[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
           PROMOTING ADOPTION AND OTHER PERMANENT PLACEMENTS

=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 20, 1999

                               __________

                             Serial 106-39

                               __________

         Printed for the use of the Committee on Ways and Means




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                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
BILL THOMAS, California              FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida           ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut        WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana               JIM McDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania      KAREN L. THURMAN, Florida
WES WATKINS, Oklahoma                LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
                     A.L. Singleton, Chief of Staff

                  Janice Mays, Minority Chief Counsel
                                 ------                                

                    Subcommittee on Human Resources

                NANCY L. JOHNSON, Connecticut, Chairman
PHILIP S. ENGLISH, Pennsylvania      BENJAMIN L. CARDIN, Maryland
WES WATKINS, Oklahoma                FORTNEY PETE STARK, California
RON LEWIS, Kentucky                  ROBERT T. MATSUI, California
MARK FOLEY, Florida                  WILLIAM J. COYNE, Pennsylvania
SCOTT McINNIS, Colorado              WILLIAM J. JEFFERSON, Louisiana
JIM McCRERY, Louisiana
DAVE CAMP, Michigan

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
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current publication process and should diminish as the process is 
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                            C O N T E N T S

                              ----------                              

                                                                   Page

Advisory of July 13, 1999, announcing the hearing................     2

                               WITNESSES

Congressional Research Service, Library of Congress, Karen Spar, 
  Specialist in Social Legislation, Domestic Social Policy 
  Division.......................................................     8
                                 ------                                
Bliley, Hon. Tom, a Representative in Congress from the State of 
  Virginia.......................................................    52
Children's Village, Nan Dale.....................................    39
International Center for Residential Education, Heidi Goldsmith..    13
Lewis, Hon. Ron, a Representative in Congress from the State of 
  Kentucky.......................................................     5
McKenzie, Richard B., University of California, Irvine...........    20
North American Council on Adoptable Children, (NACAC), Joe Kroll.    35
Smyth, John, Maryville Academy...................................    48

                       SUBMISSION FOR THE RECORD

Smith, Hon. Christopher H., a Representative in Congress from the 
  State of New Jersey............................................    59



           PROMOTING ADOPTION AND OTHER PERMANENT PLACEMENTS

                              ----------                              


                         TUESDAY, JULY 20, 1999

                  House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Human Resources,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:10 a.m., in 
room B-318 Rayburn House Office Building, Hon. Nancy L. Johnson 
(Chairman of the Subcommittee) presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                                CONTACT: (202) 225-1025
FOR IMMEDIATE RELEASE

July 13, 1999

No. HR-9

  Johnson Announces Hearing on Promoting Adoption and Other Permanent 
                               Placements

    Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on 
Human Resources of the Committee on Ways and Means, today announced 
that the Subcommittee will hold a hearing on adoption and other 
permanent placements. The hearing will take place on Tuesday, July 20, 
1999, in room B-318 Rayburn House Office Building, beginning at 10:00 
a.m.
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. 
Witnesses will include Members of Congress, an adoption specialist from 
the Congressional Research Service, children's advocates, and program 
administrators. However, any individual or organization not scheduled 
for an oral appearance may submit a written statement for consideration 
by the Committee and for inclusion in the printed record of the 
hearing.

BACKGROUND:

    In 1997, Congress passed major adoption reform legislation, the 
Adoption and Safe Families Act of 1997 (P.L. 105-89 ). Among other 
innovations, the 1997 law provided States with more flexibility to 
decide the particular circumstances under which reasonable efforts to 
reunify families could be terminated, required States to file a 
petition to terminate parental rights after the child had been in State 
custody for 15 months (with certain exceptions), and provided cash 
incentive payments for increasing the number of adoptions of children 
in foster care. The Subcommittee has been conducting regular oversight 
hearings of adoption and associated issues to track several issues 
including whether the new Federal requirements are being aggressively 
implemented by States and whether adoption rates are climbing. Several 
Members of the House and Senate have introduced legislation to 
encourage adoption.
    In announcing the hearing, Chairman Johnson stated: ``There is 
universal agreement that adoption is the preferred living arrangement 
for children who cannot live with their biological parents, but, many 
experts and administrators in the field of child protection are telling 
us that some children need living arrangements other than adoption or 
family-based foster care. We are looking forward to hearing both sides 
of this debate and to examine the strengths and weaknesses of these 
alternative living arrangements.''

FOCUS OF THE HEARING:

    One focus of the hearing is to provide Members with an opportunity 
to explain their proposed legislation and to provide an opportunity to 
determine what action might be appropriate on the various bills. A 
second issue the Subcommittee intends to explore is what long-term 
living arrangements States are now making for children who are not in 
family-based foster care and for whom adoption is not planned. We are 
especially interested in hearing about group homes and residential 
education arrangements. The goal of this part of the hearing will be to 
learn about how these institutions operate, the types of children who 
are in residence, how long children stay, and whether there is 
information about their safety, permanency, and well-being.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

    Any person or organization wishing to submit a written statement 
for the printed record of the hearing should submit six (6) single-
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diskette in WordPerfect 5.1 format, with their name, address, and 
hearing date noted on a label, by the close of business, Tuesday, 
August 3, 1999, to A.L. Singleton, Chief of Staff, Committee on Ways 
and Means, U.S. House of Representatives, 1102 Longworth House Office 
Building, Washington, D.C. 20515. If those filing written statements 
wish to have their statements distributed to the press and interested 
public at the hearing, they may deliver 200 additional copies for this 
purpose to the Subcommittee on Human Resources office, room B-317 
Rayburn House Office Building, by close of business the day before the 
hearing.

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    2. Copies of whole documents submitted as exhibit material will not 
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    3. A witness appearing at a public hearing, or submitting a 
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    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
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    Note: All Committee advisories and news releases are available on 
the World Wide Web at ``HTTP://WWW.HOUSE.GOV/WAYS__MEANS/''.
      

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.
      

                                


    Chairman Johnson. Good morning. We will bring the hearing 
to order. My colleague and ranking member, Mr. Cardin, is 
meeting with Mr. Brock, and so he will come as soon as that 
meeting concludes.
    In 1997, Congress passed the Adoption and Safe Families 
Act, which originated in this subcommittee under the leadership 
of Clay Shaw. This law reflected the preference for adoption 
over foster care when maltreating families continued to provide 
an unsafe environment for their children. Members agreed that 
too often we pass legislation and nothing happens, or at least 
not in the immediate and measurable future; and I am delighted 
that under ASFA important changes have occurred in the 
immediate and measurable future. The General Accounting Office 
found that adoptions have increased between a whopping 52 
percent and 101 percent in its study of Connecticut, Florida, 
Illinois, Iowa and Texas.
    So often the problems faced by too many children in our 
society seem intractable, unsolvable, hopeless, but for 
children in out-of-home placement who do not have loving 
families, we have found not only a policy that works but a 
signal that big change is possible.
    But some problems have solutions with legislative origins. 
One problem that Congress continues to face is that adoptions 
have increased so much and so fast that the amount of money we 
have in the law for incentive payments is inadequate. Those of 
you who follow the work of our subcommittee know that both Ben 
Cardin and I are committed to figuring out how to get this 
additional money. States have done a superb job, and they 
should and will get the incentive payments they earn.
    Because some legislative remedies can improve the status of 
children in out-of-home care, I am particularly pleased to hear 
today the legislative proposals of our colleagues in Congress 
that have been designed to reform child welfare so that the 
lives of more of our Nation's children can be improved. I know 
that many of the members testifying here today have a personal 
involvement in adoption and are its best advocates.
    I am grateful to each of you for not only taking the time 
to share your legislative ideas with our subcommittee, but for 
all your efforts over many years on behalf of vulnerable 
children to find adoptive homes. But despite our preference for 
adoption over foster care, clearly we recognize that not all 
children are adoptable nor do all children want to be adopted. 
We had some interesting testimony to that effect during the 
independent living hearing, and as we will hear in this 
testimony today, there are some indications that not all 
adoptions result in permanent families for children. 
Unfortunately, too many adoptions fall apart leaving the child 
still in need of a permanent placement and an adoptive family.
    So while public policy should continue to pursue adoption 
as the preferred placement for children in need of permanent 
homes, there needs to be a comprehensive array of services for 
children for whom adoption is not an option, and far better 
support services for adoptive parents adopting difficult 
children.
    Our second panel today will explore the array of services 
and alternative placement options available to children in need 
of permanent arrangements. We have asked the Congressional 
Research Service to survey where children and out-of-home 
placements are going and what is known about these placements. 
I am aware that these placements are not without controversy. 
So we have in this panel a wide range of opinion regarding the 
benefits of residential education, intensive residential 
treatment services and other options that can provide a 
positive, healthy alternative to foster care and, in some 
cases, even to adoption.
    [The opening statement of Mr. Cardin follows:]

Statement of Hon. Benjamin Cardin, a Representative in Congress from 
the State of Maryland

    Madame Chairman, I would like to thank you for calling this 
hearing on promoting adoption and examining other long-term 
placements for children in foster care.
    When children come into the foster care system, our first 
goal should be to help them return to their families--unless of 
course reunification poses a risk to their health or well-
being. If a child cannot be returned home, he or she should not 
be expected to wait indefinitely in foster care. Concurrent 
planning should be undertaken to find that child a loving, 
adoptive home. Fortunately, we have made some positive strides 
toward this goal in the last couple of years. In fact, it 
appears adoptions of foster care children rose 40% nationwide 
last year compared to 1995.
    On the issue of long-term, group foster care, I recognize 
that some children, especially those with severe psychiatric 
conditions, may benefit from such arrangements. However, I am 
concerned when long-term, institutionalized care is depicted as 
an alternative to a full-fledged fight against the impact of 
poverty on families. Furthermore, I worry about how and why 
certain foster children might be deemed ``unadoptable'' and 
therefore fit only for long-term foster care.
    Some foster children may not return home or be adopted, and 
we have an obligation to help them develop the skills needed 
for self-sufficiency. The overwhelming House vote in favor of 
the Foster Care Independence Act, a bipartisan product of this 
Subcommittee's hard work, hopefully suggests we are soon to 
meet that pressing need. However, when initial placement 
decisions are made, we should guard against pigeon-holing 
children as being suitable only for long-term foster care and 
not adoption.
    Finally, on the issue of promoting adoption, our focus 
should be on those children who face the greatest barriers to 
adoption--namely ``special needs'' children, such as older kids 
or those with mental, physical or emotional problems. There is 
no shortage of prospective adoptive parents for healthy babies, 
with or without an expanded tax break. But there is a clear 
shortage of adoptive families for ``special needs'' children, 
who may demand more time and resources. An op-ed in the Boston 
Globe on May 6th by Jeff Katz, who is the executive director of 
Adoption Rhode Island, suggested that increasing the adoption 
tax credit from $5,000 to $10,000 will do little or nothing to 
help increase the adoption of ``special needs'' children. The 
article points out that ``it costs virtually nothing to adopt a 
child from foster care'' (there are no private agency fees). As 
we continue our dialog on adoption, I hope we will remember 
which children need the most help in finding a permanent, 
loving family.
    Thank you, Madame Chairman. I look forward to hearing from 
our witnesses.

                                


    I am pleased to open this hearing and call forward the 
first panel of my colleagues, Mr. Ron Lewis, and I guess, Ron, 
you are the only one here right now. If the others come in, we 
will interrupt the second panel to hear from them. It is a 
pleasure to have you, Congressman Lewis.

STATEMENT OF HON. RON LEWIS, A REPRESENTATIVE IN CONGRESS FROM 
                     THE STATE OF KENTUCKY

    Mr. Lewis. Thank you. Thank you, Chairman Johnson, for 
holding this important hearing and giving me the opportunity to 
discuss with the Subcommittee my bill, the Fairness for Foster 
Care Families Act, H.R. 1194.
    During a Human Resources Subcommittee hearing in April we 
heard some good news regarding adoption. Studies have shown 
that the Adoption and Safe Families Act of 1997 has helped more 
children move from foster care into adoption.
    Our goal, as a society, has always been to move children 
from foster care into adoption or, when possible, to reunite 
them with their parents. As we work towards this goal however, 
many children will spend at least some time in the foster care 
system. According to a CRS report, over 400,000 children spent 
some time in foster care in 1995.
    As the father of an adopted son, I support the legislative 
proposals of our colleague Chairman Bliley, and I would like to 
thank Chairman Johnson for her interest in adoption 
legislation. In our ongoing efforts to promote child welfare, 
however, we must also remember the important role of supportive 
foster care families.
    One concern I have is that under the current tax law, some 
families are discouraged from providing foster care. The reason 
is because tax laws regarding foster care payments are 
confusing and unfair.
    The current policy with regard to the tax treatment of 
foster care payments is the result of congressional action in 
1986. Under this 1986 law, foster care families can exclude 
from taxable income the foster care payments for the care of an 
individual. The exclusion, however, is dependent on a 
complicated analysis of three factors: the age of the foster 
individual, the type of agency that placed the individual, and 
the source of the payment. If the payments are not excludable, 
the foster care provider is then required to keep extensive 
records of every expense made on behalf of the foster 
individual in their care in order to qualify for lower tax 
payments.
    As you can see by the chart in my statement, these tax 
rules are extremely confusing. In fact, many accountants and 
IRS officials have difficulty understanding the tax treatment 
of foster care payments.
    My bill, H.R. 1194, will simplify and correct inequities in 
the tax treatment of foster care payments. This is accomplished 
by allowing all foster care providers to exclude foster care 
payments from taxable income, regardless of the age of the 
individual in foster care and type of entity that placed the 
individual.
    By passing this legislation, Congress will also recognize 
the increasing role of private agencies in foster care. As you 
may know, many local communities and States are now contracting 
with nongovernment, private agencies to help needy individuals 
find safe homes. These agencies must be licensed and certified 
by the State and are also accountable to the State.
    In closing, I would like to thank my colleagues on the 
Subcommittee who have cosponsored H.R. 1194. A strong 
bipartisan support of this common-sense, profamily legislation 
has helped my efforts in getting it included in the recently 
committee passed tax cut bill.
    Again, thank you, Chairman Johnson, for giving me the 
opportunity to testify this morning.
    [The prepared statement follows:]

Statement of Hon. Ron Lewis, a Representative in Congress from the 
State of Kentucky

    Thank you Chairman Johnson for holding this important 
hearing and giving me the opportunity to discuss with the 
Subcommittee my bill--the Fairness for Foster Care Families 
Act-H.R. 1194.
    During a Human Resources Subcommittee hearing in April, we 
heard some good news regarding adoption. Studies have shown 
that the Adoption and Safe Families Act of 1997 has helped more 
children move from foster care into adoption.
    Our goal as a society has always been to move children from 
foster care into adoption or, when possible, to reunite them 
with their parents. As we work towards this goal, however, many 
children will spend at least some time in the foster care 
system. According to a Congressional Research Service report, 
494,000 children were in foster care in 1995.
    As the father of an adopted son, I support the legislative 
proposals of our colleague Chairman Bliley and I would like to 
thank Chairman Johnson for her interest in adoption 
legislation. In our ongoing efforts to promote child welfare, 
however, we must also remember the important role of supportive 
foster care families.
    One concern I have is that under the current tax law, some 
families are discouraged from providing foster care. The reason 
is because tax laws regarding foster care payments are 
confusing and unfair.
    The current policy with regard to the tax treatment of 
foster care payments is the result of congressional action in 
1986. Under this 1986 law, foster care families can exclude 
from taxable income the foster care payments for the care of an 
individual.
    The exclusion, however, is dependent on a complicated 
analysis of three factors: the age of the foster individual, 
the type of entity that placed the individual, and the source 
of the payment.
    If the payments are not excludable, the foster care 
provider is then required to keep extensive records of every 
expense made on behalf of the foster individual in their care 
in order to qualify for lower tax payments.
    As you can see by the chart below, these tax rules are 
extremely confusing. In fact, many accountants and IRS 
officials have difficulty understanding the tax treatment of 
foster care payments.


------------------------------------------------------------------------
                                                   Age of
       Placement Agency             Payor       Foster Care    Payment
                                                 Individual  Excludable?
------------------------------------------------------------------------
State or political             State or           <19 years         Yes
 subdivision.                   political
                                subdivision.
State or political             State or            19 years         Yes
 subdivision.                   political
                                subdivision.
State or political             501(c)(3)......    <19 years         Yes
 subdivision.
State or political             501(c)(3)......     19 years          No
 subdivision.
State or political             Not 501(c)(3)..    <19 years          No
 subdivision.
State or political             Not 501(c)(3)..     19 years          No
 subdivision.
Licensed 501(c)(3)...........  State or           <19 years         Yes
                                political
                                subdivision.
Licensed 501(c)(3)...........  State or            19 years          No
                                political
                                subdivision.
Licensed 501(c)(3)...........  501(c)(3)......    <19 years         Yes
Licensed 501(c)(3)...........  501(c)(3)......     19 years          No
Licensed 501(c)(3)...........  Not 501(c)(3)..    <19 years          No
Licensed 501(c)(3)...........  Not 501(c)(3)..     19 years          No
Not 501(c)(3)................  State or           <19 years          No
                                Political
                                subdivision.
Not 501(c)(3)................  State or            19 years          No
                                Political
                                subdivision.
Not 501(c)(3)................  501(c)(3)......    <19 years          No
Not 501(c)(3)................  501(c)(3)......     19 years          No
Not 501(c)(3)................  Not 501(c)(3)..    <19 years          No
Not 501(c)(3)................  Not 501(c)(3)..     19 years          No
------------------------------------------------------------------------

    My bill, H.R. 1194, will simplify and correct inequities in 
the tax treatment of foster care payments. This is accomplished 
by allowing all foster care providers to exclude foster care 
payments from taxable income, regardless of the age of the 
individual in foster care and type of entity that placed the 
individual.
    By passing this legislation, Congress will also recognize 
the increasing role of private agencies in foster care. As you 
may know, many local communities and states are now contracting 
with non-government, private agencies. These agencies must be 
licensed and certified by the state and are also accountable to 
the state.
    In closing, I would like to thank my colleagues on the 
Subcommittee who have cosponsored H.R. 1194. The strong bi-
partisan support of this common-sense, pro-family legislation 
has helped my efforts in getting this legislation included in 
the recently passed tax-cut bill.
    Again, thank you Chairman Johnson for giving me the 
opportunity to testify this morning.

                                


    Chairman Johnson. Well, thank you very much for taking the 
time to testify on this issue because, as we all know, it is 
going to take a long time to get a tax bill through, and little 
provisions are most at risk in the kind of eclectic process 
ahead of us; and I hope all of you who are concerned about this 
issue will help us by reminding those in the Senate how 
important this kind of little change is to the fundamental 
goals of providing safe and secure homes for children, and as 
we move to conference, that these kinds of little reforms in 
our tax code are really terribly important in people's lives.
    It is one of the good, nice, solid positives in the tax 
bill, and as we move forward, I certainly will work with you to 
protect it.
    Mr. Lewis. Thank you.
    Chairman Johnson. Thanks. We will move on to the next panel 
then, and as I say, if members arrive, we will interrupt the 
panel to hear from them. So, if we could move to actually the 
first and only panel, Karen Spar, Heidi Goldsmith, Richard 
McKenzie, Joe Kroll, Nan Dale, and the Reverend John Smyth.
    Karen Spar, Specialist in Social Legislation, Domestic 
Policy Division of the Congressional Research Service, thank 
you for being here today.

  STATEMENT OF KAREN SPAR, SPECIALIST IN SOCIAL LEGISLATION, 
   DOMESTIC POLICY DIVISION, CONGRESSIONAL RESEARCH SERVICE, 
                      LIBRARY OF CONGRESS

    Ms. Spar. Good morning, Madam Chair and Members of the 
Subcommittee. Thank you for inviting me to testify before you 
this morning. I have been asked to present an overview of the 
different ways in which children enter foster care, and the 
different kinds of settings that children are placed into.
    According to our latest data, more than half a million 
children are in foster care under the custody of State child 
welfare agencies. Most of these children are there because they 
don't have families that can care for them safely. According to 
the latest available data, 60 percent of the children who 
entered foster care in 1994 were placed because they had been 
victims of abuse or neglect and another 17 percent because of 
the absence of their parents. Thus, about three-quarters of the 
children who entered care in 1994 were placed because their 
natural families were either unable, unwilling or unavailable 
to care for them, whether for a short time or permanently.
    For some children, the primary reason they enter care has 
to do with them, the children themselves, rather than with the 
actions or absence of their parents. Again, looking at 1994, 
almost 10 percent of the children who entered foster care that 
year entered because of delinquent behavior, and another 5 
percent because they had committed a juvenile status offense, 
such as running away or truancy. Another 5 percent were placed 
because of a disability.
    We often use the term ``foster care'' generically to 
describe all situations where children are living apart from 
their families under the supervision of child welfare agencies, 
although foster care actually encompasses a range of settings 
and placements. In general, child welfare professionals and 
Federal policy favor placing children in the least restrictive, 
most family-like setting available that can meet the child's 
needs. However, because of the complex needs of some children, 
and also because of the shortage of foster family homes and the 
frequent instability of foster home placements, there has been 
ongoing discussion for years about the role of group facilities 
for foster children.
    According to data for 1997, less than half the children who 
were in foster care on September 30 of that year actually lived 
in the home of a family to whom they were not related, although 
that is the arrangement people think of most commonly as foster 
care. Even within this category, there is variety. For example, 
some children are in therapeutic or treatment foster care, 
which resembles traditional foster care except that the foster 
parents may have additional skills or training and function as 
part of a broader team, such as a health care or mental health 
care team that provides and arranges services for the child.
    Another 32 percent of foster children in 1997 lived with 
relatives, in a form of foster care known as ``kinship care.'' 
it is important to understand that, while the data indicate 
that almost a third of the children we refer to as foster 
children live with relatives, not all children who live with 
relatives are foster children. In 1997, about 1.3 million 
children lived away from their parents in households maintained 
by their grandparents, but only a fraction of these children 
had been formally placed with their grandparents and were under 
the supervision of the child welfare system.
    Finally, a certain number of children in foster care are 
placed in group or institutional settings. In 1997, 9 percent 
of foster children were living in group homes and another 7 
percent were in institutions.
    Whether children are placed in foster family homes or in 
some type of group setting generally is a function of the 
child's needs. For example, adolescents and older children who 
have experienced multiple foster care placements may be 
uncomfortable in close family settings and prefer a group home 
with other children their age. Children with emotional, 
behavioral, physical or medical needs may be more likely to be 
placed in a group home or, potentially, an institution, 
depending on the severity of their needs. However, it also 
happens that some children are placed in group care, at least 
on a short-term basis, because of the shortage of foster family 
homes.
    As with kinship care, group homes and residential 
facilities are used by child welfare agencies as a placement 
for foster children; again, however, not all children living in 
group homes or residential facilities are foster children. For 
example, the Justice Department reports that 106,000 juveniles 
who had been charged with some kind of offense were living in 
public or private facilities in October of 1997. It is possible 
that some of the children included in the Justice Department 
count may also be included in the HHS count of the total number 
of children in foster care.
    As other witnesses will testify, there are a variety of 
kinds of public and private residential programs. We have no 
comprehensive information or data on the specific types of 
group facilities that serve foster children, or the larger 
population of all children who are living in residential 
facilities away from their families. Although research is 
sketchy, it appears that the number of group facilities for 
children and youth has increased in the last 20 or 30 years, 
while the facilities themselves are smaller and more 
specialized than institutions of the past. Some of the children 
in these facilities are placed through the child welfare 
system, but others are placed by juvenile justice or mental 
health care agencies, or they may be referred by their schools 
or placed voluntarily by their families. Children in the same 
facility may be supported by Federal funds, State funds, 
private funds or their parents' own resources or insurance 
policies.
    Although Federal foster care law requires children to be 
placed in the least restrictive setting consistent with the 
child's best interests and special needs, the law also 
envisions that children in foster care may be placed in 
settings other than private homes. Title IV-E of the Social 
Security Act allows Federal funds to be used by States to help 
care for children who are placed in foster family homes and in 
child care institutions, within certain constraints. For 
example, Federal funds cannot be used to support children in 
public facilities that serve more than 25 children or to 
maintain children in detention facilities.
    Federal foster care law also contains provisions relating 
to permanency planning for children which reflect the 
philosophy that foster care should be temporary and as short-
term as possible. Especially since enactment of the Adoption 
and Safe Families Act in 1997, Federal policy requires 
expeditious decision-making regarding whether children will be 
returned to their families or freed for adoption.
    I have been talking about different placement settings as 
variations of foster care, and regardless of the type of foster 
care arrangement that a child is living in, permanency planning 
requirements apply. These include periodic case reviews, 
judicial reviews and the new deadline established in 1997 for 
filing petitions to terminate parental rights. Nonetheless, for 
some children who cannot return home and for whom adoption is 
not considered feasible or appropriate, long-term foster care 
is used by the States as a permanent arrangement. However, 
there are currently no data to indicate the types of permanent 
foster care arrangements that are generally used for these 
children.
    Madam Chair, that concludes my statement. I would be happy 
to answer questions.
    Chairman Johnson. OK. Thank you very much, Ms. Spar.
    [The prepared statement follows:]

Statement of Karen Spar, Specialist in Social Legislation, Domestic 
Social Policy Division, Congressional Research Service, Library of 
Congress

    Good morning, Madam Chairman and Members of the 
Subcommittee. Thank you for inviting me to testify this 
morning. I have been asked to present an overview of the 
different ways in which children enter foster care, and the 
different kinds of settings that foster children are placed 
into. We tend to use the terms ``foster children'' and ``foster 
care'' in a generic way, to encompass all children who are 
living away from their parents under the supervision of child 
welfare agencies. Typically, these terms evoke images of 
children who have been abused or neglected and are living in 
the homes of other families, while their own family may be 
receiving some kind of services so they can return home, or 
while they are waiting for a new family to adopt them. In 
reality, children come into custody for various reasons, 
usually but not always because they are victims of abuse or 
neglect. And, children are placed in various kinds of settings, 
not always the private homes of other families.

                         Pathways into Custody

    According to our latest data, more than half a million 
children are in foster care under the custody of state child 
welfare agencies. Most of these children are there because they 
don't have families that can care for them safely. According to 
the most recent readily available data, 60% of the children who 
entered foster care in 1994 were placed for protective service 
reasons. These children had either been victims of abuse or 
neglect at home, or were considered at imminent risk. Another 
17% of the children who entered care that year came because of 
the absence of their parents, as a result of such conditions as 
illness, death, disability, or other problems. Thus, about 
three-quarters of the children who entered care in 1994 were 
placed because their natural families were either unable, 
unwilling, or unavailable to care for them, whether for a short 
time or permanently.
    For some children, the primary reason they enter care has 
to do with them, the children themselves, rather than directly 
with their families. Again looking at the 1994 data, almost 10% 
of the children who entered foster care that year were placed 
because of delinquent behavior, and another 5% because they had 
committed a juvenile status offense, such as running away or 
truancy. Some of these children may have come directly to the 
child welfare agency; others may have been referred by the 
juvenile justice system. Another 5% of the children who entered 
care in 1994 were placed because of a disability, and some of 
these children may have been referred to the child welfare 
system through a health care or mental health care agency. 
Finally, for almost 1% of the children who entered care in 
1994, their parents had voluntarily relinquished their rights 
and placed them in the custody of the child welfare system.
    It is important to note that the primary reason a child 
enters foster care doesn't tell the complete story of that 
child, especially during the entire period of time that the 
child remains in care. Children may enter care primarily 
because of the actions of their parents, but the children bring 
with them their own unique circumstances, and a wide range of 
problems and needs, both related and unrelated to the specific 
reason for their placement in care. Being removed from home and 
placed in foster care--in and of itself--is traumatic for 
children, and the period of time they spend in care is usually 
filled with uncertainty and change. Thus, the child welfare 
system is faced with multiple challenges: first and foremost, 
to protect children, but also to treat the underlying problems 
within their families, while also meeting the complex, ongoing 
and constantly changing needs of the children themselves.

                          Types of Placements

    As I said earlier, we often use the term ``foster care'' 
generically, to describe all situations where children are 
living apart from their families, although foster care actually 
encompasses a wide range of settings and placements for 
children. There is not absolute consensus within the child 
welfare community about what constitute the best and most 
appropriate placements for children. In general, child welfare 
professionals--and federal policy--favor placing children in 
the least restrictive, most family-like setting available that 
can meet the child's needs. However, because of the complex 
needs of some children, and also because of the shortage of 
foster family homes and the frequent instability of foster home 
placements, there has been ongoing discussion within the child 
welfare community about the role of group facilities for foster 
children.
    According to data for 1997, less than half the children who 
were in foster care on September 30 of that year actually lived 
in the home of a family to whom they were not related. 
Specifically, 46% of foster children on that date lived in non-
relative foster family homes, even though that is the 
arrangement people think of most commonly as ``foster care.'' 
Even within the category of foster family care, there is 
variety. For example, some children are in ``therapeutic'' or 
``treatment'' foster care, which resembles traditional foster 
care in that an individual family opens its home to a child or 
children in need. But in a therapeutic or treatment home, the 
foster parents may have additional skills or training and 
function as part of a broader team, often a health care or 
mental health care team, that provides and arranges services 
for the child. Treatment foster care is sometimes an 
alternative to regular foster care for a child with special 
needs. For some children, treatment foster care is an 
alternative to institutional care.
    Also in 1997, another 32% of children who were in foster 
care lived with their relatives, other than their parents. This 
is a form of foster care known as ``kinship care,'' and has 
been increasingly used as a placement of first resort during 
the past decade, especially as the number of traditional foster 
homes has not kept pace with the increasing number of children 
in need of care. It is important to understand that, while the 
data indicate that almost a third of the children we refer to 
as ``foster children'' live with relatives, not all children 
who live with relatives are foster children. In fact, in 1997, 
about 1.3 million children lived away from their parents in 
households maintained by their grandparents, but only a 
fraction of these children had been formally placed with their 
grandparents and were under the supervision of the child 
welfare system. Nonetheless, in some cases, the lives and 
circumstances of children in formal ``kinship care'' may be 
very similar to children who are living with their relatives 
informally, although the role of the government in the lives of 
these children and families differs a great deal.
    Finally, a certain number of foster children are placed in 
group or institutional care. In 1997, 9% of foster children 
were living in group homes and another 7% were living in 
institutions. What do these terms actually mean? According to 
regulations issued by the Department of Health and Human 
Services (HHS), a ``group home'' is defined as a ``licensed or 
approved home providing 24-hour care for children in a small 
group setting that generally has from seven to 12 children.'' 
An ``institution'' is defined as ``a child care facility 
operated by a public or private agency and providing 24-hour 
care and/or treatment for children who require separation from 
their own homes and group living experiences.'' HHS cites child 
care institutions, residential treatment facilities, and 
maternity homes as examples of institutions.
    As I said earlier, the primary reason that a child is 
removed from home and placed in care doesn't tell that child's 
whole story. Regardless of the reason they enter care, whether 
children are placed in foster family homes or in some type of 
group setting generally is a function of the child's needs, not 
the circumstances of the child's family. For example, 
adolescents and older children who have experienced multiple 
foster care placements may be uncomfortable in close family 
settings and prefer a group home with other children their age. 
Children with emotional, behavioral, physical, or medical needs 
may be more likely to be placed in a group home, or potentially 
an institution, depending on the complexity of their needs. 
However, it also happens that some children are placed in group 
care, at least on a short-term basis, because of the shortage 
of foster family homes. Sometimes, children are placed in 
emergency shelters until an appropriate family is found for 
them.
    As with kinship care, group homes and residential 
facilities are used by child welfare agencies as a placement 
for foster children; again, however, not all children living in 
group homes or residential facilities are foster children. For 
example, the Justice Department reports that 106,000 juveniles 
who had been charged with some kind of offense were living in 
public or private facilities on October 29, 1997. A small 
percentage--about 6.5%--had been charged with status offenses 
and it is possible that some among this group may have been 
placed in the same facilities with foster children who had 
committed similar offenses. Indeed, it is possible that some of 
the children included in the Justice Department count may also 
be included in the HHS count of the total number of children in 
foster care. Similarly, some of the children in residential 
treatment facilities may be foster children, while others are 
not; and some of the children in residential education programs 
may be foster children, while others are not.
    As other witnesses will testify, there are a variety of 
kinds of public and private residential programs, with 
different goals, philosophies, target populations, and 
services. We have no comprehensive information or data on the 
specific types of group facilities that serve foster children, 
or the larger population of all children who are living, at 
least temporarily, in residential facilities away from their 
families. Although research is sketchy, it appears that, in 
general, the number of group facilities for children and youth 
has increased in the last 20 or 30 years, while the facilities 
themselves are smaller, serving fewer children, and more 
specialized than institutions of the past. Some of the children 
in these programs are placed through the child welfare system, 
but others are placed by juvenile justice or mental health 
agencies, or they may be referred by their schools or placed 
voluntarily by their families. Children in the same facility 
may be supported by federal funds, state funds, private funds, 
or their parents' own resources or insurance policies.

                    Title IV-E and Group Foster Care

    Although federal foster care law requires children to be 
placed in the least restrictive setting consistent with the 
child's best interest and special needs, the law clearly 
envisions that children in foster care may be placed in 
settings other than private homes. Title IV-E of the Social 
Security Act allows federal funds to be used by states to help 
care for children who are placed in licensed or approved foster 
family homes, and in licensed or approved child care 
institutions, within certain constraints. For example, federal 
funds cannot be used to support children in public facilities 
that serve more than 25 children (although there is no 
comparable restriction on private facilities), and federal 
funds cannot be used to maintain children in facilities that 
are operated primarily for the detention of delinquent youth. 
Currently, data are not readily available on the number of 
federally eligible foster children who are cared for in group 
settings, or on the federal expenditures made on behalf of 
those children.
    Federal foster care law also contains provisions relating 
to permanency planning for children, which reflect the 
philosophy that foster care should be temporary and as short-
term as possible. Especially since enactment of the Adoption 
and Safe Families Act in 1997, federal policy requires 
expeditious decision-making regarding whether children will be 
returned to their families or freed for adoption. I have been 
talking about different placement settings as variations of 
foster care, and regardless of the type of foster care 
arrangement that a child is living in, permanency planning 
requirements apply. These include periodic case reviews, 
judicial reviews, and the new deadline established in 1997 for 
filing petitions to terminate parental rights. Nonetheless, for 
some children who cannot return home and for whom adoption is 
not considered feasible or appropriate, long-term foster care 
is used by the states as a permanent arrangement. Long-term 
foster care was the placement goal for 7% of the children who 
were in foster care on September 30, 1997. However, there are 
no data to indicate the type of permanent foster care 
arrangement these children were living in.
    Madame Chairman, that concludes my statement. I'd be happy 
to answer any questions the Subcommittee may have.
    Notes regarding data sources: Data cited in this testimony 
should be considered estimates. Data on the total number of 
children in foster care and on the living arrangements and 
placement goals of children in foster care on September 30, 
1997, are from the Adoption and Foster Care Analysis and 
Reporting System (AFCARS), administered by the Department of 
Health and Human Services (HHS). National estimates are based 
on incomplete reports; not all states have submitted data of 
acceptable quality to HHS for inclusion in AFCARS. Data on the 
primary reasons for placement for children entering foster care 
in 1994 are from the Voluntary Cooperative Information System 
(VCIS), operated by the American Public Human Services 
Association, and also are based on incomplete reporting by the 
states; not all states submitted information or responded to 
every data element. Data on youth in juvenile justice 
facilities in 1997 are from the Department of Justice, Census 
of Juveniles in Residential Placement (CJRP).

                                


    Chairman Johnson. Heidi Goldsmith, the executive director 
of the International Center for Residential Education.

 STATEMENT OF HEIDI GOLDSMITH, FOUNDER AND EXECUTIVE DIRECTOR, 
         INTERNATIONAL CENTER FOR RESIDENTIAL EDUCATION

    Ms. Goldsmith. Madam Chair, members of the Subcommittee. My 
name is Heidi Goldsmith. I am the founder and executive 
director of the International Center for Residential Education, 
a nonprofit organization dedicated to promoting and assisting 
the development of residential schools for disadvantaged 
children and youth. For 6 years, we have helped communities 
open new residential schools and formed a coalition among the 
existing ones. Thank you for the opportunity to be here today.
    I am strongly in favor of adoption, but as the chairman 
says, not all young people are, realistically, adoptable; nor 
do all at-risk children want or need adoption. We advocate for 
additional long-term choices, residential education, in 
particular. I contend it is No. 1, an effective option which we 
need to expand; No. 2, it is a cost-effective option; and No. 
3, legislation is needed to help expand this option for at-risk 
children and youth.
    Residential education is an umbrella term for out-of-home 
settings where a person both lives and learns. It encompasses 
boarding schools, prep schools, orphanages, children's 
villages, and youth academies. These 24-hour educational, 
future-focused settings become students' ``second homes.'' 
Students are fed, they are safe, they receive a quality 
education and they can take advantage of such opportunities as 
sports teams, community service, computer clubs, arts, 
leadership programs, et cetera. They learn social skills such 
as conflict resolution, have positive adult role models and 
gain a positive sense of what their lives can be, that a more 
positive life lies ahead of them.
    The values and lessons learned are consistent 24 hours a 
day, so that what they learn in the mornings in their 
classrooms are the same things that are reinforced in the 
afternoon in their dorms or cottages, and vice versa.
    Despite their low income, troubled backgrounds, children in 
these settings--in some of our member schools, 95 percent of 
the graduates go on to 4-year colleges. Your leadership is 
needed to make this success a more widely available option.
    Residential education programs were prevalent in the United 
States until the late 1960s. With the advent of 
deinstitutionalization, most were closed or transformed into 
residential treatment centers or juvenile delinquency 
facilities. Most of the surviving 30 or so programs were funded 
under private auspices. In the past 2 to 3 years, there has 
been a dramatic resurgence of interest, especially in the form 
of public-private partnerships, usually using the vehicle of 
residential charter schools.
    There are now residential charter schools in three States 
and the District of Columbia. The Minnesota legislature last 
year passed legislation creating three new residential schools. 
Efforts are now under way in New York City, San Diego, Florida 
and elsewhere. As with all charter schools, the funding for the 
educational component comes from public education dollars which 
follow a child to the school. The residential component is 
funded by a combination of a variety of public sources, and 
private dollars.
    They are cost-effective, and at most schools can meet a 
child's educational and living arrangements for the cost of 
about $28,000. That is less than half the cost of a juvenile 
delinquency facility, where many of these children will end up 
without significant intervention; a third to a fifth of the 
cost of residential treatment centers or intensive psychiatric 
facilities, which tend to be short-term, intensive and focus on 
the youth's pathology. Unfortunately, many children from 
abusive living situations are inappropriately placed in these 
settings because of the lack of less restrictive, less 
expensive residential education alternatives.
    While there are no empirical studies for residential 
education as a whole, there are thousands of anecdotes. Over 
and over again, students in schools I visit tell me they are 
the only one of their friends who is not in jail or dead. 
Sometimes the students vote with their feet. Schools in our 
coalition have ``pilgrims'', students who arrive at the door to 
the schools, kind of with the proverbial bandanna on a stick 
over their shoulder and say, ``Please take me in.''
    Who are best served in these settings? Youth who don't live 
in safe homes, meaning homeless youth and those in abusive 
homes; youth who have been bouncing around in the foster care 
system from foster home to foster home; youth whose well-
meaning parents, struggling to make ends meet, beg the 
residential schools to take them in, in order to keep them safe 
and away from the drug culture; youth whose parents won't go 
into residential drug treatment programs because they are 
afraid to place their children in the foster care system. So 
they continue their self-destructive habits and their habitual 
abuse and neglect of their children.
    Parents who live in nice, safe neighborhoods and have the 
financial means often send their children, with pride, to 
residential prep schools. Children from abusive or neglectful 
homes rarely have that choice. Yet they need this choice the 
most.
    I personally was inspired to make this option available for 
at-risk youth, having seen Israel's 65-year-old network of 70 
children and youth villages. There they tell the children, 
``What your family cannot provide for you, your community 
will.'' We can and need to do that here.
    Legislation is needed to appropriate funds to jump-start 
new residential schools, as was done with charter schools; to 
increase flexibility of the use of existing public funds; to 
allow waivers of certain restrictive rules and regulations; and 
to fund a study and evaluation of this reemerging field.
    This option for kids needs to transcend partisan politics, 
as was done with the charter schools.
    Thank you for reframing this debate on the residential 
education option. I urge you to consider creation of a national 
policy and modest funding which encourages the development and 
expansion of residential schools as an option in a continuum of 
options for America's valuable youth.
    Thank you.
    Chairman Johnson. Thank you.
    [The prepared statement follows:]

Statement of Heidi Goldsmith, Founder and Executive Director, 
International Center for Residential Education

    Madame Chairman, Members of the Subcommittee, staff, and 
guests, My name is Heidi Goldsmith. I am the Founder and 
Executive Director of the International Center for Residential 
Education, a non-profit organization, based in Washington, DC, 
dedicated to promoting and assisting the development of 
residential schools for disadvantaged children and youth. For 
six years the International Center for Residential Education 
has been waging an uphill struggle to increase the number of 
residential schools for at-risk, school-age children. It has 
helped communities open new schools and formed a network of 
existing ones, primarily in the United States. The 
International Center and its supporters believe the residential 
education option should be made available to more at-risk 
children and youth, as one more option, in a continuum of 
options, along with adoption and family preservation.
    Thank you for this opportunity to be here today, to share 
with you what we have learned about stable, effective options 
for children and youth whose families cannot support them. We 
are all in favor of adoption. But not all young people are, 
realistically, adoptable.
    My fellow panelists and I will discuss today a long-term 
alternative to adoption and foster care--``residential 
education.'' Residential education is an out-of-home setting 
where a person both lives and learns. The term encompasses 
boarding schools, `prep' schools, orphanages, children's 
villages, and youth academies. In these environments, youth are 
provided safe, 24-hour, nurturing, long-term, education-focused 
settings in which to develop to their full potential. The 
International Center for Residential Education, and its 
association of residential schools, the Coalition for 
Residential Education, focus on residential education programs 
for economically disadvantaged children from zero-parent, 
single-parent, or abusive homes. Today we will describe these 
environments, profile the youth for whom they are most 
effective, and encourage you to consider legislative action 
encouraging the further development of these safe, healthy, 
structured, educative environments. We have seen great results 
in these settings, and greater promise awaits with your 
assistance.
    Residential schools for poor children from single-parent, 
no-parent, or abusive homes worked well in the past for 
thousands of disadvantaged children and teenagers. Recently, 
there has been increased interest in opening new residential 
schools for these children, whose homes cannot support them and 
whose schools cannot effectively teach them.

          A Brief History of Residential Education in the U.S.

    Residential education programs have existed in the United 
States for over 350 years. Traditional ``preparatory schools,'' 
geared toward children from well-to-do families, with the 
primary goal being preparation for college, have flourished 
since the 1700's. Large congregate care settings for 
economically and socially disadvantaged youth changed, for the 
most part in the late 1960's, with the advent of 
``deinstitutionalization,'' from primarily custodial 
``orphanages'' to primarily ``residential treatment,'', 
``shelters,'' or ``correctional'' facilities. What remains is 
about 30 residential programs located erratically across the 
country, which focus on providing a safe, nurturing, surrogate 
home, and a quality education. For example, Pennsylvania has 3 
large programs. Maryland has none.
    Despite the term `orphanage' and the associated image, the 
vast majority of the students in the orphanages of the past 
were not true ``orphans.'' The legal definition of being an 
orphan was having no father. Today it often means having no 
mother. The ``bottom line'' was, and should continue to be, 
``Is the child's family able to provide him or her with basic 
developmental needs?'' Can they get the basics: Food, clothing, 
shelter, an appropriate education, a close and positive 
relationship with an adult, physical and emotional safety? The 
orphanages of the past were really residential schools--second 
homes and good schools for disadvantaged children who wouldn't 
otherwise have these basics. In these `second homes' they also 
had a much better academic, vocational, and social skills 
learning environment, readying them for productive lives, and 
more equal access to success to mainstream society. In this 
way, the `orphanages', the residential schools for 
disadvantaged children, of the past, are much like the few 
existing residential schools today. This, and not the movie 
image of a 19th Century British warehouse for unwanted kids, is 
the reality.
    The Federal Government runs the large Job Corps program, 
more of a ``second-chance'' residential education program for 
low-income 16-24 year olds. The federal Bureau of Indian 
Affairs runs a network of 49 residential schools for American 
Indian children. There are two state-funded residential schools 
for poor children whose parents are military veterans. Until 2 
years ago, other residential schools for at-risk children were 
funded under private auspices--private philanthropists, church 
groups, or intensive fundraising, though some receive state 
funding for specific children referred by state sources. The 
Milton Hershey School and Girard College in Pennsylvania, and 
the Piney Woods School in Mississippi, the nation's largest 
historically Black boarding school for low-income teens, are 
prime examples of these entirely privately funded schools. At 
Girard College in Philadelphia and at Piney Woods, despite 
their low-income, single parent backgrounds, 95% of the 
graduates go on to attend four-year colleges.\1\
---------------------------------------------------------------------------
    \1\ Goldsmith, Heidi, Residential Education--An Option for 
America's Youth: Policy and Practice, Milton Hershey School, November 
1995.
---------------------------------------------------------------------------

                        Equal Access and Choices

    There is a perverse dichotomy today: It is considered 
admirable for parents who have the financial means to send 
their children to residential preparatory (``prep'') schools, 
boarding schools. Yet most child welfare professionals, and 
much of the general public, consider it a negative practice to 
send a child to a residential school if they come from an 
abusive or neglectful family, and/or who live in a neighborhood 
with high crime, poverty, high school dropout rates, high teen 
pregnancy rates, and few positive male role models. These 
children need this choice every bit as much, if not more than, 
the children from more privileged backgrounds. They rarely have 
the option, the choice, to attend a residential school.
    ``Residential Education'' is a term imported from Israel, 
which has an extensive network of children and youth villages. 
``Residential care'' or ``residential treatment'' had been the 
terms used in the US. ``Education'' is a normative term; 
education is something everyone needs. It represents a more 
positive view of students, and emphasizes strengths and the 
future. `Care' or `treatment' is what you give to a patient--to 
someone who is ill, and indicates a more problem-to-be-solved 
approach. In the residential education programs we are 
discussing today, the focus is on young people's future. It is 
the job of everyone in the program, especially theirs, to 
develop and utilize the youth's potential. In these programs, 
they are safe, they are fed, they get a quality education, and 
they can take advantage of a myriad of opportunities such as 
sports teams, computer clubs, arts, leadership programs, 
community service, mentoring, and on and on. They learn social 
skills such as conflict resolution, and they gain a positive 
sense of purpose.
    The fact that these schools allow children to stay for a 
longer period of time is crucial. The average length of stay in 
the residential schools I work with is approximately 3.5 years. 
Everywhere I go, whether it is a residential school in downtown 
Philadelphia, an American Indian residential school, a rural 
school, an Israeli youth village, or a residential school in 
Namibia or Scotland, I ask how long it takes to really see a 
change in a child. In each setting, I hear the same response, 
``About two years.'' Somewhere around the two year mark, and it 
may be 18 months for one child and 30 months for another, the 
student suddenly understands that he or she doesn't have to be 
a `victim'. He realizes there is a choice, that he can really 
be a `somebody', and that it is up to him to make that choice. 
A light goes on in his eyes, and his motivation for success 
skyrockets. It is a thrilling and rewarding thing to see!
    Some students at the few existing residential schools come 
from low-income families who want the best for their children, 
but they themselves are struggling. They beg the schools to 
take in their children. With their children safe, studying, and 
away from the temptations of drugs and gangs, they get a 
respite, and can get the needed job training and/or drug 
treatment they need. Their children get `on track' 
academically, and gain productive social and life skills. With 
the assistance of these residential schools, their families are 
made stronger, even though they spend most of their time apart.
    Some parents won't go into residential drug treatment 
programs because they don't want their children in the foster 
care system. And they are unwilling to relinquish them for 
adoption. So they continue their self-destructive habits, and 
their habitual abuse and neglect of their children. I have been 
working recently with the Board of Education of New York City 
on creating a new residential academy. One of their prime goals 
is to create a residential setting for children from high-risk 
home environments, without having to place these children into 
the foster care system.
    There is currently little empirical evidence that these 
settings are effective. There are thousands and thousands of 
anecdotes. Professor McKenzie, the next speaker and Chair of 
the Board of the International Center for Residential 
Education, is a ``live anecdote.'' One statement I hear from 
students in many residential schools I have visited is that 
they are the only one of the friends they grew up with who is 
not in jail or dead. Sometimes the `clients'--the students, 
even `vote with their feet'. Every school in our organization's 
association for residential schools for at-risk young people, 
the Coalition for Residential Education, has `Pilgrims'. These 
are students who arrive at the entrance to the residential 
schools on their own accord from hundreds of miles away, with a 
modern version of the bandana on a stick over their shoulders, 
and say, ``Please Take Me In!''
    Cross-program evaluation is needed. In its 1994 report on 
residential care, the U.S. General Accounting Office concluded:

          ``Residential care appears to be a viable option for some at-
        risk youth. However, programs seldom conduct controlled or 
        comparison studies to determine how outcomes are linked to 
        their treatment efforts, and few programs have conducted 
        studies to show what happened to participants more than 12 
        months after they left the program No consensus exists on which 
        youth are best served by residential care rather than 
        community-based care or how residential care should be combined 
        with community-based care to best serve at-risk youths over 
        time.'' \2\

    \2\ United States General Accounting Office, Residential Care: Some 
High-Risk Youth Benefit, But More Study Needed, United States General 
Accounting Office, Washington, DC, January 1994 (GAO/HEHS-94-56)

    Residential schools are also cost-effective. Most schools 
can meet a student's educational and living needs for 
approximately $28,000 a year. That is less than half the cost 
of most juvenile delinquency facilities, where many of these 
kids are likely to end up without significant intervention. 
$28,000 is a third to a fifth of the cost of residential 
treatment centers or psychiatric treatment facilities, which 
are short-term, intensive, and focus on the youth's pathology. 
But that is where many children from abusive living situations 
are placed, often because there are no less intensive, less 
expensive residential options for them.

                     For Whom is this Option Best?

    Clearly, these schools are not for all children. We contend 
this is the most effective, and cost-effective option for 
bringing some marginalized and at-risk young people into the 
mainstream to become future tax-paying, productive, responsible 
citizens. For whom, specifically, are these settings best?

          Children who don't live in safe homes--homeless youth, those 
        in abusive homes.
          Children who have been bouncing around in, or would fail in, 
        the foster care system.
          Children whose parents want to, but cannot provide for their 
        basic needs. This usually means children living in single 
        parent, low income homes in violent neighborhoods.

    Five years ago I spent a few months traveling around the 
country, visiting existing residential education programs, to 
write a study, Overview of American Residential Education 
Programs for Youth. I found that the programs differ in size, 
target age, funding auspices, location, and even specific 
expected outcomes. I found they share more than they differ, 
however. They all offer students five essential components of 
life, otherwise unavailable to them: Safety (physical and 
emotional), Education, Community, Structure, and Self-Esteem.

                The Israeli Residential Education System

    I personally was inspired to make this option available for 
at-risk American youth, having seen Israel's extensive network 
of 70 children and youth villages. There they tell neglected, 
abused, and parentless children, half of them immigrants and 
half from abusive homes, ``What your family cannot do for you, 
your community will.'' We can, and need to, do this here!
    Israel's residential education network was created 
originally to house children fleeing the Holocaust. The 
programs are based on a hybrid of a Kibbutz (communal village) 
and traditional European boarding schools. Many of Israel's top 
politicians, artists, military heroes, and business executives 
are graduates of these schools. The programs have been adapted 
over the past 65 years to meet the changing demographics and 
needs of Israel's citizens. The current mix of students is 
approximately half abused and neglected Israeli children born 
in Israel and half new immigrants, primarily from Ethiopia and 
the former Soviet Union.
    The settings in Israel function as communities. The 
programs are group-centered while valuing each community 
member, committeed to helping students graduate, and 
unstigmatized. Students and staff contribute what they can and 
take what they need that is available. In the Israeli system 
today, the various cultures from which students arrive are 
celebrated, studied, and used to enrich the environment of the 
majority rather than be replaced by it. As Dr. Chaim Peri, 
Director of Yemin Orde Children's Village, explains, ``You must 
get thoroughly into the children's past, culture, and language. 
He doesn't come from a void!''

          American Residential Education in the New Millenium

    Since the International Center for Residential Education 
was founded in 1993, we have seen a dramatic resurgence in 
interest in this option for at-risk youth, particularly in the 
form of public/private partnerships. Two years ago the nation's 
first residential charter school opened in Massachusetts, the 
Boston University Residential Charter School. There are now 
four publicly/privately supported residential charter schools, 
in three states and the District of Columbia. In April 1998, 
the Minnesota legislature, at the urging of former Governor 
Arne Carlson, passed legislation and appropriated money to 
create three new boarding schools for at-risk children and 
teenagers. Efforts under way to develop new residential schools 
in New York City, San Diego, Florida, and elsewhere. In these 
public/private partnerships, funds for the educational 
components are funded with public education dollars. Funds for 
the residential components are funded with a combination of 
existing public dollars and private donations.
    Private philanthropy is also excited about this option. 
Five years ago the American Honda Corporation funded a new 
residential school, Eagle Rock, in Estes Park, Colorado. 
Individuals and church groups are exploring creating additional 
ones, developing their own models.

                               Obstacles

    The two biggest obstacles to the development of more 
residential education programs are funding and attitudes. Many 
at-risk children are not, for a variety of reasons, adoptable. 
Residential education is, in the short term, an expensive 
option for meeting the needs of at-risk youth, when compared to 
basic foster care or simply leaving a young person to live at 
home and drop out of school. Yet, compared to the costs of 
residential treatment and juvenile lockup facilities, where 
many young people from difficult circumstance might end up, it 
is much less expensive, and certainly much more educative. The 
myths about residential education, that the programs are 
``institutional,'' ``last hope settings,'' or Oliver Twist-like 
environments where youth are placed by social workers and 
probation officers, are a further detriment. Many child welfare 
professionals and teachers' unions oppose ``new'' modes of 
caring for and teaching at-risk children. The prevailing theory 
among critics of residential schools for these at-risk children 
is ``The worst home is better than the best institution.'' I, 
and those I represent, strongly disagree.
    Another obstacle is the dearth of information about 
residential schools. Until a year ago, the approximately 30 
residential education programs had little contact with each 
other. There was little sharing of ``best practices'' in 
residential schools, cross-program evaluation, and no student 
referral network. When a private philanthropist, a community, 
or organization wants to start a new residential school, they 
must start almost from scratch, traveling the country visiting 
the existing schools to try to identify components to include 
in their new school, designing and redesigning their new model, 
scrounging for potential funding sources, and initially meeting 
with mixed success in the schools they create. Large 
foundations which support at-risk children haven't supported 
study or development of residential education because, on the 
face of it, residential education seemed to go against the 
prevailing politically correct `darlings' of Family 
Preservation and Community Support.
    A year ago, we founded the Coalition for Residential 
Education, a national association of existing and developing 
residential schools, to network among practitioners and other 
advocates, exchange ``best practices,'' collaboratively address 
common dilemnas, and implement, in a concerted fashion, a 
public education campaign about the value of residential 
schools. This has begun to help both fledgeling and long-
existing residential schools.
    A further obstacle is certain restrictive rules and 
regulations which unnecessarily drive up the costs of these 
schools, restrict student referrals, and in many instances 
cause the school to be an `institution' rather than a 
supportive, educative community.

                     Legislative Action Needed Now

    Legislative action needed in the near future is legislation 
which:
     Increases flexibility in the use of existing 
public funds--for example, funds earmarked for foster care, 
which could follow the child, used to cover costs of the 
residential components in a residential school
     Appropriation of funds to jumpstart new 
residential schools, as was done with charter schools
     Allows waivers of certain restrictive rules and 
regulations
     Allocates funding for the study and evaluation of 
this re-emerging field, option
    In 1994, a year after the creation of the International 
Center for Residential Education, the enthusiasm for this 
additional preventative and developmental intervention for 
children was dampened, in the short term, when then Speaker 
Gingrich brought up the concept of `bringing back' orphanages. 
This option for at-risk kids became suddenly publicized and 
quickly politicized. There was a lot of publicity and public 
debate. Both sides were earnest about their beliefs, but based 
much of their opinion and their spin on old movie images.
    Fortunately, times are changing. Over the past few years, 
Americans across the political perspective are urging the 
development of boarding schools for poor children from broken 
families and violent neighborhoods. Both the Heritage 
Foundation's magazine Policy Reviewand the Democratic 
Leadership Council's magazine The New Democrat have published 
articles I have written promoting this concept. This option for 
kids needs to transcend partisan politics, as was done with 
charter schools. It needs to be available as one more option, 
one more choice for kids and those who care about them
    Many people consider children from difficult backgrounds 
``Throw Away Children.'' Human and financial resources are 
expended--or rather, not expended--on them accordingly. Thank 
you for today's careful and realistic consideration of this 
option for kids. You are reframing the debate on this option 
for at-risk youth. This time we are opening an informed, 
serious, reasoned discussion, based on reality.
    I believe adoption is the first preference for a child who 
no longer has a parent. For children for whom adoption is not a 
realistic option, the safe, 24-hour, education-oriented, 
structured environment of a long-term residential school 
prevents them from dropping out of school early, having 
children too soon, and engaging in a range of self-destructive 
behaviors. If we are to avoid `losing' so many of our young 
people to drug abuse, crime, and hopeless futures, we cannot 
afford to wait. I urge you to consider creation of a national 
policy, and modest funding, which encourages the development 
and expansion of residential education as a long-term option, 
in a continuum of options, for America's valuable children.
    [Attachments are being retained in the Committee files.]

                                


    Chairman Johnson. Mr. Richard McKenzie, the Walter B. 
Gerken Professor of Enterprise and Society at the Graduate 
School of Management, University of California, Irvine.
    Welcome.

  STATEMENT OF RICHARD B. McKENZIE, ECONOMICS AND MANAGEMENT 
    PROFESSOR, GRADUATE SCHOOL OF MANAGEMENT, UNIVERSITY OF 
                       CALIFORNIA, IRVINE

    Mr. McKenzie. Again, I am Richard McKenzie, and I am here 
because of an edited volume that I put together a couple of 
years ago on Rethinking Orphanages for the 21st Century. My 
written testimony reflects that volume and tries to suggest to 
you the range of issues that need to be addressed to facilitate 
bringing back children's homes. I recognize that some of those 
issues have, in fact, been dealt with over the last year or so.
    I am also here because I grew up in an orphanage in the 
1950s, and that has in many ways motivated my recent work.
    Five years ago this November Newt Gingrich made an off-the-
cuff comment about how children in the welfare system might be 
better off in orphanages. It started a media fire storm, and 
his proposal was rapidly dismissed as ``unbelievable and 
absurd.'' Perhaps Mr. Gingrich was more right than he knew at 
the time.
    Over the past 5 years we have learned a lot, not the least 
of which is how many millions of American kids are, in fact, 
abused, and that abuse is substantiated. We know that there are 
at least a half a million American kids in foster care at any 
point in time. We also know that at least 100,000 kids that 
were in the foster care system in November 1994 are still there 
today. We know that 27 percent of the foster care kids will go 
through at least three placements on their first cycle through 
the system, and many of them will go through several cycles 
through the system. We do not know how many placements many of 
them will suffer. Anecdotal evidence suggests that many kids 
will go through dozens of placements. There are also reports of 
kids going through 40 and 50 placements before they graduate 
from high school.
    With that background in mind, is there not some 
understanding of why people might look ``back to the future,'' 
back to homes for children?
    We have also learned a good deal about how well alumni did 
in the past. I undertook a survey of 1,600 alumni from nine 
homes in the South and Midwest. All of these kids are now 45 
years of age and older. All of them spent an average of 8 years 
in their children's home. They went there at an average age of 
7, at anywhere from 2 to 13 or 14 years of age.
    What I found is startling, but yet it confirms my own 
personal experience with the kids with when I grew up. The 
alumni from these homes have outpaced their counterparts in the 
general population on almost all accounts, not the least of 
which are education, income and attitude toward life. The 
alumni have a college graduation rate that is 39 percent higher 
than the general population. They have a 20 percent higher rate 
of Ph.D's than the general population. They have a median 
income somewhere between 10 and 60 percent higher than the 
general white population. They have a lower poverty rate. They 
have a lower rate of public assistance, a lower rate of 
criminal incarceration. You name it, they have done better. And 
that should perhaps suggest to us that we should look ``back to 
the future.''
    Not only that, we also learned that these kids were not all 
like Little Orphan Annie, pining to be adopted. Indeed, 86 
percent of the alumni from these homes said that they never 
contemplated adoption. Many of them were like me. When I knew 
that a couple was coming on campus to survey the kids who were 
10, 11, and 12 years old, the age group I was in, we didn't 
stand out to be asked to be adopted. We would head for the 
woods, and there is good reason for that: If your family has 
failed you, you don't necessarily think that Daddy Warbucks is 
going to be the one who picks you out. If you have a pretty 
good place, why not stay with it?
    Only 3 percent of the alumni were like Annie pining to be 
adopted. Some of the kids were asked to be adopted, but they 
didn't allow themselves to be adopted until they graduated from 
high school. This is an unheralded story that needs to get out.
    Now, children's homes that are coming back--I mean the 
children you meet today are being hampered in getting the kind 
of care that I and many of my alumni cohouts got. If you ask 
the alumni what counted, they will all tell you the work ethic, 
religious and moral nurturing, and a sense of responsibility. 
Yet, we have laws on the books that restrict kids from mowing 
the grass. There is a home in Chicago that won't send its kids 
to the grocery stores because of liability problems.
    There are all kinds of restrictions on how religious and 
moral nurturing cannot be instituted; and, of course, there is 
a liability problem, not only in these homes but in foster 
care. Kids in California who are in foster care or in these 
homes cannot get a driver's license because nobody will assume 
liability.
    I think adoption is wonderful; I think it is great for 
those kids who meet the requirements. But you have got to 
understand that not all the kids are adoptable. Not all parents 
will allow their kids to be adopted. My father would have 
terrorized any adoptive parent who took me. Also, not all 
children want to be adopted.
    And then there is the issue--sorry, time's up.
    Chairman Johnson. You finish if you can, in a couple 
minutes, go ahead.
    Mr. McKenzie. I am sorry, I lost my train of thought.
    Chairman Johnson. You were going on to a second issue.
    Mr. McKenzie. I know.
    Chairman Johnson. We will come back to you.
    [The prepared statement follows:]

Statement of Richard B. McKenzie \1\, Economics and Management 
Professor, Graduate School of Management, University of California, 
Irvine

                    Part I. Extended Oral Testimony

    I am Richard McKenzie, an economics and management 
professor in the Graduate School of Management at the 
University of California, Irvine. I am here because of my 
research on the alumni of children's homes that operated in 
this country decades ago.
---------------------------------------------------------------------------
    \1\ Richard McKenzie is a professor in the Graduate School of 
Management at the University of California, Irvine. He is also editor 
of Rethinking Orphanages for the 21st Century (Sage Publications, 1998) 
and author of The Home: A Memoir of Growing up in an Orphanage  (Basic 
Books, 1996). E-mail: [email protected].
---------------------------------------------------------------------------
    Nearly five years ago former Speaker of the House Newt 
Gingrich set the tone for his contentious speakership when he 
dared to suggest that some welfare children would be better off 
in private orphanages. In making his off-the-cuff comments, he 
ignited a media firestorm, mainly organized around claims of 
critics that his proposal was ``unbelievable and absurd.'' In 
early 1995, Speaker Gingrich quietly conceded the issue to his 
critics. He did not know how right he was.
    Over the past five years an untold number of American 
children have endured third-world living conditions and the 
sordid consequences of their parents' horrific life choices, 
facts that have regularly been reported in the news. Five 
million cases of serious child abuse have been substantiated. 
More than a million children have cycled through the foster-
care system. A hundred thousand or more American kids who were 
in foster care in late 1994 remain there today--and will be 
there into the next millenium.
    Over the past five years, tens of thousands of children 
have been repeatedly taken from their abusive and neglectful 
parents only to be abused again, sometimes with greater force, 
by the nation's child welfare system that regularly separates 
siblings, sending brothers and sisters separately through a 
dozen or more foster-care placements. These children have 
become seasoned troopers in what family court judges have come 
to call the ``plastic bag brigade,'' children who repeatedly 
show up in court for yet another placement with only a plastic 
bag in which to carry their possessions. They will never 
understand what other Americans mean by one of the most basic 
of human advantages--``home,'' a permanent place to call their 
own. Ill prepared for a productive life outside the foster-care 
system, many will graduate to relive the lives of their 
parents.
    There should be no debate that many of the children trapped 
in the country's child welfare system would be better served by 
being adopted. We have an absurd child welfare system in this 
country that makes adoption so costly and cumbersome that many 
American couples this year will travel thousands of miles to 
foreign lands to adopt children. At the same time, it is 
senseless to believe that all children in need of a permanent 
home will be adopted. Some children do not fit the needs of 
parents in search of children to adopt, and contrary to 
conventional thinking, many other children do not want to be 
adopted. Moreover, there is a little-discussed upward trend in 
``failed adoptions'' that many adoption advocates rarely 
acknowledge. I am here to suggest that the country needs--no, 
children need--permanent care options beyond adoption.
    What do we do with children who either can't or don't want 
to be adopted? What do we do with the children who have been 
dumped by their biological parents, dumped by a series of 
foster parents, and then dumped by their adoptive parents?
    I would be the first to acknowledge that children's homes 
were far from perfect care options. I should know. I grew up at 
Barium Springs Children's Home in North Carolina in the 1950s. 
At the same time, I'm here as a representative of the hundreds 
of thousands of adult Americans who grew up the way I did, who 
have done well in life--and who to this day feel fortunate for 
the opportunity they had as children and who shudder at having 
to endure what many American children go through today.
    Over the past four years, we've learned much about 
children's homes that we didn't know in late 1994. We now know 
from the first large-scale survey of 1,600 alumni from nine 
orphanages in the South and Midwest that dismissal of the 
orphanage option nearly five years ago was far too quick, 
related more to ingrained and outdated Dickensian images of 
orphanage life a century or more ago than to the reality of the 
experiences that the vast majority of the children had in their 
homes.
    The alumni in the survey (all of whom are now middle aged 
and older) have done very well as a group, exceeding by a 
substantial margin the educational and economic accomplishments 
of their counterparts in the general population.\2\ For 
example, the alumni have a 39 percent higher college graduation 
rate than other Americans in their age group; far more income; 
and substantially lower unemployment, poverty, and 
incarceration rates. Moreover, the vast majority (upwards of 85 
percent) look back favorably on their orphanage experience and 
attribute much of their life's successes to what they learned 
about life, morality, and work in their at their homes. Less 
than 3 percent view their experience unfavorably.
---------------------------------------------------------------------------
    \2\ The details of this study are reported in Richard B. McKenzie, 
``Orphanage Alumni: How They Have Done and How They Evaluate Their 
Experience,'' Child and Youth Care Forum, vol. 26 (no. 2; April 1997), 
pp. 87-111. The results have been reprinted in Richard B. McKenzie, 
editor, Rethinking Orphanages for the 21st Century (Thousand Oaks, 
Calif.: Sage Publications, 1998), chapter 7.
---------------------------------------------------------------------------
    What is important for this committee to hear is that very 
few (less than 3 percent) were like Little Orphan Annie who 
pined for adoption. Most were like the kids I grew up with. 
When we heard that a nice couple would be roaming the campus 
with thoughts of adopting one of us, we headed for the woods. 
Why? When your family has failed you, you don't necessarily 
assume that the adoptive parents will be like Daddy Warbucks.
     In all due respect to the policy combatants in late 1994, 
the issue today is no longer whether children's homes will 
return; they never went completely away. Moreover, new 
children's homes, whether in the form of residential charter 
schools or SOS Villages USA, are emerging. The California 
Lutheran Church is one of a number of private groups across the 
country working to establish homes. This past spring Minnesota 
agreed to set up a dozen ``residential academies.'' The 
movement is quiet and slow but unstoppable, because the need is 
so great.
     Moreover, children's homes offer many disadvantaged 
children distinct advantages over foster care, not the least of 
which are structure, stability, and a sense of permanence, if 
not a place they can call ``home.'' However, children's homes 
also permit siblings to stay together, and they afford children 
a chance develop moral and religious values, a sense of 
responsibility and work ethic, as well as much needed education 
and job-related skills, factors that are sorely missing in the 
foster care system.
     However, as described in detail in my new edited volume, 
Rethinking Orphanages for the 21st Century, there is much left 
to be done in the way of policy reforms at the state and 
federal government levels to speed up the reemergence of 
private children's homes. First and foremost, we must correct 
popular misconceptions relating to children's homes. People 
must realize that if the orphanages of the past were all hell 
holes, their alumni would not continue to gather yearly in the 
hundreds and thousands across this country for homecomings--
forty and fifty years after their homes closed. (For a 
discussion of the recommended policy reforms developed two 
years ago by a group of child welfare practitioners and 
scholars, see Part II of this testimony.)
     We need to work hard to deregulate in a variety of ways 
much residential childcare in order that modern children's 
homes can become more cost effective and more common. We need 
to once again free up the creative energies of American 
philanthropists. The Hershey children's home in Pennsylvania, 
which is expanding from 1,100 to 1,500 children and has an 
endowment that rivals the Getty Museum, stands as the late 
Milton Hershey's working monument to what good deeds, not 
political rhetoric, can do for and through the lives of 
children.
    If anyone wants to see what private deeds through 
children's homes can do, go to Hershey and be amazed. Take a 
side trip to the SOS Village in Florida or Illinois and to the 
Connie Maxwell Children's Home in South Carolina, and listen to 
yourself wishing that more disadvantaged kids could have the 
same opportunity to make a break from their sordid 
circumstances and chart a brighter future in a place that they 
can call home.
    Again, my point is simple: Adoption is wonderful for those 
children who have that opportunity, but adoption is not a 
panacea. Children's homes are a care option whose time has come 
again.

   Part II. Rethinking Orphanages for the 21st Century: A Search for 
            Reform of the Nation's Child-Welfare System \3\
---------------------------------------------------------------------------

    \3\ This section is drawn from Richard B. McKenzie, editor, 
Rethinking Orphanages for the 21st Century (Thousand Oaks, Calif.: Sage 
Publications, 1998), chap. 16.
---------------------------------------------------------------------------
    Few question the proposition that children need a good 
start in life. However, far too many American children fail to 
get the ``good starts'' that they need. The percentage of 
children who are growing up without the supervision and 
guidance of one or both parents for much of the time while they 
are out of school is widely acknowledged. The statistics on 
child abuse and neglect are horrific.\4\ More than a million 
cases of significant child abuse and neglect are substantiated 
every year. Five children in the country die each day from 
abuse and neglect. Upwards of 22,000 babies are abandoned 
annually in the hospitals in which they were born. The 
incidence of child abuse and neglect of all forms more than 
doubled between 1980 and 1993.\5\
---------------------------------------------------------------------------
    \4\ For details on the extent of the nation's problems of abuse and 
neglect, see Sedlak and Broadhurst (1996).
    \5\ For a summary of statistics on child abuse and neglect, see 
Fagan and Hanks (1997).
---------------------------------------------------------------------------
     Adoptions have eased the troubles of many children, as 
have various forms of substitute public care, not the least of 
which has been foster-parent care.\6\ However, only 6 percent 
of the babies abandoned each year in hospital nurseries are 
adopted. The foster-care system is now approaching a crisis 
state, given the speed with which the count of children in care 
is expanding while the number of available foster parents is 
contracting; the increase in the time children are staying in 
the system; the decline in the percentage of foster-care 
children who are adopted out of the system; and the growth in 
the number of different foster-care placements many children 
must endure.\7\
---------------------------------------------------------------------------
    \6\ For a review of the problems potential adoptive parents face in 
their efforts to adopt children, see Craig (1995).
    \7\ For a review of one state's child-welfare system, see Matlick 
(1997).
---------------------------------------------------------------------------
    The foster-care system had well over 600,000 children in 
care in 1992, up by more than 50 percent since 1986. At the 
same time, tens of thousands of children across the country are 
waiting to be placed in the foster-care system. The percentage 
of children in foster care who had been in the system for two 
to three years increased by almost half in just seven years, 
from under 11 percent in 1983 to nearly 16 percent in 1990. The 
percentage of children in foster care for three to five years 
rose from under 12 percent in 1983 to almost 17 percent in 
1990. All the while, the percentage of children adopted out of 
foster care declined by a third, from 12 percent in 1983 to 
under 8 percent in 1990.\8\
---------------------------------------------------------------------------
    \8\  For more details on the problems in the foster-care system, 
see Bevan (1996).
---------------------------------------------------------------------------
    Foster care was intended to be temporary care. However, one 
out of every ten children--over 60,000 of all current foster-
care children--can expect foster care to be, in effect, 
permanent care, given that they will spend more than seven 
years in the system. For all too many children, foster care 
will also be unstable care, especially since siblings are often 
sent to different foster homes. Moreover, twenty-three percent 
of foster-care children will have two placements, an additional 
20 percent will experience three to five placements, and 7 
percent will have more than seven placements, which means that 
more than one quarter of the children who go into the foster-
care system can expect to be shifted among more than three 
foster parents \9\ (and many can expect to go through dozens of 
placements \10\).
---------------------------------------------------------------------------
    \9\ As reported in A Challenge to the Nation: Safe and Permanent 
Homes for Children (1997).
    \10\ No one knows how many children go through placements that 
reach into the ``dozens.'' However, Donald Veuleur, an officer in the 
Olive Crest home for children in Orange County, California, and Robert 
Stansel, president of Barium Springs Home for Children in Iredell 
County, North Carolina, attest to all-too-frequently working with 
children who may have been through three and four dozen foster 
placements.
---------------------------------------------------------------------------
     No doubt, many foster children have done well because 
their foster parents gave a lot of themselves for very little 
payment. However, signs of strain with the foster-care system 
abound. Currently, children in foster care constitute less than 
.003 percent of the nation's population. However, 17 percent of 
state prisoners are former foster-care children, 40 percent of 
foster children leave the system to go on the nation's welfare 
roles, and 39 percent of the homeless youth in Los Angeles 
County are former foster-care children.\11\
---------------------------------------------------------------------------
    \11\ As reported in A Challenge to the Nation: Safe and Permanent 
Homes for Children (1997, p. 3).
---------------------------------------------------------------------------
     Judges and childcare workers across the country openly 
decry the fact that many abused and neglected children will be 
sent home from the foster-care system only to be abused again 
and returned to the system for another round of foster 
placements. Heads of group homes, which provide temporary care 
for troubled children, readily admit that many of their charges 
should never be sent home, but all too often, abusive homes or 
additional foster-care placements are the only options 
available.\12\
---------------------------------------------------------------------------
    \12\ For an example of how judges assess their options, see Estella 
Moriarty's contribution in McKenzie (1998; chapter 3).
---------------------------------------------------------------------------
     To say that the nation's childcare system needs new 
options for care is an understatement of major proportion. One 
of the ``new'' options for a growing number of children will 
likely be an ``old'' one--the private ``orphanage'' (or 
children's home) option. This short paper reviews the policy 
obstacles that impede the return of private children's homes 
and offers suggested policy reforms devised at a symposium of 
researchers and practitioners.\13\
---------------------------------------------------------------------------
    \13\ The list of the attendees at the symposium is included in the 
appendix to this chapter.

---------------------------------------------------------------------------
The Children's Home Option

    In late 1994 and early 1995, policy makers and commentators 
furiously debated the issues of whether private orphanages (or 
long-term residential and educational care centers for 
disadvantaged children) should be brought back as a care 
option.\14\ Contrary to the way that debate ended--abruptly, 
without any apparent resolution of the central issue--the issue 
today is no longer whether private orphanages (or some modern 
variant of them) will return. Private orphanages never went 
completely away, as might be believed. Not all children's homes 
folded or changed their missions to care for severely troubled 
youth. The Milton Hershey School in Pennsylvania, the Connie 
Maxwell Home for Children in South Carolina, the Masonic Home 
for Children in North Carolina, and the Palmer House in 
Mississippi are four examples of children's homes that have 
continued to provide long-term care for disadvantaged children 
for much, if not all, of this century.\15\
---------------------------------------------------------------------------
    \14\  For a review of the orphanage debate of 1994-1995, see Ross 
London's contribution to McKenzie (1998; chapter 6).
    \15\  For reviews of beneficial residential children's programs in 
Israel, Africa, and Europe, see Beker and Magnuson (1996). For a review 
of the potential benefits of residential programs in the United States, 
see Goldsmith (1995).
---------------------------------------------------------------------------
    New private orphanages (or children's homes) are springing 
up. SOS Children's Villages-USA, Inc., which has children's 
homes in 125 countries, has established a childcare beachhead 
in the United States, with a new model for children's homes 
that has been tested and proven effective in Florida and 
Illinois and that will likely be duplicated throughout the 
country.\16\ Moreover, other religious and civic groups have 
concluded that the disadvantaged children who are now being 
tossed from one foster placement to another, and between foster 
placements and their own dysfunctional families, need the sense 
of security that comes from having a permanent home. The 
Lutheran Church of California has a project they have dubbed 
``20/20/20,'' for twenty children's homes in twenty cities in 
twenty years. Children's homes that two and three decades ago 
became short-term treatment centers are reconsidering their 
mission, with an eye toward reintroducing long-term residential 
care for children who would otherwise not be able to return 
home or who would likely continue to move from one foster 
placement to the next.
---------------------------------------------------------------------------
    \16\ For more information on SOS Villages-International, see the 
organization's home page: www.sos.or.at/sos. There are currently 361 
SOS children's villages worldwide caring for nearly 30,000 children 
supported by over six million ``friends'' of the organization. All of 
the world's major religions are represented in the villages, and each 
child is brought up in his or her own religion.
---------------------------------------------------------------------------
    Clearly, the nation's growing problems with family 
stability, child abuse and neglect, welfare reform, and foster-
care ensure that some modern form of private orphanage care 
will continue to return. The relevant question now is at what 
pace private orphanages (or whatever they are called) will 
spread, and that issue is critically related to the cost of 
care, which is high and going up.\17\
---------------------------------------------------------------------------
    \17\ For an analysis of the cost of care at two childcare 
institutions, see Del Bradshaw, Donald Wyent, and Richard McKenzie's 
contribution to McKenzie (1998; chapter 15). Briefly, these authors 
found that the annual cost of care at one home for severely troubled 
children was over $64,000 per child in 1995. The annual cost of care in 
a home for disadvantaged children was more than $32,000 per child. The 
annual cost of care per child at both institutions in 1950 (when they 
cared for disadvantaged children) was less than $7,500 per child in 
1995 dollars.

---------------------------------------------------------------------------
Children's Need for a ``Good Start''

    To say that children need a ``good start'' is instructive 
but not sufficient. One childcare expert, whose authority is 
grounded in his professional work and his background as an 
orphanage alumnus, suggests that a good start for a child 
almost always encompasses four attributes: Connectedness, 
Continuity, Dignity, and Opportunity (Seita, Mitchell, and 
Tobin, 1996):
    1. By connectedness he means that ``children need to feel 
that someone is there for them, and that they are a part of 
someone else's life'' (Mitchell, and Tobin, 1996; p. 93).
    2. ``Continuity is a sense of continuous belonging with 
another person or persons. The young person needs to feel a 
part of a greater whole and has an important position to play 
within it'' (Mitchell, and Tobin, 1996; p. 96).
    3. ``To have dignity is to feel worthy. All children are 
worthy of respect, caring, love, thought and courtesy.'' 
(Mitchell, and Tobin, 1996; p. 98).
    4. Children need an opportunity to grow and develop, which 
means that ``young people must be able to explore and express 
their capabilities without undue external barriers. Children 
must have access to quality education, recreation and leisure, 
all at an appropriate developmental level.'' (Mitchell, and 
Tobin, 1996; p. 100).
    The list is short and subject to quibbles. Seita would be 
the first to acknowledge that his list of four attributes is 
not necessarily all-inclusive of children's needs. For example, 
children need to feel safe (which Seita would include under 
dignity), and they need some form of spiritual and/or moral 
nurturing (which he would include under continuity). The point 
is that what children needs are fairly basic and relatively 
easy to identify and categorize. The tough task is ensuring 
that children get the basics.
    Most children will get the good start they need from their 
biological families. Others will get a good start from adoptive 
families, and still others will benefit from some form of 
short-term and long-term foster care as the children's families 
reconstitute themselves. Work on improving the care children 
receive from their biological, adoptive, and foster families 
must continue for an obvious reason: These forms of care will 
always be the dominant means by which children get their starts 
in life. However, for a growing number of children, the various 
forms of family-based care available to them have been 
inadequate, if not destructive. Many disadvantaged children 
will never be adopted. That does not mean that adoption should 
not be encouraged and more widely used, with the legal and cost 
impediments to adoption reduced, as has been recommended.\18\
---------------------------------------------------------------------------
    \18\ See Bevan (1996, chap. 5).
---------------------------------------------------------------------------
    The unadulterated fact remains that many children should 
never be returned to their abusive and neglectful biological 
parents, and far too many children will spend years of their 
childhoods in what can only be called ``permanent temporary 
care,'' year by year going from one temporary foster-care 
placement to another. Could not these children find better 
childhood experiences in care centers that offer long-term, 
permanent substitute care that might not match the ideal of 
family life but would be significantly better than their next 
best alternative?

Reconsideration of Past Assessments Of Orphanages

    Past assessments of institutional care for children have 
been far too harsh. Admittedly, many childcare experts have 
concluded, after reviewing a number of studies relating to the 
efficacy of institutional care, that private orphanages 
``damaged'' the children in their care.\19\ While many 
orphanages may not have provided their charges with good 
experiences, a critical review of the childcare literature 
relating to orphanages suggests that the studies themselves are 
defective in a number of regards, leaving open the question of 
whether the broad sweep of private orphanages that covered the 
country during the first half of this century were as ``bad'' 
as has been suggested.\20\
---------------------------------------------------------------------------
    \19\ For a summary of the criticisms, see Ford and Kroll (1995).
    \20\ For a brief history of the orphanage movement in this country, 
see Marvin Olasky's contribution to McKenzie (1998; chapter 5). Also 
see Seita, Mitchell, and Tobin (1996). For histories of individual 
homes that appeared to have served a substantial majority of their 
children well, see Cmiel (1995), Goldstein (1996), and Zmora (1994). 
For a review of the scholarly childcare literature as it relates to 
orphanage care, see John McCall's contribution to McKenzie (1998; 
chapter 8) and Children's Bureau, Orphanage Background Materials 
(1995).
---------------------------------------------------------------------------
    While all homes for disadvantaged children probably harmed 
some of the children in their care (as do some families), there 
is strong evidence that homes for disadvantaged children helped 
a substantial majority of their charges. The general conclusion 
drawn from the first and only large-scale survey of orphanage 
alumni (involving 1,600 respondents from nine orphanages in the 
South and Midwest) stands in sharp contrast to conventional 
wisdom and expert conclusion on orphanage life: As a group, the 
alumni have outpaced their counterparts in the general 
population by significant margins on practically all measures, 
not the least of which are education, income, and attitude 
toward life.\21\ The survey respondents seem to be saying that 
they got from their orphanage experience the required 
``connectedness, continuity, dignity, and opportunity'' that 
constituted a ``good start'' and served them well later in 
life.\22\
---------------------------------------------------------------------------
    \21\ See Richard McKenzie's contribution to McKenzie (1998; chapter 
7).
    \22\ The overwhelming majority of the respondents indicated that 
they maintain favorable assessments of their orphanage experience (see 
chapter 7 of McKenzie (1998)).
---------------------------------------------------------------------------
    The record of many homes of the past should be reassessed 
with an eye toward considering their ``batting averages'' 
relative to the ``batting averages'' of alternative systems of 
substitute care, most notably foster parent care. These 
assessments of the programs of past and current children homes 
should be remade with the goal of identifying ``best 
practices,'' and avoiding many of the mistakes that were made 
in the past.
    The case for temporary institutional care of seriously 
troubled children has been made and is widely accepted. The 
case for permanent care of disadvantaged children who have not 
yet become seriously troubled has not been widely accepted and 
needs to be remade with greater force. That case needs to be 
made with reference to the problems and deficiencies in the 
current substitute-care systems. However, what is needed is not 
a contraction in the number of children who receive substitute 
care, but an expansion in the array of care options in order 
that children can be placed in environments that best serve 
their particular needs.
    It must be acknowledged that many children will never 
prosper in an institutional setting. At the same time, 
experience has shown that many children can do well in such a 
setting, and they can surely do better in such a setting that 
they might do in a sequence of temporary placements. Private 
homes for children can provide a form of long-term, permanent 
care, from which a sense a security can develop, but homes can 
provide much more, not the least of which is improved 
educational opportunity, a sense of work ethic, religious and 
moral nurturing, and camaraderie and sense of community--
attributes that the alumni of homes have as important in their 
childhoods and that are clearly evident at homes like the 
Milton Hershey School in Hershey, Pennsylvania, and SOS 
Children's Villages that, as noted, are scattered across more 
than 100 countries worldwide.\23\
---------------------------------------------------------------------------
    \23\ See McKenzie, ``Orphanage Alumni'' and Heidi Goldsmith, 
Residential Education: An Option for America's Youth (Hershey, Penn.: 
Milton Hershey School, November 1995). For more information on SOS 
Children's Villages International, use the following web site: 
www.netwing.at/sos/.

---------------------------------------------------------------------------
Policy Impediments to Permanent Institutional Care

    Greater use of the private orphanage (or permanent 
children's home) option is now, however, inhibited by a variety 
of state and federal laws and regulations that encourage judges 
and child-welfare workers to keep children with their 
biological but abusive and neglectful parents and to shun the 
use of long-term, institutional care. Many of these laws and 
regulations also have the effect of driving up the cost of 
long-term childcare in institutional settings, which means that 
fewer children than otherwise will receive the type of 
permanent care they need.
    Under current federal law (namely the Adoption Assistance 
and Child Welfare Act of 1980), states must prove that they 
have made ``reasonable efforts'' to prevent the removal of 
children from their biological parents and to return children 
to their biological parents, a seemingly innocuous requirement. 
The policy intent of that federal law was understandable, to 
reverse the sharp rise in foster placements that occurred in 
the 1970s (which did, in fact occur for a time \24\, and few 
would question making ``reasonable efforts'' to keep families 
together. However, the problem is that the term ``reasonable 
efforts'' has been unreasonably interpreted by practitioners in 
the child-welfare system to mean that virtually every possible 
effort must be made to rehabilitate the parents and to reunite 
the children with their parents when the children have been 
removed.
---------------------------------------------------------------------------
    \24\ Foster-care placements fell from a half million in the late 
1970s to 300,000 by the mid-1980s. However, as noted, placements were 
back above 600,000 by the early 1990s. See Pelton (1989), Tatara 
(n.d.), and U.S. Advisory Board on Child Abuse and Neglect (1993).
---------------------------------------------------------------------------
    The termination of parental rights is often delayed for 
years as the parents make little or no effort to change their 
abusive and neglectful ways. Abusive and neglectful parents can 
also slow down the termination process by, at times, making 
only marginal improvements in their behavior or by claiming 
that they have not been provided with ample state resources 
(through, for example, drug rehabilitation programs) to correct 
their behavior.
    The accumulation of delays can mean that children are 
forced to remain with their parents long after parental abuse 
and neglect has been substantiated, as extensive efforts 
continue to rehabilitate the parents and to stop the abuse. It 
has also meant that children have been repeatedly returned to 
abusive and neglectful parents to be abused and neglected again 
and that, all the while, the children have been forced to 
endure repeated cycles of multiple foster-care placements.\25\
---------------------------------------------------------------------------
    \25\ See Conna Craig's contribution in McKenzie (1998; chapter 2).
---------------------------------------------------------------------------
    The termination of parental rights of biological parents 
has become progressively more difficult and time consuming, 
even among abusive parents who have committed repeated felonies 
against one or more of their children. Often, children who have 
not been abused (sexually, emotionally, or physically) cannot 
be removed from their abusing parent(s) even though one or more 
of their siblings has been abused.\26\
---------------------------------------------------------------------------
    \26\ For discussions of the problems children must face because of 
family rehabilitation and reunification efforts, see Moriarty (chapter 
3), Gelles (chapter 4), and Gelles (1996).
---------------------------------------------------------------------------
    No one questions the importance of good family nurturing to 
children, and clearly state and federal law should not obstruct 
the continuance of family life when it supports the welfare of 
children in the families. However, as state efforts to 
rehabilitate and reunite otherwise abusive and neglectful 
parents have been extended and parental rights have not been 
denied, children have aged through repeated cycles of foster-
care placements and have become progressively more troubled. 
The children's growing troubles should be expected with the 
buildup of insecurity as they are passed from one set of foster 
parents to another in the so-called ``foster-care drift.'' 
Understandably, the children have become less adoptable, often 
requiring, eventually, psychological care in institutional 
settings.
    Indeed, researchers have found that the substitution of the 
foster-care system for the institutional/orphanage-care system 
in the 1950s and 1960s has (after adjusting for a number of 
other forces at work) lowered the adoption rate of 
disadvantaged children.\27\ Unfortunately, growing evidence 
indicates that the family rehabilitation and reunification 
programs have been ineffective, all the while children have not 
gotten the care they need or, worse, have literally been 
abused, albeit inadvertently, by the child-welfare system that 
was designed to help them.\28\
---------------------------------------------------------------------------
    \27\ See William Chappell and William Shughart's contribution in 
McKenzie (1998; chapter 9).
    \28\ See Gelles' contribution in McKenzie (1998; chapter 4) and 
Gelles (1996).
---------------------------------------------------------------------------
    The child-welfare system may have been predisposed to 
interpret ``reasonable efforts'' very generously because many 
experts and practitioners are convinced that any form of family 
care is to be preferred even over the best form of 
institutional care, but also because the scope of care provided 
by state agencies can be expanded with a generous 
interpretation of what constitutes ``reasonable efforts.'' 
Regrettably, within the child aid system, there are built-in 
budget biases in favor of placing children in foster care and 
not moving them out to institutional care.\29\
---------------------------------------------------------------------------
    \29\ For a political assessment of the growth of the child-welfare 
system, see the contributions in McKenzie (1998) by Karol and Donald 
Boudreaux (chapter 10) and Dwight Lee (chapter 11). The Bordeaux's 
write, ``Such a program creates clear incentives to place children in 
foster-care families. Add to the open-endedness of these funds the fact 
that under the AFDC program `administrative costs' of social services 
agencies were shared on a 50/50 basis with the federal government, and 
the bureaucratic tendency to grow like kudzu receives further 
encouragement. That is, social service agencies were receiving 
unlimited funds from federal coffers for AFDC payments, which, as of 
1961 included some foster-children, and agencies were splitting 
administrative costs with the federal government. The greater the 
number of children placed with foster-care families, the larger the 
child-welfare agency budget.'' They quote the Encyclopedia of Social 
Work (1987, p. 642), which also concludes that ``[s]tates that were 
heavily dependent on [AFDC foster-care] funds had no incentives to move 
children out of foster care because funding was lost each time a child 
was discharged from placement'' (Encyclopedia of Social Work, 18th ed., 
Vol. 1 [Silver Spring, Md: National Association of Social Workers, 
1987], p. 642).
---------------------------------------------------------------------------
    However, the system has another, perhaps stronger economic 
incentive to make far more than ``reasonable efforts'' to 
rehabilitate parents and to reunify children with families that 
may or may not have been rehabilitated: The cost of 
institutional care, which might have to be covered out of state 
budgets, is very high--easily exceeding $30,000 per year per 
child--and the cost has grown substantially over recent 
decades.\30\ At one home for disadvantaged children, the annual 
cost of care per child in 1995 was more than four times the 
real (inflation-adjusted) cost of care per child in the early 
1950s.\31\
---------------------------------------------------------------------------
    \30\ See Bradshaw, Wyent, and McKenzie (chapter 15).
    \31\ See Bradshaw, Wyent, and McKenzie (chapter 15).
---------------------------------------------------------------------------
    The growth in the cost of institutional care over the last 
five decades has been the result of many factors, not the least 
of which have been the rise in the real wages of institutional 
caregivers and the intentional reduction the institutions have 
made in their children-to-staff ratios in order that additional 
higher quality and more personal childcare services could be 
provided. However, the cost increases have also been partially 
self-inflicted by states, given the growth in the detailed 
regulations that institutions must meet.
    Institutions must now adhere to volumes of regulations and 
accreditation requirements that in printed form weigh several 
pounds. For example, in many states institutional children's 
homes must meet construction requirements that exceed the 
specifications in building codes for single-family homes, and 
then they are told how many square feet of living space and 
toilets they must have for each child in care. The institutions 
are also told how many children they can have in each bedroom 
and how many staff people with various credentials they must 
hire for each child in care. In addition, they are required to 
pay house parents when they are asleep.\32\ Then, the 
institutions are limited in the work they can require their 
children to do. They are further limited in the work they can 
ask of children in their care because of the liability they may 
incur in case of accidents.\33\ The financial problems of 
institutions have been compounded by the fact that, when the 
institutions accept public funding, they are told how long they 
can care for and treat children, and they are restricted in the 
extent of the required religious component of their programs, 
restrictions that, no doubt, have undercut the willingness of 
various denominations and civic groups to financially support 
institutional care.\34\
---------------------------------------------------------------------------
    \32\ See Michael DeBow's contribution in McKenzie (1998; chapter 
13).
    \33\ See Margaret MacFarlane Wright's contribution to McKenzie 
(1998; chapter 12).
    \34\ See Ross London's contribution to McKenzie (1998; chapter 6).

---------------------------------------------------------------------------
The Path to Policy Reforms

    Ways must be found to ensure that private charitable, 
religious, and civic groups can develop creative and improved 
alternative institutional care opportunities that meet the 
local needs of identified populations of children. To develop 
those care options, two changes in conditions appear self-
evident:
     First, private homes, and their supporting 
religious, civic, and charitable organizations, must be given 
greater freedom to devise methods of care that are more cost 
effective.
     Second, more children must be allowed to enter 
permanent institutional care before they have been repeatedly 
abused, have experienced prolonged stays in the foster-care 
system, and have become troubled by the lack of permanency in 
their lives.\35\
---------------------------------------------------------------------------
    \35\ For a set of policy recommendations designed specifically to 
curb child abuse, see Fagan and Hanks (1997).
---------------------------------------------------------------------------
    Members of Congress and their staff have recognized the 
need for substantial reform in the country's basic child 
welfare laws, and there is some reason to hope that laudable 
policy changes will be forthcoming, given the passage of The 
Adoption Promotion Act of 1997 (H.R. 867) by the House of 
Representatives in the spring of 1997, which is understandably 
intended to encourage adoption. At this writing (summer 1997), 
this legislation is awaiting Senate action.\36\ But broader 
changes are badly needed, given that adoption will not be 
suitable for all disadvantaged children in need of a permanent 
place to call home.
---------------------------------------------------------------------------
    \36\ Under H.R. 867, as amended by a bipartisan proposal accepted 
by voice vote, the current child welfare system would be reformed in 
numerous ways that are endorsed in this paper: certain aggravated 
circumstances involving children would be identified in which States 
can bypass or discontinue efforts to reunite abused or neglected 
children with their family; financial incentives would be provided to 
the States to move more children out of foster care and into adoptive 
families; and, for children under the age of 10 who have spent a 
substantial portion of their lives in foster care, States would be 
required to move expeditiously toward freeing these children for 
adoption; the timetable for the hearing that determines the child's 
future placement would be shortened from 18 months to 1 year; and 
States would be required to provide foster parents and relatives notice 
of all hearings and reviews. Additional minor and technical amendments 
are also included in the bill.
---------------------------------------------------------------------------
    To afford homes for children greater flexibility in their 
programs, five very general policy recommendations need to be 
considered:
     Lessen the Regulatory Burden on Childcare 
Institutions. There must be a broad liberalization of state 
licensure statutes and regulations applicable to residential 
educational institutions, the goals of which are to lower the 
costs of care facing current and would-be operators of such 
facilities and to promote innovation and entrepreneurial 
efforts.\37\ We suggest that states license particular 
providers of residential childcare--including churches and 
other civic and philanthropic organizations--and leave the 
management details of residential facilities staffing and 
programming to the licensed provider. In general, the states 
should be assigned responsibility for setting the standards of 
care, especially when public funding is involved, while the 
facilities should be in the business of determining how best in 
terms of quality and cost the standards can be met. Thus, we 
suggest the following:
---------------------------------------------------------------------------
    \37\ For an analysis of the extent and impact of institutional 
childcare regulations in six states, (see DeBow chapter 13).
---------------------------------------------------------------------------
    1. That states adopt a statute that provides for a less 
regulated status of ``registered'' childcare institution as an 
alternative to the traditional, more regulated ``licensed'' 
status (versions of which have been adopted in Florida and 
Mississippi).
    2. That states take steps to eliminate the statutes and 
regulations which currently discourage the use of volunteers 
and resident labor, to the extent allowed by applicable federal 
law.
    3. That state regulatory bodies recognize the role of the 
law in contributing to the high cost of starting up and 
operating residential facilities for children and engage in on-
going discussions with the providers of these facilities to 
find additional ways by which statutes and regulations can be 
relaxed or eliminated and thus reduce the start-up costs of new 
care facilities and the cost of continuing care.
     Expand Work Opportunities in Childcare 
Institutions. Many state laws allow parents to assign their 
children a broad range of work responsibilities around the home 
and in family farms and businesses. Childcare institutions 
should be afforded the same rights to assign work 
responsibilities to the children in their care.
     Convert Public Child-Welfare Funds to Block 
Grants. A portion, if not all, of federal child-welfare funds 
that are now going into foster care should be distributed to 
states as block grants, allowing states maximum flexibility in 
the placement of disadvantaged children in existing permanent 
institutional settings (for example, SOS Children's Villages-
USA), and in the development, monitoring, and evaluation of new 
options for the permanent institutional placement of children.
    To reduce the time children spend in foster care and to 
increase the chances children will have to receive a measure of 
permanency in their lives, a number of policy recommendations 
need to be considered:
     Elevate the Importance of ``Permanence'' in the 
Development of Child-Welfare Policies. Preserving families and 
reunifying children with their biological parents are worthy 
welfare goal, but they are hardly the only guiding goals that 
should direct child welfare policies, giving the number of 
children who continue to be harmed by their parents. North 
Carolina legislators have taken the lead in having child safety 
take precedence over family preservation and reunification in 
directing that state's child welfare policies.\38\ However, 
policy makers must realize that children can be ``safe'' as 
they are bounced among multiple foster-care placements. Policy 
makers take an additional step, making the establishment of a 
permanent residence for the child a higher public policy 
priority. This means that the time allotted for permanency 
planning for children in some jurisdictions, which, as noted, 
can stretch to a number of years or until the child grows to 
adulthood, must be shortened. We must seek to impose some 
enforced time limit on the process of family rehabilitation and 
reunification, before parental rights are ultimately 
terminated. Clearly, we must make subjecting the child to the 
fewest possible substitute-care placements a top priority.
---------------------------------------------------------------------------
    \38\ As reported by Batten (1997, p. 1C).
---------------------------------------------------------------------------
     Narrow the Range of Cases in Which ``Reasonable 
Efforts'' Must be Made to Reunify Children with Their Abusive 
and Neglectful Families. The Adoption Act of 1997 (H.R. 867) 
proposes the type of change in federal child welfare law that 
is needed. Under that bill, states would not be required to 
make reasonable efforts to reunify a family in ``aggravated 
circumstances'' as defined in State law and in which a court 
has confirmed that a child has been subjected to such 
aggravated circumstances. Examples of aggravated circumstances 
are cases of abandonment, torture, chronic abuse or sexual 
abuse. Reasonable efforts would also not be required when 
parents' rights to a sibling have been involuntarily terminated 
or when parents have murdered or committed manslaughter of 
another child. In determining the reasonable efforts to be 
made, the child's health and safety must be the paramount 
concern.
     Assign the Initial Investigation of Cases of 
Substantial Abuse and Neglect to the Police and the Criminal 
Justice System. Charges of child abuse and neglect, even in 
severe cases, are handled in many states by social workers. 
Shifting the assignment of investigative duties to the police 
and criminal justice system would eliminate the inherent 
conflict of interest between the child-welfare system that now 
frequently investigates and, at the same time, apportions 
resources for children who are found to be victims of abuse or 
neglect. (The police and the criminal justice system are also 
more likely to follow proper criminal investigative procedures 
and requirements, such as notifying suspects of their rights at 
appropriate stages of an investigation. In all too many 
instances, procedural errors alone cause substantial delays in 
the termination of parental rights.)
     Establish a Rebuttable Presumption of Unfitness in 
the Child-Welfare Law. This means, for example, we must make 
the intentional infliction of serious injury or the killing of 
a child or spouse presumptive grounds for the termination of 
parental rights for all surviving children.
     Shorten the Timetable for the Initial Hearings on 
the Termination of Parental Rights. Instead of delays that can 
go on for years, the timetable for initial hearings for 
children removed from their homes should be shortened to 12 
months (as recommended by H.R. 867). Such hearings would be 
strengthened by requiring that the expected permanency 
outcomes--including whether and when the child would be 
returned home, placed for adoption, or placed in a home for 
children--be a part of the child's written plan.
     Speed Up the Notification of Judicial Authorities 
of Cases of Parental Rights Termination. Delays in the 
termination of parental rights occur simply because judges have 
not been notified until after all avenues of parental 
rehabilitation have been exhausted. We must begin to notify 
judicial authorities at earlier stages of potential cases 
involving the termination of parental rights--particularly when 
a parent commits a felony against his or her child.
     Establish Guidelines for the Permanent Placement 
of Children. We must establish enforceable timelines for the 
permanent placement of children after the termination of 
parental rights. These guidelines should include guidance for 
the pursuit of adoption and institutional placement 
options.\39\
---------------------------------------------------------------------------
    \39\ As recommended by H.R. 867, states would have to document 
steps taken to find and finalize an adoptive or other permanent home 
for the child including placement in the custody of another fit and 
willing relative or home for children. Of course, biological and foster 
parents and relatives providing childcare would be notified of reviews 
and permanency hearings regarding child placement and would be given 
the opportunity to be heard at these proceedings.
---------------------------------------------------------------------------
     Place Responsibility for Rehabilitation on 
Parents. Where parental rehabilitation is an issue in 
termination of parental rights cases, we must place the 
responsibility for rehabilitation entirely on the parent. We 
must eliminate the objection to termination of parental rights 
based on services not having been provided to the parent by the 
government or some other service provider (for example, drug 
treatment programs for addicted parents). Such objections now 
delay many cases of parental rights terminations.
     Make the Central Issue in Cases of Termination of 
Parental Rights What Is Best for the Children. Parental rights 
are, no doubt, important. However, in trying to protect the 
rights of parents, the care of the parents' children can 
suffer. In far too many cases, the rule of ``what are the 
rights of the parents'' takes precedence over ``what is best 
for the children.''
     Require Concurrent Case Planning for Both 
Reunification and Termination of Parental Rights. All too 
often, attempts to terminate parental rights are initiated only 
after repeated efforts to rehabilitate parents have failed, 
resulting in prolonged stays for the children in the foster-
care system. If termination proceedings are initiated at the 
same time that efforts to rehabilitate are begun, and if 
reunification of a child with his or her parents is not 
possible, the termination of parental rights can proceed 
expeditiously.
     Evaluate Parents' Fitness to Be Parents at the 
Start of Child Abuse and Neglect Cases. The most fervently 
contested parental rights termination cases are usually those 
of neglect (rather than abuse). All too often, the termination 
of parental rights is delayed because psychological and 
substance abuse evaluations of parents are not made until 
rehabilitation efforts have failed. These cases could be 
processed more quickly and soundly by initiating parental 
evaluations at the start of the investigations.
     Use Public Funds to Encourage Childcare 
Innovations. In restructuring current federal law 
(specifically, Title IV), Congress should allow states maximum 
flexibility in the use of those funds among various care 
options, including institutional care. The purpose will be to 
encourage new care options by more groups.

Concluding Comments

    The child-welfare system in the United States is helping 
hundreds of thousands of children. However, there are obvious 
problems within the system, not the least of which is the lack 
of permanent care being received by many children. Private 
children's homes have never been a dominant form of care for 
children in need, nor will they ever be a dominant form in the 
future. Nevertheless, many of today's disadvantaged children 
could benefit from the type of permanent care that children's 
homes have demonstrated they can provide. The evidence is 
mounting that children's homes have worked well in the past, 
are working well now, and can work even better in the future.
    Institutional care has always been and will continue to be 
an imperfect substitute for loving biological, adoptive, or 
other substitute parents. However, it can be an improvement in 
the care provided to many hard-to-place children over what they 
would otherwise receive. When loving and responsible parental 
care is not possible, children need, at the very least, the 
basic amenities of life. They also need permanency and 
security. The recommendations tendered here are intended to 
provide disadvantaged children with more opportunities to find 
that permanence and security in their lives.

References

    Adoption Promotion Act of 1997, H.R. 867, 105th Cong., 1st 
Sess. (April 28, 1997) 105-77 (as found on the web: http://
thomas.loc.gov/cgi-bin/query/z?c105:h.r.867).
    Batten, Taylor. 1997. ``Child Safety Tops Family in Senate 
Vote,'' Charlotte Observer (July 30).
    Beker, Jerome and Douglas Magnuson. 1996. Residential 
Education as an Option for At-Risk Youth (New York: Haworth 
Press).
    Bevan, Carole Statuto. 1996. Foster Care: Too Much, Too 
Little, Too Early, Too Late (Washington, D.C.: National Council 
for Adoption, 1996).
    A Challenge to the Nation: Safe and Permanent Homes for 
Children. 1997. A report to President William Clinton on 
adoption reform (Alexandria, VA: SOS Children's Villages-USA, 
Inc., February 6), p. 3.
    Children's Bureau. 1995. Orphanage Background Materials 
(Washington, D.C.: U.S. Department of Health and Human 
Services, May, duplicated).
    Cmiel, Kenneth. 1995. A Home of a Different Kind: One 
Chicago Orphanage and the Tangle of Child Welfare (Chicago: 
University of Chicago Press)
    Craig, Conna. 1995. ``What I Need Is a Mom,'' Policy 
Review, Summer, pp. 41-49.
    Encyclopedia of Social Work. 1987. 18th ed., Vol. 1 (Silver 
Spring, Md: National Association of Social Workers).
    Fagan, Patrick and Dorothy B. Hanks. 1997. ``The Child 
Abuse Crisis: The Disintegration of Marriage, Family, and the 
American Community,'' Backgrounder (Washington, D.C.: Heritage 
Foundation, May 15).
    Ford, Mary and Joe Kroll. 1995. There Is a Better Way: 
Family-Based Alternatives to Institutional Care (Washington, 
D.C.: North American Council on Adoptable Children, Research 
Brief no. 3, March 1995).
    Gelles, Richard. 1996. The Book of David: How Preserving 
Children Can Cost Children's Lives (New York: Basic Books, 
1996).
    Goldsmith, Heidi. 1995. Residential Education: An Option 
for America's Youth (Hershey, Pa.: Milton Hershey School).
    Goldstein, Howard. 1996. The Home on Gorham Street and the 
Voices of Its Children (Tuscaloosa, Ala.: University of Alabama 
Press).
    Matlick, Justin. 1997. Fifteen Years of Failure: An 
Assessment of California's Child Welfare System (San Francisco: 
Pacific Research Institute, March).
    McKenzie, Richard B. Rethinking Orphanages for the 21st 
Century (Thousand Oaks, Calif.: Sage Publications, 1998).
    Pelton, See L. 1989. For Reasons of Poverty: A Critical 
Analysis of the Public Child Welfare System in the United 
States. (New York: Praeger)
    Sedlak, Andrea J. and Diane D. Broadhurst. 1996. The Third 
National Incidence Study of Child Abuse and Neglect: Final 
Report (Washington, D.C.: U.S. Department of Health and Human 
Services, National Center on Child Abuse and Neglect, 
September).
    Seita, John, Martin Mitchell, and Christi Tobin. 1996. In 
Whose Best Interest: One Child's Odyssey, A Nation's 
Responsibility (Elizabethtown, Penn.: Continental Press).
    TataraT. n.d. Characteristics of Children in Substitute and 
Adoptive Care (Washington, D.C.: Voluntary Cooperative 
Information System, American Public Welfare Association).
    U.S. Advisory Board on Child Abuse and Neglect. 1993. Child 
Abuse and Neglect: First Steps in Response to a National 
Emergency: 1990 (Washington, DC: U.S. Department of Health and 
Human Services).
    Zmora, Nurith. 1994. Orphanages Reconsidered: Child Care 
Institutions in Progressive Era Baltimore (Philadelphia: Temple 
University Press)
References

    Adoption Promotion Act of 1997, H.R. 867, 105th Cong., 1st 
Sess. (April 28, 1997) 105-77 (as found on the web: http://
thomas.loc.gov/cgi-bin/query/z?c105:h.r.867).
    Batten, Taylor. 1997. ``Child Safety Tops Family in Senate 
Vote,'' Charlotte Observer (July 30).
    Beker, Jerome and Douglas Magnuson. 1996. Residential 
Education as an Option for At-Risk Youth (New York: Haworth 
Press).
    Bevan, Carole Statuto. 1996. Foster Care: Too Much, Too 
Little, Too Early, Too Late (Washington, D.C.: National Council 
for Adoption, 1996).
    A Challenge to the Nation: Safe and Permanent Homes for 
Children. 1997. A report to President William Clinton on 
adoption reform (Alexandria, VA: SOS Children's Villages-USA, 
Inc., February 6), p. 3.
    Children's Bureau. 1995. Orphanage Background Materials 
(Washington, D.C.: U.S. Department of Health and Human 
Services, May, duplicated).
    Cmiel, Kenneth. 1995. A Home of a Different Kind: One 
Chicago Orphanage and the Tangle of Child Welfare (Chicago: 
University of Chicago Press)
    Craig, Conna. 1995. ``What I Need Is a Mom,'' Policy 
Review, Summer, pp. 41-49.
    Encyclopedia of Social Work. 1987. 18th ed., Vol. 1 (Silver 
Spring, Md: National Association of Social Workers).
    Fagan, Patrick and Dorothy B. Hanks. 1997. ``The Child 
Abuse Crisis: The Disintegration of Marriage, Family, and the 
American Community,'' Backgrounder (Washington, D.C.: Heritage 
Foundation, May 15).
    Ford, Mary and Joe Kroll. 1995. There Is a Better Way: 
Family-Based Alternatives to Institutional Care (Washington, 
D.C.: North American Council on Adoptable Children, Research 
Brief no. 3, March 1995).
    Gelles, Richard. 1996. The Book of David: How Preserving 
Children Can Cost Children's Lives (New York: Basic Books, 
1996).
    Goldsmith, Heidi. 1995. Residential Education: An Option 
for America's Youth (Hershey, Pa.: Milton Hershey School).
    Goldstein, Howard. 1996. The Home on Gorham Street and the 
Voices of Its Children (Tuscaloosa, Ala.: University of Alabama 
Press).
    Matlick, Justin. 1997. Fifteen Years of Failure: An 
Assessment of California's Child Welfare System (San Francisco: 
Pacific Research Institute, March).
    McKenzie, Richard B. Rethinking Orphanages for the 21st 
Century (Thousand Oaks, Calif.: Sage Publications, 1998).
    Pelton, See L. 1989. For Reasons of Poverty: A Critical 
Analysis of the Public Child Welfare System in the United 
States. (New York: Praeger)
    Sedlak, Andrea J. and Diane D. Broadhurst. 1996. The Third 
National Incidence Study of Child Abuse and Neglect: Final 
Report (Washington, D.C.: U.S. Department of Health and Human 
Services, National Center on Child Abuse and Neglect, 
September).
    Seita, John, Martin Mitchell, and Christi Tobin. 1996. In 
Whose Best Interest: One Child's Odyssey, A Nation's 
Responsibility (Elizabethtown, Penn.: Continental Press).
    TataraT. n.d. Characteristics of Children in Substitute and 
Adoptive Care (Washington, D.C.: Voluntary Cooperative 
Information System, American Public Welfare Association).
    U.S. Advisory Board on Child Abuse and Neglect. 1993. Child 
Abuse and Neglect: First Steps in Response to a National 
Emergency: 1990 (Washington, DC: U.S. Department of Health and 
Human Services).
    Zmora, Nurith. 1994. Orphanages Reconsidered: Child Care 
Institutions in Progressive Era Baltimore (Philadelphia: Temple 
University Press)

Appendix

               Rethinking Orphanages for the 21st Century

 A Symposium in Search of Reforms for the Nation's Child-Welfare System

                       Newport Beach, California

                             June 6-8, 1997

               List of Symposium Attendees and Observers

Ms. Melissa Beall
Office of Congressman Todd Tiahrt
428 Cannon House Office Building
Washington, DC 20515
(202) 225-6216 Fax 225-3489
[email protected]

Dr. Cassie Bevan
Ways and Means Committee
B317 Rayburn House Office Building
U.S. House of Representatives
Washington, D.C. 20515
(202) 225-1025 Fax: 225-9480
[email protected]

Mr. Dennis Braziel, Director
Group and Residential Care
Child Welfare League of America
440 1st Street, NW
Washington, DC 20001-2028
(202) 942-0314 Fax: 638-4004
[email protected]

Mr. Robert Chitister
Idea Channel
10539 Edinboro Rd.
McKean, PA 16426
(814) 476-7721 Fax: 476-1283
[email protected]

Ms. Conna Craig, President
Institute for Children, Inc.
18 Brattle Street
Cambridge, MA 02138
(617) 491-4614 Fax: 491-4673
[email protected]

Professor Michael DeBow
Cumberland Law School
Samford University
Birmingham, AL 35229
(205) 870-2434 Fax: 970-2587
[email protected]

Dr. Glenn Ellmers, Research Fellow
The Claremont Institute for the Study of
Statesmanship and Political Philosophy
250 First Street, Suite 330
Claremont, CA 91711
(909) 621-6825 Fax: 626-8724
[email protected]

Professor Richard Gelles
Family Violence Research Program
University of Rhode Island
509A Chafee Social Science Center
Kingston, RI 02881
Phone/Fax: (401) 792-4138
[email protected]

Ms. Heidi Goldsmith, Executive Director
International Center for Residential Education 3726
Conn. Avenue, NW, #109
Washington, DC 20008
(202) 966-4304 Fax: 244-0820
[email protected]

Mr. Derek Herbert
Institute for Children
18 Brattle Street
Cambridge, MA 02138
(617) 491-4691Fax (617) 491-4673
[email protected]

Ms. Carolyn Hicks
Legislative Director
Office of Congressman Dan Burton
2185 Rayburn House Office Building
U.S. House of Representatives
Washington, D.C. 200515
(202) 225-2276 Fax: 225--0016
[email protected]

Mr. James Jones
Milton Hershey School
Founders Hall--Box 830
Hershey, PA 17033
(717) 520-2445 FAX: 520-2444
[email protected]

The Honorable Kathleen Kearney
Circuit Judge, 17th Circuit of Florida
Broward County Courthouse
201 SE 6th Street
Fort Lauderdale, FL 33301
(954) 831-7093 Fax: 831-5572
[email protected]

Professor Dwight Lee
Department of Economics
University of Georgia
Athens, GA 30602
(706) 542-3970 Fax: 542-4144
[email protected]

Dr. Allen Leland
20/20/20 Project, Lutheran Church
90 Faculty Street
Thousand Oaks, CA 91360
(805) 492-1121

Mr. Justine Matlick, Senior Researcher
Pacific Research Institute
755 Sansome Street, Suite 450
San Francisco, CA 94111
(415) 989-0833 Fax: 989-2411
[email protected]

Ms. Karen McKenzie
3 Owen court
Irvine, CA 92612
(714) 854-7156
[email protected]

Professor Richard McKenzie
Symposium Organizer
Graduate School of Management
University of California, Irvine
Irvine, CA 92717-3125
O: (714) 824-2604 H: 854-7156 Fax: 824-8469
[email protected]

Professor Douglas Magnuson
College of Street Catherine
Project on Vocation, Work, and Youth Development Box 4165
2004 Randolph Avenue
Phone: (612) 690-8718 Fax: 690-6024
St. Paul, MN 55105
[email protected]

Dr. Richard Pierce
Dean of Community Life
Milton Hershey School
Hershey, PA 17033
(717) 520-2061 Fax: 520-2068
[email protected]

Mr. Robert Stansel, President
Barium Springs Home for Children
PO Box 1
Barium Springs, NC 28010-0001
(704) 872-4257 Fax: 838-1541

Mr. Bernie Stumbras, President
SOS Villages, USA
1906 Capital Avenue
Madison, WI 53705
(608) 238-4584 Fax: 238-4611
[email protected]

Mr. Donald Verleur, CEO
Olive Crest
2130 E. Fourth Street, Suite 200
Santa Ana, CA 92705
(714) 543-5437 ext. 115 Fax: 543-5463
[email protected]

Mr. David Villiotti
Executive Director
Nashua Children's Association
125 Amherst Street
Nashua, NH 03060-2043
(603) 883-3851 Fax: 883-5925

Mr. John Walters, President
Philanthropy Roundtable
1150 17th Street, NW, Suite 503
Washington, DC 20036
(202) 822-8333 822-8325
[email protected]

Dr. Delores Wardell
Licensed Clinical Psychologist
540 N. Golden Circle Drive, Suite 114
Santa Ana, CA 92705
(714) 558-0971 Fax: 550-0166
[email protected]

Ms. Margaret MacFarlane Wright
Attorney
A Professional Corporation
2472 Chambers Road, Suite 150
Tustin, California 92780
(714) 832-9440 Fax: 832-9545
[email protected]

  
  
  
  

                                

    Chairman Johnson. Joe Kroll, the executive director of the 
North American Council on Adoptable Children.

  STATEMENT OF JOE KROLL, EXECUTIVE DIRECTOR, NORTH AMERICAN 
   COUNCIL ON ADOPTABLE CHILDREN (NACAC), ST. PAUL, MINNESOTA

    Mr. Kroll. Thank you, Mrs. Johnson. I apologize for 
arriving late. I didn't travel as far as Mr. McKenzie, but 
those red-eyes can knock you out sometimes.
    I just wanted to do a quick followup to the good news that 
was presented in April. We had a report from Hawaii just 
yesterday on the number of adoptions in this country. It is now 
up to over 8,800 above the baseline from last year. Hawaii went 
from 85 to 300 in 1998, so that is quite a remarkable story.
    I probably will get as emotional as my colleague by the end 
of the presentation, because I too have been affected by 
orphanages, but I will wait till the end to describe my 
personal experience.
    From my written testimony you will see statements by older 
children, who had experiences with institutional or long-term 
foster care, who cried out to be adopted; and I think we have 
to remember those children. And I was concerned about the 87 
percent that Mr. McKenzie mentioned who have never contemplated 
adoption. Today, I don't believe that would happen because 
children are aware of their options. We are doing more for 
families who are adopting older children.
    And I also wanted to report from our poster event that a 
sibling group of five Native American children from South 
Dakota were recently placed. These are tribal children and they 
have been placed in a permanent home. They had many calls for 
five children, ages 4 through 13. That is not a small sibling 
group.
    So I think that times are quite different than they were 40 
or 60 years ago, or 70 years ago when my father spent time in 
an orphanage.
    Another thing that we know is that most of the children 
that are adopted from the public child welfare system are 
adopted through their foster families. Sixty-four percent of 
children who were adopted in 1997 were adopted by foster 
parents and another 14 percent by relatives. If the children 
weren't placed in a family, they wouldn't have that opportunity 
to be adopted by their foster family, and I think that is a 
very important issue. It is one that I forgot to put in my 
written testimony, which I wanted to emphasize today.
    Also, if we look at the group of children who are preparing 
to be adopted, 69 percent are under 5, and 91 percent are under 
10. Obviously, families are what these children should be 
eligible for. If we would choose an institutional setting, we 
wouldn't find families.
    When we look at some of the items in the testimony, I think 
that we have to look at some of the outcomes that we have 
discovered in the research, and when Newt Gingrich in 1994 
called for orphanages, we did a paper countering the call for 
orphanages. We looked at research on children who had been in 
institutional care, as compared to a control group of children 
who hadn't been in institutional care, and the children in 
institutional care from the research findings did not fare as 
well. That doesn't mean other studies haven't come along that 
suggest they fare very well. I think the point is that we know 
that children fare well in families.
    I, too, had a strong work ethic, moral upbringing, a sense 
of responsibility in my family. I was raised by a single mother 
after my father died.
    When we talk about the families who are adopting the older 
kids, I think one of the things we have to look clearly at is 
that the children who are being adopted today may be the very 
children for whom a residential treatment facility is needed. 
It is sometimes very difficult to get adopted children into 
those facilities because of the way the IV-D child support 
enforcement operates. States won't support families after they 
have adopted. I think we could place more older children if we 
said to the families, you will have support after the child is 
adopted. I think that is a very important message that we have 
to carry, and I think as the adoptions of children in the 
country continue to increase, as they appear to be, even in 
1999, that more support is needed for the families.
    One of the fears that I have had over time is that as more 
and more public agencies become bankrupt in the sense that they 
cannot handle the children in their care, they will turn to an 
institutional setting because someone can provide 50 beds when 
it can't find 50 foster homes. In Sunday's paper in Minneapolis 
it was noted that Ramsey County is desperately in need of 
foster homes. I don't think the alternative to lack of foster 
homes is institutional placements, but in some cases, it is 
easier for administrators to choose that. We have to be very 
careful to make sure that doesn't occur.
    We also have to remember that today there are over 46,000 
children in institutional placements, according to the AFCARS 
data. I think it would be useful for the committee to ask why 
they are there, what kind of placements they are in, ask some 
hard questions before you start considering legislative 
alternatives.
    Finally, I did want to say that children who have grown up 
in families take something with them forever. Even though my 
father died when I was 9 years old, it was very clear to me 
that he had made every effort possible to keep his family 
together the way his mother had been unable to keep her family 
together when his father died at a very young age, and he went 
into an orphanage with his younger brother. My mother raised 4 
children. She had the support of the family, and today, that 
84-year-old uncle, who was in an orphanage with my father, is 
like a father to our family. He never had children of his own, 
but he is our father, and he is the only living relative on my 
father's side of that generation, and he is like family; and it 
is not something you can have if you graduate from an 
institution and have no family to go back to.
    My father made sure we stayed together. We have had family 
forever, and it is something that carries over to our children 
and our grandchildren, hopefully.
    Thank you very much.
    Chairman Johnson. Thank you very much, Mr. Kroll.
    [The prepared statement follows:]

Statement of Joe Kroll, Executive Director, North American Council on 
Adoptable Children (NACAC), St. Paul, Minnesota

    Madam Chairman and Members of the Committee, I thank you 
for this opportunity to appear before you today.
    I am Joe Kroll, executive director of the North American 
Council on Adoptable Children (NACAC). I also serve as the 
adoption chairman of the National Foster Parents Association. 
More importantly, I am a parent of two adult children, one by 
birth and one by adoption.
    NACAC represents adoptive parents and parent groups, 
adoption agencies, adopted children, and most importantly the 
110,000 special needs children waiting for families in the U.S. 
For 25 years we have been involved at the local, state, and 
national level as advocates for these children.
    In this discussion we must listen to the voices of children 
who have experienced institutional care. The following comments 
are by David Forderer at the closing session of NACAC's annual 
conference in Toronto in August 1986. David was a 16 year old 
adopted youth confined to a wheelchair because of cerebral 
palsy, but in no way confined in his perspective on life and 
family.
    There are 350,000 children in foster care in the United 
States. Sixty thousand of them are legally free and waiting for 
adoptive parents. Of all these kids in foster care, about 
35,000 are in institutions.
    We are not getting enough children out of institutions. We 
have to get them out. Child caring institutions are NOT a 
family.
    Let me share an example. When my brother Nicky had to go 
into an institution temporarily, we met a boy named Jonas. 
Jonas was 13 and had cerebral palsy. He went into the 
institution healthy. In a year and a half's time he went 
downhill. He got thinner and thinner, sicker and sicker. My 
brother was fortunate; he was able to come home. Jonas stayed. 
My friend Jonas reached his 15th birthday in the institution 
just before he died. He was an intelligent boy who never had 
the opportunity to leave and to share a family and give that 
family the chance to know what he could give. I know Jonas 
would NOT have died if anyone understood adoption and kept him 
out of that institution.
    I want to issue you a challenge. I challenge social workers 
and lawmakers to find out how many kids are really in 
institutions and pass laws to put them in families, into 
adoption. GET THEM OUT. Parents and prospective parents too, 
GET THEM OUT.
    As David said, ``Child caring institutions are NOT a 
family.'' Even the best-run institutions are a poor substitute. 
Do house parents, who turn over every year or so, and shift 
workers provide the consistency of parents? The graduates of 
foster care who lived in institutions have no home to return 
to. Where do they go for Thanksgiving and Christmas? The 
institution cafeteria. Who calls on their birthday? The third 
shift worker?
    Children should not be raised in institutions. Research 
clearly demonstrates that institutions frequently have adverse 
psychological effects that can impair people throughout their 
lives. In addition to the psychological harm to children, 
institutions are extremely expensive and create unnecessary 
financial burdens for the community. Yearly care in an 
institution costs at least four times as much as foster care 
and six times as much as welfare payments.

         Countering the Call for Institutional Care of Children

    Given this information, why would anyone consider 
institutional care alternatives to family care? Let me 
summarize some arguments used to support the use of 
institutional care and offer a response to each of them.

1. Some children are too disabled or so old that they cannot be 
adopted.

    NACAC's experience suggests that children with every 
possible disability or age or history of the most severe abuse 
have been adopted if parents receive an adequate level of 
support. The following statement was written in 1999 by a young 
man who spent more than a decade in foster care before finding 
a permanent family.

          Hello my name is Jim. Let me start off by saying that my 
        family is the most important thing to me. I would do anything 
        in the world for them. I say this because I know what it's like 
        to not have a real family.
          I had lived in foster care from the time I was 4 years old 
        until I was adopted when I was 16 years old. In those 12 years 
        I moved 10 times and lived with many different families 
        including my biological family. But for some reason nobody 
        wanted to make me a part of their permanent family. We all know 
        that rejection is painful. But could you imagine how a kid 
        feels when a family rejects them? Not once or twice but many 
        times. Time after time.
          As I grew older I became withdrawn with my emotions and I 
        didn't trust anyone. By the time I was 15, I had pretty much 
        given up hope of ever having a normal life which included a 
        family. I was doing poorly in school and didn't really have a 
        plan for my life. I figured if nobody else cared why should I.
          Then something good finally happened to me. I met my mom and 
        dad. I could not believe somebody would actually want me as 
        part of their family especially since I was so old. It took a 
        long time for me to believe that there were actually good 
        people out there who did not want to hurt me.
          I'm grateful that I have parents that were there for me. As a 
        young adult I've come to realize the importance of having a 
        family. I know that them being there has been instrumental in 
        my development as a productive adult and a caring person.
          I'd like to finish by saying that everyone deserves a family 
        regardless of how old they are. Everyone deserves a family.

    Jim's experience has been duplicated time and again by 
``unadoptable'' children, who have cried out for parents and 
have found one once someone believed they deserved a family.

2. Some children are so troubled that they cannot be raised in 
family settings.

    All children--birth, foster, and adopted who are in need of 
residential treatment should receive adequate care. One reason 
adoptive parents fear finalizing adoptions of emotional 
troubled children is the failure of the state to guarantee 
residential treatment for adopted children. Since some families 
have gone bankrupt or been forced to dissolve the adoption in 
order to obtain proper treatment, other families are afraid to 
adopt. These children do not need to be condemned to a life of 
institutionalization, as long as states guarantee support in 
their adoption assistance agreements. The committee should 
consider amending the Title IV-E Adoption Assistance program to 
allow for federal reimbursement of residential treatment.

3. There are not enough foster and adoptive families to care 
for all the children.

    We all know that the demand for foster and adoptive 
families exceeds the supply. If we are willing to invest more 
than $50,000 per year to care for a child in institutional 
care, could we not invest in finding and supporting families. 
Through some perverted logic, the social welfare system is 
willing to pay more money as children move emotionally and 
geographically further from their families. Welfare costs less 
than subsidized adoption or family foster care, which costs 
less than group care, which costs less than residential 
treatment. By the time children reach residential facilities 
they are being parented by a business, not a family.
    With resources, we can find the families children need. The 
dramatic increases in adoption reported to this committee in 
April are a testimony to the work of public and private 
agencies which engage in targeted and community based 
recruitment campaigns, offer post-adopt support, and raise 
foster family reimbursement rates and adoption subsidies to 
make parenting more attractive to middle class families who are 
already successfully raising children.

4. Successful people have been raised in institutional care.

    I'm sure you will hear stories of successful adults who 
spent time in institutional settings. I am pleased that they 
succeeded. However research suggests that outcomes for children 
raised in institutions are not always positive.
    In 1995, NACAC published here is a Better Way: Family-Based 
Alternatives to Institutional Care as a response to calls for 
orphanages by former Speaker Newt Gingrich and Governor Edgar 
of Illinois. Our research showed the true effects of 
institutionalization on children:
     Institutionalized children are denied the 
opportunity to form a consistent relationship with a caregiver 
in their early years and are at serious risk for developmental 
problems and long-term personality disorders.
     Many insecurely attached, institutionalized 
children lack empathy, seek attention in negative ways, exhibit 
poor self-confidence, show indiscriminate affection toward 
adults, are prone to noncompliance, and are more aggressive 
than their non-institutionalized counterparts.
     Insecurely attached children rebound from 
adversity far less effectively than securely attached children.
     With few exceptions, children reared in poor 
quality institutions fail to sit, stand, walk, and talk by age 
four.
     Close examination reveals that even good 
institutions harm young children, leave teens ill-prepared for 
the outside world, and cost over three times more than a 
permanent, loving family.

5. Institutional solutions are attractive to child welfare 
administrators.

    According to AFCARS data as of March 31, 1998, 31,200 
foster children are living in group homes and 46,800 foster 
children are living in institutions. Why do some social service 
administrators and politicians prefer institutional solutions 
for children in care? Because it is an easy way out of a 
perplexing dilemma. Where does this tendency to institutional 
solutions lead us?
    For example, a county anticipates the need for 100 foster 
care slots for teenagers, so it decides to license 50 family 
foster care slots and contract 50 to a local institution. The 
family slots cost $25 per day and the institutional slots cost 
$200 per day. To guarantee the institutional slots, the county 
contracts with an agency for 50 beds at $200 per day for 365 
days at a total cost of $3.65 million dollars. The foster care 
maintenance payments cost only $456,250 for the year. To make 
matters worse, when a child is in need of placement, the 
institutional slot is likely to be used first because the bed 
is already paid for. An additional danger of this approach is 
that these institutions become self perpetuating. Once an 
institution is open, it is not likely to close. Once it is 
full, it is easy for institution operators to build more 
institutions to keep up with the demand for open beds.

6. Children are abused in family foster care.

    Horror stories abound in the child welfare system. Children 
returned to birth parents are murdered, children are sexually 
abused in foster homes, state-operated institutions run 
prostitution rings. Anyone promoting institutional care because 
children are abused in foster homes must acknowledge similar 
and worse abuses in institutions of all types.

                               Conclusion

    As our mission clearly states, NACAC believes that every 
child has the right to a permanent family. This right should 
not be denied or compromised. Family is at the core of child 
development and lifetime relationships.
    It is clear--from the passage of the Adoption and Safe 
Families Act of 1997 and the celebration of the dramatic 
increase in adoptions of foster children in April--that this 
committee cares deeply about children who need families. Why 
would you now consider an option that condemns children to a 
future without a family?

                                


    Chairman Johnson. Nan Dale, the president and chief 
executive officer of the Children's Village, Dobbs Ferry, NY.

 STATEMENT OF NAN DALE, PRESIDENT AND CHIEF EXECUTIVE OFFICER, 
           CHILDREN'S VILLAGE, DOBBS FERRY, NEW YORK

    Ms. Dale. Thank you. I have been president and CEO of 
Children's Village for the last 18 years, and during that time 
there has been a significant shift. I would like to talk for a 
minute about what some of that shift has been and whether, in 
fact, we are in debate with one another about what we are 
calling large group care facilities.
    Children's Village runs a range of programs. We run foster 
boarding homes, adoptions, group homes, independent living 
programs, therapeutic foster homes, kinship foster homes, the 
entire range of services; but in the minds of many, when you 
think of Children's Village, you think of an orphanage, and we 
are often asked if we are an orphanage.
    We are not an orphanage. It is something we are rather 
prickly about. The reason that we are so prickly about it is 
because indeed we once were under the warm, fuzzy name of the 
New York Juvenile Asylum, founded in 1851, but since that time 
not only has the physical plant itself changed dramatically, 
but the kinds of services that we provide to children and 
families is vastly different from that which we provided when 
we were indeed an orphanage. We have had to reinvent ourselves 
as the kinds of children, who are referred to us, change 
dramatically.
    I would say, on the one hand, that we are closer to the 
kind of school that Heidi Goldsmith describes as a boarding 
school, albeit for very, very, very troubled kids, than we are 
like an orphanage. We are also closer to being a children's 
psychiatric hospital than we are to an orphanage. Indeed, we 
are accredited by the Joint Commission of Health Care 
Organizations in much the same way that a children's 
psychiatric hospital is accredited; and the reason for that is 
because the only kids--the only kids who are referred to us 
these days are kids with serious and pervasive emotional and 
behavioral problems.
    It was just said that only 7 percent of the kids in the 
Nation are sent to institutions. Well, if only 7 percent of a 
very vulnerable population to begin with, the foster care 
population, are being sent to residential treatment centers, 
then you can imagine that that end of the spectrum is a very 
troubled group of kids.
    We are today, the sort of institutional descendants of 
orphanages referred to as residential treatment centers, and I 
underscore the word ``treatment.''
    I would like to try to make five quick points in the 5 
minutes allotted to me, now probably 4\1/2\ minutes. The first 
is that the issues are indeed very complex, as has been said. 
H.L. Mencken once said something I always thought was very 
important, which is that to every complex problem there is a 
solution that is simple, elegant and wrong. There is no simple 
solution to this. Neither adoption nor orphanages nor boarding 
schools nor kinship foster homes is the answer because the 
second point is that we need the full array of services. There 
is no one-size-fits-all, and if we skimp on any of these, we 
will have a system that doesn't work, and we have been skimping 
on what exists.
    My third point is that we need to try to expand our 
thinking about what permanency means, and I think that is some 
of what you have been hearing from the other panelists. We need 
to include the notion that subjecting children to the fewest 
possible substitute care placements should be a critical 
consideration. Ideally, permanency should mean a permanent home 
in a family, whether that is biological, kinship or adoption, 
but for the two subsets of kids that I just mentioned--those 
with serious emotional problems and behavioral problems--a 
boarding school or residential treatment center, some form of 
long-term group care is the best option, and there is evidence 
to prove that it is a good option that works well.
    I would like to talk, if I can, toward the end, if there is 
time, about who exactly these kids are; but let me say just 
very briefly that these are kids who have been so traumatized 
in their early life that they can't tolerate the intimacy of a 
family, and they are the kids who behave in foster homes in 
ways that are so frightening to most foster parents that they 
say, get this kid out of my home. And as was just said, we at 
Children's Village regularly see kids who have been in 5 and 10 
and 15 foster homes.
    My personal record is 23 homes, if you include kinship 
homes, foster home, back to grandma, back to a foster home, to 
an aunt, back to a foster home, to a hospital, back to foster 
home, to another hospital, finally to Children's Village 23 
placements later. That child, by the way, was 10 years old, and 
yes, there are 10-year-olds and there are 5-year-olds whose 
conduct has become so frightening that even they cannot be 
adopted.
    So the next question is what works for such kids, and I 
know I have only a minute left, if that, but let me just tell 
you very quickly that in a study we just completed of one of 
our programs, called the WAY program, which is fundamentally an 
independent living program--we are grateful to the Committee 
for the work that you have done on independent living--we 
looked at a group of our kids who had left Children's Village 
in a 5-year period who are now all between the ages of 21 and 
30, and what is unique about this study from the other studies 
is that these were all, 100 percent of them, were the kids who 
are the most severe emotionally- and behaviorally-impaired 
kids; and even with those kids, we achieved 80 percent high 
school graduation rates which compares to--well, I won't give 
you the comparison since the light is on--but 80 percent of 
those kids also were working full-time with a mean average 
salary of $23,000, and if you looked at arrests for criminal 
behavior, only 8 percent of them had been arrested, this from 
that tiny percent of severely disturbed kids.
    So, in conclusion, it is clear that there is a need for 
residential services but not just for kids who are simply 
disadvantaged but for the super at-risk kids who one of my 
colleagues referred to as the ``frequent fliers.'' we need to 
do more and we need to do better for them, and the existing 
resources are not meeting the needs even of this very, very 
needy population.
    Thank you.
    Chairman Johnson. Thank you very much, Ms. Dale.
    [The prepared statement follows:]

Statement of Nan Dale, President and Chief Executive Officer, 
Children's Village, Dobbs Ferry, New York

    My name is Nan Dale and, for nearly two decades, I have had 
the privilege of serving as President and CEO of The Children's 
Village, one of the nation's oldest child welfare agencies. The 
Children's Village is a member of the Child Welfare League of 
America (CWLA) and I am a member of the CWLA Board of Directors 
and I chair its National Advisory Council of Executives. My 
testimony today is intended to look broadly at the child 
welfare system of care for children--at how best we can achieve 
our collective aspiration of providing all children with a 
decent life--and, to the extent possible, with ``permanency.'' 
Given the emphasis of the hearings on examining the role of 
adoption and of orphanages as permanent placements, I will 
include some critique of these issues in my comments.
    Most people associate the name ``Children's Village'' with 
being an orphanage. It is not an orphanage. We're very prickly 
about that. Like many of the large group care facilities, we 
once were an orphanage. In 1851 we were known by the warm, 
fuzzy name of the New York Juvenile Asylum. Well over 1,000 
children lived in a large building in the city, sleeping in row 
after row of metal beds, eating in a cavernous cafeteria, 
working, and attending school at the asylum. Then, at the turn 
of the century, the Asylum Board bought 250 acres north of the 
city and built a small town, changed the name to Children's 
Village, moved the children into houses in small neighborhoods 
around a central quad, constructed a school, recreation 
facilities and hired mental health specialists. They proudly 
pioneered in creating a therapeutic community--a safe, 
predictable, stimulating environment with an emphasis on 
treatment services.
    Today, Children's Village operates as a residential 
treatment center (RTC), one among many of the institutional 
descendents of orphanages. Our RTC is the largest such child 
welfare institution in the United States. It is not the only 
program we run--in fact we provide a full continuum of child 
welfare and mental health services--preventive, foster/adoptive 
(including therapeutic and kinship foster homes), group homes 
and residential treatment. But, in the minds of many, 
Children's Village is synonymous with orphanage. There is, in 
fact, an enormous difference--a difference that is driven by 
the necessity of re-inventing ourselves over the last several 
decades to serve the highly disturbed and immensely difficult 
children and adolescents who are referred to us. We see those 
youngsters with serious emotional and behavioral problems. Our 
RTC, like most, functions more like a boarding school than an 
orphanage--more like a children's psychiatric hospital than an 
orphanage. Essentially, it is a highly structured, heavily 
supervised boarding school with intense treatment services for 
children and their families. Most importantly, it is very, very 
successful in working with a shockingly troubled and even 
dangerous population of kids. Our RTC is accredited by the 
Joint Commission on Accreditation of Health Care Organizations 
(JCAHO), as is a children's psychiatric hospital. No one 
requires that RTCs be accredited, an issue I'd like to return 
to later.
    I'd like to make 5 overarching points and then to present 
some general comments and facts that bear on the question of 
whether or not we should be ``bringing back the orphanage.''
    First, the five (5) overarching points:
     The issues are complex.
     We need a full array of services.
     We need to expand our thinking about what 
``permanency'' means.
     There are some children who do best in long-term 
residential placements--especially seriously mentally ill 
children and those with early, dangerous criminal patterns of 
behavior.
     There is strong evidence that residential group 
care works well for that population.
    I will take each of these in turn:
    (1) The issues are complex--I agree with H.L. Mencken, who 
said that, ``For every complex problem there is a solution that 
is simple, elegant and wrong.'' Any one size fits all solution 
is doomed to failure. The idea that all kids are adoptable or 
that bringing back orphanages will solve our problems is, 
simply put, ``wrong.''
    (2) We need a full array of services for children--and for 
families. We need preventive services to help preserve 
families; we need foster families and supports for kinship 
family care; we need strong adoption services; and we need 
several different kinds of group care facilities (group homes, 
residential treatment, supervised apartments, etc.), along with 
after care and independent living services. If we skimp on any 
of these, we will have a system that doesn't work. We have been 
skimping.
    (3) We need to expand our thinking about what permanency 
means and include the notion that subjecting children to the 
fewest possible substitute care placements should be a critical 
consideration. Ideally, permanency should mean a permanent home 
in a family (biological, kinship or adoptive), but for a sub-
set of kids in the child welfare system permanency is best 
achieved by long term care in a group setting--a boarding 
school or residential treatment center (RTC). And, let's face 
it, most RTCs function like boarding schools--albeit schools 
for very troubled kids from mostly poor families.
    (4) Two categories of kids in the child welfare system 
should be provided with long term residential care as the best 
permanency plan--those with multiple family placement failures 
who evidence severe mental health problems or those with 
serious anti-social, criminal behaviors. These are the kids who 
are repeatedly placed and replaced in foster homes and/or 
psychiatric hospitals--they are the ``frequent fliers''--the 
kids who require an enormous amount of child welfare, juvenile 
justice and mental health resources.
    These are kids who have been so traumatized by their early 
life experiences that they cannot tolerate the intimacy of 
family living, at least not until they get some long term 
treatment in an environment that is highly structured and in 
which they feel safe. These kids behave in ways that are so 
scary to foster families that they kick them out again and 
again. Not uncommonly they have numerous failed placements and/
or have been repeatedly hospitalized. They are not candidates 
for adoption. It doesn't work for them--in too many instances 
they've been compelled to go to a pre-adoptive home, only to 
experience yet another placement failure. At Children's Village 
(CV) we've had kids come to us after 10, 15, or more 
placements. Our record is a boy who had 23 failed prior 
placements (including back and forth to various kin and in and 
out of the hospital). He was 10 years old. One kid who finally 
got to CV, refused to unpack--that is, he refused to unpack the 
few clothes he had from the green garbage bag the city had 
given him for his belongings. ``Why should I unpack,'' he said, 
``you'll be sending me somewhere else soon.''
    Before describing these kids in greater detail, let me make 
my fifth major point.
    (5) There is strong evidence that residential group care 
works well for very troubled youth. Over the last 15 years, we 
have been researching one of our programs--the WAY Program, an 
Independent Living Program, with a unique, long-term after care 
component. WAY is targeted at our older youth transitioning out 
of the RTC. The study examined the outcomes for those in the 
program who left the RTC between 1989 and 1995, all of whom 
were between the ages of 21 and 30 at the time of the study. 
These youth were nearly all from New York City's most 
impoverished communities, all had been special education 
students when they came to CV, 66% were African American; 27% 
were Hispanic--all had some constellation of the 
characteristics I've just described.
    High school graduation rates are generally viewed as the 
single best predictor of adult success. Research showed that 
80% of the RTC kids who had been in the WAY Program had 
graduated high school, earned a GED or were still in school. 
These results are dramatically better than graduation 
statistics on comparable groups.
    High School Completion Rates:

        Children living below poverty level: 53%
        New York City special education students: 61%
        New York City Hispanic students: 64%
        New York City African American students: 68%
        WAY participants: 80% (all former RTC residents)

    Further, 80% of WAY alumni studied were employed with mean 
earnings for full-time workers of $23,000. The study also 
checked criminal arrest records of alumni and found that only 
8% had been arrested for violent crimes since age 21. On 
average, these kids were in our RTC just over 4 years and 
roughly half were then able to return to live with a family 
member--the others moved on to live in one of our group homes.
    Let me describe for you in slightly more detail the two 
kinds of children who, I believe, should be provided with a 
different kind of ``permanency plan.'' These kids need a plan 
that recognizes their need for a stable, long-term placement 
and that recognizes that they may never be able to live in a 
permanent family. We don't want to automatically dismiss the 
option of permanency with a family. However, we must not 
presume that permanency with a family is the only, or the right 
option. For these very troubled young people, graduating from a 
group residential facility and becoming a productive adult 
without serious problems--mental health or criminal--is a good 
outcome. For many, family contacts have been maintained while 
they have been in care at the same time that the youngster has 
come to accept that his family is not available to him on a 
permanent basis. He is not an orphan. He is a graduate of an 
RTC--cum-Boarding School. Can we not find a way to see this as 
``success,'' not a failure of permanency planning--both for the 
child welfare community and for the individual children who 
work so hard to overcome such overwhelming odds?
    Youth with severe mental health problems: With the advent 
of Managed Care and the concomitant near elimination of long 
term psychiatric hospitalizations, the child welfare system is 
serving alarming numbers of serious emotionally disturbed 
children and adolescents. Funding from the state departments of 
mental health have not made the same journey across systems. 
More importantly, RTCs, the best-equipped programs to serve 
these kids, have not been given the freedom to develop new 
models of care for these kids.
    Some of these children could be kept at home or prevented 
from a record of foster home failures if we could provide a 
combination of intensive, community-based services, with the 
back up of using RTCs as short-term treatment options for the 
whole family. Funding among and between systems must be 
flexible. Mentally ill children in the foster care system must 
be able to access services and resources under federal and 
state mental health programs.
     Who are they? They are kids who have been 
chronically and repeatedly abused or neglected--many have been 
sexually abused. At CV, there is evidence that nearly half the 
boys in our care have been sexually abused. Some have not been 
abused but have neurological and bio-chemical pre-dispositions 
to mental illness--and, often have been cared for under chaotic 
circumstances by a family member with serious mental illness or 
substance abuse problems. These children are nearly always far 
behind (or barely functional) in school, they have virtually no 
age-appropriate social skills. They have had no childhood. They 
are filled with despair--and, sometimes, with rage. About half 
have no viable family member willing or able to care for them; 
the other half do. With help and support, these families are 
eager to be good parents. Not all kids get into this kind of 
condition because of inadequate or dysfunctional families--
sometimes it's quite enough to be living in a community of 
violence, with decrepit schools, no jobs and drugs everywhere 
you turn.
     What do they do? Mostly, they are terribly 
destructive to themselves and to others. At the mild end of the 
spectrum, they are so despondent, disoriented and distracted 
that they cannot learn. They don't know how to play or to ask 
for help. They wake up screaming at night, they wet or soil 
themselves--though they are long past the age that such 
behavior is accepted in the real world. They are volatile and 
seem to have little or no control over their impulses. They are 
wary of everyone--especially adults. The more seriously 
troubled kids are suicidal or seriously self injurious. One boy 
we had would stick pins in his scalp. Some eat objects like 
batteries and tacks and suck their skin raw. Some set fires, 
hear voices telling them to do bad things, act out in sexually 
inappropriate ways, torture animals, and lash out at others at 
the slightest provocation.
    Youth with a history of serious anti-social, delinquent 
behaviors: David Fanshel, whose work inspired the permanency 
planning revolution, also identified a ``second stream'' of 
children in child welfare, which he says should not be subject 
to the same rules. These kids, he estimates, represent about a 
quarter of the children in child welfare. For them the goal 
should be to ``forestall the evolution of full-blown deviant 
careers,'' not to find them permanent homes quickly.
     Who are they? They are often kids who have been 
out on the streets and out of school for a long time, living by 
their wits or involved with a gang. Many regularly use drugs 
and alcohol--some are addicted. They often have a string of 
juvenile arrests for both petty and serious crimes. They may 
have been used and abused sexually (we've had kids who had been 
sold into pornography from the time they were babies--one boy 
had been dressed by his mother as a girl and sold to a porno 
ring). They've learned to steal and to con at an early age and 
they've been rehearsing those skills for many years before they 
come to us.
     What do they do? Sometimes they are 
indistinguishable from the group I've just described in that 
they often show tremendous depression but more of their actions 
are focused outward, at others. They steal, lie, and stalk 
victims. They hurt people. Some seem to have lost the ability 
to feel empathy. All seem to see the world as a hostile place 
and to behave in ways that reinforce their alienation from it.
    Now, here's the most shocking news of all. These kids are 
kids. They are afraid of the dark, afraid of themselves, and 
afraid of the world that has offered them so little protection 
and help. Underneath the despair and the rage there is a child 
who desperately wants our help. They are not all that difficult 
to reach or to turn around. But it takes time and it takes 
money. And, it requires that we take them out of the revolving 
door of foster home placement and replacement . . . out of the 
adoption failure syndrome . . . and provide them with a sense 
of permanency through long-term group care.

                       Are Orphanages the Answer?

    The question of whether or not to bring back orphanages has 
been lurking in the wings of child welfare for a least a 
decade. Unfortunately, people on both sides of the debate frame 
their arguments in such extreme terms that the best interests 
of children are being sacrificed to the controversy. If there 
is to be a thoughtful debate on the issues, we need to hear 
what each side is not saying.
    On the one hand, most child welfare professionals--people 
like myself--cannot even bring ourselves to say the O-word, at 
least not in public. To us, bringing back the orphanage means 
dropping down a rung on the evolutionary ladder. But, here's 
what we're not saying. We are not saying that group care 
facilities are bad for kids or that no child should ever live 
in an institutional setting. We are saying that we are mighty 
skeptical because what we really think is that society is 
looking for easy, cheap solutions to immensely complex issues. 
We believe that if orphanages are brought back, no matter what 
you call them--they will be so poorly funded, like all other 
child welfare services, that we'll be back to talking about 
kids sleeping in rows of metal bunks, eating mush, and the 
like. Therefore, we reject out of hand any discussion about 
orphanages or any variation on the theme.
    Most of us believe that the notion of orphanages is a cop 
out--a way of avoiding fixing neighborhoods and schools so that 
low income families can rear their own children in safe, 
thriving communities. Also, most child welfare professionals 
genuinely believe that foster homes (with their potential to 
become adoptive homes) are the best option for most children 
who must be removed from their families and cannot be placed in 
a kinship foster family home. We further believe that only 
those children who cannot be served in foster or kinship homes 
belong in residential treatment centers. Most of us believe 
that if the entire array of child welfare services--from 
preventive services to foster family and kinship care to 
residential group care were better funded, there would be no 
need to talk about orphanages.
    So, on one side of the debate, you have child welfare 
professionals saying ``before you do anything as drastic as 
bringing back the orphanage, why not fund what you have 
properly so that we can do our jobs really well--then you won't 
need orphanages.'' Our fear of a return to the bad old days is 
so great that we are unwilling to deal with the arithmetical 
fact that, in some areas of the country, there are simply not 
enough willing, able foster parents. Something must be done.
    On the other side, you have people who say, ``the child 
welfare system is broken beyond repair . . . there aren't 
enough decent foster homes to go around . . . let's bring back 
the orphanage.'' What proponents of orphanages are not saying 
is that orphanages are the best option. Rather, they are saying 
that ``a good orphanage is better than a bad home''--a phrase 
that was much bandied about at the turn of the century when 
orphanages were in their heyday. But, when you really press 
most of the proponents of orphanages, what they are really 
describing is what might better be called ``boarding 
schools''--facilities where kids from really horrible home 
situations--or no home situation at all--can live safely and 
get a good education, discipline, supervision and strong moral 
teaching.
    What they are not saying is that this is cheap. To run a 
responsible ``orphanage,'' with a good school, in today's 
economy is expensive. And, what they are not saying is that 
kids prefer orphanages. They, too, acknowledge that what most 
children, even those from really abusive homes, want most is 
``parents.'' What they are saying is that we've run out of 
parents--and, that they are skeptical, at best, that kinship 
families can fill the void.
    If we are going to have a serious, realistic public debate, 
some of us will all have to overcome our reflexive revulsion to 
the word ``orphanage'' and others will need to give up their 
off-handed rejection of the child welfare system. We need to 
examine fairly and honestly what it is we believe kids need and 
whether we can fund and implement the best options. To do so, 
I'd like to divide the rest of these comments into two 
categories:
    (1) What are the real costs, practical considerations and 
options to rear productive citizens?
    (2) Can existing child welfare services and constructs be 
strengthened or better targeted to meet the need?
    What are the costs, practical considerations and options? 
Most of those calling for bringing back the orphanages are 
talking about removing children from impoverished, high-risk 
communities and families considered unhealthy for children. 
Without debating who gets to decide what is ``unhealthy,'' 
let's assume that \1/4\ of the children receiving TANF funds 
would be so designated--or some 1,372,296 children (as of 9/
97), not counting the current 500,000 already in the child 
welfare system.
    To provide around-the-clock care to children costs, at an 
absolute minimum, $100 a day (not counting construction of the 
facilities, schooling, medical or mental health care)--$36,000 
a year per child or $49.3 billion to cover the cost of basic 
care for \1/4\ of those on TANF. By comparison, the cost of 
keeping a child in a foster home is roughly $25.00 a day, under 
$10,000 a year.
    If one of the reasons for considering orphanages over 
foster homes is that there are not enough good foster families, 
there are other options worth considering. When there is a 
market shortage of needed personnel in a particular field, 
salaries go up and training programs are created to lure people 
to the profession. Nothing comparable has happened in the 
foster parent profession. In 1996, the average monthly board 
rate paid to a foster parent was $431 per month. Yet, the USDA 
Report on Expenditures on Children by Families in 1998 
estimates $686.67 to $778.33 per month to cover the expenses of 
a child in a middle income family. Would it not be worth 
experimenting with increasing the reimbursement to foster 
families and providing training and other incentives to 
encourage more good people to pursue foster parenting as a full 
time vocation. If it worked, the savings would be enormous and 
kids would be able to experience family living as well as the 
possibility of adoption if they were not able to return to 
family in the long run.
    Another option worth considering is the real boarding 
school model--possibly as a 5 day a week program. I have mixed 
feelings about this option, as I do about Charter Schools. We 
need to fix public schools so that they provide a good 
education to all children in a community but, like many people, 
I have grown impatient with those willing to sacrifice another 
generation of children while they wait in crumbling buildings 
for someone to fix that little problem. Providing 
underprivileged kids with boarding schools is a terrific idea 
but it is not cheap. There is the potential to combine pots of 
money--education and social services--in a way that can make it 
cost effective. One thing for sure is that in terms of kid's 
self image, it's a whole lot more acceptable to say you're 
going away to private school than that you're living in a 
orphanage. This is not small consideration. Boarding schools 
for high-risk kids is a terrific way to support families on the 
edge and to turn around a generation of under-educated kids.
    When people come to visit Children's Village, their most 
frequent observation is that it looks and feels like a private 
boarding school. I've even had government officials say to me, 
``We ought to close those institutions and open more places 
like this.'' Then, I explain we are an institution, by 
government designation. But, in every way that matters, we 
function like a boarding school, albeit one for extremely 
troubled kids--and, because our students are so severely 
troubled, it is a school with intense staff supervision, small 
classes and intensive mental health and medical treatment 
services. As I've already mentioned, any private school for 
disadvantaged kids would be proud of our school success. But, 
what they don't want to hear is that such success comes at a 
high cost, some $50,000 a year, without counting the school 
costs.
    There are those who argue that the cost to run an 
orphanage-like program is much lower than the $100 a day I've 
estimated. I don't believe it. The model they are talking about 
involves hiring ``moms and pops'' to care for kids and using 
the kids to do much of the work at the facility. I don't 
believe such a model is realistic today, except on a very small 
scale, for two reasons. First, if the ``mom and pop'' you hired 
don't work out and you need to fire them, it is like firing the 
kids' parents--and hitting the kid in the gut with yet another 
traumatic loss. I used to run such programs but stopped because 
they rarely work for long. Mom and Pop teams burn out quickly 
and they have a nasty habit of wanting to go to sleep at night. 
That brings me to the second reason this cheaper model rarely 
works. Kids--especially adolescents--need awake care at night. 
The kids, even the less troubled ones, often have night 
terrors, and some kids victimize others at night. With a house 
full of adolescents, someone always is out past curfew, needs 
hand-holding and the like.
    My experience is that having a core group of approximately 
6 people per home, around the clock, works best. The kids 
become attached but if one person leaves or is fired, their 
world doesn't collapse. Facilities must be open 24 hours a day, 
7 days a week. When you factor in social work services to work 
with the family, to maintain sibling contacts and to ensure 
appropriate case planning plus food, clothing, recreation and 
other essentials, it costs over $100 a day.
    Further, the days of teaching kids to farm or to be a 
cobbler and then placing them in apprentice positions are long 
gone. We need to teach them computer skills and how to use high 
tech equipment, along with work ethics, if they are to have any 
real chance of success in their future.
    There are two other practical considerations:
    (a) Site-ing is an enormous barrier. Finding available 
sites for large facilities or even group homes, and getting 
local zoning board approval, is extremely difficult and 
lengthy--as in years and years of work. NIMBY (Not In My Back 
Yard) is alive and well. It is always an ugly and lengthy 
battle to get all the required permissions to open even one 
group home for 6-10 kids. I've been turned down for ideal 
locations. I've often tried to imagine the scene that would 
ensue if I tried to open Children's Village today in the small, 
picturesque town we're in--with our 40 buildings and 150 
acres--and 325 seriously troubled, inner city kids. It wouldn't 
happen. I'd lose. No doubt about it.
    (b) Assuming land or facilities are acquired, who will pay 
the construction or renovation costs? Currently, most states do 
not provide capital funding for facility renovations, much less 
construction. At Children's Village, our 100 year old buildings 
were falling apart because there was no mechanism for acquiring 
public funding for restoration and major repairs. Ultimately, 
we sold land, took out loans and raised private dollars to 
acquire the $23 million needed just to repair the 21 houses in 
which some 300 children reside. Where would the funding come 
from for orphanages? One proposal being whispered about is to 
convert defunct military bases to orphanages. Now there's a 
step forward. What makes places like Children's Village work is 
that the environment is home-like and children live in as close 
to a family like environment as any institution can provide. 
Most of the large residential facilities opened long ago, when 
there was land near to the urban areas. It has been a happy 
coincidence that as agencies have recognized the need to 
maintain family contacts, most residential facilities are 
within easy transportation reach for regular visiting. Building 
such facilities today would be astronomical. If they could be 
built at all, the locations would likely be far from family 
contacts. Kids need to maintain those contacts even when they 
are unable to live with their family--there are costs 
associated with maintaining these contacts.
    Can existing child welfare services and constructs be 
strengthened or better targeted to meet the need? Broadly 
speaking, the child welfare system needs to be far more 
adequately funded to prevent the need for out of home care of 
any kind. Too many families are struggling to rear their 
children in communities that resemble war zones, with 
inadequate and under-funded schools, little or no health care, 
lack of adequate and affordable housing and lack of community 
recreation or work options. That families find it nearly 
impossible to reverse the odds and make a solid future for 
themselves and their children should come as no surprise to 
anyone.
    Removing children from homes where they are not being 
abused and neglected is no solution to the problems that plague 
America's families. Rather, it is an abdication of our 
responsibility. To renege on the future for entire communities 
by pouring money into orphanages--or boarding schools--instead 
of providing decent neighborhood schools, affordable housing 
and general preventive counseling services is unjust.
    We already have a system for removing children from their 
families who have been abused or neglected. The major problem 
with child welfare is that as the needs of kids have changed 
and as their problems have been made all the more serious with 
the three headed monster of Crack, Homelessness and AIDS at 
their doorstep, the system has not kept pace. There has been a 
steady erosion of available resources.
    The entire array of child welfare services is needed--along 
with some new approaches--so that we can tailor the help to the 
needs of individual families and children. What follows are 
some specific suggestions on how existing services can be 
strengthened followed by two new, proposed approaches to using 
group care differently, no matter what you call it. First, the 
overarching recommendations:
     Every community must be expected to provide the 
full array of services: prevention, foster care, kinship care, 
boarding homes care, adoption, residential treatment, group 
homes (and related community support programs), and independent 
living services. These must be adequately funded.

           The federal payments to states through the Title IV-
        E Foster Care and Adoption Assistance must not be capped. It 
        must be maintained as an open-ended entitlement.
           Congress should pass this year, the Foster Care 
        Independence Act, H.R. 1802, which doubles the federal funding 
        for the Title IV-E Independent Living Program.
           Federal funds for prevention should be drastically 
        increased. The Adoption and Safe Families Act reauthorized and 
        made some increases in funding for the Promoting Safe and 
        Stable Families Program (Title IV-B, Subpart 2) which states 
        use to provide services to children and families so that 
        children will not need to be placed in foster care.
           Congress should provide the authorized level of 
        funding of $325 million for the Title IV-B Child Welfare 
        Services Program and $2.38 billion for the Title XX Social 
        Services Block Grant. These two programs provide major sources 
        of discretionary funding for states to protect and care for 
        abused and neglected children.

     After-care services must be mandated. The work of 
this committee on the Independent Living bill was magnificent 
and I thank you. The only thing missing, in my opinion, was the 
expectation that every child leave care with long-term after 
care services, especially with the help of a paid professional 
mentor. Our own research bears out the importance--and the cost 
effectiveness--of such a model. This can't be left to the 
states--they're not doing it. You must make it happen.
     Child welfare services in general, and residential 
treatment centers in particular, must be required to meet 
certain national standards and be accredited. We would not 
think of sending our own child to a hospital that wasn't 
accredited but we expect poor people to send their children to 
facilities that aren't. This is an easy, low cost improvement.
     We need increased resources in order to make 
better initial assessments so that children are quickly placed 
into the most appropriate service. Kids shouldn't have to fail 
to get to residential treatment. Everywhere there are long 
waiting lists of extremely troubled youth waiting too long for 
the help they need. Now, while they wait, they bounce from home 
to home, often ending up on the streets, further victimized, or 
in the criminal justice system, having committed some heinous 
crime. To meet the needs of these children and young people, 
residential services that can respond to their complex problems 
must be increased.
    New approaches are needed to address the needs of the two 
specific, poorly served populations mentioned above: the youth 
in the child welfare system who seem to be headed for a life of 
crime and those with serious mental health problems. These two 
populations cost us the most in child welfare budgets. The 
first might be better served by longer term care akin to a 
boarding school; the other, by highly targeted stays in RTC to 
preserve placements in their own, foster, kinship or adoptive 
homes--or, for some, with long-term residential care.
    Arguments for ``permanency'' and shortened length of stays 
for all children must fall when confronted by the actualities 
of troubled children, whose current problems cannot be 
adequately resolved and whose future potential cannot be 
adequately realized within such wooden standards.
    In summary, there is a clear need for more residential 
services--but not for kids who are simply disadvantaged, but 
for super, at-risk kids and for those who require intensive 
treatment. Now a-days, the Residential Treatment Centers are 
more or less filling that role. They are serving a very, very 
troubled population--kids who have been repeatedly abused, 
physically and sexually--kids who are filled with 
incapacitating despair and/or frightening rage. Even with these 
kids, who almost no one argues should not be in a group care 
facility, we are fighting constantly for the funding we need to 
run such facilities effectively.
    At present, there is little evidence that we, as 
individuals and tax payers are willing to do what it takes and 
pay what we must, to have the full array of good child welfare 
services--or, good orphanages. Indeed the record shows, over 
and over again, that we are not willing to pay more than lip 
service to the welfare of our children. And that is why nobody 
who really cares about children wants to say the O-word.
    Thus, we bridle at any discussion about bringing back the 
orphanage. Secretly, we admit--only to one another--that there 
are many, many other children who ought to be in some kind of 
group care facility if we are to achieve the best possible 
outcome for them. We worry that if such facilities are built 
and funded, then the essential services to the most needy will 
be further shredded. Nonetheless, when we talk about it, we 
envision places that are well run, well funded, residential 
schools--the B-word--Boarding Schools, not the O-word. Never 
the O-word.

                                


    Chairman Johnson. Reverend John Smyth.

STATEMENT OF REVEREND JOHN SMYTH, EXECUTIVE DIRECTOR, MARYVILLE 
                 ACADEMY, DES PLAINES, ILLINOIS

    Rev. Smyth. Good morning, Madam Chair and the committee 
members.
    Chairman Johnson. Sorry, I forgot to mention, the executive 
director of the Maryville Academy of Des Plaines, IL.
    Rev. Smyth. Correct, I have been there since 1962. 
Maryville was started in 1882. The kids think I have been there 
since 1882, but I am struggling through that.
    Last year we served over 16,500 children who were 
physically and sexually and emotionally abused. We receive all 
the children from the Illinois Department of Children and 
Family Services and through the juvenile court system, and we 
have developed Maryville in a no-decline situation so that 
Maryville can be a safety net and a help, because I totally 
believe in adoption, as I totally believe in foster care--I 
totally believe in all those--but in the social service world, 
they have limited the options of permanency, and I wish they 
would expand them.
    Insofar as adoptions today, Director McDonald has done an 
excellent job in getting adoptions. I think they went up to 
5,500 last year, and the goal for the year 2000 is 6,500. My 
only worry about that is, many of these homes--I haven't got an 
exact number--many are set to explode because there has been a 
rush to meet the Federal mandate and they are not getting the 
support. But I have developed Maryville to be a safety net for 
the children who are exploding out of foster care, and I think 
that is what part of an agency goal today is.
    Maryville is different now than when I came in 1962. It is 
a therapeutic center. It has options for many children, and the 
idea is that if any child in the Cook County, Chicagoland area 
has a problem, we can go out and serve them. We operate on a 
no-decline system. We would never kick a youth out. If a boy 
has to leave or a girl has to leave for incarceration, when 
their term is up, they come back to Maryville, or if they go to 
a psychiatric hospital, they come back to Maryville. I want to 
have Maryville as a unique safety net to promote adoptions and 
promote foster care.
    We do run a big foster care program ourselves which--about 
45 percent of them become adoptive parents, and we do have, I 
hope, a very good support system for those adoptive parents.
    I am talking about the people, as was just mentioned, that 
fall through the system. They need help, and I believe that the 
role of the agency today is a lot different than it was 25 or 
30 years ago. The agency today has to stick with the youth much 
longer, they are more fractured. Yes, they have gone through 
10, 15, 20 foster homes, but that doesn't mean that that child 
is useless, and I think every agency should really look to a 
point of--really, independent living is extremely important, 
which we run, and transition living, to get those youth that 
are ready to face the world in the economics and in skill 
development.
    I believe there is a role of agency today to specialize in 
taking care of this population that falls through the cracks 
and that is happening very, very rapidly, and those children 
that are not adoptable, and they will never be adopted, and 
anybody who works with children know that there are a certain 
number of children that will never be adopted and will never go 
into foster homes. They are the youth that I think agencies 
should look to and say, ``Hey, we can serve this population'' 
and you have to develop your own service complex to be able to 
serve those in a very thorough way, a very permanent way, and 
you can give them permanency.
    I believe permanency is a state of mind, heart and soul. It 
is not written on a piece of paper that you are adopted or you 
are in a foster home or you are in an agency. I think an agency 
has to be operated for the sake of the child, not for the sake 
of the agency; and it is a world of difference if you are 
operating one. If you are operating for the sake of child, you 
never close 365 days a year. You look at the individual--and I 
say ``individual''--treatment plan and the God-given abilities 
of that child and you go to that child and say, ``Why was this 
child kicked out of 15 foster homes or 20 or whatever it may 
be?'' And every case is unique. You look, and that child has to 
be answered. Or she will answer and say, ``I want to be this or 
I want to be that''; and then you open the doors for that child 
to make that child a developing person so they can face the 
community.
    I think that the social service world would take a very, 
very great step forward that--when it comes to say, this child 
should go from an agency or to some place, into a foster home 
or adoptive home, and especially when they get to that tender 
loving age of 13 or 14, I would think they would ask the child, 
what do they want, instead of mandating a permanency plan.
    It would be a novel idea to think what we are going to do 
for the best interest of the child. I think if an agency looks 
at the best interest of the child, saying, what do you want to 
be and we will create the road for that and we will open the 
doors for that.
    One of the big things that I would like to mention, too, is 
the success of many of our children in the residential care at 
Maryville reflected in our alumni association, which was 
mentioned before, successful young men and women coming home 
and giving back, and these men and women with intact, loving 
families have formed a strong alumni group that continue to 
support children in need and to volunteer at Maryville events 
and the family affairs and realize that they would not have 
become the productive citizens without Maryville.
    I think there have to be many resources for the children 
and don't deny any of them. Thank you.
    [The prepared statement follows:]

Statement of Reverend John Smyth, Exective Director, Maryville Academy, 
Des Plaines, Illinois

                            I. Introduction

    Good morning Chairman Johnson and Committee members. My 
name is Fr. John Smyth. I am the Executive Director of 
Maryville Academy located in Des Plaines, Illinois. I have been 
at Maryville Academy since 1962.
    Maryville was founded in 1882 by Archbishop Patrick Feehan 
as St. Mary's Training School and today is the largest 
residential child care facility in Illinois. From the 
beginning, Maryville has been home to children of all races, 
religions, and ethnic backgrounds. Over the last year, on a 
long-term and short-term basis, Maryville has been home to over 
16,500 physically, sexually, and emotionally abused, abandoned, 
and neglected children and drug dependent newborns.
    Children come to Maryville from the Illinois Department of 
Children and Family Services and through the Juvenile Court 
systems. Maryville will not decline entrance for any child; and 
once they come to live here, we will under no circumstances ask 
for that child's discharge. At times, children will have to 
leave to serve time for offenses committed or for periods of 
psychiatric hospitalization, but we will re-admit that child 
upon release.
    Today, Maryville Academy operates twenty-one facilities 
offering short-term shelter care, long-term residential care, 
foster care, therapy and counseling, services for addicted 
mothers while giving care to their drug addicted newborns, 
providing safety for children who must testify as witnesses in 
criminal cases, residential care for pregnant teens and their 
infants, and mentors for children who leave our facilities.
    Despite the gangs, crack cocaine, drugs, and violence of 
today, Maryville's mission remains to protect and provide 
specialized services for youth in need and to insure their 
rights and always advocate for the least restrictive program 
alternative for children. Whenever possible, youth will be 
returned to their natural parents, extended family, foster care 
homes, or community-based group homes.

                 II. What is Behind Illinois' Numbers?

    Illinois has done a commendable job increasing the number 
of adoptions to 5,500 this past year, with the goal for the 
year 2000 of 6,500 adoptions. What statistics don't show is the 
number of adoptive or foster placements that have failed. 
Abused, neglected, and abandoned children have difficulty 
adjusting to a family environment and the adoptive or foster 
parents ask for their removal. Many foster placements end 
abruptly and adoptive parents receive no help since these 
children are no longer in the child welfare system. Agencies 
such as Maryville Academy are there to provide a ``Safety-Net'' 
for these children with no alternatives.
    Illinois is making it increasingly difficult for children 
to be placed in residential care. The number of residential 
beds in the Illinois budget is continually in jeopardy. 
Illinois does not list residential care as a permanency option 
in published materials. Illinois' permanency measures are: 
subsidized adoption, subsidized guardianship, adoption, 
guardianship, and kinship foster care. If residential care is 
eliminated, thousands of children in Illinois will have no 
where to go. The LANS (wrap-around services) to keep a child 
successful in adoptive or foster care reads as an excellent 
document; however, after several months or years of placement, 
children and families still do not have these services in place 
due to the bureaucracy of funding to provide these services.

III. Children Need Continued Support When Placed in Adoptive or Foster 
                             Care Families

    Children who achieve early permanent placements in adoptive 
families have better chances of achieving strong self-esteem, 
self-identity, and self-worth. For Illinois to achieve early 
permanent placement for children, it must provide the services 
to assure successful placements. Children bounced between 
multiple foster families or placements have difficulty bonding 
with others. Children must be provided with services to help 
them deal with the trauma and to provide the skills to bond 
with foster or adoptive families. Many of these children are 
not adoptable. Many of these children will require the 
professional expertise of an agency that can provide 
psychiatric care, therapy, special education services, and one-
on-one staff if necessary.
    While states continue to promote adoption as the best 
permanency goal, the state must also provide the services for 
these adoptions to succeed. They must provide pre-placement 
services, counseling and therapy, and respite care.

                  IV. Residential Care as a Safety Net

    For children that do not have adoption as an option, 
permanency goals and stability must be provided. Residential 
Child Care Facilities can provide stability and permanency 
goals to prepare children for adulthood and matriculation into 
society. Realistic goals must be set for children and states 
should not follow a policy of imposing one permanency option on 
every child. Individualized needs of each child must guide the 
placement decision. Residential care must be viewed as a viable 
placement and permanency option, along with adoptive and foster 
care.
    Maryville Academy has been successful because we focus on 
teaching children to live within a family environment. Under 
the ``Family Teaching'' model of child-care, which was 
developed at the University of Kansas, professionally trained 
live-in teaching parents supervise a carefully structured home 
environment. The parents work to ensure that the needs of each 
child are being met. The premise of the program is that 
behavior is influenced by the consequences of that behavior. We 
reward proper conduct and discourage improper conduct and help 
the child develop skills to live independently and successfully 
in society, without relying on the welfare system.
    For children striving toward independent living, Maryville 
offers a career development program which prepares youth to be 
economically independent and self-sufficient. The program 
stresses the values and ideas of the work ethic as an 
alternative to welfare. The program offers employment 
opportunities and corporate-sponsored junior achievement 
programs. Maryville also provides a scholarship to any child 
who is accepted into a college program. During their college 
years, Maryville continues to mentor and support these children 
and provide summer jobs if necessary.
    All Maryville children are offered a year-round athletic 
and recreation program which promotes sportsmanship, team 
cooperation, and fun. Volunteer coaches are trained through the 
American Coaching Effectiveness Program which teaches 
``Athletes First and Winning Second.'' Maryville's children 
participate in a variety of organized sports and teams are 
evaluated on ten sportsmanship criteria and rewarded for 
cooperation, team play, and sportsmanship.
    The success of children in residential care at Maryville is 
reflected in our Alumni Association. Successful young men and 
women coming home and giving back. These men and women with 
intact loving families have formed a strong Alumni group to 
continue to support children in need and to volunteer at 
Maryville events; and realize that they would not have become 
productive citizens without Maryville.
    We must continue to provide residential care for children 
who cannot succeed in foster care or adoption. Years ago, I 
would receive calls from parents begging for help with their 
adolescent son or daughter. I still get those calls, but now 
the children are six, seven, or eight, not thirteen, fourteen, 
or fifteen; and now the parents are not the natural parents but 
foster or adoptive parents. By eliminating residential care for 
children you will eliminate the ``Safety-Net'' and these 
children will be doomed. For the children, who cannot succeed 
in adoptive or foster homes, residential agencies can provide a 
nurturing environment, specialized services, individualized 
treatment plans, and hope for a successful future.

                                


    Chairman Johnson. Thank you very much, Reverend Smyth, and 
I thank the whole panel for your excellent testimony.
    Before we proceed to questioning, I am going to ask Ms. 
Goldsmith if she would just yield her seat to Congressman 
Bliley, who has just arrived--and I thank him for joining us--
and give him an opportunity to present testimony on his bill.

STATEMENT OF HON. TOM BLILEY, A REPRESENTATIVE IN CONGRESS FROM 
                     THE STATE OF VIRGINIA

    Mr. Bliley. Well, first of all, I want to thank you, Madam 
Chair, for holding this hearing.
    Second, I want to apologize to you and Ranking Member Ben 
Cardin for being late, but the higher pay grades called me to a 
meeting.
    Chairman Johnson. We can accommodate to your schedule.
    Mr. Bliley. They made me an offer I couldn't refuse, so I 
had to go. I am going to ask unanimous consent to put my full 
statement in the record.
    Chairman Johnson. It is so granted.
    Mr. Bliley. In a very short space of time, I will summarize 
the bill.
    On Father's Day in 1998 Newt Gingrich spoke about 
increasing the adoption tax credit. As an adoptive father, I 
set about to work with Newt to make it a reality. When I 
adopted through Catholic Charities many years ago, it was 
relatively simple, and it was relatively inexpensive. Today, it 
can cost anywhere from $8,000 to $25,000, and that is a huge 
hurdle for young people to climb, particularly if they are 
paying off college loans, automobile loans, paying rent, or 
they are buying a house. It is huge. Today, the adoption credit 
is $5,000, and it is $6,000 if you adopt a child with special 
needs, but it expires in 2001.
    So what we propose in this legislation is to, make the 
adoption tax credit permanent and increase it to $10,000. This 
will help enormously for prospective adoptive parents to get 
over the hurdle.
    One of the reasons that adoption is so expensive is that 
you have legal fees, agency fees, and then frequently you have 
the cost of the pregnant woman going to term and her hospital 
expenses and her living expenses and this is what dramatically 
raises the cost. So I am deeply appreciative of you holding 
this hearing, and I hope that we can pass this bill. I mean, at 
a time when we are running trillion-dollar-plus surpluses, we 
ought to be able to afford this very modest bill to grant some 
relief to people who otherwise wouldn't have it.
    And with that, I will stop, and if you have a question or 
two, I will be happy to try to answer.
    [The prepared statement follows:]

Statement of Hon. Tom Bliley, a Representative in Congress from the 
State of Virginia

    Thank you Madam Chair and members of the Subcommittee.
    Before I address several adoption related bills I have 
introduced, I would like to thank Chairman Johnson for holding 
this hearing today. Chairman Johnson, you have consistently 
shown your commitment to promoting adoption throughout your 
service in Congress. By holding this hearing, you again 
demonstrate your dedication to ensuring children find loving 
homes, increasing adoption awareness, and helping to reduce the 
high cost of adopting a child.
    Adoption has touched my life personally because my wife and 
I are adoptive parents of two. We consider ourselves very 
fortunate to have been able to adopt many years ago. Mom and 
Dad are the greatest titles in the world.
    My personal involvement with adoption has been a rewarding 
experience I have brought to Congress as one of the founding 
Co-Chairs of the Congressional Coalition on Adoption. I have 
been blessed by my experiences with adoption so now I am doing 
what I can to help thousands of innocent children find a mom 
and dad.
    During the 106th Congress, I have focused a great deal of 
effort on finding ways to reduce the high cost of adoption. 
Adoptions today can cost upwards of $25,000. Needless to say, 
this high cost puts adoption well out the reach of many 
parents. I hear from constituents and people all across America 
who are taking out a second mortgage or dipping into savings to 
adopt a child. The result is that parents who would like to 
provide a loving home to a child in need are simply unable to 
do so. I firmly believe that the federal government must do 
more to help fight this high cost. There are simply too many 
parents with love to give and too many children in need of a 
home for the federal government not to act.
    With this in mind, I have introduced three bills, the Hope 
for Children Act (H.R. 531), the Families First Act (H.R. 2282) 
and House Resolution 238, which will help parents fight the 
high cost of adoption. The idea to seek a legislative solution 
to the high cost of adoption began to take shape on Father's 
Day, 1998. Speaker Newt Gingrich was visiting the Hope for 
Children Adoption Agency in Marrietta, Georgia. Speaker 
Gingrich met with adoptive parents and their children and spoke 
about increasing the adoption tax credit. As an adoptive 
father, I set out to work with Newt to make this bill a reality 
and the Hope for Children Act was born.
    Speaker Gingrich and I introduced the Hope for Children Act 
in the final days of the 105th Congress. The Hope for Children 
Act would be the last bill Speaker Gingrich and I sponsored 
last Congress and the last bill Newt ever sponsored in 
Congress. The adoption tax credit Congress passed in 1996 as 
part of the Small Business Job Protection Act was a good start 
and it has helped a lot of families adopt who could not afford 
to do so in the past. Still, the Federal Government can do more 
and that is why I reintroduced the Hope for Children Act this 
year. I am pleased to say it has 147 co-sponsors and bipartisan 
support that crosses party-lines because 41 percent of the co-
sponsors are Democrats.
    The Hope for Children Act seeks to increase the adoption 
tax credit to $10,000 for all adoptions. The current tax credit 
provides only a $5,000 tax credit and a $6,000 tax credit for 
children with special needs. The tax credit would also become 
permanent law and would be exempted from the Alternative 
Minimum Tax. Finally, the tax credit would be indexed for 
inflation and the earnings limitation expanded to families 
earning $150,000 and gradually phased out for families making 
up to $190,000.
    At this time, I want to bring to the committee's attention 
a letter I received from Mr. Scott Thompson, a constituent of 
mine from Richmond, Virginia. Mr. Thompson writes about the 
Hope for Children Act:

          To give some background, my wife and I have been going 
        through the adoption process for about two years. During that 
        time we have pursued many different paths and options, all 
        unsuccessful, so far. As it stands now we are abut six months 
        from getting our child, hopefully. We have invested to date, 
        roughly $6,000. We will surely invest another $10,000 before it 
        is all over . . . It is, however, very sad that two people who 
        wish to provide a loving and stable home to a child must endure 
        . . . outrageous costs as well. In our case we will have to 
        obtain a second mortgage on our home and use all of our savings 
        to make this a reality. These payments will make it more 
        difficult for us to give all that we want to our child. Passage 
        of this bill will cost the Federal Government so little in the 
        grand scheme of things. It will, however, provide much needed 
        help to the searching families and the waiting children.

    More recently, I, along with Representatives James 
Oberstar, Dave Camp, Bobby Scott, Dan Burton, Earl Pomeroy, and 
Jim DeMint, introduced the Families First Act to give parents 
more options when addressing the high cost of adopting a child. 
This bill will allow penalty-free withdrawals from IRA's (up to 
$5,000) for adoption expenses. Presently, withdrawals from an 
IRA before age 59\1/2\ incur a 10% excise tax on taxable 
amounts withdrawn. The Families First Act will enable families 
to use their own money to start a family as opposed to taking 
out a second mortgage or going into debt.
    The Families First Act would also make tax free employer-
provided adoption benefits permanent law. You may remember the 
Congress passed legislation in 1996 to make employer 
contributions for adoptions expenses tax free. Unfortunately, 
this tax free status will expire on December 31, 2001. It also 
exempts up to $10,000 from taxation any employer-supported 
adoption benefits while increasing the income eligibility for 
tax free employer supported adoptive benefits. This act makes 
it clear--families come first, not the IRS.
    Increasing numbers of corporations now offer adoption 
benefits as part of their employment benefit package. 
Corporations such as Apple Computer, Inc., Coca-Cola, IBM, Time 
Warner, Walt Disney Co., Wendy's International, and others 
provide their employees with financial assistance to adopt and 
other benefits designed to promote adoption. Of the top 100 
companies for working women, 85 percent offer financial 
assistance for adoption. These benefits allow companies to be 
competitive in recruiting qualified employees. Unless Congress 
acts to extend this tax free status, however, the effectiveness 
of employer-provided adoption benefits will be severely 
diminished.
    Adoptive parents and I eagerly await the January 1, 2000 
Treasury Department report on the effectiveness of the 1996 
adoption tax credit. The longer the American people and I look 
at the benefits of the adoption tax credit proposed by the Hope 
for Children Act and the Families First Act, the more I 
envision the American people having an opportunity to adopt 
again. I hope the study will determine what you and I both know 
that it takes years of saving and planning for middle-income 
parents to afford adoption.
    I believe the House of Representatives should follow the 
lead of the private sector and offer the same assistance to 
families who want to adopt children. Accordingly, Rep. James 
Obertstar and I have introduced House Resolution 238, a bill to 
reimburse employees of the House of Representatives for 
qualified adoption expenses. According to House Resolution 238, 
the maximum amount that may be reimbursed to employees of the 
House of Representatives is $2,000. The resolution lets each 
office decide whether to provide adoption reimbursement to its 
employees. Reimbursement funds would come out of existing 
salary accounts.
    The largest employer in the U.S. should follow the lead of 
the private sector and provide some assistance to families who 
decide to adopt. Accordingly, I am also pleased to announce 
Rep. Oberstar and I will introduce similar legislation for 
federal government employees. The Federal Employee Adoption 
Assistance Act will mandate that federal agencies reimburse 
employees up to $2,000 for expenses associated with the 
adoption of a child. Any benefit paid by this legislation would 
be paid out of funds available for salaries and expenses of the 
relevant agencies.
    Employer support of adoption results in increased employee 
satisfaction, higher productivity, and increased loyalty and 
commitment towards one's employer. At a time when a young 
couple is experiencing the cost and stress of creating a 
family, financial assistance for adoption is the right thing to 
do. We should continue to promote this benefit and we can 
increase public awareness of this adoption benefit by passing 
these two employee adoption assistance bills.
    There are 100,000 children in state care waiting to be 
adopted who are in search of parents to read to them, to teach 
them how to tie shoe laces, to say bedtime prayers with them, 
and to eat ice-cream with on a summer night. We need to create 
additional incentives and eliminate disincentives for parents 
to adopt these children. If we are successful, there will be 
thousands more parents who will feel a love they did not know 
could exist until they adopted their new son or daughter.
    We have done a lot in recent years to improve the situation 
but lets continue to work harder on behalf of children.
    Chairman Johnson, I want to thank you again for holding 
this hearing and I want to thank all of my colleagues who have 
become co-sponsors of the important adoption bills I have 
talked about today.

                                


    Chairman Johnson. I thank you very much for your testimony. 
Certainly permanence is very important in looking at why the 
costs are going up, and keeping the credit somehow balanced 
with the costs is very important.
    Mr. Bliley. Well, one thing I forgot to mention, too, we 
phase this out. If it is at $150,000 joint income, it begins to 
phase out, so by the time you begin to get to 190,000, you 
would not have this credit, but it wouldn't figure you would 
need it when you get up into that income category.
    Chairman Johnson. Thank you.
    Mr. Bliley. And we also waive the Alternative Minimum Tax 
because I had a letter to the editor in my paper where somebody 
said, well, the adoption credit is fine, we thought it was 
going to be great, but all of the sudden we get hit with the 
Alternative Minimum Tax.
    Chairman Johnson. Hopefully, we will repeal the Alternative 
Minimum Tax so that the $500 credit and all the wonderful tax 
benefits to help kids go to college will not be countered by 
that very regressive provision in the tax code.
    Ben, do you have any questions?
    Mr. Cardin. Let me first ask that my opening statement be 
included in the record and thank all of our witnesses today, 
including my colleague and friend, Mr. Bliley, for his interest 
in trying to assist those who are able to adopt children.
    I think there is a general consensus here we have got to do 
a lot more in regards to children and special needs, and that 
is where the real difficulty is. Where we have long-term 
placements, we need long-term placements.
    I was particularly impressed by Mr. Kroll's comment about 
the loss of certain financial incentives if you move towards 
adoption for a child who has special needs and these additional 
services, and I think what has come out of this panel 
particularly is that we do need to have flexible options, that 
each child is different as Reverend Smyth has said. Each child 
is truly different. We need to have more flexibility in dealing 
with long-term situations including the ability for adoption, 
particularly for children with special needs, and I appreciate 
all of your statements today.
    Chairman Johnson. Thank you. We do have a vote on, and for 
some extraneous reasons, I won't be able to return. So we have 
10 minutes, and I will try to focus a couple of questions and 
give Ben a chance, and if you have an opportunity to come back 
and pursue that, we will see.
    I think that there is really broad understanding that we 
have to do a better job of supporting adoption, that too many 
kids--you know, the first round of adoptions was really kids in 
foster care by foster parents. We have been surprised at the 
number of adoptions that haven't worked and a lot of those 
haven't worked because there hasn't been the support and there 
isn't the belief that for the next 5 years there will be the 
support, and so we understand that we have to make that change.
    Part of that is a funding change, and in my State, there is 
a demonstration project that gives a residential facility the 
flexibility to do all the things that you do and, you know, let 
the child visit short-term placements and let the child and the 
adoptive parents choose each other through knowledge and 
experience and familiarity and friendship. So, you know, we see 
a lot of those things to do.
    What I want to ask, what has concerned me the most--and 
this comes from visiting kids from our program called The 
Bridge, which are difficult kids awaiting placements, and 
placements are hard to find for those kids--they are teenagers, 
they have troubled pasts; and it does strike me that they would 
do better in a residential, a permanent placement, in a family-
type group home, not 50 kids you know, not 30 kids, really the 
kind of a group home or an institution that is capable of 
giving them permanency, confidence. And also they often are 
sufficiently troubled that they don't need just intensive help, 
but they need long-term support that carries through on what 
they learned in that intensive treatment.
    So there is a group of kids that are coming into the 
system, some of whom could be supported with better support of 
foster care, but some of them actually who would do better in a 
supportive system. And I couldn't possibly tell you, you know, 
which kid, but when you have kids who are 13, 14, 15, coming to 
you with a history that some of these kids have, it just seems 
to me we are better off being more serious about developing the 
kind of group home option or, you know, that historically 
orphanages provided in the past.
    So I am very interested in the alumni data that you have. 
The orphanages in the past, however, did have kids that were on 
the whole sort of healthier and hadn't been through quite the 
level of trauma that kids with addicted parents and dangerous 
neighborhoods have. I think we have never had children who have 
witnessed so much violent crime or been the recipient of such 
extraordinary violence.
    So I would just like you to comment on, how do we define 
this entity, and is it defined under current law? Is definition 
a problem or is it just funding? I mean, I like the idea of 
beginning to notice residential educational facilities. So I 
don't know what the definition is of this in between. Some of 
you are actually doing it, and I think Mr. Kroll's point that 
we don't want our absorptioness to relieve us of the 
responsibility to get kids into foster homes because it does 
increase their chances of adoption and into adoptive homes, but 
do we have a definitional problem as we move forward?
    You just indicate that you would like to speak and I will 
just call you.
    Mr. McKenzie.
    Mr. McKenzie. I would simply say it is fairly well accepted 
that children who have difficult problems belong in a 
residential treatment center. The problem is making available 
homes or residential facilities for those kids who have not yet 
become traumatized by either their parents or by the system 
itself.
    The issue here today is not against adoption. It is about 
or towards----
    Chairman Johnson. Early intervention is very important.
    Mr. McKenzie. That is right, and if you go to the head of 
my children's home that has become a treatment center, they 
will tell you that they can identify about 40 percent of their 
kids should never go home, and they can identify them early on. 
They can also point out that they cannot keep them, and so 
people in the field can spot these people, spot these kids who, 
they know if they put them back with their families, they are 
going to be abused again; or if they put them into the foster 
care system they are going to be abused again.
    Chairman Johnson. Just a minute. It looks like we are going 
to have 5 votes, so I want to be sure to give----
    Mr. Cardin. Madam Chair, why don't you just continue. The 
line that you are pursuing I think is the line that I would 
want to pursue.
    Chairman Johnson. If you all will comment, and keep it 
short, so we can try to hear from many. Ms. Dale.
    Ms. Dale. I want to respond to the kinds of kids you were 
just describing, those 13-year-olds. We have some of them, 
including some of them from Connecticut, at Children's Village 
and those are the kids we serve every day. One of the myths 
that needs to be debunked is that, ``large institutions are bad 
for kids'' because I think what you have heard today is there 
is plenty of evidence that is not true. The group homes that 
are failing are the group homes that are taking kids directly 
who haven't first come through a therapeutic experience in 
residential treatment.
    Father Smyth and I probably run the two largest residential 
programs in the country. People come to Children's Village and 
will say to me, see, we should close those big institutions and 
open places like this, because the image is that we look like 
we are low-brow. The reality is, we look like a small town and 
children live in houses, but it is outside of the community and 
they get the therapeutic help that they need, they get 
stabilized before they move on to a group home.
    So this notion, I just want to add, David Fanschal, who was 
one of the architects of permanency planning legislation, spoke 
from the beginning about what he called a second stream of kids 
who were kids for whom permanency should not be the goal, but 
to prevent a lifetime of criminal behavior, ought to be there, 
that they are already demonstrating the deviant behaviors that 
you can see, that you can catalog, that you can profile, that 
clearly show that that is the road that they are on, and that 
to interrupt that trajectory, we need to provide those kids 
with long term care.
    So I guess what I am arguing is that this small subset of 
kids, we ought to take out of that permanency stream and put 
into a different mindset.
    Chairman Johnson. Reverend Smyth, because I think he wants 
to carry on there, and then Mr. Kroll.
    Rev. Smyth. I think what we are talking about right now is 
the fairly rejected or damaged child. They should be held in; 
if it is a large agency it doesn't matter, as long as they are 
brought into a small setting and we use the teacher/parent 
model, and every home is independent of the big agency of 
Maryville and every child comes in with a treatment plan.
    And I believe very, very strongly, as I said, permanency is 
mind, heart and soul. If you reach that child, if they are 
rejected from 15 foster homes, God bless them, they come in 
here, they start new, they develop on their treatment plan what 
is God-given talents of their own, and you develop that. That 
is permanency.
    Chairman Johnson. That is interesting. I certainly think 
the individualism, and you can always come back. I know our 
most successful pregnancy prevention program is, you are always 
a member of the program.
    Mr. Smyth. Don't run the big agency for the sake of the big 
agency. It is the small.
    Mr. Kroll. One quick example, a family has a child in 
foster care for 5 years. The plan is to return the child home. 
He is abused so severely he has to go into a treatment center. 
While in the treatment center, parental rights are terminated. 
The foster family hears about it, wants to adopt the child, but 
is then told they have got to pay the bills in the treatment 
center. When we look at the----
    Chairman Johnson. You are kidding.
    Mr. Kroll. I am not kidding.
    OK, and IV-D, child enforcement, has done a terrible thing 
for families right now who have adopted children who need 
residential treatment, and this family, for this 15-year-old, 
was an advocate. They weren't going to nurture that child. They 
were the advocate, but it was where the child could return to. 
It was the only positive family the child never knew, but the 
funding system in Minnesota didn't allow that child to be 
adopted; and that is something we need to change.
    Chairman Johnson. I do personally think that we have got to 
change the funding system, and I know we want to give the 
community confidence that the money will be there, but it is 
just like everything else. You have got to be able to tailor 
things to the individual child and the individual situation, 
and there has to be a lot more flexibility. And I know the 
anguish about eliminating an entitlement, but there must be 
some way of moving this money together, of giving the greater 
flexibility and guaranteeing the resources.
    Yes.
    Ms. Spar. Just a note about the child welfare system itself 
and the ways in which these decisions are made in terms of 
where to place children: That it probably should be kept in 
mind that this is not always an orderly and clean system. When 
these kids are coming into care, they are often coming in in 
crisis situations and so forth, so there is also the issue of 
the caseworkers, who may or may not know what placement options 
are available for a particular child, where vacancies may exist 
at a particular time on a particular night for a child, and 
that adds an element in terms of whether or not children do end 
up in the best possible placement.
    Chairman Johnson. The research does show that having a 
single person to relate to is just terribly, terribly important 
to the level of trauma that kids suffer as they move toward a 
more permanent area.
    Ms. Goldsmith.
    Ms. Goldsmith. Just one quick answer. You asked about 
definition, what definition do we use. I don't think we have a 
definition. That is something we are always grappling with. 
What do we call it? Do we call it ``residential education''? 
Does that include ``treatment''? And sometimes residential 
education programs are practically residential treatment 
centers and vice versa because--for instance, in Children's 
Village, the kids can stay for a longer period of time.
    So some of these lines are not hard and fast, but I think 
the point is that we need this whole range of continuums of 
options for kids that right now are not prevalent.
    Chairman Johnson. Unfortunately, we only have 2 minutes 
left, which means that I really do have to go, but I want to 
say one thing.
    It may not be worth our time to do definitional stuff 
because you are already out there doing this, and somehow the 
money is moving itself around. Maybe what we need to 
concentrate on is how do we make the money far more flexible; 
and by that I mean, repealing the entitlement to foster care 
placement dollars, and I know I see you, but you see there has 
got to be a way where you can write in a decent trigger if 
there is an increase and where you can gain maximum protection 
against a reduction in resources.
    But if you look at the model of welfare where we have stuck 
by our guarantee; for the first time ever in history there is 
more social service money in the welfare system than there has 
ever been because, as placements declined, service money did 
not, and there are a variety of forces at work in the foster 
care system that may well decline placements, but the system 
currently, as structured, will not reserve those dollars for 
the fact that many of the kids in the system are going to be 
much more difficult to help and care for.
    So I now have 1 minute left. I am sorry.
    If you want to sit here and discuss among yourselves and 
have the staff come down, they would be happy to. I hate to 
bring this to an end, but I am very appreciative of the quality 
of your testimony and the variety of the comments you have 
made, and you really brought to a head the conflicts and the 
difficulties of, you know, individual placement and foster home 
versus more of a group setting.
    Thank you very much. The hearing is adjourned.
    [Whereupon, at 11:15 a.m., the hearing was adjourned.]
    [A submission for the record follows:]

Statement of Hon. Christopher Smith, a Representative in Congress from 
the State of New Jersey

    Thank you Madame Chairman. I appreciate this opportunity to 
discuss a matter that is close to my heart: adoption. Last 
week, I reintroduced my Omnibus Adoption Act, H.R. 2540, and I 
would like to outline some of its provisions, as well as key 
issues that drive the adoption debate in America today.
    As someone who has been a passionate advocate for helping 
families and children through adoption, I urge all of my 
colleagues to support this important proposal, because adoption 
is truly a loving option for women and families who find 
themselves in less than optimal circumstances.
    The statistics about adoption reveal a downward trend away 
from this life-affirming choice made by women who face an 
unplanned or difficult pregnancy. For instance, the estimated 
number of annual adoptions by families who are not related to 
the birth mother, including babies and older children, has 
ranged from a high of 89,200 in 1970 to an estimated 60,000 in 
1998. The number of children from the foster care system 
formally placed with relatives, known as kinship care, is 
estimated at 200,000. Clearly, the benefits of adoption as they 
pertain to non-familial placement are not being articulated to 
women in America today.
    Recognizing there was a need for legislation which 
addresses adoption issues in a comprehensive fashion, I 
introduced my first Omnibus Adoption Act in 1991. This 
legislation proposed federal assistance to pregnant women, 
children in need of adoptive families, and to families seeking 
to adopt children. I have introduced this legislation in every 
Congress since then and I am pleased to note the Republican 
Congress has enacted some of its most important provisions, 
including the `crown jewel' of the plan--a $5,000 tax credit 
for adoptive families to defray the expenses associated with 
adoption.
    As with all things, the nature of adoption in America has 
changed over the last decade, so this year's Omnibus Adoption 
Act, HR 2540, reflects today's adoption trends and meets 
today's needs.
    As a result, the 1999 Omnibus Adoption Act seeks to use the 
best and most creative ideas in promoting adoption today. The 
Omnibus Adoption Act takes a three pronged approach to this 
important issue. It is designed to assist: (1) the birth 
mother, (2) the adoptive parents and (3) the non-profit 
organizations that work with birth mothers and adoptive 
parents.
    The first goal of the Omnibus Adoption Act is to ensure the 
birth mothers who are considering adoption are provided with 
all of the resources, counseling and financial support, they 
will need to help them make a free and fully-informed decision 
during the nine months leading up to the birth of their child, 
and afterwards. As such, HR 2540 retains a provision from the 
original bill which provides certificates for pregnant women to 
use residential and other services provided by a maternity home 
or other non-profit organizations, including job training, 
medical services, and nutrition counseling. H.R. 2540 also 
provides for grants for the building or rehabilitation of 
facilities that could be used by these charitable organizations 
to provide such services to these women.
    An example of a charitable organization which might benefit 
from these grants, and therefore would be able to effectively 
assist women in ``crisis pregnancies,'' is the Smithlawn 
Maternity Home and Adoption Center in Lubbock, Texas. Frances 
Phillips, director of the center, has informed me that 25% to 
30% of the women who come through their doors ultimately decide 
to place their baby for adoption.
    Across America, women often find themselves without the 
emotional and financial support that is so crucial during their 
pregnancy and in the months afterwards. While the Smithlawn 
Maternity Home is a non-profit organization and is able to 
provide a variety of services to these women, the agency's 
ability to expand its services to more women would be greatly 
enhanced by both the certificate and grant initiatives in HR 
2540.
    The Omnibus Adoption Act would also require both the United 
States Armed Services and the federal prison system make 
readily available information about the choice of adoption. I 
believe in an age when our military depends upon volunteers, we 
must ensure that our personnel are fully informed about the 
benefits of adoption, should they find themselves dealing with 
an unplanned pregnancy. I have heard reports of women at 
military bases who became pregnant and found no information 
readily available about adoption. The same goes for our federal 
prison system, where female inmates often have no alternatives 
to abortion.
    Military and prison chaplains should have information on 
hand about adoption for anyone who comes seeking resources. My 
vision is every federal chaplain should have at their disposal 
a row of books about adoption. There are a wide array of 
resources available, which run the gamut from ``Dialogues About 
Adoption: Conversations Between Parents And Their Children'' by 
Linda Bothun, to ``The Complete Idiot's Guide to Adoption'' by 
Chris Adamec.
    Furthermore, I am hopeful this provision will encourage the 
Department of Defense to be forthcoming regarding information 
on pregnancies within the military that has been impossible to 
ascertain up to this point. For many years, Congressman Jerry 
Solomon, my friend and former colleague, asked Pentagon 
contacts to report on the outcomes of pregnancies within the 
military: how many resulted in abortion, how many resulted in 
adoption, how many women decided to be single parents, and how 
many chose to marry the father of their child? These are 
important questions which need to be answered because they 
directly impact our military's readiness and morale.
    The Omnibus Adoption Act would also permit Title X funds to 
be used for adoption counseling as well as require 
accreditation of those who provide counseling on adoption with 
the use of federal funds. Health centers across the nation--
including Title X clinics, community health centers, migrant 
health centers, centers for homeless individuals, school-based 
clinics, and crisis pregnancy centers--need a resource to turn 
to, so their staff are adequately trained in adoption 
counseling.
    Women with unintended pregnancies should have the best 
resources at their disposal to make informed decisions which 
will affect the future of their child. Adoption counseling in 
these clinics should also be available for couples considering 
how to manage infertility. Sometimes overlooked in favor of 
riskier, more expensive and ethically dubious medical and other 
procedures, such as ``surrogate parenting,'' adoption is a 
positive option for infertile couples.
    Furthermore, while counseling should be non-directive, 
health centers should have excellent contacts, information, 
counseling and referral to other appropriate agencies or 
organizations in place for adoption for pregnant women and 
infertile couples to consider. In my opinion, the federal 
government should actively promote the option of adoption.
    Besides addressing the needs of children and adoptive 
parents, we must also boost our efforts to assist pregnant 
women who are contemplating adoption. Too often these women are 
forgotten as we focus on the child and his or her adoptive 
parents. We must not forget that for most women, the decision 
to plan an adoption for their child is difficult, and more 
needs to be done to ensure that women are fully assisted as 
they consider the benefits of adoption as well as the resources 
that are available to them during and after this process, and 
after the adoption has been legally finalized.
    A central element of H.R. 2540 is a provision that would 
provide a $5000 tax credit for medical expenses incurred during 
the mother's pregnancy if she decides to place her child up for 
adoption. According to Met Life, in 1996, the average medical 
costs for a pregnant woman are $7,090 for a normal delivery and 
$11,450 for a Caesarean section delivery. Approximately 15% of 
deliveries are C-sections and they tend to occur among younger 
women. Clearly, this $5000 credit would help ease the financial 
hurdles faced by many women in an unplanned or crisis 
pregnancy.
    With regards to prospective adoptive parents, H.R. 2540 
would expand the $5,000 adoption tax credit which I first 
introduced in 1990 and double it to $10,000. As many of you 
know, my friend, Congressman Tom Bliley, has introduced this 
provision as the Hope for Children Act, of which I am a proud 
cosponsor.
    Similarly, H.R. 2540 incorporates legislation (H.R. 1573) 
introduced in the 105th Congress by Congressman Jim Oberstar, 
the lead Democrat and original coauthor of this year's Omnibus 
Adoption Act. This provision seeks to expand the benefits of 
the Family and Medical Leave Act to new adoptive and foster 
parents. We should not discriminate against a child and his or 
her parents merely because of the circumstances surrounding 
their entrance into their new, loving family.
    Lastly, but equally important, H.R. 2540 would require 
states to collect more complete data on adoption and transmit 
this information to the Department of Health and Human 
Services. There is a dearth of reliable information on adoption 
and foster care, not just from the public sector but also from 
the private sector. How can we legislate on adoption if we do 
not have accurate aggregate data?
    My legislation also repeals the authority for the National 
Adoption Information Clearinghouse (NAIC) because it is my 
belief--and that of many others--that this Clearinghouse has 
outlived its purpose, and with the advent of the Internet, it 
is no longer needed. A general search of the Internet will turn 
up hundreds of web sites, without the use of our tax dollars, 
which provide a variety of resources on adoption. In this day 
and age, NAIC is a duplication of efforts which are quite ably 
being provided by a variety of adoption groups.
    The existing evidence shows adoption generates 
overwhelmingly positive benefits to all persons involved in the 
process--including the birth mother. Research indicates women 
who choose to make an adoption plan for their child are less 
likely to live in poverty, more likely to complete high school, 
less likely to have additional unplanned pregnancies, and more 
likely to marry.
    Adoption also provides a child who might otherwise face a 
bleak or difficult childhood the prospect of having loving 
parents who are ready and willing to take on the challenge of 
raising a child. Adoption offers a child many measurable 
benefits: a stable home, a higher standard of living and 
enhanced career opportunities as the child matures into 
adulthood. Adoption provides adoptive parents, who desperately 
want to raise children and form a family or by reaching out to 
a child in need, the opportunity to fulfill that dream. It is 
estimated that about 1 million children in the United States 
live with adoptive parents, and that between 2% to 4% of 
American families include an adopted child.
    In sum, I believe that the Omnibus Adoption Act addresses a 
variety of issues that will jumpstart a renewed national 
discussion which is long overdue. If we are committed to 
raising a generation of children who are provided with secure 
and loving homes, then we must make sure children who might 
otherwise fall through the cracks are not forgotten.

                                
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