[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]




       BUSH ADMINISTRATION FOSTER CARE FLEXIBLE FUNDING PROPOSAL

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 11, 2003

                               __________

                           Serial No. 108-23

                               __________

         Printed for the use of the Committee on Ways and Means



91-276              U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003
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                      COMMITTEE ON WAYS AND MEANS

                   BILL THOMAS, California, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
E. CLAY SHAW, JR., Florida           FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut        ROBERT T. MATSUI, California
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
PHIL ENGLISH, Pennsylvania           LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona               EARL POMEROY, North Dakota
JERRY WELLER, Illinois               MAX SANDLIN, Texas
KENNY C. HULSHOF, Missouri           STEPHANIE TUBBS JONES, Ohio
SCOTT MCINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
ERIC CANTOR, Virginia

                    Allison H. Giles, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                    Subcommittee on Human Resources

                   WALLY HERGER, California, Chairman

NANCY L. JOHNSON, Connecticut        BENJAMIN L. CARDIN, Maryland
SCOTT MCINNIS, Colorado              FORTNEY PETE STARK, California
JIM MCCRERY, Louisiana               SANDER M. LEVIN, Michigan
DAVE CAMP, Michigan                  JIM MCDERMOTT, Washington
PHIL ENGLISH, Pennsylvania           CHARLES B. RANGEL, New York
RON LEWIS, Kentucky
ERIC CANTOR, Virginia

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 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.


                            C O N T E N T S

                               __________
                                                                   Page
Advisory of June 4, 2003, announcing the hearing.................     2

                               WITNESSES

U.S. Department of Health and Human Services, Hon. Wade F. Horn, 
  Ph.D., Assistant Secretary for Children and Families...........     8

                                 ______

American Public Human Services Association, Elaine M. Ryan.......    28
County Welfare Directors Association of California, National 
  Association of County Human Services Administrators, and Sonoma 
  County Human Services Department, Dianne Edwards...............    33
National Indian Child Welfare Association, Terry L. Cross........    38
Ohio Department of Job and Family Services, Barbara Riley........    24

                       SUBMISSIONS FOR THE RECORD

Acevedo-Vila, Hon. Anibal, a Representative in Congress from the 
  Commonwealth of Puerto Rico, statement.........................    58
Allen, MaryLee, Children's Defense Fund, statement...............    69
Alliance for Children and Families, Carmen Delgado Votaw, letter 
  and attachment.................................................    59
American Federation of State, County and Municipal Employees, 
  statement......................................................    61
Association on American Indian Affairs, Rockville, MD, Jack F. 
  Trope, letter and attachment...................................    62
Atwood, Thomas C., National Council For Adoption, Alexandria, VA, 
  statement......................................................    92
Child Welfare League of America, statement.......................    63
Children's Defense Fund, MaryLee Allen, statement................    69
Clark, Elizabeth J., National Association of Social Workers, 
  statement......................................................    81
Coalition for Family and Children's Services in Iowa, Des Moines, 
  IA, Ann Harrmann, statement and attachment.....................    76
Delgado Votaw, Carmen, Alliance for Children and Families, letter 
  and attachment.................................................    59
Diehl, Sue, Maryland Chapter, National Association of Social 
  Workers, Baltimore, MD, statement..............................    79
Emig, Carol, Pew Commission on Children in Foster Care, statement    98
Family Services of Central Florida, Leesburg, FL, Marlin 
  Livingston, letter.............................................    78
Harris, Jesse J., University of Maryland School of Social Work, 
  Baltimore, MD, statement.......................................   101
Harrmann, Ann, Coalition for Family and Children's Services in 
  Iowa, Des Moines, IA, statement and attachment.................    76
Hernandez, Antonia, Mexican American Legal Defense and 
  Educational Fund, statement....................................    81
Katzenmeyer, Paula, Hutchinson, MN, statement (see listing under 
  Olund, Lynn)...................................................    97
Livingston, Marlin, Family Services of Central Florida, Leesburg, 
  FL, letter.....................................................    78
Maryland Chapter, National Association of Social Workers, 
  Baltimore, MD, Sue Diehl and Judith M. Schagrin, statement.....    79
Mexican American Legal Defense and Educational Fund, Antonia 
  Hernandez, statement...........................................    81
Mirabal, Manuel, National Puerto Rican Coalition, statement......    96
National Association of Social Workers, Elizabeth J. Clark, 
  statement......................................................    81
National Coalition for Child Protection Reform, Alexandria, VA, 
  Richard Wexler, statement......................................    89
National Council For Adoption, Alexandria, VA, Thomas C. Atwood, 
  statement......................................................    92
National Council of La Raza, Raul Yzaguirre, as submitted by 
  Sonia M. Perez, statement......................................    94
National Puerto Rican Coalition, Manuel Mirabal, statement.......    96
Olund, Lynn, Brimson, MN, Paula Katzenmeyer, Hutchinson, MN, 
  Debbie Retterath, Adams, MN, and Deborah Trotter, Aitkin, MN, 
  statement......................................................    97
Perez, Sonia M., National Council of La Raza, submitting for Raul 
  Yzaguirre, statement...........................................    94
Pew Commission on Children in Foster Care, Carol Emig, statement.    98
Prevent Child Abuse America, Chicago, IL, statement..............    99
Retterath, Debbie, Adams, MN, statement (see listing under Olund, 
  Lynn)..........................................................    97
Schagrin, Judith M., Maryland Chapter, National Association of 
  Social Workers, Baltimore, MD, statement.......................    79
Trope, Jack F., Association on American Indian Affairs, 
  Rockville, MD, letter and attachment...........................    62
Trotter, Deborah, Aitkin, MN, statement (see listing under Olund, 
  Lynn)..........................................................    97
University of Maryland School of Social Work, Baltimore, MD, 
  Jesse J. Harris, statement.....................................   101
Voice For Adoption, statement....................................   102
Wexler, Richard, National Coalition for Child Protection Reform, 
  Alexandria, VA, statement......................................    89
Yzaguirre, Raul, National Council of La Raza, as submitted by 
  Sonia M. Perez, statement......................................    94

 
       BUSH ADMINISTRATION FOSTER CARE FLEXIBLE FUNDING PROPOSAL

                              ----------                              


                        WEDNESDAY, JUNE 11, 2003

             U.S. House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Human Resources,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:06 p.m., in 
room B-318, Rayburn House Office Building, Hon. Wally Herger 
(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
June 04, 2003
HR-4

 Herger Announces Hearing on Bush Administration Foster Care Flexible 
                            Funding Proposal

    Congressman Wally Herger (R-CA) Chairman, Subcommittee on Human 
Resources of the Committee on Ways and Means, today announced that the 
Subcommittee will hold a hearing on the foster care flexible funding 
proposal included in the Bush Administration's FY 2004 budget proposal. 
The hearing will take place on Wednesday, June 11, 2003, in room B-318 
Rayburn House Office Building, beginning at 2:00 p.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 representatives from the U.S. Department of 
Health and Human Services and other experts in child welfare issues. 
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 enacted 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. In 2002, the Federal Government provided approximately $7 
billion to the States for these programs. However, the majority of 
these funds ($5 billion) support the Title IV-E foster care program, 
which focuses on out-of-home placements for at-risk children, rather 
than on services designed to return children to their families or place 
them in adoptive homes.
      
    The Subcommittee is interested in reviewing proposals to provide 
more flexibility to States to spend their IV-E foster care dollars, 
including for additional prevention and treatment as well as for out-
of-home placement needs. The Administration's proposal would offer 
States such an alternative financing system to their current Title IV-E 
foster care program. Under this proposal, States could opt to receive 
their share of Federal foster care funds in a constant, fixed amount in 
each of the next 5 years. By exercising this option States would 
receive more money in the early years to spend on prevention 
andtreatment activities to support a broader range of families in need.
      
    In announcing the hearing, Chairman Herger stated, ``It's time to 
begin thinking creatively about how we can help States provide more 
comprehensive and coordinated services to children and families. States 
should have ample flexibility to use the resources we provide to best 
protect vulnerable children. I look forward to hearing more details on 
how the President's proposal to allow States more flexibility would 
help them to meet their child welfare needs.''
      

FOCUS OF THE HEARING:

      
    The hearing will review the proposal included in the 
Administration's FY 2004 budget to provide States an alternative foster 
care financing system.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Due to the change in House mail policy, any person or 
organization wishing to submit a written statement for the printed 
record of the hearing should send it electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, by the close of business, Wednesday, June 25, 2003. 
Those filing written statements who wish to have their statements 
distributed to the press and interested public at the hearing should 
deliver their 200 copies to the Subcommittee on Human Resources in room 
B-317 Rayburn House Office Building, in an open and searchable package 
48 hours before the hearing. The U.S. Capitol Police will refuse 
sealed-packaged deliveries to all House Office Buildings.
      

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. Due to the change in House mail policy, all statements and any 
accompanying exhibits for printing must be submitted electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, in WordPerfect or MS Word format and MUST 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. Any statements must include a list of all clients, persons, or 
organizations on whose behalf the witness appears. A supplemental sheet 
must accompany each statement listing the name, company, address, 
telephone and fax numbers of each witness.
      
    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 HERGER. Good afternoon and welcome to today's 
hearing. The purpose of today's hearing is to review the 
Administration's foster care flexible funding proposal.
    Today, the Federal Government provides open-ended 
entitlement funding to help States support children in certain 
foster and adopted homes. These programs support the most 
vulnerable among us, children who have been removed from their 
own parents due to abuse or neglect.
    We all agree States should have ample resources and 
flexibility to prevent child abuse. I am pleased that this 
Subcommittee took steps last Congress to extend and expand the 
Promoting Safe and Stable Families Program, which provides 
important services to prevent abuse or support adoptions.
    I would like to thank Mr. Cardin for co-signing a letter 
with me to key appropriators supporting full funding for this 
important program. If extended in each of the next 5 years, it 
would ensure that $1 billion in added funding is available to 
prevent abuse or to speed the placement of children in 
permanent adoptive homes. Today's hearing will review 
additional steps to make these programs serve children and 
families better.
    Most of what the Federal Government spends each year on 
child welfare programs, about $5 billion, supports children in 
foster care. These funds support the costs of maintaining 
children in out-of-home placements, the costs of administering 
this program, and some training costs.
    However, under current law, States generally lack the 
flexibility to devote any of these funds to services and 
interventions to prevent foster placements in the first place. 
In short, we provide most of our funding in response to child 
abuse and neglect, not to prevent such abuse. To the degree 
States would like to refocus their efforts more on prevention, 
their hands are generally tied by current Federal rules. That 
is not good enough. We should think creatively about how we can 
help States better serve children and families.
    As we have learned from the States' success with welfare 
reform, flexibility, and positive incentives are critical to 
achieving good results. As we will hear today, there is 
evidence that the sort of flexibility promoted by the 
Administration's foster care proposal has been exercised in 
recent waiver programs and achieved results.
    I look forward to hearing from Dr. Wade Horn and the rest 
of today's witnesses on the Administration's foster care 
flexible funding proposal. Without objection, each Member will 
have the opportunity to submit a written statement and have it 
included in the record. Mr. Cardin, would you like to make an 
opening statement?
    [The opening statement of Chairman Herger follows:]

   Opening Statement of the Honorable Wally Herger, Chairman, and a 
        Representative in Congress from the State of California

    Good afternoon and welcome to today's hearing. The purpose of 
today's hearing is to review the Administration's foster care flexible 
funding proposal.
    Today the Federal Government provides open-ended entitlement 
funding to help States support children in certain foster and adoptive 
homes. These programs support the most vulnerable among us--children 
who have been removed from their own parents due to abuse or neglect.
    We all agree States should have ample resources and flexibility to 
prevent child abuse. I'm pleased this Subcommittee took steps last 
Congress to extend and expand the Promoting Safe and Stable Families 
program, which provides important services to prevent abuse or support 
adoptions.
    I'd like to thank Mr. Cardin for co-signing a letter with me to key 
appropriators supporting full funding for this important program. 
Extending the program in each of the next five years would ensure that 
$1 billion in added funding is available to prevent abuse or to speed 
the placement of children in permanent adoptive homes.
    Today's hearing will review additional steps to help these programs 
serve children and families better.
    Most of what the Federal Government spends each year on child 
welfare programs--about $5 billion--supports children in foster care. 
These funds support the costs of maintaining children in out-of-home 
placements, the costs of administering this program, and some training 
costs.
    However, under current law, States generally lack the flexibility 
to devote any of these funds to services and interventions to prevent 
foster placements from the start. In short, we provide most of our 
funding in response to child abuse or neglect, not to prevent such 
abuse. To the degree States would like to refocus their efforts more on 
prevention, their hands are generally tied by current Federal rules.
    That's not good enough. We should think creatively about how we can 
help States better serve children and families. As we've learned from 
the States' success with welfare reform, flexibility and positive 
incentives are critical to achieving good results.
    As we will hear today, there is evidence that the sort of 
flexibility promoted by the Administration's foster care proposal has 
been exercised in recent waiver programs, and achieved positive 
results.
    I look forward to hearing from Dr. Wade Horn and the rest of 
today's witnesses on the Administration's foster care flexible funding 
proposal.

                                 

    Mr. CARDIN. Thank you very much, Mr. Chairman, and let me 
first thank you for holding this hearing. I think it is a very 
important hearing as we talk about foster care and child 
welfare issues.
    I must tell you, we are about one-fourth finished with this 
term of Congress, and I am getting very frustrated on issues 
that affect children. Dr. Horn has been a champion of speaking 
out on these issues. I would like to help him with getting more 
resources to deal with it first. I think one of our major 
problems has been that we just are not putting enough resources 
into these programs, and it is tough to talk about innovative 
new ways when we are not willing to put up the tools necessary 
to adequately deal with America's most vulnerable children.
    This Subcommittee has had a proud history of dealing with 
vulnerable children, and we have been able to bring out some 
good bipartisan products that are now the law of the land. I 
hope that will be the model for moving forward on this issue.
    On the floor a little bit earlier, the Chairman and I were 
engaged on a bill that extended Temporary Assistance for Needy 
Families (TANF) (P.L. 104-193) for 3 additional months as we 
try to figure out TANF reauthorization. I pointed out at that 
time--and I will repeat that during this term of Congress--we 
seem to be able to find resources for everything but helping 
our children.
    We spent a couple of trillion dollars on tax cuts in 2001 
and now in 2003. There was just recently a book released by 
Isabelle Sawhill, who points out that we spend 2 percent of our 
gross domestic product for our children at the Federal level. 
We spend 2.5 percent of our gross domestic product servicing 
our national debt. Our national debt will increase by $400 
billion--this is the recent projections--in this next year. 
That will require us to spend somewhere around $15 to $20 
billion in additional debt service in the next budget. We can 
only get a little bit of that money for children. The money 
instead is being used to service a tax cut. I think that is a 
mistake.
    So, Mr. Chairman, as we start this hearing, I am going to 
be expressing some serious concerns about the direction we are 
moving in these programs. I must tell you, I think it stems 
from, first, our budget priorities and whether we are willing 
to give the tools necessary.
    We have problems in our child welfare systems. We have 
caseworkers who turn over on average 2 years. That is not going 
to be solved by just giving States more flexibility. You have 
to be willing to make a commitment if we are going to deal with 
the problems of caseworkers that are handling our most 
difficult and most vulnerable children.
    We have real obstacles in our child welfare system dealing 
with substance abuse. If we are not willing to put some money 
into it, you can give all the flexibility you want to the 
States. I use the U.S. Government Accounting Office (GAO) 
report on child care. I think every one of our Governors, every 
one of our State Legislators would like to put more money into 
child care. It has been proven to be successful in dealing with 
a whole host of problems. Yet, all of our States are cutting 
child care. In my own State of Maryland, unless you go on 
welfare, you can't be a new enrollee in the child care system. 
What a message. So, we need more resources in order to deal 
with these problems.
    On behalf of my Democratic colleagues, I filed legislation 
that I thought would be a model for our discussion, which talks 
about trying to provide more resources to our States to deal 
with the foster care problems and to deal with the turnover and 
preventive services and updating certain eligibility. 
Unfortunately, I think the Administration is taking a different 
approach.
    We don't have the legislation yet, Dr. Horn, but we do know 
that you are suggesting what I would call a block grant option 
to the States which would have the opportunity to opt in. The 
problem is that once you start down this path, I don't know how 
much improvement we are going to have for those States who 
don't want to opt in, who want to continue the current system.
    You also indicate there is going to be a finite amount of 
money available. As I understand it, there are no reductions. 
We are trying to project what is going to happen, but we don't 
know what is going to happen with caseload. The caseload could 
vary. These are circumstances that are not as predictable as 
what we do in the welfare system generally. We are dealing with 
children. We are dealing with children for whom there may not 
be adoptive parents willing to take care of them.
    So, what happens if we are wrong on the caseload? What 
happens with the States that stay under the current system? I 
am not sure we have answered those questions and I am very 
concerned as to what is going to happen as we move forward.
    Let me also suggest that there are a lot of questions that 
have been raised, and I will mention these early, Dr. Horn, in 
hopes that you will be able to deal with them. The State opts 
into a block grant and its foster care caseload goes up. How 
will it cover the resulting cuts in reimbursement? What will 
happen to children whose Medicaid coverage is tied to their 
current eligibility for Federal foster care payments? How will 
State funding for child welfare services be locked in under the 
block grant? Will Federal adoption assistance become less 
available if it is left with an increasingly out-of-date 
eligibility standard? Those are just some of the questions that 
I have, and I hope that we will be able to deal with them.
    I can assure you that as a Member of Congress so concerned 
about the children we are dealing with--and I know every Member 
of the Committee feels the same way--I welcome an opportunity 
in a public, private, or any kind of setting to see whether we 
can't continue the tradition of this Committee and reach a 
bipartisan agreement on what is in the best interest of Federal 
policy to help our foster children. Thank you very much, Mr. 
Chairman.
    [The opening statement of Mr. Cardin follows:]

Opening Statement of the Honorable Benjamin L. Cardin, a Representative 
                 in Congress from the State of Maryland

    Mr. Chairman, I am glad there seems to be a growing consensus that 
improvements are needed in our child welfare system. Along with my 
Democratic colleagues on this subcommittee, I introduced legislation 
earlier this year to help our States and communities combat many of the 
specific problems that now plague children in foster care. The bill 
seeks to give our States the tools, motivation, and resources needed to 
ensure child safety, address the connection between substance abuse and 
child abuse, improve the retention of quality caseworkers, expand 
preventive services, and update certain eligibility standards.
    The Bush Administration has chosen a different path. The President 
has proposed an optional block grant for foster care, under which 
States could receive a fixed allocation of funds for five years, rather 
than being guaranteed matching payments for each eligible child. This 
plan, which is designed to be cost neutral, concerns me for a number of 
reasons.
    First, I do not agree with the premise that our child welfare 
system is undeserving of any new resources. We have now spent over $2 
Trillion for three successive tax cuts, so it seems more than a little 
stingy to suggest that we cannot spend a single dime of new money on 
protecting abused and neglected children.
    Second, the Administration's plan is a piecemeal approach that will 
deny an opportunity for meaningful change in many and probably most 
States. Some states may opt in, but many others will surely decide to 
pass on assuming the inherent risks associated with the proposal. The 
President's plan offers nothing to these States who think the block 
grant is a bad deal. No new resources for preventive services, no 
needed updates in eligibility criteria, and no increased flexibility. 
The end result will be no change and no improvement for millions of 
children.
    Third, the proposal raises more questions than it answers, and it 
may cause more problems than it cures. For example:

     If a State opts into the block grant and its foster care 
caseload goes up, how will it cover the resulting cuts in 
reimbursement?
     What will happen to children whose Medicaid coverage is 
tied to their current eligibility for federal foster care payments?
     How will State funding for child welfare services be 
locked in under the block grant?
     And will Federal adoption assistance become less 
available if its left with an increasingly out-of-date eligibility 
standard (as it is under the President's plan)?

    Mr. Chairman, I don't know if there is a middle ground between what 
my colleagues and I have introduced and what the Administration is 
proposing. But I am always willing to work toward a consensus. Perhaps 
we all might benefit from the work now being conducted by a new Pew 
Commission on this topic. This non-partisan panel includes many leading 
child welfare experts, and it is chaired by a former Republican Member 
of this Committee, Bill Frenzel. The commission hopes to provide 
Congress with recommendations to improve the foster care system by 
early next year.
    In any event, I hope we can continue this committee's tradition of 
bipartisanship on issues related to our Nation's foster care system. 
Millions of vulnerable children are counting on us to get the job done. 
Thank you.

                                 

    Chairman HERGER. Thank you, Mr. Cardin. Before we move on 
to our testimony, I want to remind our witnesses to limit their 
oral statements to 5 minutes. However, without objection, all 
the written testimony will be made a part of the permanent 
record.
    For our first witness today, we are pleased to have with us 
once again Dr. Wade Horn, Assistant Secretary for Children and 
Families at the U.S. Department of Health and Human Services 
(HHS).
    Dr. Horn.

   STATEMENT OF THE HONORABLE WADE F. HORN, PH.D., ASSISTANT 
SECRETARY FOR CHILDREN AND FAMILIES, U.S. DEPARTMENT OF HEALTH 
                       AND HUMAN SERVICES

    Dr. HORN. Thank you very much, Mr. Chairman. It is a great 
pleasure to appear before you again to discuss the President's 
proposal for improving child welfare in our Nation. Our 
proposal provides States and Indian tribes with both the 
flexibility and sustained financial support needed to build 
innovative programs that provide effective services to the 
thousands of children and families in the child welfare system.
    Over the past several years, with your help, the Federal 
Government has made important strides in reforming child 
welfare services. Through the Adoption and Safe Families Act 
1997 (P.L. 105-89), and other important legislative reforms, we 
built a national consensus on the key goals for child welfare, 
ensuring children's safety, meeting children's needs for timely 
permanency, and promoting child and family well-being.
    The Bush Administration is proud of the progress that we 
have made to date in providing more resources to States to 
support children, families, and youth. We are pleased to be 
able to work with this Committee and other Members of Congress 
to pass legislation reauthorizing and significantly increasing 
the funding level for the program, and I just want to pause for 
a moment to thank both you and the Ranking Member, Congressman 
Cardin, for indicating your support in writing to the 
Appropriations Committee to fully fund the President's request 
for increased resources for the Promoting Safe and Stable 
Families Program. We also appreciate the authorization and, at 
this point, partial funding of the President's proposal to 
provide education and training vouchers for youth who age out 
of foster care.
    These efforts represent important contributions to 
improving child welfare services, but we all know that there 
must be more done to protect children, support families, and 
promote timely permanency. Therefore, in the President's 2004 
budget, the Administration is proposing a major change in the 
Title IV-E foster care program, an alternative funding option 
to provide States with greater flexibility so they can design 
more effective ways to help vulnerable children and families 
and move toward a seamless child welfare system. States that 
don't elect this option would continue to operate the existing 
Title IV-E entitlement program.
    Briefly, the alterative funding option would incorporate 
dollars from the existing Title IV-E maintenance payments 
program as well as the associated administrative and training 
costs. States that choose this option would be able to use the 
funds for foster care payments, prevention activities, 
permanency efforts, case management, administrative costs, 
training child welfare staff, and other service-related child 
welfare activities--a far broader range of uses of these funds 
than allowed under current law.
    The proposal would provide States with the flexibility to 
develop a child welfare system that supports a continuum of 
services to families in crisis and children at risk while 
removing some of the administrative burdens of many of the 
current Federal requirements, including the need to determine 
the child's eligibility for Aid to Families with Dependent 
Children (AFDC).
    While States that choose this option would have greater 
flexibility in how they use the funds, they would continue to 
be required to maintain the child safety protections under 
current law, including requirements for conducting criminal 
background checks and licensing of foster care providers, 
obtaining judicial oversight of decisions related to a child's 
removal and permanency, meeting permanency time lines, 
developing case plans for all children in foster care, and 
prohibiting race-based discrimination in foster and adoptive 
placements.
    Allocations for this alternative financing structure will 
be determined in consultation with States, using historic 
expenditure information, and would be cost-neutral over 5 
years. However, a State could receive up front funding at the 
outset of the program cycle. This approach would allow States 
to develop innovative programs and make initial investments 
that are likely to result in cost savings to the States in 
later years.
    The proposal also includes a maintenance of effort 
requirement to ensure that States selecting this new option 
maintain their existing investments in the program. To help 
protect States against unanticipated emergencies affecting 
their foster care system, the proposal also includes a 
provision that would allow a participating State to access 
additional funding through the TANF contingency fund if 
specified crisis conditions are met.
    In addition to providing a new option for States, our 
proposal includes a $30 million set-aside for Indian tribes or 
consortia that can demonstrate the capacity to operate a Title 
IV-E program. Currently, tribes, as you know, are not eligible 
to receive direct Title IV-E funding, although some tribes are 
able to access funds through agreements with the States. This 
proposal would open the possibility for tribes to receive 
direct Title IV-E funding.
    In closing, I would like to thank the Subcommittee for the 
opportunity to discuss the President's bold new vision for 
strengthening child welfare through our child welfare program 
option. This option encourages innovation and the development 
of cost-effective programming that, over time, will result in 
children reaching permanency more quickly and fewer children 
being removed from the home, a goal I know we all share.
    This Administration is firmly committed to improving the 
lives of every child in America. Enacting legislation that will 
give States a choice in how they design and fund their child 
welfare programs will move us closer to meeting this 
commitment. Thank you for this opportunity. I would be pleased 
to answer any questions that you may have.
    [The prepared statement of Dr. Horn follows:]

Statement of the Honorable Wade F. Horn, Ph.D., Assistant Secretary for 
  Children and Families, U.S. Department of Health and Human Services

    Mr. Chairman and Members of the Subcommittee:
    Thank you for the opportunity to appear before you to discuss the 
President's proposal for improving child welfare in our Nation. The 
proposal responds to long-term criticisms about the current structure 
for addressing the needs of at-risk children and families and the 
Administration's desire to support innovation in addressing this 
critical issue. Our proposal provides States and Indian Tribes with 
both the flexibility and sustained financial support needed to build 
innovative programs that provide effective services to the thousands of 
children and families in need of child welfare services.

Background
    Over the past several years, with your help, the Federal Government 
has made important strides in reforming child welfare services. Through 
the passage of the Adoption and Safe Families Act of 1997 and other 
important legislative reforms, the development of national outcome 
measures, and the implementation of the new, results-oriented Child and 
Family Services (CFS) review process, we have built a national 
consensus on the key goals for child welfare: ensuring children's 
safety, meeting children's needs for timely permanency in a loving 
family, and promoting child and family well being. We have developed 
regulations and policies to promote these goals and an infrastructure 
to track progress toward meeting them. We also have seen important 
progress, most notably in the area of adoption, with the annual number 
of children adopted from foster care increasing from 31,000 in FY 1997 
to 51,000 in FY 2001. We expect that the final number of adoptions for 
FY 2002 will exceed last year's impressive results.
    It is fair to say that because of improved data collection and the 
CFS review process, we have more and better information than ever 
before about the state of child welfare services, both strengths and 
weaknesses. And despite the progress to date, it is evident that we 
still have a long way to go. Newspaper accounts from around the country 
continue to report individual tragedies where the system has failed to 
protect children. National statistics show that too many children are 
lingering in foster care and waiting for adoptive families.
    The CFS reviews began in FY 2001 and, to date, we have reviewed 37 
States. We will complete the first round of all 50 States, the District 
of Columbia, and Puerto Rico by the end of March 2004. This is the most 
comprehensive and far-reaching Federal review of State child welfare 
services ever conducted. The review covers all areas of child welfare 
services, from child protection and family preservation to adoption and 
youth development. When weaknesses are identified, States are required 
to implement Program Improvement Plans. Through a network of National 
Resource Centers, we provide technical assistance to help States 
develop and implement their Plans.
    Among the most significant findings of the CFS reviews:

     States are performing slightly better on safety outcomes 
for children than on permanency and well being. In fact, the timely 
achievement of permanency outcomes for children in foster care, 
especially adoption, is one of the weakest areas of State performance.
     All State program improvement plans need to include 
provisions to strengthen the quality of front-line practice in such 
areas as conducting needs assessments of children and families and 
developing effective case plans.
     Most States need to make significant improvements in 
their judicial processes for monitoring children in foster care, such 
as ensuring timely court hearings and increasing their attention to 
timely termination of parental rights, where appropriate.
     The reviews pointed to a correlation between frequent 
caseworker visits with children and positive findings in other areas, 
such as timely permanency achievement and indicators of child well 
being.

    What more can be done to address these program shortfalls and 
better serve this vulnerable population?
    The Bush Administration is proud of the progress we have made to 
date in providing more resources to States to support children, youth 
and families. We were pleased to be able to work with this Committee 
and other Members of Congress to pass legislation reauthorizing and 
increasing the funding level for the Promoting Safe and Stable Families 
program, which funds family support, family preservation, time-limited 
reunification, and adoption promotion and support services. And we 
appreciate the authorization of the President's proposal to provide 
education and training vouchers for youth who ``age out'' of foster 
care. This program offers youth a chance to pursue and complete their 
education, thereby improving their prospects to become truly 
independent and self-sufficient adults.
    The recent 2003 Consolidated Appropriations Resolution provided 
almost $405 million for the Promoting Safe and Stable Families program, 
$29 million over the FY 2002 level, and included additional first-time 
funding of nearly $42 million to support educational vouchers for youth 
aging out of foster care. The President's FY 2004 request would go a 
step further and fully fund the Promoting Safe and Stable Families 
program at the level of $505 million and the educational vouchers 
program at $60 million. I hope that you will join us in supporting 
these targeted but important investments, as well as critical policy 
changes to foster care and adoption incentives requested by the 
Administration.

Child Welfare Program Option
    The programs mentioned above make an important contribution to 
improving child welfare services. However, given what we have learned 
about the States' child welfare systems, we all must continue to do 
more to protect children, support families, and promote timely 
permanency. Therefore, in our FY 2004 budget, the Administration is 
proposing a major change in the title IV-E foster care program. Under 
this proposal, States would be offered an alternative financing option 
to the current title IV-E entitlement program, where States could 
choose to administer their foster care program with a fixed allocation 
of funds over a five-year period, should this approach better support 
their particular child welfare needs. States that do not elect to 
receive funding provided by this option would continue operating under 
the current title IV-E entitlement program.
    Under current law, States may be reimbursed for a percentage 
(ranging from 50 to 79 percent) of the costs associated with the foster 
care stays of eligible children. The Federal Government also reimburses 
States for 50 percent of allowable administrative costs and 75 percent 
of training costs for State and local staff and foster parents. While 
an essential source of funding to assist States with supporting 
children in foster care and related administrative and training 
expenses, the program has long been criticized for, among other things, 
its lack of flexibility, administrative burdens, and narrow focus on 
only those children already removed from the home.
    We have consistently heard from the States that the title IV-E 
foster care program is too restrictive because it provides funds only 
for poor children who have been removed from the home. In order to be 
eligible for title IV-E, a child must have been removed from a family 
that would have met AFDC eligibility requirements as they existed in 
1996, prior to the enactment of the Personal Responsibility and Work 
Opportunity Reconciliation Act and the creation of the Temporary 
Assistance for Needy Families program. Under the IV-E program, the 
Federal Government does not share in the expenses relating to non-IV-E 
children and, as time passes, a declining proportion of foster care 
children nationally meet the old AFDC income standard.
    The program also is criticized for failing to support the goal of 
permanency. While reimbursement for foster care and related case 
management services is open-ended, title IV-E funds may not be used for 
other types of services that could prevent a child from needing to be 
placed in care in the first place or that could facilitate the child's 
returning home or moving to another permanent placement. Furthermore, a 
State that is successful in preventing unnecessary removals or in 
shortening lengths of foster care stays actually is apt to receive less 
Federal funding than a State where children remain in foster care for 
long periods of time.
    States are concerned that the title IV-E program contains 
significant administrative burdens, which take valuable time and 
resources away from serving children and families. These include making 
IV-E eligibility and re-eligibility determinations and engaging in the 
cumbersome cost-allocation process for claiming administrative costs.
    In response to these concerns the Administration is proposing the 
alternative funding option to provide States with a more flexible 
environment so they can design more effective ways to strengthen 
services to vulnerable children and families and to further the goal of 
helping States develop a seamless child welfare system. Specifically, 
the alternative funding option would include dollars currently 
estimated for the existing title IV-E foster care maintenance payments 
program and the associated administrative costs. States that choose 
this option would be able to use the funds for foster care payments, 
prevention activities, permanency efforts (including subsidized 
guardianships), case management, administrative activities (including 
developing and operating State information systems), training child 
welfare staff, and other service-related child welfare activities--a 
far broader range of uses than allowed under current law. The proposal 
would provide States with the flexibility to develop a child welfare 
system that supports a continuum of services to families in crisis and 
children at risk while removing the administrative burden of many of 
the current Federal requirements, including the need to determine the 
child's eligibility for AFDC.
    While States that choose this option would have much greater 
flexibility in how they use funds, they would continue to be required 
to maintain the child safety protections under current law, including 
requirements for conducting criminal background checks and licensing 
foster care providers, obtaining judicial oversight of decisions 
related to a child's removal and permanency, meeting permanency 
timelines, developing case plans for all children in foster care, and 
prohibiting race-based discrimination in foster and adoptive 
placements.
    States that select this alternative financing structure would be 
required to apply for the new child welfare program option soon after 
enactment of the proposed legislation and to commit to the new funding 
structure for the full five-year period. State allocations would be 
determined in consultation with States, using historic expenditure 
information, and would be cost neutral over five years. However, a 
State could receive up-front funding at the outset of the program 
cycle. This approach would allow States to develop innovative programs 
and make initial investments that are likely to result in cost savings 
to the States in later years. The proposal also includes a maintenance-
of-effort requirement to ensure that States selecting the new option 
maintain their existing level of investment in the program.
    To help protect States against unanticipated emergencies affecting 
their foster care systems, the proposal also includes a provision that 
would allow a participating State to access additional funding through 
the TANF contingency fund if specified crisis conditions are met.
    In addition to providing a new option for States, our proposal 
includes a $30 million set-aside for Indian Tribes or consortia that 
can demonstrate the capacity to operate a title IV-E program. 
Currently, Tribes are not eligible to receive direct title IV-E 
funding, although some Tribes are able to access funds through 
agreements with States. This proposal would open the possibility for 
Tribes to receive direct title IV-E funding. Indian Tribes would be 
subject to program requirements similar to those of States. However, 
the Secretary could waive certain program requirements, provided that 
doing so would not compromise child safety.
    We also are requesting a small administrative set-aside to 
facilitate program monitoring and technical assistance necessary to 
support the efforts of State and Tribal child welfare programs and to 
fund important child welfare research. As States and Tribes develop new 
and innovative service models and financing structures through the 
child welfare program option, it will be even more important to ensure 
that we have sufficient resources to provide technical assistance and 
to monitor their activities so we have an understanding of how the new 
option is affecting child welfare services and outcomes and to share 
any success stories with other States.
    We believe this proposal will result in the development of 
innovative child welfare programs that ultimately will better serve 
vulnerable children. We ask for your support in making this vision a 
reality.

Adoption Incentive Proposal.
    Finally, I would like to take this opportunity to briefly address 
another proposal in the President's FY 2004 budget as part of our 
request to reauthorize the Adoption Incentive Program. The Adoption 
Incentive Program, authorized under the Adoption and Safe Families Act, 
was the first Federal performance-based incentive program in child 
welfare. The program proved very successful in engaging all States in 
efforts to increase adoptions and made an important contribution to the 
large national increases in adoption we have seen over the past several 
years. However, as we have analyzed adoption data, we have learned that 
while the overall number of children being adopted has grown 
dramatically, older children in foster care still face excessively long 
waits for adoption, and in many cases, are never adopted. This is 
clearly a problem that warrants our attention.
    In fact, data from the Adoption and Foster Care Analysis and 
Reporting System (AFCARS) show that between the ages of 8 and 9, the 
probability that a child will continue to wait in foster care exceeds 
the probability that the child will be adopted. Further, the number of 
children in this older age group is growing, now representing almost 
half of the children waiting to be adopted nationally.
    To ensure that the adoption incentive focuses on these hard-to-
place children, the President proposes that the Adoption Incentive 
Program be amended so it continues to recognize and reward overall 
increases in the number of adoptions while providing a special focus on 
the adoption needs of children age 9 and older. Awarding the incentive 
funds in this way will provide a special focus on the adoption needs of 
older children, while maintaining the goal of increasing adoptions for 
all waiting children.

Conclusion
    In closing, I would like to thank the Subcommittee for the 
opportunity to discuss the President's bold new vision for 
strengthening child welfare through our new child welfare program 
option. This option encourages innovation and the development of cost-
effective programming that over time will result in children reaching 
permanency more quickly and fewer children being removed from the home, 
a goal we all share. Under this option, we believe that States would be 
better able to develop a seamless child welfare system that supports a 
continuum of services to families in crisis and children at risk.
    This Administration is firmly committed to improving the lives of 
every child in America. Secretary Thompson has always been a strong 
advocate of increasing State control in designing programs that best 
meet the needs of their citizens. Enacting legislation that will give 
States a choice in how they design and fund their child welfare 
programs will move us closer to meeting that commitment. We look 
forward to working with you to pass legislation implementing these new 
proposals, and I would be pleased to answer any questions you may have.

                                 

    Chairman HERGER. Thank you for your testimony, Dr. Horn. 
Now, we will hear the gentleman from Kentucky, Mr. Lewis, to 
inquire.
    Mr. LEWIS. Thank you, Mr. Chairman. Dr. Horn, will there be 
anything in the President's proposal that would allow the 
States the flexibility to keep children within the family unit 
as far as aunts, uncles, grandparents? It seems like there 
should be an emphasis on this, to try to keep children with 
family members rather than in a new, strange environment, and I 
am not sure that there is that flexibility now. I think the 
grandparents or the aunt, uncle, brother, or sister, would have 
to go through the process of becoming legally a foster parent 
in order to do that.
    I know we have about 60,000 grandparents in Kentucky that 
are caring for their grandchildren now, which is good, but a 
lot of those people are on Social Security. They are elderly 
and it makes it a little difficult. We are paying a lot of 
dollars to take those children out of those circumstances and 
put them in, like I said, unfamiliar surroundings.
    Dr. HORN. That is an excellent question and, in fact, under 
the current system, States are prohibited from using Title IV-E 
funds for subsidized guardianship arrangements, which often are 
the kinds of situations that you describe with kinship members. 
Under the President's flexibility proposal, States could, in 
fact, opt to use those monies, in part, to support subsidized 
guardianship arrangements.
    In fact, the State of Illinois has had a very large waiver 
over the last 5 years to look at using Title IV-E funds more 
flexibly in order to support subsidized guardianship 
arrangements, and one of the things that they found is that, by 
doing so, they move more children more quickly toward 
permanency arrangements, and have less need for long-term 
foster care. They are doing all that without compromising child 
safety. So, we think that this flexibility proposal would 
precisely address the issue that you raise.
    Mr. LEWIS. That would be wonderful. Thank you.
    Chairman HERGER. I thank the gentleman. The gentleman from 
Maryland, Mr. Cardin, to inquire.
    Mr. CARDIN. Thank you very much, Mr. Chairman. Dr. Horn, 
let me just go through a couple scenarios so I understand 
exactly what we are trying to achieve here. As I understand it, 
there are no new resources over baseline being put into this 
proposal for States that go into the optional block grant. 
There is some advance money, but over time, it is basically 
neutral on cost.
    We have seen in the history of foster care that there have 
been episodes where we have had large increases in the number 
of foster care children. In the late 1980s, we saw in a 5-year 
period a 42-percent increase in foster care, which was 
attributed mostly to the crack cocaine problem.
    Obviously, the funds that are being made available through 
these programs are not geared towards a crack cocaine problem 
or a significant national problem. If there were a spike in the 
number of children that needed assistance with the State that 
chose the optional path, what would happen during this 5-year 
period?
    Dr. HORN. Well, first, it is not precisely correct to say 
that the President has not proposed additional resources for 
the child welfare system. As you know--and I know that you are 
very supportive of it--the President has proposed $1 billion in 
additional funds over 5 years through Safe and Stable Families, 
which can be used to fund an array of services in the child 
welfare system.
    In addition to that, we were very concerned with exactly 
the situation that you describe. In fact, I, in my first tenure 
in government, was the Commissioner of the Administration on 
Children, Youth and Families during the spike in foster care 
placements largely because of the crack cocaine epidemic and we 
were concerned that there be some protection for the States who 
chose this option.
    So, what we have built into the proposal is the ability for 
States to draw down additional funds under certain 
circumstances from the TANF contingency fund. As you know, that 
is a $2 billion fund that already exists and no State has yet 
needed to draw down any of those resources through the TANF 
program and we thought that by allowing States the ability to 
access those funds if there are spikes in foster care----
    Mr. CARDIN. So, you would use the TANF contingency? You 
would not build in anything directly in this program? There is 
a lot of concern about whether there are adequate resources in 
TANF, including the contingency funds that we could argue 
another day. There would be no adjustment in the overall 
program that you are configuring based on external increases in 
caseload?
    Dr. HORN. In terms of the 5-year cost to the Title IV-E 
program, what we do is we capture all those costs over the next 
5 years. We then allow States to increase the spending in the 
first few years, if that is their choice, and reduce funding in 
each of the subsequent years, in order to return to the 
baseline.
    A piece that is important to keep in mind is that the 
baseline projections for this program have been decelerating 
over time. That is, if you go back 4 years ago, the baseline 
was accelerating at a higher percentage than it was 2 years ago 
and at a higher percentage than 1 year ago and so forth. So, 
actually, what we are seeing is a ratcheting down of the 
baseline over time. If, in fact, that continues, there actually 
will be less money 4 or 5 years from now than current baseline 
projections----
    Mr. CARDIN. Let us hope you are right. I hope these 
projections--I just worry if it doesn't. One of the problems we 
have, I think we all agree, is that the lookback, where you 
have to go back to the 1996 eligibility to see whether a 
family, a child qualifies, needs to be adjusted. However, you 
don't change that. So, isn't a State being penalized if it 
doesn't go into the optional program because you still have the 
lookback arrangements? You are not trying to modernize the 
current program. Basically, it seems to me, you are trying to 
force States to go into the optional program that you call 
voluntary.
    Dr. HORN. No, it is a complete voluntary choice on the part 
of the State. If the State feels that this is something that 
works for them, then the State can opt into it. Otherwise, the 
program stays the same.
    Mr. CARDIN. Would you be willing to work with us to 
modernize the program on eligibility for those States that stay 
under the current system?
    Dr. HORN. I think at the heart of this proposal is this 
notion that it seems kind of absurd to continue to have as an 
eligibility requirement for the Title IV-E program--a program 
that hasn't existed for 6 years called AFDC.
    Mr. CARDIN. Good. Well, maybe we can at least agree on that 
part of the issue. I think my time is just about expired, so I 
will save the final questions for the next round or I will send 
them to you in writing. Thank you.
    Chairman HERGER. Thank you, Mr. Cardin. The gentleman from 
Louisiana, Mr. McCrery, to inquire.
    Mr. MCCRERY. Thank you, Mr. Chairman. Dr. Horn, there do 
seem to be some parallels between the Administration proposal 
with foster care and the welfare proposal in 1996, the welfare 
plan that passed in 1996. In the welfare reform plan, we 
basically wanted to get people off welfare instead of adding to 
the rolls and basically giving States more money the more 
people they had on welfare. We said, look, we are going to give 
you a set amount of money and you can use it, and we hope you 
will use it, to keep people off of welfare and get them into 
work.
    This proposal seems to me to be somewhat the same. You are 
telling the States, look, we are going to give you the same 
amount of money we have been giving you, but we are going to 
give you flexibility that we hope you will use to prevent 
children from going into foster care. Is that kind of where we 
are with this?
    Dr. HORN. I think there are certain similarities between 
the two, yes.
    Mr. MCCRERY. I know that you have granted some State 
waivers and there are some demonstration projects. Can you 
point to any that have shown results from the States using this 
money in the ways that you anticipate?
    Dr. HORN. Yes. For example, in North Carolina, we granted a 
waiver in which they could use their Title IV-E funds with much 
more flexibility, including preventative services. One of the 
things that North Carolina found in this waiver process is that 
by providing more preventative services and being able to use 
those funds more flexibly, there was less need for children to 
go into foster care.
    It is important for us all to keep in mind that foster care 
is an important service. The goal is not to eliminate the 
foster care system. There are children who require foster care 
placements. We believe that the categorical nature of the 
funding streams that support the child welfare system often get 
in the way of allowing the flexibility that States need in 
order to create a system that is both seamless and efficient, 
so that foster care is available for those children who need 
foster care. We ought to be able to also provide more 
preventative services so there is less need for foster care in 
the first place, not at the expense of child safety, but in 
order to prevent abuse from occurring in the first place, 
obviating the need for some foster care placements.
    Mr. MCCRERY. So, in effect, you encourage States to invest 
some of this Federal money in prevention, preventing children 
from having to go into foster care, but then if they are 
successful in that, in keeping children off the foster care 
rolls, you don't punish them by taking away their money. You 
reward them by continuing to give them a set amount of money 
that they can use for those purposes.
    Dr. HORN. Yes. In fact, under the President's proposal, if 
a State did not use up its allotment in one year, much like the 
TANF program, they would be able to carryover those funds into 
subsequent years in case there were spikes in subsequent years 
in terms of a need for foster care or other services. So, yes, 
the idea would be if States are able to reduce the costs 
associated with foster care--not because they have compromised 
child safety but because they have been successful in 
prevention efforts--there may be savings that States then can 
reinvest or save for future years when there might be an 
additional need for foster care.
    Mr. MCCRERY. Is there anything in the Administration 
proposal that would allow States to reduce the child safety 
protections in the law?
    Dr. HORN. Nothing. Our proposal says that all of the child 
protections that are currently in place would continue. We 
actually think, in fact, that under the President's proposal, 
if a State were to choose that option, we would be in a better 
position to be able to ensure those protections are there. This 
would be true not just for kids who are fully eligible, but for 
all of the children in foster care. This is because the 
mechanism for looking at many of those protections would no 
longer be the Title IV-E reviews, which are only relevant to 
kids who get a Title IV-E payment, about 44 percent of the 
caseload, but rather the child and family services reviews 
which look at all the kids in care.
    We think we would be in a better position to ensure those 
protections are in place, not just for Title IV-E kids, but for 
all the children in foster care, under the President's 
proposal.
    Mr. MCCRERY. So, in other words, this proposal would 
actually give States the flexibility to expand their child 
safety protections?
    Dr. HORN. We think that it would give them the ability to 
dedicate the resources they need to ensure those protections 
are in place.
    Mr. MCCRERY. Thank you, Mr. Chairman.
    Chairman HERGER. Thank you, Mr. McCrery. The gentleman from 
Washington, Mr. McDermott, to inquire.
    Mr. MCDERMOTT. Thank you, Mr. Chairman. I appreciate the 
opportunity to talk. I wish we had a bill to look at, but since 
we don't, I will have to go on what I sort of surmise is going 
on here. When you put a block grant out there and you say to 
the States, you can choose a block grant or you can choose to 
stay in the old program, obviously, you want them to go to the 
block grant, don't you?
    Dr. HORN. That would be up to the State. I have no----
    Mr. MCDERMOTT. Wouldn't that be the purpose of putting out? 
You want to get them off the old program.
    Dr. HORN. I think it is simply giving the State the option, 
and they can choose what they see is in their best interests.
    Mr. MCDERMOTT. It seems to me, if I understand what is 
going on, you haven't changed the payments since 1996 and if 
you want to have an upgrade in your payments, you have to go 
into the block grant. If you stay in the old program, it is 
based on the 1996 data, is that correct? There has been no 
update since 1996?
    Dr. HORN. States have the ability to set their own payment 
rates.
    Mr. MCDERMOTT. The payments from the Federal Government, 
those haven't changed.
    Dr. HORN. The Federal Government reimburses using the 
Federal Medical Assistance Payments rate, so that has not 
changed.
    Mr. MCDERMOTT. If you stay with the old program, it is only 
kids that qualified for AFDC in 1996, right?
    Dr. HORN. That is current law. That is right.
    Mr. MCDERMOTT. So, what you are doing here is trying to 
make every incentive push in the direction of getting people to 
take the block grant, is that correct?
    Dr. HORN. No, it is not correct. What we are trying to do 
is provide an option for a State. The State would then have the 
ability to make a decision based upon what they perceive is in 
their own best interests, and if they think the current system 
works best for them, we have no a priori belief whether that is 
a good or a bad judgment. That is for the State to make. So, it 
is giving an option to a State.
    Mr. MCDERMOTT. I guess you were never in a State 
Legislature, but I was. I was a budget Chairman in a State 
Legislature and we would always try to figure out how to get 
the maximum amount of money out of the Federal Government. What 
you are telling me is that somebody would stay in a program 
where they would get less money? No. They are going to go for 
the block grant because they are going to get more money. Under 
present law, that baseline declines over time, right?
    Dr. HORN. No, actually it depends on the State, and that is 
why a State would have to individually determine whether it 
makes sense to them. Some State baselines are accelerating; 
some are decelerating.
    Mr. MCDERMOTT. We will discuss that if we ever see the 
language. Having done this a few years and watched the majority 
operate here, I always like to see what is in the language. We 
find out stuff in the language that is different than what we 
find in the newspaper, and these kind of hearings where we are 
kind of groping around in the dark.
    One question I would like to ask you is the whole question 
of, if you go to the issue of a block grant, are the children 
covered by Medicaid or not?
    Dr. HORN. Under the President's proposal, States choosing 
the option could do one of two things regarding Medicaid. First 
of all, they could continue to qualify kids for Medicaid as 
under the current system. Most children in foster care actually 
qualify for Medicaid because once a child is placed outside of 
their home, it is the child's individual assets and income--
most of these kids don't have income, most don't have assets--
that qualify or don't qualify them for Medicaid. So, a State 
could continue under the option to do it that way, or under the 
President's proposal, a State could make all children in foster 
care categorically eligible for Medicaid. So, we see this not 
as reducing the availability for Medicaid one iota for children 
under this option.
    Mr. MCDERMOTT. So, it is your testimony that no child will 
be denied Medicaid who is in foster care?
    Dr. HORN. It is my testimony that a State would have the 
ability to make a choice, either to continue to determine 
Medicaid eligibility as under the current system, or to make 
all the children categorically eligible for Medicaid who are in 
foster care under the State option.
    Mr. MCDERMOTT. That would be using options--using standards 
from 1996. If they stayed in the present program and used it, 
they would be using lower standards so that less kids would get 
in.
    Dr. HORN. We may be confusing two issues here. The 
standards for Medicaid eligibility are separate from the 
standards for Title IV-E eligibility. Medicaid eligibility for 
kids in foster care is based on the assets and income of the 
child. The asset threshold is $10,000 per child under the 
Chafee amendments and that would not change under the current 
law. If a State were to choose the option, they could continue 
to address Medicaid eligibility that way or make all the 
children categorically eligible in Medicaid.
    Right now, most kids in foster care are, in fact, eligible 
for Medicaid. Either they are categorically eligible because 
they are Title IV-E eligible or they are eligible because of 
the asset-income test. Under the President's proposal, we would 
do away with the existing Title IV-E program for those States 
that choose the option. So, rather than making Title IV-E the 
category that allows kids to be Medicaid eligible, a State 
could choose instead to make all their children categorically 
eligible in foster care.
    Mr. MCDERMOTT. What they have to do, then, is take that out 
of the block grant that they have gotten in Medicaid?
    Dr. HORN. No. I think they would----
    Mr. MCDERMOTT. The additional money----
    Dr. HORN. Pay for it the same way they are paying for 
Medicaid now.
    Mr. MCDERMOTT. I have got a State where we are putting in 
waiting lists in Medicaid, so I think people are going to be 
looking----
    Dr. HORN. In foster care?
    Mr. MCDERMOTT. No, not in foster care, in the regular 
Medicaid program.
    Dr. HORN. Okay, then that is a different issue. We are 
talking about the foster care.
    Mr. MCDERMOTT. Oh, this is another Medicaid program?
    Dr. HORN. This is the Medicaid program for kids in foster 
care.
    Mr. MCDERMOTT. It is not the same Medicaid? That is, 
Medicaid is not Medicaid?
    Dr. HORN. You said that your State has waiting lists for 
Medicaid, and I asked if that was true for foster care.
    Mr. MCDERMOTT. Yes, I understand that.
    Dr. HORN. I would be surprised if you had waiting lists for 
Medicaid coverage for kids in foster care.
    Chairman HERGER. The gentleman's time has expired.
    Mr. MCDERMOTT. I would like to see the language, Mr. 
Chairman.
    Mr. CARDIN. Could I just ask unanimous consent for 15 
seconds, just to get a clarification on Dr. Horn's point?
    Chairman HERGER. Without objection.
    Mr. CARDIN. Thank you very much. You are suggesting that 
States have legislative authority so that all of their children 
in the new program could be eligible for Medicaid, is that what 
you are suggesting?
    Dr. HORN. Yes.
    Mr. CARDIN. Thank you.
    Chairman HERGER. The gentlelady from Connecticut, Mrs. 
Johnson, to inquire.
    Mrs. JOHNSON. Thanks very much, Mr. Chairman, and thanks 
for holding this hearing and for your interest in this subject.
    Dr. Horn, I have been working on this since 1990. My State 
was one that got a waiver and they very smartly divided the 
kids into a control group and a demonstration project. I just 
want to report how very well the children did under the 
demonstration project which allowed the money to follow the 
child's need. Now, the money only goes to the State if you take 
the child out of the home. That is just so absurd, it is 
unbelievable.
    So, we got a waiver to do that, and in our waiver, 39 
percent of the kids in the demonstration, that is, those kids 
who are allowed to have their needs determine where the money 
was spent, 39 percent of those kids were in in-home placements 
versus 11 percent under the regular program. Twenty-four 
percent of the--in the 12 months of the demonstration project, 
kids spent 24 percent of their days with their family versus 9 
percent for the control group, and children in in-home 
placements had 16.5 percent fewer clinical system visits than 
in the control group, which was 7 percent.
    So, in other words, their mental health, their progress 
toward dealing with their emotional problems was greater. Their 
treatment options were greater. Their length of stay in 
restrictive settings was radically decreased. The children did 
better. The families did better. It cost no more money.
    I do have two concerns with your proposal, because while it 
costs no more money, in a bill I introduced some years ago 
actually working with Mr. Cardin, we did allow States to 
negotiate with the Federal Government what their baseline would 
be, looking at projections. So, I think it is important that we 
not just automatically freeze them where they are now--that the 
expected increase in costs is recognized, because while this 
provides much better quality care for children and enables 
States to develop a much better group of community-based 
services, it isn't necessarily going to save money.
    You have got to allow salaries to increase. One of the 
biggest mistakes we make in the human services is we don't plan 
for salary growth costs. So, I think I would like you to 
address whether your plan in any way looks to the future of 
cost growth.
    Then the second thing we did in our bill was to enable 
States when there were certain dimensions of increasing 
caseload, and you referred to the problem with the crack 
babies, to elect to snap back into the entitlement-based 
program. That structure will be there because not every State 
is going to elect the block grant. If they could elect the 
block grant knowing that if certain triggers were reached they 
could automatically snap back into the old program, then I 
think you would see not only services grow and there never 
being a need to snap back, but I think we would see the quality 
of care for these children dramatically improve.
    So, those two things--the snap back and negotiated 
baseline, looking toward future costs--I would like you to 
address.
    Dr. HORN. First of all, I would like to recognize your 
longstanding interest in this----
    Mrs. JOHNSON. Sometimes mean-spirited interest in this.
    [Laughter.]
    Dr. HORN. I just hope that in 2010, we are still not in 
this room trying to figure out how to reform child welfare.
    Mrs. JOHNSON. I hope not.
    Dr. HORN. In terms of your two issues, first of all, under 
the current baseline projections nationally, the expenditures 
under the Title IV-E program are expected to grow at about 4 
percent a year, and all of that would be captured in the 5-year 
projections.
    Mrs. JOHNSON. You are not talking about freezing. You are 
talking about a baseline based on the expected growth.
    Dr. HORN. That is exactly right. So, there is expected 
growth that is part of the baseline. Some States have a higher 
growth rate than 4 percent, some have a lower growth rate. 
Nationally, the growth rate is 4 percent.
    Now, what is different about our proposal is that we don't 
just say, if you take this, you are stuck with what the current 
baseline projections are year by year by year. You can choose 
that if you want to under our proposal. The other thing that we 
let you do is--as an option--is to collapse that 5-year total 
and take it in equal 5-year increments, which means in the 
first few years you get more money than you would expect under 
the current baseline projections and at the latter part you 
would have less money. The State would have the option. They 
could do it that way, equal increments, or allow it to grow 
over time given their baseline projections.
    The advantage of the former, that is, to take it in equal 
increments, is that you can put some up front investments in 
prevention that may reduce, we hope, the need for foster care. 
The advantage of the other is that you get a predictable growth 
in terms of the money that you get from the Federal Government 
over 5 years----
    Mrs. JOHNSON. Which is basically the growth they would get 
anyhow.
    Dr. HORN. That is right, and so----
    Mrs. JOHNSON. So, we are not in any way reducing the amount 
of money they are allowed to get.
    Dr. HORN. Not at all.
    Mrs. JOHNSON. We are giving them some options about when 
they get it.
    Dr. HORN. That is exactly right. In terms of your question 
about if there is an increase in caseload--we considered as an 
option the ability for States to opt back into the open-end 
entitlement and we couldn't do that and keep this proposal cost 
neutral over 5 years if we also allowed States to take the 
money in equal increments over time.
    Mrs. JOHNSON. So, you could allow a snapback for the States 
whose base rose each year, but not for those that chose the 
option?
    Dr. HORN. That is not currently part of the President's 
proposal. The way we try to deal with that is allow States who 
experience an uptick in the need for foster care to access 
additional dollars through the TANF contingency fund.
    Mrs. JOHNSON. Right.
    Chairman HERGER. The gentlelady's time has expired. I thank 
her. The gentleman from California, Mr. Stark, to inquire.
    Mr. STARK. I guess we don't know what the plan is, but I 
guess, basically, if I understand it, Dr. Horn, you want to 
give the States an option for a block grant and you are not 
increasing any funds to State programs for foster care 
programs, is that right?
    Dr. HORN. It is not true that we haven't asked for 
additional funds for State child welfare systems, including 
foster care, because we have asked for $1 billion in additional 
money over 5 years in the Safe and Stable Families Program.
    Mr. STARK. How much did you get?
    Dr. HORN. We only got half of it, and----
    Mr. STARK. Half?
    Dr. HORN. Half of it has been appropriated----
    Mr. STARK. Is that $500 million or $100 million?
    Dr. HORN. We got $500 million over 5, and this year----
    Mr. STARK. Oh, $100 million a year.
    Dr. HORN. Over 5 years, $500 million in additional money, 
and what we are asking for this year is for the other half. You 
came a little bit late to the hearing and I already expressed 
my gratitude to both the Chairman and the Ranking Member for 
sending a very supportive letter to the Appropriations 
Committee supporting our request for the additional money in 
Safe and Stable Families.
    Mr. STARK. If a State were to take your block grant and 
their caseload increased, if the preventive program didn't 
work, or if there was a drug epidemic as we had with crack, 
then they would have no way to find the additional funds to 
deal with that increased caseload, is that correct?
    Dr. HORN. No, it is not, because under our proposal, the 
State in those conditions would be able to draw down additional 
funds from the $2 billion TANF contingency fund, and so there 
is an ability for States to access that money.
    Mr. STARK. That cuts their TANF program, so----
    Dr. HORN. Well, no----
    Mr. STARK. Let us just deal with the foster care. Under the 
block grant program, you are letting them take 5 years flag, or 
5 years fixed, and they can draw it down earlier if they 
choose, right? If the programs don't work, then toward the end 
of the program where they would need more money for foster care 
services, is that right?
    Dr. HORN. Well, again----
    Mr. STARK. If the caseload increases----
    Dr. HORN. If the caseload increases, they would have the 
ability to draw additional funds.
    Mr. STARK. They would not get that from the Federal 
Government, would they?
    Dr. HORN. No, they would. The TANF contingency fund is part 
of the Federal budget.
    Mr. STARK. The contingency fund is for TANF, right, or for 
cases that one might expect in the coming recession who have 
nothing to do with foster care. That money could be used for 
child care and worker training and day care and all those other 
things, right?
    Dr. HORN. Well, we have just been through a recession and, 
in fact, under the TANF program--there was no State that drew 
down any money in the contingency fund.
    Mr. STARK. You may do very well in social work, but in 
economics, we are in a recession. We haven't been through one 
yet. We are on the way down, pal, and let us confine your 
expertise, such as it is, to social work. We have not been 
through one yet. We are losing a couple of million jobs a year 
and they are not being recreated by the stupid tax cut and the 
unemployment is going up. In anybody's book, that is very apt 
to increase the burden on TANF funds. So, that with a block 
grant to the States, it is close to lying to suggest that there 
will be money in the TANF funds to support foster care.
    Mr. CARDIN. Would the gentleman yield just very briefly on 
that point?
    Mr. STARK. Yes, I would be glad to.
    Mr. CARDIN. It is not only an increasing caseload, you are 
assuming a declining caseload.
    Dr. HORN. In which program?
    Mr. CARDIN. As I understand, the Congressional Budget 
Office (CBO) baseline assumes over the next 10 years a decline 
in the caseload, and therefore, the 4 percent reflects a 
decline in the caseload because of the average monthly 
maintenance payments going up.
    Dr. HORN. The way that----
    Mr. CARDIN. I think that if a State just held its own, it 
actually would be under the CBO baseline.
    Dr. HORN. Well, I will try to restrict my testimony to my 
area of expertise and one of them is as a social scientist who 
looks at empirical data, and we actually have data from States 
who, in fact, have opted under the waivers to take this money 
more flexibly. The fact of the matter is, what they have been 
able to do is demonstrate with more flexible funding that they 
can, in fact, reduce the need for foster care. They can reduce 
the length of time in foster care and, in fact, expend less 
money.
    Mr. CARDIN. Let me just make one more point before Mr. 
Stark's time expires, and that is that the total TANF 
contingency fund is $2 billion. The foster care system is $5 
billion a year. It is hardly enough if we really run into a 
problem for the entire system.
    I think the point is, if we run into a problem, we are 
running significant risks here whether the resources are going 
to be there to deal with these vulnerable children. Thank you, 
Mr. Stark.
    Chairman HERGER. The gentleman's time is expired. Dr. Horn, 
your testimony describes how national statistics show that too 
many children are lingering in foster care and waiting for 
adopted families. Could you give us a little more background 
about the number of children currently in foster care, how long 
these children spend in foster care, and what these lengths of 
stay mean in terms of outcomes for those children--and also 
could you give us the Administration's proposal to address 
these concerns?
    Dr. HORN. Currently, there are about 542,000 children in 
foster care. About 46 or close to 47 percent of them are Title 
IV-E eligible children. The average length of stay for a child 
in foster care is about 3 years. Now, one of the things we know 
from the empirical literature is that the longer a child spends 
in foster care and the increase in the number of placements in 
foster care is directly associated with poor outcomes.
    So, if we want to have better outcomes for children, what 
we need to do is find ways to reduce the length of stays in 
foster care--again recognizing the foster care system is an 
important piece of the system of child welfare services--and 
also try to reduce the number of placements. We believe that by 
providing the ability for States to use this money more 
flexibly--to, in fact, fund more preventative services as well 
as more intensive services for kids that are particularly at 
risk--will support State efforts to improve outcomes for 
children.
    There is a State waiver that we gave that looked at 
children who are very, very much at risk from multiple 
placements, disruptive placements, and long-term foster care. 
These are kids with long histories of aggressive behavior, fire 
setting, and so forth. Right now, you can't use Title IV-E 
funds for those kids to provide intensive services. So, we 
provided the waiver to provide intensive services to those 
kinds of children, and what we found was that those kids who 
are provided those intensive services were less likely to have 
disrupted foster care placements and so we think that States 
can use this more flexible funding structure to better suit the 
needs of children in the foster care system.
    Remember, it is important to keep in mind that we do not 
fund all children in foster care. We only fund 47 percent of 
the kids in foster care, those children who are Title IV-E 
eligible. Those children, in part, are Title IV-E eligible by 
pretending the AFDC system still exists. It doesn't exist. Yet 
we make eligibility workers in the foster care system pretend 
as if the 6-year-old dead program still is alive, and well, 
that makes no sense.
    So, what we are saying is, break down the categorical 
nature of this funding stream. Allow States to use this money 
more flexibly. Allow them to use it for services as well as 
administrative costs and foster care payments, which they can't 
do now under current law, and we think--and based on the 
experience we have had with the State waivers--that we are 
going to see better outcomes for kids.
    Chairman HERGER. Thank you. The Congressional Research 
Service (CRS) recently did a memo that shows how Federal foster 
care funding can swing wildly within States from year to year. 
At the same time, we don't see these wild swings in the number 
of children in foster care based on this. If I were a State 
program administrator, one of the most attractive features of 
this proposal is the added predictability I could gain in terms 
of Federal funds that we receive to serve children and families 
in the next 5 years.
    Dr. Horn, would you care to comment about how this proposal 
can provide States more predictability over funding they 
receive and what that can mean for States?
    Dr. HORN. Well, certainly if a State were to choose this 
option, they would have a very clear idea of the amount of 
money that they will have in each of the next subsequent 5 
years. They could choose that money to come to them in equal 
installments over 5 years or in an acceleration based upon the 
State's baseline projections. They would know exactly how much 
money they would have and I think that would add to 
predictability. If I were running a child welfare system and 
wanted to know what my budget was, I would have a better sense 
of being able to budget for the future years if I knew what 
that money was, as opposed to sort of rapid changes in how much 
money is being drawn from the Federal Government.
    Chairman HERGER. Dr. Horn, thank you very much for your 
testimony. With that, I would like to ask the next----
    Mr. STARK. Mr. Chairman?
    Chairman HERGER. Yes?
    Mr. STARK. Could we have a second round here?
    Mr. CARDIN. Mr. Chairman, if I might, this will be the 
first time I have made this request. I think we have made some 
progress here today in clarifying some of the points. I think 
it might be useful to have a second round, and I would request 
maybe we could limit it to 3 minutes rather than 5.
    Chairman HERGER. I think we have had good testimony from 
the Administration. I do not want to delay the next round, and 
I believe we will move to the next round.
    Mr. STARK. Sort of like weapons of mass destruction, Mr. 
Chairman. If we hide them from the public----
    Chairman HERGER. The next panel will have a seat at the 
table, please: Barbara Riley, Deputy Director of the Office of 
Children and Families of the Ohio Department of Job and Family 
Services; Elaine Ryan, Deputy Executive Director of Policy and 
Government Affairs of the American Public Human Services 
Association (APHSA); Dianne Edwards from my home State of 
California, Director of Sonoma County Human Services 
Department; and Terry Cross, Executive Director of the National 
Indian Child Welfare Association in Portland, Oregon. Ms. 
Riley, if you would testify.

STATEMENT OF BARBARA RILEY, DEPUTY DIRECTOR, OHIO DEPARTMENT OF 
            JOB AND FAMILY SERVICES, COLUMBUS, OHIO

    Ms. RILEY. Chairman Herger, distinguished Subcommittee 
Members, I am Barbara Riley, Deputy Director of the Ohio 
Department of Job and Family Services and responsible for 
Ohio's child welfare program.
    It is my pleasure to testify today in regard to the 
Administration's foster care flexible funding proposal. For a 
number of years, the States have been eager to engage in a 
conversation regarding child welfare financing, and I welcome 
the opportunity to discuss some of the benefits and the 
challenges this proposal presents.
    In order to provide some context for Ohio's interest in 
foster care financing, I would like to share just a quick 
snapshot of our child welfare system. In State fiscal year 
2002, we had over 71,000 reports of child abuse and neglect 
involving nearly 114,000 children. In July, 1992, we had 17,285 
children in out-of-home placement, and by July of 2002, that 
had risen to 22,883, with an average length of stay of 208 
days, and until I heard the average for the country, I had no 
idea how lucky Ohio's children are that we are only at 208. 
However, I would like to ask you to think about how long 208 
days is in a child's life.
    In State fiscal year 2002, Ohio's children spent over 8 
million days in foster care, which is equal to 2\1/2\ days for 
every child in Ohio, and an increase of 39 percent from 1992. 
In that same timeframe, placement costs rose by 134 percent.
    In State fiscal year 2002, 36,417 Ohio children were in the 
custody of a public children's service agency, and our total 
expenditures for child welfare in Ohio in fiscal year 2003 are 
projected to be about $850 million, with county taxpayers 
bearing 55 percent of that total while the Federal Government 
will absorb approximately 38 percent of that cost.
    These statistics clearly represent the scope of our issues, 
but the depth and the breadth of the problems we face to 
resolve is vast, and our experience has taught us that 
segregated funding streams do not support the efforts that need 
to be made to affect child safety and well-being. In fact, I 
believe that the current Title IV-E funding system rewards 
failure rather than success. So, Ohio is very much interested 
in the foster care flexible financing proposal with some 
modifications.
    This proposal would allow the States to choose to receive 
their foster care maintenance, administration, and training 
funding in the form of a quasi-block grant, providing greater 
flexibility. I am able to foretell the future of this proposal 
for Ohio with some level of confidence as Ohio is in the 
enviable position of having a Title IV-E child welfare 
demonstration wavier that has taught us just how important 
flexible funding can be.
    In our protect Ohio waiver, 14 counties receive a budget of 
placement days at a very set unit cost and along with that the 
flexibility to use their Title IV-E funding on children and 
services as they see fit. To the extent that a county is able 
to avoid the placement of children, their allocated dollars not 
used on placement may be used for non-Title IV-E services, such 
as family counseling, drug treatment and prevention.
    We have just completed our 5-year evaluation, and it 
reveals several very intriguing results. On the business side, 
we have saved $41.2 million in placement costs while those 
dollars are available for alternative services. Most 
importantly, children experience 682,350 fewer days in 
placement.
    On the programmatic side, the waiver results include 
improved availability and quality of services, development of 
new services, increases in service capacity, timely access, 
increased attention to outcomes, and increased family 
involvement. In essence, the State serves as a managed care 
provider to the Federal Government, and the Federal Government 
indemnifies itself against any cost overruns for increases in 
placement costs that might be experienced by those 14 counties.
    If we could extend this ability statewide to align funding 
with successful outcomes for children and families, I believe 
it could herald the beginning of child welfare reform in Ohio 
akin to the level of reform experienced under the TANF program.
    The Administration's foster care flexible funding proposal 
promises much. However, for us to be able to experience such a 
reformation, we would like to recommend that Congress provide 
States with the ability to negotiate how to administer this 
budget-neutral flexible funding option in each State.
    The Congress allows States to choose to opt in beyond the 
Federal fiscal year 2004. Even if you freeze the base for 
establishing funding levels, this type of endeavor requires 
incredible planning at the State level and may even require 
changes in State law. We would ask Congress to allow States to 
reopen the option if additional Federal requirements alter the 
actuarial assumptions on which original funding levels were 
based.
    Also, the inflation factor needs to more accurately reflect 
an individual State's experience rather than a national 
average. We also believe that access to the contingency fund 
should be dependent only on increases in State caseloads, not 
national experience.
    Also, for Ohio, it is important that the statewide 
Automated Child Welfare Information Systems funding not be 
included.
    Chairman HERGER. If you could sum up your testimony, 
please.
    Ms. RILEY. Mr. Chairman, Members of the Subcommittee, there 
is little doubt in my mind that the Federal funding for foster 
care forces rigidity--that is, as it is today--forces rigidity 
onto the foster care system and the flexible funding here 
offers much promise to Ohio. Thank you, Mr. Chairman.
    [The prepared statement of Ms. Riley follows:]

Statement of Barbara Riley, Deputy Director, Ohio Department of Job and 
                    Family Services, Columbus, Ohio

    Good afternoon. Chairman Herger, distinguished Subcommittee 
Members, I am Barbara Riley, Deputy Director of the Ohio Department of 
Job and Family Services, and responsible for Ohio's child welfare 
program. It is my pleasure to be able to testify today in regard to the 
Administration's Foster Care Flexible Funding proposal. For a number of 
years the states have been eager to engage in a conversation regarding 
child welfare financing, and I welcome this opportunity to explore some 
of the benefits and challenges this proposal presents.
    In order to provide context for our interest in foster care 
financing, I would like to share a snapshot of our child welfare 
system.

     In State Fiscal Year (SFY) 2002 we had 71,366 reports of 
child abuse and neglect, involving 113,897 children.
     In July 1992 there were 17,285 children in out-of-home 
placements. In July 2002 that number had risen to 22,883, with an 
average length of stay of 208 days.
     In SFY 2002 Ohio's children spent 8,105,166 days in 
foster care, which is equal to 2\1/2\ days for every child in Ohio, and 
an increase of 39% from 1992. In that same time frame costs rose by 
134% to $325.4 million per year.
     In SFY 2002, 36,417 Ohio children were in the custody of 
a public children services agency.
     Total expenditures for child welfare in Ohio in SFY 2003 
are estimated to be $850-$865 million, with county taxpayers bearing 
about 55 percent of that total, while the Federal Government will 
absorb approximately 38 percent of the cost.

    These statistics clearly represent the scope of our issues. The 
depth and breadth of the problems we must resolve is vast, but our 
experience has taught us that segregated funding streams do not support 
the efforts that need to be made to affect the safety and well-being of 
children. In fact, I believe that the current Title IV-E funding system 
rewards failure rather than success, so Ohio is very much interested in 
the Foster Care Flexible Funding Proposal, with some modifications.
    This proposal would allow the states to choose to receive their 
foster care maintenance, administration, and training funding in the 
form of a quasi block grant, providing greater flexibility in 
determining who we serve and with what services. I am able to foretell 
the future of this proposal for Ohio with some level of confidence, as 
Ohio is in the enviable position of having a IV-E child welfare 
demonstration waiver that has taught us just how important flexible 
funding can be. In our ProtectOhio waiver, 14 counties receive a budget 
of placement days at a set unit cost; and along with that, the 
flexibility to use their IV-E funding on any child who is a victim of 
abuse and neglect, and for any service, regardless of IV-E eligibility. 
To the extent that a county is able to avoid placement of children, 
their allocated dollars, not used on placement, may be used for non IV-
E services such as family counseling, drug treatment, prevention 
services, etc.
    Our five year evaluation has been completed and reveals several 
very intriguing results. On the business side: we have saved $41.2 
million in placement costs, with those dollars available for 
alternative services; and most importantly, children experienced 
682,350 fewer days in placement. On the programmatic side, the waiver 
results include: improved availability and quality of services, 
development of new services, increases in service capacity, timely 
access to services, increased attention to outcomes, increased family 
involvement in case management, and increases in recruiting results for 
foster and adoptive parents. In essence, the state serves as a managed 
care provider to the Federal Government, and the Federal Government 
indemnifies itself against any ``cost overruns'' for increases in 
placement costs that might be experienced by these counties.
    If we could extend statewide this ability to align funding with 
successful outcomes for children and families, I believe it would 
herald the beginning of child welfare reform in Ohio, akin to the level 
of reform experienced with Temporary Assistance to Needy Families. The 
Administration's Foster Care Flexible Funding Proposal promises much, 
however, for us to be able to experience such a reformation, I would 
like to recommend that:

     Congress provide states with the ability to negotiate how 
to administer this budget neutral flexible funding option in each 
state;
     Congress allow states to choose to ``opt in'' beyond FFY 
2004, even if you freeze the base for establishing funding levels, as 
this type of endeavor requires planning at the state level, including 
potential necessary changes in state law;
     Congress allow states to reopen the option if additional 
federal requirements alter the actuarial assumptions on which original 
funding levels were based;
     The inflation factor more accurately reflect an 
individual state's experience, rather than a national average;
     Access to the contingency fund be dependent only on 
increases in state caseloads; and
     SACWIS funding not be included in the option.

    Mr. Chairman, members of the subcommittee, there is little doubt in 
my mind that federal funding for foster care, as now manifested in 
Title IV-E, forces a rigidity onto child welfare practice that limits 
and stifles state and local innovation. Removal of that rigidity would, 
in my opinion, create a singularly powerful catalyst to state and local 
innovation and reform by targeting service dollars to both stated 
federal policy objectives, and just plain good child welfare practice. 
I also believe that any flexible funding model must occur in the 
context of preserving a federal entitlement for foster care maintenance 
funds, while also creating a more rational array of funding incentives 
which reward best practice behaviors. Against this backdrop, Ohio would 
both welcome and embrace many of the elements of the Administration's 
proposal.
    Thank you for the opportunity to provide this testimony, and I 
would be happy to answer any questions.

                                 

    Chairman HERGER. Thank you very much, Ms. Riley. Ms. Ryan?

STATEMENT OF ELAINE M. RYAN, DEPUTY EXECUTIVE DIRECTOR, POLICY 
    AND GOVERNMENT AFFAIRS, AMERICAN PUBLIC HUMAN SERVICES 
                          ASSOCIATION

    Ms. RYAN. Mr. Chairman and Members of the Subcommittee, 
thank you so much for the opportunity to testify. I am Elaine 
Ryan. I am the Deputy Executive Director of the APHSA. I really 
appreciate the opportunity to focus on this very critical issue 
of child welfare financing that just impacts so many children's 
lives. We have had the opportunity to testify before you and 
really commend Congresswoman Johnson's leadership on child 
welfare financing in the past, and Mr. Cardin's, and also look 
forward to working with the Committee on these important 
issues.
    Our association has spent the last 7 years looking at child 
welfare financing, so this is not new to our association. We 
see what I think most of the experts in the room and those who 
have testified see, and that is the fact that the Title IV-E 
entitlement structure is just woefully inadequate and out of 
step with the needs of the children and families we serve.
    For example, the circumstances of abuse and neglect bring 
children to the system. It is not the income of their parents. 
Yet we have a Federal funding stream that only supports the 
services to the poor children in the system, but not all the 
children in the system. We believe that needs to be reformed.
    The second principle that we have embraced over the years 
is enhanced Title IV-E flexibility. By flexibility, we mean the 
ability to use Federal funds in a way that are more 
contemporary with the needs of the system. For example, Title 
IV-E funds cannot be used for investigations, frontline worker 
training, post-adoption services to guarantee that those are 
successful adoptions, permanency, or subsidized guardianship 
for some of the older, more troubled children in the system. It 
is out of step with the children and families' needs and it 
needs to be reformed.
    So, we come to you with a lot of recommendations and are 
grateful for the opportunity, because we feel a sense of 
urgency. You see, because of the lookback, the Federal 
financial commitment to child welfare has slipped over the 
years. Just by inflation alone, fewer children are eligible for 
any reimbursement or services.
    Second, we have experienced huge cuts in the Social 
Services Block Grant program (SSBG), and I just want to commend 
the Members of this Subcommittee in particular for your 
leadership, and Congressman Levin's and Mrs. Johnson's 
leadership, in particular, to restore block grant funding for 
the SSBG, such a critical source. The block grant has been cut 
from $2.8 billion to $1.7 billion and it is hurting on the 
frontlines. We need to have that restored.
    I have a lot of passion about this issue, and it is because 
I think so much is at stake that we do this right, that we take 
the time to embrace proposals that will have the maximum 
possible benefit for the vulnerable children and families in 
this system.
    We were asked early on, quite frankly, when the 
Administration released their budget proposal to examine it, 
and we gladly did so by putting together a working group of 
States. When we asked about which States had interest in the 
issue of child welfare financing, 38 States signed up 
immediately to say, count us in, because they know what we all 
know, that this system is in bad need of reform.
    The foster care flexible funding option that the 
Administration has put forth has some very positive options. 
First, it stops the slide and the lookback. In other words, 
States don't have that declining Title IV-E reimbursement. 
Second, States can use those dollars for all children in the 
system. Third, you can use those dollars for multiple purposes, 
like some of those that I have mentioned earlier in my 
testimony.
    With that said, we also have heard in our exploration of 
this some concerns raised. For example, Congresswoman Johnson's 
point of the snapback--I like that better than opt out--but 
quite frankly, States are concerned that if they commit once 
and have a short period of time that they are in for 5 years. 
They also have raised some issues that I have outlined in my 
testimony that I commend to your attention.
    States are in very different points of reform. Ohio is in a 
place. California is in a place. One thing we know is we need 
every option possible to serve these children as quickly as 
possible and with some flexibility to meet their needs. The 
current system doesn't do that.
    Let me just close by saying that we are very appreciative 
of Mr. Cardin's leadership in terms of trying to fix the 
lookback, making it a bit more contemporary. Of course, we want 
Federal financial participation on all children in the system, 
but we really appreciate your initiative as a fine starting 
point for future discussions.
    Second, States, as you well know, are going through the 
child and family services reviews. They are then asked to put 
together Program Improvement Plans (PIPs), and as I have put 
it, in some circumstances, State budgets are too pooped to PIP.
    [Laughter.]
    In other words, we don't have the resources to meet the 
objectives contained in those proposals, to be able to get some 
of those improved outcomes for children and families, and we 
have a lot at stake here.
    So, let me say that we appreciate the recognition of the 
idea that more resources might be needed for those program 
improvement plans, but we think we can find perhaps some reform 
in making Title IV-E more flexible so that you can actually use 
those dollars to drive those outcomes. For example, training 
caseworkers in child development, you can't----
    Chairman HERGER. If you could sum up, please.
    Ms. RYAN. You can't do that now, and we think that Title 
IV-E could be made more flexible in a number of ways.
    Let me just sum up by saying we are appreciative of the 
child welfare waiver authority and Congressman Herger, for your 
leadership in including that in the Welfare Reform Act (P.L. 
104-93). We want to see that demonstration authority that has 
worked so well in Ohio and Connecticut continue. In sum, I am 
happy to answer any questions that you may have for me.
    [The prepared statement of Ms. Ryan follows:]

  Statement of Elaine M. Ryan, Deputy Executive Director, Policy and 
     Government Affairs, American Public Human Services Association

    Good afternoon, Mr. Chairman and Members of the Subcommittee, I am 
Elaine M. Ryan, Deputy Executive Director for Policy and Government 
Affairs at the American Public Human Services Association (APHSA). I am 
pleased to have the opportunity to testify about child welfare 
financing reform and the proposal to create a foster care funding 
option for states.

Child Welfare Financing Reform Goals
    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. Indeed, APHSA 
members have dedicated nearly seven years discussing and crafting 
policy recommendations with respect to the financing of the child 
welfare system. APHSA has embraced two fundamental goals for child 
welfare financing reform outlined in our policy document, Crossroads: 
New Directions in Social Policy. First, there should be federal 
financial participation in support of all children in the child welfare 
system and, second, there should be increased flexibility in the use of 
IV-E funds.
    APHSA policy supports delinking IV-E eligibility from AFDC so that 
the Federal Government can share in the support of all children in the 
child welfare system, regardless of income. With respect to increased 
flexibility, we strongly believe that the current IV-E structure fails 
to support the outcomes for children and families that we seek to 
achieve. Federal funding is disproportionately directed to funding out 
of home care--the very part of the system agencies seeks to minimize in 
order to achieve greater permanence for children. The IV-E entitlement 
should fund front-end services, reunification, post-permanency for 
children and families in the system as well.
    Over the past several years, the demands on the child welfare 
system have increased significantly. State administrators have focused 
their efforts on implementing the requirements of the Adoption and Safe 
Families Act and setting forth plans to achieve improved outcomes for 
children with respect to safety, permanency and well-being. At the same 
time, fewer and fewer children served in the child welfare system are 
supported with federal funds, due to the ``look back'' provision of the 
welfare reform act that links IV-E eligibility to the former AFDC 
eligibility rules in effect as of July 16, 1996. In addition, since 
1996, the Social Services Block Grant, a critical source of federal 
funding for child welfare, has been dramatically reduced from $2.8 
billion to $1.7 billion. And recent federal policy announcements and 
actions threaten to restrict federal IV-E reimbursement for 
administrative costs incurred on behalf of children in unlicensed 
foster family homes as well as for targeted case management under 
Medicaid. Given the growing demands on the child welfare system and in 
light of the fragmented and fragile funding infrastructure, we believe 
Congress must address the critical issue of child welfare financing.
    With so much at stake, we urge this subcommittee to engage in a 
thorough and comprehensive examination of all possible reform 
proposals.

The Administration's Foster Care Flexible Funding Proposal
    We want to commend the Administration for highlighting the need for 
child welfare financing reform by setting forth a foster care flexible 
funding option in its FY 2004 Budget. Shortly after the release this 
year of the Administration's proposal, APHSA formed a working group of 
interested states to discuss various aspects of the proposal. In 
addition, Dr. Horn, Assistant Secretary for the Administration for 
Children and Families and various Administration officials have met 
with our members and have solicited input on the proposed idea and the 
design of a state option. I am pleased to have the opportunity to share 
some of our preliminary thoughts on the broad construct of the foster 
care flexible funding proposal, based on the feedback we have received 
from our working group. However, it is important to note that APHSA has 
not taken a formal position on the Administration's proposal to date. 
When legislation is introduced in Congress, we will bring the proposal 
before our membership for consideration at that time.
    As we understand the proposal, there are several strong aspects of 
the Administration's foster care flexible funding option. First, states 
would have the flexibility to use their IV-E funding allotments, as 
well as their MOE funds, for a broad range of services to children and 
families. We assume any legislative language would enable states to 
invest in prevention, subsidized guardianship, case-management, post-
adoption services, and cross-system collaborative efforts with 
substance abuse agencies and juvenile courts and other activities and 
services as they see fit. Second, under the option, states could use 
the federal and MOE funds for all children in their foster care system, 
without regard to income. Third, under the option states could stem the 
decline in IV-E funding, due to the ``AFDC look-back.'' Fourth, states 
would have the option of spending a greater proportion of their annual 
allotments in the first several years and could opt to roll any unspent 
funds from one fiscal year to the other. Finally, states would have 
access to a contingency fund in the event of a significant increase in 
their foster care caseload.

Determination of Baseline and Opt-in Period
    As the subcommittee members are well aware, states child welfare 
systems are at various stages of reform and their state fiscal 
situations vary. Some states have experienced dramatic declines in IV-E 
eligibility claims in recent years, some have achieved reductions in 
foster care caseloads, some have seen increases, and some have operated 
waiver demonstrations. In addition, states differ in the resources used 
to support their child welfare systems--some have used TANF, SSBG, 
Medicaid, and a host of state and local resources. Therefore, states 
will need to engage in a complex calculation of whether to embrace the 
option or continue to operate under the entitlement structure.
    States will have great interest in the calculation of the baseline, 
the base year, treatment of claims filed vs. claims paid, the treatment 
of child support collections, disallowances and deferrals. States 
should be consulted in the development of the criteria used to 
calculate the baseline. In addition, we would urge the subcommittee to 
consider adding a state option to exclude the cost of AFCARS and SACWIS 
systems from the baseline calculation and retain the current federal 
match for these data systems.
    Lead time will be important to states interested in opting in to 
allow for calculations to determine benefits of participating, to make 
any needed regulatory and/or statutory changes, systems changes, and to 
instruct the field of changes in practice. A significant time period 
may be required due to the need for extensive discussions with their 
local jurisdictions who administer child welfare. In addition, the 
proposed one-time opt-in period may limit some states from taking 
advantage of the option, due to the need to seek legislative approval 
or to undertake the aforementioned approval process. The subcommittee 
might explore the idea of allowing states to opt in within a two or 
three year period.

Opt Out
    Some states have expressed concerns with the provision in the 
foster care option that would require states to stay in the option for 
five years. In light of the fiscal difficulties in the states, and the 
uncertainty related to the rising cost of child welfare, caseload 
dynamics and other factors, we urge the subcommittee to consider 
affording states the opportunity to opt out within the five year 
period. The creation of a contingency fund, while helpful, may not be 
able to shield states from unexpected revenue shortfalls or rising 
state deficits. With the protection of children our paramount concern, 
state should be able to opt out of the plan.

Maintenance of Effort
    As in the TANF statute, we recommend the maintenance of effort 
(MOE) requirement should be limited to the historic share of state 
match for the base year identified in the law.
Links to Other Programs
    As the subcommittee considers the option, we encourage you to look 
in-depth at the relationship this foster care option will have to other 
federal programs such as IV-E Adoption Assistance and Medicaid. While 
states may serve all children without respect to income under the 
foster care option, IV-E eligibility for Adoption Assistance must be 
simplified. Medicaid coverage must be continued for all previously 
eligible children under the option.

Contingency Fund
    Under the Administration's proposal, states would need to meet a 
federal and state trigger in order to draw contingency funds. We 
recommend that the subcommittee consider one trigger linked to a 
significant increase in the state's foster care caseload. In addition, 
Congress should ensure that the match rate under the contingency fund 
is no greater than the state's current IV-E match rate.

Additional Congressional Actions
    As stated earlier, state child welfare systems vary widely. For 
some states, the proposed option may not be viable. Cost neutrality 
conditions and financial risks may not be acceptable to some states. 
Therefore, in addition to considering the foster care funding option, 
we encourage the subcommittee to consider the following revisions to 
the IV-E entitlement.

Address the ``Look Back''
    Under the welfare law of 1996, states were given greater 
flexibility to establish Medicaid eligibility, including an inflation 
factor. However, with respect to IV-E eligibility, no inflation factor 
was included in the provision. In 1996, Congress acknowledged that they 
would need to address the IV-E eligibility criteria at a later date. 
Nearly seven years have passed and no action has been taken. We urge 
action on this critical issue. We want to acknowledge the legislation 
sponsored by Congressman Cardin that would update the IV-E eligibility 
by linking it to TANF eligibility. While we believe the proposal does 
not go far enough, we believe it is a positive starting point for 
further discussion.

Expand IV-E Flexibility
    We appreciate that the Cardin bill recognizes that states will need 
additional resources in order to implement their Program Improvement 
Plans resulting from the federal Child and Family Service Reviews. We 
urge the subcommittee to examine the ways IV-E funding might be made 
more flexible so that states could use these resources to improve the 
outcomes for children and families in the system.

Restore the Social Services Block Grant
    I cannot discuss child welfare funding without mentioning the 
Social Services Block Grant (SSBG). SSBG is a critical source of 
federal funding for child welfare services, and $1.3 billion in 
increased funding is currently pending in the Senate as part of the 
CARE Act. It is also through the leadership of several members of this 
committee including Representatives Johnson, Levin, Camp, Cardin, 
McDermott, English, and Stark who have called for full restoration of 
SSBG to $2.8 billion as part of the Social Services Block Grant 
Restoration Act. APHSA strongly encourages the subcommittee to support 
SSBG Restoration, either through passage of this legislation or as part 
of HR7, the companion bill to CARE that may move through the House. 
There are a host of SSBG services that support children and their 
families involved in the child welfare system; it is significant that 
in FY 2001 49 states used over $825.5 million for such child welfare 
services such as foster care, child protection, prevention and 
intervention, and adoption. According to an Urban Institute survey, 
SSBG was the second major funding stream for child welfare services 
after Title IV-E. Also, with only $21 million available federally under 
the Child Abuse and Prevention and Treatment Act (CAPTA) for the 
protection of children, states made use of over $314 million in SSBG 
funds for the same purpose.

Reauthorize and Expand IV-E Child Welfare Waivers
    We appreciate the leadership of this subcommittee to reauthorize 
IV-E waivers in H.R. 4, the welfare reform act and call on Congress to 
include this provision in any final TANF legislation. The current 
waiver process limits innovation, prohibits approval for multiple 
states to test similar innovations, such as subsidized guardianship; 
restricts research, control groups, and random assignment requirements; 
cost-neutrality methodology; and limits statewide approaches. While the 
waiver program has enabled some states to reinvest federal foster care 
funding in services and other activities to improve their systems and 
promote permanence, in its current mode of HHS implementation, it is a 
promise unfulfilled and will not meet state's needs for the flexibility 
necessary to achieve broad systems change. APHSA strongly supports 
making substantial modifications to the current Title IV-E waiver 
process to allow more flexibility and to foster system change, 
including eliminating the limited number of waivers HHS can approve; 
eliminating approval criteria that require random assignment and 
control groups that limit statewide approaches; eliminating the limited 
number of states that may conduct waivers on the same topic; 
eliminating the limited number of waivers that may be conducted by a 
single state; and enabling states to continue their waivers beyond five 
years. The Title IV-E Demonstration Waivers would afford states another 
option to achieve flexibility and improve performance.

Conclusion
    APHSA's vision for child welfare is a society where children are 
free from abuse and neglect, and live in safe, stable, permanent 
families-where children and families have needed supports and can help 
themselves. When children are at risk and come to the attention of the 
public agency, the agency can provide services and supports to them and 
their families to mitigate their problems and prevent them from being 
removed from their families and communities. When children must come 
into care, the agency can address children and family needs 
expeditiously and enable a safe reunification or, where that is not 
possible, find an alternative permanent placement expeditiously, while 
assuring their well-being in the interim. This is a vision where the 
safety and protection of children is the shared responsibility of all 
parts of the human service agency and the larger community. It is a 
vision where the child welfare system has the capacity to improve 
outcomes for children and families and the Federal Government and 
states are equal partners in serving all children in all parts of the 
system.
    The child welfare financing system, developed 23 years ago, no 
longer supports states' efforts to achieve this vision. We need reform 
and look forward to working with the subcommittee to devise a financing 
construct that can meet the needs of the most vulnerable children and 
families we serve.
    Thank you for the opportunity to testify. I would be pleased to 
respond to any questions you may have.

                                 

    Chairman HERGER. Thank you, Ms. Ryan. Now, Dianne Edwards 
from my own home State of California, Director of the Sonoma 
County Human Services Department. Ms. Edwards?

  STATEMENT OF DIANNE EDWARDS, DIRECTOR, SONOMA COUNTY HUMAN 
 SERVICES DEPARTMENT, SANTA ROSA, CALIFORNIA, VICE PRESIDENT, 
 NATIONAL ASSOCIATION OF COUNTY HUMAN SERVICES ADMINISTRATORS, 
  AND CHAIR, LEGISLATIVE COMMITTEE, COUNTY WELFARE DIRECTORS 
       ASSOCIATION OF CALIFORNIA, SACRAMENTO, CALIFORNIA

    Ms. EDWARDS. Good afternoon, Mr. Chairman and Members of 
the Subcommittee. I am honored to be here today to give the 
local perspective on the Administration's foster care proposal. 
I am Dianne Edwards, Director of Human Services for Sonoma 
County. I am also representing the County Welfare Directors 
Association of California and the National Association of 
County Human Services Administrators.
    California is among 12 States where counties operate foster 
care with State and Federal oversight. We have experienced 
increased public scrutiny of our programs in recent years, 
leading to a multitude of ideas for reinventing the system. One 
of the most promising ideas is increasing the front-end 
prevention services for families in order to reduce further 
involvement with child welfare.
    Past efforts to increase prevention have been held back in 
part by the inflexible child welfare funding structure. States, 
as you have heard, must evaluate Federal Title IV-E eligibility 
for every foster child, using outdated rules from the AFDC 
program. Since these rules have not been updated, the 
proportion of eligible California children has dropped by more 
than 4 percent over time and is expected to continue to decline 
unless this is changed.
    For these reasons, counties urge you to eliminate the AFDC 
lookback and we would welcome the ability to use Title IV-E 
funds for front-end services. States opting into the 
Administration's proposal could do both. However, we are 
concerned about other provisions that would limit our 
flexibility to administer child welfare.
    In particular, the 5-year budget neutrality requirement 
will make it very difficult, if not impossible, for us to fully 
realize the benefits of increased flexibility. At a time when 
the Federal Government is working with States to expand front-
end services to families and improve outcomes, we feel it would 
be detrimental to cap Federal funding for child welfare 
services. We would like to see more prevention, treatment, 
training, and fiscal incentives for States that improve. 
Emphasizing these aspects of the child welfare system while 
maintaining the uncapped Title IV-E system as in the 
legislation that Congressman Cardin has introduced, the Child 
Protective Services Improvement Act (H.R. 1534), would improve 
the services available to all families.
    We have a number of recommendations to improve the 
Administration's proposal and make it more workable for a 
greater number of States and counties. First, the Federal 
Government should share in the services provided to all abused 
and neglected children, not only those from poor families or 
those who reside in States that choose the flexible funding 
option. The lookback should be eliminated.
    Second, while increased prevention activities should reduce 
the need for out-of-home care, it could take longer than the 
Administration's 5-year time line. Instead of sharing this 
risk, the proposal would shift it to States and counties. A 
better option would be to increase flexibility in the use of 
Title IV-E funding while maintaining the program's uncapped 
nature so all States can increase their prevention and early 
intervention strategies.
    While the proposal would allow States to access the TANF 
contingency fund, the criteria for doing so are relatively 
narrow. Access to the fund should be more flexible and should 
be broadened to allow a county or a sub-State region to also 
receive funding.
    Importantly, States must maintain their current level of 
spending on child welfare programs. The definition of child 
welfare is of critical importance, and we would be happy to 
assist in drafting specific maintenance of effort language to 
ensure that spending remains in the program.
    Further, training dollars and automation expenditures 
should be kept outside of the flexibility proposal. Increased 
training is key to improving performance on the Federal 
outcomes of safety, permanence, and well-being.
    The statewide child welfare data systems are key to 
measuring and tracking these improvements. As such, the Federal 
Government has a stake in the operation and improvement of such 
systems.
    Currently, children who are found eligible for Federal 
Title IV-E funding are automatically eligible for Medicaid. We 
understand that States will be given the option to declare all 
children covered and we strongly support this option.
    Finally, given the ramifications of the flexible grant 
option, States with county-administered child welfare systems 
should be required to consult with the local statewide 
organizations before opting in.
    Now that you have heard our recommendations, we also have a 
question. Can States truly opt back out after the 5-year 
period? It appears that a State would have to redetermine Title 
IV-E eligibility using the lookback for its entire caseload in 
order to return to the uncapped funding environment. If so, 
this would be cost prohibitive. Further, States and counties 
would have to continue serving the non-federally eligible 
families using their own funding or scale back their services. 
Neither option is appealing.
    In conclusion, States and counties are working in 
partnership with the Federal Government to improve outcomes and 
ensure safety, well-being, and permanence for children and 
families. Elimination of the AFDC lookback requirement and the 
ability to use Title IV-E funds for front-end services would 
enhance the implementation of program improvement plans. Given 
the fiscal condition of counties, we believe that this is not 
the time to limit Federal funding for foster care, training, 
automation, or program operations. The Federal Government 
should continue to share in the risk of a new prevention-
focused strategy as well as the rewards. I thank you again for 
inviting me to testify and would be happy to answer any 
questions.
    [The prepared statement of Ms. Edwards follows:]

  Statement of Dianne Edwards, Director, Sonoma County Human Services 
     Department, Santa Rosa, California, Vice President, National 
    Association of County Human Services Administrators, and Chair, 
    Legislative Committee, County Welfare Directors Association of 
                   California, Sacramento, California

    Good afternoon, Mr. Chairman and Members of the Subcommittee. I am 
honored to be here today to give the local-level perspective on the 
Bush Administration's foster care proposal. I am Dianne Edwards, 
Director of the Human Services Department in Sonoma County, California. 
I am a past president of the County Welfare Directors Association of 
California (CWDA), currently serve as chair of CWDA's Legislative 
Committee, and am also Vice President of the National Association of 
County Human Services Administrators (NACHSA).
    Each of California's 58 counties operates its own child welfare, 
foster care, and adoptions programs, with oversight from the state and 
Federal Governments. We are one of a dozen states where counties 
operate foster care. In recent years, we have seen a trend toward 
increased public scrutiny of the child welfare system, not just at the 
state and federal levels, but also from the courts, the media, and 
foster children and their families. This increased attention has led to 
a multitude of ideas for reinventing the system. As you will hear often 
during your examination of this issue, one of the most promising 
practices is that of increasing ``front-end'' prevention services for 
families in order to reduce their further involvement with child 
protective services.
    Prevention is not a new concept, but the sharpened focus on front-
end services is a significant change. Past efforts to increase these 
services have been hampered by a lack of flexibility in the federal 
child welfare financing structure. For example, the funding we receive 
through Title IV-B can be used for a wide range of activities to 
protect and reunify families, but it is an insufficient allocation that 
most California counties exhaust in the first three months of each 
fiscal year. We spend the rest of the year scrambling to patch together 
services using other limited and less flexible funding sources. At the 
same time, we are required to evaluate federal Title IV-E eligibility 
for every child who enters foster care, using outdated rules from the 
Aid to Families with Dependent Children (AFDC) program. Because these 
rules have not been updated since 1995, the number of eligible 
California children has dropped by 4 to 5 percent over the past several 
years. This decline is expected to continue if nothing is changed, with 
counties covering a greater share of the costs for these children.
    For these reasons, counties generally support increased flexibility 
in the use of Title IV-E funding. That said, we have concerns with 
provisions of the Administration's proposal that would actually limit 
our flexibility to administer child welfare, rather than increase it. 
Much of the proposal, especially the elimination of the AFDC look-back 
requirement and the ability to use Title IV-E funds for some front-end 
services that are not presently covered, could lead to major 
improvements in child welfare. But this is not the time to limit 
federal funding for foster care, staff training, program operations, or 
automation. In particular, we fear that the budget neutrality 
requirement will limit our ability to spend more money on prevention 
activities and staff training over the long-term. This would make it 
very difficult, if not impossible, for us to reap the benefits of 
increased flexibility. Without assurances that the funds will grow to 
support the expanded services, rather than diminish over time, we 
cannot endorse the proposal.

WHY FLEXIBLE FUNDING IS NEEDED
    To give you a sense of magnitude, California will spend more than 
$4 billion on its child welfare program next year. While county funding 
currently represents one-quarter of these expenditures, the counties' 
share may increase to nearly $1.5 billion in the coming year. Although 
$4 billion is a lot of money, counties would need much more in order to 
offer up-front prevention to all of the families who could benefit from 
it. Our child welfare workers already carry caseloads that are twice 
the recommended levels, making it difficult for them to provide 
services beyond the basic protections to children and 
families.1 Mental health and substance abuse treatment 
programs are also overextended, making these services unavailable to 
many families.
---------------------------------------------------------------------------
    \1\ California Department of Social Services (April 2000). SB 2030 
Child Welfare Services Workload Study: Final Report. Sacramento, 
California.
---------------------------------------------------------------------------
    For years counties have recognized that federal funding should be 
available to children in need of protection regardless of their 
parents' income. The Federal Government should share in the services 
that we provide to all abused and neglected children, not only those 
from poor families. Enabling counties to use Title IV-E funds in a more 
flexible manner, as included in the Bush Administration proposal as 
well as HR 1534, the bill that Congressman Cardin has introduced, would 
definitely help. If we could use Title IV-E funding to pay for mental 
health services and substance abuse treatment, we could ensure faster 
access to needed services. If we could use Title IV-E funding without 
``looking back'' to outdated eligibility rules from a program that no 
longer exists, we could save administrative costs and direct those 
funds toward more services for a broader group of families. Congressman 
Cardin's legislation would also provide new funding for staff training 
and retention, substance abuse assessment and treatment, and fiscal 
incentives for states that achieve better outcomes. Emphasizing these 
aspects of the child welfare system would further improve the services 
available to families.

CONCERNS WITH FUNDING PROVISIONS
    We support the elimination of the AFDC look-back requirement, but 
this flexibility comes at too high a price in the Administration's 
proposal. While we agree that increased prevention activities should 
ultimately reduce the need for out-of-home care, no one knows how fast 
that reduction will occur. It could very well be longer than the 
Administration's five-year budget neutrality timeline. This 
uncertainty, though not uncommon in social services programs, is 
usually accompanied by some sharing of risk among the federal, state, 
and county governments. In this case, instead of sharing the risk, the 
Administration shifts it entirely to the states and counties. If a 
state front-loads its funding for prevention activities, it might not 
see a return for eight or ten years, or even more. During the five-year 
budget-neutrality window, a state could run out of federal money and be 
left holding the bill for continuing foster care placements.
    From counties' perspective, a better option would be to increase 
flexibility in the use of federal Title IV-E funding and eliminate the 
unnecessary AFDC look-back requirements, while maintaining the 
entitlement nature of Title IV-E. This will enable all stakeholders to 
share in both the risks and the rewards of providing more prevention 
and intervention services. Restructuring child welfare in partnership 
is particularly important at a time when most states, including 
California, are entering into plans with the Federal Government to 
improve their child welfare outcomes. The expanded services and 
supports and additional staff training called for in these plans--and, 
ultimately, the improved outcomes that all of us seek for children and 
families--cannot be realized unless Title IV-E is made more flexible 
and is continued as a stable, dependable funding source for states and 
counties.
    While the proposal would allow states to access the $2 billion 
Temporary Assistance to Needy Families program contingency fund under 
certain circumstances, the current proposal would not enable all states 
to benefit. Access to the contingency fund should be made more flexible 
and should also be broadened to allow a county or a sub-state region to 
receive funding. As we understand the current proposal, the criteria 
that must be met in order to access the fund are relatively narrow, 
enough so that a state may not be able to receive funding even when it 
is dire need. Of particular interest to county-run child welfare 
systems is the idea of allowing a county or region to access the 
contingency fund even if the state as a whole cannot. For example, 
caseloads or unemployment rates in one county may increase sharply, 
while the rest of the state experiences only minor increases.
    Another vital issue for counties is the structure of the state 
maintenance-of-effort requirement. States should be required to 
maintain their current level of spending on child welfare programs. We 
believe the way in which ``child welfare'' is defined will be of 
critical importance in ensuring that spending remains in the program. 
We would be happy to assist in drafting the specific language regarding 
this requirement.
    Further, we recommend that training dollars be kept outside of the 
flexibility proposal and maintained as an uncapped funding source, as 
in the current system. In California, counties have forged many 
successful training partnerships with universities and community 
organizations, using the enhanced 75 percent federal matching rate for 
training activities to improve the skills of our child welfare staff. 
Increased training will be a key piece of improving county performance 
on the federal outcomes of safety, permanence, and well-being. The 
Federal Government has a stake in ensuring that the changes it hopes to 
facilitate in state child welfare programs come to pass, and ensuring 
that funding remains available for this vital function.
    Along the same lines, states should not have an incentive to limit 
the maintenance and operation of their Statewide Automated Child 
Welfare Information Systems (SACWIS) or to shift funding for these 
projects to other program areas. We believe that automation funding 
should not be included in the proposal, in order to ensure continued 
state commitment to these vital systems. The SACWIS projects ensure 
more consistent data collection and reporting across the nation, and 
are a key component of the federal child welfare review system. As 
such, the Federal Government has a stake in the continued operation and 
improvement of these systems.

ADOPTION ASSISTANCE PROGRAM
    Additionally, while states opting into the program will be able to 
forego the time-consuming process of determining federal eligibility 
for children placed into foster care, they will continue to determine 
eligibility for adoption assistance using the old AFDC look-back rules. 
While the rules will be changed to enable states to test at one point 
in time rather than two, this requirement still will reduce the 
effectiveness of eliminating the look-back requirement for foster care.

GOVERNANCE ISSUES
    At this time, it is not clear what steps a state would be required 
to take in order to opt into the flexible funding proposal. Given the 
potentially significant ramifications of opting in, a decision-making 
process that includes program administrators and other stakeholders is 
advisable. In states that are county-administered, we ask that the 
state be required to consult with the statewide association of counties 
on the advisability of opting into the proposal. In states with county-
administered child welfare programs, the county association would also 
have the right to approve or disapprove the state request for the 
optional grant. State legislatures should also have the right to 
approve or disapprove the request.

ENSURING MEDICAID ELIGIBILITY
    Currently, children who are found eligible for federal Title IV-E 
funding are automatically eligible for federal Medicaid reimbursement 
under Title XIX. This categorical link helps to ensure that foster 
children receive preventative and acute medical care. Understandably, 
counties are concerned that removing the look-back requirement for 
federal Title IV-E eligibility could also jeopardize the eligibility of 
those children to the Medicaid program. From our discussions with 
representatives of the Administration, we understand that states will 
be given the option of either declaring all foster children a covered 
group, or conducting a separate eligibility process for these children. 
As the cost of allowing states to declare all foster children eligible 
for Medicaid without a separate eligibility determination process is 
estimated to be minor, we encourage the committee to preserve this 
option for states.

CAN STATES TRULY OPT BACK OUT?
    While the states opting into the proposal could theoretically opt 
back out after five years, we are unclear on whether that is truly 
possible. Would a state have to re-determine Title IV-E eligibility 
under the old AFDC rules for its entire caseload in order to return to 
the uncapped funding environment? Would programs operated using 
flexible Title IV-E dollars be grandfathered in, or would they become 
state-only programs? Redetermining eligibility would be cost-
prohibitive, requiring a significant administrative effort. Further, 
states and counties would have to decide whether to continue serving 
non-federally eligible families using their own funding or scale back 
their programs and services. Neither option would be appealing, even if 
the national economy has improved by that time.

CONCLUSION
    States and counties are working with the Federal Government to 
improve program outcomes and ensure safety, well-being and permanence 
for children and their families. Much of the Administration's proposal, 
especially the elimination of the AFDC look-back requirement and the 
ability to use Title IV-E funds for front-end services, would enhance 
the implementation of these program improvement plans. However, we 
believe that this is not the time to limit federal funding for foster 
care, staff training, program operations, or automation. The budget 
neutrality required under the Bush Administration proposal could very 
well serve to limit, rather than expand, prevention activities and 
training. The Federal Government should continue to share in the risks 
of the new prevention-focused strategy, as well as the rewards.
    Thank you very much for this opportunity to testify on the foster 
care funding proposal. As always, counties stand ready to provide any 
assistance and support that we can as you consider how to proceed along 
the path toward greater flexibility.

                                 

    Chairman HERGER. Thank you very much, Ms. Edwards. Now, Mr. 
Terry Cross, Executive Director of the National Indian Child 
Welfare Association in Portland, Oregon. Mr. Cross?
    Mr. MCDERMOTT. Mr. Chairman, before you--may I ask a point 
of information, Mr. Chairman?
    Chairman HERGER. Yes.
    Mr. MCDERMOTT. All these people are responding as though 
they have something in hand or they know what is going to be 
proposed. The only thing I know of is a 6-inch paragraph in the 
budget proposal. Is that what you are responding to, or have 
you been presented other information?
    Chairman HERGER. Well, that is what we have. That is the 
purpose of this hearing. That is why we asked the 
Administration----
    Mr. MCDERMOTT. You mean they are responding to this?
    Chairman HERGER. We heard witnesses, again, from the 
Administration--the purpose of this hearing is to try to bring 
out the thoughts on all sides, and basically, yes, that is what 
we have done.
    Mr. MCDERMOTT. How did they get this information?
    Chairman HERGER. Mr. Cross, if you would proceed, please. 
Thank you.

   STATEMENT OF TERRY L. CROSS, EXECUTIVE DIRECTOR, NATIONAL 
       INDIAN CHILD WELFARE ASSOCIATION, PORTLAND, OREGON

    Mr. CROSS. Thank you, Mr. Chairman. I am very honored to be 
here today. This is a historic day for our American Indian 
children, to be included at the table at the front end of 
decisionmaking about children's policy, because so often we 
have been left out of the process and our children get left out 
of programs, including Title IV-E.
    I would like to commend the Administration for this bold 
inclusion of tribes in this particular language. As several 
people have said, it is very early. We don't know exactly what 
it is. In reviewing both the short paragraph in the budget 
proposal as well as the testimony presented today, we think 
that the proposal is on a good track when it comes to tribal 
children.
    I also want to thank Congressman Camp for his leadership on 
this issue and bringing this to the attention of the House in 
his bill, the Indian and Alaska Native Foster Care and Adoption 
Services Amendments of 2003 (H.R. 443), which would open direct 
funding for the entitlement portion of this program to tribes, 
since tribes don't currently have that.
    You might ask why, and, what is the situation? Well, tribes 
are sovereign nation-states within a nation, and one of the 
areas that they retain sovereignty over, the power to govern 
themselves, is around the custody of their children and 
Congress affirmed that in 1978 in the Indian Child Welfare Act 
(P.L. 95-608) that set up a mechanism for tribes to be able to 
exercise their jurisdiction on child welfare issues, have their 
own tribal courts and tribal codes and child welfare programs.
    However, in 1980, when Title IV-E was put into being, 
tribes were not at the table. We did not get invited to the 
hearings. So, as a result, we are left out of that funding 
stream.
    We have been working now for many years to open this 
funding stream to tribal children under the custody of tribal 
courts. It has been almost an impossible process. We have 
approximately 5,000 Indian children in foster care across the 
country for whom nobody is paying any foster care payment. Poor 
people are taking care of those children out of the kindness of 
their hearts. There is no training for the workers, there is no 
money for administration, and there are no funds for record 
keeping.
    This Committee has done a marvelous job in the last several 
years of addressing issues in child welfare, but none of what 
you have done has done one thing for children under the custody 
of tribal courts because none of the protections of safety and 
well-being or permanency extend to children under the custody 
of tribal courts. So, while I applaud your efforts with all 
children, our children are left behind, and I have to tell you 
that it is time for that to stop.
    I had a grandmother come up to me at a meeting 2 weeks ago. 
She takes care of three children, not her grandchildren, though 
they call her ``Grandmother.'' She is a foster parent. Her 
question was, ``Do you think it would be possible for me to get 
some financial help to take care of these kids? I can't meet my 
housing costs. I can't buy enough food to feed them. Some of 
the kids have been sexually abused. There is no money for 
counseling or mental health care.'' That has to stop.
    We estimate that the Navajo Nation alone has 300 children 
in foster care for whom no one pays a foster care payment. We 
also know that many, many Indian children would be adopted by 
their relatives, by their neighbors, by their families' 
friends, but there is almost no access to adoption assistance. 
While tribal members can go to State offices and apply, those 
offices are mostly hundreds of miles away and those services 
are not available through their tribes. The human cost is high.
    The systems costs are also high. We know that over-
representation of Indian children in the State system is high. 
The Children and Family Services Review (CFSR) has shown that 
65 percent of the kids in South Dakota are Indian in the foster 
care system. Only 17 percent of the kids are Indian in the 
State. If tribes had access to these resources, they would be 
providing services for those children and those children would 
be close to their homes and they would be with their relatives.
    Adoption does not seem to be addressed in this proposal. We 
don't see any language, but I may have missed it. There are 
some issues we are going to have to be very careful about and 
we want to make sure that tribes are in this discussion, things 
like what is the distribution formula? What about match when 
tribes can't provide match? What about unexpected increases in 
cost? Say, for instance, that 65 percent of kids in the South 
Dakota foster care system--tribes take over their own services, 
those kids go back to the tribes. Representative Johnson raised 
a very important point earlier today. The dollars should follow 
the child.
    Tribes also need access to the same option that States 
have, to opt into the entitlement portion of this program, 
which they currently do not have.
    This proposal is consistent with every piece of Federal 
policy of the Administration and the Congress over the last 
several years, including ``No Child Left Behind,'' self-
determination, community-based, faith-based, permanency, and 
well-being. I hope you see fit to include Indian children, 
because you guys can do something about it. Thank you.
    [The prepared statement of Mr. Cross follows:]

Statement of Terry L. Cross, Executive Director, National Indian Child 
                 Welfare Association, Portland, Oregon

    The National Indian Child Welfare Association submits this 
statement on the Bush Administration's foster care flexible funding 
proposal. Our statement will focus on the potential benefits for 
American Indian children and areas needing further clarification. This 
statement will also show how not having access to Title IV-E funding in 
the past has hampered the ability of tribal governments to provide 
basic services that support permanency for their children.
Summary of Recommendations
    The National Indian Child Welfare Association is honored to have 
this opportunity to present our comments and recommendations before the 
subcommittee. In the past, tribal governments were often not included 
in the debates that decided how federal funding would flow or how 
services would be designed, which underscores the importance of this 
opportunity.
    Our general response to the President's flexible funding proposal 
as it applies to American Indian children is very positive. This 
includes a $30 million reserved amount for distribution to eligible 
tribal governments. For many years now, tribal governments have 
struggled to piece together funding to provide child welfare services 
in ways that are as creative and innovative as anything you will see 
elsewhere. This has not been easy but has demonstrated the strong 
desire of tribal governments to exercise their sovereignty and right to 
self-governance.
    There are still many details that need to be worked out and 
clarified, and this is why it is very important for Congress and the 
Administration to open a dialog with tribal governments on how to 
develop the best possible funding proposal. The nuances and 
complexities of making a child welfare program successful for American 
Indian children, such as integrating requirements under existing 
federal Indian laws with this proposal, are many, but there are many 
good minds and people with expertise in these areas that can help.
    Our primary recommendations are summarized below:

     Tribal governments should have the same options as states 
under this proposal, including having access to the existing Title IV-E 
program. This means amending the Title IV-E law, as in Representative 
Dave Camp's legislation, H.R. 443, which allows tribal governments to 
administer the program.
     Tribal government eligibility should be extended to all 
tribal governments in the United States and also include tribal 
consortia.
     The distribution of tribal funding from any reserved 
amount should take into consideration the historic lack of child 
welfare funding for tribes and provide opportunities in the future to 
adjust funding based upon factors such as need and inflation. In 
addition, if enacted, the numbers of tribal governments likely to apply 
will grow each year for several years. Allowing for the redistribution 
of any funds not allocated during a fiscal year would be helpful and 
could be accomplished through the use of supplemental or contingency 
budgets submitted by eligible tribal governments.
     Maximum flexibility in the use of these funds will be 
important in addressing the issues that cause American Indian children 
to become involved in the child welfare system, including cross cutting 
issues like alcohol and substance abuse that impact all child welfare 
populations, but have unique origins and dynamics in American Indian 
communities. We also support the Administration considering providing 
some limited waiver authority to the Secretary to adjust program 
requirements for tribal governments that improve outcomes but don't 
sacrifice health or safety.
     Tribal governments that apply should also be able to 
determine their service area and who they will serve, similar to what 
is available in other federal laws (TANF and Title IV-B).
     The ability of tribal governments, who are the poorest of 
the poor, to provide matching funds is limited in most cases. We 
recommend waiving any matching fund requirement for tribal governments. 
If the subcommittee is not amenable to this, we recommend using a 
strategy that is used in other federal programs that allows tribal 
governments to use other public funds as match (state and federal) and 
consider the use of in-kind contributions to meet match requirements.
     Because tribal governments have not received the funding 
that state governments have, there will be a need for additional 
technical assistance than what is already available. The technical 
assistance should be rooted in tribal child welfare realities and will 
help tribal governments access a knowledge base for program innovation 
and success.
American Indian Children and Title IV-E
    Important to understanding how the Bush Administration's proposal 
will impact American Indian children is the overall experience with 
Title IV-E for these children. It is a story of American Indian 
children left behind.
    In 1980 when the Foster Care and Adoption Assistance Act was 
debated and then enacted into law, Congress did not consider that 
thousands of American Indian children receive child welfare services 
through their tribal governments. State governments were the only 
eligible recipients for Title IV-E funds as written into the law. This 
oversight created a gap in the program where American Indian children 
under the jurisdiction of tribal courts could not receive Title IV-E 
services. These are the same children who are found to be some of the 
most over represented children in the foster care system and live in 
communities with some of the greatest needs in the United States. This 
oversight has essentially made a class of children ineligible for 
federal entitlement services simply because of where they live in the 
United States.
    In most tribal communities, the inability to access Title IV-E 
funds has meant additional hardship for tribal governments as they try 
to develop child welfare services that can move American Indian 
children towards permanency. Recruiting, training, and maintaining an 
adequate pool of foster and adoptive homes has been very difficult, 
with many tribes having to place children in unsubsidized homes because 
no funding exists. Case management, a critical element of helping 
children move out of crisis and into a permanent arrangement, is 
hampered when funding for staff positions and the training of staff is 
inadequate. Data systems critical to developing information that can 
inform government officials and policymakers have received a boost from 
Title IV-E funding, but tribal governments have not shared in this. The 
overall effect has been to limit progress towards improving permanency 
for American Indian children.
    Addressing this disparity in recent years have been several members 
of the House and Senate who have signed on to legislation that would 
amend Title IV-E to make tribal governments eligible to receive these 
funds directly. We thank the primary House co-sponsor of H.R. 443, 
Representative Dave Camp, for introducing this important legislation 
and working to seek its passage.
    Some stopgap efforts to piece together foster care funding for 
tribal governments has occurred in 13 states. Agreements between tribes 
and states have allowed a small portion of tribes the ability to 
receive Title IV-E funding for foster care services. These agreements 
have given about 70 tribes access to foster care funding to support 
maintenance payments to foster families. However, these agreements are 
often hard to develop and provide only a small portion of the overall 
program funding to tribes. Agreements to provide access to the adoption 
assistance program or reimburse tribes for eligible administrative 
services are almost non-existent. Tribal governments who want to 
develop agreements in many other states have not been able to because 
of state officials who are cautious about administrative or legal 
concerns. Two studies, one conducted by the Department of Health and 
Human Services Office of Inspector General in 1994 entitled, 
``Opportunities for Administration for Children and Families to Improve 
Child Welfare Services and Protections for Native American Children'' 
and one that Casey Family Programs and the National Indian Child 
Welfare Association conducted in 2000 entitled, ``Tribal/State Title 
IV-E Agreements: Facilitating Tribal Access to Federal Resources'' had 
similar findings.
    The Bureau of Indian Affairs offers some discretionary funding for 
foster care to a limited number of tribes, but this source does not 
support program costs and is unavailable to a large number of tribes. 
It is part of an $85 million pot of funds termed ``Welfare 
Assistance'', which must also meet the other following needs of tribes 
nationwide: general assistance, non-medical institutional or custodial 
care of disabled adults; the Tribal Work Experience program; burial 
expenses of deceased indigent American Indian people; and emergency 
assistance to prevent hardship caused by fire, flood, or other acts of 
nature. To say the least, this is not a reliable source of funds for 
foster care and adoption assistance. We also point out that the funding 
from the Bureau of Indian Affairs does not support adoption assistance 
services. At the Navajo Nation, a recipient of these Bureau funds, the 
tribal social services program still has to place approximately 300 
children a year in unsubsidized foster care. The Navajo families that 
volunteer their time and homes have very modest incomes and yet are 
forced to use what little resources they have to support the costs of 
providing a foster care or adoptive placement. This situation creates 
an additional risk factor for disrupted placements, beyond what state 
child welfare programs typically see. As you can see, the funding 
picture for foster care and adoption assistance services for American 
Indian children is bleak and does not even begin to meet the 
overwhelming needs found in most tribal communities.
    The Department of Justice reports that violent victimizations were 
more likely among American Indian children than any other racial group, 
and that between 1992 and 1995 child abuse and neglect rates increased 
among American Indians while declining for other groups (1999 National 
Report Services: Juvenile Justice Bulletin). Many of these Indian 
children end up in the child welfare system; tribes need the resources 
of the Title IV-E program to assist these children and their families.

The Administration's Proposal for Title IV-E Flexible Funding and 
        Application with American Indian Children
    Our general response to the Administration's proposal to provide 
$30 million for allocation to eligible tribal governments is supportive 
in that the proposal recognizes the needs of tribal governments to be 
included in any new development or reform of federal child welfare 
programs. We also interpret this element of the Title IV-E proposal as 
support for the government-to-government relationship that tribal 
governments have with the Federal Government. It is consistent with the 
way many DHHS and other federal funds are distributed to tribes--on a 
government-to-government basis that allows for local design of programs 
within the confines of federal law. While there are still many details 
to be ironed out, this appears to be a promising beginning. A number of 
the tribal governments with whom we have talked regarding this proposal 
are also very interested and looking forward to having the opportunity 
to provide their input too.
    Our basic understanding of the proposal, at this point, is that it 
would be an option for states and require a five-year commitment. 
Funding is also reserved for eligible tribal governments under this 
proposal--approximately $30 million--which would be available after an 
application is submitted to the Department of Health and Human Services 
and approved, although the process and amounts available for 
distribution to individual tribal governments have not yet been 
determined. The process for determining who is an eligible tribal 
applicant has not been decided either, although conversations with the 
Children's Bureau have indicated that they are looking at a number of 
possibilities. We also understand that individual children will not 
have to meet a certain income level requirement in order to qualify for 
services under this proposal. The President's proposal also mentions 
providing some waiver authority to modify or waive certain requirements 
for tribal programs as long as the modifications do not compromise 
child safety or health. Funding under this proposal will also be 
available for purposes authorized under Title IV-B or IV-E, which would 
include subsidized guardianship placements--a good option for some 
children for whom adoption is not realistic.
    Based upon the information we have received so far, we are 
providing a brief description of what the National Indian Child Welfare 
sees as the key issues, areas that need clarification, and our ideas on 
how to address these challenges.
    Eligibility for tribal governments--Tribal governments, like state 
governments, need dependable, adequate funding for child welfare 
services for children under their jurisdiction. In many situations, 
lack of funding has been the primary barrier for tribes as they seek to 
protect their children and give them a greater sense of permanency. All 
tribes in the United States operate some form of child welfare service, 
and a great number of these currently operate foster care and adoption 
services. Since the President's proposal implies great flexibility in 
how the funds can be used and tribal communities have the experience 
and some of the greatest needs, it makes good sense to allow all tribal 
governments to participate in this proposal. Basic program and 
reporting requirements required for all applicants will provide the 
Children's Bureau with an opportunity to evaluate the suitability of 
this program for each applicant. Furthermore, by increasing tribal 
participation in this program, the Federal Government will also 
facilitate the collection of tribal data on foster care and adoption, 
which is currently not available. By not limiting eligibility to only 
select groups of tribes, the Administration will be making a strong 
statement about its commitment to improving child welfare services for 
all American Indian children.
    Tribal consortia--Tribal child welfare services have been provided 
through consortium in many parts of the United States for over 20 
years. Tribes in states like Alaska and California, which comprise over 
half of all tribal governments in the United States, rely on the option 
to use consortium to maximize their limited funds. Typically, the 
consortium designates a lead tribe that becomes the services 
administrator for Indian children in the identified service area. The 
organization of tribal consortium in child welfare is a response to 
several things: 1) the need to improve service coordination, 2) the 
need to maximize the use of limited funding and improve access to other 
potential funding sources, and 3) the need to provide tribal 
governments with insufficient resources the opportunity to exercise 
their authority and responsibility to protect their children. Allowing 
tribal consortia to qualify for funding under the President's proposal 
will help a much greater number of Indian children who otherwise would 
go unserved, and, we believe, will help make the administration of the 
program by the Children's Bureau easier.
    Distribution of funds--Related to tribal eligibility will be the 
issue of how available funding is distributed to eligible tribes. 
Because most tribes have had very limited access to federal child 
welfare funding, especially foster care and adoption assistance 
funding, it is almost impossible to know what an accurate baseline of 
need related to these types of services is. Accurate caseload and 
program histories, especially related to use of Title IV-E funds, are 
not available at this time. If the President's proposal is enacted, our 
experience tells us that tribal governments will apply incrementally, 
with more applying each year. At the end of five years, we could see 
even more tribal governments wanting to apply as increased information 
regarding promising practices and critical analysis of program 
operations becomes available. These issues underline the need for 
tribes to have the same options as states to choose between the 
existing IV-E program and the President's flexible funding option and 
for a periodic system to review the adequacy of tribal funding under 
this proposal. This review may trigger the adjustment of the reserved 
funds for tribal governments, based upon factors such as need and 
inflation and also be equitable with any mechanism that provides 
adjustments for state allocations.
    An approach to ensuring adequate tribal participation and benefits 
for American Indian children would be to allow redistribution of any 
unspent funds in a given fiscal year. This is consistent with how other 
similar federal funding for tribal governments is distributed (Title 
IV-B, Subpart 2) and can be accomplished through the use of 
supplemental or contingency budgets submitted by tribal governments. 
The Secretary could review supplemental applications and assess them 
for their merit and feasibility.
    Waiver authority--Research regarding tribal child welfare programs 
demonstrates that culturally defined services are much more likely to 
succeed with Indian children and families, and this is an area where 
waivers may be appropriate. Another reason for allowing waiver 
authority is the economy of scale of applying requirements designed for 
larger programs that are not feasible for smaller programs. The ability 
of federal programs to allow flexibility in program requirements is a 
positive development, and, used wisely, will help reduce the flow of 
children into the child welfare system and produce better outcomes for 
those who are involved.
    Service area--Under the TANF program and other federal programs, 
tribes define their service area and the American Indian population 
being served. This is important because of the differences in available 
tribal resources, working relationships with state and county 
governments, and jurisdictional variances. When tribal governments have 
this option, they will often use it to provide services to more than 
just members of their tribe. They may provide the services to Indian 
people from other tribes living within their reservation or service 
area. This can help alleviate the burden state and county agencies 
often feel and provide more accessible and/or culturally designed 
services. New and emerging partnerships can also develop as tribal and 
state agencies work to map out a service delivery plan that meets 
everyone's needs.
    Matching funds--Proposing a significant match or maintenance of 
effort requirement for tribes could become an impediment to tribal 
participation. The majority of tribal communities continue to be 
economically disadvantaged. In many cases, their only source of revenue 
for government services will come from Bureau of Indian Affairs or 
Indian Health Services funds, which are restricted to specific 
activities. Because tribal communities often have such high rates of 
poverty and unemployment, tribal governments have very few options when 
it comes to raising general, unrestricted revenue. As a result, a 
number of federal programs have reduced match requirements that apply 
to tribal governments and/or provide them with the opportunity to use 
other federal or state funds as match (e.g. TANF, Title IV-B and Child 
Care Block Grant). This can be done without supplanting tribal funding 
or significantly reducing maintenance of effort. We strongly recommend 
flexibility with regard to any required tribal match rates.
    We note that, according to the 2000 Census, the poverty rate for 
the large federal reservations is 40.3%; the unemployment rate for the 
same set of large reservations is 22.8%. Several reservations have 
poverty rates of over 50% with unofficial employment rates exceeding 
30%.
    Technical assistance--While the National Indian Child Welfare 
Association, through our partnerships with four of the National 
Resource Centers in Child Welfare, has been able to provide technical 
assistance to many tribes that are planning for or operating foster 
care and adoption assistance services, we consistently have to turn 
away tribal governments who request technical assistance. We can also 
see an increased demand for technical assistance from tribal 
governments once this proposal is enacted. To ensure that critical 
information and assistance is available to further the program's goals, 
it would be worthwhile to establish technical assistance resources for 
tribes interested in child welfare services. This could be approached 
in several ways, but the overall goal would be to improve access to the 
knowledge base in practice and policy.
Conclusion
    We greatly appreciate the opportunity to appear before you today to 
share our thoughts and ideas regarding the President's proposal for 
flexible foster care funding. As we said earlier, both our organization 
and the tribal governments that we have talked with are very interested 
in this proposal in combination with amending the Title IV-E law to 
allow tribal governments, like state governments, to administer the 
current Title IV-E program. I think it is fair to say that all of us 
are looking to improve the way in which children and families receive 
services in the child welfare system. We want to avoid the mistakes of 
the past, take advantage of the opportunities before us now, and create 
a world where all children can receive the services they need. The 
National Indian Child Welfare Association feels strongly about this, as 
we are sure you do, and is hopeful that this will be the Congress that 
will make this vision a reality.

                                 

    Chairman HERGER. Thank you very much, Mr. Cross. Now to 
inquire, the gentleman from Louisiana, Mr. McCrery.
    Mr. MCCRERY. Thank you, Mr. Chairman. Ms. Riley, you talked 
in your oral presentation generally about how current foster 
care program rules limit how a State can serve children and 
families. Would you elaborate on that? What are some of the 
limitations or restrictions that current law places on the 
States?
    Ms. RILEY. Mr. Chairman, Congressman McCrery, the limit 
that you have heard a lot about today is that we have to spend 
Title IV-E funds on placement costs and placement is really 
only one small part of what a child welfare system ought to be, 
and in fact, it ought to be a smaller part than what it is.
    So, the restriction for that weighs heavily on us. The 
opportunity to have the flexibility to do something with those 
dollars that would provide things like family counseling--we 
are not allowed to provide counseling for families with Title 
IV-E dollars. We are not providing substance abuse services for 
families with Title IV-E dollars. All of those types of 
ancillary services that wrap around the placement of a child 
are crucial to returning that child home--and not just services 
for the child but services for the family, as well, so that the 
child has an opportunity to go back to an intact and 
functioning family. So, those are all precluded under the 
current Title IV-E funding stream.
    Mr. MCCRERY. Is that one of the reasons that Ohio requested 
a waiver?
    Ms. RILEY. Absolutely. Absolutely.
    Mr. MCCRERY. Is it working as you thought it would when you 
get that flexibility to use that Federal money?
    Ms. RILEY. I have to admit that I wasn't there when we 
applied for that waiver, so I am not certain what people 
thought it would do. I do know that we had hoped for somewhat 
better results than we have achieved. Five years has not been 
long enough. We are just beginning to see a glimmer of change 
in many of the areas. We do think that that glimmer is 
sufficient to show us that this flexibility would be vital to 
that ongoing building of that service. We have learned that 5 
years has not been sufficient to really see outcomes and have 
measurable outcomes that we can project accurately into the 
future.
    Mr. MCCRERY. Well, what types of services were you able to 
develop with this increased flexibility?
    Ms. RILEY. Like California, we are a State supervised, 
county administered system, so 14 counties did it basically 14 
different ways. We had things like subsidized guardianships. We 
had lots of prevention services, lots of counseling services. 
We had folks like social workers placed in schools to deal 
directly at the school with the children who are in the child 
protection system. So, a real array of services. It also 
allowed us to be an incredible pot of experiment to be able to 
tell which of those things work best, and we are just now 
beginning to get a handle on what happened in one county versus 
another and how we might learn from where it was successful.
    Mr. MCCRERY. Prior to your waiver, you were unable to use 
the Federal Title IV-E funds for those kinds of services?
    Ms. RILEY. That is correct.
    Mr. MCCRERY. So, I assume that since you have seen some 
glimmer, as you put it, there is hope for the favorable 
outcomes that you had gone for with these kinds of services. Do 
you think that there is some merit to expanding the waiver in 
your State to all States across the nation?
    Ms. RILEY. Mr. McCrery, I think it would be very helpful to 
be able to expand it from 14 counties to 88 in Ohio and across 
the country.
    Mr. MCCRERY. Last, you say in your testimony that, ``I 
believe that the current Title IV-E funding system rewards 
failure rather than success.'' Would you elaborate?
    Ms. RILEY. Mr. McCrery, right now, we are receiving funding 
for children that are in placement rather than funding that 
rewards the goals of the Adoption and Safe Families Act, which 
encourage States to keep children at home, to quickly reunify 
children. Instead, we get money--the longer the child stays, 
the more money we get. We want it to be the opposite, and in 
our waiver counties, that is exactly what we have been able to 
do. They bank their dollars that they did not spend on 
placement and can spend them on those alternative services.
    Mr. MCCRERY. Thank you. Thank you, Mr. Chairman.
    Chairman HERGER. Thank you, Mr. McCrery. Ms. Riley, I want 
to thank you also for the great work that we hear coming out of 
your State. Thank you very much for the example I believe you 
are setting and that we can all, hopefully, learn from and help 
improve the system throughout the nation. With that, the 
gentleman from Maryland, Mr. Cardin, to inquire.
    Mr. CARDIN. Thank you very much, Mr. Chairman. I think we 
all agree that we need to reform the Title IV-E system, so that 
is not a matter that is in disagreement. In fact, as you 
noticed, on the Democratic side, we filed legislation to do 
just that.
    I was disappointed we didn't have a second round because I 
thought we were trying to come to a conclusion on the lookback 
with the Administration. One of my concerns is that we all 
agree the lookback is not a good idea, to go back to the AFDC 
rules. Yet, if I understand the Administration's proposal, we 
still have the lookback for adoption services assistance, 
because that is not dealt with in the legislation. If I had a 
chance on a second round, I would have tried to clarify that.
    So, I think that we are still going to need to reform the 
basic system, and I think we all agree with that, and 
particularly with giving States a true option. We want to make 
sure that the current system is reformed to give the States the 
flexibility they need and still protect our national goals.
    Ms. Edwards, in your testimony, you--the CBO baseline 
assumes a 25-percent reduction in the Title IV-E caseload 
assumptions over the next 10 years, as to how they get to the 
dollars that are available. So, I guess my concern is that in 
your State, if you were to go into the option, if you would go 
into the block grant and you were not able to achieve the 
caseload reductions, in fact, if you had a caseload increase, 
is it possible that where we are trying to get more funds in 
preventive services, and we all agree with that, that 
ultimately you might have to take money out of preventive 
services in order to finance your basic caseload increases? Is 
that a real risk?
    Ms. EDWARDS. Mr. Cardin, Mr. Chairman, obviously, that is a 
risk and one that is greatly concerning to us. If, indeed, our 
State opted in and we invested more money up front and the 
caseload increased, then we would have no other option. I would 
point out, too, that already, there are many children in the 
system for whom we cannot use Title IV-E funding because of the 
lookback. We still are responsible for those children. So, it 
would only add to the burden and that burden ultimately falls 
at the local level.
    In California, counties pay about one-quarter of the costs 
of the foster care system, and that is roughly $1 billion. I 
don't think it comes as any surprise to you that not only 
counties in California, but across the nation, are having 
financial difficulties meeting all of the needs for services in 
their communities.
    Mr. CARDIN. I appreciate that answer. Ms. Ryan, I also 
appreciate your testimony where you try to be kind to the 
Administration's proposal and then you add a lot of caveats 
that you would like to see improved on, and I like all your 
caveats. States should be allowed to opt out of the block 
grant, Mrs. Johnson already covered that. The triggers for the 
contingency funds should be improved. The State maintenance of 
efforts are limited. This plan should be accompanied by an 
increase in the SSBG. All States should be allowed to update 
their eligibility standards for foster care regardless of 
whether they opt into the block grant. All States should be 
provided more flexibility for preventive services. I agree with 
all of those assessments.
    I guess my question to you is, that is fine, but as I 
understand the Administration's proposal, they want it budget 
neutral. It seems to me that your recommendation, your 
suggestions--and I support them--require that we provide 
additional help in order to be able to achieve the flexibility 
and the results that we want.
    Ms. RYAN. Mr. Cardin and Mr. Chairman, I would have to 
respond that--and really to a question I think Congressman 
McDermott asked--we have been in a series of conversations with 
the Administration. We haven't seen the actual details of the 
proposal. We hope that there is an opportunity to talk about 
the baseline, what is in the baseline, what might be the rate 
of growth in the baseline. National rates of growth are quite 
different than State rates of growth. Congresswoman Johnson 
talked about the fact that States are not similarly situated. 
We have rising costs of care that have nothing to do with 
inflation or the number of children, so-called children, who 
have been in the system with multiple issues that are actually 
more costly. So, yes, we believe that under the 
Administration's proposal, we need to have that discussion 
about baseline growth.
    Mr. CARDIN. Thank you. I appreciate that response. Ms. 
Riley, you present to us a real opportunity because you already 
have something similar to what the Administration is proposing 
in a certain number of your counties. So, I would like you to 
make available to our Committee, unless you have the 
information today--some of the problems you are encountering. 
We know we have high caseloads, caseworker turnover is very 
heavy, and we don't have experienced caseworkers. I would like 
to know if there has been a difference in those counties in 
which you have had the waiver program in effect. I would like 
to know the caseload reductions, the comparisons, et cetera. I 
assume that in those counties, you feel you have adequate 
resources. If that is not the case, I would like to know that, 
also.
    So, if you could make available for the Committee the 
specific information over the last several years of what has 
happened as far as caseworker longevity, reduction of caseload, 
eligible individuals, and whether you have adequate funding in 
order to deal with these problems, I would appreciate it.
    Ms. RILEY. Mr. Chairman, Mr. Cardin, we would be happy to 
do that. Anecdotally, I can tell you that it has been positive 
in some counties and less so than in others, but we will be 
happy to provide that county by county and try to tie it back 
to some of the things they did that engendered those outcomes.
    [The information is being retained in the Committee files.]
    Mr. CARDIN. I appreciate that. Thank you.
    Chairman HERGER. I thank the gentleman from Maryland. Just 
a couple of points. Number one is that in the next 15 minutes 
or so, we are expected to have a series of three or four votes. 
Second, any questions that any Members of this Committee have 
for any of our panelists, including Dr. Horn, can be submitted 
in writing and we will include that in the record.
    Also, it is my understanding one of the reasons why the 
Administration does not have this writing is that this policy 
is evolving now. I understand, Ms. Ryan, that they are in 
contact with you, and again, one of the purposes of this 
Committee is to get the information out and hopefully to come 
up with the very best policy that we can. Certainly, that is 
the intent of this Committee.
    With that, I would like to, Ms. Ryan, ask you the same 
question I posed to Dr. Horn. With the recent CRS memo that 
shows how Federal foster care funding can swing wildly within 
State from year to year, would you care to share how you feel 
this proposal can help provide States more predictability over 
the funding they currently receive, and what that can mean to 
States?
    Ms. RYAN. Thank you, Mr. Chairman. I think that what the 
CBO data may be showing is that, frankly, there are wide 
variances among States in terms of the number of children cared 
for, the cost of care, and the so-called penetration rate in 
terms of Title IV-E claiming. A lot of things can drive that 
caseload.
    One thing that we have seen, is that in some States in 
recent years, they have actually increased their Title IV-E 
claims. The State of Washington, for example, has. West 
Virginia has. In other places, States have seen a dramatic 
reduction in those claims.
    I think under this foster care reduction, or this proposal, 
what it would do is enable States to be able to know the fixed 
amount of money that they have, be able to set some reasonable 
targets as to whether or not they believe that they can operate 
from year to year with some certainty of how many resources 
that they have available to them. Quite frankly, for some 
States, they may be able to achieve what Ohio has achieved, 
which is a reduced length of stay in foster care or reduced 
number of children to free up those dollars to be able to use 
them for more preventive front-end services. In other States, 
they may not be so successful, and that may actually influence 
whether they decide to opt in.
    Just to close with this and say that sometimes within the 
course, given the wide variation of those claiming rates, 
sometimes during the course, like the crack epidemic or the 
methamphetamines on the West Coast, there are things beyond the 
control of a particular system where, for whatever reason, we 
believe States should be able to opt out within the 5-year 
period because the protection of children are paramount in this 
program.
    Chairman HERGER. Thank you, Ms. Ryan. Ms. Riley, would you 
mind commenting on the same question?
    Ms. RILEY. I smiled while you asked that question, because 
although I think it would give us greater predictability and I 
would welcome that predictability, I worry a little about where 
my swing is whenever the baseline is established, because if 
that base happens to hit one of my down years, it could very 
negatively reflect on my next 5 years' worth of revenue flow. 
So, that causes me concern. The predictability would be 
welcome.
    Chairman HERGER. Thank you very much. With that, the 
gentleman from Washington, Mr. McDermott, to inquire.
    Mr. MCDERMOTT. Thank you, Mr. Chairman. I was trying to ask 
earlier, what do you think this system is going to do? What 
kind of specificity did you have when you prepared your 
testimony coming here, because some of you say you are in favor 
of this? You just want to have flexibility? Is that enough of 
an offer from the Federal Government?
    Ms. RILEY. Mr. McDermott, speaking from Ohio's point of 
view, flexibility is not enough, but it is a big incentive. I 
also raised in my testimony a number of issues we would like to 
see addressed, some of which we have had some answers to, 
some--or not answers, but we have had some information around 
and some we have not. So, I think there are still many things 
undetermined. Our source of information was primarily APHSA and 
some conference calls that they have convened and their 
willingness to share from their perspective.
    Ms. RYAN. I would be happy to respond to that question, as 
well. After the President's proposal was put in the budget, we 
actually reached out to our States, quite frankly thrilled that 
someone was paying attention to child welfare financing at that 
level, and asked them to convene a workgroup. We invited the 
Administration, Dr. Horn, as well as Joe Knoll and Susan Orr, 
to actually talk to our members about what they had in mind. We 
had nothing written. In fact, I think in some ways those are 
things that I have actually prepared as a series of 
conversations that are continual conversations.
    So, we don't have any formal proposal. We have a broad 
rubric, and we have been engaged in discussions about what 
makes sense in terms of opt in, opt out, claims filed versus 
claims paid, and other kind of arcane issues.
    Mr. MCDERMOTT. Are you saying that you like this new 
proposal with the thought in mind that you will have the same 
amount of money or less money or more money?
    Ms. RYAN. I think that at this point, our association does 
not have a formal position on the proposal because we haven't 
seen it, and when legislation is introduced, we will put it 
before our Membership, understand the details, and determine 
whether or not this, quite frankly, fits the needs of the 
States. So, we have not taken a position to date.
    What we do believe is that some of the fundamental pieces 
of it are well worth the time to explore. The flexibility to 
use those funds on all children in the system is very 
attractive to States, and I will defer to the professionals at 
the table.
    The second piece, the fact that you can use those dollars 
for things that actually make sense for families, is also very, 
very attractive. There is some peril among some administrators 
in some States saying, we are not sure we can take the risk to 
enter a fixed allotment of funds and be able to produce the 
kind of changes needed to free up those dollars to do those 
good things.
    So, I think at this point, we have taken this as an idea, 
something that we want to work with the Administration to try 
to refine. If it is a State option, we want to make it the best 
option. If there are States that cannot opt into this for 
whatever reason, we want to continue to pursue things like 
fixing the lookback, making sure Title IV-E is much more 
flexible so that they can actually support the goals of the 
program.
    Mr. MCDERMOTT. What is it that States do that make it not 
possible for them to opt into the program? What have they done 
wrong? Give me an example of a State that hasn't been able to 
opt in because of something they have done. Is it a law they 
have or----
    Ms. RYAN. I think at this point, because we don't really 
know what would be involved in the opt in--for example, the 
baseline determination, what the rate of growth might be over 
time. Those could give pause to States. Some States have 
actually achieved shorter length of stay in foster care for 
children. They might not see enough promise in this to lock in 
at a fixed amount of money, thinking that they have done as 
well as they could do.
    Some other States, like the State of Washington, quite 
frankly, have increased Title IV-E claims in recent years, and 
so if they have expectation that they might be able to find 
more children who are Title IV-E eligible to be able to get 
increased Federal reimbursement, they are going to be unlikely 
to look back a year when their claims weren't as high and then 
lock in at that point.
    So, as I tried to put out in my testimony, States are in 
very different places, and as you well know, child welfare 
financing is a system in crisis serving children and families 
in crisis, and we have the gall to expect outcomes and measure 
them. We have got half of the children covered with any Federal 
dollars. We are patching together SSBG dollars, a little bit of 
Medicaid, some TANF, some court costs, some local costs, some 
State costs, and then actually say it is a system.
    I think that the issue before us is whether or not we can 
create some context for this next round of reform so that we 
actually can get the hydraulics right, that we have the funding 
stream flexible enough to serve families and children and that 
it is adequate in order to meet the outcomes that these Child 
and Family Service Reviews ask States to achieve. So, we want 
to have a very thoughtful and planned full discussion on this 
next round of reform.
    Mr. MCDERMOTT. I assure you, I hope we have another hearing 
when we have a bill.
    Ms. RYAN. Thank you.
    Chairman HERGER. I thank the gentleman. Mr. Cross, the 
Administration proposal would provide $30 million for tribes to 
operate child welfare programs. What types of programs and 
services do you feel the tribes would provide under this 
option?
    Mr. CROSS. Foster care, primarily, because right now, that 
is where the need is. We don't have enough detail to judge. One 
of the things that scares me about this, while I believe it is 
on a good track, is that we have no baseline by which to 
measure because so many tribal children are in foster care 
without any payment or because they are in the custody of 
States, and tribes would do those services if they had that 
money.
    I believe we are going to have to be very cautious and 
flexible with how we create the baseline for tribes and that is 
going to have to take shape over a period of years. I hope any 
legislative language allows for some realistic picture of how 
many children this is really going to mean.
    Tribal programs right now across the country are providing 
a range of child welfare services, but they are piecing 
together those services with a variety of funding sources. Some 
contract with the States around them. Some are using their own 
tribal resources. They receive very small amounts from IV-B 
part 1. Most of those grants are under a couple thousand 
dollars. Seventy tribes in the country, approximately, are 
receiving IV-B part 2. The majority of them receive less than 
$20,000 each. Tribes receive about $20,000 each from the Indian 
Child Welfare Act Title II appropriation.
    So, tribes are piecing all of these different funding 
sources together, and then are able to hire one or two 
caseworkers who are handling everything and then not having 
enough resources to pay a foster care payment.
    So, this would be the most dramatic thing to happen for 
Indian children since the passage of the Indian Child Welfare 
Act. I can't emphasize enough that when a people have the 
authority and responsibility to protect and care for their 
children and then there are no resources to do that, we are 
leaving children behind simply because of their residence and 
citizenship in the nations of our Indian Tribes in this 
country. It is as if you cut off the upper peninsula of 
Michigan or something and said, you are just not eligible for 
an entitlement or in the program.
    So, I am here because whatever happens, tribes need a 
voice. I can't say that this is a good thing. We don't know 
because we don't have language yet to indicate what the real 
impact of this would be across the board. We can only say that 
it seems that these concepts are on a good track. This is a 
good conversation to have. For the tribal provisions, I am 
feeling that this is very promising. It is the first time that 
this kind of dialog has gone forward within the Administration.
    Chairman HERGER. Thank you, Mr. Cross. The gentleman from 
California, Mr. Stark, to inquire.
    Mr. STARK. Thank you, Mr. Chairman. I want to thank the 
witnesses, and I want to address this problem. We don't know, 
and the Chair doesn't seem disposed to let the Administration 
tell us very much about what this plan will look like. 
Basically, all we know is they want to block grant the funds, 
and this thing will not increase them if the caseload goes up.
    We do know that the same Administration for children and 
families has given us some dire predictions. Now, in 
Connecticut, HHS has told us that the caseworkers have failed 
to maintain stability of foster care placement and that 
reducing the staff would have--a reduced staff will have more 
difficulties ensuring stability for foster children.
    In Indiana, 70 kids died from abuse and neglect in the year 
July 2001 to July 2002, a new State record. HHS found that the 
cause was that the State child protection agencies failed to 
sufficiently reduce incidences of repeated mistreatment and 
warned that State budgets will further impact the limited 
ability to track these incidences. Now, there are dozens of 
comments. All these studies are bad. So, we are hearing from 
the same people who are suggesting we limit the funding.
    Ms. Riley's State, I gather, operates under what would be 
the way you would operate if you had the block grant, is that 
not correct?
    Ms. RILEY. Mr. Stark, 14 of our 88 counties operate under 
something that we think----
    Mr. STARK. Well, but when you answered Mr. Cardin--because 
the Children's Bureau found that Ohio's welfare program did not 
achieve substantial conformity with any of the seven safety, 
permanency, or well-being outcomes. In addition, Ohio did not 
meet national standards for measures relating to repeat 
maltreatment, maltreatment of children in foster care, foster 
care reentry, stability of foster care placements, length of 
time to achieve reunification, or the length of time to achieve 
adoption. There are a few things that you did right, but it 
doesn't have much to do in here.
    It goes on, caseworkers didn't visit parents with 
sufficient frequency. Your case reviews found that children did 
not receive adequate services to meet their physical and mental 
health needs. You are going to tell me that you can improve 
that with less money?
    Now, I would like to know if those figures didn't apply to 
these 14 counties where you are using this system. That would 
be very good to know. I will bet you they are just in there 
with the rest of the counties, aren't they?
    Ms. RILEY. Mr. Stark, the figures you are referencing refer 
to the Child and Family Service Review----
    Mr. STARK. Yes.
    Ms. RILEY. Which we, like every other State that has gone 
through it----
    Mr. STARK. Every State in the Union got----
    Ms. RILEY. Has not done well.
    Mr. STARK. It is not well in any State. I don't know how we 
did in California. We probably didn't do much better.
    Ms. EDWARDS. Mr. Stark, California did not pass the 
reviews, either.
    Mr. STARK. Yes. I am not suggesting--every State didn't. 
What I am saying is that block granting it didn't seem to help 
much.
    Ms. RILEY. Mr. Stark, really, the Child and Family Service 
Review--I have to admit, I am not certain I can encompass all 
of this in a very short time, but the Child and Family Service 
Review has, I think, a lot of other deficiencies attached to 
it, and----
    Mr. STARK. Well, you just heard the guy. He has a lot of 
deficiencies, too, the guy who is running this system. We are 
not here to talk about the deficiencies in our Administration. 
What we are trying to say is, is it suddenly a solution to 
underpaid, underfunded, overworked social workers in States to 
say, we are going to give you a block grant and let you move 
the chairs around on the Titanic as it sinks? Is that what you 
guys want?
    Ms. RILEY. Mr. Stark, that is not a solution. That, 
however, may contribute to a solution, and I am hopeful for 
that.
    Mr. STARK. Will it help us in California, Ms. Edwards?
    Ms. EDWARDS. No, I am afraid it will not. We need the 
flexibility. We need to eliminate the lookback. I am gravely 
concerned when I know that in California, we have a study that 
shows we need $280 million more to adequately staff child 
welfare as it exists today.
    Mr. STARK. Ms. Ryan, your association--can we do this 
without adding any resources?
    Ms. RYAN. I think I have testified, Mr. Stark, that the 
fact is that the system needs more resources. So, it wouldn't 
be my testimony that we would plan shrinkage and think that we 
could do a better job.
    Having said that, I have to say that, on all of our 
members' behalf, the Child and Family Service Review is a 
snapshot. It is a baseline. It is the first time we have 
actually taken a look. So, it ought not to be perceived as a 
measure of whether or not States are actually achieving 
outcomes.
    I think it is very important, though, to your point, to 
look at those measures and to ask whether or not Title IV-E 
funds can be used to meet any of those improved outcomes. That 
is why we called for improved flexibility----
    Mr. STARK. What if we just made them an entitlement for 
matching funds? Wouldn't that be better?
    Ms. RYAN. We testified to broaden the use of Title IV-E 
funding and we would have a better chance at moving those----
    Mr. STARK. Would you like that better, Ms. Riley, just to 
make it an entitlement and let Ohio match it?
    Chairman HERGER. The gentleman's time has expired.
    Mr. STARK. I want to hear that answer, Mr. Chairman. It 
might change your mind.
    Ms. RILEY. Mr. Stark, I would love an entitlement.
    Mr. STARK. A little information wouldn't hurt you, Mr. 
Chairman.
    Chairman HERGER. We have gone----
    Mr. STARK. Once you get used to learning things, even as 
Republicans, it helps.
    Chairman HERGER. We have gone 1 minute and 6 seconds over 
your time. Would the gentlemen from Michigan, Mr. Levin, like 
to inquire?
    Mr. LEVIN. Mr. Chairman, my apologies. Due to other 
meetings, I just had to miss most of this, but I guess I came 
in at an important moment for the discussion of the issue. We 
have a number of votes now.
    I don't think the issue is more flexibility. I think we 
want to grant enough flexibility so that you can do your job. 
That is a different question than a block grant. Mr. Stark 
asked you whether you want more flexibility without more 
resources. Do you?
    Ms. RILEY. Mr. Levin, no.
    Mr. LEVIN. I would think that that may be an important 
message for everybody to hear. I have been on this Subcommittee 
off and on for how many years, 14 or 15? This has been a major 
problem area, and anybody who thinks that the answer is simply 
to shift this off to the States with the present level of 
resources, when we got into this issue in part because the 
States were not doing a job--if the States had been pulling 
their weight on these issues, I don't think we ever would have 
been involved in this difficult and important area.
    So, now simply to say, ship it back to the States with the 
States in the present circumstances they are in--right? What is 
the budget deficit in your State?
    Ms. RILEY. Mr. Levin, I fear to say which year?
    Mr. LEVIN. You pick.
    Ms. RILEY. We are anticipating, I believe, another $1 
billion shortfall after several billion dollar cuts in the 
upcoming biennial.
    Mr. LEVIN. I don't have anything further.
    Mr. STARK. How about in California?
    Mr. LEVIN. I didn't want to embarrass you.
    [Laughter.]
    Ms. EDWARDS. I can top that, Mr. Levin.
    Mr. LEVIN. It was $30 billion, wasn't it?
    Ms. EDWARDS. The last count was, I think, $36 billion.
    Mr. LEVIN. So, resources are an issue?
    Ms. EDWARDS. Absolutely.
    Mr. LEVIN. Thank you.
    Chairman HERGER. Ms. Riley, you say in your testimony, ``I 
believe that the current Title IV-E funding system rewards 
failure rather than success.'' Do you believe this option could 
give you the flexibility necessary to address this issue in 
your foster care system that needs to be addressed?
    Ms. RILEY. Chairman Herger, that is the linchpin for why I 
want to at least further explore the option, because right now, 
I believe that we are rewarding excessive, potentially 
excessive placements of children because we fund placements, 
while we are not funding child abuse prevention, we are not 
funding family casework services, we are not funding substance 
abuse services, all of which would help our families immensely.
    Chairman HERGER. Ms. Riley, I want to thank you very much, 
and I want to thank each of the members of our panel and our 
previous panel for testifying today. Your testimony will be 
very helpful to us as we consider options to improve our foster 
care system.
    With that, the hearing stands adjourned.
    [Whereupon, at 3:59 p.m., the hearing adjourned.]
    [Questions submitted from Chairman Herger and Mr. Cardin to 
the Honorable Wade F. Horn, and his responses follow:]

   Question from Chairman Wally Herger to the Honorable Wade F. Horn
  Question: Under the existing child welfare waiver authority, four 
states--Indiana, North Carolina, Ohio and Oregon--have demonstrated 
some of the promise of the Administration's Foster Care Flexible 
Funding proposal. Could you describe these programs and what they have 
been able to accomplish?
    Answer: In each of these four child welfare waiver demonstration 
sites, the State is providing counties or other local entities the 
opportunity to use Title IV-E foster care funds more flexibly to 
enhance the array of services available to prevent foster care 
placement, facilitate reunification and otherwise ensure safe, 
permanent outcomes for children. In these States, counties may use 
Title IV-E funds for an array of services, but their total Title IV-E 
allotment is fixed by agreement with the State. These States have 
arrangements with participating counties to share risks and rewards if 
expenses are either below or above their planned Title IV-E allotment.

     Indiana has set aside 4,000 slots and is allowing 
counties to use up to $9,000 annually per slot to develop an increased 
capacity for home- or community-based alternatives to institutional 
placements. All counties pay any costs for foster care or related 
administrative expenses that exceed $9,000. Eligible children are those 
who are at risk of placement, or have already been placed, and who have 
substantiated reports of abuse/neglect. Services most frequently paid 
for with Title IV-E funds have been child and family counseling, 
parenting and homemaker skills. Job-related services, legal assistance 
and other services also are available.
     In North Carolina, 19 counties receive a capped amount of 
Title IV-E funds that may be used flexibly to meet the needs of 
children and families in the child welfare system. If a county's 
expenses are in excess of their Title IV-E allotment, the State and 
county will share the excess costs. Eligible children are those who are 
at imminent risk of placement or are already in placement. Counties use 
their funds in a variety of ways. Thirteen counties use funds to meet 
needs on a case-by-case basis. Other counties developed new services 
in-house or entered into contracts with providers for such services as 
family support, assessment, adoption, substance abuse and mental health 
treatment and family reunification.
     In Ohio, 14 counties are experimenting with a diverse 
array of managed care strategies. The State provides the participating 
counties with a capped amount of funds. Each county has developed its 
own managed care strategy for managing expenditures within the 
allotment. Some of the strategies employed by counties include 
establishing capitated or case rate contracts with private providers; 
developing utilization review strategies including pre-placement and 
period review processes; increasing incentives to enhance foster care 
provider networks; and establishing quality assurance procedures.
     In Oregon, the State requested plans from interested 
branch offices to spend a portion of their foster care budgets more 
flexibly than typically allowed. Plans addressed three types of 
services: foster care prevention, expansion of established services, 
and ``innovative'' service plans for the development and implementation 
of new services. The State approved plans and negotiated agreements 
with the branch offices. If the branch office spends less of its 
flexible funds than budgeted, the difference is ``banked'' and 
available for future local waiver proposals. If additional foster care 
funds are needed, the State makes up the difference with realized 
savings through the first quarter after the shortfall occurred. Key 
service strategies employed by Oregon's counties have included Family 
Decision Meetings, Enhanced Visitation, and facilitation of drug and 
alcohol treatment.

    Two of the States, North Carolina and Oregon, have now submitted 
final evaluations reporting on outcomes for children based on their 
first 5 years of implementation of these demonstrations.

     In North Carolina, researchers found that while the 
probability of foster care placement following a substantiated report 
of abuse or neglect declined in both the demonstration counties and the 
comparison counties over the 5 years of the demonstration, the decline 
in out-of-home placement was more dramatic in the 19 demonstration 
counties with access to flexible funding under the waiver than in the 
comparison counties.
     Similarly, Oregon's final evaluation report found that in 
the localities in which the child welfare agency had access to flexible 
funds through the Title IV-E waiver and/or through a State-funded 
System of Care initiative, children were more likely to remain in their 
own homes. Children in the localities with access to both waiver and 
System of Care funds were over three times as likely to remain at home 
as children in localities that did not have access to either source of 
flexible funding.

                                 

Questions from Representative Benjamin L. Cardin to the Honorable Wade 

                                F. Horn

    Question: In your testimony, you suggest that under the 
Administration's plan, States ``could receive up front funding'' to 
make investments in family related services that may reduce future 
foster care placements. However, the Administration's estimates (from 
OMB) suggest that the plan would increase child welfare spending by 
only $119 million over the next two years (while reducing expenditures 
correspondingly in later years). Do you believe $119 million is going 
to make a huge difference to a foster care system that will spend $10 
billion over the same time period?
    Answer: The Child Welfare Program Option allows States to receive 
up front funding and to save funds immediately from reduced 
administrative burdens. States claimed approximately $68 million of 
these administrative costs in FY 2001. Although some activities that 
are linked to eligibility requirements will continue under the 
proposal, we expect significant savings in this area. Another area 
where we expect savings is in the area of cost allocation, as this 
process will be significantly streamlined.
    We believe that this initial influx of funding in addition to the 
longer-term savings generated from innovative programs that reduce 
foster care caseloads will allow States to fund new and improved 
services and maintain their responsibility for children in foster care. 
This proposal is an opportunity for States to use Federal funds to 
improve the way they plan, organize, and invest in their child welfare 
system.
    Additionally, the President's FY 2004 budget requests full funding 
of Promoting Safe and Stable Families, which will provide States with 
an additional $1 billion influx of funding for their child welfare 
systems over 5 years. States may use that influx in the same flexible 
manner they may use Program Option funds.
    We believe that the flexibility afforded states through the Program 
Option coupled with the additional funding in Promoting Safe and Stable 
Families will have a significant impact in improving state child 
welfare systems.
    Question: You stated that the Administration's foster care plan is 
designed to be cost-neutral over 5 years. Does the Administration have 
a position on other proposals that may provide net new resources to the 
child welfare system (beyond seeking full funding for the current 
Promoting Safe and Stable Families Program)? For example, is the 
Administration willing to consider providing additional resources to 
the child welfare system to implement program improvement plans, 
address substance abuse problems, and improve the retention of 
qualified caseworkers?
    Answer: We developed the Child Welfare Program Option using the 
following principles: 1) provide maximum flexibility to States; 2) 
maintain child safety, permanency and well-being outcomes and 3) retain 
cost neutrality. Any child welfare reforms that we consider must 
comport with those principles.
    The Option allows each State that chooses it to direct its funding 
in the manner that best serves the population, including, but not 
limited to implementing program improvement plans, addressing substance 
abuse problems and improving the retention of qualified caseworkers. 
Having said that, we are, of course, willing to discuss issues and 
other proposals with members.
    As with the Safe and Stable Families Program, the Administration is 
requesting full funding ($60 million) for the Independent Living 
Education and Training Vouchers program for FY 2004, the same as the FY 
2003 request. The program was funded at $42 million less a rescission 
of .65 percent in FY 2003. These vouchers provide youth an additional 
resource to prepare for adult living, increasing the prospect that they 
will be able to secure work and become contributing members of society. 
Full funding would allow us to continue supporting State efforts to 
meet the needs of this highly vulnerable population.
    I would also like to take this opportunity to note that the 
President's FY 2004 budget for SAMHSA provides a new $200 million State 
voucher program for substance abuse treatment.
    Question: Your testimony highlighted the growing inequality of the 
current eligibility standard for Federal foster care assistance. Under 
this so-called ``look back'' provision, States must verify that a 
foster child's birth family was eligible for welfare under the rules in 
place in 1996 (which are not indexed for inflation). You suggested that 
States selecting the proposed option foster care block grant would not 
have to go through this look-back process. Does the Administration also 
support addressing this problem for states [sic] decide not to opt into 
the Administration's proposal. [sic] In other words, would you support 
updating eligibility standards for Federal foster care payments in 
States that do not believe the proposed block grant is a good deal? The 
Administration's plan does not address the look-back problem for 
determining adoption assistance payments, regardless of whether a 
States opts into the proposed block grant. Does the Administration 
support updating eligibility standards for Federal adoption assistance 
payments?
    Answer: The Administration developed the Child Welfare Program 
Option in a cost-neutral environment. With respect to both of your 
questions, we are unfamiliar with any proposals that address the look-
back date for both the foster care and adoption assistance programs 
that are cost-neutral. However, we are willing to review and discuss 
any proposals that do so.
    I would point out that spending under the Title IV-E adoption 
assistance program continues to grow at a rate of 10 percent per year 
and thus we are maintaining the entitlement to adoption in order to 
ensure that all children can grow up in a loving and permanent home. 
However, under our proposal, any State that chooses the child welfare 
program option would only be required to test for AFDC eligibility once 
at the time that termination of parental rights proceedings are 
initiated rather than determining eligibility at two points in time (at 
the point of removal from the home and when the State files the 
adoption petition), as is currently required.
    Question: Between 1987 and 1992, the number of children in foster 
care increased by 42%, going up from 300,000 to 427,000. A significant 
factor in this increase was the emergence of crack cocaine and the 
devastating impact it had on families. If a similar trend occurs in the 
future for whatever reasons, what would happen under the 
Administration's proposal? Do you think a capped contingency fund 
designed to help state [sic] welfare programs during economic downturns 
can truly respond to such a dramatic change in the number of at-risk 
children?
    Answer: The Child Welfare Program Option allows each State to re-
direct dollars as necessary so that the State quickly may address 
unexpected changes, trends and circumstances within the State before 
such circumstances become overwhelming. If a State is not able to do 
so, and it meets all other criteria, the contingency fund is available 
to provide relief.
    The TANF contingency fund is currently authorized at a level of $2 
billion. No State has drawn down these funds even during an economic 
downturn and we anticipate that few States will need the funds for the 
TANF program in the future. Further it should be noted that the 
triggers for the contingency fund under the Child Welfare Program 
Option have been modified to appropriately address the child welfare 
environment. Under the Option, States may request additional funding 
from the TANF contingency fund when the State's foster care population 
increases by at least 15 percent over the course of two fiscal years 
and either the foster care population increases by at least 10 percent 
nationally over the course of two years, or the unemployment trigger 
for the TANF Contingency Fund is met.
    Question: Children currently eligible for federal foster care 
payments are categorically eligible for Medicaid. If a State no longer 
calculates eligibility for these payments under the proposed block 
grant, how are we going to guarantee continued Medicaid coverage for 
these kids? You mentioned the Administration's plan would allow States 
to make all children in foster care categorically eligible for Medicaid 
if they opted into the block grant. Can you outline how that would 
work? Does OMB consider such a reform to be cost-neutral?
    Answer: Our child welfare proposal does not impact Medicaid 
eligibility. Children that are currently eligible will continue to be 
eligible. The vast majority of children in foster care are either 
currently entitled to Medicaid under the existing Title IV-E foster 
care maintenance payments program or would otherwise qualify for the 
program. With the exception of the children who have significant income 
and resources of their own, all children who have been removed from 
their parents' home and receive services under the program option would 
be eligible for Medicaid under an eligibility group that covers all 
children with incomes at or below the Federal poverty line.
    Question: The Administration's plan requires a projected baseline 
under current law of foster care spending over five years in every 
state [sic] opting into the block grant (to devise funding levels). Do 
such baselines exist today? Are their [sic] any other programs that you 
are aware of that depend on state-by-state [sic] baselines of projected 
future spending? How would you ensure that all of these state [sic] 
baselines add up to a budget-neutral National baseline? What role would 
OMB play in constructing these state [sic] baselines and ensuring 
budget neutrality?
    Answer: The Administration does not currently project State-by-
State baselines for the Foster Care program, or for any other relevant 
Department of Health and Human Services (``HHS'') programs. We plan to 
work with States, the Congress and other interested organizations such 
as the American Public Human Services Association to develop a 
methodology for determining State-by-State allocations that would 
function within the national baseline. Similarly, the Office of 
Management and Budget (``OMB'') will be involved in these discussions, 
as both OMB and HHS have strong interests in maintaining cost-
neutrality, which the President requires for this proposal.

                                 

    [Submissions for the record follow:]

  Statement of the Honorable Anibal Acevedo-Vila, a Representative in 
             Congress from the Commonwealth of Puerto Rico

    I commend the Chairman and the committee for focusing their 
attention on the critical problem of protecting and providing for our 
nation's abused and neglected children. I am confident that this marks 
the beginning of a dialogue on this urgent national problem, one that I 
expect will culminate in action by this Congress to strengthen our 
nation's response to child abuse and neglect. I agree that providing 
more flexibility under the IV-E program is an important step in this 
direction, and like many of the states, Puerto Rico would be very 
interested in investigating the option of the allotment, given an 
appropriate baseline. We agree that it is of vital importance that 
federal funding support more services, including preventive services, 
for these families and children.
    I also want to take this opportunity to bring to the committee's 
attention the specific difficulties the Commonwealth of Puerto Rico is 
facing with the IV-E program regarding the federal support available to 
assist us in ensuring the safety and well being of our most vulnerable 
boys and girls.
    Sadly, as is the case on the Mainland, child abuse and neglect are 
very serious and urgent problems in Puerto Rico. The twin evils of 
poverty and substance abuse have combined to conspire against our 
children and have placed too many of them at risk for abuse and 
neglect. In 2002, the Commonwealth received around 30,000 complaints of 
abuse and neglect and approximately 10,000 children went through our 
foster care system.
    When Governor Sila Calderon was sworn into office two and a half 
years ago, she encountered a child welfare system that was in complete 
disarray. There was a backlog of over 4,000 complaints that were 
waiting to be assigned; the investigations themselves took 2-3 months 
to complete, and social workers were overwhelmed with caseloads of over 
50 complaints each. Leaving children in possibly risky environments for 
such extended periods of time was simply unacceptable.
    Improving our child protection system became one of our highest 
priorities, so over the last two and a half years, with an investment 
of an additional $12 million in Commonwealth dollars, the Governor 
doubled the number of social workers in this program, shrunk the 
backlog of cases by 88 percent, and reduced social workers' caseloads 
down to an average of 28. In addition, last year a pilot program to 
reduce the turnaround of complaint investigations to 48 hours was 
successfully instituted in one of the Family Department regions. It 
will be extended to the whole Island by the end of July. Moreover, last 
year the Commonwealth inaugurated the first multidisciplinary 
transitional shelter, ``Mi Casita Feliz,'' at an annual operating cost 
of $2.4 million. This 108-bed shelter, run in cooperation with the 
Health, Justice, and Police Departments, not only provides immediate 
shelter for children who have just been removed, but it also offers 
integrated medical, psychological, social, and educational evaluations 
and services. Similar shelters are slated to open this year in two 
other regions of the Island.
    I am very pleased with the progress made. However, all these 
ground-breaking improvements came without the benefit of any additional 
support from our Federal partners. Children living in Puerto Rico are 
denied their entitlement to IV-E assistance solely on the basis of 
where in the U.S. they live. Unfortunately, Puerto Rico's IV-E program 
is capped, so once the ceiling is reached, the Federal partnership ends 
and it is up to the Commonwealth alone to provide resources for these 
essential services. This legislatively imposed cap on foster care 
expenditures has no foundation in either welfare or economic policy, 
but is an arbitrary limitation imposed on the Commonwealth.
    States with populations similar to Puerto Rico are reimbursed $40 
to $50 million a year for their foster care and adoption assistance 
expenditures, however, and Puerto Rico receives about $12 million a 
year. Puerto Rico receives one quarter of one percent of all IV-E 
funding, when the Commonwealth has seven times that proportion of the 
nation's foster kids. This limitation undermines our ability to respond 
quickly and appropriately to provide the necessary level of care these 
children require. It also undermines the Federal investment in the 
system as it prevents investments in training and in data systems to 
assure appropriate record keeping and tracking.
    One example of unintended consequences resulting from the statutory 
dollar limitation on the IV-E program for the Commonwealth occurred in 
October 2002, when Puerto Rico the Commonwealth earned an adoption 
incentive bonus. On one day the Department of Health and Human Services 
awarded the bonus and on the next day, it reduced the Foster Care IV-E 
basic grant because the performance bonus had put Puerto Rico over the 
welfare cap. Similarly, there is no room under the cap for our IV-E 
eligible training, administrative, and placement expenses. Furthermore 
we have been advised by ACF that the additional funds Mr. Horn spoke of 
in his testimony to the Subcommittee, the Educational Vouchers Program 
which is intended to support educational opportunities for youth 
placing out of foster care will not be available either, because of the 
cap.
    Furthermore Puerto Rico has been advised by ACF that because of the 
cap on IV-E the $648,557 Puerto Rico was to receive for the Educational 
and Training Vouchers for Youths Aging out of Foster Care will not be 
available. This is the program that Dr. Horn referenced in his 
testimony to the Subcommittee that Congress established, which is 
intended to support educational opportunities for youth placing out of 
foster care.
    Mr. Chairman, Puerto Rico is in favor of additional flexibility for 
the IV-E program. However, it is also important to establish an 
appropriate baseline so that children, regardless of where they live in 
the United States, have access to a foster care system that is 
responsive, caring, and addresses their needs. The issue of child 
protective services is a critical issue in the Commonwealth and I look 
forward to working with you so that we can take significant steps to 
resolving these issues.
    In addition to the critical issue of establishing an appropriate 
base line--a concern that I believe is shared by all of the states--
there are other issues that the Commonwealth would like to work with 
the Committee to resolve as the foster care proposal is developed. 
These are the:

    1.  Contingency Fund: Puerto Rico is not authorized to participate 
in the TANF contingency fund. While I am hopeful that Congress will 
address this issue during the reauthorization of TANF, access to the 
Contingency fund is a fundamental need if the Commonwealth is to 
implement the flexible foster care proposal.
    2.  Maintenance of Effort: Puerto Rico has historically 
overmatched the IV-E requirement because of the cap. Given the relative 
low levels (as compared to the states) of Federal financial 
participation in the Puerto Rico IV-E program, mandating the 
Commonwealth to this higher level of MOE would appear to be overly 
burdensome.
    3.  Medicaid Eligibility: While children eligible for IV-E are 
automatically eligible for Medicaid and, in the states there is a full 
Federal partnership for the provision of healthcare. However, in the 
Commonwealth, the Federal Government only contributes approximately 15% 
of eligible Medicaid costs. I would urge the Committee to exempt the 
Medicaid expenditures for IV-E children from the Medicaid cap.
    4.  CFS Review: Puerto Rico expects to have its CFS Review 
completed this year by HHS. However, the difference between the 
improvement plan that the Commonwealth will adopt and work to implement 
and the plans implemented by the states is that there will be no 
reimbursement for eligible IV-E expenses that occur with the 
implementation of the plan. States can secure additional IV-E 
reimbursement for eligible portions of their plan, but because of the 
cap on foster care expenses, Puerto Rico will be required to confront 
this federal mandate with no federal partner to help finance this 
effort.

    Mr. Chairman, it is my hope that my colleagues will join with me 
this year in working to see that Puerto Rico's abused and neglected 
children are provided the same access to federal assistance during the 
darkest times of their lives--without the imposition of arbitrary 
limits that bear no relationship to their actual needs. Let us renew 
our commitment to protecting all the vulnerable children of this 
country, regardless of where they live, and let us reinforce the 
historical partnership between the Federal Government and the 
Commonwealth so that children in Puerto Rico are not left behind.

                                 

                                 Alliance for Children and Families
                                               Washington, DC 20004
                                                      June 25, 2003
Honorable Wally Herger
Chairman, Subcommittee on Human Resources
Ways and Means Committee
House of Representatives
Washington, DC 20510

    Dear Chairman Herger,

    Please consider this cover letter and the attached documents as our 
submission for the printed record of the June 11, 2003 hearing held by 
your Committee on ``Foster Care Flexible Funding Proposal''. As you 
consider this issue, we believe it is imperative that you take into 
consideration the voice of the nonprofit sector, which has increasingly 
been delivering services on the front lines to America's most 
vulnerable children.
    As your Committee prepares to explore the Bush Administration's 
Flexible Funding Proposal for foster care, we ask that you consider the 
recommendations of the Alliance for Children and Families, a national 
association of nonprofit, human service organizations that serve almost 
eight million people in more than 6,700 communities.
    Please feel free to contact the Alliance for Children and Families 
and our member agencies all across the nation. Our website lists our 
members in every state (www.alliance1.org) and both our Milwaukee 
headquarters and our Washington, D.C. policy office can answer your 
questions about our research and recommendations. The Alliance would be 
honored to participate in any upcoming hearings on these or other 
issues affecting nonprofit human service providers.
            Sincerely,
                                               Carmen Delgado Votaw
                               Senior Vice President, Public Policy
                                 ______
                                 
 The Alliance for Children and Families' Recommendations for the Bush 
          Administration Foster Care Flexible Funding Proposal

The Alliance Responds to Secretary Horn's testimony on June 11, 2003 
        before the House Subcommittee on Human Resources, Ways and 
        Means Committee.

    We are pleased that Assistant Secretary Horn was willing to use 
this hearing as an opportunity to explore and clarify components of the 
Administration's flexible funding proposal for foster care. There is a 
growing consensus among national advocacy groups, child welfare 
providers, as well as many states and policymakers that the current 
mechanism for funding the nation's child welfare system needs revision, 
and must be revamped. Child welfare funding has eroded, and scant 
attention has been paid to maintaining the funding for children in the 
foster care system, who often have severe physical and psychological 
needs. It is imperative that any proposed changes promote and invest in 
increased prevention and early intervention, while assuring protection, 
permanency and well being of our country's most vulnerable children.
The Need for Increased Investment in Child Welfare Services

    Although the Administration's proposal will provide states with the 
option to utilize greater funds initially, they will be limited to a 
capped amount over five years. Thus, it is unlikely that the block 
granted funds will be sufficient to build the front-end capacity of 
child welfare systems, in addition to sustaining foster care 
maintenance payments and providing case management to families. We 
recognize the states' need for more flexibility to provide more 
targeted systems of care, however, new investments are also needed to 
make improvements and build a more preventative system.
The Alliance for Children and Families further recommends the 
        following:

     Eliminate the ``Look Back'' for Adoption Assistance--
While eliminating the ``look back'' provision for foster care 
streamlines the IV-E process, maintaining the provision for Adoption 
Assistance reverses this movement towards simplification. An assessment 
of the child's household income at removal must still be completed 
while the child is in foster care for accurate determination, because 
this information is still needed for Adoption Assistance eligibility. 
If eligibility determinations are eliminated from foster care, the 
``look back'' provision should be eliminated from foster care as well.
     Set Aside Funds for Children with Severe Needs; Research 
& Training--Because the children coming into the foster care system 
have increasingly complex physical and behavioral health needs, it is 
unlikely that child welfare costs will be significantly reduced as 
prevention strategies begin to take effect. The Federal Government 
should acknowledge the severe needs of this population, and consider 
maintaining the entitlement mechanism for specific populations, such as 
children who are compliant with Adoption and Safe Families Act (ASFA) 
regulations, and are placed in treatment foster care, group, and 
residential care facilities. Furthermore, the federal commitment to 
providing research and training dollars to states should be considered 
distinct from the block of funds for prevention and service provision.
     Create Minimum Standards for State Involvement in Child 
Welfare--With the offer of more state flexibility, the Federal 
Government is transferring a greater share of responsibility and risk 
for the child welfare population to the states. The partnership between 
the Federal Government and states in providing services to abused and 
neglected children must be maintained and states should be discouraged 
from diminishing their investment in the child welfare system once 
receiving federal dollars. Additionally, Congress should create 
appropriate and minimum standards in areas such as size of caseloads, 
to give guidance to participating states to ensure the progress of 
child welfare reforms. States must carefully weigh the decision to 
forgo entitlement programs with state match requirements that may help 
them leverage additional resources within their own state legislatures.

                                 

  Statement of the American Federation of State, County and Municipal 
                               Employees

    The American Federation of State, County and Municipal Employees 
(AFSCME) is a labor organization representing 1.4 million workers, 
predominantly in the public sector. Tens of thousands of our members 
are caseworkers, supervisors and provide clerical support for public 
child welfare agencies across the country.
    Many child welfare programs are in crisis, with more abuse and 
neglect cases than state and county run systems can handle 
successfully. Congress can play an important role in alleviating the 
strains on these systems that cause many of the heartbreaking stories 
we read about in local newspapers. However, allowing states to cap 
funding for the Title IV-E Foster Care and Adoption Assistance program 
in exchange for more flexibility runs directly counter to this goal.
Retain and Expand Child Welfare Entitlement
    The open-ended entitlement to Title IV-E funds has provided stable, 
reliable funding for abused and neglected children who require 
placement in out-of-home care. During periods like the late 1980s when 
child welfare caseloads increased dramatically, state and county child 
welfare agencies relied on additional federal assistance as the need 
for foster care exploded. More recently, foster care roles have leveled 
off in many states and concomitantly, the need for federal foster care 
dollars has stabilized.
    While federal support for foster care and adoptions has been 
strong, states and counties have not received sufficient funds for 
other components of their child welfare systems, including abuse 
prevention, family reunification, substance abuse, and mental health 
services. States should be allowed to fund kinship guardianship 
assistance payments under Title IV-E as seven states currently are able 
to do through waivers. Moreover, Congress should provide guaranteed 
funding for the Promoting Safe and Stable Families Program (PSSFP), an 
important abuse prevention program. In addition, the authority of the 
Secretary of the U.S. Department of Health and Human Services to 
approve child welfare demonstration projects should be extended.
    AFSCME's Recommendation: We urge Congress to preserve the Title IV-
E open-ended entitlement to ensure a stable and reliable federal 
commitment to supporting abused and neglected children. We also support 
allowing states to use Title IV-E funds more flexibly.

Workforce Crisis
    In a 2003 report entitled ``The Unsolved Challenge of System 
Reform, The Condition of Frontline Human Service Workforce,'' the Annie 
E. Casey Foundation and the Brookings Institution Center for Public 
Service appropriately refer to child welfare workers as ``America's 
other first responders.'' They found that while this workforce is 
highly committed and motivated, workloads are overwhelming, stress is 
too high, and training is inadequate. All of this had led to 40 percent 
turnover rates and inexperienced staff without the tools to perform 
their extremely challenging jobs.
    A 1998 AFSCME survey of our members who work in child welfare had 
similar findings. Caseloads in well over half of the child welfare 
agencies surveyed exceeded the recommended guidelines published by the 
Child Welfare League of America. Wages were not commensurate with the 
job demanded of these professional workers, virtually all of whom have 
a minimum of four years of college. Training was inadequate, with 
workers lacking a voice in shaping the training received. And, violence 
in the workplace and in the neighborhoods where workers must go was 
also a serious problem. Over 70 percent of the AFSCME affiliates 
responding to the survey reported that front-line workers in their 
agencies had been victims of violence or threats of violence in the 
line of duty.
    AFSCME's Recommendation: We support legislation that recognizes and 
begins to solve the problems front line workers face. Federal grants to 
states should be established to improve the working conditions of child 
welfare workers by increasing wages, lowering caseloads and workloads, 
improving education and training, providing scholarships and student 
loan forgiveness, and increasing worker safety.

Fully Fund Child Welfare and Related Programs
    Too often in the federal budget process, child welfare and related 
programs do not receive the funding they require to perform the 
critically important work they are charged to do. For example, funding 
for the Child Abuse Prevention and Treatment Act (CAPTA) and Promoting 
Safe and Stable Families Program is often set below the funding level 
authorized. Looking at the Fiscal Year 2004 budget, the House 
subcommittee mark contains only a 1% increase in funding for mental 
health services and an increase only slightly above inflation for 
substance abuse treatment. These funding levels will not come close to 
closing the gap between services needed and services provided.
    Indeed, the House subcommittee mark proposes to reduce funding 
overall for children and family services programs by 9 percent. And, 
funding for the Social Services Block Grant (SSBG) has been flat funded 
for years after it was cut in the mid-1990s. Almost one-quarter of SSBG 
spending goes for child welfare services.
    AFSCME Recommendation: All programs that provide services for 
families either in the child welfare system or at-risk of abuse or 
neglect should be provided the funds they need to keep children safe. 
This includes services that get to the root causes of abuse, including 
mental health and substance abuse programs, as well as child welfare 
programs.

Conclusion
    Protecting vulnerable children from abuse and neglect should be a 
national priority. This commitment must be reflected in federal 
policies and funding. We urge this Congress to reject a cap on funding 
for the Title IV-E program, enact legislation that would support the 
child welfare workforce, and increase funding for child welfare and 
related services.

                                 

                             Association on American Indian Affairs
                                          Rockville, Maryland 20850
                                                      June 23, 2003
Congressman Wally Herger
Chairman, Subcommittee on Human Resources
Ways and Means Committee
U.S. House of Representatives
1102 Longworth House Office Building
Washington, DC 20515

    Dear Chairman Herger,

Re: Submission for the record of the June 11, 2003 hearing on the Bush 
Administration Flexible Foster Care Funding proposal.

    Please accept the following statement for the record of the above 
hearing.
    The Association on American Indian Affairs is an 80-year-old Indian 
advocacy organization located in South Dakota and Maryland and governed 
by an all-Native American Board of Directors. We have been involved 
with Indian child welfare issues for decades and played a key role in 
the enactment of the Indian Child Welfare Act of 1978. We have had a 
long-standing interest in the issue of direct funding to tribes under 
Title IV-E of the Social Security Act, having testified before this 
subcommittee about this issue as far back as 1990.
    We applaud the Administration's recognition of the need for direct 
tribal funding under Title IV-E in its flexible funding proposal. We 
also wish to thank Rep. Camp for introducing and seeking the enactment 
of H.R. 443 that would provide direct tribal funding under the existing 
Title IV-E program. It is long overdue that the exclusion of tribal 
governments from this program be rectified.
    There are many needs in Indian country that access to this money 
can address. Among other things, this money can be used to pay foster 
families, provide assistance and support for those families, finance 
child protective services to prevent family breakup and ensure adequate 
training for staff and foster families. Attached is a fact sheet that 
summarizes the many reasons why inclusion of tribes in Title IV-E--both 
any new program and the existing program--is critical.
    As you move forward to develop legislation implementing the 
President's proposal, it is critically important that tribes and 
organizations such as ours and the National Indian Child Welfare 
Association be involved in the discussion. In that way, the Committee 
can ensure that any law that is enacted will truly meet the needs of 
Indian country. It is also vital that this Committee support the 
enactment of H.R. 443, so that tribes will have access to adoption 
assistance money, in addition to foster care money, and in order to 
provide tribes with the same option as states in regard to the Title 
IV-E foster care program.
    Thank you for considering this testimony.
            Sincerely,
                                                      Jack F. Trope
                                                 Executive Director
                                 ______
                                 
     Fact Sheet on Title IV-E Funding to Indian Tribal Governments

    As has been well documented, tribal exclusion from the Title IV-E 
program was not deliberate. At that time (1980), the Committees 
addressing these issues did not fully understand nor recognize the 
critical role of tribal governments in service delivery to children, 
nor the inherent sovereignty of Indian tribal nations. Today, Congress 
has a better understanding of tribal sovereignty and the critical role 
of tribal governments in providing services to children and families 
and it is time to correct this oversight. Tribal governments are the 
entities best situated to provide such services to their communities 
for several reasons:

     Indian tribes are ``domestic dependent nations'' with 
inherent sovereign powers. They have a direct government-to-government 
relationship with the Federal Government and are not subdivisions of 
the states.
     History has shown, and a 1994 HHS inspector general 
report confirmed, that in the case of Title IV-E, there have been some 
tribal-state agreements negotiated, but they are limited in number and 
scope and generally do not include the full array of IV-E services and 
administrative support that states are able to access.
     Tribal programs are more attuned to the special 
programmatic and cultural needs of their local communities and have 
experience in operating quality programs when resources are available; 
permanency for Indian children who need out-of-home placements is best 
achieved when tribes have the resources to ensure that quality foster 
care and adoptive placements for these children.
     Tribal members continue to experience inequity in the 
quality and quantity of services available under State-administered 
programs.
     Although some tribes have accumulated significant 
resources because of their successful gaming operations, most tribes 
continue to lack a substantial economic and tax base from which to 
generate resources.
     Federal resources provided for Indian people for social 
services through Bureau of Indian Affairs and Indian Health Services 
budgets have consistently been inadequate, falling far short of need.]
     In the case of Title IV-E, providing for tribal access to 
this program would address a substantial injustice--namely, that some 
of the neediest children in the country are excluded from a program 
that is an entitlement for all other similarly situated children, 
simply because they fall under tribal jurisdiction.

    Of note, support for these provisions is not limited to tribes and 
Indian organizations. For example, the 1994 HHS Inspector General 
report specifically recommended direct funding to tribes under Titles 
IV-E and state-based groups such as the American Public Human Services 
Association have taken a clear position in support of Title IV-E 
funding for tribal governments.

                                 

            Statement of the Child Welfare League of America

    The Child Welfare League of America (CWLA) welcomes this 
opportunity to submit testimony on behalf of our more than 1,100 public 
and private nonprofit child-serving member agencies nationwide on the 
Administration's proposal to restructure Title IV-E foster care 
funding. This hearing represents an important opportunity to address 
the comprehensive reform of the child welfare system that is needed to 
ensure that our most vulnerable children are protected from abuse and 
neglect.
    Newspaper headlines across the country reveal that we, as a 
country, need to do more to protect our children from abuse and neglect 
and to care for the children who are in foster care. All children need 
protection and do best when they are living in permanent loving homes. 
There is also a compelling national interest in providing consistent 
levels of safety, protection, and care for America's children across 
each state in the nation.
    CWLA strongly opposes any measure that limits the federal 
responsibility to participate fully with the states in meeting our 
fundamental obligation to America's most vulnerable children and 
families. We believe that a new, more complete approach to shared state 
and federal funding should be implemented. In the meantime, while 
recognizing the inadequacy of the current program, we believe that it 
is essential to maintain basic Title IV-E entitlements until a more 
effective financing method is implemented.

Nationwide Reform Is Needed To Build A System Of Care That Will Ensure 
        Children Are Protected

    While recognizing the valiant efforts of the people who work within 
our nation's child welfare system, CWLA recognizes that the current 
child welfare system does not protect all children adequately. The 
shared federal, state, local, and tribal responsibility has never been 
fully developed or realized. The result is an incomplete system that 
continues to be in urgent need of reform and completion. We are overdue 
in implementing an improved and strengthened system. True child welfare 
reform hinges on an improved system of shared financing 
responsibilities among federal, state, local, and tribal governments.
    The national child welfare system continues to be in need of:

     A reliable, responsive, and predictable method of 
guaranteed funding, for a full range of essential services, as well as 
placement and treatment services. The current Title IV-E entitlement 
has proven to be an imperfect vehicle for funding a true child welfare 
system. Viable alternatives that offer guarantees to all children in 
need should be explored.
     A means of maintaining consistent focus on safety, 
permanency, and well-being as outcomes for children.
     Rigorous standards combined with strong federal and state 
accountability mechanisms.
     Recruitment and support of adequately trained child 
welfare professionals, foster parents, mentors, and community 
volunteers.
     Resources that enable parents to provide adequate 
protection and care for their own children.

Flaws In The Current System

The current child welfare financing structure is unbalanced.
     Title IV-E foster care provides approximately 38% of 
support for all child welfare services, yet it supports only about 50% 
of the small portion of children who actually are placed in out-of-home 
care. At most, this group represents less than even 20% of children 
receiving child welfare services. In fact, the federal role, as defined 
and limited by these eligibility requirements, has never been extended 
to all of this country's children who have been removed from their 
homes. Due to the eligibility restrictions linking Title IV-E 
eligibility to outdated 1996 AFDC standards, this limited level of 
federal support for children through Title IV-E is consistently 
diminishing over time.
     Even among those who are Title IV-E eligible, the scope 
of reimbursable care is limited to routine maintenance care. Family 
support services that might keep a child at home or treatment services 
that might reduce the length of time in out-of-home care are not 
included.
The current system of financing child welfare services is complex.
     An inordinate amount of state administrative costs is 
attributable to maintaining individual eligibility systems, cost 
allocation systems, blended funding formulas, match certification 
protocols, and other artifacts of an overly complex system.
     Since the patchwork of mechanisms that finance child 
welfare services is so complex, states vary greatly in fully utilizing 
existing resources.
LThe currect system is inadequately linked to either need or outcomes 
        and is over-invested in misplaced accountability.
     Strong steps have been taken to move the child welfare 
system to an outcomes-based accountability system. Despite some 
significant shortcomings, the current federal review system, under the 
Child and Family Service Reviews, has substantial promise.
     In the meantime, states continue to be required to invest 
considerable money and time in systems to track Title IV-E eligibility 
and related administrative tasks. By some estimates, this consumes as 
much as 5% of the total investment in the child welfare system. These 
resources could be better utilized in providing services or managing 
the mandated safety, permanency, and well-being outcomes for children.
The current system is overly dependent on potentially transitory 
        resources.
     Temporary Assistance for Needy Families (TANF), the 
Social Services Block Grant (SSBG), and Medicaid provide significant 
federal resources for child welfare. These funding sources, however, 
must provide resources for services to many other consumer populations. 
In addition, funding for SSBG is unpredictable and has been 
significantly reduced in recent years.
Principal Objectives Of Child Welfare Reform

    An improved federal and state child welfare financing system should 
be constructed to achieve four principal objectives. CWLA looks forward 
to working with this Subcommittee to develop a comprehensive child 
welfare reform proposal that includes the following principles:

1.  Preserve the shared federal and state responsibility for 
        protecting and caring for at-risk children.
    a.
       Maintain and expand federal protections for individual 
children.
    b.
       Ensure full federal financial participation in both protection 
and care responsibilities for all children who require the attention of 
state child protection agencies.
    c.
       Ensure that the Federal Government continues to share 
responsibility for closing the gap between resources and need with the 
states to guarantee safety and permanency of children coming to the 
attention of the child welfare system--resources should match needs.
    d.
       Establish a nationally-recognized mechanism for objectively 
defining the full extent of protection and care needs of children in 
the child welfare system.
    e.
       Extend direct access to federal funding by tribes for care and 
protection of children who are victims of abuse and neglect.
L2.  Ensure that the outcomes of safety, permanency, and well-being are 
        achieved for all children.
    a.
       Build on the success of the Child and Family Service Review 
process by continuing the emphasis on child outcomes.
    b.
       Initiate a concerted national effort to refine the scope and 
reliability of measurable outcomes.
    c.
       Connect performance indicators to nationally-defined standards 
of child need.
3. Attain high levels of quality and accountability in state and local 
        programs.
    a.
       Ensure accountability through formal standards of care, 
accreditation, certification, or licensure.
    b.
       Continue and strengthen Child and Family Service Reviews.
    c.
       Strengthen and refine national reporting standards (AFCARS, 
NCANDS, etc.).
    d.
       Allow states and tribes substantial flexibility to design 
service systems that work within a local context, while still requiring 
them to meet performance standards.

4. Provide states with sufficient flexibility to permit simplified 
        administration and a full continuum of responsive services.
    a.
       Simplify administration by eliminating individual eligibility 
determination and the need to track case administrative costs as 
distinct from service costs.
    b.
       Provide state and local flexibility in defining the mix of 
services and types of care. Permit flexible services in response to a 
full range of child welfare client needs.
    c.
       Allow states to use all federal funds for both service and 
administration to support delivery through either public or private 
agencies.
    d.
       Allow set-asides to address special needs, such as workforce 
development, training, and research.

The Administration's Foster Care Funding Proposal

    The Administration's response to the reforms needed in child 
welfare include a proposal that would restructure the current Title IV-
E foster care program. While legislation has not yet been introduced, 
some details have emerged through congressional testimony and public 
comments from Administration officials. Under the proposal, each state 
would have an option to receive a fixed, predetermined allocation, or 
block grant, of Title IV-E foster care maintenance payments, 
administrative costs, and training funds.
    Under the proposed option:

     States would receive annual grants over a five-year 
period. Funding would equal the projected growth in federal foster care 
expenditures. These projections would be based on the current 
restrictions which require states to base eligibility on their 1996 
AFDC program standards. States would be allowed to draw down up to 20% 
of this five-year total in any one year.
     All states would have a set period of time to opt-in, or 
choose this option. States not choosing this option at that set time 
could not elect to make that choice at a later date. States that do 
choose this option must continue to receive this set funding for a 
period of five years. Once a state chooses the option, it may not opt-
out during the five-year period.
     States choosing the option could spend the funds on 
foster care and any services now provided under Title IV-E and Title 
IV-B, Child Welfare Services, and Promoting Safe and Stable Families 
programs.
     States could use the funds for any child in the child 
welfare system, regardless of income. Based on current eligibility, 
approximately 50% of all children in foster care are supported with 
federal funds.
     States choosing the option would have to maintain the 
same level of state funds now used to draw down federal Title IV-E 
foster care funds.
     States would be expected to maintain the protections for 
children that exist in current law.
     If a state experienced an unusual increase in their 
foster care population, a state could draw funds from an emergency fund 
under the TANF block grant. To qualify for this relief, a state would 
have to meet a national and state target increase in foster care 
caseload or unemployment rates.
     HHS would continue to conduct Child and Family Service 
Reviews. For states choosing this option, Title IV-E eligibility 
reviews would be eliminated.
     A set-aside of $30 million would be established for 
Indian Tribes or consortia that demonstrate the capacity to operate a 
Title IV-E program. Indian tribes will have similar program 
requirements as states. However, HHS may waive certain state program 
requirements that are burdensome to Indian Tribes but do not compromise 
child safety.
     The Title IV-E Adoption Assistance program would remain 
unchanged. The eligibility for this program would continue to be linked 
to a state's 1996 AFDC standards.

CWLA Key Concerns About The Administration's Foster Care Funding 
        Proposal
    The Administration's proposal opens the door to a serious national 
consideration about the way in which we choose to carry out our 
collective responsibility for protecting and caring for the most 
vulnerable children and youth in our communities. Based on the 
information available, the proposal does appear to recognize the urgent 
need for administrative simplification and more flexibility for states 
to develop creative solutions to the widely varied needs of children 
and families. It acknowledges that up-front investment is required to 
begin movement toward new patterns of child protection and care.
    The Administration's proposal, however, does not yet appear to 
offer the depth of reform or the guarantee of sufficient federal 
financing necessary nationwide to improve the child welfare system and 
ensure that all children are protected. The proposal appears to freeze 
federal resources at a time when there is a great need for significant 
new investments and reform in our national child welfare system.
    CWLA also has many concerns about the Administration's proposal:

     The proposal breaks the link between federal funding 
based on an entitlement funding formula and transforms it into a fixed 
amount of funds no longer driven by need or the number of eligible 
children.
     The proposal does not address the complex array of 
federal funding sources for child welfare. Title IV-E foster care, the 
subject of the Administration's proposal, comprises 38% of all federal 
child welfare spending. Other federal funding sources include: Title 
IV-E adoption assistance (10%); the Social Services Block Grant (17%); 
Temporary Assistance for Needy Families (15%); Medicaid (10%); Title 
IV-B, Child Welfare Services, and Promoting Safe and Stable Families 
Program (5%); and SSI and others (5%).
     The Administration's foster care proposal is cost 
neutral, setting a five-year cap on spending. The proposal does not 
recognize the need for any new resources to build a system of care to 
better protect children and address pressing issues, including supports 
for the child welfare workforce and substance abuse treatment for 
families that come to the attention of the child welfare system.
     A state choosing the foster care option would receive a 
fixed allocation/block grant based on the current Title IV-E 
eligibility criteria that link eligibility to 1996 AFDC standards. This 
means that the allocation/block grant would be based on a declining 
number of children becoming eligible over the next five years.
     The proposal would not ensure that funds would be used 
for prevention services. Current Title IV-E funding does not cover all 
children in out-of-home care and few, if any states, adequately fund 
their child welfare systems so as to provide the safety and permanence 
contemplated by current law. States may have to use the fixed 
allocation/block funds to cover non-Title IV-E eligible children. There 
is no guarantee that any funds would be used for prevention services. 
Federal Title IV-E funding currently supports only 50% of the children 
in out-of-home care.
     Adoption assistance eligibility would continue to be 
linked to foster care eligibility. If the Title IV-E foster care 
eligibility is removed, determining future eligibility for adoption 
assistance would be complex and more difficult than it is presently. 
This may result in reducing the number of federally-supported adoptions 
from foster care.
     The role of the cities and counties is not protected in 
this state option proposal. There is no requirement that the fixed 
allocation/block grant funds be distributed to local or regional 
governments will be based on need or eligible children. There is no 
requirement that a city or county, which may include the bulk of a 
state's foster care population, will have any input in whether a state 
chooses this block grant or not.
     The proposed state maintenance-of-effort is based only on 
state funds currently used to draw Title IV-E federal funds. Since the 
financing of child welfare services (adoption, foster care, child 
protection, and other services) involves a variety of federal, state, 
and local funds, it appears that states would be able to reduce state 
spending by billions of dollars and still meet the federal spending 
requirement necessary to draw down the fixed allocation/block grant.
     Questions remain about the formula being developed to 
determine each individual state share of the fixed amount of funding. 
Will all states that take the fixed allocation/block grant option and 
project they will have increased costs over the next five years be 
eligible to receive increased funds? Will the formula be based on 
historical claim or actual reimbursements? Since the overall total 
federal allotment is fixed, would some states get less if other states 
negotiated an increase since certain formulas that benefit one state 
could result in less funding for another state?
     In order to access needed additional funds if states 
experience a dramatic increase in child welfare caseloads (or an 
increasingly complex caseload with greater needs), the proposal 
suggests that states could access the TANF emergency fund. The trigger 
that would allow a state to draw these TANF funds would be based on 
national and the individual state increases in foster care. These 
criteria would not necessarily reflect what is happening in a county or 
city where the bulk of the foster care population might be found. These 
emergency relief funds would divert funds from TANF. If the same event 
(a recession for example) caused both cash assistance and foster care 
caseloads to increase, a state may have to choose whether they wanted 
to fund increases in TANF or foster care.
     The proposal would combine Title IV-E training funds into 
the fixed allocation. States would have to choose what, if any, portion 
of the allocation could be dedicated to training and staff development.

CWLA Recommendations

    CWLA urges Congress to comprehensively review and take action on 
what is truly needed to build the system of care so that children are 
protected. CWLA looks forward to working with this Subcommittee to 
develop a comprehensive child welfare financing reform proposal that is 
built on the following four principles and achieves the objectives 
outlined earlier.

     Maintain Federal/State Responsibilities
     Achieve Sound Outcomes
     Ensure Quality and Accountability
     Provide State Flexibility

Pew Commission on Children in Foster Care
    The Pew Commission on Children in Foster Care has been established 
to develop recommendations to improve outcomes for children in the 
foster care system. The Commission was announced on May 7, 2003, as an 
independent, nonpartisan body with the goal of developing effective and 
practical recommendations to improve the foster care system. The 
Commission will focus on recommendations in the areas of improving 
existing federal financing mechanisms to facilitate fewer foster care 
entries and faster movement of children from foster care into safe, 
permanent, and nurturing families. The Commission will also focus on 
improving court oversight by providing state and local courts with 
tracking and management tools to help achieve safety and permanency for 
foster children.
    The Commission members are committed to reach consensus on a set of 
achievable recommendations in these targeted areas and to seek 
implementation of these recommendations. A final report and 
recommendations are due to be released in the summer of 2004. CWLA 
urges Congress to carefully weigh these recommendations as they move 
forward in making changes to the federal/state partnership in financing 
child welfare services.

Congressional Proposals Addressing Child Welfare Financing
    Congress can also take action to make incremental improvements to 
the child welfare system. Many of CWLA's recommendations were contained 
in testimony submitted to this Subcommittee for the April 8, 2003, 
hearing on the implementation of the Adoption and Safe Families Act 
(ASFA). Those recommendations included:

     Eliminate the eligibility link to 1996 AFDC standards so 
all children in foster care receive federal assistance. Congress has 
mandated legal and permanency protections for all foster and adopted 
children, however, federal funding is only available to pay for the 
costs of children who are eligible for Title IV-E. A reformulation of 
the federal-state share would have to be determined in order to 
institute this change.
      The current law links Title IV-E eligibility to archaic 
standards that each state had in place under their 1996 AFDC cash 
welfare system. States are required to maintain the same eligibility 
standards that existed in July 1996. Since AFDC no longer exists, this 
continues to be an administrative burden on the states. If the current 
system remains in place, what is even more critical, is the fact that 
as time goes by, fewer and fewer children will be eligible for federal 
foster care and adoption assistance. Based on these standards, only 50% 
of children in out-of-home placement are currently eligible for the 
Title IV-E funding. Unless changes are made, some states may be able to 
serve less than one-third of their children in out-of-home placement 
through the use of Title IV-E foster care funds.
     Address the growing child welfare workforce issues that 
pose challenges to ensuring children's safety and care. A major 
challenge in reducing the number of children entering or remaining in 
out-of-home care or waiting for an adoptive family lies in the ability 
of a well-staffed and well-trained child welfare workforce. Caseworkers 
must assist families that are experiencing difficult and chronic family 
problems. They also must achieve the goals of safety and permanency and 
make lifetime decisions for the child within the ASFA timelines. Yet, 
the safety and permanency of children is hampered due to large 
caseloads, caseworker turnover, and minimal training. In addition, 
extending federal training funds will ensure that workers employed in 
private agencies are well-trained.
     Dedicate significant new resources to provide substance 
abuse treatment for families in the child welfare system. Families in 
the child welfare system need access to appropriate substance abuse 
treatment. Up to 80% of the children in the child welfare system have 
families with substance abuse problems. Resources for substance abuse 
treatment for families are chronically in short supply. All states 
report long waiting lists. Alarmingly, over two-thirds of parents 
involved in the child welfare system need substance abuse treatment, 
but less than one-third get the treatment they need. To ensure that 
permanency decisions can be made for children whose families have 
alcohol and other drug problems, special steps must be taken to begin 
services and treatment for the family immediately upon a child's entry 
into foster care or to regain custody of their children.
     Make available a federally-funded guardianship permanency 
option to allow states to provide assistance payments on behalf of 
children to grandparents and other relatives who have assumed legal 
guardianship of the children for whom they have committed to care for 
on a permanent basis.
     Extend and expand the existing child welfare waivers. The 
U.S. Department of Health and Human Services should collect data on 
these efforts in order to evaluate their effectiveness.
     Extend and modify the adoption incentive program to help 
older youth secure permanent adoptive homes.
     Adopt the Administration's recommendation to increase 
funding to $505 million for the Promoting Safe and Stable Families 
Program and $60 million for the educational and training vouchers for 
youth aging out of foster care.
     Restore funding for the Social Services Block Grant. SSBG 
funding comprises 17% of all federal child welfare funding. Reductions 
in SSBG funding in recent years has hampered state ability to protect 
needed services.
     Provide direct tribal access to Title IV-E funds. 
Currently, tribes can only access these federal funds through 
agreements with states.

    Legislation has been introduced this year that adopt some of these 
incremental measures. The Child Protection Improvement Act (HR. 1534), 
introduced by Representative Ben Cardin (D-MD) and several members of 
this Subcommittee, makes a down payment towards addressing the 
comprehensive reforms needed. H.R. 1534 provides new funding to help 
states implement strategies to expand and improve their child welfare 
system, including the expanded use of child welfare waivers. The 
legislation will also help public and private child welfare agencies 
better secure and maintain a stable and well-trained child welfare 
workforce. New funds are also provided to address the substance abuse 
treatment needs of families in the child welfare system and to ensure 
that more children are eligible for federal foster care and adoption 
assistance. The bill also provides first-time federal assistance to 
support kinship guardianship as a permanency option for some children.
    Child welfare reform measures are also contained in Title VIII of 
the Act to Leave No Child Behind, (H.R. 936). That legislation provides 
additional federal funding for preventive, crisis, permanency, and 
post-permanency services for children and parents or other caregivers 
when they first come to the attention of the child welfare system; when 
children enter foster care; and when children leave care to be united 
with their families, adopted, or placed permanently with grandparents 
or other relatives. Title VIII would also expand eligibility for foster 
care, adoption assistance, and other services.

Conclusion
    The child welfare system needs reform. CWLA calls on Congress to 
take action to ensure that we, as a country, do a better job of 
protecting and caring for our children. We urge Congress to take time 
to review and act on comprehensive child welfare reform measures that 
maintain a strong federal responsibility. CWLA strongly opposes any 
measure that limits the federal responsibility to participate fully 
with the states in meeting this fundamental obligation. We believe that 
a new, more complete and streamlined approach to shared state and 
federal funding should be implemented. In the meantime, while 
recognizing the inadequacy of the current program, we believe that it 
is essential to maintain basic Title IV-E entitlements until a more 
effective financing method is implemented. CWLA believes important and 
necessary reforms must be enacted to guarantee a federal/state/local 
commitment to ensure a consistent level of safety and care for all of 
America's children. We look forward to working with this Subcommittee 
to develop a comprehensive child welfare reform proposal that meets all 
the needs of America's most vulnerable children and families.

                                 

          Statement of MaryLee Allen, Children's Defense Fund

    The Children's Defense Fund (CDF) is pleased to have the 
opportunity to submit a written statement for the record of the June 
11, 2003, hearing on the Bush Administration's Foster Care Flexible 
Funding Proposal before the Subcommittee on Human Resources.
    The Children's Defense Fund's mission is to Leave No Child Behind 
and to ensure every child a healthy start, a head start, a fair start, 
a safe start and a moral start in life and successful passage to 
adulthood with the help of caring families and communities. CDF 
provides a strong, effective voice for all the children of America who 
cannot vote, lobby, or speak for themselves. We pay particular 
attention to the needs of poor and minority children and those with 
disabilities.
    CDF's advocacy for reforms on behalf of children who are abused or 
neglected or at risk of maltreatment predates the passage of the 
Adoption Assistance and Child Welfare Act of 1980. Over the years we 
have had the opportunity to work closely with Members of the 
Subcommittee on Human Resources, formerly the Subcommittee on Public 
Assistance and Unemployment Compensation, to make improvements in many 
aspects of the child welfare system. The Subcommittee has often played 
a leadership role in securing new investments in family support 
services, strengthening adoption opportunities for children, creating 
new opportunities for older youths aging out of foster care, and 
putting in place new monitoring mechanisms for promoting quality care 
for children. Despite these gains, much remains to be done.
    We therefore appreciate your current attention to how to structure 
the financing of child welfare to create the best opportunities for 
children--those who are at risk of entering foster care, those in care, 
and those who have returned home, been adopted or are with kin and need 
ongoing support to prevent them from returning to care. As you well 
know, this is not a new discussion. When we testified before this 
Subcommittee in 1979, we urged that funds for prevention and 
specialized services be put on an equal footing with funds for out-of-
home care, and today our message is similar. There also have been a 
number of financing proposals before you in recent years. Yet, 
investments in out-of-home care are still almost three times the 
investments in prevention and other services. We urge the Subcommittee 
to give careful consideration to the issue of child welfare financing 
throughout the 108th Congress--to hear from state officials, 
providers, and advocates in states that have explored alternative 
funding options, to review proposals from the recently appointed Pew 
Commission on Children in Foster Care that is examining child welfare 
financing and the role of the courts, and to craft reforms that will 
ensure long term gains for all vulnerable children and families.
    In our statement, we will do three things:

     Comment on the foster care flexible funding proposal 
included in the Bush Administration's FY 2004 Budget, by posing ten 
questions that we believe must be asked of it and any other financing 
proposals;
     Suggest briefly an alternative financing scheme for child 
welfare; and
     Recommend steps that can and should be taken immediately, 
while broader financing options are being considered, to increase the 
capacity in states to promote safety and permanence for children.

Concerns About the Bush Administration's Foster Care Flexible Funding 
        Proposal

    The Administration proposes to offer states the option of taking a 
fixed amount of money over five years in exchange for its current open-
ended funding for foster care under Title IV-E of the Social Security 
Act. While few details and no legislative language are yet available, 
the Administration proposes that states could receive more money in the 
early years to spend on prevention and treatment activities. While CDF 
agrees with the goal of increased investments in prevention and 
treatment, we do not believe that what appears to be a foster care 
block grant, as proposed by the Administration, will reach that goal. 
In fact, we are concerned that a block grant, especially if implemented 
when states are in deep fiscal crises and as part of a broader strategy 
to end key supports for poor children and families, would have a 
negative impact on the very children and families it is intended to 
serve. If we are to keep children safe and in permanent families we 
need a continuum of services that includes prevention, specialized 
services, foster care, and a range of permanency and post-permanency 
options.
    We list our concerns about the Administration's foster care block 
grant below, in the form of ten key questions, and ask you to consider 
these questions as you examine this and other financing proposals that 
come before the Subcommittee.
1. Will the proposal assure increased investments in prevention?
    The Administration's foster care block grant continues to pit 
prevention against foster care. It appears that increased federal funds 
for prevention would be available only if foster care costs decline, 
yet some of the claims made by proponents of the block grant suggest 
that states would be able to make more children in foster care eligible 
for federally-supported payments because they will be able to use 
federal funds for children who do not meet the current AFDC eligibility 
criteria. Decisions about expenditures should be based on the 
individual needs of the children and families, rather than pitting one 
type of service against another. There also seems to be no assurance 
that funds would be invested in prevention, even if foster care costs 
should decline. It also is not clear at this time whether all states 
opting for the block grant would be eligible for an initial increase in 
funds or what the amount of that increase would be.
2. What attention will be given to the specialized treatment needs of 
        children and families facing substance abuse, mental health 
        problems, domestic violence, and other challenges?
    The Administration's block grant similarly gives no attention to 
the specialized treatment needs of families struggling with substance 
abuse, mental health problems, and domestic violence. As many as 80 
percent of the children who enter the child welfare system are from 
families challenged by substance abuse. 30 to 60 percent of the 
children who are exposed to domestic violence are also victims of child 
abuse. Today you cannot attend a meeting of child welfare officials 
from various states without the discussion turning to shortfalls in the 
areas of substance abuse and mental health treatment. It is critically 
important that funding be tied to what children need. Even if increased 
dollars were available for prevention, it is difficult to foresee new 
investments in treatment for substance abuse, mental health, and 
domestic violence problems.
3. How will the protections under current law be maintained and 
        enforced?
    The maintenance of protections and quality of care for abused and 
neglected children has been a constant challenge in the states. More 
than half of the states have been the subject of class action lawsuits, 
most of which have resulted in consent decrees that specified 
improvements in the protections afforded children. It is critical that 
the protections in current law, such as requirements for case plans, 
periodic case reviews, placements in the most family-like setting, and 
reasonable efforts to preserve and reunify families and to guarantee 
quality foster care when other alternatives are not available be 
maintained. While Assistant Secretary Horn testified to the 
Subcommittee that current protections would be maintained in the foster 
care block grant, it will be important to see how they are drafted. It 
is also critical that there be a method in place to monitor and enforce 
the protections. The current Title IV-E eligibility reviews will no 
longer be required. While the Child and Family Services Reviews will 
continue, they focus on ensuring certain outcomes are achieved for 
children and do not directly assess whether individual protections for 
children are maintained. The reviews also are only undertaken every 
five years.
4. How will training for staff, foster parents, and adoptive parents 
        be improved?
    It is not clear whether training funds will be included in the 
foster care block grant. Although it was not mentioned in Assistant 
Secretary Horn's testimony, training has been described as being part 
of the new financing option in presentations by other Administration 
officials. Given the crises in child welfare systems, it is clear that 
increased training to improve the quality of care provided needs to be 
an urgent priority. We are concerned that investments in training would 
be reduced if training funds, which are now available on an open-ended 
basis and at a higher match rate than foster care, were included in the 
block grant. Instead, as we will describe later, funding for training 
must be increased. Federal IV-E training funds must be expanded to 
reach staff from private child welfare agencies (only public agency 
staff are currently eligible) and staff from related child-serving 
agencies, such as mental health and substance abuse, who are working 
with children in the child welfare system.
5. What will be the impact on adoption?
    Given current descriptions of the foster care block grant, it is 
not clear how eligibility for Title IV-E adoption assistance, which 
will remain outside of the block grant, will be determined. Although 
Administration officials have made clear their priority for adoption, 
it is not clear that more children would be adopted under the current 
proposal. Currently most children qualify for federal adoption 
assistance based on their eligibility for the IV-E foster care program, 
but those eligibility requirements will no longer be in place. Will 
states still be required to use the IV-E eligibility rules to determine 
the individual eligibility of children for adoption? It certainly seems 
inconsistent with a focus on increased flexibility and permanence for 
children in foster care to increase requirements for getting children 
adopted from foster care.
6. How will Medicaid eligibility be ensured?
    The foster care block grant proposal also raises questions about 
children's eligibility for Medicaid. Currently all children who are 
eligible for IV-E foster care are categorically eligible for and must 
be covered through the state's Medicaid program. States may elect to 
cover non-IV-E eligible foster children through their Medicaid program 
as well. In states that opt for the block grant, will all children 
served by the block grant who receive foster care be automatically 
eligible for Medicaid? Will foster children be mandatory or optional 
participants in state Medicaid programs? Will children who receive 
services through the block grant be eligible for Medicaid if they are 
not in foster care? Will children currently in IV-E foster care who 
receive Medicaid continue to be automatically eligible for it, even if 
they no longer receive foster care under the block grant? Will states 
have to develop an eligibility determination process for Medicaid? Will 
an amendment to the Medicaid law be required? How will this proposal 
work with the Administration's proposal to block grant certain aspects 
of the Medicaid program? Recognition of special health and mental 
health needs of these children is well established and it is critically 
important that they not lose Medicaid.
7. How will the proposal accommodate emergencies in the child welfare 
        system?
    The Administration has made clear that under no circumstances would 
states be able to opt out of the block grant during the five-year 
period. What would happen therefore if a state experienced a sudden and 
dramatic increase in its foster care caseload? Many states saw this in 
the mid-1980's as large urban areas experienced the crack cocaine 
epidemic. Other states have seen sudden jumps in caseloads following a 
tragic death of a child at home. Sometimes a change in the law also can 
result in more children entering care. Sometimes these caseload 
increases occur despite a state's best efforts but the state remains 
responsible for ensuring that children's needs are met. What would 
happen if a state experienced increased foster care costs, despite a 
decreased foster care caseload, because the children in care presented 
more complex challenges or the state better identified their 
challenges? Again, the state would need additional funds to address the 
needs of children in care. The safety valve proposed by the 
Administration in its new funding option--the TANF contingency fund--
seems problematic in at least two ways.
    First, the complexities of accessing the TANF contingency fund have 
made it difficult for even TANF agencies to use the funds to date. It 
also seems problematic for child welfare agencies to have to compete 
with TANF agencies for emergency services. It means pitting families 
who are struggling to work to keep their children out of the child 
welfare system against families who are trying to get help to get their 
children back home. Which services or groups of families would get 
priority? This is an important question given that some of the factors 
that might trigger a foster care caseload increase will also contribute 
to a greater need for TANF.
    Second, there is also uncertainty about what would count as an 
emergency. In various presentations about its proposals, the 
Administration has referred to both state and national triggers. Yet, 
it is easy to imagine an individual state, say the size of Connecticut, 
Louisiana, or Wyoming, having a big increase in their caseload that 
would likely have no, or only a minimal, impact on the national 
caseload. In considering financing proposals, attention must be given 
to how best to expand resources for alternative services while at the 
same time offering a safety net for the vulnerable children for whom 
foster care may be the last and only option.
8. What is the danger that investments in child welfare will be 
        reduced over time before the needs of children and families are 
        adequately met?
    What impact will the block grant have on other child welfare 
spending? We have concerns, described more specifically below, that the 
foster care block grant being discussed could actually result over time 
in reduced resources for child welfare in the states.
    First, it is not clear that protections will be built in to prevent 
states from withdrawing some of their other investments in child 
welfare when they receive their block grant. Currently states make 
significant federal, state, and local investments in child welfare. In 
2000, based on Urban Institute data, Title IV-E represented 25% of 
child welfare expenditures. Of the remainder, 25% were from other 
federal programs, 39% were state, and 11% were local. In examining 
financing proposals, it is essential to ensure that states be required 
to maintain at least their current levels of federal, state, and local 
child welfare funding. In addition to including strong maintenance of 
effort and non-supplanting provisions, it must be clear how the Federal 
Government will enforce these provisions and what penalties would 
attach. These were issues that the Subcommittee gave thoughtful 
attention to during its look at financing options in the 
107th Congress and should be revisited in the context of 
proposals currently on the table.
    Second, the conversion of programs to block grants often results in 
decreased levels of expenditures over time. The Title XX Social 
Services Block Grant (SSBG) is a good example. In 2000, 22% of the SSBG 
funds were used for child welfare activities. SSBG was funded at $2.7 
billion in 1995 and $1.7 billion in 2002, a decline of 38% (a 45% 
decline in constant 2002 dollars). We have great concern that a foster 
care block grant will result in decreased dollars in the end, when 
increased investments are actually needed. Yet, there seems to be no 
assurance that states could opt out of the block grant if the dollars 
available to them were reduced. In fact, it is difficult to figure out 
how a state could opt out of the block grant even at the end of five 
years. A requirement that it redetermine eligibility for its entire 
caseload at that point would certainly be burdensome and costly.
    Third, we have special concerns about the impact of the block grant 
on spending in county-administered states. Under current law, counties 
are assured each year of getting federal reimbursement for foster care 
for all of their eligible foster children. Under the block grant 
though, as we expect it to be proposed, dollars will go to the states 
and states will decide on allocations to the counties. Some counties, 
therefore, may be left with significant shortfalls. The Chair of the 
Legislative Committee of the County Welfare Directors of California and 
Vice President of the National Association of County Human Services 
Administrators joined others at the June 11 hearing in raising 
questions about the new financing option. She testified that she feared 
``the budget neutrality requirements will limit our ability to spend 
more money on prevention activities and staff training over the long-
term.'' ``Without assurances that the funds will grow to support the 
expanded services, rather than diminish over time,'' she said, ``we 
cannot endorse the proposal.''
    Fourth, the block grant is likely to make it even harder for child 
welfare administrators to obtain new state child welfare investments 
that in the past they could have argued would bring them increased 
federal investments. Given state fiscal shortfalls in states, it may 
even be difficult for them to hang on to the state dollars they have 
had.
    Fifth, it is not clear what the call for cost neutrality means in 
the context of the Title IV-E Foster Care Program overall. For example, 
what would happen if states that remain in the entitlement program and 
do not opt for the block grant exceed their projected expenditures and 
overall IV-E spending exceeds the budget limits? Would HHS be permitted 
or required to reduce the funds available to states that elected the 
new program option in order to keep the overall program cost budget 
neutral? There is also always the danger with a block grant, or any 
funding change for that matter, that a future Congress could reduce 
funding. Would a state then have the option of withdrawing from the 
block grant?
9. In what broader context is the new financing mechanism being 
        proposed?
    The Administration's foster care block grant is one of four major 
proposals in its FY 2004 Budget to turn major federal programs over to 
the states without adequate assurances that key services and 
protections will be maintained. The Administration also is proposing to 
cap portions of Medicaid funding, block grant the Section 8 Housing 
Program for low-income families, and dramatically alter the structure 
of Head Start without an assurance that comprehensive services will be 
maintained. These changes all impact some of the same vulnerable 
families. In fact, the assurance of health care, housing, and quality 
early childhood services are all preventive services that can help keep 
families out of the child welfare system. Thus we must ask what we know 
about the likely outcomes of these proposals and whether the foster 
care block grant proposal is part of a larger effort to dismantle 
investments in the most vulnerable children and families.
10. Are there better ways to increase state flexibility and increase 
        preventive, permanency, and post-permanency services for abused 
        and neglected children and those at risk of maltreatment?
    Yes, there are better short-term and long-term approaches than the 
foster care block grant to increase state flexibility and key 
investments in services and supports necessary to enhance safety and 
permanence for children. These include alternative approaches to 
providing flexibility and increased resources within the IV-E program 
and steps that can be taken right now to increase state's capacity in 
these areas, all of which are discussed below.

Alternative Proposals for Increasing State Flexibility and Increased 
        Resources to Promote Safety and Permanence for Children
    Before describing what we believe can be done immediately, we want 
to describe an alternative financing scheme that we believe is 
responsive to many of the questions and concerns just raised. The 
proposal is in the comprehensive Act to Leave No Child Behind (H.R. 
936/S. 448), which is legislation that lays out a comprehensive policy 
vision for meeting the challenge of giving all children a healthy 
start, a head start, a fair start, and a safe start in life and 
successful passage to adulthood with the help of caring families and 
communities.
    Title VIII of the Act to Leave No Child Behind takes important 
steps towards giving all children a safe start in life and ensuring 
that they grow up in nurturing, permanent families by giving states 
increased flexibility and expanded investments. It also requires 
additional steps toward enhanced accountability. It makes clear that 
federal, state, and local governments should have shared responsibility 
for ensuring the safety and permanence of all children who have been 
abused and neglected or are at risk of maltreatment. We look forward to 
discussing these proposals with both staff and Members of the 
Subcommittee as you explore other financing alternatives throughout the 
108th Congress. Very briefly, Title VIII of the 
comprehensive Act to Leave No Child Behind:

     Provides prevention, protection, and crisis services for 
children when they first come to the attention of the child welfare 
system by allowing IV-E funds to be used for these services on a 
limited basis, eliminating fiscal disincentives that deprive some 
children of important services, and restoring funding for the Social 
Services Block Grant.
     Promotes permanency for children in foster care and 
expands permanency options for children leaving foster care by allowing 
IV-E funds to be used for services to children in foster care and their 
families, to promote safe reunification or other planned permanent 
living arrangements as provided for under the Adoption and Safe 
Families Act (ASFA), and to offer post-permanency services when 
children are returned home or moved to adoption or other permanent 
homes. It also offers ongoing Kinship Guardianship Assistance Payments 
under IV-E to relative caregivers who obtain legal guardianship of the 
children for whom they cared for in foster care and for whom return 
home or adoption are not appropriate. It would also help promote 
adoption and other permanency options by extending IV-E adoption 
assistance payments to children up to age 19 in certain circumstances, 
providing that the adoption assistance payments for children must be at 
least equal to the foster care payment for which the child would have 
been eligible, and promoting permanency grants to states to help them 
move their backlog of waiting children to permanent families.
     Gets rid of long time inequities in the IV-E Programs by 
eliminating the AFDC eligibility requirements for both the Titles IV-E 
Foster Care and Adoption Assistance Programs; providing for a uniform 
match across all Title IV-E activities; and also allowing Indian Tribes 
and tribal consortia to be eligible for direct funding under the Title 
IV-E Programs.
     Increases accountability within the child welfare system 
by requiring states to report regularly to HHS on improvements being 
made in services and staffing and on the children who are not moving to 
permanent families in a timely fashion; requiring coordination with the 
Child and Family Service Reviews; asking external child welfare review 
boards to report regularly to Congress on how children are faring; and 
providing fiscal incentives for public child welfare agencies to become 
accredited.

Steps That Can Be Take Immediately to Build State Capacity for Safety 
        and Permanence for Children
    At the same time the Subcommittee reviews comprehensive proposals 
like the above, we urge you to take some important steps now that will 
help to increase the capacity of states to continue working to promote 
safety and permanence.
    The Administration's own proposal to reauthorize and expand the 
Adoption Incentive Program and the proposal to extend the Child Welfare 
Waiver Demonstration Program that was part of the House-passed TANF 
Reauthorization Bill (H.R. 4), are two proposals that would help states 
make important improvements now. The Adoption Incentive Program 
includes alterations to recognize the special efforts needed to help 
older children in care move to adoption. In the future, CDF would like 
to see the program expanded further to reward successful state efforts 
not only to move children to adoption, but also to help children return 
safely to their families or be placed permanently with kin, the other 
permanency options recognized in the ASFA. The continuation of the 
Child Welfare Waiver Demonstration Program, with the improvements 
already approved by the House, will allow even more states to use their 
IV-E and IV-B Program funds more flexibly. To date, some states have 
taken steps to use this flexibility to invest in alternative services, 
but generally on a smaller scale in selected counties. Much more can be 
learned from these waiver demonstrations.
    We also urge you to approve the provisions in the Child Protection 
Services Improvement Act, H.R. 1534, introduced by Representatives Ben 
Cardin and George Miller, which will further give states the capacity 
they need to keep children safe and in permanent families. It offers 
expanded flexibility to all states in selected areas, addresses gaps in 
services, improves the quality of the child welfare workforce and staff 
from related service systems, and enhances accountability. Let us 
mention briefly some of its specific changes:

     Expands flexibility for states so that they can provide 
foster care and adoption assistance for all the children who need it 
and allows states to provide assistance to children permanently placed 
with grandparents and other relatives who have been caring for them in 
foster care. These are both areas where states have been asking for 
increased flexibility. The current Title IV-E eligibility rule that 
requires that children must have been removed from families who were 
eligible for AFDC according to standards in place in July 1996 makes no 
sense. The TANF Program has replaced the AFDC program and most states 
have increased their income and resource guidelines since that time. 
Recognizing in the first instance that it makes little sense to 
condition foster care or adoption eligibility on the income of the 
homes from which abused and neglected children were removed, it 
certainly makes no sense to require that these families be even poorer 
than those who would be eligible for TANF in the state. In exploring 
new financing structures, Congress should certainly ensure that the 
Federal Government would contribute to assistance for all children. 
Immediately, however, steps, as proposed in H.R. 1534 could be taken to 
help eliminate this inequity in current law. H.R. 1534 would eliminate 
the current requirement that states ``look back'' to July 1996 in 
determining eligibility and instead allow states to update their 
eligibility standards so that eligibility could be based on their 
current eligibility for the TANF Program.
      H.R. 1534 would also allow states to use Title IV-E funds more 
flexibly to provide subsidized guardianship payments on behalf of 
children who were in foster care with grandparents and other relatives, 
for whom return home and adoption have been ruled out, and whose 
relatives want to care for them permanently. Thirty-four states 
currently have some sort of subsidized guardianship program that offers 
help to varying numbers of children. Seven states have been using Title 
IV-E funds for such programs under the Child Welfare Waiver 
Demonstration Program and others have expressed an interest in doing 
the same.
     Addresses gaps in services by guaranteeing investments in 
prevention and increasing substance abuse treatment for families who 
come to the attention of the child welfare system. H.R. 1534 recognizes 
that between 40 and 80 percent of the children who come to the 
attention of the child welfare system have families with substance 
abuse problems. It draws from bipartisan legislation in the Senate (S. 
614) that would provide funds to states where the child welfare and 
substance abuse prevention and treatment agencies apply together to 
make improvements on behalf of children and families who come to the 
attention of the child welfare system. States must indicate how they 
will use the flexible funds to expand comprehensive substance abuse 
treatment to the parents and their children, enhance screening and 
assessment so that families can be directed to the treatment they need, 
expand after-care services for families in recovery to ensure that 
safety and permanence are maintained, and enhance training of staff in 
both systems and the tracking of cases so progress can be documented. 
It also clarifies that states could use their waiver demonstration 
programs to expand community partnerships in their states to keep 
children safe. Finally, the bill ensures that the Promoting Safe and 
Stable Families Program will receive funding at the full authorization 
level by making all $505 million mandatory spending.
     Supports a quality workforce for abused and neglected 
children. H.R. 1534 addresses the turnover rate in child welfare and 
provides funds for improvements in staff recruitment and retention 
activities. The General Accounting Office recently reported that the 
average tenure of a child welfare worker is only two years. The bill 
requires improvements in working conditions, supervision, and training. 
It also takes steps to expand training under the Title IV-E Program for 
staff in private child welfare agencies who work with these families, 
court staff, and staff of substance abuse treatment and mental health 
agencies and domestic violence programs working with children in the 
child welfare system. S. 2437 and H.R. 734 also address the workforce 
challenges in important ways.
     Enhances accountability. H.R. 1534 takes important steps 
to make states more accountable for the care they are providing. 
Certainly news headlines from Florida, New Jersey, Missouri, Delaware, 
and other states over this past year do little to instill confidence in 
public child welfare systems. The bill helps to restore confidence in 
the system by improving the quality of the workforce, targeting 
resources in the areas where states see they are needed, and 
strengthening accountability. It provides grants and bonuses to states 
that are implementing their program improvement plans developed in 
response to the Child and Family Service Reviews. It also recognizes 
the importance of having members of the community, and other 
stakeholders, included in the review process and in the implementation 
of the Program Improvement Plans. It takes important steps toward 
getting improved data from the states. It is difficult to ensure that 
children will get what they need if they cannot track where they are, 
the type of help they are getting, and their progress over time. This 
provision complements the recent request from HHS for recommendations 
for improvements in the Adoption and Foster Care Analysis and Reporting 
System.

    CDF looks forward to working with you to explore further child 
welfare financing strategies that will benefit children who have been 
abused and neglected and are at risk of maltreatment. We ask you to 
examine a range of options, including those in Title VIII of the Act to 
Leave No Child Behind, to combine the best of them to benefit children.
    Thank you.

                                 

Statement of Ann Harrmann, Coalition for Family and Children's Services 
                       in Iowa, Des Moines, Iowa
    On behalf of the Coalition for Family and Children's Services in 
Iowa, I thank you for the opportunity to respond to the President's 
proposal for flexible funding for foster care. The Coalition is an 
alliance of 32 agencies in Iowa that provide most of the direct 
treatment services to abused and troubled children. Coalition agencies 
provide services in all counties in Iowa.
    Currently abused and neglected children in Iowa are facing a 
gridlock when they try to get help in the child welfare system. We feel 
that the federal and state child welfare system as currently structured 
and funded is adding to harm of children who have already been hurt.
    Let me offer one recent example, which unfortunately is all too 
typical. It is a case of a young girl who has been sexually and 
physically abused and is waiting to get into group care--in fact, has 
been waiting to get into group care for 13 months. She has been in 
emergency shelter and because shelter is meant to be short term, she 
has been passed from shelter to shelter, knowing no stability, and 
being further victimized. This cannot be an American value!
    There are currently 188 similar Iowa children waiting to get 
therapy in group care, and the number is growing every day. In the past 
2 years, thousands of children did not receive needed child welfare 
services because $30 million in state and federal funding was cut from 
the state budget. Iowa lost about $12 million in IV-E and IV-B alone. 
Additionally, 258 foster care beds closed, 82+ services/programs 
closed, often in rural areas, and 500+ staff are no longer employed in 
private agencies.
    The number of state social workers has been cut back dramatically. 
Iowa social workers currently have among the highest caseloads in the 
nation.
    The amount of red tape and bureaucratic record keeping required of 
private non-profit agencies is shocking, keeping many staff documenting 
every word and action rather than working with children in order to 
turn their lives around.
    We applaud President Bush's proposal to provide more flexibility in 
the foster care/child welfare system. We believe the goal of the child 
welfare system should be that children get better, not that every word 
spoken and every action is documented with just the right words and 
phrases. Flexibility would indeed help states to help children.
    The Coalition also supports being able to use federal funds for 
child welfare services other than foster care. In Iowa, private and 
public agencies provide a rich array of child welfare services 
including family centered services, family preservation, family foster 
care, partial group care, shelter care, counseling, and group care/
residential treatment. We believe that all of these services deserve 
equal federal participation and are of great value to abused and 
neglected children.
    The Iowa Coalition is concerned about the Administration's proposal 
for several reasons:

     Flexibility will not take the place of resources. The 
child welfare system in Iowa (and many other states) is severely under 
funded. Flexibility will not make up for the $30-$50 million that has 
been stripped from the Iowa child welfare system in the past 2-3 years. 
The Federal Government should allocate sufficient resources to improve 
the lives of abused and neglected children.
     We haven't seen any proposal to change the ``look back'' 
issue. The formula needs to be changed so that eligibility is not tied 
to AFDC in 1996. There is not an AFDC program any longer and 1996 is 7 
years ago. Our nation should be about helping all children.This should 
be tied to an eligibility standard that covers all children in need of 
care regardless of income.
     If that cannot be accomplished in this fiscal year then 
tie eligibility to another program such as TANF cash assistance or 
another program that can be adjusted to address the annual impact of 
inflation. Costs do increase for everyone in the child welfare system 
i.e. insurance, heating, housing and staff salaries.
     The provision that allows use of TANF in case of a foster 
care crisis is unworkable. As noted above, Iowa is already in a foster 
care crisis. We don't think a contingency fund will help, when 
additional resources are needed now.
     We believe that child welfare services should remain an 
entitlement. All abused and neglected children should receive the 
services they need to become healthy, productive adults.

    Thank you for this opportunity to provide testimony on this 
critical issue.
                               __________
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                                 Family Services of Central Florida
                                            Leesburg, Florida 34748
                                                      June 25, 2003
Sub-Committee on Human Resources
Committee on Ways and Means
U.S. House of Representatives
Rayburn House Office Building
Room B-317
Washington, DC 20515
    Dear Sub-Committee on Human Resources,
    During the recent Ways and Means sub-committee on Human Resources 
hearing for the President's proposal to block grant foster care, 
several concerns were raised. The Child Welfare League of America has 
highlighted several of their concerns, but I would like to address two 
that specifically affect Florida's foster children.
    The first concern is the low penetration rate of a block grant. As 
you may be aware, currently the Title IV-E foster care program provides 
funding for approximately 47-57% of children in foster care nationwide. 
This area of concern, as well, does not address the diversity of 
federal funding sources for child welfare. Under the current proposal, 
76% of federal spending for child welfare would be frozen through 2008. 
This includes the Title IV-E Adoption Assistance (10%), the Social 
Services Block Grant (17%), TANF (15%), Medicaid (10%), and Title IV-B, 
Child Welfare Services and Promoting Safe and Stable Families (5%).
    Furthermore, adoption assistance eligibility would continue to be 
linked to foster care eligibility. If the Title IV-E Foster Care is 
removed, determining the future eligibility for adoption assistance 
would be complex and more difficult than it is presently and may result 
in reducing the numbers of federally supported adoptions from foster 
care, which in turn, would lead to an increase in the number of 
children without permanency.
    The second concern is the high growth rate in Florida and the 
growing number of children in foster care in Florida. The 
Administration's foster care proposal is cost neutral, setting a five-
year cap on spending. The proposal does not recognize the need for any 
new resources (e.g. Staff development and training or prevention 
programs). According the President's proposal, states choosing the 
foster care option would receive a fixed allocation/block grant based 
on the current 1996 AFDC eligibility standards. This means the 
allocation/block grant would be based on a declining number of children 
becoming eligible over the next five years. Based on these standards, 
states that do not choose the child welfare program option would 
continue to increasingly have to provide state only support for foster 
care, since federal supports would continue to decrease since fewer and 
fewer children would be eligible for federal assistance unless Congress 
acted separately on this issue.
    In addition, to access additional funds if states experience a 
dramatic increase in child welfare caseloads or an increasingly complex 
caseload with greater needs, the Administration's proposal allows 
states to access the $2 billion TANF contingency fund. The trigger that 
would allow a state to draw down these TANF funds would be based on 
national and individual state increases in foster care. These criteria 
would not necessarily reflect what is happening in a county or city 
where the bulk of the foster care population might be found. These 
emergency relief dollars would divert funds from TANF. If the same 
event (a recession for example) caused both cash assistance and 
caseloads to increase, a state may have to choose whether they wanted 
to fund increases in TANF or foster care.
    Along with both of these concerns are the questions about the 
formula that will be used to determine each individual state share of 
the fixed amount of funding. Will all states that take the fixed 
allocation/block grant option and project they will have increased 
costs over the next five years be eligible to receive increased funds? 
Will the formula be based on historical claim or actual reimbursements? 
Since the overall federal allotment is fixed, would some states get 
less if other states negotiated an increase since certain formulas that 
benefit one state could result in less funding for another state?
    I hope that you will take these issues into consideration as you 
deliberate on President Bush's Proposal.
            Sincerely,
                                                  Marlin Livingston
                                              Senior Vice President

                                 

   Statement of Sue Diehl and Judith M. Schagrin, Maryland Chapter, 
      National Association of Social Workers, Baltimore, Maryland

    We appreciate the opportunity to offer comments with regards to the 
Administration's Foster Care Flexible Funding Proposal. Like so many 
others interested in child welfare, we value debate about alternative 
funding strategies.
    There is no disagreement that the IV-E funding strategy is broken 
and needs to be fixed. The administrative costs for establishing 
eligibility are unacceptable, the ``look back'' to AFDC eligibility in 
June, 1996 is dated, and the rigidity of funding discourages 
innovation. Furthermore, all children in the government's custody need 
the nation's financial commitment, not just those from impoverished 
homes. We welcome the interest the Bush Administration has in these 
issues, and support much needed and long overdue reforms in the 
nation's child welfare systems. Gambling with child welfare financing, 
however, is hardly compatible with real reform. We would offer the 
following concerns:

     There is increasing recognition that a professionally 
educated, trained, and supervised child welfare workforce is an 
integral part to achieving the important goals of safety, permanence, 
and child well-being. The Administration's funding strategy does not 
address the child welfare workforce despite a recent GAO report 
concluding that HHS should be playing a greater role in the recruitment 
and retention of staff.
     Other studies have demonstrated that child welfare 
professionals with social worker degrees have higher job performance 
and lower turnover rates than other workers. One of the most 
outstanding initiatives to improve the child welfare workforce--IV-E 
child welfare training partnerships between universities and public 
agencies--will be undermined by the proposed funding strategy.
     The Federal Child and Family Services Reviews are finding 
a correlation between frequent caseworker visits with children and 
positive findings in other areas such as achievement of timely 
permanence for children in foster care, and indicators of child well-
being. Because caseload size drives caseworker contact, genuine reform 
requires sufficient fiscal resources to insure that nationally 
recognized caseload standards are met.
     The funding plan touts flexibility as a selling point, 
painting an optimistic picture of the preventive services that may (or 
may not) significantly lower the number of children in foster care. 
Recent studies completed by Chapin Hall and Westat, Inc. questioned the 
effectiveness of preventive services and no data is available as to the 
timeframe necessary to develop and implement preventive services. 
States risk running out of money long before this five year experiment 
has come to an end.
     Since the success of prevention strategies remains 
largely unknown, States receiving up-front funding at the outset of the 
program cycle with the belief that investment in preventive services 
will result in cost-savings later on are taking an enormous risk. The 
likely impact is that the fiscal burden will ultimately shift to States 
already in deep financial distress.
     Under certain circumstances, the proposed fiscal plan 
would allow States to access additional funds from the TANF Contingency 
Fund. This pits the needs of the nation's poor children against the 
needs of the nation's abused, neglected and foster children as this 
fund, too, is capped.
     With reference to the much promoted flexibility, in a 
recent publication on child welfare financing, Rob Geen of the Urban 
Institute pointed out that nationally, 56% of child welfare funding is 
already flexible (SSBG, TANF, IV-B, and state funds not used for 
matching federal allocations.) Mr. Geen found no direct correlation 
between availability of flexible funding and front-end services, nor 
was he able to identify data to support the contention that the result 
of the Administration's strategy will be effective preventive services.
     In states like Maryland, where 66% of child welfare 
funding is already flexible, opting into the Administration's plan 
would likely be imprudent. However, the Administration's plan forces 
States that opt out to maintain a federal funding strategy that 
everyone has agreed is wholly inadequate and needs reform.
     Once states opt in for the five year period and receive 
their fixed allocation, real accountability for federal requirements 
becomes ephemeral.

    In summary, the flexible foster care financing strategy is a 
wonderfully optimistic but poorly informed proposal. Significantly, the 
Administration's strategy is not evidence based; assumptions are made 
about preventive services that have not been borne out by research and 
experience. If preventive services are not effective or the timeframe 
for success extends beyond five years, States already experiencing 
serious financial hardships will be forced to take on even more 
responsibility for funding critical services for children. Optimally a 
foster care financing strategy that embraces a genuine commitment by 
the Federal Government to our children's safety, permanence, and well-
being would include:

     support for a quality workforce;
     expansion of university and child welfare agency 
partnerships;
     incentives to promote innovation;
     lower administrative costs;
     enhanced accountability;
     support for functional data systems;
     an entitlement to funding.

    While reforming the federal financing of child welfare services 
must be a priority, basing a proposal on what amounts to wishful 
thinking represents an abdication of responsibility for our nation's 
most vulnerable children. Surely we can do better than this.

                                 

  Statement of Antonia Hernandez, Mexican American Legal Defense and 
                            Educational Fund

    On behalf of MALDEF, a national Latino civil rights organization, 
we urge you to remedy the problem of disparate foster care funding for 
Puerto Rico. We have written to this Congress before about the need to 
prevent discrimination in the provision of temporary assistance to 
needy families (TANF). Today, we urge the House Ways & Means Committee 
to amend H.R. 4 and solve the problem of disparate treatment of Puerto 
Rican children. It is unconscionable that the abused and neglected 
children of the island receive much less federal funding than other 
American children. Foster Care and Adoption Assistance (Title IV-E) 
should be removed from the welfare cap for Puerto Rico, to assure that 
children needing foster care are not left behind due to a discrepancy 
in how they are treated by federal policy.
    Puerto Rico has been doing an excellent job to try to ensure the 
safety of its most vulnerable boys and girls, but current federal law 
blocks these efforts by capping its IV-E program. For example, Puerto 
Rico has shrunk backlogs by 88 per cent, and consolidated services for 
children at high risk in a shelter that combines police, medical and 
social services. But unlike the U.S. States and the District of 
Columbia, Puerto Rico's IV-E program is capped, so once the ceiling is 
reached, it is up to the Commonwealth alone to provide resources for 
these children. States with populations similar to Puerto Rico are 
reimbursed $40 to $50 million a year for foster care and adoption 
assistance expenditures; however, Puerto Rico only receives about $12 
million a year. Puerto Rico therefore receives only one quarter of one 
percent of all IV-E funding, although Puerto Rico has seven times that 
proportion of the nation's foster kids.
    Furthermore, the Commonwealth is currently ineligible to receive 
its earned adoption bonus. The Commonwealth has been doing outstanding 
work to place neglected children in safe and loving homes, which also 
reduces governmental expenditures. Yet, although Puerto Rico earned a 
federal adoption incentive bonus, this put the IV-E program over the 
cap for Puerto Rico. In 2002, funding was actually reduced due to 
excellent performance. This contradicts the very reasons for the 
adoption incentives, and it is unfair to Puerto Rican children.
    If Puerto Rico is treated differently than U.S. states because of 
various justifications, this is certainly not the fault of the children 
and the poor. MALDEF urges you to amend H.R. 4 in order to remove the 
IV-E cap for Puerto Rico, and treat its most vulnerable children in the 
same way as other American children are treated. Any other 
discrepancies in TANF funding for Puerto Rico should also be resolved 
as you process TANF reauthorization this year.

                                 

Statement of Elizabeth J. Clark, Ph.D., National Association of Social 
                                Workers

Organizational Description
    The National Association of Social Workers (NASW) is the largest 
membership organization of professional social workers in the world, 
with nearly 150,000 members. NASW works to enhance the professional 
growth and development of its members, to create and maintain standards 
for the profession, and to advance sound social policies. NASW also 
contributes to the well-being of individuals, families and communities 
through its work and advocacy.
    Ninety-one percent of NASW members hold master's degrees in social 
work, and 92 percent maintain some type of license, certification, or 
registration in their state; 70,000 also hold advanced credentials from 
NASW.
    Nearly 40 percent of NASW members say that mental health is their 
primary practice area; eight percent practice in child welfare or 
family organizations; eight percent practice in the health sector; six 
percent practice in schools; and another three percent work primarily 
with adolescents.

Overview
    The social work profession has a long tradition of involvement with 
the child welfare system, and welcomes the opportunity to participate 
in the current debate about how to restructure system financing to 
improve outcomes for children and families.
Among NASW's major concerns with the outlines of the President's 
flexible funding proposal is the possible loss of federal support for 
educating and training the child welfare workforce. Without the current 
Title IV-E financing structure, which provides three federal dollars 
for every state/local dollar, training is not likely to remain a 
priority--especially when states are facing record budget deficits. 
Without a well-trained, competent, and stable workforce, it is nearly 
impossible to deliver uniformly high quality services.
    A number of studies have documented the critical connections 
between training, competency, and quality services.

     In 1982, a study based on an analysis of the data from 
the ``1977 National Study of Social Services To Children and Their 
Families'' found that workers with social work education were more 
effective in service delivery than workers with bachelor of arts (BA) 
degrees or other graduate degrees.[i]
---------------------------------------------------------------------------
    \[i]\ Olsen, L. & W. Holmes, ``Educating Child Welfare Workers: The 
Effects of Professional Training on Service Delivery,'' Journal of 
Education for Social Work, 18(1), 1982.
---------------------------------------------------------------------------
     In 1987, Booz-Allen & Hamilton Inc. found that the 
``overall performance of MSWs [master's in social work] was 
significantly higher than non-MSWs,'' and that ``education, 
specifically holding an MSW, appears to be the best predictor of 
overall performance in social service work.'' [ii]
---------------------------------------------------------------------------
    \[ii]\ Booz-Allen & Hamilton Inc., ``The Maryland Social Services 
Job Analysis and Personnel Qualifications Study,'' Executive Summary, 
Baltimore: Maryland Department of Human Resources, 1987.
---------------------------------------------------------------------------
     In 1990, a study of social service workers in Kentucky 
found that staff with social work degrees, either BSWs or MSWs, were 
better prepared than those without social work degrees.[iii]
---------------------------------------------------------------------------
    \[iii]\ Dhooper, S.S., Rose, D.D., and L.C. Wolfe, ``Does Social 
Work Education Make a Difference?,'' Social Work, 35(1), 1990.
---------------------------------------------------------------------------
     In 1992, a study on the ``Effectiveness of Family 
Reunification Services'' found that, in nearly 40 percent of the cases 
reviewed, insufficient or inadequate caseworker training or experience 
was a contributing factor in preventing family 
reunification.[iv]
---------------------------------------------------------------------------
    \[iv]\ Hess, P., Folaron, G. and A. Jefferson, ``Effectiveness of 
Family Reunification Services: An Innovative Evaluative Model,'' Social 
Work, 37(4), 1992.
---------------------------------------------------------------------------
     Those findings were confirmed in a 1993 study that found 
child welfare staff with BSW and MSW degrees were more effective in 
developing successful permanency plans for children who were in foster 
care for more than two years.[v]
---------------------------------------------------------------------------
    \[v]\ Albers, E., Reilly, T., & B. Rittner, ``Children in Foster 
Care: Possible Factors Affecting Permanency Planning,'' Child and 
Adolescent Social Work Journal, 10(4), 1993.

    The connection of workforce quality to family outcomes was further 
documented in a March 2003 report by the U.S. General Accounting Office 
(GAO). The report, ``HHS Could Play a Greater Role in Helping Child 
Welfare Agencies Recruit and Retain Staff,'' states, ``A stable and 
highly skilled child welfare workforce is necessary to effectively 
provide child welfare services that meet federal goals. [However] large 
caseloads and worker turnover delay the timeliness of investigations 
and limit the frequency of worker visits with children, hampering 
agencies' attainment of some key federal safety and permanency 
outcomes.'' [vi]
---------------------------------------------------------------------------
    \[vi]\ U.S. General Accounting Office, ``HHS Could Play a Greater 
Role in Helping Child Welfare Agencies Recruit and Retain Staff'' (GAO-
03-357), March 2003.
---------------------------------------------------------------------------
    The Administration for Children and Families (ACF) concurred with 
the GAO's findings, saying, ``ACF's initial analysis of the CFSR [Child 
and Family Services Reviews] data involving the first 32 States 
reviewed makes it abundantly clear that sufficient staff to make 
regular, substantive contacts with the children and families in their 
caseloads is essential. A direct relationship was found between the 
consistency and quality of caseworker visits with the child and family 
and the achievement of case outcomes evaluated in the CFSR.'' 
[vii]
---------------------------------------------------------------------------
    \[vii]\ Ibid.
---------------------------------------------------------------------------
Child Welfare Workforce
    As it should, the public has high expectations for the child 
welfare system. Everyday, these agencies make life and death decisions 
for children and families with complex needs, while striving to meet 
extensive legal mandates. Much of the burden of these decisions falls 
to front-line workers and their supervisors.
    Child welfare positions are particularly demanding and stressful, 
often involving unreasonable workloads and low pay, in comparison to 
jobs in other sectors that require comparable amounts of education and 
responsibility. Consequently, it is difficult to attract the most 
qualified employees, those with professional training and experience, 
and turnover and vacancy rates among child welfare agencies are often 
alarmingly high.
    Standards and policies for child welfare practice that are 
promulgated by the Child Welfare League of America, the American Humane 
Association, and NASW recommend that child welfare administrators and 
supervisors have a master's degree in social work (MSW) and previous 
child welfare experience, and that direct service workers have at least 
a bachelor in social work (BSW) degree.[viii] However, these 
standards contrast sharply with reality.
---------------------------------------------------------------------------
    \[viii]\ National Association of Social Workers, ``Addressing the 
Program and Personnel Crisis in Child Welfare: A Social Work 
Response,'' NASW Commission on Family and Primary Associations, 1989.
---------------------------------------------------------------------------
    In the 1950s, close to 50 percent of child welfare staff were 
professional social workers.[ix] By the 1980s, only 28 
percent of child welfare staff had either a BSW (15 percent) or an MSW 
(13 percent) degree.[x] A survey of the child welfare 
workforce conducted in 1998 found that fewer than 15 percent of child 
welfare agencies require caseworkers to hold either bachelors or 
masters degrees in social work.[xi]
---------------------------------------------------------------------------
    \[ix]\ Leighninger, L. & A.J. Ellett, ``De-professionalism in Child 
Welfare: Historical Analysis and Implications for Social Work 
Education,'' paper presented at the Council on Social Work Education 
Annual Program Meeting, Orlando, Florida, March 1998, cited in C. 
Risley-Curtiss, ``Current Challenges and Future Directions for 
Collaborative Child Welfare Educational Programs,'' Journal of Human 
Behavior in the Social Environment, 7(1/2), 2003.
    \[x]\ Lieberman, A.A., Hornby, H., & M. Russell, ``Analyzing the 
Educational Backgrounds and Work Experiences of Child Welfare 
Personnel: A National Study,'' Social Work, 33(6), 1988.
    \[xi]\ Child Welfare League of America, ``Minimum Education 
Required by State Child Welfare Agencies, Percent, By Degree Type, 
1998,'' State Child Welfare Agency Survey, 1999.
---------------------------------------------------------------------------
    In the late 1980s, the failed commitment to employing well-trained 
child welfare staff was coupled with rising foster care caseloads, 
rising rates of child abuse and neglect reports, increasing numbers of 
class action suits, and increased media attention resulting from a 
number of child deaths.[xii]
---------------------------------------------------------------------------
    \[xii]\ Zlotnik, J.L., ``Preparing Social Workers for Child Welfare 
Practice: Lessons from an Historical Review of the Literature,'' 
Journal of Health & Social Policy, 15(3/4), 2002.
---------------------------------------------------------------------------
    By the mid-1990s, 90 percent of states reported difficulty in 
recruiting and retaining caseworkers.[xiii] The major 
challenges child welfare agencies face in recruiting and retaining 
front-line workers and supervisors include: low salaries, high 
caseloads/workloads, administrative burdens, risk of violence, limited 
and inadequate supervision, and insufficient training.[xiv]
---------------------------------------------------------------------------
    \[xiii]\ U.S. General Accounting Office, ``Child Welfare: Complex 
Needs Strain Capacity to Provide Services'' (GAO/HEHS-95-208), based on 
survey by American Public Welfare Association (APWA), September 1995.
    \[xiv]\ U.S. General Accounting Office, ``HHS Could Play a Greater 
Role in Helping Child Welfare Agencies Recruit and Retain Staff'' (GAO-
03-357), March 2003.
---------------------------------------------------------------------------
Worker Turnover

    The GAO found that turnover rates of child welfare staff--which 
affect both recruitment and retention efforts--has been estimated at 
between 30 percent and 40 percent annually nationwide, with workers' 
average tenure being less than two years.[xv]
---------------------------------------------------------------------------
    \[xv]\ Ibid.
---------------------------------------------------------------------------
    Turnover rates vary greatly among agencies. In a child welfare 
workforce survey conducted in 2000, 36 agencies reported annual 
turnover rates between zero and 20 percent, while 23 agencies reported 
rates between 50 percent and 600 percent.[xvi]
---------------------------------------------------------------------------
    \[xvi]\ Alliance for Children and Families, American Public Human 
Services Association, Child Welfare League of America, ``The Child 
Welfare Workforce Challenge: Results from a Preliminary Study,'' 
presented at Finding Better Ways 2001, Dallas, Texas, May 2001.
---------------------------------------------------------------------------
    One Texas state official reported that because of high turnover, 
caseworkers with only three years of experience are commonly promoted 
to supervisory positions, which has caused additional problems. Some 
newly promoted supervisors have requested demotions because they feel 
unprepared for the requirements of their jobs, and the caseworkers they 
supervise have complained of poor management and insufficient 
support.[xvii]
---------------------------------------------------------------------------
    \[xvii]\ U.S. General Accounting Office, ``HHS Could Play a Greater 
Role in Helping Child Welfare Agencies Recruit and Retain Staff'' (GAO-
03-357), March 2003.
---------------------------------------------------------------------------
    In Arizona, a wide gap developed between the demand for child 
welfare services and the availability of qualified staff to meet this 
demand. Because of personnel shortages, the Department of Economic 
Security (DES) was, in some recent years, unable to respond to as many 
as 25 percent of child abuse and neglect reports deemed appropriate for 
investigation statewide.[xviii]
---------------------------------------------------------------------------
    \[xviii]\ Risley-Curtiss, C., ``Current Challenges and Future 
Directions for Collaborative Child Welfare Educational Programs,'' 
Journal of Human Behavior in the Social Environment, 7(1/2), 2003.
---------------------------------------------------------------------------
Inadequate Training

    The good news-bad news about turnover is that, according to a 2000 
workforce survey, states estimated that nearly 60 percent of turnover 
is preventable.[xix] One way to prevent turnover, which has 
been documented by a number of studies, is by hiring better-trained 
staff.
---------------------------------------------------------------------------
    \[xix]\ Alliance for Children and Families, American Public Human 
Services Association, Child Welfare League of America, ``The Child 
Welfare Workforce Challenge: Results from a Preliminary Study,'' 
presented at Finding Better Ways 2001, Dallas, Texas, May 2001.

     A study based on the 1987 National Study of Public Child 
Welfare Job Requirements found that turnover is consistently higher in 
states that do not require any kind of degree for child welfare 
positions, and is consistently lower in states that require an 
MSW.[xx]
---------------------------------------------------------------------------
    \[xx]\ Russell, M., ``1987 National Study of Public Child Welfare 
Job Requirements,'' Portland, ME: University of Southern Maine, 
National Resource Center for Management and Administration, 1987.
---------------------------------------------------------------------------
     A 1990 study in Florida found that workers without 
educational preparation for child welfare work were most likely to 
leave within one year of being hired.[xxi]
---------------------------------------------------------------------------
    \[xxi]\ Child Welfare League of America, ``Florida Recruitment and 
Retention Study,'' 1990.
---------------------------------------------------------------------------
     A 1994 study in South Carolina found that social work 
education (particularly graduate social work education) reduces 
workers' burnout, a major cause of staff turnover.[xxii]
---------------------------------------------------------------------------
    \[xxii]\ Anderson, D.G., ``Coping Strategies and Burnout Among 
Veteran Child Protection Workers,'' Doctoral dissertation, University 
of South Carolina, 1994.
---------------------------------------------------------------------------
     A 1995 study in Ohio found that, among nine variables 
predictive of worker retention, three of the most important were: 
training; having had an internship in public child welfare as part of 
preparation; and agency support (including strong 
supervision).[xxiii]
---------------------------------------------------------------------------
    \[xxiii]\ Harrison, S.G., ``Exploration of Factors Related to 
Intent to Leave Among Child Welfare Caseworkers,'' Doctoral 
dissertation, Ohio State University, 1995.
---------------------------------------------------------------------------
     A 1998 study examining the reasons child welfare workers 
remain in their positions longer than two years found that--in addition 
to concern for, and satisfaction in, helping children--the two most 
decisive factors in employee retention were social work education and 
the climate of the work environment, including supportiveness of 
supervisors and peers. More than 80 percent of those who stayed beyond 
two years had completed at least one social work 
degree.[xxiv]
---------------------------------------------------------------------------
    \[xxiv]\ Cicero-Reese, B. & P. Black, ``Research Suggests Why Child 
Welfare Workers Stay on the Job,'' Partnerships for Child Welfare, 
5(5), February 1998.
---------------------------------------------------------------------------
Low Salaries

    Another major obstacle to recruitment and retention is the fact 
that child welfare agencies often are forced to compete for workers 
with institutions that pay higher wages and offer safer and more 
predictable work environments.
    The Bureau of Labor Statistics' national wages survey reports that 
elementary and middle school teachers earn, on average, about $42,000 
annually, while ``social workers'' earn about $33,000. One county 
official in Texas reported that teachers now earn starting salaries of 
about $37,000, while entry-level caseworkers earn about $28,000 
annually, a difference of about 32 percent.[xxv]
---------------------------------------------------------------------------
    \[xxv]\ U.S. General Accounting Office, ``HHS Could Play a Greater 
Role in Helping Child Welfare Agencies Recruit and Retain Staff'' (GAO-
03-357), March 2003.
---------------------------------------------------------------------------
    One private agency in California reported that foster care workers 
with MSWs who worked in group residential care facilities, which 
provided structured living arrangements and treatment services for 
children with complex needs, earned $5,000 to $30,000 less than school 
counselors, nurses, and medical- and public-health social 
workers.[xxvi]
---------------------------------------------------------------------------
    \[xxvi]\ Ibid.
---------------------------------------------------------------------------
    According to the 2000 workforce survey, the average annual salaries 
for public child protective services workers is $33,000 and, for 
private agency staff, $27,000. For child welfare supervisors in public 
agencies, the average annual salary is $42,000 and, in private 
agencies, $40,000.[xxvii]
---------------------------------------------------------------------------
    \[xxvii]\ Alliance for Children and Families, American Public Human 
Services Association, Child Welfare League of America, ``The Child 
Welfare Workforce Challenge: Results from a Preliminary Study,'' 
presented at Finding Better Ways 2001, Dallas, Texas, May 2001.
---------------------------------------------------------------------------
High Caseloads/Workloads

    In California, Illinois, Kentucky, and Texas, agencies reported 
that their inability to retain staff has contributed to their existing 
unmanageable caseloads.[xxviii] Those four states are not 
alone.
---------------------------------------------------------------------------
    \[xxviii]\ U.S. General Accounting Office, ``HHS Could Play a 
Greater Role in Helping Child Welfare Agencies Recruit and Retain 
Staff'' (GAO-03-357), March 2003.
---------------------------------------------------------------------------
    The Child Welfare League of America (CWLA) recommends a caseload 
ratio of 12 to 15 children per caseworker, and the Council on 
Accreditation (COA) recommends that caseloads not exceed 18 children 
per caseworker. However, a national survey found that caseloads for 
individual child welfare workers ranged from 10 to 110 children, with 
workers handling an average of about 24 to 31 children each--double the 
recommended number.[xxix]
---------------------------------------------------------------------------
    \[xxix]\ Alliance for Children and Families, American Public Human 
Services Association, Child Welfare League of America, ``The Child 
Welfare Workforce Challenge: Results from a Preliminary Study,'' 
presented at Finding Better Ways 2001, Dallas, Texas, May 2001.
---------------------------------------------------------------------------
    Contributing to the workload problem is the increasing complexity 
of cases. Drug and alcohol abuse most often co-occurs with a finding of 
abuse or neglect, but it is rarely the only serious issue. Poverty, 
substandard housing, mental illness, domestic violence, and HIV/AIDS 
are also often present.[xxx]
---------------------------------------------------------------------------
    \[xxx]\ U.S. Department of Health and Human Services, 1999, cited 
in C. Risley-Curtiss, ``Current Challenges and Future Directions for 
Collaborative Child Welfare Educational Programs,'' Journal of Human 
Behavior in the Social Environment, 7(1/2), 2003.
---------------------------------------------------------------------------
    One former private agency worker in Delaware reported that, 
although caseloads were manageable, the complexity of each case was a 
problem. And one former county worker in California said that cases are 
becoming increasingly difficult, and caseworkers are no longer able to 
do ``social work.'' This caseworker also said that the amount of work 
and stress is endless, and limits the amount of time she has to perform 
her job well.[xxxi]
---------------------------------------------------------------------------
    \[xxxi]\ U.S. General Accounting Office, ``HHS Could Play a Greater 
Role in Helping Child Welfare Agencies Recruit and Retain Staff'' (GAO-
03-357), March 2003.
---------------------------------------------------------------------------
Risk of Violence

    Another difficulty facing today's child welfare workers is the 
constant risk of violence. According to a 1998 national study of front-
line caseworkers, more than 70 percent had been victims of violence or 
threats of violence in the line of duty. In a peer exit interview 
process conducted in one state, 90 percent of its child protective 
services employees reported that they had experienced verbal threats; 
30 percent experienced physical attacks; and 13 percent were threatened 
with weapons.[xxxii]
---------------------------------------------------------------------------
    \[xxxii]\ American Federation of State, County, and Municipal 
Employees, ``Double Jeopardy: Caseworkers at Risk Helping At-Risk 
Children: A Report on the Working Conditions Facing Child Welfare 
Workers,'' 1998.
---------------------------------------------------------------------------
    According to public agency caseworkers in Texas, their salaries do 
not reflect the risks to personal safety they face as part of their 
work. These caseworkers reported that, given the safety risks they are 
exposed to daily, they should be given hazardous duty pay, similar to 
workers in other high-risk professions.[xxxiii]
---------------------------------------------------------------------------
    \[xxxiii]\ U.S. General Accounting Office, ``HHS Could Play a 
Greater Role in Helping Child Welfare Agencies Recruit and Retain 
Staff'' (GAO-03-357), March 2003.
---------------------------------------------------------------------------
Federal Support for the Child Welfare Workforce
    Federal support for child welfare workforce began with enactment of 
the Social Security Act (SSA) in 1935. The U.S. Children's Bureau 
awarded SSA grants to states to strengthen child welfare services and 
promoted professionalism of child welfare employees by encouraging 
educational leave for workers to study in schools of social work. As of 
1939, at least 35 states and Hawaii had granted educational leave to 
people to attend graduate schools of social work.[xxxiv]
---------------------------------------------------------------------------
    \[xxxiv]\ Leighninger, L. & A.J. Ellett, ``De-professionalism in 
Child Welfare: Historical Analysis and Implications for Social Work 
Education,'' paper presented at the Council on Social Work Education 
Annual Program Meeting, Orlando, Florida, March 1998, cited in C. 
Risley-Curtiss, ``Current Challenges and Future Directions for 
Collaborative Child Welfare Educational Programs,'' Journal of Human 
Behavior in the Social Environment, 7(1/2), 2003.
---------------------------------------------------------------------------
    Today, the Federal Government's primary support for training 
continues to be through its funding of two Social Security Act 
programs--Title IV-B, Section 426 and Title IV-E both still 
administered by the Children's Bureau.
Title IV-B, Section 426 Child Welfare Training Program

    The Title IV-B, Section 426 Child Welfare Training Program was 
formalized in the SSA Amendments of 1962, as a response to a perceived 
workforce shortage for graduate level social workers who are prepared 
for--and interested in-- working in public child 
welfare.[xxxv]
---------------------------------------------------------------------------
    \[xxxv]\ Zlotnik, J.L., ``Preparing Social Workers for Child 
Welfare Practice: Lessons from an Historical Review of the 
Literature,'' Journal of Health & Social Policy, 15(3/4), 2002.
---------------------------------------------------------------------------
    Under the IV-B program, grants are awarded to public and private 
nonprofit institutions of higher learning, usually social work 
education programs, to develop and improve the education, training, and 
resources available for providers of child welfare services. These 
grants are used to upgrade the skills and qualifications of child 
welfare workers through their participation, full-time or part-time, in 
training programs focused specifically on child welfare practice.
    Guidelines for the program vary from year to year, depending on the 
Children's Bureau's analysis of need. Priorities for fiscal year 2003 
grants, which were announced earlier this month, include practice in 
rural communities, training for American Indian and/or Alaskan Native 
public child welfare staff, effective models for staff recruitment and 
retention, and training for healthy marriage and family 
formation.[xxxvi]
---------------------------------------------------------------------------
    \[xxxvi]\ U.S. Department of Health and Human Services, 
Administration for Children and Families, ``Program Announcement No. 
ACYF/CB-2003-01,'' Federal Register, 68(111), June 10, 2003.
---------------------------------------------------------------------------
    The Section 426 program is the only one of six child welfare 
discretionary grant programs managed by the Children's Bureau with a 
specific emphasis on staff training. In fiscal year 2002, even after 
funding increases in the late 1990s, the training program received the 
second smallest share--nine percent--of the Children's Bureau's total 
discretionary funds.[xxxvii]
---------------------------------------------------------------------------
    \[xxxvii]\ U.S. General Accounting Office, ``HHS Could Play a 
Greater Role in Helping Child Welfare Agencies Recruit and Retain 
Staff'' (GAO-03-357), March 2003.
---------------------------------------------------------------------------
    Program funding reached a high of $8 million in 1978, was cut by 
more than 50 percent (to $3.8 million) in 1982, and stayed at that 
level for many years. Funding was not increased until 1995 when it 
jumped to $4.6 million and then was cut again in 1996 to $2 million. 
Strong advocacy resulted in an increase to $4 million in 1997; $6 
million in 1998; and eventually to $7 million, where it stands today.
    According to a leading expert on the program, ``The 426 program has 
served as an important catalyst for innovations in child welfare 
training and to stimulate the preparation of social work students for 
child welfare careers. However, the competitive nature of the grant 
program, the narrow categories for which applicants are sought each 
fiscal year, and the limitations of a $7 million annual appropriation 
restrict its beneficiaries to a small cadre of states and social work 
education programs.'' [xxxviii]
---------------------------------------------------------------------------
    \[xxxviii]\ Zlotnik, J.L., ``The Use of Title IV-E Training Funds 
for Social Work Education: An Historical Perspective,'' Journal of 
Human Behavior in the Social Environment, 7(1/2), 2003.
---------------------------------------------------------------------------
Title IV-E Child Welfare Training Program

    The Title IV-E child welfare training program represents a much 
greater federal investment in the child welfare workforce than Title 
IV-B. Created as part of the Child Welfare and Adoption Assistance Act 
of 1980, Title IV-E is a valuable tool to address the child welfare-
staffing crisis and ensure that staff have the competencies necessary 
to perform their jobs.
    Under the program, the Federal Government demonstrates its support 
for training by providing an enhanced federal match of 75 percent 
(other administrative costs are matched at 50 percent) to fund training 
programs both for current and prospective child welfare staff. In 
addition to short-term and long-term training and direct financial 
assistance to students, this funding also may be used for curriculum 
development, materials and books, and incentives for recruitment.
    Although the program was created in 1980, it was not until the 
early 1990s that Children's Bureau staff became aware of the real 
opportunities provided by Title IV-E training funds.[xxxix] 
In fiscal year 1990, Title IV-E provided about $44 million to states to 
train child welfare workers.[xl] By fiscal year 2001, 49 
states received $276 million in Title IV-E training reimbursements. 
These reimbursements ranged from a low of approximately $1,400 in 
Wyoming to a high of more than $59 million in California, with the 
median reimbursement approximating $3.1 million.[xli]
---------------------------------------------------------------------------
    \[xxxix]\ Ibid.
    \[xl]\ U.S. General Accounting Office, ``Foster Care: Federal 
Policy on Title IV-E Share of Training Costs'' (GAO/HRD-94-7), November 
1993.
    \[xli]\ U.S. General Accounting Office, ``HHS Could Play a Greater 
Role in Helping Child Welfare Agencies Recruit and Retain Staff'' (GAO-
03-357), March 2003.
---------------------------------------------------------------------------
University-Agency Training Partnerships under Title IV-E
    According to the GAO report, the university-agency training 
partnerships, funded by Title IV-E, present promising practices for 
addressing the staffing crisis in child welfare. It is a finding with 
which HHS concurred: ``[A]lthough few in number, the ACF funded 
university and State child welfare agency partnerships referenced in 
this report have had a positive impact on State child welfare agencies' 
ability to recruit and retain child welfare staff.'' [xlii]
---------------------------------------------------------------------------
    \[xlii]\ Ibid.
---------------------------------------------------------------------------
    These partnership programs are designed to prepare social work 
students for careers in the child welfare profession, and to develop 
the skills of current workers. The programs require that students 
receiving stipends for the study of child welfare commit to employment 
with the state or county public child welfare agency for a specified 
period of time. The length of the contractual employment obligation--
usually one to two years--and the curriculum content each program 
offers, differ by state and sometimes by university.
    A survey conducted in 1996 found that 68 university social work 
programs in 29 states were accessing IV-E funds for BSW and MSW 
education.[xliii] Today, it is estimated that partnerships 
exist in over 40 states, and use more than $50 million, to prepare 
workers for the challenges of child welfare service 
delivery.[xliv]
---------------------------------------------------------------------------
    \[xliii]\ Zlotnik, J.L. & L. Cornelius, ``Preparing Social Work 
Students for Child Welfare Careers: The Use of Title IV-E Training 
Funds in Social Work Education,'' Journal of Baccalaureate Social Work 
Education, 51, 2000.
    \[xliv]\ Zlotnik, J.L., ``The Use of Title IV-E Training Funds for 
Social Work Education: An Historical Perspective,'' Journal of Human 
Behavior in the Social Environment, 7(1/2), 2003.
---------------------------------------------------------------------------
    While relatively few in number, available studies on the impact of 
Title IV-E training partnerships suggest that they improve both worker 
retention and worker competence.[xlv]
---------------------------------------------------------------------------
    \[xlv]\ U.S. General Accounting Office, ``HHS Could Play a Greater 
Role in Helping Child Welfare Agencies Recruit and Retain Staff'' (GAO-
03-357), March 2003.
---------------------------------------------------------------------------
Improved Worker Retention
    One study, which tracked four groups of students who participated 
in a training partnership, found that 93 percent continued to be 
employed in the child welfare profession--and 52 percent remained with 
public agencies--well beyond he minimum required by their employment 
obligation.[xlvi]
---------------------------------------------------------------------------
    \[xlvi]\ Robin, S.C. and C.D. Hollister, ``Career Paths and 
Contributions of Four Cohorts of IV-E Funded MSW Child Welfare 
Graduates,'' Journal of Health and Social Policy, 15(3/4), 2002.
---------------------------------------------------------------------------
    Findings were similar in evaluations of programs in Kentucky and 
California. Evaluations in both states found that more than 80 percent 
of participants remained with the state agencies after their initial 
work obligations concluded. In Kentucky, whose collaboration includes 
nine of the state's undergraduate social work schools and the Cabinet 
for Families and Children, state officials attribute their retention 
rates, in part, to the intensive coursework, formal internships, and 
rigorous training included in the curriculum of the training 
partnerships. California's collaboration consists of the state's 15 
graduate schools of social work, the Department of Social Services, 
county welfare directors, and the California Chapter of 
NASW.[xlvii]
---------------------------------------------------------------------------
    \[xlvii]\ Barbee, A.P., ``Creating a Chain of Evidence for the 
Effectiveness of Kentucky's Training System,'' For the Child and Family 
Services Review, March 2003; and N. S. Dickinson and R. Perry, ``Do MSW 
Graduates Stay in Public Child Welfare? Factors Influencing the Burnout 
and Retention Rates of Specially Educated Child Welfare Workers,'' The 
California Social Work Education Center, University of California at 
Berkeley, August 1998.
---------------------------------------------------------------------------
    In Texas--where six universities offer both BSW and MSW stipends, 
five offer BSW stipends only, and one offers only MSW stipends--
graduates of one participating program were surveyed. The survey found 
that 70 percent of respondents were still employed with the agency 
after their contractual employment obligation 
expired.[xlviii]
---------------------------------------------------------------------------
    \[xlviii]\ Scannapieco, M. and K. Connell-Carrick, ``Do 
Collaborations with Schools of Social Work Make a Difference for the 
Field of Child Welfare? Practice, Retention, and Curriculum,'' Journal 
of Human Behavior in the Social Environment, 2003.
---------------------------------------------------------------------------
Improved Worker Competence
    The program evaluations in Kentucky and California suggest that the 
training partnerships improved worker competence. In both states, 
evaluations found that staff hired through specially designed Title IV-
E programs performed better on the job and applied their training more 
deftly than employees hired through other means.
    Controlling for undergraduate grade point averages, the Kentucky 
study found that those who completed the training scored better on the 
agency's test of core competencies. Kentucky supervisors reported that 
they considered students certified by the partnership to be better 
prepared for their jobs than other new employees.[xlix]
---------------------------------------------------------------------------
    \[xlix]\ Fox, S., Miller, V. & A.P. Barbee, ``Finding and Keeping 
Child Welfare Workers: Effective Use of Training and Professional 
Development,'' Journal of Human Behavior in the Social Environment, 
7(1/2), 2003.
---------------------------------------------------------------------------
    The California study reported that students who participated in the 
partnership training scored higher on a test of child welfare 
knowledge, reported greater competency in their work, and had a more 
realistic view of child welfare work than those who had not 
participated.[l]
---------------------------------------------------------------------------
    \[l]\ Jones, L.P. and A. Okamura, ``Reprofessionalizing Child 
Welfare Services: An Evaluation of Title IV-E Training,'' Research on 
Social Work Practice, September 2000.
---------------------------------------------------------------------------
    In Louisiana, research found that Title IV-E participants score 
higher on child welfare competency exams than control groups, have 
higher rates of retention with the agency, and score higher on 
supervisor evaluations of their work preparation.[li]
---------------------------------------------------------------------------
    \[li]\ Ellett, B. and K. Gansle, ``Louisiana Title IV-E Program 
Begins Evaluation Process,'' Partnerships for Child Welfare, 5(5), 
February 1998.
---------------------------------------------------------------------------
Recommendations

    Over the years, NASW has advocated for a number of improvements to 
increase the effectiveness of the Title IV-E program. The association 
continues to support those changes, but believes they should be made 
within the current financing structure. Our recommendations for 
improvements include:
1.  Eliminating requirements for cost allocation based on the 
percentage of the Title IV-E eligible caseload: All children in the 
system benefit by better qualified staff, not only children from 
families meeting the 1996 AFDC income test.
2.  Expanding eligibility for training content: Eligible training 
should include all areas related to meeting the federal goals of 
safety, permanence, and well-being, and should not be limited to 
training related to out-of-home placement.
3.  Expanding access for reimbursement to private universities: In 
many jurisdictions, social work education programs at private 
universities are the most geographically accessible for child welfare 
workers. However, direct financial participation by private 
universities is prohibited, which limits access to quality training 
programs for many child welfare staff.
4.  Expanding the 75 percent reimbursement rate to include all real 
costs of traiing, both direct and indirect, incuding the costs of 
administering the training program: Current limitations significantly 
reduce the number of colleges and universities able to provide the 
required matching funds.

Conclusion

    With or without the recommended improvements, it is clear that the 
current Title IV-E child welfare training program is critical to re-
professionalizing the child welfare system. Continued strong federal 
support for this program and others designed to create a well-trained, 
competent, and stable child welfare workforce will be even more 
critical in the future, as states develop and implement Program 
Improvement Plans (PIPs) to meet outcomes measured in the Child and 
Family Services Reviews.
    In response to the March 2003 GAO report, HHS noted that ``a number 
of States have identified strategies that target workforce 
stabilization and reduction in caseloads as part of their PIPs,'' but 
acknowledged that ``the Federal Government has limited resources to 
offer States in these efforts.'' [lii] While additional 
resources are clearly needed, now is not the time to jeopardize the 
current federal funding available to assist states in their efforts to 
educate and train their child welfare staff.
---------------------------------------------------------------------------
    \[lii]\ U.S. General Accounting Office, ``HHS Could Play a Greater 
Role in Helping Child Welfare Agencies Recruit and Retain Staff'' (GAO-
03-357), March 2003.

    Again, we appreciate the opportunity to provide the social work 
perspective on child welfare financing, and look forward to 
participating in the debate as the issue moves forward.
    For additional information, please contact Cynthia Woodside, senior 
government relations associate, 202-336-8324 or [email protected].

                                 

 Statement of Richard Wexler, National Coalition for Child Protection 
                      Reform, Alexandria, Virginia

    I am pleased to have the opportunity to submit written testimony 
concerning the Bush Administration's foster care funding flexibility 
plan on behalf of the National Coalition for Child Protection Reform, a 
non-profit child advocacy organization dedicated to making the child 
welfare system better serve America's most vulnerable children.
    We are a very small organization, with no particular interest in 
becoming another big non-profit bureaucracy. But what we lack in size, 
we make up for in track record. We were the only national child 
advocacy organization to predict the collapse of the Florida child 
welfare system--three years before it happened--because we knew that 
the child welfare agency there was embarking on the same course that 
had led other states and localities to disaster.
    And we are proud to have been the only child advocacy organization, 
aside from the event sponsors, singled out for thanks by Rep. George 
Miller at the Child Welfare Summit he helped to organize last year.
    There is much more about us at our website, www.nccpr.org. But 
there's something else you should know about us.
    We're liberals--and in my case, at least, a tax-and-spend liberal 
at that.
    But when an Administration with which we often disagree comes up 
with a plan that has the potential to be the biggest change for the 
better in federal child welfare policy in 23 years, we'd rather put 
ideology aside and help make it work than jerk our knees in opposition 
before anyone has even seen the fine print.
    The story of one child and his mother explains why this change has 
the potential to be so important.
    This is what a single mother in The Bronx named Rose Mary Grant had 
to do every week for many, many months, just to see her 11-year-old 
son, Issa, as described in a keenly-observed story in the Westchester 
County, N.Y. Journal-News.

          ``Starting from her brick apartment tower, Rose walks a block 
        to Gun Hill Road, takes the 28 bus to the subway station, 
        catches the 5 train to Harlem, makes her way down 125th Street, 
        boards the Metro-North train to Dobbs Ferry, and rides a 
        shuttle . . . At each step, she places two metal crutches ahead 
        of her and swings forward on two prosthetic legs.''
          The journey would have been worth it, had there been 
        something worthwhile at the end of the line. But there wasn't. 
        Issa was warehoused at a ``residential treatment center.''

    Issa is not paranoid, he's not schizophrenic, he's not delusional. 
The only label pinned on him is Attention Deficit Hyperactivity 
Disorder. Sometimes, at home, he was seriously out-of-control. But his 
handicapped, impoverished single mother couldn't do what middle-class 
and wealthy families do: find a good psychiatrist and hire home health 
aides.
    She couldn't do that because the Federal Government does almost 
nothing to help pay for such alternatives. But, in many cases, the 
Federal Government, in other words, the American taxpayer, will gladly 
reimburse states between 50 and 79 cents for every one of the 86,000-
or-more dollars it costs to keep children like Issa in his ``RTC.''
    Now consider another case, described in the cover story of the June 
issue of the outstanding trade journal, Youth Today. EMQ Children and 
Family Services used to be just like the place that warehoused Issa. 
But ten years ago, they admitted to themselves that what they were 
doing was not helping children. So they shut down 100 of their 130 beds 
and came up with far better alternatives for the children. They wound 
up helping more children at less cost and getting far better outcomes. 
Another institution, called Youth Villages in Tennessee won a national 
award for doing the same thing. Keep in mind that the children they 
helped in their own homes or foster homes are the very same children 
that the child welfare establishment--what I have come to call, ``the 
foster care- industrial complex'' insists absolutely cannot be helped 
anyplace except in their institutions.
    But both Youth Villages and EMQ encountered the same problem: For 
years, even though their alternatives were better and cheaper, they 
couldn't get reimbursement from their states. EMQ almost went out of 
business.
    There are many cases that don't involve institutions at all, but do 
involve needless use of foster care.
    Contrary to the common stereotype, most parents who lose their 
children to foster care are neither brutally abusive nor hopelessly 
addicted. Far more common are cases in which a family's poverty has 
been confused with child ``neglect.'' Other cases fall on a broad 
continuum between the extremes, the parents neither all victim nor all 
villain. What these cases have in common is the fact that there are a 
wide variety of proven programs that can keep these children in their 
own homes, and do it with a far better track record for safety than 
foster care itself.
    But financial incentives at the federal, state and sometimes local 
level--plus the power of the ``foster care-industrial complex'' 
marginalize these alternatives.
    Documentation for this, and other problems related to the 
widespread confusion of poverty with child ``neglect'' can be found in 
our Issue Papers at www.nccpr.org.
    To many liberals, the confusion of poverty with child ``neglect'' 
is the single biggest problem in child welfare. That confusion is 
encouraged by federal funding formulas.
    The giant federal entitlement program for foster care--Title IV-E--
is about ten times larger than the primary ``funding stream'' used to 
prevent foster care, Title IV-B.
    The Bush Administration proposes to change that. And what are many 
of my fellow liberals doing? Jerking their knees in opposition.
    I will not go into the details of the plan here--to the extent that 
we know them--the Subcommittee already is familiar with them.
    There are many legitimate questions about this plan, and no one 
should endorse it without qualification until they are answered. Most 
of the questions involve arcane but important details you have heard 
about in other testimony. They fall under headings like ``maintenance 
of effort'' and ``eligibility lookback.'' But that is a reason to wait 
for the details, negotiate, and then take a position. Instead, in much 
of the child welfare community, the response boils down to: ``Whatever 
it is, we're against it.''
    In some cases, that's naked self-interest. Of course the Child 
Welfare League of America is opposed--their member agencies hold 
children in foster care. The Residential Treatment Center that held 
Issa so long and so needlessly is a prominent member.
    States and localities typically tell these agencies that their 
first job is to return these children safely to their own homes or, if 
that is not possible, find them adoptive homes. But if they do that, 
those same states and localities will stop paying them. The states say 
they want permanence, but they pay for limbo, reimbursing agencies for 
every day they hold children like Issa in foster homes or institutions.
    You have undoubtedly heard and read a great deal about the 
``addiction'' problem in child welfare, and that problem is indeed 
serious. But the biggest addiction problem in child welfare isn't 
substance-abusing parents. The biggest addiction problem in child 
welfare is politically powerful, old-line, well-established child 
welfare agencies with blue-chip boards of directors that are addicted 
to per-diem payments and addicted to institutionalization as the only 
answer for too many children. And these agencies are putting their 
addiction ahead of the needs of the children.
    And the biggest ``enabler'' of this addiction is the Federal 
Government, with its ``open spigot'' of money for substitute care, and 
far, far less for anything other than substitute care.
    Breaking an addiction is extremely difficult. One first has to get 
past the addict's denial. So it's no wonder that so much of the foster 
care-industrial complex is opposing this plan without even seeing it.
    Sadly, even the Children's Defense Fund, an organization whose past 
work in child welfare has been heroic, has lost its way on this issue. 
Without waiting for the fine print, CDF has lumped this good idea in 
with some bad ideas in the Bush budget and denounced all of them--in 
apocalyptic terms. The CDF website has included material claiming that 
the plan would ``dismantle'' foster care. That is preposterous. There 
is no way that a purely voluntary plan that, in some cases, will give 
states more money than they would get under the status quo, can 
``dismantle'' foster care. Such claims only undermine CDF's credibility 
when the organization seeks, rightly, in my view, to prevent budget 
cuts in other areas.
    The opposition to this proposal has consisted of a shameful 
collection of fear, smear, and scare stories.

     First of all, this is not a ``block grant'' in any 
meaningful sense of the term. Under a block grant, several different 
funding streams are combined, states are allowed to use the money for 
any purpose covered by any of those funding streams--and, often, some 
money is cut from the total.
      LThis plan involves only one portion of one funding stream--Title 
IV-E foster care funds. This money could be spent on prevention and 
adoption. But the other funding streams remain separate. Title IV-B 
funds for prevention, for example, cannot be used for foster care. This 
``IV-B firewall'' is a crucial feature of the plan. Were IV-B and IV-E 
to be combined, the ``foster care-industrial complex'' would grab the 
prevention money to use for more foster care. This plan recognizes that 
danger. In the absence of this firewall we would oppose the plan.
     Second, this plan not only does not cut funding, in some 
cases, funding may go up. Under this plan, states would receive the 
same, agreed-upon amount of money for each of the five years. In 
contrast, states that stick with the status quo will find that the 
proportion of foster care costs covered by the Federal Government will 
decrease, as a result of the ``eligibility lookback.''
     And perhaps most important, this plan is strictly 
voluntary. Though states that opt in must stay in for five years, any 
state that feels it's not getting a good deal can walk away from the 
table and stick with the status quo. If the fine print matches the 
broad outlines, governors and child welfare leaders who have the guts 
and imagination to try something with so much potential to do so much 
good, should have the right to do so, without being held back by their 
timorous colleagues and a foster care establishment with a huge vested 
interest in the status quo.

    As I said at the outset, there are legitimate questions about this 
plan, and we cannot endorse it until we see the details and see if they 
match the promise of the proposal's broad outlines. But because the 
plan is strictly voluntary, it doesn't have to be ideal to be worth 
offering to the states.
    Some of the key questions include: How will the emergency fund 
work? How will it be triggered? Is it adequate? (It may, in fact, be 
adequate for some states and not others; that's the beauty of a 
voluntary plan).
    Ideally, I would like to see states able to opt out in fewer than 
five years, and I'd like an emergency fund that would be more 
reassuring to states than the ideas discussed so far. But again, that 
may someday be a reason for some states not to take part in the plan, 
it is not a reason to deny any state the chance to participate by 
strangling the plan before anyone has even seen it.
    Some of my liberal friends have argued that Congress should support 
legislation introduced by Representatives Benjamin Cardin and George 
Miller instead.
    They're half right.
    These representatives have been tireless champions for children, 
and they have introduced a bill with some good provisions, increasing 
funding for crucial prevention programs. But this bill and the Bush 
Administration plan are not mutually exclusive. If the fine print in 
the Bush plan lives up to the broad outlines there is no reason that 
Congress shouldn't support this plan and the good provisions of Cardin-
Miller.
    But Cardin-Miller also has a provision likely to backfire. It ties 
some of the aid to states' performance on Child and Family Service 
Reviews (CFSRs). Unfortunately, though well-intended, the CFSR process 
is deeply flawed. The sample size is far too small to accurately 
measure state performance. And in at least one crucial instance, the 
incentives in CFSRs perversely encourage poor performance.
    The CFSRs measure reducing average length of stay in foster care, 
but they do not measure success in keeping children out of foster care 
in the first place. As a result, this measure rewards states or 
localities with hair-triggers for removals. These states remove 
children at the drop of a hat. Then they realize that many of the 
children didn't need to be taken and return them--much the worse for 
the experience--in a month, or two, or three. As a result, the average 
length of stay looks low.
    In contrast, a state that takes family preservation seriously will 
truly remove children only as a last resort. As a result, the problems 
in those children's birth families will be genuinely serious and are 
likely to take more time to resolve--if they can be resolved at all. So 
in these states, average length of stay will be longer, even though 
those states actually may be doing a better job.
    The Administration is aware of these problems, and may be able to 
fix them when the next round of CFSRs take place. But until we know 
that, it would be counterproductive to base aid to states upon 
performance using these flawed measures. And that is one of the things 
the Cardin-Miller bill proposes to do.
    Others have said that financial incentives don't really affect 
child welfare decision-making anyway. (I wonder if they also believe 
HMOs have no affect on health care decisions?) These tend to be the 
same people who benefit most from the status quo. If they're right, 
they have nothing to worry about, and the Bush plan is a great way to 
put their claim to the test.
    But in fact, I think they're worried about the nation as a whole 
seeing the same kind of success as is now being seen in the State of 
Illinois.
    In 1997, Illinois had one of the worst child welfare systems in the 
country. Illinois had 51,000 children in foster care--proportionately 
more than any other state. Today, the foster care population in 
Illinois is under 22,000--and, proportionately, below the national 
average. At the same time, and this is most important, child safety has 
improved.
    If you thought that was all due to adoption, it's understandable. 
Since that's the part of the story that is most popular politically, it 
is the part that state officials like to tell the most. But the biggest 
change in Illinois is that the state is taking far fewer children in 
the first place--and it has changed financial incentives to get 
children back into their own homes faster.
    Illinois no longer simply pays private agencies for each day they 
hold a child in foster care. Instead, agencies are rewarded financially 
for keeping children safely in their own homes or finding them adoptive 
homes. They are penalized financially for letting children languish in 
foster care. Once Illinois changed the payment system, lo and behold: 
The ``intractable'' became tractable, the ``dysfunctional'' became 
functional the foster care population plummeted and, as I said, child 
safety improved.
    Some have argued that the very fact that Illinois managed to do 
this under the current system shows that there is no need to change 
federal financial incentives. However:

     Illinois is an exception. It required rare and 
extraordinary guts and imagination, combined with an unprecedented 
child welfare crisis, before the state could summon the strength to 
fight its ``foster care-industrial complex'' and accomplish real 
reform.
     Illinois was among the first states to take advantage of 
waivers offered by the Department of Health and Human Services and 
among the most creative in their use.

    In order to accomplish its reforms, Illinois had to swim against 
the tide of federal policy as reflected by where the Federal Government 
puts its money. If we really want to change child welfare and improve 
the prospects of America's most vulnerable children, then the tide of 
federal policy needs to turn toward reform, so states that want to do 
better are swimming with the tide instead of against it.
    If the fine print matches the broad outlines, then the Bush plan 
offers the potential to do just that.

                                 

     Statement of Thomas C. Atwood, National Council For Adoption, 
                          Alexandria, Virginia

    Chairman Herger, the National Council For Adoption thanks the House 
Ways and Means Sub-Committee on Human Resources for the opportunity to 
submit a written statement regarding the important topic of ``The Bush 
Administration Foster Care Flexible Funding Proposal.'' Although there 
are details still to be determined, in our view the principles 
articulated in this proposal would be a significant step forward in 
America's efforts to develop new and better ways of serving children in 
foster care.
    The National Council For Adoption (NCFA) is a research, education, 
and advocacy nonprofit whose mission is to promote the well-being of 
children, birthparents, and adoptive families, by advocating for the 
positive option of adoption. Since our founding in 1980, NCFA has been 
a leader in promoting sound child welfare and adoption policies that 
make it easier for children to be adopted out of foster care into 
families, present adoption as a positive option for women with 
unplanned pregnancies, reduce obstacles to transracial adoption, make 
adoption more affordable through the tax credit, and facilitate 
intercountry adoptions. NCFA's 1996 monograph, ``Foster Care: Too Much, 
Too Little, Too Early, Too Late,'' by Dr. Carol Statuto Bevan, 
contributed much to the intellectual basis for the Adoption and Safe 
Families Act of 1997 (ASFA).
    While reaffirming the commitment to family reunification when 
appropriate, ASFA clearly established the priority of child safety. 
ASFA reformed the child welfare system to promote more timely 
permanency decisions to help prevent children from languishing in 
foster care. ASFA encourages adoption out of foster care with 
incentives for states, and it expanded support services to foster and 
adoptive families. ASFA gave the Department of Health and Human 
Services tools for producing greater accountability and innovation in 
the child welfare system.
    ASFA's results have been positive. The number of children adopted 
out of foster care rose from 31,000 in FY 1997 to 50,000 in FY 2001. 
ASFA has been a successful policy for tens of thousands of former 
foster children who would not otherwise have been adopted into their 
forever families. However, while we have made significant progress in 
addressing the needs of children in foster care, there is still much to 
be done. As of September 30, 2001, there were 542,000 children in 
foster care, of whom 126,000 were waiting to be adopted.
    The tide of children needing foster care is, unfortunately, all too 
steady. Moreover, as we find homes for more children, the children who 
remain in foster care may tend to be more difficult to place. Not all 
children will find adoptive homes, especially those who are older. 
These realities accentuate the need in our child welfare system for 
increased child and family services in the areas of recruitment, 
training, and education of adoptive and foster parents, pre- and post-
placement counseling and services for children and families, vocational 
and job training for older foster care populations and for those aging 
out of foster care, and counseling foster youth for independent living 
and for prevention of substance abuse and other harmful behaviors.
    The Bush Administration took creative steps in addressing the needs 
of older children in foster care with its initiatives to provide 
education and training vouchers for youth who age out of foster care 
and to increase states' financial incentives for placing for adoption 
foster children age 9 and up. The vouchers offer youth a chance to 
extend their education and improve their possibilities of succeeding as 
self-sufficient adults. States' increased incentives to place children 
9 and up will improve this vulnerable population's prospects for 
adoption. The Department of Health and Human Services has found that 
from age 9 on, a child's likelihood of remaining in foster care is 
greater than the likelihood of being adopted.
    The President's foster care flexible funding proposal is a logical 
next step in addressing the needs of the evolving population of 
children in foster care. This new Child Welfare Program Option would 
allow states to maintain the federal funding of their foster care 
program as is, or to receive these funds as a flexible grant over five 
years, to support a range of child welfare services. The proposal's 
funding flexibility, including the option of up-front funding, offers 
states the opportunity to be timely and effective in addressing the 
particular concerns and needs of their respective foster care 
populations and systems.
    The flexible funding proposal is consistent with a proven model for 
federal-state partnerships: The Federal Government provides goals, 
incentives, standards, and accountability; the states determine the 
best ways to achieve them, given the particular needs and circumstances 
of their respective states. This model for federal-state partnership 
has worked in many policy areas and can also work in serving the needs 
of children in foster care, and of their families and caregivers. The 
flexible funding proposal recognizes that it does not serve the best 
interests of children and families for the Federal Government to 
dictate a one-size-fits-all policy for our diverse 50 states. The 
states have important perspectives on the needs of the children and 
families served by their respective child welfare systems. The Federal 
Government must work with the states to make safe and stable homes a 
reality for all children.
    Given the flexibility, states will direct their federal foster care 
dollars in various ways depending on the particular needs of their 
respective populations. The flexible funding should be sufficiently 
inclusive as to allow states to use the funds for such programs and 
child and family services as:

     Recruitment, training, and education of adoptive and 
foster parents.
     Pre- and post-placement counseling and services for 
adoptive and foster children and families.
     Vocational counseling and job training and placement for 
older foster care children and for those aging out of foster care.
     Counseling foster youth for independent living and 
prevention of sexual abuse and substance abuse.

    If Congress grants states the flexibility recommended in this 
proposal, states are likely over the next five years to develop 
creative and effective approaches that address these concerns.
    Finally, it should be noted that the proposal provides safeguards 
against possible negligence of states' foster care populations by 
requiring states to: adhere to the child safety protections mandated by 
ASFA; maintain existing levels of investment in their child welfare 
programs; and continue to participate in the Administration for 
Children and Family's Child and Family Service Reviews. Congress should 
ensure that the policy is sufficiently inclusive to allow states to 
spend their federal foster care dollars on the areas of greatest need, 
such as foster and adoptive family training and recruitment, pre- and 
post-placement counseling, and vocational training and life skills 
counseling for older foster children.
    President Bush's flexible funding proposal recognizes the crucial 
importance of the federal-state partnership in developing effective 
solutions that meet the needs of children in foster care, and of their 
families and caregivers. While reducing states' administrative burdens, 
it offers states a useful tool to structure their child welfare 
programs in ways that support the ongoing priorities of safety, timely 
permanency, and improved well-being for children and families. While 
protecting against a reduction of resources spent on foster care, the 
proposal allows states the opportunity to target their foster care 
resources in ways best suited to their respective populations' and 
systems' needs. The President's flexible funding proposal is a logical 
next step for America's child welfare system.

                                 

Statement of Raul Yzaguirre, National Council of La Raza, as submitted 
                           by Sonia M. Perez
Introduction
    My name is Sonia M. Perez and I am Deputy Vice President of the 
National Council of La Raza (NCLR); I also oversee the activities of 
NCLR's Puerto Rico regional office. NCLR is the largest national Latino 
research and advocacy organization in the U.S.; and works to reduce 
poverty and discrimination and improve life opportunities for the 
estimated 38 million Hispanics living on the mainland U.S. and the 
nearly 4 million people in the Commonwealth of Puerto Rico through our 
network of 300 local affiliate community-based organizations and 33,000 
individual associate members.
    For more than 15 years, NCLR has been engaged in research and 
public information efforts on poverty, social policy, and related 
issues affecting Latino families. In particular, NCLR has researched 
and written extensively on the experience of Latina women and their 
children with public assistance, as well as on the impact that welfare 
reform has had on Hispanic families in the U.S. mainland and in Puerto 
Rico. Through its research on welfare reform issues, NCLR has learned 
that significant disparities in funding for social welfare programs 
exist between Puerto Rico and the 50 states, despite the Island's high 
level of poverty and the significant challenges faced by poor families 
and children.

Background
    The Commonwealth of Puerto Rico faces unique social and economic 
conditions that significantly impact the well-being of the U.S. 
citizens living on the Island, and, particularly, the Island's 
children. For example, according to the U.S. Census Bureau:

     Almost half (48.2%) of the total population lives below 
the poverty level.
     About three in five (58.3%) children in Puerto Rico are 
poor--the only U.S. state, territory or commonwealth with a higher 
child poverty rate is American Samoa (67%).
     More than one-quarter (27%) of families in Puerto Rico 
are headed by a female householder.

    In addition, Puerto Rico has experienced slower economic growth and 
significantly higher unemployment than the States--even during the 
economic boom of the 1990s. According to the latest data from the 
Puerto Rico Department of Labor, the Island had a 12.1% unemployment 
rate in May.

Child Welfare in Puerto Rico
    Poverty and other social and economic factors have placed many 
children at risk, not only of poor educational, social, and health 
outcomes, but also of abuse and neglect. While data on child abuse, 
neglect, and foster care have not always been systematically collected 
for Puerto Rico, data from the Puerto Rico Department of the Family 
indicate the following:

     The Commonwealth received 71,617 child abuse and neglect 
complaints in fiscal year 2002.
     At the end of 2002, there were roughly 9,555 children in 
foster care in Puerto Rico.
     Abused and neglected children are cared for in 
approximately 3,380 certified foster homes.
     To maintain this level of care, the Commonwealth spends 
$25.5 million in payments to foster families alone, at an average 
monthly maintenance payment of $325.

Funding Limitations
    One of the most significant challenges that Puerto Rico faces in 
trying to address these issues is low funding. Local government funds 
help to meet some of the need, but as is the case with other states, 
federal monies greatly help to offset the administrative costs and 
payments to families providing foster care to children who have been 
abused or neglected.
    While children who have been removed from their families are 
entitled to foster care and adoption programs and assistance under the 
Title IV-E Foster Care and Adoption Assistance Program in the States, 
foster care is not an entitlement in Puerto Rico. The Title IV-E 
program falls under the Section 1108 cap, which restricts total welfare 
funding to Puerto Rico, creating a ceiling for several unrelated 
programs, including TANF and Assistance for the Aged, Blind and 
Disabled (Puerto Rico's substitute for Supplemental Security Income, 
from which the Commonwealth is excluded). This means that aid to abused 
and neglected children competes with assistance to the Island's poor 
families, the disabled, and seniors.
    The funding limitations placed on the Title IV-E program in Puerto 
Rico have far-reaching consequences. For instance, States with 
populations similar to Puerto Rico receive $40 to $50 million in 
reimbursements per year for their foster care and adoption assistance 
expenditures, whereas Puerto Rico is only reimbursed roughly $12 
million a year. Also, the Congressional Budget Office (CBO) projected 
that the federal share of monthly maintenance payments averaged $564 
for foster care, making Puerto Rico's average federal share of $152.50 
only 27% of the national average.
    Puerto Rico has not been able to take advantage of the adoption 
assistance program to the same extent as the states: in 2000, 88% of 
all children adopted out of foster care received adoption subsidies, 
while in Puerto Rico, the rate was 19%. According to the CBO the 
projected average federal share of monthly maintenance payments was 
$283 for adoption assistance, however, the average federal share in 
Puerto Rico was only $90. The Commonwealth spent approximately $500,000 
in Adoption Assistance payments in 2002, for 255 special needs 
children. Nearly one in three of these children were assisted with 
state-only funds. Adoption assistance payments for children adopted in 
Puerto Rico range from $107 to $300 a month, with an average of $180. 
Federal funding in this area has become so restricted, that when Puerto 
Rico earned a bonus for increasing adoptions, the basic IV-E grant was 
reduced, because of the impact of the welfare cap on the program, in 
order to provide the Island with the $218,000 performance incentive.
    Taken as a whole, the limitation on federal funding for Puerto 
Rico's child welfare system has created significant challenges in its 
efforts to care for vulnerable children, which range from limited and 
outdated case management capacity, insufficient communications between 
regional offices because of inadequate technology, and poor management 
and follow-up systems. In the end, the lack of federal funds, technical 
assistance, and general support means that too many children in need of 
services in Puerto Rico fall through the cracks.
Foster Care Flexible Funding Proposal: Disadvantages for Puerto Rico
    NCLR believes that members of Congress must consider the unique 
barriers facing Puerto Rico's child welfare system, particularly in 
light of the President's proposal for offering an alternative financing 
option to the current Title IV-E program. This proposal would not 
enhance Puerto Rico's ability to serve children who are neglected or 
abused. Specifically, the proposal does not consider the following:

     There are existing disparities for federal funding for 
these services between Puerto Rico and the 50 states. The problem 
facing Puerto Rico's child welfare system is severely limited federal 
contributions, due to the Section 1108 cap. As discussed above, Puerto 
Rico is unable to serve its existing populations well because of 
competing needs.
     The current low federal contribution would undermine the 
establishment of an appropriate baseline for any proposed foster care 
block grant. In the last three years, Puerto Rico received $10 to $12 
million in federal funding for foster care and adoption assistance. 
Since the foster care block grant would be based on previous federal 
reimbursements, the baseline would preserve the historic inequity in 
funding and would result in inadequate resources for Puerto Rico to 
care for children who are abused or neglected.
     A block grant will aggravate the problem of low funding 
levels in Puerto Rico. While the President's proposal to block-grant 
foster care funding is purported to provide states with increased 
flexibility in using federal funds to support a broader range of 
families and prevention and treatment activities, such claims would not 
apply to Puerto Rico. Because the Island currently receives inadequate 
federal funds for the breadth of services provided to the Island's 
poor, abused and neglected children, extending eligibility and 
broadening the range of activities would result in greater competition 
for funding and services than presently exist. Such an approach would 
further strain already limited resources.
     Elements of the flexible foster care funding proposal do 
not apply to Puerto Rico. The President's proposal includes a provision 
that would allow States to access additional funding through the TANF 
contingency fund if specific crisis conditions are met. However, Puerto 
Rico is not authorized to participate in the TANF contingency fund. 
Therefore, this provision could not be used to benefit children in 
need.

    The Title IV-E Foster Care and Adoption Assistance Program was 
established as a state-federal partnership to ensure that abused and 
neglected children receive the services needed to be safe. However, 
because Title IV-E funding falls under the Commonwealth's federal 
welfare cap, Puerto Rican children in need of these services have no 
entitlement to federal aid--rather they must compete with the poor, 
blind, aged and disabled for limited federal funding.
    NCLR supports two directions for responding to these deficiencies:

     Remove the Title IV-E program from Puerto Rico's welfare 
cap. In order for Puerto Rico to reach parity with other states and 
meet the existing needs in this area, the Title IV-E program should not 
be considered as part of the Island's overall ``welfare'' cap. Such a 
measure is a critical step in strengthening Puerto Rico's partnership 
with the Federal Government and shoring up its ability to provide 
appropriate levels of support and protection for these children.
     Assess and enhance funding levels for foster care, 
adoption, and abuse/maltreatment services for children in Puerto Rico 
based on existing needs. In addition to the funding disparities 
outlined above, the President's proposal would be largely inaccessible 
to the Commonwealth due to the Section 1108 cap. The question of how 
best to address the serious child welfare issues in Puerto Rico should 
not be determined by faulty formulas or proposals that do not apply to 
the Island, but instead by examining the serious deficiencies, 
backlogs, and inadequate services that prevent the current system from 
protecting the most vulnerable children in Puerto Rico.

                                 

    Statement of Manuel Mirabal, the National Puerto Rican Coalition

    On behalf of the National Puerto Rican Coalition (NPRC), a non-
profit organization representing the interests of the seven million 
Puerto Rican U.S. citizens on the mainland and the Island of Puerto 
Rico, I would like to express my appreciation to the Chairman and the 
Committee for their attention in addressing a pressing issue: meeting 
the needs of the nation's abused and neglected children.
    I am confident that the Committee will work to ensure that no child 
is left behind as you design this important legislation. However, I 
would like to focus my remarks on the island of Puerto Rico, where the 
Foster Care situation is very unique. While IV-E Foster Care and 
Adoption Assistance is an entitlement throughout the states, funding is 
severely limited in Puerto Rico due to a cap on Foster Care and two 
unrelated programs. TANF, Aid to Aged, Blind and Disabled (the program 
the Island has instead of SSI) and Foster Care and Adoption Assistance 
fall under one arbitrary cap. This cap is so restrictive that Puerto 
Rico has never received reimbursement for eligible administration, 
placement and training cost in IV-E, nor was it able to receive 
additional funding under the Adoption Incentive Bonus the Island earned 
in 2002. Similarly, Puerto Rico bears most of the costs of providing 
health care to children in Foster Care due to a federal funding cap on 
Medicaid. Due to these funding restrictions, the Island has had to face 
difficult challenges in meeting the needs of abused and neglected 
children. Fortunately, the government of Puerto Rico has made it a 
priority to care for these children by investing additional resources 
into the program.
    While I am encouraged by Puerto Rico's efforts, it is unrealistic 
to expect the Island to continue to bear this disproportionate 
financial responsibility in meeting the needs of these children. In 
Puerto Rico, the child poverty rate is 58 percent, with 630,000 poor 
children. In cases where parents are unable or unwilling to care for 
them, these children should not be left behind.
    The need for federal support is undeniable as many Puerto Rican 
children are subject to some type of mistreatment. For example, in 
2002, there were 30,000 complaints of abuse and neglect and 10,000 
children were in the Foster Care system. Yet, while states with 
populations similar in size to Puerto Rico are reimbursed from $40 to 
$50 million, the Island receives approximately $12 million per year. It 
is essential that resources are provided to ensure that children are 
not trapped in high risk environments.
    To remedy the federal funding inequity, NPRC recommends the 
following:

     Remove IV-E Foster Care from the Section 1108 cap. Due to 
the cap, Puerto Rico could not even receive the adoption incentive 
bonus earned last year without having to cut the IV-E Foster Care basic 
grant. Further, Puerto Rico only receives 0.26 percent of total federal 
IV-E dollars, yet 1.7 percent of the nation's foster children reside on 
the Island.
     Exempt Medicaid expenditures for IV-E foster children 
from the Medicaid Cap. The states receive federal support for Medicaid 
costs associated with providing health care to children in IV-E Foster 
Care. However, in Puerto Rico, the Federal Government only contributes 
approximately 15 percent of eligible Medicaid costs due to the funding 
cap.

    As the Committee moves toward crafting legislation to meet the 
needs of the nation's at-risk children, I hope you will use this 
opportunity to remedy the inequities the Island faces when providing 
for this population of children.

                                 

    Statement of Lynn Olund, Brimson, Minnesota, Paula Katzenmeyer, 
Hutchinson, Minnesota, Debbie Retterath, Adams, Minnesota, and Deborah 
                       Trotter, Aitkin, Minnesota

    This written testimony is in response to the Foster Care Flexible 
Funding Proposal that had a hearing on June 11, 2003. As an interested 
human service professional and citizen concerned for the well being of 
our nation's children, I would like to make a few short comments.

    1.  The professionalism of child welfare workers and consistency 
in child welfare practice are major concerns, judging from the 
statistics and testimony already provided to the committee.
    2.  Child welfare worker turnover contributes to both of these 
concerns. Turnover has been connected to a lack of support due to a 
shortage of proper training and excessive workloads. Administrative 
duties also compete for time spent with children in need.
    3.  Retention of seasoned workers through the provision of 
consistent training and support will contribute to the improved safety 
and the well being of the most vulnerable members of our society, our 
children. They depend on us now, as we will depend on them in the 
future. With ongoing training, policy will be interpreted correctly and 
practice will be followed accurately, helping to insure that all 
children will receive equal care and oversight, improving their chances 
for success, or even survival. Workers who are trained will have the 
confidence and competence to make the most efficient use of their time, 
reaching more children in need, and minimizing their own stress in 
achieving positive outcomes.
    4.  If the flexible funding proposal is followed, we will be 
moving away from the safeguards listed above, and moving toward the 
likelihood that child welfare workers will be frustrated in their 
efforts and make misjudgments that affect the safety of the children 
under their responsibility.

    I was a front line worker in county social services until I 
accepted my present position as a community trainer of social services 
agencies. The reason I was interested in taking my present position was 
my own experience of the frustration of good workers trying to follow 
policy and do the best work possible, while not always having 
sufficient training support to be sure what the best practices are. In 
my current position, our project team conducted a satisfaction survey 
of workers who have received support and training. The response was 
consistently positive regarding assisting workers with meeting their 
responsibilities. Having been both a worker and trainer, I know the 
value and necessity of training. I know how much more productively time 
is used when workers are clear as to their obligations and they know 
where to receive support from resources about difficult situations. 
Training partnerships are invaluable in solving some of the worst 
dilemmas we face in improving child welfare outcomes. These outcomes 
are so important since they represent real children who are counting on 
us.
    Thank you.

                                 

   Statement of Carol Emig, Pew Commission on Children in Foster Care

    The nonpartisan Pew Commission on Children in Foster Care was 
launched on May 7, 2003 under the leadership of former Congressmen Bill 
Frenzel and Bill Gray. This expert panel of experienced legislators, 
child welfare administrators and providers, judges, parents, and youth, 
is committed to improving outcomes for some of the nation's most 
vulnerable children by developing practical, bipartisan recommendations 
related to federal financing and court oversight of child welfare. It 
will report those recommendations in 2004.
    For the purposes of this hearing, this statement primarily 
addresses the Commission's work on federal financing. It is important 
to note, however, that court practices are also an integral part of our 
work.
    The Commission shares Congress' desire to protect children who have 
experienced abuse and neglect and provide them with the safe and 
permanent homes that all children deserve. While changes in financing 
won't solve every problem in child welfare, thoughtful change could 
enable every state and community to do a better job of supporting the 
healthy development of these very vulnerable children.
    The Pew Commission on Children in Foster Care is committed to 
developing--quickly--a set of practical, evidence-based 
recommendations. Our work has been greeted with interest and excitement 
across the policy and political spectrum. This enthusiasm reflects 
consensus in the policy and practice communities that the current 
financing structure does not effectively promote the Adoption and Safe 
Families Act's (AFSA's) goals of safety, permanence, and well-being for 
children, as well as widespread interest in the development of 
thoughtful, new recommendations for reform. The Commission will 
therefore carefully examine a broad array of financing options to 
develop recommendations that will promote good outcomes for children. 
In doing so, we intend to learn from information that is just now 
emerging from states and communities that have experimented with 
different financing structures, including those with federal waivers. 
States and communities clearly differ in their circumstances and 
approaches, and the Commission's recommendations will take these 
differences into account. We welcome input and suggestions and will be 
posting information for submitting ideas to the Commission on our web 
site shortly.
    Every member of the Pew Commission is committed to developing 
recommendations that have a strong likelihood of adoption. We share 
Congress' frustration over the current child welfare system and its 
urgency to do a better job for children and families. We also know that 
progress in this arena occurs only when there is strong bipartisan 
agreement. That is the experience of ASFA and the Promoting Safe and 
Stable Families Act. Our goal, therefore, is to develop practical, 
evidence-based recommendations that will earn broad, bipartisan support 
among policy makers and will improve outcomes for children.
About the Commission
    The Pew Commission on Children in Foster Care will focus its 
recommendations in two targeted areas:

     Improving existing federal financing mechanisms to 
facilitate faster movement of children from foster care into safe, 
permanent families and to reduce the need to place children in foster 
care.
     Improving court oversight of child welfare cases to 
facilitate better and more timely decisions affecting children's 
safety, permanence, and well-being.

    Timeline and Process. The Commission will report recommendations by 
summer 2004--sooner, if possible. The Commission held its first meeting 
in May 2003. It will meet again in September and November 2003, and as 
often as necessary in the first several months of 2004.
    In light of this short timeline, we will request that interested 
parties submit suggestions or ideas this summer for consideration by 
the Commission. Guidelines for these submissions will be posted on the 
Commission's website, www.pewfostercare.org.
    The Pew Commission on Children in Foster Care is committed to 
developing recommendations that will earn the support of Congress, 
federal agencies, states, courts, and communities. The Commission will 
therefore consult closely with representatives of the Administration, 
members of Congress, the Governors, state legislators, the major 
judicial associations, state and local child welfare directors, and 
major professional associations. These contacts are already underway.
    Funding for the Commission. The Commission is supported by a grant 
from The Pew Charitable Trusts to the Georgetown University Public 
Policy Institute.

                                 

      Statement of Prevent Child Abuse America, Chicago, Illinois

    Prevent Child Abuse (PCA) America appreciates this opportunity to 
submit testimony on the title IV-E funding proposal put forth by the 
Bush Administration in its FY 2004 budget plan. We hope this testimony 
will be of assistance to the Subcommittee as it considers improvements 
and reforms to the child welfare system over the coming weeks and 
months.
    PCA America is the leading organization working at the national, 
state and local levels to prevent the abuse and neglect of our nation's 
children. By valuing children, strengthening families and engaging 
communities, PCA America works with its chapters in 36 states and the 
District of Columbia to prevent child maltreatment before it occurs.
    As you are well aware, each year approximately three million 
children are reported to be abused and neglected; about one million of 
these reports are ultimately substantiated. We also know that abuse and 
neglect exacts an enormous toll on children. In addition to the 
physical and emotional harm inflicted, children who are maltreated 
suffer higher rates of school failure, feelings of worthlessness, 
aggressive behavior, detention, and incarceration. It is also known 
that child abuse and neglect causes a substantial drain on resources 
and services. In a landmark study released in 2001, PCA America 
discovered that today child abuse and neglect costs American taxpayers 
$258 million per day, or more than $94 billion per year. Put another 
way, the consequences of child abuse and neglect cost every American 
family more than $1,400 each year.
    Since the Administration has yet to release a detailed description 
of its title IV-E proposal, this testimony reflects our general 
thoughts on the objectives, rather than the specifics,of the flexible 
funding option.

Increased Flexibility
    As we understand the Administration's proposal, states will be able 
to choose between continuing to receive title IV-E foster care funds as 
an uncapped entitlement or opting into a five-year, fixed-sum block 
grant. The block grant option would give states greater discretion on 
the use of title IV-E funds, so that states would no longer be obliged 
to spend all of the dollars on out of home care. Instead, states could 
use title IV-E to fund up-front efforts to prevent child abuse and 
neglect from occurring in the first place.
    The move toward flexible funding addresses one of PCA America's 
primary concerns with the way child welfare is currently financed--that 
the overwhelming focus of the federal response to child maltreatment is 
on out of home care. As you know, there is a tremendous imbalance 
between what is invested to prevent abuse and neglect before it happens 
and what is spent on care and services after abuse or neglect has 
occurred. This is not to say that investments made in treating and 
intervening on behalf of abused and neglected children are too high or 
less vital to protecting children and families. On the contrary, the 
incidence and nature of child abuse and neglect, coupled with 
requirements put in place by the Adoption and Safe Families Act (ASFA) 
and other recent reforms, can well exceed the financial capacity to 
respond to, let alone prevent, child maltreatment.
    The block grant option would allow foster care funds to support a 
broader range of services to children and families, including front-end 
prevention services intended to reduce the number of children coming 
into the child welfare system in the first place--services, it should 
be noted, that have historically been under funded. As the leading 
national advocate for child abuse and neglect prevention, PCA America 
fully supports a more flexible use of federal funds that allows for a 
full continuum of services while emphasizing the value of prevention, 
if this approach provides sufficient funding to support the full 
continuum of services.
    Whether or not states participating in the block grant option will 
actually invest title IV-E funds in prevention services is quite 
another matter. Cash-strapped states, in particular, may not have the 
resources to do so over the long term. Because the Administration's 
proposal is budget neutral, additional federal investments are not 
anticipated under the plan. We are thus mindful of existing block 
grants, such as Temporary Assistance to Needy Families (TANF), Social 
Services Block Grant (SSBG), and Comprehensive Community Development 
Block Grant (CCDBG), which have not kept pace with inflation, resulting 
over time in a considerable erosion of their financial value to the 
states. If a similar block grant for title IV-E fails to keep pace with 
inflation, the Administration's proposed policy will predictably 
decrease the federal investment in title IV-E over time and thereby 
increase the financial exposure of the states.
    The prospect of a diminished federal commitment to child welfare is 
particularly troublesome given the current demands on state child 
welfare systems. Since passage of ASFA and implementation of Child and 
Family Services (CFS) reviews, states have also been asked to address 
child welfare shortfalls by making substantial and costly system 
improvements. No additional resources have been provided to carry out 
such improvements, although Representative Cardin has proposed state 
grants for this purpose in H.R. 1534. Since the child welfare system is 
generally under funded and the demands on state systems are increasing, 
it is doubtful that the Administration's title IV-E proposal makes 
sufficient provision for the necessary investments in child welfare 
intervention, system reform, and child maltreatment prevention.
    An additional issue addressed by the Administration's proposal is 
the application of outdated AFDC standards to the determination of 
title IV-E eligibility. Currently, title IV-E foster care funds cover 
maintenance payments for just over half of the children in out of home 
care. This is because eligibility for title IV-E is tied to AFDC 
standards which predate the 1997 welfare reform law. The elimination of 
the AFDC look-back requirement will increase the number of children 
determined eligible for title IV-E services. Still, without new federal 
investments and faced with increasing financial pressures, states may 
not have enough resources to support front-end services even if they 
are allowed by law to do so. That said, we applaud the Bush 
Administration as well as Representative Cardin for eliminating the 
AFDC look-back requirement in their respective proposals.
    Finally, the efficacy of child maltreatment prevention is 
demonstrated, but its economic value is realized only over the long-
run. So, it is unlikely that increased investment in child maltreatment 
prevention will result in immediate and commensurate cost savings in 
out of home care. Indeed, it is more likely that increased prevention 
and early intervention services will have a case-finding effect in the 
near-term, possibly enabling earlier and more effective intervention. 
Hence, the Administration's proposal neither ensures increased 
investment in funding for child maltreatment prevention services or 
sufficient time for states to realize the economic benefits of such 
investment were they to make them.

Capped Funding
    Our general concern with the Administration's proposal stems from 
the financial risk transferred to states electing to participate in the 
block grant option. While enjoying greater flexibility to use title IV-
E funds for a broader range of services including up-front prevention, 
these states would also relinquish the title IV-E entitlement status 
and assume greater financial risk should foster care caseloads increase 
in the future.
    At a general level, block grants afford states increased discretion 
in the use of federal funds, but also transfer primary financial risk 
from the Federal Government to the states. In a period of stable or 
decreased demand for child welfare services, a block grant option may 
allow states greater latitude to redirect funding, possibly in support 
of prevention services and other front-end investments. On the other 
hand, in a period of increased demand and/or escalating costs for child 
welfare services, the block grant option may expose participating 
states to considerable financial risk. Even stable caseloads may result 
in increased costs for states if the block grant is not structured to 
keep pace with inflation.

Conclusion
    Many important details of the Administration's proposal are not yet 
known. How will state block grant allocations be determined? Will all 
foster children continue to be Medicaid eligible? What criteria will 
have to be met before states can access the TANF contingency fund? We 
look forward to hearing more about proposed changes to title IV-E and 
working with our networks to consider the merits of the 
Administration's proposal.
    We appreciate the Subcommittee's consideration of child welfare 
improvements this session and its increased attention to the value of 
prevention.

                                 

  Statement of Dean Jesse J. Harris, University of Maryland School of 
                    Social Work, Baltimore, Maryland

    Thank you for this opportunity to submit written testimony 
regarding the Bush Administration's Foster Care Flexible Funding 
Proposal. The purpose of this letter is to urge Congress to closely 
examine the specifics of the Bush Administration proposal, and, and 
avoid the rush to ``do something'' without the type of scrutiny that is 
necessary to bring about true reform. I am writing from my perspective 
as Dean of the University of Maryland School of Social Work and a 
social work educator in one of the largest schools of social work in 
the nation. Our faculty members have national reputations as 
practitioners, researchers, and educators in child welfare practice and 
policy. In addition, our School has developed a highly successful 
partnership with the Maryland Department of Human Resources, with 
federal financial assistance through Title IV-E of the Social Security 
Act to educate the next generation of public child welfare 
professionals, who are the backbone of any child welfare system, and 
ultimately responsible for producing the outcomes of child welfare 
programs identified in the Adoption and Safe Families Act of 1997 
(ASFA).
    Although the Administration has not yet submitted specific 
statutory proposals, I have had the opportunity to review a number of 
the features of the Administration's proposals circulated in press 
releases. It is commendable that the Bush Administration seeks to 
streamline federal financing for foster care. The current system, based 
on foster children's eligibility for AFDC, is cumbersome and costly for 
the states and Federal Government to administer. A review of this 
method for calculating federal financial assistance to provide care and 
planning for a permanent, safe, and healthy family situation for abused 
children in state custody is long overdue. I am, however, deeply 
concerned that the cornerstone of the Federal Government's 
responsibility for abused, abandoned, and neglected children is being 
dismantled without an opportunity to thoroughly examine how its 
replacement will impact vulnerable children, their families, and state 
agencies responsible for providing services to this population.
    Analyses that have examined alternative funding proposals over the 
past 10 years, (Improving Child Welfare Agency Performance through 
Fiscal Reforms: An Assessment of Recent Proposals; Geen, The Urban 
Institute, 2003) have concluded that any fiscal reform must be 
understood from the perspective that the current system is chronically 
under funded: ``Experts agree that child welfare agencies are severely 
under funded given the ever expanding scope of their responsibilities'' 
(Courtney 1997, Myers, 1994, Primus 2000; Schorr 1997). Thus, reform 
proposals should not seek to drastically reduce federal expenditures 
needed to protect our nation's children and seek permanent homes for 
children in state custody.
    Flexibility of funding, while desirable, will not, in itself, 
address the complex needs of children in foster care. In fact, most 
states, including Maryland, already have funding flexibility for the 
majority of child welfare programs. This has not diminished the number 
of children entering care, due in part, from growing substance abuse 
problems among the child-bearing population, and the inadequacy of 
community based substance abuse and mental health treatment programs. 
Moreover, there is no evidence to suggest that federal child welfare 
financing strategies have any effect on decision making on the case 
level. Therefore, a proposal that encourages states to draw down future 
child welfare dollars on the promise that funding flexibility will 
decrease funding needs in the future, may be seriously flawed and may 
result in a fiscal crisis of unprecedented proportions for child 
welfare programs in the future.
    Of great concern to me is the unanswered question of how the 
current proposal would address child welfare workforce issues. The 
primary resource need for the child welfare system is its workforce. 
Yet, a recent GAO report (March, 2003), notes that child welfare 
agencies suffer from chronic high turnover and staff shortages. In this 
report, the GAO's analysis of HHS's state child welfare agency reviews 
in 27 states showed that large caseloads and worker turnover delay the 
timeliness of investigations of child maltreatment, limit the frequency 
and quality of worker visits, and hamper attainment of other key 
federal safety and permanency outcomes. The GAO concludes, ``A stable 
and highly skilled child welfare workforce is necessary to provide 
child welfare services that meet federal goals.'' The GAO recommended 
that HHS take action that helps child welfare agencies address 
recruitment and retention challenges through University Training 
Partnerships, accreditation of state & local child welfare agencies, 
and leadership and mentoring programs. Research has indicated that 
State-University Partnerships, such as our Title IV-E Education for 
Public Child Welfare Program, produce a highly trained, competent 
workforce prepared to carry out the missions of child safety, 
permanence, and well-being, outlined in ASFA. Any proposals to reform 
federal financing strategies should include set asides for this 
critical purpose.
    Historically, the Federal Government has provided leadership in 
setting standards for the provision of child welfare services, 
oversight, and accountability measures that have resulted in improved 
services to children and families across the nation. The nation's 
children and families continue to need this level of leadership from 
Washington.
    Thank you for your consideration.
                                 

                    Statement of Voice For Adoption

    Voice for Adoption (VFA), a nationwide, not-for-profit, membership 
organization dedicated to speaking out for our nation's waiting 
children, appreciates the opportunity to share our concerns with the 
Committee about the Bush Administration's foster care proposal. VFA 
believes that the child welfare system is in great need of real reform; 
however, we are waiting to take a position until a formal proposal is 
introduced as legislation.
    VFA appreciates that the Administration's proposal is optional and 
does not force states to enroll in a five-year capped alternative 
funding program. We believe that many states would choose to stay with 
their current entitlement system if the proposal were enacted.
    VFA is concerned that any attempt to cap a program that already has 
limited resources will be detrimental to the children and youth in the 
child welfare system.
    Since the proposal has not been introduced in Congress, VFA sees an 
opportunity to work with the Administration by offering suggestions for 
the proposal that we believe would most benefit children and families.

Suggestions

    Maintain current funding levels (with cost of living adjustments). 
In the past Congress has taken resources from block grants to fund 
other unrelated projects or reduced the funding levels of block grants. 
A good example of this is the Social Services Block Grant (SSBG), which 
is a vital source of federal funding for child welfare services. States 
have seen the funding levels for SSBG drop 31 percent, from $2.5 
billion in 1997 to $1.725 billion in 2001. VFA is concerned that any 
block grant or capped allotment for Title IV-E would experience a 
similar reduction, further limiting the ability of states to meet the 
needs of vulnerable children and families.
    Completely delink Title IV-E eligibility from AFDC guidelines. VFA 
applauds the fact that the Administration's proposal addresses the need 
to de-link Title IV-E foster care eligibility from 1996 Aid to Families 
with Dependent Children (AFDC) eligibility standards. However, we are 
concerned that the proposal would only de-link Title IV-E eligibility 
for foster care, not for adoption assistance, and only for states that 
opt into the new program. VFA urges the Committee to consider 
eliminating the same eligibility for adoption assistance. All families 
that adopt foster children meeting the state's definition of special 
needs should receive financial support and services. De-linking 
eligibility for foster care and not adoption assistance would create an 
administrative nightmare for states.
    In addition, having the funding formula for the five year allotment 
be based on estimates of Title IV-E eligible children using the current 
1996 AFDC requirements seemingly defeats the purpose of updating the 
eligibility standards, as states will have less money to provide 
services for a larger population of eligible children.
    Mandate specific funds for vital services. Giving states 
flexibility in how they spend their Title IV-E foster care funds should 
not mean that states don't invest in keeping families together and 
preventing children from entering into foster care. While states are 
likely to come up with creative uses for the flexible funding, it is 
still important to target resources to specific areas such as post-
adoption services, family recruitment, and other adoption activities.
    VFA agrees that Title IV-E is restrictive and inhibits state 
innovation. We urge Congress and the Administration to consider 
expanding Title IV-E to include funding post-adoption services to help 
families who adopt special needs children. Title IV-E money can be used 
for case management for children in foster care, but once children are 
adopted, there needs to be Title IV-E funds available for ongoing case 
management to provide post-adoption services to families who adopt 
children from foster care. Ongoing services to families and children 
before, during and after adoption papers are signed are critical in 
promoting the well-being of families and minimizing the possibility 
that adoptions will fail. Comprehensive counseling, support groups, 
case management and educational and advocacy services assist families 
who have adopted with strengthening and preserving the family.
    Create an independent, unmatched emergency fund. Under the 
Administration's proposal, states that experience an increase in foster 
care caseloads may access emergency TANF funds. The TANF emergency fund 
would be the source of relief for two separate programs. Additionally, 
there is a 50 percent match of state dollars to federal dollars. States 
are experiencing the worst financial crisis in decades. Some states 
will not attempt to access the emergency funds due to the matching 
requirement. The triggers to use the emergency funds would not 
necessarily reflect what is happening in a county or city where the 
bulk of the foster care population might be found.
    Offer a few opportunities to opt in and out of the program. Under 
the Administration's proposal, states would have only one chance to opt 
into the program. Once a state is in the program, it cannot opt out. 
More flexibility to opt in or out would make the program more 
attractive to states. VFA is also concerned that localities and 
counties would not have input if their states decide to take the 
flexible financing option.
    Keep the Adoption Incentive Program independent. VFA supports and 
applauds the Administration's efforts to reauthorize the Adoption 
Incentive Program at $43 million, and to target incentives to place 
older children in care. However, we also urge lawmakers not to attach 
the reauthorization of the program to the flexible funding proposal. 
The Adoption Incentive Program is considered one of the most innovative 
provisions in AFSA. It encourages states to find adoptive homes for 
waiting children who are legally free for adoption by granting a 
financial incentive for each foster child that the state places in 
adoption. During the past five years, states reinvested millions of 
dollar in adoption incentive payments in adoption programs, including 
post-adoption services, family recruitment, and adoption promotion and 
support.
    As Congress begins to review the Administration's Foster Care 
Financing proposal, we hope that the above suggestions will be 
considered. Also, it is important to remember that the bipartisan Pew 
Commission on Children in Foster Care was created recently, and will 
recommend reforms to the foster care financing system in 2004. VFA 
encourages Congress to also review the outcomes from Title IV-E waiver 
recipients. These waivers demonstrate a variety of what does and does 
not work. Using all available resources will aid lawmakers in their 
efforts to address the crisis in foster care.

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