date the child is considered to have entered
foster care does not affect the date Federal financial participation
(FFP) may be claimed for foster care maintenance payments. One
commenter observed that there is a connection between maintaining
eligibility for title IV-E funding and the date a child is considered
to have entered foster care.
Response: Both commenters are correct. Establishing initial
eligibility for title IV-E funding and initial claiming for FFP have no
relationship to the date the child is considered to have entered foster
care defined at section 475(5)(F) of the Act. The purpose of that
provision is to set the ``clock'' for determining when to satisfy the
requirements for holding periodic reviews, permanency hearings, and the
TPR provision. A child's initial eligibility for title IV-E funding is
not related to this time frame. We have amended the regulation at
Sec. 1355.20 accordingly.
The date a child is considered to have entered foster care is,
however, related to maintaining a child's eligibility for title IV-E
funding. Under Sec. 1356.21(b)(2), we require the State to use the date
the child is considered to have entered foster care in determining when
to obtain a judicial determination that it made reasonable efforts to
finalize a permanency plan. We intentionally linked the timing for
obtaining this judicial determination to the date the child is
considered to have entered foster care so that such determinations
could occur at the permanency hearing, the logical time for making such
determinations.
Comment: Several commenters requested guidance for applying the
statutory definition of the date a child is considered to have entered
foster care to children who are adjudicated delinquent, particularly
for those children who enter foster care subsequent to placement in a
detention facility.
Response: In general, a date that is no later than 60 days from the
date the child was physically removed from his or her home should be
used in calculating when to satisfy the requirements for holding
periodic reviews, permanency hearings, and for complying with the TPR
provision, because judicial determinations regarding abuse or neglect
are not typically made for children who are adjudicated delinquent. For
children who enter foster care subsequent to placement in a detention
facility, States should follow existing policy as stated in ACYF-PA-87-
02 in calculating when to develop case plans, hold periodic reviews and
permanency hearings, and comply with the TPR provision.
ACYF-PA-87-02 requires States to satisfy the requirements for
developing case plans, holding periodic reviews and permanency hearings
(the requirements at section 427 of the Act at the time ACYF-PA-87-02
was written) for all children supervised by or under the responsibility
of another public agency with which the title IV-B/IV-E agency has an
agreement under title IV-E, and on whose behalf the State makes title
IV-E foster care maintenance payments. Since the State cannot claim
Federal financial participation under title IV-E for children in
detention facilities, the ``clock'' for calculating when to comply with
the requirements for developing case plans, holding periodic reviews
and permanency hearings, and the TPR provision begins when the child is
placed in foster care.
Although the ASFA was passed long after ACYF-PA-87-02 was issued,
we think that the existing policy is an appropriate interpretation of
section 475(5)(F) with respect to adjudicated delinquents who enter
foster care subsequent to placement in a detention facility.
Comment: A few commenters suggested that we adjust the date a child
is considered to have entered foster care for Indian children to
accommodate the time involved in tribal identification and notification
required by the Indian Child Welfare Act.
Response: We are sensitive to the fact that tribal identification
and notification may take time and limit the amount of time the tribe
or State has in making reasonable efforts to finalize a permanency plan
prior to the permanency hearing. However, we have no authority to set a
different ``date of entry into foster care'' for a particular group of
the foster care population. Nothing precludes the agency and court at
the permanency hearing from taking into consideration the amount of
time it took the State to comply with tribal identification and
notification requirements when determining appropriate permanency plans
for Indian children.
Comment: Several commenters did not want the definition of the date
a child is considered to have entered foster care to apply to the six-
month periodic reviews. The commenters are concerned that, if the
definition were so applied, children could potentially be in foster
care for eight months before a review is held.
Response: We chose to apply section 475(5)(F) of the Act to the
six-month periodic reviews, permanency hearings, and the TPR provision,
for two reasons. First, nothing prohibits the State from holding six-
month periodic reviews

[[Page 4032]]

based on the date the child is physically removed from the home.
Second, setting different ``clocks'' for calculating when to hold
periodic reviews and permanency hearings, and for complying with the
TPR provision would add administrative burdens on States.
For example, we believe that we would encumber State systems by
requiring a State to hold six-month periodic reviews based on the date
the child is removed from the home while holding permanency hearings
based on section 475(5)(F) of the Act. In that situation, the State
would be obliged to hold two periodic reviews prior to the permanency
hearing, the second of which would have to be held two months before
the permanency hearing if the date of entry into foster care were 60
days from the date the child is removed from the home. Therefore, we
have not made any changes to the final rule as a result of this
comment.
Foster care. No comments were received on this definition and
therefore no changes are being made to the language proposed in the
NPRM.
Foster care maintenance payments. Comment: One commenter questioned
our ability to revise the definition of foster care maintenance
payments to include travel for visits with workers, which is currently
covered as a title IV-E administrative expense. Another commenter
recommended that a revision to the definition be made to include the
travel costs for a parent to visit his/her child(ren) as an allowable
title IV-E foster care maintenance payment cost.
Response: The first commenter's observation is correct. Including
the phrase ``agency workers * * * '' in the definition goes beyond the
statute and was an error on our part. The statute clearly allows
reasonable travel by the child for visitation with family. We have
revised the definition in the final rule, deleting the words ``agency
workers,'' to conform to the statute. ACYF-PIQ-97-01 addresses the
second commenter's request to expand foster care maintenance payments
to include travel by the parent(s). Such costs are service related and
may be charged to title IV-B, title XX or the State. No change has been
made to expand foster care maintenance payments to include other
travel.
Comment: We received several requests to expand the definition of
foster care maintenance payments to cover a variety of items. For
example, one commenter recommended that a State be able to claim child
care when the foster parent is attending a school meeting or medical
and mental health staffings for another foster child in his/her care.
Response: The definition of foster care maintenance payments cited
in the NPRM mirrors the statutory language at section 475(4) of the
Act. We do not have the authority to extend the definition beyond the
statute. Furthermore, ACYF-PIQ-97-01 explains that child care provided
to a foster child when a foster parent is attending activities that go
beyond the scope of ``ordinary parental duties'' are reimbursable under
title IV-E. The PIQ provides a thorough discussion on the child care
costs that can be included in the title IV-E foster care maintenance
payment.
Comment: One commenter asked if the State could seek foster care
maintenance payments for appropriate child care costs if the State has
a two-tiered licensing system, ``licensed'' for center-based and
``regulated'' for home-based child care.
Response: A State's use of specific terminology or type of child
care licensing system has no bearing on whether the costs of child care
can be included in title IV-E foster care maintenance payments. As long
as the child care facility or individual (in the case of home-based
child care) is licensed, or otherwise officially authorized or approved
by the State as meeting the requirements for a child care facility, the
State may claim the costs of allowable child care as part of a foster
care maintenance payment.
Comment: Two commenters requested that the language in the preamble
to the NPRM which stated that payments for child care could be a
separate payment to the child care provider or included in the basic
maintenance payment be inserted in the regulatory text of the final
rule.
Response: We agree and have amended the regulation accordingly.
Foster family home. Comment: We received many comments on the
definition of ``foster family home'' and related concerns regarding
title IV-E eligibility and reimbursement. Several commenters noted that
in some States, the terms ``approved'' and ``licensed'' are
interchangeable, while in other States there are separate standards for
each of these categories. States sometimes establish separate
standards, i.e., approval and provisional licensure, as opposed to full
licensure, for relative caretakers. Some commenters suggested that we
allow States to claim title IV-E for eligible children placed with
relative caretakers who meet the State standards for approval or
provisional licensure, rather than the State's higher standards for
full licensure. Some commenters noted that relative placements
encourage continuity in a child's life, allowing the child to maintain
a sense of identity and minimize separation and attachment issues. One
commenter expressed a belief that the statutory language of ``licensed
or approved'' implies that different standards are acceptable. Another
commenter suggested that to require that approval and licensure be held
to the same standard is an extremely problematic higher standard than
has been required in the past.
Response: We have given considerable thought to these comments and
have tried to balance the integrity of the requirement, the safety of
the child and existing State licensing practices. We did not change the
requirements: (1) That approved foster family homes must meet the same
standards as licensed foster family homes; or (2) that relatives must
meet the same licensing/approval standards as nonrelative foster family
homes for the reasons below.
Section 471(a)(10) of the Act requires that a State's title IV-E
plan provide for the establishment or designation of a State authority
that is responsible for establishing and maintaining standards for
foster family homes and child care institutions. This section also
requires that the title IV-E State plan provide for the application of
these standards to ``any'' foster family home or child care institution
receiving either title IV-B or title IV-E funds. Further, the statutory
definition of ``foster family home'' in section 472(c) of the Act
states that a foster family home is a home ``* * * which is licensed by
the State in which it is situated or has been approved (by the State
licensing authority) as meeting the standards established for such
licensing.'' Clearly, the statute did not intend that there be separate
standards for licensing and approval.
The plain language of the statute requires that, to be considered a
foster family home for the purpose of title IV-E eligibility, the home
must be either licensed or approved as meeting State licensing
standards. It also is clear from the language in section 471(a)(10) of
the Act that the State licensing standards must be applied to ``any''
foster family home that receives funding under titles IV-E or IV-B. The
licensing provisions of the Act make no exceptions for different
categories of foster care providers, including relative caretakers.
In past title IV-E foster care eligibility reviews, we have
verified the existence of a license without differentiating among the
types, and we understand State concerns in this regard. We also agree
that placements that meet the

[[Page 4033]]

child's need for attachment and continuity should be encouraged. We
further recognize that, consistent with section 471(a)(19) of the Act,
States must consider giving preference to a relative caregiver,
provided that the relative caregiver meets all relevant State child
protection standards. However, given the emphasis in ASFA on child
safety, and the plain language of the statute with respect to the
licensing requirements, we believe that it is incumbent upon us, as
part of our oversight responsibilities, to fully implement the
licensing and safety requirements specified in the statute by requiring
that foster care homes, whether relative or nonrelative, be fully
licensed by the State.
Comment: In some States, relative caretakers must meet the
standards for full licensure, but the State allows for a waiver of
certain provisions for these specific caretakers. One commenter asked
if the language requiring that ``approved'' and ``licensed'' homes meet
the same standard would restrict the use of these waivers to approve
relative foster family homes. Other commenters requested that we
continue our current policy of allowing certain requirements to be
waived for relatives.
Response: Waivers are not addressed in the regulatory text.
However, as we have explained in ACYF-PIQ-85-11, special situations may
arise with relative caretakers in individual cases where there are
grounds for waiving certain requirements, such as square footage of the
relative's home. The safety standards, however, cannot be waived in any
circumstance. ACYF-PIQ-85-11 has not been withdrawn and, therefore,
continues to reflect current policy. To the extent that waivers are
allowed, they must be granted on a case-by-case basis, based on the
home of the relative and the needs of the child. The State may not
exclude relative homes, as a group, from any requirements.
Comment: Several commenters requested that we reconsider our
position on requiring that a foster family home be fully licensed
before the State is eligible to claim for title IV-E. We were advised
that in some States, a provisional license is issued so that a child
may be placed in a foster home while the State is awaiting criminal
background checks or waiting for the prospective foster parents to
complete required training. In other States, a provisional license is
issued to all new foster homes during a probationary period, even
though the home meets the requirements for a full license or approval.
Response: We considered the commenter' suggestions, but we believe
that the statute requires a foster family home to meet all of the State
requirements for full licensure or approval to be eligible for title
IV-E purposes. Accordingly, if a State issues an interim license
(provisional, emergency, etc.) pending satisfaction of all licensing
standards (e.g., while the State is awaiting the results of a criminal
records check or the completion of training), then the State may not
claim title IV-E funds on behalf of a child in that home.
Since there seems to be some confusion over the nomenclature used
in the draft regulation, we have revised the regulatory language in
Sec. 1355.20 to remove the reference to provisional licensure and to
articulate that before a State may claim title IV-E funds, it must find
that the home meets the State's licensing standards.
Comment: Several commenters offered varying suggestions on the
concept of allowing retroactive payments. Generally, the commenters
suggested that we allow States to claim title IV-E reimbursement back
to the date of placement once the home becomes fully licensed.
Response: The statute predicates foster family home eligibility on
licensure or approval of the home. Allowing retroactive payments to the
child's date of placement would be inconsistent with this requirement.
In addition, we do not wish to provide financial incentives for States
to place children in homes before the safety of the children in those
homes can be assured.
However, we recognize that some time may elapse between the date
that satisfaction of the requirements is received and documented and
the date on which the license is actually issued. We have concluded
that 60 days is an ample period of time to allow between the time the
State receives all the information on a home and the date on which the
full license is issued. Therefore, we are permitting States to claim
title IV-E reimbursement during the period of time between the date a
prospective foster family home satisfies all requirements for licensure
or approval and the date the actual license is issued, not to exceed 60
days.
Comment: One commenter requested that we allow States a six-month
period to grandfather in homes that are currently operating under a
provisional license, so long as the safety of the child is preserved.
Response: We will allow States a grace period to bring homes
currently operating with less than a full license or approval to full
licensure/approval status. Accordingly, if a State is currently
claiming title IV-E foster care for a foster family home that does not
meet fully the State licensing standards, the State has no more than
six months from the effective date of this final rule to grant a full
license or approval for these homes. After that date, a State may not
claim title IV-E funds for any child in a home that does not meet the
State's full licensing or approval standards.
Comment: One commenter suggested that provisional and emergency
licensure be defined, and a distinction be drawn between these two
types of licenses.
Response: The terms provisional licensure and emergency licensure
are not used in the regulation. Thus, we see no reason to impose a
definition of these terms on States.
Comment: One commenter recommended that the definition of ``foster
family home'' begin with a statement indicating that this definition is
for purposes of title IV-E foster care so that it is not wrongly
applied to exclude non-licensed placements from the section 422
requirements.
Response: We concur with the commenter and have revised the
regulation to clarify that the definition relates to title IV-E
eligibility only. It should be noted that section 471(a)(10) of the Act
more broadly requires that a State's title IV-E plan provide that a
State's established licensing standards apply to ``any'' foster family
home or child care institution receiving either title IV-B or IV-E
funds. This is a State plan conformance issue, however, and not a title
IV-E eligibility issue.
Comment: A commenter opposed inclusion of group homes, agency
operated boarding homes and other institutional settings in the
definition of ``foster family home.'' The commenter noted that Congress
clearly has indicated a desire to avoid a child's placement in such
settings unless it is necessitated by repeated extreme disruptions of
the preferred family settings. It was suggested that the definition
include only homes of individuals or families licensed or approved by
the State licensing or approval authorities that provide 24-hour out-
of-home care for children.
Response: Group homes, agency operated boarding homes and other
facilities have been included in the definition of ``foster family
home'' since the title IV-E regulations were issued in 1983. The
purpose of including these facilities has been to assure that all
foster care placements meet the minimum safety requirements by being
licensed or approved under State law or

[[Page 4034]]

rules. We believe this is a safety issue for children and not a
statement of placement preference; therefore, we have retained the
language in the final rule.
Comment: We received some comments concerning the licensing of
homes by tribal authorities. A few commenters suggested that tribes
should have the authority to license tribal homes irrespective of where
they are located, and that the language in the definition of ``foster
family home'' implies that tribes only have the authority to license
homes that are on or near reservations. A couple of commenters
suggested that not to allow tribes this authority would be a violation
of tribal sovereignty and jurisdiction. One commenter suggested that
this is an overreaching of the Federal government rather than a safety
issue. It was suggested that HHS strike ``or with respect to foster
family homes on or near Indian reservations'' from the definition.
Response: The authority of Indian tribes to license homes that are
``on or near Indian reservations'' has been part of the title IV-E
regulations since May 23, 1983. This provision is consistent with the
Indian Child Welfare Act (ICWA) of 1978. Section 1931 of ICWA
authorizes Indian tribes and tribal organizations to establish and
operate child and family services programs ``on or near reservations,''
including a system for licensing or otherwise regulating Indian foster
and adoptive homes. We are maintaining the language to remain
consistent with the ICWA.
Comment: One commenter asked whether the definition of ``foster
family home'' should be interpreted to mean that homes approved through
the tribal process must meet the same standard as homes licensed by the
State.
Response: The definition of ``foster family home'' should not be
interpreted in that manner. The definition of ``foster family home''
gives tribal licensing or approval authorities the jurisdiction to
license or approve homes that are on or near Indian reservations. This
is consistent with ICWA at section 1931(b) which states that for
purposes of qualifying for funds under a federally assisted program,
licensing or approval of foster or adoptive homes or institutions by an
Indian tribe is equivalent to licensing or approval by a State. The
authority to license or approve includes the authority to set
standards.
Comment: One commenter was concerned about the requirement that
approved and licensed homes must meet the same standard. The commenter
noted that States sometimes use waivers to approve Indian foster homes
which may not meet certain criteria, such as square footage
requirements, in order to comply with the ICWA placement preferences.
The commenter recommended that we include language to assure that this
type of waiver continues to be permissible.
Response: Our current policy, set forth in ACYF-PIQ-85-11,
recognizes that there may be exceptional circumstances that arise with
a specific relative caretaker where there are grounds for waiving a
licensing requirement, such as square footage, in order to place a
child. The policy set forth in that issuance applies also to licensing
or approving tribal relative foster homes, either by a State or tribal
licensing authority. This waiver authority does not extend to all
foster homes, but only to relative homes in certain circumstances
delineated in ACYF-PIQ-85-11, as determined by the licensing authority
on a case-by-case basis. We did not address the issue of waivers in the
NPRM or final rule, but clarify here that the existing policy stands.
Full hearing. Comment: Several commenters objected to a definition
for ``full hearing'' because it did not coincide with some States'
terminology. Many commenters requested clarification, while others
recommended changes in the definition that would accommodate the
specific terms and proceedings used in their States.
Response: We defined a full hearing in an attempt to establish a
universal term for the hearing at which the State agency is assigned
responsibility for placement and care of a child who is removed from
home. Given the multiple requests for clarification and the conflicting
nature of the recommendations, it is likely that any definition for
``full hearing'' would be problematic given the variety of State-
specific practices. Therefore, we have deleted this definition from the
final rule.
Full review. No comments were received on this definition and
therefore no changes are being made to the language proposed in the
NPRM.
Legal guardianship. Comment: A few commenters supported the
definition of legal guardianship as written in the proposed rule.
However, some commenters requested clarification that the term
``custody,'' as used in the definition, refers only to physical custody
of the child rather than legal custody. The commenters asserted that
some States retain legal custody of the child in guardianship
situations.
Response: The definition in the final rule is taken directly from
the statute which makes no distinction between physical and legal
custody. We believe that the definition is intended to include all
legal guardianship arrangements that are permanent.
Comment: A commenter wanted to know how the Federal definition for
legal guardianship will be applied to States that do not have the same
definition in their State statutes.
Response: There is no Federal requirement for States to have the
statutory definition of legal guardianship in State law. The statute
requires States to evaluate certain permanency goals, including legal
guardianship, for children during the development of the case plan and
the course of a permanency hearing. We believe that the definition was
developed to clarify that States should consider legal guardianships
that are permanent and self-sustaining as a permanency option for
children in foster care.
Comment: There were several comments on funding legal
guardianships. We received a suggestion that title IV-E funding be made
available for subsidized legal guardianship. Another commenter asked
for clarification on financial and medical assistance available for
children placed in legal guardianship and how to access funding for
legal guardianship. A third commenter requested that we clarify that a
State is not precluded from providing financial assistance in legal
guardianships.
Response: While legal guardianship arrangements may be appropriate
permanency plans, we have no statutory authority to make title IV-E
funding available for subsidized legal guardianships. However, some
States are using title IV-E funds to subsidize legal guardianships
under the terms of a title IV-E demonstration waiver approved by the
Secretary. The statute does not preclude States from subsidizing legal
guardianships with State funds.
Comment: A commenter requested that we make a greater distinction
between legal guardianships and other living arrangements such as
permanent foster care placements and parent-child relationships. The
commenter believed that children placed in legal guardianships often
are not subject to ongoing judicial review, and that in contrast to
parent-child relationships, a child is not entitled to inherit from a
guardian, and vice versa.
Response: The term legal guardianship should be used in reference
to the requirements on reasonable efforts to finalize a permanency
plan, case plans,

[[Page 4035]]

permanency hearings, and TPR. In that context, States determine whether
a legal guardianship is the most appropriate permanency option for a
child. We do not believe it is appropriate for us to regulate the
definition of a legal guardianship further.
Comment: One commenter requested guidance on the use of legal
guardianship as a permanency option. The commenter requested that we
share lessons learned from the title IV-E demonstration waiver States.
Response: Information on the findings from the States with
demonstration waivers will be disseminated when available. This
information will be better provided through our resource centers and
technical assistance activities rather than through regulation.
National Child Abuse and Neglect Data System (NCANDS). No comments
were received on this definition and therefore no changes are being
made to the language proposed in the NPRM.
Partial Review. The Department is responsible for State compliance
with all aspects of the title IV-B and IV-E plan requirements and not
only the elements covered by the child and family service reviews.
Accordingly, we have revised the definition of ``partial review,'' to
clarify its application to title IV-E and title IV-B compliance issues
that are outside the scope of the child and family services review.
This partial review may cover whatever the Secretary considers
necessary to make a determination regarding State plan compliance. An
example of an area which is not subject to the full child and family
services review but subject to a partial review is compliance with
AFCARS. The procedures and standards for AFCARS compliance are set
forth in 45 CFR 1355.40.
Permanency Hearing. Comment: One commenter disagreed with the
requirement that permanency hearings be held within 12 months of the
date a child is considered to have entered foster care. The commenter
felt that it did not give families sufficient time to make their homes
ready for the child to return.
Response: The requirement to conduct permanency hearings no later
than 12 months from when a child enters foster care is statutory. One
of the main purposes of ASFA was to encourage States and parents to
achieve permanency for children in a more timely manner.
Comment: One commenter did not think that permanency hearings
should be conducted by any entity other than a court.
Response: The option for administrative bodies, appointed or
approved by the court, to conduct permanency hearings is expressly
permitted at section 475(5)(C) of the Act.
Comment: Several commenters were opposed to the requirement that
any body that conducts permanency hearings may not be part of or under
the supervision or direction of the State agency. One commenter asked
if this requirement extended to other public agencies with which the
State agency has an agreement.
Response: Critical decisions that have a significant effect on the
lives of children and their families are made at permanency hearings.
The purpose of requiring courts to oversee permanency hearings is to
ensure that these hearings are conducted by an impartial body, which
includes any body appointed or approved by the court to provide this
oversight in its stead. An administrative body that is part of the
State agency or under its direction or supervision would not meet the
test of impartiality.
The requirement does extend to other public agencies with which the
State agency has an agreement. In accordance with ACYF-PIQ-85-2, title
IV-E requirements extend to any other public agency with which the
State agency enters an agreement for the performance of title IV-E
administrative functions, including responsibility for placement and
care of the child.
Comment: One commenter requested that the definition of
``permanency hearing'' be revised to indicate specifically that a
tribal agency is permitted to appear before a tribal court and that the
tribal court has the authority to make all the necessary rulings with
respect to permanency hearings.
Response: The statutory and regulatory language both clearly
indicate that permanency hearings may be held before a tribal court.
The references to State courts in the permanency hearing requirements
in section 475(5)(C) of the Act and in the definition of permanency
hearing at Sec. 1355.20 should be understood to include tribal courts.
Comment: A few commenters requested additional guidance regarding
whether reunification efforts can be extended beyond the permanency
hearing or if an alternate permanency plan must be set at the
permanency hearing if the child and family cannot be reunited at that
time.
Response: A major purpose of ASFA is to promote timely permanency
planning. We recognize, however, that there are situations when
reunification cannot occur within 12 months but it is not appropriate
to abandon it as the permanency plan at the permanency hearing. It is
acceptable to extend reunification efforts past the permanency hearing
if the parent(s) has been diligently working toward reunification and
the State and court expect that reunification can occur within a time
frame that is consistent with the child's developmental needs.
Comment: One commenter wanted to know if the permanency hearing was
similar to a dispositional hearing or an administrative review. This
commenter also wanted to know if the hearing could still be held within
18 months of a child entering foster care.
Response: The ASFA changed the name of the former ``dispositional
hearing'' to ``permanency hearing'' and the timing was changed from 18
months to 12 months (see p. 50072 of the NPRM). No statutory
flexibility exists with respect to the time line in the ASFA for
conducting permanency hearings.
Comment: One commenter asked that we clarify whether the permanency
goal of placement with a fit and willing relative was optional because
the commenter's State had eliminated it as a permanency goal. A few
commenters asked that we specifically identify placement in ``another
planned permanent living arrangement'' as the appropriate permanency
option for all unaccompanied refugee minors. These commenters requested
that, in establishing placement in ``another planned permanent living
arrangement'' as the appropriate permanency option for unaccompanied
refugee minors, this group of the foster care population be exempted
from the requirement to provide a compelling reason for not setting
reunification, adoption, legal guardianship or placement with a fit and
willing relative as the permanency plan.
Response: We do not believe it is appropriate for ACF or States to
exclude any permanency options from consideration or to identify one
permanency goal as the appropriate permanency goal for an entire group
of the foster care population. Permanency planning is based on the best
interests, individual needs, and circumstances of the child. The
requirement to document, to the court, a compelling reason for setting
a permanency plan other than reunification, adoption, legal
guardianship, or placement with a fit and willing relative is statutory
and cannot be waived for any group of the foster care population.
Comment: We had several commenters request that we include

[[Page 4036]]

placement in a permanent foster family home and emancipation in the
list of permanency goals at section 475(5)(C) of the Act that are
exempt from the compelling reason requirement in that section. Some
commenters also asked us to include long term foster care and
emancipation as other planned permanent living arrangements.
Response: Section 475(5)(C) of the Act specifies that the only
permanency options the State may set without a compelling reason to do
so include reunification, adoption, legal guardianship, or placement
with a fit and willing relative. Therefore, ``another planned permanent
living arrangement'' would be any permanent living arrangement that is
not enumerated in statute.
Comment: One commenter suggested that we amend the section of the
definition that describes the decisions to be made at a permanency
hearing. The commenter suggested that the term ``should'' be replaced
with ``will'' in the definition. The commenter thinks the term ``will''
is consistent with ASFA's intent to ensure permanency while ``should''
is noncommittal.
Response: We agree and have amended the language accordingly.
Comment: One commenter was opposed to the prohibition of paper
reviews, ex parte hearings, and agreed orders as satisfying the
requirements of a permanency hearing.
Response: Section 475(5)(C) of the Act requires the State to ensure
``* * * procedural safeguards shall also be applied with respect to
parental rights pertaining to the removal of the child from the home of
his parents, to a change in the child's placement, and to any
determination affecting visitation privileges of parents * * *.'' In
our view, paper reviews, ex parte hearings, and agreed orders fail to
provide these important safeguards. No change was made to the
regulation based on this comment.
Comment: One commenter was opposed to the use of the term
``compelling reason'' for setting another planned permanent living
arrangement as the permanency plan. The commenter feels the term
suggests a legal burden of proof that is not appropriate for
establishing permanency plans.
Response: The term ``compelling reason'' is taken directly from the
statutory language. Moreover, the term was adopted because far too many
children are given the permanency goal of long-term foster care, which
is not a permanent living situation for a child. The requirement is in
place to encourage States to move children from foster care into the
most appropriate permanent situation available.
Comment: We received several comments regarding the preamble
language to paragraph 1356.21(g) in the NPRM which states that States
should exhaust all efforts to place a child in a permanent home outside
the foster care system before placing the child in a permanent foster
care setting. The commenters feel this language has created a standard
above the ``compelling reason'' requirement prescribed in statute.
Response: We want to clarify that the language should not be
interpreted to set a standard above what is set in statute. It was
intended to encourage States to seriously consider placement options
outside of foster care before settling on a permanent foster care
placement as the permanency plan.
Statewide Assessment (formerly State self-assessment). No comments
were received on this definition, so we made no changes to the
definition itself. We did, however, change the name from ``State self-
assessment'' to ``statewide assessment.'' The term ``statewide
assessment'' more accurately reflects the comprehensive nature of the
assessment conducted during the first phase of a child and family
services review.
Temporary custody proceeding. Comment: Several commenters objected
to a definition for a temporary custody proceeding. Some commenters
expressed confusion while others asserted that the definition,
especially in combination with the definition for a ``full hearing,''
did not accurately reflect the variety of State proceedings where
placement and care responsibility is granted to the State agency.
Response: In the proposed rule we defined ``temporary custody
proceeding'' as the first judicial proceeding held at or shortly after
the emergency removal of a child from the home. We intended to clarify
when the State court must make certain reasonable efforts and contrary
to the welfare judicial determinations. However, we concur that a
Federal definition for a temporary custody proceeding is not helpful in
clarifying when the court must make certain title IV-E eligibility
determinations, and we have deleted the definition.

Sections 1355.31-1355.37 The Child and Family Services Reviews

Section 1355.31 Elements of the Child and Family Services Review
System

This section describes the scope of the child and family services
reviews as including programs administered by States under titles IV-B
and IV-E of the Act.
All of the relevant comments on this section are addressed in the
following sections.

Section 1355.32 Timetable for the Reviews

This section specifies the review timetable for the initial and the
subsequent reviews as required by section 1123A of the Act, and sets
forth rules for reinstatement of reviews based on information that a
State is not in substantial conformity.

Section 1355.32(a) Initial Reviews

This section sets forth the timetable for the initial child and
family services reviews.
Comment: We received many comments concerning the time that it will
take for States to become familiar with the new review process. Most of
the commenters indicated that it will take significant time for States
to prepare for the reviews and requested that ACF add to this section a
requirement that we provide an advance six-month, or longer,
notification to States prior to initiating the review process.
Similarly, most of these commenters indicated that the six-month period
proposed between publication of the final rule and initiation of the
new review schedule is necessary and some comments suggested that a
longer time frame to begin reviews is desirable. A small number of
comments dissented on this provision.
Response: We acknowledge that advance notice and preparation are
required for the child and family services reviews. The exact period of
preparation may vary by State and may change as the States and ACF
become more familiar with the process. Taking into consideration that
Federal staff will also require a period of time to prepare adequately
for each review, we do not anticipate lack of advance notice becoming
an issue. Therefore, we do not intend to regulate the notification
period. We have, however, extended the time for completing the initial
reviews to up to 4 years following the effective date of the final
rule.
Comment: We received comments requesting coordination among the
components of the child and family services reviews with other Federal
planning and review functions, i.e., coordinating the statewide
assessment with the CFSP and coordinating the reviews with the title
IV-E reviews.
Response: We have designed the child and family services reviews to
build on and coordinate with the process in place

[[Page 4037]]

for title IV-B State planning as set forth in 45 CFR part 1357. The
timing of the statewide assessments will, in part, be determined by the
timing of the actual reviews which will vary from State to State, and
coordination with the timing of the annual progress and services
reports (APSRs) may not be possible.
We considered combining the child and family services and the title
IV-E reviews but believe that conducting the two reviews at the same
time would pose a serious burden on States, given the intensity of the
review processes and the level of State effort required for each. We
will coordinate the actual timing of the two different reviews such
that States will not be over-burdened.

Section 1355.32(b) Reviews Following the Initial Review

This section sets forth the timetables for subsequent child and
family services reviews.
Comment: We received a range of comments on the proposed frequency
of the reviews. Although a number of comments supported the proposed
schedule, some commenters suggested that reviewing at five-year
intervals for States determined to be in substantial conformity is
insufficient to assure the safety and permanency of children. Others
suggested that the interim statewide assessments should not be required
at three-year intervals if the State is in substantial conformity, but
should either be eliminated or occur less frequently.
Response: We proposed a five-year review cycle for States found in
substantial conformity and do not think that it compromises our ability
to ensure children's safety and permanency for the following reasons:
sbull; A full or partial child and family services review can be
reinstated whenever information from any source indicates that the
State is not in substantial conformity;
The standard for achieving substantial conformity is high;
States in substantial conformity are required to complete
a statewide assessment at the three-year point between full reviews;
The title IV-B five-year Child and Family Services plan,
and the related annual updates, provide significant insight into the
functioning of the State child welfare program and a mechanism for
identifying potential conformance issues with respect to safety and
permanency.
Because we believe that other types of reviews and information
gathering provide insight into State performance between on-site
reviews, we have not changed the requirement to review States every
five years if they are determined to be in substantial conformity.
Likewise, we have not eliminated or changed the requirement for the
statewide assessment to be completed every three years because we
believe that the use of information from that source is an important
mechanism for helping States maintain successful performance.
In order to address the comments about assuring the safety and
permanency of children between reviews, we have changed the requirement
for States determined not to be in substantial conformity to be
reviewed at two-year intervals, rather than three-year intervals.

Section 1355.32(c) Reinstatement of Reviews Based on Information That
a State Is Not in Substantial Conformity

This section sets forth the requirements for a reinstatement of a
full or partial review and describes the types of information that may
require a review.
Comment: We received many comments suggesting that the regulation
should denote that ACF and the State negotiate a specific time frame
for the receipt of additional information as part of the detailed
inquiry to determine if more frequent reviews should be reinstated, and
that only after that time has been exceeded should we be authorized to
proceed with an additional review.
Response: The time frame and circumstances of the request for
information will vary depending upon the nature of the information
required to determine if more frequent reviews should be reinstated. We
have a responsibility to assure compliance with State plan requirements
and it may be necessary to require information of a particular nature
within a specific time frame. Thus, we will not provide for a
negotiated time frame.
Comment: We received many comments indicating concern about the
sources of information that could trigger reinstatement of reviews
based on information that a State is not in substantial conformity.
Specifically, objections were raised regarding inclusion of information
from public and private organizations and from the disposition of class
action lawsuits. The main concern was the accuracy of information from
these and other sources.
Response: Section 1123A(b)(1)(C) of the Act gives the Secretary the
authority to reinstate more frequent reviews based on information
indicating that the State may not be in conformity with the State plan.
The statute is silent with respect to the source of the information
that would trigger an unplanned review. Therefore, we deleted the list
of potential sources of information that could trigger an investigation
and, instead, reiterated the statutory language.
We do recognize that the specific sources mentioned in the NPRM,
and others not mentioned, may not always provide accurate information
about the State' compliance with State plan requirements. The provision
for ACF to conduct detailed inquiries prior to initiating more frequent
reviews is designed to address this issue by ascertaining the validity
of the information. A decision whether or not to reinstate reviews to
determine substantial conformity will only be made after the validity
of the information is determined.
Comment: We received questions concerning the process for
reinstating reviews based on information that a State may not be in
substantial conformity. Specifically, questions were raised about the
content and format of the more frequent reviews.
Response: The reinstatement of reviews could take the form of a
full or partial review, both of which are defined in Sec. 1355.20. We
prefer not to specify an exact format for each reinstated review in the
rule, since the nature of the concerns triggering the review and the
intensity of reviews needed will vary. We have, however, clarified in
the regulation that any inquiry conducted by ACF does not replace a
full review as scheduled according to Sec. 1355.32(b).

Section 1355.32(d) Partial Reviews Based on Noncompliance With State
Plan Requirements That are Outside the Scope of a Child and Family
Services Review

This new section was added to set parameters for addressing
noncompliance with title IV-B and IV-E State plan requirements that are
outside the scope of a child and family services review.
Comment: A few commenters questioned our proposal to review for
only certain State plan requirements in the child and family services
reviews, rather than all State plan requirements.
Response: We have selected those requirements for the child and
family services review that are most directly related to the
achievement of successful outcomes in the areas of safety, permanence
and child and family well-being. However, the State remains responsible
for complying with all State plan requirements for titles IV-B and IV-
E, even if each requirement is not

[[Page 4038]]

subject to review in the child and family services review. Therefore,
we have added Sec. 1355.32(d) to clarify that we will use a partial
review to determine conformity with State plan requirements outside the
scope of the child and family services reviews. Because defining the
variety of State plan compliance issues in advance is not possible, we
will approach each circumstance on a case-by-case basis. Consistent
with section 1123A, the necessary elements of the program improvement
plan and, if necessary, the amount of the withholding, will be
commensurate with the extent of the State's non-conformity.

Section 1355.33 Procedures for the Review

This section sets forth the review process and outlines general
procedures for the statewide assessment and the on-site review.
Comment: Overall, we received many comments from the States
favoring the use of the statewide assessment process and applauding the
partnership between State and Federal reviewers who comprise the
proposed review teams. Many comments indicated support for the joint
planning of the on-site review and the proposal that it be guided by
information in the statewide assessment. Others wrote in support of the
increased focus on outcomes from prior reviews and the comprehensive
nature of the reviews in covering the range of child and family
services.
Response: None needed.
Comment: We received comments regarding the review' reliance on
existing data sources, specifically AFCARS. Some comments supported the
use of existing data sources for the reviews, while some suggested that
these data may not be reliable or capable of addressing safety and
permanency adequately.
Response: We understand the concerns regarding the AFCARS data and
acknowledge that the data in the earliest AFCARS submissions had
weaknesses with respect to quality. The quality of the data has
increased with every submission and we see this trend continuing as a
result of three factors:
(1) Penalties. Since October 1994, States have been required to
participate in AFCARS and, beginning in Federal fiscal year 1998,
penalties were imposed on States not in compliance with AFCARS
submission requirements. The number of States submitting penalty-free
data has increased significantly since penalties have been imposed.
(2) State self-analysis prior to submission. Two types of software
are available to afford States the opportunity to ensure the quality of
their data prior to submitting it to ACF. The first performs more than
800 checks on various relationships among AFCARS data elements to
ensure the accuracy of the data. The second is the same software ACF
uses to assess data quality and is the basis for imposing penalties.
(3) Incentives. Two sources provide incentives for improving AFCARS
data. First, the ASFA established the Adoption Incentive Program,
section 473A of the Act, under which States receive a bonus for
increasing the numbers of children adopted out of the public child
welfare system. While the statute provides flexibility with respect to
data sources used for establishing initial baselines, AFCARS data must
be used in calculating bonuses for the number of adoptions over the
baseline. Second, under section 479A of the Act, the Department is
required to develop a set of outcome measures based, to the maximum
extent possible, on AFCARS data. State performance will be rated based
on these outcome measures.
AFCARS is the statutorily-mandated information collection system
for the Federal child welfare programs. Thus, it is the appropriate
data source for use in Federal reviews.

Section 1355.33(a) The Full Child and Family Services Reviews

This section states that the review will be a two-phase process and
describes the composition of the review team.
Comment: We received a number of comments about the composition of
the review team, including requests for specific representatives on the
team, such as representatives of citizen review panels. Some commenters
raised concerns that the training and backgrounds of review team
members reflect strength in child welfare practice. One respondent
suggested that representatives of the Department's Office for Civil
Rights (OCR) in particular receive training in the processes and issues
covered by the child and family services reviews.
Response: We recognize the necessity of having reviewers who are
knowledgeable about child and family services and this is an important
matter for internal ACF consideration. However, the existing
regulations that implement title IV-B of the Act specify the types of
representatives with whom the State should consult in its planning
processes, and we anticipate that States will utilize many of these
same individuals or types of representatives in staffing the child and
family services review teams. We will also provide guidance to States
for the selection of team members and train both Federal and State
members of the review teams on the review procedures as the reviews are
conducted. For those reasons, we did not regulate the specific State or
Federal representatives who will participate on the review team.

Section 1355.33(b) Statewide Assessment

This section describes the first phase of the full review, the
statewide assessment.
Comment: There were a wide variety of concerns about objectivity in
the review process, most of which were directed toward the sample of
cases to be reviewed on-site and the role of the statewide assessment.
Response: We are making revisions to the following sections of the
rule to increase the objectivity of the reviews and support accurate
determinations of substantial conformity:
In Sec. 1355.33(b)(1), we require that the statewide
assessment address each systemic factor under review, including the
statewide information system, case review system, quality assurance
system, staff training, service array, agency responsiveness to the
community, and foster and adoptive parent licensing, recruitment and
retention.
In Sec. 1355.33(b)(2), we require that the State, using
data from AFCARS, NCANDS, or, for the initial review, another source
approved by ACF, assess the outcome areas of safety, permanency, and
well-being of children and families served by the State agency,
including a discussion of the State's performance in meeting the
national standard established for the statewide data indicators.
In Sec. 1355.33(b)(5), we require that the completed
statewide assessment include a list of all the persons external to the
State agency who had input into the preparation of the statewide
assessment in order to assure that the required participation and
consultation in Sec. 1355.33(a)(2)(ii) and (iv) actually occurred.
In Sec. 1355.33(b)(6), we require that the State submit
the statewide assessment to ACF within 4 months of our transmission of
the information for the statewide assessment to the State. We
anticipate that we will need 60 days to review the statewide assessment
and notify the State of any potential areas that might be an issue
during the on-site review. It will also afford the State an opportunity
to gather additional information in advance of the review to clarify
any concerns raised; and,

[[Page 4039]]

In Sec. 1355.33(c)(5), we regulate the size of the on-site
sample of cases to be reviewed and require that the cases be selected
randomly from AFCARS and NCANDS, or, for the initial review, another
approved source. This will promote consistency and help to eliminate
bias in the sample.
Comment: We received a few comments that expressed concern about
the use of the statewide assessment in county-administered States.
Commenters noted that particular items in the statewide assessment have
the potential for variance among counties.
Response: We recognize the issues raised by reviewing programs in
county-administered versus State-administered systems. Following the
pilot reviews, however, we concluded that we could not design a
separate review process to measure State compliance for county-
administered system. States, not counties, are ultimately responsible
and held accountable for compliance with State plan requirements. The
statewide assessment is designed to be completed by the State, not by
individual counties, and responses should reflect official State
policies and the most typical State practice, while noting where
outstanding exceptions exist.

Section 1355.33(c) On-site Review

This section describes the second phase of the full review, the on-
site review.
Comment: We received some comments about the geographic areas to be
covered by the on-site review as stated in paragraph (c)(1) through
(3). In particular, some concern was expressed that including the
State's largest metropolitan area would lessen the representativeness
of the sample and would target the area of the State with the most
resources. Another comment requested that the review also include rural
areas of the State.
Response: Urban areas often provide a disproportionate number of
families who have contact with the child welfare system. In order to
serve its stated purpose of improving outcomes for children and
families, the proposed review process must include this population of
children and families. For example, the reviews could not accurately
claim to represent statewide issues in Illinois without reviewing
Chicago, in New York without reviewing New York City, or in California
without reviewing Los Angeles. It is also important to represent the
range of other environments in the State including rural and suburban
areas with their unique family and resource issues. However, since the
reviews will only permit on-site activities in a limited number of
locations, we prefer not to regulate geographic sites other than the
largest metropolitan area. Beyond that, we have provided for the
statewide assessment to guide the State and Regional ACF Offices in
determining the most appropriate review sites given each State's unique
characteristics, issues and population.
Comment: We received comments requesting that specific
representatives be interviewed as part of the on-site review process as
described in paragraph (c)(4). Most often, the commenters suggested a
requirement that parents and adoptive parents be included, as well as
the courts or administrative body that conducts administrative reviews
in the States. One respondent also noted that special consideration
should be given to the circumstances under which children and families
should or should not be interviewed and the weight that should be given
their responses.
Response: Parents and adoptive parents will be routinely
interviewed on cases selected for the on-site review. While the rule
does not specify the community stakeholders who will be interviewed in
addition to the case-specific representatives, a number of
representatives with both statewide and local perspectives on the
systemic functioning of the child and family services delivery system
will be interviewed. Representatives from the courts or other
administrative review bodies will be included, as well as children's
guardians ad litem and other individuals representing the child's best
interests. We are producing, separate from the rule, a procedures
manual for use in conducting the reviews that lists the community
representatives to be interviewed. The procedures manual and the
training provided by ACF to the reviewers will also address the
circumstances under which children and families should or should not be
interviewed.
Comment: Some commenters requested that we require case information
obtained by reviewers to be kept confidential.
Response: All case-specific information disclosed during a child
and family services review is confidential. Both titles IV-B and IV-E
have restrictive disclosure provisions (found at section 471(a)(8) of
the Act and 45 CFR 205.50). One of the purposes for which a State is
authorized to disclose such information, however, is for an audit or
similar activity conducted by the Department in connection with the
State plan. Further, Federal regulations at 45 CFR 205.50 require that
recipients of information concerning children and families receiving
assistance and/or services from the title IV-B/IV-E agency be held to
the same standards of confidentiality as the agency. The
confidentiality standards for case-specific information are addressed
in the procedures manual for use in conducting the child and family
services review. In addition, the confidentiality of case records
routinely will be reinforced during reviewer training prior to each
review.
States have complete flexibility in establishing procedures to
ensure that confidentiality requirements are met. During the pilot
reviews, some States chose to require the reviewers who were not State
or Federal employees to sign confidentiality agreements prior to
reviewing confidential information.
Comment: We received a number of comments requesting that we not
use the term ``social worker'' unless it is a specific reference to
professionally trained social workers, i.e., persons with B.S.W. or
M.S.W. degrees.
Response: Recognizing that not all caseworkers in public agencies
have academic degrees in social work, we are changing the term ``social
worker'' in the rule to ``caseworker.''

Section 1355.33(d) Resolution of Discrepancies Between the Statewide
Assessment and the On-site Review

This new section was added to describe the steps we will take in
resolving discrepancies between the aggregate data and the findings of
the on-site review.
ACF will provide States with the option of submitting additional
information to resolve the discrepancy, or for ACF and the State to
review additional cases, using only those indicators in which the
discrepancy occurred. ACF and the State will determine an additional
number of cases to be reviewed, not to exceed a total of 150 cases. As
described in section 1355.33(c)(6), the additional cases, in
combination with the 30-50 cases reviewed on-site, will comprise a
statistically significant sample with a 90 percent (or 95 percent for
subsequent reviews) compliance rate, a tolerable error rate of 5
percent, and a confidence coefficient of 95 percent. We will pull the
additional cases from an oversample of cases for the on-site review, so
that both sets of cases will comprise one sample. Only those indicators
in which the discrepancy occurred will be subject to review.

Section 1355.33(e) Partial Review (1355.33(d) in the NPRM)

This section describes the partial review process.

[[Page 4040]]

We redesignated Sec. 1355.33(d) as Sec. 1355.33(e) and made a
technical edit to clarify that the partial review requirements in this
section relate to the partial child and family services reviews. We
have also clarified that a partial review does not substitute for the
regularly scheduled full reviews.

Section 1355.33(f) Notification (1355.33(e) in the NPRM)

This section describes the manner in which ACF will notify States
of whether the State is operating in substantial conformity.
Comment: Some comments requested that the regulation require more
detail to be included in the ACF notification letter to States,
informing them if they are operating, or not operating, in substantial
conformity.
Response: In the interest of providing the States with timely
feedback on the child and family services reviews, we have designed a
review process that is less dependent upon lengthy reports than in the
past. The review team will provide the State with verbal information on
the findings of the review throughout the on-site review and subsequent
exit conference. The written description of the findings will begin
with the evaluation of the statewide assessment and will be updated as
a result of the on-site review. The notification to the State following
the on-site review is a confirmation of those findings and will provide
specific information to allow a State to know where it is operating in
or out of conformity.

Section 1355.34 Criteria for Determining Substantial Conformity

This section pertains to the criteria that must be satisfied to
find a State in substantial conformity, including a discussion of
outcomes, level of achievement of outcomes, and criteria related to a
State agency's capacity to deliver services leading to improved
outcomes for children and families.

Section 1355.34(a) Criteria To Be Satisfied

This section describes the elements on which a State's substantial
conformance with title IV-B and title IV-E State plan requirements will
be based.
Comment: Some respondents requested that decisions regarding
substantial conformity not be reliant on the resolution of
discrepancies between aggregate data from the statewide assessment and
the findings of the on-site review.
Response: It was always our intention to resolve discrepancies
between aggregate data from the statewide assessment and the findings
of the on-site review. Now that substantial conformity is based on
statewide data indicators, as well as the findings of the on-site
review, we believe that if significant discrepancies occur among the
sources of information used to determine substantial conformity, they
must be reconciled so an accurate determination can be made. To clarify
our procedures to resolve these discrepancies, we are adding a new
Sec. 1355.33(d) that gives States the option of either submitting
additional information to resolve discrepancies between the statewide
data indicators, or the State and ACF reviewing additional cases for
the indicators where the discrepancy exists.

Section 1355.34(b) Criteria Related to Outcomes

This section sets forth the criteria related to outcomes that will
be evaluated to determine a State's substantial conformance.
Comment: We received many comments supporting the proposed approach
of limiting the reviews to those State plan requirements that relate
specifically to outcomes and the delivery of improved services. Some
comments questioned the authority of HHS to select only certain State
plan requirements for review in the child and family services reviews.
Response: The child and family service reviews focus on the most
prominent aspects of the programs under review, specifically child
safety, permanency for children in foster care, and well-being of all
the children served by the programs. This focus in no way alters the
requirements imposed on States to operate their programs in conformity
with all applicable State plan requirements.
Therefore, in response to this comment, a new paragraph (d) under
Sec. 1355.32, ``Partial reviews based on noncompliance with State plan
requirements that are outside the scope of a child and family services
review'' has been added to clarify parameters for addressing issues
regarding compliance with title IV-B and title IV-E State plan
requirements that are outside the scope of these reviews. If needed, we
will conduct partial reviews to resolve such issues regarding
compliance. Partial reviews of this nature will not necessarily follow
the prescribed format of the child and family services review. Rather,
such partial reviews will address whatever the Secretary deems
necessary in order to make a determination concerning State plan
compliance.
If a State is determined to be out of compliance with a State plan
requirement under either title IV-E or title IV-B, there will be an
opportunity for program improvement, consistent with section 1123A of
the Act, before funds are withheld.
Comment: A significant number of comments noted that Safety Outcome
#1 is actually two separate outcomes.
Response: We agree and have revised Sec. 1355.34(b)(1)(i)(A) and
(B). We separated Safety Outcome #1 into its two component parts and
will use them as the two safety outcomes, replacing the current Safety
Outcome #2 (The risk of harm to children will be minimized.). The two
safety outcomes now read as follows:
Outcome S1: Children are, first and foremost, protected from abuse
and neglect.
Outcome S2: Children are safely maintained in their homes whenever
possible and appropriate.
In this manner, we will address safety as a State's primary concern
while measuring compliance with the statutory requirement to maintain
children safely in their own homes when possible.
Comment: One commenter questioned whether safely maintaining
children in their own homes is, in fact, a safety outcome. The
commenter suggested that it would be more appropriately assessed as a
permanency outcome.
Response: Although this outcome addresses decisions about whether
to remove children and place them in foster care or maintain them in
their own homes, it is, in fact, a safety outcome. ASFA is clear that
the child's health and safety must be the primary concern in decisions
to remove or to reunify. In reviewing the circumstances of those
children who remain in their own homes, we intend to review for their
safety and well-being, and not for the foster care provisions under the
permanency outcomes that are not applicable to them. We will evaluate
the permanency outcomes only for those children who have been removed
from their homes and placed in foster care, since foster care is
intended to be a temporary setting.
Comment: We received numerous comments questioning the
applicability of certain performance indicators to their related
outcomes. One example cited was Well-Being Outcome #1, Families have
enhanced capacity to provide for their children's needs. Commenters
raised concerns that the performance indicators associated with it are
measures of process and do not equate with enhanced capacity for
parents.

[[Page 4041]]

Response: For each outcome to be reviewed, we selected indicators
that, if met, are both within the scope of the State agency's range of
responsibilities and are likely to promote outcome achievement. Each of
the on-site indicators includes a subset of questions and issues that
permits reviewers to explore the indicator below the surface level. We
believe that this type of exploration during the on-site review is
necessary to evaluate the quality of work and the successful
achievement of outcomes for children and families. It is unlikely that
individual performance indicators, in isolation, can be used to
evaluate the outcomes accurately. In combination, however, the set of
performance indicators associated with each outcome will provide a
balanced perspective on the outcome.
Comment: A number of comments were received indicating concern that
Well-Being Outcome #2, Children receive appropriate services to meet
their educational needs, is not an outcome that can necessarily be
achieved by the child welfare system. Other comments were received
questioning if this outcome, as it is stated, meets the definition of
an outcome.
Response: The outcome delineated in Sec. 1355.34(b)(1)(iii)(B),
addresses the responsibilities of public child welfare agencies in
regard to the educational needs of children in their care and custody.
Certain aspects of the educational status of children are not within
the control of the public child welfare agency. We are reluctant to
describe the outcome in more definitive terms and hold the State
accountable for educational outcomes that must be addressed primarily
through the State's educational agencies. Rather, we have proposed to
review those responsibilities that the State child welfare agency
legitimately has in this area: Considering and addressing educational
needs for children in case planning; obtaining and considering
educational records for children in its care; and, where appropriate,
advocating for children's educational needs with the education
authorities in the State.
Comment: A few commenters raised concerns that length of stay in
foster care and number of adoptions from the public child welfare
system were not included as outcomes for the child and family services
reviews.
Response: We agree that it is critical to track the length of a
child's stay in foster care and the number of adoptions from the public
child welfare system. We have included length of stay as a statewide
data indicator and we are addressing numbers of adoptions by looking at
the length of time between a child's entry into foster care and a
finalized adoption. In this manner, we capture not only the number of
adoptions but also assess State performance in expediting this
permanency goal.
Comment: Commenters noted that some of the outcomes and indicators
may not be appropriate for all types of cases in the system,
particularly the well-being outcomes as they relate to families who are
receiving child protective services.
Response: We recognize that not all of the outcomes and indicators
will be applicable to every type of case reviewed. In most areas, we
have allowed for nonapplicability to be noted on the review instrument.
However, we also believe that the well-being outcomes very often do
apply to children and families who are served in their own homes, in
addition to children placed in out-of-home care. For example, the well-
being outcomes address issues such as: A family's ability to meet a
child's needs; educational achievements of children; and children's
physical and mental health needs. We believe that these are concerns
that should be addressed by child welfare systems regardless of whether
the child is in out-of-home-care or not.
Comment: We received many comments urging consistency between the
outcomes used in the child and family services reviews, and those
outcomes that will be included in the annual report to Congress on
State performance.
Response: We agree with the commenters that it is critical that we
coordinate the annual report on State performance in child welfare,
required by Section 203 of the ASFA, with the child and family services
reviews and have taken the necessary steps to do so. Specific statewide
data indicators, drawn from the outcome measures included in the annual
report, in addition to the findings of the on-site review, will be used
as the basis for determinations of substantial conformity on one
outcome measure of safety and one of permanency. As we gain experience
in using statewide data indicators for making determinations of
substantial conformity, such data indicators may change. However, we
have committed in regulation, to the extent practical and feasible, to
keeping the data indicators used in the child and family services
review consistent with the measures developed pursuant to section 203
of the ASFA.

Section 1355.34(c) Criteria Related to State Agency Capacity to
Deliver Services Leading to Improved Outcomes for Children and Families

This section describes criteria for seven core systemic factors
that will be evaluated to determine the State agency's capacity to
deliver services that improve outcomes for children and families.
Comment: A number of comments suggested a need for greater detail
in the regulation on how determinations of substantial conformity will
be made for the systemic factors being reviewed.
Response: A detailed description of the changes to the process for
making determinations of substantial conformity can be found under the
``Discussion of Major Changes and Provisions of the Final Rule''
section. We amended Sec. 1355.34(c) so that determining substantial
conformity with the systemic factors includes a process by which the
review team rates the State's conformity with State plan requirements,
based on information obtained from the statewide assessment and the on-
site review. Information from BOTH the statewide assessment and the on-
site portion of the review must support a determination of substantial
conformity. State performance will now be rated for each systemic
factor, using a Likert-type scale, e.g., 1-4 with criteria attached to
each rating, based on the total information obtained from a variety of
stakeholders interviewed on-site.
Comment: We received several comments suggesting that States found
to be in substantial conformity on the outcomes should not be reviewed
for conformity with the systemic factors, stating that these are
process measures. Other comments requested deleting some of the
systemic requirements.
Response: The purpose of the child and family services reviews is
to determine compliance with State plan requirements as well as the
outcomes for children. Some requirements are related directly to
outcomes in the areas of safety, permanency, and well-being, while
others are related to systemic factors that States are accountable for
implementing in return for receipt of Federal funds. We do not believe
that a process limited to procedural requirements can assure improved
outcomes for children and families. We do believe, however, that the
presence of specific systemic factors is essential to assuring that
States have the capacity to deliver services in a manner that is most
likely to help children and families achieve desirable outcomes. We
cannot forego the responsibility to

[[Page 4042]]

review systemic factors, and abandoning that responsibility would
weaken the potential of the child and family service review process to
help States identify areas where needed improvements can lead to better
outcomes.
Comment: We received a number of comments requesting that the child
and family services reviews include the full range of training
activities permitted under title IV-E, including pre-employment
training of State staff and long-term training that permits staff to
obtain social work degrees.
Response: We have proposed to review staff and provider training
according to State plan requirements in those areas, as stated in the
NPRM. Although pre-employment and long-term staff training are
allowable title IV-E training costs, there are no State plan
requirements for these activities that would be subject to the child
and family services review.
Comment: Several commenters expressed concern that the child and
family services review does not include the ASFA requirements.
Response: The child and family services review does examine a
State's compliance with several requirements of the ASFA. However, the
rule does not specifically cite the ASFA in identifying those State
plan requirements under review. The ASFA is not cited because it
primarily amends the Social Security Act, which is the authorizing
legislation for the Federal child welfare programs.
Comment: We received a comment that the NPRM fails to recognize two
distinct case review systems in Public Law 96-272 and ASFA and does not
acknowledge the value of the periodic case review system in place since
1980. The comment noted that periodic review should be recognized as
necessary to insure safety and permanency.
Response: This comment seems to confuse the State's periodic
administrative or judicial review of individual cases with the Federal
review of State plan requirements. The purpose of the child and family
service review, in part, is to test whether a State has appropriately
implemented the case review system required by Public Law 96-272 and
strengthened by ASFA. We concur with the commenter that periodic
reviews and other requirements of the case review system are critical
protections for children and help to promote timely permanency.
Comment: We received some comments questioning the applicability of
the review of State plan requirements to the tribes and the Indian
Child Welfare Act (ICWA), and whether a State's compliance with ICWA
will be part of the review. Some commenters raised questions about how
particular State plan requirements will be considered for tribes that
receive their title IV-B allocations directly.
Response: In both the statewide assessment and the on-site review
instruments, we have included items that address how States are meeting
ICWA requirements. Further, in the pilot reviews, we found that the
review process helped us successfully assess whether or not the
interaction between the State and tribes satisfied title IV-B and title
IV-E requirements for tribal children. However, the child and family
services reviews are not intended to review for ICWA compliance, per
se, but to review for the effectiveness of the broad child and family
service system relative to State plan requirements. Further, the
reviews are based on the entire child and family service system as
indicated by the use of AFCARS and NCANDS data as an integral part of
the process, and assessing penalties for nonconformity on a pool of
funds that includes both titles IV-B and IV-E. For these reasons, we
did not tailor the CFSR specifically to examine ICWA requirements.
Similarly, because the child and family service reviews are
designed to review the entire system of child and family services,
which includes both titles IV-B and IV-E, this review process is not
designed for tribes that receive title IV-B funding only. Furthermore,
section 1123A of the Act directed the Department to develop a review
system for State compliance with the State plans under titles IV-B and
IV-E of the Act. Therefore, tribes that receive title IV-B allocations
will not be reviewed under the child and family services review
process.

Section 1355.34(d) Availability of Review Instruments

This section states that copies of the review instruments will be
made available to the State.
Comment: We received several comments in response to our request
for suggestions on the most effective method for keeping States updated
on the content of the review instruments. One of the recommendations
was to provide States with a copy of the instrument that will be used
for the review at least six months before the review is conducted.
Response: We appreciate the State' need to have as much advance
exposure as possible to the most current review instruments. We
anticipate revising the instruments as appropriate, based on lessons
learned from ongoing reviews and from State' feedback to us. Given that
we expect the statewide assessment process to take approximately six
months, we easily anticipate having review instruments available to the
State well before the on-site portion of the review is conducted. In
addition, we plan to post the instruments on the ACF website (http://
www.acf.dhhs.gov/programs/cb/) in order to make the most current
version of the instruments available at all times.

Section 1355.35 Program Improvement Plans

This section pertains to the development of program improvement
plans for States determined not to be in substantial conformity with
State plan requirements, including the time frames for submission and
implementation of the plans.

Section 1355.35(a) Mandatory Program Improvement Plan

This section describes elements of a program improvement plan for
those States found not to be operating in substantial conformity.
Comment: We received comments concerning Federal technical
assistance to States upon a finding of nonconformity, ranging from a
need to develop the capacity for technical assistance prior to
initiating reviews to suggesting that the need for technical assistance
is not a valid reason for delaying penalties or the frequency of
reviews.
Response: Section 1123A of the Act requires that States be afforded
opportunities to correct areas of nonconformity with the use of
technical assistance prior to having penalties withheld. While we have
not regulated this aspect of the review process, we are committed to
developing effective sources and means for providing technical
assistance to States.
Comment: We received many comments concerning possible conflicts
between program improvement plans and requirements for State consent
decrees. Concerns were raised that program improvement plans not be
required to include any action steps or goals that are inconsistent
with a State's consent decree. Some respondents also requested that the
provisions of a State's consent decree not automatically be required to
be included in a program improvement plan.
Response: ACF is responsible for reviewing compliance with State
plan requirements, and we must assure that the program improvement plan
addresses applicable requirements. We did not include any provisions in
the NPRM that would require States to include the provisions of consent

[[Page 4043]]

decrees into program improvement plans. We cannot assure that the
provisions of a State's consent decree do not conflict with Federal
requirements. It is the State' responsibility to ensure that no such
conflict exists. We are willing to work with States to minimize such
conflict within our statutory and regulatory mandates.
Comment: We received a small number of comments suggesting that
States determined not to be in substantial conformity should be
penalized for ASFA violations immediately, rather than suspending the
penalties pending implementation of a program improvement plan. The
same comments suggested that the term ``program improvement plan''
deviates from the ``corrective action'' language of the statute and
undermines the enforcement role of HHS.
Response: Section 1123A(b) of the Act requires that States be
afforded the opportunity to correct areas of noncompliance prior to
withholding Federal funds. ASFA primarily amends sections of the Social
Security Act to which section 1123A applies. Moreover, ASFA did not
supercede section 1123A, nor did it amend section 1123A to require
immediate penalties for failure to comply with the ASFA requirements.
The use of the term ``program improvement plan'' in no way deviates
from statutory requirements since the result is still that the State
must correct any identified areas of nonconformity with State plan
requirements. The term ``program improvement plan'' underscores the
intent of the reviews to serve as a means of assisting States to help
families and children experience improved outcomes as a result of the
services provided by the State and funded by the State and Federal
governments. Failure to successfully complete a program improvement
plan will result in penalties.

Section 1355.35(b) Voluntary Program Improvement Plan

This section sets forth the condition, under which States found to
be operating in substantial conformity may voluntarily develop and
implement a program improvement plan.
There were no comments on this section and no changes have been
made to this section.

Section 1355.35(c) Approval of Program Improvement Plans

This section sets forth the approval process for the program
improvement plan.
Comment: With a few exceptions, most of the comments we received on
the time frames for submitting and re-submitting program improvement
plans following reviews encouraged us to lengthen the time frames.
Response: We recognize that the development and revision of program
improvement plans requires considerable effort. Given the complexity of
the issues that will be addressed in many program improvement plans, we
are extending the length of time for the initial submission of the
program improvement plan by the State to ACF from 60 days to 90 days.
We are retaining the 30-day time frame for re-submitting plans that are
not initially approved by ACF. Given the potential consequences for
children and families of delaying efforts to correct areas of need, we
do not believe we can further lengthen the time frames to develop the
plans.

Section 1355.35(d) Duration of Program Improvement Plans

This section sets forth the time frame for successful completion of
provisions in a State's program improvement plan.
Comment: We received a number of comments in favor of the two-year
maximum time frame for implementing program improvement plans, with the
opportunity for a one-year extension in certain circumstances. Some
comments, however, indicated the time period was too long and should be
shortened.
Response: We have retained this feature in the final rule. However,
not all program improvement plans will require two years to implement
and the specific time frame for each State's plan will be negotiated
and agreed upon between the State and ACF. We are aware though, from
the complex issues being litigated or settled by a number of States on
behalf of their child welfare systems, that some improvements will
require extensive periods of time to implement. Systemic changes that
lead to identifiable improvements in the outcomes for children and
families cannot always be achieved by simply modifying a policy,
creating new tracking procedures or implementing new standards.
However, in consideration of the comments on this issue and those
pertaining to Sec. 1355.36 that we strengthen the certainty of a
penalty when a State fails to make program improvements, we are making
the following changes in the rule for the time allotted to implement
program improvement plans:
ACF will require time frames for a program improvement
plan to be consistent with the seriousness and complexity of the
remedies required for any areas determined not in substantial
conformity.
We are requiring in paragraph (d)(2) that particularly
egregious areas of nonconformity impacting the safety of children in
the State's responsibility receive priority in both the content and
time frames of the program improvement plans and must be satisfactorily
addressed in less than two years.
We are adding a requirement to paragraph (d)(3) that the
Secretary approve any extensions of deadlines in the program
improvement plans and any requests to extend the program improvement
plan by a third year. The circumstances under which requests for
extensions would be approved are expected to be very rare and will
require compelling documentation. Requests for extensions must be
received by ACF at least 60 days prior to the affected completion date.
Finally, in paragraph (d)(4) we are requiring that
monitoring of the implementation of the State' program improvement
plans include quarterly status reports by the States to ACF, unless the
State and ACF agree to less frequent reports. These reports will inform
ACF of the State's progress in implementing the plan.

Section 1355.35(e) Evaluating Program Improvement Plans.

This section describes the joint process the State agency and ACF
will use to evaluate the program improvement plan. This section also
describes the frequency of evaluating progress and the terms for
renegotiating a program improvement plan.
No comments were received on this section. Changes were made to
this section only to the extent necessary to keep it consistent with
the changes made to the other sections of Sec. 1355.35.

Section 1355.35(f) Integration of Program Improvement Plans With CFSP
Planning.

This section requires that elements of the program improvement plan
be incorporated into the goals and objectives of the State's CFSP and
annual reviews and progress reports related to the CFSP.
No comments were received on this section and no changes have been
made to the final rule.

Section 1355.36 Withholding Federal Funds Due to Failure To Achieve
Substantial Conformity or Failure to Successfully Complete a Program
Improvement Plan

This section sets forth the penalties associated with a State's
failure to operate a program in substantial conformity; implements the
statutory

[[Page 4044]]

requirement to specify the methods for withholding Federal funds for
substantial nonconformity; and describes the amount of Federal funds
that are subject to a penalty. The suspension of withholding during the
course of a State's program improvement plan, and termination of the
penalty upon successful completion of the plan are also discussed.

Section 1355.36(a) For the Purposes of This Section

This section defines ``title IV-B funds'' and ``title IV-E funds''
for the purpose of this section.
Comment: We received comments that the regulation, rather than the
preamble, should state that the title IV-E administrative costs to
which withholding applies does not include funds allocated for
training.
Response: In the proposed rule, we specified that the
administrative costs of the foster care maintenance payments program
are included in the pool of funds from which penalties will be
assessed. In the final rule, rather than listing those title IV-E
components that are excluded from the penalty pool, we have amended the
regulatory language to more specifically identify the administrative
costs of the foster care maintenance payments program as the source of
title IV-E funds for the penalty pool.

Section 1355.36(b) Determination of the Amount of Federal Funds To Be
Withheld

This section describes the manner in which ACF will determine the
amount of the State title IV-B and IV-E funds to be withheld if the
State is not operating in substantial conformity.
Comment: We received many comments in favor of the proposal that
funds not be withheld from a State if the determination of
nonconformity was caused by the State's correct use of formal written
statements of Federal law or policy provided by HHS, but a few comments
objected to this provision.
Response: This is a statutory requirement under section 1123A of
the Act. Therefore, we have not made changes to the final rule.
Comment: We received comments regarding the proposed requirement
that, upon finding that a State is not in substantial conformity, funds
be withheld for the year under review and for each succeeding year
until the State's failure to comply is ended either through the
successful completion of a program improvement plan or until a
subsequent full review determines the State is operating in substantial
conformity. The commenter requested assurance that withholding is not
unnecessarily extended because of HHS'' lack of capacity to assess the
completion of the plan or to conduct another review.
Response: The rule specifies the time frames for conducting reviews
and for the duration of program improvement plans. Adherence to those
time frames should limit delays in determining the status of the State'
substantial conformity. We do not believe any change to the regulation
is necessary.
Comment: We received many comments pertaining to the amount of the
penalties. The comments ranged from the suggestion that the proposed
penalties are too low to the idea that they are too high. Some
respondents expressed concern about the cumulative effects of penalties
for a variety of Federal reviews of child welfare programs and systems,
and urged us to consider a consolidated penalty proposal based on a
performance-based incentive system for child welfare or a reinvestment
policy for nonconformity. Comments on the pool of funds from which
penalties will be taken ranged from requests to specifically limit the
pool to increasing it to include additional funds.
Response: We have given serious consideration to the comments on
the amount of the penalties and the pool from which they are to be
taken and believe that a change is warranted. We wish to promote
practice improvements through the review process, and do not wish to
use the penalty process to prevent States from making the needed
improvements. However, we must make clear that the failure to correct
areas of nonconformity identified in the reviews will result in
substantial financial penalties. Therefore, we have added sections
1355.36(b)(7) and (b)(8) to provide a graduated penalty for continuous
nonconformity.
To strengthen our commitment to program improvement through the
review process, we have added these sections to the final rule that
will increase the penalty for outcomes and systemic factors that remain
in continuous nonconformity on successive reviews. States that continue
to remain out of substantial conformity on successive reviews can now
be penalized up to two percent per outcome or systemic factor at the
second full review in which the nonconformity continues, and up to
three percent per outcome or systemic factor at the third and
subsequent full reviews in which the nonconformity continues. We
believe the possibility of increased withholding of funds will
encourage States to engage in active program improvement planning and
make efforts to resolve areas of nonconformity as early as possible.
We believe that this revised penalty structure is in accordance
with the Social Security Act Amendments of 1994 (Pub. L. 103-342),
since we are making the amount of the penalty commensurate with the
level of nonconformity and providing States an opportunity to engage in
corrective action prior to withholding funds. We tried to establish
penalties in amounts that create significant motivators for States to
improve programs while not denying services to needy children that are
critical to their safety, permanency, and well-being. We believe the
approach contained in these final rules balances the issues in a manner
that promotes the overall goal of program improvement in States.
The State's entire title IV-B allocation is included in the pool
from which penalties will be taken because we are reviewing for all the
programs funded by title IV-B in the State. A portion of the title IV-E
administrative funds is included in the pool from which penalties will
be taken, since a smaller percentage of title IV-E requirements are
reviewed in the child and family services reviews.
In addressing the comments that advocated for funding reinvestment,
the statute specifically mandates withholding Federal funds as
penalties for nonconformity, rather than reinvesting. Also, the
statutes for various programs carry penalty provisions that HHS cannot
waive in favor of a consolidated, performance-based incentive system in
child welfare.
We recognize the commenter' concerns that States found to be the
most egregious in their non-conformity, based on the child and family
services reviews, may also be determined out of conformity in other
reviews, e.g., title IV-E eligibility reviews and other reviews that
cover related issues and requirements. Such States could be exposed to
multiple penalties in a fiscal year. We strongly encourage States in
those situations to take full advantage of the opportunities for
technical assistance and program improvement planning in order to
increase the effectiveness of their programs and improve the outcomes
of children and families served by the programs.

Section 1355.36(c) Suspension of Withholding

This section describes the circumstances under which ACF will
suspend the withholding of funds for those States found not to be
operating in substantial conformance.

[[Page 4045]]

We did not receive comments on this particular section and have
made no changes to the regulation.

Section 1355.36(d) Terminating the Withholding of Funds

This section describes the circumstances under which ACF will
terminate the withholding of State funds related to nonconformity.
We did not receive comments on this particular section and have
made no changes to the regulation.

Section 1355.36(e) Withholding of Funds

This section describes the circumstances under which ACF will
withhold funds for those States determined not to be in substantial
conformity.
Comment: A number of commenters suggested that we emphasize that
penalties will be enforced.
Response: As we consider the amount of the penalty and the
provisions for withholding funds due to nonconformity, we think that
this is an area where stronger provisions are needed. We want to convey
in the rule our sense of urgency about the need to implement needed
improvements in child and family services and to make the application
of penalties consistent with that sense of urgency. As a result, we
have amended the regulatory language at Sec. 1355.36(e)(2) so that
proposed penalties associated with a particular outcome or systemic
area will be imposed when the State fails to come into substantial
conformity or fails to make the necessary progress with respect to the
statewide data indicators by the date specified in the PIP, rather than
waiting for the completion of the entire PIP. Some problems may only
require six months to fix, for example, while others may require the
full two years. In this manner, if the State is required to complete an
action step in six months, fails to do so, and the Secretary does not
approve an extension, an immediate penalty will be assessed for that
area of nonconformity. We also added a provision at Sec. 1355.36(e)(4)
that applies the maximum withholding of funds of 42 percent of the pool
to States that elect not to engage in program improvement planning or
to otherwise correct areas determined not to be in substantial
conformity.
Comment: There were several alternatives suggested regarding the
basis for computing interest on penalties and the time frame during
which interest will accrue.
Response: The Department has established regulations with respect
to interest on withheld funds to which we are bound.

Section 1355.37 Opportunity for Public Inspection of Review Reports
and Materials

This section provides that States must make certain sources of
information related to the child and family services reviews available
for public inspection.
Comment: We received several comments requesting that States be
given flexibility in the methods of making the review reports and
materials available for public inspection. Some commenters suggested we
take a more prescriptive approach with respect to this issue.
Response: Given the variance across State systems, we think it is
important to permit States flexibility in satisfying this requirement.
While the suggestions we received regarding ways States should
publicize information related to the child and family services review
were excellent, they would be more appropriately deployed through
technical assistance efforts with States rather than requiring them
through regulation.
Comment: We received comments requesting that ACF provide official
public notice of reviews in advance of the reviews.
Response: We are considering options for implementing this
suggestion. However, we do not believe it is an appropriate issue for
regulation.

Section 1355.38 Enforcement of Section 471(a)(18) of the Act Regarding
the Removal of Barriers to Interethnic Adoption

This section implements the enforcement of section 471(a)(18) of
the Act which specifically prohibits the denial of the opportunity to
any person to become an adoptive or a foster parent, or the delay or
denial of the placement of a child in an adoptive or foster family home
on the basis of the race, color, or national origin of the child or of
the adoptive or foster parent. In addition to the specific comments on
Sec. 1355.38, we received a number of general comments and requests
related to the statutory language itself at section 471(a)(18) of the
Act.
Many commenters requested that the final rule include a section on
what constitutes a delay or denial of a child's adoptive or foster care
placement and when race, color, or national origin can be used in child
placement decisions. Several commenters also requested that the final
rule include a discussion of good social work practice and define
``best interest of the child'' as it relates to section 471(a)(18) of
the Act. A large number of commenters also requested that the final
rule include language that stated that compliance with section
471(a)(19) (which allows the State to give preference to a relative
over a non-related caregiver) and section 422(b)(9) (which requires the
State to make diligent efforts to recruit potential foster and adoptive
families that reflect the ethnic and racial diversity of children
needing an adoptive or foster home) would not be considered a violation
of section 471(a)(18) of the Act.
Also, many commenters believed the tone of the section to be
adversarial and requested that the section be revised to mirror the
partnership approach used in the child and family services review. A
few commenters believed the enforcement of section 471(a)(18) of the
Act is too heavily focused on the rights of adults rather than the
needs of the child. Additionally, a few commenters were concerned that
vigorous enforcement of section 471(a)(18) of the Act may have a
negative effect on the quality of services available to children.
In contrast to these comments, one commenter voiced concern that
Sec. 1355.38 did not adequately enforce section 471(a)(18) of the Act.
The commenter believed that additional enforcement mechanisms and
administrative authority should be included in the final rule.
The regulatory language in Sec. 1355.38 closely follows the
statutory language and represents our commitment to diligently enforce
these provisions of law. We have made only limited revisions to this
portion of the regulation in response to comments, as we believe that
enforcement of section 471(a)(18) of the Act is clearly defined by the
statute. We would like to note that the statutory language guiding this
section is very different from that underpinning the child and family
services reviews, and it is this distinction that accounts for the
difference in the approaches taken.
The request for guidance on what constitutes a delay or denial of a
child's adoptive or foster care placement and when race, color, or
national origin can be used in child placement decisions; a discussion
section on good social work practice; and the inclusion of a definition
of ``best interest of the child'' as it relates to section 471(a)(18)
of the Act all represent practice level issues. Practice level issues
are more appropriately addressed through technical assistance rather
than regulation. Also, the determination of delay or denial in foster
care or adoption is based on the facts of the specific case. Thus, we
did not include

[[Page 4046]]

any additional guidance in the final rule.
We also did not include qualifying statements regarding relative
preference and/or diligent recruitment in the final rule. The
activities regulated in this final rule are procedural directives for
implementation of financial sanctions. Thus, we do not intend to cite
all the activities which may or may not violate section 471(a)(18) of
the Act. Given the number of comments received, we are providing the
following discussion on relative preference and diligent recruitment as
they relate to section 471(a)(18) of the Act:
Section 471(a)(19) of the Act allows the State to give
preference to an adult relative over a nonrelated caregiver, when
placing a child for adoption or in foster care provided that the
relative caregiver meets all relevant child protection standards.
Relative preference recognizes the importance of maintaining biological
relationships. Prioritizing biological ties is not a form of race
preference; rather it is an acknowledgment of the significance of these
ties. Relatives come under the same scrutiny as nonrelatives and must
meet the same Federal title IV-E requirements to become foster and/or
adoptive parents. In all circumstances, the best interests of the child
must determine a placement decision. A State's appropriate use of the
relative placement preference does not constitute a violation of
section 471(a)(18) of the Act.
Section 422(b)(9) of the Act requires the State to make
diligent efforts to recruit potential foster and adoptive families that
reflect the ethnic and racial diversity of children in the State
needing an adoptive or foster home. Diligent recruitment activities are
necessary to ensure that all qualified members of a community, who may
be excluded from or reluctant to request services, have the opportunity
to become a foster or adoptive parent. Diligent recruitment can provide
a broad pool of placement resources for those children waiting for
foster or adoptive homes. A State's general diligent recruitment
activities do not constitute a violation of section 471(a)(18) of the
Act. General diligent recruitment activities should not discriminate on
the basis of race, color or national origin by excluding families who
are not targeted for services and denying them the opportunity to be a
part of the pool of available families for children of different
backgrounds.
The purpose of the Multiethnic Placement Act of 1994
(MEPA) was threefold: (1) To decrease the length of time a child waits
to be adopted; (2) to prevent discrimination in foster care and
adoption; and (3) to promote the recruitment of ethnic and minority
families that reflect the children in the public child welfare system.
We do not interpret any of these purposes to be mutually exclusive. In
the Removal of Barriers to Interethnic Adoption (IEP) provisions, which
amended MEPA, Congress further clarified that race, color, or national
origin should not be routinely considered in foster care and adoption
placements. The IEP also contained enforcement provisions. The IEP did
not change the recruitment provision contained at section 422(b)(9) of
the Act.
We recommend that the State or entity review Federal policy
guidance already issued on the MEPA, as amended by IEP (found at http:/
/www.acf.dhhs.gov/programs/cb/). Additionally, both the Office of Civil
Rights (OCR) and ACF Regional Offices stand ready to provide guidance
to any State with a specific policy question.
Rather than attempting to identify the multiple situations which
may lead to a violation of section 471(a)(18) of the Act, we have found
that providing technical assistance to specific State questions is most
useful. Technical assistance is available through the ACF and OCR
regional offices, as well as through the federally funded national
resource centers. Periodically the Department will review the issues
raised to determine the need for additional guidance.
Specific questions and comments are addressed in the following
paragraphs.
Section 1355.38(a) Determination That a Violation Has Occurred in
the Absence of a Court Finding
This section sets forth the requirements for determining a
violation of section 471(a)(18) of the Act during the course of a child
and family services review, the filing of a complaint, or some other
mechanism.
Comment: One commenter requested clarification of the term ``entity
in the State'' as used in section 471(a)(18) of the Act, specifically
if it includes private agencies. Another commenter inquired about the
application of section 471(a)(18) of the Act to court findings and if
ACF has the authority to sanction the court as an ``entity.''
Response: We have added a definition for ``entity'' in Sec. 1355.20
in response to this comment. According to the statute any entity in a
State that receives title IV-E funds must comply with section
471(a)(18) of the Act. We define the term ``entity'' to include private
agencies. A State court is not an ``entity,'' for purposes of this
provision, to the extent that it issues decisions or opinions, or
performs other judicial functions. If, on the other hand, an
administrative arm of a State court carries out title IV-E
administrative functions pursuant to a contract with the State agency,
then it is an ``entity'' for these narrow purposes. If the private
agency, an administrative arm of the court, or any other entity is
found not to be in compliance with section 471(a)(18) of the Act, ACF
has the authority to collect all of the title IV-E funds received by
the entity for the quarter the violation occurred.
Comment: Several commenters requested that the final rule contain
the ``HHS criteria'' that ACF will use to determine if a violation of
section 471(a)(18) of the Act has occurred.
Response: HHS has not developed any specific ``criteria'' for
determining if a violation of section 471(a)(18) of the Act has
occurred. HHS will determine on a case-by-case basis whether the State
has delayed or denied a child's adoptive or foster care placement or
denied a person the opportunity to become an adoptive or foster parent
based on race, color, or national origin. It is impossible to define
every situation and circumstance that would result in a civil rights
violation. Thus, the regional office will review the specific facts of
each case to determine if a State or entity is in violation of section
471(a)(18) or if a policy or practice is consistent with previously
issued guidance. No change has been made to the final rule as a result
of this comment.
Comment: One commenter requested that the final rule provide
guidance on how a complaint from a prospective foster or adoptive
parent who is not selected for a specific placement and is of a
different race, color, or national origin of the child to be placed,
will be handled (i.e., the roles of all parties involved, if the State
will have an opportunity to respond to the allegation, etc.).
Response: We have not defined specific procedures for the
determination of a violation, or the procedures for handling
allegations of a violation in regulation, as we expect that these
determinations will be made on a case-by-case basis and rely on the
specific facts of each situation.
Comment: Many commenters requested that the final rule detail the
contents of the notification letter that ACF will provide to the State
found to be in violation of section of 471(a)(18) of the Act and
suggested that the letter include specific information on the roles and
responsibilities of HHS and the State.
Response: We intend to draw on this suggestion, and others like it,
in

[[Page 4047]]

preparing the internal agency procedures that will be used to
investigate and respond to a violation of section 471(a)(18) of the
Act. However, we believe this level of specificity is inappropriate for
regulation. No change has been made to the final rule.
Comment: Several commenters objected to the phrase `` * * * if
applied, would likely result in a violation against a person * * * ''
in paragraph (a)(2)(iii). The commenters stated that this ambiguous
phrase may result in a violation being based on a hypothetical
situation.
Response: We concur with the commenters that the phrase `` * * *
would likely result * * * '' may appear ambiguous. We have reworded
paragraph (a)(2)(iii) to clarify that a violation will be based on
policies, procedures, practices, regulations, and laws that on their
face violate the law.

Section 1355.38(b) Corrective Action and Penalties for Violations With
Respect to a Person or Based on a Court Finding

This section sets forth the requirements for corrective action and
penalties for a violation of section 471(a)(18) of the Act with respect
to a person or based on a court finding.
Comment: One commenter requested that we define the term ``court
finding,'' to clarify what court is being referred to in this section
as it relates to the assessment of penalties for a violation of section
471(a)(18) of the Act.
Response: While we do not intend to define the term ``court
finding,'' we would like to clarify that any Federal or State court's
finding of a violation of section 471(a)(18) of the Act may result in
the assessment of a penalty by ACF. Under the statute, an individual
who believes that he or she has been aggrieved by a section 471(a)(18)
violation, may bring action in the United States District Court. The
final rule will not be this specific because the District Court finding
can be appealed to a higher court; thus a court other than the United
States District Court may ultimately determine that a 471(a)(18)
violation has taken place.
Comment: Several commenters opposed the immediate assessment of the
penalty for a violation with respect to a person, suggesting that there
should be an opportunity for corrective action beforehand.
Response: We believe that the statute is clear at 474(d)(1) that
there is to be an immediate penalty, without corrective action
beforehand, where there is a violation with respect to a person. This
is consistent with the Department's commitment to aggressive
enforcement of section 471(a)(18) of the Act. Thus, no change has been
made to the final rule as a result of these comments.
Comment: Several commenters opposed the immediate assessment of a
penalty for a violation based on a court finding, suggesting that ACF/
OCR investigations be the sole basis for assessing a penalty.
Response: Section 474(d)(3) of the Act affords an individual who is
aggrieved by a violation of section 471(a)(18) of the Act the right to
file a lawsuit against the State or entity. In accordance with the
statute, a violation with respect to an individual requires an
immediate penalty if the court finds that the State has violated
section 471(a)(18) of the Act. Thus, we do not intend to investigate a
case where the court has already rendered a finding. If a State, an
entity, or an individual is dissatisfied with the court's finding, the
appropriate action of recourse is to appeal through the judicial
system. No change has been made to the final rule as a result of these
comments.
Comment: Several commenters expressed concern about dual penalties
(from both the Court and ACF) that States may incur based on a court
finding of a violation of section 471(a)(18) of the Act.
Response: We do not believe that dual penalties will result from
the situation as described. The statute allows for an individual
aggrieved by a violation of section 471(a)(18) of the Act the right to
bring action and seek relief from the State. If the court finds that
the individual has been aggrieved by the State, it is possible that
monetary compensation may be awarded to the individual as relief for
the State's action. This monetary award is not a penalty. Penalties by
ACF are required by the statute when the State violates the law. No
change has been made to the final rule as a result of these comments.
Comment: A few commenters recommended that the final rule require
the State to notify ACF of a court's finding that the State is in
violation of section 471(a)(18) of the Act, since ACF will not be a
party to the proceedings.
Response: We agree with the commenter' recommendation and have
revised the final rule to require a State found by a court to be in
violation of section 471(a)(18) to notify ACF. A new paragraph,
Sec. 1355.38(b)(4), requires the State to notify the appropriate ACF
regional office of the violation within 30 days from date of entry of
the final judgement once all appeals have been exhausted, declined, or
the appeal period has expired.

Section 1355.38(c) Corrective Action for Violations Resulting From a
State's Statute, Regulation, Policy, Procedure, or Practice

This section sets forth the requirements for corrective action when
a State's statute, regulation, policy, procedure, or practice is found
to be in violation of section 471(a)(18) of the Act.
Comment: We received several comments relating to the time period
provided for corrective action. One commenter stated that six months
for corrective action is too short, while another commenter stated that
six months is excessively long.
Response: The statute specifies at 474(d)(1) of the Act, that the
time period to implement a corrective action plan for section
471(a)(18) of the Act must not exceed six months. We have made a change
to the regulation to require a State to complete a corrective action
plan within six months. All corrective action plans will not require
six months to complete. ACF has the authority to establish a shorter
time frame for the completion of the corrective action plan consistent
with the seriousness, complexity, and the remedy required by the
violation.
Comment: Another commenter recommended that the time limit for ACF
to approve or disapprove a State's corrective action plan be defined in
the final rule to avoid a State's being penalized due to delayed action
by ACF.
Response: ACF recognizes the need for approving corrective action
plans in a timely manner but did not include the commenter's
recommendation in the final rule. To respond to the commenter's concern
we have revised Sec. 1355.38(c)(1). The State will have 30 days after
receipt of written notification of noncompliance with section
471(a)(18) of the Act, to develop a corrective action plan and submit
it to ACF for approval. Once the corrective action plan is approved by
ACF, the State will have six months to complete the corrective action
and come into compliance before a penalty is applied. The calculation
for the six months will begin after ACF has approved the plan.
A State's completion of a corrective action plan within the
specified time will not, in itself, prevent the assessment of a
penalty. The completed corrective action plan must result in the State
coming into compliance with section 471(a)(18) of the Act to avoid
incurring a penalty. We have revised the final rule to clarify this
point at Sec. 1355.38(c)(1) and also at (g)(1)-(4).
Additionally, we have revised Sec. 1355.38(c)(3) to provide the
State with

[[Page 4048]]

an additional 30 days to revise and resubmit the corrective action plan
in the event the State's corrective action plan is not approved by ACF.
If the State fails to resubmit the corrective action plan within the 30
days, a penalty will be assessed.
Comment: One commenter was concerned that Secs. 1355.38(c)(1) and
(g)(3) were inconsistent. The commenter believed paragraph (c)(1)
provides a State with six months before assessing a penalty while
paragraph (g)(3) imposes a reduction beginning with the quarter that
the State received notification.
Response: Paragraphs (c)(1) and (g)(3) are not inconsistent.
Paragraph (c)(1) provides the State with six months to complete
corrective action before a penalty is assessed. Paragraph (g)(3)
defines the starting point for assessing the penalty in the event a
State declines to participate in corrective action or fails to
successfully complete the corrective action plan within six months.
Comment: One commenter disagreed with the use of the word
``implement,'' in original paragraph (c)(4), to mean ``begin'' and
stated that ``implement'' means to ``complete.''
Response: In light of the addition of up to a 60-day period for the
State to develop the corrective action plan, we have revised the
definition of ``implement'' in the final rule to mean ``complete.''
Paragraphs (c)(4) and (5) were deleted and paragraph (c)(1) now reads
that a State in violation of section 471(a)(18) of the Act will have
six months to complete corrective action and come into compliance once
its plan has been approved before a penalty is assessed.
Comment: One commenter requested that the State be allowed to make
changes to the corrective action plan without incurring additional
penalties.
Response: As written, the regulation does not preclude the State
from making changes to the corrective action plan. The changes made to
the corrective action plan must be approved by ACF and completed within
the original six-month time frame.

Section 1355.38(d) Contents of a Corrective Action Plan

This section describes the contents of a corrective action plan.
We did not receive comments related to this section but have
revised this section to coincide with changes made in Sec. 1355.38(c).
Paragraph (d)(4) defines the completion date for the corrective action
and deletes the option to extend the corrective action completion date.

Section 1355.38(e) Evaluation of Corrective Action Plans

This section describes the evaluative steps that ACF will take to
review the implementation of corrective action plans submitted by
States who have been found to be in violation of section 471(a)(18) of
the Act.
We received no comments related to this section but revised this
section to coincide with changes made to Sec. 1355.38(c) and (d). This
section now states that ACF will evaluate the corrective action plan
within 30 days of the six-month completion date.

Section 1355.38(f) Funds To Be Withheld

This section defines the term ``title IV-E funds'' in the context
of this section.
Comment: One commenter requested clarification on the use of the
word ``claims.''
Response: In describing the penalty for a violation of section
471(a)(18) of the Act, the statute at 474(d)(1) uses the phrase,
``otherwise payable to the State under this part'' in reference to the
amount of title IV-E funds to be reduced. We interpret this to mean the
Federal share of allowable title IV-E costs paid or advanced to the
State and have revised Sec. 1355.38(f) in the final rule to reflect
this interpretation. The reader should note that it does not matter
whether the costs are reported as a current expenditure or as an
adjustment; all title IV-E funds expended during the quarter(s) the
State is determined to be in violation of section 471(a)(18) of the Act
will be subject to a penalty.

Section 1355.38(g) Reduction of Title IV-E Funds

This section describes the circumstances under which a State's
title IV-E funds will be reduced by ACF due to a violation of section
471(a)(18) of the Act.
Comment: Several commenters expressed concern about ACF's authority
to continue a penalty into the next fiscal year.
Response: The regulation does not provide for a continuation of a
penalty into the subsequent fiscal year if a State fails to come into
compliance. ACF may and has the authority to initiate a full or partial
review in a subsequent fiscal year for those States that are in
violation of section 471(a)(18) of the Act and have failed to complete
corrective action to come into compliance. Thus, any statute,
regulation, policy, procedure or practice that remains uncorrected from
a previous fiscal year may result in a new finding of a violation of
noncompliance with section 471(a)(18) of the Act. We will not disregard
an uncorrected violation simply because a fiscal year has ended. It is
part of the Department's oversight responsibility to ensure that all
States are in compliance with section 471(a)(18) of the Act at any
given time and any uncorrected violation may be subject to a review at
the beginning of a new fiscal year.
Comment: One commenter is concerned that the use of fiscal
sanctions for every quarter that the State has not completed a
corrective action plan is overly harsh.
Response: We are unable to modify the penalty structure as it is
defined in law. The statute clearly states that penalties are to be
applied quarterly when a State is in violation of section 471(a)(18) or
has not successfully implemented a corrective action plan; and that the
penalty will be applied until the State achieves compliance or until
the end of the fiscal year.
Comment: Several commenters requested that the final rule permit
the suspension of the penalty while the State appeals a court finding
of a violation of section 471(a)(18) of the Act.
Response: We concur and have included such language in the final
rule at paragraph (g)(6). This clarifies that penalties will not be
imposed until a final determination regarding a violation is made
through the judicial appeal process.

Section 1355.38(h) Determination of the Amount of Reduction of Federal
Funds

This section describes the specific amount a State's title IV-E
funds will be reduced by ACF in the event of a section 471(a)(18)
violation and provides instructions related to interest liability.
Comment: One commenter requested that the final rule clarify that
the calculation of the penalty is quarterly.
Response: We have revised paragraph (h) to clarify that the penalty
is calculated and assessed quarterly.
Comment: One commenter believed that five percent is the penalty
and not a cap.
Response: Five percent is both a penalty and a cap. The statute at
section 474(d)(1) of the Act requires that the third or subsequent
violation(s) in a fiscal year will result in a five percent reduction
of title IV-E funds payable to the State in that quarter. The statute
also sets an annual cap whereby no State's fiscal year payment will be
reduced by more than 5 percent.
Comment: One commenter requested clarification on the State
agency's

[[Page 4049]]

responsibility for interest if an entity such as a private agency
violates section 471(a)(18) of the Act.
Response: The State agency or entity that has been found to be in
violation is responsible for the interest. No change has been made to
the final rule.

Section 1355.39 Administrative and Judicial Review

This section provides States found not to be in substantial
conformity with titles IV-B and IV-E State plan requirements, or in
violation of section 471(a)(18) of the Act, with an opportunity to
appeal.
Comment: One commenter recommended that the final rule provide the
State with the right to immediately appeal a determination of
substantial nonconformity or require ACF to provide the State with a
detailed report of the reasons underlying the finding prior to the
development and implementation of a program improvement plan.
Response: A final determination regarding State nonconformity is
not made until the State has had an opportunity for corrective action.
Therefore, it would be premature to provide for an appeal to the DAB
prior to that time. However, we will provide written notification,
within 30 days following the child and family services review, that the
State is, or is not, operating in substantial conformity. While we
understand the commenter's desire to have a detailed report of the
review findings, specifying the details of the notification letter is
not appropriate for regulation. Additionally, we have designed the
review process to be less dependent upon a lengthy report. The team
will provide the State with verbal information on the findings of the
review throughout the on-site review and subsequent exit conference.
The notification letter will confirm findings of the onsite review,
which builds on information initially reported in the State prepared
statewide assessment, and will include sufficient information for a
State to know where it is operating in or out of conformity. No change
has been made to the final rule.
Comment: One commenter recommended that the final rule require ACF
to assume the responsibility for any costs related to the development
and implementation of the program improvement plan in the event ACF
determines that the State is not operating in substantial conformity
but a subsequent DAB decision finds that the State is operating in
substantial conformity.
Response: We do not concur with the commenter's proposal that ACF
should assume full costs for the program improvement plans in the event
the DAB overturns an ACF finding of substantial nonconformity. The
State may claim FFP for appropriate program improvement plan activities
under title IV-E.
Comment: One commenter stated that if private agencies are to be
sanctioned for a violation as ``entities in the State,'' they should
have an opportunity for appeal.
Response: We concur with the commenter and have revised the final
rule to allow such entities the opportunity to appeal to the DAB.

Section 1355.40 Foster Care and Adoption Data Collection

We have made a technical amendment to conform with new Federal
requirements related to the collection of race and ethnicity data. On
October 30, 1997, the Office of Management and Budget (OMB) published a
notice in the Federal Register (62 FR 58781-58790) announcing its
decision to revise Statistical Policy Directive No. 15, The Race and
Ethnic Standards for Federal Statistics and Administrative Reporting.
OMB's Statistical Policy standards provide a common language to promote
uniformity and comparability of data on race and ethnicity for the
population groups specified in the directive. The Department is
required to collect information in accordance with the directive's
standards.
The revised standards have five categories for data on race:
American Indian or Alaska Native, Asian, Black or African American,
Native Hawaiian or Other Pacific Islander, and White. The new standards
allow individuals of mixed race to identify with more than one race.
Also, OMB revised the two categories for data on ethnicity to:
``Hispanic or Latino'' and ``Not Hispanic or Latino.'' The AFCARS
currently collects information on the race and ethnicity of children in
foster care and those who have been adopted, foster parents, and
adoptive parents. However, we must change the definitions of the racial
classifications, revise ethnicity classifications, and allow multiple-
race identification in AFCARS race data elements to comply with the OMB
Directive. In ACYF-CB-PI-99-01 (issued January 27, 1999) we informed
States of the required changes to the AFCARS collection of race data as
a result of a change in OMB policy. States were directed to change race
and ethnicity collections for the report period beginning October 1,
1999. Since these changes are already underway in the States and a
matter of HHS policy, we are codifying these changes as technical
amendments in this final rule.

Section 1355.40(a) Scope of the Data Collection System

We removed a reference to the former protections in section 427 of
the Act in paragraph (a)(2) and replaced it with the correct citation.
Congress repealed section 427 of the Act with Public Law 103-432,
effective October 1, 1997. The protections previously included in
section 427 of the Act are now included as assurances in section
422(b)(10) of the Act.

Appendix A to Part 1355

In Appendix A to part 1355, Section I, we included the new race and
ethnicity classifications consistent with OMB's Statistical Policy
Directive Number 15. All of the foster care race elements (elements
II.C.1, IX.C.1 and IX.C.3) are listed in the element chart
alphabetically as they are in the directive.
In section II to appendix A, we removed the obsolete reference to
the section 427 protections and replaced it with the correct statutory
reference. In Section II, II.C.1, we added new race definitions and
made an editorial change regarding how a person's race and ethnicity is
determined. Consistent with the OMB Directive, we make this change to
emphasize that self-identification or self-reporting is the preferred
method of gathering information on race or ethnicity except where this
is not practical. Obviously, in the case of young children, racial or
ethnic self-identification is not practical and is therefore primarily
determined by the parent. We recommend that caseworkers ask children
(if age appropriate) and adults to identify all the racial categories
that apply.
In ACYF-CB-PI-99-01 we provided policy guidance on the use of the
category ``unable to determine'' as it applies to situations where a
parent or other adult caretaker is unwilling to identify their race or
that of the child. We have included that clarification in this
regulation. If a parent or caretaker is unwilling to identify a race,
then the State should classify the information as ``unable to
determine,'' indicating that the State attempted to gather the
information but was unable to do so. This will provide for better data
as the State will not overstate the amount of missing data for this
element and jeopardize conformity with the missing data standards.
Finally, we amend the way that a State must code the data for the race
categories to properly identify a single race, multiple race or
``unable to determine'' response.

[[Page 4050]]

We have made changes similar to those above in Section II, II.C.2,
which define the Hispanic and Latino ethnicity classifications. In
addition, we have deleted the last sentence of the paragraph that
required the State to indicate that the child is not of Hispanic
ethnicity only when the origin of the child is clear. We believe that
this distinction is unnecessary and inconsistent with our approach to
other regulatory definitions on race and ethnicity.
In Section II, IX.C, we now cross-reference only the definitions of
race and ethnicity classifications used in the section on child
demographics (II.C). The existing regulations also cross-reference the
definition of ``unable to determine,'' however, this definition as
stated is not applicable to adults. For adults, the code ``f. unable to
determine,'' must be used only in circumstances where the parent is
unwilling to identify his or her race or ethnicity. During AFCARS pilot
reviews, we found that States were inappropriately coding missing
information as ``unable to determine.'' When data is missing or not
known because the State has not asked an individual for information on
race or ethnicity, the response must be left blank.
Finally, in Section II, we have deleted paragraph IX.D on coding
ethnicity data. This paragraph incorrectly cross-referenced the section
on disabilities. We have incorporated the relevant portions of the
instruction in paragraph IX.C.

Appendix B to Part 1355

In appendix B to part 1355, we have made the same amendments to the
race and ethnicity adoption data elements as those listed above for the
foster care elements.

Appendix D to Part 1355

In appendix D to part 1355, we amended the race and ethnicity
elements in the foster care and adoption record layouts consistent with
the OMB directive. We amended the coding notes that precede each record
layout table to clarify that the race classifications are now elements
where more than one response is allowed.
We also made a technical change to the foster care and adoption
record layouts to accommodate the year 2000 century date change. Prior
to October 1996, States were required by regulation to report date
information in decade format. In response to the year 2000 and the data
issues associated with the processing of date information, we issued an
information memorandum, ACYF-IM-CB-96-08 (April 17, 1996), requiring
States to report in century date format. We are now making the
requisite technical change to the regulation.
Appendix E to Part 1355
In appendix E to part 1355, we made several technical edits to
replace all references to ``Hispanic origin'' with ``Hispanic or Latino
ethnicity'' in order to be consistent with the OMB directive (see
element charts and Section B.2.a.(8)). In section A.2.a.(18) for foster
care and section B.2.a.(9) for adoption, we have added an internal
consistency validation for race elements. Internal consistency
validations evaluate the logical relationship between data elements in
a record. We also revised cross-references to the internal consistency
checks throughout the Appendix to accommodate the addition.

Part 1356--Requirements Applicable to Title IV-E

Section 1356.20 State Plan Document and Submission Requirements

Section 1356.20(e)(4) State Plan Document and Submission Requirements

This section implements the authority of ACF Regional HUB Directors
and Administrators and the Commissioner of ACYF to approve State plans
and amendments that govern State programs under section 471 of the Act.
No comments were received on this section and no changes were made
in the final rule.

Section 1356.21 Foster Care Maintenance Payments Program
Implementation Requirements

In this section, we clarified existing policies and set forth
additional foster care maintenance requirements which have a direct
impact on determining the eligibility of children in the title IV-E
foster care program.
Comment: A few commenters were concerned that Sec. 1356.21 of the
regulation was not sensitive to and appeared inconsistent with the
Indian Child Welfare Act (ICWA).
Response: The purpose of the regulation is to implement the title
IV-E foster care program, not the requirements of the ICWA. We want to
be clear that nothing in these regulations supersedes the requirements
of the Indian Child Welfare Act. States must continue to comply fully
with ICWA.
Comment: We received a large number of general comments expressing
disappointment that following the outcome orientation of the child and
family services review that Sec. 1356.21 of the regulation reverts to a
process orientation.
Response: We agree, this section of the regulation is process-
oriented. The purpose of this section is to regulate title IV-E
eligibility criteria and procedural requirements, which are inherently
process-oriented.
Comment: One commenter suggested we provide language throughout
this section that distinguishes title IV-E eligibility criteria from
State plan requirements.
Response: Title IV-E eligibility criteria are distinguished from
State plan requirements in Sec. 1356.21. We have amended
Sec. 1356.71(f) and (g) to clearly enumerate the title IV-E eligibility
criteria. However, we agree that we may have caused some confusion by
addressing a particular State plan requirement in the reasonable
efforts section relating to permanency hearings that must be held
within 30 days of a judicial determination that reasonable efforts to
reunify a child and family are not required. Also, the leading
sentences to Sec. 1356.21(h) suggest that the permanency hearing is an
eligibility criterion. We have deleted language that could cause any
confusion between title IV-E eligibility criteria and State plan
requirements.
Comment: Some commenters recommended that the regulations include a
new section that describes tribal authority and responsibilities in
satisfying title IV-E requirements when tribes and States enter into
title IV-E agreements. One commenter also requested that the suggested
section include a provision that permits the Secretary to waive title
IV-E provisions with respect to any title IV-E agreement between an
Indian tribe and a State. The commenter believed such a provision would
make it easier for State-tribal agreements to be established.
Response: The regulations are written from the perspective of the
State agency because the statute makes the State child welfare agency
ultimately responsible for the proper administration of the title IV-E
program. Section 472(a)(2) of the Act permits other public agencies to
have responsibility for placement and care of children in foster care
under an agreement with the State child welfare agency. The State and
the public entity with which it is entering into an agreement, whether
it is a tribe, juvenile justice agency, etc., must determine between
themselves how roles and responsibilities for meeting title IV-E
requirements will be shared. The requirements of the title IV-E program
do not, and cannot, change merely because a public entity other than
the

[[Page 4051]]

State child welfare agency has responsibility for placement and care of
certain children in foster care. Tribes and other public entities with
which the State agency has entered into agreements do, however, have
the latitude to develop their own procedures for satisfying title IV-E
requirements as long as the State child welfare agency's ultimate
responsibility for compliance is assured. We have not made any changes
to the regulation based on these comments.

Section 1356.21(a) Statutory and Regulatory Requirements of the
Federal Foster Care Program

This section introduces the title IV-E implementation requirements
for eligibility of Federal financial participation (FFP) under the
title IV-E foster care program.
Comment: One commenter observed that Secs. 1356.22 and 1356.30
should be included in the references in this paragraph.
Response: We concur and have amended the paragraph accordingly.

Section 1356.21(b) Reasonable Efforts

This section sets forth the ASFA requirement that the State hold
the child's health and safety as its paramount concern when making
reasonable efforts.
Comment: We received several suggestions to include, in the
regulation, the preamble language at page 50073 of the NPRM which
describes the threefold purpose of the reasonable efforts requirements.
The basis for this suggestion was a concern that the focus of the
regulation was on the steps the State agency must take in order to
access Federal funds rather than the intent of the statute. The
commenters believe the inclusion of this language in the regulation
will provide an outcome oriented balance to the process orientation of
this section of the regulation.
Response: We concur and have amended Sec. 1356.21(b) accordingly.
Comment: Many commenters requested that we delete the preamble
language at page 50073 of the NPRM that provides examples of questions
the courts should consider in determining whether the agency satisfied
the reasonable efforts requirements. These commenters are concerned
that examples provided in regulation or policy guidance become de facto
policy. Conversely, we received many comments not only supporting the
list in question, but encouraging us to include it in the text of the
regulation and expand it to include more guidance on reasonable efforts
to make and finalize permanent placements.
Response: We intend for examples to set parameters for the
appropriate use of the flexibility that is inherent in some title IV-E
provisions. We believe the examples will be helpful to State child
welfare agencies in preparing for hearings at which reasonable efforts
determinations are to be made. We do, however, think the list is more
appropriate as policy guidance rather than regulatory text and
therefore, did not change the regulation to include the examples.
Comment: One commenter suggested that we include regulatory
language which places the burden of proof in satisfying the reasonable
efforts requirements on the State agency.
Response: We believe that the very nature of the reasonable efforts
determination indicates the burden of proof is on the State agency.
Section 472(a)(1) of the Act requires that the court determine whether
the State agency made reasonable efforts in accordance with section
471(a)(15) of the Act. We believe that the suggested change is
unnecessary, therefore, and have made no changes to the regulation.
Comment: We received a few comments suggesting that we have no
statutory basis for requiring a judicial determination that the State
made reasonable efforts to prevent the child's removal from his/her
home, to reunify the child and family, and to make and finalize an
alternate permanent placement when the child and family cannot be
reunited. We also received several comments supporting the requirement
for three separate reasonable efforts determinations but questioning
our authority to link title IV-E funding to such determinations.
Response: The judicial determinations are based in the statute.
Section 472(a)(1) of the Act contains two eligibility criteria. The
first pertains to the child's removal from home. Such removal must be
based on a voluntary placement agreement or a judicial determination
that it was contrary to the child's welfare to remain at home. The
second eligibility criterion requires a judicial determination that the
State made reasonable efforts of the type described in section
471(a)(15) of the Act. Section 471(a)(15) of the Act requires the State
agency to make reasonable efforts to prevent the child's removal from
his/her home, to reunify the child and family, and to make and finalize
an alternate permanent placement when the child and family cannot be
reunited. The requirements for judicial determinations regarding
reasonable efforts are title IV-E eligibility criteria. If the
eligibility criteria are not satisfied, the child is not eligible for
title IV-E funding.
Comment: One commenter suggested we permit a 60-day extension to
the time frames prescribed in the regulation for obtaining judicial
determinations regarding reasonable efforts to address the problem of
continuances.
Response: We are sympathetic to the issue of continuances. However,
we believe that the need for timely judicial determinations is more
appropriately addressed by building capacity through training judges
and attorneys rather than extending the time frames for satisfying
title IV-E eligibility criteria. Therefore, we have not modified the
regulation in response to this comment.
Comment: We received a few comments observing that a sentence in
the preamble for this section mistakenly read, ``Congress provided a
list of circumstances in which reasonable efforts are required.''
Response: Yes, this was a misprint. The sentence should have read,
``Congress provided a list of circumstances in which reasonable efforts
are not required (emphasis added).''

Section 1356.21(b)(1) Judicial Determination of Reasonable Efforts To
Prevent a Child's Removal From the Home

This section sets forth the statutory requirement of a judicial
determination that reasonable efforts were made to prevent removal of a
child from his or her home.
Comment: Numerous commenters informed us that the distinction we
made between emergency and non-emergency removals was not reflective of
State practice.
Response: We concur that the distinction was not useful. We have
removed the distinction and consolidated the requirements for
reasonable efforts to prevent removals into a single paragraph, (b)(1).
States will now have up to 60 days from the time a child is removed
from the home to obtain a judicial determination regarding reasonable
efforts to prevent removal.
Comment: We received an overwhelming number of comments on the
timing prescribed for obtaining judicial determinations that the State
made reasonable efforts to prevent removals. The proposed language
required such determinations to be made ``* * * at the first full
hearing pertaining to the removal of the child or no later than 60 days
after a child has been removed from home, whichever is first.''
Commenters interpreted this

[[Page 4052]]

language to preclude such determinations from being made at an earlier
time, thus delaying title IV-E eligibility.
Response: We did not intend to prohibit these determinations from
being made at an earlier time and we have amended the regulation
language in paragraph (b)(1)(i) accordingly. The rule now requires the
State agency to obtain a judicial determination that it either made or
was not required to make reasonable efforts to prevent a child's
removal from home no later than 60 days from the date the child was
removed from the home.
Comment: Many commenters believed that we were overly harsh in
prohibiting title IV-E eligibility for an entire foster care episode if
the reasonable efforts to prevent removal requirements were not
satisfied. Some suggested that the State be permitted to establish the
child's eligibility when and if this requirement is met at a later
date.
Response: The requirement for the State to make reasonable efforts
to prevent removals is a fundamental protection under the Act and one
of several title IV-E eligibility criteria used in establishing
eligibility. From both a practice and an eligibility perspective, it is
impossible for the State to provide efforts to prevent the removal of a
child from home after the fact.
In terms of practice, there is a profound effect on the child and
family once a child is removed from home, even for a short time, that
cannot be undone. If the child is returned after services have been
delivered, or even immediately, the State has reunified the family, not
prevented a removal.
The statute requires that title IV-E eligibility be established at
the time of a removal. If the State does not make reasonable efforts to
prevent a removal or fails to obtain a judicial determination with
respect to such efforts, the child can never become eligible for title
IV-E funding for that entire foster care episode because there is no
opportunity to establish eligibility at a later date. Once title IV-E
eligibility is initially established, the judicial determination
regarding the reasonable efforts the State made to finalize a
permanency plan is required to maintain title IV-E eligibility.
Comment: A couple of commenters stated that it was impossible to
satisfy the proposed requirements for making reasonable efforts to
prevent removals for unaccompanied refugee minors.
Response: We have no authority to waive title IV-E eligibility
requirements for any child or group of children. If the State wishes to
claim title IV-E funds for unaccompanied refugee minors, then all title
IV-E eligibility criteria must be satisfied.

Section 1356.21(b)(2) Judicial Determination of Reasonable Efforts to
Finalize a Permanency Plan

This section (formerly Sec. 1356.21(b)(3) and (b)(4) of the NPRM)
describes the requirements for obtaining a judicial determination to
finalize a permanency plan.
Comment: Most commenters expressed confusion regarding when the
``clock'' starts for obtaining judicial determinations that the State
made reasonable efforts to reunify the child and family or to make and
finalize an alternate permanency plan. A few commenters observed that
often the permanency plan may change from reunification to an alternate
permanency plan prior to the State obtaining a judicial determination
regarding its efforts to reunify the child and family. These commenters
requested clarification about which permanency plan the court must rely
on to make its determination in such situations. A couple of commenters
suggested that we not permit States to change the permanency plan
outside a permanency hearing or without a court order so that the court
has an opportunity to determine if the State agency did make reasonable
efforts to reunify the child and family before sanctioning the change
in the permanency plan.
Response: After reviewing the comments and the proposed
requirements, we determined that our proposal in the NPRM with respect
to reasonable efforts to reunify a child and family and to make and
finalize alternate permanency plans was confusing and not responsive to
actual practice. To simplify the requirements, we have consolidated the
reasonable efforts requirements regarding efforts to reunify the child
and family and to make and finalize alternate permanent placements into
a single requirement related to making reasonable efforts to finalize a
permanency plan. In new paragraph (b)(2), we require the State to
obtain a judicial determination that it made reasonable efforts to
finalize the permanency plan that is in effect, regardless of what it
is, within 12 months of the date the child is considered to have
entered foster care in accordance with the definition of such at
Sec. 1355.20. The State must obtain such a determination every 12
months thereafter while the child is in foster care. Our purpose in
imposing this policy, as stated in the NPRM, is to tie the timing for
obtaining reasonable efforts determinations regarding permanency to the
timing of the permanency hearing because it is a logical determination
to make at such hearings and it would ease administrative burden.
In determining whether the State made reasonable efforts to
finalize a permanency plan, the court's determination should be based
on the permanency plan that is in effect at the time at which the
agency is seeking such a determination. We are not requiring the State
to obtain judicial determinations on its efforts regarding permanency
plans that it has abandoned.
We realize that obtaining reasonable efforts determinations
regarding finalizing permanency plans every 12 months while a child is
in foster care is a significant departure from current practice and
that States will need transition time to implement this requirement for
children who have been in foster care for more than 12 months.
Therefore, we will not take adverse action against States who cannot
comply with this requirement for a period of 12 months from the
effective date of this final rule.
Finally, we think it appropriate to permit the State agency to
alter the permanency plan outside a permanency hearing and will not
require the court to approve such a plan before the State agency can
act on it. When a State agency has placement and care responsibility
for a child, it is responsible for setting and acting on the
appropriate permanency plan. We understand that, in some States, courts
provide such active oversight during the course of a permanency hearing
that the court actually sets the permanency plan. That is the State's
prerogative. Federal law does not require the courts to play such a
prescriptive role in the permanency planning process. Section 475(5)(C)
of the Act requires the court to review the permanency plan presented
to it by the State agency.
Comment: We received several comments objecting to the proposal
that children, for whom judicial determinations are not made regarding
reasonable efforts to reunify and to make and finalize alternate
permanency plans, become ineligible for title IV-E funding until such a
determination is made.
Response: We did not amend the regulation based on these comments
because the requirements for judicial determinations are statutory. To
be eligible for title IV-E funding, section 472(a)(1) of the Act
requires the State to obtain a judicial determination regarding its
reasonable efforts of the type described in section 471(a)(15) of

[[Page 4053]]

the Act. Section 471(a)(15) of the Act, among other things, requires
the State to make reasonable efforts to finalize permanency plans. If
these criteria are not satisfied, the child is ineligible for title IV-
E funding.
Comment: We received a number of comments opposing the requirement
that judicial determinations regarding reasonable efforts to finalize
permanency plans be made at least every 12 months. These commenters
suggested that such determinations should be required every six months
to be consistent with the ASFA's focus on expedited permanency.
Response: We agree that six-month intervals for making
determinations regarding reasonable efforts to effect a permanency plan
may provide an incentive for expediting permanency. However, requiring
such judicial determinations to be made at the interval suggested would
limit the flexibility provided at section 475(5)(B) of the Act for
holding the periodic reviews required therein before an administrative
body rather than a court. We cannot justify a requirement that would
limit flexibility provided by the statute, particularly since we know
it would place a significant burden on the courts and State agencies.
Therefore, we have made no changes to the regulation.
We believe that the six-month periodic reviews will encourage a
timely permanency planning process. These reviews must determine, in
part: ``the continuing necessity for and appropriateness of the
placement, the extent of compliance with the case plan * * * and to
project a likely date by which the child may be returned to and safely
maintained in the home or placed for adoption or legal guardianship.''
Thus, the statute already compels States to review reasonable efforts
to achieve permanency every six months.
Comment: One commenter requested that we amend the regulatory
language to ensure that courts oversee reunification efforts between
unaccompanied refugee children and the party designated as the child's
permanent placement.
Response: The courts oversee the State agency's efforts to finalize
permanency plans, regardless of what the permanency plan is or with
whom the child is to be placed. Therefore, we do not believe we must
regulate such an assurance for a particular group of children in foster
care.
Section 1356.21(b)(3) Circumstances in Which Reasonable Efforts Are
Not Required to Prevent a Child's Removal From Home or to Reunify the
Child and Family
This section (formerly Sec. 1356.21(b)(5) in the NPRM) describes
the circumstances in which reasonable efforts to prevent a removal or
to reunify a child with his or her family are not required.
Comment: Many commenters requested additional guidance in defining
aggravated circumstances in which reasonable efforts are not required.
The majority of commenters supported State autonomy in identifying
those aggravated circumstances but wanted further guidance or
clarification.
Response: Congress provided specific examples of aggravated
circumstances in the statute which we have included in the regulation.
Section 471(a)(15)(D)(i) of the Act requires the State to define, in
law, those aggravated circumstances in which reasonable efforts are not
required. We believe that the State legislative process will produce
decisions that are based on public debate, consideration, and broad
input from all interested and relevant parties. We strongly believe
that providing Federal guidance beyond what is included in the statute
is inconsistent with the intent of the statute to provide States with
maximum flexibility in this area.
Comment: Several commenters urged us to permit the court to
determine that reasonable efforts are not required in circumstances
other than those enumerated at section 471(a)(15)(D) of the Act when
the State agency provides evidence to that effect. These commenters
believe that the interpretation that they are requesting is consistent
with the Rule of Construction at section 478 of the Act. Many
commenters made this suggestion because they were uncomfortable with
the preamble discussion which submits that an assessment of the family
that indicates that the child is not safe in the home would satisfy the
reasonable efforts requirements.
Response: We understand the commenter' concern; however, the
statute specifically enumerates those circumstances in which reasonable
efforts are not required. Section 478 of the Act clarifies that the
State court continues to have discretion when making judgements about
the health and safety of the child. However, it does not grant ACF the
authority to add or change the list at section 471(a)(15)(D) of the
Act. As written, the statute requires the State to make reasonable
efforts in all cases unless one of the circumstances at section
471(a)(15)(D) of the Act exists.
The aforementioned interpretation of the statute should not be
construed to support unwarranted attempts to preserve families. Rather,
when reasonable efforts are required, the State agency and the courts
must determine the level of effort that is reasonable, based on safety
considerations and the circumstances of the family. Sometimes, based on
its assessment of a family, the State agency determines that it is
reasonable to make no effort to maintain the child in the home or to
reunify the child and family. In such circumstances, if the court
determines that the agency's assessment of the family is accurate and
its actions were appropriate, the court should find that the agency's
efforts in such cases were reasonable, not that reasonable efforts were
not required.
Comment: One commenter recommended that we permit Indian tribes to
identify in tribal code those aggravated circumstances in which
reasonable efforts are not required in accordance with section
471(a)(15)(D)(i) of the Act.
Response: When entering into a title IV-E agreement with a State,
the tribe must adhere to the list of aggravated circumstances defined
in State law. The statute at section 471(a)(15)(D)(i) specifically
requires that the aggravated circumstances in which reasonable efforts
are not required be defined in State law. Moreover, other public
agencies and tribes that enter into agreements with the State agency
are not operating or developing their own title IV-E program separate
and apart from that operated under the State plan. Rather, the agency
or tribe is agreeing to operate the title IV-E program established
under the State plan for a specific population of children in foster
care. Therefore, the other public agency or tribe is bound by any State
statute related to the operation of the title IV-E program. We expect
the State child welfare agency to engage the tribes, and any other
agency with which it has title IV-E agreements, in developing its list
of aggravated circumstances.
Comment: In the preamble to proposed Sec. 1356.21(b)(5), we
explained that a court determination that reasonable efforts to prevent
a child's removal were not required did not remove the State's
obligation to make reasonable efforts to reunify the child and family.
Only a judicial determination that reasonable efforts to reunify the
child and family are not required removes that obligation. Several
commenters requested that we

[[Page 4054]]

eliminate this requirement because they believe it to be unduly
burdensome.
Response: We believe that States will frequently encounter
circumstances in which they are exempt from making efforts to prevent a
child's removal from the home but it is appropriate to make reasonable
efforts to reunify the child and family. We think the policy described
in the comment above ensures that decision making is based on the
individual circumstances of the child and family rather than blanket
exceptions. Moreover, the statute supports such an interpretation.
Section 471(a)(15)(D) of the Act enumerates circumstances in which
reasonable efforts of the type described at section 471(a)(15)(B) of
the Act are not required. Two distinct types of reasonable efforts are
described at section 471(a)(15)(B) of the Act: to prevent removals; and
to reunify children and their families. Therefore, a judicial
determination exempting the State from providing each type of
reasonable effort must be made. We have retained this requirement.
Comment: A couple of commenters requested that we clarify that we
are not prescribing the timing for judicial determinations that
reasonable efforts are not required to reunify the family.
Response: The commenters are correct that we are not prescribing
the time frame for judicial determinations that reasonable efforts to
reunify the child and family are not required. We do not think it is
appropriate to prescribe a time frame for obtaining such a
determination and have made this clarification in paragraph (b)(3).
However, all judicial determinations with respect to reasonable efforts
to prevent removals, even determinations that such efforts are not
required, must be obtained within the time frame prescribed in
paragraph (b)(1), within 60 days of the date the child is removed from
the home.
Comment: We received a number of comments regarding the list of
felonies at Sec. 1356.21(b)(5) used to identify when reasonable efforts
are not required. The comments included requests for clarification
regarding whether a criminal conviction is required, support for
requiring a criminal conviction, and opposition to requiring a criminal
conviction.
Response: We have amended Sec. 1356.21(b)(3)(ii) to clarify that a
parent must be convicted of one of the felonies enumerated before the
court can determine that reasonable efforts are not required. (We have
similarly amended language in Sec. 1356.21(i)(1)(iii) which requires
TPR when a parent is convicted of one of the enumerated felonies). The
statutory language specifically calls for a court of competent
jurisdiction to find that one of the felonies was committed. In our
opinion, this language requires a criminal conviction. As we stated in
the NPRM, however, in circumstances in which the criminal proceedings
have not been completed or are under appeal, the court that hears child
welfare dependency cases determines whether it is reasonable to attempt
to reunify the child with his/her parent. It is important for this
decision to be based on the developmental needs of the child and the
length of time associated with completion of the criminal proceedings
or the appeals process.

Section 1356.21(b)(4) Concurrent Planning

This section (formerly Sec. 1356.21(b)(6) in the NPRM) implements
the statutory provision which provides States the option of using
concurrent planning.
Comment: One commenter suggested that we require an assessment of
every family to determine the appropriateness of concurrent planning
before the State implements it for that family.
Response: We agree that the commenter's suggestion is consistent
with good practice. However, it would be overly prescriptive to include
such a requirement in regulation since concurrent planning is an option
for the State, and not a mandate.
Comment: One commenter encouraged us to prohibit States from using
concurrent planning for unaccompanied refugee minors.
Response: The choice to engage in concurrent planning is optional
and should be made on a case-by-case basis. We see no reason to
prohibit the use of this technique for a particular group of children
in foster care.
Comment: One commenter asked if the State must present the
concurrent plan to the court and if the court must make a reasonable
efforts determination with respect to the concurrent plan.
Response: The answer to both questions is no. The State is not
required to present the plan for the purposes of obtaining a reasonable
efforts determination by the court. The concurrent planning option is
addressed in the reasonable efforts section because, among other
things, that section of the regulation addresses permanency planning
activities, of which concurrent planning is one.
Comment: One commenter suggested we broaden the concurrent planning
language in the regulation to include all types of permanency plans. As
presented in the NPRM, we only address concurrent planning with respect
to reunification and adoption. The commenter thinks the regulation
should clarify that concurrent planning may be used regardless of what
the alternate permanency plan is.
Response: We agree and have amended the language in paragraph
(b)(4) accordingly.

Section 1356.21(b)(5) Use of the Federal Parent Locator Service

This section (formerly Sec. 1356.21(b)(7) in the NPRM) provides for
the use of the Federal Parent Locator Service (FPLS) to search for
absent parents in order to expedite permanency for children.
Comment: A number of commenters suggested we provide guidance
regarding the timing for use of the Federal Parent Locator Service.
Comments ranged from suggesting that we encourage States to locate
absent parents and/or putative fathers as soon as possible to requiring
that such searches take place within 30 days of the child entering
foster care.
Response: While we agree with the idea that searches for absent
parents should be conducted as soon as possible after a child enters
care, we do not think it is appropriate to include such practice level
guidance in regulation. We have, however, made an editorial change in
paragraph (b)(5) to note that we are not restricting when a State can
seek the services of the FPLS.

Section 1356.21(c) Contrary to the Welfare Determination

This section sets forth the requirements that there be a judicial
determination stating that remaining in the home would be contrary to
the child's welfare.
Comment: We received numerous comments regarding the distinction in
the NPRM between emergency and non-emergency removals. The comments
were similar to those we received regarding reasonable efforts to
prevent removals; that the distinction is not consistent with actual
practice in many States.
Response: We concur and have removed the distinction between
emergency and non-emergency removals in the final rule. Now a State
will need to obtain a contrary to the welfare determination in the
first court order removing the child from the home, regardless of
whether there is an emergency or non-emergency situation.
Comment: Commenters overwhelmingly opposed our proposed requirement
that contrary to the welfare determinations be made at the first
hearing pertaining to the child's removal from home. The commenters
said we were inappropriately overturning policy established by the

[[Page 4055]]

Departmental Appeals Board (DAB) decision #1508, which permitted States
up to six months to obtain a contrary to the welfare determination.
Response: We recognize that some States may have made changes to
their contrary to the welfare policies based on this DAB decision.
However, at the time that the DAB made that ruling, the Department did
not have regulations addressing the timing of contrary to the welfare
determinations. Therefore, we are now taking this opportunity to
clarify in regulation our policy on this issue. Our reasons for
establishing this policy are set forth below:
The contrary to the welfare determination was the first of the
existing protections afforded to children and their families by the
Federal foster care program and has been in effect since the inception
of the program in 1961 when it was operated under title IV-A. The
statute then, and now, recognizes the severity of removing a child,
even temporarily, from home. This protection is in place because
Congress believed that judicial oversight would prevent unnecessary
removals and act as a safeguard against potential inappropriate agency
action. This policy is consistent with Congressional intent and stands
as proposed in the NPRM. The contrary to the welfare determination must
be made in the first court order sanctioning the removal of the child
from home, as is explicitly required at section 472(a)(1) of the Act.
Comment: Several commenters requested that we clarify that we did
not intend to consider an emergency order (sometimes referred to as a
``pick-up order'' or ``ex-parte order'') as the first court ruling for
the purpose of meeting the contrary to the welfare requirements.
Response: We did not make any distinction about the type of order
in which the contrary to the welfare determination is required. We mean
the very first court order pertaining to the child's removal from home.
If the emergency order is the first order pertaining to a child's
removal from home, then the contrary to the welfare determination must
be made in that order to establish title IV-E eligibility. We
understand that some States must change their practices and even State
statutes to meet this requirement. The critical nature of this
protection requires us to maintain this policy.
Comment: One commenter suggested we eliminate the contrary to the
welfare requirement because it provides an incentive for workers not to
remove children from their homes.
Response: The contrary to the welfare determination is a statutory
requirement and a critical protection that must be afforded to all
children and their families to assure that unnecessary removals are
minimized. We have, therefore, made no change to the regulation.
Comment: A few commenters opposed the policy to make children for
whom the contrary to the welfare requirements are not satisfied
ineligible for title IV-E funding. Commenters thought we were
particularly harsh in making the child ineligible for that entire
foster care episode.
Response: Consistent with the reasonable efforts to prevent
removals requirements, the contrary to the welfare determination is a
critical statutory protection and a criterion for establishing title
IV-E eligibility. Once a child is removed from home, the State cannot
go back and fix an inappropriate removal. If a child's removal from
home is not based on a judicial determination that it was contrary to
the child's welfare to remain in the home, the child is ineligible for
title IV-E funding for the entire foster care episode subsequent to
that removal because there is no opportunity to satisfy this
eligibility criterion at a later date. The same does not hold true for
all other eligibility criteria. For example, judicial determinations
regarding reasonable efforts to finalize a permanency plan, placement
in a licensed foster family home or child care institution, and State
agency responsibility for placement and care are all title IV-E
eligibility criteria that can be reestablished if lost or established
at a later time if missing at the beginning of a foster care episode.
This is not the case with the contrary to the welfare determination.
Comment: A number of commenters pointed out a technical discrepancy
between the contrary to the welfare and reasonable efforts to prevent
removals requirements regarding the consequence for not meeting these
requirements. In the NPRM, we stated that, if the reasonable efforts to
prevent removals requirements are not met, the child is ineligible for
title IV-E funding for the remainder of ``that stay'' in foster care.
The language for the contrary to the welfare determination states that
the child is not eligible for the duration of ``his/her'' stay in
foster care. The commenters are concerned that the language for the
contrary to the welfare requirements could be construed to mean the
child is never eligible for title IV-E funding again.
Response: We have amended the language at Sec. 1356.21(c) so that
it is consistent with that at Sec. 1356.21(b)(1). If the contrary to
the welfare requirements are not satisfied, the child is not eligible
for title IV-E funding for the remainder of that stay in foster care.
Comment: One commenter suggested that unaccompanied refugee minors
be exempt from the contrary to the welfare requirements.
Response: We have no authority to waive or exempt any group of
children in foster care from this provision. It is a title IV-E
eligibility criterion that must be satisfied if a State claims title
IV-E funding for a child.
Comment: A few commenters requested that we accept a judicial
determination that the removal of the child from the home was in the
best interests of society in satisfying the contrary to the welfare
requirements.
Response: This suggestion would not comport with the law or the
intent of the title IV-E foster care program. The statute is clear that
for title IV-E purposes a removal from the home must be based on a
determination that remaining in the home would be contrary to the
child's welfare. We have clarified this requirement previously in ACYF-
PIQ-91-03 which states that, ``* * * if the court order indicates only
that the child is a threat to the community, such language would not
satisfy the requirement for a determination that continuation in the
home would be contrary to the child's welfare * * *''. We find no basis
to overturn this policy as it is intended to ensure that children are
not unnecessarily removed from their homes and is based on the child's
best interests.
Section 1356.21(d) Documentation of Judicial Determinations
This section establishes the documentation requirements for the
reasonable efforts and contrary to the welfare determinations.
Comment: Many commenters wrote in support of our proposed policy of
requiring judicial determinations to be explicit, made on a case-by-
case basis, and so stated in the court order. Others felt that we were
being overly prescriptive in this section. Those commenters expressed
concern that this requirement prohibits the use of preprinted forms
that include checklists for making the necessary judicial
determinations. A few suggested that we permit the court order to
reference the facts in a court report, related psychiatric or psycho-
social report, or sustained petition to demonstrate that the
determination was based on the individual circumstances of that case. A
few commenters even suggested that we delete the paragraph in its
entirety.
Response: In keeping with the supportive comments we received on

[[Page 4056]]

the need for individualized judicial determinations, we have not made
changes in this section, but would like to clarify our reasons for the
policy. Our purpose for proposing this policy can be found in the
legislative history of the Federal foster care program. The Senate
report on the bill characterized the required judicial determinations
as ``* * * important safeguard(s) against inappropriate agency action *
* *'' and made clear that such requirements were not to become ``* * *
a mere pro forma exercise in paper shuffling to obtain Federal funding
* * *'' (S. Rept. No. 336, 96th Cong., 2d Sess. 16 (1980)). We
concluded, based on our review of State' documentation of judicial
determinations over the past years, that, in many instances, these
important safeguards had become precisely what Congress was concerned
that they not become.
Our primary concern is that judicial determinations be made on a
case-by-case basis and it was not our intent to create a policy that
was overly prescriptive and burdensome. States have a great deal of
flexibility in satisfying this requirement. The suggestion that the
court order reference the facts of a court report, related psychiatric
or psycho-social report, or sustained petition as a mechanism for
demonstrating that judicial determinations are made on a case-by-case
basis is an excellent one and would satisfy this requirement. If the
State can demonstrate that such determinations are made on a case-by-
case basis through a checklist then that is acceptable also.
Comment: A few commenters asked for clarification regarding the
language that must be contained in judicial determinations that satisfy
title IV-E eligibility criteria. The commenters wanted to know if these
determinations needed to use the exact terms ``reasonable efforts'' and
``contrary to the welfare.''
Response: Existing policy does not require the judicial
determinations to use the exact terminology of the statute. We have no
intention of overturning this policy. In fact, in the preamble to this
section in the NPRM, we specifically stated that,

* * * (t)he judicial determinations themselves need not
necessarily include the exact terms ``contrary to the welfare'' and
``reasonable efforts,'' but must convey that the court has
determined that reasonable efforts have been made or are/were not
required (as described in section 471(a)(15) of the Act), and that
it would be contrary to the welfare of a child to remain at home.

Comment: One commenter was opposed to our requiring specific
judicial determinations. The commenter felt we should be able to cull
out the fact that the court made the appropriate determinations by
reading the hearing record.
Response: While we can allow some flexibility in this area, it is a
statutory requirement that the specific judicial determinations
regarding reasonable efforts and contrary to the welfare be explicit in
court orders. Section 1356.21(d)(1) of the regulation states that we
will accept transcripts of the court proceedings if the necessary
judicial determinations are not explicit in the court orders.
Comment: Overwhelmingly, commenters were opposed to the prohibition
on nunc pro tunc orders. Commenters generally felt that the States
would be punished for the failure of the court to fulfill its
responsibility. Some commenters suggested we permit nunc pro tunc
orders only to clarify or correct technical errors.
Response: We placed the ban on nunc pro tunc orders because we
discovered that they were being used months, sometimes years, later to
meet reasonable efforts and contrary to the welfare requirements that
had not been met at the time the original hearing took place. We are
sensitive to the issue of technical errors. However, it is permissible
for States to use transcripts of court proceedings to verify that
judicial determinations were made in the absence of the necessary
orders. We have, therefore, made no changes to the regulation to modify
the ban on nunc pro tunc orders.
Comment: Some commenters opposed our decision not to accept
judicial determinations regarding reasonable efforts and contrary to
the welfare determinations which merely reference State statute.
Response: We believe that judicial determinations should be as
meaningful as possible and child-specific in order to ensure that the
circumstances of each child are reviewed individually. We believe that
explicit documentation is a way to ensure that such determinations
actually occur and could find no compelling argument to change our
position. We will not accept judicial determinations that merely
reference State statute to satisfy the reasonable efforts and contrary
to the welfare determinations.

Section 1356.21(e) Trial Home Visits

This section defines trial home visits for the purposes of
establishing title IV-E eligibility.
Comment: Most commenters supported allowing title IV-E eligibility
to continue for six months while a child is on a trial home visit.
Response: No response is necessary to these comments, but we
changed the term ``foster care setting,'' to ``foster care,'' to have
consistent terminology throughout the rule.
Comment: A commenter sought clarification of whether there is a
regulatory definition of a trial home visit.
Response: There is no regulatory definition of the term ``trial
home visit,'' as it is within the State's discretion to define. We do
not believe that it would be appropriate for us to develop a regulatory
definition. We also do not believe that we could develop a definition
that would be inclusive of the variety of State policies on trial home
visits or that a definition would be helpful. In practice, a trial home
visit is intended to be a short term option in preparation for
returning the child home permanently.
Comment: A commenter asserted that the law does not recognize or
define a trial home visit, and therefore, we have no authority to
require a determination of title IV-E eligibility for children who
reenter foster care after a trial home visit that lasts more than six
months.
Response: While it is true that the statute does not explicitly
address trial home visits and determinations of title IV-E eligibility,
we believe our policy is consistent with the statute. Further, we are
allowing maximum flexibility to States regarding establishing title IV-
E eligibility if the child reenters foster care. If a trial home visit
continues for an extended period, the circumstances of the original
removal are likely to have changed. For that reason, a State must
determine title IV-E eligibility upon a child's reentry into foster
care. When a trial home visit extends beyond six months and the child
returns to foster care, the child is then considered to be entering a
new placement.
Comment: A commenter sought clarification on whether a continuance
of a hearing scheduled to address the trial home visit satisfied the
requirement that for title IV-E funding to continue, a court must order
a longer visit.
Response: The provision establishes a six-month outer limit for a
trial home visit, except when a court orders a longer visit. A court
continuance of a hearing regarding the trial home visit does not
satisfy this requirement.

Section 1356.21(f)--Case Review System

This section establishes the case review system requirements for
the title IV-E foster care program.

[[Page 4057]]

Comment: A few commenters requested that the regulations contain
more guidance on how the case review system could determine the safety
of the child and ensure that the child was maintained safely in the
home.
Response: We believe that we can better respond to these comments
through the provision of technical assistance as this is more of a
practice issue. Nor do we think that prescribing how a State must
maintain a child's safety would be useful, since safety considerations
will vary on a case-by-case basis.
Comment: Another commenter suggested that the time frames for all
case review requirements (permanency hearings, TPR and periodic
reviews) were arbitrary, and should not be prescribed in regulations.
The commenter recommended that the time frames should be flexible to
accommodate court calendars.
Response: We do not have the authority to waive time frames for
case review requirements because the law requires that States hold
court hearings and periodic reviews within very specific time frames.
We believe that States must be held accountable to these statutory time
frames, and therefore, offer no changes to the case review system. A
major goal of ASFA was to tighten case review time frames to prevent
children from experiencing extended stays in foster care.

Section 1356.21(g) Case Plan Requirements

This section establishes the development and documentation
requirements for case plans.
Comment: The majority of commenters on this section supported the
requirement in Sec. 1356.21(g)(1) that States develop the case plan
with the child's parent or guardian.
Response: None needed.
Comment: Several commenters suggested that we amend
Sec. 1356.21(g)(1) to instruct the State to document a parent's
inability or refusal to participate in the development of the case
plan. Another commenter suggested that we require a State to document
in the case plan the efforts caseworkers employed to engage the parent
in the development of the plan.
Response: We expect that States will document efforts made to
engage parents in developing the case plan, but we do not believe that
it is necessary to prescribe this documentation. We believe it is
especially critical that caseworkers engage parents early on because of
the new time frames for permanency established by the ASFA.
Comment: A couple of commenters suggested that case plans be
developed within 30 days of a State agency assuming responsibility for
placement and providing services. One commenter believed that according
to our proposed rule, case plans might not be developed until 120 days
after a child has been actually removed from the home.
Response: The proposed rule at Sec. 1356.21(g)(2) mirrored the
language in existing regulations which required the case plan to be
developed within 60 days of a State assuming responsibility for
providing services, including placing the child. We are not convinced
that shortening the time frame for developing case plans to 30 days
will have any measurable effect on the quality and function of a case
plan, and therefore, are not changing the regulation in this manner. We
believe that one of the commenters may have misinterpreted the proposed
rule to mean that States have up to 60 days from the date the child is
considered to have entered care according to 475(5)(F) of the Act to
develop the case plan. We would like to clarify that the date the child
is considered to have entered foster care is irrelevant for purposes of
developing the case plan. Rather, the case plan must be developed
within 60 days of the child's removal from the home.
Comment: Some commenters suggested that we require specific steps
in Sec. 1356.21(g)(5) that a State should take to make and finalize
alternate permanency placements.
Response: We believe that the specific steps a State agency makes
to finalize alternate permanency placements are practice issues that
need to be determined on a case-by-case basis. Therefore, we are not
including these specific steps in regulation. A State agency can best
formulate the steps necessary to achieve permanency based on the best
interests of the child and the child's permanency plan. Court review
and oversight of the permanency plan should provide an adequate check
on State efforts in this area.
Comment: A few commenters suggested that we include in the final
rule the language from section 475(1)(E) of the Act, which requires
States, at a minimum, to document the steps and child-specific
recruitment efforts if the child's permanency goal is adoption or
placement in another permanent home. A couple of commenters also
requested that we include in the final rule the statutory examples of
child-specific recruitment efforts, i.e., the use of State, regional
and national adoption exchanges.
Response: We agree that a clearer statement of the requirement to
document the steps to permanently place the child is warranted. We
have, therefore, made changes to the language and included it in a new
paragraph, 1356.21(g)(5). We have amended the language in the
regulation so that the documentation of ``child specific recruitment
efforts'' is only applicable to children with case plan goals of
adoption and not to other permanency goals. We believe that the
illustrative list which mentions adoption exchanges and the reference
to recruitment limits the requirement to children with case plan goals
of adoption. States still need to document the steps taken to secure a
permanent placement for children with alternate permanency goals.
Comment: A commenter requested clarification on the differences
between a case plan and a permanency plan.
Response: We use the term ``case plan'' to refer to a plan
developed to meet the statutory requirements of sections
422(b)(10)(B)(ii), 471(a)(16), 475(1) and 475(5)(A) of the Act. The
case plan is a written document which includes, in part: a description
of the child's placement; a discussion of the safety and
appropriateness of the placement; a plan for ensuring that the child
and family receive services designed to facilitate the return of the
child to a safe home or to another permanent placement; the health and
educational records of the child; when appropriate, a description of
the programs and services which will facilitate the child's transition
from foster care to independent living; and, documentation of the steps
to place the child in a permanent living arrangement.
The ``permanency plan,'' while it may be described in the case plan
or may be a portion of the case plan, is what the planned permanency
living arrangement will be for the child, e.g., reunification with the
family, or adoption. We understand that some States use the term
``permanency plan'' synonymously with ``case plan,'' because it conveys
what the case plan is designed to accomplish. We do not believe that it
is necessary to require States to use distinct terminology, as long as
States meet the requirements of the statute and regulations.
Comment: A commenter suggested that we require courts to approve
case plans.
Response: There is no statutory basis for requiring judicial
approval of the State agency's case plan document. The court's role is
to: exercise oversight of the permanency plan; review the State
agency's reasonable efforts to prevent

[[Page 4058]]

removal from the home, reunify the child with the family and finalize
permanent placements; and to conduct permanency hearings. The State
agency is responsible for developing and implementing the case plan. We
see no additional benefit in requiring court approval of the case plan.
In addition, we are clarifying in the regulation at
Sec. 1356.21(g)(3) that it is not permissible for courts to extend
their responsibilities to include ordering a child's placement with a
specific foster care provider. To be eligible for title IV-E foster
care maintenance payments the child's placement and care responsibility
must either lie with the State agency, or another public agency with
whom the State has an agreement according to section 472(a)(2) of the
Act. Once a court has ordered a placement with a specific provider, it
has assumed the State agency's placement responsibility. Consequently,
the State cannot claim FFP for that placement.
Comment: A couple of commenters requested that we specify that long
term foster care is an appropriate permanency goal for unaccompanied
refugee minors.
Response: The determination of the appropriateness of a permanency
goal must be made by the State on a case-by-case basis and take into
consideration the best interests of the child. The State agency is the
responsible party for making this determination, with the oversight of
the court. We, therefore, will not regulate appropriate permanency
goals for any group of children.
Comment: A commenter suggested that we require case plans to
address the child's developmental needs and acquisition of life skills.
Response: We believe that the statute at section 475(1) of the Act
already requires States to document how the services provided will meet
the needs of the child, and in the case of a child whose goal is
independent living, the programs and services that will enable the
child to transition into independent living. We do not believe that any
additional regulation in this area is required.

Section 1356.21(h) Application of Permanency Hearing Requirements

This section implements the new ASFA requirements related to
permanency hearings and modifies and clarifies existing policy. It also
sets forth requirements for an administrative body appointed or
approved by the court to conduct permanency hearings.
Comment: One commenter was concerned that children would become
ineligible for title IV-E funding if the permanency hearing
requirements were not satisfied as prescribed.
Response: We agree that the language at paragraph (h)(1) presented
the permanency hearing as an eligibility criterion. That is not the
case and we have amended the paragraph to clarify that, in meeting the
requirements of the permanency hearing, the State must comply with
section 475(5)(C) of the Act and this paragraph. The permanency hearing
is a State plan requirement. It is not a title IV-E eligibility
criterion. If the State fails to meet the permanency hearing
requirements, it is out of compliance with the State plan. The child
does not become ineligible for title IV-E funding.
Comment: We received a number of comments regarding paragraph
(h)(2) which provides guidance related to determining for whom the
State must hold permanency hearings. Commenters thought the paragraph
was confusing and unclear about whether we were referring to initial or
subsequent permanency hearings. We also received a request not to refer
to these permanent placements as ``court sanctioned'' because the
commenter felt the terminology meant the court chooses the placement,
which would make the placement ineligible for title IV-E funding.
Response: In the NPRM, we proposed to retain the provision in the
current regulation for permitting the State to waive subsequent
permanency hearings for children placed in permanent foster family
homes. The number of comments received prompted us to review this
section of the proposed rule against the statutory language as amended
by ASFA. Based on that review, we have decided to delete the paragraph
in its entirety. When ASFA was passed the language from the definition
of permanency hearing in section 475(5)(C) of the Act that addressed
children remaining in foster care on a ``permanent or long term basis''
was removed. Instead, the ASFA requires the State to document a
compelling reason for establishing a permanency plan that does not call
for the child to exit foster care through reunification, adoption,
legal guardianship, or placement with a fit and willing relative.
Therefore, all children in foster care must be afforded the benefit of
permanency hearings while they are in foster care.
Although the paragraph in question has been deleted from the
regulation, we wanted to take this opportunity to respond to the
observation that the State may not claim FFP when the court orders a
specific placement for a child. The commenter is correct. Section
472(a)(2) of the Act requires responsibility for the child's placement
and care to be with the State agency. When the court orders a specific
placement, it in essence takes on the State's responsibility for the
child's placement and the child becomes ineligible for title IV-E
funding. To make this clear, we have amended Sec. 1356.21(g) to note
this restriction. The court may sanction a permanent foster family home
through its oversight of the permanency plan, however, this does not
give the court the authority to determine a specific placement for the
child.
Finally, we recognize that States will need transition time to
begin holding subsequent permanency hearings for children who formerly
were exempt from this requirement. We will not take adverse action
against a State that cannot comply with this requirement for a period
of 12 months from the effective date of this final rule.
Comment: One commenter suggested that the requirement in paragraph
(h)(2) for holding a permanency hearing within 30 days of a judicial
determination that reasonable efforts are not required, be extended to
circumstances beyond those identified at section 471(a)(15)(D) of the
Act. Another wanted us to exempt unaccompanied refugee minors from this
provision altogether.
Response: The statute is very specific to those circumstances
enumerated at section 471(a)(15)(D) of the Act. We have no authority to
expand that list. However, the State may hold a permanency hearing any
time it deems it to be appropriate to do so. We also have no authority
to exempt unaccompanied refugee minors from this requirement.
Comment: Some commenters noted that the language in
Sec. 1356.21(h)(3) (proposed Sec. 1356.21(h)(4)) is inconsistent with
the definition of ``permanency hearing'' at Sec. 1355.20. The language
at Sec. 1356.21(h)(3) limited the alternate planned permanent living
arrangement options to a foster family home.
Response: We concur with the commenter and have amended paragraph
(h)(3) to use the exact statutory language, `` * * * another planned
permanent living arrangement * * *.''
Comment: Some commenters objected to the inclusion of an example of
a compelling reason for the State to choose another planned permanent
living arrangement over reunification, guardianship, or adoption in the
text of the regulation. These commenters believe that examples included
in regulation become de facto policy.

[[Page 4059]]

Response: We do not believe that examples in regulation become de
facto policy, nor were they intended to do so. However, we do not
believe the example provided in the NPRM fully illustrates how to
comply with this provision and have included additional examples in
paragraph (h)(3) to more accurately reflect its intent.

Section 1356.21(i) Requirements for Filing a Petition to Terminate
Parental Rights Per Section 475(5)(E) of the Social Security Act

This section implements the new ASFA provisions regarding
termination of parental rights.
Comment: Many commenters sought exemptions for specific populations
from the requirement for States to file or join TPR petitions for
certain children who have been in foster care for 15 out of the most
recent 22 months, abandoned infants, or children of parents who have
committed certain felonies. Several commenters noted that many tribal
cultures and traditions do not recognize the concepts of terminating
parental rights and adoption, and requested a specific exemption from
the application of the provision to tribes. Several commenters also
wanted an exemption for unaccompanied refugee minors in foster care.
The commenters noted that according to Federal regulations for child
welfare services to unaccompanied refugee minors (see 45 CFR part 400,
subpart H) such children ``are not generally eligible for adoption
since family reunification is the objective of the [unaccompanied
refugee minor child welfare] program.'' Similarly, some advocates and
providers who work to preserve or reunify foreign-born children with
their families, noted that the TPR requirement may hinder international
reunification efforts by switching the focus from reunification to
adoption after fifteen months. A few commenters also wanted exemptions
for juveniles adjudicated delinquent, children voluntarily placed in
foster care, and children deemed ``persons in need of services'' who
are not considered abused or neglected.
Response: We have no statutory authority to provide an exemption
for particular populations from the requirement to file a TPR for
certain children. Thus, we did not make any exemptions to the
requirement in the regulation. The TPR requirement is designed to
encourage State agencies to make timely decisions about permanency for
children in foster care. Congress developed the TPR provision to be
applied to all children in foster care, whatever their entry point into
the system. Exempting groups of children from the requirements would be
contrary to ASFA's goal to shorten children's time in foster care.
However, we are changing Sec. 1356.21(i)(2)(ii) in two ways. First, to
clarify that the State agency must apply the exceptions to the
requirement to file a petition for TPR by considering the best
interests of the individual child on a case-by-case basis. Second, we
added two more examples of compelling reasons regarding unaccompanied
refugee minors and situations involving international legal or foreign
policy issues.
Comment: A commenter requested an explanation of how the TPR
requirement applies to Indian tribes and the relationship to Indian
Child Welfare Act requirements. A commenter suggested that the
regulation clarify that tribal agencies can elect not to file a
petition for TPR in certain circumstances.
Response: The Indian Child Welfare Act of 1978 (ICWA), Public Law
95-608, was passed in response to concerns about the large number of
Indian children who were being removed from their families and tribes
and the failure of States to recognize the culture and tribal relations
of Indian people. ICWA, in part, creates procedural protections and
imposes substantive standards on the removal, placement, termination of
parental rights and consent to adoption of children who are members of
or are eligible for membership in an Indian tribe. The addition of the
requirement in section 475(5)(E) of the Act to file a petition for TPR
for certain children in no way diminishes the requirements of ICWA for
the State to protect the best interests of Indian children.
Furthermore, States are required to comply with the ICWA requirements
and develop plans that specify how they will comply with ICWA in
section 422(b)(11) of the Act.
The requirement in section 475(5)(E) of the Act applies to Indian
tribal children as it applies to any other child under the placement
and care responsibility of a State or tribal agency receiving title IV-
B or IV-E funds. While we recognize that termination of parental rights
and adoption may not be a part of an Indian tribe's traditional belief
system or legal code, we have no statutory authority to provide a
general exemption for Indian tribal children from the requirement to
file a petition for TPR. If an Indian tribe that receives title IV-B or
IV-E funds has placement and care responsibility for an Indian child,
the Indian tribe must file a petition for TPR or, if appropriate,
document the reason for an exception to the requirement in the case
plan, on a case-by-case basis.
Comment: We received many comments on the time frame in which a
State must file a petition for TPR according to Sec. 1356.21(i)(1)(i).
Many commenters objected to our requiring a State to file a petition
for TPR at the end of the child's fifteenth month in foster care, and
suggested that we allow a grace period of up to 60 days. These
commenters believed that to meet this time frame, a State agency would
need to make decisions on permanency before the end of the fifteenth
month, which they felt was unreasonable. A few commenters supported the
provision as written. A commenter suggested that the State file before
the end of the fifteenth month, and another suggested that we establish
no time frames for filing the petition.
Response: We believe that States will have adequate time to prepare
petitions for TPR, when appropriate, by the end of the child's
fifteenth month in foster care. Furthermore, we can find no statutory
basis for allowing a grace period for States to file a petition for TPR
for children who have been in foster care for 15 out of the most recent
22 months. To meet the permanency hearing requirements, the State
agency must prepare a permanency plan for the child to present to the
court within 12 months. This will require the State agency to begin
working with the family early on, so that the State agency can make
appropriate decisions about permanency goals for the child, including
whether to file a petition for TPR and pursue adoption.
Comment: A commenter suggested that once a State agency has
determined that a child is an abandoned infant or a parent has
committed certain felonies as described in section 475(5)(E) of the
Act, the State file a petition within one week of that determination.
The NPRM required that a State file such petitions within 60 days of
the determination of abandonment or a parent's felony conviction.
Response: We do not concur with the commenter's suggestion to
require a State to file a TPR petition within one week of a
determination that the child is abandoned or that a parent has
committed certain felonies. We continue to believe that 60 days is a
reasonable period of time for the State agency to complete the
necessary administrative and legal work required to file a petition for
TPR.
Comment: A few commenters expressed uncertainty about whether a
State must file a petition for TPR after a child has been in foster
care for 15 months or 22 months.

[[Page 4060]]

Response: The State agency is required either to file a petition
for TPR or document an exception to the requirement when a child has
been in foster care for 15 cumulative months out of 22 months. If the
child has been in care for 15 cumulative months, the State should not
wait for 22 months of a child's stay in foster care to elapse before
filing a petition for TPR. We do not believe that any change to the
regulation is necessary.
Comment: A commenter expressed concern that the TPR requirement
would be misinterpreted as prohibiting a State from filing a petition
for TPR before a child has been in foster care for 15 months out of the
most recent 22 months.
Response: We would like to clarify that a State continues to have
the discretion to file a petition for TPR whenever it is in the best
interests of the child to do so. In addition, Congress passed a Rule of
Construction at section 103(d) of Public Law 105-89 reaffirming a
State's ability to file a petition for TPR before it is mandated by
Federal statute or for reasons other than those indicated in Federal
law. Therefore, States should view the Federal statutory time frames of
15 out of 22 months of a child's stay in foster care as the maximum
length of time that can elapse before a State agency must file a
petition or document an exception for TPR.
Comment: We received a range of suggestions and comments on our
proposal to exclude runaway episodes and trial home visits from the
calculation of the 15-month time frame a child spends in foster care
for TPR purposes. A few commenters opposed our exclusion of runaway
episodes and trial home visits for various reasons. One commenter
suggested that including trial visits and runaway episodes in the
calculation was a way to ensure that no child languished in foster
care. Another commenter suggested that we allow States to determine
whether such time should be included. A third commenter was concerned
that excluding runaway episodes and trial home visits increased the
record keeping burden on States. A couple of commenters supported the
provision as written. These commenters believed that our proposed
policy is consistent with efforts to reunify the family when that is
the goal.
Response: We considered all of these viewpoints and do not believe
a change in the regulation is warranted. We believe that it is
inappropriate to count time a child is on a runaway episode because
during that time the agency is unable to provide services to the child
or the family. Similarly, counting time when a child is at home with
the family toward the time for calculating when to file a petition for
TPR is inappropriate. While the child may be in the legal custody and
under the supervision of the State agency, both the child and the
parent consider him or her to be at home. However, as we discussed
above, the State has the discretion to file a petition for TPR whenever
it is in the best interests of the child to do so.
Comment: A commenter suggested that we define the number of
calendar or business days that constitute a month for the purposes of
calculating 15 out of the 22 most recent months for the TPR
requirement. The commenter suggested we define a month as 30 days,
presumably so that time less than a month spent in foster care would
not be counted toward the requirement.
Response: We have decided not to define a ``month'' and leave it to
the State's discretion.
Comment: We received a range of comments to our proposal that
States need only apply the provision to file a TPR petition when a
child has been in care 15 out of the most recent 22 months once, when
the State determines that an exception applies. Several commenters
voiced support for the proposed rule as written. Another commenter
supported the proposed provision overall, but suggested that we include
language in the regulation that explicitly requires States
periodically, to reevaluate the need to file a petition for termination
of parental rights. Many commenters opposed the provision believing
that children may stay indefinitely in foster care once a State makes
an exception to the TPR requirement.
Response: We understand the concern that children may continue to
languish in foster care once a State applies an exception if this
decision is never reevaluated. Nevertheless, we did not change the one-
time application of the TPR provision for two reasons. First, the
statutory construction of the provision makes it applicable only once.
Second, we believe that there are at least two existing opportunities
for the State to reevaluate an exception to the TPR requirement: the
six-month periodic review and the permanency hearing.
We encourage States to use the six-month periodic review to review
the continuing appropriateness of an exception to the requirement to
file a petition for TPR within the context of the requirements in
section 475(5)(B) of the Act. States also have another opportunity to
reevaluate the decision not to pursue a TPR petition at the permanency
hearing, which must be held at least every 12 months. The permanency
hearing must address whether the child's permanency plan is to reunify
the child with the family, file a petition for TPR and move toward
adoption, or place the child with a fit and willing relative, legal
guardian, or in another planned permanent living arrangement. The State
is required to reevaluate the permanency plan during the course of the
permanency hearing, regardless of whether the State agency has
previously applied an exception to the requirement to file a petition
for TPR. As such, we believe there are multiple safeguards to ensure
that children do not languish in foster care.
Comment: A few commenters expressed doubt that States would use the
exceptions in paragraph (i)(2) in appropriate cases and suggested that
we discourage States from using the exceptions in the regulations. The
commenters expressed concern that the exceptions could be used as a
loophole to cover a State agency's deficiency in proper case planning
or service delivery.
Response: We understand these concerns, however, the exceptions to
the requirement to file a petition for TPR are statutory. We expect
that States will apply the exceptions to filing a petition for TPR
judiciously and on a case-by-case basis. We believe the intent of the
requirement to file a petition for TPR for certain children was to
encourage State agencies to make timely decisions about permanency for
children in foster care. The exceptions were developed to allow State
agencies to exercise individual case planning and seek an alternative
permanent placement when adoption may not be appropriate or available
for a child.
Comment: A couple of commenters raised concerns about the exception
to filing a petition for TPR in situations where the child is placed
with a relative. The commenters sought more guidance on how and when
States should use this exception.
Response: The statute provides the State with the option not to
file a petition for TPR when a child is placed with a relative. We
encourage the use of relative placements as an option for ensuring that
the child achieves permanency, and not only as a temporary placement. A
State must continue to develop and reevaluate a child's case plan goal
and conduct permanency hearings if the State decides not to file a
petition for TPR because the child is placed with a relative. Relative
placements should not preclude consideration of legalizing the
permanency of the placement through adoption or legal guardianship.
Comment: The majority of comments supported our decision not to
define the

[[Page 4061]]

term ``compelling reason,'' as it is used in section 475(5)(E) of the
Act, to allow exceptions to the requirement to file a petition for TPR.
A couple of commenters wanted us to define the term.
Response: We concur with the majority of commenters who did not
want us to define the term ``compelling reason'' as used in the statute
and have made no changes to the regulation. We believe that the
determination of what constitutes a ``compelling reason'' must be based
on the individual circumstances of the child and the family, and that a
Federal definition would not be helpful in that process. We believe
that the examples provided on possible compelling reasons provide
adequate guidance about the practical application of this term without
limiting a State's flexibility.
Comment: We received both criticism and support for listing two
examples of a compelling reason not to file a petition for TPR. Many
commenters did not want the two examples of compelling reasons included
in the regulation for a variety of reasons. Some commenters believed
that the examples would become ``de facto policy,'' and would therefore
exempt groups of children from the requirement. Similarly, other
commenters thought that specifying examples of compelling reasons was
inconsistent with our decision not to define the term. Some commenters
believed that the examples were too broad, and if used, would mitigate
the effectiveness of the requirement.
On the other hand, many commenters supported the inclusion of the
examples of compelling reasons. Some commenters expressed that the
examples provided critical guidance to the field and would temper
concerns about increases in the number of ``junk'' petitions and legal
orphans. Other commenters wanted us to include the language from the
preamble discussion on the examples in the regulation text, and some
wanted us to expand the list of examples of compelling reasons.
Commenters suggested that the expanded list of compelling reasons could
include: A child belongs to a particular population (i.e., adjudicated
delinquents, Indian tribal children, and unaccompanied refugee minors);
a child has not completed treatment in a residential facility; a
child's parent had not been notified by the State agency that TPR was a
possible outcome; a parent has made significant measurable progress to
meet the requirements of the case plan; or, a child had a permanency
goal other than adoption.
Response: In developing the two broad examples, we wished to
provide some basic guidance to States short of the definition that most
commenters opposed. We have, therefore, decided to retain the two
examples of compelling reasons in the proposed regulation and added two
additional examples. Unaccompanied refugee minors are those children
who enter the country unaccompanied and are not destined to a parent,
relative, or custodial adult. We received a number of comments noting
that the Office of Refugee Resettlement (ORR) within the Department
maintains a policy that reunification, in general, is the appropriate
goal for these children while they are classified as unaccompanied
refugee minors. ORR's regulation at 45 CFR part 400, Subpart H, defines
an unaccompanied refugee minor and the rare circumstances in which
adoption may be appropriate. In order to clarify that we do not intend
to contradict HHS policy in this regard, we are listing this as another
example of a compelling reason for not filing or joining a petition for
TPR. We have also added a fourth example to address situations in which
international legal or foreign policy considerations may affect a
child's status. We are not including other populations as part of the
examples of compelling reasons because we believe that the broad
examples provide a framework that allows a State sufficient room to
make decisions regarding filing a petition for TPR on a case-by-case
basis that is in the best interests of an individual child.
Comment: One commenter suggested that the regulations clarify that
compelling reasons for not filing for TPR may be defined in tribal
policy. Another commenter suggested clarifying that the tribe rather
than the State could document the compelling reason.
Response: The regulations are written from the State perspective
because the State agency is ultimately responsible for the
administration of the title IV-E program. If the tribe has
responsibility for the placement and care of a child pursuant to a
title IV-E agreement with a State, not only would it be permissible for
the tribal agency to identify the compelling reason for not filing a
petition for TPR, it would be the tribal agency's responsibility.
Tribes and States may not develop a standard list of compelling reasons
for not filing for TPR that exempts groups of children. Such a practice
is contrary to the requirement that determinations regarding compelling
reasons be made on a case-by-case basis.
Comment: A commenter suggested that we clarify the terminology for
the second compelling reason example in Sec. 1356.21(i)(2)(ii)(B) from
``insufficient grounds for filing a petition to terminate parental
rights exist,'' to ``no grounds to file a petition to terminate
parental rights exist.''
Response: We concur that the suggested language more accurately
conveys our point that a compelling reason for not filing a petition
for TPR may be that there are no grounds in State law on which to
pursue a legal action to terminate parental rights. Therefore, we have
made the suggested change in the regulation text. States, however, are
not permitted to have State laws that carve out groups of the foster
care population to be exempted from the requirement to file a petition
for TPR.
Comment: A commenter wanted us to elaborate on the exception to TPR
where the State has not provided the services identified in the case
plan. The commenter may be concerned that we were not encouraging
States to provide services in a more timely way. Another commenter
questioned whether this exception also applied in situations where the
specified services were not available, how the determination is made,
and by whom.
Response: This exception to the requirement to file a petition for
TPR is taken directly from the statute, as are all of the exceptions.
We do not believe it is necessary to elaborate in the regulation on how
the State agency should make the determination that the necessary
services have not been provided. The exception affirms that the
provision of services, early in a child's placement in foster care, is
often crucial to either enabling the child to return to a safe and
stable home or making a determination to move forward with a petition
for TPR. By using the exception, a State agency can avoid penalizing
the parent if the necessary services are not available or accessible to
a parent or child. We encourage States to strengthen service delivery
systems and to use this exception judiciously. We will be monitoring
State' use of all of the exceptions in the child and family services
review.
Comment: Many commenters sought clarification about the requirement
at Sec. 1356.21(i)(3) for a State concurrently to recruit and approve
an adoptive family for a child while a State petitions for TPR. Most
commenters wanted language added to the regulation text that
interpreted the statutory provision to mean that a State agency should
begin the process of finding an adoptive family at the time a petition
for TPR is filed. Some commenters were concerned that the proposed rule
and statutory language imply or encourage a State agency to wait until
it has an adoptive family available for the child before the State
agency proceeds with filing a

[[Page 4062]]

petition for TPR. Another commenter wanted to know if this requirement
could be waived for children who did not have a goal of adoption.
Response: We understand the commenter' concern regarding the
wording of this requirement and have made some changes to the
regulatory language in Sec. 1356.21(i)(3). The final rule now clarifies
that the State must begin the process to find an adoptive family for
the child concurrently with filing a petition for TPR. We believe that
this provision was developed to ensure that a child does not wait
unnecessarily between the time a TPR is granted and the child's
permanent placement in a home. The requirement should not be
interpreted to suggest that a State wait until an adoptive family is
found for a specific child before a TPR petition is filed. We cannot
waive the requirement to find an adoptive family for a child
concurrently with the filing of a petition for TPR as there is no
statutory authority to do so.
Comment: Several commenters sought clarification on whether the
fact that a child had been in foster care for 15 out of the most recent
22 months was legal grounds for a State to file a TPR petition. Some
commenters believed that we should specifically exclude the time frame
as grounds for a TPR, while others thought that we should require or
permit the time frame to be grounds for TPR.
Response: States are neither required nor prohibited by Federal
statute from making a child's length of stay in foster care legal
grounds to file or grant a petition for TPR. We have made no changes to
the regulation in response to these comments.
Comment: A couple of commenters asked for greater specificity on
the roles of the court and the agency with respect to the exceptions to
filing a petition for TPR for certain children in foster care. In the
preamble to the NPRM we noted that there was no requirement for the
court to make a judicial determination if a State made a compelling
reason exception to filing a petition for TPR. A commenter disagreed
and suggested that Congressional intent was for the State agency to
make an evidentiary case to the court regarding whether an exception
was appropriate for the child. Another commenter suggested that we
specify that court decisions prevail in situations where the court and
State agency disagree on pursuing TPR.
Response: The requirement to file a petition for TPR or to document
an exception to the requirement is the State agency's responsibility.
The statutory language is clear that for a compelling reason, or any
other exception to the requirement to file a petition for TPR, there is
no requirement for a judicial determination. However, the State agency
is to document in the case plan, which is available for court review,
the compelling reason for why filing a petition for TPR is not in the
best interests of the child. Clearly, courts play an important
oversight role for children in foster care. The court exercises
authority in making decisions at permanency hearings regarding the
child's permanency plan. It is at these times that the court should
review State agency decisions with regard to the requirement to file a
petition for TPR. Finally, we have no authority to suggest that courts
prevail in situations where there is a disagreement between the court
and the State agency on filing a petition for TPR. We have made no
change to the regulation in response to these comments.
Comment: Several commenters sought regulations on the
responsibilities of courts and State agencies to finalize proceedings
to terminate parental rights once the State agency has filed a petition
for TPR. A couple of commenters proposed that we suggest a particular
time frame for the court to finalize a TPR, and one suggested a time
frame of six months. A third commenter suggested that we require the
State agency to continue to file petitions for TPR if a court denies
the original petition.
Response: We understand the concern that court and State agency
delays occur once a petition for TPR is filed such that it could be
several years before a child is finally adopted. However, our authority
does not extend into the finalization of proceedings for termination of
parental rights as this is a matter of State law. Therefore, we did not
make any changes to the regulation in response to these comments.
Comment: A few commenters suggested that we note the importance of
making reunification efforts with both parents and when necessary,
filing TPR petitions on both parents.
Response: We believe that we have addressed this issue in a
separate section of the regulation. We indicate in Sec. 1356.21(b)(5)
that State title IV-B/IV-E agencies can use the Federal Parent Locator
Service (FPLS) in expediting permanency. In that paragraph we encourage
States to use the FPLS to locate absent parents in order to explore
permanent placements or pursue TPR. To avoid duplication, we chose to
make such a statement in the reasonable efforts section to encourage
States to find noncustodial parents early in a child's stay in foster
care.
Comment: We received several comments that requested funding or
program guidance on staff training, assessments, case planning, and
concurrent planning around permanency.
Response: We believe that we can better provide practice-level
guidance through technical assistance rather than through regulation.

Section 1356.21(j) Child of a Minor Parent in Foster Care

This section implements the statutory provision related to the
title IV-E eligibility of the child of a minor parent who is in foster
care.
Comment: A commenter suggested replacing ``must include amounts * *
* '' to ``may include amounts * * * '' as some States give minor
parents financial responsibility for the child.
Response: To revise this provision to be permissive would be in
conflict with the statutory requirement. Section 475(4)(B) of the Act
specifically requires that the foster care maintenance payment made on
behalf of the minor parent ``shall'' include amounts that may be
necessary to cover the foster care maintenance costs of a child of a
minor parent when the parent and child are in the same foster family
home or child care institution. We, therefore, did not change this
paragraph of the regulation to reflect the commenter's suggestion.

Section 1356.21(k) Removal From the Home of a Specified Relative and
Sec. 1356.21(l) Living With a Specified Relative

Section 1356.21(k) describes, for the purposes of meeting the
requirements of section 471(a)(1) of the Act, a ``removal.'' Section
1356.21(l) sets forth the required conditions for living with a
specified relative prior to removal from the home.
Because of the complexity of this issue, we thought it best to
explain again how the policy has changed before discussing the comments
on this section of the regulation. To be eligible for title IV-E
funding, a child must, among other things, be removed from the home of
a relative as the result of a voluntary placement agreement or a
judicial determination that continuation in the home would be contrary
to the child's welfare. Under prior policy, we interpreted the term
``removal'' to mean a physical removal. As a result, if a child was
residing with an interim caretaker who was a relative between the time
the child lived with the custodial parent and when he or she entered
foster care, and the State intended to remove custody from the

[[Page 4063]]

parent but let the child remain with that interim caretaker relative,
the child could not be eligible for title IV-E funding because the
child was not physically removed from the home of a relative. This
policy created a disincentive for relative placements. To remove this
inequity between relative and nonrelative caregivers, we now permit the
removal of the child from the home, in such circumstances, to be a
``constructive'' (i.e., a nonphysical) removal.
As a result of the comments we received on this proposed policy, we
closely examined the examples provided in the preamble to the NPRM and
the proposed regulatory text against the statute. As a result of this
further review, we do not believe that example (3) on page 50078 of the
preamble should have been included. In example (3), the living with and
removal from requirements were satisfied by a physical removal from the
interim relative caretaker with whom the child lived for seven months.
A physical removal from the home of an interim relative caretaker
cannot satisfy title IV-E eligibility because it is not the result of a
voluntary placement or a judicial determination, as required by section
472(a)(1) of the Act.
We offer a summary of examples to clarify when a child would be
eligible for title IV-E foster care under the rule. These examples
presume that the child is eligible for AFDC (according to the State
plan in effect on July 16, 1996) in the home of the parent or other
specified relative:
The child lived with either a related or nonrelated
interim caretaker for less than six months prior to the State's
petition to the court for removal of the child. The State licenses the
home as a foster family home and the child continues to reside in that
home in foster care. The child is eligible for title IV-E foster care
if he or she lived with the parent within six months of the State's
petition to the court, and was constructively removed from the parent
(i.e., there was a paper removal of custody).
The child lived with either a related or nonrelated
interim caretaker for more than six months prior to the State's
petition to the court. The State licenses the home as a foster family
home and the child remains in that home in foster care. The child is
ineligible for title IV-E foster care since he or she had not lived
with the specified relative within six months of the State's petition
to the court, and was not removed from the home of a relative. (The
constructive removal does not apply to this situation because it had
been more than six months since the child lived with the parent.)
The child lives with a related interim caretaker for seven
months before the caretaker contacts the State to remove the child from
his/her home. The agency petitions the court and the court removes
custody from the parents and the agency physically removes the child
from the home of the interim related caretaker. The child would not be
eligible for title IV-E foster care since he or she had not lived with
the parent or other specified relative from whom there was a
constructive removal within six months of the initiation of court
proceedings. (Although the child was physically removed from the home
of the related interim caretaker, that removal cannot be used to
determine title IV-E eligibility since the removal was not the result
of a voluntary placement agreement or judicial determination, as
required in section 472(a)(1) of the Act. Nor does constructive removal
apply to this situation because it had been more than six months since
the child lived with the parent from whom custody was removed.)
The child lived with a nonrelated interim caretaker for
seven months before the caretaker asks the State to remove the child
from his/her home and place the child in foster care. The child is
ineligible for title IV-E foster care because he or she had not lived
with a parent or other specified relative within six months of the
petition.
The child is in a three-generation household in which the
mother leaves the home. The grandmother contacts the State agency four
months later and the agency petitions the court within six months of
the date the child lived with the mother in the home. The State
licenses the grandmother's home as a foster family home and the child
continues to reside in the home in foster care. The child is eligible
for title IV-E foster care since he or she lived with the parent within
six months of the State's petition to the court, and was constructively
removed from the parent's custody.
The regulatory text has been amended to reflect this change in
policy and to more clearly delineate the requirements of living with
and removal from the home of a specified relative.
Comment: Several commenters supported the policy on living with and
removal from the home of a specified relative. One commenter noted that
the new policy enhances a child's ability to remain with a relative and
preserve the child's culture, as well as minimizes the number of out-
of-home placements a child otherwise might experience.
Response: No changes were necessary in response to these comments.
Comment: Three commenters opposed the policy. Some of the
commenters shared beliefs that: (1) The proposed policy creates a six-
month statute of limitations period within which an abused and
abandoned child must apply for foster care or be forever barred from
receiving such benefits; (2) the policy impermissibly narrows title IV-
E eligibility for children living with a relative; and (3) the policy
discriminates against relative homes, and is in violation of the
language and intent of ASFA.
Response: We have retained the proposed policy for the reasons that
follow. In order to be eligible for title IV-E foster care, a child
must be eligible for AFDC in his or her own home in the month of the
voluntary placement agreement or initiation of court proceedings (i.e.,
petition). However, if a child is not living with the custodial
relative in the month of the voluntary placement agreement or petition,
then the statute allows a six-month period during which the child may
reside with an interim caretaker and still be eligible for title IV-E.
In these circumstances, if a child is not living with the specified
relative from whom he or she is being removed in the month of the
voluntary placement agreement or petition, the child can be deemed
eligible for that month if: (1) The child had been living with that
specified relative at some time within the six-month period prior to
that month; and (2) would have been eligible in the home of that
specified relative in the month of the voluntary placement agreement or
petition if the child had continued to reside with the relative. This
is a longstanding Departmental policy based upon the statutory language
in section 472(a)(4)(ii) of the Act, and consistent with the purpose of
the program which is to provide continuing support for an AFDC-eligible
child when he or she cannot live safely at home.
It is a misinterpretation to suggest that the proposed policy
narrows title IV-E eligibility for children living with relative
caretakers and is discriminatory against relatives as foster
caretakers. Rather than limiting a child's eligibility or
discriminating against relative homes, the policy supports children
remaining with related caretakers when the State determines that they
cannot live safely in their own homes, and applies the living with and
removal from requirements equitably to both relative and nonrelative
caretakers. Under the previous policy, if a parent left a child with a
nonrelated caretaker and the agency petitioned the court for

[[Page 4064]]

removal of custody from the parent in less than six months from the
date the child lived with the parent, the otherwise eligible child
would have been eligible to receive title IV-E if the interim caretaker
was subsequently licensed or approved as a foster family home by the
State and the child remained in that home. Conversely, if the parent
left the child with a related caretaker and the same circumstances
existed, the otherwise eligible child would not have been eligible for
title IV-E foster care because: (1) In the absence of the parents, the
home and customary family setting was considered to have shifted to the
home of the other relatives; and (2) the child was living with another
relative at the time of petition and not physically removed from that
home. The revised policy provides equitable treatment in either
circumstance and encourages a child's continued placement with a
relative caretaker when he or she cannot remain safely at home. The
policy does not discriminate against relatives, and is consistent with
the intent of ASFA.
Comment: Two commenters referenced the Land v. Anderson case and
related litigation that are currently in the Ninth Circuit Court of
Appeals. One commenter recommended that we follow the analysis in the
Land v. Anderson case and the other commenter urged us to withdraw the
proposed policy and await the outcome of the Ninth Circuit case.
Response: The final rule with respect to the issue before the above
referenced court reflects longstanding Departmental policy that is in
keeping with the statutory requirements. That policy continues to be in
effect. Should the Ninth Circuit Court of Appeals rule against the
Department, that decision would be subject to further review by the
Supreme Court, and it would not, in any event, necessarily require a
nationwide change in Federal law or policy. No changes were made to the
regulation as a result of this comment.
Comment: One commenter suggested that the six-month time limit
should be waived for relative care to support the child remaining with
a family member.
Response: We are unable to waive the six-month time limit because
it is statutory. The statute at section 472(a)(4) of the Act requires,
among other things, that a child be living with and removed from the
home of a specified relative at the time of the voluntary placement
agreement or initiation of court proceedings. Section 472(a)(4)(B)(ii)
of the Act provides an exception to that requirement by allowing a six-
month period that the child can live with an interim caretaker and
still be eligible for title IV-E foster care. We do not have the
authority to waive a statutory provision and, therefore, did not revise
the regulations. The flexibility we have afforded States, however, is
to allow constructive removals (i.e., paper or nonphysical removals) in
order to provide equal treatment for related and nonrelated caregivers.
Comment: One commenter supported allowing ``legal'' removals, but
did not believe that the revised interpretation of the removal
requirement was clearly expressed. The commenter suggested language be
included that more clearly states that ``legal'' removals are allowed.
Response: We concur with the comment and have revised the
regulatory language to clarify that either physical or constructive
removals are allowed.
Comment: A commenter suggested that ``interim caretaker'' be
defined.
Response: We have revised the regulatory language to clearly
provide for the use of constructive removals. In doing so, we have
removed all references to interim caretakers. Therefore, there is no
need to define this term in the regulation.
Comment: A commenter expressed concern that the restriction of
``within six months'' appears to contradict other areas of title IV-E
eligibility where removal from the home of a specified relative is a
determining factor.
Response: Removal from the home of a specified relative is one of
several criteria for title IV-E eligibility, as is the six-month living
with requirement. The commenter did not cite references for the
sections of the Act about which the concern was raised and we do not
find any specific citation that conflicts with the six-month
limitation. No changes were made to the regulation based upon this
comment.
Comment: One commenter asked if a child must be AFDC eligible as if
he or she had been living in his or her home in the removal month even
in circumstances where the child is not physically removed from that
home.
Response: In determining title IV-E foster care eligibility, a
child must be eligible for AFDC in the month in which either a
voluntary placement agreement is entered into or a petition to the
court is initiated to remove the child from his or her home. If the
child is not living with a specified relative at that time, then
section 472(a)(4)(B)(ii) of the Act allows a six-month period of time
during which the child could have been living with an interim
caretaker. Under these circumstances, a child can be considered AFDC
eligible in the month of the voluntary placement agreement or petition
if: (1) The child had been living with the specified relative at some
time within the six-month period prior to that month; and (2) would
have been eligible in the home of the specified relative in that month
if he or she had continued to reside with the relative.
Comment: One commenter asked if there must be a physical removal
for a child who lives with the same relative after legal custody is
transferred to the State.
Response: Two possible scenarios can be derived from this question.
In the first, a child is living with his or her parent, custody is
transferred to the State but the child remains in the home of the
parent. In this situation, the child is not in foster care and
ineligible for title IV-E foster care. However, in a second scenario,
the child is living with a related interim caretaker for less than six
months prior to the State's petition to the court for removal of the
child, and custody is removed from the parent. The related caretaker is
licensed as a foster family home and the child continues to live in
that home. In this situation, the child remains with the related
caretaker, who is now a licensed foster parent, and the child is
eligible for title IV-E foster care.
Comment: One commenter asked whether the child must have been
living with the specified relative from whom custody is removed. The
commenter pointed out that, at times, a child could be absent from such
a home for six months or longer.
Response: Yes. The child must have been living with the specified
relative from whom custody is removed at some time within the six-month
period prior to the month of the voluntary placement agreement or
initiation of court proceedings.
Comment: One commenter questioned the State agency's ability to
make after the fact assessments of the need for foster care placement
when families make such placements initially without the agency's
involvement or determination that such placement/family disruption was
necessary. The commenter expressed concern that this could create an
incentive to get higher foster care rates in lieu of lower TANF rates.
Response: The purpose of title IV-E foster care is to provide
assistance for the maintenance of AFDC-eligible children who cannot
remain safely in their own homes. It is not for the purpose of
maintaining children in the homes of noncustodial relatives when
protection in their own home is not an issue. The revised policy
assures equitable treatment for relative and nonrelative interim
caretakers when the

[[Page 4065]]

child can no longer remain safely with the parent or other custodial
relative. There are, however, certain requirements that must be met for
AFDC-eligible children in every case: (1) There must be either a
voluntary placement agreement between the custodial relative and the
State agency, or court findings that it is contrary to the child's
welfare to remain at home and that reasonable efforts have been made to
prevent placement; (2) the foster care provider's home (whether related
or not) must be fully licensed or approved in accordance with the State
licensing standards; and (3) the protective and permanency requirements
in the Act must be met. We want to emphasize that title IV-E foster
care funds are available only when the child is at-risk in his or her
own home and all other eligibility criteria are met.

Section 1356.21(m) Review of Payments and Licensing Standards

This section sets forth the State plan requirement regarding review
of the appropriateness of payments under title IV-E, as well as State
licensing/approval standards for foster homes. No comments were
received on this paragraph and therefore we made no changes to the
regulation.

Section 1356.21(n) Foster Care Goals

This section provides the requirements related to foster care goals
that must be established by States.
Comment: One commenter requested an explanation of the criteria for
these goals, and who will identify the goals.
Response: The criteria for establishing these goals, and who will
identify the goals, is left to the individual States to determine. One
example would be to set goals to reduce the number of children, in a
given year, who have remained in foster care for at least 24 months by
a certain percentage for each succeeding year and provide the steps
that the State will take to achieve these incremental reductions.
States also may want to align their foster care goals with those used
for the annual report on State performance under section 479A of the
Act.

Section 1356.21(o) Notice and Opportunity To Be Heard

This section implements the new requirement of the case review
system that mandates giving notice of hearings and an opportunity to be
heard to foster parents, preadoptive parents and relative caregivers.
Comment: We received several comments concerning the notification
process for this requirement. Some commenters suggested that the
regulation not be prescriptive concerning who must provide the notice,
while others recommended that we clarify the manner in which the notice
is given and who is responsible for providing the notice. One commenter
cautioned that we not presume that foster parents will receive notice
in the same manner as other parties. Another commenter suggested that
the State agency be responsible for providing notice. One commenter
raised a concern that more court hearings could occur as a result of
improper notice. Another commenter recommended that we state the intent
of this provision is for notice to be given in a timely manner and that
the hearings be conducted in a location accessible to the child's
family.
Response: We concur with the commenters who suggested that the
regulation not be prescriptive with respect to who must provide the
notice of the opportunity to be heard. Since the State title IV-B/IV-E
agency has the ultimate responsibility for implementing the case review
system requirements in section 475(5)of the Act and we do not regulate
the courts, we believe that such decisions are best left to the State.
Although we expect that a State will choose to use the same procedure
for giving notice to foster parents, relative caretakers, and
preadoptive parents as it does for the parents and others who are
parties to the case, this is a State decision.
We also agree with the comment that suggested we clarify that the
notification of the opportunity to be heard be given in a timely manner
and have revised paragraph (o) accordingly. The right to notification
of an opportunity to be heard is meaningless unless the individuals are
notified of the opportunity to be heard at the review or hearing in a
timely manner.
In addition, we understood the suggestion that we require that the
location of the reviews and hearings be accessible to parents to mean
the parents from whom the child was removed and not the foster parents,
preadoptive parents or relative caretakers. We did not revise the
regulation as a result of this comment since such a requirement is not
covered by the statutory provision, the purpose of which is to afford
the primary caregivers for a child who is in an out-of-home placement
the opportunity to provide relevant information about the child at the
review and hearing.
Comment: One commenter suggested that the regulatory language for
this section be the same as that in the Act.
Response: These regulations implement the Act and clarify for
States the requirements related to the statutory provisions. We believe
that this section needs additional language to clarify the statutory
provisions and therefore have not revised the regulation in the
suggested manner.
Comment: One commenter suggested that we require States to provide
extended family members with written notice of a child's entrance into
foster care, timelines and permanency goals.
Response: States are not prohibited from providing extended family
members with written notification of a child's entrance into foster
care, if doing so is appropriate for the situation, in the best
interests of the child, and consistent with the administration of the
State's title IV-E State plan. However, we believe that the suggestion
goes beyond the statutory authority; therefore we have not made this a
requirement in the regulation.
Comment: One commenter requested more guidance on what
documentation the State has to give caregivers, e.g., court reports, in
preparation for their appearance in court. This commenter also
requested that we require States to provide notice to caregivers who
have had the child for at least three months during the two years
preceding the hearing.
Response: The requirement that States give foster parents,
preadoptive parents and relative caretakers notice of and an
opportunity to be heard affords these individuals with a right to
provide input to these reviews and hearings. However, it does not
confer a right to appear in person at the review or hearing. The
requirement can be met as the State sees fit, such as by notification
to the individuals that they have an opportunity to attend the review
or hearing and provide input, or notification that they can provide
written input for consideration at the review or hearing. Since this
provision does not make these individuals a legal party to the case and
does not give them a right to appear at the review or hearing, it is up
to the State to determine what documentation, if any, to provide,
consistent with Federal and State confidentiality laws.
In addition, requiring that a State provide notice of an
opportunity to be heard to previous caregivers goes beyond the
statutory language. The statute requires only that notice be given to
caregivers ``providing care'' for the child. This does not, however,
prohibit a State from offering previous caregivers the opportunity to
be heard, if the State determines it is appropriate for a particular
child's situation.

[[Page 4066]]

Comment: We received several comments requesting clarification
around the types of hearings these individuals should be attending, and
the extent of their participation in the hearings. One commenter
recommended that the regulation clearly lay out the types of hearings
at which foster parents, preadoptive parents and relative caretakers
have notice/ opportunity to be heard. Some commenters pointed out that
section 475(5)(G) of the Act gives foster parents, preadoptive parents,
and relative caregivers the right to notice and the opportunity to be
heard at ``any review or hearing,'' and is not limited to ``any review
or permanency hearing.'' However, one commenter did not feel it would
make sense to give them the opportunity to participate in purely
procedural hearings, such as discovery hearings or hearings addressing
purely legal issues. One commenter requested that HHS delete the
requirement that these individuals be provided an opportunity to be
heard at the six-month case reviews, and that the decision to invite
individuals other than the biological parents should be made on a case-
by-case basis.
Response: The proposed regulation provides the types of hearings
and reviews that require notice and an opportunity to be heard for
foster parents, preadoptive parents and relative caretakers. We made a
minor revision to the regulatory language, however, to clarify that the
review is the six-month periodic review as described in section
475(5)(B) of the Act. We did not make any further revisions as a result
of these comments as we do not believe that they can be supported by
the statute. The statute specifically requires that these caretakers be
provided notice and an opportunity to be heard at ``any review or
hearing'' held with respect to the child. We, therefore, do not have
the statutory authority to waive that requirement by allowing a State
to determine on a case-by-case basis whether these caretakers should be
provided an opportunity to be heard at the reviews. Also, as stated
above, the notice and opportunity to be heard does not mean that these
individuals have to be invited to the reviews and hearings. This
requirement can be met by providing the caretakers with an opportunity
to present either written or oral input that can then be considered at
the review or hearing.
Comment: Some commenters suggested that these individuals should
not have the right to be present during entire hearings or access to
confidential information regarding biological parents that is likely to
be disclosed in a full hearing.
Response: We believe that the regulation is consistent with the
statute with respect to the rights of the foster parents, preadoptive
parents and relative caretakers regarding this provision and,
therefore, did not make any changes. The provision only offers an
opportunity to be heard and does not afford these individuals standing
as a party in the case. As discussed in the preamble of the NPRM, the
court, however, is not precluded from making appropriate rulings with
respect to any of these individuals. Rather than prescribing in
regulation that these individuals cannot be present during the entire
hearing or be provided with confidential information, we believe those
decisions are best left to the State and the court to determine,
consistent with Federal and State confidentiality laws and the best
interests of the child.
Comment: We received several comments concerning legal standing and
party status for foster and preadoptive parents and relative
caregivers. One commenter suggested adding language to the effect that
the court can give standing to these individuals, and further
recommended that the States set criteria for receiving standing, such
as when the child has been in a particular foster home for a year. One
commenter believes that these individuals need not be given the right
to legal counsel because they do not have standing.
Response: State courts have the authority to make appropriate
rulings with respect to these individuals. We believe that to impose
requirements on States related to standing goes beyond the intent of
the provision. In addition, the right to provide input on a case at a
hearing does not convey the right to legal counsel to these
individuals. We have not made any changes to the regulation in response
to these comments.

Section 1356.22 Implementation Requirements for Children Voluntarily
Placed in Foster Care

This section sets forth requirements States must meet to receive
Federal financial participation (FFP) for children removed from home
under a voluntary placement agreement.
Comment: We received several comments expressing concern around the
application of the TPR requirement to children voluntarily placed in
foster care. Some commenters believe that application of the TPR
provision to this population goes beyond the statute. One commenter
requested that unaccompanied refugee minors placed voluntarily be
exempt from the TPR provision.
Response: We do not have the statutory authority to provide an
exemption from the requirement to file a TPR for particular populations
of children. Thus, we did not change the regulation to provide an
exemption for children, including unaccompanied refugee minors, placed
in foster care by a voluntary placement agreement. The TPR requirement
is designed to encourage State agencies to make timely decisions about
permanency for children in foster care. Congress developed the TPR
provision to be applied to all children in foster care, whatever their
entry point into the system. Exempting groups of children from the
requirements would be contrary to ASFA's goal to shorten a child's time
in foster care. Exceptions to the requirement to file a petition for
TPR must be applied on a case-by-case basis considering the best
interests of the child, consistent with Sec. 1356.21(i)(2).
Comment: Many commenters expressed concern that there are
insufficient protections for parents who voluntarily place their
children in foster care, and that States have an affirmative obligation
to notify parents of the ASFA requirements. Some commenters suggested
that States be required to provide written notification to the parents
or guardian at the time they voluntarily place their children in foster
care of the requirements for periodic reviews, case plans, permanency
hearings, and the TPR provisions.
Response: The statute and the regulation provide sufficient
protections to parents who voluntarily place their children in foster
care. Section 472(f)(2) of the Act requires that the voluntary
placement agreement specify, at a minimum, the legal status of the
child and the rights and obligations of the parents or guardian, the
child, and the agency while the child is in an out-of-home placement.
Further, the statute at section 472(g) of the Act suggests that a
voluntary placement agreement is a temporary status, such that the
parents or guardian have the capacity and right to revoke such
agreement unless a court determines that return to the home would be
contrary to the best interests of the child. The regulation at
Sec. 1356.22(c) emphasizes the rights of the parents in this regard as
it requires the State to have uniform procedures, consistent with State
law, for revocation by the parents of a voluntary placement agreement.
In addition, the regulation at Sec. 1356.21(g) requires that the case
plan be developed jointly with the parent or guardian. Furthermore, it
is incumbent

[[Page 4067]]

upon the State to work toward a timely reunification when the case plan
goal is to return the child to his or her parents or guardian. We,
therefore, do not believe that it is necessary to further prescribe
what the State must present to the parents or guardian when they
voluntarily place a child in foster care.
Comment: One commenter was opposed to the requirement that States
establish a procedure for revocation of a voluntary placement agreement
by the parents. The commenter believed that this is an unnecessary
requirement unless the Department has evidence suggesting that parents
have difficulty revoking these agreements and having their children
returned.
Response: The requirement that States establish a procedure for
revocation of a voluntary placement agreement is not new. This has been
included in the voluntary placement agreement requirements since the
regulations were issued in 1983. In fact, at that time, the Department
determined that since the practice among States in returning children
voluntarily placed is sufficiently responsive, we did not need to
impose further requirements on States to specify the timing and
procedures for the return home of a voluntarily placed child, as public
comment had suggested at that time. We believe the requirement that the
State have uniform procedures, consistent with State law, for
revocation of such agreements provides a safeguard for parents who
voluntarily place their children into foster care and, therefore, did
not revoke this requirement.
Comment: One commenter suggested that Sec. 1356.22(a)(3) be revised
to read, ``45 CFR 1356.21 (f), (g), (h), and (i).''
Response: We concur with these comments and have amended the
regulation accordingly. We agree that paragraph (f) should be included
since it sets forth the sections of the statute to which a State must
adhere in order to meet the case review system requirements. The case
review system applies to all children in foster care, including
children placed through a voluntary placement agreement. In addition,
we concur with the inclusion of Sec. 1356.21(g) in this provision since
the State is required to develop a case plan for each child in foster
care, including those voluntarily placed. We also agree with the
exclusion of paragraph (j) since that sets forth the requirements for
an infant born to, and placed with, a minor parent who is in foster
care.

Section 1356.30 Safety Requirements for Foster Care and Adoptive Home
Providers

This section pertains to safety requirements for foster care and
adoptive home providers, and sets forth conditions under which States
cannot license or approve foster and adoptive homes if the State finds
that prospective foster or adoptive parents have been convicted of
certain crimes.
Comment: We received several comments and questions regarding the
application of the criminal records check requirement to the
individuals and groups contained within the definition of foster care
in Sec. 1355.20 of the regulation. Some commenters recommended that the
criminal records check provision not be applied to child care
facilities or to unlicensed relatives. One commenter suggested that
child care facilities not be included in the requirement, but that upon
discovery of a criminal record, the facility be required to undertake
corrective action.
Response: To address these comments, we would like to clarify the
requirements for States that institute the criminal records check
provision and the requirements for States that do not. The criminal
records check provision does not extend to child care facilities; the
statute specifically limits this requirement to prospective foster and
adoptive parents. However, in order to be an eligible provider for
title IV-E funding purposes, in all cases where no criminal records
check is conducted, the licensing file must include documentation that
safety considerations with respect to the caretakers have been
addressed. This safety documentation requirement applies to child care
institutions in every situation and to prospective foster and adoptive
parents in States that opt out of the criminal records check provision.
Since this provision is a title IV-E funding requirement, it does not
extend to relative homes that are not licensed or approved in
accordance with State licensing standards because children placed in
such homes are not eligible for title IV-E funding.
Comment: Two commenters asked if this section applies to currently
licensed foster parents and approved adoptive parents whose licensure
or approval predates the passage of ASFA.
Response: The provision applies to ``prospective'' foster and
adoptive parents. Therefore, the provision applies to foster and
adoptive parents who are licensed or approved after the date of
enactment of the law (November 19, 1997), or the approved delayed
effective date if the State required legislation to implement the
provision.
Comment: A commenter requested that we extend the requirements for
a criminal records check by encouraging States to complete checks for
any member of the household over the age of 18.
Response: To require that a State conduct criminal records checks
for anyone other than prospective foster and adoptive parents goes
beyond the statute.
Comment: One commenter requested clarification that this provision
not be interpreted to require prospective foster/ adoptive parents to
be U.S. residents for the last five years. The commenter expressed
belief that such an interpretation would be unfair to prospective
caretakers of refugee minors.
Response: This provision does not impose a time-specified U.S.
residency requirement on prospective foster and adoptive parents.
However, for the State to claim title IV-E funds on behalf of a foster
or an adoptive child, the prospective parent and the child must meet
the requirements in the Personal Responsibility and Work Opportunity
Reconciliation Act (PRWORA) of 1996 related to qualified aliens. ACYF-
CB-PIQ-99-01 provides guidance with respect to when alien foster and
adoptive parents and children can be eligible for title IV-E.
Comment: Several comments were received requesting flexibility in
awarding adoptive/foster home licenses to individuals who have been
convicted of certain crimes within the last five years. There is a
concern regarding the requirement to automatically deny eligibility to
prospective adoptive and foster parents who have had drug convictions
within five years. It was recommended that States be allowed to make
individual assessments of the prospective parent's ability to care for
a child. Also, it was recommended that States have flexibility in
decisions concerning rehabilitated relatives.
Response: The statute is very explicit in specifying that in such
situations ``final approval shall not be granted.'' We, therefore, did
not make the suggested changes because the statute does not support
such an interpretation.
Comment: One commenter recommended that the phrase in
Sec. 1356.30(b)(4), ``violent crime, including rape, sexual assault * *
*,'' be revised to reflect the ASFA language of ``crime involving
violence.'' The commenter was concerned that certain nonviolent crimes,
such as robbery, may involve violent actions that should be considered
when determining the

[[Page 4068]]

suitability of prospective foster and adoptive parents.
Response: We concur with this comment and have revised the
regulation to reflect the statutory language.
Comment: A commenter expressed concern with the inconsistency of
allowing States to reunite children with biological parents who have
committed certain crimes, but denying child placements with foster or
adoptive parents who have committed these same crimes.
Response: We do not believe the statute is inconsistent in this
regard. Although the safety of children is the paramount concern in
both in-home and out-of-home situations, biological parents, who have
certain rights with respect to their children, cannot be compared to a
foster parent, who is a substitute caretaker when the child cannot be
maintained safely in his or her own home. It is up to a State's
discretion to determine, in individual cases, whether a child and
biological parent should be reunited in cases where the parent has been
convicted of certain crimes. It also is incumbent upon the State in its
custodial role of a child to provide scrutiny of its foster parents to
assure they meet certain established safety (and other) standards
before a child is placed in the home.
Comment: A question was raised about whether ``a drug-related
offense'' includes an alcohol-related felony conviction.
Response: The criminal records check provision at section
471(a)(20)(A) of the Act would apply in such situations. Alcohol is
considered a drug and a felony conviction for an alcohol-related
offense is a serious crime. Therefore, unless the State opts out of the
provision, an alcohol-related felony conviction within the last five
years would prohibit the State from placing children with the
individual for the purpose of foster care or adoption under title IV-E.
Comment: One commenter supported the criminal records check
provision, but raised a concern that prospective foster and adoptive
parents not be subjected to duplicate or multiple requirements when
several jurisdictions, with differing licensing and background checks,
are involved. The commenter noted that involvement of multiple
jurisdictions in an adoption may sometimes become a stumbling block to
achieving permanency and finalizing adoptions.
Response: This issue is a matter of State discretion. The criminal
records check provision is intended to assure the safety of children in
foster care and adoptive placements. The State agency is responsible
for determining the type of background checks necessary to meet the
safety standards established by the State.
Comment: A commenter requested clarification concerning which
criminal records check provisions apply to title IV-B and which apply
to title IV-E. The commenter believes that Sec. 1356.30(b), (c), and
(d) are requirements only for title IV-E, and that (e) should be for
children in licensed homes receiving title IV-E in States that opt out
of the criminal records check requirement. The commenter suggests that
an additional item (f) be added to address safety as a title IV-B
requirement for all non-title IV-E out-of-home placements.
Response: The criminal records check requirement is both a title
IV-E State plan provision and an eligibility requirement for title IV-E
funding. The specific statutory language of the provision limits its
authority to eligibility for the title IV-E foster care maintenance
payment and adoption assistance programs under a State's title IV-E
State plan. We, therefore, do not have the statutory authority to apply
the requirement for criminal records checks to all non-title IV-E out-
of-home placements of children and did not make this change in the
regulation.
The regulation at Sec. 1356.30(e), as proposed in the NPRM, would
apply more broadly than only to those States that opt out of the
criminal records check requirement. Since we may not have made this
clear, we have separated the requirements of this paragraph into two
sections for the final rule to clarify the criteria for title IV-E
eligibility. We revised Sec. 1356.30(e) to apply only in States that
opt out of the criminal records check. We also added a paragraph (f) to
set forth the safety requirements that must be addressed for child care
institutions, which are not covered under the criminal records check
provision. This revision only clarifies the requirements; it does not
change the substance of the requirements in any way.
Comment: We received several comments concerning the inability to
claim title IV-E until the criminal records check is completed.
Commenters noted that the length of time required to complete
background checks, particularly Federal Bureau of Investigations (FBI)
checks, unfairly penalizes States. Several commenters recommended that
States be allowed to claim FFP retroactively to the date of placement
once the criminal records check has been completed, while others
suggested that HHS allow provisional licensure for up to six months as
long as application for the criminal records check is made within 30
days of placement. Another commenter suggested that States be allowed
to claim FFP if the safety of the placement is documented, including
checking the names of prospective parents against the State's child
abuse registry, while awaiting completion of the background check.
Response: Federal matching funds for payments to foster family
homes under title IV-E cannot be permitted until all State requirements
for licensure are satisfied. Further, the criminal records check
provision restricts eligibility for title IV-E funding until after the
home has been finally approved for the placement of a title IV-E
eligible child. In fact, the plain language of the criminal records
check provision requires such checks on prospective foster and adoptive
parents ``before'' the parent can be approved for ``placement of a
child'' for whom foster care maintenance payments or adoption
assistance payments ``are to be made.'' Accordingly, to allow a State
to claim retroactively back to the date of placement would be in
conflict with the statute which bases foster family home eligibility on
licensure or approval of the home, including completion of a criminal
records check.
However, we recognize that some time may elapse between the date
the requirements are satisfied and the date on which the license or
approval actually is issued to the foster home. We have concluded that
60 days is an ample period of time to allow between the time the State
receives all the information on a home that is required to fully
license or approve it and the date on which such license or approval is
issued. Therefore, we have revised the definition of ``foster family
home'' in the regulation to allow a State to claim title IV-E
reimbursement for a period, not to exceed 60 days, between satisfaction
of the approval or licensing requirements and the actual issuance of a
full license or approval. This accommodation does not conflict with the
statutory requirement that all licensure requirements must be satisfied
before a foster home is eligible for title IV-E funding. Rather, it is
recognition that a period of time may elapse between when the
eligibility criteria are met and the time it takes a State to issue a
license or approval.
Comment: One commenter opposed linking criminal records checks to
title IV-E eligibility.
Response: Since the requirement for criminal records checks is
statutorily linked to title IV-E eligibility, we did not change the
regulation.

[[Page 4069]]

Comment: One commenter requested that we specify that the costs of
conducting criminal records checks are allowable administrative costs
under title IV-E.
Response: The regulations at Sec. 1356.60(c)(2) allow States to
claim costs associated with the recruitment and licensing of foster
homes as administrative costs under title IV-E. ACYF-PA-83-01
identifies additional allowable administrative costs specific to the
title IV-E adoption assistance program. Since the criminal records
check provision is a condition of licensure or approval in States that
do not opt out of the provision, costs associated with criminal records
checks for prospective foster and adoptive parents are allowable under
title IV-E when claimed pursuant to an approved cost allocation plan.
No revisions were made to this section of the regulation since this is
already covered in Sec. 1356.60 which addresses fiscal requirements for
title IV-E.
Comment: We received many comments concerning the levels of
background checks required, e.g., local, State, and Federal. Comments
ranged from those that approve of State discretion in deciding what
level of checks to conduct, to those that believe HHS should require
both State and Federal background checks. One commenter suggested that
we require all States to conduct Federal criminal records checks on
prospective parents who have been living in a State for less than two
years, while another suggested we require States to conduct background
checks in States where the prospective parent previously resided.
Response: We have carefully considered the comments in this area.
We concur with the commenters who approved of State discretion with
respect to the level of background checks to conduct and, therefore,
did not make any changes to the regulation. Although the comments with
respect to expanding the criminal records check requirement were good
suggestions, we believe that, in the absence of any statutory direction
in this area, such decisions are best left to the State. We do,
however, encourage States to be thorough in their safety assessments of
foster homes and to utilize the information sources available to them
to the fullest extent possible to assure the safety of children in out-
of-home placements.
Comment: We received some comments suggesting that HHS require more
extensive background checks, including child abuse registries, domestic
violence registries, and adult protective services records.
Response: These are good suggestions and we encourage States to
routinely include checks of State registries to assist in determining
whether a potential foster family home is safe. However, we believe
that to require a State to include such checks under this provision
goes beyond the statutory authority.
Comment: One commenter expressed concern that past suspicions of
child abuse and neglect will be discarded, and suggested that a
National central registry be established for child abuse and neglect
records.
Response: The establishment of a National central registry, and a
requirement that States participate in such a registry, goes beyond the
statutory authority. We did not make any changes to the regulations
based on this comment since it does not relate directly to criminal
records checks.
Comment: Two commenters expressed concern that States may opt out
of the criminal records check requirement.
Response: The statute specifically makes the criminal records check
requirement a State option. However, Sec. 1356.30(e) and (f) of the
regulation require States that opt out of the requirement to address
and document safety in foster and adoptive homes, as well as child care
institutions.
Comment: One commenter requested that the regulations be revised to
specify that an Indian tribe may elect not to conduct or require
criminal records checks on foster or adoptive parents if it obtains an
approved resolution from the governing body of the Indian tribe.
Response: While we understand that Tribes often license or approve
foster homes, we are unable to modify the regulation based on this
comment. Tribes may only receive title IV-E funds pursuant to a title
IV-E agreement with a State. A tribe that enters into such an agreement
must comport with section 471(a)(20) of the Act and Sec. 1356.30 in
accordance with the State plan in order to receive title IV-E funding
on behalf of children placed in the homes it licenses. The statute
expressly gives the State the authority to opt out of section
471(a)(20) of the Act through State legislation or a letter from the
Governor to the Secretary. Agreements between the State child welfare
agency and other public agencies or tribes permit those entities to
have placement and care responsibility for a particular group of the
foster care population under the approved State plan. Such agreements
do not permit other public agencies or tribes to develop a distinct
title IV-E program separate from that operated under the approved State
plan.
Comment: We received several comments asking for clarification
concerning Sec. 1356.30(e) and the procedures and documentation
required to show that safety considerations have been made in States
that have elected not to conduct or require criminal records checks.
One commenter asked for guidance on what processes and procedures
should be in place in lieu of a criminal records check. Another
commenter suggested that the regulations require minimum documentation,
such as: Written results of an on-site inspection of the home, group
care facility, or institution; a statement that the home meets the
minimal standards for health and safety; and an assurance that the
caregivers have plans or procedures for protecting the safety of
children.
Response: Although these were good suggestions, we do not believe
that we have the statutory authority to specify the mechanism or
documentation required to verify that safety considerations have been
made. Although we leave that decision to the State, we continue to
require that the licensing file for the foster family, adoptive family,
child care institution and relative placement contain documentation
that shows safety considerations have been addressed. In addition, we
made a minor revision to the regulation to clarify that the
documentation must verify that the safety considerations have been
addressed. We strongly encourage States to conduct thorough safety
checks and utilize all available information sources to the fullest to
assure the safety of children in out-of-home placements.
Comment: One commenter asked for clarification that for States that
have elected not to conduct or require criminal records checks, title
IV-E may be claimed as long as the licensing file contains
documentation that safety considerations have been addressed.
Response: We do not believe that a change is required in the
regulation to confirm that title IV-E can be claimed in such
circumstances. However, we have separated the requirements of this
paragraph into two sections for the final rule to clarify the criteria
for title IV-E eligibility. We revised Sec. 1356.30(e) to apply only in
States that opt out of the criminal records check. We also added a
paragraph (f) to set forth the safety requirements that must be
addressed for child care institutions, which are not covered under the
criminal records check provision.

[[Page 4070]]

Section1356.50 Withholding of Funds for Noncompliance With the
Approved Title IV-E State Plan.

Although we did not propose amendments to Sec. 1356.50 of the
regulations in the NPRM, we are amending it in this final rule to bring
the cross-references contained therein into conformity with the new
regulations.

Section 1356.60 Fiscal Requirements (Title IV-E)

This section sets for the fiscal requirements and available federal
financial participation for title IV-E costs
In Sec. 1356.60(b) we have made a technical amendment to the
existing regulation with regard to matching for title IV-E training, in
order to make it consistent with the statute. The existing regulation
at Sec. 1356.60(c)(4) authorizes States to use administrative funds at
a matching rate of 50% for the training of foster and adoptive parents
and staff of licensed or approved child care institutions that provide
care for children receiving assistance under title IV-E. The existing
regulation also limits associated costs to per diem and travel
expenses. Since the promulgation of that regulation, the statute has
been amended by section 13715 of the Omnibus Budget Reconciliation Act
of 1993, to authorize State' use of training funds at a 75% match rate
for the short-term training of current or prospective foster or
adoptive parents as well as staff of licensed child care institutions.
Under the statute, a State's claims may include but are not limited to
per diem and travel.
The Department has followed the overriding statutory language since
it was enacted (see ACYF-PI-94-15 and ACYF-PA-90-01). However, we would
like to take this opportunity to make the regulatory language
consistent with the statute. Because this change is technical in
nature, and does not affect policy, we have included this change in
this final rule. We are rescinding existing paragraph
Sec. 1356.60(c)(4) and amending Sec. 1356.60(b)(1) to make this
technical change.

Section 1356.71 Federal Review of the Eligibility of Children in
Foster Care and the Eligibility of Foster Care Providers in Title IV-E
Programs

This section sets forth the requirements governing Federal reviews
of State compliance with the title IV-E eligibility provisions as they
apply to children and foster care providers under paragraphs (a) and
(b) of section 472 of the Act.

Section 1356.71(a) Purpose, Scope and Overview of the Process

Comment: Three commenters were of the opinion that the title IV-E
review, because its major focus is on documentation, is inconsistent
with the new outcomes-based review for child and family services. Two
commenters said that this review relies solely on individual case
eligibility for payments absent any consideration of good casework
practice and procedures.
Response: The title IV-E foster care eligibility review and the
child and family services review are different in purpose and scope.
The purpose of the title IV-E eligibility review is to validate the
accuracy of a State's claims to assure that appropriate payments are
made on behalf of eligible children, to eligible homes and
institutions, at allowable rates. These determinations are made most
effectively by an examination of the case record and payment
documentation. The title IV-E review has been revised, within existing
statutory constraints, to strengthen the State and Federal partnership
through the provision of corrective action and technical assistance.
While we acknowledge the importance of positive outcomes for the
children and families the title IV-E foster care program serves, we
also acknowledge our attendant stewardship responsibility in the
administration of this program.
Comment: We received five comments indicating that the title IV-E
eligibility review penalizes child welfare agencies when certain
eligibility requirements beyond the State's control, specifically those
related to the documentation of judicial determinations, are not met.
Response: We recognize that child welfare agencies ultimately may
be held accountable and lose title IV-E funding when documentation of
the required title IV-E judicial determinations is not secured. Because
the statute specifically requires judicial determinations regarding
contrary to the welfare and reasonable efforts, however, we have no
authority or flexibility to modify these requirements. Where the
statute permits, we have afforded State child welfare agencies
additional time to obtain the required judicial determinations.

Section 1356.71(b) Composition of Review Team and Preliminary
Activities Preceding an On-Site Review

This section describes the composition of the on-site review team
and the preliminary activities which the State must undertake prior to
the on-site review.
Comment: We received four comments regarding the composition of the
review team, including requests for specific representatives on the
team, such as State foster care review board members, child advocates,
and individuals with expertise on unaccompanied refugee minors. One
commenter requested that we require States to include local agency
staff on the review team.
Response: The purpose of the title IV-E financial review is to
assess payment accuracy through an examination of case record
documentation. Those individuals recommended above to participate on
the title IV-E review team possess expertise that would be utilized
more effectively on a review of service delivery issues, such as the
child and family services review. During the title IV-E pilot reviews,
we learned that the Federal/State team combination assisted States in
identifying strategies for training, technical assistance and
corrective action, and augmented the knowledge of State staff about
title IV-E eligibility requirements. For these reasons, we see no
benefit in expanding the review team composition to include external
representatives. The State may, however, exercise its discretion in
deciding the range of State and/or local staff to include on the team.
Comment: One commenter noted that the requirement that the State
submit the complete payment history records for each sample case does
not comport with the regulation governing records retention at 45 CFR
part 74. The commenter inquired if ACF could require States to retain
the payment history for a child in out-of-home care for more than three
years. We received an additional comment about the difficulty of
obtaining the payment history for a child in care for 10 years. A third
commenter requested clarification regarding whether complete payment
history encompassed only the six-month period under review or the
complete life of the case. Another commenter said that complete payment
history should be required only when the case is determined to be
ineligible.
Response: There is no inconsistency between the requirement that a
State provide the complete payment history and the regulation at 45 CFR
74.53(b) which, in pertinent part, states that ``Financial records * *
* shall be retained for a period of three years from the date of
submission of the final expenditure report * * .*'' (emphasis added).
For a child in out-of-home care, the final expenditure report would not
be submitted to ACF until such child is discharged from foster care.
Since the title IV-E review is designed to look at a sample of more
recent cases and because ASFA reinforces moving

[[Page 4071]]

children to permanency more expediently, we hope not to encounter any
case where a child has been in foster care for 10 years. In those rare
instances where we do review such a case, however, the payment history
must reflect the title IV-E foster care payments for the duration of
that child's placement, irrespective of the initial date of placement,
if the case is still open and title IV-E payments continue to be made
on that child's behalf. For these reasons, we do not agree that this
requirement conflicts with 45 CFR part 74 and have made no
modifications to this section.
We have concerns with the recommendation that the complete payment
history be required only after a case is determined to be ineligible.
The purpose of the title IV-E foster care eligibility review is to
assure that appropriate payments are made on behalf of eligible
children at allowable rates to eligible homes and institutions. Our
experience has demonstrated that assuring that ``appropriate payments
are made * * * at allowable rates'' is determined as the result of
identifying duplicate payments, overpayments, underpayments, erroneous
payments and related fiscal issues for each case under review at the
time the case is being reviewed. Therefore, we have made no
modification to this section.
Comment: We received one comment that ACF should allow sufficient
time for States to prepare for the review.
Response: We acknowledge our responsibility to assure that States
receive ample notice in order to prepare for a title IV-E review. We
recognize that the specific preparation time may vary by State and may
change as States become more familiar with the process. Taking into
consideration the fact that Federal staff also will require time to
prepare adequately for each review, we do not anticipate the lack of
advance notice becoming an issue and, therefore, prefer not to regulate
the notification period. We fully expect that States and Regional
Offices will negotiate this aspect of the review in a mutually
agreeable manner.

Section 1356.71(c) Sampling Guidance and Conduct of Review

This section describes the process to be used to select the title
IV-E foster care sample of children to be reviewed.
Comment: Two commenters recommended that the description of the
alternative sampling frame to be utilized when AFCARS data are
unavailable or deficient should specify that the period under review is
six months.
Response: We concur and have revised paragraph (c)(1) to clarify
that the period under review is to be consistent with one AFCARS six-
month reporting period when an alternative sampling methodology is
utilized.
Comment: We received numerous comments about the sample that
included a range of concerns regarding its statistical validity, its
applicability to States of differing sizes with varying populations of
children in foster care, its accuracy and its reliability. Three
commenters questioned the rationale for random sampling as the
preferred methodology. Several commenters objected to the error rate
thresholds as abstract and unreasonably high. One commenter supported
the thresholds as fair and reasonable. Several commenters urged us not
to regulate the sampling methodology at all.
Response: The proposed sampling methodology is designed to provide
national consistency in sample selection, reduce the burden on States
associated with drawing their own samples, utilize the AFCARS database,
and assure statistical validity. In our attempt to achieve a balance
between partnership and stewardship, we considered and evaluated
several sampling methodologies. The methodology chosen was the result
of internal deliberations with ACF statisticians and is similar to the
sampling methodology deployed throughout the history of the title IV-E
reviews, with a significant modification that affords States an
opportunity for program improvement prior to an extrapolated
disallowance. We chose simple random sampling as the preferred
methodology as we believe it will result in the most representative
sample. However, we expect that States will work closely with ACF
statisticians in pulling a sample that is representative and fair. We
further expect that regulating the sample will afford States and ACF
maximum accuracy, uniformity, consistency, and reliability.
Comment: One commenter found the terms ``first'' and ``second''
confusing, particularly when applied to the subsequent three-year
reviews.
Response: We concur and have modified this and related sections to
use the terms ``primary'' and ``secondary,'' respectively, to describe
the reviews. The review of 80 cases is the primary review. In those
instances where the 15 percent threshold is exceeded and the State
enters into a PIP, followed by a review of 150 additional cases, this
subsequent review will be referred to as the secondary review.
Comment: One commenter recommended that all States have an
opportunity to have their primary review at the 15 percent threshold,
since all primary reviews may not be completed within three years of
the final rule. Another commenter noted that the title IV-E monitoring
regulations do not indicate when ACF will begin conducting these
reviews. A third commenter indicated that States should be afforded
ample time to implement the various requirements.
Response: We agree in principle and have modified this section
accordingly to reflect that each State's primary review will be subject
to the 15 percent threshold. We fully anticipate that ACF and States
will work together to assure that the primary reviews are held within a
reasonable period of time after publication of the final rule. In any
event, we do not expect that States will procrastinate in scheduling
their primary reviews once they have been approached by ACF.
Comment: One commenter recommended that we delete the words
``determined to be'' from the discussion of disallowances in this
section, noting that the disallowance will be applicable for the period
of time that the case was ineligible and not from the date the reviewer
discovered the ineligibility.
Response: We concur and have modified this section accordingly. Any
disallowance will be applicable to the period of time during which the
case is ineligible and not from the date the reviewer makes the
determination of ineligibility.
Comment: Several commenters recommended that the secondary review
should be limited to cases where children entered foster care after the
PIP was implemented. Four commenters said that the final rules should
not apply to children who entered foster care before the rule was
finalized.
Response: We do not concur that the secondary review should include
only cases of children who entered foster care after the program
improvement plan was implemented or that the final rule apply only to
children who entered foster care after its promulgation. We will apply
the final rule prospectively so that States are only responsible for
meeting the new requirements following the effective date of the final
rule. Compliance with the requirements will be evaluated against the
standards in effect at the time the action was taken. Therefore, the
checklist will be modified so that we review for the ACF policy in
effect at the time of the action and it reflects the transition time
indicated in the pertinent sections of Secs. 1355.20 and 1356.21(b)(2)
related to

[[Page 4072]]

licensing of foster family homes and the reasonable efforts
determination regarding finalizing permanency plans.
Comment: One commenter requested the discussion of the 10 percent
and 15 percent error thresholds be clarified to make it apparent that
the error threshold for the primary review is eight cases or fewer and
four cases or fewer--not simply ``8'' and ``4.''
Response: We agree and have modified the regulations such that they
consistently express that the error threshold for the primary review is
eight or fewer and four or fewer cases--not simply eight or four. We
further have revised this section to clarify that the error rate
applicable to the secondary review of 150 cases is 10%.
Comment: One commenter requested that unaccompanied refugee minors
be excluded from the sample of title IV-E cases reviewed.
Response: Any child on whose behalf title IV-E payments were made
is subject to review. No statutory basis exists to exclude any specific
population from review and, consequently, no modifications were made to
this section.

Section 1356.71(d) Requirements Subject to Review

This section describes the requirements subject to the title IV-E
eligibility reviews.
Comment: One commenter noted that section 475(1) of the Act was
inappropriately cross-referenced in paragraph (2).
Response: We concur and have changed this cross-reference to
Sec. 1356.30 which addresses the safety requirements for foster care
and adoptive home providers.
Comment: One commenter suggested that all title IV-E requirements
be reviewed, including sections 471(a)(16), 475(1) and 475(5)(B) of the
Act which are the requirements for case plans and six-month periodic
reviews.
Response: The focus of the title IV-E foster care eligibility
review is those child eligibility criteria set forth at section
472(a)(1)-(4) of the Act and the criminal records checks required at
section 471(a)(20) of the Act. The sections noted by the commenter are
addressed in the child and family services review of State plan
requirements, and we made no changes to this section.

Section 1356.71(e) Review Instrument

This section informs States that a checklist will be used to
substantiate child and provider eligibility during the on-site title
IV-E foster care eligibility review.
Comment: Three commenters requested that the review instrument be
made available immediately rather than upon publication of the final
rule.
Response: It would be premature for us to publish the review
instrument until the rule becomes final. Once that occurs, we will
modify the instrument to reflect the final rule and make it publicly
available.

Section 1356.71(f) Eligibility Determination--Child

This section sets forth the case record requirement of
documentation to verify a child's eligibility.
Comment: Two commenters requested that the specific child
eligibility requirements be included in this section.
Response: We concur that this would be helpful to States and have
modified this section accordingly.

Section 1356.71(g) Eligibility Determination--Provider

This section sets forth the requirement for the licensing file for
each case under review.
Comment: One commenter supports obtaining the licensing file and
indicates that we should look ``beyond'' the actual license. Another
commenter requested that the specific provider eligibility requirements
be included in this section. A third commenter wanted to know the
specific licensing standards to which States will be held accountable
for the title IV-E foster care eligibility reviews. A fourth commenter
requested clarification regarding the scope and extent of the provider
review.
Response: The State plan requirement at section 471(a)(10) of the
Act vests the State with the responsibility for establishing minimum
licensing standards regarding safety, admissions policies, sanitation,
and civil rights for foster family homes and child care institutions.
The State is required to apply its licensing standards to any foster
family home or child care institution receiving funds under titles IV-B
and IV-E, and for the purposes of title IV-E, only place children in
facilities that meet the Federal definition of a foster family home or
child care institution. However, it is not within the scope of the
title IV-E foster care eligibility review to examine the State
licensing standards. For the title IV-E eligibility review, we will
determine that the foster family home or facility has a valid license
that encompasses the period of the child's stay under review and that
the safety requirements at Sec. 1356.30 have been addressed. We made no
changes to the regulation as a result of this comment.
During a title IV-E eligibility review, we will examine a
provider's license to determine that; it is an appropriate type of
facility (i.e., meets the definition of a foster family home or child
care institution), the license is valid for the duration of the child's
placement, and the safety requirements at Sec. 1356.30 have been
addressed. We made no changes to the regulation as a result of this
comment.

Section 1356.71(h) Standards of Compliance

This section defines the terms ``substantial compliance'' and
``noncompliance,'' and describes the disallowances and program
improvement plan process.
Comment: One commenter indicated that reviews should be conducted
annually, as opposed to at three-year intervals. Another commenter
recommended that we conduct monthly audits. A third commenter suggested
reviews at five-year instead of three-year intervals after a State
completes its primary review.
Response: The frequency of the title IV-E reviews is not
statutorily mandated. We decided that three years was a reasonable time
frame, considering that some States may be required to develop a PIP
after their primary review. For some States, the PIP will be effective
for as long as one year. Furthermore, the title IV-E review is not the
sole mechanism in place to assure the propriety and accuracy of State'
claiming procedures, since the ACF Regional Offices review the
quarterly claims submitted by the States. For these reasons, and
because States will be undergoing an intensive child and family
services review following the publication of the final rule, we have
made no modification to this section.
Comment: One commenter was of the opinion that more meaningful
sanctions should be imposed. Another commenter supported ACF's proposal
for the disallowance of funds, indicating that it provides an incentive
for States to come into compliance.
Response: We carefully considered various options in developing the
penalty structure for ineligible cases and believe that our proposal
achieves the appropriate balance between partnership and stewardship.
We have developed a more collaborative approach with the goal of
bringing about the desired results utilizing a process that includes
technical assistance and corrective action.

[[Page 4073]]

Section 1356.71(i) Program Improvement Plans

This section sets forth the requirement for States, determined not
to be in substantial compliance, to develop a program improvement plan.
Comment: One commenter requested that we consider a provision for a
State to negotiate the extension of a PIP in those instances when a
legislative amendment is necessary for the State to achieve substantial
compliance.
Response: We concur and have modified paragraph (i)(1)(i) to
reflect that the duration of the program improvement plan will be
determined jointly by the State and the ACF Regional Office, but shall
not exceed one year, unless legislative action is required. In such
cases, the State and ACF will negotiate the terms and length of the
extension not to exceed the last day of the first legislative session
after the date of the program improvement plan. We believe that this
time frame is sufficient for a State to make necessary statutory
changes to achieve substantial compliance.
Comment: Several commenters said that 60 days is insufficient time
for a State to produce a comprehensive program improvement plan, since
such a plan will require collaboration with multiple external entities.
Proposed time frames ranged from 120 days to two years. Some commenters
indicated that, under exceptional circumstances, a 30-day extension
should be an option.
Response: An extensive period of time should not elapse from the
completion of the on-site review to the development of the PIP. We do
recognize, however, that occasionally circumstances may warrant the
need for additional time for the State to collaborate with entities
outside the child welfare agency, e.g., the court system. We have,
therefore, amended paragraph (i)(2) to reflect a modification from 60
days to 90 days for the development of the PIP.

Section 1356.71(j) Disallowance of Funds

This section sets describes how funds to be disallowed will be
determined.
Comment: Two commenters noted that we reference a nonexistent
paragraph ``(k)'' in the NPRM.
Response: We recognize this oversight and have removed the
reference to paragraph (k) and clarified that, in the event that a
State fails to submit a PIP, we will immediately proceed to the
secondary review process.
Comment: One commenter noted that the sample period for a review
after the completion of a PIP should be the first full AFCARS period
subsequent to completion of the PIP.
Response: It is our intent to select a sample of cases from AFCARS
for the secondary review after the PIP has been completed. In most
instances, the most recent State AFCARS submission subsequent to the
completion of the PIP will constitute the period under review.
Comment: One commenter recommends that the first review under the
new protocol should be a joint pilot review with no disallowances taken
in order to demonstrate ACF's assertion that the primary objectives of
the reviews include promoting federal/state partnerships, focusing on
program improvements and generating useful information.
Response: We conducted 12 title IV-E foster care eligibility pilot
reviews over the past three years to inform the development of the new
protocol. States were afforded many opportunities to volunteer for
these pilots. We do not concur with the recommendation that we defer
sanctions until after the primary review, since in the development of
the process we already have suspended disallowances for more than three
years.
Comment: One commenter requested clarification regarding the term
``universe of claims paid.'' Another commenter requested clarification
regarding the scope of the title IV-E foster care disallowance and what
was included in it.
Response: The term ``universe of claims paid'' means the Federal
share of allowable title IV-E foster care maintenance payments and
administrative costs for the period of time the case is ineligible. All
title IV-E funds expended during the quarter(s) the case is ineligible
will be subject to disallowance, including funds for administrative
costs. We have revised this paragraph in the final rule to specify
which funds will be reduced.

Part 1357--Requirements Applicable to Title IV-B

Section 1357.40 Direct Payments to Indian Tribal Organizations (Title
IV-B, Subpart 1, Child Welfare Services)

This section provides the requirements for Indian Tribal
Organizations to apply for and receive direct funds under title IV-B,
subpart 1.
We made a technical change to Sec. 1357.40 in the final rule to
incorporate a 1995 change to the regulation that was mistakenly
eliminated by a subsequent final rule. On June 2, 1995, we published a
final rule (60 FR 28735-28737) amending the regulations governing
direct payments to Indian Tribal Organizations (ITOs) for child welfare
services. The revised regulations added a description of the formula
used to calculate the amount of Federal funds available to eligible
ITOs under title IV-B. A new paragraph, Sec. 1357.40(g)(6), was added
to implement the new formula. On November 18, 1996, we published a
comprehensive final rule for title IV-B, Child and Family Services (61
FR 58632-58663), which amended Sec. 1357.40 and inadvertently omitted
the paragraph including the grant formula for ITOs.
We are taking this opportunity to restore the grant formula for
ITOs to the regulation as we have been using this formula since it was
effective in FFY 1996 (see ACYF-IM-CB-95-28). We have, therefore, made
a technical amendment to add the grant formula in a new paragraph,
Sec. 1357.40(d)(6).

Impact Analysis

Executive Order 12866

Executive Order 12866 requires that regulations be drafted to
ensure that they are consistent with the priorities and principles set
forth in the Executive Order. The Department has determined that this
rule is consistent with these priorities and principles. This final
rule amends existing regulations concerning Child and Family Services
by adding new requirements governing the review of a State's conformity
with its State plan under titles IV-B and IV-E of the Social Security
Act (the Act), and implements the provisions of the Social Security Act
Amendments of 1994 (Pub. L. 103-432), the Multiethnic Placement Act
(MEPA) as amended by Public Law 104-188, and certain provisions of the
Adoption and Safe Families Act (ASFA) of 1997 (Pub. L. 105-89).
In addition, this final rule sets forth regulations that clarify
certain eligibility criteria that govern the title IV-E foster care
eligibility reviews that the Administration on Children, Youth and
Families (ACYF) conducts to ensure a State agency's compliance with
statutory requirements under the Act.
We received no comments on this section.

Executive Order 13132

Executive Order 13132 on Federalism applies to policies that have
federalism implications, defined as ``regulations, legislative comments
or proposed legislation, and other policy statements or actions that
have substantial direct effects on the States, on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government.''
This rule does not have federalism implications as defined in the
Executive Order.

[[Page 4074]]

Family Well-Being Impact

As required by Section 654 of the Treasury and General Government
Appropriations Act of 1999, we have assessed the impact of this final
rule on family well-being. The final rule implements requirements of
titles IV-B and IV-E of the Social Security Act relating to Federal
monitoring and oversight of State child welfare programs. The rule will
promote child safety, child and family well-being and permanence for
those children who must be removed from their families temporarily to
assure their safety. The final rule will help to ensure that States are
taking appropriate steps to protect children and to strengthen, support
and stabilize both biological and adoptive families.

Regulatory Flexibility Act of 1980

The Regulatory Flexibility Act (5 U.S.C. Ch. 6) requires the
Federal government to anticipate and reduce the impact of rules and
paperwork requirements on small businesses. For each rule with a
``significant number of small entities'' an analysis must be prepared
describing the rule's impact on small entities. ``Small entities'' are
defined by the Act to include small businesses, small nonprofit
organizations and small governmental entities. These regulations do not
affect small entities because they are applicable to State agencies
that administer the child and family services programs and the foster
care maintenance payments program.
We received no comments on this section.

Unfunded Mandates Reform Act

The Unfunded Mandates Reform Act (Pub. L. 104-4) requires agencies
to prepare an assessment of anticipated costs and benefits before
proposing any rule that may result in an annual expenditure by State,
local, and tribal governments, in the aggregate, or by the private
sector, of $100,000,000 or more (adjusted annually for inflation).
Comment: One commenter argued that the regulation was not in
compliance with the Unfunded Mandates Reform Act (UMRA) because the
ASFA requirements significantly increase the administrative burden and
cost for State courts and agencies, which are not offset by an increase
in Federal funding.
Response: Section 201 of the UMRA states that, ``[e]ach agency
shall, unless otherwise prohibited by law, assess the effects of
Federal regulatory actions on State, local, and tribal governments, and
the private sector (other than to the extent that such regulations
incorporate requirements specifically set forth in law).'' The UMRA is
not applicable to the codification of the ASFA requirements because
they are specifically set forth in law. Rather, it is the requirements
and procedures of the child and family services review and the title
IV-E eligibility review processes which come under the auspices of the
UMRA.
This final rule does not impose any mandates on State, local, or
tribal governments, or the private sector that will result in an annual
expenditure of $100,000,000 or more. We anticipate that one-third (17)
of the States will be reviewed under both review procedures each year
and that, each year, approximately five States will be required to
complete a corrective action plan in response to section 471(a)(18)
compliance issues, for an annual cost of $352,420. This estimate is
based on the burden hours associated with each information collection
identified in the ``Paperwork Reduction Act'' section.

Congressional Review

This rule is not a major rule as defined in 5 U.S.C., Chapter 8.

Paperwork Reduction Act

Under the Paperwork Reduction Act of 1995, Public Law 104-13, all
Departments are required to submit to the Office of Management and
Budget (OMB) for review and approval any reporting or record-keeping
requirements inherent in a proposed or final rule. This final rule
contains information collection requirements in certain sections that
the Department has submitted to OMB for its review.
The sections that contain information collection requirements are:
1355.33(b) on statewide assessments, and (c) on-site review; 1355.35(a)
on program improvement plan; 1355.38(b) and (c) on corrective action
plans; and 1356.71(i) on program improvement plan. Section 1356 on
State plan document and submission requirements (OMB Number 0980-0141)
and case plan requirements (OMB Number 0980-0140) contains information
collections. However, these are approved collections and no changes are
being made at this time.
The respondents to the information collection requirements in this
rule are State agencies. The Department requires this collection of
information: (1) In order to review State' compliance with the
provisions of the statute and implementing regulations of titles IV-B
and IV-E of the Act; and (2) effectively implement the statutory
requirement at section 1123A of the Act which requires that regulations
be promulgated for the review of child and family services programs,
and foster care and adoption assistance programs for conformity with
State plan requirements.
Comment: A few commenters noted that the estimate for the burden
hours associated with Sec. 1355.33(c), the on-site portion of the child
and family services review, was too low. The commenters observed that
extensive training is required to prepare reviewers.
Response: We agree and have amended the estimate accordingly. In
addition, we have significantly increased the estimated burden for the
on-site portion of the child and family services review to account for
the logistics associated with scheduling interviews.

----------------------------------------------------------------------------------------------------------------
Average
Number of burden Total
Collection Number of respondents responses hours per burden
response hours
----------------------------------------------------------------------------------------------------------------
1355.33(b)--Statewide assessment.... 17--State agencies administering 17 240 4,080
the title IV-B & E Programs.
1355.33(c)--On-site review.......... 17--State agencies administering 595 18 10,710
the title IV-B & E programs.
1355.35(a)--Program improvement plan 17--State agencies administering 17 80 1,360
the titles IV-B & IV-E programs.
1355.38(b) and (c)--Corrective 5--State agencies administering 5 80 400
action plan. titles IV-B and IV-E.
1356.71(i)--Program improvement plan 17--State agencies administering 17 63 1,071
the title IV-E program.
----------------------------------------------------------------------------------------------------------------

[[Page 4075]]

We received and considered 38 letters in response to the
preclearance Notice (63 FR 52703 (October 1, 1998)) published in order
to obtain approval of this information collection under the Paperwork
Reduction Act. Several commenters submitted comments on the October 1,
1998 Notice in conjunction with their comments on the NPRM. The comment
period for the October 1, 1998 Notice closed on December 1, 1998 while
the comment period for the NPRM closed on December 17, 1998. In our
opinion, to consider late comments constitutes an arbitrary extension
of the comment period for certain groups or individuals. Those comments
pertaining to the October 1, 1998 Notice that were submitted in
conjunction with the comments on the NPRM were late and were not
considered.
In the October 1, 1998 Notice, we published, in their entirety, the
statewide assessment, on-site review instrument, and stakeholder
interview guide used in conducting the child and family service review.
Overwhelmingly, the comments we received were very technical in nature.
Commenters offered specific suggestions for rephrasing or adding
questions, for quantifying responses, for changes in terminology, and
for increasing the objectivity of the instruments. In response to the
comments received, each instrument has undergone significant revision.
We streamlined the statewide assessment so that it targets State
performance in satisfying the relevant State plan requirements and
reports on the statewide data indicators used for determining
substantial conformity. The on-site review instrument and stakeholder
interview guide have been revised to increase objectivity in drawing
conclusions regarding the State's performance in achieving the outcomes
and in implementing the systemic factors. Copies of the instruments
will be distributed to all State agencies and posted on the ACF web
site immediately following the effective date of this regulation.

List of Subjects

45 CFR Part 1355

Adoption and foster care, Child welfare, Grant programs-Social
programs.

45 CFR Part 1356

Adoption and foster care, Grant programs-social programs

45 CFR Part 1357

Child and family services, Child welfare, Grant programs-Social
programs
(Catalog of Federal Domestic Assistance Program Numbers 93.658, Foster
Care Maintenance; 93.659, Adoption Assistance; and 93.645, Child
Welfare Services--State Grants)

Approved: September 23, 1999.
Donna E. Shalala,
Secretary.
Dated: August 25, 1999.
Olivia A. Golden,
Assistant Secretary for Children and Families.

For the reasons set forth in the preamble we are amending 45 CFR
parts 1355, 1356, and 1357 to read as follows:

PART 1355--GENERAL

1. The authority citation for part 1355 continues to read as
follows:

Authority: 42 U.S.C. 620 et seq., 42 U.S.C. 670 et seq., 42
U.S.C. 1302.

2. Section 1355.20 is amended by revising the definition of Foster
care and by adding the following definitions in alphabetical order to
read as follows:

Sec. 1355.20 Definitions.

(a) * * *
Child care institution means a private child care institution, or a
public child care institution which accommodates no more than twenty-
five children, and is licensed by the State in which it is situated or
has been approved by the agency of such State or tribal licensing
authority (with respect to child care institutions on or near Indian
Reservations) responsible for licensing or approval of institutions of
this type as meeting the standards established for such licensing. This
definition must not include detention facilities, forestry camps,
training schools, or any other facility operated primarily for the
detention of children who are determined to be delinquent.
* * * * *
Date a child is considered to have entered foster care means the
earlier of: The date of the first judicial finding that the child has
been subjected to child abuse or neglect; or, the date that is 60
calendar days after the date on which the child is removed from the
home pursuant to Sec. 1356.21(k). A State may use a date earlier than
that required in this paragraph, such as the date the child is
physically removed from the home. This definition determines the date
used in calculating all time period requirements for the periodic
reviews, permanency hearings, and termination of parental rights
provision in section 475(5) of the Act and for providing time-limited
reunification services described at section 431(a)(7) of the Act. The
definition has no relationship to establishing initial title IV-E
eligibility.
* * * * *
Entity, as used in Sec. 1355.38, means any organization or agency
(e.g., a private child placing agency) that is separate and independent
of the State agency; performs title IV-E functions pursuant to a
contract or subcontract with the State agency; and, receives title IV-E
funds. A State court is not an ``entity'' for the purposes of
Sec. 1355.38 except if an administrative arm of the State court carries
out title IV-E administrative functions pursuant to a contract with the
State agency.
Foster care means 24-hour substitute care for children placed away
from their parents or guardians and for whom the State agency has
placement and care responsibility. This includes, but is not limited
to, placements in foster family homes, foster homes of relatives, group
homes, emergency shelters, residential facilities, child care
institutions, and preadoptive homes. A child is in foster care in
accordance with this definition regardless of whether the foster care
facility is licensed and payments are made by the State or local agency
for the care of the child, whether adoption subsidy payments are being
made prior to the finalization of an adoption, or whether there is
Federal matching of any payments that are made.
Foster care maintenance payments are payments made on behalf of a
child eligible for title IV-E foster care to cover the cost of (and the
cost of providing) food, clothing, shelter, daily supervision, school
supplies, a child's personal incidentals, liability insurance with
respect to a child, and reasonable travel for a child's visitation with
family, or other caretakers. Local travel associated with providing the
items listed above is also an allowable expense. In the case of child
care institutions, such term must include the reasonable costs of
administration and operation of such institutions as are necessarily
required to provide the items described in the preceding sentences.
``Daily supervision'' for which foster care maintenance payments may be
made includes:
(1) Foster family care--licensed child care, when work
responsibilities preclude foster parents from being at home when the
child for whom they have care and responsibility in foster care is not
in school, licensed child care when the foster parent is required to
participate, without the child, in activities associated with parenting
a child in foster care that are beyond the scope of ordinary parental
duties, such as attendance at administrative or

[[Page 4076]]

judicial reviews, case conferences, or foster parent training. Payments
to cover these costs may be: included in the basic foster care
maintenance payment; a separate payment to the foster parent, or a
separate payment to the child care provider; and
(2) Child care institutions--routine day-to-day direction and
arrangements to ensure the well-being and safety of the child.
Foster family home means, for the purpose of title IV-E
eligibility, the home of an individual or family licensed or approved
as meeting the standards established by the State licensing or approval
authority(ies) (or with respect to foster family homes on or near
Indian reservations, by the tribal licensing or approval
authority(ies)), that provides 24-hour out-of-home care for children.
The term may include group homes, agency-operated boarding homes or
other facilities licensed or approved for the purpose of providing
foster care by the State agency responsible for approval or licensing
of such facilities. Foster family homes that are approved must be held
to the same standards as foster family homes that are licensed.
Anything less than full licensure or approval is insufficient for
meeting title IV-E eligibility requirements. States may, however, claim
title IV-E reimbursement during the period of time between the date a
prospective foster family home satisfies all requirements for licensure
or approval and the date the actual license is issued, not to exceed 60
days.
Full review means the joint Federal and State review of all
federally-assisted child and family services programs in the States,
including family preservation and support services, child protective
services, foster care, adoption, and independent living services, for
the purpose of determining the State's substantial conformity with the
State plan requirements of titles IV-B and IV-E as listed in
Sec. 1355.34 of this part. A full review consists of two phases, the
statewide assessment and a subsequent on-site review, as described in
Sec. 1355.33 of this part.
* * * * *
Legal guardianship means a judicially-created relationship between
child and caretaker which is intended to be permanent and self-
sustaining as evidenced by the transfer to the caretaker of the
following parental rights with respect to the child: protection,
education, care and control of the person, custody of the person, and
decision-making. The term legal guardian means the caretaker in such a
relationship.
National Child Abuse and Neglect Data System (NCANDS) means the
voluntary national data collection and analysis system established by
the Administration for Children and Families in response to a
requirement in the Child Abuse Prevention and Treatment Act (Pub. L.
93-247), as amended.
Partial review means:
(1) For the purpose of the child and family services review, the
joint Federal and State review of one or more federally-assisted child
and family services program(s) in the States, including family
preservation and support services, child protective services, foster
care, adoption, and independent living services. A partial review may
consist of any of the components of the full review, as mutually agreed
upon by the State and the Administration for Children and Families as
being sufficient to determine substantial conformity of the reviewed
components with the State plan requirements of titles IV-B and IV-E as
listed in Sec. 1355.34 of this part; and
(2) For the purpose of title IV-B and title IV-E State plan
compliance issues that are outside the prescribed child and family
services review format, e.g., compliance with AFCARS requirements, a
review of State laws, policies, regulations, or other information
appropriate to the nature of the concern, to determine State plan
compliance.
Permanency hearing means:
(1) The hearing required by section 475(5)(C) of the Act to
determine the permanency plan for a child in foster care. Within this
context, the court (including a Tribal court) or administrative body
determines whether and, if applicable, when the child will be:
(i) Returned to the parent;
(ii) Placed for adoption, with the State filing a petition for
termination of parental rights;
(iii) Referred for legal guardianship;
(iv) Placed permanently with a fit and willing relative; or
(v) Placed in another planned permanent living arrangement, but
only in cases where the State agency has documented to the State court
a compelling reason for determining that it would not be in the best
interests of the child to follow one of the four specified options
above.
(2) The permanency hearing must be held no later than 12 months
after the date the child is considered to have entered foster care in
accordance with the definition at Sec. 1355.20 of this part or within
30 days of a judicial determination that reasonable efforts to reunify
the child and family are not required. After the initial permanency
hearing, subsequent permanency hearings must be held not less
frequently than every 12 months during the continuation of foster care.
The permanency hearing must be conducted by a family or juvenile court
or another court of competent jurisdiction or by an administrative body
appointed or approved by the court which is not a part of or under the
supervision or direction of the State agency. Paper reviews, ex parte
hearings, agreed orders, or other actions or hearings which are not
open to the participation of the parents of the child, the child (if of
appropriate age), and foster parents or preadoptive parents (if any)
are not permanency hearings.
* * * * *
Statewide assessment means the initial phase of a full review of
all federally-assisted child and family services programs in the
States, including family preservation and support services, child
protective services, foster care, adoption, and independent living
services, for the purpose of determining, in part, the State's
substantial conformity with the State plan requirements of titles IV-B
and IV-E as listed in Sec. 1355.34 of this part. The statewide
assessment refers to the completion of the federally-prescribed
assessment instrument by members of a review team that meet the
requirements of Sec. 1355.33(a)(2) of this part.

3. New Secs. 1355.31 through 1355.39 are added to read as follows:

Sec. 1355.31 Elements of the child and family services review system.

Scope. Sections 1355.32 through 1355.37 of this part apply to
reviews of child and family services programs administered by States
under subparts 1 and 2 of title IV-B of the Act, and reviews of foster
care and adoption assistance programs administered by States under
title IV-E of the Act.

Sec. 1355.32 Timetable for the reviews.

(a) Initial reviews. Each State must complete an initial full
review as described in Sec. 1355.33 of this part during the four-year
period after the final rule becomes effective.
(b) Reviews following the initial review.
(1) A State found to be operating in substantial conformity during
an initial or subsequent review, as defined in Sec. 1355.34 of this
part, must:
(i) Complete a full review every five years; and
(ii) Submit a completed statewide assessment to ACF three years
after the

[[Page 4077]]

on-site review. The statewide assessment will be reviewed jointly by
the State and the Administration for Children and Families to determine
the State's continuing substantial conformity with the State plan
requirements subject to review. No formal approval of this interim
statewide assessment by ACF is required.
(2) A State program found not to be operating in substantial
conformity during an initial or subsequent review will:
(i) Be required to develop and implement a program improvement
plan, as defined in Sec. 1355.35 of this part; and
(ii) Begin a full review two years after approval of the program
improvement plan.
(c) Reinstatement of reviews based on information that a State is
not in substantial conformity.
(1) ACF may require a full or a partial review at any time, based
on any information, regardless of the source, that indicates the State
may no longer be operating in substantial conformity.
(2) Prior to reinstating a full or partial review, ACF will conduct
an inquiry and require the State to submit additional data whenever ACF
receives information that the State may not be in substantial
conformity.
(3) If the additional information and inquiry indicates to ACF's
satisfaction that the State is operating in substantial conformity, ACF
will not proceed with any further review of the issue addressed by the
inquiry. This inquiry will not substitute for the full reviews
conducted by ACF under Sec. 1355.32(b).
(4) ACF may proceed with a full or partial review if the State does
not provide the additional information as requested, or the additional
information confirms that the State may not be operating in substantial
conformity.
(d) Partial reviews based on noncompliance with State plan
requirements that are outside the scope of a child and family services
review. When ACF becomes aware of a title IV-B or title IV-E compliance
issue that is outside the scope of the child and family services review
process, we will:
(1) Conduct an inquiry and require the State to submit additional
data.
(2) If the additional information and inquiry indicates to ACF's
satisfaction that the State is in compliance, we will not proceed with
any further review of the issue addressed by the inquiry.
(3) ACF will institute a partial review, appropriate to the nature
of the concern, if the State does not provide the additional
information as requested, or the additional information confirms that
the State may not be in compliance.
(4) If the partial review determines that the State is not in
compliance with the applicable State plan requirement, the State must
enter into a program improvement plan designed to bring the State into
compliance. The terms, action steps and time-frames of the program
improvement plan will be developed on a case-by-case basis by ACF and
the State. The program improvement plan must take into consideration
the extent of noncompliance and the impact of the noncompliance on the
safety, permanency or well-being of children and families served
through the State's title IV-B or IV-E allocation. If the State remains
out of compliance, the State will be subject to a penalty related to
the extent of the noncompliance.
(5) Review of AFCARS compliance will take place in accordance with
45 CFR 1355.40.

Sec. 1355.33 Procedures for the review.

(a) The full child and family services reviews will:
(1) Consist of a two-phase process that includes a statewide
assessment and an on-site review; and
(2) Be conducted by a team of Federal and State reviewers that
includes:
(i) Staff of the State child and family services agency, including
the State and local offices that represent the service areas that are
the focus of any particular review;
(ii) Representatives selected by the State, in collaboration with
the ACF Regional Office, from those with whom the State was required to
consult in developing its CFSP, as described and required in 45 CFR
part 1357.15(l);
(iii) Federal staff of HHS; and
(iv) Other individuals, as deemed appropriate and agreed upon by
the State and ACF.
(b) Statewide assessment. The first phase of the full review will
be a statewide assessment conducted by the internal and external State
members of the review team. The statewide assessment must:
(1) Address each systemic factor under review, including the
statewide information system; case review system; quality assurance
system; staff training; service array; agency responsiveness to the
community; and foster and adoptive parent licensing, recruitment and
retention;
(2) Assess the outcome areas of safety, permanency, and well-being
of children and families served by the State agency using data from
AFCARS, NCANDS, or, for the initial review, another source approved by
ACF. The State must also analyze and explain its performance in meeting
the national standards for the statewide data indicators;
(3) Assess the characteristics of the State agency that have the
most significant impact on the agency's capacity to deliver services to
children and families that will lead to improved outcomes;
(4) Assess the strengths and areas of the State's child and family
services programs that require further examination through an on-site
review;
(1) Include a listing of all the persons external to the State
agency who participated in the preparation of the statewide assessment
pursuant to Secs. 1355.33(a)(2)(ii) and (iv); and
(2) Be completed and submitted to ACF within 4 months of the date
that ACF transmits the information for the statewide assessment to the
State.
(c) On-site review. The second phase of the full review will be an
on-site review.
(1) The on-site review will cover the State's programs under titles
IV-B and IV-E of the Act, including in-home services and foster care.
It will be jointly planned by the State and ACF, and guided by
information in the completed statewide assessment that identifies areas
in need of improvement or further review.
(2) The on-site review may be concentrated in several specific
political subdivisions of the State, as agreed upon by the ACF and the
State; however, the State's largest metropolitan subdivision must be
one of the locations selected.
(3) ACF has final approval of the selection of specific areas of
the State's child and family services continuum described in paragraph
(c)(1) of this section and selection of the political subdivisions
referenced in paragraph (c)(2) of this section.
(4) Sources of information collected during the on-site review to
determine substantial conformity must include, but are not limited to:
(i) Case records on children and families served by the agency;
(ii) Interviews with children and families whose case records have
been reviewed and who are, or have been, recipients of services of the
agency;
(iii) Interviews with caseworkers, foster parents, and service
providers for the cases selected for the on-site review; and
(iv) Interviews with key stakeholders, both internal and external
to the agency, which, at a minimum, must include those individuals who
participated in the development of the State's CFSP required at 45 CFR
1357.15(1), courts, administrative review bodies, children's guardians
ad litem and other

[[Page 4078]]

individuals or bodies assigned responsibility for representing the best
interests of the child.
(5) The sample will range from 30-50 cases. Foster care cases must
be drawn randomly from AFCARS, or, for the initial review, from another
source approved by ACF and include children who entered foster care
during the year under review. In-home cases must be drawn randomly from
NCANDS or from another source approved by ACF. To ensure that all
program areas are adequately represented, the sample size may be
increased.
(6) The sample of 30-50 cases reviewed on-site will be selected
from a randomly drawn oversample of no more than 150 cases. The
oversample must be statistically significant at a 90 percent compliance
rate (95 percent in subsequent reviews), with a tolerable sampling
error of 5 percent and a confidence coefficient of 95 percent. The
additional cases in the oversample not selected for the on-site review
will form the sample of cases to be reviewed, if needed, in order to
resolve discrepancies between the data indicators and the on-site
reviews in accordance with paragraph (d)(2) of this section.
(d) Resolution of discrepancies between the statewide assessment
and the findings of the on-site portion of the review. Discrepancies
between the statewide assessment and the findings of the on-site
portion of the review will be resolved by either of the following
means, at the State's option:
(1) The submission of additional information by the State; or
(2) ACF and the State will review additional cases using only those
indicators in which the discrepancy occurred. ACF and the State will
determine jointly the number of additional cases to be reviewed, not to
exceed a total of 150 cases to be selected as specified in paragraph
(c)(6) of this section.
(e) Partial review. A partial child and family services review,
when required, will be planned and conducted jointly by ACF and the
State agency based on the nature of the concern. A partial review does
not substitute for the full reviews as required under Sec. 1355.32(b).
(f) Notification. Within 30 calendar days following either a
partial child and family services review, full child and family
services review, or the resolution of a discrepancy between the
statewide assessment and the findings of the on-site portion of the
review, ACF will notify the State agency in writing of whether the
State is, or is not, operating in substantial conformity.

Sec. 1355.34 Criteria for determining substantial conformity.

(a) Criteria to be satisfied. ACF will determine a State's
substantial conformity with title IV-B and title IV-E State plan
requirements based on the following:
(1) Its ability to meet national standards, set by the Secretary,
for statewide data indicators associated with specific outcomes for
children and families;
(2) Its ability to meet criteria related to outcomes for children
and families; and
(3) Its ability to meet criteria related to the State agency's
capacity to deliver services leading to improved outcomes.
(b) Criteria related to outcomes.
(1) A State's substantial conformity will be determined by its
ability to substantially achieve the following child and family service
outcomes:
(i) In the area of child safety:
(A) Children are, first and foremost, protected from abuse and
neglect; and,
(B) Children are safely maintained in their own homes whenever
possible and appropriate;
(ii) In the area of permanency for children:
(A) Children have permanency and stability in their living
situations; and
(B) The continuity of family relationships and connections is
preserved for children; and
(iii) In the area of child and family well-being:
(A) Families have enhanced capacity to provide for their children's
needs;
(B) Children receive appropriate services to meet their educational
needs; and
(C) Children receive adequate services to meet their physical and
mental health needs.
(2) A State's level of achievement with regard to each outcome
reflects the extent to which a State has:
(i) Met the national standard(s) for the statewide data
indicator(s) associated with that outcome, if applicable; and,
(ii) Implemented the following CFSP requirements or assurances:
(A) The requirements in 45 CFR 1357.15(p) regarding services
designed to assure the safety and protection of children and the
preservation and support of families;
(B) The requirements in 45 CFR 1357.15(q) regarding the permanency
provisions for children and families in sections 422 and 471 of the
Act;
(C) The requirements in section 422(b)(9) of the Act regarding
recruitment of potential foster and adoptive families;
(D) The assurances by the State as required by section
422(b)(10)(C)(i) and (ii) of the Act regarding policies and procedures
for abandoned children;
(E) The requirements in section 422(b)(11) of the Act regarding the
State's compliance with the Indian Child Welfare Act;
(F) The requirements in section 422(b)(12) of the Act regarding a
State's plan for effective use of cross-jurisdictional resources to
facilitate timely adoptive or permanent placements; and,
(G) The requirements in section 471(a)(15) of the Act regarding
reasonable efforts to prevent removals of children from their homes, to
make it possible for children in foster care to safely return to their
homes, or, when the child is not able to return home, to place the
child in accordance with the permanency plan and complete the steps
necessary to finalize the permanent placement.
(3) A State will be determined to be in substantial conformity if
its performance on:
(i) Each statewide data indicator developed pursuant to paragraph
(b)(4) of this section meets the national standard described in
paragraph (b)(5) of this section; and,
(ii) Each outcome listed in paragraph (b)(1) of this section is
rated as ``substantially achieved'' in 95 percent of the cases examined
during the on-site review (90 percent of the cases for a State's
initial review). Information from various sources (case records,
interviews) will be examined for each outcome and a determination made
as to the degree to which each outcome has been achieved for each case
reviewed.
(4) The Secretary will, using AFCARS and NCANDS, develop statewide
data indicators for each of the specific outcomes described in
paragraph (b)(1) of this section for use in determining substantial
conformity. The Secretary will add, amend, or suspend any such
statewide data indicator(s) when appropriate. To the extent practical
and feasible, the statewide data indicators will be consistent with
those developed in accordance with section 203 of the Adoption and Safe
Families Act of 1997 (Pub. L. 105-89).
(5) The initial national standards for the statewide data
indicators described in paragraph (b)(4) of this section will be based
on the 75th percentile of all State performance for that indicator, as
reported in AFCARS or NCANDS. The Secretary may adjust these national
standards if appropriate. The initial national standard will be set
using the following data sources:
(i) The 1997 and 1998 submissions to NCANDS (or the most recent and
complete 2 years available), for those

[[Page 4079]]

statewide data indicators associated with the safety outcomes; and,
(ii) The 1998b, 1999c, and 2000a submissions to AFCARS (or the most
recent and complete report periods available), for those statewide data
indicators associated with the permanency outcomes.
(c) Criteria related to State agency capacity to deliver services
leading to improved outcomes for children and families. In addition to
the criteria related to outcomes contained in paragraph (b) of this
section, the State agency must also satisfy criteria related to the
delivery of services. Based on information from the statewide
assessment and onsite review, the State must meet the following
criteria for each systemic factor in paragraphs (c)(2) through (c)(7)
of this section to be considered in substantial conformity: All of the
State plan requirements associated with the systemic factor must be in
place, and no more than one of the state plan requirements fails to
function as described in paragraphs (c)(2) through (c)(7) of this
section. The systemic factor in paragraph (c)(1) of this section, is
rated on the basis of only one State plan requirement. To be considered
in substantial conformity, the State plan requirement associated with
statewide information system capacity must be both in place and
functioning as described in the requirement. ACF will use a rating
scale to make the determinations of substantial conformity. The
systemic factors under review are:
(1) Statewide information system: The State is operating a
statewide information system that, at a minimum, can readily identify
the status, demographic characteristics, location, and goals for the
placement of every child who is (or within the immediately preceding 12
months, has been) in foster care (section 422(b)(10)(B)(i) of the Act);
(2) Case review system: The State has procedures in place that:
(i) Provide, for each child, a written case plan to be developed
jointly with the child's parent(s) that includes provisions: for
placing the child in the least restrictive, most family-like placement
appropriate to his/her needs, and in close proximity to the parent'
home where such placement is in the child's best interests; for visits
with a child placed out of State at least every 12 months by a
caseworker of the agency or of the agency in the State where the child
is placed; and for documentation of the steps taken to make and
finalize an adoptive or other permanent placement when the child cannot
return home (sections 422(b)(10)(B)(ii), 471(a)(16) and 475(5)(A) of
the Act);
(ii) Provide for periodic review of the status of each child no
less frequently than once every six months by either a court or by
administrative review (sections 422(b)(10)(B)(ii), 471(a)(16) and
475(5)(B) of the Act);
(iii) Assure that each child in foster care under the supervision
of the State has a permanency hearing in a family or juvenile court or
another court of competent jurisdiction (including a Tribal court), or
by an administrative body appointed or approved by the court, which is
not a part of or under the supervision or direction of the State
agency, no later than 12 months from the date the child entered foster
care (and not less frequently than every 12 months thereafter during
the continuation of foster care) (sections 422(b)(10)(B)(ii),
471(a)(16) and 475(5)(C) of the Act);
(iv) Provide a process for termination of parental rights
proceedings in accordance with sections 422(b)(10(B)(ii), 475(5)(E) and
(F) of the Act; and,
(v) Provide foster parents, preadoptive parents, and relative
caregivers of children in foster care with notice of and an opportunity
to be heard in any review or hearing held with respect to the child
(sections 422(b)(10)(B)(ii) and 475(5)(G) of the Act).
(3) Quality assurance system: The State has developed and
implemented standards to ensure that children in foster care placements
are provided quality services that protect the safety and health of the
children (section 471(a)(22)) and is operating an identifiable quality
assurance system (45 CFR 1357.15(u)) as described in the CFSP that:
(i) Is in place in the jurisdictions within the State where
services included in the CFSP are provided;
(ii) Is able to evaluate the adequacy and quality of services
provided under the CFSP;
(iii) Is able to identify the strengths and needs of the service
delivery system it evaluates;
(iv) Provides reports to agency administrators on the quality of
services evaluated and needs for improvement; and
(v) Evaluates measures implemented to address identified problems.
(4) Staff training: The State is operating a staff development and
training program (45 CFR 1357.15(t)) that:
(i) Supports the goals and objectives in the State's CFSP;
(ii) Addresses services provided under both subparts of title IV-B
and the training plan under title IV-E of the Act;
(iii) Provides training for all staff who provide family
preservation and support services, child protective services, foster
care services, adoption services and independent living services soon
after they are employed and that includes the basic skills and
knowledge required for their positions;
(iv) Provides ongoing training for staff that addresses the skills
and knowledge base needed to carry out their duties with regard to the
services included in the State's CFSP; and,
(v) Provides short-term training for current or prospective foster
parents, adoptive parents, and the staff of State-licensed or State-
approved child care institutions providing care to foster and adopted
children receiving assistance under title IV-E that addresses the
skills and knowledge base needed to carry out their duties with regard
to caring for foster and adopted children.
(5) Service array: Information from the Statewide assessment and
on-site review determines that the State has in place an array of
services (45 CFR 1357.15(n) and section 422(b)(10)(B)(iii) and (iv) of
the Act) that includes, at a minimum:
(i) Services that assess the strengths and needs of children and
families assisted by the agency and are used to determine other service
needs;
(ii) Services that address the needs of the family, as well as the
individual child, in order to create a safe home environment;
(iii) Services designed to enable children at risk of foster care
placement to remain with their families when their safety and well-
being can be reasonably assured;
(iv) Services designed to help children achieve permanency by
returning to families from which they have been removed, where
appropriate, be placed for adoption or with a legal guardian or in some
other planned, permanent living arrangement, and through post-legal
adoption services;
(v) Services that are accessible to families and children in all
political subdivisions covered in the State's CFSP; and,
(vi) Services that can be individualized to meet the unique needs
of children and families served by the agency.
(6) Agency responsiveness to the community:
(i) The State, in implementing the provisions of the CFSP, engages
in ongoing consultation with a broad array of individuals and
organizations representing the State and county agencies responsible
for implementing

[[Page 4080]]

the CFSP and other major stakeholders in the services delivery system
including, at a minimum, tribal representatives, consumers, service
providers, foster care providers, the juvenile court, and other public
and private child and family serving agencies (45 CFR 1357.15(l)(4));
(ii) The agency develops, in consultation with these or similar
representatives, annual reports of progress and services delivered
pursuant to the CFSP (45 CFR 1357.16(a));
(iii) There is evidence that the agency's goals and objectives
included in the CFSP reflect consideration of the major concerns of
stakeholders consulted in developing the plan and on an ongoing basis
(45 CFR 1357.15(m)); and
(iv) There is evidence that the State's services under the plan are
coordinated with services or benefits under other Federal or federally-
assisted programs serving the same populations to achieve the goals and
objectives in the plan (45 CFR 1357.15(m)).
(7) Foster and adoptive parent licensing, recruitment and
retention:
(i) The State has established and maintains standards for foster
family homes and child care institutions which are reasonably in accord
with recommended standards of national organizations concerned with
standards for such institutions or homes (section 471(a)(10) of the
Act);
(ii) The standards so established are applied by the State to every
licensed or approved foster family home or child care institution
receiving funds under title IV-E or IV-B of the Act (section 471(a)(10)
of the Act);
(iii) The State complies with the safety requirements for foster
care and adoptive placements in accordance with sections 471(a)(16),
471(a)(20) and 475(1) of the Act and 45 CFR 1356.30;
(iv) The State has in place an identifiable process for assuring
the diligent recruitment of potential foster and adoptive families that
reflect the ethnic and racial diversity of children in the State for
whom foster and adoptive homes are needed (section 422(b)(9) of the
Act); and,
(v) The State has developed and implemented plans for the effective
use of cross-jurisdictional resources to facilitate timely adoptive or
permanent placements for waiting children (section 422(b)(12) of the
Act).
(d) Availability of review instruments. ACF will make available to
the States copies of the review instruments, which will contain the
specific standards to be used to determine substantial conformity, on
an ongoing basis, whenever significant revisions to the instruments are
made.

Sec. 1355.35 Program improvement plans.

(a) Mandatory program improvement plan.
(1) States found not to be operating in substantial conformity
shall develop a program improvement plan. The program improvement plan
must:
(i) Be developed jointly by State and Federal staff in consultation
with the review team;
(ii) Identify the areas in which the State's program is not in
substantial conformity;
(iii)Set forth the goals, the action steps required to correct each
identified weakness or deficiency, and dates by which each action step
is to be completed in order to improve the specific areas;
(iv) Set forth the amount of progress the statewide data will make
toward meeting the national standards;
(v) Establish benchmarks that will be used to measure the State's
progress in implementing the program improvement plan and describe the
methods that will be used to evaluate progress;
(vi) Identify how the action steps in the plan build on and make
progress over prior program improvement plans;
(vii) Identify the technical assistance needs and sources of
technical assistance, both Federal and non-Federal, which will be used
to make the necessary improvements identified in the program
improvement plan.
(2) In the event that ACF and the State cannot reach consensus
regarding the content of a program improvement plan or the degree of
program or data improvement to be achieved, ACF retains the final
authority to assign the contents of the plan and/or the degree of
improvement required for successful completion of the plan. Under such
circumstances, ACF will render a written rationale for assigning such
content or degree of improvement.
(b) Voluntary program improvement plan. States found to be
operating in substantial conformity may voluntarily develop and
implement a program improvement plan in collaboration with the ACF
Regional Office, under the following circumstances:
(1) The State and Regional Office agree that there are areas of the
State's child and family services programs in need of improvement which
can be addressed through the development and implementation of a
voluntary program improvement plan;
(2) ACF approval of the voluntary program improvement plan will not
be required; and
(3) No penalty will be assessed for the State's failure to achieve
the goals described in the voluntary program improvement plan.
(c) Approval of program improvement plans.
(1) A State determined not to be in substantial conformity must
submit a program improvement plan to ACF for approval within 90
calendar days from the date the State receives the written notification
from ACF that it is not operating in substantial conformity.
(2) Any program improvement plan will be approved by ACF if it
meets the provisions of paragraph (a) of this section.
(3) If the program improvement plan does not meet the provisions of
paragraph (a) of this section, the State will have 30 calendar days
from the date it receives notice from ACF that the plan has not been
approved to revise and resubmit the plan for approval.
(4) If the State does not submit a revised program improvement plan
according to the provisions of paragraph (c)(3) of this section or if
the plan does not meet the provisions of paragraph (a) of this section,
withholding of funds pursuant to the provisions of Sec. 1355.36 of this
part will begin.
(d) Duration of program improvement plans.
(1) ACF retains the authority to establish time frames for the
program improvement plan consistent with the seriousness and complexity
of the remedies required for any areas determined not in substantial
conformity, not to exceed two years.
(2) Particularly egregious areas of nonconformity impacting child
safety must receive priority in both the content and time frames of the
program improvement plans and must be addressed in less than two years.
(3) The Secretary may approve extensions of deadlines in a program
improvement plan not to exceed one year. The circumstances under which
requests for extensions will be approved are expected to be rare. The
State must provide compelling documentation of the need for such an
extension. Requests for extensions must be received by ACF at least 60
days prior to the affected completion date.
(4) States must provide quarterly status reports (unless ACF and
the State agree upon less frequent reports) to ACF. Such reports must
inform ACF of progress in implementing the measures of the plan.
(e) Evaluating program improvement plans. Program improvement plans
will be evaluated jointly by the State agency and ACF, in collaboration
with other members of the review team, as

[[Page 4081]]

described in the State's program improvement plan and in accordance
with the following criteria:
(1) The methods and information used to measure progress must be
sufficient to determine when and whether the State is operating in
subsequent substantial conformity or has reached the negotiated
standard with respect to statewide data indicators that fail to meet
the national standard for that indicator;
(2) The frequency of evaluating progress will be determined jointly
by the State and Federal team members, but no less than annually.
Evaluation of progress will be performed in conjunction with the annual
updates of the State's CFSP, as described in paragraph (f) of this
section;
(3) Action steps may be jointly determined by the State and ACF to
be achieved prior to projected completion dates, and will not require
any further evaluation at a later date; and
(4) The State and ACF may jointly renegotiate the terms and
conditions of the program improvement plan as needed, provided that:
(i) The renegotiated plan is designed to correct the areas of the
State's program determined not to be in substantial conformity and/or
achieve a standard for the statewide data indicators that is acceptable
to ACF;
(ii) The amount of time needed to implement the provisions of the
plan does not extend beyond three years from the date the original
program improvement plan was approved;
(iii) The terms of the renegotiated plan are approved by ACF; and
(iv) The Secretary approves any extensions beyond the two-year
limit.
(f) Integration of program improvement plans with CFSP planning.
The elements of the program improvement plan must be incorporated into
the goals and objectives of the State's CFSP. Progress in implementing
the program improvement plan must be included in the annual reviews and
progress reports related to the CFSP required in 45 CFR 1357.16.

Sec. 1355.36 Withholding Federal funds due to failure to achieve
substantial conformity or failure to successfully complete a program
improvement plan.

(a) For the purposes of this section:
(1) The term ``title IV-B funds'' refers to the State's combined
allocation of title IV-B subpart 1 and subpart 2 funds; and
(2) The term ``title IV-E funds'' refers to the State's
reimbursement for administrative costs for the foster care program
under title IV-E.
(b) Determination of the amount of Federal funds to be withheld.
ACF will determine the amount of the State title IV-B and IV-E funds to
be withheld due to a finding that the State is not operating in
substantial conformity, as follows:
(1) A State will have the opportunity to develop and complete a
program improvement plan prior to any withholding of funds.
(2) Title IV-B and IV-E funds will not be withheld from a State if
the determination of nonconformity was caused by the State's correct
use of formal written statements of Federal law or policy provided the
State by DHHS.
(3) A portion of the State's title IV-B and IV-E funds will be
withheld by ACF for the year under review and for each succeeding year
until the State either successfully completes a program improvement
plan or is found to be operating in substantial conformity.
(4) The amount of title IV-B and title IV-E funds subject to
withholding due to a determination that a State is not operating in
substantial conformity is based on a pool of funds defined as follows:
(i) The State's allotment of title IV-B funds for each of the years
to which the withholding applies; and
(ii) An amount equivalent to 10 percent of the State's Federal
claims for title IV-E foster care administrative costs for each of the
years to which withholding applies;
(5) The amount of funds to be withheld from the pool in paragraph
(b)(4) of this section will be computed as follows:
(i) Except as provided for in paragraphs (b)(7) and (b)(8) of this
section, an amount equivalent to one percent of the funds described in
paragraph (b)(4) of this section for each of the years to which
withholding applies will be withheld for each of the seven outcomes
listed in Sec. 1355.34(b)(1) of this part that is determined not to be
substantially achieved; and
(ii) Except as provided for in paragraphs (b)(7) and (b)(8) of this
section, an amount equivalent to one percent of the funds described in
paragraph (b)(4) of this section for each of the years to which
withholding applies will be withheld for each of the seven systemic
factors listed in Sec. 1355.34(c) of this part that is determined not
to be in substantial conformity.
(6) Except as provided for in paragraphs (b)(7), (b)(8), and (e)(4)
of this section, in the event the State is determined to be in
nonconformity on each of the seven outcomes and each of the seven
systemic factors subject to review, the maximum amount of title IV-B
and title IV-E funds to be withheld due to the State's failure to
comply is 14 percent per year of the funds described in paragraph
(b)(4) of this section for each year.
(7) States determined not to be in substantial conformity that fail
to correct the areas of nonconformity through the successful completion
of a program improvement plan, and are determined to be in
nonconformity on the second full review following the first full review
in which a determination of nonconformity was made will be subject to
increased withholding as follows:
(i) The amount of funds described in paragraph (b)(5) of this
section will increase to two percent for each of the seven outcomes and
each of the seven systemic factors that continues in nonconformity
since the immediately preceding child and family services review;
(ii) The increased withholding of funds for areas of continuous
nonconformity is subject to the provisions of paragraphs (c), (d), and
(e) of this section;
(iii) The maximum amount of title IV-B and title IV-E funds to be
withheld due to the State's failure to comply on the second full review
following the first full review in which the determination of
nonconformity was made is 28 percent of the funds described in
paragraph (b)(4) of this section for each year to which the withholding
of funds applies.
(8) States determined not to be in substantial conformity that fail
to correct the areas of nonconformity through the successful completion
of a program improvement plan, and are determined to be in
nonconformity on the third and any subsequent full reviews following
the first full review in which a determination of nonconformity was
made will be subject to increased withholding as follows:
(i) The amount of funds described in paragraph (b)(5) of this
section will increase to three percent for each of the seven outcomes
and each of the seven systemic factors that continues in nonconformity
since the immediately preceding child and family services review;
(ii) The increased withholding of funds for areas of continuous
nonconformity is subject to the provisions of paragraphs (c), (d), and
(e) of this section;
(iii) The maximum amount of title IV-B and title IV-E funds to be
withheld due to the State's failure to comply on the third and any
subsequent full reviews following the first full review in which the
determination of nonconformity was made is 42 percent

[[Page 4082]]

of the funds described in paragraph (b)(4) of this section for each
year to which the withholding of funds applies.
(c) Suspension of withholding.
(1) For States determined not to be operating in substantial
conformity, ACF will suspend the withholding of the State title IV-B
and title IV-E funds during the time that a program improvement plan is
in effect, provided that:
(i) The program improvement plan conforms to the provisions of
Sec. 1355.35 of this part; and
(ii) The State is actively implementing the provisions of the
program improvement plan.
(2) Suspension of the withholding of funds is limited to three
years following each review, or the amount of time approved for
implementation of the program improvement plan, whichever is less.
(d) Terminating the withholding of funds. For States determined not
to be in substantial conformity, ACF will terminate the withholding of
the State's title IV-B and title IV-E funds related to the
nonconformity upon determination by the State and ACF that the State
has achieved substantial conformity or has successfully completed a
program improvement plan. ACF will rescind the withholding of the
portion of title IV-B and title IV-E funds related to specific goals or
action steps as of the date at the end of the quarter in which they
were determined to have been achieved.
(e) Withholding of funds.
(1) States determined not to be in substantial conformity that fail
to successfully complete a program improvement plan will be notified by
ACF of this final determination of nonconformity in writing within 10
business days after the relevant completion date specified in the plan,
and advised of the amount of title IV-B and title IV-E funds which are
to be withheld.
(2) Title IV-B and title IV-E funds will be withheld based on the
following:
(i) If the State fails to submit status reports in accordance with
Sec. 1355.35(d)(4), or if such reports indicate that the State is not
making satisfactory progress toward achieving goals or actions steps,
funds will be withheld at that time for a period beginning October 1 of
the fiscal year for which the determination of nonconformity was made
and ending on the specified completion date for the affected goal or
action step.
(ii) Funds related to goals and action steps that have not been
achieved by the specified completion date will be withheld at that time
for a period beginning October 1 of the fiscal year for which the
determination of nonconformity was made and ending on the completion
date of the affected goal or action step; and
(iii) The withholding of funds commensurate with the level of
nonconformity at the end of the program improvement plan will begin at
the latest completion date specified in the program improvement plan
and will continue until a subsequent full review determines the State
to be in substantial conformity or the State successfully completes a
program improvement plan developed as a result of that subsequent full
review.
(3) When the date the State is determined to be in substantial
conformity or to have successfully completed a program improvement plan
falls within a specific quarter, the amount of funds to be withheld
will be computed to the end of that quarter.
(4) A State agency that refuses to participate in the development
or implementation of a program improvement plan, as required by ACF,
will be subject to the maximum increased withholding of 42 percent of
its title IV-B and title IV-E funds, as described in paragraph (b)(8)
of this section, for each year or portion thereof to which the
withholding of funds applies.
(5) The State agency will be liable for interest on the amount of
funds withheld by the Department, in accordance with the provisions of
45 CFR 30.13.

Sec. 1355.37 Opportunity for Public Inspection of Review Reports and
Materials.

The State agency must make available for public review and
inspection all statewide assessments (Sec. 1355.33(b)), report of
findings (Sec. 1355.33(e)), and program improvement plans
(Sec. 1355.35(a)) developed as a result of a full or partial child and
family services review.

Sec. 1355.38 Enforcement of section 471(a)(18) of the Act regarding
the removal of barriers to interethnic adoption.

(a) Determination that a violation has occurred in the absence of a
court finding.
(1) If ACF becomes aware of a possible section 471(a)(18)
violation, whether in the course of a child and family services review,
the filing of a complaint, or through some other mechanism, it will
refer such a case to the Department's Office for Civil Rights (OCR) for
investigation.
(2) Based on the findings of the OCR investigation, ACF will
determine if a violation of section 471(a)(18) has occurred. A section
471(a)(18) violation occurs if a State or an entity in the State:
(i) Has denied to any person the opportunity to become an adoptive
or foster parent on the basis of the race, color, or national origin of
the person, or of the child, involved;
(ii) Has delayed or denied the placement of a child for adoption or
into foster care on the basis of the race, color, or national origin of
the adoptive or foster parent, or the child involved; or,
(iii) With respect to a State, maintains any statute, regulation,
policy, procedure, or practice that on its face, is a violation as
defined in paragraphs (a)(2)(i) and (2)(ii) of this section.
(3) ACF will provide the State or entity with written notification
of its determination.
(4) If there has been no violation, there will be no further
action. If ACF determines that there has been a violation of section
471(a)(18), it will take enforcement action as described in this
section.
(5) Compliance with the Indian Child Welfare Act of 1978 (Pub. L.
95-608) does not constitute a violation of section 471(a)(18).
(b) Corrective action and penalties for violations with respect to
a person or based on a court finding.
(1) A State found to be in violation of section 471(a)(18) with
respect to a person, as described in paragraphs (a)(2)(i) and
(a)(2)(ii) of this section, will be penalized in accordance with
paragraph (g)(2) of this section. A State determined to be in violation
of section 471(a)(18) of the Act as a result of a court finding will be
penalized in accordance with paragraph (g)(4) of this section. The
State may develop, obtain approval of, and implement a plan of
corrective action any time after it receives written notification from
ACF that it is in violation of section 471(a)(18) of the Act.
(2) Corrective action plans are subject to ACF approval.
(3) If the corrective action plan does not meet the provisions of
paragraph (d) of this section, the State must revise and resubmit the
plan for approval until it has an approved plan.
(4) A State found to be in violation of section 471(a)(18) by a
court must notify ACF within 30 days from the date of entry of the
final judgement once all appeals have been exhausted, declined, or the
appeal period has expired.
(c) Corrective action for violations resulting from a State's
statute, regulation, policy, procedure, or practice.
(1) A State found to have committed a violation of the type
described in paragraph (a)(2)(iii) of this section must develop and
submit a corrective action plan within 30 days of receiving written

[[Page 4083]]

notification from ACF that it is in violation of section 471(a)(18).
Once the plan is approved the State will have to complete the
corrective action and come into compliance. If the State fails to
complete the corrective action plan within six months and come into
compliance, a penalty will be imposed in accordance with paragraph
(g)(3) of this section.
(2) Corrective action plans are subject to ACF approval.
(3) If the corrective action plan does not meet the provisions of
paragraph (d) of this section, the State must revise and resubmit the
plan within 30 days from the date it receives a written notice from ACF
that the plan has not been approved. If the State does not submit a
revised corrective action plan according to the provisions of paragraph
(d) of this section, withholding of funds pursuant to the provisions of
paragraph (g) of this section will apply.
(d) Contents of a corrective action plan. A corrective action plan
must:
(1) Identify the issues to be addressed;
(2) Set forth the steps for taking corrective action;
(3) Identify any technical assistance needs and Federal and non-
Federal sources of technical assistance which will be used to complete
the action steps; and,
(4) Specify the completion date. This date will be no later than 6
months from the date ACF approves the corrective action plan.
(e) Evaluation of corrective action plans. ACF will evaluate
corrective action plans and notify the State (in writing) of its
success or failure to complete the plan within 30 calendar days. If the
State has failed to complete the corrective action plan, ACF will
calculate the amount of reduction in the State's title IV-E payment and
include this information in the written notification of failure to
complete the plan.
(f) Funds to be withheld. The term ``title IV-E funds'' refers to
the amount of Federal funds advanced or paid to the State for allowable
costs incurred by a State for foster care maintenance payments,
adoption assistance payments, administrative, and training costs under
title IV-E and the State's allotment for the Independent Living
program.
(g) Reduction of title IV-E funds.
(1) Title IV-E funds shall be reduced in specified amounts in
accordance with paragraph (h) of this section under the following
circumstances:
(i) A determination that a State is in violation of section
471(a)(18) of the Act with respect to a person as described in
paragraphs (a)(2)(i) and (a)(2)(ii) of this section, or;
(ii) After a State's failure to implement and complete a corrective
action plan and come into compliance as described in paragraph (c) of
this section.
(2) Once ACF notifies a State, in writing, that it has committed a
section 471(a)(18) violation with respect to a person, the State's
title IV-E funds will be reduced for the fiscal quarter in which the
State received such written notification and for each succeeding
quarter within that fiscal year or until the State completes a
corrective action plan and comes into compliance, whichever is earlier.
(3) For States that fail to complete a corrective action plan
within 6 months, title IV-E funds will be reduced by ACF for the fiscal
quarter in which the State received notification of its violation. The
reduction will continue for each succeeding quarter within that fiscal
year or until the State completes the corrective action plan and comes
into compliance, whichever is earlier.
(4) If, as a result of a court finding, a State is determined to be
in violation of section 471(a)(18) of the Act, ACF will assess a
penalty without further investigation. Once the State is notified (in
writing) of the violation, its title IV-E funds will be reduced for the
fiscal quarter in which the court finding was made and for each
succeeding quarter within that fiscal year or until the State completes
a corrective action plan and comes into compliance, whichever is
sooner.
(5) The maximum number of quarters that a State will have its title
IV-E funds reduced due to a finding of a State's failure to conform to
section 471(a)(18) of the Act is limited to the number of quarters
within the fiscal year in which a determination of nonconformity was
made. However, an uncorrected violation may result in a subsequent
review, another finding, and additional penalties.
(6) No penalty will be imposed for a court finding of a violation
of section 471(a)(18) until the judgement is final and all appeals have
been exhausted, declined, or the appeal period has expired.
(h) Determination of the amount of reduction of Federal funds. ACF
will determine the reduction in title IV-E funds due to a section
471(a)(18) violation in accordance with section 474(d)(1) of the Act.
(1) State agencies that violate section 471(a)(18) with respect to
a person or fail to implement or complete a corrective action plan as
described in paragraph (c) of this section will be subject to a
penalty. The penalty structure will follow section 474(d)(1) of the
Act. Penalties will be levied for the quarter of the fiscal year in
which the State is notified of its section 471(a)(18) violation, and
for each succeeding quarter within that fiscal year until the State
comes into compliance with section 471(a)(18). The reduction in title
IV-E funds will be computed as follows:
(i) 2 percent of the State's title IV-E funds for the fiscal year
quarter, as defined in paragraph (f) of this section, for the first
finding of noncompliance in that fiscal year;
(ii) 3 percent of the State's title IV-E funds for the fiscal year
quarter, as defined in paragraph (f) of this section, for the second
finding of noncompliance in that fiscal year;
(iii) 5 percent of the State's title IV-E funds for the fiscal year
quarter, as defined in paragraph (f) of this section, for the third or
subsequent finding of noncompliance in that fiscal year.
(2) Any entity (other than the State agency) which violates section
471(a)(18) of the Act during a fiscal quarter with respect to any
person must remit to the Secretary all title IV-E funds paid to it by
the State during the quarter in which the entity is notified of its
violation.
(3) No fiscal year payment to a State will be reduced by more than
5 percent of its title IV-E funds, as defined in paragraph (f) of this
section, where the State has been determined to be out of compliance
with section 471(a)(18) of the Act.
(4) The State agency or entity, as applicable, will be liable for
interest on the amount of funds reduced by the Department, in
accordance with the provisions of 45 CFR 30.13.

Sec. 1355.39 Administrative and judicial review.

States determined not to be in substantial conformity with titles
IV-B and IV-E State plan requirements, or a State or entity in
violation of section 471(a)(18) of the Act:
(a) May appeal, pursuant to 45 CFR part 16, the final determination
and any subsequent withholding of, or reduction in, funds to the HHS
Departmental Appeals Board within 60 days after receipt of a notice of
nonconformity described in Sec. 1355.36(e)(1) of this part, or receipt
of a notice of noncompliance by ACF as described in Sec. 1355.38(a)(3)
of this part; and
(b) Will have the opportunity to obtain judicial review of an
adverse decision of the Departmental Appeals Board within 60 days after
the State or entity receives notice of the decision by the Board.
Appeals of adverse

[[Page 4084]]

Department Appeals Board decisions must be made to the district court
of the United States for the judicial district in which the principal
or headquarters office of the agency responsible for administering the
program is located.
(c) The procedure described in paragraphs (a) and (b) of this
section will not apply to a finding that a State or entity has been
determined to be in violation of section 471(a)(18) which is based on a
judicial decision.

4. Amend Sec. 1355.40 by revising the second sentence in paragraph
(a)(2) to read as follows:

Sec. 1355.40 Foster care and adoption data collection.

(a) Scope of the data collection system.
(1) * * *
(2) * * * This includes American Indian children covered under the
assurances in section 422(b)(10) of the Act on the same basis as any
other child. * * *
* * * * *

Appendix A to Part 1355--Foster Care Data Elements

5. Appendix A to part 1355 is amended as follows:
a. Amend Section I by revising data elements II.C.1. and heading of
2., IX.C.1., headings of 2. and 4., and IX.C.3.

b. Amend Section II by revising the first paragraph on ``Reporting
population'' and the instruction paragraphs II.C. and IX.C., and
c. Remove paragraph IX.D. to read as follows:

Section I--Foster Care Data Elements

* * * * *
II. Child's Demographic Information
* * * * *
C. Race/Ethnicity
1. Race
a. American Indian or Alaska Native
b. Asian
c. Black or African American
d. Native Hawaiian or Other Pacific Islander
e. White
f. Unable to Determine
2. Hispanic or Latino Ethnicity______
* * * * *
IX. Foster Family Home-Parent(s) Data (To be answered only if
Section V., Part A. CURRENT PLACEMENT SETTING is 1, 2 or 3)
* * * * *
C. Race/Ethnicity
1. Race of 1st Foster Caretaker
a. American Indian or Alaska Native
b. Asian
c. Black or African American
d. Native Hawaiian or Other Pacific Islander
e. White
f. Unable to Determine
2. Hispanic or Latino Ethnicity of 1st Foster Caretaker______
* * * * *
3. Race of 2nd Foster Caretaker (If Applicable)
a. American Indian or Alaska Native
b. Asian
c. Black or African American
d. Native Hawaiian or Other Pacific Islander
e. White
f. Unable to Determine
4. Hispanic or Latino Ethnicity of 2nd Foster Caretaker (If
applicable)______
* * * * *

Section II--Definitions of and Instructions for Foster Care Data
Elements

Reporting population. The population to be included in this
reporting system includes all children in foster care under the
responsibility of the State agency administering or supervising the
administration of the title IV-B Child and Family Services State
plan and the title IV-E State plan; that is, all children who are
required to be provided the assurances of section 422(b)(10) of the
Social Security Act.
* * * * *
II. Child's Demographic Information
* * * * *
C. Race/Ethnicity**
1. Race--In general, a person's race is determined by how they
define themselves or by how others define them. In the case of young
children, parents determine the race of the child. Indicate all
races (a through e) that apply with a ``1.'' For those that do not
apply, indicate a ``0.'' Indicate ``f. Unable to Determine'' with a
``1'' if it applies and a ``0'' if it does not.
American Indian or Alaska Native--A person having origins in any
of the original peoples of North or South America (including Central
America), and who maintains tribal affiliation or community
attachment.
Asian--A person having origins in any of the original peoples of
the Far East, Southeast Asia, or the Indian subcontinent including,
for example, Cambodia, China, India, Japan, Korea, Malaysia,
Pakistan, the Philippine Islands, Thailand, and Vietnam.
Black or African American--A person having origins in any of the
black racial groups of Africa.
Native Hawaiian or Other Pacific Islander--A person having
origins in any of the original peoples of Hawaii, Guam, Samoa, or
other Pacific Islands.
White--A person having origins in any of the original peoples of
Europe, the Middle East, or North Africa.
Unable to Determine--The specific race category is ``unable to
determine'' because the child is very young or is severely disabled
and no person is available to identify the child's race. ``Unable to
determine'' is also used if the parent, relative or guardian is
unwilling to identify the child's race.
2. Hispanic or Latino Ethnicity--Answer ``yes'' if the child is
of Mexican, Puerto Rican, Cuban, Central or South American origin,
or a person of other Spanish cultural origin regardless of race.
Whether or not a person is Hispanic or Latino is determined by how
they define themselves or by how others define them. In the case of
young children, parents determine the ethnicity of the child.
``Unable to Determine'' is used because the child is very young or
is severely disabled and no person is available to determine whether
or not the child is Hispanic or Latino. ``Unable to determine'' is
also used if the parent, relative or guardian is unwilling to
identify the child's ethnicity.
* * * * *

IX. Family Foster Home-Parent(s) Data

* * * * *
C. Race--Indicate the race for each of the foster parent(s). See
instructions and definitions for the race categories under data
element II.C.1. Use ``f. Unable to Determine'' only when a parent is
unwilling to identify his or her race. Hispanic or Latino
Ethnicity--Indicate the ethnicity for each of the foster parent(s).
See instructions and definitions under data element II.C.2. Use ``f.
Unable to Determine'' only when a parent is unwilling to identify
his or her ethnicity.
* * * * *

Appendix B to Part 1355--Adoption Data Elements

6. Appendix B to part 1355 is amended as follows:
a. Amend Section I by revising data elements II.C.1., headings of
2. and 4., II.C.3., II.C. and VI.C. b. Amend Section II by revising the
instruction paragraphs II.C. and VI.C. to read as follows:

Section I--Adoption Data Elements

* * * * *
II. Child's Demographic Information
* * * * *
C. Race/Ethnicity
1. Race
a. American Indian or Alaska Native
b. Asian
c. Black or African American
d. Native Hawaiian or Other Pacific Islander
e. White
f. Unable to Determine
2. Hispanic or Latino Ethnicity______
* * * * *
VI. Adoptive Parents
* * * * *
C. Race/Ethnicity
1. Adoptive Mother's Race (If Applicable)
a. American Indian or Alaska Native
b. Asian
c. Black or African American
d. Native Hawaiian or Other Pacific Islander
e. White
f. Unable to Determine
2. Hispanic or Latino Ethnicity of Mother (If Applicable)______
* * * * *
3. Adoptive Father's Race (If Applicable)
a. American Indian or Alaska Native
b. Asian
c. Black or African American
d. Native Hawaiian or Other Pacific Islander

[[Page 4085]]

e. White
f. Unable to Determine
4. Hispanic or Latino Ethnicity of Father (If Applicable)______
* * * * *

Section II--Definitions of Instructions for Adoption Data Elements

* * * * *
II. Child's Demographic Information
* * * * *
C. Race/Ethnicity
1. Race--In general, a person's race is determined by how they
define themselves or by how others define them. In the case of young
children, parents determine the race of the child. Indicate all races
(a-e) that apply with a ``1.'' For those that do not apply, indicate a
``0.'' Indicate ``f. Unable to Determine'' with a 1'' if it applies and
a ``0'' if it does not.
American Indian or Alaska Native--A person having origins in any of
the original peoples of North or South America (including Central
America), and who maintains tribal affiliation or community attachment.
Asian--A person having origins in any of the original peoples of
the Far East, Southeast Asia, or the Indian subcontinent including, for
example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the
Philippine Islands, Thailand, and Vietnam.
Black or African American--A person having origins in any of the
black racial groups of Africa.
Native Hawaiian or Other Pacific Islander--A person having origins
in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific
Islands.
White--A person having origins in any of the original peoples of
Europe, the Middle East, or North Africa.
Unable to Determine--The specific race category is ``unable to
determine'' because the child is very young or is severely disabled and
no person is available to identify the child's race. ``Unable to
determine'' is also used if the parent, relative or guardian is
unwilling to identify the child's race.
2. Hispanic or Latino Ethnicity--Answer ``yes'' if the child is of
Mexican, Puerto Rican, Cuban, Central or South American origin, or a
person of other Spanish cultural origin regardless of race. Whether or
not a person is Hispanic or Latino is determined by how they define
themselves or by how others define them. In the case of young children,
parents determine the ethnicity of the child. ``Unable to Determine''
is used because the child is very young or is severely disabled and no
other person is available to determine whether or not the child is
Hispanic or Latino. ``Unable to determine'' is also used if the parent,
relative or guardian is unwilling to identify the child's ethnicity.
* * * * *

VI. Adoptive Parents

* * * * *
C. Race/Ethnicity--Indicate the race/ethnicity for each of the
adoptive parent(s). See instructions and definitions for the race/
ethnicity categories under data element II.C. Use ``f. Unable to
Determine'' only when a parent is unwilling to identify his or her race
or ethnicity.
* * * * *

Appendix D to Part 1355--Foster Care and Adoption Record Layouts

7. Appendix D to part 1355 is amended as follows:
a. Amend Section A by revising 1.b.(2) and (3), revising the
Element No., Data element description, and No. of numeric characters
columns of the table under c. for certain elements, and revising the
number of ``Total characters'';
b. Amend Section A by revising 2.b.(3) and the table under c.
including the No. of characters for Element No. 02 and the number for
``Record Length'';

c. Amend Section B by revising 1.b.(2) and (3), revising the
Element No., Data element description, and No. of numeric characters
columns of the table under c. for certain elements, and revising the
number of ``Total characters''; and
d. Amend Section B by revising 2.b.(3) and the table under c.
including the No. of characters for Element No. 02 and the number for
``Record Length'', to read as follows:

A. Foster Care

1. Foster Care Semi-Annual Detailed Data Elements Record
a. * * *
b. * * *
(2) Enter date values in year, month and day order (YYYYMMDD),
e.g., 19991030 for October 30, 1999, or year and month order (YYYYMM),
e.g., 199910 for October 1999. Leave the element value blank if dates
are not applicable.
(3) For elements 8, 11-15, 26-40, 52, 54 and 59-65, which are
``select all that apply'' elements, enter a ``1'' for each element that
applies, enter a zero for non-applicable elements.
* * * * *
c. foster care Semi-Annual Detailed Data elements Record layout
follows:

----------------------------------------------------------------------------------------------------------------
No. of numeric
Element No. Appendix A data element Data element description characters
----------------------------------------------------------------------------------------------------------------

* * * * * * *
02 I.B. Report period ending date..... 6

* * * * * * *
05 I.E. Date of most recent periodic 8
review.
06 II.A. Child's date of birth......... 8

* * * * * * *
08 II.C.1. Race..........................
08a ................................... American Indian or Alaska 1
native.
08b ................................... Asian......................... 1
08c ................................... Black or African American..... 1
08d ................................... Native Hawaiian or Other 1
Pacific Islander.
08e ................................... White......................... 1
08f ................................... Unable to Determine........... 1
09 II.C.2. Hispanic or Latino Ethnicity.. 1

* * * * * * *
18 III.A.1. Date of first removal from 8
home.

[[Page 4086]]

* * * * * * *
20 III.A.3. Date child was discharged from 8
last foster care episode.
21 III.A.4. Date of latest removal from 8
home.
22 III.A.5. Removal transaction date...... 8
23 III.B.1. Date of placement in current 8
foster care setting.

* * * * * * *
45 VII.B.1. Year of birth (1st principal 4
caretaker).
46 VII.B.2. Year of birth (2nd principal 4
caretaker).
47 VIII.A. Date of mother's parental 8
rights termination.
48 VIII.B. Date of legal or putative 8
father's parental rights.

* * * * * * *
50 IX.B.1. Year of birth (1st foster 4
caretaker).
51 IX.B.2. Year of birth (2nd foster 4
caretaker).
52 IX.C.1. Race of 1st foster caretaker..
52a ................................... American Indian or Alaska 1
Native.
52b ................................... Asian......................... 1
52c ................................... Black or African American..... 1
52d ................................... Native Hawaiian or Other 1
Pacific Islander.
52e ................................... White......................... 1
52f ................................... Unable to Determine........... 1
53 IX.C.2. Hispanic or Latino ethnicity 1
of 1st foster caretaker.
54 IX.C.3. Race of 2nd foster caretaker..
54a ................................... American Indian or Alaska 1
Native.
54b ................................... Asian......................... 1
54c ................................... Black or African American..... 1
54d ................................... Native Hawaiian or Other 1
pacific Islander.
54e ................................... White......................... 1
54f ................................... Unable to Determine........... 1
55 IX.C.4. Hispanic or Latino ethnicity 1
of 2nd foster caretaker.
56 X.A.1. Date of discharge from foster 8
care.
57 X.A.2. Foster care discharge 8
transaction date.

* * * * * * *
................................... Total Characters........ 197
----------------------------------------------------------------------------------------------------------------

2. Foster Care Semi-Annual Summary Data Elements Record

a. * * *
b. * * *

(3) Enter date values in year, month order (YYYYMM), e.g.,199912
for December 1999.

c. Foster Care Semi-Annual Summary Data Elements Record Layout
follows:

------------------------------------------------------------------------
No. of
Element No. Summary data file characters
------------------------------------------------------------------------

* * * * *
02 Report period ending date 6
(YYYYMM).

* * * * *
Record Length............... 174
------------------------------------------------------------------------

B. Adoption

1. Adoption Semi-Annual Detailed Data Elements Record
a. * * *
b. * * *
(2) Enter date values in year, month and day order (YYYYMMDD),
e.g., 19991030 for October 30, 1999, or year and month order (YYYYMM),
e.g., 199910 for October 1999. Leave the element value blank if dates
are not applicable.
(3) For elements 7, 11-15, 25, 27 and 29-32 which are ``select all
that apply'' elements, enter a ``1'' for each element that applies;
enter a zero for non-applicable elements.
c. Adoption Semi-Annual Detailed Data Elements Record Layout
follows:

----------------------------------------------------------------------------------------------------------------
No. of numeric
Element No. Appendix B data element Data element description characters
----------------------------------------------------------------------------------------------------------------

* * * * * * *
02 I.B. Report period ending date..... 6

* * * * * * *
05 II.A. Date of birth................. 6

* * * * * * *
07 II.C.1 Race..........................
07a ................................... American Indian or Alaska 1
Native.
07b ................................... Asian......................... 1
07c ................................... Black or African American..... 1
07d ................................... Native Hawaiian or Other 1
Pacific Islander.

[[Page 4087]]

07e ................................... White......................... 1
07f ................................... Unable to Determine........... 1
08 II.C.2. Hispanic or Latino ethnicity.. 1

* * * * * * *
16 IV.A.1 Mother's year of birth........ 4
17 IV.A.2. Father's (Putative or legal) 4
year of birth.

* * * * * * *
19 V.A.1. Date of mother's termination 8
of parental rights.
20 V.A.2. Date of father's termination 8
of parental rights.
21 V.B. Date adoption legalized....... 8

* * * * * * *
23 VI.B.1. Mother's year of birth (if 4
applicable).
24 VI.B.2. Father's year of birth (if 4
applicable).
25 VI.C.1. Adoptive mother's race........
25a ................................... American Indian or Alaska 1
Native.
25b ................................... Asian......................... 1
25c ................................... Black or African American..... 1
25d ................................... Native Hawaiian or Other 1
Pacific Islander.
25e ................................... White......................... 1
25f ................................... Unable to Determine........... 1
26 VI.C.2. Hispanic or Latino Ethnicity.. 1
27 VI.C.3. Adoptive father's race........
27a ................................... American Indian or Alaska 1
Native.
27b ................................... Asian......................... 1
27c ................................... Black or African American..... 1
27d ................................... Native Hawaiian or Other 1
Pacific Islander.
27e ................................... White......................... 1
27f ................................... Unable to Determine........... 1
28 VI.C.4. Hispanic or Latino Ethnicity.. 1
................................... Total Characters........ 111
----------------------------------------------------------------------------------------------------------------

2. Adoption Semi-Annual Summary Data Elements Record
a. * * *
b. * * *
(3) Enter data values in year, month order (YYYYMM), e.g., 199912
for December 1999.
c. Adoption Semi-Annual Summary Data Element Record Layout follows:

------------------------------------------------------------------------
No. of
Element No. Summary data file characters
------------------------------------------------------------------------

* * * * *
02 Report period ending date 6
(YYYYMM).

* * * * *
Record Length............... 174
------------------------------------------------------------------------

Appendix E to Part 1355--Data Standards

8. Appendix E to part 1355 is amended as follows:
a. Amend Section A.2. by adding paragraph a.(18);

b. Revise Section A.3. paragraph a.(1), and the element description
for Element No. 09, 53, and 55 of the chart under b.(2);

c. Amend Section B.2. by revising paragraph a.(8) and adding
paragraph a.(9); and

d. In Section B.3. revise paragraph a.(1), the element description
for Element No. 08, 26 and 28 of the chart under b.(2), to read as
follows:

A. Foster Care

* * * * *

2. Detailed Data File Submission Standards

a. * * *
(18) In Elements 8, 52, and 54, race categories (``a'' through
``e'') and ``f. Unable to Determine'' cannot be coded ``0,'' for it
does not apply. If any of the race categories apply and are coded as
``1'' then ``f. Unable to Determine'' cannot also apply.
* * * * *

3. Missing Data Standards

* * * * *
a. * * *
(1) Data elements whose values fail internal consistency
validations as outlined in A.2.a.(1)-(18) above, and
* * * * *

------------------------------------------------------------------------
Element No. Element description
------------------------------------------------------------------------

* * * * *
09 Child's Hispanic or Latino
Ethnicity

* * * * *
53 Hispanic or Latino Ethnicity of
1st foster caretaker

* * * * *
55 Hispanic or Latino Ethnicity of
2nd foster caretaker
------------------------------------------------------------------------

* * * * *

B. Adoption

* * * * *

2. Detailed Data Elements File Submission Standards

a. * * *
(8) If the ``Family Structure'' (Element 22) is option 3, Single
Female, then the Mother's Year of Birth (Element 23), the ``Adoptive
Mother's Race'' (Element 25) and ``Hispanic or Latino Ethnicity''
(Element 26) must be completed. Similarly, if the ``Family
Structure'' (Element 22) is option 4, Single Male, then the Father's
Year of Birth (Element 24), the Adoptive Father's Race'' (Element
27) and ``Hispanic or Latino Ethnicity'' (Element 28) must be
completed. If the ``Family Structure'' (Element 22) is option 1 or
2, then both Mother's and Father's ``Year of Birth,'' ``Race'' and
``Hispanic or Latino Ethnicity'' must be completed.
(9) In Elements 7, 25, and 27, race categories (``a'' through
``e'') and ``f. Unable to Determine'' cannot be coded ``0,'' for it
does not apply. If any of the race categories apply and are coded as
``1'' then ``f. Unable to Determine'' cannot also apply.
* * * * *

[[Page 4088]]

3. Missing Data Standards

* * * * *
a. * * *
(1) Data elements whose values fail internal consistency
validations as outlined in 2.a.(1)-(9) above, and
* * * * *

------------------------------------------------------------------------
Element No. Element description
------------------------------------------------------------------------

* * * * *
08 Is the child of Hispanic or Latino
ethnicity?

* * * * *
26 Hispanic or Latino ethnicity of
mother

* * * * *
28 Hispanic or Latino ethnicity of
father
------------------------------------------------------------------------

* * * * *

PART 1356--REQUIREMENTS APPLICABLE TO TITLE IV-E

9. The authority citation for Part 1356 continues to read as
follows:

Authority: 42 U.S.C. 620 et seq., 42 U.S.C. 670 et seq., and 42
U.S.C. 1302.

10. Section 1356.20 is amended by revising the first two sentences
of paragraph (e)(4) to read as follows:

Sec. 1356.20 State plan document and submission requirements.

* * * * *
(e) * * *
(4) Action. Each Regional Administrator, ACF, has the authority to
approve State plans and amendments thereto which provide for the
administration of foster care maintenance payments and adoption
assistance programs under section 471 of the Act. The Commissioner,
ACYF, retains the authority to determine that proposed plan material is
not approvable, or that a previously approved plan no longer meets the
requirements for approval. * * *
* * * * *

11. Section 1356.21 is revised to read as follows:

Sec. 1356.21 Foster care maintenance payments program implementation
requirements.

(a) Statutory and regulatory requirements of the Federal foster
care program. To implement the foster care maintenance payments program
provisions of the title IV-E State plan and to be eligible to receive
Federal financial participation (FFP) for foster care maintenance
payments under this part, a State must meet the requirements of this
section, 45 CFR 1356.22, 45 CFR 1356.30, and sections 472, 475(1),
475(4), 475(5) and 475(6) of the Act.
(b) Reasonable efforts. The State must make reasonable efforts to
maintain the family unit and prevent the unnecessary removal of a child
from his/her home, as long as the child's safety is assured; to effect
the safe reunification of the child and family (if temporary out-of-
home placement is necessary to ensure the immediate safety of the
child); and to make and finalize alternate permanency plans in a timely
manner when reunification is not appropriate or possible. In order to
satisfy the ``reasonable efforts'' requirements of section 471(a)(15)
(as implemented through section 472(a)(1) of the Act), the State must
meet the requirements of paragraphs (b) and (d) of this section. In
determining reasonable efforts to be made with respect to a child and
in making such reasonable efforts, the child's health and safety must
be the State's paramount concern.
(1) Judicial determination of reasonable efforts to prevent a
child's removal from the home.
(i) When a child is removed from his/her home, the judicial
determination as to whether reasonable efforts were made, or were not
required to prevent the removal in accordance with paragraph (b)(3) of
this section, must be made no later than 60 days from the date the
child is removed from the home pursuant to paragraph (k) of this
section.
(ii) If the determination concerning reasonable efforts to prevent
the removal is not made as specified in paragraph (b)(1)(i) of this
section, the child is not eligible under the title IV-E foster care
maintenance payments program for the duration of that stay in foster
care.
(2) Judicial determination of reasonable efforts to finalize a
permanency plan.
(i) The State agency must obtain a judicial determination that it
has made reasonable efforts to finalize the permanency plan that is in
effect (whether the plan is reunification, adoption, legal
guardianship, placement with a fit and willing relative, or placement
in another planned permanent living arrangement) within twelve months
of the date the child is considered to have entered foster care in
accordance with the definition at Sec. 1355.20 of this part, and at
least once every twelve months thereafter while the child is in foster
care.
(ii) If such a judicial determination regarding reasonable efforts
to finalize a permanency plan is not made, the child becomes ineligible
under title IV-E from the end of the twelfth month following the date
the child is considered to have entered foster care in accordance with
the definition at Sec. 1355.20 of this part, or the end of the month in
which the most recent judicial determination of reasonable efforts to
finalize a permanency plan was made, and remains ineligible until such
a judicial determination is made.
(3) Circumstances in which reasonable efforts are not required to
prevent a child's removal from home or to reunify the child and family.
Reasonable efforts to prevent a child's removal from home or to reunify
the child and family are not required if the State agency obtains a
judicial determination that such efforts are not required because:
(i) A court of competent jurisdiction has determined that the
parent has subjected the child to aggravated circumstances (as defined
in State law, which definition may include but need not be limited to
abandonment, torture, chronic abuse, and sexual abuse);
(ii) A court of competent jurisdiction has determined that the
parent has been convicted of:
(A) Murder (which would have been an offense under section 1111(a)
of title 18, United States Code, if the offense had occurred in the
special maritime or territorial jurisdiction of the United States) of
another child of the parent;
(B) Voluntary manslaughter (which would have been an offense under
section 1112(a) of title 18, United States Code, if the offense had
occurred in the special maritime or territorial jurisdiction of the
United States) of another child of the parent;
(C) Aiding or abetting, attempting, conspiring, or soliciting to
commit such a murder or such a voluntary manslaughter; or
(D) A felony assault that results in serious bodily injury to the
child or another child of the parent; or,
(iii) The parental rights of the parent with respect to a sibling
have been terminated involuntarily.
(4) Concurrent planning. Reasonable efforts to finalize an
alternate permanency plan may be made concurrently with reasonable
efforts to reunify the child and family.
(5) Use of the Federal Parent Locator Service. The State agency may
seek the services of the Federal Parent Locator Service to search for
absent parents at any point in order to facilitate a permanency plan.
(c) Contrary to the welfare determination. Under section 472(a)(1)
of the Act, a child's removal from the home must have been the result
of a judicial determination (unless the child was removed pursuant to a
voluntary placement agreement) to the effect that

[[Page 4089]]

continuation of residence in the home would be contrary to the welfare,
or that placement would be in the best interest, of the child. The
contrary to the welfare determination must be made in the first court
ruling that sanctions (even temporarily) the removal of a child from
home. If the determination regarding contrary to the welfare is not
made in the first court ruling pertaining to removal from the home, the
child is not eligible for title IV-E foster care maintenance payments
for the duration of that stay in foster care.
(d) Documentation of judicial determinations. The judicial
determinations regarding contrary to the welfare, reasonable efforts to
prevent removal, and reasonable efforts to finalize the permanency plan
in effect, including judicial determinations that reasonable efforts
are not required, must be explicitly documented and must be made on a
case-by-case basis and so stated in the court order.
(1) If the reasonable efforts and contrary to the welfare judicial
determinations are not included as required in the court orders
identified in paragraphs (b) and (c) of this section, a transcript of
the court proceedings is the only other documentation that will be
accepted to verify that these required determinations have been made.
(2) Neither affidavits nor nunc pro tunc orders will be accepted as
verification documentation in support of reasonable efforts and
contrary to the welfare judicial determinations.
(3) Court orders that reference State law to substantiate judicial
determinations are not acceptable, even if State law provides that a
removal must be based on a judicial determination that remaining in the
home would be contrary to the child's welfare or that removal can only
be ordered after reasonable efforts have been made.
(e) Trial home visits. A trial home visit may not exceed six months
in duration, unless a court orders a longer trial home visit. If a
trial home visit extends beyond six months and has not been authorized
by the court, or exceeds the time period the court has deemed
appropriate, and the child is subsequently returned to foster care,
that placement must then be considered a new placement and title IV-E
eligibility must be newly established. Under these circumstances the
judicial determinations regarding contrary to the welfare and
reasonable efforts to prevent removal are required.
(f) Case review system. In order to satisfy the provisions of
section 471(a)(16) of the Act regarding a case review system, each
State's case review system must meet the requirements of sections
475(5) and 475(6) of the Act.
(g) Case plan requirements. In order to satisfy the case plan
requirements of sections 471(a)(16), 475(1) and 475(5) (A) and (D) of
the Act, the State agency must promulgate policy materials and
instructions for use by State and local staff to determine the
appropriateness of and necessity for the foster care placement of the
child. The case plan for each child must:
(1) Be a written document, which is a discrete part of the case
record, in a format determined by the State, which is developed jointly
with the parent(s) or guardian of the child in foster care; and
(2) Be developed within a reasonable period, to be established by
the State, but in no event later than 60 days from the child's removal
from the home pursuant to paragraph (k) of this section;
(3) Include a discussion of how the case plan is designed to
achieve a safe placement for the child in the least restrictive (most
family-like) setting available and in close proximity to the home of
the parent(s) when the case plan goal is reunification and a discussion
of how the placement is consistent with the best interests and special
needs of the child. (FFP is not available when a court orders a
placement with a specific foster care provider);
(4) Include a description of the services offered and provided to
prevent removal of the child from the home and to reunify the family;
and
(5) Document the steps to finalize a placement when the case plan
goal is or becomes adoption or placement in another permanent home in
accordance with sections 475(1)(E) and (5)(E) of the Act. When the case
plan goal is adoption, at a minimum, such documentation shall include
child-specific recruitment efforts such as the use of State, regional,
and national adoption exchanges including electronic exchange systems.

(This requirement has been approved by the Office of Management and
Budget (OMB) under OMB control number 0980-0140)

(h) Application of the permanency hearing requirements.
(1) To meet the requirements of the permanency hearing, the State
must, among other requirements, comply with section 475(5)(C) of the
Act.
(2) In accordance with paragraph (b)(3) of this section, when a
court determines that reasonable efforts to return the child home are
not required, a permanency hearing must be held within 30 days of that
determination, unless the requirements of the permanency hearing are
fulfilled at the hearing in which the court determines that reasonable
efforts to reunify the child and family are not required.
(3) If the State concludes, after considering reunification,
adoption, legal guardianship, or permanent placement with a fit and
willing relative, that the most appropriate permanency plan for a child
is placement in another planned permanent living arrangement, the State
must document to the court the compelling reason for the alternate
plan. Examples of a compelling reason for establishing such a
permanency plan may include:
(i) The case of an older teen who specifically requests that
emancipation be established as his/her permanency plan;
(ii) The case of a parent and child who have a significant bond but
the parent is unable to care for the child because of an emotional or
physical disability and the child's foster parents have committed to
raising him/her to the age of majority and to facilitate visitation
with the disabled parent; or,
(iii) the Tribe has identified another planned permanent living
arrangement for the child.
(4) When an administrative body, appointed or approved by the
court, conducts the permanency hearing, the procedural safeguards set
forth in the definition of permanency hearing must be so extended by
the administrative body.
(i) Application of the requirements for filing a petition to
terminate parental rights at section 475(5)(E) of the Social Security
Act. (1) Subject to the exceptions in paragraph (i)(2) of this section,
the State must file a petition (or, if such a petition has been filed
by another party, seek to be joined as a party to the petition) to
terminate the parental rights of a parent(s):
(i) Whose child has been in foster care under the responsibility of
the State for 15 of the most recent 22 months. The petition must be
filed by the end of the child's fifteenth month in foster care. In
calculating when to file a petition for termination of parental rights,
the State:
(A) Must calculate the 15 out of the most recent 22 month period
from the date the child entered foster care as defined at section
475(5)(F) of the Act;
(B) Must use a cumulative method of calculation when a child
experiences multiple exits from and entries into foster care during the
22 month period;
(C) Must not include trial home visits or runaway episodes in
calculating 15 months in foster care; and,
(D) Need only apply section 475(5)(E) of the Act to a child once if
the State

[[Page 4090]]

does not file a petition because one of the exceptions at paragraph
(i)(2) of this section applies;
(ii) Whose child has been determined by a court of competent
jurisdiction to be an abandoned infant (as defined under State law).
The petition to terminate parental rights must be filed within 60 days
of the judicial determination that the child is an abandoned infant;
or,
(iii) Who has been convicted of one of the felonies listed at
paragraph (b)(3)(ii) of this section. Under such circumstances, the
petition to terminate parental rights must be filed within 60 days of a
judicial determination that reasonable efforts to reunify the child and
parent are not required.
(2) The State may elect not to file or join a petition to terminate
the parental rights of a parent per paragraph (i)(1) of this section
if:
(i) At the option of the State, the child is being cared for by a
relative;
(ii) The State agency has documented in the case plan (which must
be available for court review) a compelling reason for determining that
filing such a petition would not be in the best interests of the
individual child. Compelling reasons for not filing a petition to
terminate parental rights include, but are not limited to:
(A) Adoption is not the appropriate permanency goal for the child;
or,
(B) No grounds to file a petition to terminate parental rights
exist; or,
(C) The child is an unaccompanied refugee minor as defined in 45
CFR 400.111; or
(D) There are international legal obligations or compelling foreign
policy reasons that would preclude terminating parental rights; or
(iii) The State agency has not provided to the family, consistent
with the time period in the case plan, services that the State deems
necessary for the safe return of the child to the home, when reasonable
efforts to reunify the family are required.
(3) When the State files or joins a petition to terminate parental
rights in accordance with paragraph (i)(1) of this section, it must
concurrently begin to identify, recruit, process, and approve a
qualified adoptive family for the child.
(j) Child of a minor parent in foster care. Foster care maintenance
payments made on behalf of a child placed in a foster family home or
child care institution, who is the parent of a son or daughter in the
same home or institution, must include amounts which are necessary to
cover costs incurred on behalf of the child's son or daughter. Said
costs must be limited to funds expended on those items described in the
definition of foster care maintenance payments.
(k) Removal from the home of a specified relative.
(1) For the purposes of meeting the requirements of section
472(a)(1) of the Act, a removal from the home must occur pursuant to:
(i) A voluntary placement agreement entered into by a parent or
relative which leads to a physical or constructive removal (i.e., a
non-physical or paper removal of custody) of the child from the home;
or
(ii) A judicial order for a physical or constructive removal of the
child from a parent or specified relative.
(2) A removal has not occurred in situations where legal custody is
removed from the parent or relative and the child remains with the same
relative in that home under supervision by the State agency.
(3) A child is considered constructively removed on the date of the
first judicial order removing custody, even temporarily, from the
appropriate specified relative or the date that the voluntary placement
agreement is signed by all relevant parties.
(l) Living with a specified relative.For purposes of meeting the
requirements for living with a specified relative prior to removal from
the home under section 472(a)(1) of the Act and all of the conditions
under section 472(a)(4), one of the two following situations must
apply:
(1) The child was living with the parent or specified relative, and
was AFDC eligible in that home in the month of the voluntary placement
agreement or initiation of court proceedings; or
(2) The child had been living with the parent or specified relative
within six months of the month of the voluntary placement agreement or
the initiation of court proceedings, and the child would have been AFDC
eligible in that month if s/he had still been living in that home.
(m) Review of payments and licensing standards. In meeting the
requirements of section 471(a)(11) of the Act, the State must review at
reasonable, specific, time-limited periods to be established by the
State:
(1) The amount of the payments made for foster care maintenance and
adoption assistance to assure their continued appropriateness; and
(2) The licensing or approval standards for child care institutions
and foster family homes.
(n) Foster care goals. The specific foster care goals required
under section 471(a)(14) of the Act must be incorporated into State law
by statute or administrative regulation with the force of law.
(o) Notice and opportunity to be heard. The State must provide the
foster parent(s) of a child and any preadoptive parent or relative
providing care for the child with timely notice of and an opportunity
to be heard in permanency hearings and six-month periodic reviews held
with respect to the child during the time the child is in the care of
such foster parent, preadoptive parent, or relative caregiver. Notice
of and an opportunity to be heard does not include the right to
standing as a party to the case.

12. Section 1356.30 is redesignated as Sec. 1356.22 and revised to
read as follows:

Sec. 1356.22 Implementation requirements for children voluntarily
placed in foster care.

(a) As a condition of receipt of Federal financial participation
(FFP) in foster care maintenance payments for a dependent child removed
from his home under a voluntary placement agreement, the State must
meet the requirements of:
(1) Section 472 of the Act, as amended;
(2) Sections 422(b)(10) and 475(5) of the Act;
(3) 45 CFR 1356.21 (f), (g), (h), and (i); and
(4) The requirements of this section.
(b) Federal financial participation is available only for voluntary
foster care maintenance expenditures made within the first 180 days of
the child's placement in foster care unless there has been a judicial
determination by a court of competent jurisdiction, within the first
180 days of such placement, to the effect that the continued voluntary
placement is in the best interests of the child.
(c) The State agency must establish and maintain a uniform
procedure or system, consistent with State law, for revocation by the
parent(s) of a voluntary placement agreement and return of the child.
13. New Sec. 1356.30 is added to read as follows:

Sec. 1356.30 Safety requirements for foster care and adoptive home
providers.

(a) Unless an election provided for in paragraph (d) of this
section is made, the State must provide documentation that criminal
records checks have been conducted with respect to prospective foster
and adoptive parents.
(b) The State may not approve or license any prospective foster or
adoptive parent, nor may the State claim FFP for any foster care
maintenance or adoption assistance payment made on behalf of a child
placed in a foster home

[[Page 4091]]

operated under the auspices of a child placing agency or on behalf of a
child placed in an adoptive home through a private adoption agency, if
the State finds that, based on a criminal records check conducted in
accordance with paragraph (a) of this section, a court of competent
jurisdiction has determined that the prospective foster or adoptive
parent has been convicted of a felony involving:
(1) Child abuse or neglect;
(2) Spousal abuse;
(3) A crime against a child or children (including child
pornography); or,
(4) A crime involving violence, including rape, sexual assault, or
homicide, but not including other physical assault or battery.
(c) The State may not approve or license any prospective foster or
adoptive parent, nor may the State claim FFP for any foster care
maintenance or adoption assistance payment made on behalf of a child
placed in a foster home operated under the auspices of a child placing
agency or on behalf of a child placed in an adoptive home through a
private adoption agency, if the State finds, based on a criminal
records check conducted in accordance with paragraph (a) of this
section, that a court of competent jurisdiction has determined that the
prospective foster or adoptive parent has, within the last five years,
been convicted of a felony involving:
(1) Physical assault;
(2) Battery; or,
(3) A drug-related offense.
(d)(1) The State may elect not to conduct or require criminal
records checks on prospective foster or adoptive parents by:
(i) Notifying the Secretary in a letter from the Governor; or
(ii) Enacting State legislation.
(2) Such an election also removes the State's obligation to comport
with paragraphs (b) and (c) of this section.
(e) In all cases where the State opts out of the criminal records
check requirement, the licensing file for that foster or adoptive
family must contain documentation which verifies that safety
considerations with respect to the caretaker(s) have been addressed.
(f) In order for a child care institution to be eligible for title
IV-E funding, the licensing file for the institution must contain
documentation which verifies that safety considerations with respect to
the staff of the institution have been addressed.

14. Section 1356.50 is amended by revising paragraphs (a) and (b)
to read as follows:

Sec. 1356.50 Withholding of funds for noncompliance with the approved
title IV-E State plan.

(a) To be in compliance with the title IV-E State plan
requirements, a State must meet the requirements of the Act and 45 CFR
1356.20, 1356.21, 1356.30, and 1356.40 of this part.
(b) To be in compliance with the title IV-E State plan
requirements, a State that chooses to claim FFP for voluntary
placements must meet the requirements of the Act, 45 CFR 1356.22 and
paragraph (a) of this section; and
* * * * *

15. Section 1356.60 is amended by revising paragraph (b)(1) and
removing paragraph (c)(4) to read as follows:

Sec. 1356.60 Fiscal requirements (title IV-E).

* * * * *
(b) Federal matching funds for State and local training for foster
care and adoption assistance under title IV-E.
(1) Federal financial participation is available at the rate of
seventy-five percent (75%) in the costs of:
(i) Training personnel employed or preparing for employment by the
State or local agency administering the plan, and;
(ii) Providing short-term training (including travel and per diem
expenses) to current or prospective foster or adoptive parents and the
members of the state licensed or approved child care institutions
providing care to foster and adopted children receiving title IV-E
assistance.
* * * * *

Secs. 1356.65 and 1356.70 [Removed]

16. Sections 1356.65 and 1356.70 are removed.

17. New Sec. 1356.71 is added to read as follows:

Sec. 1356.71 Federal review of the eligibility of children in foster
care and the eligibility of foster care providers in title IV-E
programs.

(a) Purpose, scope and overview of the process.
(1) This section sets forth requirements governing Federal reviews
of State compliance with the title IV-E eligibility provisions as they
apply to children and foster care providers under paragraphs (a) and
(b) of section 472 of the Act.
(2) The requirements of this section apply to State agencies that
receive Federal payments for foster care under title IV-E of the Act.
(3) The review process begins with a primary review of foster care
cases for the title IV-E eligibility requirements. States determined to
be in substantial compliance based on the primary review will not be
subject to another review for three years. States that are determined
not to be in compliance will develop and implement a program
improvement plan designed to correct the areas of non-compliance, and a
secondary review will be conducted after completion of the program
improvement plan.
(b) Composition of review team and preliminary activities preceding
an on-site review.
(1) The review team must be composed of representatives of the
State agency, and ACF's Regional and Central Offices.
(2) The State must provide ACF with the complete payment history
for each of the sample and oversample cases prior to the on-site
review.
(c) Sampling guidance and conduct of review.
(1) The list of sampling units in the target population (i.e., the
sampling frame) will be drawn by ACF statistical staff from the
Adoption and Foster Care Analysis and Reporting System (AFCARS) data
which are transmitted by the State agency to ACF. The sampling frame
will consist of cases of children who were eligible for foster care
maintenance payments during the reporting period reflected in a State's
most recent AFCARS data submission. For the initial primary review, if
these data are not available or are deficient, an alternative sampling
frame, consistent with one AFCARS six-month reporting period, will be
selected by ACF in conjunction with the State agency.
(2) A sample of 80 cases (plus a 10 percent oversample of eight
cases) from the title IV-E foster care program will be selected for the
primary review utilizing probability sampling methodologies. Usually,
the chosen methodology will be simple random sampling, but other
probability samples may be utilized, when necessary and appropriate.
(3) Cases from the oversample will be substituted and reviewed for
each of the original sample of 80 cases which is found to be in error.
(4) At the completion of the primary review, the review team will
determine the number of ineligible cases. When the total number of
ineligible cases does not exceed eight, ACF can conclude with a
probability of 88 percent that in a population of 1000 or more cases
the population ineligibility case error rate is less than 15 percent
and the State will be considered in substantial compliance. For primary
reviews held subsequent to the initial primary reviews, the acceptable
population ineligibility case error rate threshold will be reduced from
less than 15 percent (eight or fewer ineligible cases)

[[Page 4092]]

to less than 10 percent (four or fewer ineligible cases)). A State
agency which meets this standard is considered to be in ``substantial
compliance'' (see paragraph (h) of this section). A disallowance will
be assessed for the ineligible cases for the period of time the cases
are ineligible.
(5) A State which has been determined to be in ``noncompliance''
(i.e., not in substantial compliance) will be required to develop a
program improvement plan according to the specifications discussed in
paragraph (i) of this section, as well as undergo a secondary review.
For the secondary review, a sample of 150 cases (plus a 10 percent
oversample of 15 cases) will be drawn from the most recent AFCARS
submission. Usually, the chosen methodology will be simple random
sampling, but other probability samples may be utilized, when necessary
and appropriate. Cases from the oversample will be substituted and
reviewed for each of the original sample of 150 cases which is found to
be in error.
(6) At the completion of the secondary review, the review team will
calculate both the sample case ineligibility and dollar error rates for
the cases determined ineligible during the review. An extrapolated
disallowance equal to the lower limit of a 90 percent confidence
interval for the population total dollars in error for the amount of
time corresponding to the AFCARS reporting period will be assessed if
both the child/provider (case) ineligibility and dollar error rates
exceed 10 percent. If neither, or only one, of the error rates exceeds
10 percent, a disallowance will be assessed for the ineligible cases
for the period of time the cases are ineligible.
(d) Requirements subject to review. States will be reviewed against
the requirements of title IV-E of the Act regarding:
(1) The eligibility of the children on whose behalf the foster care
maintenance payments are made (section 472(a)(1)-(4) of the Act) to
include:
(i) Judicial determinations regarding ``reasonable efforts'' and
``contrary to the welfare'' in accordance with Sec. 1356.21(b) and (c),
respectively;
(ii) Voluntary placement agreements in accordance with
Sec. 1356.22;
(iii) Responsibility for placement and care vested with the State
agency;
(iv) Placement in a licensed foster family home or child care
institution; and,
(v) eligibility for AFDC under such State plan as it was in effect
on July 16, 1996.
(2) Allowable payments made to foster care providers who comport
with sections 471(a)(10), 471(a)(20), 472(b) and (c) of the Act and
Sec. 1356.30.
(e) Review instrument. A title IV-E foster care eligibility review
checklist will be used when conducting the eligibility review.
(f) Eligibility determination--child. The case record of the child
must contain sufficient documentation to verify a child's eligibility
in accordance with paragraph (d)(1) of this section, in order to
substantiate payments made on the child's behalf.
(g) Eligibility determination--provider.
(1) For each case being reviewed, the State agency must make
available a licensing file which contains the licensing history,
including a copy of the certificate of licensure/approval or letter of
approval, for each of the providers in the following categories:
(i) Public child care institutions with 25 children or less in
residence;
(ii) Private child care institutions;
(iii) Group homes; and
(iv) Foster family homes, including relative homes.
(2) The licensing file must contain documentation that the State
has complied with the safety requirements for foster and adoptive
placements in accordance with Sec. 1356.30.
(3) If the licensing file does not contain sufficient information
to support a child's placement in a licensed facility, the State agency
may provide supplemental information from other sources (e.g., a
computerized database).
(h) Standards of compliance.
(1) Disallowances will be taken, and plans for program improvement
required, based on the extent to which a State is not in substantial
compliance with recipient or provider eligibility provisions of title
IV-E, or applicable regulations in 45 CFR parts 1355 and 1356.
(2) Substantial compliance and noncompliance are defined as
follows:
(i) Substantial compliance--For the primary review (of the sample
of 80 cases), no more than eight of the title IV-E cases reviewed may
be determined to be ineligible. (This critical number of allowable
``errors,'' i.e., ineligible cases, is reduced to four errors or less
in primary reviews held subsequent to the initial primary review). For
the secondary review (if required), substantial compliance means either
the case ineligibility or dollar error rate does not exceed 10 percent.
(ii) Noncompliance--means not in substantial compliance. For the
primary review (of the sample of 80 cases), nine or more of the title
IV-E cases reviewed must be determined to be ineligible. (This critical
number of allowable ``errors,'' i.e., ineligible cases, is reduced to
five or more in primary reviews subsequent to the initial primary
review). For the secondary review (if required), noncompliance means
both the case ineligibility and dollar error rates exceed 10 percent.
(3) ACF will notify the State in writing within 30 calendar days
after the completion of the review of whether the State is, or is not,
operating in substantial compliance.
(4) States which are determined to be in substantial compliance
must undergo a subsequent review after a minimum of three years.
(i) Program improvement plans.
(1) States which are determined to be in noncompliance with
recipient or provider eligibility provisions of title IV-E, or
applicable regulations in 45 CFR Parts 1355 and 1356, will develop a
program improvement plan designed to correct the areas determined not
to be in substantial compliance. The program improvement plan will:
(i) Be developed jointly by State and Federal staff;
(ii) Identify the areas in which the State's program is not in
substantial compliance;
(iii) Not extend beyond one year. A State will have a maximum of
one year in which to implement and complete the provisions of the
program improvement plan unless State legislative action is required.
In such instances, an extension may be granted with the State and ACF
negotiating the terms and length of such extension that shall not
exceed the last day of the first legislative session after the date of
the program improvement plan; and
(iv) Include:
(A) Specific goals;
(B) The action steps required to correct each identified weakness
or deficiency; and,
(C) a date by which each of the action steps is to be completed.
(2) States determined not to be in substantial compliance as a
result of a primary review must submit the program improvement plan to
ACF for approval within 90 calendar days from the date the State
receives written notification that it is not in substantial compliance.
This deadline may be extended an additional 30 calendar days when a
State agency submits additional documentation to ACF in support of
cases determined to be ineligible as a result of the on-site
eligibility review.
(3) The ACF Regional Office will intermittently review, in
conjunction with the State agency, the State's

[[Page 4093]]

progress in completing the prescribed action steps in the program
improvement plan.
(4) If a State agency does not submit an approvable program
improvement plan in accordance with the provisions of paragraphs (i)(1)
and (2) of this section, ACF will move to a secondary review in
accordance with paragraph (c) of this section.
(j) Disallowance of funds. The amount of funds to be disallowed
will be determined by the extent to which a State is not in substantial
compliance with recipient or provider eligibility provisions of title
IV-E, or applicable regulations in 45 CFR parts 1355 and 1356.
(1) States which are in found to be in substantial compliance
during the primary or secondary review will have disallowances (if any)
determined on the basis of individual cases reviewed and found to be in
error. The amount of disallowance will be computed on the basis of
payments associated with ineligible cases for the entire period of time
that each case has been ineligible.
(2) States which are found to be in noncompliance during the
primary review will have disallowances determined on the basis of
individual cases reviewed and found to be in error, and must implement
a program improvement plan in accordance with the provisions contained
within it. A secondary review will be conducted no later than during
the AFCARS reporting period which immediately follows the program
improvement plan completion date on a sample of 150 cases drawn from
the State's most recent AFCARS data. If both the case ineligibility and
dollar error rates exceed 10 percent the State is in noncompliance and
an additional disallowance will be determined based on extrapolation
from the sample to the universe of claims paid for the duration of the
AFCARS reporting period (i.e., all title IV-E funds expended for a case
during the quarter(s) that case is ineligible). If either the case
ineligibility or dollar rate does not exceed 10 percent, the amount of
disallowance will be computed on the basis of payments associated with
ineligible cases for the entire period of time the case has been
determined to be ineligible.
(3) The State agency will be liable for interest on the amount of
funds disallowed by the Department, in accordance with the provisions
of 45 CFR 30.13.
(4) States may appeal any disallowance actions taken by ACF to the
HHS Departmental Appeals Board in accordance with regulations at 45 CFR
Part 16.

PART 1357--REQUIREMENTS APPLICABLE TO TITLE IV-B

18. The authority citation for part 1357 continues to read as
follows:

Authority: 42 U.S.C. 620 et seq., 42 U.S.C. 670 et seq.; 42
U.S.C. 1302.

19. Section 1357.40 is amended by revising paragraph (d)(6) to read
as follows:

Sec. 1357.40 Direct payments to Indian Tribal Organizations (title IV-
B, subpart 1, child welfare services).

* * * * *
(d)* * *
(6) In order to determine the amount of Federal funds available for
a direct grant to an eligible ITO, the Department shall first divide
the State's title IV-B allotment by the number of children in the
State, then multiply the resulting amount by a multiplication factor
determined by the Secretary, and then multiply that amount by the
number of Indian children in the ITO population. The multiplication
factor will be set at a level designed to achieve the purposes of the
act and revised as appropriate.
[FR Doc.00-1122 Filed 1-24-00; 8:45 am]
BILLING CODE 4184-01-P