[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
INCREASING STATE FLEXIBILITY IN USE OF FEDERAL CHILD PROTECTION FUNDS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HUMAN RESOURCES
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
JULY 20, 2000
__________
Serial 106-98
__________
Printed for the use of the Committee on Ways and Means
U.S. GOVERNMENT PRINTING OFFICE
68-872 DTP WASHINGTON : 2001 _______________________________________________________________________
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC
COMMITTEE ON WAYS AND MEANS
BILL ARCHER, Texas, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
BILL THOMAS, California FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York SANDER M. LEVIN, Michigan
WALLY HERGER, California BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana JIM McDERMOTT, Washington
DAVE CAMP, Michigan GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota JOHN LEWIS, Georgia
JIM NUSSLE, Iowa RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania KAREN L. THURMAN, Florida
WES WATKINS, Oklahoma LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
A.L. Singleton, Chief of Staff
Janice Mays, Minority Chief Counsel
______
Subcommittee on Human Resources
NANCY L. JOHNSON, Connecticut, Chairman
PHILIP S. ENGLISH, Pennsylvania BENJAMIN L. CARDIN, Maryland
WES WATKINS, Oklahoma FORTNEY PETE STARK, California
RON LEWIS, Kentucky ROBERT T. MATSUI, California
MARK FOLEY, Florida WILLIAM J. COYNE, Pennsylvania
SCOTT McINNIS, Colorado WILLIAM J. JEFFERSON, Louisiana
JIM McCRERY, Louisiana
DAVE CAMP, Michigan
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C O N T E N T S
__________
Page
Advisory of July 13, 2000, announcing the hearing................ 2
WITNESSES
U.S. General Accounting Office, Cynthia M. Fagnoni, Director,
Education, Workforce, and Income Security Issues, Health,
Education, and Human Services Division; accompanied by David
Bellis, Assistant Director, Education, Workforce, and Income
Security Issues, Health, Education, and Human Services
Division; and Karen Lyons, Evaluator, Education, Workforce, and
Income Security Issues, Health, Education, and Human Services
Division....................................................... 7
______
American Public Human Services Association, William Waldman...... 37
Children's Defense Fund, MaryLee Allen........................... 67
Geen, Robert, Urban Institute.................................... 76
Florida Department of Children and Families, Hon. Kathleen A.
Kearney........................................................ 57
Massachusetts Department of Social Services, Robert Wentworth.... 64
McCullough, Charlotte, Chevy Chase, Maryland..................... 48
SUBMISSION FOR THE RECORD
Marcus, Hope, Miami, FL, letter and attachments.................. 81
INCREASING STATE FLEXIBILITY IN USE OF FEDERAL CHILD PROTECTION FUNDS
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THURSDAY, JULY 20, 2000
House of Representatives,
Committee on Ways and Means,
Subcommittee on Human Resources,
Washington, D.C.
The Subcommittee met, pursuant to call, at 1:05 p.m., in
room B318 Rayburn Building, Hon. Nancy L. Johnson (Chairman of
the Subcommittee) presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON HUMAN RESOURCES
CONTACT: (202) 225-1025
FOR IMMEDIATE RELEASE
July 13, 2000
No. HR-23
Johnson Announces Hearing on Increasing State Flexibility in Use of
Federal Child Protection Funds
Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on
Human Resources of the Committee on Ways and Means, today announced
that the Subcommittee will hold a hearing on increasing the flexibility
States have in their use of Federal funds in the child protection
program. The hearing will take place on Thursday, July 20, 2000, in
room B-318 Rayburn House Office Building, beginning at 1:00 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. General Accounting
Office, State administrators of child protection programs, child
advocates, and researchers. However, any individual or organization not
scheduled for an oral appearance may submit a written statement for
consideration by the Committee and for inclusion in the printed record
of the hearing.
BACKGROUND:
In 1980, Congress 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. Many critics have observed that because the IV-B grant
program has grown very little since 1980 while the IV-E program has
grown rapidly, the emphasis in Federal funding may appear
unintentionally to be on maintaining children in out-of-home care and
not on providing services so that children can be either safely
returned to their families or adopted in timely fashion.
The Subcommittee is interested in increasing the amount of
flexibility States have in using their IV-E dollars. The goal is to
find ways to allow States to use the IV-E dollars for prevention and
treatment as well as out-of-home placement. The Subcommittee has
developed three options that would increase flexibility in State use of
Federal IV-E dollars. In the first approach, States would negotiate a
baseline of expected spending with the Secretary of the U.S. Department
of Health and Human Services. States would then receive the exact
amount of money specified in the baseline in quarterly payments and
would be free to spend the dollars on any child protection activity
including prevention, treatment, and out-of-home care. However, States
could return to the IV-E program of open-ended funding at the start of
any fiscal year. In the second approach, States would also negotiate a
baseline. In this case, however, States would identify a specific
intervention program expected to save money by reducing out-of-home
care or by other means. If the program does save money, the savings
could be transferred out of the IV-E program into the IV-B program
where States would have more flexibility in using the funds for
prevention and treatment. The third proposal would strengthen the
current waiver authority for child protection programs in the Social
Security Act, especially by allowing permanent waivers.
States have already shown their interest in flexible Federal
funding by taking advantage of Federal legislation enacted in 1993 that
provides them with the opportunity to obtain waivers from Federal child
protection law. Several States are now conducting waiver programs to
test whether they can use the greater flexibility permitted by waivers
to improve their child protection programs. Other States have simply
moved ahead on their own with new methods of financing child protection
services.
In announcing the hearing, Chairman Johnson stated: ``We simply
must find ways to allow States to make maximum use of Federal dollars
in their programs to protect children who have been abused or
neglected. The welfare reform bill shows what States can do when they
have flexibility in their use of Federal resources.
After working closely with States to develop these proposals, I am
confident that they would lead to great improvements by helping more
children grow up in safe and loving families.''
FOCUS OF THE HEARING:
The hearing will provide an opportunity for witnesses to give their
reactions to the funding flexibility proposals being considered by the
Subcommittee.
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noted above.
Chairman Johnson. There is a certain fundamental
irrationality about Federal policy around our child protective
and foster care programs.
Although I greatly admire the 1980 legislation that
generated the money we now give to states to operate programs
like that, the legislation is really seriously fundamentally
flawed. To simplify somewhat, think of the 1980 legislation as
establishing two programs. The first program is a capped and
appropriated program that provides money for prevention and
treatment services. This money was intended to solve the
problems before they exploded to prevent abuse and neglect. The
second program is an open-ended entitlement, actually a series
of open-ended entitlements that support a system of removing
children from their homes.
The service program is capped and appropriated and
therefore has hardly grown in two decades despite the valiant
effort of Tom Downey and many since Tom was chairman of this
Committee. By contrast, the maintenance programs were open-
ended and have grown by leaps and bounds. In nominal dollars
since 1980, the service program has grown only by $160 million.
In other words, the program has barely kept up with inflation
and on a per-child basis, has declined dramatically. By
contrast, the maintenance programs have grown by $4.5 billion.
So programs for prevention treatment grow by $160 million over
two decades while programs for removing children from their
home grow by $4.5 billion, 35 times as much as the prevention
and treatment programs.
We simply must find ways to correct this situation. I have
been trying to find a solution to this problem for more than a
decade, and I believe we are now at a point where at least we
can begin to move forward on a bipartisan basis.
I want to give the Secretary the authority to grant waivers
for funding flexibility to not more than ten states. Five of
these waiver programs would involve giving states complete
flexibility over the combined funds for prevention and
maintenance. These states would know the total amount of
Federal money they have available at the beginning of the year
and have complete flexibility in spending that money. A second
proposal would increase flexibility by allowing states to
transfer funds from the maintenance to the services program.
Second, continue all the entitlements and guarantees for
children found in current law. States that participate would
have the same level of responsibility for ensuring child safety
as they do under current law.
Third, carefully evaluate the programs so that we will know
what happens to the money and the children and the families.
Under my proposal, we will know even more about the children
and their outcomes than we do under current law. Moreover, if
the programs provide better services to families and better
outcomes, we will know that too.
Fourth, we'll guarantee that the states that embark on
these waiver experiments can return to the system of open-ended
entitlements at any time. To me, the most compelling argument
against flexibility has always been that without the open-ended
entitlement, a surge in foster care cases could leave states
stranded for funds. Our proposal would allow states to return
to the open-ended entitlement. And that should satisfy the very
reasonable concern that we must ensure Federal money for
removal in emergencies.
We have made great progress over the years in working
through this issue with program operators, state officials, and
others. I think it's fair to say that we would not be
introducing this proposal today if there weren't states that
are already doing this. Just like with welfare reform, it isn't
really the Federal Government that leads. It's the people close
to the problem that lead in developing the solution. And if the
states hadn't been so inventive in finding, frankly, more
humane realistic practical right-feeling solutions to helping
people on welfare, the Federal Government would never have
passed welfare reform. The states are really finding there are
much better ways to help families. And many of them have
waivers.
When I went and visited with the researchers at Yale, I was
really stunned and profoundly saddened to see that the brain
pictures of children who are removed from their homes are
identical to those of veterans suffering from traumatic brain
injury. And the more often, yes, the pictures are exactly the
same, the colors. And if you have gone through that level of
trauma two or three times by the time you are six, it's not
surprising you have trouble controlling your emotions as you
grow up.
So, I feel the matter before us in its broad outlines--in
its generic nature--is of extraordinary importance. And I think
the current system does not only an injustice to America's
children, but destroys the possibilities for families and
children to grow together. I feel very strongly about it. This
is a modest proposal. I hope those testifying will be as
straightforward as they can be. And I hope that you will all
begin to realize that if half the states have a waiver of one
kind or another, shouldn't we be making it much easier to move
money. There are so many examples now of money better managed
that to have states tethered to a system that rewards taking
children from their families and punishes preventing
outplacement is truly a tragedy.
So, I hope that out of this hearing we will make some
substantial progress in developing our thinking. And I hope
that the proposal before you is only a step. But if we don't
take a step this year, even if it doesn't get through the
senate, the issue will never survive the change in
administrations that is inevitable. So, I take this matter very
seriously though I recognize it is near the end of July of an
election year. Mr. Cardin.
Mr. Cardin. Thank you, Madam Chair. I didn't realize it was
the end of July of an election year. Thanks for pointing that
out.
First, let me thank you for conducting this hearing. I
think it's extremely important that we look at ways to provide
increased flexibility to our states in spending Federal child
welfare funds. So, I applaud this hearing. Like you, I believe
that we need to spend or invest more resources in many areas
than we are today. And I look forward to listening to the
witnesses and looking at your proposal. Let me say from the
beginning that I'm very concerned that we maintain a national
priority in this area. And I think that's the reasons why the
programs were created over time to establish a Federal priority
for protecting our children, our must vulnerable. We have an
entitlement to certain funds. And as we look at granting more
flexibility to our states, I want to make sure that we maintain
the Federal Government's priority and full partnership in
providing the type of assistance that's needed to protect the
children of our society. So, as we consider these proposals,
let me outline a few issues that I hope that we will look at.
First, we must ensure that the Federal entitlement to
services is maintained for those children currently eligible
for the IV-E foster care and adoption programs.
Second, we should be careful not to extend flexibility so
far to allow states to back off their own commitments in this
area and we actually find that there are less resources rather
than more being devoted toward prevention and other program to
help our children.
Third, I hope we could take advantage of some of the
savings the state child welfare system may make compared to a
projected baseline as proposed in the chairman's draft
legislation, that we must find a workable way for the states
and HHS to negotiate a predetermined baseline for child welfare
spending without completely inconsistent with estimates from
the CBO.
And fourth, we must develop a system that can illustrate
its positive impact on improving outcomes of at-risk children.
And fifth, and finally, we must acknowledge that the total
amount of resources provided for child welfare services is
inadequate to meet the growing demand particularly for
addressing the connection between substance abuse and child
abuse.
So, I think all these areas we need to make sure as we move
forward to modifying the system that we are mindful of these
very, very important goals. I look forward to hearing the
witnesses particularly as they relate to some of the specific
recommendations that are contained in the Chair's draft
legislation which would provide demonstration authority to the
Secretary of HHS and a limited number of states. I am very much
interested in hearing the views of the witnesses in that
regard. And I hope that we will all continue to work together
to make preventing child abuse and finding safe and stable
homes for children that have been abused to be our highest
priority. I can think of no more important responsibility of
this Committee than to address those needs. Thank you, Madam
Chair.
Chairman Johnson. Thank you very much, Mr. Cardin. Let me
call Ms. Fagnoni of the Division of Education, Workforce, and
Income Security Issues of the Health Education and Human
Services Division of the GAO. It's always a pleasure to have
you with us, Ms. Fagnoni.
STATEMENT OF CYNTHIA M. FAGNONI, DIRECTOR, EDUCATION,
WORKFORCE, AND INCOME SECURITY ISSUES, HEALTH, EDUCATION, AND
HUMAN SERVICES DIVISION, U.S. GENERAL ACCOUNTING OFFICE;
ACCOMPANIED BY DAVID BELLIS, ASSISTANT DIRECTOR, EDUCATION,
WORKFORCE, AND INCOME SECURITY ISSUES, HEALTH, EDUCATION, AND
HUMAN SERVICES DIVISION; AND KAREN LYONS, EVALUATOR, EDUCATION,
WORKFORCE, AND INCOME SECURITY ISSUES, HEALTH, EDUCATION, AND
HUMAN SERVICES DIVISION
Ms. Fagnoni. Thank you. Good afternoon, Chairman Johnson
and Members of the Subcommittee, Congressman Cardin. I am
pleased to be here today to discuss the progress made by a
number of states and localities as they incorporate principles
of managed care into their family preservation, foster care,
and adoption programs. About 3 years ago, many of them began
new managed care initiatives as a strategy to improve the
quality of care provided to children and families and to
control rising costs. Today I will discuss the financial and
service delivery changes states and localities have made, their
progress in measuring outcomes, and what is known about the
effect of these changes on children and families. This
information is based on our past and ongoing work.
Beginning with the financial and service delivery changes
occurring under managed care, certain elements distinguish
managed care from traditional child welfare. In place of a fee-
for-service reimbursement approach, a single provider receives
a prospective fixed fee also known as a capitated payment. The
service provider must then manage the client's care within the
fixed fee. Unlike the fee-for-service approach, under a
capitated payment there are incentives for service providers to
control costs by considering the most suitable arrays of
services for children and families while working more quickly
toward getting children into a permanent home.
The other element in managed care is that under this new
payment method, a single entity is responsible for identifying,
coordinating, and providing all appropriate services for
children and families under their care. This new service
delivery approach is designed to reduce the need for families
to navigate often--with little or no assistance--a maze of
community services as well as increase the likelihood that the
service needs of children and families match the services they
receive. In most of the 27 initiatives we studied, states and
localities have contracted with experienced, private, non-
profit community-based providers, many of whom have a long
history of providing child welfare services for states and
localities to serve as the managed care entity under a
capitated payment. In every initiative we studied, the state or
locality continues to hold the responsibility of investigating
reports of child maltreatment and recommending to the courts
whether a child needs to enter the child welfare system.
Turning now to the progress in measuring outcomes, states
and localities are taking steps toward establishing a more
performance based and results oriented system. They are
beginning to identify outcome measures in the areas of child
safety, a permanent home for the child, child and family well-
being, the stability of out-of-home placements, and client
satisfaction with services received. This strategy enables a
dual focus of ensuring desired results are achieved--such as
finding children a permanent home in a timely manner--and
unintended results are not overlooked--such as children needing
to reenter care because they were returned to an unsafe home.
For 11 of the 27 initiatives we reviewed, states and
localities are using their outcome measures to establish
performance standards for service providers. Some states and
localities are looking to further hold providers accountable
for their performance and results by using outcome measures to
link performance to financial incentives.
However, not all of the initiatives have the most
appropriate data systems in place to enable state and local
agencies to develop outcome measures and assess whether desired
results are being achieved. In many instances, private service
providers and public agencies are working with multiple,
incompatible, or manual systems which may yield information on
child and family outcomes, but are inefficient. In addition,
among the 12 initiatives we contacted about this issue, none of
the states or local agencies are using federally supported
statewide data systems to implement, monitor, or manage their
child welfare managed care initiatives.
What do we know about the effects of these changes on
children and their families? Some of the 27 initiatives have
resulted in improved child and family outcomes in one or more
areas of child safety, permanency, and well-being. Well, let's
provide some examples.
About half the initiatives resulted in improvements in the
number or percentage of children for whom a permanent home was
found. And in some instances, they did so more quickly. A third
of the initiatives reported that children and families improved
their well-being in such areas as the family's relationship
with one another and children's school performance. In
particular, initiatives that target the hard to serve and most
costly children, those in need of placement in residential
treatment centers, had a positive outcome when children
successfully transitioned to less restrictive, less costly
place settings.
While the potential to control costs attracted state and
local welfare agencies to managed care, their primary objective
was not necessarily to reduce spending. Instead, some officials
expressed a desire to reduce certain types of costs--such as
the living expenses for out-of-home placements--or to use
existing funds more efficiently and reinvest any savings into
in-home or after-care services. For some initiatives, officials
reported that overall spending has actually increased due to
additional administrative costs associated with private
entities assuming responsibility for managing clients' care and
the state or locality overseeing contracts.
Whether any results from these initiatives can be
attributed to the new service delivery and financing strategies
is still largely unknown. To date, few rigorous evaluations of
the 27 initiatives have occurred. Those comparison studies that
have been completed had serious design and data comparability
problems and were inconclusive in their findings. While the
initiatives included in our study have had limited evaluation,
planned evaluations under the Federal title IV-E waiver
demonstration program will yield additional information about
the effectiveness of child welfare managed care arrangements.
According to HHS, evaluations for the 12 waiver states that are
testing managed care principles for child welfare services
should be completed within the next 5 years.
This concludes my oral statement. I'd be happy to answer
any questions you may have. And I have with me Mr. David Bellis
and Ms. Karen Lyons who are experts in this area. Thank you.
[The prepared statement follows:]
Statement of Cynthia M. Fagnoni, Director, Education, Workforce, and
Income Security Issues, Health, Education, and Human Services Division,
U.S. General Accounting Office
Madam Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss the progress made
by states and localities as they develop new financing,
service-delivery, and accountability strategies for their child
welfare programs. In the mid-1980s, child welfare agencies
faced a poorly integrated patchwork of services for children
and families accompanied by escalating costs. As we reported to
this Subcommittee in October 1998, a number of states have
incorporated or are considering incorporating some of the
principles of managed care into their family preservation,
foster care, and adoption programs.\1\ Under a managed care
approach, states and localities prospectively pay fixed,
capitated amounts to providers to coordinate and meet all the
service needs of referred children and families. The officials
responsible for these new managed care initiatives saw this
approach as a strategy both to improve the quality of care
children and families in the child welfare system received and
to control the rising costs of delivering services while
holding all the partners in the system accountable.
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\1\ Child Welfare: Early Experiences Implementing a Managed Care
Approach (GAO/HEHS-99-8, Oct. 21, 1998.)
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Now that many of these initiatives have been in operation
for 3 or more years, you asked us to report on their progress.
As you requested, I will focus my remarks on (1) the financial
and service-delivery changes states and localities have made in
their managed care initiatives, (2) how they are measuring the
initiatives' outcomes, and (3) what is known about the effect
of these changes on children and families. My testimony is
based on our past and ongoing work on 27 state and local
initiatives that have been in operation since January 1998 or
earlier.
In summary, states and localities that are implementing
child welfare managed care initiatives are moving away from a
traditional fee-for-service reimbursement approach to one that
funds a single provider in advance under a capitated payment.
This allows the single provider--now assuming greater
responsibility for case planning and providing needed
services--the flexibility to package and manage an array of
child and family services. Under these new arrangements, states
and localities are taking steps toward becoming more
performance-based and results-oriented as they implement child
welfare managed care initiatives. We found that the state and
local agencies operating these initiatives are beginning to
identify measures associated with five child and family outcome
categories--child safety, a permanent home for the child, child
and family well-being, the stability of out-of-home placements,
and clients' satisfaction with the services they received. In
addition, these agencies are using such strategies as setting
performance standards and incorporating financial incentives in
contracts with service providers to hold them accountable for
their performance and ensure that desired results are achieved.
However, we found that many of the state and local agencies
operating these initiatives do not have appropriate data
systems in place to store, analyze, and retrieve information on
client outcomes. Most state and local officials we talked with
who were responsible for the initiatives are encouraged by the
changes occurring in child and family outcomes. While
controlling costs was seen as a potential benefit of managed
care, an equally if not more important goal was improved
services for children and families. In fact, in some cases,
overall spending has increased. Whether any outcome changes
associated with these initiatives can be attributed to the new
strategies is still largely unknown because they have not been
rigorously evaluated. Planned evaluations under the federal
waiver demonstration program will--in the future--yield
additional information about the effectiveness of child welfare
managed care arrangements.
Background
The Administration for Children and Families within the
Department of Health and Human Services (HHS) administers the
federal child welfare programs. Federal involvement includes
monitoring states' compliance with federal statutes and
regulations, providing technical assistance to states, and
supporting research and evaluation efforts. In 1994, the
Congress gave HHS the authority to establish up to 10 child
welfare demonstrations that waive certain restrictions in title
IV-E--the federal foster care program--and allow broader use of
federal foster care funds. The Adoption and Safe Families Act
of 1997 (P.L. 105-89) expanded HHS' authority to approve up to
10 states' waiver demonstrations in each of the 5 fiscal years
1998 through 2002. The purpose for granting waivers is to test
a variety of innovations, including but not limited to managed
care. Of the 21 states that have federally approved waivers, 12
states have waivers to test managed care or capitated payment
systems.\2\
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\2\ None of the 27 initiatives included in this study were
implemented with a title IV-E waiver.
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In our 1998 report, we concluded that initiatives in which
principles of managed care were being implemented were still in
the early stages of program development and, as a result, were
largely untested. We found that, for these initiatives to
mature and meet officials' program expectations, state and
local agencies needed to resolve three important issues. The
first was to address cash flow problems in a new environment of
funding services prospectively under a capitated payment system
while seeking reimbursement for the federal share of costs only
after services are delivered. In addition, state and local
agencies stood a better chance of reducing or eliminating the
service access problems often associated with different
eligibility requirements in categorical funding streams if
there was funding flexibility. The second issue facing state
and local agencies was to continue to improve their capacity to
collect, analyze, and report client and service data. Such data
are paramount for state and local agencies to set reasonable
and appropriate payment rates and performance standards, make
additional programmatic changes or give service providers
feedback, and improve policies and procedures for serving
children and families. The third issue requiring resolution was
that state and local agencies needed to continue to develop and
refine strategies to hold both themselves and their private
partners accountable for achieving desired outcomes. Moreover,
these agencies needed to develop the capacity to continuously
measure and report their progress toward meeting performance
goals. Outcome measurement and performance management were new
areas of focus for the child welfare system.
States and Localities Implement New Financing and Service-Delivery
Strategies
During the mid-to late-1990s, in an effort to reduce
inefficiencies and improve the quality of care, states and
localities began to implement new financing and service-
delivery arrangements into their child welfare systems. By
1999, according to the Child Welfare League of America, 29
states had one or more initiatives to change management,
financing, or service-delivery practices by adopting some
principles of managed care.\3\
---------------------------------------------------------------------------
\3\ Charlotte McCullough and Barbara Schmitt, Managed Care and
Privatization Child Welfare Tracking Project, 1998 State and County
Survey Results (Washington, D.C.: Child Welfare League of America,
1999).
---------------------------------------------------------------------------
Managed care arrangements in child welfare have two primary
elements. The first is a financing system whereby the state or
locality makes prospective, fixed or capitated payments to one
or more service providers rather than traditional fee-for-
service reimbursement payments. The second element is that,
under this new payment method, a single entity is responsible
for ensuring that children and families receive appropriate and
quality services.
Capitated Payments Provide Flexibility
Some states and localities are developing new payment
systems in which there are incentives to both seek the most
appropriate placement for children and have the flexibility to
provide the most appropriate array of services. In their
managed care initiatives, states and localities--often for the
first time--are making prospective, capitated payments to
providers to serve a defined group of children and families. A
capitated payment is a fixed fee that a provider receives
either for each eligible client--that is, a single rate for
each referred child or family--or for members of a pool of
potential service users--such as a single rate to serve all
eligible children and families in one county. The service
provider must then manage clients' care within the fixed fee.
This approach is a departure from the traditional fee-for-
service system states and localities have used to pay service
providers. Under a fee-for-service arrangement, providers are
reimbursed for the number and types of services delivered. Such
a payment approach offers few incentives for service providers
to control costs by considering the most suitable arrays of
services for children and families or more quickly returning
children to their biological parent or seeking other permanent
placements such as adoption.
To further increase service flexibility, some states and
localities are funding capitated payment arrangements by
pooling individual state funding streams that support different
services that children and families in the child welfare system
need. Because of restrictions on eligibility and prohibitions
on certain uses of funds, public and private child welfare
caseworkers often encounter problems accessing needed services
for clients. By pooling or blending funds from various sources,
these states and localities seek to reduce service access
problems sometimes associated with categorical programs and
increase flexibility in the use of funds. In Colorado, for
example, the state blended funds from several child welfare and
child care budget line items and allocated a fixed level of
funding--equivalent to a block grant--to its counties. Block-
granting state dollars in this way loosened the restrictions on
the use of these typically categorical funds and increased
counties' flexibility. Boulder County further pooled its child
welfare block grant with funding from the mental health agency
and youth corrections agency to finance its Integrated Managed
Partnership for Adolescent Community Treatment (IMPACT)
initiative, serving adolescents at imminent risk of placement
in group or residential care.
Service-Delivery Changes Are Designed to Improve Access to Care
States and localities are trying to improve access to
services for children and families by charging a single entity
with the responsibility of identifying and providing all
appropriate services. This approach is designed to reduce the
need for families to navigate--often with little or no
assistance--a maze of community services, as well as increase
the likelihood that the service needs of children and families
match the services they receive. In most of the 27 initiatives
we studied, states and localities have contracted with
experienced private nonprofit, community-based providers--many
of whom have a long history of providing child welfare services
for states and localities. These services often included
temporary housing for foster children, mental health services,
services to improve parenting skills, and some case management
services such as developing treatment plans. As the managed
care entity operating under a capitated payment, these
providers take lead responsibility for coordinating specified
child welfare services for a defined population of children and
families. As the single point of entry to the service system,
the managed care entity usually must provide, create, or
purchase a wide range of services to meet the needs of children
and families. If not providing services itself, this primary
contractor may develop and subcontract with a network of
service providers to make available all the services referred
clients need.
States and localities have also shifted more case
management responsibilities--much of which public agency
workers had performed--to private contractors as part of their
new role as care coordinators. In an effort to better match
services with client needs, the primary contractor in many of
the 27 initiatives included in our study uses a team approach
to managing its caseload of children and families. This
approach is designed to avoid the duplication, time delays, and
fragmentation that often result under traditional case
management, when different service systems and the many
providers involved in a child's care are not part of the
treatment planning and decision-making process. In some
initiatives, the treatment team consists of those individuals
who are regularly in direct contact with the child, including
the case manager, therapist, parents or guardians, school
officials, and other service providers. In other initiatives,
case management teams include representatives from multiple
agencies, such as child welfare, mental health, and juvenile
justice agencies.
In most of the 27 initiatives, states and localities have
contracted both the management and the coordination of care for
children who have been or are at risk of being abused and
neglected. However, not all aspects of the child welfare system
have been contracted to private entities. States and localities
have retained certain functions that officials believe are
critical to meeting their legal responsibility for the safety
and well-being of children in the child welfare system. In
every initiative, the state or locality continues to conduct
all child protection functions related to investigating reports
of child maltreatment and recommending to the courts whether a
child needs to enter the child welfare system for protective or
any other services. A child enters the managed care system on
the basis of a referral from the state or locality to the
managed care entity. In some initiatives, the state or locality
also maintains its presence by retaining the authority to
approve contractors' decisions related to reducing a child's
level of care, such as moving a child from residential care to
family foster care.
States and Localities are Taking Steps Toward a More Performance-Based
and Results-Oriented Approach
For child welfare managed care initiatives to effectively
monitor the progress of children and families and hold service
providers accountable, states and localities recognize that
data on services and outcomes are needed. We found that states
and localities are taking steps toward establishing a more
performance-based and results-oriented system. Experts have
identified critical steps to developing such a system,
including identifying the outcomes to be achieved and their
measures, establishing accountability for performance and
results, and developing a data system to manage information on
outcomes.\4\ We found that states and localities are
identifying child and family outcome measures in the areas of
child safety, a permanent home for the child, child and family
well-being, the stability of out-of-home placements, and
clients' satisfaction with the services that they received.
Many agencies operating these initiatives are holding managed
care contractors accountable for desired results by using
outcome measures to establish performance standards and link
performance to financial incentives. However, not all of the
initiatives have the most appropriate data systems in place to
enable state and local agencies to develop outcome measures and
monitor and assess whether desired results are being achieved.
---------------------------------------------------------------------------
\4\ National Partnership for Reinventing Government, Balancing
Measures: Best Practices in Performance Management (Aug. 1999); Casey
Outcomes and Decision-Making Project, Assessing Outcomes in Child
Welfare Services: Principles, Concepts, and a Framework of Core Outcome
Indicators (Englewood, Colo.: 1998).
Agencies Are Beginning to Identify Various Child and Family
---------------------------------------------------------------------------
Outcome Measures
State and local agencies responsible for the managed care
initiatives have identified a variety of child and family
outcomes to monitor--and the associated measures for those
outcomes--that traditionally reflect the child welfare system's
priorities. These outcomes include measures of child safety,
permanency, and well-being--that is, children remain safe from
harm, achieve a permanent home in which to grow up, and are
physically and emotionally healthy. Other types of outcomes for
which measures have also been identified include the stability
of out-of-home placements--sometimes measured by the number of
times children are moved from one foster care placement to
another--and client satisfaction--sometimes defined as the
extent to which children or families express positive or
negative feelings about the services provided by public or
private agency workers. Most agencies have established a range
of measures that cover some, if not all, of the five outcome
categories. (Examples of the child welfare outcome measures for
each of the five outcome categories are illustrated in table
1.) This strategy enables a dual focus of ensuring desired
results are achieved--such as finding children a permanent home
in a timely manner--and unintended results are not overlooked--
such as children needing to reenter care because they were
inappropriately discharged. Under a permanency outcome for its
foster care initiative, for example, Kansas seeks to reunite
children with their families in a timely manner and measures
the percentage of children who return home within 6 months. To
ensure that contractors responsible for managing the initiative
provide quality services and do not return children to an
unsafe home, the state also--under a safety and a permanency
outcome--measures the recurrence of abuse and reentry into
foster care within 12 months of reunification.
Table 1: Examples of Child and Family Outcome Measures
----------------------------------------------------------------------------------------------------------------
Category Outcome Measure
----------------------------------------------------------------------------------------------------------------
Safety Children are safe from maltreatment Confirmed reports of abuse and neglect in the
general population
Recurrence of abuse or neglect while children
are receiving in-home services
Reports of abuse or neglect while the
children are in out-of-home care
Recurrence of physical abuse, sexual abuse,
or neglect after children have left care
Permanency Children are placed in a permanent home in a Children who are returned to their parents or
timely manner relatives within a specified time
Finalized adoptions
Children who achieve permanency within a
specified time
Average length of stay in out-of-home care
Children who are maintained in their home and
do not enter out-of-home care
Children maintain the permanent placement Children who reenter care within a specified
time
Well-being Children function adequately in their families Children's emotional and behavior crises that
and communities result in hospital use or police calls
Children's behaviors related to sexual
misconduct, running away, and suicide
Children's scores on standardized tests of
childhood functioning
Children's movement to less restrictive
placement settings
Youths discharged from care who have
completed high school, have obtained a
general equivalency diploma, or are
participating in an educational or job
training program
Families function adequately in their Families' adaptation to caregiving
communities
Stability Children experience a minimum number of Number of placements while in out-of-home
placements care
Children maintain contact with their family Children placed with at least one sibling
and community Children placed within their home or
contiguous county
Children placed out-of-state
Satisfaction Clients are satisfied with services Youths who reported satisfaction with
services, as measured by the Client
Satisfaction Survey
Children who reported satisfaction with their
foster care placement, based on an exit
interview
Families who reported that the initiative
provided them a valuable service
----------------------------------------------------------------------------------------------------------------
Source: GAO analysis of interview data.
We also found that states and localities are measuring
different outcomes, depending on the population served by the
initiative and the states' or localities' goals. For example,
El Paso County's initiative in Colorado encompasses all
children and services in the county's child welfare system; as
a result, the county established a broad safety outcome and is
measuring child abuse and neglect rates among the general
population. In contrast, Massachusetts targets older children
in residential care for its Commonworks initiative in which the
lead contractors only serve children, while the state serves
the family and decides when a child can return home. Instead of
monitoring the recurrence of maltreatment, the state measures
outcomes related to children's movement to less restrictive
settings and reentry into residential care. One of Illinois'
goals for its performance contracting initiative is to find
foster children a permanent home in a timely manner while
minimizing multiple out-of-home placements. To monitor progress
toward this goal, the state established several outcome
measures, including average length of stay and the number of
placements in different foster homes while children are in out-
of-home care.
Agencies Are Attempting to Hold Service Providers Accountable
States and localities responsible for these child welfare
initiatives are using their outcome measures to establish
performance standards for both public and private service
providers. By doing so, they are trying to hold all the parties
in the initiative accountable for results. States and
localities have established performance standards for 11 of the
27 initiatives we reviewed. Most performance standards are
expressed as a specified level of outcome to be attained. For
its Multi-Agency Team for Children (MATCH) initiative for
seriously emotionally disturbed children, for example, Georgia
has included standards that 40 percent of the children will
improve their functioning and be discharged to a less
restrictive placement setting, and that a 20-percent decrease
will occur in the frequency with which children harm others.
As states and localities gain more experience with managed
care, officials expect to adjust existing standards or
introduce new ones. For example, in Kansas' foster care
initiative, state officials realized that their first-year
performance expectations for the lead contractors were in all
likelihood unrealistic because the standards were not based on
past program performance. As a result, Kansas officials
expected to and did adjust performance standards annually as
more current information was collected. In contrast,
Massachusetts took a more incremental approach for its
Commonworks initiative. The state did not introduce performance
standards in the lead agencies' contracts until the third year
of operation, after sufficient information had been collected
to establish a baseline from which to set standards.
Another strategy to hold managed care providers accountable
for their performance and achieving desired results is to link
financial rewards and penalties to outcomes. In some
initiatives, the state or local agency offers bonuses as a
financial incentive for the managed care entity to meet
performance standards and penalties for poor performance. In
the TrueCare partnership initiative in Hamilton County, Ohio,
for example, the managed care contractor can earn bonuses when
it meets individual performance indicators related to (1) child
and family outcomes, such as ensuring children's safety and
reducing the risk of harm, and (2) management services,
including maintaining a competent provider network and
maximizing revenues. Similarly, the contractor can incur
financial penalties when it fails to meet the performance
indicators. Massachusetts offers bonuses to the lead
contractors for achieving interim or successful outcomes. In
Massachusetts' Commonworks initiative, a lead contractor can
earn bonuses at three different intervals--when a child
transitions to a less costly level of care, when a child leaves
placement, and when a child does not re-enter the lead
contractor's care within 6 months of discharge. In addition, in
the Massachusetts initiative as well as others, poor performers
risk not having their contracts renewed. However, even
satisfactory performers may lose their contracts because of
other factors. For Illinois' performance contracting
initiative, foster care providers that met performance
standards but were not the top performers lost their contracts
when the successful outcome of a declining child welfare
population resulted in a need for fewer providers.
Data Systems Are Needed to Manage Information on Outcomes
Data systems are the linchpin between a state or locality's
efforts to identify and measure outcomes and fully implement a
performance-based, results-oriented system. As states and
localities move from a process-monitoring environment to a
performance-based approach, information on client and service
outcomes is needed to develop outcome measures and to monitor
and assess whether desired results are being achieved. Nearly
all the state and local officials we contacted reported that
developing data systems to implement, manage, and monitor their
initiatives continues to be a challenge.
Although agencies are taking steps to identify and measure
outcomes, many have done so without appropriate information
systems in place. In many instances, private service providers
and states and localities are working with multiple,
incompatible, or manual systems. While these systems may yield
information on child and family outcomes, they are inefficient.
For example, the lead contractor for the managed care
initiative in Sarasota County, Florida, uses three separate,
unintegrated data systems to track client and service data, and
must enter duplicate information into each system and
physically locate the three computer terminals side-by-side to
ensure consistent data. For some initiatives in other states,
agency staff manually collected outcome data because
information systems had yet to be developed.
In several locations, data systems were developed
specifically for the child welfare managed care initiative. In
both Massachusetts' Commonworks and the Hamilton County, Ohio,
TrueCare Partnership initiatives, the state or local agency
required one of its managed care contractors to develop a data
system specifically for the managed care initiative at the same
time that new financial and service-delivery arrangements were
implemented. These systems were not integrated with the state
or local agencies' child welfare information systems at the
time of our study, but may be in the future.
States and localities have not used federally supported
statewide data systems to implement, monitor, or manage their
child welfare managed care initiatives.\5\ Among the 12
initiatives we contacted about this issue, none of the state or
local agencies are using their state's Statewide Automated
Child Welfare Information Systems (SACWIS) to manage
information on their initiatives' clients, services, or
outcomes. Whether the state's SACWIS was operational or still
under development, officials for some initiatives told us they
hoped to either link their initiatives' data system to SACWIS
or incorporate SACWIS into their initiative in the future.
---------------------------------------------------------------------------
\5\ The Congress had authorized enhanced funding to states under
the Omnibus Budget Reconciliation Act of 1993 for the development and
implementation of Statewide Automated Child Welfare Information Systems
(SACWIS) amid concerns about the lack of information on children in the
child welfare system and their families. As of May 2000, HHS reported
that 27 states' systems were fully or partially operational--including
some of the states with ongoing child welfare managed care initiatives;
the remaining 23 states were not yet operational, and 1 state had
elected not to pursue a statewide SACWIS.
---------------------------------------------------------------------------
Effectiveness of Managed Care Initiatives is Largely Unknown
Most of the states and localities involved in the 27
initiatives are encouraged by the results of the new financial
and service-delivery changes. In particular, available data
show that some of the ongoing managed care initiatives are
associated with improved child and family outcomes in one or
more areas of child safety, permanency, and well-being. In some
initiatives, children are spending less time away from their
biological parent or another permanent family than was the case
before. While controlling costs was seen as a potential benefit
of managed care, an equally if not more important goal was
improved services for children and families. In fact, in some
cases, overall spending has increased. Although reported
results generally appear positive, few rigorous evaluations
have been completed to determine whether the managed care
arrangements are more effective or efficient than traditional
financial and service-delivery methods. Future, planned
evaluations under the federal title IV-E waiver demonstration
program are expected to yield additional information about the
effectiveness of child welfare managed care arrangements.
Officials Report Improved Child and Family Outcomes
For at least half of the managed care initiatives we
reviewed, state and local child welfare officials said that
they believed the initiatives resulted in children spending
less time in out-of-home care and away from their biological or
other permanent family, improvements in children's well-being,
and less maltreatment recurring. For most of the 27
initiatives, available data reflected results encompassing
outcome measures in three areas--permanency, child well-being,
and child safety. About half the initiatives resulted in
improvements in the number or percentage of children for whom a
permanent home was found and, in some instances, they did so
more quickly. In Florida, for example, the state reported that
adolescents spent 66 percent less time in out-of-home care in
District 4's managed care initiative when compared with another
location where children were served by the traditional state
service system. A third of the initiatives reported that
children and families improved their well-being in such areas
as their involvement in the community, the family's
relationships with one another, parenting skills, and
children's school performance. For example, Tompkins County in
New York reported in 1997 that its youth advocate program
resulted in all families improving parenting skills, all the
youths improving their ability to control violent and impulsive
behaviors, and 55 percent of the youths improving their school
performance. Lastly, Colorado reported in 1999 a decrease in
the incidence of abuse and neglect ranging from 18 to 23
percent compared with the previous year in the four counties
with ongoing initiatives. (See appendix for a summary of the
reported outcomes for the 27 initiatives.)
State and local agencies used their outcome measures to
track their initiatives' progress in several ways. For some
initiatives, outcomes were reported as change that occurred
during the initiative. The Colorado example on the reduced
incidence of abuse and neglect used the previous year as a
comparison. For other initiatives, agencies reported outcomes
without any indication of change--sometimes because comparisons
had not been made. Initiatives that targeted the hard to serve
and most costly children--those in need of placement in
residential treatment centers--were considered to have had a
positive outcome when children successfully transitioned to
less restrictive, less costly placement settings. For Georgia's
MATCH initiative, for example, officials reported that 41
percent of the program participants improved functioning and
were discharged from a more restrictive residential setting to
a less restrictive placement, such as a group home, treatment
foster home, or their own home.
While the potential to control costs attracted state and
local child welfare agencies to managed care, their primary
objective was not necessarily to reduce spending. Instead, some
officials expressed a desire to reduce certain types of costs--
such as the living expenses for out-of-home placements--or to
use existing funds more efficiently and reinvest any savings
into services. For some initiatives, officials reported that
overall spending has actually increased as a result of
additional administrative costs associated with private
entities assuming responsibility for managing clients' care and
the state or locality overseeing contracts. For example,
Massachusetts reported that its Commonworks initiative is
costing more, overall, despite realizing savings in some
specific areas. Out-of-home placement costs averaged 3 percent
less than the lead contractors' capitated payment rate.
Although spending for in-home or aftercare services increased
80 percent as more children moved from residential treatment to
less restrictive settings, the net effect was a cost reduction
in spending for out-of-home and in-home services combined. Both
the state and its lead contractors have reinvested the service-
cost savings into program development. However, the state has
incurred additional costs for an administrative services
organization (ASO) to provide management services, lead
contractors to manage their respective service-provider
networks, and the state's oversight and management of the ASO
and six lead contracts.
Lack of Rigorous Evaluation Leaves Initiatives' Effects Unknown
Although state and local child welfare agencies are
tracking progress on most initiatives' identified outcomes--
some by independent researchers--and reporting positive
results, more rigorous studies are needed to determine whether
the results can be attributed to the initiatives' new service-
delivery and financial strategies. To date, few rigorous
evaluations of the 27 initiatives we studied have occurred. Two
evaluations, both completed in 1999, respectively included
three local initiatives in Florida and a county initiative in
California, and they attempted to compare program outcomes with
a comparison group of children who were not participating in
the initiative. However, both studies had serious design and
data comparability problems and were inconclusive in their
findings. A Colorado evaluation, which includes four of the
county initiatives in our study, has established comparison
groups for evaluation purposes. However, the study is ongoing
and results have not been released.
While the 27 initiatives included in our study have had
limited evaluation, planned evaluations under the federal title
IV-E waiver demonstration program will yield additional
information about the effectiveness of child welfare managed
care arrangements. By law, states receiving this waiver must
have an independent evaluation of the initiative that, at a
minimum, compares and assesses child and family outcomes,
methods of service delivery, and fiscal consequences. According
to HHS officials, evaluations for the 12 waiver states that are
testing managed care principles for child welfare services
should be completed within the next 5 years. To date, one
ongoing evaluation--of Ohio's demonstration of child welfare
managed care in several counties--has compiled baseline
information on child and family outcomes. Evaluation results
are not yet available from any of the waiver states.
Madam Chairman, this concludes my prepared statement. I
will be happy to respond to any questions that you or other
Members of the Subcommittee may have.
GAO Contact and Acknowledgments
For further contacts regarding this testimony, please call
Cynthia M. Fagnoni at (202) 512-7215. Individuals making key
contributions to this testimony included David D. Bellis, Karen
E. Lyons, Ann T. Walker, and Rodina S. Tungol.
APPENDIX
CHILD WELFARE MANAGED CARE INITIATIVES' OUTCOMES TO DATE
Table 3 includes the 27 managed care initiatives about
which we collected information regarding documented child and
family outcomes, as of April 2000. In particular, we list
quantitative results in the outcome areas of child safety,
permanent homes, child and family well-being, out-of-home
placement stability, and clients' satisfaction with the
services that they received. Preinitiative baseline data were
generally not available. We indicate changes and describe cost
savings where data were available. In some cases, results were
not reported for individual initiatives but were aggregated
across multiple initiatives in a single state. Unless otherwise
noted, the combined outcomes are shown for (1) the three
district initiatives in Florida and (2) Champaign and Madison
Counties in Ohio.
Table 3: Child and Family Outcomes for 27 Ongoing Child Welfare Managed Care Initiatives, as of April 2000
----------------------------------------------------------------------------------------------------------------
Location and project
name Managed care model a and project description Child and family outcomes
----------------------------------------------------------------------------------------------------------------
State-level
initiatives:
Georgia Public model Fiscal year 1998-99 results
Multi-Agency Team for statewide residential treatment services for Children's behavior improved--
Children (MATCH) severely emotionally disturbed children incidents of negative behavior, such as
aggression, self abuse, and property
damage, decreased 21 percent between the 6-
month and 12-month evaluations for children
admitted during 1998, and decreased 35
percent between the 6-month and discharge
evaluations for children discharged during
1998
41 percent of the children were
either discharged from the project or
stepped down to a less restrictive setting
during 1999
66 percent of the children who
were discharged from the project were still
in a less restrictive setting 6 months
after discharge during 1999
42 percent of the children who had
progressed to a less restrictive setting
were still in a less restrictive setting 6
months after their transfer in 1999
All children were placed within
the state during 1999
Illinois Public model 1998-99 results
Performance Relative and traditional foster care Permanency rate in 1999 increased
Contracting statewide 149 percent over the previous year in Cook
County's Home of Relative Foster Care
program
Number of 1999 adoptions increased
70 percent over 1998 and 228 percent over
1997
3,660 children achieved permanency
through subsidized guardianship between
1997 and 1999
Number of reunited families
increased 12 percent between 1997 and 1999
Movement of children to more
restrictive placement settings fell by more
than half statewide
Indiana Managed care organization model Outcomes were not provided
The Dawn Project Wraparound services for seriously
emotionally disturbed children, aged 5 to
17, who have been impaired for more than 6
months and involved with multiple service
systems in Marion County
Kansas LeadYear 3 evaluation results, Jan.-Sept. 1999
Foster Care Statewide foster care services to children 99 percent of the children did not
Privatization in state custody experience abuse or neglect while in out-of-
home placement (consistent with years 1 and
2)
97 percent of the children did not
experience abuse or neglect within 12
months of reuniting with their families
(same as year 2)
27 percent of the children placed
in out-of-home care were returned to their
families within 6 months (consistent with
year 2; decrease of 49 percent from year 1)
41 percent of the children placed
in out-of-home care were returned to their
families or achieved other permanency
within 12 months (increase of 24 percent
from year 2)
74 percent of the children who
returned to their families did not reenter
out-of-home care within 12 months of
returning home (increase of 9 percent from
year 2)
81 percent of youths, who were
aged 16 and over and released from the
state's custody, had completed high school,
obtained a general equivalency diploma, or
were participating in an educational or job
training program (increase of 8 percent
from year 2 and 53 percent from year 1)
99 percent of the children
experienced no more than three placement
moves while in out-of-home care (consistent
with years 1 and 2)
71 percent of all children were
placed with at least one sibling (decrease
of 9 percent from year 2; consistent with
year 1)
78 percent of the children were
placed within their regional boundaries
(consistent with year 2; decrease of 9
percent from year 1)
47 percent of the adults and 70
percent of the youths (aged 14 and over)
reported satisfaction with services
(decrease of 6 percent for the adults and
consistent for the youth from year 2)
Massachusetts Administrative services organization with Administrative services organization
Commonworks lead agency model report, 1999
Statewide foster care for adolescents More children moved from
needing group care or residential treatment residential treatment to less restrictive
settings--the use of group homes,
specialized foster care, and independent
living increased 73 percent from July 1997
to June 1999
Children's placement in less
restrictive settings was supported by
increased provision of aftercare services--
expenditures for aftercare services
increased 80 percent, and the monthly
average number of clients receiving
aftercare services increased 51 percent
over 1998
Recidivism rate of 6 percent for
youths who had a planned discharge, such as
return to home; 17 percent for all youths
discharged, including unplanned discharges
such as running away from foster care
placement (Jan. 1997-Sept. 1998)
Savings achieved for out-of-home
and aftercare services in 1999 (excludes
administrative costs associated with the
administrative service organization, lead
contractors' management of provider
networks, and state oversight)--lead
contractors' monthly client placement costs
averaged 3 percent less than the capitated
case rate
Michigan Lead agenDescriptive evaluation results, 1998
Interagency Family Wraparound services for seriously Child abuse and neglect rate of 9
Preservation emotionally disturbed children involved with percent during families' involvement in
Initiative (MIFPI) multiple service systems at selected sites MIFPI (compared with the rate for all
children in the state of 8.4 per 1,000 in
1996)
Child abuse and neglect rate of 2
percent after families' involvement in
MIFPI
Out-of-home placement rate
decreased 38 percent during involvement
with MIFPI for children who were in a
placement setting at the time they entered
the project; decrease of 39 percent for
children who were not in a placement
setting at the time they entered the
project
Children and families improved, on
average, on all scales of well-being and
functioning, such as family and peer
relationships, community involvement,
behavior, school experiences, and family's
adaptation to caregiving, with the greatest
improvement in lowering detentions and
increasing the family's adaptation to
caregiving
94 percent of the parents involved
in MIFPI reported satisfaction with the
services they received
Tennessee Public model Annual report, July 1998-June 1999
Continuum of Care Statewide foster care for older children 59 percent of the children
Contracts with moderate to severe emotional and discharged were discharged to their own
behavioral problems family, an adoptive family, or a less
restrictive setting
Wisconsin Lead agency model Outcomes were not provided
Safety Services Family preservation services for noncourt
Program families in Milwaukee County
Local-level
initiatives:
Alameda County, Lead agency model Evaluation results, 1999
Calif. Foster care for seriously emotionally Project children were at least as
Project Destiny disturbed children in residential treatment safe as children in the comparison group on
in the county risk indexes such as alcohol and drug use,
abuse against other children, medical
emergencies, and running away
75 percent of the project children
were residing in a less restrictive
setting; 25 percent of the children could
not be maintained in less restrictive
settings (comparison data were not
available)
No significant difference in
improvement in children's mental health
between the project and comparison groups
Academic performance of project
children was comparable to the comparison
group on three measures--school attendance,
conduct reports, and academic improvement;
however, project children's academic
performance relative to grade level
declined significantly over time while the
comparison group improved on this measure
Reduced levels of placement were
not stable for a majority of the project
children--60 percent of the children
experienced two to eight additional changes
in placement (comparison data were not
available)
Project very nearly reached its
goal of revenue neutrality by the end of
the second year; between 1997 and 1999, the
project realized a net gain of 2 percent of
its capitated rate
Boulder County, Colo. Public model State managed care report, 1999
Integrated Managed Foster care for adolescents needing group Confirmed reports of abuse and
Partnership for care or residential treatment in the county neglect decreased 23 percent over 1998
Adolescent Community baseline
Treatment (IMPACT) Finalized adoptions increased 13
percent over 1998 baseline
Savings were reinvested in child
welfare services--the county realized a
savings of less than 1 percent of its
capped allocation from the state in 1998;
the dollar amount of savings increased 128
percent in 1999
El Paso County, Colo. Administrative services organization with State managed care report, 1999
Child Placement lead agency model Confirmed reports of abuse and
Agency Pilot Foster care for children placed by Child neglect decreased 19 percent over 1998
Placement Agencies in the county baseline
Finalized adoptions increased 84
percent over 1998 baseline
Savings were reinvested in child
welfare services--the county realized $1.3
million in savings in 1999
Jefferson County, Public model State managed care report, 1999
Colo. All child welfare services in the county Confirmed reports of abuse and
Child Welfare Pilot neglect decreased 18 percent over 1998
baseline
Finalized adoptions decreased 23
percent and family reunification increased
21 percent over 1998 baseline
Savings were reinvested in child
welfare services--the county accrued no
savings in 1998 and $175,000 in 1999
Mesa County, Colo. Public model State managed care report, 1999
Child Welfare Pilot All child welfare services in the county Confirmed reports of abuse and
neglect decreased 20 percent over 1998
baseline
Finalized adoptions increased 118
percent over 1998 baseline
Savings were placed in a reserve
account in 1998 and reinvested in child
welfare services in 1999--the dollar amount
of savings to the county increased 50
percent between 1998 and 1999
District 4, Fla. Administrative services Outcome evaluation report covering all
Privatization Pilot organization with lead agency model Florida initiatives, 1998-99
Foster care and independent living services Placement rate was 69 percent more
for adolescents in the district than the comparison site (specific to
District 4)
Length of stay was 66 percent less
than the comparison site (specific to
District 4)
73 percent of the families served
in Districts 4, 8, and 13 combined were
satisfied with the care they received
(similar to comparison sites)
District 8, Fla. Lead agOutcome evaluation report covering all
Sarasota County All children needing protective services, Florida initiatives, 1998-99
Privatization Pilot foster care, and adoption services in 86 percent of the cases in
Sarasota and Manatee Counties Districts 8 and 13 combined were closed in
1997-98 without reported recurrence of
abuse or neglect within 1 year of case
closure (similar to statewide rate)
Placement rate in Districts 8 and
13 combined was 29 percent less than the
comparison sites
Cases were closed at a faster rate
than the public agency had before the
initiative (specific to District 8)
Average length of stay in
Districts 8 and 13 combined was 111 days
(similar to comparison sites)
20 percent of the children in
Districts 8 and 13 combined were placed
with a parent, guardian, or relative within
15 months of the date of removal from their
home (43 percent less than the comparison
sites)
40 percent or more of the children
legally available for adoption were adopted
(specific to District 8)
77 percent of the children in
Districts 8 and 13 combined were still in
foster care 15 months after removal from
their home (51 percent more than the
comparison sites)
73 percent of the families served
in Districts 4, 8, and 13 combined were
satisfied with the care they received
(similar to comparison sites)
Average case cost in 1997-98 was
about 10 percent less than what the public
agency spent before the initiative
(specific to District 8)
District 13, Fla. Lead agOutcome evaluation report covering all
Bridges Program Children needing foster care and adoption Florida initiatives, 1998-99
services in Lake and S 86 percent of the cases in
Districts 8 and 13 combined were closed in
1997-98 without reported recurrence of
abuse or neglect within 1 year of case
closure (similar to the statewide rate)
Placement rate in Districts 8 and
13 combined was 29 percent less than the
comparison sites
Average length of stay in
Districts 8 and 13 combined was 111 days
(similar to comparison sites)
20 percent of the children in
Districts 8 and 13 combined were placed
with a parent, guardian, or relative within
15 months of the date of removal from their
homes (43 percent less than the comparison
site)
77 percent of the children in
Districts 8 and 13 combined were still in
foster care 15 months after removal from
their home (51 percent more than the
comparison sites)
73 percent of the families served
in Districts 4, 8, and 13 combined were
satisfied with the care they received
(similar to comparison sites)
Albany County, N. Y. Public model Outcomes were not available
Preventive Services Children needing preventive services in the
county
Broome County, N. Y. Lead agOutcomes were not available. The pilot
Child Welfare Care Children needing family preservation, foster project has been discontinued because of
Management care, and independent living services at one problems with implementing new financial
site and service-delivery arrangements in
accordance with federal and state
regulations.
Oneida County, N. Y. Lead agency model Outcomes were not available
Kids Oneida Wraparound services for seriously
emotionally disturbed children in the county
in or at risk of out-of-home placement
Onondaga County, N. Public model Outcome data, 1994-98
Y. Children needing emergency foster care Foster care days were reduced--
Family Support Center services in the county children admitted and discharged from the
Program program avoided staying in foster care
246,834 days since 1994
Children were discharged from
foster care more quickly--76 percent of the
children were discharged from foster care;
half the children who were placed in foster
care since 1994 were discharged in 79 days
(decrease of 77 percent from 1992, 78
percent from 1991, and 75 percent from
1990)
56 percent of the children who
were discharged returned to their parents
and 33 percent were released to relatives
Children had early contact with
their families, where appropriate--70
percent of the children visited with a
family member within 72 hours of placement
and 41 percent visited within 24 hours
88 percent of the children with
siblings were initially placed with their
siblings
20 percent of the children
discharged from foster care were readmitted
(14 percent less than the overall county
rate)
Educational continuity was
maintained--all school-aged children
attended their home schools
Tompkins County, N. Lead agency Program review, 1997
Y. Wraparound services for youth in residential 86 percent of the youths were free
Youth Advocate or institutional placements in the county of legal involvement, such as arrests
Program All families improved their
functioning, such as parenting skills
All youths improved their ability
to control violent and impulsive behaviors
both inside and outside the home
Little effect in reducing youths'
involvement with drugs and alcohol--17
percent of the youths improved on this
measure
School performance varied among
participants but improved for 55 percent of
the youths
60 percent of the youths had
successful reports from their employers
88 percent of the youths improved
in their community involvement
Champaign County, Public model Outcomes report covering Champaign and
Ohio Foster care for children needing out-of-home Madison Counties, 1999
Human Services/Adriel placement with a nonrelative in the county All children discharged from
School managed care in Champaign and Madison
Counties were discharged to a less
restrictive setting
In 1999, 63 percent of the
children who were placed through managed
care did not reenter a managed care
placement within 12 months
Crawford County, Ohio Lead agency model Outcomes were not available
Out-of-County Foster care for children placed outside the
Placement county in therapeutic family foster home,
group care, or residential treatment
Hamilton County, Ohio Managed care organization model Managed care entity report, 1998
TrueCare Partnership Foster care and independent living services 62 percent of the children who had
for children in outpatient mental health and been in a more restrictive setting--such as
therapeutic placements. residential treatment, group home,
treatment foster care, or day treatment--
were able to remain in a stable, less
restrictive setting after 6 months
Madison County, Ohio Lead agOutcomes report covering Champaign and
Adriel Out-of-Home Foster care for children in the county Madison Counties, 1999
Care Placements needing nonrelative, out-of-home placement All children discharged from
managed care in Champaign and Madison
Counties were discharged to a less
restrictive setting
In 1999, 63 percent of the
children who were placed through managed
care did not reenter a managed care
placement within 12 months
Dodge County, Wis.b Lead agencOutcome report, Aug. 1997-Aug. 1999
Family Partnership Wraparound services for adolescents in child Status offenders--youths with
Initiative care institutions or juvenile corrections in delinquent behaviors such as disorderly
10 counties conduct, fighting, truancy, possession of
marijuana, and curfew violation--had fewer
contacts with the courts after
participating in the initiative: 70 percent
of the youths had no contact, 25 percent
had one to five contacts, and 5 percent had
six or more contacts compared with before
the initiative, when 42 percent had no
contact, 44 percent had one to five
contacts, and 14 percent had six or more
contacts
Criminal offenders--those youths
with delinquent behaviors such as theft,
criminal damage to property, burglary, bomb
threat, battery, sexual assault, receiving
stolen property, possession of a firearm,
and auto theft--similarly had fewer
contacts with the courts: 75 percent had no
contact and 25 percent had up to five
contacts compared with before the
initiative, when 72 percent had no contact,
43 percent had up to five contacts, and 15
percent had six or more contacts
Truancy rate improved from 25
percent before the initiative to 15 percent
after the initiative
Milwaukee County, Public model Quality assurance/improvement and
Wis. Wraparound services for children in the utilization review report, second quarter
Wraparound Milwaukee county in or at risk of residential of 1999
treatment Youths spent less time in
residential care during their first year in
the program--the percentage of days youths
were in residential care decreased 29
percent
Youths spent more time with their
parent--the percentage of days youths were
with their biological parent increased 32
percent
Children experienced an overall
improvement of 21 percent on measures of
behavioral change--such as symptoms of
depression, anxiety, withdrawal, social
problems, delinquency, and aggressive
behavior--at 12 months after entry into the
program
Children experienced an overall
improvement of 34 percent on scales of
child-adolescent functioning, such as their
ability to function adequately at home, in
the community, and at school; their
behavior toward others; emotional problems;
self-harmful behavior; and substance abuse,
at 12 months after entry into the program
Average monthly cost of providing
services decreased 8 percent between the
first and second quarters of 1999
----------------------------------------------------------------------------------------------------------------
a Organizational arrangements among public and private entities generally fell into one of the following managed
care models: (1) public model, which maintains the traditional management and service-delivery structure while
the public agency incorporates managed care elements into its own practices and existing contracts with
service providers; (2) lead agency model, where the public agency contracts with a private entity that is
responsible for coordinating and providing all necessary services--either directly itself or by subcontracting
with a network of service providers--for a defined population of children and families; (3) administrative
services organization model, where the public agency contracts with a private organization for administrative
services only, and direct services are structured as in the lead agency or public models; and (4) managed care
organization (MCO) model, where the public agency contracts with a private organization as in the lead agency
model, but the MCO arranges for the delivery of all necessary services by subcontracting with other service
providers and does not itself provide direct services.
b Ten-county initiative includes Columbia, Dodge, Green Lake, Jefferson, Manitowoc, Ozaukee, Sauk, Sheboygan,
Washington, and Winnebago Counties.
Chairman Johnson. Thank you very much for your testimony.
The title of your testimony is ``New Financing and Service
Strategies Hold Promise, but the Effects are Unknown''. You did
address this some, but could you enlarge a little bit on what
is known and what are the likely positives of a more integrated
approach and what are the most likely negative consequences of
this more flexible funding, and how much of the unknown is just
neutral, you know, what are the positives, what are the
negatives?
Ms. Fagnoni. Well, the main reason we say the effects are
unknown, because as I mentioned at the end of my oral
statement, there have been few rigorous evaluations. So, while
a number of initiatives are tracking over time what happens to
children and families, what hasn't been done--what is underway
but hasn't been completed in some cases--is an effort to
determine to what extent the particular service delivery and
financing mechanism made a difference in the outcome. So, we do
have data, and I think we have provided some in the back of our
testimony, the written version of our testimony, that shows for
those initiatives where they are tracking what's happened to
children and families, we have seen some positive outcomes for
children over time. Again, whether or not we can attribute
those to the specific initiatives is largely unknown. But we
have seen things like children more quickly being either
returned to their parents or to a more permanent setting. In
some cases, initiatives are measuring to what extent children
are in a stable placement if they are placed outside their
homes so they're not being, you know, measuring the extent to
which they are staying in one place as opposed to being moved
around while they're trying to find a more permanent place. So,
those are examples of the types of measurements. They're also
measuring if a child is returned to the parent, looking for a 6
to 12 month time period, do they have to reenter that system
because of further neglect or abuse. So, those are some
examples of what's being measured. In some--and one of the
things some of the initiatives are doing, as you can imagine,
some efforts to return children to a more permanent--either to
their parents or a more permanent setting could have unintended
negative effects if they are done too quickly or without proper
attention, for example, with the parents to ensure they have
improved their parenting skills. So, a number of the measures
try to balance the goal of moving children more quickly into
permanent settings against the concern that moving them too
quickly could return them to the system with further abuse.
Chairman Johnson. I would certainly hope that all projects
would try to balance those two goals.
Ms. Fagnoni. Right.
Chairman Johnson. But if you saw--what I hear you saying is
that while you're not satisfied with the rigorousness of the
evaluations and you can't necessarily tie the funding mechanism
to the outcome, that you are seeing positive results. I haven't
heard you mention any negative results.
Ms. Fagnoni. Right. For those initiatives that are tracking
results, particularly there are a couple cases where the
localities tried to make some comparison with other localities
that were similar. And in those cases, some of the outcomes
did--the comparisons did not look as favorable in terms of how
quickly children were moved to a more permanent setting, for
example. But we also noted that there were some problems with
how those studies were done. So, it's not clear how reliable
those data were.
Chairman Johnson. Did you look also at--did they look also
at the complex of services? I mean, time is not the only
factor. If they were returned in the same amount of time but
they got better services and the family got better services,
you know, was that component looked at separately? What was the
service complex that emerged under a more integrated system
versus the service complex that was.
Ms. Fagnoni. I don't think we have examples of those
measures. They do measure--a number of initiatives measure
individual's satisfaction with the services they receive, which
might capture some of that. But I think in these measures we're
talking about, they're looking really more at the safety, and
permanency, and well-being sorts of outcomes.
Chairman Johnson. So, you didn't look at the specific
services that the families were given or the child was given?
Ms. Fagnoni. No. Although in these initiatives I know the
way they are set up, often the effort is as children are moved
to more family like settings, the goal is that because those
are less costly settings, the entity overseeing the
arrangements is expected to move funding in a way that provides
in-home services, after-care types of services. So, that is a
goal of that kind of shifting of resources from the out-of-home
placement to supportive services.
Chairman Johnson. Yes. That certainly is the goal. I'd just
like to see if that's the reality.
Ms. Fagnoni. That's not something we specifically looked
at.
Chairman Johnson. Mr. Cardin.
Mr. Cardin. Thank you, Madam Chair. I'm trying to figure
out how the states financially deal with a managed care
arrangement considering that the Federal funding source is for
specific services. Now as I understand, some of the states that
have developed a managed care type model are waiver states,
some are not waiver states. So, how does that work? How can
they make an arrangement for basically a lump sum payment
whereas the Federal funding flow is directed toward specific
services?
Ms. Fagnoni. What we found is that states and localities
are using the state and local funding sources to pay up front
and then using that--they do have a challenge with the cash
flow given that the IV-E portion of funding comes for out-of-
home services after they're provided. So, what states and
localities are doing is up front funding the state and local
moneys and then factoring in the reimbursement that will come
later from the Federal IV-E. They also look to try to package
funding, their own funding with other sources of funding where
they might be able to use those funds in advance. So, that's--
but that--we identified--we did a report a couple years ago
where we looked in depth at a number of these initiatives. And
we did find that that cash flow issue was a challenge for
states.
Mr. Cardin. Is it different if it's a waiver, if they have
a waiver?
Ms. Fagnoni. I think under the waiver scenario they have
more of an ability, more flexibility even with the IV-E
funding.
Mr. Cardin. So, I take it that one of the things we want to
learn from what you're doing is what model works best in this
regard. Obviously we want to protect the entitlement of the
funds, but we want to give flexibility to the states. I guess
my question is does the current system allow the states
adequate flexibility to go into this type of arrangement?
They're doing it now. Is there inefficiencies because of the
way we set the funding systems up or is this just a minor
inconvenience?
Ms. Fagnoni. You probably will hear from other state
officials who could talk directly to this. But I do think that
they--they did identify the cash flow, the reimbursement after
the fact, and the fact that the reimbursement is only for out-
of-home placements as being pretty significant challenges. And
as we found in looking at these initiatives, there are very few
that are statewide. They are mostly very localized efforts to
try to serve the target populations of children in the child
welfare system. There are only a few that try to serve all
children in the child welfare system. So, part of, I think, how
they've handled this so far is to have a fairly targeted
approach that doesn't cover a huge proportion of child welfare
children.
Mr. Cardin. Have you found that the capitated amount varies
widely among those states that are doing this?
Ms. Fagnoni. I believe so. They have different arrangements
for how they decide on a capitated rate. They have--some have,
in essence, block granted a number of funding sources and
provided them to child welfare entities. Some have actually
negotiated with a contracting agency to come up with a
reimbursement rate. Some have looked at historical cost data to
try to estimate what a reasonable reimbursement rate might be.
So, there have been some different approaches to that and some
lessons learned, I think, in some states from some early
attempts to do that.
Mr. Cardin. I hope that information is being shared.
Ms. Fagnoni. Well, I think there is at least one state, I
think the state of Kansas, which initially came in with a
capitated rate that wasn't based on historical information, I
think, has learned from that. Massachusetts, as you'll hear
later as a different example, did look to historical
information and took a couple of years before they could both
be comfortable with the rate as well as comfortable with some
of the performance standards they were establishing. So as I
said, there have been some different approaches to this.
Mr. Cardin. And if I understand from your testimony, you're
not prepared to make any evaluation as far as the outcomes
being better or worse based upon these arrangements?
Ms. Fagnoni. Well, I should--in response to that and Ms.
Johnson's question, I should reiterate that under the waiver
program there are a number of rigorous evaluations that are
currently being conducted. So, we will have some of that
information in the future. Just at this point in time, those
results aren't available.
Mr. Cardin. For those states that are under the waiver.
Ms. Fagnoni. Right.
Mr. Cardin. If they're not under the waiver, we won't have
that?
Ms. Fagnoni. Well, there aren't as many states--state
initiatives that are trying to do those sorts of rigorous
evaluations. They're not easy to do. And I think what you see
instead are states at least tracking over time what the
outcomes look like for child welfare children.
Mr. Cardin. In that evaluation will we have any information
between the relationship on substance abuse and child abuse?
Ms. Fagnoni. Not to my knowledge. I think that's a very
difficult correlation to come to. Although, we did write a
report a couple of years ago where we talked about the
widespread problem of substance abuse in the child welfare
population. Anywhere from 60 to 80% of the parents are
substance abusers of children who enter into the child welfare
system. And it's a real challenge for states and localities to
figure out how to work with those families and develop more
permanent settings for the children.
Mr. Cardin. That's not built into the evaluation process of
the waiver?
Ms. Fagnoni. Not to my--we're not sure. I mean, not to my
knowledge.
Mr. Cardin. Thank you, Madam Chair.
Chairman Johnson. Let me just clarify something for my own
purposes and for the rest of the panel. These 27 initiatives
that you have referred to, none of them are statewide, correct,
none of them have waivers?
Ms. Fagnoni. None have waivers. That's correct.
Chairman Johnson. These are state initiatives within
current law to try to implement a managed care approach...
Ms. Fagnoni. That's correct.
Chairman Johnson. Through contracts? There are 12 statewide
waiver projects where states--12 states have waivers or
statewide programs. They carry their own evaluation.
Ms. Fagnoni. Right.
Chairman Johnson. And it's that series of evaluations that
will be completed in a year and from which we will get much
broader information?
Ms. Fagnoni. That's right.
Chairman Johnson. I just wanted to clarify that because I
didn't start out with exactly the right understanding myself.
Mr. McCrery.
Mr. McCrery. Thank you. I just have one question concerning
the statewide data systems that we pay 75% of the cost. Why
haven't states--why haven't more states embraced that?
Ms. Fagnoni. Our understanding is that for these managed
care initiatives, those state data systems were not providing
them the kind of information they needed to both manage their
contracts as well as track child outcomes. So, they were--I
mean, we have one example from Florida where states were having
to piece together multiple systems--multiple data systems to
try to get the information they needed. And we had a caseworker
who had three different computers on her desk with multiple
entries of information to have the information they needed to
know what services children were being provided and what the
outcomes were for those children and their families.
Mr. McCrery. So, are you saying that the program that we
funded is basically worthless?
Ms. Fagnoni. No. It's--and in fact, what states told us,
that they hope over time that they will develop more
compatibility between the specifics they need for these managed
care initiatives and what they can obtain quickly from, say,
the SACWIS or AFCARS--SACWIS system, I should say. So, no. They
certainly are useful systems. But states recognize that they
need some more flexibility in their data information ability.
Mr. McCrery. OK. Thank you. Madam Chair, that's all I have.
Chairman Johnson. Thank you, Mr. McCrery. Mr. Camp.
Mr. Camp. Thank you, Madam Chairman. I'd like to pursue
this computer system that apparently nobody is using. If
they're finding it to be useful, why are not more states using
it and in what ways are they useful?
Mr. Bellis. We really have not done an in depth look at the
state data systems. In the managed care initiatives that we
looked at, many of them were small and were basically working
off pilot data systems or were having data systems developed
specifically for those initiatives. Recent information from HHS
says that a large number of states have implemented their
SACWIS system and continue to make progress. But there is still
a number of states who have yet come up to speed with it. When
we first reported about these managed care projects 2 years
ago, we identified data systems as an ongoing challenge. I
think states are slowly getting the capacity and the experience
to develop these systems. But it has been a continual problem.
Some states are making more progress than others.
Mr. Camp. How many states have fully implemented, do you
know?
Mr. Bellis. 27 States are fully or partially operational.
Mr. Camp. Do they tend to be larger or smaller states or
isn't there any pattern there?
Mr. Bellis. I think it's a mix.
Mr. Camp. It's a mix.
Mr. Bellis. Yes.
Mr. Camp. All right. Evaluating the managed care
initiatives, the flexible funding proposals, I mean, what would
be the key features of any evaluation requirement that would
give us the accountability to really try to see the impact
these proposals have on services for children?
Ms. Fagnoni. Well, the difference between simply tracking,
I shouldn't say simply because that in itself is a challenge.
To track what are the outcomes for children and families, how
those have changed over time, the difference between that and
being able to say, and this particular approach made a
difference in a positive difference, is to have some way to
compare what would have happened without that approach. There
are different ways that can be achieved. One can actually
have--what's the most reasonable way, I think, in some cases is
to find what they call a comparison group, children who look
similar to the children that are being served in terms of their
characteristics and look to see what, you know, what the
difference was there. There are also some approaches that are
called random assignment, which simply is you take the same
pool of children and some get a certain approach to their
services and others don't. So, there are some different ways.
But the main thing is a way to compare against an alternative
approach.
Mr. Camp. OK. Thank you very much. Thank you, Madam
Chairman.
Chairman Johnson. Thank you, Mr. Camp. Mr. Watkins.
Mr. Watkins. Thank you, Madam Chair. Page 10 on the lack of
rigorous evaluations leaves initiatives' effects unknown, which
leaves the impression that we may not have a lot of answers
yet. And you said to date few rigorous evaluations of the 27
initiatives that we've stated have occurred. Why haven't, you
know--my question is why haven't we had more of them and also
I'd like to know how many of these studies are, you know,
targeted toward rural areas, not just metropolitan?
Mr. Bellis. We're aware of a couple of locations that were
in our study group that are currently doing controlled studies
that have comparison groups, and if I understood your question,
do include both urban and rural places. Unfortunately, many of
these initiatives don't have the resources nor the expertise to
design the types of studies that I think we feel would be
rigorous enough to attribute the changes to the changes in the
program. I think that's the one reason why we believe that the
current 12 managed care initiatives, specifically under the
waivers, with the evaluation requirements will give us a wealth
of information about the reasons for changes.
Mr. Watkins. Well, you beat around the bush on it pretty
good there, I guess. But let me say, most of the time I find
these studies never get into the rural areas lots of times. And
there's usually never any comparison with that and urban areas.
And I made that fact known to, I think, Chair here. And we--the
rural areas are discriminated against. They're not brought in.
They're not--and I think there's some possibilities of
comparisons that might show that a lot of things can be done to
help a lot of these young people and others in the rural areas
at a lot less cost, a lot more personal identity, more self
esteem, all these things. And but yet it has been ignored in
many cases. And that's something I'd just like to see us make
sure we have equity out there. And I think you might find some
unbelievable positive results more so in the rural areas than
in the urban. You know, I think, you know, our education
system, you know, we always say, well, we've got to have small
classes. And I agree. But yet we're closing down the small
schools out across rural America because of all the things
we're putting on them. You know, if we--but at the same time,
we shove them into a larger situation which then comes right
back and feeds the purpose of what they were all about doing.
And so, I'd just like to see some evaluation with the rural
areas in mind and how it may even compare as we look at it. And
that's all I have. I apologize for being so late. I missed most
of the testimony. But I've read most of it since I've been
sitting here. Thank you.
Chairman Johnson. Mr. English.
Mr. English. Thank you, Madam Chair. Ms. Fagnoni, good to
see you again. And how do the outcomes that states have
incorporated into their performance-based contracts compare
with the outcomes that have just been developed in the child
and family services review? For example, is there an emerging
consensus on how to define and measure performance based on
child safety, permanency, and well-being?
Ms. Lyons. When we looked at these initiatives, we didn't
necessarily try to correlate the kinds of measures they were
looking at with the outcome measures that the department is
also tracking. But we did try to look at them. And we found
that they were tracking across the same kinds of outcome
categories; safety, permanency, well-being, stability, and
client satisfaction. What our work did show as well is that
they're measuring these outcomes in lots of different ways and
not always in consistent ways. And as I said, we didn't try to
track to see how the outcomes in these initiatives might have
affected the states' outcomes that the department is going to
report on soon.
Mr. English. Thank you, Madam Chair. I have no further
questions.
Chairman Johnson. On that point, did you note the
inconsistencies among--in other words, did you summarize any of
that information? Because I think the fact that they're
measuring the same outcomes in lots of different ways matters.
And if you drew any conclusions about which seemed to be better
or consistent, that probably would be useful for us to know.
Ms. Fagnoni. We cite in our appendix--we do cite the ways
in which each initiative our measuring and at least reporting
outcomes. But we did not look--we did not go the next step of
saying which seemed to be better than others. But that does
show examples of within the same broad categories of outcomes
in different ways of measurement.
Chairman Johnson. Is HHS aware of the fact that you did
find quite differing methods as they go about writing--trying
to put in place measurements of the same kinds of outcomes?
Mr. Bellis. We have fully briefed and worked with the
department in this work that we have done and shared that with
them. One point about the development of outcome measures, in
some ways it's a new experience for many of these agencies. And
over time, they are getting better and better at it. It is a
system that is in some ways new to performance monitoring. And
it's an evolving issue. It's not a stationary target. One of
the things that we've observed over time is that states are
getting better at identifying the appropriate outcome
categories and the measures to go along with it.
Chairman Johnson. It is difficult. That's why I thought
those regulations were a little advanced. So, I'm very
interested that you did talk to them. It's going to be hard to
get in place. One last question. In these 12 waiver review
evaluations that are going on, are you satisfied that those
evaluation structures are solid? Are they what we need? Are we
going to be able to use them or are we going to be able to look
back and say, well, they didn't do this, they didn't do that,
so we can't really use the information?
Ms. Fagnoni. We haven't examined them in depth. But our
understanding is that they do exemplify the kinds of rigorous
evaluations one needs to get to really get impact information.
Chairman Johnson. Thank you very much. I appreciate you
being with us.
Ms. Fagnoni. Thank you.
Chairman Johnson. I'm going to call both of the panels up
next so that members will have the maximum opportunity to hear
everybody's testimony. And then if they get called away, they
will at least have heard the testimony if they can't stay for
the questioning. Bill Waldman, the Executive Director of the
American Public Human Services Association, Charlotte
McCullough, the Child Welfare Consultant for Chevy Chase,
Maryland, Hon. Kathleen Kearney, the Secretary of the Florida
Department of Children and Families, Robert Wentworth, the
Director of Residential Services for the Massachusetts
Department of Social Services, MaryLee Allen, the Director of
Child Welfare Division of the Children's Defense Fund, Robert
Geen, Senior Research Associate for the Urban Institute.
Welcome. Thank you all for coming. And thank you for
participating together. And as soon as Mr. Waldman sits down,
he may start.
STATEMENT OF WILLIAM WALDMAN, EXECUTIVE DIRECTOR, AMERICAN
PUBLIC HUMAN SERVICES ASSOCIATION
Mr. Waldman. Good afternoon, Madam Chair, Members of the
Committee. It's a delight to see you again and be here with
you. I'm Bill Waldman. I'm Executive Director of the American
Public Human Services Association. My association represents
all of the states, the U.S. territories, many localities, and
many individual members all engaged in the public human
services. In addition for purposes today, one of our key
affiliate organizations, The National Association of Public
Child Welfare Administrators, they're the group in the state
and local executive branch of government that have the
responsibility for implementing these many, many important
programs.
Madam Chair, I wanted to thank you for three things as we
start. One, of course, for the opportunity to be here to
testify today to provide the opinion of the states and
localities that run these programs. Second is for the bill
that's been introduced today that we really appreciate. And the
third is for the historic concern that you have expressed in
recognition of the fact that the current system of financing we
have is deeply flawed.
I recall at a previous hearing in this room, I don't know
if I'm quoting you correctly, but you astutely observed in the
event that the states and localities did everything we wanted
them to do under the adoption of Safe Families Act, it would
basically dramatically reduce the amount of funding and support
that they have. And that really encapsulates the issue that
we're struggling with.
Our association has done a lot of work on this issue. And I
want give a thumbnail sketch of it. Two years ago, we
recognized this was a very serious problem, particularly as the
Adoption and Safe Families Act went into effect. We formed a
broadly representative bipartisan working group of states to
study the issue. We retained some of the foremost national
experts in the field. We worked with our members and these
experts and we did come up with a paper that came up with some
of the recommendations that I'm pleased to say are touched on
and incorporated in the bill.
Since we have done that and we have also taken the
opportunity to share that paper with many, many stakeholders,
some key advocacy groups, and others to get their input as
well, as that of some other national experts. We were very
proud to cosponsor with your Subcommittee a special hearing and
meeting in May here on the Hill where we had again that broad
bipartisan representation of many groups and organizations,
both in the public and private sector very much concerned with
that--this issue. All of that work that we have done for these
past 2 years and my own 35 year career in the Public Human
Services as a state cabinet officer and as a child welfare
director, leads us all to a fundamental, several fundamental
conclusions that I wanted to share with you today that I think
are appropriate to the discussion.
First is we really believed, I think it is fair to say,
there's a broad consensus that the way in which IV-E
maintenance, for example, the IV-E program is operated does not
support the outcomes we're all trying to achieve. And it does
not minimize the out-of-home care. It does support
unfortunately--it pays funds for what are impermanent
situations, the exact opposite of what we want to achieve. It
does not specifically reward safety. it does not truly reward
permanency. It does not foster innovation or creativity. It
does not permit reinvestments of funds available into early
intervention or prevention activities. The waiver process
that's currently there has serious limitations and constraints
and has, I would say, too broad and too onerous research
requirements. We would like to see rigorous research of some of
these innovations. If you look at, for example, the Medicaid
and other programs, there is a way in which to take these off.
And I believe your bill does address that part.
Further is that the current method has a look-back
provision, I know you're familiar with, where we still use the
old AFDC standard of 1996. I don't believe, and I think you'd
agree, that is good public policy. There isn't an inflationary
amount that adjusts as the cost of living and the cost of the
services go up. And it does present quite an onerous
administrative burden on the state to look back, as we say.
Also, the states have made some very significant progress
in the implementation of the Adoption and Safe Families Act.
And as you know and with your help and leadership in the
Committee, and I appreciate that, many of the states were
successful in winning bonuses. If you remember, more states won
than we had money for. And you helped go back and get us
additional funds. And we would ask for your help again when
that comes up. But we want to be able--I'm concerned that the
states won't be able to maintain, sustain, and expand that
improvements without this kind of flexibility that you're
attempting to address in the Act.
Also, in the discussion it became very clear that in the
states, there is broad and deep support among the states for
additional options for both flexibility and accountability. And
with respect to Congressman Cardin's good point, I think I
could fairly say the states understand and recognize a need to
accept accountability as to the outcomes of performance in the
same breath that they ask for flexibility. And I think that's
been a very significant and commendable change that would be
very important.
I believe that the concepts that you address in the bill,
in fact, address some of the issues that we came across as we
studied this issue nationally. I think they will permit, in
fact, a far greater flexibility. They will retain
accountability. And they will simplify the waiver process. And
we'll see good things.
There are three concerns about the bill as drafted now that
I want to express today that I hope we'll have the opportunity
to continue to work with you on. One of them is--although I
understand and I was a little disappointed, but I understand,
and that's the limitations on the number of states. And I
suspect that the cost of these bills were scored by the
Congressional Budget Office. In all sincerity, I am puzzled
that why they were scored for additional funds since we want to
have a baseline that's fairly negotiated, we don't want to
spend more than a state spent in the previous year. So, why
these are scored and therefore the limits occur is a question
we would hope the opportunity to work with you and perhaps the
CBO to look at this in what we think is the right perspective.
The second issue is that the language seems to preclude
those states that are not in conformance with the children and
family services review from participating. And clearly I
understand the thought that you want states to be at a certain
performance level before they could take advantage. But the
point is, I would suggest to you, that many states really
require the flexibility to be able to fix problems that have
been identified. And I would say that if that were afforded in
the legislation, then their plan as to how to us the money
flexibly would have to be addressed to fix the problems
identified. So, I would say if you'd make that change, you
could make another way of fixing those states that have not
done well or as well in the first review.
And finally, and I'll wrap up, is I think there is some
clarification that's required in the maintenance effort
section. I think and I agree with other statements that have
been made that this field does require more investments. And
there's only two ways you get them. One is with new funds. And
the second is the opportunity to redirect or spend better, as
your bill addresses, the existing funds that are here. And I
think there's a recognition that one has to maintain these
level investments. We certainly don't want to lose funds. On
the other hand, I think the way the language is crafted would
make it not desirable for states to participate in this. It
would appear to include a broader scope of services and
expenditures that Governors and treasurers would probably not
want to go forward with it as written. And I would offer to
work with you on it. We just recently received the bill. We
would like to review it further.
But on balance, we really do appreciate your attention,
your leadership, the Committee's interest and work on what we
believe is a vital and important issue in the human services
having directly to do with the outcomes and well-beings for
children and families. Thank you.
[The prepared statement and an attachment follow:]
Statement of William Waldman, Executive Director, American Public Human
Services Association
Chairman Johnson, Congressman Cardin, Members of the
Subcommittee, I am William Waldman, Executive Director of the
American Public Human Services Association (APHSA). I am
pleased to have the opportunity to testify today about child
welfare financing reform. As the national organization
representing state and local agencies responsible for the
operation and administration of public human service programs,
including child protection, foster care and adoption, APHSA has
a long-standing interest in developing policies and practices
that promote improved performance by states in operating these
programs for our nation's most vulnerable children and
families.
On behalf of state human service administrators and child
welfare directors, I want to applaud you, Madam Chairman, for
your commitment to developing legislation to realign the
current method of federal financing child welfare services with
the desired outcomes of safety and permanency. Your leadership
and concern for this issue have been outstanding and we know
how passionate you feel about ensuring that states have the
needed flexibility to enable them to make continuous
improvements to the system, while remaining accountable for the
outcomes we all want.
We have seen tremendous strides taking place in the states
resulting from the Adoption and Safe Families Act (ASFA) and
state reform initiatives and innovations. For example,
statistics have demonstrated significant state successes in
increasing the number of adoptions of children from foster
care--with increases in nearly every state, in many cases
rising by 50 percent or more in less than two years. Agencies
are employing a number of promising practices such as
subsidized guardianship, performance-based contracting, family
group decision making, cross-system collaborative efforts with
substance abuse agencies and juvenile courts--all of which are
promoting more safe, stable and timely permanent arrangements
for children, whether they be adoptions, reunifications or
guardianships.
In order to ensure that this improvement and innovation is
sustained and expanded, we must remove barriers to optimal
performance. As you have recognized, one of the most serious
constraints for states is a federal financing structure for
child welfare that is constrained by fiscal incentives that do
not necessarily reward the desired outcomes for children. The
current federal financing system disproportionately funds the
deepest and often least desired end of the system--out of home
care--that we are all striving to minimize in terms of lengths
of stay and numbers of children, while funding directed at
activities to achieve permanency, safety, prevention and early
intervention are comparatively limited.
Although we do not support a block grant for child welfare
funding, we do strongly urge that additional flexibility in the
use of Title IV-E dollars be afforded to states so that they
can invest these dollars in the kinds of activities that are
yielding success and test innovative ideas to generate new
programs that work. Flexibility is also critical to enabling
states to develop comprehensive approaches and a broad array of
tailored interventions to address the complex and individual
needs of children and families rather than encouraging
responses that are driven by categorical programs that deal
with only part of the system.
APHSA has a longstanding commitment to working on this
issue. We convened a special task force in early 1998 to
develop recommendations on restructuring child welfare
financing. In July 1999, our National Council of State Human
Service Administrators adopted a policy resolution supporting
two proposals--transferability and delinking. Transferability
allows states the option to reinvest IV-E funding into IV-B
services, while retaining both state accountability and the
entitlement structure. Delinking eliminates the IV-E
eligibility link to the old AFDC program, enabling a federal
commitment to all children in foster care as well as
eliminating a complex outdated eligibility determination
process that is a costly and onerous administrative burden on
states. A copy of our recommendations is attached.
We were pleased to have the opportunity to co-host the
meeting you sponsored in May, Madam Chairman, which brought
together a diverse and bipartisan group of key stakeholders,
including congressional staff, the Administration, state and
local agency directors, researchers, advocates and private
agencies, to initiate a dialogue on the three options that are
reflected in your legislative draft--one of which is the
transferability concept proposed by our association.
I drew two important conclusions from the deliberations.
The first is that a broad-based recognition exists that the
current system of financing is broken, self-defeating, and does
not support the outcomes for children and families embraced in
statute, regulation, and general public policy and practice.
The second conclusion is that there is broad and deep support
among the states for the kinds of solutions we jointly
presented that would provide greater flexibility in how Federal
funds are used, but at the same time maintain accountability
for outcomes and key protections for children. In addition,
there appeared to be consensus on support for the concept of
delinking IV-E eligibility from AFDC and extending a federal
commitment to all children in care.
Since we only received a draft of the bill days ago and are
still conducting a thorough review and analysis, I will speak
in only the broadest terms with respect to the legislation and
will follow up with your staff on the more technical, drafting
issues.
While we very much appreciate your including the concept of
transferability in your legislation, we were disappointed that
this option is not available to all states. We feel strongly
that the magnitude of the financing dilemma requires a more
comprehensive, systemic solution than just a handful of
demonstrations. The waiver modifications in Title II are very
positive and will make great strides towards ensuring that the
promise of innovation and flexibility agreed to in ASFA is not
limited by overly prescriptive and rigid federal
implementation. We understand that the more limited approach to
the flexible funding demonstrations was a result of
Congressional Budget Office (CBO) scoring, but given our intent
to make the transferability option cost neutral, we seriously
question the CBO's rationale and methodology, and would like to
explore with you ways in which the legislation could take a
more expansive approach. In addition, we would like to work on
fine tuning the language that represents our transferability
proposal to ensure that it is clarified to match the intent of
our proposal.
Maintaining of collective federal and state effort is an
important concept in financing national child welfare services,
but the way the maintenance of effort provision is crafted in
the draft legislation is highly complicated and contrary to a
flexible system that will better help to serve children and
families. Our early review indicates that the restrictions and
penalty provisions would further complicate the good efforts
you are trying to achieve. We believe in its current form it
will discourage states to take these financing options which
are seriously needed for improving the system and serving
children and families.
We appreciate the opportunity to provide input into this
important process. As it moves forward we want to work with you
to suggest technical changes to ensure your good intent is
realized.
As a long-term administrator of public human services, and
child welfare in particular, I am convinced that the system
needs additional investments in child welfare services. These
investments come in two ways. The first is new investments, for
example, in substance abuse services for children who come to
the attention of child welfare, resources for the courts to
meet the ASFA timeframes and reduce backlogs of pending cases,
and training resources for judges and private agency service
providers. The second is better spending of existing revenues.
Both are needed if we want to meet the increased demands and
capacity needs these systems are facing. Your bill, Madam
Chairman, helps with this second approach. We thank you for
taking the lead and we appreciate the opportunity to work with
you. Working Draft: May 4, 2000
APHSA DRAFT PROPOSAL TO RESTRUCTURE FEDERAL CHILD WELFARE FINANCING \1\
Background
In July of 1997, state reinvigorated their ongoing interest
in advancing a national effort to address concerns about
federal child welfare financing and its inherent barriers and
disincentives to achieving positive outcomes for children and
families. The National Association of Public Child Welfare
Administrators (NAPCWA), APHSA's child welfare affiliate,
dedicated its forum that summer to child welfare financing
issues, and discussions culminated in a resolution adopted by
APHSA's National Council of State Human Service Administrators
that laid out guiding principles for federal child welfare
financing restructuring. A major provision of the resolution
was APHSA's opposition to a block grant, but support of
increased flexibility within an entitlement structure.
---------------------------------------------------------------------------
\1\ On July 20, 1999, the APHSA National Council of State Human
Service Administrators adopted a resolution in support of the concepts
of delinking and transferability which are discussed in this proposal.
However, the details of this proposal do not represent official APHSA
policy and should be considered a working draft.
---------------------------------------------------------------------------
As the Adoption and Safe Families Act (ASFA) was debated
and enacted in November of 1997, states were continually
criticized for their failures in child welfare, particularly as
they related to foster care lengths of stay and lack of timely
permanency--the results being more federal mandates as
Congress' means to achieving improved state performance. Partly
in response to APHSA's efforts to dissuade the mandate approach
to child welfare reform and educate Congress on the links
between financing and performance during that debate, ASFA
included a directive to HHS to consult with states and others
to develop a performance-based incentive system to finance
federal child welfare programs, with the option to make other
recommendations regarding federal finance restructuring.
Building on the work initiated in July of 1997 and in order to
be most effective in shaping the HHS process, the APHSA Child
Welfare Financing Workgroup was established in January 1998 to
develop recommendations on child welfare financing and outcomes
to advance as part of the HHS process but also directly to
Congress.
The workgroup devised a three-pronged approach: 1) identify
outcome measures; 2) consider the capacity necessary to achieve
those measures; and 3) develop a financing approach that
supports achievement of those outcomes.
Since ASFA's enactment, states have demonstrated
significant progress resulting from the new law and state
initiatives in place prior to the law. In order to meet current
challenges, the additional requirements posed by the law, the
increased expectations of state performance, as well as to
sustain and expand the significant progress that has been made,
states will require greater flexibility in the use of federal
dollars. Although there is no consensus on the Hill as to
whether or how to change child welfare financing, it seems
imperative that states take a leadership role now to move this
debate forward because time is not in the favor of the states.
As states achieve greater performance, they are in effect
``penalized'' financially whenever they successfully reduce
foster care. More importantly, valuable resources are lost that
could be invested in activities that produce outcomes. In order
to capture this funding and redirect it to other parts of the
system (e.g. prevention, intervention, reunification, adoption,
guardianship, and services such as substance abuse treatment)
before it is lost from the system, these changes must be made
soon. The proposal that follows seeks to provide states the
flexibility to reinvest federal funding into activities that
achieve positive outcomes and to eliminate the administratively
burdensome reliance on now-defunct AFDC standards for
eligibility determination that has been of concern to states
for several years.
Statement of the Problem
The current structure of federal child welfare funding does
not adequately support the outcomes for the children and
families that public child welfare agencies, Congress, the
federal government, child advocates and the public seek to
achieve. The bulk of federal funding is disproportionately
directed toward funding out-of-home care--the very part of the
system that agencies are seeking to minimize in order to
achieve greater permanency for children. At the same time,
services that protect child safety and promote reunification
are underfunded by the federal government. When the Title IV-E
financing structure was created 20 years ago, the assumption
was that Title IV-B funding would grow--a promise unfulfilled.
The reality is that Title IV-B funding has not grown
commensurate with practice needs. The financing structures
established in 1980 are no longer workable today. Furthermore,
a provision in the P.L. 96-272 as originally passed had allowed
Title IV-E foster care funds to be transferred to Title IV-B to
be used for services, but it is no longer in effect.
Unfortunately, the conditions required for activating the
transfer provision were subject to increased IV-B
appropriations that never materialized.
Most observers of the child welfare system are in agreement
that the system does not have the necessary resources, and
therefore, there must either be new investments in funding made
or the redirection of existing funds. Given the reality of the
budgetary environment in Congress, increases in funding are
unlikely or often come at the expense of cuts in other human
service programs. Therefore, we believe the most effective
approach is one of redirection or reinvestment.
Proposal
The proposal contains two main features--transferability
and delinking:
Transferability proposal would give states the
ability to redirect federal revenue for Title IV-E maintenance
payments into their Title IV-B programs, thereby providing to
states the flexibility to reinvest federal revenue into other
child welfare services whenever the utilization of foster care
is reduced.
This provision addresses states' criticism of the federal
incentive toward out-of-home placement and their need for
increased capacity in prevention, early intervention and
services to families to promote permanency (reunification and
adoption).
Policy Objectives of Transferability:
Preserve the basic federal Title IV-E entitlement,
while enhancing flexibility.
Connect federal child welfare policy objectives,
federal fiscal participation in state and local child welfare
programs, and outcomes for children and families within a
single overarching framework.
Enhance or otherwise redirect the flow of federal
revenue to activities and services that expand the capacity of
public child welfare programs and improve outcomes for children
and families.
Link increases in federal spending over time to the
changing needs of children and families.
Preserve overall cost neutrality against the CBO
baseline.
Delinking proposal would eliminate income
eligibility (AFDC-eligible as of July 16, 1996) as a criteria
to determine who among the children placed in foster care or
subsidized adoption is eligible for federally reimbursed foster
care and adoption assistance under Title IV-E. Instead, all
children in care would be IV-E eligible (provided they met the
other IV-E eligibility requirements--reasonable efforts,
contrary to the welfare, eligible provider). In order to offset
increased costs to the federal government for covering all
children in foster care, the federal reimbursement rate would
be adjusted proportionately in each state.
The purpose of the delinking provision is to eliminate the
burdensome ``look-back'' requirement and promote administrative
simplicity. It also provides equity for all children in foster
care, making them all eligible for federal reimbursement
regardless of the income of their birth family. Under current
law, states must provide protections for all children in foster
care and their performance is assessed with respect to all
children in foster care. It is only reasonable that federal
funds be provided for the care of all children in foster care.
Because the law does not allow the income standards, in effect
on July 16, 1996, to grow with inflation, eligibility for
federal reimbursement will continue to decrease over time
unless the problem of the ``look back'' is addressed.
Policy Objectives of Delinking:
Expand the federal commitment to all children in
foster care, regardless of the income level of their birth
family, by eliminating income eligibility as a condition of
federal participation.
Streamline the eligibility determination process by
eliminating the link to old AFDC standards, while preserving
the basic Title IV-E entitlement.
These two features of the proposal--transferability and
delinking--are not interdependent and do not necessarily have
to be adopted as a package.
In developing the recommendations, we have tried to
emphasize themes that have been articulated by workgroup
members at the various meetings. Specifically, we have sought
to preserve as much flexibility for states as possible while
providing a link to outcomes. We have also sought to devise
strategies that preserve the level of federal revenue flowing
to each state to what it would have been in the absence of
proposed changes.
Nothing in the proposal should be construed to mean that
APHSA either opposes proposals that would increase federal
funding levels in any one of the federal child welfare programs
or that the recommendations developed herein are in any way
inconsistent with such efforts.
Basic Elements of Transferability
Transferability
Basic Policy
States that successfully reduce the utilization of foster
care, as measured against an approved state baseline may
transfer ``unused'' foster care funds into their federal Title
IV-B allocation. Alternatively, states could establish a
separate account for these funds, so long as the funds from
that account are used for child welfare purposes, broadly
defined. Transferred funds can not be used to offset state and/
or local match.
The essential idea is that meeting the desired outcomes
reduces foster care usage. For example, keeping children out of
foster care, reducing their lengths of stay, or speeding
reunifications and adoptions all lead to a reduction in foster
care utilization or care days. A reduction in care days
translates to a reduction in expenditures. It is these
expenditures we are talking about as the funds to be
transferred. It is important to note that the goal is not an
isolated reduction of expenditures, but rather increasing the
realization of outcomes which in turn leads to a reduction in
care days which in turn results in reduced expenditures
available for reinvestment.
Prospective Versus Retrospective Transferability
States could opt to undertake either a prospective
transferability agreement or a retrospective transferability
agreement.
Prospective transferability means that states get
the transfer funds up front to use for services and then must
ensure that anticipated savings are realized that same year to
make sure they come in at or below the projected baseline. If
they exceed the baseline, the state is at risk for the match on
the transferred amount, which must be repaid by the states if
they do not achieve the targeted savings. The state can still
claim reimbursement for all foster care costs above the
baseline.
Retrospective transferability requires that states
invest their state dollars up front and at the end of that
fiscal year, it would be determined if costs came in below
baseline. If states exceed the baseline then the amount above
baseline is paid as usual. Any amount below the baseline is
transferred to the states as part of their IVB allocation the
next year. There is no risk of having to payback unearned
transfer amounts.
Mechanisms
At state option, transferability agreements can be proposed
on a statewide basis or for sub-populations where sub-
populations can be defined geographically or on the basis of
some other target group of children and families. Target groups
of children and families can be defined on the basis of service
needs, age group, type of service, or other common
distinguishing features.
Transferability agreements are activated at state option in
the context of their Title IV-E and IV-B plans. Elements of the
plan for purposes of the transferability agreement would
include: a state specific foster care baseline (based on
assumptions covering admission rates, placement duration, unit
cost, and casemix); specifications related to target
population(s), program models and interventions, geographic
areas; projected impact of the plan measured in terms of
safety, permanency and well-being; the planned duration of the
agreement; provisions for outcome monitoring; and an ``exit''
plan describing the terms and conditions leading to the
termination of the agreement.
HHS Approval
Approval of the transferability agreement would be the
responsibility of HHS. Approvals would be granted based on a
mutually agreed upon baseline and a federal determination that
all proposed services are IV-B eligible. The mix of IV-B
services would be solely within the purview of the state.
As envisioned, the approval process and level of scrutiny
by HHS would be based on a state's performance review. For
states in substantial conformity with the federal performance
review, approval would be dependent on the submission of a
suitable plan as determined by HHS. For example, states in
substantial conformity may propose a statewide program, would
be subjected to regular, but less frequent outcome reviews, and
would have greater discretion over the allocation of federal
revenue for programmatic purposes. States that are not in
substantial conformity with the performance review could enter
into transferability agreements as well. However, in addition
to submitting a suitable plan as determined by HHS, states
would be required to link their transferability plan to their
program improvement plan required by the performance review.
HHS would have the authority to limit the geographic scope of
states not in substantial conformity, and could institute a
more stringent schedule of outcome reviews.
States that fall out of conformance with the federal
performance standards would be subjected to a full, mandatory
review of their transfer agreement. If the transfer agreement
were continued, continuation would be subject to the same
stipulations that would have been applicable had the state been
out of conformity at the time the transfer agreement was
reached.
In addition, HHS would have the authority to amend or
terminate the agreement in the event there is other
demonstrable evidence indicating that child safety, permanence,
or well-being was being adversely affected by the transfer
agreement.
The link to the performance review would ensure
accountability and strengthen the connection to outcomes. It
also provides states with needed resources to direct to program
improvement--the foundation of the new outcomes-based
performance review.
Cash Flow
Cash flow to states would be specified in the plan. By
agreement with HHS, states could adopt either a ``retrospective
claims'' approach or a ``prospective claims'' approach. Under a
retrospective claims approach, states would submit claims to
HHS as they normally would. The difference between the amount
claimed for foster care and the amount projected in the
approved baseline would be made available to the state in the
next fiscal year. Under a prospective approach, states in
conjunction with HHS would project total revenue for the fiscal
year. In turn, HHS would make quarterly payments to states.
Risk Sharing
Risk sharing refers to how differences between the baseline
and actual foster care utilization are resolved. When states
spend less revenue on foster care than anticipated in the
baseline, states will retain the revenue as part of their
transferability agreement. When foster care utilization and
expenditures exceed the baseline, states can continue to claim
reimbursement from the federal government for foster care in
the usual way. However, they are at risk for the dollars
subject to the transferability agreement.
In the event that foster care utilization climbs above the
level specified in the baseline and approved in the plan, the
state in conjunction with HHS would activate stop-loss
provisions. These provisions include the following features:
A state's ability to make foster care claims on
behalf of children not covered by the transferability agreement
is unaffected.
Costs up to the baseline are eligible for federal
reimbursement at the applicable match rate.
Costs related to changes in the utilization of
foster care above the baseline, on the part of children covered
in the transferability agreement, that are due to rising
admission levels would be shared with the federal government at
the existing rate of federal participation (please see the
effective rate of federal participation in the ``delinking''
section below).
Costs related to changes in the utilization of
foster care above the baseline that are due to slower than
projected rates of discharge would be shared with the federal
government at the existing rate of federal participation
(please see the effective rate of federal participation in the
``delinking'' section below).
If foster care costs exceed projections, states are at risk
for the full cost of the IV-B services up to the amount
advanced prospectively to the state under a transfer agreement.
Further Explication and Examples of Reinvestment
For purposes of clarity, examples shown are for a one-year
time period, but most likely these would be multi-year
agreements and baselines.
Prospective Transferability Example
State X has pioneered a flexible, individually tailored,
case management linked array of in-home parent education,
teaching homemaker and family preservation services, known as
the ABC Program (for purposes of this example). The State,
through experience and analysis has determined that investment
in these IVB type services prevents the need for out of home
care in many situations and reduces the time necessary for out
of home care in others. They have concluded that such
investments will achieve directly at least dollar for dollar
offset in IVE type expenditures for out of home care.
State X, which has a 50% FMAP, reflects IVE expenditures
for 1999 as follows:
Figure 1
------------------------------------------------------------------------
State Federal Total
------------------------------------------------------------------------
$100M $100M $200M
------------------------------------------------------------------------
For the Year 2000, the state and the federal government
negotiate a baseline for State X reflecting a 5% increase in
expenditures so that IVE outlays are projected to be as
follows:
Figure 2
------------------------------------------------------------------------
State Federal Total
------------------------------------------------------------------------
$105M $105M $210M
------------------------------------------------------------------------
State X opts to enter into a transferability agreement and
proposes to reinvest the amount that would be otherwise
required to finance the growth in IVE costs of $10 million
($5million State and $5 million Federal) into expanding their
new array of IVB like services. They further agree to meet all
statutory and regulatory outcome measures. They fully expect,
and are willing to risk the following outcome.
Figure 3
------------------------------------------------------------------------
State Federal Total
------------------------------------------------------------------------
IVE $100M $100M $200M
ABC Program $5M $5M $10M
Total $105M $105M $210M
------------------------------------------------------------------------
The net effect on this proposal and its successful
implementation would be to enable states to use funds that
would otherwise be required to finance out of home placement to
underwrite preventive services that would avoid and/or shorten
out of home stays for children. It would achieve the important
public policy goals of strengthening and preserving families in
a manner that is cost neutral to the Federal and State
governments while at the same time preserving the basic
entitlement program for children.
Explication of Risk
As with any responsible strategy of this nature, there are
certain risks to be considered. There is the possibility that
the proposal of State X, when implemented, will bring even
superior programmatic and financial benefits than expected.
Conversely, there is also the ``risk'' that State X's proposal
will not achieve any of the anticipated benefits.
The following two (2) figures explicate the consequences of
these two scenarios. However, there could be other examples
where caseload trends are not as stark as these examples.
State X has reduced the year 2000 out of home placement costs
further than anticipated while at the same time met all
specified child welfare outcomes. Figure 4 demonstrates the
results and consequences.
Figure 4
------------------------------------------------------------------------
State Federal Total
------------------------------------------------------------------------
IVE $95M $95M $190M
ABC Program $5M $5M $10M
*Available for $5M $5M $10M
Additional
Investment In Year
2001
Total $105M $105M $210M
------------------------------------------------------------------------
In the event that none of the desired effects of the reinvestment
strategy materialized, the results and consequences of this are
reflected in Figure 5. Basically what has occurred in this scenario is
that upon approval of the reinvestment strategy outlined in Figure 3,
State X at the beginning of the Year 2000 enters into obligations
totaling $10 million in the form of contracts with community-based
organizations and hires staff for expanding their array of IVB type
services. At the end of the year, however, the State has expended $210
million on IVE type services and an additional $10 million on the IV-B
services indicated above.
Figure 5
------------------------------------------------------------------------
State Federal Total
------------------------------------------------------------------------
IVE $105 million $105 million $210 million
ABC Program $10 million $0 $10 million
Total $115 million $105 million $220 million
------------------------------------------------------------------------
Federal government continues to match IVE growth at any level.
Summary of Risk
1. There is no risk to the federal government (other than
its continuing obligation tofinance growth under an existing
entitlement program) beyond the baseline established for a
particular state in a given year.
2. States are at risk to lose federal matching funds on
reinvested or transferred amounts (and be liable for the full
amount of contractual or other funds invested in the IVB like
services) in the event and to the extent IVE expenditures
exceed expectations.
3. The entitlement remains intact and the federal
government's obligation to reimburse states for qualified IVE
expenditures at the established State FMAP rate remains.
Other Considerations and Options
1. The basis for the reinvestment or transfer plan may be
on other than general projected growth in total expenditures.
The plan may be targeted to special populations, cover some
fraction of growth, or existing expenditures or even some
combination of the preceding.
2. States can clearly take steps to mitigate risk by
modulating, sequencing and carefully monitoring the rate of
expenditures of reinvested funds while at the same time
tracking expenditure patterns for IVE services.
3. Nothing in this proposal detracts from the oversight and
regulatory authority of the Federal Government and its ability
to require a plan of correction, or terminate an agreement for
cause, in the event that a State fails to achieve specified
outcomes during the course of implementing a transfer
agreement.
Retrospective Transferability Example
State Y thinks it knows how to reduce the rate of entry
into foster care and reduce its length of stay, without
compromising child safety. Its transferability plan is based on
tested practice and sound planning.
State Y which has a 50 % FMAP reflects IV-E expenditures
for 1999 as follows:
Figure 1
------------------------------------------------------------------------
State Federal Total
------------------------------------------------------------------------
$100M $100M $200M
------------------------------------------------------------------------
For fiscal year 2000, the federal government and the state
negotiate a baseline reflecting a 5% increase in expenditures
so that IV-E outlays are projected as follows:
Figure 2
------------------------------------------------------------------------
State Federal Total
------------------------------------------------------------------------
$105M $105M $210M
------------------------------------------------------------------------
State Y decides to front the money necessary to produce a
reduction in foster care caseload and related cost. At the end
of fiscal year 2000, the state has achieved actual foster care
costs as follows:
Figure 3
------------------------------------------------------------------------
State Federal Total
------------------------------------------------------------------------
$100M $100M $200M
------------------------------------------------------------------------
In fiscal year 2001, the state receives an additional $5
million in Title IV-B funding, representing the difference
between the federal share baseline of $105 million and the
actual federal share of $100 million. This amount (plus the
equivalent state savings--available in 2001) can then be used
to invest in strategies and services designed to produce
further savings and better outcomes for children.
If the state fails to achieve federal costs below baseline
then the federal government pays its usual 50 % share of the
full amount, including any overage.
Other Points on Transferability
Issues for the Out Years
The intent of both the prospective and retrospective
transferability approaches is to allow states to maintain their
reinvested funds in the baseline and to continue to use them in
the out years.
Adoption Assistance
Adoption assistance payments are outside any
transferability agreement and would be reimbursed as per
existing rules, notwithstanding changes in the rates of
reimbursement that arise as part of the delinking provisions of
this proposal if adopted (see delinking below).
Training and Administration
Title IV-E reimbursements for Administration and Training
are outside the transferability agreement. That is,
reimbursements for those activities would continue on an open-
ended basis, notwithstanding changes in the reimbursement rates
tied to the delinking provisions, if adopted (see delinking
below).
Basic Elements of Delinking
Delinking
Basic Policy
Eliminate income eligibility as a condition of receiving
federally financed foster care and adoption assistance.
Consequently, all children served by the state in foster care
or subsidized adoptive placements would be Title IV-E eligible
and states could claim federal reimbursement on their behalf.
This policy would eliminate state and federal costs associated
with eligibility determination.
Establishing the Rate of Federal Participation
A new federal participation or match rate would need to be
established as the basis for determining the federal share of
costs. APHSA is in the process of developing options on how to
determine the new match rate in an equitable manner.
Training and Administration
Since states claim for training and administrative costs
based on Title IV-E eligibility, the delinking provisions would
have an impact on how federal participation is carried out in
the future. For training and administrative expenditures, a new
match would need to be established.
Subsidized Guardianship
APHSA currently has policy adopted in July of 1997
advocating for the authorization of federal participation in a
state option to fund private guardianship or other legal
permanency arrangements with kin for children who otherwise
would have remained in long-term foster care. The rate of
federal participation would be equivalent to the rate
established for the adoption assistance program.
Chairman Johnson. Thank you. We certainly will work with
you on those things. The maintenance of effort issue is
extremely important to write correctly. Ultimately, we need
more money. And we certainly can't afford to create seepage.
Ms. McCullough.
STATEMENT OF CHARLOTTE MCCULLOUGH, CHILD WELFARE CONSULTANT,
CHEVY CHASE, MARYLAND
Ms. McCullough. Madam Chairman and Members of the
Committee, I appreciate the opportunity to be with you today.
Until very recently, I was a senior member of the Child Welfare
League of America. And for the last 5 years, my job was
director of the Managed Care Institute. In that capacity I was
able to track, and analyze, and sometimes shape some of the
managed care privatization and child welfare initiatives across
the country.
Some of what I am going to talk about today is going to be
overlapping with what the discussion from the GAO. But I think
it's important because we looked at different initiatives and
found similar complimentary findings in the various studies. I
believe there are lessons learned from the state and local
experiences that can be helpful in guiding this discussion.
It's important to also point out that not only is it hard
to track these initiatives, it's hard to even know what to call
them. In many of these tracking projects, they're called
privatizations, sometimes managed care, sometimes performance-
based contracting. So, we're going to look at the challenges,
what's going on currently, and how that might impact our
discussion about future Federal finance flexibility.
According to all of the studies that have been done, over
half of the states currently have one or more of these
initiatives under way. I looked at 47 initiatives that were
developed in 29 states. In most of those initiatives, the
public agency was partnering in new ways with the not-for-
profit agency. Often they were sharing financial risks with
that agency and allowing them to manage and deliver the
services. The goal there was to use the dollars flexibly to be
able to get better outcomes for kids and families.
There was great variability in the scope of the initiatives
that I tracked, just as there is in the GAO report. All toll,
we counted approximately 115,000 children currently in the
child welfare system that are affected by these plans. There is
also great variability in the financial risk share arrangement
and in how that rate was determined. Over half of the states
that we tracked are participating in the Title IV-E waiver and
are using that as a backdrop for their finance reform.
While some of the results of these initiatives appear to be
very promising, I think there were some challenges that we can
also learn from that were not addressed by these states simply
by the introduction of financial flexibility. First and
foremost among those, and we heard this earlier, is the lack of
data at the state level to currently plan and price these
initiatives, to track outcomes, to track utilization, and most
importantly, to see how much it costs linked with outcomes and
utilization. I agree that a lot of attention needs to be placed
on improving the states' capacity to track those outcomes. And
one option might be to enhance the SACWIS match back to 75% to
allow states the opportunity to add the features they can not
currently use in their systems.
The second challenge, states have found they can't predict
utilization with any degree of certainty. In fact, it's not
just bad news that drives up child welfare utilization. In many
states, improving the service system, increasing flexibility,
making it more friendly, they found an unpredicatible increase
in utilization. That uncertainty that states face would be one
issue that would have to be addressed as they move toward
embracing any of the flexible funding proposals under
consideration.
Third, the state can lose revenue under these models,
Federal revenue, just like they can in the current system. If
their plans succeed, then the Federal share diminishes the
state's role, increases in terms of the percent of the case
rate or capitated amount that the state is responsible for.
Fourth, until very recently, states were not able to access
the training dollars needed to ensure a skilled work force.
While we are turning over many of the public agency functions
to private agency staff, they found it very difficult to access
those training dollars. And here I want to really thank the
Committee. I understand that last night the bill that was being
marked up by the Full Committee, you addressed the training
issue. And I really appreciate that. And I know the states
will.
And fifth, many of these managed-carelike initiatives in
child welfare still had to contend with duplicative inefficient
eligibility and reporting requirements that increased their
administrative costs and reduced the amount of dollars
available on the street.
So, what should we do? I think there are a number of
options. I think it is time for us to take some steps to make
the system more efficient, more effective, and more
accountable. I believe that one of the options that we should
seriously look at is improving and modifying the current IV-E
waiver. I agree totally that the existing waiver is tightly
controlled. Experimental design needs to be replaced by a more
effective system. The application process needs to be
streamlined. States should not be discouraged from proposing
broad scope initiatives. And there should be no restrictions on
replicating waivers. They should be allowed to propose a
prospective payment methodology once approved for a waiver,
which would address some of the cash flow problems that are
striking in these initiatives. It also allows them front-end
funding to be able to develop new initiatives. The Children's
Bureau should work with the states to reduce the duplicative
reporting requirements that currently exist. And I believe the
gateway--the waivers should be a gateway to ongoing flexibility
once you have demonstrated good outcomes and cost-effective
models.
I am not clear why the proposal under consideration could
not be just one waiver option, and by doing that, being able to
include some of the futures of the previous APHS, a proposal on
the transferability. It seems as if that could be a waiver
option.
Finally, I think we just need to be aware that the fiscal
restructuring in any one system, including child welfare, is a
necessary step. But it's not a sufficient step to protect
children to ensure permanency. What more and more states are
doing is looking for integrated systems of care that cut across
behavioral health. They're using their Medicaid and mental
health dollars. We need to be able to support those efforts.
The biggest gap is currently in not addressing the SED needs, a
population which may be a small child welfare population, but
with incredible needs in cost. And finally, the substance abuse
treatment needs of parents of kids in care, I would urge
Congress to certainly invest in and act to support the Child
Protection and AOD Partnership Act of 2000.
And beyond that, I concur with what previous people have
said. We still do not know with any great degree of certainty
what's working. I believe additional research is needed to
tease out those elements under the existing financing contract
proposals that are under way to see what is actually working
well and holds the most promise for future. Thank you.
[The prepared statement follows:]
Statement of Charlotte McCullough, Child Welfare Consultant, Chevy
Chase, Maryland
My name is Charlotte McCullough and, for nearly fourteen
years, I had the privilege of serving as a senior staff member
of the Child Welfare League of America (CWLA), the oldest and
largest child welfare membership association in the country.
For the last five years I was director of CWLA's Managed Care
Institute. In that capacity I had the opportunity to shape,
track, and report on state efforts to change financing and
service delivery to get better results for children and
families. From that experience and from listening to hundreds
of public and private agencies describe their successes and
challenges, I believe there are certain lessons learned at the
state level that can help inform the discussion about federal
finance reform. I am now an independent child welfare
consultant working with a number of states, private agencies,
universities, and CWLA.
My testimony today is intended to describe the changes that
are currently occurring at the state or local level and to
place some of the challenges found in these new initiatives in
the context of the broader discussion about federal finance
reform for child welfare. I applaud the Committee for
addressing this critical issue and, like most child advocates,
I agree it is time for thoughtful finance reform.
As a backdrop for today's discussion, it is important to
remember there are four principal ways that child welfare
administrators can manipulate and manage their resources to get
better results for the children and families they serve. They
can:
Prevent the escalation of problems that cause
initial entry into the foster care system;
effectively and efficiently manage the care when
children enter foster care to ensure that children and their
families get the services they need, when they need them, no
more and no less;
achieve permanency sooner; and,
prevent re-abuse and re-entry.
Many states are now testing new methods of financing,
managing and delivering child welfare services with those four
approaches in mind. They are:
1) Introducing new financial incentives and managed-care
principles into their contracts with nonprofit providers--often
sharing financial risks;
2) Using Medicaid and other funds in combination with child
welfare funds to stretch limited prevention and therapeutic
dollars; and,
3) Choosing to participate in the Title IV-E waiver
program.
None of these single approaches, or the combination of
them, will end the discussion about the need for broader reform
in the financing of child welfare and related children's
services. But each of them could provide valuable insights into
what is working and not working in the current system. I will
highlight challenges and opportunities in each of those three
areas.
I. New Finance and Service Delivery Models Being Tested in
Child Welfare
There have been three national efforts to track and
describe the various child welfare managed care or
privatization initiatives across the county. The CWLA Managed
Care Institute's (MCI) Tracking Project has been collecting,
analyzing, and reporting national data since 1996, describing
various child welfare management, finance, and delivery
changes. In addition, in 1998, the GAO completed a managed care
in child welfare survey of state child welfare directors and 43
local directors. Site visits in four locations--Kansas,
Massachusetts, Boulder County, Colorado, and Sarasota County,
Florida were conducted. Georgetown University conducted the
third study of child welfare managed care efforts as part of a
broader 5-year Health Care Reform Tracking Project (HCRTP),
funded by the Center for Mental Health Services (CMHS). The
last HCRTP child welfare survey occurred in 1997-1998.
Despite the fact that each project counted different
initiatives and gathered different data to describe the
efforts, there is a striking degree of consensus on broad
findings across the projects and on what the findings mean.
Trends in Child Welfare Finance & Management Reform
Managed care or privatization efforts continue to
increase in number in the child welfare field. In all of the
separate national surveys at least half of the states have one
or more such initiatives underway. (CWLA reported on 47
initiatives in 29 states; the GAO reported on 27 initiatives in
13 states, and the Georgetown project identified 25 state and
community child welfare managed care initiatives.)
Public purchasers in most of the current
initiatives increasingly rely upon private contractors to
manage and deliver child welfare services and share in
financial risks and rewards. The most common arrangement is a
case rate. Under a case rate, a contractor is given a sum of
money for each case referred. Those funds are then used
flexibly by the contractor to pay for all services included in
the plan. Risk is currently being shared with nonprofit
agencies, for-profit agencies, and local public entities.
In the privatized risk-sharing arrangements, it
appears that contractors are often expected to supplement the
contract rate with funds from other sources. In some instances,
financial bonuses and penalties are being linked to performance
in key outcome areas. Often the contract does contain one or
more risk-adjustment mechanisms to protect the contractor from
catastrophic losses.
Various funding sources are used to support the
initiatives with the core funding coming from child welfare.
Many initiatives also use some Medicaid, mental health and
substance abuse block grant funds, TANF, and some education and
juvenile justice funds.
There is great variability in the scope of the
initiatives. Overall, it is estimated that nationwide between
10-15 % of the children and families served by child welfare
are currently affected by these managed care or privatized
models. For example, in the CWLA survey, 42 of the 47
initiatives provided estimates of the number of children to be
served annually; the total in 1998 was 114,243.
There are many different structural designs for
the initiatives and many initiatives have multiple different
design elements. However, it appears that the dominant model is
a nonprofit lead agency operating under a risk-sharing contract
with a state or local public agency.
What Are the Results to Date?
Since the majority of initiatives had been underway less
than 12 months at the time of the last surveys, it is too soon
to determine long term results for the children and families
served, or to determine which of the various models holds the
most promise for child welfare. Despite the lack of definitive
data, many of these initiatives do show promise. State
administrators cite the following benefits of the new
contracting practices:
1) True public/private partnerships are created where the
safety and well-being of children and the stability of families
is a shared responsibility.
2) The whole system becomes more accountable and outcome-
driven.
3) Creativity and innovation at the local level and
community ownership is stimulated.
4) Financial incentives are aligned for the first time with
programmatic goals.
What Are Greatest Challenges?
Despite the potential of these new methods of contracting
for services, all of the national tracking efforts have also
identified many challenges for both public agencies and their
new private partners. I would like to summarize a few of the
major barriers that should be addressed by any of the proposals
under consideration.
1. Lack of data to plan new approaches, monitor costs, track
outcomes, and manage risks
In order to plan a new finance system and develop at-risk
contract arrangements, states and contractors need to analyze
accurate fiscal data that show what it costs to deliver a unit
of service and what it costs over the life of a case in the
current system. Without data on current utilization and
outcomes linked to cost, it is very difficult to design and
price a managed care or privatized reform initiative. Yet, most
states simply do not have the capacity to track the services
used, the outcomes, and the costs to serve an individual child
and family over an episode of care. Many states cannot even
track and report accurate aggregate costs that are linked to
utilization and outcomes.
The lack of data and technology to support it becomes more
acute during implementation. Quality systems must be data-
driven. Public child welfare agencies and private contractors
must have access to real-time, client-level data to adjust, and
monitor at-risk contracts, track service use, and effectively
monitor fiscal performance and child and family outcomes.
According to GAO findings, public child welfare officials
overwhelmingly agreed that the inadequacy of their current
management information system was one of the biggest
challenges--if not the biggest challenge--they faced as they
implemented and monitored their new at-risk finance
initiatives.
Having access to accurate data is necessary not only to
support current efforts but also to support the states in
collecting and managing their resources under any future child
welfare finance arrangement. If states are hard pressed to
gather data today to design and price their contracts with
providers, how can a state have confidence in the data used to
establish the 5-year baseline called for under the proposed
flexible funding proposals?Regardless of the flexible funding
option decided upon, new investments are needed to support data
collection today and in the future. To enable all states to
begin to collect and manage utilization and cost information,
Congress and HHS should reinstate an enhanced match for SACWIS
adaptation to allow states to create added SACWIS capacity.
When the service delivery system includes a greater role for
private agencies in managing care and resources, it is
reasonable to also allow them access to funds to support the
development of their capacity to report quality, utilization,
and fiscal data to state SACWIS systems.
2. Inadequate cash flow and lost revenues for states if plans
succeed
Cash flow can become a problem for both the public agency
and the nonprofit contractor under managed care financing
arrangements. The question facing both public purchasers and
providers is how can prospective payments--the best option for
front-end flexibility--be balanced with the retroactive service
reimbursement methodology required by Title IV-E and often by
state statutes? One mechanism states have used is to have the
state advance general revenue dollars and later replace the
advances with reimbursement from Title IV-E, Medicaid, or other
sources. This assumes a state has an adequate base of general
revenue from which to draw. The cash flow challenges could be
better addressed under a modification of the Title IV-E waiver
program to allow states to propose prospective payments.
In addition to the problems with cash flow, states can lose
federal dollars if their new initiatives succeed. Under the
current system, the prohibitions against the use of Title IV-E
funds for services other than out-of-home care may increase the
state's liability for funding a greater share of any at-risk
contracts. This risk increases over time as the managed care
effort improves performance. For example, if the contractor
does succeed in reducing placement rates or shortening the
length of stay in foster care through a host of new service
interventions, the state's portion of the contract rate will
increase as the federal share decreases. When this happens, the
state may realize savings in its out-of-home care costs;
however, these savings may be more than offset by the state's
obligation to pay for non-federally reimbursable services under
the contract rate. The American Public Human Services
Association (APHSA) and other past proposals for transferring
unused IV-E funds into IV-B could help to address the problem
of being penalized for good performance.
3) Unpredictable utilization with the introduction of new
approaches
We can't just look to population and poverty trends in a
community and forecast future patterns of child welfare
utilization with a great degree of certainty. While we know
that factors in the economy may drive up demand, there are also
other problems outside the child welfare system--as the crack
cocaine epidemic in the 1980s demonstrated--which cause less
predictable but dramatic strains on the child welfare system.
And, as some states have discovered, improving practice and
creating a friendlier child and family service system may also
result in unanticipated increases in the demand for services.
As states transition to ``community-based'' or privatized
service delivery systems they must be prepared for these
unexpected consequences. For example, in some states, the
public agency is separating child protective service (CPS)
intake and investigations from the rest of the service system.
Most of the responsibility for managing funds and services is
being contracted to the private sector with the public agency
retaining control over CPS. Public agencies then focus their
efforts on improving CPS--by lowering caseloads and improving
assessments to better identify, protect and serve at-risk
children and families. As a result, they have found far more
children and families in need of services than in the previous
system. During the investigation, once a child and family is
identified as needing ongoing services, the case may be
transferred to the private contractor to manage. This is a
success scenario--children and families are getting the
services they need but didn't previously receive--but it may
result in added costs to the state or the contractor depending
on the risk-sharing arrangement.
Over time if more and more states move to these new public/
private risk-sharing partnerships and split CPS from service
delivery, it is hard to predict what the overall impact will be
on child welfare utilization and costs. This very uncertainty
is an important factor to consider in the flexible funding
proposals under consideration today. Do we know how to
calculate the potential impact of system changes--like
privatization or managed care or other reforms--on a state's
caseload and budget? Would the state have the capacity to track
utilization and costs ``real-time'' to see an upward trend
before it was too late? These would be important considerations
for states interested in participating in any proposed flexible
funding demonstration.
4) An inadequately equipped workforce
Staff roles, in both public and private agencies, change
dramatically under these at-risk or privatized contracts. Most
designers of current initiatives have failed to build in
adequate time or resources to ensure that all workers were
prepared to succeed in their new roles prior to implementation.
For example, under current privatized, at-risk models, some
public agency staff may step back from their traditional direct
case management and service provision roles to contract
monitoring and quality oversight. They need training to develop
the capacity to effectively monitor at-risk contracts and
ensure that legal protections are maintained. Private agency
staff need training to develop the knowledge and skills to
create and implement new case and utilization management
protocols, begin assuming duties long held by public
caseworkers, and manage risks they barely comprehend. At a time
when some systems are being turned upside down and roles are
dramatically shifting, training is essential.
Currently some states have experienced significant problems
in accessing and using IV-E training funds to provide private
agency staff training. The problem appears to be related to
federal regulations that have served to narrow the focus of
allowable activities, and limit the availability and
accessibility of training resources beyond what was intended by
statute. States commonly confront differing interpretations of
what is allowable, which entities are eligible, and at what
level of reimbursement. Regardless of the flexible funding
proposal chosen, Congress and HHS should clarify language and
provide access to training funds, at the enhanced 75% match to
ensure that both public and private workers are prepared for
their new roles and responsibilities.
5) Duplicative and inefficient eligibility and reporting
requirements
States and providers operating under managed care financing
arrangements still must contend with federal eligibility rules
and reporting requirements that are redundant, costly, and
difficult to manage. The problem becomes even more acute when
states try to ``blend'' or pool funds across multiple funding
streams. The magnitude of paperwork required for eligibility
and encounter reporting--in the absence of sophisticated
technology--limits access to needed services. The result is
higher administrative costs and fewer resources available to
invest in service improvements or expansion.
APHSA and others have proposed a review of current IV-E
rules and regulations to make the program easier and more cost-
effective to manage. Among the recommendations that merit a
full discussion is the de-linking proposal that would eliminate
income eligibility as a criteria to determine who among the
children in the foster care system are eligible for federally
reimbursed foster care and adoption assistance under Title IV-
E. Instead all foster care children would be Title IV-E
eligible. In order to offset increased costs to the federal
government for covering all children the APHSA proposal calls
for the federal reimbursement rate to be adjusted
proportionately in each state. The challenge will be agreeing
to the federal reimbursement rate adjustment under such a
proposal.
6) Lack of research and technical assistance to guide states in
planning new approaches
While the federal role in tracking, supporting, and
monitoring state managed health care efforts has expanded in
recent years, no comparable role has emerged for these new
managed care efforts in child welfare. According to the 1998
GAO report, the Administration for Children and Families (ACF)
has had limited capacity to provide formal guidance or
technical assistance to states wanting to go in the direction
of managed care financing in child welfare. Research is needed
to determine which elements, if any, of the new finance models
currently being used in states and local communities might be
most promising in improving quality and cost-efficiency.
Building on the past and current efforts of the GAO and the
work of national organizations, there should be a 5-year plan
for tracking and analyzing child welfare managed care/
privatization efforts, with a special emphasis on assessing
outcomes under at-risk contracts with those outcomes required
under ASFA.
Before promoting any one approach as the solution to child
welfare finance problems, it is important to proceed with
caution and glean lessons from different state and local
experiences. The ``demonstration'' language in the proposal
under discussion today is a step in the right direction. We
need to demonstrate the effectiveness of new strategies before
embracing a new model. Likewise, there is wisdom in limiting
the number of demonstrations to first determine whether the
approach is getting the desired results.
II. Using Multiple Funding Streams to Enhance Child Welfare
Increasing flexible funding in the child welfare system is
a necessary but insufficient step to ensure child safety, well-
being and permanency. Managed care models and other fiscal re-
structuring simply will not guarantee access to all the
services needed by child welfare populations. The biggest gap
lies in the behavioral health area. To address this challenge,
states need to be able to foster interagency and inter-system
collaboration between other adult and child-serving systems to
increase and enhance overall behavioral health capacity.
States are increasingly trying to develop comprehensive
programs and funding strategies that include accessing
Medicaid, TANF, and other funds to supplement their limited
child welfare prevention and treatment dollars. This is often a
monumental task--especially with the advent of managed care for
behavioral health care. To date, we do not know the full impact
managed behavioral health care on access to appropriate mental
health and substance abuse services by children and families in
the child welfare system. However, the national health care
reform tracking project (HCRTP) does shed light on some
coordination and financing issues:
1) When the boundaries are not clear and coordination is
lacking, there is a great potential for duplication of effort,
fragmentation, service gaps, cost-shifting, and disagreement
about payment responsibilities between the child welfare
systems and their behavioral health counterparts.
2) States are rarely able to track the impact of system
reform efforts in one system on reform efforts in another
system. Again, part of the problem is a lack of technology to
track costs, utilization, and outcomes for individual children
across multiple child-serving systems. Allegations of cost
shifting abound.
3) Children in the child welfare system and their families
have higher instances of mental health and substance abuse
treatment needs than other children and families of similar
socioeconomic backgrounds. However, the needs of this
population are not being adequately addressed in the design and
pricing of most Medicaid managed care plans.
These findings cause concern in light of the timeframes
contained in ASFA for making decisions about a child's
permanent placement. The bottom line is that without adequate
and appropriate behavioral health services to meet the needs of
children and families served by child welfare, ASFA is not
likely to promote, nor achieve, safety and permanency for a
large percent of the child welfare caseload. States have to
better understand and address the behavioral health care needs
of the children and families who come to their attention.
Current challenges relate to the following facts:
1. The substance abuse treatment needs of abused and neglected
children and families are not being met.
Statistics regarding the impact of substance abuse on
children and families are now well documented and staggering. A
major factor in child abuse and neglect each year, substance
abuse is associated with the placement of at least half of the
children in the custody of child welfare. It is also highly
correlated with longer lengths of stay once placed and with
reduced reunification rates. Yet, less than one-third of the
nearly 67% of parent caregivers who require treatment currently
receive it. Congress should act to address the substance abuse
treatment needs of child welfare populations by passing and
funding S.2435, the Child Protection/AOD Partnership Act of
2000.
2. The mental health treatment needs of abused and neglected
children and families are not being met.
In contrast to what we know about the issue of substance
abuse and its impact on children and families and the systems
that serve them, we have little empirical knowledge about the
scope, nature and treatment of mental health problems in child
welfare populations. However, it is estimated that it is
children with serious emotional disturbance--an unknown but
small percent of the overall foster care population--who may
consume the vast majority of both child welfare and child
mental health resources. Even less systematic research has
focused on the prevalence and impact of parental mental illness
on child abuse and neglect and placement in the child welfare
system.
Congress and HHS should support coordinated research on the
mental health needs of children and families served by child
welfare. The findings should guide future policies and result
in opportunities for demonstrations to test and promote model
approaches to cross-system child welfare and mental health
policy, practice, and funding.
3. Children are being placed in foster care solely for the
purpose of accessing needed treatment services (where no abuse
or neglect is involved).
Although the actual numbers are elusive, it appears clear
that some children are placed in the custody of public child
welfare agencies (in the absence of any finding of abuse and
neglect) when parents can find no other means of accessing
needed treatment services. Some states have enacted legislation
barring the child welfare agency from seeking or accepting
custody of children solely for the purpose of securing
treatment services, but this is clearly not the case in all
states. These practices, regardless of the scale of the
problem, must cease.
Congress and HHS should ensure the availability of services
to children with mental health needs to prevent entry into the
child welfare system. At a minimum, states should be required
to review policies and practices to ensure that children are
not entering foster care simply because it was the only means
of accessing behavioral health care services.
III. Challenges and Opportunities Under The Title IV-E Waiver
To date there are 30 waivers in nearly half of the states
and the District of Columbia. Collectively these demonstration
projects are aimed at reducing the number of children in foster
care and the length of stay, reducing the use of restrictive
and costly placement settings, and reducing re-abuse and
neglect and re-entry into foster care.
The Child Welfare Waiver Program has allowed participating
state and local agencies to use their federal resources
differently and to test innovative ways to both protect
children and preserve families. However, many observers note
that the program has become more restrictive over time. There
appears to be some federal ambivalence about how the waivers
are to be used and a narrowing of the purpose and potential of
the waiver. The different terms used to describe the waiver
program are telling. Is it a ``demonstration,'' i.e. a five-
year project intended to test, under a rigidly controlled
experimental design, innovations in a part of the service
array? Or can the waiver be a tool to test how financial
flexibility could fundamentally change the system? Is it
intended for practice innovation or a platform to support broad
system and financial reform?
The waiver program, as currently developed, appears to be
achieving some success but there are critical issues that must
be addressed if the program is to achieve maximum benefit for
participating states. Many of these issues are being raised in
the waiver modification proposal under discussion today.
I strongly support a modification of the waiver program and
encourage Congress to consider include the following points:
1) The tightly controlled experimental design requirements
should be replaced by less rigid but sound methods of ensuring
effective evaluations.
2) The application process should be streamlined and states
should be allowed to broaden the size and scope.
There has been a stated preference for ``small''
demonstrations'' in limited areas of child welfare practice and
states were strongly discouraged during the application process
from going statewide. Up to five states have withdrawn their
waiver proposals because they determined the process was too
complex, and time consuming when balanced against potential
benefits of a project with limited size and scope.
3) Existing waiver projects should be allowed to expand
Participating states should have the ability to expand
their efforts to cover additional children and families or add
geographic areas of the state during the waiver period without
having to go through a full application process and rigorous
expansion of the evaluation.
4) The program application period should be extended beyond
2002
As the program goals are clarified and some of the current
barriers removed, it is likely that additional states will see
the merits of the waiver. For those states that have not yet
applied and for existing waiver states to propose new projects,
the waiver application period should be extended beyond 2002.
5) There should be no restrictions on replicating all
features of waivers found in other states; and no limits on how
many waivers a state may have.
6) The waivers should be a gateway to continuing
flexibility.
Once a state has demonstrated improved outcomes and a cost-
effective, cost neutral model, the state should not be required
to return to business as usual after the waiver demonstration
period ends. Instead the state should be allowed to retain the
flexibility and expand the program, operating more like certain
Medicaid waivers.
Chairman Johnson. Thank you very much. We're going to hear
from Kathleen Kearney, the Secretary of the Florida Department
of Children & Families. And then we're going to go vote on one
procedural vote. We have only one vote. And then we'll be back
promptly.
STATEMENT OF HON. KATHLEEN A. KEARNEY, SECRETARY, FLORIDA
DEPARTMENT OF CHILDREN AND FAMILIES, TALLAHASSEE, FLORIDA
Ms. Kearney. Good afternoon, Madam Chair and Members of the
Committee. It's wonderful to be back with all of you again. I
would like to really limit my remarks, in light of your pending
vote, to the addendums, to the attachments, to my testimony.
And I'll begin first with a real-life example that we see
every day, which is under a child's journey through the child
protection system, an analysis of multiple funding streams.
This example is one that we see in about 80% of our cases that
come in on our Florida Child Abuse Hotline. You will see that
about 80% of our cases are, in fact, substance abuse involved.
And Jason's case is no exception. You will see in this
particular example, which is very typical, Jason, a newborn,
there is a call that comes in on the Child Abuse Hotline that
indicates that there are some concerns that a neighbor has
about this particular child. Mom is not really paying very
adequate attention to the child. But there is not enough
information at that time for the Child Abuse Hotline to accept
that case for further investigation. There are concerns. But it
is not accepted and actually investigated. Later on, a call
comes through that indicates that mom is, in fact, doing drugs.
Mom is on the street. Mom is running around. Mom is not taking
care of the child. There is enough information at that time for
the case to be accepted. And we do investigate. However, in our
state, as in most states, that would not be sufficient in and
of itself to have the matter under the jurisdiction of the
court with the filing of a Dependency Petition. But
preventative in-home services would be offered to the family.
You can see in Jason's case that those services really were not
effective. Why? Because we don't have enough of them. We have
long wait lists for those services that do exist for prevention
to keep a child in the home. And safety certainly was not
ensured in Jason's case. Jason was ultimately removed when mom
failed to continue her treatment efforts. And if you follow the
diagram through, you will see next to all of the services that
would have been provided, the various Federal funding and state
funding streams that go into providing these specific services.
We even have, luckily in Florida, a Medicaid situation now
where we can get a comprehensive assessment for children that
are brought into foster care. But you can see the complexity of
all of this, especially as it goes all the way through, Jason
ultimately ending up in a termination of parental rights
situation and adoption.
Imagine now that you are a 22-year-old caseworker and you
must now fill out all of the necessary paperwork in order to
ensure that those Federal funding sources are, in fact, covered
so that you are reimbursed for them. Now, also assume that you
have a caseload of 65 cases, which is the average right now in
Florida, rather than 18. Shortly before I came here, I was
beeped by my office to be told that there was a child in
Broward County, that's Fort Lauderdale, that was tortured, and
a foster care worker had not adequately done a reunification
home study to return this child home. And the child had
unsupervised visits with mom. The worker didn't know that mom
had a boyfriend. That boyfriend subsequently abused that child.
The excuse, the reason that was given, I have too much
paperwork, I can not afford to do direct services. And yet,
that is what you, as Members of Congress, that is certainly
what the public expect the money is being spent on, not on
administration, but, in fact, on direct services. I can tell
you that it concerns me every night when I go to bed that that
is not occurring.
You will see also in the graphs that I have provided to
you, there is a pie chart under Exhibit B that shows you the
breakdown in Florida of the funding sources. You will see in
the purple the Title IV-B and Title IV-B Prevention, which is
exploded, meaning it comes out. The Federal share for Florida
for prevention under Title IV-B is $1.7 million. You will note
how much exists in Title IV-E, out-of-home care.
Florida strongly would support the ability to have flexible
funds. We strongly support the transferability to be able to
transfer. However, you will see in my detailed written
testimony concerns that I have about all of the proposals. We
do feel that the first proposal, the flexible funding, like Mr.
Waldman, we wish would be extended beyond just five states. We
believe it's an excellent proposal. And you will see a full
breakdown of those issues as I understand them from the letter
I received from the Chair.
The last comment I'd like to make is on Exhibit C, so that
you are aware, this is a breakdown of the calls that come into
the Florida Child Abuse Hotline. The green are those where you
would find actual allegations of abuse and neglect where court
involvement could take place. In Jason's case, that was the
third call that came into the hotline. The blue are cases not
accepted for investigation, approximately 24%. You will see
that would be the first call into the hotline on Jason. The
area I'd like to highlight for you is red, which is the area
where there are findings but there may not be enough evidence
to go into court, there may not be enough evidence for removal
or evidence even to warrant services being put in place. Out of
that red group, one half eventually will move into the green
group and will eventually have another call into the hotline
just as Jason did, ultimately resulting in his removal. It is a
very serious situation. And we thank the Committee for your
attention to this matter.
[The prepared statement and attachment follows:]
Statement of the Hon. Kathleen A. Kearney, Secretary, Florida
Department of Children and Families, Tallahassee, Florida
Good afternoon Madam Chair and members of the Human
Resources Subcommittee. My name is Judge Kathleen A. Kearney,
and I am the Secretary of the Florida Department of Children
and Families. It is a pleasure to be asked to testify again
before this Subcommittee about the need for flexibility in our
Title IV-E federal funding program
The interest of this Subcommittee in these issues is deeply
appreciated. Given this Subcommittee's leadership in developing
the recent landmark child protection reforms under the Adoption
and Safe Families Act (ASFA), I have every confidence that you
will continue to ensure that child safety is always the
priority consideration of states and the individual
professionals who perform this work.
I would like to make some general comments as to why more
state flexibility in federal financing would produce:
Better outcomes for children and families;
A more ``child focused'' rather than ``system
focused'' delivery of social services.
I have brought a typical example here for you today of ``A
Child's Journey Through the Child Protection System,'' (See
Exhibit A). In every child protection case, there are six
different potential federal funding sources depending on the
services and whether or not the child is IV-E eligible.
I have attached a second chart, ``An Analysis of Federal
Funding Sources,'' (Exhibit B), which shows Florida's federal
funding, and the overall small percentage that is actually
available for prevention. It is our belief that the federal
partnership for protecting children needs to provide far
greater opportunities and incentives to support and preserve
families, as long as it is safe for the child to remain in the
home. There must be clear options at the earliest possible
stage of intervention for assisting families when they are in
crisis with the right supports and services.
There are current caps on Title IV-B funding for in-home
services and a prohibition against using Title IV-E to fund in-
home interventions. It is well known and documented that the
cost of out of home care will usually exceed the cost of in-
home interventions.
A third chart, ``Calls to Hotline'' (Exhibit C), has been
submitted which reflects the total number of calls to the
Florida Child Abuse Hotline in State fiscal year July 1, 1998
though June 30, 1999. Florida received a total of 182,691 calls
answered by the Hotline alleging child abuse and/or neglect.
Findings were as follows:
24 percent of calls did not meet criteria for
investigation; i.e. did not meet Florida's statutory definition
of abuse and/or neglect;
38 percent of calls were investigated, but found
to have not enough evidence to classify the behavior as abuse
and/or neglect under Florida law;
38 percent were investigated and were found to
meet these statutory criteria for abuse and/or neglect.
It must be noted that of the 38 percent of calls
investigated that initially are classified as having not met
statutory criteria for abuse and/or neglect, approximately one
third are referred again for new allegations of abuse that were
founded.
It is believed that had more effective front-end prevention
services been in place, there would have been fewer instances
of abuse and neglect that would require the removal of children
from their homes.
The funding sources as currently framed are not child
focused. They are skewed toward placement of children in foster
care. They are burdensome. Every specific type of activity has
to have an accounting code that tracks to the federal funding
source. To add to the complexity, there are different federal
match rates, and some activities will require documentation of
local matching dollars. Simply stated, the current patchwork of
funding sources is a budgeting nightmare that impacts our
workforce at every level. Counselors are forced to sacrifice
direct fieldwork with children and families in order to
complete paperwork required by the federal government to ensure
funding for the services they are attempting to provide. These
efforts and the rigid ``siloed'' funding streams divert
attention and resources from the real needs of children and
families.
My comments on the three different options proposed in the
draft legislation are set forth as follows:
Analysis of Proposals
Proposal 1: Optional Program to Create Flexible Funding
This proposal provides the most flexibility and includes
built in incentives to invest funds in prevention services.
Comments on the specific proposals are as follows:
a) Establishment of a three-year baseline and projection of
estimated Title IV-E spending in the next three-year period.
States would draw down equal quarterly payments each year and
would not have to recalculate Title IV-E eligibility.
Assuming that a reasonable population growth could be
factored-in, this would mitigate current concerns with respect
to this option. If the out years did reflect a growing
population, the quarterly payments could not be ``equal'' over
the entire three-year period.
The elimination of the need for ongoing eligibility
calculations would be very beneficial. This is a time consuming
process.
There should be consistent performance expectations at the
federal level that are factored in to the three-year
projection, particularly related to length of stay. A
consistent approach at the federal level in terms of funding
limitations for poor state performance on foster care lengths-
of-stay would potentially achieve more equity in federal
funding across states. Although Florida would hope not to be
disadvantaged by such provisions, we believe that Title IV-E
funds should not continue to flow for length of stay averages
that reflect poor state performance. Length of stay performance
improvements should be factored into the projected
expenditures. Selecting this option should not inadvertently
penalize states. A similar method for containing Title IV-E
payments related to average-length-of-stay would need to be
developed for states that do not participate in this
demonstration.
It is our assumption that this new federal payment option
would allow the state the flexibility to establish case rate
methods of reimbursement, which combine maintenance and case
management (administrative) costs. The current work effort
involved in documenting the six separate federal claims under
title IV-E each quarter (maintenance, administrative, and
training) is very complex and cumbersome. The quarterly payment
method would be a significant improvement in this program.
States that currently have demonstration waivers should be
allowed to discontinue the waivers if selected for
participation under this option.
b) States could renegotiate the baseline amount after the first
year if they demonstrate that estimation errors were made.
It would be beneficial to states to have an option for
demonstrating the need to adjust the projections. There should
be some standard factors that are used to allow for
adjustments, such as an increase in the state's per capita
reporting rate. Adjustments should not be allowed for increased
number of children in care as the result of increases in
overall length of stay.
c) States would be required to sign a legally enforceable
document obligating them to guarantee services for the same
group for whom the state was obligated to provide services
before they embarked on the program.
This is a reasonable expectation. However, our experience
with the documentation effort for TANF funds regarding
``maintenance of effort (MOE)'' is not one that we would want
replicated. The TANF requirements for MOE are extremely
cumbersome and complex.
d) With the exception of flexibility in spending, states would
still be subject to all provisions of the current Title IV-B
and Title IV-E statutes, including the new accountability
system recently established in federal regulations.
As Florida currently uses funds from the Title IV-B capped
grant to fund the maintenance payments for children who are not
Title IV-E eligible, this provision would be very beneficial.
The flexible spending between these two federal programs would
afford states more opportunities to provide a continuum of
services to children that, when appropriate, would allow more
placement diversion services and options.
It is not clear how the current requirements of the IV-B
grant in terms of 20% of expenditures dedicated to prevention,
20% for family preservation, 20% for reunification services,
20% for post-adoption support, and 20% for other services would
be applied. This grant is currently very complex to administer
and diminishes the opportunities for demonstrating effective
prevention and placement strategies.
The accountability system requirements appear to be based
on good practice.
e) States would have the right to return to the open-ended
entitlement system at the beginning of any fiscal year.
This is a good option for states to have, as long as it
provides equal incentives/disincentives for performance. For
example, if a state's length of stay were increasing, one
method of reimbursement should not be advantageous to any
state.
f) States could include in their flexible funding grant all
three federal foster case baseline streams under Title IV-E
(maintenance payments, administrative, and training), all three
adoption streams, or both.
This would be very beneficial to states. Florida is in the
process of establishing a community-based child protection
system through the use of contracted service providers. It is
hoped that the matching rates for training would be equalized
for the training of private provider staff. Additionally, it
would also be helpful to consolidate state match criteria for
Title IV-E and Title IV-B. It would be difficult to continue to
account for different types of local match if these two federal
programs were combined.
g) During the fifth year, and near the end of all subsequent
five-year periods, states would have the option of continuing
to receive their federal funds in a flexible grant. States
would always be guaranteed the amount of money in the baseline
for five years. In each case, the baseline would be proposed by
the state and approved by HHS, with the Secretary having the
power to accept, reject, or propose modifications. Once the
baseline was agreed upon, states would have 5 years of
guaranteed funding at a fixed amount each year. States would
always retain the option to return to the open-ended
entitlement system at the beginning of any fiscal year.
This provision was incorporated in the original position
paper submitted to me from the Subcommittee with my invitation
to testify. This is a good provision. Given the serious nature
of the work required to protect children from abuse and
neglect, it is imperative that the states be allowed to retain
the option to return to the open-ended entitlement program if
such a system proves to be more effective in keeping children
safe from harm. This provision has subsequently been modified
by the draft legislation. It is my opinion that the time
limitation imposed by the draft legislation is unnecessary.
h) States would be required to maintain state and local funding
at the current level.
It is unclear what is meant by this provision. If it is
meant to establish a state ``Maintenance of Effort''
requirement, please see comments referring to same set forth
above.
Proposal 2: Transferring Funds to Achieve Flexibility
Florida strongly endorses the concept of transferability.
However, it appears that this proposal leaves intact the
current Title IV-E entitlement structure and will not provide
the flexibility or incentives set forth in Proposal 1 described
above. Florida would need to conduct further analysis to
determine if the transfer of funds option would provide the
desired outcomes anticipated.
Proposal 3: Waiver Modification
Florida was the recipient of a statewide demonstration
waiver in late 1999, which is designed to help implement
community-based care. We are required to identify matching
control sites as part of the evaluation of this waiver.
Extensive data collection and analysis will need to be
conducted in non-waiver sites to document differences. We are
strongly in favor of an evaluation component, however, the
current waiver requirements result in duplication of efforts
and delay needed reform.
This proposal calls for several changes to Section 1130 of
the Social Security Act:
Eliminate all restrictions on the number of
waivers;
Reduce or eliminate the research and evaluation
requirements;
Eliminate the restriction on the number of states
that can conduct waivers on any given topic;
Eliminate the limit on the number of waivers a
given state could have;
Allow states that have met the terms of their
waiver agreement to extend them indefinitely.
Florida strongly supports these changes and encourages
Congress to, at a minimum, enact this legislation during this
current session. It will be of great benefit to all states if
such action is taken. Furthermore, those states participating
in a current demonstration waiver should be permitted to opt
out of that waiver in favor of the more flexible program
envisioned by these proposals.
Thank you for providing me with the opportunity to offer
comments to you on this very important legislation. Florida
would certainly compete for an opportunity to obtain more
flexibility in this critically important federal program for
abused and neglected children. You are to be commended for your
continued efforts to protect the most vulnerable among us -our
nation's children.
Respectfully submitted this 20th day of July 2000, in
Washington, D.C.
Exhibit A.
[GRAPHIC] [TIFF OMITTED] T8871.001
Exhibit B.
[GRAPHIC] [TIFF OMITTED] T8871.002
Exhibit C.
[GRAPHIC] [TIFF OMITTED] T8871.003
Chairman Johnson. Thank you very much. We will adjourn
briefly for the vote. It will take about 10 minutes. Thanks.
Unfortunately, Mr. Cardin has a markup in another Subcommittee.
Those two votes, as it turned out, did delay us. Mr. Wentworth.
STATEMENT OF ROBERT WENTWORTH, SENIOR MANAGER, MASSACHUSETTS
DEPARTMENT OF SOCIAL SERVICES, BOSTON, MASSACHUSETTS
Mr. Wentworth. Madam Chair and Members of the Subcommittee,
I am a senior manager at the Massachusetts Department of Social
Services, the children's protective services agency in that
state. My responsibilities include oversight of the residential
placement service system for over 2,100 children and
adolescents in the care or custody of the Department. I
appreciate this opportunity to testify about proposals under
consideration by this Committee to increase the amount of
flexibility states have in using their IV-E dollars. In my
testimony I will focus on our experience in implementing
flexible funding mechanisms in the purchase of residential and
aftercare services for adolescents through the Massachusetts
Commonworks Program.
The Massachusetts Commonworks Program provides a continuum
of services for adolescents who require residential treatment.
Currently serving about 55% of the total residential care
population, Commonworks provides an integrated, comprehensive
array of services for adolescents and their families through
six networks of private providers, each under the management of
a non-profit Lead Agency. These are children with severe
behavioral and emotional problems, often complicated by other
handicapping conditions, who can not be safely maintained in a
less restrictive, family like setting. The key objective of the
Commonworks Program is to help these youth to achieve their
permanent plan as quickly as possible.
The Department's goals are to improve access to necessary
and appropriate services, to ensure that services are
consistently delivered according to the highest standards of
quality, and to find cost savings that can be reinvested in the
system to serve more children within budgetary constraints.
Managed care mechanisms and processes are employed in this
carve out to help us achieve these goals through a funding
structure that permits greater flexibility in purchasing
services that best meet individual client needs.
The Department pays a monthly case rate to the Lead Agency
for each youth in placement, and a separate lesser monthly case
rate to support up to 6 months of aftercare services for youth
who have been discharged from placement. Incentive payments are
provided for successful outcomes, such as discharge from
placement, and if the youth does not return to placement within
6 months of discharge. The Lead Agency subcontracts with
providers who operate programs of varying levels of
restrictiveness from staff secure residential schools to
smaller community group homes and specialized foster care.
Youth enter the system at the highest level of care, transition
to less restrictive settings or return home as they progress in
treatment. During the transition and aftercare period, family
support and wraparound services are purchased to support the
discharge plan.
The Department pays a separate administrative fee to the
Lead Agencies for the employment of highly trained and
experienced care coordinators, educational coordinators, and
support personnel.
Each Lead Agency has fiscal liability for up to 3% of costs
that exceed the case rate, and may retain as profit up to 3% of
revenue earned for costs that fall below the case rate. This
risk corridor is calculated annually. Earnings are achieved
primarily by ensuring youth are progressing in treatment and
moving to less restrictive and less costly placement settings.
The Lead Agency can purchase whatever additional services are
needed to support the placement by drawing on the funds that
have accumulated in their service accounts. This model provides
greater flexibility in the purchase of services to meet the
individual needs of youth than when the Department purchases
placement services directly through unit rate contracts with
providers.
Savings accrued beyond the 3% are reinvested in program
development to address service gaps in the regional systems of
care. Prior to the Commonworks Program, the Department never
had access to reinvestment dollars. But over the past 2 years,
Commonworks has generated more than $2 million for Regional
program development initiatives.
Intensive case management coupled with funding mechanisms
that incentivize positive outcomes and provide greater
flexibility in the purchase of services has resulted in a 6%
recidivism rate for planned discharges and a significant
decrease in the percentage of youth who are placed in the most
restrictive settings.
While the average case rate paid for service is
substantially less than the average rate paid by the Department
for non-Commonworks placements, when the administrative costs
associated with delivering better outcomes are factored in,
Commonworks is not less expensive. Over time, however, it is
anticipated that the cost per youth may actually decrease as a
result of continued shortened lengths of stay in high cost
residential placements and further use of wrap around and
support alternatives to maintain youth in less restrictive,
less costly, permanency placements in the community.
In order to move the system forward it is our intent to
integrate the currently bifurcated system of placement services
and aftercare community support services by developing a
blending capitated rate. This will provide even greater
flexibility and an increased incentive to provide intensive
wrap around and family support services early in the youth's
placement. The proposals under consideration by this Committee
will provide Massachusetts with the tools needed to promote
further creativity and innovation in our system and will result
in earlier achievement of permanency for youth in residential
placement. Thank you, Madam Chair.
[The prepared statement follows:]
Statement of Robert Wentworth, Senior Manager, Massachusetts Department
of Social Services, Boston, Massachusetts
Members of the Subcommittee:
I am a senior manager at the Massachusetts Department of
Social Services, the children's protective services agency in
that state. My responsibilities include oversight of the
residential placement service system for over 2100 children and
adolescents in the care or custody of the Department. I
appreciate this opportunity to testify about proposals under
consideration by this committee to increase the amount of
flexibility States have in using their IV-E dollars. In my
testimony I will focus on our experience in implementing
flexible funding mechanisms in the purchase of residential and
aftercare services for adolescents through the Massachusetts
Commonworks Program.
The Massachusetts Commonworks program provides a continuum
of services for adolescents who require residential treatment.
Currently serving about 55% of the total residential care
population, Commonworks provides an integrated, comprehensive
array of services for adolescents and their families through
six networks of private providers, each under the management of
a non-profit Lead Agency. These are children with severe
behavioral and / or emotional problems, often complicated by
other handicapping conditions, who can not be safely maintained
in a less restrictive, family-like setting. The goal of the
Commonworks Program is to help these youth to achieve their
permanent plan as quickly as possible.
The Department's goals are to improve access to necessary
and appropriate services, to ensure that services are
consistently delivered according to the highest standards of
quality, and, to find cost savings that can be reinvested in
the system to serve more children within budgetary constraints.
Managed care mechanisms and processes are employed in this
carve out to help us achieve these goals through a funding
structure that permits greater flexibility in purchasing
services that best meet individual client needs.
The Department pays a monthly case rate to the Lead Agency
for each youth in placement, and a separate lesser monthly case
rate to support up to 6 months of aftercare services for youth
who have been discharged from placement. Incentive payments are
provided for successful outcomes, such as discharge from
placement, and if the youth does not return to placement within
six months of discharge. The Lead Agency sub-contracts with
providers who operate programs of varying levels of
restrictiveness from staff secure residential schools to
smaller community group homes and specialized foster care.
Youth enter the system at the highest level of care, transition
to less restrictive settings or return home as they progress in
treatment. During the transition and aftercare period, family
support and wraparound services are purchased to support the
discharge plan.
The Department pays a separate administrative fee to the
Lead Agencies for the employment of highly trained and
experienced care coordinators, educational coordinators, and
support personnel.
Each Lead Agency has fiscal liability for up to 3% of costs
that exceed the case rate, and may retain as profit up to 3% of
revenue earned for costs that fall below the case rate. This
risk corridor is calculated annually. Earnings are achieved
primarily by ensuring youth are progressing in treatment and
moving to less restrictive and less costly placement settings.
The Lead Agency can purchase whatever additional services are
needed to support the placement by drawing on the funds that
have accumulated in their service accounts. This model provides
greater flexibility in the purchase of services to meet the
individual needs of youth than when the Department purchases
placement services directly through unit rate contracts with
providers.
Savings accrued beyond the 3% are reinvested in program
development to address service gaps in the regional systems of
care. Prior to the Commonworks Program, the Department never
had access to reinvestment dollars. Over the past 2 years,
Commonworks has generated more than 2 million dollars for
Regional program development initiatives.
Intensive case management coupled with funding mechanisms
that incentivize positive outcomes and provide greater
flexibility in the purchase of services has resulted in a 6%
recidivism rate for planned discharges and a significant
decrease in the percentage of youth who are placed in the most
restrictive settings.
While the average case rate paid for services is
substantially less than the average rate paid by the Department
for non-Commonworks placements, when the administrative costs
associated with delivering better outcomes are factored in
Commonworks is not less expensive. Over time, however, it is
anticipated that the cost per youth may actually decrease as a
result of continued shortened lengths of stay in high cost
residential placements and further use of wrap around and
support alternatives to maintain youth in less restrictive,
less costly, permanency placements in the community.
In order to move the system forward it is our intent to
integrate the currently bifurcated system of placement services
and aftercare community support services by developing a
blended capitated rate. This will provide even greater
flexibility and an increased incentive to provide intensive
wrap around and family support services early in the youth's
placement. The proposals under consideration by this committee
will provide Massachusetts with the tools needed to promote
further creativity and innovation in our system and will result
in earlier achievement of permanency for youth in residential
placement.
Chairman Johnson. Thank you very much, Mr. Wentworth. Ms.
Allen.
STATEMENT OF MARYLEE ALLEN, DIRECTOR, CHILD WELFARE AND MENTAL
HEALTH, CHILDREN'S DEFENSE FUND
Ms. Allen. Good afternoon, Chairman Johnson. I am MaryLee
Allen, Director of Child Welfare and Mental Health at the
Children's Defense Fund. I really appreciate your invitation to
testify today on behalf of the Children's Defense Fund.
I am particularly pleased to be here because of the
leadership that you personally have shown over almost two
decades now in advocating on behalf of the children in the
child welfare system as well as the children who are at risk of
placement in the system. Today, CDF certainly shares your
commitment to find ways to increase investments in preventive,
reunification, and post-adoption and other post-permanency
services for abused and neglected children. We also share your
concern about the fact that the vast majority of Federal child
welfare dollars are spent on the placement of children outside
of their families, without equivalent investments in services
for children and families.
As you know, these are not new concerns for CDF. More than
20 years ago in Children Without Homes, CDF highlighted the
fact that Federal funding patterns in child welfare act as
disincentives to the development of strong family support
programs. Many a time since then, we have appeared before this
Subcommittee to make a case for increased investments in
preventive and reunification services to put such funding at
least on an equal par with funding for out-of-home care. But as
you well know, despite progress in other areas, there has been
relatively little progress in this area.
Today, however, is a new day. I believe that we have an
unprecedented opportunity. The Congressional Budget Office is
projecting a 10 year Federal on-budget surplus of $2.1
trillion, a $102 billion on-budget surplus for next year alone.
We can no longer ignore the imbalance in funding or the needs
of hundreds of thousands of our country's most vulnerable
children. It's time to make new investments in prevention,
reunification, and post-permanency services.
You are proposing that this can best be done and best be
achieved by conditioning increased flexibility in funding on
states opting for a cap on foster care and/or adoption
assistance funds.
As you know, CDF does have some serious questions about
this approach. We believe, however, that the best way to
resolve a longstanding debate about the effectiveness of such
an approach is to proceed with the small number of flexible
funding pilots that you have proposed. They should teach us a
lot about how such flexible funding proposals will impact
outcomes for children and families and increase investments in
services. To truly learn from the pilots, planning and
monitoring provisions need to be added to the draft that's in
an initial stage now. We also want to continue to work with the
Subcommittee to make the pilots more workable and somewhat
simpler. CDF's support for the pilots arises from our
understanding that the individual entitlement to services and
the individually enforceable protections in current law will be
maintained and that there will be a strong maintenance of
effort provision.
We believe that a maintenance of effort requirement is
essential, as you have mentioned earlier today, to ensure that
flexible dollars are not used to reduce Federal, state, or
local spending for child welfare services. We are pleased that
it's included in the proposal. Children need more, not less. We
also are pleased that you have attempted to address the income
eligibility test in IV-E as well and begun the process of
trying to look at what might occur if, in fact, we de-link
income from funding in that particular area.
While we're learning from the pilots, however, CDF
recommends that the Subcommittee also take a number of long and
short-term actions that are outlined in our written statement.
I think in the long term, as we continue the debate about some
of the strategies being proposed today, that we will be well
served by stepping back and putting aside the existing
programs. We should consider starting fresh. We should ask what
we would do if we were to design a new system today. What would
it look like in terms of the Federal Government's obligations
to some of our most vulnerable children and families?
In the short term, however, there are some very specific
actions that CDF believes can and should be taken to expand
investments up front immediately for prevention, reunification,
and post-permanency services. They all would give states
increased flexibility in their use of funds and would also help
ensure that the goals of the Adoption and Safe Families Act
(ASFA) were realized for children and families. I'd like to
mention quickly just three of them.
First, CDF recommends that the Title IV-E Foster Care
Program should be amended to allow, in addition to the current
reimbursement for room and board payments, for reimbursement
for services for up to 15 months for families who come to the
attention of the child welfare system. States should be
reimbursed for services to children and families whether or not
the children end up in foster care. Certainly Judge Kearney
talked earlier this afternoon about the cases of calls coming
into the hotline for whom there are often no services with
which to respond. These dollars could be used for services in
situations like those. This recommendation builds on some of
the same assumptions that underlie your flexible funding
proposal. If states make investments when problems first come
to the attention of the system, children will benefit and the
need for more costly out-of-home care may be able to be reduced
over time.
Second, the Title IV-E Foster Care and Adoption Assistance
Programs should be amended to allow states to claim
reimbursement in both programs for up to 18 months for post-
permanency services. These would help to ensure that children
who are adopted, placed permanently with kin, or are returned
home, remain in those families--that those placements really
are permanent. It's very troubling when you consider that the
reentry rates in many states for children discharged from
foster care are often 20 to 28% or higher. We are not ensuring
permanence for those children.
And one last example. We seriously urge the Subcommittee to
consider expanding treatment for families with alcohol and drug
problems. Judge Kearney mentioned, I think, that the
percentages are 70 or 80% in her state. And sadly in many other
states you see that same pattern. An estimated 75 to 85% of the
families who come to the attention of the child welfare system
are facing challenges with substance abuse. We ask the
Subcommittee to consider action on the Senate's bipartisan
Child Protection and Alcohol and Drug Partnership Act. S. 2345
would provide flexible funding to states where the child
protection and alcohol and drug agencies apply together and
commit to joint activities that will increase and improve
treatment services for these families.
We really appreciate the opportunity today to make
recommendations to increase funding for preventive,
reunification, and post-permanency services and to increase
flexibility in funding as well. CDF looks forward to, and hopes
that we'll have the opportunity to, work with the Subcommittee
on the flexible funding pilots and other short and long-term
actions to increase states' capacity to promote safety and
permanence for children. Thank you.
[The prepared statement follows:]
Statement of MaryLee Allen, Director, Child Welfare and Mental Health,
Children's Defense Fund
Good afternoon Madam Chairman, and other members of the
Subcommittee on Human Resources. I am MaryLee Allen, Director
of Child Welfare and Mental Health at the Children's Defense
Fund. The Children's Defense Fund (CDF) is a privately funded
public charity dedicated to providing a strong and effective
voice for all the children of America. As we seek to Leave No
Child Behind, CDF pays particular attention to the needs of
poor and minority children and children with disabilities. CDF
has been working since the mid-1970's on behalf of children who
are at risk of placement in the child welfare system or who are
already in care. CDF has never taken government funds.
I appreciate your invitation to testify today on behalf of
CDF at the Subcommittee's Hearing on Increasing State
Flexibility in the Use of Federal Child Protection Funds. I am
particularly pleased to be here Madam Chairman because of the
important leadership you have provided over almost two decades
on behalf of children at risk of placement in the child welfare
system or who are already in care. You and other members of the
Subcommittee have worked diligently with CDF and others to
pursue reforms on behalf of older youths aging out of foster
care, to increase services to promote safety and permanence for
children, to improve data collection and tracking, and to
encourage states to demonstrate the types of reforms they want
to undertake with increased flexibility in federal funding.
I am here today because CDF shares your commitment to
increase services to prevent children's removal from their
families, to encourage timely reunification in cases where
temporary removal is necessary, and to promote post-adoption
services--all goals that you have stated are central to the
flexible funding proposals you are preparing to introduce. CDF
also shares your concern that the vast majority of state and
federal child welfare dollars are provided for the placement of
children outside of their homes, without equivalent investments
in alternative services.
Taking A Look Back in Time
As you know, these are not new concerns for CDF. More than
20 years ago, in Children Without Homes: An Examination of
Public Responsibility to Children in Out-of-Home Care, we
highlighted the fact that federal funding patterns act as
disincentives to the development of strong family support
programs. At that time there was no federal child welfare money
specifi+cally targeted to developing alternatives to out-of-
home placement for children.
From the very beginning of the debate on what became the
Adoption Assistance and Child Welfare Act of 1980 (P.L. 96-
272), CDF testified about the need for funding for preventive
and reunification services that was on an equal par with
funding for out-of-home care. We made the case for services to
children and families to prevent crises from intensifying and
requiring removal of children from their families and to help
children be reunified safely with their families. While the
Ways and Means Committee agreed to take some important first
steps in that direction, the Congress did not. Instead, CDF and
others worked to include a stopgap measure in the Adoption
Assistance and Child Welfare Act. That measure provided for a
cap on foster care funding if funding for child welfare
services grew to a certain level. In such a case, states would
be allowed to transfer funds under the cap that they would not
need for foster care to the Title IV-B Child Welfare Services
Program. States also had the option to use such a system even
if child welfare services funding levels did not grow to the
amount anticipated.
After enactment of the Adoption Assistance and Child
Welfare Act, CDF returned to Congress on numerous occasions to
suggest other ways to increase resources available to states
for services to prevent placements, reunify children in foster
care with their families, and provide post-adoption services so
children can remain with permanent families. Yet here we are
still discussing proposals similar to those first introduced
almost 20 years ago.
As you well know, little progress has been made in leveling
the playing field between funding for prevention,
reunification, and post-permanency services, and funding for
out-of-home care. The use of federal Title IV-E administrative
funds for numerous activities related to the placement of
children in foster care and the ongoing monitoring of their
cases has helped some. The Promoting Safe and Stable Families
Program, first enacted in 1993 and expanded slightly in 1997,
has stimulated important innovations in states to increase
family support services and to promote reunification and
adoption services, but its funding level of $295 million this
year is still only a very small piece of the total funding for
child welfare. Some funds from the Child Welfare Services
Program also can be used for preventive services. The program,
however, currently funded at $292 million, still below its $325
million authorized funding level, has seen virtually no growth
since 1981 when measured in constant 1997 dollars. These
dollars are supplemented by the very small Community-Based
Family Resource Program and parts of the Child Abuse Prevention
and Treatment and Adoption Opportunities programs, all under
the jurisdiction of the House Education and Workforce
Committee. These programs together total less than $100 million
and also have grown very little over the past decade.
Unfortunately, this same pattern of inadequate funding for
prevention is repeated in the states. In its 1999 report, The
Cost of Protecting Vulnerable Children: Understanding Federal,
State, and Local Child Welfare Spending, the Urban Institute
noted that relatively little state money is being spent on
prevention. In analyzing state expenditures, it found that for
every $1 states spend on prevention, child protective services,
and case management services, states spend over $3 covering
out-of-home placements, adoption, and administrative costs.
There is clearly a need for new investments in prevention,
reunification, and post-permanency services. The challenge is
how best to make the greatest gains for children and families.
In my time this afternoon, I would like to do three things.
First, review with you some core principles that CDF believes
should be reflected in any changes in federal law that are made
to increase the capacity of state and local agencies and the
courts to improve child safety, permanence, and well-being.
Second, outline several steps that CDF urges Congress to take
to enhance services to protect children, support families, and
provide families (birth, kin, and adopted) the post-permanency
supports they need to remain together and to prevent children
from re-entering foster care. Third, I would like to raise
several questions that CDF hopes can be answered as states move
forward with the flexible funding pilots that are being
proposed.
Promoting Child Welfare Reform Principles
As Congress continues working to find the best ways to
ensure safety and permanence for children and to increase
investments in prevention, reunification, and post-permanency
services, including post-adoption services, CDF believes that
the following principles should be reflected in any child
welfare reforms:
A focus on child outcomes. The goals for any new
child welfare reforms must be improved outcomes for children
and families. It is risky to provide incentives to states to
reduce out-of-home care without also looking at what such
reductions will mean for children and families. We must always
ask how proposed changes will result in improved outcomes for
children. In assessing outcomes, it is important to recognize
that in some cases the changes proposed may increase the
likelihood of improved outcomes for children and families in
the future even though they do not immediately result in
improved outcomes.
An assurance of appropriate protections, services,
and supports. Federal leadership in promoting protections and
accountability for children has been extremely important and
must be maintained. It has prompted protections at the state
and local levels and provided opportunities to ensure that
these protections were actually provided to children.
An individual entitlement to services. Whatever
the reforms proposed, it is critically important that otherwise
eligible children remain entitled to receive assistance under
the Title IV-E Foster Care and Adoption Assistance Programs.
When child tragedies occur in states, economic conditions
worsen, or other unpredictable situations arise and caseloads
grow, CDF believes that the assurance that these children will
be protected must be a shared federal and state responsibility.
Increased capacity to promote safety and
permanence. As I will discuss further below, increased
resources are needed to provide incentives to state and local
agencies and courts so that they can improve their capacity to
provide adequate services, trained and committed staff, and
efficient responses. This will require a range of strategies.
While some states will move in these directions if they are
given increased flexibility, many more may not. Unless other
types of incentives are provided, the status quo will likely be
maintained in these states.
Up-front assistance to help increase capacity.
States need expanded resources to increase the capacity of
their systems to better meet the needs of children and their
families so safety can be paramount and timely permanency
decisions made. It is not sufficient to provide states with
incentives only after progress is achieved. Up-front
investments are needed.
Increasing Investments to Enhance Capacity
In order to truly expand investments for prevention,
reunification, and post-permanency services, CDF recommends
that the Subcommittee take action on both long-term and short-
term strategies to improve the child welfare system's treatment
of children.
Over the long term, CDF believes that it is time to re-
examine the basic structure of current federal child welfare
financing provisions to determine the appropriate role of the
federal government on behalf of this especially vulnerable
group of children and families. We urge the Subcommittee to
replace the current system with a comprehensive system that is
consistent with the above principles. For too long, despite
broad dissatisfaction with the underlying premise of the
funding system, reforms have tinkered around the edges. Any new
broad reform should include the elimination of the current link
between Title IV-E and welfare (AFDC or TANF), which certainly
makes no sense from a child's perspective or from the
perspective of those administering the system. The federal
government's support for abused and neglected children should
not be dependent on the income of the families where the abuse
occurred. The Congressional Research Service has estimated that
delinking foster care eligibility from AFDC would basically
double the number of foster children nationwide who would be
eligible for federal funds.
In the short term, while comprehensive reforms are being
examined, CDF recommends that the Subcommittee proceed with the
flexible funding pilots that Chairman Johnson has proposed,
which are discussed more fully in the next section of my
testimony, and also consider investments like those described
below. These would help to increase the service, training,
data, and tracking capacities of the child welfare system to
better keep children safe and in permanent families. CDF
believes that proposals like these will help states reduce
appropriately the number of children in foster care and allow
states to continue to receive federal Title IV-E funds after
reimbursement for room and board is no longer needed. At a
minimum, capacity should be increased in the following ways.
Expanded services
Alcohol and drug treatment
An estimated 40 to 80 percent of the children in the child
welfare system are from families with alcohol and drug
problems. Virtually every state is struggling to find
appropriate treatment and services for this population. The
bipartisan Child Protection and Alcohol and Drug Partnership
Act of 2000 (S. 2345) would provide flexible funding to states
where the child protection and alcohol and drug agencies apply
together and commit to joint activities that will enhance
alcohol and drug treatment for families who come to the
attention of the child welfare system. We urge the Subcommittee
to seriously consider service expansions for children and
families with alcohol and drug problems.
Post-permanency services
Title IV-E Foster Care and Adoption Assistance programs
should be amended to allow states to claim reimbursement for up
to 18 months of post-permanency services to ensure that
children who are returned home, placed permanently with kin
caregivers, or are adopted do not re-enter the system. At the
Working Conference on Child Welfare Financing in February 1999,
organized by the Chapin Hall Center for Children at the
University of Chicago, Child Welfare Commissioners from New
York City, Los Angeles County, and Illinois all spoke to the
importance of funding for after-care services to protect
children and strengthen families of all types. In Illinois,
some of the large increases in discharges from foster care were
attributed to a new per-family grant available for services to
support reunification services.
Data from the Multi-State Foster Care Data Archive,
maintained by the Chapin Hall Center for Children, estimates
that in 10 states (including California and New York and some
of the other largest states) an estimated 21 to 28 percent of
the children who were discharged from foster care re-entered
care. Children do not achieve permanence when re-entry occurs
at such a rate. There is also increasing concern that, in the
haste of implementing the Adoption and Safe Families Act
(ASFA), children will be placed inappropriately with adoptive
families who do not have the supports they need to care for
children with special needs, resulting in an increase in
adoption disruptions. Post-permanency support in the Title IV-E
Program would assist in all of these cases.
Preventive services
The Title IV-E Foster Care Program also should be amended
to allow payment for services for 15 months for families who
come to the attention of the child welfare system whose
children are not in foster care and for families with children
in foster care. This recommendation builds on the same
assumptions that underlie the flexible funding proposal. If
states make investments earlier, children will benefit and the
need for more costly out-of-home care in the future should be
reduced over time. To enable the expansion of family support
and permanency services, funding should be increased for the
Promoting Safe and Stable Families Program, which must be
reauthorized next year.
Support for the courts
Increased resources for tracking, data collection, and other
court improvements
Permanency for children cannot be accomplished without
making investments in the work of the courts. States need
continuing federal support for the State Court Improvement
Program, which must be re-authorized next year. These projects
have helped to improve the timeliness of court proceedings, the
decisiveness of permanency hearings, and the preparation of
attorneys. The bipartisan Strengthening Abuse and Neglect
Courts Act (S. 2272) and TAKE CARE Act (S. 2271) also would
make needed improvements in the courts by expanding funding for
data collection, tracking, and expansion of the Court Appointed
Special Advocates (CASA) Program. Representative Deborah Pryce,
Senator Mike DeWine, and Mrs. Christine DeLay all spoke to the
importance of this legislation at the Subcommittee's hearing in
March of this year.
Training
Training of public and private agency and court staffs
The goals of safety and permanence for children will not be
realized without a skilled and qualified workforce. In some
cases, specialized permanency units may have to be developed to
take on one-time challenges and cope with backlogs of children
making their way to permanent families. To help improve staff
quality, Title IV-E training funds should be available at the
75 percent federal matching rate for training staff across
child-serving systems and from public and private agencies who
are working with families who have come to the attention of the
child welfare system. It is not unusual in states for the
majority of the foster care placements to be handled by private
agencies. We applaud the Subcommittee's leadership in expanding
training funds for court staff, a provision that was included
in last year's Fathers Count Act of 1999, and we look forward
to working with you to try to ensure passage of that provision
in the Senate.
Special attention to children who are waiting
Strategies to move children to permanent families
One time funding also should be provided to states that,
following the mandates in the Adoption and Safe Families Act
(ASFA), have identified large numbers of children as needing
adoptive families or other permanent homes but do not have the
resources necessary to move these children to permanent
families. If a state can quantify how many children need help
to get into specific types of permanent living arrangements,
what kind of help they need, and how much it would cost,
Congress should give the state a one-time grant to assist with
the activities needed to move these children to permanent
families. Such a one-time grant award could be made contingent
upon the state providing some matching funds. These grants
could help move large numbers of children to permanent families
and reduce the number of children in care so that children
entering the system in the future will be more likely to
receive timely assistance and support.
Promoting Increased Flexibility in Child Protection Funding
CDF agrees that the flexible funding proposals being
promoted should be tried on a pilot basis with a small number
of states. In our view, they are certainly preferable to the
child protection block grant proposals of the past because they
maintain the individual entitlement for children and the
individual enforceable protections for children who are
entering the system or already in foster care. As envisioned,
they also are likely to result in additional dollars for the
states as well as additional flexibility.
We also believe that implementation of the pilots can help
answer some of the larger questions that were raised by
Chairman Johnson's April 2000 paper, ``Promoting Flexible
Funding in the Child Protection Program.'' Some of these
questions also raise concerns that we urge the Subcommittee to
address in the pilots as the bill is being finalized. These
questions, and related concerns, are listed below.
1. What assurance is there that any new dollars will be
invested in prevention, reunification, or post-permanency
services?
While the rationale for increased flexibility is to
increase funding for a range of alternative services to foster
care, there does not seem to be any assurance that such
investments would increase. States could use the dollars for
any activities authorized under the Title IV-B and IV-E
programs. For example, a state might decide to pay for foster
care for more children from the juvenile justice system or to
pay for more placements with expensive for-profit providers,
rather than increasing investments in prevention or
reunification services. There is not yet a provision in the
draft bill that requires states to report on how funds are used
so that there would be a way to determine what investments were
made in prevention, reunification, and post-permanency
services.
The current incentive in these proposals is for caseload
reduction, rather than for increased investments in prevention
and reunification services. In fact, if states use the dollars
successfully for prevention, their base lines will decline and
they are likely to have fewer dollars to invest in these
services in the future. CDF does not believe that caseload
reduction alone should be the goal of child welfare reform. An
incentive to lower caseloads, without similar incentives to
increase investments in prevention and reunification and post-
permanency services, may likely place children at risk by
returning them home prematurely or pushing them into the homes
of relatives or adoptive parents who are not yet ready for
them.
2.What room will there be for states to negotiate meaningful
three-or five-year funding base lines if Congress already has
established an overall funding limit for the new initiative?
This question encompasses two concerns. First, it was clear
to us from the May 12 meeting held on the flexible funding
proposals and subsequent conversations with state officials,
that there are very few, if any, states that have experience in
calculating multi-year funding base lines for child welfare
programs that accurately anticipate future needs. This was
certainly true for the five-year base lines originally
proposed, and I suspect it is true for three-year base lines as
well. The complexities of making such projections are
highlighted by graphs that demonstrate the movement of children
in and out of foster care and the unpredictability of the child
welfare system. There is often significant variation month by
month and year to year. In addition, specific events, such as
the death of a child or other factors outside the control of
the public system, can cause foster care caseloads suddenly to
increase dramatically. The Department of Health and Human
Services (HHS) also has limited expertise in computing such
base lines.
Second, we do not understand how states that sit down with
the Secretary of HHS to develop their base lines will actually
have the flexibility to negotiate necessary base line
increases. Congress will already have attached a price tag to
this initiative, and the Secretary will be forced to keep the
costs of the bill within those limits rather than accommodating
all the requested increases from the states.
3. How will Congress ensure that any funds resulting from the
increased flexibility will be used by states for the purpose of
expanding services for children and families either in or at
risk of entering the child welfare system?
CDF believes that it is important for Congress to ensure in
any flexibility proposal that the increased flexibility
actually results in increased expenditures and activities to
assist children and families. There is a lot of consensus, we
believe, that those seeking new reforms do not want to see
states reduce their own expenditures in child welfare as
increased flexibility of federal funds becomes available. A
strong maintenance of effort proposal will help to protect
against this and also help to ensure that these federal funds
are not spent for non-child welfare purposes. We are pleased
that the draft flexible funding pilots include a maintenance of
effort provision and would like the opportunity to work with
the Subcommittee staff to strengthen it further.
4. What are the political and practical barriers that will make
it difficult for a state to revert to an open-ended entitlement
if they experience unanticipated expenditures, most likely due
to unanticipated caseload growth?
States that do not correctly predict their foster care
growth trends will have to admit their errors in order to
revert to the open-ended entitlement. They also will have to
find alternative ways to make up the shortfall in funding for
the year they were operating the pilot. How this is done could
have serious implications for the safety, permanence, and well-
being of the children involved. There also will likely be
contracts with service providers that will have to be broken
when services funded with IV-E flexible dollars can no longer
be funded with IV-E dollars. Once the state reverts back to the
Title IV-E open-ended entitlement program, the use of federal
Title IV-E funds will be limited to foster care or adoption
assistance payments (room and board and related costs) only for
certain eligible children. It is also important to flag the
potential cost implications for such a proposal if all states
decide at once to revert to the open-ended entitlement program.
CDF believes that the draft pilots will help answer many
questions about the workability of the proposals, their costs,
and the likelihood that they will result in significant
increases in preventive and reunification services. We support
the concept of flexible funding pilots for up to five states
each and look forward to working with you and your staff to
further strengthen the draft as you fully develop the proposal.
For example, CDF believes that in both pilots states must be
required to submit a plan for how flexible funds will be used
and how these funds will increase the capacity of the child
welfare system to expand prevention, reunification, or post-
permanency services, or new attention to special needs
populations. States also must have a system in place to track
the progress made over time in expanding preventive,
reunification, and post-permanency services.
Modifying the Nature of the Demonstration Waivers
The draft flexible funding proposal also makes several
changes in the child welfare demonstration waivers that were
championed by Chairman Johnson and other members of the
Subcommittee in 1993. CDF supports, at least in part, several
of the modifications proposed in the demonstration waivers.
We agree that HHS should not be allowed to impose arbitrary
limits on the numbers of states that can conduct demonstrations
on similar activities. Different adaptations of a similar
activity in multiple states could be very helpful in
documenting the potential for expanding the demonstration
nationwide. For similar reasons, we also agree that there
should be no limitation on the number of demonstrations that
may be awarded in a single state. In such cases, however, we
believe that it is important for a state to specify in its
application how the multiple demonstrations within the state
will complement each other. Similarly, states should be allowed
to expand their demonstrations to reach additional children or
additional parts of the state without having to submit full
waiver requests.
Finally, we agree that the waiver provision should
specifically allow states to extend the five-year waivers for
additional periods of time. However, we do not believe that
states should be allowed to do so if the demonstrations have
harmed or had no benefit for children and families. We are
concerned that the language in the draft flexible funding bill
seems to allow unconditional extensions provided that the
demonstration is being conducted in accordance with the waiver
authority provided in law. We recommend that the extension not
be for the indefinite period specified in the draft bill but
instead be for two additional three-year periods. In some cases
extensions will be necessary because five years is too short of
a time in which to fully recognize the benefits of what is
being demonstrated. In other cases, the extension may be
important because the demonstration clearly yielded important
benefits, and there is a legitimate desire to continue to allow
children to benefit from these same activities in the future.
We recommend a maximum of 11 years for the waivers because we
believe that the regular renewals will keep the pressure on the
federal government to determine whether the demonstration
outcomes warrant changes in federal law that would extend
similar activities to all states. If states can continue to
implement their waivers indefinitely, with little subsequent
review by HHS, HHS is apt to lose track of the benefits
achieved, and these benefits will not then be extended to
additional sites and additional children and families.
We also are very interested in learning more about the
Subcommittee's plans to propose changes in the research and
evaluation requirements for the child welfare demonstration
waiver program. We agree that there are some adjustments that
need to be made, but we also believe that it is essential to be
able to document the impact of the changes in policy and
practice that are being implemented in the demonstrations. We
look forward to working with the Subcommittee more on this
feature and other aspects of the modifications in the
demonstration waivers.
Thank you for the opportunity to make recommendations as
the Subcommittee examines ways to increase funding for
preventive, reunification, and post-permanency services and to
promote increased flexibility in funding. The Children's
Defense Fund looks forward to continuing to work with the
Subcommittee on both short-term and long-term child welfare
reforms. We would like the opportunity to meet with
Subcommittee staff to talk in more detail as they finalize
language for the two five state flexible funding pilots and
modifications in the child welfare demonstration waiver
program. We also ask that you consider seriously additional
investments to increase capacity in the states to better
promote safety and permanence for children.
Chairman Johnson. Thank you very much. Mr. Geen.
STATEMENT OF ROBERT GEEN, SENIOR RESEARCH ASSOCIATE, URBAN
INSTITUTE
Mr. Geen. Madam Chair, thank you very much for the
opportunity to testify this afternoon.
I am Robert Geen, a senior research associate at the Urban
Institute. I'd like to draw your attention to three critical
issues facing the flexible funding demonstrations based on our
past 4 years of research with the Urban Institute on child
welfare financing.
First, as you have noted and many on the panel, the
existing Federal child welfare financing structure is
fundamentally flawed. The flexible funding proposals correct
some but not all of the weaknesses of the current structure.
Second, enforcing a maintenance of effort requirement will
be very difficult given the variety of Federal funds states use
and the variety of agencies that provide child welfare
services.
Third, the flexible funding demonstrations would likely
alter states' use and support of relative or kinship foster
care.
Let me elaborate on these issues. The most basic
shortcoming of the present financing structure is that states
have little financial incentive to reinforce child welfare
goals as has been mentioned. If a state saves Federal dollars
by shortening the time a child spends in foster care, the
saving is returned to the Federal Government. The flexible
funding demonstrations address this problem by allowing states
to reinvest IV-E savings from shorter foster care stays into
other parts of the child welfare system.
The Consolidation of Grants demonstrations would allow
states to receive a block grant for foster care funds, adoption
funds, or both. By permitting states to receive a block grant
for foster care while leaving adoption and open-ended
entitlement, the legislation may have an unintended
consequence. States may have the financial incentive to make
adoptive placements before making reasonable efforts to reunify
children with their families.
A second shortcoming of the current system is that states
must spend inordinate amounts of time and money determining
what they can claim for Federal reimbursement. Currently, IV-E,
as you know, is based on the eligibility of the child's prior
care giver for Aid to Families with Dependent Children. In our
research, one child welfare agency reported that it spent $4
million a year to claim $26 million in Federal funds. Another
child welfare agency noted that they have 600 eligibility
staff.
While the five states approved for the Consolidation of
Grants demonstrations will receive relief from eligibility
determination, other states will not. The historical reasons
for linking IV-E eligibility to AFDC are no longer valid. The
Federal Government has an interest in all foster children, not
just those from impoverished homes. The Committee could provide
relief for all states by providing Federal reimbursement for
all children in state custody and reducing Federal matching
rates accordingly.
Expanding on the second point about the variety of Federal
funds used for child welfare, a flexible funding demonstrations
could encourage states to shift child welfare spending to
remaining entitlements such as Medicaid or Supplemental
Security Income. After all, IV-E represents less than half of
the total funds that states expend on child welfare services.
States always have the incentive to first seek out entitlement
funding before expending block grant funds or state funds.
Multiple agencies provide a variety of service and
interventions that may be considered child welfare. States use
a variety of Federal funds to support child welfare. Thus, it
is difficult to define what actually constitutes a child
welfare budget for a state. And it will be even more difficult
to ensure that a state maintains its historical investment.
States could shift funding from child welfare agencies to other
agencies that provide similar services and would likely appear
to meet MOE requirements. I want to be clear, however, that
this does not negate the need for an MOE requirement. Rather it
argues for HHS to develop very specific and comprehensive
regulations that include a non-supplantation provision.
On the third point about block granting IV-E would likely
alter states' use and support of relative foster care. In
January, HHS issued regulations requiring states to license
relative foster parents based on the same licensing criteria
used for non-relatives in order to receive IV-E reimbursements.
Currently, based on a 1999 survey by the Urban Institute, 31
states and the District of Columbia use different licensing
standards to improve at least some of their relative foster
parents. This would no longer be possible under the flexible
funding demonstrations which would award all IV-E protections
to both IV-E and non-IV-E eligible children. States then would
have two options under the flexible demonstrations. They could
provide foster payments to all relative foster parents, which
could significantly increase IV-E expenditures, or they could
not maintain protective custody of children placed with
relatives, which would make it difficult to ensure the safety
of these kids.
In conclusion, despite its clear improvements over the
current Federal financing system, implementing flexible funding
for child welfare is not without risk. The main benefit of an
entitlement is that states are protected from sudden increases
in their caseload for issues beyond their control.
While the Consolidation of Grants demonstrations provide
some protection for such a scenario by allowing states to opt
out of the block grant in future periods, exiting the
demonstration will entail both economic and political costs. In
comparison, the Transfer of Funds demonstrations provide
greater protection for sudden changes in caseloads since this
proposal allows flexible funding but also maintains the IV-E
entitlement.
Thank you. And I'll be happy to answer any questions you
may have.
[The prepared statement follows:]
Statement of Robert Geen, Senior Research Associate, Urban Institute
Madam Chair, members of the Subcommittee, thank you very
much for the opportunity to testify this afternoon.
I am Robert Geen, a senior research associate at the Urban
Institute, where my research focuses on child welfare issues.
Based on our past four years of research on child welfare
financing, I would like to draw your attention to three
critical issues facing the flexible funding demonstrations that
have been proposed to this Committee.
First: The existing federal child welfare financing
structure is fundamentally flawed. It provides financial
incentives that run counter to the goals of the child welfare
system and requires states to invest considerable time and
money to claim federal reimbursement. The flexible funding
proposals correct some but not all of the weakness of the
current structure.
Second: Enforcing a maintenance of effort requirement and
non-supplantation provision will be very difficult given the
variety of federal funding streams states use and the variety
of agencies that provide child welfare services.
Third: The flexible funding demonstrations would likely
alter states' use and support of relative foster care, or
kinship care--a growing source of care for children in the
child welfare system.
Let me elaborate on these issues.
Legislation addresses some but not all shortcomings of the
current system.
The most basic shortcoming of the present federal child
welfare financing structure is that states have little
financial incentive to reinforce child welfare goals. For
example, if a state saves federal dollars by shortening the
time a child spends in foster care, the savings return to the
federal government. Both the flexible funding demonstrations
and the IV-E waivers address this problem by allowing states to
reinvest IV-E savings from shorter foster care stays in other
parts of the child welfare system, such as prevention or
aftercare services.
The Consolidation of Grants demonstrations would allow
states to receive a block grant for foster care funds, adoption
funds, or both. By permitting states to receive a block grant
for federal foster care funds while leaving adoption an open-
ended entitlement, the legislation may have an unintended
consequence. States may have a financial incentive to make
adoptive placements before making reasonable efforts to reunify
children with their families.
A second shortcoming of the current system is that states
must spend inordinate amounts of time and money determining
what they can claim for federal reimbursement. Currently, IV-E
eligibility is based on the eligibility of the child's prior
caregiver for Aid to Families with Dependent Children. In our
research, one child welfare agency reported that it spent $4
million a year to claim $26 million in federal funds. Another
agency reported that they have a staff of 600 to determine
eligibility.
While the five states approved for the Consolidation of
Grants demonstrations will receive relief from IV-E eligibility
determination, states implementing the Transfer of Funds
demonstrations or the waivers will not. The historical reasons
for linking IV-E eligibility to AFDC are no longer valid. The
federal government has an interest in all foster children, not
just those from impoverished homes. This Committee could
provide relief from IV-E eligibility determination for all
states by providing federal reimbursement for all children in
state custody and reducing federal matching rates accordingly.
The variety of federal funds used for child welfare makes the
maintenance of effort (MOE) requirement problematic.
The flexible funding demonstrations could encourage states
to shift child welfare spending to remaining federal
entitlements like Medicaid or Supplemental Security Income.
After all, IV-E represents less than half of the total federal
funds that states expend on child welfare services.\1\ States
always have the incentive to first seek out entitlement funding
before expending block grant funds.
---------------------------------------------------------------------------
\1\ Geen, R., Boots, S., and Tumlin, K. The Cost of Protecting
Vulnerable Children: Understanding Federal, State, and Local Child
Welfare Spending. The Urban Institute, January 1999.
---------------------------------------------------------------------------
Multiple agencies provide a wide variety of services and
interventions that may be considered child welfare. In
addition, states use a variety of federal funds to support
child welfare services. Thus, it is difficult to define what
constitutes a state's child welfare budget and even more
difficult to ensure that a state maintains its historical
investment. States could shift funding from child welfare
agencies to other agencies that provide similar services and
would likely appear to meet MOE requirements. I want to be
clear, however, that this does not negate the need for a MOE
requirement. Rather it argues for HHS to develop specific and
comprehensive regulations that include a non-supplantation
provision.
Block Granting IV-E would likely alter states' use and support
of relative foster care.
Approximately 200,000 foster children are in relative
foster care and this number is growing due in part to the
declining number of nonrelative foster parents. In January, HHS
issued regulations for states to implement the Adoption and
Safe Families Act. The regulations require states to license
relative foster parents based on the same licensing criteria
used for nonrelatives in order to receive IV-E reimbursements.
Based on an 1999 Urban Institute survey, 31 states and the
District of Columbia use different licensing standards to
approve at least some relative foster parents.\2\ Most states
provide those relative foster parents with Temporary Assistance
for Needy Families grants instead of foster care payments. This
would no longer be possible under the flexible funding
demonstrations, which would award IV-E protections to both IV-E
and non-IV-E eligible children. States that implement flexible
funding demonstrations will have two choices:
---------------------------------------------------------------------------
\2\ Leos-Urbel, J., Bess, R., and Geen, R. State Policies for
Assessing and Supporting Kinship Foster Parents. The Urban Institute,
(In Press).
---------------------------------------------------------------------------
(1) provide foster payments to all relative foster parents,
which could significantly increase IV-E expenditures and/or cut
the supply of relative foster parents since not all may be able
to meet licensing requirements, or
(2) not maintain protective custody of children placed with
relatives, which could make it difficult to ensure the safety
of those children.
It is also important to note that states' decisions on
whether to include kinship care placements in their IV-E
caseloads could significantly affect their baselines. States,
at least initially, will have the incentive to move all kinship
care placements into their caseloads to increase the size of
their block grant.
In conclusion, despite its clear improvements over the
current federal financing system for child welfare services,
implementing flexible funding for child welfare is not without
risk. The main benefit of an entitlement is that states are
protected from sudden caseload increases due to factors beyond
their control, for example a drug epidemic or a sharp downturn
in the economy.
While the Consolidation of Grants demonstrations provide
some protection for such a scenario by allowing states to opt
out of the block grant in future periods, exiting the
demonstration will entail both economic and political costs. In
comparison, the Transfer of Funds demonstrations provide
greater protection for sudden changes in caseloads since they
provide funding flexibility but also maintain the IV-E
entitlement.
Thank you again for this opportunity to testify and I am
happy to answer any questions you may have.
The views expressed are those of the author and do not
necessarily reflect those of the Urban Institute, its trustees,
or its sponsors.
Chairman Johnson. I'd like to start by saying that a number
of you have mentioned the complexity of the current system. And
Judge Kearney, you gave a very good chart that shows how many
sources have to be tapped. And I assume that for every source,
a different set of papers has to be filled out. You know, I
don't know why you're not up in arms. I read a memo from this
little group in my hometown and a few adjoining towns that have
a waiver and they are trying to do this and it described the
number of problems they're having to deal with from the micro-
level up. Why aren't you outraged? I mean, we desperately need
the money for services. We all know that. We're squandering it
at the administrative costs level. And we have a chance to make
change. Now, I don't think my proposal goes far enough in
making change, and particularly administrative change. I mean,
we have got to do better than this. I think your testimony
demonstrates that we've got to do something. And I appreciate
some of the detailed comments made about the legislation, that
is, you know, we always do work with you.
But I was very interested in Ms. McCullough's testimony
where you testify that states were discouraged during the
application process from going statewide. Now, in the eighties,
I personally on this Committee put demonstration projects in
place for statewide demonstrations. But I mean, what was the
point? Why did you want micro demonstrations? How much can be
learned from micro demonstrations? How much do state
reimbursement policies change when you have a micro
demonstration? And all of these poor little notes that I was
reading was all about this little thing, and that little thing,
and this little funding, and that little funding. Can't you
think bigger? You know, I need help now. And we ought to be
able to do this in a way that both parties--that we can all
agree on because so much of it isn't about children. So much of
it is about government. And for a worker to have to do all
that, boy, I don't blame her. I mean, at what point do you stop
filling out papers for one child and move on to the next case?
So, you know, I'm sorry that more members weren't able to
stay for all of the comments of the panelists because you all
have a lot of experience. Although I certainly appreciate the
concerns of the Children's Defense Fund, you know, I think
we've got to be bolder.
Ms. Allen. I agree with that.
Chairman Johnson. You know, we've got to be much bolder
than this bill. And one of the things that strikes me is the
very, very conservative implementation of past authorities. And
the implementation has been so conservative that the underlying
problems don't get moved. So, you're always, you know, pressing
against the same walls. And you're just, you know, stirring
this chocolate syrup in the white milk in the small glass. You
know, we've just got to find a way to at least force--allow
states to merge funds, to strip out reports, and so on and so
forth. We have an example in the regulations that the
Department just proposed that were very forward looking on
outcomes, very thoughtful. You know, why can't we use that
work? So, I'm not smart enough to be able to ask the level of
questions that I really need to be able to ask without more
reflection when I hear so many comments. But I would just urge
you to take back what you've heard from one another and the
proposal as it now lies and really help us. We really have got
to do better. If we just do this, we'll just have another
series of demonstration projects. The fact that we aren't going
to have good information from the bigger demonstration projects
for 5 years--but on the other hand, we have so much micro
evidence. I mean, there is no question but that we need to turn
around the service preference here. So, you know, while GAO
were sort of neutral about this, they're neutral because
they're sort of research design people and there wasn't the
proper design. I have never, ever run into anyone who has had
experience with integrating services and trying to prevent and
be more holistic and move kids through more rapidly that says
that it was better the old way. So, we may not know exactly--
have exactly the data to document. But have we ever? No. We
have never even gotten a data system nationwide, you know,
after 10 years. So, let's stop kidding ourselves and thinking
that we can do this like you might do, you know, like you might
be able to oversee the technology in our air traffic control
towers, in which we have done a markedly terrible job, markedly
terrible. But at least you can take an inventory and see it,
you know. We don't fund it. We don't keep up with the pace of
change. But at least you can see what you're doing. You can't
do that. You'll never have that luxury here. But we do know
that it is outright absurd, outright absurd. And furthermore,
how can we afford 38% of the calls having to be remade if we
have any concern about our children? So, I think we just have
to sort of take another stab. And we'll look forward to your
help. We'll certainly take seriously some of the concerns that
you had about this particular piece of legislation. But we do
need to think much bigger. And we will have to have those ideas
promptly. Thank you. I appreciate your participation.
[Whereupon, at 3 p.m., the hearing was adjourned.]
[A submission for the record follows:]
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