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






  H.R. 5292, ``THE FLEXIBLE FUNDING FOR CHILD PROTECTION ACT OF 2000''

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 3, 2000

                               __________

                             Serial 106-73

                               __________

         Printed for the use of the Committee on Ways and Means


                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
68-104                     WASHINGTON : 2000



_______________________________________________________________________
            For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 
                                 20402


                      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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unintentional errors or omissions. Such occurrences are inherent in the 
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 September 26, 2000, announcing the hearing...........     2

                               WITNESSES

American Public Human Services Association, William Waldman......     8
Catholic Charities USA, Sharon Daly..............................    25
Center on Budget and Policy Priorities, Wendell Primus...........    13
Chapin Hall Center for Children, Fred Wulczyn....................    23
Florida Department of Children and Families, Hon. Kathleen A. 
  Kearney........................................................    35
Geen, Robert, Urban Institute....................................    31

                       SUBMISSION FOR THE RECORD

National Children's Alliance, Nancy Chandler, statement..........    50

 
  H.R. 5292, ``THE FLEXIBLE FUNDING FOR CHILD PROTECTION ACT OF 2000''

                              ----------                              


                        TUESDAY, OCTOBER 3, 2000

                  House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Human Resources,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:05 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

September 26, 2000

No. HR-25

              Johnson Announces Hearing on H.R. 5292, the

         ``Flexible Funding for Child Protection Act of 2000''

    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 H.R. 5292, the ``Flexible 
Funding for Child Protection Act of 2000.'' The hearing is being called 
in lieu of the Subcommittee markup originally scheduled for Wednesday, 
September 27, 2000. The hearing will take place on Tuesday, October 3, 
2000, 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 State administrators of child protection 
programs, child advocates, and researchers. 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 1980, Congress passed legislation that created a program of 
Federal support for child protection programs conducted by State and 
local governments. The legislation created two major programs: a capped 
grant program under Title IV-B of the Social Security Act that gave 
States flexibility in providing treatment for families and children 
involved in abuse or neglect as well as services for foster and 
adoptive families; and a series of open-ended entitlement programs 
under Title IV-E that help States operate their foster care and 
adoption programs for children who have been removed from their 
families. The funding for the IV-B grant program has grown very little 
since 1980 while the IV-E program has grown rapidly. The emphasis in 
Federal funding may appear unintentionally to be on maintaining 
children in out-of-home care, and not on providing services so that 
children can be either safely returned to their families or adopted in 
timely fashion.
      
    As a result, there is now interest in increasing the amount of 
flexibility States have in using their IV-E dollars. On September 26, 
2000, Chairman Johnson introduced H.R. 5292, a bill that would provide 
flexible funding demonstrations to determine whether providing States 
with flexible funds for child protection has an effect on caseload 
levels, enhances availability and use of services, efficiency of 
service delivery, and child safety, permanency, and well-being. The 
goal is to find ways to allow States to use the IV-E dollars for 
prevention and treatment as well as out-of-home placement.
      
    The bill includes three options that would increase flexibility in 
State use of Federal IV-E dollars. In the first approach, States would 
negotiate a baseline of expected spending with the Secretary of the 
U.S. Department of Health and Human Services. States would then receive 
the exact amount of money specified in the baseline in quarterly 
payments and would be free to spend the dollars on any child protection 
activity including prevention, treatment, and out-of-home care. 
However, States could return to the IV-E program of open-ended funding 
at the start of any fiscal year. In the second approach, States would 
also negotiate a baseline. In this case, however, States would identify 
a specific intervention program expected to save money by reducing out-
of-home care or by other means. If the program does save money, the 
savings could be transferred out of the IV-E program into the IV-B 
program where States would have more flexibility in using the funds for 
prevention and treatment. The third proposal would strengthen the 
current waiver authority for child protection programs in the Social 
Security Act, especially by allowing permanent waivers.
      
    States have already shown their interest in flexible Federal 
funding by taking advantage of Federal legislation enacted in 1993 that 
provides them with the opportunity to obtain waivers from Federal child 
protection law. Several States are now conducting waiver programs to 
test whether they can use the greater flexibility permitted by waivers 
to improve their child protection programs. Other States have simply 
moved ahead on their own with new methods of financing child protection 
services.
      
    In announcing the hearing, Chairman Johnson stated: ``We must do 
everything we can to promote safe and loving homes for children. 
However, current law provides open-ended entitlement dollars for 
putting children into foster care, but limits the amount of money for 
treating at risk families and providing services to children. I believe 
we must find ways to allow States to flexibly use Federal funds to 
enhance the availability and use of services and to promote the safety, 
permanency, and well-being of these vulnerable children.''
      

FOCUS OF THE HEARING:

      
    The hearing will provide an opportunity for witnesses to give their 
reactions to H.R. 5292.
      

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-
spaced copies of their statement, along with an IBM compatible 3.5-inch 
diskette in WordPerfect or MS Word format, with their name, address, 
and hearing date noted on a label, by the close of business, Tuesday, 
October 17, 2000, 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.
      

FORMATTING REQUIREMENTS:

      
    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.
      
    1. All statements and any accompanying exhibits for printing must 
be submitted on an IBM compatible 3.5-inch diskette WordPerfect or MS 
Word format, typed in single space and may not exceed a total of 10 
pages including attachments. Witnesses are advised that the Committee 
will rely on electronic submissions for printing the official hearing 
record.
      
    2.Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3.A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.
      
    4.A supplemental sheet must accompany each statement listing the 
name, company, address, telephone and fax numbers where the witness or 
the designated representative may be reached. This supplemental sheet 
will not be included in the printed record.
      
    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
material submitted solely for distribution to the Members, the press, 
and the public during the course of a public hearing may be submitted 
in other forms.
      

    Note: All Committee advisories and news releases are available on 
the World Wide Web at ``http://waysandmeans.house.gov.''
      

    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. As many of you know, I have been working 
for well over a decade to give States greater control over the 
Federal resources we provide to them to battle against child 
abuse and neglect. I recognize that the current structure of 
Federal funding, which includes capped and relatively small 
resources for prevention and treatment as contrasted with open-
ended and rapidly-growing entitlement funds for out-of-home 
placements, has achieved the very worthy purpose of leading to 
big increases in Federal spending on child protection, but we 
are spending most of our money on out-of-home care.
    Here is the essence of the proposals I have been making for 
many years. Give States exactly the same amount of money they 
would get under current law. Depending on the State and the 
time period, this amount would almost always increase every 
year, sometimes substantially. Then let the States decide 
whether to spend the money on prevention, treatment, court 
procedures, out-of-home care, or any other of the scores of 
worthy purposes.
    Let me tell you why I think this approach would be better 
than current law. Once we provide financial incentives for 
States to keep children out of foster care or to minimize the 
length of time they spend in foster care, I believe States will 
take three actions.
    First, they will do a better job of preventing the removal 
of children from homes, and we now frankly have lots of 
evidence to support this belief.
    Second, they will increase the quality of their casework 
and the efficiency of their administrative procedures. The 
result will be that when States do remove a child from her 
home, States will take much less time than currently to push 
the case to a decision about permanency, whether that means the 
child is returned home or the parental rights are terminated.
    Third, States will increase their use of adoption, even 
above the current very high level.
    Let me assure everyone with a concern with the nation's 
child protection system that I have never been interested in 
saving Federal money with my flexible funding proposals. In 
fact, not only do States receive all the money they have 
coming, including projected spending increases, but the 
Congressional Budget Office has consistently scored my 
proposals as putting additional Federal dollars into the child 
protection system. In fact, that has been one of the problems. 
They score my bill as a coster. You ought to be for that.
    In the past, I have been constructively criticized by 
Democrats and child advocates for endangering the major source 
of funding growth in the Federal child protection system and 
for placing children at risk. I have never doubted the 
sincerity or usefulness of these criticisms. In fact, over the 
years, I have made many perfecting changes to my basic proposal 
to respond to these criticisms.
    I believe the proposal we introduced last week responds to 
all the important problems raised by critics of my earlier 
legislation. All of the child protections of current law are 
preserved. The two funding flexibility proposals are confined 
to a maximum of ten demonstration States, which will allow a 
fair test of whether States can use the funding flexibility to 
good effect.
    And above all, we have developed two mechanisms, one with 
extensive help from the American Public Human Services 
Association, to protect the open-ended entitlement while 
simultaneously allowing much greater flexibility in State use 
of Federal resources. And equally important, given the research 
funds in my bill, we are nearly certain to learn a great deal 
about how States react to the new funding flexibility and 
whether they are, in fact, able to advance a child's safety, 
permanency, and well being.
    We received several frantic calls that because our bill 
replaces the current Section 1130(a) of the Social Security 
Act, we are repealing the Suter provision we worked so hard to 
enact several years ago. Let the record show that the Suter 
provision was mistakenly put into two sections of the Social 
Security Act. Once our bill replaces the Suter provision in 
Section 1130(a), it will still have a comfortable home in 
Section 1123, where I expect it will live a long and useful 
life.
    I fervently hope that we would be able to enact our funding 
flexibility proposal in the 106th Congress, but I am realistic 
and I now have concluded that the stars are not yet in the 
correct alignment to allow this proposal to pass both houses of 
Congress and be signed by the President. I held this hearing 
today because I want to create a permanent record that this 
bill is well worth enacting and it will lead to a new era of 
protecting our nation's most vulnerable children. In fact, 
hopefully, with Ben Cardin's help, we will be back in this room 
in February marking up this legislation and finding a way to 
push it through the Senate into public law.
    Finally, I thank all the State officials, members of 
Congress, and child advocates who have worked so hard to help 
us improve this proposal. The American Public Human Services 
Administration, under the inspired leadership of Bill Waldman, 
deserves a special note of thanks. I think that because of the 
tireless and sustained efforts of all those who have helped 
with this bill, we are very close to bipartisan agreement on a 
new vision of child protection.
    I would also like to say personally that if you go back to 
the first time I introduced this legislation in the late 1980s, 
you will see that under it, States would have gotten more money 
than they are currently getting. It really is a tragedy that 
because of fear we were unable to pass this legislation that 
would have given children hope in America. I say that very, 
very seriously. We have in this bill mechanism that allows 
States to realize dollars in the future that they may not now 
qualify for or if they have an unexpected change in the number 
of children eligible for foster care they can go back to the 
old entitlement process. I believe the mechanism we have in 
this bill is better than the mechanism we had in the 1980s 
bill.
    But I really am urging the community to begin to understand 
and ask themselves, can we in good conscience go forward and 
predicate the majority of money for child protective services 
on out-of-home placement in an era when there are major, major 
policy initiatives already in place that are going to reduce 
the number of children in foster care, i.e., reduce the money 
flowing to States.
    So I think if you really are concerned about funding for 
child protective services, you really have to look at this bill 
as a very progressive and very important step forward, and I 
really regret that there is not the commitment to move this 
through the House because I think it would put us in a much 
better position next session to go the whole way. But I cannot 
do that alone at this time in the year. You know that. I know 
that. I am utterly realistic about that.
    But I do say to you, mark my words, our primary job is to 
see that the States have money. They are going to need more 
money for these children because they are difficult children 
and some are not adoptable. These children need a much 
different support service system just like in welfare. Welfare 
succeeds because we have a much bigger series of services that 
help with the transition.
    So it is a sea change we have to make. We cannot let our 
fear of losing the entitlements prevent us from developing a 
strong funding system to strengthen families as a whole.
    So I regret that we cannot go further, but I think it is 
very important to set the record today, to begin to look at how 
far States have already come and the remarkable things that are 
happening as a result of waivers that allow this approach and 
also to allow those that still have reservations to put those 
reservations on the record.
    Mr. Cardin?
    Mr. Cardin. Thank you, Madam Chair, and thank you for the 
passion you bring to this subject. This will probably be the 
last hearing of our subcommittee in the 106th and let me just 
take a moment, if I might, to congratulate you, Madam Chair, 
for an outstanding record in this 106th Congress. I am very 
proud to have been your partner in the work of this committee.
    We have passed some extremely important legislation. Some 
has already been enacted into law. And we hope that we will get 
the other body to pass some bills before they adjourn and I 
think we can be very proud of the record that you have achieved 
during this Congress. You have truly put our most vulnerable 
first before politics and have been willing to reach out to 
each member of our committee, Democrat and Republican alike, 
and I personally thank you for that and you should be very 
proud of the record of this committee.
    Chairman Johnson. Thank you.
    Mr. Cardin. Madam Chair, your legislation that is before us 
today, raises some very important issues, particularly the need 
for preventive family-oriented services designed to reduce out-
of-home placement of children. However, I believe the bill 
needs work in three areas.
    First, the legislation does not acknowledge a fundamental 
issue, namely that new resources are needed to protect and care 
for our nation's most vulnerable children. I am not alone in 
coming to this conclusion. Earlier this year, Governor Bush 
proposed an additional $1 billion in Federal assistance for 
State efforts to provide services to families in the child 
welfare system. I should point out that these proposed new 
funds were not contingent upon saving money in foster care or 
other programs dedicated to helping at-risk children, nor was 
the funding limited to only a few States.
    Second, if we want to provide additional flexibility for 
State child welfare programs, it seems to me that it would be 
wiser to modify the existing waiver process rather than 
establish not one but two new demonstration programs. This 
point seems particularly salient when you consider that we have 
not yet fully evaluated the 30 child welfare waivers that have 
already been approved by HHS. These current law waivers are 
testing a variety of reforms, including providing more 
preventive services to families in or identified by the child 
welfare system.
    In fact, my home State of Maryland has had three child 
welfare waivers approved by HHS, one designed to provide 
substance abuse services to the parents of at-risk children, 
another to promote certain kinship arrangements in which family 
members become permanent guardians, and a third to test managed 
care payment policies for children in foster care.
    My final concern about this bill is that its first section 
amounts to an optional block grant for foster care and adoption 
programs in up to five States. I am worried that this could be 
seen as a Trojan horse which is ultimately aimed at block 
granting the entire foster care system.
    As a member who supported the TANF block grant, let me say 
I do not support efforts to reduce the Federal presence in 
ensuring protection and permanency for abused and neglected 
children, particularly when about half the States are under 
some form of court order to improve their child welfare 
systems. Furthermore, it is worth remembering that this 
committee endorsed the idea of increased, not reduced, Federal 
oversight of the child welfare system when it passed the 
bipartisan Adoption and Safe Families Act in 1997.
    Madam Chair, as we continue to consider how to promote our 
shared goal of improving the nation's child welfare system, I 
urge the committee to keep two general ideas in mind. First, we 
can and should increase State flexibility, but never at the 
expense of State accountability. And second, money spent 
helping at-risk children live safely with their families or 
become adopted into a loving home is money very well spent.
    Finally, I want to thank you, Madam Chair, for postponing a 
markup on this legislation. As you pointed out in your opening 
statement, your intentions in holding this hearing is to 
establish a record rather than trying to move legislation in 
this Congress. Pursuing consensus and bipartisanship is worth 
waiting for, especially when enactment of a proposal that seeks 
anything less is very unlikely at the end of a Congressional 
session.
    I thank you very much for convening this hearing and I also 
would like to acknowledge that we have a very distinguished 
group of witnesses today and I am very much looking forward to 
their help as we try to sort out these issues.
    Chairman Johnson. Thanks very much, Ben, for your kind 
comments and for your work on this committee. We could not have 
produced so much good legislation without working together 
closely on a lot of things, and we have done that.
    I would also like to thank Nick Gwyn for his good work 
throughout these two years and a special thanks to Ron Haskins, 
for whom this also is a last hearing. He has been an absolute 
stalwart advocate of children and children's interests for many 
decades, and Ron, we salute you.
    [Applause.]
    Chairman Johnson. If the panelists will come forward, 
please, William Waldman, Executive Director of the American 
Public Human Services Association; Wendell Primus, Director of 
Income Security, Center on Budget and Policy Priorities; Fred 
Wulczyn, Chapin Hall Center for Children in Chicago; Sharon 
Daly, Deputy to the President for Social Policy, Catholic 
Charities; Robert Geen, Senior Research Associate, Urban 
Institute; and the Honorable Kathleen Kearney, Secretary, 
Florida Department of Children and Families.
    Some of you have testified before us in the past and we 
welcome you back. Others of you are new and we thank you for 
being here. Mr. Waldman?

  STATEMENT OF WILLIAM WALDMAN, EXECUTIVE DIRECTOR, AMERICAN 
               PUBLIC HUMAN SERVICES ASSOCIATION

    Mr. Waldman. Thank you, Madam Chair. Mrs. Johnson, Mr. 
Cardin, members of the committee, I want to thank you again for 
the opportunity to be here a second time to testify on this 
bill and be with you.
    I want to also sincerely express my appreciation for your 
ongoing commitment and persistence and obvious passion on this 
issue. The kind of bill you have introduced really, I think, is 
the solution for a lot of issues that are wrong with the system 
now that will permit the kind of flexibility with 
accountability that States require, and most importantly, 
result in better outcomes for safety and permanency for the 
kids that we care about.
    I want to especially thank you also for the opportunity to 
work with you and introduce our idea on the transferability, 
which I believe is the second title or component of the bill. 
We are proud that that is in there.
    The association that I represent, I think has a significant 
contribution to make to this debate. They are the folks that 
operate these programs 24 hours a day, seven days a week. They 
have the passion, the heartache sometimes associated with that 
responsibility. We represent them on a fully bipartisan basis 
and our conclusion is identical to the one that you discussed, 
that the current system of financing Federal child welfare 
services is fundamentally flawed because it rewards the 
outcomes that we want to avoid, that it pays for the deepest 
end of the system.
    Just compare the over $5 billion I think we will have spent 
this last year for out-of-home care for 4(e) services as 
combined to the maybe $600 million that we spend on the other 
side of the equation for primary and preventive care.
    We have done, as you know, some extensive work on this 
issue. We have had a two-and-a-half-year bipartisan task force. 
We have retained outside experts, at least one of whom is here 
today. We are proud to cosponsor a forum on the Hill with 
advocates, staff from both sides of the aisle to explore these 
areas and others. And ultimately, what this bill provides is 
the balance of two items that are necessary to make a 
difference, the flexibility for the State but no step back 
whatsoever in the accountability for the outcomes that have 
been specified and the regulations associated with that law and 
the maintaining of all the Federal protections that are in 
previous law for children. We think that is real important.
    I am also very pleased with the modifications to the waiver 
process that are incorporated in this bill. Those are very, 
very important. If you think about the Medicaid program, the 
kind of waivers this moves towards is the kinds of waivers in 
the Medicaid program that transformed it from a program that 
was fixed in funding nursing homes, institutions, emergency 
rooms, and hospitals, and the proliferation of those waivers 
really enabled home and community-based services that not only 
helped contain costs, but more importantly resulted in better 
outcomes, senior citizens able to live their twilight years 
with their homes and families.
    I was struck by your words at the last hearing where you 
kind of challenged us to come up with something more bold. I 
could not forget those, and I gave that a lot of thought. I 
want to just remention something I had mentioned the earlier 
time. In our proposal as an association, we had come up with an 
idea about delinking Federal 4(e) eligibility from the old AFDC 
standard of 1996. I understand when Congress passed that part 
of the law, it was kind of an agreement to go back and revisit 
that, as well, and I hope you would.
    My view is, if you combine-our vision for this, to meet 
your challenge to bold, we would be to have a system where all 
children are covered by eligibility, number one, that the 
flexibility that you have incorporated into this bill be 
broadly expanded to no more than just a few, or ten--which is 
significant, but only ten--and you add in the accountability 
and the protections, and I think you have got a mix of a simple 
program, then, with uniform clear eligibility, clear outcomes 
and standards that would promote the kind of flexibility that 
results in innovation and creativity that I know you are after. 
So I think that might work.
    I want to stop for a minute just to really commend the 
States for the progress that has been made. I know you are 
aware that just a couple weeks ago or so the Secretary 
announced the adoption of bonuses. As you know, there has been 
a great increase to 42 States. We had a 20 percent increase in 
the number of adoptions, up from about 37,000-something to 
46,000. And one might legitimately ask, if States are doing so 
well, why do we require these additional amendments?
    I would say to you, as someone who is a former State child 
welfare administrator and a commissioner, I think we have 
cleaned up the backlog and I think we are on the right trail, 
but my view is in order to maintain, sustain, and expand this 
progress to keep children safe and move towards permanency, we 
need the kinds of flexibility that are inherent in your bill 
over time so that we are not back here in a couple years 
bemoaning problems that have occurred and backups in the 
system.
    We do have several suggestions with respect to concerns on 
the legislation I would like to highlight briefly. One is a 
limitation in numbers. I could not agree with you more about 
the scoring of these proposals. I think no matter what, whoever 
scores these needs to realize the level 4(e) expenditures are 
going up. They have been going up and it is not unreasonable 
to, as the bill provides, suggest a baseline.
    Two is that I am very concerned in the first title about 
the language around the maintenance of effort provision. I 
think that goes beyond the matching that is current 
traditionally required, that would be continued. It even goes 
beyond what is required in the maintenance of effort for 
welfare in the TANF bill, as well. From my own experience, I 
think that this provision might throw a serious wet blanket on 
States' desire to innovate because treasurers and governors 
will look at this broad provision, which will be very 
contentious in implementation, to identify what expenditure 
qualifies and what does not and, I think, serve to work against 
the purposes that we are trying to achieve, as well.
    I would also suggest we could limit the use of the random 
assignment research in there, I know the bill encourages that 
we do that. Many States find that onerous. It is difficult. It 
takes years for the research. I am not saying we should not do 
that again, but I think what the Medicaid experience did to the 
1915 series of waivers permitted a usually used type innovation 
not to have a random assignment in each and every State it is 
assigned to. I think it would promote more participation.
    I think we need, I tend to agree, we need more investment 
in this field.
    Chairman Johnson. Bill, we do have to wrap up because we 
have some people who have planes to catch.
    Mr. Waldman. I surely will. I just want to close and again 
thank you. We know that our delinking proposal is difficult, it 
raises issues of geopolitical issues and formulas. We would 
offer ourselves to work with you, and I would say that if given 
the restrictions that you put out early in terms of the 
schedule and everything else, if we could do nothing else other 
than to expand the waivers that you provided this time, and 
revisit the other parts next time, I think we will have made 
some progress in this.
    Thank you. It is a delight to be here again.
    [The prepared statement follows:]

Statement of William Waldman, Executive Director, American Public Human 
Services Association

    Chairman Johnson, Congressman Cardin, Members of the 
Subcommittee, I am william Waldman, Executive Director of the 
American Public Human Services Association (APHSA). I am 
pleased to once again have the opportunity to testify about 
reforming the child welfare financing system and legislation on 
flexible funding for child protection programs.
    As the national organization representing State and local 
agencies responsible for the operation and administration of 
public human service programs, including child protection, 
foster care and adoption, APHSA has a long-standing interest in 
developing policies and practices that promote improved 
performance by States in operating these programs for our 
nation's most vulnerable children and families. On a personal 
level, I've had a long career as an administrator of public 
human services, and served as a State child welfare director 
for part of my career.
    On behalf of State human service administrators and child 
welfare directors, I want to take a moment to commend you, 
Madam Chairman, for your continued efforts to reform the child 
welfare financing system and for your commitment to safety and 
permanency for our nation's most vulnerable children. Your 
leadership and concern for this issue have been outstanding and 
we know how passionate you feel about ensuring that States have 
the needed flexibility to enable them to make continuous 
improvements to the system, while remaining accountable for the 
outcomes we all want. I also want to thank you and your staff 
for working so closely with APHSA over the past months on the 
language in the bill regarding APHSA's transferability 
proposal. We appreciate the opportunity to have input into such 
an important process.
    Everyone involved with the child welfare system recognizes 
that States face serious challenges in the administration of 
child welfare programs. At the meeting on flexible funding that 
APHSA had the pleasure of cosponsoring with your office in May, 
there was broad consensus that the current Federal financing 
system disproportionately funds the deepest and often least 
desired end of the system-out of home care-that we are all 
striving to minimize in terms of lengths of stay and numbers of 
children. On the other hand, funding directed at activities to 
achieve permanency, safety, prevention and early intervention 
are comparatively limited. As a result, the system does not 
support the outcomes for children and families embraced in 
statute, regulation, and general public policy and practice. 
States need additional flexibility to better serve children and 
families, and at the same time are committed to maintaining 
accountability for outcomes and key protections for children.
    APHSA has committed a great deal of time and resources to 
study and propose alternative financing structures that will 
result in meaningful child welfare reform. We convened a 
special task force in early 1998 to develop recommendations on 
restructuring child welfare financing. In July 1999, our 
National Council of State Human Service Administrators adopted 
a policy resolution supporting two proposals-transferability 
and delinking. As you have recognized, one of the most serious 
constraints for States is a Federal financing structure for 
child welfare that reinforces perverse incentives and that does 
not allow States the flexibility to implement programs and 
policies that would result in the desired outcomes for 
children.
    Flexibility in the use of Title IV-E dollars must be 
afforded to States so that they can invest these dollars in the 
kinds of activities that are yielding success and go to scale 
with innovative programs that work-activities such as 
subsidized guardianship, performance-based contracting, post-
adoption services, cross-system collaborative efforts with 
substance abuse agencies and juvenile courts-all of which are 
promoting more safe, stable and timely permanent arrangements 
for children, whether they be adoptions, reunifications or 
guardianships. The transferability option we developed as 
included in this bill allows States the option to reinvest IV-E 
funding into IV-B services, while retaining both State 
accountability and the entitlement structure. We think that 
this transferability proposal will enable States to make the 
kinds of investments in front end and post-placement services 
that are needed to protect children's safety and provide them 
with a variety of permanency options. Because flexibility for 
States is so important, we are disappointed that this option, 
which holds so much potential for providing States with the 
tools they need to make effective changes, is limited to only 
five States. We believe that any attempt to truly reform child 
welfare financing must give all States the opportunity to 
advance cutting edge child welfare programs and practices.
    In addition to the transferability proposal, we believe 
that the following modifications to the current IV-E wavier 
process in the bill would go a long way towards adding 
flexibility to child welfare financing:
     Elimination of the limitation on the number of 
waivers,
     Ability to conduct Statewide demonstration 
projects,
     Elimination of the limitation on the number of 
States that can receive a waiver on the same topic,
     Elimination of the limitation on the number of 
waivers that may be granted to a single State,
     Conditional authority to conduct demonstration 
projects indefinitely,
     A streamlined process for consideration of 
amendments to demonstration projects requiring waivers and,
     The permissible use of historical baselines.
    These are important modifications to the waiver process. 
Many States that have been interested in waivers as a tool for 
reform have declined to participate because of Federal 
implementation limitations, and we think that these provisions 
will go a long way towards fulfilling the original promise of 
the waivers that unfortunately has not been realized due to 
overly prescriptive and rigid Federal implementation.
    Let me be clear that even while the system is in serious 
need of reform, States have made and continue to make 
tremendous strides, both as a result of the Adoption and Safe 
Families Act (ASFA) and due to individual State initiatives. 
Recent statistics have demonstrated significant State successes 
in increasing the number of adoptions of children from foster 
care. In fact, just two weeks ago Secretary Shalala announced 
that nearly $20 million in adoption bonuses, a program enacted 
through ASFA, will be distributed this year to 42 States, the 
District of Columbia, and Puerto Rico, for increasing the 
number of children adopted from foster care. The number of 
States receiving bonuses is up from 37 in 1999, with each State 
and the District of Columbia and Puerto Rico having qualified 
for funds for one or both years of the program. HHS reported 
that 46,000 foster care children were legally adopted in FY 
1999, a 28 percent increase over the 36,000 adoptions in FY 
1998 and a 64 percent increase over FY 1996's 28,000 adoptions. 
States have been so successful in increasing the number of 
adoptions that they actually earned over $50 million in 
bonuses. I would like to take a moment to point out that 
because only $20 million has been authorized for this purpose, 
States were only awarded a portion of the $50 million they 
earned. The Senate version of the Labor-HHS-Education 
Appropriations bill includes an amendment by Senator Mary 
Landrieu (D-La.) that increases the amount of the adoption 
bonuses to $56 million. I want to thank you Mrs. Johnson for 
your support on adoption bonuses in the past and ask for the 
continued support from members of the subcommittee for 
increased authorization and appropriations for adoption bonuses 
so that States will receive the rewards they deserve and have 
this promised funding to spend on services to children. In 
order to ensure that this improvement and innovation is 
sustained and expanded, we must remove barriers to optimal 
performance.
    In response to your call at the July hearing for us to 
think more broadly and boldly on these issues, I would like to 
take this opportunity to expand a bit on APHSA's other proposal 
to reform child welfare funding-delinking IV-E eligibility from 
AFDC. Delinking eliminates the IV-E eligibility link to the old 
AFDC program, providing Federal matching funds for all children 
in foster care or receiving adoption assistance, rather than 
just covering those who are from poor families of origin. Good 
public policy calls for a Federal commitment to all children in 
foster care, as well as eliminating a complex and outdated 
eligibility determination process that is a costly and onerous 
administrative burden on States, and that takes time and 
resources away from serving children and families. This change 
would require a new funding scheme which has difficult and 
contentious geopolitical implications. APHSA would like to work 
with Congress and the Administration to craft a delinking 
proposal that would be equitable to States and enable a true 
Federal-State partnership.
    While we are thankful for your efforts to reform the 
financing system, and appreciate your including the concept of 
transferability in your legislation, we have some concerns 
about particular aspects of the bill. In addition to concerns 
regarding the limit on the number of States that can 
participate in these demonstrations that I mentioned earlier, 
we have some additional concerns.
    With respect to the consolidated grant option, I would like 
to note APHSA's strong objection to the proposed maintenance of 
effort requirement (MOE). The new mandate is quite different in 
design from the TANF block grant MOE. Let me be clear. We 
believe that in exchange for greater flexibility in the use of 
IV-E funds, it is reasonable to require States to maintain 
their historic State IV-E match. However, we believe that it is 
simply unjustified to require States to maintain their child-
welfare related expenditures under TANF, Social Services Block 
Grant, and the Medicaid program and in hundreds of State or 
locally funded programs. The requirement is far too expansive 
and imposes a burden disproportionate to the flexibility that 
the IV-E block grant may provide. Inclusion of this MOE as part 
of this option may well have the effect of discouraging States 
from taking advantage of much-needed flexibility. We urge you 
to revise this requirement.
    With respect to the provision requiring national evaluation 
as it relates to the two sets of flexible funding 
demonstrations, we are concerned that the encouragement of the 
use of random assignment will have the effect of limiting 
States' ability to pursue these demonstrations Statewide and 
will constrain full implementation across a State's caseload. 
The requirement for random assignment in the current waiver 
program has been significantly limiting, and, in fact, you seek 
to mitigate this in the Title II Waiver Modifications 
provisions. We urge you not to create the same problem in these 
new demonstrations as you simultaneously address that problem 
in the current waiver program.
    Many States have innovative ideas they are ready to pursue 
in child welfare and system reform. However, they will not be 
able achieve significant reform if they are not allowed the 
flexibility to make these programs reality. Significant 
restructuring of Federal child welfare financing is crucial for 
providing the child welfare system with the capacity it needs 
to be accountable in terms of the outcomes of safety and 
permanency that are now required by law, and flexibility in 
Federal financing would support the strides States are making 
toward improving the system.
    But, increased flexibility alone will not be enough for 
States to reach desired outcomes for children. In addition to 
making investments through better spending of existing 
resources, I am convinced that States also need additional 
Federal investments in child welfare services. Both 
reinvestment and new investment are needed if we want to meet 
the increased demands, expectations and capacity needs these 
systems are facing. It is time for the Federal Government to 
fully share in the commitment of preventing child abuse, 
keeping children safe and moving them towards permanency as 
expeditiously as possible.
    Unfortunately, given the limited amount of time on the 
Congressional schedule for the rest of this year and the 
unpredictability of the legislative process, it is unclear that 
comprehensive child welfare reform will be achievable this 
session. In order to better serve the children for whom they 
are responsible, the immediate needs of State public agencies 
must be addressed as soon as possible. I encourage you to help 
States now by implementing Title II of the legislation--
modifications to the current waiver system, as well as the 
increased adoption bonuses as part of the Labor-H 
appropriations bill in this session of Congress.
    We would like to work with you and all the members of the 
subcommittee to rise to your challenge of broader system 
reform. I also want to again extend the offer to work with you 
on legislation that would delink Title IV-E from AFDC, as it is 
long past due to address this complicated look-back provision 
established in the 1996 welfare reform law. The provision was 
meant simply to be a short term solution, and was enacted with 
the promise that it would be addressed at a later time. That 
time is now.
    Madam Chairman, I want to thank you again for taking the 
lead on this important issue and we appreciate the opportunity 
to work with you.
      

                                


    Chairman Johnson. Thank you very much. I am going to have 
to keep it at five minutes the first time through and then we 
will be able to come back through questions to have some 
discussion amongst panelists thereafter.
    Wendell?

   STATEMENT OF WENDELL PRIMUS, DIRECTOR OF INCOME SECURITY, 
             CENTER ON BUDGET AND POLICY PRIORITIES

    Mr. Primus. Madam Chair and Congressman Cardin, thank you 
for the opportunity to testify on child welfare legislation. 
Let me just say at the outset that I agree wholeheartedly with 
the comments that Congressman Cardin made. I think you have 
established a good record and Ron, in particular, has been a 
joy to work with over the past year on child support 
legislation. I even noted that the New York Times said it is 
one of the five things that ought to get done this year. So I 
hope you can convince the other body to move forward on that 
important legislation.
    Mr. Cardin. I do not know whether that helps us or hurts 
us.
    [Laughter.]
    Mr. Primus. I appreciate your continuing efforts to call 
attention to the system and its shortcomings and the goals you 
have advanced in H.R. 5292. Federal funding patterns for child 
welfare services over the last 20 years clearly demonstrate the 
need for additional funding, as well as the need for additional 
flexibility. Only 28 percent of those children who meet the 
more stringent definition of child maltreatment, the harm 
standard in the third national incidence study, had been 
investigated by child protective services, and nationally, only 
half of those children actually receive services, and in some 
States that is as low as one-quarter of the cases where an 
investigation has substantiated an incidence of child neglect 
and that child receives services. I think that makes the case 
for additional funding.
    I am pleased that H.R. 5292 includes the child protection 
provisions and it keeps the entitlement. And also, the other 
important protection is the strong maintenance of effort that 
you have attached to the consolidation of grants pilot. This 
MOB is essential to assure that overall funding for child 
welfare services does not decrease. The MOB language contained 
in your bill recognizes that every State's child welfare 
spending is a unique mix of Federal, State, and local funds. It 
recognizes that Federal funds may fluctuate from year to year. 
It gives States flexibility to count expenditures made by other 
agencies, such as substance abuse treatment or mental health.
    I realize that this is a very sensitive issue with States, 
but under TANF, supplementation did happen, and not because any 
one official thought it was a good idea. The supplementation 
that occurred in Wisconsin under TANF did not happen because 
the governor proposed it. Rather, it happened in the give and 
take of the State legislative process and competition with 
other State spending priorities. And the additional provisions 
that require careful monitoring and evaluation of the impact of 
the pilots is also extremely important. I believe that the MOB 
provision that you apply to the consolidation of grants pilot 
should also be applied to the transfer of funds pilot.
    Although I agree with the goals of H.R. 5292, I believe 
that a simpler and more direct way of providing additional 
funding to States would work much better. These pilots are 
really predicated on the assumption that the CBO baseline for 
mandatory 4(e) spending was growing too rapidly and many felt 
this growth would never materialize. In essence, both types of 
pilot projects were innovative attempts to take advantage of 
this budgetary situation and convert what were perceived by 
some to be bloated projections into real dollars for funding 
prevention services under child welfare. I could not agree 
more.
    But while some of this growth may be excessive, States do 
have an incentive to constrain costs in 4(e). They match it. 
And I do not believe that States are intentionally placing too 
many children in 4(e). I also believe that the amount of money 
a State receives should not depend upon projections negotiated 
between Federal and State bureaucrats. These projections are 
likely to be wrong and probably will not reflect a State's true 
need for funding. And I think cost considerations should not 
guide decision making at the front lines. What is in the best 
interest of the child should be the primary criteria.
    By fixing the amount of funds a State receives, it implies 
that States should bear all the costs of any additional 
children that need to be served, and frankly, State child 
welfare administrators do not control entries into their 
system. They do have some extent over the length of time, but 
not the entry.
    My primary argument is that a more direct and simpler 
method of providing additional funds to States--you could do it 
like you did under ASFA or setting up a pool of funds for 
States to compete--either of these approaches seem preferable 
to the funding mechanism in H.R. 5292.
    I also think you need to do a comprehensive review of the 
entire system. Substance abuse is often a factor in cases of 
child neglect. I think an important component is the 
coordination between these two systems. I think you should also 
look at the bills that improve the capacity of courts.
    And shortly after I became staff director way back in 1991, 
I was amazed to learn that 4(e) was not a universal program. If 
a child is a victim of abuse or neglect to such an extent that 
a State court declares that the child must be removed from the 
home, why should the Federal Government deny funding to States 
for those neglected or abused children? The States do not have 
that choice. And furthermore, it costs us money to make that 
administrative determination.
    So in conclusion, Madam Chair, I strongly agree with your 
last statement at the prior hearing that we need to be bolder. 
I would urge that you develop a broad consensus on how the 
Federal involvement in the child welfare system should change. 
I would urge this subcommittee to work over the next several 
months, and your staff, to conduct a comprehensive review of 
the entire system to address concerns raised by this panel and 
at your hearing in July, develop a much bolder plan that 
revamps the Federal role in the child welfare system, increases 
Federal funds significantly, and then convince the new 
administration that this should be an important priority for 
Congress and the nation. Thank you.
    [The prepared statement follows:]

Statement of Wendell Primus, Director of Income Security, Center on 
Budget and Policy Priorities

                              Introduction

    Madam Chairman and Members of the Subcommittee on Human 
Resources:
    Thank you for the opportunity to testify on child welfare 
legislation, specifically H.R. H.R. 5292, the Flexible Funding 
for Child Protection Act of 2000.\1\ My name is Wendell Primus 
and I am Director of Income Security at the Center on Budget 
and Policy Priorities. The Center is a nonpartisan, nonprofit 
policy organization that conducts research and analysis on a 
wide range of issues affecting low-and moderate-income 
families. We are primarily funded by foundations and receive no 
Federal funding.
---------------------------------------------------------------------------
    \1\ I want to acknowledge and thank MaryLee Allen of the Children's 
Defense Fund and Rutledge Hutson of the Center for Law and Social 
Policy for the significant contributions they made in the preparation 
of this testimony. However, neither they nor their organizations should 
be held responsible for the recommendations and analysis outlined in 
this testimony.
---------------------------------------------------------------------------
    The child welfare system serves the nation's most 
vulnerable children. These are children who are neglected or 
abused by their parents. Unfortunately, substance abuse is 
often a contributing factor to this sad state of affairs. The 
workers at the front lines must confront these stark realities 
day after day and make tough decisions such as whether to 
remove a child from the home because the safety of the child is 
at risk, whether to reunite children with parents because the 
parent has made progress in once again being able to care for 
their children, and whether to terminate parental rights. These 
decisions in many instances must be ratified by a court system. 
I appreciate the work and wisdom of these front-line workers 
and efforts it takes by States and local governments to achieve 
a well-functioning child welfare system.
    Madam Chairman, I also appreciate your continuing efforts 
to call attention to this system and its shortcomings, your 
leadership in important child welfare reforms over the years, 
including the recently enacted Foster Care Independence Act, 
and finally for the goals you have advanced in H.R. 5292. I am 
in full agreement that States need additional funding and 
flexibility to operate their child welfare systems, and that 
States should be able to receive Federal assistance for all 
children under their child welfare systems. Your leadership has 
helped us find new ways to keep children safe and move them to 
adoptive families.
    I hope now that we can build on the recent bipartisan 
improvements made in child welfare and in child support as 
well. Therefore, I would urge the Subcommittee to wait until 
early next year to pass legislation and to develop a broad 
consensus on how the Federal involvement in the child welfare 
system should change. There is no compelling reason this 
legislation needs to be enacted this year. As I will outline 
below, a much more comprehensive review of the entire system is 
needed. More Federal funding of the child welfare system is 
needed. Both major Presidential candidates, particularly 
Governor Bush, have recognized this need. In light of the 
Federal budget surpluses, I would urge that this Subcommittee 
work over the next several months to conduct a comprehensive 
review of the entire system to address concerns raised by this 
panel and at your hearing in July, develop a much bolder plan 
that revamps the Federal role in the child welfare system, 
increases Federal funding significantly, and convince the new 
Administration that this should be an important priority for 
Congress and the nation.

            More Federal Funding and Flexibility Are Needed

    Federal funding patterns for child welfare services over 
the last 20 years clearly demonstrate the need for additional 
funding as well the need for more flexibility. Currently, the 
Safe and Stable Families portion of IV-B is funded at $295 
million, and the Child Welfare Services Program is authorized 
for $325 million but appropriations total only $292 million. 
CAPTA and the Community Based Family Resource Program add an 
additional $100 million. These amounts are all relatively small 
and have grown little in the past 20 years. Compare this to the 
$5.0 billion we spend on IV-E foster care and adoption 
payments, and related training and administrative costs, in 
fiscal year 2000.
    The gap between out-of-home spending and prevention monies 
is huge and growing. For example, assuming that the two Title 
IV-B programs were level funded and targeted, the amount of 
Federal spending for prevention services (adjusted for 
inflation) will decline by 37 percent per child in IV-E while 
out-of-home spending will grow by 22 percent between 1989 and 
2004 based on CBO projections. Rob Geen's work at the Urban 
Institute shows that for every $1 a State spends on prevention, 
child protective services and case management services, they 
spent more than $3 covering out-of-home placements, adoption, 
and administrative costs.\2\
---------------------------------------------------------------------------
    \2\ The Cost of Protecting Vulnerable Children: Understanding 
Federal, State, and Local Child Welfare Spending, The Urban Institute, 
1999.
---------------------------------------------------------------------------
    There is evidence that there are insufficient services to 
children who need them. Only 28 percent of those children who 
met the more stringent definition of child maltreatment (the 
``Harm Standard'') in the Third National Incidence Study had 
been investigated by child protective services agencies.\3\ 
Recall Judge Kathleen Kearny's testimony before this 
Subcommittee on July 20th that of the 38 percent of child abuse 
hotline calls whose allegations were investigated and 
unsubstantiated, one-third were subsequently reported for new 
allegations of abuse that were substantiated. Nationally, only 
slightly more than half of those children whose cases are 
substantiated receive services beyond the investigation. This 
percentage varies widely by State but most States fall between 
25 and 75 percent.
---------------------------------------------------------------------------
    \3\ Third National Incidence Study of Child Abuse and Neglect: NIS-
3, National Center on Child Abuse and Neglect, September, 1996.
---------------------------------------------------------------------------
    Such figures imply that in some States, the State provides 
additional services in only one-quarter of cases where an 
investigation has substantiated an incidence of child neglect 
or abuse. Many States lack the capacity to provide necessary 
front end services. This is not just a matter of not having the 
funding; some States do not have the service providers to offer 
services, particularly in the area of substance abuse 
treatment. These States will not be able to take advantage of 
the flexible funds until such capacity can be developed. H.R. 
5292 does not help to create that capacity because no 
additional monies are available for capacity-building.
    In his testimony before this Subcommittee on July 20th, 
Bill Waldman, Executive Director of the American Public Human 
Services Association, said that ``the system needs additional 
investments in child welfare services [and] these investments 
come in two ways.'' The first is new investments, the second is 
``better spending of existing resources.'' He concluded that 
both are needed and I agree. Yet, the money for new investments 
should not be contingent on reduced caseloads and the timing of 
these two approaches in relation to providing additional child 
welfare services is critical. Redirecting resources will not be 
sufficient until we provide child welfare programs with 
additional resources for new investments.
    Relative to other Federal-State partnership programs like 
child support, Medicaid or TANF, the Federal Government 
provides substantially less financing to the child welfare 
program. Based upon Census data, the number of children living 
with neither natural parent or adoptive parents increased from 
1.8 million in 1989 to 3.0 million in 1998, a 67 percent 
increase. Only a small percentage of these children 
are currently being served under the child welfare system. I 
realize that not every child not living with either parent 
needs to be served by the child welfare system, but this fact 
does demonstrate the need for additional funding and raises 
questions about the extent and coverage of the child welfare 
system.

 Protections, Entitlements, and Maintenance-of-Effort Requirements in 
                               H.R. 5292

    H.R. 5292 is one way to provide additional funding and 
flexibility to the States administering the child welfare 
system. H.R. 5292 provides States more flexibility in the use 
of their IV-E funds so that they can provide more front-end 
services rather than spending money on out-of-home placements.
    I am pleased that H.R. 5292 as introduced includes a number 
of provisions to help ensure that children get the quality care 
that you intend, and that Federal funding for child welfare is 
not diverted to other spending priorities. Regardless of the 
funding mechanism chosen, it is important that these provisions 
are included. I would like to highlight several provisions that 
have been significantly strengthened in the bill as introduced, 
and I appreciate the attention your staff has given to these 
important concerns.

Protections and Entitlements

    It is critically important to be clear that the protections 
and entitlements available to children under current law will 
be maintained in these new pilots and I believe that your bill 
does that. The existing Child Welfare Waiver Demonstration 
Program that you championed maintains both the protections and 
entitlement, and similar language is used in H.R. 5292.

Maintenance of Effort

    Another important protection in H.R. 5292 is the strong 
maintenance of effort (MOE) provision that you have attached to 
the ``Consolidation of Grants'' pilot. A strong MOE provision 
is essential to ensure that overall funding for child welfare 
services does not decrease once States have increased 
flexibility in the use of their funds. There is a broad 
consensus that child welfare funding should not be reduced 
given the unmet needs that remain. The MOE provision for the 
``Consolidation of Grants'' pilot requires States to maintain 
total child welfare spending from all sources, Federal, State 
and local, and thus ensures that funding for child welfare 
services will not decrease during the operation of the pilots.
    Before making a case as to why this same MOE provision 
should be applied to the ``Transfer of Funds'' pilot, let me 
emphasize several of its important characteristics:
     The MOE language recognizes that in every State 
child welfare spending is a unique mix of Federal, State, and 
local funds. By requiring the maintenance of Federal, State, 
and local spending, States are treated equitably in the effort 
they must make to ensure that dollars for children in the child 
welfare system are not cut back.
     The MOE language recognizes that Federal funds may 
fluctuate from year to year and specifically allows States to 
adjust their spending baseline when Federal child welfare 
spending is decreased.
     The MOE language gives States flexibility to count 
expenditures made by other agencies, such as substance abuse 
treatment or mental health agencies, on behalf of children and 
families in the child welfare system, when new investments are 
made by these agencies.
     The MOE language also gives States leeway in 
complying with the MOE requirement. It takes into account the 
fact that expenditures within a State may fluctuate some from 
year to year and therefore only holds States accountable for 
maintaining their effort based on a two year rolling average.
     The MOE requirement gives State child welfare 
agencies leverage in budget discussions. The potential 
penalties created by the provision make it easier for States to 
maintain spending for child welfare and thus enhance the 
likelihood that the demonstration will enhance access to 
services and improve outcomes for children and their families.
    If the Federal Government makes available more funding for 
child welfare, a State should not be allowed to spend less than 
it otherwise would have. In most cases, the baseline that would 
be agreed upon between the Secretary and the State would assume 
that the State is increasing State expenditures. The State 
should be required to maintain this level of effort. I realize 
this is a very sensitive issue; States and State officials take 
umbrage in requiring a MOE because there is an implicit 
assumption that the States would lower their own spending when 
the Federal Government increases their spending on a particular 
program -an assumption that they insist would not happen.
    But under TANF it has happened, and not because any one 
official thought it was a good idea. The supplantation that 
occurred in Wisconsin under TANF did not happen because the 
Governor proposed it. Rather it happened in the give and take 
of the State legislative process and competition with other 
State spending priorities. A strong MOE requirement is needed 
because States have many other important spending priorities 
(e.g., education, transportation, and nursing homes), and 
extraneous forces can reduce State spending on child welfare 
services. A strong provision is critical to this bill because 
it gives States an important tool which will enable child 
welfare administrators to insure that spending on their program 
does not decline.

Monitoring and Evaluation

    The addition of provisions in H.R. 5292 that require 
careful monitoring and evaluation of the impact of the pilots 
is also extremely important. It is essential that we know from 
the beginning what specific services and activities States plan 
to provide with these more flexible funds. You have required a 
description of services in States' initial plans, but also 
recognized that plans may change during the course of a 
demonstration and put a process in place for States to amend 
their plans when necessary. The national evaluation will 
provide useful information on how the evaluation has enhanced 
the availability and use of services as well as child safety, 
permanency, and well-being. I am very pleased with how these 
provisions have evolved.

                           Technical Changes

    Before moving on to a discussion of the bigger picture, I 
wanted to spend just a few more minutes highlighting a couple 
important questions about H.R. 5292 as introduced.

Maintenance of Effort for the ``Transfer of Funds'' Pilots

    As I alluded earlier, I am very concerned that H.R. 5292 
does not apply the same MOE provision to both of the pilots. I 
believe the MOE provision that applies to the ``Consolidation 
of Grants'' pilots should also be applied to the ``Transfer of 
Funds'' pilots. To participate in the Transfer pilots, a State 
should be required to maintain its overall level of spending 
for child welfare services. It should not be permitted to use 
the flexibility of this demonstration to supplant or reduce 
existing spending.
    As drafted, the MOE provision that applies to the Transfer 
pilots in H.R. 5292 permits States to supplant current child 
welfare spending with their new flexible dollars and also 
allows States to reduce total spending on child welfare 
services if their foster care caseloads decline. Under the 
Transfer pilots, a State will negotiate an anticipated baseline 
of IV-E foster care maintenance and/or administrative spending. 
If the State submits claims totaling less than that baseline 
amount for IV-E foster care expenditures, it is permitted to 
use the ``freed up'' amount, the difference between the 
baseline and actual claims, for any child welfare services 
which help achieve the purposes of the bill.\4\ However, to 
receive those ``freed up'' funds, the State must meet a MOE 
requirement.
---------------------------------------------------------------------------
    \4\ The State must use the funds consistently with the plan filed 
as part of its application for the demonstration (subsection 
(c)(1)(B)), however, the State can amend this plan at any time as long 
as the amended plan is consistent with the provisions of the bill 
(subsection (d)).
---------------------------------------------------------------------------
    It is not clear to me from the bill what the intention is 
behind the MOE requirement in the Transfer pilots. Does it 
require a State to maintain its State effort at the level that 
would be necessary to claim the full amount in the State 
baseline? For example, if its IV-E match is 50 percent, must it 
agree to keep State spending at a level that is at least 
equivalent to 50 percent of the total State baseline? \5\ Or, 
alternatively, do States have the ability to spend only a 
portion of their ``freed up funds'' and as a result only 
maintain State funding at a level that would be necessary to 
match that amount of expenditures? \6\
---------------------------------------------------------------------------
    \5\ If this is the goal, the language of the bill does not appear 
to accomplish it. The formula in section (c)(4)(C) allows the State to 
reduce the MOE amount below this level, although this appears to be a 
drafting error, rather than an intentional reduction.
    \6\ Regardless of the intention, the language in the bill seems to 
permit this flexibility and thus permit States to reduce overall 
spending on child welfare services.
---------------------------------------------------------------------------
    While a correctly drafted provision that bases the MOE 
amount on the total State baseline, rather than the amount of 
funds the State receives, would hold State spending at the 
level anticipated in the baseline, it would not prevent the 
``freed up'' dollars from being used to replace other State 
spending for child welfare services. For example, suppose a 
State negotiated a baseline of $100 million but had IV-E claims 
of $80 million. It could use the $20 million of ``freed up'' 
funds to pay for a home-visiting program or for a post-adoption 
services program previously funded with State dollars. This 
supplantation would lead to no net gain in the funds available 
to provide child welfare services, a result that seems contrary 
to the purposes of the bill.
    If the intention of the MOE provision in the Transfer 
pilots is to give States the flexibility to take less than the 
full baseline amount (e.g. not all of the ``freed up'' funds), 
States may find themselves unable to take advantage of ``freed 
up'' funds. For example, a State may come to the end of the 
year and have $20 million in ``freed up'' funds, but be unable 
to convince the legislature to allocate the MOE funds needed to 
receive even a portion of those funds. The strong requirements 
and penalty provisions of the MOE requirement in the 
Consolidation of Grants pilots would offer much more leverage 
to States and increase the likelihood that the State 
maintenance of effort amount would be provided and the 
availability and use of services would be enhanced through the 
pilots. Thus, regardless of the intent behind the MOE provision 
of the Transfer pilots, I do not believe the provision 
sufficiently safeguards child welfare spending. As I mentioned 
earlier, I believe the MOE provision for the Consolidation 
pilots should also apply to the Transfer pilots.
    However, if a decision is made to continue with a different 
MOE provision for the Transfer pilots, at a minimum, the 
provision should require States to maintain a level of spending 
equivalent to the State match for the total amount of State 
baseline and the provision should contain non-supplantation 
language similar to that in the Safe and Stable Families 
Program and the Chafee Foster Care Independence Program.

Relationship Between TANF and Child Welfare MOE Requirements

    It is possible that some additional modifications may be 
needed in this MOE provision. For example, some concerns have 
been raised that this provision may effectively create an 
earmark within the TANF program for child welfare spending in 
those States that have already been spending TANF dollars on 
child welfare. We need to address this issue to ensure that 
States continue to have full flexibility in the use of their 
TANF dollars.

Clarifying Activities for Which the Funds will be Spent in the 
Transfer Pilots

    As I have described earlier, we applaud the language in the 
Consolidation pilots that requires that the plan include a 
description of each activity for which any of the amounts would 
be expended. I recommend that same language be in the plan for 
the Transfer pilots, and expect that it was a technical error 
that it was not.

Suter Language

    Under current law, the ``Suter language'' in the section on 
the Effect of Failure to Carry Out State Plan in the Social 
Security Act is in two places. I understand from conversations 
with Subcommittee staff that the removal of the Suter language 
from section 1130A of the Social Security Act was only an 
effort to remove the duplicative language in the Act and that 
there was no intention to remove the Suter language. The Suter 
language is retained in section 1123 of the Social Security 
Act.

      Is H.R. 5292 the Best Way to Provide Additional Funding and 
                              Flexibility?

    Although I agree with the goals of H.R. 5292, I believe 
that a simpler and more direct way of providing additional 
funding to States would work much better. Both the ``Transfer 
of Funds'' and the ``Consolidation of Grants'' pilots are 
predicated on the assumptions that additional Federal funding 
for child welfare was not politically possible, and that the 
CBO baseline for mandatory IV-E spending was growing too 
rapidly--many felt this growth would never materialize. In 
essence, both types of pilot projects were innovative attempts 
to take advantage of this budgetary situation and convert what 
were perceived by some to be bloated projections into real 
dollars for funding prevention services under child welfare. 
Accomplishing this under H.R. 5292 requires that projections be 
made for each State as to what its spending would be under IV-E 
and either allowing a transfer of some portion of mandatory 
spending to fund services or giving the State the monies it 
would have received under the projection and allowing it to be 
spent on a broader set of activities.

    This mechanism is not ideal for several reasons:

     The political assumption that additional funds 
were not possible may no longer be correct.
     While some of the growth in IV-E caseloads may be 
excessive, more attention to placing children in safe and 
stable families is needed. Because States share in the cost of 
IV-E, States have some incentive under current law to lower 
their IV-E caseloads. I do not believe States are intentionally 
placing too many children in IV-E. However, States do not 
receive sufficient monies for service to prevent out-of-home 
placements, or sufficient monies to reunify families. This may 
lead to a greater number of children in out-of-home placement 
than necessary.
     The amount of money a State receives should not 
depend upon projections negotiated between Federal and State 
bureaucrats. These projections are likely to be wrong and 
probably will not reflect the States true need for funding. One 
method to determine the feasibility of a new financing approach 
is to examine how it might have worked during a historical 
period. Pretend you are in 1992 and you need to make 
projections of IV-E caseloads in 1994. Table 1 shows the 
average monthly number of children in foster care in 1986, 
1990, and 1994 in selected States. How would one predict for 
each State the caseload three years into the future? 
(Projections of dollar amounts, which are required under H.R. 
5292, would have difficulties similar to projecting caseload.) 
Clearly the projections would be based on more information than 
just these historic caseloads for two points in time, but this 
an important starting point. Look at the variation by State in 
the growth in the IV-E caseload between 1990 and 1994 relative 
to growth between 1986 and 1990. Arizona is a good example. 
Between 1986 and 1990, the caseload increased by 80 percent, 
from 481 to 866. A baseline calculated with these numbers would 
leave the State with substantially fewer funds per foster 
child; between 1990 and 1994 Arizona's caseload almost tripled, 
reaching 2,697. This State presumably would have had to revert 
back to current law if it had opted for the ``Consolidation of 
Grant'' stream. In contrast, in North Carolina, the caseload 
more than doubled between 1986 and 1990, and then leveled off 
between 1990 and 1994. If the baseline were based on caseload 
between 1986 and 1990, North Carolina would have come out 
substantially ahead in funding, and its investment in service 
dollars would appear to have been extremely successful. 
Finally, in some States even the direction of caseload trends 
changed during the same time period: in Maryland, for example, 
between 1986 and 1990 the caseload fell from 1,511 in 1986 to 
803 in 1990; by 1996, it had more than quadrupled, reaching 
3,553. How much funding is really needed is based upon many 
factors that are outside the control of State administrators--
changes in the culture of courts and their decision-making 
process, economic factors in which studies show a strong 
correlation between child abuse and poverty, and changes in 
substance abuse patterns or the appearance of new drugs.

Table 1

                  Title IV-E Foster Care Average Montly
                 Number of Children for Selected States

                                    1986          1990          1994

Arizona.......................          481           866          2697
Delaware......................          289           125           221
Hawaii........................           46            41           530
Idaho.........................          435           138           280
Maryland......................         1511           803          3553
Newe Jersey...................         3840          2816          3715
North Carolina................         1411          3561          3550
Washington....................          983          2751          1989
Wisconsin.....................         2620          5562          4780


     These proposals raise fundamental problems which 
H.R. 5292 does not address. For example, how will future 
projections be made? What happens after the first three years? 
How does the Secretary or the State estimate growth under 
current law? If the ``Consolidation of Grants'' proposal is 
successful for the first three year period, how does the 
Secretary project growth for the second three years? Will those 
States continue to get substantial amounts of funding for 
prevention services based on their reduced caseloads? Or 
consider the opposite case. How will the estimates be done when 
the strategy, despite the best efforts of the State, has still 
resulted in substantial foster care growth?
     Cost considerations should not guide decision-
making at the front line. The ``best interests'' of the child 
should be the primary criteria guiding decision-making. By 
fixing the amount of funds a State receives, it implies that 
States would bear all of the costs of any additional children 
that need to be served. This is not a true Federal-State 
partnership. I am concerned that we will pay States to lower 
foster care caseloads, not by the provision of additional 
preventive services, but by other mechanisms.
     Caseload reduction should not be our primary goal 
in the child welfare system. Caseload reduction in child 
welfare carries much greater risks than caseload reductions in 
TANF, because the effects of bad decisions are much more 
serious. The child welfare system has some very difficult 
decisions to make: a) Is the system removing children from 
parents when necessary; b) Are they being reunified when 
appropriate; c) Is the system terminating parental rights 
appropriately so adoptions can take place; d) When children are 
removed, are the alternative care arrangements appropriate--the 
use of kin-care, the use of very intensive institutional 
settings when needed, and finding the right foster care 
parents. These are only a few of the decisions that the system 
must make. I am concerned about creating a system where the 
financial incentives not to remove a child have been made even 
greater. The right decision in one set of circumstances is the 
wrong decision in a different set of circumstances.
    I believe that the amount of Federal funds a State receives 
should not be based on a negotiation about budget projections 
between State and Federal officials. I know of no other 
instance where the amount of funding a State receives from the 
Federal Government is based upon a negotiation of what spending 
would be under current law. As shown above, these estimates are 
prone to large estimating variances and depend upon factors 
outside the administrator's control. There is a lot of 
guesswork in making State-by-State projections and the range of 
reasonable projections is huge.
    Madam Chairman, I do believe the negotiating process over 
baselines anticipated by H.R. 5292 would result in getting 
substantial more Federal funding to the States involved in this 
demonstration. If I believe in more Federal funding for child 
welfare services, why make this case against your funding 
mechanism? I do not think this approach is sustainable and 
services do not automatically translate into lower caseloads. 
My primary argument is that there is a more direct and simpler 
method of providing additional funding to States. This could be 
done in any number of different ways. One approach is to 
provide the services dollars necessary under Title IV-B to 
implement ASFA, and letting the ingenuity of the States 
determine how these additional dollars will be spent.
    Another approach is providing a significant pool of funds 
for competitive grant child welfare monies that would be 
awarded to States to determine if additional funding for 
services would allow them to better meet the goals of the child 
welfare system. I would require a small State match of 10 
percent or so. This means State officials would have to go 
through some effort to get State approval. This approach could 
then study where the additional monies are spent and determine 
whether the goals of a child welfare program are better met.
    Either of these approaches seem preferable to the funding 
mechanism outlined in H.R. 5292.

   The Need for A Comprehensive Review of Federal Funding and Child 
                            Welfare Programs

    Besides the need for significant amounts of additional 
funding and flexibility, there are several other important 
reasons why a more comprehensive review of the entire pattern 
and nature of child welfare financing is needed. As a recent 
Urban Institute study illustrates, funding today for children 
in the child welfare system is scattered over a wide array of 
Federal programs.\7\ Today, child welfare is funded by IV-B and 
IV-E programs, the Social Services block grant, TANF, Medicaid 
and the CAPTA programs. States make substantial different 
decisions about which kinds of children are funded from these 
different sources.
---------------------------------------------------------------------------
    \7\ The Cost of Protecting Vulnerable Children: Understanding 
Federal, State, and Local Child Welfare Spending, The Urban Institute, 
1999.
---------------------------------------------------------------------------
    As I mentioned previously, substance abuse is often a 
factor in cases of child neglect and many States lack the 
capacity to provide front-end services, particularly in the 
area of substance abuse. Bills such as S. 2345 and H.R. 5081, 
which address child protection and substance abuse and the 
coordination between these two systems, need to be part of a 
comprehensive review.
    There also are important bills that have been introduced in 
the Senate to improve the capacity of the courts to meet the 
new timelines for decision making in the Adoption and Safe 
Families Act that should be part of this package. The Promoting 
Safe and Stable Families Program, including the State Court 
Improvement Program, also has to be reauthorized next year, and 
that too will help increase the capacity of States to better 
support families and promote adoptions.
    Beyond those suggestions, I believe a comprehensive review 
should result in recommendations that would include:
     Universal coverage of all children who are abused 
or neglected,
     Significant additional amounts of Federal dollars,
     Additional flexibility to States of where 
additional dollars should be spent,
     A reexamination of the interaction between child 
welfare and other programs such as TANF and juvenile justice.

Universal Coverage of All Children Who Are Abused or Neglected

    Shortly after I became staff director of this Subcommittee 
back in 1991, I was amazed to learn that IV-E was not a 
universal program. I can understand why TANF, food stamps or 
the Medicaid programs should have a means-test. But if a child 
is the victim of abuse or neglect to such an extent that a 
State court declares that the child must be removed from the 
home, why should the Federal Government deny funding to States 
for these neglected or abused children? The States do not have 
such a choice and clearly have an obligation to provide 
services and assistance to these children. Furthermore, 
determining whether the parent would have been eligible for 
AFDC assistance under the rules that prevailed in July, 1996 
costs significant administrative dollars. The Federal-State 
partnership would be stronger if the program were made 
universal. This might be one way of providing additional 
assistance to States. This aspect of the program should be 
reviewed.
    In addition to a reexamination of which children are 
eligible for foster care payments, there needs to be a 
determination of what package of services these children should 
be provided through IV-E. I realize that open-ended funding of 
additional services may risk increases in Federal spending 
beyond what is politically feasible. This review should examine 
various options for reducing this risk. These options could 
include State matching rates, aggregate caps on spending for 
services, or limits on the time or amount of services provided 
per child.

Interaction Between TANF and Child Welfare

    Many children today whose parents are no longer able to 
care for them are placed informally (sometimes formally) with 
grandparents or other close relatives. For these children, the 
traditional goals of a child welfare system may need to be 
modified somewhat.\8\ Not all of these caretakers necessarily 
need assistance. But States need more flexibility in deciding 
how these caretakers should be treated. The use of TANF funds 
to finance child welfare services should be reexamined when 
many parents still need employment services and work supports 
such as child care to help them find and retain jobs, and when 
more assistance is needed to lift children out of poverty.
---------------------------------------------------------------------------
    \8\ Rob Geen, ``In the Interest of Chidlren: Rethinking Federal and 
State Policies Affecting Kinship Care,'' Policy & Practice, American 
Public Human Services Association, March, 2000.
---------------------------------------------------------------------------

                               Conclusion

    In conclusion, I remember well what you Madam Chairman said 
at the last hearing and I strongly agree that we need to be 
bolder. Additional funds are needed to increase the capacity of 
the child welfare system to provide up-front services that 
allow children to remain safely in their homes, to be quickly 
returned if removal is necessary, and to move to adoption when 
appropriate.
    I would urge you to move forward carefully, however, and to 
take the next several months to build broad consensus on how 
the Federal involvement in the child welfare system should 
change and to develop a much bolder plan that structurally 
revamps the Federal role in the child welfare system. We must 
re-examine which maltreated children, or children at risk of 
maltreatment, should be eligible for Federal support and what 
that support should look like. As I mentioned, I do not believe 
it makes sense to continue to tie eligibility for IV-E to the 
old AFDC standard and I think that policymakers and advocates, 
from both parties and from the Federal, State and local levels, 
should continue to discuss what the eligibility criteria for 
Federal support to vulnerable children and families should look 
like.
    An important part of our bigger look at child welfare 
reform must be looking at the interaction between child welfare 
and other systems, like TANF and Juvenile Justice. Especially 
in TANF, we see many points in which the two systems overlap. 
Some of the children and families served are the same and the 
problems families on the rolls face, and their service needs, 
also are similar. In some States children with kinship 
caregivers who are receiving TANF funds are in the formal 
foster care system and in others they are not. We have to take 
a more careful look at issues like these as we move forward.
      

                                


    Chairman Johnson. Thank you. Dr. Wulczyn?

   STATEMENT OF FRED WULCZYN, PH.D., CHAPIN HALL CENTER FOR 
                  CHILDREN, CHICAGO, ILLINOIS

    Dr. Wulczyn. Madam Chair, members of the committee, thank 
you for inviting me here to speak today. My name is Fred 
Wulczyn. I am a research fellow at the Chapin Hall Center for 
Children at the University of Chicago, and for the past ten 
years I have been studying issues related to finance and child 
welfare. Most recently, I have worked in the City of New York 
helping Commissioner Scapetta and his staff design a system for 
financing services that blends positive incentives for 
providers of foster care with vigorous monitoring while 
protecting the entitlement for foster care.
    That work has been praised by the court-appointed panel 
overseeing the child welfare reform in the City of New York. I 
mention this because my remarks today are based on the 
practical experience of helping a jurisdiction create the kind 
of financing system that your legislation speaks to.
    Flexibility is an issue that will keep coming back to the 
Congress. History says as much. We have been dealing with the 
issue of flexibility for the last 35 or so years in various 
disguises. The dynamic, the reason why it keeps coming back has 
less to do with the tension between block grants and 
entitlements, as some would characterize the reason for its 
inevitable return, and has more to do with the issue of 
outcomes and the fact that there is increasing pressure on the 
States to achieve better outcomes for children and families.
    The dynamic basically is the same as the tension between 
having responsibility but no authority. As States are pressed 
to be more accountable for the things they do for children and 
families, they are going to want to have control over the 
resources at their disposal to accomplish those objectives.
    I think that the question of flexibility returning is 
important also because the longer it takes to deal with the 
question of flexibility, the more likely frustration will build 
so that less positive types of Federal legislation are more 
likely to pass, so that if we can act now, proactively, I think 
we can avoid legislation that is less desirable.
    Another issue that we are seeing is that in health care, as 
in child welfare, we observed over the last 20 years or so that 
the question of how services are purchased is as important as 
what services are purchased. The cost reimbursability rules 
that are in Federal law today sets a tone as to what services 
are purchased that invades all levels of State and local 
government and restricts the flexibility. By limiting how 
States are allowed to purchase care, we necessarily limit 
flexibility.
    I think the legislation that is proposed accomplishes two 
very important things. First, it preserves the entitlement. I 
think there has long been an assumption that flexibility and 
entitlements are mutually exclusive policy concepts and I think 
that the various proposals that are included here, the waiver, 
the modified block grant, if that is a fair characterization, 
the transferability, adequately address the question of whether 
or not the entitlement can be preserved in the context of 
flexibility.
    As I see it, what in effect the legislation accomplishes is 
that it establishes a floor below which Federal funding would 
not fall as opposed to a ceiling above which Federal fiscal 
responsibility could not rise, and those are fundamentally 
different ways to characterize the role of Federal financing.
    Second of all, the law grants State flexibility. There are 
certain realities with respect to incentives. The first is that 
there is no such thing as an incentive-free system. So we do 
not want to push States into adopting flexible programs without 
carefully considering the issues of local context and how any 
given system of incentives would work.
    Similarly, incentives have to be sensitive to time, place, 
and context. There is considerable variation in State 
performance, and within States county performance, and within 
counties provider performance. The idea that a one-size-fits-
all response to this variation would be useful and 
constructive, I think is a somewhat tenuous assumption. States 
should be encouraged to adopt incentives that are appropriate 
for their local jurisdiction and the issues that they face and 
they are not uniform.
    Finally, States are not equally equipped to use incentives. 
This is an issue of how well they are able to aggressively 
monitor and track outcomes. Clearly, performance is leveling 
off in that regard. States are more able to do that. But 
whether or not they can enter into vigorous systems of tracking 
outcomes is a developmental question. Over time, we can expect 
that to improve, but pushing States into a one-size-fits-all 
set of incentives, I think is a risky proposition from the 
Federal Government's perspective.
    Finally, in effect, what we are dealing with here are 
issues about the efficient distribution of care and resources 
and outcomes will eventually be paired with the question of 
need. Flexibility is not an inoculation against the requirement 
that we focus on the issue of whether or not the basic 
commitment to meeting the needs of children is being met by the 
current Federal commitment. I think we will continue to expect, 
as Wendell suggested, that the issue of need and whether or not 
there is enough money to go around, even with flexibility, is 
going to be a recurring theme, as well. Thank you very much.
    Chairman Johnson. Thank you very much. Ms. Daly?

  STATEMENT OF SHARON DALY, VICE PRESIDENT FOR SOCIAL POLICY, 
          CATHOLIC CHARITIES USA, ALEXANDRIA, VIRGINIA

    Ms. Daly. Thank you very much, Mrs. Johnson. I would like 
to, first of all, thank you very much for this opportunity to 
testify. I want to start with thanking the chair and Mr. Cardin 
for their extraordinary work on behalf of the Title XX social 
services block grant program this year. A billion dollars has 
come out of services for children because of those cuts and it 
is critically important that your efforts in persuading the 
Senate to restore that funding are successful, not only for 
children in the child welfare system, but for elderly and 
disabled people and other people in need. So I want to thank 
you for that.
    I also think the record of the subcommittee on the Adoption 
and Safe Families Act, the fatherhood provisions, child support 
enforcement, has been extraordinary and I certainly hope that 
your efforts succeed before we all get to go home.
    I have just come back from spending five days with about 
700 of the Catholic Charities local direct services providers 
who gathered in Kansas City for our annual meeting and there is 
no issue in their view that is as important as reforming the 
child welfare and foster care systems. So we are very grateful 
for the attention that this issue is getting, but also grateful 
that markup of the bill is postponed until we have time to 
really think through all the implications of the bill.
    Catholic Charities USA, as you know, represents 1,400 
member agencies. We serve more than ten million people a year, 
about 90,000 children in residential care and foster care in 
our care, and so we have a big stake in this. Actually, from 
its very first work in 1727, Catholic Charities agencies have 
been caring for homeless mothers and children, people who have 
been abandoned by the system.
    Mrs. Johnson said at the beginning of the hearing, our 
primary job is to see that States have the money to care for 
these children. Well, there is nothing more important than 
that. That is exactly right. That is why we are all here. How 
do we make sure that the States have the money to care for 
these children?
    So, of course, I am very skeptical about any danger at all 
to the entitlement and am very glad that the chairlady is 
sensitive to that issue. I am very concerned, as Wendell Primus 
pointed out, that maintenance of effort provisions that are 
already in the bill be maintained and also added any time there 
is additional flexibility for the States.
    At the bottom of the list of priorities in any State 
legislature is the children in the child welfare system, and 
there is nothing that is more dangerous than allowing the State 
legislatures to get off the hook with funding. So maintaining 
maintenance of effort requirements, making sure that the States 
have to invest, and making sure that the States meet 
requirements continue to be very important.
    There has been a lot of talk here about State flexibility. 
Well, I represent the people who need flexibility the most and 
have absolutely none, the people who are faced with a family 
where there is terrible substance abuse, where there is neglect 
or abuse, and all of the options are bad--inadequately funded 
foster care with untrained parents, unsupervised homes, lack of 
treatment for the parents, lack of mental health services, lack 
of care for the children who are already so traumatized by the 
situations in their families. It is the workers who do direct 
services who have no flexibility.
    I met recently with Jack Smey from Catholic Charities in 
Connecticut and Pat Johnson, who is the director in Hartford, 
and said, what can we do to fix the system? Should we have 
foster care review boards, as Mr. Grassley suggests? Should we 
change the reimbursement mechanisms, as Mrs. Johnson suggests? 
And they both said, as all the other Catholic Charities 
agencies in the country say, it is really a matter of more 
resources. How do we get more money into it?
    And I would ask the subcommittee to not go with the 
assumption that we have to have a budget-neutral bill, that we 
have to restrict expenditures for foster care maintenance in 
order to get more services into prevention and keeping families 
together.
    Foster care is terribly underfunded. Of course, it is not a 
great option to have children in foster care, but our foster 
care and residential care treatment programs typically do not 
even get a two percent increase per year in cost of doing 
business from their State legislatures. The amount of money to 
pay foster parents is so inadequate that it is very difficult 
to get qualified people to take care of these children. More 
and more States are putting very severely traumatized children 
in regular foster care instead of in treatment and residential 
care.
    We may have fewer children coming into the system, and I am 
not sure that is right, whether the States are always going to 
be keeping families safe when they keep children out of foster 
care. You know, we are all very happy about the adoption 
bonuses. We all feel good that there are more kids who have 
been adopted. But when I heard that the District of Columbia 
was one of the States that got an adoption bonus, I was really 
shocked, because this Congress has heard incredible testimony 
over the past few months about the terrible, terrible 
deficiencies in the child welfare system in the District.
    So when we devise new incentives and new funding 
mechanisms, we have to be careful we do not send a message we 
only care about adoption or we only care about reducing the 
number of kids in foster care. Sometimes foster care is the 
best place for a child. Very often, temporarily, at least, that 
is a good place for a child. So sending a message to the States 
that we are going to reward certain things and not others and 
not taking into account the total operation of a system is 
really a mistake, I believe.
    I would also like to mention that we are strongly in 
support of a bill that Mr. Rangel and Mr. Cardin have 
introduced that would provide nearly $2 billion of additional 
resources to States for mental health and substance abuse 
treatment for the families of children in the child welfare 
system. Nothing could be more important. The States estimate 
that 80 percent of these families have substance abuse and 
mental health problems and very rarely do they get the right 
kind of treatment.
    The way Medicaid provides reimbursement, and the way the 
substance abuse block grant program works, is that people are 
rotated in and out of short-term drug treatment and never 
really have addressed the underlying serious, dangerous mental 
health problems that those parents have, that substance abuse 
is really only a symptom. And until the Federal Government 
requires the States to change the way they reimburse and to 
make sure we have integrated mental health and substance abuse 
treatment and that it is available to those families, and not 
just to the moms but to the children who have been traumatized, 
we are not going to see children grow up healthy and safe. So I 
urge that that be included among your deliberations.
    [The prepared statement follows:]

Statement of Sharon Daly, Vice President for Social Policy, Catholic 
Charities USA, Alexandria, Virginia

    Good morning. My name is Sharon Daly, and I am the Vice 
President for Social Policy of Catholic Charities USA. I am 
pleased to testify today on behalf of our organization.
    Catholic Charities USA is the nation's largest private 
network of independent social service organizations, working to 
support families, reduce poverty and build communities. 
Annually, our 1,400 member agencies provide services to over 10 
million of the most vulnerable people in our country, including 
more than one million children. In 1997, Catholic Charities 
agencies provided more than 89,197 children with residential 
care, foster care and group home care.
    Catholic Charities USA appreciates that this subcommittee, 
under the leadership of its Chair, Nancy Johnson, and its 
ranking minority member, Ben Cardin, is focusing on the 
question of resource distribution in the Federal child welfare 
system. With regular input from our Catholic Charities agencies 
across the country, Catholic Charities USA has long been an 
advocate for increasing Federal support for preventive services 
while ensuring State accountability for children's safety. 
However, while we agree that there must be more resources 
devoted to preventive child welfare services, we do not think 
the approach taken in H.R. 5292 is the right response.
    Quite simply, this bill fails to address the most critical 
shortcomings of the child welfare system: inadequate Federal 
funding for child welfare services, insufficient Federal 
dollars allocated to the treatment of substance abuse and 
mental health problems suffered by families in crisis, and the 
failure of Congress to acknowledge the need to provide a range 
of social supports for poor families. This bill appears to 
approach the problem of inadequate resources by allowing States 
to move existing dollars from one urgent need to another. 
Catholic Charities USA shares the subcommittee's concerns that 
States need additional resources for preventive child welfare 
services. But in a time of unprecedented economic prosperity, 
we believe Congress should do more to heal families and protect 
our nation's children.
    Today I will speak briefly about some of the components of 
H.R. 5292 and make some suggestions about where I believe 
Congress should be focusing its efforts in the 107th Congress. 
I would also ask permission to submit, at a later date, a more 
detailed analysis of H.R. 5292 for the record.

                              Block Grants

    H.R. 5292 provides for two new demonstration projects. 
Under the first, up to five States could receive all or a 
portion of their Title IV-E adoption or foster care funds as 
block grants. Currently, under existing law, in order to 
receive Title IV-E funds, a State must submit a plan that meets 
a number of detailed requirements outlined in Section 471 of 
the Social Security Act, including provisions to ensure 
children's health and safety that were recently enacted by the 
Adoption and Safe Families Act of 1997 (AFSA). Under H.R. 5292, 
however, it appears that to be eligible for a block grant, a 
State would no longer be required to meet the requirements of 
Section 471. Rather, a State would only be required to submit a 
plan that:
     Describes how the funds received under the block 
grant will be used;
     Makes the same assurances that States are 
currently required to make in their Title IV-B State plans 
pursuant to Section 422(b)(10) of the Social Security Act (for 
example, a State must make assurances that it is operating an 
effective Statewide information system to track children in 
foster care and that it is operating a preplacement preventive 
services program for children at risk of foster care 
placement); and
     ``Does not impair'' a child or family's 
entitlement to benefits under the State's existing Title IV-E 
plan.
    In addition, the bill includes a requirement that 
participating States maintain 1998 expenditure levels for the 
activities covered by the block grant.
    H.R. 5292 would also allow participating States to delink 
eligibility for foster care and adoption assistance payments 
from the current income requirements. In other words, a State 
could make adoption assistance payments to any family that 
adopts a child, regardless of the income of the child's prior 
family.\1\ States could elect to continue delinking these 
payments beyond the expiration of the demonstration project. 
Catholic Charities USA has always supported delinking foster 
care and adoption payments from the current income 
requirements, and we are pleased that such a provision has been 
included in the bill.
---------------------------------------------------------------------------
    \1\ Foster care payments may be delinked only if the State has 
submitted an application to block grant its foster care payments.
---------------------------------------------------------------------------
    However, Catholic Charities USA has concerns about 
consolidating into a block grant Federal reimbursement for an 
activity as critical as the protection of our children. As we 
read it, the bill exempts States who participate in the block 
grant program from important Federal requirements which 
currently govern State foster care and adoption programs. Prior 
drafts of this bill required States to show that their use of 
the block grant funds would comply with the requirements of 
their Title IV-B or IV-E State plans. We are not sure why this 
provision was changed in the final bill. We believe that the 
States' record on child welfare issues and particularly on 
protection of children does not justify a relaxation of Federal 
standards in this area.

                Transfer of Title IV-E Foster Care Funds

    H.R. 5292 proposes a second demonstration project specific 
to the foster care program. Under the ``transfer'' provisions, 
the bill appears to allow up to five States to retain the 
difference between the State's estimated Title IV-E foster care 
entitlement funds and the actual amount of its eligible foster 
care expenditures in a given year. In other words, if the 
State's eligible foster care expenditures in a given year are 
less than the amount which the Department of Health and Human 
Services and the State originally estimated that the State 
would need, the State can keep these ``savings.'' We understand 
that the intent of this provision is to allow States to 
recapture these funds and use them for other child welfare 
purposes.
    Under existing law, in order to receive Federal foster care 
payments, a State must submit a State plan which meets a number 
of detailed requirements, including provisions designed to 
ensure children's health and safety that were added by ASFA. 
Under this provision of H.R. 5292, to be eligible to 
participate in this incentive program, States must submit a 
plan which meets only those same requirements as are required 
of State plans submitted for the block grant proposal: the plan 
must describe how the funds will be used; States must make the 
same assurances as those required under Section 422(b)(10) of 
the Social Security Act for the State's IV-B plan; and States 
must not ``impair'' the child or family's entitlement to foster 
care payments. In addition, a State is required to maintain at 
least a certain level of foster care expenditures.
    As noted above in our comments for the block grant 
provisions in this bill, Catholic Charities USA is concerned 
about relaxing the Federal standards that currently govern 
State foster care programs. Again, we note that prior drafts of 
this bill also required States to show that their use of Title 
IV-E funds would continue to comply with the requirements of 
their Title IV-B or IV-E State plans. We are not sure why this 
provision was dropped from the final bill. Further, we are 
concerned that this ``transfer of savings'' provision provides 
a disincentive for States to ensure that all children in need 
of foster care are placed in the foster care system. To ensure 
the protection of children, Catholic Charities USA believes 
States should be rewarded only when their activities and 
programs improve child welfare outcomes.
    In addition, Catholic Charities USA is concerned that this 
provision sends an incomplete message to the States by 
directing incentives only at the foster care program. We are 
concerned that an unbalanced approach could have perverse 
results. For example, a participating State with an abysmal 
track record for the overall performance of its child welfare 
system could nevertheless receive additional funds under this 
proposal for controlling its foster care expenditures. It 
defies logic to reward a child welfare system that improves in 
only one area, while failing overall in its mission to serve 
families and protect children.

                     Expansion of Waiver Authority

    H.R. 5292 would also expand the Department's authority to 
waive Federal requirements in order to allow more States to 
carry out more child welfare demonstration projects with 
greater flexibility.
    Catholic Charities USA strongly supports the provision in 
this bill that would permit multiple States to pursue similar 
demonstration projects. However, Catholic Charities USA does 
not support a general expansion of the Secretary's waiver 
authority at this time. Current law already gives States the 
flexibility to pursue worthy demonstration projects, and we 
think that any generalized expansion of this flexibility would 
be premature and unnecessary. We understand that 22 States and 
the District of Columbia are operating demonstration projects 
under waivers from the Department. As these demonstrations are 
still in the early stages, it is too soon to know whether these 
projects are improving child welfare systems.

                           Lack of Resources

    Catholic Charities USA understands that the intent of H.R. 
5292 is to allow States to retain unspent Title IV-E 
entitlement funds so that these funds can be spent for child 
welfare purposes and not end up back in the Federal treasury. 
We appreciate the intent behind this bill, and thank the 
subcommittee again for focusing on the issue of insufficient 
resources for State child welfare systems. However, we question 
whether this bill needs to include exemptions from current 
Federal requirements in order to allow States to keep unspent 
adoption and foster care funds.
    I think we all recognize that in order to improve child 
welfare services and outcomes, Congress must commit to 
significant increases in funding for child welfare programs. 
Although this bill may allow States to hold on to more of the 
allotted Title IV-E dollars, real reform of the child welfare 
system is not possible without substantial additional Federal 
resources. As I stated earlier in my testimony, Federal budget 
surpluses have provided us with a window of opportunity to 
accomplish significant reforms in the existing child welfare 
system. Catholic Charities USA stands ready to work with the 
subcommittee to accomplish this critically important goal.
    And when I talk about real reform of the child welfare 
system, I am not just talking about more money for Title IV-B. 
One of the most critical problems affecting the child welfare 
system is the lack of comprehensive substance abuse and mental 
health treatment for families. Our best hope for securing a 
safe and happy future for our children is to appropriate the 
resources necessary to heal and preserve broken families. The 
States estimate that over two-thirds of parents involved in the 
child welfare system need substance abuse treatment, yet 
existing treatment resources meet less than one-third of that 
need.\2\
---------------------------------------------------------------------------
    \2\ Child Welfare League of America, Alcohol and Other Drug Survey 
of State Child Welfare Agencies (1998).
---------------------------------------------------------------------------
    In addition, Catholic Charities agencies serving these 
families are convinced that at least 80 percent of parents with 
persistent substance abuse problems are also suffering from 
serious mental health disorders. We have found that integrated 
mental health and substance abuse treatment programs are rarely 
available. Because treatment for substance abuse and mental 
health disorders are typically offered through separate 
programs, with separate reimbursement methodologies and program 
requirements, it is virtually impossible for any single 
provider or program to offer comprehensive, integrated 
substance abuse and mental health treatment.
    For example, last weekend at the Catholic Charities USA 
annual conference, we heard testimony from the Catholic 
Charities agency in Omaha about their substance abuse program. 
Catholic Charities of Omaha runs the Omaha Campus for Hope, the 
largest provider of addiction recovery services in the State. 
To cobble together the appropriate treatment for persons 
suffering from substance abuse and mental health disorders, the 
Omaha program must often refer clients back and forth between 
different programs. When their clients have maximized the 
treatment resources available in one program, they are 
transferred to another program (which often means a different 
site, a new provider, and different program requirements). They 
told us that the experience was enough to make a healthy person 
``schizophrenic,'' and that, all too often, troubled clients 
and overextended staff are unable to negotiate the system.
    The problem is not just a lack of resources overall devoted 
to substance abuse and mental health treatment, or a lack of 
consistent payment methodologies and requirements. Most 
treatment programs are predicated on a single adult model and 
fail to address the complex problems of parents. Parents 
require treatment programs that wrap services and healing 
strategies around the particular challenges of raising a child. 
They need special parenting classes and support, and their 
children need counseling for potential emotional or mental 
health problems.
    In other words, comprehensive treatment means caring for 
the entire family. Comprehensive treatment also means long-term 
care that extends from 12 to 24 months, rather than ``drive 
by'' treatment programs that drop patients after only a few 
weeks or months. And comprehensive care also means including 
mental health services as a key component in the recovery 
process.
    There is evidence that substance abuse treatment improves 
children's futures by healing families. In 1995, the Center for 
Substance Abuse Treatment published findings from a study of 
its grants administered through its Women and Children's 
Branch. They found the following: \3\
---------------------------------------------------------------------------
    \3\ See Center for Substance Abuse Treatment, 50 Strategies for 
Substance Abuse Treatment (1997).
---------------------------------------------------------------------------
     75 percent of the mothers who completed their 
treatment programs remained drug free; and
     40 percent terminated or reduced their receipt of 
welfare.
    Of the mothers' children in treatment:
     65 percent were returned from foster care; and
     84 percent who participated in treatment with 
their parents improved their school performance.
    We need look no further than our own back yard for a 
compelling example of how real, comprehensive mental health and 
substance abuse treatment for families works and keeps families 
together. In Anacostia, the Center for Mental Health is an 18-
month substance abuse treatment program for mothers and their 
children that focuses on the integration of treatment and 
mental health services. The Center was started in 1989 with a 
$2.8 million grant from the Center for Substance Abuse 
Prevention's Pregnant Postpartum Women and Infants program and 
is a true success story: \4\
---------------------------------------------------------------------------
    \4\ Center for Mental Health, Fact Sheet on Outcomes for Parents 
and Children. For more information, please contact Dr. Johanna Fuhrman 
at 202-889-5255.
---------------------------------------------------------------------------
     Of the mothers who stay in treatment for the 
initial three months, 90 percent of them successfully graduate 
from the program;
     All graduates of the Center for Mental Health exit 
the program with placements in job training or are employed in 
financially stable jobs;
     87 percent of the children of the mothers in 
treatment have been reunified with their parents (7 out of 8); 
and
     100 percent of the children have made progress in 
overcoming developmental delays.
    In addition to this program, many Catholic Charities 
agencies have begun to establish treatment programs that treat 
the entire family and address both substance abuse and mental 
health needs. We need to devote more Federal dollars to 
encourage the development of programs like this across the 
country. We also need to make changes in Medicaid and in our 
Federal alcohol and substance abuse treatment programs to 
encourage States to develop common payment methodologies and 
program requirements in order to make this comprehensive 
treatment possible. If we devote time and resources to this 
issue, I am confident that we will see the effects in 
improvements in our child welfare systems and outcomes for 
children.
    I also would like to mention a related bill introduced in 
this Congress that deserves your support. Senators Olympia 
Snowe, John D. Rockefeller IV, Mike DeWine and Christopher Dodd 
have introduced a bill that would provide additional resources 
for families in crisis. S. 2435, the Child Welfare/Alcohol and 
Drug Partnership Act of 2000, would authorize $1.9 billion in 
grants to the States over five years to address the connection 
between substance abuse and child welfare. We have recommended 
that the bill also provide incentives for States to link child 
welfare, substance abuse treatment and mental health treatment 
agencies. Our concern is that, without Federal incentives, 
States are unlikely to develop comprehensive, integrated 
family-based treatment programs at any time in the near future. 
We hope the subcommittee will consider proposals to provide new 
funds to the States for family-centered substance abuse and 
mental health treatment.
    Finally, we must acknowledge that we will not see dramatic 
improvements in outcomes for children and families until we 
address the range of problems faced by poor families--problems 
such as lack of affordable housing, lack of reliable and 
affordable child care, and insufficient resources for respite 
care and other family support services. A homeless family that 
cannot move out of a shelter because there is no affordable 
permanent housing for them will never be stable, no matter what 
improvements we make to the child welfare system. I recognize 
that matters like increasing the supply of affordable permanent 
housing are beyond the jurisdiction of this subcommittee. But 
there must be some way that the Federal government can 
encourage States to help families in the child welfare system 
access the support services they need to provide for their 
children. Catholic Charities USA looks forward to working with 
this subcommittee, and with other relevant subcommittees, to 
enact a comprehensive package of reforms which will truly make 
a difference for the most vulnerable members of our population, 
our children.
    Thank you for the opportunity to speak with you this 
morning. I would be happy to answer any questions you might 
have.
      

                                


    Chairman Johnson. Thank you. Mr. Geen?

  STATEMENT OF ROBERT GEEN, SENIOR RESEARCH ASSOCIATE, URBAN 
                           INSTITUTE

    Mr. Geen. Madam Chair, members of the subcommittee, thank 
you for the opportunity to testify this morning. I would like 
to make three points this morning about the need for greater 
funding flexibility and content of the bill that is before the 
subcommittee.
    First, the existing Federal funding structure for child 
welfare stifles innovation. Greater funding flexibility will 
allow States to experiment with new service delivery approaches 
that are more in line with the child welfare goals of improved 
child well-being, child safety, and timely permanency.
    Second, providing States with greater funding flexibility, 
just not diminish the need for additional funding for child 
welfare services.
    And third, while addressing current problems in the 
existing financial incentives, the proposed flexible funding 
legislation itself creates unintended and undesired financial 
incentives for States.
    Let us start by looking at what are the limitations of the 
existing financing structure. As has been mentioned by several 
people, Federal child welfare funds are disproportionately 
allocated for foster care with relatively little Federal 
funding available for prevention. But the imbalance is even 
greater than the difference between Title 4(e) and Title 4(b). 
Based on the results of a recent Urban Institute survey, in 
State fiscal year 1998, the States expended $707 million in 
Federal funds for prevention compared to $4.5 billion in foster 
care. But with their own State funds, they spent $3.8 billion 
on foster care, only $609 million on prevention services.
    With a cap on Federal funds for prevention and an open-
ended entitlement for placement, many researchers and advocates 
have noted that States have little financial incentive to 
reinforce the child welfare goals of keeping families together 
and ensuring timing permanency of children removed from their 
homes.
    In practice, however, I have seen no evidence to suggest 
that worker decisions are influenced by whether a child that 
needs to be placed in foster care or needs to be unified is 
4(a) eligible. Rather, I think the research suggests that the 
more fundamental problem is that given the limited Federal 
funding for prevention, many child welfare agencies have 
developed few alternatives to foster care. States appear 
reluctant to put forth their own funds on the hope that they 
might reduce foster care placements and costs in the long run, 
since States do not get to retain the Federal funds that are 
saved. In other words, the current financing structure 
reinforces the status quo and limits the innovation that States 
can do.
    Will flexible funding lead to better outcomes for children 
and families? We do not know. The ability of flexible funding 
to lead to better outcomes is predicated on the answer to two 
questions. One, are there children in foster care who do not 
need to be? Certainly, child welfare officials and advocates 
think so, and it is true that many child welfare agencies have 
minimal placement prevention, reunification, and after-care 
services.
    There is also testimonial evidence from workers that they 
currently place children in foster care that they would not 
have had services been available to safely maintain them in 
their own homes. However, there is limited and very mixed 
research evidence on the success of interventions to prevent 
placement, speed up permanency, and avoid recurrence of foster 
care. This may be due to the fact that innovative programs are 
often limited in scope, given the minimal resources available 
for such services.
    The second question is, can child welfare workers correctly 
identify those children and families that can benefit from 
prevention services? Research on the effectiveness of existing 
risk assessment tools and instruments is also limited and 
mixed. Moreover, research to date has focused on the ability to 
assess risk if no intervention is offered rather than a 
specific intervention that might be implemented.
    The lack of documented success of existing prevention 
programs or risk assessment does not negate the need for 
flexible funding. Indeed, if the child welfare is ever going to 
move forward and determine what types of interventions work, 
agencies need the flexibility to fund and test different 
program models. The proposed legislation does include funding 
for research that should help ensure that we document the 
lessons learned from these demonstrations.
    Does flexible funding diminish the need for additional 
funds? No. There is abundant evidence that the existing 
capacity of child welfare agencies is insufficient to meet the 
demands placed on them. For example, caseload sizes in almost 
all child welfare agencies exceed professional standards, in 
many agencies by 100 percent or more. In recent case studies 
done by the Urban Institute, many child welfare officials noted 
that insufficient capacity has led their agencies to turn away 
families they would have served in the past.
    Without additional funds, many States may be unwilling to 
take the financial risks associated with attempting to reduce 
foster care. Consider the fact that many States are currently 
using significant amounts of flexible funds, such as Title 
4(b), social services block grant, and TANF to cover foster 
care expenses in addition to prevention.
    H.R. 5292 would go a long way toward addressing the 
problems caused by inflexibility of the existing Federal child 
welfare financing structure. However, while the bill addresses 
some of the current problems in existing financial incentives, 
it may provide States with some new and different undesired 
financial incentives, and I want to mention a couple.
    The bill provides an incentive for States to reduce their 
foster care caseloads but not necessarily by investing more in 
prevention services. For example, if a State receives a block 
grant for foster care but an open-ended entitlement for 
adoption, the State might have the financial incentive to make 
adoptive placements before making reasonable efforts to reunify 
children.
    Similarly, the bill could negatively affect kinship foster 
parents as many States will have a financial incentive to get 
them off their foster care caseloads, reimbursing them instead 
with TANF rather than foster care, as foster care payments are 
much higher.
    In addition, States may simply have an incentive to apply 
for the demonstrations so that they do not have to be burdened 
by applying the income requirements required under 4(e) 
eligibility determination. As Mr. Waldman mentioned, the bill 
could go further by eliminating the income determination for 
all States rather than just permitting this for the five States 
that are selected for demonstration. Thank you.
    [The prepared statement follows:]

Statement of Robert Geen, Senior Research Associate, Urban Institute

    Madam Chair, members of the Subcommittee, thank you for 
this opportunity to discuss with you some of the issues raised 
by the ``Flexible Funding for Child Protection Act of 2000.''
    I am Robert Geen, a senior research associate at the Urban 
Institute, where my research focuses on child welfare issues. 
Based on our past four years of research on child welfare 
financing, I would like to make three points about the need for 
greater funding flexibility and the content of the bill that is 
before this Subcommittee.
     First: The existing Federal financing structure 
for child welfare services stifles innovation. Greater funding 
flexibility will allow States to experiment with new service 
delivery approaches that are more in line with the child 
welfare goals of improved child well-being, child safety, and 
timely permanency.
     Second: Providing States with greater funding 
flexibility does not diminish the need for additional funding 
for child welfare services.
     Third: While addressing current problems in 
existing financial incentives, the proposed flexible funding 
legislation may create new unintended and undesired financial 
incentives for States.

What limitations of the existing financing structure can 
flexible funding address?

    Federal child welfare funds are disproportionately 
allocated for foster care. Relatively little Federal funds are 
available for preventive services including services to prevent 
child abuse and neglect, services to prevent foster care 
placement, and services to prevent recurrence of abuse and 
neglect. But the imbalance is even greater than the differences 
between title IV-E (which supports foster care) and title IV-B 
funding (which supports prevention). Based on the results of a 
recent Urban Institute survey, in State Fiscal Year (SFY) 1998, 
States expended approximately $707 million in Federal funds for 
preventive services compared to $4.5 billion on foster care. 
Moreover, States spent $3.8 billion of their own money on 
foster care but only $609 million on preventive services.
    With a cap on Federal funds for prevention and an open 
ended entitlement on placement expenses, many researchers and 
advocates have noted that States have little financial 
incentive to reinforce the child welfare goals of keeping 
families together and ensuring timely permanency of children 
removed from their homes. In practice, however, I have seen no 
evidence to suggest that worker decisions on whether to place a 
child in foster care or whether to reunify a family are 
influenced by whether the child in question is IV-E eligible.
    Rather, research suggests that the more fundamental problem 
is that given the limited Federal funding for prevention, many 
child welfare agencies have developed few alternatives to 
foster care. States appear to be reluctant to put forth their 
own funds on the hope that they will reduce foster care 
placements and costs in the long-run, since States do not get 
to retain the Federal foster care dollars that are saved. In 
other words, the current financing structure reinforces the 
status quo and limits innovation. For example, assume that a 
State estimates that it will cost $10,000 for it to maintain a 
child in foster care, but that the State could prevent the 
placement if it spent $8,000 on intensive services. If the 
child is IV-E eligible and the State's Federal matching rate is 
50 percent, than the cost of the foster care placement to the 
State would be $5,000. Thus, to prevent the foster care 
placement, the State would need to invest an additional $3,000.

Will flexible funding lead to better outcomes for children and 
families?

    We do not know if flexible funding will lead to better 
outcomes for children and families. The ability of flexible 
funding to lead to better outcomes for children and families is 
predicated on the answers to two questions:
    1. Are there children in foster care who do not need to be, 
i.e., are their children that could have avoided placement or 
that could return home if additional services were available, 
or could additional services prevent recurrence of foster care 
placement?
    Certainly child welfare officials and advocates think so, 
and it is true that many child welfare agencies have minimal 
placement prevention, reunification, and aftercare services. 
There is also testimonial evidence from workers that they 
currently place children in foster care who they would not 
have, had services been available to safely maintain them in 
their own homes. However, there is limited and mixed research 
evidence on the success of interventions to prevent placement, 
speed up permanency, and avoid recurrence.\1\ This may be due 
to the fact that innovative programs are often limited in scope 
given the minimal resources available for such services.
---------------------------------------------------------------------------
    \1\ See, for example, ``Gomby, D., Culross, P., and Behrman, R. 
``Home Visiting: Recent Program Evaluations--Analysis and 
Recommendations,'' The Future of Children, Sping/summer (1999); 
Schuerman, J., Rzepnicki, T. & Littell, J. Putting families first: An 
experiment in family preservation. New York: Aldine de Gruyter (1994); 
Rossi, P. ``Reviewing progress in assessing the impact of family 
preservation services.'' Children and Youth Services Review, 16, 453-
457 (1994); Littell, J. and Schuerman, J. A Synthesis of Research on 
Family Preservation and Family Reunification Programs. Office of the 
Assistant Secretary for Planning and Evaluation Department of Health 
and Human Services. (1995).
---------------------------------------------------------------------------
    2. Can child welfare workers correctly identify those 
children and families that can benefit from placement 
prevention, reunification, and/or aftercare services?
    Research on the effectiveness of existing risk assessment 
tools and instruments is also limited and mixed.\2\ Moreover, 
research to date has focused on our ability to assess risk to a 
child if no intervention is offered rather than assessing risk 
given a specific intervention.
---------------------------------------------------------------------------
    \2\ See, for example, Wald, Michael S. and Woolverton, Maria. 
``Risk Assessment: The Emperor's New Cloths?'' Child Welfare 69; 483-
511 (1990).
---------------------------------------------------------------------------
    The lack of documented success of existing prevention 
programs or risk assessment does not negate the need for 
flexible funding. Indeed, if the child welfare community is 
ever going to determine the types of interventions that work, 
agencies need the flexibility to fund and test different 
program models. The proposed legislation does include funding 
for research that should help ensure that we document lessons 
learned from the demonstrations.

Does flexible funding diminish the need for additional funds?

    Flexible funding does not diminish the need for additional 
funds. There is abundant evidence that the existing capacity of 
child welfare agencies is insufficient to meet the demands 
placed on them. For example, caseload sizes in almost all child 
welfare agencies exceed professional standards, in many 
agencies by 100 percent of more.\3\ In recent case studies of 
State child welfare agencies conducted by the Urban Institute, 
many administrators reported that insufficient capacity has led 
their agencies to turn away families they would have served in 
the past.
---------------------------------------------------------------------------
    \3\ Petit, M. and Curtis, P. Child Abuse and Neglect: A Look at the 
States. Child Welfare League of America, CWLA Press: Washington, DC 
(1997).
---------------------------------------------------------------------------
    Without additional funds, many States will be unwilling to 
take the financial risks associated with attempting to reduce 
foster care caseloads. Consider the fact that many States are 
currently using significant amount of flexible funds such as 
title IV-B, Social Services Block Grant (SSBG), and Temporary 
Assistance for Needy Families (TANF) to cover foster care 
expenses. In SFY 1998, States expended approximately $87 
million of IV-B funds, $356 million from SSBG, and $124 million 
from TANF for foster care, and $161 million, $298 million, and 
$59 million on prevention respectively.
    HR 5292 would go a long way toward addressing the problems 
caused by the inflexibility of the existing Federal child 
welfare financing structure. However, while the bill addresses 
some of the current problems in existing financial incentives, 
it may provide States with some new and different undesired 
financial incentives.
     The bill provides an incentive for States to 
reduce their foster care caseloads, but not necessarily by 
investing more in preventive services. For example, if a State 
receives a block grant for foster care funds but retains the 
open-ended entitlement for adoption assistance, the State may 
have a financial incentive to make adoptive placements before 
making reasonable efforts to reunify children with their 
families. Similarly, the bill could negatively affect kinship 
foster parents, as States may have a financial incentive to 
move them off their caseloads and support them with TANF rather 
than foster care payments which are considerably higher.
     In addition, States may have an incentive to apply 
for a demonstration, not to use funds more flexibly, but simply 
to be relieved of the burden of applying income requirements in 
determining IV-E eligibility. The bill could eliminate the 
income determination for all States rather than just permitting 
this for the 5 States that are selected for demonstrations.
    Thank you again for this opportunity to testify and I am 
happy to answer any questions you may have.
    The views expressed are those of the author and do not 
necessarily reflect those of the Urban Institute, its trustees, 
or its sponsors.
      

                                


    Chairman Johnson. Thank you very much, Mr. Geen. Ms. 
Kearney?

   STATEMENT OF HON. KATHLEEN A. KEARNEY, SECRETARY, FLORIDA 
              DEPARTMENT OF CHILDREN AND FAMILIES

    Ms. Kearney. Good morning. It is so nice to see all of you 
again. I am Judge Kathleen Kearney, the Secretary of the 
Florida Department of Children and Families. I would like today 
to urge you to pass at least the waiver portion of H.R. 5292. I 
feel that it is critical. I would like to today address my 
remarks predominately to the waiver aspect of the legislation 
that you have pending and I will tell you why I think it is 
absolutely critical. I do not think kids can wait at this time 
any further.
    What I would like to do is basically point you to the 
legislation and in my written testimony you will see this 
written on page five, the issues pertaining predominately to 
the waiver. What this legislation will do at the front lines is 
critical. First, it will replace the current tightly controlled 
experimental design requirements with less rigid evaluation 
methods that nonetheless will still hold States accountable, 
which is critical. Obviously, I think it is very important that 
we manage by data, but right now, under the current waivers, 
what goes with that is such a strong administrative burden that 
many States are contemplating whether or not the waivers are 
even worth it. So I think it is important that this legislation 
advance that cause.
    Additionally, this legislation is designed to streamline 
the application process for the waivers. Florida first applied 
for a waiver in April of 1998. We did not hear from the 
administration until July of 1999, and by then, the 
implementation of ASFA in Florida had taken place and it 
required a complete change to the waiver. We had to go back to 
ground zero. Under this current legislation, it envisions that 
that would not take place, that you could resubmit immediately 
and you would not lose any time. We are still to this day now 
waiting for approval to implement the amended waiver. It has 
now been two-and-a-half years and our waiver has not yet been 
put on the streets.
    This legislation also will allow States to broaden the size 
and the scope of their waivers. It will extend the waivers 
beyond 2002, particularly for those programs that are 
successful. To terminate them right now would not be 
appropriate. It also will eliminate restrictions on replicating 
all features of waivers that are found in other States and 
eliminate the number requirement, which I believe Mr. Waldman 
also spoke about. This is absolutely critical.
    Right now in the State of Florida, we have a Clark 
Foundation grant in Jacksonville that deals with prevention. If 
I was able to successfully get another waiver, I could expand 
that program and I believe it would be highly successful. I 
would also seek a waiver in order to replicate what the State 
of Illinois is currently doing with their guardianship waiver. 
That is so needed at this moment, this very moment, in Miami, 
where so many children are placed with relatives and we 
desperately need that flexibility.
    Also, I believe that if you allow the expansion at this 
time of the waiver portion, it will lead to a gateway for 
further flexibility. I understand the concerns that have been 
expressed here today. You will see in my written testimony some 
concerns about the maintenance of effort requirement. While I 
believe that States do need to put in their fair share, there 
are concerns about the fact that States will bear the cost of 
that inflation. So I think that is a critical issue that you 
should look at.
    But I would strongly urge this subcommittee to look at 
passing this year the waiver requirement. Kids cannot wait. I 
say that very mindful that one of my colleagues on the court in 
Gainesville has asked me to personally review a case of a child 
who has been in foster care and is about ready to age out at 
18. She has been in foster care for five years. She has been in 
some incredibly therapeutic placements that did her no good. 
She has been in regular foster care. And right now, the court 
is very concerned that she will have no place to go on her 18th 
birthday but the adult mental health system and we have done 
her no service.
    As I speak here today, my district administrator in Palm 
Beach County is in front of a grand jury investigating two 
deaths in Palm Beach County, two deaths that, frankly, could 
have been prevented had monies been put in the front end of the 
system to prevent child abuse and, frankly, to have that child 
be maintained safely in an intact family, and also address the 
mental health and substance abuse issues of that family. That 
did not occur and these children are dead.
    So I encourage you strongly to please look at the waiver 
requirement this year. Kids cannot wait. Thank you.
    [The prepared statement follows:]

Statement of Hon. Kathleen A. Kearney, Secretary, Florida Department of 
Children and Families

    Good morning Madam Chair and members of the Human Resources 
Subcommittee. My name is Judge Kathleen A. Kearney and I am the 
Secretary of the Florida Department of Children and Families. 
Thank you for inviting me to once again address the 
Subcommittee on an issue of utmost importance -protecting our 
Nation's children from abuse and neglect. I want to applaud 
you, Madam Chairman, for your leadership and steadfast 
commitment to developing legislation that will benefit the 
children and families served by the child welfare system. Since 
I have only recently seen the final version of H.R. 5292 and I 
have not completed a thorough review and analysis, I will speak 
only in the broadest terms with respect to the legislation.
    After seeing the child welfare system both as a judge and 
as Secretary in Florida, I have reached several conclusions. 
First, the current system of child welfare financing is broken 
and does not support the outcomes for children and families 
that are embodied in Federal and State statute nor does it 
model social work ``best practices.'' Second, States need 
greater flexibility over available resources to make needed 
improvements. Third, the magnitude of the crisis we face 
everyday, requires a bold solution with a broad base of 
support. And, finally, the Title IV-E waiver program could be 
modified to provide much needed relief to States while 
maintaining an essential entitlement. I realize modifying 
demonstration waivers will not end the discussion about the 
need for greater reform but it is a step that will support 
States in significant ways.
    Under Florida's legislative mandate to transition to 
community-based care by January 1, 2003, the Department of 
Children and Families is committed to working in partnership 
with local communities to ensure safety, well-being and self-
sufficiency for the people we serve. We share a common vision 
for our child protection system:
     The safety of children at all times will be a 
foremost concern, and permanency resolution in accordance with 
a child's sense of time will be the system's standard;
     Services will be provided by comprehensive, 
community-based networks of providers who are equipped to 
manage and deliver all needed services to meet the needs of 
child abuse and neglect victims and at-risk children and their 
families;
     Resources will be efficiently and effectively 
managed to achieve better outcomes for children, with the 
ultimate goal being child safety and permanency within a 
twelve-month timeframe;
     Services will be coordinated across systems to 
maximize limited resources and ensure a single, unified case 
plan, managed by a primary case manager;
     Financial support will be available from diverse 
Federal, State, and local sources, flexibly managed at the 
local level, to meet child and family needs;
     There will be financial incentives to stimulate 
continuous improvement in child safety and permanency outcomes; 
and
     The system will be able to collect and use data to 
accurately forecast what services and supports are needed, at 
what level of intensity and duration, and at what cost, to 
achieve desired outcomes for each child and family in need.
    My State is taking steps to realize this vision. Just over 
a year ago, Florida was granted a Title IV-E waiver, which we 
have not yet begun to implement. I sought the waiver because I 
believed it would help the State reduce the number of children 
in foster care and the length of stay, reduce the use of 
restrictive and costly placement settings, and reduce re-abuse 
and re-entry into foster care, while stimulating much needed 
innovative preventive and aftercare service options. These are 
all goals that I know you support.
    The waiver will help my State achieve these goals in part, 
by allowing greater flexibility and financial incentives that 
are better aligned with program goals. Instead of spending a 
disproportionate share of Federal resources to fund the deepest 
and least desirable part of the system--out of home care--the 
State and local community-based agencies will use their 
resources differently to test innovative ways to both protect 
children and preserve families.
    I still believe the Title IV-E waiver can greatly help 
Florida transition to a more effective community-based care 
system and achieve the vision. However, there are obstacles 
that need to be addressed. To ensure that improvement and 
innovation are sustained and expanded under the waiver in 
Florida and in other States, we must remove barriers to optimal 
performance. Many of the problems with the existing waiver 
program are being addressed in H.R. 5292.
    The child welfare waivers proposed in this bill present 
several opportunities that would help States make needed 
improvements in their child protection systems. I strongly 
support the Title IV-E waiver modifications proposed in the 
legislation that will:
    1. Replace the tightly controlled experimental design 
requirements with less rigid evaluation methods that will 
nonetheless hold States accountable.
    2. Streamline the application process and allow States to 
modify and expand waivers during the demonstration.
    3. Allow States to broaden the size and scope of their 
waivers.
    4. Expand the program application period beyond 2002.
    5. Eliminate restrictions on replicating all features of 
waivers found in other States; and eliminate limits on how many 
waivers a State may have.
    6. Allow the waivers to be a gateway to continuing 
flexibility.
    Once a State has demonstrated improved outcomes and a cost-
effective, cost neutral model, the State should not be required 
to return to business as usual after the waiver demonstration 
period ends. Instead the State should be allowed to retain the 
flexibility and expand the program. Given the significant 
diversity of our State, we would take advantage of implementing 
different initiatives depending on the unique assets of the 
communities involved.
    Florida currently has a multiyear grant from the Edna 
McConnell Clark Foundation that involves numerous community-
based strategies to better serve children and families. This 
initiative, currently well developed in Jacksonville, is 
designed to keep children from ever being abused the first 
time. Jacksonville would benefit from a demonstration waiver 
that would provide greater incentives for reinvesting savings 
in prevention efforts.
    In other areas of Florida, most notably in Miami, there are 
many children in out of home care that are placed with 
relatives. In these areas, a guardianship waiver would 
significantly enhance the permanency options for these 
children. A stable, permanent relationship in these foster care 
cases cannot be established with current the Federal funding 
requirements. The relative guardianship waiver, which has been 
highly successful in Illinois, cannot be replicated in Florida 
under the current Federal regulations. The amendments set forth 
in H.R. 5292 would allow Florida and other States to apply for 
and replicate the Illinois waiver.
    Streamlining the current process for obtaining a waiver is 
critical. A waiver application and implementation under the 
current system is a challenging and lengthy undertaking for a 
State. The process at the Federal level for approving proposals 
and subsequent implementation plans must be streamlined. For 
example, Florida first applied for a waiver in April of 1998, 
and by July 1999 had not received notification of either an 
acceptance or rejection from the US Department of Health and 
Human Services. By that time, the passage of the Federal 
Adoption and Safe Families Act and subsequent major State 
legislative changes creating a community-based care system of 
child protection, resulted in the need to withdraw and rewrite 
the pending application. Had multiple waiver options been 
available, Florida could have simply requested another waiver. 
Under current rules Florida had to decide which waiver was the 
most critical to the State, so the first waiver was withdrawn 
and a second waiver written. Even now, with this new waiver 
written and approved by the Department of Health and Human 
Services on September 29, 1999, Florida still does not have 
approval on an implementation plan submitted in May 2000. It 
has been over two and one-half years since our original 
submission and we have not been able to implement necessary 
changes.
    In addition to these modifications, which would greatly 
enhance the waiver potential in Florida, I urge you to expand 
your efforts to help reduce the cumbersome and difficult to 
manage rules and regulations. States and providers operating 
under Title IV-E waivers still must contend with Federal 
eligibility rules and reporting requirements that are 
redundant, costly, and difficult to manage. The problem becomes 
even more acute when States try to ``blend'' or pool funds 
across multiple funding streams. The magnitude of paperwork 
required for eligibility and encounter reporting--in the 
absence of sophisticated technology-limits access to needed 
services. The result is higher administrative costs and fewer 
resources available to invest in service improvements or 
expansion. In my State, I am told it will be even more 
cumbersome to administer the Title IV-E waiver than it is to 
manage without the waiver. Surely, this was not the intent.
    Finally, I believe the Title IV-E modifications should also 
address some of the problems you address in the Flexible 
Funding Demonstration section of the bill. I realize that the 
current bill addresses some of the recommendations related to 
transferability and de-linking in the flexible funding 
demonstration. However, instead of limiting this option to the 
five States that elect to participate in the flexible funding 
demonstrations, it would be helpful if these issues could also 
be addressed under the modification of Title IV-E waiver. All 
States need relief from the inordinate amounts of time and 
money required just to determine eligibility for Federal 
reimbursement. And, all States should be rewarded and not 
penalized when their efforts result in improved outcomes for 
children and families. All States should have the opportunity 
to re-invest savings from Title IV-E into their Title IV-B 
programs when their innovations result in reductions in foster 
care.
    The section of the proposed legislation related to 
consolidation of grants includes a maintenance of effort 
requirement. While it is reasonable for Congress to expect 
States to maintain support for child welfare programs, the 
proposal, as currently written, is going to make it very 
difficult for States to support the bill for two reasons.
    First, the bill requires States to be responsible for 
maintaining historic levels of State, Federal and local funding 
in child welfare services. Secondly, the proposed bill 
increases the requirement by an adjustment for inflation that 
occurs after 1998. This means that if a Federal funding source 
fails to keep pace with inflation, the State would be 
responsible for making up the difference. Similarly, if a local 
funding source either reduces funding or fails to keep pace 
with inflation, the State would be responsible for the gap. 
States will be very reluctant to accept responsibility for 
factors that are beyond their control. While there is an 
adjustment for reductions in Federal funding, these adjustments 
are not adjusted for inflation. The current proposal would make 
the State responsible for the impact of inflation on Federal 
funds, even if the Federal funding source was reduced.
    It would be extremely unfortunate for States to decide not 
to pursue the flexibility offered by the proposed legislation 
due to the unacceptable risk posed by the maintenance of effort 
requirement. I would urge you to revise the requirement to 
remove Federal and local funds from the calculation and to 
remove the inflation adjustment from consideration.
    In the section of the proposed bill related to transfer of 
funds, the maintenance of effort provision does not appear to 
have some of the features that are mentioned above. It would be 
a positive move to avoid placing States in a position where 
they would fail to take advantage of opportunities to improve 
service delivery through more flexible use of funds because of 
maintenance of effort provisions that impose unacceptable 
financial risks.
    In closing, I support the Title IV-E demonstration waiver 
modifications and believe the waiver model offers the best 
opportunity for Congress and the States to test and prove the 
best ways to fund the child protection system. I believe that 
success will be even more likely when Federal funding supports 
and encourages the development of a child welfare system based 
on community specific, State specific child and family needs. 
Thank you for your continued efforts to protect our country's 
most precious resource--our children.
      

                                


    Chairman Johnson. Before we go on to questions, I would 
like to put two comments squarely in the record. First of all, 
I do not believe there is anyone on this committee that does 
not believe we do not need more money for these kids, period. 
That is not the issue here.
    Secondly, Ms. Daly, I was elected in 1982. In 1983, I went 
to every child care facility in my State, every community 
mental health center in my State, and all of them said 80 
percent of the families have substance abuse problems. We have 
known that. Nobody has done anything about that, so I cannot 
let that stand in the way. Do not tell me to tighten up the 
existing system to take care of that. Nobody will do it. I 
cannot get it to happen.
    I was here when we did welfare reform the first time. It 
failed because we did not give them day care money. The new 
reform succeeded because we gave them flexible money and they 
could use it on day care if they needed it.
    So I really was disheartened by your testimony. You know, 
what Connecticut is doing using flexibility is really--if your 
people at Catholic Family Charities in Connecticut do not know 
it, they should. Those safe homes where they take four or five 
kids who are in a household at risk and put them in a safe home 
instead of breaking them all up and placing them here and 
there. So for a month or two or maybe even three, they can 
treat the whole family and see, can they reunify this family? 
Can they find a foster care for all the family? Can they do 
kinship? It is not covered by our system. Those are not 
placement dollars.
    Talk to the people at Yale. Do your people not talk to the 
people at Yale who have done a phenomenal job of reducing the 
length of stay in the psychiatric ward in the Children's 
Hospital of Yale from six months--imagine the reunification 
problems after six months of separation with that severely ill 
a child--to two months by supporting the whole family and the 
child and working through this.
    I just want you to know, I am absolutely not interested and 
will not be a part of just pouring money into the current 
system because the current system does not work and we cannot 
reach all those people beyond the 28 percent that Wendell 
pointed to.
    Now, one other thing I want to put on the record. This 
maintenance of effort issue has begun to take a very different 
nature in my mind and that results from my work on TANF. My 
State was criticized for substitution. When you got into the 
issue, what they were doing was trying to eliminate the 
difference between women with exactly the same family and 
income circumstances, the only difference being whether they 
had been on welfare or had not been on welfare. The ones that 
had not been on welfare had simply struggled and struggled on 
their own or sometimes with better family supports.
    But maintenance of effort does tie in old lines, and if we 
want an integrated system of services to support all struggling 
families, all poor single parents gaining their independence, 
we cannot stay with this old fashioned, unenlightened policy of 
maintenance of effort down old lines, and this is going to be 
for me a major issue in welfare reform because my State was 
right. They moved into a system that said, if you are in the 
same circumstances, honey, just because you did not go on 
welfare, we are still going to give you the same help.
    That is what we are trying to do in fatherhood. We are 
trying to branch out beyond mothers on welfare to the fathers 
of the children on welfare, and then we are going to have to 
branch out to the fathers of poor children not on welfare. And 
in foster care, we have got to reach the families that are 
having trouble but have not reached the Federal definition of 
at risk.
    So I am not building a system to improve what we are doing 
now because it is not adequate. I am trying to build a system 
that looks more holistically and far earlier and looks at how 
can we prevent families from ever getting to the point that 
they are getting to now. If we do not look bigger and broader, 
we cannot do that. If we focus now on MOEs for this narrow 
thing, that is just lunacy.
    So we have got to look bigger and maybe the best thing to 
do is to move ahead. I will be very interested and I hope the 
members of my subcommittee, including Ben, will comment on 
whether or not there would be bipartisan support for just 
moving ahead with the waiver part of this bill because I 
absolutely agree with Judge Kearney. These children cannot 
wait, and we are ``helping'' much too narrow a spectrum of the 
kids who need help. If we wait to treat substance abuse until 
the kids are beaten, what kind of society is that?
    I am disheartened by your rather backward-looking approach, 
in my estimation, to change and want to look far bigger than 
that. I appreciate some of the comments that have been made 
here about looking bigger than that. I would also urge people 
with Wendell's experience to really look beyond maintenance of 
effort. It is such a limited concept and it will build us the 
wrong system.
    Ms. Daly. Mrs. Johnson, may I respond?
    Chairman Johnson. You certainly may.
    Ms. Daly. Your interest in these issues is very well known 
in Connecticut as well as in the subcommittee. What I am 
arguing is not that we should not invest at the beginning of 
the system. Of course we should. Of course we need more 
prevention. What I am afraid of is that the children who are 
already abused and neglected, who are already taken out of 
their parents' care or in foster care will get worse and worse 
care and some children who ought to be--
    Chairman Johnson. What do you base that assumption on?
    Ms. Daly. Because the States will be taking some of their 
money that would otherwise go into foster care maintenance, 
which I believe is underfunded now, and will transfer that 
money into prevention. That is a Sophie's choice. We should be 
doing both.
    Chairman Johnson. I do not see that.
    Ms. Daly. We should be reforming both systems. You are 
assuming that there cannot be any additional Federal money 
under this program going into these systems.
    Chairman Johnson. I am not assuming that. I made that point 
earlier. I am not assuming that. I am separating the issues.
    Ms. Daly. But you are trying to transfer foster care 
maintenance money over into prevention by allowing States to do 
that, which means inevitably they will be spending less money 
on the children who need foster care.
    Chairman Johnson. No, no. It only means that if they have 
less children going into foster care, they will have more money 
for earlier treatment. It does not mean that once the kid is in 
foster care you will reduce the payment. I do not want to 
belabor this, but I will forego my questions since I have taken 
the time to make comments.
    Ben?
    Mr. Cardin. Thank you, Madam Chair. Here is the dilemma. We 
all agree the States should have more flexibility. We all agree 
there is a need for more resources to be put into the program 
and there needs to be accountability. We also are not putting 
enough money into prevention and certainly not enough money 
into substance abuse for families at risk.
    The problem is, and this is the point that Ms. Daly made 
that I happen to agree with, is that if you look at the history 
of Title XX, which was a block grant to the States that gives 
them flexible monies that they can use for these purposes, they 
actually use the money for preventive services. Now, what has 
happened? In 1996, it was $2.8 billion. Today, it is $1.7 
billion.
    The problem that I see historically, if you look at 
Congress over its history, flexibility has usually been 
followed with reduced funding, not more funding, because there 
is not the specific responsibility of the Federal Government to 
ensure certain outcomes. I am very concerned about that fact--
and I know Mrs. Johnson absolutely supports more funds in this 
area. We joined together on the Title XX issue. I understand 
that.
    The problem is that the people who make decisions on the 
dollar amounts are not always the same people who have 
responsibility for creating the authorization bills. We then 
get into a budget debate late in the session, quite frankly, 
children's issues do not fare as well as some of the other 
issues late in the session. Unless there is a specific 
obligation at the Federal level, historically, we have found 
under both Democratic and Republican administrations and 
Congresses, the funds have been diminished, and that is what, I 
guess, concerned me as we go down this path as to how we get 
more money into these programs that everyone acknowledges is 
needed--and more flexibility into the program. How do we do 
both and maintain the Federal Government's standards for 
accountability to the States to achieve not just caring for 
children who already have been damaged but to prevent more 
children from being put at risk.
    I think, Mrs. Johnson, that we could work out an agreement 
on the waiver issue. The waiver issue, I happen to agree with 
the provisions in the bill and it is possible that we could try 
to come to grips with that section and move that forward.
    Let me just caution, as you know, we are in the last ten 
days of this session--actually, the last two days, but I think 
it is going to be the last ten days of the session because we 
are doing another CR until next weekend--and although we can 
clear our calendar here, the Senate has a difficulty clearing 
its calendar even for naming a post office today, so it is 
going to be tough to figure out how we are going to get bills 
through the other body.
    And then lastly, let me point out, Mrs. Johnson's 
legislation, as I understand it, has been scored by CBO as 
additional outlays. The reason, as I understand it, CBO assumes 
that because of the baseline calculations, States will pick 
what is most advantageous to them and, therefore, will come out 
somewhat ahead as a result of the additional flexibility.
    My point is very simple. If we have the additional 
resources--I think it is close to half-a-billion dollars as it 
has been scored--let us put that into the system. Maybe we 
could work out before the end of this session the flexibility 
on the waivers to the States and some additional resources into 
the program. We accomplish the goal that Mrs. Johnson has put 
forward rather persuasively, that the States need additional 
flexibility and they also need additional funds but that the 
current system needs to be changed. Well, the best way to 
change it is to let the States go forward with demonstration 
under their waiver. They do not need a new demonstration 
authority. They can use the waiver authority to come forward 
with new programs in this area.
    I guess my question to the panel, and in the time that 
remains I will be glad to let any of you respond to it, is how 
do we get more money into the system? How do we do this, with 
the concerns that Mrs. Johnson has raised, with the needs that 
you know are out there? Yes, we need the money in the children 
who are already placed in foster care, but we also want to put 
more money into prevention and I really want to get some more 
money into substance abuse. How do we go about doing it? What 
are your strategies? How do we maintain Federal accountability 
with flexibility to the States, in 30 seconds?
    [Laughter.]
    Mr. Cardin. Yes?
    Mr. Waldman. Congressman, I do not know if I can do it in 
30 seconds, but I do want to different a key point you made, 
just with some observations about how funding cuts follow 
flexibility.
    I think there are some other elements at play. I think in 
the SSBG, which I commend both of you for supporting, there 
were not defined outcomes. We have defined outcomes now that I 
think we could rally around. If we could couple the flexibility 
with improvements in safety and permanency outcomes, I think 
that will make a difference. And I agree with you. Without 
those, the program gets very vulnerable, what happened to 
revenue sharing, SSBG, and others. But I think those outcomes 
make a world of difference.
    Thirty-five years of practical experience in government. 
This area does need more resources. That only comes two ways. I 
think what will get the additional resources is to spend the 
money better than we are doing now and get the outcomes that we 
need that will generate the confidence in the public child 
welfare system for legislators, governors, and others, and 
Congressmen, to make additional appropriations.
    Mr. Primus. Let me just comment briefly. I think the other 
dilemma is that when you have an open-ended stream of funding 
for services, there really is almost no limit in terms of what 
States might legitimately spend on services. So the question 
is, how do you minimize the risk to the Federal Government of 
overspending when you have an open-ended stream of funding for 
services? I do not think you have the same risk in terms of 
cash payments or maintenance payments, and so I think as part 
of the review, the question is, do you match it? I think a 
considerable State match demands accountability from States 
because then State legislators have to put up the money to get 
that flexible stream of funding. You might consider overall 
capped entitlements, and that does not necessarily mean an 
aggregate cap. It might mean a per child or a time limit on 
when services can be provided.
    I do think you have to worry about the risk of an open-
ended funding stream, and really, the question is how do you 
minimize that risk and still give a lot of flexibility to 
States.
    Mr. Cardin. You set up the issue. You have not told me the 
answer yet, but--
    [Laughter.]
    Mr. Cardin. Thank you.
    Mr. Primus. I would come down in favor of the State match. 
I think that really does demand a lot of accountability because 
then State legislators have to appropriate funding and I think 
there is more accountability in that kind of a system than we 
sometimes assume.
    Chairman Johnson. I just would say that I have written the 
governors to use their TANF money to focus on substance abuse 
and mental health issues, because I think as we move forward 
with welfare reform, we are beginning to focus on a population 
where these are very big problems, and as we get those programs 
better established and able to reach people on welfare, there 
is a whole parallel population or side-by-side population.
    Dr. Wulczyn, I know you have to leave for a plane pretty 
soon. Would you like to make any additional comments?
    Dr. Wulczyn. I think the issue on how we approach greater 
flexibility in the context of additional money at the same 
time, Mr. Waldman was exactly right that we have to focus on 
outcomes. If we are not getting outcomes and we need more 
money, then we have to find a way to do that.
    I think it is conceivable that we look at--the big 
difference now compared to where we were 20 years ago or ten 
years ago is the availability of information with respect to 
who is using services, who are the high-risk target 
populations, and that we ought to use that information more 
wisely, not simply for tracking outcomes but for also 
projecting into the future where we ought to make investments. 
It is conceivable to me that we could develop programs of 
national interest that target certain populations of children 
and that resources at the Federal level with matching at the 
State level be targeted to specific groups of children, for 
example, infants.
    The rate of placement in foster care among children under 
the age of three months is extraordinarily high. Undoubtedly, 
it is higher than it is anywhere else in the world. We need 
specific revenues targeting those children. They stay in care 
longer than any other children admitted to foster care. They 
use more resources of different kinds than any other children. 
It would be useful to have a specific program at the national 
level that allowed States to target those most vulnerable 
children, provided that in a given State, that is the group of 
children that are, in fact, most vulnerable, because it is not 
always the case.
    But I think having that kind of structure where States 
would, in effect, apply for targeted revenues where you have 
identified key target populations, target areas for some kind 
of revenue sharing proposal, predicated on outcomes, reducing 
the overall utilization of foster care, increasing the 
availability of preventive services, that would be a productive 
way to go and it would allow you to generate flexibility for 
States both in terms of how they are thinking of things, but 
also, I think, in terms of breaking down the way the current 
funding system does create certain incentives around building a 
foster care system as opposed to building a--
    Chairman Johnson. Is this what you meant in your testimony 
when you said, how you purchase services affects what services 
you are able to develop?
    Dr. Wulczyn. That is right. It is not simply a matter of 
expanding the array of services that influences what is 
available. It is how you allow them to be purchased. It is 
something that we learned in health care over the last 25 years 
and it is something that restricts the range of State 
responses, is that if you purchase things on a fee-for-service 
basis or per diem rates, which is the dominant method for 
purchasing foster care in this country, it is hard to get out 
of that when you are trying to reduce, because the level of 
funding is predicated on your ability to supply a claim.
    It works very well when you are increasing the utilization 
of foster care for reasons of substance abuse and what have 
you, but when you enter into a period where you might logically 
expect the utilization of foster care to go down, then these 
fee-for-service systems are constraining on State efforts and, 
therefore, the means by which you are purchasing stifles 
innovation.
    Chairman Johnson. Thank you very much.
    Does anyone else have any question of Dr. Wulczyn?
    Mr. Camp. I have got some questions for the panel.
    Chairman Johnson. All right. You are next in line to 
question, but thank you, Dr. Wulczyn.
    Congressman Camp?
    Mr. Camp. Thank you, Madam Chairman. Thank you for this 
hearing and thank you for your leadership on these critical 
issues that are important to children.
    I sort of feel like Yogi Berra. It is deja vu all over 
again. I remember the debate on the Adoption and Safe Families 
Act and there were so many people who wanted to hold the bill 
up for more money for kinship or drugs or whatever issues and 
we almost did not get the legislation because of that. Some of 
those same people were the first to step forward and take 
credit for the bill once it passed. But I think if we wait for 
more money, we will miss the good policies that we need now, 
and I know many of you have talked about the critical need in 
this area and it is, I mean, when you are talking about the 
difficulty that children face.
    I do not think any of us would think children would be 
better served if we did not pass the Adoption and Safe Families 
Act and waited to try to get the funding resources in line. We 
have been waiting for the administration to give a report on 
the specifics, policy guidance in those areas where they wanted 
more money, and we got a report but there are no specifics in 
the report, so I think that we have some difficulty here.
    We have worked closely with the administration to try to 
ensure that Health and Human Services has enough money to pay 
for these adoption bonuses, Mr. Waldman, that you mentioned in 
your written testimony, and I do think this committee, we had a 
significant discussion about those adoption bonuses. We 
established those incentives under the Adoption and Safe 
Families Act and I think we have protected those and continue 
to promote those and this committee, I know that Madam Chairman 
agrees and will continue to do that in the future. So I think 
that is something that we all can agree on.
    I am interested in pursuing the waiver portion of this 
legislation as a possibility in the short few days that we have 
left, but I have a specific question for Judge Kearney. Thank 
you for coming again. It is good to see you. As a State 
official, and we do this here too, we have to balance needs and 
it is always a debate. You never get to get everything you want 
and it is trade-offs and difficult.
    There are kind of two important policies here, the need for 
more resources and Federal dollars but also the need for 
greater State flexibility. If you had to kind of choose one of 
those, which I know is a difficult thing to ask you to do, 
could you discuss which you would prefer and other trade-offs 
in the different approaches to promoting children's safety and 
permanency and well-being.
    Ms. Kearney. In coming to this job from the bench, I did 
not realize that in many ways it would be like the television 
show ``Survivor'' as to who gets kicked off the island today. 
You are right. It is a constant balancing act between competing 
interests, all of which are important, all of which are 
critical.
    But I can tell you that now having done this job for 20 
months, that to me, what is most critical right now is the 
flexibility. We have had a tremendous growth in resources in 
the child protection system in Florida due to the leadership of 
Governor Jeb Bush, who came in and recognized a significant 
need, urged the legislature to fund, and they have increased 
general revenue into our system.
    But it is absolutely imperative that we have the 
flexibility to put the funds where they are most needed, and 
right now, in an analysis of the Florida child protection 
system, it is the front end of the system that is most 
critically in need. We have 14,000 children in foster care in 
Florida. Our definition of foster care is the State-run 
traditional foster care system, not the relative placements. 
Although they are under the jurisdiction of the court in 
protective supervision status, they are not foster care.
    But when I see how much money, the portion of the pie that 
is going into the 4(e) funding, that if I had the ability to 
transfer even five percent of that into a front-end portion of 
the system, I know I could prevent the children coming into the 
system to be able to have them in safe environments, to ensure 
that ASFA is intact, and the goals of ASFA are intact.
    But right now, frankly, if asked, would you like another 
$500 million or would you like the flexibility to manage the 
system, I think as a manager, it is key right now that we have 
the flexibility, and that is why I felt it was imperative that 
I come here today to specifically address what I think is 
realistic for you at this moment in the political lifespan, is 
to address at least the waivers to give us that flexibility.
    Mr. Camp. Thank you. Thank you very much.
    Chairman Johnson. Thank you. Mr. McCrery?
    Mr. McCrery. This debate reminds me somewhat of the welfare 
reform debate, when those of us who trusted the States to use 
their money wisely and where they thought it could best be used 
were criticized by people saying, oh, the States will not do 
that. There must be Federal standards and guidelines and 
strings attached to the money or the States will just fritter 
it away and throw people in the streets. Obviously, that has 
not happened and the flexibility that we gave States in TANF 
has worked.
    So I am a little reluctant to give in to those of you who 
are cautioning us not to allow States to use money that we send 
them in ways that they best see fit. I mean, what is the 
problem? Why do you suspect that Judge Kearney, when she gets 
that flexibility, will just waste it, fritter it away on 
something--I do not know what you are talking about. Why do you 
think people in the States are less able than we are here in 
Washington to determine the best interests of the children? I 
do not understand. I would like for you to respond. What is the 
problem?
    Ms. Daly. May I respond? I would like for the judge, when 
she goes to her State legislature and for her State office of 
management and budget to be able to say, look, we cannot do 
less than this for these children who we already know are 
abused and neglected and are in the system because the Federal 
Government will not give us money, will not release those funds 
unless we make these investments. I want to strengthen her 
hand, because it is not just the judge who will make the 
decisions. It is all these other people and competing interests 
and there is not a strong lobby at the State level to protect 
those children. They are out of sight, out of mind, and--
    Mr. McCrery. Well, again--
    Ms. Daly. Remember, this is a--
    Mr. McCrery. Let me interrupt for just a second because I 
am not satisfied with that answer.
    Ms. Daly. Okay.
    Mr. McCrery. There will be controls on the money. The 
States will not be able to spend it on highways. They will have 
to spend it on foster care in some form or fashion. So the 
State legislators that you are concerned about, is there a 
stronger lobby for the services aspect of this program?
    Ms. Daly. Well, there is a real strong lobby for the 
highways and we have seen how Medicaid money gets spent on 
highways.
    Mr. McCrery. You cannot use this money on highways, let me 
repeat.
    Ms. Daly. No, I understand, and I am not opposed to 
flexibility--
    Mr. McCrery. Answer my question.
    Ms. Daly. Okay.
    Mr. McCrery. Is there a stronger lobby in the State for the 
services aspect of this program?
    Ms. Daly. Well, I think that would depend on the State. 
What I am afraid of--
    Mr. McCrery. So the answer is no.
    Ms. Daly. No, I do not think that is the question.
    Mr. McCrery. So I still do not have an answer.
    Ms. Daly. The question is, is there a lobby for more money? 
If the State is going to have more flexibility--
    Mr. McCrery. We are not talking about more money. We are 
talking about flexibility.
    Ms. Daly. But I think flexibility without more money in the 
system is just unrealistic.
    Mr. McCrery. I hear what you think, but you have not given 
me a rationale for your thinking. Wendell, maybe you can shed 
some light on it.
    Mr. Primus. Again, I am for State flexibility. I am also 
for additional funding. I would like to give the State of 
Florida additional dollars. What this bill is demanding is that 
to get those additional dollars, she has to cut something out 
of IV-E, and in some ways, it is very much a mechanical issue 
here. Do you really want for the State of Louisiana--we do not 
know whether the projections of how much IV-E is really going 
to cost will come true. Look at the little table I provided in 
my testimony. For some States, caseloads went down and then 
back up. For other States, caseloads were level and then really 
exploded. Again, if you look at the history, projections are 
extremely difficult to make on a State-by-State basis.
    So the real question is, do you really want the amount of 
money that Louisiana gets to depend upon a negotiation over 
something that is basically unknowable between Federal and 
State officials? I think we should give additional money much 
more directly and simply and give the States with that stream 
of funding more flexibility and then the Florida Secretary 
could use that money to try to reduce placements. That is what 
you did in ASFA. I mean, there was some additional funding, and 
as a result, and with some incentives, you are now getting this 
increase in adoptions.
    So what I am basically arguing is that that would be a 
modest step, but I think you should do a more comprehensive 
review of the system. I mean, some kids are not--the other 
thing about the waivers, if State after State requires a waiver 
for the same thing, maybe the Federal provision should be 
changed. My understanding from Bill in the little exchange of 
notes is one of the primary problems is we do not take the 
child out of the home. There is a grandmother, a mother that is 
on drugs or is no longer capable of caring for that child, and 
then the small child. But 4(e) says you cannot get money unless 
the child is removed from the home. Well, that is one of the 
problems and maybe in your review you ought to address that.
    Mr. McCrery. That is something we can look at and that 
would certainly go along with Judge Kearney's testimony.
    Yes, would you like to comment?
    Mr. Waldman. Just briefly, and I think I am agreeing with 
your point of view. I just want to say for the record, I have 
worked for three different governors as secretary of both 
political parties and it did not matter which party. There was 
always a high commitment to this issue and a willingness to 
invest.
    If I had to say what I thought was the constraint in 
getting the additional revenue from governors, legislators of 
both parties, and of Congress through the years, a belief that 
the money might not be well spent, that good money would be 
invested after bad. In my view sequentially, if we hope to get 
more resources in this system, we have got to demonstrate that 
we could spend them well, that there is truly return on 
investment for children.
    Mr. McCrery. Let me just conclude by making two points. 
Number one, I am told that, in fact, we will be spending more 
money if this bill passes, and number two, Wendell, if you are 
concerned that there will be an uptick in the need that will 
not be anticipated by the State and they will have spent their 
money on other things, that might be a good way for you to get 
your additional funding. When it is made clear to us that there 
is a shortfall, then Congress often will step in to correct 
that if the need is proved, so I just leave you with those 
thoughts.
    Chairman Johnson. I think, just for the record, it is true 
that the adoption bill did not have any new money in it. There 
was new money in the family preservation portion but not in the 
adoption portion and the adoption new money was in the bonus. 
It was the timelines and things like that that led to a lot of 
State reform of the process that actually was extremely 
favorable to children. So one of the reasons this bill is 
before you is because there are a lot of process reforms.
    Look at the administrative dollars, and why would you not 
integrate training for foster care along with training for your 
workers? I mean, foster parents are undertrained for the kind 
of children they are working with. But why set up a separate 
foster parent training program? Why not integrate it with your 
casework training and then there will be a separate part that 
has to do with managing a foster child with problems in your 
own home.
    But there is so much that could be integrated that it 
really defeats my imagination as to why you oppose this, 
particularly the administrative mergers when we have seen how 
much administrative reform saved poorly spent dollars but also 
helped children in the adoption reforms. So we have a long road 
to travel on this issue.
    Mr. English?
    Mr. English. Madam Chair, in a second I am going to yield 
the balance of my time to Mr. McCrery so that he can continue 
his line of questioning, but first, I would like to 
congratulate you on putting forward this legislation. I do 
think it is timely. I also congratulate you for moving this 
debate out of a sterile discussion of things like maintenance 
of effort and toward flexibility. The thing that I have gotten 
out of this hearing so far is those who advocate more money 
consider it a prerequisite for passing flexibility and the 
advocates of flexibility consider that a prerequisite before we 
invest more money in the system. I think we do need to do both. 
I do not think it weakens Judge Kearney's hand to give her the 
flexibility now and look at the resources in the future.
    I guess the other point I would make, having worked as a 
staffer at the State legislative level in Pennsylvania, I do 
not think the debates there make them readily confused with the 
STOWA, but I do think that our State legislature is perfectly 
capable of making intelligent decisions about where to allocate 
our budgetary resources in Pennsylvania, and if given the 
flexibility, I do think they will do the right thing, whether 
there is a lobbying effort there for it or not.
    I yield the balance of my time to Mr. McCrery.
    Mr. McCrery. Thank you. I do not really want to ask more 
questions of the panel. I appreciate the testimony. You do 
raise some legitimate points for us to consider, but I have to 
say I lean toward allowing more flexibility in this system.
    What I would like to do, though, Madam Chair, with your 
permission, is to acknowledge the tremendous work of a member 
of our staff who will be leaving us soon. I just learned this 
today and I was shocked and dismayed and felt instantly a great 
sense of loss. Dr. Ron Haskins is going to move on to, we hope, 
greener pastures.
    Mr. Cardin. Is he coming over to the Democratic side? Is 
that what you are talking about?
    [Laughter.]
    Mr. McCrery. He is going to the Brookings Institution. It 
is close.
    [Laughter.]
    Mr. McCrery. Just kidding, if there is anybody here from 
Brookings. It used to be that way, but with the new majority in 
town, they have kind of corrected their shop.
    [Laughter.]
    Mr. McCrery. Dr. Haskins did just unbelievable work on 
welfare reform and I dare say if it had not been for his work, 
we would not have produced a product that--maybe not have 
produced a product that could have passed and been signed by 
the President, and certainly would not have produced a product 
as finely honed and tuned and that has been shown to be so 
successful without his work. He will be missed sorely by this 
member and I am sure by every member who had the very 
tremendous experience of working with him on welfare reform, 
the biggest change in social policy in this country in probably 
50 or 60 years.
    Mr. Cardin. Would the gentleman yield?
    Mr. McCrery. I would be glad to yield.
    Mr. Cardin. I would also like for the record to associate 
myself with your comments. Dr. Haskins has been an extremely 
important part of the work of this committee and I have felt 
extremely comfortable as a Democrat talking with him on any 
issue and knowing that the information that I was receiving was 
going to be the right information. He never, ever misled our 
side of the aisle, always worked very closely with us and with 
our staff people. I just want to thank him for his public 
service. Clearly, children are better off as a result of his 
efforts here in Congress.
    Mr. McCrery. Thank you. I would like to yield to Mr. Camp.
    Mr. Camp. I thank the gentleman for yielding. There is no 
question that welfare reform would not have happened without 
Dr. Haskins' efforts. He has been a source of--first of all, a 
great resource, tremendously intelligent, and a real honest 
broker in this whole process and somebody that we have all 
relied on a great deal. I think when you look at the changes 
that have occurred with our majority in 1995, welfare reform 
may be our biggest accomplishment. He was right in the center 
of that and it is his intelligence and drive that really helped 
make it happen and made it easy for us as members. So I want to 
say, thank you, Ron, for a job well done, and hopefully you 
will still talk to us when you are at Brookings. Thank you.
    [Laughter.]
    Mr. McCrery. Thank you, Madam Chair.
    Chairman Johnson. Thank you. I think that is a good note to 
conclude this hearing on. I did not sort of focus on the fact 
that this would be Ron's last hearing myself until I began to 
open the hearing and realized that this would be the last time 
that we would open a hearing together, Ron.
    I do want to say that, really, without Ron's steadfast 
focus on the structure that underlay the welfare reform bill, 
and without his ability to clearly listen to and understand the 
heart of people's concerns all across the spectrum of both 
political parties, we could not have passed that bill and we 
particularly could not have made it the force in the lives of 
individual people and in our society that it has become, 
because without repealing the entitlement, we would not have 
gotten work on the table, and without getting work on the table 
of people's lives, we could not as a government have gotten 
services out there to support that work toward independence. It 
really was Ron's bigger vision and the courage behind that 
vision that enabled him to draw from all of the various groups 
and members the insight we all jointly needed.
    But a staff director that is able to do that for the 
members and help them keep their eye on the most important of 
all the balls is really not only a gift to the members that he 
works with, but a gift to our nation, and we thank you, Ron, 
for your knowledge, for the depth of experience that you bring 
to the table, for your humanness, and for your honesty. It has 
been a real honor to work with you. Thank you.
    [Applause.]
    Chairman Johnson. The hearing stands adjourned.
    [Whereupon, at 11:37 a.m., the hearing was adjourned.]
    [A submission for the record follows:]

Statement of Nancy Chandler, Executive Director, National Children's 
Alliance

    Mrs. Chairman and Members of the Subcommittee:
    I appreciate this opportunity to provide written testimony 
relative to H.R. 5292, Flexible Funding for Child Protection 
Act of 2000. I applaud the efforts of this Committee in seeking 
ways to enhance the child protection services provided by 
states. National Children's Alliance and our nearly 350 member 
programs offer states an opportunity to respond to the earliest 
outcry of child abuse and neglect in a manner which keeps more 
families intact, and reduces the use of foster care as a 
protective device for children.
    By way of introduction, National Children's Alliance was 
founded in 1988 by then Madison County, Alabama District 
Attorney Robert E. ``Bud'' Cramer, Jr. In response to a crisis 
in services to children suspected of having been severely 
abused and/or neglected, then District Attorney Cramer founded 
the country's first Children's Advocacy Center in Huntsville, 
Alabama in 1985. Mr. Cramer currently serves as a Member of 
Congress representing the 5th District of Alabama.
    Prior to this effort, investigation and intervention into 
serious cases of child maltreatment had been sporadic and 
without a common sense of duty and purpose. By bringing the 
various members of the child protection, law enforcement, 
prosecution, medical and mental health communities together, 
this Huntsville model was instrumental in reforming the systems 
that deal with child abuse cases. After the Huntsville 
Children's Advocacy Center opened, word quickly began to spread 
about this revolutionary way of intervening in cases of child 
abuse and neglect. The Huntsville Center was deluged with 
requests from communities across the country eager to open 
their own children's advocacy center. In response, then 
District Attorney Cramer and representatives of small and 
large, urban and rural area CACs formed National Children's 
Alliance.
    As of September 2000, there are 259 full member programs 98 
Associate member programs, and 31 chapters of National 
Children's Alliance. There are sites in all fifty states, the 
District of Columbia, and the Virgin Islands, as well as 
Canada.
    Children's Advocacy Centers offer a change in the way the 
system handles child abuse cases. Rather than have each 
identified agency act independently in their investigation, 
Child Advocacy Centers bring all of the agencies ``under one 
roof.'' In this model, children suspected of having been abused 
are jointly interviewed by law enforcement as well as child 
protective services so that a determination of the nature and 
incidence of abuse can be made more readily. Law enforcement 
works to see if a crime has been committed, while child 
protective services works on a risk assessment to see if the 
child can return to his or her home or if out of home services 
are necessary. By immediately bringing these key agencies 
together along with the medical, mental health and victim 
advocacy components, plans can quickly be made to keep the 
child safe from further harm.
    By acting in tandem with their multidisciplinary partners, 
each agency is then able to make a plan that is truly in ``the 
best interest of the child.'' Through the early intervention of 
law enforcement and prosecution, the alleged perpetrator can be 
made to leave the home or be removed from the scene so that the 
child can return home. Failing this, efforts are quickly made 
to place the child with other non-offending relatives so that 
the child is not forced into foster care.
    This early, coordinated, multidisciplinary response is the 
heart of a Children's Advocacy Center. So often, children are 
placed into foster care simply because the systems need time to 
complete an investigation and connect with other agencies. In 
the Children's Advocacy Center model, these connections are 
made more immediately and more efficiently.
    By utilizing both private and public funding, Children's 
Advocacy Centers offer a child-friendly model for private-
public partnerships that provide services to our most 
vulnerable children. Over half of NCA's CAC member programs are 
non-profits acting through signed Letters of Agreement and 
Protocols to provide these early coordinated multidisciplinary 
services. These protocols establish the manner in which each 
agency is responsible for investigation and intervention. Cases 
are tracked throughout the system so that no child is lost to 
bureaucratic red tape.
    States should be encouraged to use any flexibility in 
funding to support the development and expansion of the 
Children's Advocacy Center model. Our goal is that every 
community in the country that wishes to have a Children's 
Advocacy Center should be supported to build such a program. 
National Children's Alliance stands ready, willing, and able to 
enhance these efforts through training and technical 
assistance.