[Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means (Green Book)] [Program Descriptions] [Section 11. Child Protection, Foster Care, and Adoption Assistance] [From the U.S. Government Printing Office, www.gpo.gov] SECTION 11 - CHILD PROTECTION, FOSTER CARE, AND ADOPTION ASSISTANCE CONTENTS Introduction Federal Child Welfare Programs Today The Title IV-B Child Welfare Programs The Title IV-E Foster Care Program The Title IV-E Adoption Assistance Program The Title IV-E Adoption Incentives Payment Program The Title IV-E Foster Care Independence Program State Accountability and Federal Oversight History of Federal Review Efforts Federal Conformity Review System Interethnic and Interjurisdictional Adoption Provisions State Performance Reports Federal Waivers of Title IV-B and IV-E Provisions Recent Trends Affecting Child Welfare Populations and Programs Child Abuse and Neglect Substance Abuse Kinship Care Welfare Reform National Foster Care and Adoption Information Data Collection Systems Trends in Foster Care Caseloads National Data on Foster Care and Adoption Trends in Child Welfare and Foster Care Costs Legislative History References INTRODUCTION Child welfare services aim to improve the conditions of children and their families and to improve or provide substitutes for functions that parents have difficulty performing. Child welfare services encompass a broad range of activities, including protection of abused or neglected children, support and preservation of families, care of the homeless and neglected, support for family development, and provision of out-of-home care, including adoption. Services may help the family cope with problems or they may protect children while the family learns to perform appropriate parenting roles. It is generally agreed that it is in the best interests of children to live with their families. To this end, experts emphasize both the value of preventive and rehabilitative services and the need to limit the duration of foster care placements. However, if children must be removed, a major principle of professional social work is the provision of permanent living arrangements, either by returning children to their homes in a timely fashion or by moving children into adoption or other permanent arrangements. Many private, nonprofit and government entities work to provide child welfare services to families in need. The primary responsibility for child welfare services in the government, however, rests with the States. Each State has its own legal and administrative structures and programs that address the needs of children. The Federal Government has also been involved in efforts to improve the welfare of children in specific areas of national concern since the early 1900s. The largest Federal programs are authorized under titles IV-B and IV-E of the Social Security Act, are administered by the U.S. Department of Health and Human Services (HHS), and are under the jurisdiction of the House Committee on Ways and Means. Additional non- Social Security Act Federal programs include grants to States, local governments and nongovernmental agencies for prevention and treatment of child abuse and neglect, advocacy centers for victims of sexual abuse, services for abandoned infants and children with AIDS, promotion of adoption, child abuse-related training for judicial personnel, federally administered research and demonstration, Indian child welfare programs, family violence programs, and a number of other small programs. Of these non-Social Security Act programs, most have annual funding of less than $25 million. In addition, services related to child welfare may be provided at State discretion under the Social Services Block Grant (title XX of the Social Security Act), described in section 10, and States also use funds under the Temporary Assistance for Needy Families program, described in section 7, for activities related to child welfare. Finally, a tax credit of up to $10,160 in 2003 (and indexed for future years) is available to adoptive parents to offset some of the initial expenses associated with adoption (including for children with special needs); see section 13. This section will focus specifically on Child Welfare, Foster Care, and Adoption Assistance Programs authorized under titles IV-B and IV-E of the Social Security Act. FEDERAL CHILD WELFARE PROGRAMS TODAY The Social Security Act contains the primary sources of Federal funds available to States for child welfare, foster care, and adoption activities. These funds include both discretionary authorizations (for which the amount of funding available is determined through the annual appropriations process) and entitlements (under which the Federal Government has a binding obligation to make payments to any person or unit of government that meets the eligibility criteria established by law). The programs include the title IV-B Child Welfare Services, Promoting Safe and Stable Families, and Mentoring Children of Prisoners programs; and the title IV-E Foster Care, Adoption Assistance, and Foster Care Independence programs. Table 11-1 lists these programs, and describes their funding. Table 11-2 provides data on the level of Federal funds provided to States under titles IV-B and IV-E for fiscal years 1989-2001, and the HHS projections for fiscal years 2002-2008. TABLE 11-1 -- MAJOR FEDERAL PROGRAMS DEDICATED TO THE SUPPORT OF CHILD WELFARE ACTIVITIES [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Funds available to States from the title IV-B programs may be used for services to families and children without regard to family income. Federal matching funds for foster care maintenance payments under title IV-E are provided only in those cases in which the child would have been eligible for the old Aid to Families with Dependent Children (AFDC) program if still in the home. All children determined to have "special needs" related to their being adopted, as defined under title IV-E, are eligible for reimbursement of certain non- recurring costs of adoption under the Title IV-E Adoption Assistance Program. However, only AFDC- or Supplemental Security Income (SSI)- eligible "special-needs" children qualify for federally-matched adoption assistance payments available under title IV-E. Funds available to States for the Title IV-E Chafee Foster Care Independence Program may be used for services which facilitate the transition of children from foster care to independent living, regardless of whether they are eligible for foster care assistance under title IV-E. In addition to the programs described above, title IV-B authorizes funds for research and demonstration activities and for direct Federal grants to public and private entities for child welfare staff training. Under title IV-E, incentive payments are authorized for States that increase their number of adoptions of foster children, including children with special needs, above specified baselines. Table 11-3 provides HHS data and projections on participation under the title IV-E programs; data on participation in title IV-B programs are not available. Table 11-4 shows the Congressional Budget Office (CBO) projections for Federal foster care and adoption assistance caseloads and outlays for fiscal years 2003-2008. According to CBO, between 2003 and 2008, the federally-funded foster care caseload is projected to decline from 250,000 to 228,000 (9 percent). Over the same time period, title IV-E foster care outlays are expected to increase 14 percent, from $4.6 billion to $5.2 billion. Also over the same time period, the adoption assistance caseload is projected to increase from 317,000 to 451,000 (42 percent), while total adoption assistance outlays are estimated to increase from $1.5 billion to $2.5 billion (66 percent). TABLE 11-2 -- FEDERAL FUNDING TO STATES FOR CHILD WELFARE ACTIVITIES UNDER TITLES IV-B AND IV-E OF THE SOCIAL SECURITY ACT, 1995-2008 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-3--PARTICIPATION IN FOSTER CARE, ADOPTION, AND INDEPENDENT LIVING ACTIVITIES UNDER TITLE IV-E OF THE SOCIAL SECURITY ACT, 1988-2008 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TITLE IV-B CHILD WELFARE PROGRAMS Grants to States for child welfare services The Child Welfare Services Program under subpart 1 of title IV-B permanently authorizes 75 percent Federal matching grants to States for services that protect the welfare of children. These services: address problems that may result in neglect, abuse, exploitation or delinquency of children; prevent the unnecessary separation of children from their families and restore children to their families, when possible; place children in adoptive families when appropriate; and assure adequate foster care when children cannot return home or be placed for adoption. There are no Federal income eligibility requirements for the receipt of child welfare services. TABLE 11-4 -- CBO BASELINE CASELOAD AND OUTLAY PROJECTIONS FOR THE FEDERAL FOSTER CARE AND ADOPTION ASSISTANCE PROGRAMS, FISCAL YEARS [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Under legislation originally enacted in 1980 (Public Law 96- 272), States are limited in the amount of their title IV-B allotments that may be used for child day care, foster care maintenance payments, and adoption assistance payments. Specifically, States may use no more than their portion of the first $56.6 million in Federal title IV-B appropriations for these three activities. The intent of this restriction is to devote as much title IV-B funding as possible to supportive services that could prevent the need for out-of-home placement. In November 2003, HHS issued a Program Instruction (ACYF-CB-PI-03-07) showing each State's title IV-B subpart 1 funding limit for foster care, adoption assistance, or work-related child care and instructing States to ensure that their estimated expenditures for those items, which are included in annual and 5-year planning documents, do not exceed these limits. Between 1977 and 1990, the annual authorization level for the Child Welfare Services Program remained flat at $266 million. The authorization level was increased to $325 million under Public Law 101-239 beginning with fiscal year 1990. Appropriations for the program - the amount of money Congress actually made available for spending each year - increased from $163.6 million in fiscal year 1981 to $294.6 million in fiscal year 1994. Appropriations decreased, to $292 million in fiscal year 1995 and $277.4 million in fiscal year 1996, and have generally remained at $292 million since fiscal year 1997 (see Table 11-2). Table 11-5 details the State-by-State distribution of child welfare service funds for selected fiscal years. Child welfare service funds are distributed to States on the basis of their under 21 population and per capita income. TABLE 11-5 -- STATE -BY-STATE ALLOCATIONS FOR TITLE IV-B (SUBPART 1) -- CHILD WELFARE SERVICES, SELECTED FISCAL YEARS 1994-2003 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Because of minimal reporting requirements, no reliable data are available on the exact number of children or families served, their characteristics, or the services provided with child welfare service funds. The U.S. General Accounting Office reported in September 2003 that, based on its own surveys, States spent about 28 percent of Child Welfare Services funds (title IV-B, subpart 1) in fiscal year 2002 on salaries for child welfare agency staff, primarily social workers who perform such activities as child protective services investigations, recruitment of foster parents, and making referrals for families in need of services (GAO, 2003). Another 17 percent was used for administration and management, 16 percent for child protective services (e.g., telephone hotlines, emergency shelters, and investigative services), and 11 percent for foster care maintenance payments. GAO further found that 42 percent of funding in fiscal year 2002 was targeted toward children in foster care and their parents, another 17 percent was targeted toward children at risk of abuse or neglect and their parents, and additional funds were spent on a combination of these populations. About 5 percent of subpart 1 funding was targeted toward children waiting for adoption, or adopted children and adoptive parents, and 4 percent of subpart 1 funding was targeted toward such populations as delinquent youth or foster parents. GAO reported that HHS conducts little specific oversight of States' use of subpart 1 funds, and does not generally monitor State compliance with the statutory provision limiting the use of these funds for foster care, adoption assistance, or work-related child care. A 1997 study funded by HHS provided some information on the number and characteristics of children and families served by the child welfare system in 1994, and examined changes in this population since a similar study was conducted of children and families served in 1977 (U.S. Department, 1997). This study looked at children served by all components of the child welfare system, regardless of funding source, and found a significant decline in the number of children receiving services from the child welfare system, from an estimated 1.8 million children in 1977 to an estimated 1 million in 1994. Of these totals, about the same number of children in each of the 2 years were in foster care (543,000 in 1977 and 502,000 in 1994). However, HHS found a sharp drop in the number of children receiving services while still living at home, and a substantial increase in the percent of children receiving services as a result of abuse or neglect (45 percent in 1977 compared with 80 percent in 1994). The report suggests that child welfare agencies in 1994 were dealing with more difficult cases that required more extensive services and therefore were forced to set priorities and narrow their focus from a broader population of children and families to those in more immediate crisis. It is also worth noting that this study was conducted just prior to the full implementation of the Promoting Safe and Stables Families program. Grants to States for promoting safe and stable families Grants to States for family preservation and family support services were originally authorized as a capped entitlement under subpart 2 of title IV-B, beginning in fiscal year 1994. States already had the flexibility to expend their child welfare services funds available under subpart 1 of title IV-B for family support and preservation activities, but few States used a significant share of such funds for these two categories of services. Entitlement funding was authorized for five years at the following levels: $60 million in fiscal year 1994; $150 million in 1995; $225 million in 1996; $240 million in 1997; and either $255 million in 1998 or the 1997 level adjusted for inflation, whichever was greater. The Adoption and Safe Families Act (Public Law 105-89), enacted in November 1997, reauthorized and changed the name of this program to Promoting Safe and Stable Families (PSSF). Entitlement ceilings were set at the following levels: $275 million for fiscal year 1999, $295 million for 2000, and $305 million for 2001. The Promoting Safe and Stable Families Amendments of 2001 (Public Law 107-133) reauthorized the program for five years (fiscal years 2002 through 2006) at $305 million per year in mandatory funds and also authorized an additional $200 million per year in discretionary funding, for a total authorization of $505 million per year. Of this discretionary authorization, Congress appropriated $70 million in fiscal year 2002 and $99.4 million in fiscal year 2003. The 2001 reauthorization also allowed for PSSF funds that are certified as unused by a State to be reallocated to other States. From the mandatory ceiling amounts, $6 million is reserved each fiscal year for use by the Secretary of HHS to fund research, training, technical assistance, and evaluation of PSSF activities. In addition, $10 million is reserved each fiscal year for a grant program for State courts (described below). Indian tribes are allotted one percent of the mandatory PSSF funds. From any discretionary funds appropriated, the following set-asides are made: 3.3 percent for evaluations, research, training, and technical assistance, 3.3 percent for State court improvement grants, and 2 percent for Indian tribes. After these set-asides are made, the remaining funds are allocated among States according to their relative shares of children receiving food stamps, subject to a 25 percent non-Federal match. Table 11-6 shows State allotments of Promoting Safe and Stable Families funds in fiscal years 1999-2003. States must submit a plan to HHS that provides a detailed account of how the money will be used. Prior to the enactment of Public Law 105-89, at least 90 percent of the funds had to be used for two categories of services: family preservation services and community-based family support services. Public Law 105-89 added two additional categories: time-limited family reunification services, and adoption promotion and support services. No more than 10 percent of funds can be used for administration. The Federal statute does not specify a percentage or minimum amount of funds that must be spent on any particular category of service, but says that States must devote "significant portions" of their expenditures to each of the four categories. HHS has issued annual program instructions specifying that States must have a "strong rationale" for spending less than 20 percent of their allotments on each of the four categories of services. Family preservation services are intended for children and families, including extended and adoptive families that are at risk or in crisis. Services include: programs to help reunite children with their biological families, if appropriate, or to place them for adoption or another permanent arrangement; programs to prevent placement of children in foster care, including intensive family preservation services; programs to provide follow-up services to families after a child has been returned from foster care; respite care to provide temporary relief for parents and other care givers (including foster parents); services to improve parenting skills; and services to support infant "safe haven" programs (added by Public Law 107-133). TABLE 11-6 -- STATE BY STATE ALLOCATIONS FOR TITLE IV-B (SUBPART 2) PROMOTING SAFE AND STABLE FAMILIES, FISCAL YEARS 1999-2003 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Family support services are intended to reach families that are not yet in crisis and to prevent child abuse or neglect from occurring. Family support services are generally community-based activities designed to promote the well-being of children and families, to increase the strength and stability of families (including adoptive, foster, and extended families), to increase parents' confidence and competence, to provide children with a stable and supportive family environment, to enhance child development, and to strengthen parental relationships and promote healthy marriages (added by Public Law 107-133). Examples include parenting skills training, respite care to relieve parents and other care givers, structured activities involving parents and children to strengthen their relationships, drop-in centers for families, information and referral services, and early developmental screening for children. As added by Public Law 105-89, time-limited reunification services are services and activities intended to facilitate the safe and appropriate reunification of children who have been removed from home and placed in foster care with their parents in a timely fashion; i.e., within 15 months of having entered foster care. Reunification services for children and their families include counseling, substance abuse treatment services, mental health services, assistance to address domestic violence, temporary child care and therapeutic services such as crisis nurseries, and transportation to and from these activities. Adoption promotion and support services, also added by Public Law 105-89, are services and activities designed to encourage more adoptions out of the foster care system, including pre- and post-adoptive services and activities designed to expedite adoptions and support adoptive families. In regulations proposed on October 4, 1994 and made final on November 18, 1996, HHS set forth a series of child and family services "principles" that were intended to guide State implementation of the program. According to HHS, these principles emphasize the paramount importance of safety for all family members, including victims of child abuse and neglect and victims of domestic violence and their dependents. In the preamble to its regulations, HHS stated that family preservation "does NOT mean that the family must stay together or 'be preserved'under all circumstances." The principles also were intended to support a family-focused approach while allowing for individual needs and a service delivery approach that stresses flexibility, accessibility, coordination, and respect for cultural and community strengths. The Secretary of HHS is required to evaluate activities under subpart 2 of title IV-B. In September 1994, the Secretary funded three evaluation projects: a study of the implementation of family preservation and family support programs; a national evaluation of family preservation and reunification programs; and a national evaluation of family support programs. Summaries of the findings are found below. James Bell Associates released the final report (2003) on the family preservation and family support services implementation study, reporting on State and local planning efforts, the relationship of planning to service delivery, and the design of programs. The report stated that services did not fall neatly into the categories defined in the legislation, particularly for family preservation and family support, and, as was discussed in the interim report, the majority of services were in general more characteristic of family support programs. However, the final report revealed that program sites appear to be moving toward a greater balance in service provision among the four categories. This is also evidenced in the budget planning documents submitted by States to HHS, which show that funds have been shifted from family support programs to programs focusing on time-limited family reunification and adoption promotion and support. The final evaluation of family preservation and reunification (Westat, Chapin Hall Center for Children, James Bell Associates, 2002) studied programs in four States (Kentucky, New Jersey, Tennessee, and Pennsylvania); three sites used the Homebuilders model, and one used a broader, home-based model. The evaluation found no significant differences between the experimental and control groups for rates of foster care placement, days in care, case closings, or subsequent maltreatment. In two of the four States, caretakers in the experimental groups tended to report greater improvement in their lives than those in the control group. The evaluation's findings of minimal effects and benefits of family preservation programs are similar to those from previous evaluations and research. The evaluation cautioned that these results should not be taken to mean that family preservation programs serve no useful purpose, but rather that they should indicate that these programs may need to undergo several changes, such as providing more targeted services to various subgroups and rethinking program objectives. The final evaluation of family support programs (Abt Associates, 2001) found varied results on the effectiveness of these programs. The evaluation's analysis of existing research on family support programs found that focusing on specific at-risk groups, such as children with special needs or teenage parents with young children, and providing support services in groups managed by professional staff, rather than home visits by paraprofessionals, were shown to have positive effects on parents and children. Additionally, in order to positively affect children's cognitive development and school readiness, family support services must be provided directly to children rather than through parenting education. However, although certain family support strategies have proven to be effective with specific populations, no single program approach was determined to be effective across all populations. Some additional information on States' use of PSSF funds was included in the September 2003 report by GAO on title IV-B in general (referred to earlier). Through surveys, GAO found that States spent almost half of their subpart 2 funds in fiscal year 2002 on family support and prevention activities and another 12 percent on family preservation. About 14 percent was used for adoption activities and post-adoption services and 9 percent was used for family reunification. Court Improvement Program A portion of the Promoting Safe and Stable Families funds is reserved for a grant program to the highest State courts to assess and improve certain child welfare proceedings. The court set-aside equals $10 million in mandatory funds and 3.3 percent of any discretionary funds appropriated for each of fiscal years 2002-2006. A 25 percent non-Federal match is required. Courts use their grant funds to assess their procedures and effectiveness in determinations regarding foster care placement, termination of parental rights (TPR), and recognition of adoptions. Courts also can use these grant funds to implement changes found necessary as a result of the assessments. According to HHS, as of fiscal year 2003, 50 States and the District of Columbia were participating in this program. According to a review conducted for HHS on court improvement activities during 1995-98, States conducted thorough assessments of their judicial systems and came up with various recommendations (James Bell Associates, 1999). Categories where improvement was most commonly recommended were: representation of parties, timeliness of decisions, management information systems, quality of court hearings, judicial expertise, multidisciplinary training for court participants, coordination between the courts and child welfare agency or service providers, treatment and participation of parties, and resources for courts and social services. The activities most commonly implemented included: development of training and educational materials; pilot programs; revision of legislation, court rules and judicial directives; development of automated case tracking systems, public relations campaigns and local work groups; supplemental assessments or studies; increased number of attorneys, judges and other court personnel; hiring of court improvement coordinating staff; and improved treatment of parties. The report found that court improvement changes were still at an early stage, partially because initial assessments took longer to complete than expected and also because reforms requiring new legislation or staff take time to implement. However, the report concluded that the Court Improvement Program had raised the visibility of courts within the child welfare system and provided States with flexibility and resources to address court- related challenges. Mentoring Children of Prisoners The Promoting Safe and Stable Families Amendments of 2001 (Public Law 107-133) created new program authority to provide mentoring services to children of prisoners. This program is authorized to be funded at $67 million for each of fiscal years 2002 and 2003 and for such sums as necessary in succeeding years. Funding for this program is separate from the $505 million authorized for PSSF activities. This program received initial funding of $10 million in fiscal year 2003. HHS may provide grants of up to $5 million each to State or local governments, community- and faith-based organizations, and tribes or tribal groups in areas where there are significant numbers of children of prisoners. Grantees must use non-Federal resources to make a minimum 25 percent in-kind or cash match of Federal funds for the first two years of a grant reward and a minimum of 50 percent match in succeeding years. Two and a half percent of annually appropriated funds for this program are reserved for evaluation. Child welfare research, training, studies In addition to providing funds to the States for services, title IV-B authorizes the Secretary of HHS to make direct grants for research and demonstration, training, and studies. Specifically, section 426 authorizes direct grants from HHS to public and private organizations and institutions of higher education for research and demonstration projects related to child welfare, and for training projects for personnel in the child welfare field. For fiscal year 2003, $7.4 million was appropriated for child welfare training, but no funding was provided for research and demonstration under section 426. Section 429A was added to title IV-B by the welfare reform legislation enacted in 1996 (Public Law 104-193). This provision authorized and appropriated funds for HHS to conduct a national longitudinal study of children at risk for abuse or neglect, and of children who have been identified as victims of abuse or neglect. For this study, the welfare reform law appropriated $6 million for each of fiscal years 1996-2002; however, Congress subsequently rescinded the appropriations for each year, with the understanding that adequate funding was available for the study in the broader appropriation for social services and income maintenance research. In response to the section 429A provision, HHS has undertaken the National Survey of Child and Adolescent Well-Being (NSCAW). HHS anticipates that this study will provide nationally representative data on children and families that come into contact with the child welfare system, which will enable analysis of child and family well- being outcomes in relation to the experience of children and families with the child welfare system, as well as characteristics of the families, the community environment, and other factors. The study is being conducted over a 6-year period (1997-2003) and includes a sample of more than 6,000 children, ages 0-14, from 100 child welfare agencies nationwide. In addition to child-level data, NSCAW is collecting data from State and local administrators, and findings from this component of the study were reported in June 2001. Of the 46 State administrators participating in the survey, two-thirds reported that the Adoption and Safe Families Act of 1997 (Public Law 105-89) has caused improvements or changes in at least one of the following areas: child safety, permanency, collaboration with the courts, and data collection. State administrators reported that formal collaborations have increased between agencies and groups serving child welfare clients, and that participation in multidisciplinary teams has increased, involving more partners (including families) and beginning at earlier stages of a case. Local agencies described a dynamic system; 40 percent of local agencies had developed new initiatives in the previous 12 months. The Adoption and Safe Families Act resulted in shortened permanency planning time frames for almost all local agencies, greater emphasis on safety for about 60 percent, and increased emphasis on adoption for children in kinship foster care for the majority of local agencies. Local agencies agreed that regulations, paperwork, and the number of hours worked per case had increased, with no decrease in the actual number of cases. Local agencies reported less impact from interethnic adoption provisions enacted by Congress in the 1990s, reporting some increased training on this issue but no increase in transracial foster or adoptive placements for 77 percent of local agencies. THE TITLE IV-E FOSTER CARE PROGRAM Eligibility criteria The Foster Care Program under title IV-E is a permanent entitlement that provides open-ended matching payments to States for the costs of maintaining certain children in foster care, and associated administrative, child placement, and training costs. Several eligibility criteria apply to the foster children on whose behalf Federal reimbursement is available to States. First, children must have been removed from families that would have been eligible for Aid to Families with Dependent Children (AFDC), as the program existed in their State on July 16, 1996. Although welfare reform legislation enacted in 1996 (Public Law 104-193) repealed the AFDC Program, its eligibility criteria continue to be used for determining children's eligibility under title IV-E. Under Public Law 104-193 as originally enacted, foster children would be eligible under title IV-E if their families met the AFDC criteria of June 1, 1995; however, technical corrections enacted in 1997 changed this date to July 16, 1996 (Public Law 105-33). The welfare reform legislation replaced AFDC with a block grant to States called Temporary Assistance for Needy Families (TANF), and requires all States participating in TANF to certify that they will operate a foster care and adoption assistance program under title IV-E. States are required to provide foster care maintenance payments to AFDC-eligible children removed from the home of a relative if the child received or would have received AFDC prior to removal from the home and if the following also apply: (1) the removal and foster care placement were based on a voluntary placement agreement signed by the child's parents or guardians or a judicial determination that remaining in the home would be contrary to the child's welfare; (2) reasonable efforts were made to eliminate the need for removal or to return the child home (unless certain exceptions apply, which are described later in the section); and (3) care and placement of the child are the responsibility of the State. Children whose expenses are eligible for reimbursement under title IV-E also are deemed eligible for Medicaid. Finally, States may claim reimbursement on behalf of eligible children who have been placed in licensed or approved foster family homes or child care institutions, which can be public or private, including both for-profit and nonprofit. Public child care institutions can accommodate no more than 25 children, although no limitation applies to the size of private institutions. Detention facilities for children determined to be delinquent are not eligible for Federal reimbursement under title IV-E. Not all foster children meet the Federal eligibility criteria just described. Table 11-7 shows, for each of fiscal years 1999 through 2001, the average monthly number of foster children in each State who were eligible for Federal subsidies under title IV-E, and the total number of foster children in each State who were in care on September 30 of the given fiscal year. While these two sets of numbers are not directly comparable, they can be used to give rough estimates of the percent of foster children who are supported solely with State and/or local funds. Financing structure The Federal matching rate for foster care maintenance payments for a given State is that State's Medicaid matching rate, which is inversely related to State per capita income, may vary annually, and can range from 50 to 83 percent. States may claim open-ended Federal matching at a rate of 50 percent for their child placement services and administrative costs, including costs of data collection. States may claim open-ended Federal matching at a rate of 75 percent for costs of training personnel employed (or preparing for employment) by State or local agencies administering the program and for training current and prospective foster and adoptive parents. During fiscal years 1994-97, States also were able to receive Federal matching at the 75 percent rate for certain costs related to the development of Statewide Automated Child Welfare Information Systems (SACWIS); currently, these costs are matched at the 50 percent rate. TABLE 11-7-- TITLE IV-E AND TOTAL FOSTER CARE CASELOADS, BY STATE, FISCAL YEARS 1999-2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Foster care expenditures and participation rates The average estimated monthly number of children in title IV-E foster care grew by 131 percent between 1988 and 1998, from 132,757 to 306,500 (Table 11-3). However, between 1998 and 2002, the number declined 17 percent, to 254,000, and is projected to continue a gradual decline to 237,300 in 2008. Also between the years 1998 and 2002, while the caseload grew smaller, Federal spending on title IV-E foster care increased 22 percent, from $3.7 billion to an estimated $4.5 billion (Table 11-2). Table 11-8 provides a State breakdown of foster care expenditures in fiscal year 2002, showing maintenance payments, child placement services and administration, information systems, training, and expenditures under waiver demonstrations. Note that California, New York, Pennsylvania, Illinois and Ohio accounted for 56 percent of total Federal foster care expenditures in fiscal year 2002. California alone accounted for 26 percent of all Federal foster care expenditures in that year. Federal expenditures for child placement services, administrative costs, training, and information systems have grown more rapidly (increasing by 390 percent from fiscal year 1989 to fiscal year 2002) than expenditures for foster care maintenance payments (which grew by 214 percent during that time period). In fiscal year 1989, expenditures for child placement services, administration, training, and information systems equaled $507 million, or 44 percent of total Federal foster care expenditures. In fiscal year 2002, Federal expenditures for child placement services, administration, training, and information systems totaled almost $2.5 billion, or 55 percent of total Federal expenditures for foster care. HHS regulations give the following examples of allowable child placement services and administrative costs for foster care under title IV-E: referral to services, preparation for and participation in judicial determinations, placement of the child, development of the case plan, case reviews, case management and supervision, recruitment and licensing of foster homes and institutions, rate setting, and a proportionate share of agency overhead. In addition, Federal matching is available for certain expenses related to data collection and automation of child welfare information systems (see below). Expenditures for child placement services and administration also include expenditures made on behalf of children before and during the time a title IV-E eligibility determination is made; as a result, Federal reimbursement is provided for expenditures made for some children who, ultimately, are determined not eligible for title IV-E maintenance payments. In response to concerns about the rapid growth in administrative costs, the 101st Congress enacted legislation as part of the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508) that was intended to provide better information on State reimbursement for administrative costs. Under Public Law 101-508, "child placement services'' was added as a separate category for which States could claim reimbursement, in addition to administrative costs. Prior to this provision, child placement services were included among administrative costs and not identified separately. HHS reports that of claims filed for child placement and administrative costs in fiscal year 2001, 45 percent were for case planning and management activities, 19 percent were for preplacement activities, 4 percent were for eligibility determinations, and the remaining 32 percent were for other activities including traditional administrative and overhead costs. Foster care payment rates Table 11-9 shows each State's "basic" monthly foster care payment rates in 1994, 1998, and 2000 for children ages 2, 9, and 16, as reported in surveys conducted by the Child Welfare League of America. States are allowed to set the payments at any level; thus, as the Table shows, the rates vary widely. The basic monthly foster care rates shown in the Table are those paid for family foster care, and differ from rates paid for group or congregate care. The family foster care rates shown in the table are only generally comparable due to variations among States regarding the items that are covered under the basic rate, additional services that are provided by supplements (which are not shown in this table), and the States' administrative structures. Room and board is covered in all of the basic family foster care rates shown; some of the rates shown also include amounts for supervision or clothing. States include other items in their basic rates, such as child care, respite care, transportation, personal allowance, school supplies, recreational and community activities, and incidentals. In addition, many States and counties supplement their basic rates for items such as education, child care, respite care, level of need, clothing, transportation, health and medical care (other than TABLE 11-8 -- ESTIMATED FEDERAL IV-E FOSTER CARE EXPENDITURES, FISCAL YEAR 2002 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Medicaid or State-funded medical assistance), and special emotional, behavioral, medical, or psychological needs. Public Law 96-272 (1980) stipulated that title IV-E foster care payments could be made for children in public institutions, whereas previously under title IV-A (AFDC), payments were limited to children in private nonprofit institutions or foster family homes. To qualify for Federal payments, these public institutions may not accommodate more than 25 children. Facilities operated primarily for the detention of delinquents, including forestry camps and training schools, are ineligible for Federal funds. Legislation enacted in 1996 (Public Law 104-193) also allows participation of for-profit institutions. It is generally agreed that the costs associated with institutional care are substantially higher than the cost of family foster care. However, definitive data are not available. History of Federal protections for children in foster care The 1980 legislation that established the current framework of titles IV-B and IV-E contained several provisions intended to protect foster children and children at risk of foster care placement. Under the 1980 law as originally enacted, States were not eligible for all of their Federal title IV-B funds unless the following protections had been implemented: (1) a one-time inventory of children who had been in foster care more than 6 months to determine the appropriateness of and necessity for their current foster care placement, whether the child should be returned home or freed for adoption, and the services needed to achieve this placement goal; (2) a statewide information system containing the status, demographic characteristics, location, and placement goals of every child in care for the preceding 12 months; (3) a case review system to assure procedural safeguards for each child in foster care, including a 6-month court or administrative review and an 18-month dispositional hearing to assure placement in the least restrictive (most family- like) setting available, in close proximity to the child's original home, and consistent with the child's best interest; and (4) a reunification program to return children to their original homes. These provisions were originally contained in section 427 of the Social Security Act. Effective for fiscal years beginning after April 1, 1996, however, these protections are required of States as a component of their State plans under section 422 of the act. This change was enacted under the Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66). In addition, the Adoption and Safe Families Act (Public Law 105-89) made significant changes in the case review system, including a requirement that dispositional hearings (renamed permanency hearings) be held at 12 months after placement and a requirement that States initiate procedures to terminate parental rights after a child has been in foster care a certain period of time (see below). Since April 1, 1996, States have been required to implement preplacement preventive services as a component of their State plans. In addition, under Public Law 103-66, States are required to review their policies and procedures related to abandoned children and to implement any changes necessary to enable permanent placement decisions to be made expeditiously for such children. States must comply with certain State plan requirements under title IV-B that are intended to protect all children in foster care. The law reinforces these protections by specifically requiring that they be provided in the case of children for whom Federal reimbursement is claimed under title IV-E. In addition, the law requires States to establish specific goals for title IV-E-eligible children who will remain in foster care more than 24 months, and to describe the steps the State will take to meet these goals. Mandatory procedural safeguards: "reasonable efforts" The 1980 legislation required that in every case, "reasonable efforts'' must be made to prevent placement of a child in foster care and to reunify a foster child with her parents. The Adoption and Safe Families Act (Public Law 105-89), enacted in November 1997, modified this provision. First, the law now specifies that a child's health and safety must be of "paramount" concern in all efforts made by the State to preserve or reunify the child's family. States continue to be required to make reasonable efforts to preserve or reunify the family, but the 1997 law established exceptions to this requirement. Specifically, States are not required to make such efforts if a court finds that a parent had killed another of their children, or committed felony assault against the child or a sibling, or if their parental rights to another child had previously been involuntarily terminated. In addition, the law establishes that efforts to preserve or reunify a family are not required if the court finds that a parent had subjected the child to "aggravated circumstances." Each State may define these circumstances in State law; the act cites abandonment, torture, chronic abuse, and sexual abuse as examples. Moreover, the law does not preclude judges from using their discretion to protect a child's health and safety regardless of whether the specific circumstances are cited in Federal law. If the court determines that reasonable efforts to preserve or reunify a child and family are not required, the law now requires that a permanency hearing be held within 30 days of the child entering foster care, and that reasonable efforts be made to place the child for adoption or in an alternative permanent setting in a timely manner. Notwithstanding the exceptions allowed under the Adoption and Safe Families Act, reasonable efforts to preserve or reunify a family are still required in most cases. The Social Security Act establishes this requirement in two separate provisions. First, in order for a State to be eligible for title IV-E funding, its plan must specify that reasonable efforts will be made prior to a child's placement in foster care to prevent the need for placement or to help the child return home, unless the exceptions described above apply (section 471(a)(15)). Second, for every title IV-E-eligible child placed in foster care, a judicial determination must be made and documented that reasonable efforts were made to prevent placement into foster care in that particular case, unless an exception applies (section 472(a)(1)). TABLE 11-9 -- FOSTER CARE BASIC MONTHLY MAINTENANCE RATES FOR CHILDREN AGES 2, 9, AND 16, SELECTED YEARS 1994-2000 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] The term "reasonable efforts" is not defined in law or regulations. Instead, U.S. Department of Health and Human Services (HHS) regulations have required State plans to include a description of the services provided to prevent removal or to reunify families. The regulations provide an illustrative list of the types of preplacement preventive and reunification services that may be offered. This list includes: 24-hour emergency caretaker and homemaker services; day care; crisis counseling; emergency shelters; access to available emergency financial assistance; respite care; home-based family services; self-help groups; services to unmarried parents; provision of or arrangement for mental health; drug and alcohol abuse counseling; vocational counseling or vocational rehabilitation; and postadoption services. Because "reasonable efforts" is not defined by statute, Federal courts have been active in defining reasonable efforts in individual cases. Over the 20 years since enactment of Public Law 96-272, numerous lawsuits have been filed by foster children, parents, and advocacy groups against State and local child welfare systems, challenging their failure to make reasonable efforts to preserve or reunify families. Many of these cases have been broad in scope, and some Federal courts have become involved in the overall child welfare system, although this traditionally has been an area of exclusive State jurisdiction. As a result of the U.S. Supreme Court's decision in one such case (Suter v. Artist M., 1992), Congress enacted legislation in 1994 (Public Laws 103-382 and 103-432). These laws added a new section to the Social Security Act, which was inadvertently enacted twice, as section 1123 and section 1130A. The provision establishes that, in any action brought to enforce a provision of the Social Security Act, the provision is not to be deemed unenforceable because of its inclusion in a section of the act requiring a State plan. Congress explicitly stated that it does not intend to limit or expand any grounds for determining the availability of private actions to enforce State plan requirements. The provision also is not intended to alter the Court's decision in Suter that the reasonable efforts requirement is not enforceable in a private right of action. Mandatory procedural safeguards: case planning and case reviews The law specifies case review provisions that apply to all foster children, as required by the title IV-B State plan, and to title IV-E-eligible children in order for States to claim Federal reimbursement for expenditures made on their behalf. The case review process must include a written case plan that: describes the child's placement, including its safety and appropriateness; describes a plan for assuring the child receives safe and proper care and that services are provided to enable the child to return home or to another permanent setting; includes the child's health and education records; describes services to help the child prepare for independent living, if the child is age 16 or older; and for children with permanency plans of adoption or another permanent arrangement, documents the steps taken or planned by the agency to place the child in accordance with that plan. Children must have a case plan that is designed to achieve a safe setting, that is the least restrictive (most family- like) and most appropriate setting available, in close proximity to the child's parent's home, and is consistent with the child's best interest and special needs. The law also requires an administrative or judicial review at least every 6 months for children in foster care to determine the continuing need and appropriateness of the foster care setting, compliance with the case plan, progress made toward improving the conditions that caused the child to be placed in foster care, and projecting a date by which the child can be returned home or placed for adoption or legal guardianship. The mandatory case review process also includes a judicial permanency hearing, to be held no later than 12 months after a child has entered foster care (as amended by Public Law 105-89), and every subsequent 12 months. This hearing determines the child's permanency plan; i.e., whether the child should be returned to the parents, placed for adoption (in which case, the State also will initiate proceedings to terminate parental rights), referred for legal guardianship, or placed in another planned, permanent arrangement (if other options, including placement with a fit and willing relative, are not in the child's best interest). Prior to enactment of Public Law 105-89 in 1997, long-term foster care also was a specified permanency plan. Also as amended in 1997, the law provides that States may make efforts to reunify a child and family concurrently with efforts to place the child for adoption or guardianship. This practice, referred to as "concurrent planning," allows States to develop a backup plan, to save time in case efforts to restore the original family are unsuccessful. The permanency hearing also must ensure safeguards for children placed outside their home State; must determine the independent living services needed for foster children aged 16 and older; and must ensure safeguards for the parental rights pertaining to children in foster care. A child's foster parents, preadoptive parents, or relative caretakers must be given notice and an opportunity to be heard at any review or hearing held with respect to the child. Mandatory procedural safeguards: filing for termination of parental rights (TPR) One of the most significant provisions of the 1997 Adoption and Safe Families Act requires States to initiate proceedings to terminate parental rights for certain foster children. There was no comparable provision in prior law. Specifically, the act requires States to initiate or join TPR proceedings for children who have been in foster care for 15 of the most recent 22 months, or for infants determined under State law to be abandoned, or in any case in which the court has found that a parent has killed another of their children or committed felony assault against the child or a sibling. States can opt not to initiate such proceedings if the child is in a relative's care, or if the State agency has documented in the child's case plan a compelling reason to determine that TPR would not be in the child's best interest, or if the State had not provided necessary services to the family. According to final regulations issued by HHS on January 25, 2000, exceptions to the TPR requirement must be made on a case- by-case basis; States may not establish blanket exceptions for categories of children. For purposes of the TPR provision and the 12-month permanency hearing, children are considered to have entered foster care on the first date that the court finds they have been subjected to abuse or neglect, or 60 days after their removal from home, whichever occurs first. THE TITLE IV-E ADOPTION ASSISTANCE PROGRAM The Title IV-E Adoption Assistance Program is an open-ended entitlement program required of States that participate in TANF. Like the IV-E Foster Care Program, the IV-E Adoption Assistance Program funds three distinct types of activities: assistance payments for qualified children who are adopted, administrative payments for expenses associated with placing children in adoption, and training of professional staff and parents involved in adoptions. Under the Adoption Assistance Program, which is permanently authorized, States develop adoption assistance agreements with parents who adopt eligible children with special needs. Federal matching funds are provided to States that, under these agreements, provide adoption assistance payments to parents who adopt AFDC- or SSI-eligible children with special needs. In addition, the program authorizes Federal matching funds for States that reimburse the nonrecurring adoption expenses of adoptive parents of special-needs children (regardless of AFDC or SSI eligibility). Definition of special needs A special-needs child is defined in the statute as a child with respect to whom the State determines there is a specific condition or situation, such as age, membership in a minority or sibling group, or a mental, emotional, or physical disability, which prevents placement without special assistance. Before a child can be considered to be a child with special needs, the State must determine that the child cannot or should not be returned to the biological family, and that reasonable efforts have been made to place the child without providing adoption assistance. States have discretion in defining special-needs eligibility criteria and individually determining whether a child is eligible. For example, some States add religion or not being able to place the child without subsidy to the definition of special needs. Adoption assistance agreements and payments An adoption assistance agreement is a written agreement between the adoptive parents, the State IV-E agency, and other relevant agencies (such as a private adoption agency) specifying the nature and amount of assistance to be given. Under the adoption assistance agreement, States may make federally subsidized monthly adoption assistance payments for AFDC- and SSI-eligible children with special needs who are adopted. The amount of adoption assistance payments is based on the circumstances of the adopting parents and the needs of the child. No means test can be used to determine eligibility of parents for the program; however, States do consider the adoptive parents' income in determining the payment. Payments may be adjusted periodically if circumstances change, with the concurrence of the adopting parents. However, the payments may not exceed the amount the family would have received on behalf of the child under foster care. Adoption assistance payments may continue until the child is age 18, or, at State option, age 21 if the child is mentally or physically disabled. Payments are discontinued if the State determines that the parents are no longer legally responsible for the support of the child. Federally subsidized payments may start as soon as an agreement is signed and the child has been placed in an adoptive home. Not all families of adopted IV-E eligible children with special needs actually receive adoption assistance payments. The adoptive parents' circumstances may be such that an adoption subsidy is not needed or wanted. Adopted AFDC- or SSI-eligible children with special needs are also eligible for Medicaid if an adoption assistance agreement is in effect, regardless of whether adoption assistance payments are being made. Pursuant to the 1985 budget reconciliation legislation, a child for whom an adoption assistance agreement is in effect is eligible for Medicaid from the State in which the child resides regardless of whether the State is the one with which the adoptive parents have an adoption assistance agreement. States also have the option under the Medicaid Program to provide Medicaid coverage for other special-needs children (those not eligible for AFDC or SSI) who are adopted under a State-funded adoption subsidy program. According to the Association of Administrators of the Interstate Compact on Adoption and Medical Assistance (AAICAMA), all States but two currently take this option, with regard to children for whom they have an adoption assistance agreement in effect. (The two that do not take this option are Connecticut and New Mexico.) In addition, AAICAMA reports that 32 States provide Medicaid to children living in their States who have State-funded adoption assistance agreements from other States, and another 9 States provide Medicaid to children with State-funded adoption assistance agreements from other States, but only if those States are members of the Interstate Compact on Adoption and Medical Assistance. As of February 2003, an additional three States were in the process of developing reciprocity policies. The Adoption and Safe Families Act (Public Law 105-89) contains additional requirements regarding health insurance coverage for special-needs adopted children who are not eligible for title IV-E adoption assistance. Specifically, the 1997 law requires States to provide health insurance coverage to non-title IV-E children for whom they have an adoption assistance agreement in effect, if the children have special needs for medical, mental health or rehabilitative care. This health coverage can be through Medicaid or another program, as long as benefits are comparable. In addition, the law prohibited States from receiving adoption incentive payments (described below), or from receiving waivers of title IV-B or IV-E provisions (also described below), unless they provided health coverage for non-title IV-E children who are living in their State, but who are covered by an adoption assistance agreement from another State. The structure of adoption subsidy programs varies across States. Some States offer basic maintenance payments and also allow additional payments for certain activities (such as family counseling) or for certain groups of children (such as children with severe disabilities). Other States offer one level of payment to everyone with no special allowances. Some States allow parents to request changes in payment levels on a regular basis if circumstances change for a child; others allow very little change once the adoption agreement is signed. Some States start payments as soon as placement is made; others not until the adoption is finalized. (Table 11-10 shows basic adoption subsidy rates by State for 2002, as published by the North American Council on Adoptable Children in May 2003.) Not all children who receive adoption subsidies from States are eligible for Federal title IV-E funds. HHS reports that in 2001, 74 percent of children adopted from foster care received Federal title IV-E adoption assistance and 14 percent received State-funded adoption assistance; the remainder did not receive ongoing adoption assistance. The non-IV-E children's adoption subsidies are paid solely by the State in which their adoption agreement was signed. Nonrecurring adoption costs The Adoption Assistance Program also authorizes Federal matching funds for States to pay the one-time adoption expenses of parents of special-needs children (regardless of AFDC or SSI eligibility). In order to be eligible, the child must be a child with special needs, as defined in section 473(c) of the Social Security Act and described above. Through the program, parents may receive reimbursement of up to $2,000 per child for these nonrecurring adoption expenses, and States may claim 50 percent Federal matching for these reimbursements. Qualified adoption expenses are defined as reasonable and necessary adoption fees, court costs, attorney fees, and other expenses that are directly related to the adoption of a child with special needs. States may vary in the maximum amount they allow parents to receive under this provision. All States and the District of Columbia have implemented the program; Delaware does not operate a separate program for reimbursing these one-time expenses. Table 11-10 shows State-by-State data on maximum reimbursement rates for nonrecurring expenses, as reported by the North American Council on Adoptable Children in May 2003. It should be noted that these are maximum payment rates, which are not necessarily the amounts received by an individual family; a 1996 survey by the American Public Human Services Association found that the average reimbursements did not equal the maximum for many States. In addition, parents adopting children from public child welfare agencies may not necessarily claim these reimbursements because many costs incurred in public agency adoptions are already covered under the States' adoption programs. Adoption assistance expenditures The number of children receiving adoption assistance payments and the Federal expenditures for these payments have increased significantly since the program began. In fiscal year 1981, only six States participated in the program, with payments being made for an average of 165 children per month. In fiscal year 2002, 50 States plus the District of Columbia and Puerto Rico participated, and an average of 285,600 children (Table 11-3) were served per month. Federal expenditures for adoption assistance payments have increased from less than $400,000 in fiscal year 1981 to $1.3 billion in fiscal year 2002, and are expected to reach almost $2.5 billion by fiscal year 2008 (Table 11-2). HHS data indicate that expenditures for child placement services and administration for the Adoption Assistance Program also have increased significantly in recent years. In fiscal year 1981, claims totaled $100,000; in fiscal year 2002 they totaled $305 million and are expected to be $451 million in fiscal year 2008. TABLE 11-10 -- ADOPTION ASSISTANCE BASIC RATES AND MAXIMUM NONRECURRING EXPENSE ALLOWANCE, BY AGE, 2002 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Table 11-11 below shows estimated Federal adoption assistance expenditures in fiscal year 2002, by State, broken down by assistance payments, administration, training, and expenditures under waiver demonstrations. Table 11-12 shows average monthly participation in adoption assistance, by State, in fiscal years 1999, 2000, and 2001. TABLE 11-11 -- ESTIMATED FEDERAL ADOPTION ASSISTANCE EXPENDITURES UNDER TITLE IV-E, FISCAL YEAR 2002 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-12 -- TITLE IV-E ADOPTION ASSISTANCE AVERAGE MONTHLY CASELOADS, BY STATE, FISCAL YEARS 1999-2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] THE TITLE IV-E ADOPTION INCENTIVES PAYMENT PROGRAM The Adoption and Safe Families Act (ASFA) of 1997 (Public Law 105- 89) established a new provision intended to promote adoption through incentive payments to States that increase their number of foster child adoptions, with additional incentives for the adoption of special-needs foster children with adoption assistance agreements under title IV-E. This discretionary program was authorized to grant payments for adoptions finalized in each of fiscal years 1998 through 2002; funds to make these grants were authorized through fiscal year 2003. Incentive payments equaled $4,000 for each foster child whose adoption was finalized (over a certain State-specific baseline) and an additional $2,000 for each special-needs child whose adoption was finalized (over a State-specific baseline). For adoptions finalized in fiscal year 1998, the baseline was the State's average number of adoptions in fiscal years1995-97. For adoptions finalized in fiscal years 1999-2002, the State's baseline was the highest number of adoptions in any preceding year, beginning with fiscal year 1997. Table 11-13 shows each state's baseline and number of incentive- qualifying adoptions for fiscal years 1998, 2000, and 2002. Qualifying adoptions shown in this Table are those of children who were in foster care before their adoption and are not necessarily the same as adoptions made with the involvement of public child welfare agencies. Through fiscal year 2002, States earned a total of $159.7 million in adoption incentive payments. Table 11-14 shows the adoption incentives payments, by State, in fiscal years 1999 through 2003 which are payments for adoptions completed in each of fiscal years 1998 through 2002. Public Law 105-89 originally authorized appropriations of $20 million annually for fiscal years 1999-2003 for adoption incentive payments. In addition, discretionary budget caps were adjusted to help ensure that the funds were actually appropriated for each year. However, in several years, the amount of incentive payments that States earned exceeded the $20 million level and Congress provided additional funds in several years to ensure States received their full incentive earnings. For example, States earned $42.5 million for adoptions finalized in fiscal year 1998; $51.5 million for adoptions finalized in fiscal year 1999; and $33.2 million for adoptions finalized in fiscal year 2000. However, States earned adoption incentives of $17.6 million and $14.9 million for adoptions finalized in fiscal years 2001 and 2002, respectively. Congress enacted Public Law 108-145 in December 2003 reauthorizing annual appropriations of $43 million for the Adoption Incentives program for fiscal years 2004 through 2008, to reward States for increased adoptions finalized in fiscal years 2003 through 2007. Under this latest version of the program, States continue to be rewarded for all increased adoptions of foster children, above a baseline, and the incentive payment remains at $4,000 for each adoption above the baseline. However, the baseline is updated to the number of such adoptions in fiscal year 2002 (for adoptions finalized in fiscal year 2003), and the highest previous year beginning with fiscal year 2002 (for adoptions finalized in fiscal year 2004 and subsequent years). States also continue to be rewarded for increased adoptions of special needs children, and this additional payment remains at $2,000. However, the special needs payment is now limited only to adoptions of special needs children who are under age 9 at the time the adoption is finalized, and the baseline is set at the number of such adoptions in fiscal year 2002 (for adoptions finalized in fiscal year 2003), and the highest previous year beginning with fiscal year 2002 (for adoptions finalized in FY2004 and subsequent years). Public Law 108-145 creates TABLE 11-13 -- BASELINE AND NUMBER OF INCENTIVE-QUALIFYING ADOPTIONS, BY STATE, SELECTED FISCAL YEARS 1998-2002 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-14 -- ADOPTION INCENTIVES PAYMENTS, BY STATE, FISCAL YEARS 1999-2003 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] a third incentive payment, equal to $4,000 for each increased adoption of foster children who are age 9 or older at the time of adoption. States must exceed their baseline number of such "older child" adoptions to earn this payment, set at the number of such adoptions in fiscal year 2002 (for adoptions finalized in fiscal year 2003), and the highest previous year beginning with fiscal year 2002 (for adoptions finalized in fiscal year 2004 and subsequent years). The older child adoption incentive payment is independent of the basic foster child incentive payment, so that a State can earn a payment on the basis of an increase in its older child adoptions, but not necessarily be eligible for an incentive payment based on its total number of foster child adoptions. Under the revised program, a State can receive a special needs incentive payment (for children with special needs who are under age 9) only if they also qualify for an incentive payment on the basis of either an increase in total foster child adoptions or older child adoptions. THE TITLE IV-E FOSTER CARE INDEPENDENCE PROGRAM In 1986, title IV-E was amended by Public Law 99-272 (Consolidated Omnibus Budget Reconciliation Act of 1985) to include section 477, which established the Independent Living Program to assist youth who would eventually be emancipated from the foster care system. Several surveys conducted during the mid-1980s showed that a significant number of homeless shelter users had been recently discharged from foster care, prompting Congress to establish a program to help youngsters in foster care establish their independence. Initially, an annual entitlement amount of $45 million was established for 1987 and 1988 to provide States with the resources to create and implement independent living services. These services were designed to assist title IV-E-eligible children age 16 and over make a successful transition from foster care to independent adult living when they became ineligible for foster care maintenance payments at age 18. In 1988, the program was expanded under Public Law 100-647, which permitted States to provide independent living services to all youth in foster care aged 16 to 18 (not just title IV-E-eligible youth); States could also provide follow-up services to youth up to 6 months after their emancipation from foster care. Under Public Law 101-508, States had the option of serving individuals up to age 21 in the Independent Living Program. Funds were allocated on the basis of each State's share of children receiving title IV-E foster care in 1984. Public Law 101-239 increased the amount of Federal entitlement funds available to the States for the Independent Living Program to $50 million for fiscal year 1990, $60 million for fiscal year 1991, and $70 million for fiscal year 1992. Beginning in fiscal year 1991, States were required to provide 50 percent matching for any Federal funding claimed that exceeded the original $45 million funding level. In 1993, Congress permanently extended the authority for independent living under Public Law 103-66. In response to continuing concerns about the adjustment problems faced by older children leaving foster care, the 106th Congress enacted the Foster Care Independence Act of 1999 (Public Law 106-169). The law replaced section 477 with new language and renamed the program the John H. Chafee Foster Care Independence Program, in honor of the Rhode Island Senator who was one of the law's sponsors and who died before it was enacted. As amended in 1999, the Foster Care Independence Program is intended to help States provide services to children who are likely to remain in foster care until age 18 (no minimum age is specified for participation in the program), as well as former foster children between the ages of 18 and 21. To participate in the program, States must submit a 5-year plan to HHS and must certify that, among other things, no more than 30 percent of program funds will be used for room and board for 18-20 year olds and that services will be coordinated with related Federal and State youth programs, including transitional living youth projects funded under the Juvenile Justice and Delinquency Prevention Act, abstinence education, housing programs, programs for disabled youth, and school- to-work activities. The law also allows foster care youth to accumulate assets up to $10,000 without losing their Title IV-E eligibility status and it permits States to extend Medicaid coverage to former foster children between 18 and 21 years of age. As of the end of 2003, 9 States included this optional coverage in their Medicaid plans. States have flexibility in the use of their Foster Care Independence Program funds within the general purposes outlined in the law. These purposes include helping eligible children make the transition to self-sufficiency through such services as assistance in obtaining a high school diploma, career exploration, vocational training, job placement and retention, training in daily living skills, training in budgeting and financial management skills, substance abuse prevention, and preventive health activities. The revised Foster Care Independence Program is a capped entitlement with an annual ceiling set at $140 million, which is double the entitlement ceiling level prior to enactment of Public Law 106-169. States are entitled to an amount based on their share of the Nation's foster care population, in the most recent year for which information is available. However, no State may receive less than the greater of $500,000 or the amount received by the State in fiscal year 1998. The law contains a ratable reduction provision to ensure total State allotments do not exceed the national ceiling of $140 million. The law also requires a 20 percent non-Federal match. In 2001, under Public Law 107-133, Congress authorized an additional $60 million in discretionary funds for education and training vouchers. Youths otherwise eligible for the Foster Care Independence Program, as well as youths who are adopted from foster care after reaching 16 years of age, are eligible for education and training vouchers worth up to $5,000 per year for the cost of attendance at an institution of higher education. States may allow youths participating in the education and training voucher program when they reach age 21 to remain eligible for the program until age 23, so long as they are enrolled in a postsecondary education or training program and making satisfactory progress toward completion. For fiscal year 2003, the first year in which this program was funded, Congress appropriated $41.7 million for the vouchers Table 11-15 shows FY2003 allotments to States under the Foster Care Independence Program, both for the general program and for education and training vouchers. TABLE 11-15 -- STATE-BY-STATE TITLE IV-E FOSTER CARE INDEPENDENCE PROGRAM ALLOTMENTS, FISCAL YEAR 2003 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] As originally enacted in 1986, section 477 instructed HHS to conduct a study of independent living services, which was done in two phases by Westat, Inc. (Cook, 1990, 1992). Looking at youths who emancipated from foster care between January 1987 and July 1988, Westat reported that they were a troubled population, with low rates of education or job experience and high rates of emotional disturbance, drug abuse, health problems, and pregnancy. Later research conducted by the University of Wisconsin had similar findings (Courtney & Piliavin, 1998). Looking at Wisconsin youths 12-18 months after they emancipated from foster care in 1995, researchers found that 37 percent had still not completed high school and 12 percent had been homeless at least once since their discharge from foster care. While 81 percent had held at least one job since their discharge, only 61 percent reported being employed at the time of their interview, suggesting that job retention was a problem for some. Of females, 40 percent were receiving public assistance, as were 23 percent of the males. Access to medical care was a problem for 44 percent of the youths, usually because of a lack of health insurance. While almost half of the youths had received mental health services when still connected to the child welfare system, 21 percent reported receiving such services after they left foster care. Although they were not reunited with their biological families by the child welfare system, many of the youths had contact with their original families after their discharge from foster care, with about one-third actually living with their families. At the same time, 40 percent reported continued and frequent contact with their foster parents. About 18 percent of the youths had been incarcerated at some point since their discharge. The U.S. General Accounting Office (GAO) reported in 1999 that State and local administrators felt they could not provide youths who were leaving foster care with all the support they needed to make a successful transition to independent adult living. Also in 1999, HHS released a report reviewing the history of the Independent Living Program over the 10 years from 1987 through 1996 (U.S. Department, 1999b). This report found that many eligible youth did not receive independent living services at all. Specifically, in 30 States that reported data for fiscal year 1996, 37 percent of eligible youth received no services. Of those youth served in fiscal year 1996, 65 percent were either 16 or 17 years old, while 22 percent were 18 and the remainder were 19 or 20. Half the youth were white, and slightly more than half were females. African-American youth comprised 38 percent and Hispanic youth 9 percent. Half of the youth served had been in foster care less than 2 years, while 20 percent had been in care 5 years or longer. Slightly more than a quarter of the youth had special needs, and 9 percent were parents or pregnant. To enable assessments of State independent living activities, Public Law 106-169 directed the Secretary of HHS to develop a series of outcome measures, including the following: educational attainment, high school diploma, employment, avoidance of dependency, homelessness, nonmarital childbirth, incarceration, and high-risk behaviors. The Secretary was directed to identify data elements that can be used to track the number and characteristics of children receiving independent living services, the type and quantity of services provided, and State performance on the outcome measures. HHS reported to Congress in September 2001 on its plan for this data system and piloted data collection instruments in seven states (HHS, 2001). The Department expects States to collect some characteristic data needed through their existing data collection systems, but is developing additional characteristic, services and outcome data items that will be unique. State collection of these data is expected to begin in October 2006 with the first State reports submitted to HHS in 2007. Once this data collection plan is in effect, States must submit the required reports or face financial penalties. In addition, the law requires the Secretary to conduct evaluations of innovative State Independent Living Programs or programs that have potential national significance. The law reserves 1.5 percent of each year's appropriation for such evaluation, technical assistance, performance measurement, and data collection. STATE ACCOUNTABILITY AND FEDERAL OVERSIGHT Federal child welfare law requires States to comply with a series of provisions that are intended to protect children who have been placed in foster care or who are at risk of foster care placement. States are required to comply with these provisions to be eligible to receive Federal funds, but the extent to which the Federal Government actually holds States accountable has been an issue of ongoing concern. On January 25, 2000, HHS published final regulations establishing a new system, mandated by Congress, for monitoring and enforcing the implementation by States of Federal child welfare laws. The new regulations took effect on March 27, 2000. In addition, the law establishes specific penalties for violations of certain provisions intended to eliminate ethnic or geographic barriers to adoption. Finally, the Adoption and Safe Families Act in 1997 (Public Law 105-89) mandated that HHS establish a series of outcome measures to be used to rate the performance of State child welfare programs, and to report annually on State performance in meeting these outcome measures. HHS published the outcome measures on August 20, 1999, and has issued annual reports for 1998 through 2000. The Federal review system, the penalties applicable to violations of ethnic or geographic discrimination provisions, and the outcome measures used to measure State performance are described in detail below. HISTORY OF FEDERAL REVIEW EFFORTS The history of Federal child welfare review efforts goes back to passage of the Adoption Assistance and Child Welfare Act of 1980 (Public Law 96-272). Many of the original foster child protections were established by that legislation as part of section 427 and were voluntary incentives for States to meet to receive their full allotment of title IV-B funds. In addition, the 1980 law established eligibility requirements that were used to determine which children could qualify for federally subsidized foster care and adoption assistance payments. These eligibility criteria contained provisions that were intended to work together with the "section 427 requirements" to protect children in foster care. In the early 1980s, HHS developed and operated review systems for monitoring State compliance with section 427 protections and with the Federal foster care requirements under title IV-E. However, child welfare advocates, State and Federal officials, and Members of Congress grew dissatisfied with the early review systems for various reasons, both procedural and programmatic, and beginning in 1989, Congress suspended the collection of penalties resulting from these reviews. Procedural concerns included a lack of formal regulations, frequently resulting in confusion about the standards that States were expected to meet. Reviews were conducted retrospectively, sometimes for fiscal years that had long past, so that current practices were not examined. Exacerbating this problem was the late release of final reports by HHS, so their findings and recommendations were sometimes irrelevant by the time they were issued. State officials had limited ongoing contact with Federal regional office staff, so that formal reviews were seen as adversarial and punitive, rather than collaborative and potentially helpful. The reviews were often seen as time consuming, labor intensive, and burdensome for the States. Of greater concern, however, was the perception that the reviews did not result in improved services for children and families. Both section 427 and title IV-E eligibility reviews focused on paper compliance with legal requirements. Moreover, States were sometimes held accountable for circumstances beyond their control, such as the schedule or actions of the courts. Reviews were criticized for focusing on isolated components of a State's child welfare system, rather than the system as a whole. When problems were identified, penalties were imposed but little technical assistance was provided. The review system contained no mechanism for helping States improve the quality of their child welfare programs, and also was criticized for failing, in some cases, to identify problems in State programs. In 1989, Congress imposed the first in a series of moratoriums, prohibiting HHS from collecting penalties associated with these reviews. Finally, in 1994, Congress enacted two significant provisions as part of the Social Security Act amendments of that year (Public Law 103-432). First, Congress restructured title IV-B so that the foster child protections previously contained in section 427 were no longer voluntary incentives, but rather mandatory components of the State title IV-B plan. Second, Congress mandated the development of a new system to review State conformity with Federal requirements, including State plan requirements, under titles IV-B and IV-E. The 1994 legislation directed HHS to develop a review system that would incorporate the concepts of technical assistance and corrective action. Specifically, HHS was directed to specify the Federal requirements that would be subject to review and the criteria that would be used to determine if a State was substantially meeting those requirements. The law further directed HHS to specify a method for determining the amount of financial penalties that would be imposed in cases of substantial nonconformity. However, Congress also mandated that before such penalties could be imposed, States must be given an opportunity to implement a corrective action plan, and required that HHS provide the States with necessary technical assistance. FEDERAL CONFORMITY REVIEW SYSTEM The 1994 legislation directed HHS to promulgate regulations establishing the new review system by July 1, 1995, to take effect on April 1, 1996. After pilot testing the system in several States, HHS proposed regulations in the Federal Register of September 18, 1998, and issued them as final on January 25, 2000, with an effective date of March 27, 2000. Two types of reviews were established: child and family services reviews of activities funded by both titles IV-B and IV-E to determine system wide State compliance with Federal law; and title IV-E eligibility reviews to determine the eligibility of State expenditures for foster care or related activities for Federal reimbursement under title IV-E. Child and family services reviews: the process The child and family services review primarily measures outcomes and results, and allows States to undertake corrective action if they are not found in substantial conformity with the law. HHS established three outcomes for children and families and seven specific criteria as indicators of States' conformity with Federal law: 1. Child safety - children are first and foremost protected from abuse and neglect, and - children are safely maintained in their own homes whenever possible and appropriate; 2. Permanency for children - children have permanency and stability in their living situations, and - the continuity of family relationships and connections is preserved for children; 3. Child and family well-being - families have enhanced capacity to provide for their children's needs, - children receive appropriate services to meet their educational needs, and - children receive adequate services to meet their physical and mental health needs. In addition, the review system measures State performance on the following seven systemic factors that reflect a State's capacity to deliver services leading to improved outcomes for children and families. These factors are: 1. Statewide information system on children in foster care; 2. Case review system for all children in foster care; 3. Standards to protect the health and safety of children in foster care and an identifiable quality assurance system; 4. Staff development and training program; 5. Service array for children and families; 6. Agency responsiveness to the community; and 7. Foster and adoptive parent licensing, recruitment, and retention. The child and family services review is conducted by a joint Federal-State team, and a full review consists of two steps: first, a statewide assessment conducted by the State members of the team, and second, an onsite review conducted by the joint Federal-State team. The statewide assessment examines each of the seven systemic factors listed above; assesses State performance in each of the three child and family outcomes listed above, using statewide data, and analyzes the State's performance in meeting national standards established for these outcomes; assesses characteristics of the State agency that enable it to deliver services that lead to improved outcomes; and assesses the State's strengths and areas that require further examination during the onsite review. HHS has developed national numerical standards to measure State performance on several of the criteria related to child and family outcomes, based on data reported by the States through the National Child Abuse and Neglect Data System (NCANDS) and the Adoption and Foster Care Analysis and Reporting System (AFCARS). The standards are set at the 75PthP percentile of all States' performance in all or parts of 1997 and 1998, and States are required to meet these standards to demonstrate substantial conformity with Federal law. Both the standards, and the outcomes for which standards are established, may change over time, as the availability and quality of data change. As most recently revised by HHS, the national standards are as follows (State performance in meeting these standards is summarized in Table 11-17): For the child safety outcome: - percent of children with substantiated or indicated child abuse or neglect reports, for whom a subsequent abuse or neglect report is substantiated or indicated: standard - no more than 6.1 percent; - percent of foster children who are the subject of substantiated or indicated abuse or neglect by a foster parent or facility staff: standard - no more than 0.57 percent. For the child permanency outcome: - of children who entered foster care during a review period, the percent who reentered within 12 months of a prior foster care episode: standard - no more than 8.6 percent; - of children in foster care less than 12 months, the percent who had no more than two placement settings: standard - no less than 86.7 percent; - of foster children who were reunified with their parents, the percent who were reunified in less than 12 months: standard - no less than 76.2 percent; - of foster children who were adopted, the percent who left foster care in less than 24 months: standard - no less than 32 percent. Sources of information to determine whether a State is in substantial conformity with Federal law include at a minimum: specific case records on children and families served by the agency; interviews with the children and families; interviews with caseworkers, foster parents, and service providers for the cases selected for review; and interviews with "key stakeholders," including individuals involved in developing the State's child and family services plan, courts, administrative review bodies, guardians ad litem, and other individuals or organizations with responsibility for representing the best interests of children. The onsite review examines a sample of cases (drawn randomly from AFCARS and NCANDS data) that may range in size from 30 to 50. The sample size may be increased to ensure that all program areas (i.e., children in foster care, children and families receiving in-home services) are adequately represented. If discrepancies appear between the statewide assessment and the findings of the onsite review, the State may submit additional data or the State and HHS may jointly review additional cases, up to a specified maximum. A State is considered in substantial conformity with regard to the three child and family outcomes (and seven associated criteria), if its performance meets the appropriate national standard; and if each of the outcomes is "substantially achieved" in 95 percent of cases examined during an onsite review (90 percent for an initial review). The compliance level for each of the cases, including the extent to which relevant statutory and regulatory requirements or assurances were met, is determined through a review of the written records and interviews with the involved children and families, case managers and any major service providers. A State is determined in substantial conformity with the seven systemic factors if the Statewide Assessment, and subsequent on-site review interviews with stakeholders, indicate the required service capacity is in place and that no more than one of the specified statutory or regulatory requirements associated with each of those seven factors fails to function. (Table 11-18 lists each of the factors with its associated requirements.) If a State is found not to be in substantial conformity with any of the outcome or systemic factors, the HHS regulations require development and implementation of a corrective action plan before financial penalties may be assessed. The plan must be approved by HHS. States subject to a mandatory program improvement plan must report quarterly to HHS on their progress, and have a specified time in which to complete the plan, based on the seriousness and complexity of the remedies required to correct program deficiencies. In general, the maximum time allowed to complete the program improvement plan is 2 years, although HHS may grant 1-year extensions in rare circumstances. Priority goes to correcting deficiencies that affect child safety, which must be addressed in less than 2 years. For States that are not in substantial conformity, HHS must determine the amount of Federal funds to be withheld from that State as a penalty. HHS will not actually withhold these funds while an approved program improvement plan is in effect, if the State is actively implementing the plan. HHS can suspend the withholding of funds for no longer than 3 years, or the amount of time allowed for completing the improvement plan, whichever is shorter. Ultimately, funds are withheld for those States that fail to complete their plan by the specified date, or for States that fail to submit quarterly progress reports, or if reports indicate that the State is not making satisfactory progress toward achieving the steps outlined in the plan. The amount of Federal funds to be withheld from a particular State can vary, depending on the extent of the State's nonconformity. Penalties are calculated as a percentage of the following pool of funds: the State's allotment of title IV-B funds (both subparts 1 and 2) for the year(s) to which the withholding applies; and 10 percent of the State's Federal reimbursement claims for administrative costs related to foster care under title IV-E, for the years to which the withholding applies. In the case of a first finding of substantial nonconformity, the amount to be withheld equals 1 percent of the pooled amount described above, for each of the seven criteria associated with child and family outcomes and for each of the seven systemic factors subject to review. For example, if a State does not substantially achieve two of the seven child and family outcome indicators, then 2 percent of the pooled amount of funds it would otherwise receive would be withheld. Likewise, if a State is not in substantial conformity with one of the systemic factors, then 1 percent of the pooled amount would be withheld. The maximum penalty is 14 percent of the pooled amount (i.e., 1 percent for each of the 14 factors). If a State completes a program improvement plan but is found to be in substantial nonconformity during a second full review, the amount of pooled funds to be withheld increases to 2 percent for each of the child and family outcomes or systemic factors that are not achieved, for a maximum penalty of 28 percent. In the case of a third finding of nonconformity, after completion of a program improvement plan, the penalty increases to 3 percent for each factor, for a maximum of 42 percent. If a State refuses to develop a program improvement plan altogether, it is subject to the maximum 42 percent withholding. Once funds are withheld from a State, the withholding continues until a subsequent full review finds the State in substantial conformity or until the State successfully completes a program improvement plan developed as a result of the subsequent review. All States are required to complete an initial full review under the regulation within the 4-year period that began March 27, 2000. Those States that are found to be in substantial conformity must complete a subsequent full review every 5 years, and submit a completed statewide assessment 3 years after their last onsite review. This assessment must be reviewed by the State and HHS to determine the State's continuing substantial conformity, but is not subject to formal HHS approval. If an initial or subsequent full review finds that a State is not in substantial conformity, the State must develop and implement a program improvement plan and must begin a subsequent full review 2 years after the plan is approved. If HHS has any information suggesting that a State is no longer operating in substantial conformity, it may conduct an inquiry and request data from the State and may, depending on the outcome of the inquiry, require a full or partial review at any time, regardless of when the State was last reviewed. Moreover, if HHS learns that a State is not complying with a title IV-B or IV-E requirement that is outside the scope of the child and family services review, it may conduct an inquiry and institute a partial review at any time, which could result in a mandatory program improvement plan and potentially a financial penalty. Final determinations of substantial nonconformity, and withholding or reduction of funds, may be appealed to the HHS Departmental Appeals Board within 60 days of the State receiving notice of the nonconformity. States may seek judicial review of an adverse decision by the Board in Federal district court. Child and family services reviews: the results Reviews were conducted in 32 States (including the District of Columbia) during fiscal years 2001 and 2002, with 13 scheduled for fiscal year 2003 (including Puerto Rico) and the final seven scheduled for fiscal year 2004. A HHS summary of the first 32 States indicates that State performance has been strongest on safety-related outcomes and has needed the most improvement in the outcomes related to permanency and well-being. On systemic factors, State performance has been the weakest in areas related to the case review system. No State so far has been found in substantial conformity on all outcomes and factors; therefore, most States are in some stage of developing or implementing a program improvement plan. HHS has posted on its web site the final reports of most States that have completed a child and family services review. Tables 11-16 through 11-18 summarize the results of the 32 child and family service reviews (CFSRs) conducted in fiscal years 2001 and 2002. Table 11-16 shows the number of States that were or were not in substantial conformity on the safety, permanency, and well-being outcomes and the number of States that showed a particular indicator as a strength or an area needing improvement. Table 11-17 shows the number of States that met the national numerical standards established for the safety and permanency outcomes (see discussion above for explanation of standards), and Table 11-18 shows the number of States that were in substantial conformity on the seven systemic factors and the associated required elements. TABLE 11-16 -- SUMMARY OF FY2001 AND FY2002 CHILD AND FAMILY SERVICES REVIEW FINDINGS ON SAFETY, PERMANENCY, AND WELL-BEING OUTCOMES [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-17 -- SUMMARY OF FY2001 AND FY2002 CHILD AND FAMILY SERVICES REVIEW FINDINGS ON NATIONAL STANDARDS FOR SAFETY AND PERMANENCY OUTCOMES [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Title IV-E eligibility reviews Like the child and family services reviews, title IV-E eligibility reviews are conducted by a Federal-State team and include an onsite review. From AFCARS data, HHS officials select a random sample of 80 cases, plus a 10 percent "oversample" of 8 additional cases, from the pool of children eligible for federally funded foster care maintenance payments. Cases from the oversample are used to replace any cases in the basic sample that are found to be invalid for some reason. The State submits to HHS the complete payment history for all cases in the sample and the oversample prior to the onsite review. The Federal-State team reviews the sample to determine whether any cases are ineligible under title IV-E. In an initial review, a State is considered in substantial compliance with the law if no more than 8 cases (from the sample of 80) are determined to be ineligible. In a subsequent review, a State is considered in substantial compliance if no more than 4 cases (again, from a sample of 80) are found ineligible. If a State is found in substantial compliance, it is not subject to another review for 3 years. If a State is not found in substantial compliance, it must develop a program improvement plan followed by a secondary review. The program improvement plan must be developed by the joint Federal-State team, identify weaknesses to be corrected and steps to correct them, and specify a timetable for achieving these steps. However, in contrast to the child and family services review, the program improvement plan for a title IV-E eligibility review can last no longer than 1 year, unless enactment of State legislation is required, in which case an extension of one legislative session may be granted. In the secondary review, HHS draws a sample of 150 cases (plus a 10 percent oversample) from AFCARS data, for review by the joint Federal-State team. The team calculates for the sample both an ineligibility error rate and a dollar error rate. If neither of these error rates, or only one, is more than 10 percent, a disallowance is assessed for the ineligible cases in the sample. If both error rates exceed 10 percent, an extrapolated disallowance is assessed based on the State's entire foster care population. The following title IV-E State plan requirements and regulations, which relate to the eligibility of children and foster care providers, are subject to review: 1. For each child, there must be judicial finding that "reasonable efforts" were made by the State to prevent removal of the child and to finalize a permanency plan, and that remaining in the biological home would be "contrary to the welfare" of the child; 2. If a child was placed through a voluntary placement agreement, the agreement must meet specified criteria; 3. The State agency must have responsibility for the child's placement and care; 4. The child must be placed in a licensed foster family home or child care institution; and 5. The child must meet Aid to Families with Dependent Children (AFDC) requirements, as in effect on July 16, 1996. Compliance with State plan requirements regarding licensing authorities and criminal background checks are also reviewed. INTERETHNIC AND INTERJURISDICTIONAL ADOPTION PROVISIONS States are separately subject to penalties if they violate certain provisions of law that were enacted to eliminate barriers to adoption. Specifically, States may not discriminate in adoption or foster care placements on the basis of race, color or national origin, and also may not deny or delay a child's adoptive placement when an approved family is available outside of the jurisdiction that has responsibility for handling the child's case. The law establishes specific penalties for violations of these provisions. Interethnic provisions Regarding discrimination on the basis of race or ethnicity, Congress initially enacted the Multiethnic Placement Act (MEPA) in 1994 (Public Law 103-382), which prohibited any agency or entity that received Federal assistance from discriminating on the basis of the child's or the potential adoptive or foster parents' race, color, or national origin. However, as enacted in 1994, MEPA originally allowed agencies to consider the child's cultural, ethnic, or racial background, and the capacity of the prospective parents to meet the child's needs, as one of the factors used to determine the child's best interest. The 1994 legislation also provided a right of action in U.S. district court for individuals who were aggrieved by a MEPA violation and deemed noncompliance with MEPA to be a violation of title VI of the Civil Rights Act. In addition, the 1994 law amended title IV-B of the Social Security Act to add, as a State plan requirement, that States must provide for the diligent recruitment of potential foster and adoptive families that reflect the ethnic and racial diversity of children who need homes. In 1996 Congress revised the interethnic discrimination provisions as part of the Small Business Job Protection Act (Public Law 104-188). The 1996 law repealed the prior MEPA provision that allowed consideration of a child's cultural, ethnic, or racial background in making placement decisions. Further, the law amended title IV-E of the Social Security Act to provide that neither the State nor any other entity that receives Federal funds may discriminate in adoption or foster care placements on the basis of race, color or national origin. The law specified a penalty for violations of this State plan requirement equal to 2 percent of Federal title IV-E funds for a first violation, 3 percent for a second violation, and 5 percent for a third or subsequent violation. Private agencies that violate the interethnic provisions are required to pay back any Federal funds received. Under the current law, private individuals may continue to seek relief in U.S. district court. However, Public Law 104-188 provides that no action may be brought more than 2 years after the alleged violation occurs. None of these interethnic provisions affect the application of the Indian Child Welfare Act. The final child welfare review regulations, published by HHS on January 25, 2000, did not establish a specific monitoring system for the antidiscrimination provisions of MEPA, as amended by the 1996 law. However, the regulations established a procedure for responding to reports of violations of these provisions, and for enforcing the law in cases where violations are found to have occurred. (In March 2003, HHS issued an information memorandum, "to reiterate support" for these antidiscrimination provisions and to note that penalties may be imposed in cases of violation.) Specifically, whenever HHS becomes aware of a possible violation, either through a child and family services review or filing of a complaint or any other mechanism, it refers the case to the Department's Office for Civil Rights (OCR) for investigation. If, on the basis of OCR's investigation, a violation actually has occurred, enforcement action will be taken, based on the nature of the violation. If OCR (or a court) finds that a State has discriminated against an individual, on the basis of race, color, or national origin in the course of a foster or adoptive placement, a penalty is assessed for the quarter in which the State is notified of the violation. The penalty equals 2 percent of the State's total title IV-E funds for the quarter in the case of a first violation in a given fiscal year, and continues for subsequent quarters in that fiscal year until the State ompletes a corrective action plan or comes into compliance. In the case of a second violation in the same fiscal year, the penalty equals 3 percent, and 5 percent for a third or subsequent violation in a given fiscal year. Violations that remain uncorrected at the end of the fiscal year may be subject to another review and additional penalties. If a MEPA violation results from a State's statute, regulation, policy, procedure, or practice, and no individual is directly affected, the State has 30 days to develop and submit a corrective action plan for HHS approval. If the State hasn't completed the plan and come into compliance within 6 months of HHS approving the plan, penalties are assessed. Findings of MEPA violations and related financial penalties may be appealed to the HHS Departmental Appeals Board, and States may seek judicial review of an adverse decision by the Board in Federal district court. OCR has investigated alleged MEPA violations in a number of States and counties and these investigations usually have been resolved without fines through negotiation of corrective actions. In November 2003, however, HHS issued its first MEPA violation fines based on an OCR investigation in Hamilton County, Ohio. A $1.8 million fine was assessed against that county and the State of Ohio based on OCR findings that the county denied or delayed adoption in 16 individual transracial cases and that it systematically applied additional requirements for parents interested in transracial placements, as well as considered the racial make-up of the neighborhoods in which prospective parents interested in transracial adoption lived. OCR also found that the State of Ohio had violated the law when it issued certain administrative rules governing transracial adoption and foster care. Interjurisdictional provisions As amended in 1997 by the Adoption and Safe Families Act (Public Law 105-89), title IV-E provides that States may not deny or delay a child's placement for adoption if an approved family is available outside the jurisdiction responsible for the child's case. Further, States must provide an opportunity for a fair hearing to anyone whose allegation of a violation of this provision is denied by the State or not acted upon promptly. The law (as amended by Public Law 105-200) specifies that the same penalty structure applicable to violations of the interethnic provisions described above also applies to violations of this provision. HHS did not specifically address enforcement of this interjurisdictional provision in the January 25, 2000 child welfare monitoring regulations. However, the Department issued a program instruction on October 7, 2002 outlining the following procedures. If HHS becomes aware of a potential violation of the law's interjurisdictional provisions, it will conduct a partial review giving the State an opportunity to demonstrate compliance and allowing the State 6 months to complete a corrective action plan if a violation is found. If the State fails to come into compliance within 6 months, then penalties will be imposed as authorized in law. If an individual violation is found through the fair hearing process, HHS will impose a penalty after allowing the State an opportunity to exhaust legal remedies; however, there is no provision for a corrective action plan in this case. STATE PERFORMANCE REPORTS The Adoption and Safe Families Act (Public Law 105-89) required the Secretary of HHS, in consultation with Governors, State legislatures, State and local public officials, and child welfare advocates, to develop a set of outcome measures that could be used to assess State performance in operating programs under titles IV-B and IV-E. The law required that these outcome measures include length of stay in foster care, number of foster care placements, and number of adoptions. The law also required that HHS develop a system for rating State performance on these outcome measures and publish an annual report on each State's performance, examining the reasons for high and low performance and making recommendations for how State performance could be improved. As of October 2003, the outcome reports for 1998, 1999, and 2000 had been issued. HHS published preliminary outcomes and measures to be studied on February 2, 1999, and published a final list of child welfare outcomes and measures on August 20, 1999. Some of the outcomes and measures were revised for the 1999 outcome report (published in February 2002). See the notes for Table 11-19, which identifies the child welfare outcomes and measures, for further details on the changes. TABLE 11-19 -- CHILD WELFARE PERFORMANCE OUTCOMES AND RELATED MEASURES [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] FEDERAL WAIVERS OF TITLE IV-B AND IV-E PROVISIONS To provide States flexibility to design innovative child welfare programs, Congress enacted a provision in 1994 (Public Law 103-432) that authorized the Secretary of HHS to approve up to 10 demonstration projects requiring waivers of provisions under titles IV-B and IV-E. This authority was established by section 1130 of the Social Security Act and was subsequently amended by the Adoption and Safe Families Act (ASFA) in 1997. ASFA allowed HHS to approve an additional 10 demonstration projects in each of fiscal years 1998- 2002. The Secretary was authorized to waive any provision of either title IV-B or title IV-E if necessary to enable the State to carry out its demonstration project, with some exceptions, such as provisions that would compromise child safety. Demonstrations are limited to 5 years, although the Secretary may grant extensions of up to five years. They must include an evaluation component and be cost-neutral to the Federal Government. The authority to grant new waivers under this program had expired with fiscal year 2002 but in June 2003 was reauthorized through the end of fiscal year 2003 (P.L. 108-40) and in October 2003 through March 31,2004 (P.L. 108-89). As of December 2003 a total of 25 projects had been implemented in 17 States for waiver agreements that were approved between 1996 and 2001. All of the projects involve waivers of Title IV-E provisions. No new waivers have been approved since 2001. However, HHS issued an Information Memorandum in November 2003 calling for States to submit new proposals and it expects to approve new demonstration projects prior to the scheduled expiration of its waiver-granting authority in March 2004. States have broad discretion on the type of waiver projects they can propose and implement. To date States have undertaken projects in 8 categories: assisted guardianship/kinship permanence (7 States); capped IV-E allocations and flexibility to local agencies (4 States); services to substance- abusing caretakers (4 States); managed care payment systems (5 States); intensive service options (2 States); adoption services (1 State); tribal administration of IV-E funds (1 State); and enhanced training for child welfare staff (1 State). Table 11-20 summarizes the 25 waiver projects that are ongoing or have been completed/terminated. Of these, 8 (located in 6 States) have been completed or were terminated early by the State and as of December 2003 there were 17 ongoing demonstration projects located in 12 States. Nine of the ongoing projects (in 7 States) were operating on the basis of a short-term extension pending HHS review of their final evaluation reports and a decision on a full 5-year extension. As of December 2003, each of the 5 managed care projects had been completed (Michigan) or were ended by the State (Colorado, Connecticut, Washington, Maryland) and no State had requested an extension of these waivers. All 4 States (Indiana, North Carolina, Ohio, Oregon) that implemented capped IV-E allocation projects had also completed their initial demonstration projects but were continuing them after seeking waiver extensions. Five of the 7 States that implemented assisted guardianship/kinship permanence projects had completed the original demonstration and each sought an extension. As of December 2003, Delaware's guardianship project had been denied an extension; Illinois's guardianship project was extended for a full five years (effective January 1, 2004); guardianship projects in Maryland, North Carolina and Oregon were operating under short-term extensions of the waiver (and New Mexico and Montana continued their original projects). Four States implemented projects designed to test provision of services to substance abusing caretakers. As of December 2003, Delaware's request for an extension of its waiver for this project had been denied, Maryland had terminated its project in this area, and Illinois and New Hampshire continued implementation of these projects. Two States, California and Mississippi, implemented intensive services projects; as of December 2003, California had received approval to extend its project on a short term basis and Mississippi's project was ongoing. Maine implemented the sole adoption- related project and, as of December 2003, had been granted short-term approval to extend the project. Projects to test the tribal administration of Title IV-E funds (New Mexico) and for enhanced training for child welfare staff (Illinois) were also ongoing as of the end of 2003. TABLE 11-20--SUMMARY OF APPROVED STATE CHILD WELFARE WAIVER DEMONSTRATIONS CALIFORNIA [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] RECENT TRENDS AFFECTING CHILD WELFARE POPULATIONS AND PROGRAMS Certain social problems and trends are inextricably linked with the child welfare system and its clients, and data and information on these issues are sometimes used as indicators of the need for child protection and preventive services for families. Most children enter foster care as a result of child abuse or neglect; thus, data on the incidence and trends of maltreatment are of great interest to child welfare practitioners and policymakers. Likewise, substance abuse is cited as a factor in many of the cases coming to the attention of child welfare agencies, so that information on substance abuse among families with children and responses to the problem of substance abuse is also of interest. Kinship care also is a phenomenon that has had a significant impact on the child welfare system. In addition, as a major policy change affecting low-income families with children, the welfare reform law of 1996 has implications for both the child welfare system and its clients. These issues are described briefly below. CHILD ABUSE AND NEGLECT Child Abuse Prevention and Treatment Act Between 1963 and 1967, every State and the District of Columbia enacted some form of child abuse and neglect reporting law. The model reporting law disseminated by the U.S. Children's Bureau facilitated the States' rapid adoption of these laws; after 1974 reporting laws were modified to conform to the standards established by the Child Abuse Prevention and Treatment Act of 1974 (CAPTA). CAPTA provides formula grants to States to help support their child protective service systems ($22 million in fiscal year 2003), in exchange for which States must comply with various requirements related to the reporting, investigation, and treatment of child maltreatment cases. The law also authorizes Federal discretionary research and demonstration projects ($34 million in fiscal year 2003), grants to States for community-based family resource and support services ($33 million in fiscal year 2003), and grants to States to improve investigation and prosecution of child maltreatment cases (funded through a $20 million set-aside of the victims of crime fund). CAPTA requires States to have procedures for reporting known or suspected cases of child abuse or neglect, for investigating such reports, and for taking immediate steps to protect children who might be in danger. The law requires States to provide immunity from prosecution for individuals who make good faith reports of suspected abuse or neglect, and to provide confidentiality of records. States also must have procedures for public disclosure of information about cases of abuse or neglect which result in a child's death or near- death. State CAPTA plans must provide for cooperation with law enforcement officials, courts, and human service agencies, and for the expungement of records in cases that are false or unsubstantiated. Further, States must appoint a guardian ad litem, who may be an attorney or court-appointed special advocate, to represent children in judicial proceedings. The 1996 reauthorization of CAPTA (Public Law 104-235) required States to establish citizen review panels, composed of volunteer community representatives, to evaluate State and local child protection activities. In addition, the law required States to have procedures for expedited termination of parental rights (TPR) in any case of an abandoned infant, and to have procedures for individuals to appeal an official finding of abuse or neglect. States are required to provide that efforts toward family reunification are not mandatory for a surviving child with a parent who committed or aided in the murder or voluntary manslaughter of another of their children, or who committed a felony assault that resulted in serious bodily injury to any of their children. States are required to provide that conviction of any of these felonies will constitute grounds for TPR. CAPTA also requires States to have procedures for responding to cases of medical neglect. CAPTA was most recently amended and reauthorized in 2003 (Public Law 108-36) and the new law added a number of State requirements. Specifically, in requesting basic CAPTA grants, States must assure that they will: require that health care providers involved in delivery of an infant who was prenatally exposed to an illegal drug and is affected by this substance abuse report the child's birth to child protective services and require that a "safe plan of care" for this newborn be developed; have triage procedures for the appropriate referral of children who are not at risk of imminent harm to a community organization or voluntary preventive service; disclose confidential information to Federal, State, and local government entities (or their agents) if the information is needed to carry out their lawful duties to protect children; have provisions to ensure that alleged child maltreatment perpetrators promptly are informed of the allegations made against them; develop (within 2 years of the law's enactment) provisions for criminal background checks of all adults in prospective adoptive and foster care homes; have provisions for improving the training, retention, and supervision of caseworkers; have provisions to address training of child protective service workers on their legal duties in order to protect the legal rights and safety of children and families; and develop procedures for referral of child maltreatment victims under 3 years of age to the statewide early intervention program (for developmental assessment and services) operated under Part C of the Individuals with Disabilities Education Act (IDEA). Child abuse and neglect statistics The 1996 CAPTA amendments required States (to the "maximum extent practicable") to submit annual aggregate data to HHS on child maltreatment for inclusion in the National Child Abuse and Neglect Data System (NCANDS). States with the capacity to do so may also submit case-level data. NCANDS was established by the 1988 amendments to CAPTA and has published annual reports each year beginning with 1990, although prior to the 1996 amendments States participated in NCANDS on a voluntary basis. Other sources of national data on child maltreatment have included the American Association for Protecting Children (of the American Humane Association), which collected information from 1976 to 1987, and Prevent Child Abuse America (formerly called the National Committee to Prevent Child Abuse), which has been conducting an annual survey of States since 1986. Finally, HHS has periodically funded the National Incidence Study of Child Abuse and Neglect (NIS), which collects data on children who have been investigated by child protection agencies, but also includes information from community professionals on children who were either not reported to child welfare agencies or whose cases were not investigated. The NIS has been conducted three times, in 1980, 1986, and 1993. The most recent CAPTA amendments (Public Law 108-36) require that HHS conduct a fourth NIS. The latest data available from NCANDS are for 2001, and include aggregate data from all States and the District of Columbia and case-level data from 39 States. Data for 2001 show that 2.7 million reports of possible maltreatment were made to child welfare agencies in that year (U.S. Department, 2003). Almost two-thirds of these reports were investigated, and 903,000 children were estimated to have been victims of abuse or neglect, for an incidence rate of 12.4 per 1,000 children. These numbers mark a continuation of a downward trend that began in 1993, when more than 1 million children were substantiated as victims, for an incidence rate of 15.3 per 1,000 children. Table 11-21 shows NCANDS data on the incidence of children alleged to have been victims, and substantiated or indicated victimization, by State, in 1998 and 2001, and the percent change between those years. Chart 11-1 illustrates nationwide changes in the incidence of substantiated or indicated maltreatment between 1990, when NCANDS began, and 2001, and also shows trends in the incidence of physical abuse and neglect between 1996 and 2001. TABLE 11-21--INCIDENCE OF CHILD MALTREATMENT ALLEGATIONS AND VICTIMIZATION, BY STATE, 1998-2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] The long-term trend in child abuse reporting has been one of substantial growth, with the number of maltreatment reports more than quadrupling since 1976. However, increased reporting does not necessarily mean an equivalent increase in actual abuse or neglect. It is generally agreed that some part of the dramatic growth in reporting over the last two to three decades is due to greater public awareness and recognition of child abuse and neglect, especially since the 1960s and 1970s when States enacted mandatory reporting laws. Moreover, not all reports are substantiated, and the percentage of substantiated reports has declined over time. According to NCANDS data, 27.5 percent of investigations in 2001 resulted in a substantiated case of child maltreatment, and another 4.4 percent found that maltreatment was "indicated." Looking at data from earlier sources, 65 percent of child abuse or neglect reports were substantiated in 1976. However, researchers and professionals also agree that not all children who are victims of abuse or neglect are reported to child welfare agencies. According to the most recent NIS survey, more than 1.5 million children were victims of abuse or neglect in 1993 under the "harm" standard (i.e., children who have suffered demonstrable harm by objective measures), for a 67 percent increase from 1986, and a 149 percent increase from 1980 (Sedlak & Broadhurst, 1996). The NIS also found that 2.8 million children could be counted in 1993 under the "endangerment" standard (a more subjective measure, including children who were not actually harmed but who might be considered at risk), which was almost double the number counted in 1986. The endangerment standard was not used in the 1980 NIS. CHART 11-1 -- INCIDENCE OF CHILD MALTREATMENT, 1990-2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Of child victims in 2001, more than 59 percent experienced neglect (including medical neglect), while almost 19 percent were physically abused. Almost 10 percent were sexual abuse victims and almost 7 percent had been psychologically abused. Other forms of maltreatment were found for 19.5 percent of child victims in 2001, with some children falling into more than one of these categories. According to NCANDS data, the number of children who died in 2001 as a result of substantiated abuse or neglect was about 1,300, for an incidence rate of 1.8 child abuse-related deaths per 100,000 children in the general population. These deaths included 18 that occurred in foster care. SUBSTANCE ABUSE Substance abuse has been a major challenge facing the child welfare system, especially in the last 15-20 years. It is widely believed that the dramatic increase in foster care placements in the mid to late 1980s resulted, at least in part, from the introduction of crack cocaine. Children born drug exposed often enter substitute care shortly after birth, either because of their own medical problems or because of abuse or neglect by their parents. However, children exposed prenatally to drugs or alcohol are a small portion of the children affected by parental substance abuse. The abuse of alcohol, marijuana, cocaine, heroin, and hallucinogens, as well as the non- medical use of prescription pain relievers, tranquilizers, stimulants, and sedatives by adults affects the welfare of children in a variety of ways. Substance abuse can impair the priorities and judgment of a caretaker, leading to decreased supervision, assistance, and provision, and a high risk of child maltreatment. Children of all ages typically enter foster care because of abuse or neglect, and substance abuse is a factor in many of these cases. According to the most recent annual National Household Survey on Drug Use and Health (NHSDUH, formerly called the National Household Survey on Drug Abuse, published by the Substance Abuse and Mental Health Services Administration), 19.5 million people or 8.3 percent of the U.S. population over age 12 engaged in illicit drug use in 2002 (SAMHSA, 2003). The most commonly used illicit drug was marijuana (6.2 percent of the population), while slightly less than 1 percent of the population were current cocaine users. About 2.6 percent of the over-age-12 population used psychotherapeutic drugs for nonmedical reasons. Among pregnant women aged 15 to 44, 3.3 percent had used illicit drugs in the month prior to being interviewed for the NHSDUH, compared with 10.3 percent of nonpregnant women in the same age group. More than half (51 percent) of Americans, or 120 million individuals over the age of 12, reported current use of alcohol, with 6.7 percent identifying themselves as heavy drinkers. An estimated 8.3 million children live with substance-abusing or substance-dependent parents, according to a congressionally mandated HHS study (U.S. Department, 1999a). African-American parents have higher rates of illegal drug abuse than white parents, especially for cocaine, and substance abusing parents in general have less education, are less likely to be working full time, are less likely to be married, and more likely to be receiving welfare than other parents. Of all forms of parental substance abuse, alcohol abuse is the most prevalent. Although relatively few of the children in substance abusing families ever come into contact with the child welfare system, substance abuse is a major factor in the child welfare caseload. For children with substantiated reports of abuse or neglect, HHS found that substance abuse is a factor in between one- third and two-thirds of cases, and is a factor in two-thirds of the cases of children in foster care. While mothers and fathers are equally represented in substance abusing households with children, mothers more typically come to the attention of the child welfare system. The National Center on Addiction and Substance Abuse estimates that substance abuse and addiction account for some $10 billion in Federal, State, and local government spending, or 70 percent of the $14.4 billion in total child welfare spending in 1995 (National Center, 1999). The National Center further estimates that hospital costs for newborns whose mothers abused illegal drugs amount to $360 million annually, and that yearly health care costs and related services for children and surviving adults who suffer from Fetal Alcohol Syndrome are $2 billion. In a report mandated by Congress and released in 1999, HHS identified various barriers to meeting the needs of child welfare clients with substance abuse problems, including the different perspectives and philosophies of the substance abuse treatment and child welfare fields. For example, differences exist with regard to the definition of "client," the establishment of reasonable expectations for outcomes and timetables, and responses to setbacks in treatment. Additional barriers cited by HHS include certain Federal and State laws, the crisis environment affecting many child welfare agencies, shortages of substance abuse treatment facilities, the particular shortage of services appropriate for women with children, and confidentiality requirements. HHS identified certain key features as important components of a comprehensive approach to addressing joint substance abuse and child maltreatment problems, including preventative services for children, training for caseworkers, enhanced risk assessment and referral capacity, increased access to substance abuse treatment, client retention, recognition of the importance of permanency for children, and support for ongoing recovery. KINSHIP CARE The number of children living with relatives who are not their parents has increased in recent years, especially among minority populations. According to the Urban Institute's most recent National Survey of America's Families, 2.3 million children lived with relatives - apart from their parents - in three different types of arrangements in 2002: 76 percent in "private" kinship care, where the family made the arrangement with no involvement by a social services agency or court; 6 percent in "voluntary" kinship care, where a social services agency helped place the child with relatives but the court was not involved; and 17 percent in kinship "foster" care, where the child was formally placed with relatives by a social services agency with approval of the court (Urban, 2003). However, of the more than half million children identified in this survey as having been placed in kinship care with the involvement of social service agencies (including more than 405,000 with court involvement), it appears most do not enter State-supervised foster care. On the last day of fiscal year 2001, an estimated 131,000 children lived in State-supervised kinship fostercare (Ehrle, Geen and Main). Grandparents were the caregivers for more than half of kinship children (59 percent), and more than half of the children were minorities (43 percent African- American and 17 percent Hispanic). Slightly more than half (52 percent) of the children were age 11 or older, and almost half (46 percent) lived in the South. Kinship children often lived with families with modest means (52 percent had incomes below 200 percent of the Federal poverty level), with a single caregiver (54 percent), and with caregivers over age 50 (52 percent). Almost a quarter of kinship children lived with caregivers who lacked a high school degree. The Census Bureau also recently released data on grandparents living with their grandchildren, obtained from questions added to the 2000 Census in response to a congressional directive in the 1996 welfare reform law (Public Law 104-193) (U.S. Census, 2003). Census found 5.8 million "coresident" grandparents (i.e., grandparents living with their minor grandchildren), of which 2.4 million were "grandparent caregivers" or people with primary responsibility for their grandchildren. Of these grandparent caregivers, 39 percent had been caring for their grandchildren for five or more years. Among black grandparents living with their grandchildren, 52 percent were the primary caregiver, while 42 percent of white coresident grandparents were their grandchildren's primary caregiver. Hispanic coresident grandparents (of any race) were least likely to be primary caregivers (35 percent). Younger grandparents (under age 60) were more likely to be primary caregivers than those age 60 or more; half of coresident grandparents under age 60 were primary caregivers, compared with 31 percent of those age 60 or older. The majority of coresident grandparents (64 percent) were women, and 19 percent of grandparent caregivers were poor. Looking specifically at kinship foster care, the Urban Institute surveyed foster care administrators in 1999 to obtain information on State policies and found considerable variation among States (Urban, 2000). Almost all States gave preference to relatives over nonrelative foster care providers, and actively sought out relatives as preferred placements. However, States defined "kin" differently, with 23 States and the District of Columbia limiting the definition to those related by blood, marriage or adoption, while 21 States have more expansive definitions and six States have no formal definition. Licensing policy also varied among States, particularly with regard to the stringency of requirements applied to relative caregivers. According to a 2001 survey conducted by the Urban Institute, 15 States required kinship caregivers to meet the same licensing standards as nonrelative foster parents, 23 States waived certain licensing standards (typically training) for kinship caregivers, and 20 States (including 7 of those that waive standards) have a separate licensing process for relative caregivers that is less stringent than the process for non-relatives (Urban, 2002). All States provide full foster care payments to relatives who are licensed under the same standards that apply to non-relative foster care providers. However, most States do not provide a full foster care payment to relatives who meet less stringent criteria that are developed specifically for kinship caregivers. In some cases, these families may be eligible for Temporary Assistance for Needy Families (TANF) benefits. The U.S. General Accounting Office (GAO) reported in 1999 on quality and permanency issues raised by kinship care. Looking at open foster care cases in California and Illinois, as of September 1997, GAO found the quality of kinship care and other foster care was good and the experiences of children in both types of settings were comparable. GAO's review confirmed the generally held view that children in kinship care have more stability than children in other forms of foster care, but also found that caseworkers had somewhat less confidence that kinship care givers would enforce court-ordered restrictions on parental visits with their children. In addition, the two States held kinship caregivers to somewhat lower standards than other foster parents and provided a lower level of support to these families as well. Kinship care children in California spent about the same length of time in foster care as other foster children, while kinship care children in Illinois spent significantly less time in the system, according to GAO. More recently, HHS released a report to Congress on kinship care in response to a mandate in the 1997 Adoption and Safe Families Act (U.S. Department, 2000b). The report included a research review, and also identified the following principles to guide policy discussions on kinship care: the child welfare system should continue to focus on safety, permanency, and well-being of children; kinship placement decisions should be based on the best interests of the child; the child welfare system should not supplant family efforts or income assistance programs; and relatives should be viewed as potential resources but should be assessed on a case-by-case basis. WELFARE REFORM Congress enacted landmark welfare reform legislation in 1996, the Personal Responsibility and Work Opportunity Reconciliation Act (Public Law 104-193), which has been of great interest to child welfare practitioners, researchers, and policymakers because of its potential implications for the child welfare system and its clients. The 1996 law replaced the 61-year-old program of Aid to Families with Dependent Children (AFDC) with a State-administered block grant of Temporary Assistance for Needy Families (TANF). Receipt of public assistance now is time limited and conditioned on participation in work activities (see section 7). The 1996 legislation had an immediate programmatic impact on child welfare agencies because of the legal connection between AFDC eligibility and title IV-E foster care and adoption assistance. As explained earlier, the law now limits title IV-E funding to those children who would have been eligible for the former AFDC Program as it existed on July 16, 1996. Thus, States must maintain these eligibility criteria, even though AFDC has been repealed, for use in determining title IV-E (and Medicaid) eligibility. Some analysts have observed that over time, these eligibility criteria could erode in value and the number of foster and adoptive children for whom States can claim Federal reimbursement may decrease. The financing of welfare reform also has potential implications for child welfare. The law replaced an open-ended entitlement program with a capped block grant, while allowing foster care and adoption assistance under title IV-E to remain uncapped. There is overlap between the populations served by TANF and title IV- E, raising the possibility that States might have an incentive to shift expenditures from TANF to the open-ended title IV-E program, particularly for kinship care families who might be able to meet Federal title IV-E eligibility criteria. Despite such apparent incentives, a third of children receiving TANF benefits in fiscal year 2001 were "child-only" cases (see section 7), which means the adult in the household was not part of the assistance unit. In about two-thirds of these cases, the adult was a parent who was not eligible for TANF benefits because of immigration status or another reason, but slightly more than 30 percent of these children were living with grandparents or other relatives without their parents present in the household. Both welfare and child welfare analysts are particularly interested in the dynamics of this population and the extent to which these children and families resemble those in formal kinship foster care arrangements. Beyond these issues, child welfare professionals are closely watching the implementation of welfare reform to determine its impact on the well-being of children and families, especially as measured through changes in the incidence of child maltreatment or entry into foster care. Although relatively few welfare families ever come into contact with the child welfare system, a disproportionately large share of child welfare clients receive or have received cash assistance. Thus, changes in welfare programs that affect a small percentage of clients may have a significant impact on the size of the child welfare population and the workload of the child welfare system. HHS reported on the interaction between welfare assistance (specifically, receipt of AFDC), Medicaid, and foster care prior to enactment of welfare reform (U.S. Department, 2000a). Using administrative data from California, Illinois, and North Carolina in 1995-96, HHS found that less than 3 percent of children who entered AFDC during the study period were subsequently placed in foster care. However, about 60 percent of the foster care entries in the three States during the study period were from AFDC families. Numerous evaluations have been conducted or are underway on the impact of welfare reform on various outcomes, including the transition of welfare recipients to work, the family formation patterns of welfare recipients, the economic status of families receiving or formerly receiving welfare, and the behavior and well- being of children and adolescents (see appendix L). Some research also has attempted to identify the impact of various welfare policies on specific child welfare outcomes. For example, a comparative analysis of State-level data from 1990-1998 suggests that certain welfare policies, including benefit size and work requirements, may affect child maltreatment rates and/or out- of-home placement rates for children (Paxson and Waldfogel, 2001). This study's researchers reported that more generous welfare benefits are associated with significantly lower levels of neglect and smaller numbers of children in out-of-home care. (Or conversely, reduced benefits are associated with higher levels of neglect and larger numbers of out-of-home placements.) These researchers also reported that family cap policies, which typically mean that a family's benefit is not increased for an infant born 10 months or more after the family begins to receive cash aid, are associated with lower numbers of substantiated cases of maltreatment but increased numbers of out-of-home placements. An experimental study in Delaware suggests a connection between strong work requirements and increased levels of child neglect (Fein and Lee, 2000). The Abt Associates evaluation of Delaware's pre-TANF waiver program found higher rates of neglect (after three years) among families that were subject to strong work requirements and time-limited benefits (as compared to those subject to the old cash aid program). However, researchers who used administrative data to study the effect of welfare reform on the incidence of child maltreatment among Illinois children entering AFDC/TANF found a decline in reported child maltreatment after enactment of Federal welfare reform (Goerge and Lee, 2000). For children who received cash benefits in the years 1994-1996 (during which Illinois instituted a Work Pays program to encourage employment among adult welfare recipients), the incidence of reported child maltreatment one year after first receiving cash benefits remained stable. But for children who first received cash aid in 1997 - after Federal welfare reform was enacted - there was a 10 percent decrease in substantiated maltreatment cases. A study comparing Utah families who left TANF because of sanctions to those who left for other reasons found the sanctioned families were no more likely than non-sanctioned families to have a child welfare case opened at some time within three years after their cash aid ended (Derr & Cooley, 2002). Both groups had relatively high involvement with the child welfare system, however, and among families with child welfare involvement, those that had been sanctioned were much more likely to have been found without adequate resources to support their families and to have an open child welfare case at the end of the three years. NATIONAL FOSTER CARE AND ADOPTION INFORMATION DATA COLLECTION SYSTEMS Historically, there has been a lack of reliable data on foster care and adoption. In fact, not every State even reported its average monthly foster care caseload under the federally assisted program until 1975. Moreover, before 1980 States were not required to collect data on nonfederally-assisted foster care, which in a typical State constitutes about half the cases in foster care. This lack of data was one of several concerns that Congress hoped to address with enactment of the Adoption Assistance and Child Welfare Act of 1980 (Public Law 96-272). The 1980 law imposed several requirements on States as a condition for incentive funds under the Title IV-B Child Welfare Services Program, including a one-time inventory of children in foster care and a statewide information system for tracking children in foster care. HHS issued a policy information question (ACYF- PIQ-82-06) which restated the law's requirement that States have an information system, but did not specify the system's content. Final regulations were never issued. Starting in 1982, HHS funded the American Public Human Services Association (APHSA, formerly the American Public Welfare Association) to conduct a voluntary annual survey of States, known as the Voluntary Cooperative Information System (VCIS). Until the mid- 1990s, VCIS was the only source of national data on the number and characteristics of children in foster and adoptive care. However, the VCIS was of limited use for several reasons: (1) not all States participated fully in the survey; (2) reporting periods were not consistent among States; (3) there was a serious time lag between data collection and publication; and (4) data were available only in an aggregated, State-specific format, preventing the type of analysis that could be conducted with case-specific data. In response to the need for better data collection, Congress in 1986 approved an amendment to title IV-E (section 479) requiring that an advisory committee be established and submit a report to Congress and HHS with recommendations for establishing, administering, and financing a system for collecting data on adoption and foster care. The advisory committee submitted its final report in 1987, and in May 1989, HHS submitted an implementation plan to Congress. On September 27, 1990, HHS proposed regulations to implement the data collection system known as the Adoption and Foster Care Analysis and Reporting System (AFCARS). The population to be covered was children under the responsibility of the State child welfare agency and financing was to come from the title IV-E administrative cost match. States were to claim only that portion of their costs that related to children eligible for title IV-E, although the system would have required States to collect data on non-IV-E children as well. In 1993, as part of the Omnibus Budget Reconciliation Act (Public Law 103-66), Congress authorized an enhanced Federal matching rate to States for certain costs related to data collection for fiscal years 1994-96. Welfare reform legislation enacted in 1996 (Public Law 104-193) extended this enhanced match through fiscal year 1997. The statute specified that this enhanced match of 75 percent was available for costs of planning, design, development and installation of statewide mechanized data collection and information retrieval systems, including costs of hardware, as long as the systems did the following: complied with HHS regulations; to the extent practicable, interfaced with State child abuse and neglect data collection systems and with AFDC (now TANF) data collection systems; and provided more efficient, economical, and effective administration of State child welfare programs, as determined by HHS. The law also provided that ongoing operational costs of State data collection and information retrieval systems would be matched at the 50 percent Federal rate available for administrative expenses under title IV-E. Further, the amendment specified that States may claim reimbursement for data collection systems without regard to whether they are used for foster and adoptive children who are not eligible for title IV-E assistance. On December 22, 1993, HHS published: (1) interim final rules for Statewide Automated Child Welfare Information Systems (SACWIS), issued in response to enactment of Public Law 103-66; and (2) final rules implementing AFCARS. Under the interim final rules for SACWIS, States were required to develop "comprehensive"' child welfare data collection systems, of which AFCARS must be a component, in order to qualify for Federal funding, including the 75 percent enhanced match. According to HHS, "comprehensive" means that a State SACWIS system must include child welfare services, foster care and adoption assistance, family preservation and support services, and independent living. State SACWIS systems must do the following, at a minimum: 1. Meet the AFCARS data collection and reporting requirements; 2. Provide for intrastate electronic data exchange with data collection systems operated under TANF, Medicaid, child support enforcement, and the National Child Abuse and Neglect Data System (NCANDS) (unless not practicable for certain reasons); 3. Provide for automated data collection on all children in foster care under the responsibility of the State child welfare agency to support implementation of statutory child protections and requirements; 4. Collect and manage information necessary to facilitate delivery of child welfare services, family preservation and family support services, family reunification services, and permanent placement; 5. Collect and manage information necessary to determine eligibility for the Foster Care, Adoption Assistance, and independent living programs and to meet case management requirements for these programs; 6. Monitor case plan development, payment authorization and issuance, and review and management including eligibility determinations and redeterminations; and 7. Ensure confidentiality and security of information. In addition, optional SACWIS functions could include (if cost- beneficial) resource management, tracking and maintenance of legal and court information, administration and management of staff and workloads, licensing verification, risk analysis, and interfacing with other automated information systems. Under the final AFCARS rules, States are required to collect case-specific data on all children in foster care for whom the State child welfare agency has responsibility for placement, care, or supervision, regardless of their eligibility for title IV-E. Further, States are required to collect data on all adopted children who were placed by the State child welfare agency, and on all adopted children for whom the State provides adoption assistance (ongoing payments or for nonrecurring expenses), care, or services either directly or by contract with other private or public agencies. States must report data to HHS twice a year. Table 11-22 shows the status of State SACWIS projects as of November 2003. TRENDS IN FOSTER CARE CASELOADS The incidence of all children in the United States who are in foster care has increased from 3.9 per 1,000 in 1962 to an estimated 7.1 per 1,000 in 2001, although the 2001 incidence rate is a decline from the estimated peak of 7.5 per 1,000 in 1999. The incidence of children in foster care fluctuated during the 1960s and 1970s, although it was the same (3.9 per 1,000) in 1982 as it was 20 years earlier. From 1982 to 1999, the incidence rose steadily each year, and sometimes climbed sharply. For example, in the 2 years between 1987 and 1989, the incidence rose from 4.5 per 1,000 to 5.6 per 1,000. The incidence of children in foster care declined in both 2000 and 2001 (see Table 11-23). TABLE 11-22 - STATUS OF DEVELOPMENT OF STATEWIDE AUTOMATED CHILD WELFARE INFORMATION SYSTEMS (SACWIS), NOVEMBER 2003 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] The number of children in federally-assisted foster care has grown significantly in the years since funding first became available under AFDC in the early 1960s. The number grew from 1962 to 1976, then decreased from 1976 to 1983. Between 1983 and 1998, the number of foster care children funded under title IV-E increased steadily, but has declined in each year from 1999 to 2001 (Table 11-23). TABLE 11-23 -- U.S. FOSTER CARE AND IV-E FOSTER CARE POPULATIONS AND FOSTER CARE INCIDENCE IN U.S. POPULATION AGES 0-18, 1962-2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Multistate data on caseload trends More detailed information is available on trends in foster care caseloads through the Multistate Foster Care Data Archive at the Chapin Hall Center for Children. Using State administrative data, Chapin Hall has conducted analyses of foster care dynamics from 1983 through 2001. The most recent analysis, looking at trends between 1990 and 2001, is based on data from nine States: Alabama, California, Illinois, Maryland, Michigan, Missouri, New Jersey, New York, and Ohio (Chapin Hall, 2003). (Additional States have participated in the archive, but only the above States are included in the following discussion. Moreover, California data on exits from foster care were excluded from the analysis discussed below because of a change in their information system.) In general, Chapin Hall has reported in recent years that caseload growth has become more a function of longer lengths of stay and changes in the composition of the caseload, rather than the marked increases in admissions that characterized the late 1980s. Chapin Hall found that caseload growth in the late 1980s coincided with a change in the age distribution of children entering the system for the first time, with a dramatic increase in infants and a decrease in adolescents. Infants remain the single largest group of children entering care; however, the proportion of children entering care who were under age 1 decreased from nearly 25 percent in 1990- 1993 to 20 percent for children entering in 1998-2001. Children entering as infants had incidence rates (per 1,000 children) that were four to five times higher than children ages 1-17; likewise, regardless of age, children entering care in primary urban areas had higher incidence rates than children in other areas. Looking at age, race or ethnicity, and children's geographic location, Chapin Hall researchers found African-American infants in primary urban areas had the highest incidence of foster care and the greatest likelihood of entering foster care. Looking at types of placement, Chapin Hall found that 47 percent of first placements were with non-relatives in 1994, increasing to 58 percent of first placements for children who entered in 2000. About 21 percent of first placements were in congregate care throughout the period from 1990-2001, while kinship care rose from 23 percent of first placements in 1990 to 25 percent in 1994, but since declined to 20 percent in each of 2000 and 2001. To further understand the dynamics of State foster care caseloads, Chapin Hall examined the length of time that children remained in care during their first spell and found that a quarter of the children, regardless of their year of entry, had completed their first spell (i.e., exited from the system) within the first 4 months of placement. However, first spells had lengthened over time, with 25 percent of children who entered care in 1990 having completed their first spell in less than 3 months. Again, regardless of their year of entry, half of the children completed their first spell within 13 to 16 months, and, between 1994 and 1999, the length of time required for 75 percent of children to complete their first spell decreased from almost 45 months to less than 32 months. Researchers found that children who entered foster care from primary urban areas had longer initial spells than children from other areas; children entering as infants also had significantly longer initial spells than older children; and African-American children had longer spells than children of other races or ethnicities. Children placed in kinship care stayed longer than children in non-relative foster care, and children in congregate care had shorter spells than children in other types of placements. Children who entered the system as infants had the highest rates of adoption, with the likelihood of adoption decreasing each year after the first birthday. Children who entered at age 14 or older were less likely than younger children to exit through family reunification, and the likelihood of exiting to the home of a relative decreased for children who entered care at age 8 or older. White and Hispanic children who left care were more likely to be reunified with their families than African-American children, who in turn were more likely to be adopted or exit to the home of a relative. Finally, Chapin Hall researchers looked at children who reentered foster care within 2 years of exiting, and found that children with longer initial spells in care were less likely to reenter care than those with shorter initial spells. Infants were least likely to reenter, and children who entered care between the ages of 6 and 17 were the most likely to reenter. Children discharged from congregate care had the highest rates of reentry within 2 years, while children discharged from kinship care had the lowest rates. Circumstances of foster children at one year after entry As discussed earlier, the 1996 welfare reform law authorized a national longitudinal study of children at risk of abuse or neglect or identified as victims, and HHS responded by establishing the National Survey of Child and Adolescent Well-Being (NSCAW). In October 2003, the first NSCAW report on individual case-level data was released, providing information on 700 children who had been in foster care for one year (HHS, 2003). These children are a subset of the total NSCAW population of more than 6,200 children who have come in contact with the Nation's child welfare system. Researchers found that the majority of children at one year after entry into foster care were 6 years old or older (32 percent were between ages 6 and 10, and 27 percent were 11 or older), 24 percent were between 1 and 2 years old, and 17 percent were between the ages of 3 and 5. The single largest group of children were African-American (45 percent); 31 percent were white; and 17 percent were identified as Hispanic. Neglect was identified as the most serious form of m altreatment for 60 percent of the children in this cohort. Physical abuse was identified as the most serious form of maltreatment for 10 percent of the children; sexual abuse for 8 percent; emotional, moral/legal, or education abuse, or abandonment for 14 percent of the children; and 8 percent entered foster care for reasons other than abuse or neglect, such as domestic violence, or access to mental health services. At one year in foster care, 44 percent of the children were in non-relative foster homes, and 24 percent were in kinship foster care. Another 7 percent were in group homes or residential placements, and about a quarter of the children had actually gone home by the time of their interview. Researchers attributed this last result to the likelihood of a timely one-year permanency review that resulted in reunification. Caregivers reported that more than a quarter of the children had lasting or recurring physical or mental health problems, and assessments of the children's developmental functioning showed scores marginally below the norm on almost all measures. Researchers suggested this last finding might also result from the high likelihood that the children came from poor backgrounds. Children generally showed low social skills, low daily living skills, and a high degree of behavior problems. The majority of caregivers (62 percent) were age 40 or older, with kinship caregivers more likely to be 60 or older and caregivers in group homes more likely to be under 40. Racially, caregivers generally matched the children; 42 percent were African-American, 36 percent were white, and 15 percent were Hispanic. Somewhat less than half (45 percent) of caregivers were single and somewhat more than half (53 percent) were married, and more than half (56 percent) had no education beyond high school. A little over a third (36 percent) did not work; the remainder worked full or part-time. Almost half had fewer than three years experience as a foster parent, although non-relative caregivers had more experience than kin. At one year after entry into foster care, children age 6 or older generally reported that they liked the people they were living with (90 percent) and felt like part of the family (92 percent), though about 11 percent had attempted to run away. Half the children wanted their current placement to become their permanent home; however, 58 percent believed they would live with their parents again and more than half of the children wanted to see their parents more often. Children in group homes were less happy with their placements than children in family foster care, and children in kinship care reported more contact with their parents and were less likely to have attempted to run away. Child welfare workers reported the most common risk factor at the time of placement was the lack of a second supportive caregiver in the family. Workers referred biological parents most often to Medicaid for services, with income assistance, child care, mental health and substance abuse services also frequently needed by families. Almost a quarter of the children had received some type of "specialty" mental health service during their year in foster care, with children in group care and white children more likely to receive such services. About a third (36 percent) of children with clinical or borderline test scores on at least one standardized test received special education, although most of these children (92 percent) received special education or supplementary services, such as assessment, tutoring or counseling. Of children in foster care for one year, about a quarter had a permanency plan of family reunification, while another quarter had already returned home, as noted above. Reunification efforts had been made at some time during the year for 84 percent of children whose permanency goal was not reunification at the one-year point. Only about 8 percent of children had never had a reunification plan. Children whose most serious type of maltreatment was "failure to supervise" were more likely to have a current reunification plan than children who had suffered from "failure to provide." Among children who had not yet gone home, children in group care were more likely to have reunification plans than children in kinship foster care. In addition, most foster parents (68 percent) had considered adopting their foster child, assuming adoption became an option for the child. Unlike caregivers, child welfare workers were relatively young, with more than half under age 40. Almost half (46 percent) were white, 32 percent were black, 11 percent were Hispanic, and 12 percent identified themselves as "other." About 60 percent of workers had a bachelor's degree, with 40 percent of those in social work. Another 20 percent had a master's in social work, and 16 percent had a master's in another field of study. NATIONAL DATA ON FOSTER CARE AND ADOPTION As described earlier, States now are required to participate in a mandatory data collection system known as AFCARS. Tables 11-24 through 11-48, below, present national and State AFCARS data on the following: (1) total numbers of children in foster care, including numbers of children entering and exiting the system; (2) characteristics of children in foster care and conditions of their placement; (3) characteristics of foster children who are awaiting adoption; and (4) number and characteristics of children who have been adopted through the public child welfare system, including their relationship with their adoptive parents. Over the years, States have made great strides in collecting, analyzing and submitting child welfare data to the Federal Government for inclusion in AFCARS. Nonetheless, State capacity to collect and report valid data in a nationally consistent format continues to be a challenge. As States transition from older, payment-focused systems to more comprehensive, child-focused systems, they face difficult implementation decisions, while also addressing such issues as training workers, revising manuals, and synchronizing paper and automated information systems. Many States have been and continue to be engaged in the development and implementation of SACWIS. The construction of a SACWIS normally requires sequential stages of development; i.e., planning, design, development, and implementation. Until a State's SACWIS is fully utilized by staff, operational statewide, and all programming errors have been corrected, care should be exercised in utilizing their data (see Table 11-22 for the status of individual States' SACWIS development). This year's Green Book contains numerous expanded tables that provide State AFCARS data on a single item across three years. HHS has indicated that child welfare data reported by States have improved in each of these years and readers are advised to keep this in mind as they compare information across these years. HHS provides ongoing technical assistance to States to promote continued improvement of AFCARS data reports, (and child abuse data reported in NCANDS), and to assist States in implementing SACWIS systems. This technical assistance includes services provided by the National Resource Center for Information Technology in Child Welfare. Number of children in foster care Table 11-24 illustrates the "flow" of children through the foster care system in 1982-2001; i.e., the number of children in care at the start of each year, the number who entered or exited foster care during the course of the year, the total number of children served during the year, and the number of children who remained in care at the end of the year. These numbers indicate steady increases in the foster care population that were most dramatic in the late 1980s and that continued until 2000 and 2001; declines occurred in both those years (also see chart 11-2). It should be remembered that these data reflect the total foster care population and are not limited to those children receiving subsidies under title IV-E. For State-by-State estimates of the percent of title IV-E eligible children, see Table 11-7. TABLE 11-24 -- NUMBER AND MOVEMENT OF SUBSTITUTE CARE CHILDREN, FISCAL YEARS 1982-2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Table 11-25 shows the number of children who entered and exited care during fiscal years 1999, 2000, and 2001, and the total number of children in care on September 30 of each of those three years, by State. Table 11-26 lists the average monthly number of children in foster care, by State, who received Federal funding under title IV-E for the years 1993, 1997, 1999, and 2002. These figures are lower than AFCARS estimates of the total number of children in foster care because they do not include the substantial number of children who were not eligible for Federal funding (primarily because they were not from AFDC-eligible homes). Characteristics of children in foster care Much of the data collected on children in foster care reflect three different groupings of children: children who entered foster care during the study period; children who left care during the study period; and children who remained in care on the last day of the study period. Table 11-27 presents data on the age composition of children in these three categories, for all States combined, in fiscal years 1999, 2000, and 2001; and Table 11-28 presents data, by State, on the ages of children who were in care on September 30, 2001. Table 11-29 shows the racial and ethnic composition of children in each category, for all States combined, in fiscal years 1999, 2000, and 2001, while Table 11-30 shows these data, by State, for children who remained in care on September 30 of 1999, 2000, and 2001. TABLE 11-25 -- NUMBER OF CHILDREN ENTERING AND EXITING CARE DURING FISCAL YEAR, AND NUMBER OF CHILDREN IN CARE ON SEPTEMBER 30, BY STATE: FISCAL YEARS 1999-2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-26 -- TITLE IV-E FOSTER CARE AVERAGE MONTHLY NUMBER OF CHILDREN, SELECTED FISCAL YEARS, 1993-2002 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-27 -- AGES OF CHILDREN ENTERING AND EXITING CARE DURING FISCAL YEAR, AND IN CARE ON SEPTEMBER 30, FISCAL YEARS 1999-2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-28 -- AGES OF CHILDREN IN CARE ON SEPTEMBER 30, 2001, BY STATE [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-29 -- RACE/ETHNICITY OF CHILDREN ENTERING AND EXITING CARE DURING FISCAL YEAR, AND IN CARE ON SEPTEMBER 30, FISCAL YEARS 1999-2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-30 -- RACE/ETHNICITY OF CHILDREN IN CARE ON SEPTEMBER 30, BY STATE, FISCAL YEARS 1999-2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Characteristics of foster care As Table 11-31 shows, 44 percent of the children who were in foster care on September 30, 2001, had permanency plans of reunification with their families, while 22 percent had plans of adoption. For 9 percent of the children, the permanency plan was long-term foster care. (Table 11-31 shows these data for children in care at the end of fiscal years 1999, 2000, and 2001; Table 11-32 shows these data, by State, for children in care on September 30, 2001.) As for the living arrangements of these children, Table 11-33 shows that on September 30, 2001, slightly less than half were in foster family homes with people unrelated to them, while another 18 percent were in foster care with relatives, and 15 percent of these children were either in a group home or institution. (Table 11-33 shows these data for each of fiscal years 1999 through 2001, while Table 11-34 shows them, by State, for children in care on September 30, 2001.) As shown in Tables 11-35 and 11-36, less than two-thirds of the children in care on September 30, 2001, had experienced between one and two placements during their current spell in foster care, while 22 percent had experienced three or four, and 17 percent had experienced five or more. (See Table 11-35 for aggregate data on placements in 1999, 2000, and 2001; Table 11-36 shows placement data by State for children in care on September 30, 2001.) TABLE 11-31 -- PERMANENCY PLANS OF CHILDREN IN CARE ON SEPTEMBER 30, FISCAL YEARS 1999-2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-32 -- PERMANENCY PLANS OF CHILDREN IN CARE ON SEPTEMBER 30, 2001, BY STATE [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-33 - PLACEMENT SETTINGS OF CHILDREN IN CARE ON SEPTEMBER 30, FISCAL YEARS 1999-2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-34 - PLACEMENT SETTINGS OF CHILDREN IN CARE ON SEPTEMBER 30, 2001, BY STATE [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-35 -- NUMBER OF PLACEMENTS OF CHILDREN IN CARE ON SEPTEMBER 30, FISCAL YEARS 1999-2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-36 -- NUMBER OF PLACEMENTS (FOR CURRENT EPISODE) OF CHILDREN IN CARE ON SEPTEMBER 30, 2001, BY STATE [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] The amount of time that children spend in foster care is an issue of public policy concern. As shown in Table 11-37, children who left care during a given fiscal year had generally shorter lengths of stay from the time of removal from home than those children who remained in care at the end of the fiscal year. Table 11-37 shows aggregate data on length of stay for children who exited care during fiscal years 1999 through 2001, and children who remained in care on the last day of each fiscal year. Table 11-38 shows the length of stay, by State, for children in care on September 30, 2001. TABLE 11-37 -- LENGTH OF STAY FOR CHILDREN EXITING CARE DURING FISCAL YEAR AND FOR CHILDREN IN CARE ON SEPTEMBER 30, FISCAL YEARS 1999-2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-38 -- LENGTH OF STAY FOR CHILDREN IN CARE ON SEPTEMBER 30, 2001, BY STATE [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Finally, Table 11-39 shows the reasons for discharge for children who left foster care during fiscal years 1999, 2000, and 2001, and indicates that a slightly decreasing majority of these children were reunified with their families (58 percent in fiscal year 1999 and 56 percent in fiscal year 2001). Another 18 percent were adopted in fiscal year 2001, 10 percent left to live with other relatives, and 7 percent were emancipated (i.e., "aged out"'). Table 11-40 shows the discharge reasons, by State, for children in care on September 30, 2001. TABLE 11-39 -- DISCHARGE REASONS FOR CHILDREN EXITING CARE, FISCAL YEARS 1999 - 2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-40 -- DISCHARGE REASONS FOR CHILDREN EXITING CARE, BY STATE, FISCAL YEAR 2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Characteristics of children waiting for adoption Tables 11-41 through 11-43 show, by State, characteristics of children who were waiting for adoption at the end of fiscal year 2001; i.e., children in foster care who had permanency plans of adoption and/or whose parental rights had been terminated. Children whose permanency plans were emancipation are not included in these tables. As the tables show, nearly 60 percent were between the ages of 6 and 15 (Table 11-41), less than half (42 percent) were black (Table 11-42); and almost half (48 percent) had been in foster care for 3 years or longer (Table 11-43). TABLE 11-41 -- AGE DISTRIBUTION OF CHILDREN WAITING FOR ADOPTION, BY STATE, FISCAL YEAR 2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-42 - RACE/ETHNICITY OF CHILDREN WAITING FOR ADOPTION, BY STATE, FISCAL YEAR 2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-43 - LENGTH OF STAY FOR CHILDREN WAITING FOR ADOPTION, BY STATE, FISCAL YEAR 2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Number and characteristics of adopted children The Adoption and Foster Care Analysis and Reporting System (AFCARS) collects data on children who were adopted with the involvement of public child welfare agencies (see Table 11-44). As explained earlier, this is not necessarily the same as the number of adoptions reported by States for purposes of earning adoption incentive payments, which are based specifically on adoptions of children from foster care. Table 11-45 compares the racial and ethnic composition of children who were adopted through the child welfare system in fiscal year 2001 with the race and ethnicity of children who were waiting for adoption during that year. Black children were the largest racial group among children waiting for adoption (42 percent), but somewhat more white children than black children (38 percent compared with 35 percent) had actually been adopted in fiscal year 2001. TABLE 11-44 -- NUMBER OF AGENCY-INVOLVED ADOPTIONS BY STATE, SELECTED FISCAL YEARS 1995-2002 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-45 -- RACE/ETHNICITY OF CHILDREN WAITING FOR ADOPTION AND ADOPTED, FISCAL YEAR 2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Additional State-by-State information on children adopted through the public child welfare system is shown in tables 11-46 through 11-48, including race/ethnicity, age at the time of adoption finalization, and the prior relationship between adoptive parents and children. Readers should note that most children who are adopted out of foster care are adopted by their foster parents (Table 11-48). TABLE 11-46 -- RACE/ETHNICITY OF CHILDREN ADOPTED IN FISCAL YEAR 2001, BY STATEP [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-47 -- CHILD'S AGE AT ADOPTION FINALIZATION, BY STATE, FISCAL YEAR 2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TABLE 11-48 -- PRIOR RELATIONSHIP OF ADOPTIVE PARENT(S) TO CHILD, BY STATE, FISCAL YEAR 2001 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] TRENDS IN CHILD WELFARE AND FOSTER CARE COSTS Federal spending under the title IV-E Foster Care Program has increased significantly since it began in 1981. Based on Administration estimates, Federal title IV-E expenditures have increased more than fourteenfold, from $309 million to $4.5 billion, between 1981 and 2002. Funding for the title IV-B Child Welfare Services Program increased by almost 80 percent from 1981 to 2002 ($163.6 million to $292 million). Funding for the title XX Social Services Block Grant (SSBG), which States may use for child welfare services, has fallen. In recent years, an increasing proportion of title IV-E costs has been expended on child placement services, administration, and training. Table 11-49 shows HHS and Congressional Budget Office (CBO) estimates of title IV-E expenditures through fiscal year 2008. TABLE 11-49 -- PROPORTION OF TITLE IV-E FOSTER CARE EXPENDITURES SPENT ON CHILD PLACEMENT, ADMINISTRATION, AND TRAINING, FISCAL YEARS 1989-2008 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] Table 11-50 shows Federal foster care expenditures by State in 1991, 1996, 1999, and 2002. Between 1991 and 2002, total foster care expenditures increased by 129 percent. Over this same time period, foster care maintenance costs increased by 68 percent. Because of the large increase in administrative and child placement costs relative to maintenance costs, the share of total costs represented by maintenance costs decreased between 1991 and 2002. In an effort to gain more complete information on total child welfare spending, including sources in addition to titles IV-B and IV-E of the Social Security Act, the Urban Institute has conducted a series of State surveys; 51 States responded to the most recent survey with information about spending in fiscal year 2000 (Urban, 2002b). The survey found that States spent $20 billion in that year, and researchers estimated that Federal funds accounted for 49 percent of total spending, State funds also constituted 39 percent, and local sources accounted for 11 percent. Of Federal expenditures, 50 percent was from title IV-E but only 5 percent was from title IV-B. Nontraditional funding sources played a significant role; 17 percent of Federal expenditures for child welfare came from Temporary Assistance for Needy Families funds, 15 percent was from the Social Services Block Grant, and 8 percent was from Medicaid. Other sources included Supplemental Security Income. The report also found that the financing of child welfare services varies considerably by State, and that the largest single category of expenditure was for out-of-home care, accounting for 45 percent of all child welfare spending in fiscal year 2000. TABLE 11-50 -- FEDERAL FOSTER CARE EXPENDITURES BY STATE, SELECTED FISCAL YEARS 1991-2002 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] LEGISLATIVE HISTORY (For legislative history before 1996, see previous editions of the Green Book.) During the 104th Congress, comprehensive welfare reform legislation was enacted that contained provisions affecting child welfare (Personal Responsibility and Work Opportunity Reconciliation Act, Public Law 104-193). The centerpiece of the welfare reform legislation was the repeal of AFDC and creation of a new block grant to States for Temporary Assistance for Needy Families (TANF). As a condition of receiving TANF funds, States must operate Foster Care and Adoption Assistance Programs under title IV-E of the Social Security Act. However, eligibility for title IV-E historically has been linked to AFDC eligibility. Thus, Public Law 104-193 provides that foster or adoptive children are eligible for title IV-E subsidies if their families would have been eligible for AFDC, as it was in effect in their State on June 1, 1995. (Technical amendments enacted in 1997, Public Law 105-33, subsequently changed this date to July 16, 1996.) Children eligible for SSI continue to be eligible for title IV-E adoption assistance, and foster and adoptive children continue to be eligible for Medicaid. Public Law 104-193 also amended title IV-E to enable for- profit child care institutions to participate in the Federal Foster Care Program; extended the enhanced Federal matching rate for certain data collection costs through fiscal year 1997; mandated HHS to conduct a national random sample study of children in the child welfare system; and required States, as a component of their title IV-E plans, to consider giving preference to adult relatives in determining a foster or adoptive placement for a child. In 1997, Congress enacted the most significant changes to titles IV-B and IV-E of the Social Security Act since they were established in their current form in 1980. This legislation, the Adoption and Safe Families Act (Public Law 105-89), was intended to promote adoption and ensure safety for children in foster care. The law established that a child's health and safety must be of paramount concern in any efforts made by the State to preserve or reunify the child's family. The law retained, but clarified the requirement that States make "reasonable efforts" to preserve or reunify a child's family, establishing exceptions to this requirement. Also to promote safety, Public Law 105-89 required States to conduct criminal background checks for all prospective foster or adoptive parents, and required States to develop standards to ensure quality services that protect children's health and safety while in foster care. To promote permanency, the law required States to make reasonable efforts to place children, in a timely manner, who have permanency plans of adoption or another alternative to family reunification, and to document these efforts. Further, provisions were intended to eliminate interjurisdictional barriers to adoption. Public Law 105-89 changed the name of dispositional hearings to "permanency" hearings, and required that they occur within 12 months of a child's placement in foster care, rather than the first 18 months. The law also revised the list of permanency goals, eliminating specific reference to long-term foster care, and required that foster parents, preadoptive parents, and relative care givers be given notice and opportunity to be heard at reviews and hearings. The Adoption and Safe Families Act required that States initiate or join proceedings to terminate parental rights on behalf of children who have been in foster care for 15 of the most recent 22 months, although certain exceptions are allowed. The law also authorized incentive payments to States to increase the number of foster and special-needs children who are placed for adoption. The law contains some provisions intended to expand health insurance coverage for special-needs adopted children who are not eligible under title IV-E, and also reauthorized and renamed the Family Preservation and Family Support Program. The program was authorized through fiscal year 2001, as the Promoting Safe and Stable Families Program. In addition, Public Law 105-89 established a new outcome measures reporting system for States, and authorized an expansion of the child welfare waiver demonstration authority established earlier. Public Law 106-169 was enacted during the 106th Congress, revising the Independent Living Program and renaming it in honor of the late Senator John Chafee. The legislation provided greater flexibility to States in their use of funds to help older foster children obtain the education and employment services necessary for a successful transition to adult living, increased the entitlement ceiling for the program, and revised the State allocation formula. The law also established an option under Medicaid for States to cover certain former foster care youth aged 18-20. Public Law 107-133 reauthorized the Promoting Safe and Stable Families program for 5 years (FY2002-FY2006) at an annual mandatory funding level of $305 million, and authorized additional discretionary funds of up to $200 million annually. The law also granted new program authority for HHS to fund programs that mentor children of prisoners and expanded the Foster Care Independence Program by authorizing new discretionary funds for education and training vouchers. Public Law 108-145 reauthorized adoption incentive payments to States to increase adoptions of foster children and children with special needs. 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Washington, DC: Author. U.S. General Accounting Office. (2003, September). Child welfare: Enhanced Federal oversight could provide States additional information to improve services (GAO-03-956). Washington, D.C: Author. Westat, Chapin Hall Center for Children, James Bell Associates. (2002, December). Evaluation of family preservation and reunification programs final report. Washington, D.C: U.S. Department of Health and Human Services.