Child Welfare: Foster Care and Adoption Assistance Provisions in the Budget Reconciliation Bills
CRS Report for Congress
Child Welfare: Foster Care and
Adoption Assistance Provisions
in Budget Reconciliation
Updated October 18, 2006
Emilie Stoltzfus
Specialist in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress
Child Welfare: Foster Care and Adoption Assistance
Provisions in Budget Reconciliation
Summary
On February 8, 2006, President Bush signed the Deficit Reduction Act of 2005
into law (P.L. 109-171). As enacted, the Deficit Reduction Act includes two child
welfare provisions intended to reduce federal foster care spending under Title IV-E
of the Social Security Act. Those provisions, sometimes called the Rosales provision
and candidates provision, respectively, would 1) clarify individual eligibility for
federal foster care and adoption assistance programs (Title IV-E of the Social
Security Act); and 2) limit certain kinds of state claims for federal reimbursement of
administrative costs under the federal foster care program. The Congressional
Budget Office (CBO) estimated that together, these changes will reduce federal
spending under the foster care program by $554 million over five years, and by
almost $1.3 billion over 10 years.
As enacted, the Deficit Reduction Act also includes several child welfare
provisions that will increase federal child welfare spending and make other limited
changes to federal child welfare policy. These provisions were added during
conference negotiations and were not included in either of the earlier Senate or House
versions of the budget reconciliation bill (S. 1932) that passed in November 2005.
Those provisions 1) increase the FY2006 mandatory funding authorization under the
Promoting Safe and Stable Families program (Title IV-B, Subpart 2 of the Social
Security Act) to $345 million (from current $305 million); 2) appropriate $100
million in mandatory funds over five years (FY2006-FY2010) to improve state
courts’ handling of child welfare proceedings; 3) require court and child welfare
agency collaboration; and 4) clarify confidentiality rules with regard to open child
welfare court proceedings. CBO estimated that the first two of these provisions will
increase federal budget authority for child welfare purposes by $300 million over five
years.
As enacted, the Deficit Reduction Act also includes provisions related to federal
reimbursement of costs for “targeted case management” (TCM) under the Medicaid
program (Title XIX of the Social Security Act). These provisions were included in
both the House and Senate reconciliation bills (as they were passed in November
2005), and may limit the ability of state child welfare agencies to use Medicaid TCM
for children in foster care. CBO estimated the net federal savings for this change, all
of which would be to Medicaid (and not all of which would affect financing of
services for children in foster care), at $760 million over five years and $2.1 billion
over 10 years.
Finally, as enacted, the Deficit Reduction Act does not include House and
Senate proposals that would have 1) extended the authority of the U.S. Department
of Health and Human Services (HHS) to grant child welfare waivers; 2) amended the
Higher Education Act to improve higher education access for youth leaving foster
care; and 3) authorized a discretionary student loan forgiveness program available to
child welfare workers. This report discusses child welfare provisions in the enacted
version of the budget reconciliation bill (P.L. 109-171), and will not be updated.
Contents
The Rosales Provision or Clarifying Eligibility
for Federal Foster Care and Adoption Assistance.................2
The “Candidates” Provision or Limiting Eligibility
for Federal Matching of Foster Care Administrative Costs..........4
Increase Mandatory Funding
for the Promoting Safe and Stable Families Program..............7
Grants to Strengthen Court Handling of Child Welfare Proceedings......8
Purposes of the grants......................................8
Applications ..............................................8
Funding and state match....................................9
Formula and entitlement....................................9
Requirement to Demonstrate Collaboration
Between Courts and Agencies in Child Welfare Programs .........9
Use of Child Welfare Records in Court Proceedings.................10
Targeted Case Management Services under Medicaid................10
What is Medicaid TCM?...................................11
Proposals Not Included in the Final Legislation.....................13
Extend Child Welfare Waiver Authority.......................13
Student Loan Forgiveness for Child Welfare Workers............14
Education-Related Services and Aid for Foster Children
and Those Aging Out of Foster Care......................14
Child Welfare: Foster Care
and Adoption Assistance Provisions
in Budget Reconciliation
On February 8, 2006, President Bush signed the Deficit Reduction Act of 2005
(P.L. 109-171). The bill was cleared for the President’s signature earlier that month
after the House voted to accept the changes made by the Senate (in December 2005)
to a previously agreed-upon conference agreement (H.Rept. 109-362).
A primary purpose of budget reconciliation is to make statutory changes that
reduce direct (or mandatory) spending out of the federal treasury.1 The largest child
welfare programs receive mandatory federal funding, and certain changes to these
programs would be made by the Deficit Reduction Act of 2005. Some of these were
initially provided for only in the House version of the reconciliation bill, and some
were in neither the initial Senate nor House version of the reconciliation legislation
(S. 1932) as it was passed in November 2005. These were added during the
December 2005 conference agreement negotiations.
The federal foster care and adoption assistance programs are open-ended
entitlement programs. This means that the statutory language (contained in Title IV-
E of the Social Security Act) commits the federal government to reimbursing states
for every eligible claim submitted on behalf of an eligible child receiving foster care
maintenance payments or an adoption assistance subsidy. Because of the open-ended
nature of this mandatory spending, any statutory changes that redefine who is eligible
to receive foster care or adoption assistance — or what kind of costs a state may
submit as eligible for reimbursement — should have a direct effect on the level of
federal spending in the program. In FY2004 (the most recent data available), federal
spending on the foster care and adoption assistance programs combined was
approximately $6.1 billion.
The federal Promoting Safe and Stable Families program (Title IV-B, Subpart
2 of the Social Security Act) provides capped mandatory funds (and also authorizes
discretionary funds) for states to offer services aimed at maintaining or reuniting
families and promoting and supporting adoption. A set-aside from the program’s
funding is used for grants intended to help state courts assess and improve their
handling of child welfare proceedings. For FY2005, mandatory funding of $305
million for the Safe and Stable program was increased by discretionary funding of
$98.6 million, for total program funding of $404 million.
1 For more information on the budget reconciliation process, see CRS Report RL33132,
Budget Reconciliation Legislation in 2005, by Robert Keith.
The Rosales Provision or Clarifying Eligibility
for Federal Foster Care and Adoption Assistance
As proposed by the President in his FY2006 budget request and included in the
House reconciliation bill (H.R. 4241)2, the Deficit Reduction Act of 2005 (P.L. 109-
171), as enacted, rewrites the eligibility provisions for federal foster care under Title
IV-E of the Social Security Act; it also made related changes to the adoption
assistance eligibility provisions (also contained in Title IV-E). This change is
sometimes called the Rosales provision because, as intended, it makes moot a 9th
Circuit U.S. Court of Appeals decision, Rosales v. Thompson (321 F. 3d. 835). The
Congressional Budget Office (CBO) estimates that this provision will reduce federal
outlays to the foster care program by $380 million over five years (FY2006-FY2010)
and $863 million over 10 years (FY2006-FY2015).3
The Senate did not include the Rosales provision in the reconciliation legislation
it approved in early November. However, after an effort on the Senate floor by
Senator Conrad to strike this language from the final conference agreement failed,
the provision remained in the conference agreement approved in both chambers, and
was enacted in P.L. 109-171.4
Explanation of the Change. This provision of P.L. 109-171 restates
eligibility for federal foster care in a manner intended to clarify the longstanding
interpretation of those provisions by the U.S. Department of Health and Human
Services (HHS), and thus to effectively overturn a 2003 court decision that disagreed
with that interpretation. Changes to the adoption assistance eligibility criteria were
made to conform with those foster care changes and to somewhat simplify the
eligibility test. As included in the enacted legislation, the change does not prohibit
payment of foster care maintenance payments to foster children living with
2 Throughout this report the version of the reconciliation bill as it passed the House on
November 18, 2005 is referred to as H.R. 4241. This is done as an easy way to distinguish
that bill from the budget reconciliation legislation that passed the Senate on November 3,
2005 and was number S. 1932. Technically, however, as part of preparing for the conference
on these bills, the House adopted the provisions of H.R. 4241 in their own version of S.
3 Outlays measure the amount of money the federal government is expected to pay out in the
given year(s) — whether the obligation to make the payment was incurred in the current or
a previous fiscal year. The CBO may also estimate budget authority — or the amount of
money the law authorizes to be spent on a given program in the current or a future fiscal
year. The CBO budget authority savings estimate for this provision is $410 million over five
years and $895 million over 10 years.
4 Congressional Record, December 21, 2005, p. S140202-S140206. Senator Conrad sought
to use a provision of the Congressional Budget Act, commonly called the “Bryd Rule,”
which allows a Senator to use a “point of order” to seek to remove any “extraneous
provisions” in a reconciliation bill. Such extraneous provisions may include those that
produce a change in federal spending that is “merely incidental” to non-budgetary aspects
of the provision. In this particular case, the Senate parliamentarian apparently found that the
budgetary impact of the Rosales provision was more than “merely incidental” to the
legislative change. See Congressional Budget Act, Section 313(b)(1)(D).
grandparents. However, it may make it less likely that children who lived with a non-
parent relative before they were formally brought into foster care (and who are in one
of the 9th Circuit states), will be eligible for federal foster care assistance.
Eligibility for Title IV-E foster care and adoption assistance is multifaceted but,
with limited exceptions for adoption assistance, includes a link to the income,
deprivation, and resources tests as they were included in a state’s Aid to Families
with Dependent Children (AFDC) program, as that program existed on July 16, 1996.
(Congress repealed the AFDC program as part of the 1996 welfare reform legislation
that became P.L. 104-193.) HHS has historically maintained that the AFDC income,
deprivation, and resource tests must determine whether or not a foster child was or
would have been considered needy if that child had still been living in the home from
which he or she was removed for safety reasons (generally the home of the biological
parent(s)). However, this HHS interpretation of how to apply the AFDC eligibility
tests was challenged in California, and in March 2003, the 9th Circuit Court of
Appeals (Rosales v. Thompson, 321 F. 3d. 835) ruled against HHS. The 9th Circuit
court interpreted the law to permit, in some instances, a state to determine whether
a foster child would have met the AFDC tests while living in the home of a relative
instead of in the home of the parent (e.g., a grandmother or aunt who informally
cared for the child because the parents were unfit or unwilling).
Under AFDC program rules, a child living with a non-parent relative is virtually
always considered needy because the AFDC income, resource and other tests are
applied only to the child. This means that whether the non-parent relative is very
wealthy or very poor is not a consideration in determining a child’s eligibility for
federal foster care assistance; only the child’s personal income is considered.
Therefore, this reading of the law permits expanded eligibility for federal (Title IV-E)
foster care assistance if a child lived with a non-parent relative before being formally
placed in foster care (provided the child lives in a 9th Circuit state).5
HHS chose not to appeal the decision of the 9th Circuit. Instead, it notified the
nine states in the 9th Circuit (Alaska, Arizona, California, Hawaii, Idaho, Montana,
Nevada, Oregon, and Washington) that they should amend their Title IV-E state plans
to follow the eligibility logic of the Rosales decision. At the same time, HHS
notified all other states that they must continue to determine Title IV-E foster care
eligibility based on the traditional HHS reading of the law. Finally, the Department
sought a statutory change to bolster its longstanding interpretation of Title IV-E
(foster care and adoption assistance) eligibility rules, and to restore their uniform
application in all states.
Effect of Provision. All states in the 9th Circuit have amended their state
Title IV-E plans to provide for expanded Title IV-E foster care eligibility (as
permitted by the Rosales decision). Enactment of the statutory eligibility
clarifications in the Deficit Reduction Act, however, means that states will have to
5 Subsequently, the U.S. District Court for the Northern District of Georgia, in a ruling that
cited the Rosales decision (Harris v. Martin, 2004 U.S. Dist. LEXIS 17384), held that the
HHS interpretation of how the AFDC test should be applied was also too restrictive for
determining adoption assistance eligibility.
redo those plans again, because children entering foster care in the 9th Circuit states
are again required to meet the eligibility criteria currently used in all states outside
the 9th Circuit.6 In June 2006, HHS issued an Information Memorandum that permits
9th Circuit states to continue to make Title IV-E foster claims for children who were
federally eligible solely because of the Rosales definition of eligibility only until the
annual re-determination of that child’s Title IV-E foster care eligibility. In addition,
those states may no longer apply the Rosales eligibility criteria for children entering
foster care. Instead, all children must now qualify under the more narrow eligibility
criteria.7 Accordingly, states in the 9th Circuit may see a decline in the share of
children in their caseloads for whom they may receive federal reimbursement for
foster care costs. These states would then need to support a larger share of foster care
children using state dollars only (or possibly some other capped source of federal
funding such as the Temporary Assistance to Needy Families — or TANF — block
grant). The exact effect of this provision in each of the 9th Circuit states is unknown.8
Finally, the provisions included in the final budget reconciliation bill (P.L. 109-
171) restate certain adoption assistance eligibility requirements to conform with the
foster care eligibility clarifications, and somewhat simplify the eligibility
determination process for adoption assistance. Prior policy provided that, in cases
where adoption assistance eligibility rests in some part on AFDC eligibility, the
AFDC eligibility criteria must have been met at two points: 1) when the child was
removed from his or her home and placed in foster care, and 2) when adoption
proceedings were initiated. P.L. 109-71, as had previously been passed by the House
(H.R. 4241), would eliminate the second AFDC test. This change was expected to
simplify adoption assistance eligibility determination while having little to no effect
on the number of children found eligible.
The “Candidates” Provision or Limiting Eligibility
for Federal Matching of Foster Care Administrative Costs
As enacted, the Deficit Reduction Act (P.L. 109-171) will also limit the ability
of states to claim federal reimbursement of certain costs related to administering their
Title IV-E foster care programs. In January 2005, the Administration published a
Notice of Proposed Rulemaking (NPRM) that proposed regulations similar to the
6 See U.S. Department of Health and Human Services, Administration for Children and
Families, ACYF-PI-06-06, “Deficit Reduction Act - State Plan Amendments,” August 23,
7 U.S. Department of Health and Human Services, Administration for Children and Families,
ACYF-IM-06-02 “Deficit Reduction Act, Rosales ...” June 9, 2006 [http://www.acf.dhhs.
gov/ programs /cb/laws_policies/policy/im/im0602.htm] .
8 California is the only state where retroactive claims under this decision were permitted.
The state submitted additional Rosales-related claims for 1998-2003 that totaled $9.7
million in federal expenditures. Other than these retroactive claims, additional claims made
eligible under the Rosales decision are not reported separately by the affected states. For ath
discussion of estimated effects of the Rosales provision on states in the 9 Circuit request
CRS Congressional Distribution Memorandum, “Estimated Effect of the Rosales Provision,
by State,” by Emilie Stoltzfus.
statutory changes included in P.L. 109-171.9 Those statutory changes were included
in the House budget reconciliation bill (H.R. 4241), but were not a part of the
reconciliation bill that passed the Senate in November.
In sum, this provision puts in statute a definition of “candidate for foster care”
that is more narrow than previous HHS policy, and which consequently limits the
ability of states to receive federal reimbursement for foster care administrative costs
made on behalf of certain children. CBO estimated that these provisions will reduce
federal outlays for the Title IV-E foster care program by $174 million over five years
(FY2006-FY2010) and $405 million over 10 years (FY2006-FY2015).
Explanation of the Change. Under current law, states are permitted to seek
federal reimbursement (a 50% match) for any eligible administrative costs necessary
for the “proper and efficient” operation of their foster care programs. Among other
things, Title IV-E administrative costs are defined to include payment for time spent
by a social worker finding and making a foster care placement, as well as ensuring
that the child’s placement setting and permanency goal (e.g., reuniting with family
or adoption) are reviewed at federally specified intervals, and that other federal case
review protections are afforded each child in foster care.
In general, these administrative costs may only be reimbursed if the child on
whose behalf the costs are incurred meets the federal Title IV-E eligibility
requirements for foster care maintenance payments. Those eligibility requirements
include a stipulation that the foster child must be living in a family home or other
eligible child care institution that is licensed by the state to provide foster care.
However, some states previously made Title IV-E administrative claims (only) for
costs incurred on behalf of children who meet all of the Title IV-E foster care
eligibility requirements except that they are placed in an unlicensed setting. This kind
of administrative claim was specifically permitted by a 1993 memorandum from
HHS, which suggests that these children could be considered “candidates” for Title
IV-E foster care because the possibility existed that they might be moved to an
eligible setting.10 More recently, however, HHS argued that the 1993 memorandum
was too broadly interpreted and that parts of it are inconsistent with the statute.
Specifically, HHS asserted that a child already placed in foster care may never be
considered a candidate for foster care.
In the January 2005 NPRM, however, the Administration conceded that a
complete prohibition on Title IV-E administrative claims for placement of otherwise
eligible foster children in homes of unlicensed relatives might be contrary to the
9 U.S. Department of Health and Human Services, Administration for Children and Families,
“Administrative Costs for Children in Title IV-E Foster Care,” 70 Federal Register 4803,
January 31, 2005. A number of these proposed changes were originally made by the
Administration as part of a “policy announcement” (ACYF-CB-PA-01-02, issued July 3,
arguing that instead they represented a reversal of current policy, the Administration delayed
the implementation of the most controversial policies included in that announcement and
said that it would use the formal regulatory process to achieve the same end.
10 The 1993 memorandum is briefly discussed in ACYF-CB-PA-01-02, issued July 3, 2001.
federal law/policy that encourages states to place a foster child with relatives.
Further, in recognition of the fact that states cannot be expected to have a ready pool
of relatives licensed to provide foster care, HHS proposed to allow continued Title
IV-E administrative claims for otherwise eligible children placed in unlicensed
relatives’ homes but only for the length of time it normally takes the state to license
a foster family home. As enacted, the Deficit Reduction Act of 2005 adopts this
language (except that it provides that states may make such claims only for as long
as the length of time it normally takes a state to license a home, or up to 12 months
— whichever is shorter). Like the NPRM, the statutory language included in P.L.
109-171 also stipulates one additional instance in which a state may continue to make
Title IV-E administrative claims (but not Title IV-E maintenance payments) on
behalf of an otherwise eligible foster care child placed in an ineligible setting. These
administrative claims may be made on behalf of a child placed temporarily in a
setting such as a juvenile detention home or certain psychiatric hospitals (ineligible
settings under Title IV-E) — but only for one calendar month and only if the child
is subsequently moved back to an eligible setting.
Finally, the changes included in P.L. 109-171 restate current Title IV-E
administrative claims policy — which permits states to make claims on behalf of
children who are not yet in foster care but who are considered at imminent risk of
removal from their homes. Such children are now considered by HHS as “true”
candidates for foster care, and in need of pre-placement services (required under Title
IV-E) to prevent their removal from their homes. However, the new law (as
proposed in H.R. 4241 and the NPRM) newly provides that in order to make these
Title IV-E administrative claims, the state must redetermine, no less often than every
six months, a child’s status as a candidate for foster care.11
Effect of the Provision. The primary federal savings from this change are
expected to come from a state’s reduced ability to make administrative claims for
children placed in unlicensed relatives’ homes. States that previously made such
claims on an indefinite basis now need to use state funds to meet these administrative
costs, or to license relatives’ homes — in which case they will be able to continue to
claim federal matching funds for administrative costs and will also be able to claim
federal matching funds for their foster care maintenance payments.
States and some child welfare advocates argue that many relatives do not wish
to subject themselves to the governmental intrusion necessary to receive a foster care
license. All foster family home licensing requirements are established and maintained
by state authorities, and typically include requirements related to the physical and
family environment of a home, as well as training requirements. Under current
federal child welfare policy, states are required to apply the same licensing standards
to both relative and non-relative foster homes. However, they are permitted — but
11 Some states have sought to make Title IV-E administrative claims for a more general
population of children who were not yet placed in foster care. However, over the past
number of years, HHS has moved to disallow this kind of Title IV-E claim and, in this
instance, the Department’s view of “true” candidates has prevailed. See, for instance, HHS
Departmental Appeals Board, Appellate Division, Decision No. 1899 (November 25, 2003),
regarding disallowance of Title IV-E administrative claims made by the Missouri
Department of Social Services.
only on a case-by-case basis — to waive a given licensing requirement if doing so
will not endanger the child (e.g., a state may waive a requirement that a bedroom be
of a certain size or that a foster child have his or her own bedroom).
The exact number of states affected by this new statutory provision is not
known; however, the degree of impact is expected to vary widely by state. In a
survey of the states conducted by the HHS Administration for Children and Families
(ACF), close to half of the states (24) indicated that such a policy would have an
annual financial impact ranging from $200,000 at the low end to $79 million at the
highest; 15 states indicated there would be little or no financial impact and 2 states
were uncertain if there would be any impact. Information was not available from the
remaining states. A total of 16 states responded to a survey by the American Public
Human Services Association (APHSA). Eight states estimated an annual financial
impact of $80,000 to $20 million; two states estimated that the impact could range
as high as $21 million to $100 million annually; five reported no anticipated impact,
and one reported uncertain impact.12
Increase Mandatory Funding for the
Promoting Safe and Stable Families Program
The Deficit Reduction Act of 2005 (P.L. 109-171) increased the FY2006
mandatory funding authorization level for the Promoting Safe and Stable Families
program to $345 million from the previous level of $305 million. If Congress
appropriates the full mandatory funding level for the program now authorized for
FY2006, this money, combined with the $89 million in discretionary funds
appropriated for the program in FY2006, would bring the program’s total FY2006
funding to $434 million.13 Neither the House nor the Senate version of reconciliation
legislation proposed this funding increase.
While the Deficit Reduction Act increased the mandatory funding authorization
for FY2006 only, under CBO budget scoring rules this higher level of mandatory
funding authority is assumed in future baselines. Thus the five-year cost of this
provision totaled $200 million. Further, if Congress chooses to reauthorize the
Promoting Safe and Stable program before its FY2006 expiration, mandatory funding
12 These surveys are cited at 70 Federal Register, 4806, January 31, 2005. Also, at the time
of the July 2001 policy announcement, which would have made changes similar to those
included in H.R. 4241, 14 states submitted a formal objection to HHS, including a legal
analysis of the proposed policies. Those states, AZ, CA, IL, IA, KS, LA, MI, MN, MO, OH,
SD, VA, WA, and WI, might be among those that expect to experience loss of federal funds
if this legislative change were enacted.
13 P.L. 109-149 appropriated $90 million in discretionary funds for the Safe and Stable
program and $305 million in mandatory funds. However, the discretionary amount will be
reduced to an estimated $89.1 million by the 1% across-the-board cut in discretionary
accounts required by P.L. 109-148. The provisions regarding FY2006 Safe and Stable
funding in the Deficit Reduction Act do not change the FY2006 discretionary funding
available for the program.
of $345 million would be available for the program (in each fiscal year) without
scoring additional costs.14
Grants to Strengthen Court Handling
of Child Welfare Proceedings
The Deficit Reduction Act also amended the Court Improvement Project
(authorized under Section 438 of the Social Security Act) to provide funding for two
new grant programs aimed at strengthening the performance of courts on behalf of
children who have been abused and neglected. These provisions were not included
in the House or Senate version of the reconciliation bill. However, grant programs
with similar or related purposes were proposed by the bipartisan Pew Commission
on Children in Foster Care in its May 2004 report and in legislation introduced earlier
in 2005 (S. 1679 by Senators DeWine and Rockefeller and H.R. 3756 by
Representative Schiff). The statutory language appropriates $100 million for these
grants, out of which $10 million is available for each of the two new CIP grants in
each of FY2006-FY2010.
Purposes of the grants. The Court Improvement Program (CIP) previously
allowed state highest courts to receive grants to assess and improve their handling of
child welfare proceedings generally. This grant program is authorized through
FY2006, and the Deficit Reduction Act (P.L. 109-171) does not extend this
authorization.15 However, under the provisions of P.L. 109-171, for FY2006-
FY2010, state highest courts may also choose to apply for separate CIP grants aimed
at 1) improving their timely and complete action on behalf of foster children (via
improved data collection), and 2) providing training to judges, attorneys, and other
legal personnel in child welfare proceedings.
Applications. Under the enacted provisions of the Deficit Reduction Act, state
highest courts are required to apply separately for one or more of these grants and
need to meet both general and specific application requirements. An application for
any of the three grant programs must demonstrate “meaningful and ongoing
collaboration” between the courts, the state child welfare agency (or any other agency
under contract with the state child welfare agency to administer child welfare
programs authorized under the Social Security Act), and Indian tribes (where
applicable). Further, as is required for receipt of current CIP funds, in each of the
grant applications, a state highest court must supply any additional information or
assurances that HHS chooses to require.
Separately, in order to receive funding specifically related to improving timely
and complete actions on behalf of children, a state highest court must include a
description of how the court and the child welfare agencies on the local and state
14 For more information on this program and reauthorization issues, see CRS Report
RL33354 The Promoting Safe and Stable Families Program: Reauthorization in the 109th
Congress, by Emilie Stoltzfus.
15 However, Congress may choose to reauthorize funding for this grant in this session. For
more information, see CRS Report RL33350, Child Welfare: The Court Improvement
Program, by Emilie Stoltzfus.
levels jointly plan for the collection and sharing of all relevant data and information.
And, finally, state highest courts seeking training funds under the Court Improvement
Program must submit an application demonstrating that at least part of the grant
funding would be used for cross-training initiatives jointly planned and carried out
with the state child welfare agency, or an agency under contract with the state agency
to administer child welfare program(s).
Funding and state match. In addition to the Court Improvement Program
funding contained in prior law (a set-aside out of regular Promoting Safe and Stable
Families funds)16 the conference agreement to the Deficit Reduction Act provides
$100 million in mandatory funds for Court Improvement over five years (FY2006-
FY2010). The two new grants would each be funded at $10 million in each of those
years. And, has been the case with CIP grants in the past, the state highest court is
required to supply at least 25% of the funds used for the purpose of each grant.
Formula and entitlement. Under prior law, each state highest court with an
approved application under the CIP grant program was entitled to receive a minimum
grant of $85,000 and a portion of any of the remaining set-aside funds that was equal
to its state’s share of individuals under 21 years of age (compared to all states with
an approved application for the grant). The conference agreement to the Deficit
Reduction Act maintains this formula for the prior grant and also applies it to each
of the new grants under the CIP. Thus, if a state highest court successfully applies for
all three grants in FY2006, it would receive three minimum allotments of $85,000
and a share of the remaining funds for each grant program based the size of its
population under 21 years of age (relative to all states whose highest court has an
approved applications for each of the grants).
Requirement to Demonstrate Collaboration Between
Courts and Agencies in Child Welfare Programs
The Deficit Reduction Act of 2005 (P.L. 109-171) requires (as a condition of
eligibility for funding under the Child Welfare Services program, Title IV-B, Subpart
1 of the Social Security Act) that a state demonstrate “substantial, ongoing, and
meaningful collaboration” with state courts in developing and implementing the state
plan for Child Welfare Services, the state plan for the Promoting Safe and Stable
Families Program (Title IV-B, Subpart 2 of the Social Security Act), the state
Adoption Assistance and Foster Care plan (under Title IV-E of the Social Security
Act), and any Program Improvement Plan17 that may be required. This provision was
not initially included in either the House or Senate versions of the reconciliation
legislation, but was proposed by the bipartisan Pew Commission on Children in
16 Current law authorizes, through FY2006, a Court Improvement set-aside of $10 million
out of the mandatory Safe and Stable funding plus 3.3% of any discretionary funds
appropriated for that program. In FY2005 a little more than $13 million was made available
for the Court Improvement Program.
17 A Program Improvement Plan (PIP) must be developed and implemented by a state if a
federal review of that state’s child welfare practice (via the Child and Family Services
Review, CFSR) indicates that the state is “not in substantial conformity” with all of federal
child welfare policy.
Foster Care in its May 2004 report. Further legislation introduced in 2005 (S. 1679
by Senators DeWine and Rockefeller) sought similar legislative changes.
Use of Child Welfare Records in Court Proceedings
The Deficit Reduction Act also amends the state plan requirements for foster
care and adoption assistance (Section 471 in Title IV-E of the Social Security Act)
to clarify that required confidentiality provisions related to information about the
children served do not limit the ability of a state to determine its policies regarding
public access to court proceedings on child abuse and neglect or other child welfare
related court proceedings (except that the policies must, at a minimum, ensure the
safety and well-being of the child, parents, and family). This provision was not
included in either the Senate or House version of the reconciliation bill but it is
consistent with similar clarifying language added to the Child Abuse Prevention and
Treatment Act (CAPTA) in 200318 and is substantively identical to language
introduced this year in the Senate (S. 1679 by Senators DeWine and Rockefeller).
Targeted Case Management Services under Medicaid
The Deficit Reduction Act of 2005 (P.L. 109-171) includes statutory language
(previously included in both the House and Senate versions of the reconciliation bill)
that intends to clarify when states may make Medicaid claims related to optional
targeted case management (TCM) services. The statutory clarification extends to
claims made on behalf of any Medicaid-eligible individual who may also be served
by another federal or state program (e.g., juvenile justice, foster care, or special
education), but it provides special details regarding unallowable claims on behalf of
Medicaid-eligible foster care children. The newly enacted law further provides that
HHS must issue formal regulations to implement this clarification. (Neither the
House nor Senate version of the reconciliation bill required HHS to issue
regulations.)
The Administration called for clarification with regard to TCM claims in its
FY2006 Budget request and in legislative language it later sent to Congress for
consideration. However, the language included in the P.L. 109-171 is significantly
different from that offered by the Administration, and it appears to be less restrictive
to state TCM claims. CBO estimated that the changes will shift some costs to the
federal foster care program — increasing federal Title IV-E foster care spending by
$350 million over five years (FY2006-FY2010) and $940 million over 10 years
(FY2006-FY2015). This increased foster care spending would offset savings to the
Medicaid program; the net federal savings are consequently estimated at $760 million
over the same five years (FY2006-FY2010) and $2.1 billion over 10 years (FY2006-19
FY2015).
18 The amendment was made by the Keeping Children and Families Safe Act (P.L. 108-36).
19 The Administration estimated savings to Medicaid of $2.0 billion over five years for its
proposal to limit TCM claims. In addition, it estimated savings of $1 billion over five years
from a proposed reduction in the federal matching rate for TCM services. (This matching
rate reduction was not included in either the House or Senate reconciliation bill and is not
(continued...)
What is Medicaid TCM? Medicaid (Title XIX of the Social Security Act)
is an open-ended entitlement to states. States may seek federal matching payments
for medical assistance offered to Medicaid-eligible individuals. Children who are
eligible for federal foster care (Title IV-E eligible) are automatically deemed eligible
for Medicaid, and most other foster children (non-Title IV-E eligible) are presumed
to qualify for Medicaid under other (low-income and/or disability-related) Medicaid
eligibility criteria. Further, under Medicaid law, case management is an optional
benefit that states may offer Medicaid beneficiaries, and it includes services to assist
them in gaining access to needed medical, social, education, and other services. The
term “targeted case management,” or TCM, refers to situations in which these case
management services are not provided statewide to all Medicaid beneficiaries, but
rather are provided only to specific classes of individuals or “target” groups (e.g.,
people with AIDS or those with developmental disabilities, children who are abused
or neglected, or children in foster care).
For FY2002, across all states the estimated total federal share of TCM
expenditures for all targeted groups was $1.3 billion, of which $171.5 million was
reimbursed on behalf of costs incurred for 165,265 foster care children.20 States
varied widely in the use of TCM services for children in foster care. Nine states
(including the District of Columbia) showed no TCM claims for foster care children
in FY2002. Among the states that did submit Medicaid TCM claims for foster care
children, the estimated federal share was under $1,000 in two states, more than
$1,000 but less then $100,000 in 11 states, and more than $100,000 but less than $1
million in 10 states. Among the remaining 19 states, the federal share of TCM claims
for foster care children ranged from $1.1 million in West Virginia to $38.9 million
in Texas.21
Explanation of Change. The prior law definition of TCM was broadly
written, and there have been conflicting policy directives in regard to how TCM
claims may be made on behalf of Medicaid-eligible individuals, particularly if an
individual might also be able to receive related/same services under another state or
federal program. The provisions included in the Deficit Reduction Act were inteded
to enact policies outlined in a January 19, 2001 letter to state Medicaid directors and
which was co-signed by federal Medicaid and Child Welfare administrators. The
policy letter, which explicitly addressed only the issue of Title IV-E eligible foster
care children and allowable TCM claims, has now been written into statute by P.L.
109-171 in a way that would address TCM claims for a variety of populations
(including non-Title IV-E eligible foster care children). The provisions, however,
continue to give special attention to foster care-related claims generally.
The Deficit Reduction Act (P.L. 109-171) provides a more detailed definition
of TCM that includes assessing a person’s need for services, developing a care plan,
19 (...continued)
in the conference agreement.)
20 FY2002 Medicaid Statistical Information System (MSIS). The definition of “foster care
children” for MSIS includes children in foster care and those receiving adoption assistance.
21 Ibid.
referring individuals to services, and monitoring and followup of service use. It
reiterates that TCM services do not include reimbursement for any of the underlying
services costs (e.g., mental health counseling), and further that in the specific case of
foster care, TCM does not include services that are part of the “direct delivery” of
foster care. The legislation (like the policy letter it codifies) provides illustrative
examples of these foster care services (research gathering and completion of
documentation required by the foster care program, assessing adoption placements,
recruiting or interviewing potential foster parents, serving legal papers, conducting
home investigations, providing transportation, administering foster care subsidies,
and making placement arrangements). Additionally, the provisions assert that
Medicaid can be billed only for case management or TCM where “there are no other
third parties liable to pay for such services, including as reimbursement under a
medical, social, education, or other program.” Finally, the statutory language in the
enacted legislation (P.L. 109-171) stipulates that states may use accepted federal cost
allocation methods to ensure costs are appropriately billed to the proper program.
Under the Bush Administration, CMS had backed away from the TCM policies
in the January 2001 letter, and increasingly suggested — via denials of state plan
amendments seeking to provide TCM services to foster care children (or abused and
neglected children broadly) — that the kinds of services provided by Medicaid TCM
are integral to the foster care program and therefore the financial responsibility of the
child welfare agency rather then Medicaid.
Effect of this Provision. This provision of the Deficit Reduction Act asserts
that states may allocate costs of Medicaid TCM services to children in foster care.
This is contrary to current CMS policy (as provided in the State Medicaid Manual),
which does not allow states to use cost allocation when making claims related to
Medicaid services, but is in keeping with the January 2001 policy letter on TCM
claims for Title IV-E eligible foster care children. In this sense, the newly enacted
language seems to clarify conflicting policy statements in a way that supports rather
than limits TCM claims for foster care children.
At the same time, the new statutory provision asserts that Medicaid may not be
billed for TCM services if there is another party liable for the cost of such services,
including as reimbursement under a “medical, social, education, or other program.”
Exactly how this “third-party liability” language would be implemented — which
primarily restates general third-party liability provisions under current Medicaid law
— is unclear. In his brief statement regarding a proposed (but failed) amendment to
strike the TCM provisions from the budget reconciliation bill that passed the Senate
in November 2005, Senator Reed expressed the concern that the language would
“force” payment for TCM services by “third parties, States or others,” resulting in
reduced services and increased costs to states. In response, Senator Grassley said that
the legislative proposal simply sought to codify a policy originally proposed by the
Clinton Administration.22 The final bill did not significantly alter the third party
liability language included in the earlier House or Senate bills.23
The CBO estimate of savings for this provision is based on the assumption that
states — with regard to foster care and other programs (e.g., juvenile justice) — have
too broadly billed the provision of TCM services to Medicaid. This is in keeping with
the Administration’s assertion that states have been shifting costs from foster care,
and certain criminal justice and education programs to Medicaid. In particular, CBO
believes that some states will move some of the claims they previously or currently
bill as Medicaid TCM to foster care administrative claims under Title IV-E.
However, as CBO also estimates net savings to the federal treasury ($760 million
over five years ; $1.3 billion over 10 years), it apparently does not believe that all of
these claims may be made under Title IV-E. In sum, the effect of this new provision
is uncertain, but is believed — as is suggested by net CBO savings — to reduce
access to Medicaid TCM claims for a range of populations, including particularly
Medicaid-eligible foster care children.
Proposals Not Included in the Final Legislation
Reconciliation legislation, passed initially in the Senate (S. 1932) and the House
(H.R. 4241) also included several other provisions relevant to child welfare, and for
which no significant budget effect (savings or cost) was estimated or expected. These
provisions, which would have extended the authority of HHS to issue waivers of
federal child welfare policy through FY2010 (House bill only), authorized a federal
student loan forgiveness program for child welfare workers and others (House bill
only),” and amended the Higher Education Act in ways intended to encourage greater
access to youth aging out of foster care (primarily included in the Senate bill) were
not included in the final conference agreement. A brief summary of the deleted
provisions follows.
Extend Child Welfare Waiver Authority. The authority of HHS to approve
new waivers of some federal child welfare program requirements (included in Title
IV-B or Title IV-E of the Social Security Act) expired with March 31, 2006. This is
not expected to affect previously approved and/or implemented waivers, but means
that HHS is no longer authorized to approve additional waivers. Waivers are
intended to allow states to demonstrate innovative programs for the delivery of foster
care and other child welfare services. Congress previously temporarily extended this
waiver authority numerous times as part of short-term reauthorizations of the
Temporary Assistance to Needy Families (TANF) block grant, including most
recently in P.L. 109-161 (signed by the President on December 30, 2005). However,
22 See discussion of Amendment No. 2409 in the Congressional Record, Nov. 3, 2005,
p. S12321.
23 However, unlike either the House or Senate versions of the reconciliation bill, the
conference agreement stipulates that the new language does not affect the prior law
application of third party liability with regard to programs or activities of the Indian Health
Services Act or those carried out under Title XXVI of the Public Health Services Act.
while the Deficit Reduction Act reauthorized the basic TANF block grant through
FY2010, it did not similarly extend child welfare waiver authority past March 2006.24
As initially passed, the House reconciliation bill (H.R. 4241) would have
extended (through FY2010) HHS authority to grant child welfare waivers, would
have removed the limit on the total number of demonstration programs HHS may
approve in any given year (set at 10 by current law) and would have made other
changes related to the approval of waiver projects and availability of information
about the projects.25 These provisions were not in the Senate reconciliation
legislation nor the conference agreement, and were thus not a part of the Deficit
Reduction Act as enacted (P.L. 109-171).
Student Loan Forgiveness for Child Welfare Workers. H.R. 4241
would have authorized the Department of Education to repay up to $5,000 in student
loan debt if an individual has worked full-time for five years in one of several “areas
of national need” — defined to include child welfare workers.26 This provision was
not in the Senate reconciliation legislation and was not included in the enacted
Deficit Reduction Act of 2005.27
Education-Related Services and Aid for Foster Children and Those
Aging Out of Foster Care. Both the House and Senate reconciliation bills (using
slightly different language) would have amended the Higher Education Act to clarify
that youth in foster care (or formerly in foster care) on his/her 18th birthday are
included in the definition of “independent student.” (The definition is used for
purposes of determining eligibility for federal student financial aid.) This clarifying
change was not included in the Deficit Reduction Act as it was finally enacted.28
Proposed TRIO Program Amendments. The Higher Education Act
authorizes a range of grant programs, collectively called the Federal TRIO programs.
24 These temporary reauthorizations have also been used to continue mandatory funding of
the national random sample study of child welfare (Section 429A of the Social Security
Act). The study has been implemented by HHS as the National Survey of Child and
Adolescent Well-Being (NSCAW). As enacted, the Deficit Reduction Act appropriated
funds for the national random sample study of child welfare through FY2010.
25 The child welfare waiver provisions of H.R. 4241 were identical to those included in H.R.
240, omnibus welfare reform legislation proposed in the House earlier this session and
incorporated into H.R. 4241. Earlier this year, the Senate Finance Committee reported
welfare reform legislation (S. 667) that would extend through FY2010 HHS authority to
grant child welfare waivers but would make no other changes to this waiver authority.
26 Several other bills introduced in this Congress would provide separate loan forgiveness
programs for child welfare workers and/or for attorneys practicing in the field of child and
family law. These include H.R. 127, S. 1431, S. 1679, and H.R. 3758.
27 In late March 2006, the House again passed this same student loan provision as a part of
the College Opportunity and Access Act (H.R. 609). That legislation, which would
reauthorize the Higher Education Act, is pending in the Senate.
28 The House has subsequently re-passed its provision regarding the definition of
independent student as a part of the College Opportunity and Access Act (H.R. 609). That
legislation, which would reauthorize the Higher Education Act, is pending in the Senate.
These programs are designed to identify potential post-secondary students from
disadvantaged backgrounds, to prepare these individuals for post-secondary
education, to provide certain support services to them while they are in post-
secondary education — and to train individuals who provide these services.
Collectively, the programs are authorized to provide a wide range of services, such
as tutoring, financial aid, personal or career counseling, mentoring, exposure to
cultural activities and educational institutions, academic advising, and financial
literacy training. The Senate reconciliation bill would have amended a number of
these programs to help ensure that youth in foster care and those leaving the foster
care system because of their age (typically the 18th birthday) are served by these
programs. These changes were not included in the Deficit Reduction Act as it was
finally enacted.