Show Me the Money: A Look at New Trends in Child Welfare Financing
Kristina Rosinsky,* Child Trends
Show Me the Money: A Look at New Trends in Child Welfare Financing
How states are slowly rewiring child welfare budgets
Kristina Rosinsky,* Child Trends
*This work is my own and does not necessarily reflect the views of Child Trends
Hot off the press! Child Trends has just released the latest Child Welfare Financing Survey data that covers state fiscal year (SFY) 2022.
This survey represents the only comprehensive source of information about how much child welfare agencies are spending, from what sources, and on what services.
The latest data give us insights into national and state-level trends as well as the early impacts of the Family First Prevention Services Act (FFPSA), the use of pandemic relief dollars, and other policy shifts.
Signal of a Shift Away from Out-of-Home Placements?
We are seeing early indications that states are shifting funds away from out-of-home placements.
In SFYs 2018 and 2020, states spent 46% of their total funding on out-of-home placements. But in SFY 2022, this dropped to 43%.
About half of that 3 percentage point change is going toward prevention.
Systems like child welfare are tremendously difficult to shift– think turning a cargo ship.
This seemingly small change may signal the beginning of a potentially significant shift toward keeping families together through services.
We will continue to track this over time to see if the trend persists.
Conserving Child Benefits
Another noteworthy trend involves the use of children’s Social Security benefits by child welfare agencies.
Income from various child benefits, like Supplemental Security Income and Social Security Disability Insurance, can be used by child welfare agencies to offset their costs. However, this practice is controversial.
On one hand, people argue that these are benefits to which children are entitled and children should not be charged for their foster care.
Others argue that without a fiscal incentive, child welfare agencies may not undertake the time intensive work to help children access these benefits in the first place.
In recent years, several states have enacted legislation to stop child welfare agencies from using child benefits to offset agency costs.
We are seeing this shift reflected in spending data: the SFY 2022 data show a 22% reduction in child welfare agency expenditures of child benefits and family income (like child support) since SFY 2020.
This amounts to millions of dollars in child benefits no longer being used by child welfare agencies to pay for the cost of foster care.
It is an open question as to whether those funds are now being conserved for the child or their caregiver to support their transition back home and to adulthood, or whether the funds are simply not being accessed at all.
What This Means for Leaders
The data Child Trends just released can help child welfare leaders and partners take the financial temperature of their system and pinpoint areas that need further exploration.
No other source provides a comprehensive look at all the funding sources child welfare agencies are using and what they are spending those funds on.
State policymakers may see their state is using relatively little federal funding compared to similar states, and use that insight to maximize federal funds.
Advocates may see a significant decline in spending in a specific category and dig deeper to understand why that change occurred and how it is impacting families.
Philanthropy may spot opportunities for public-private partnerships related to system shifts that would benefit from outside capital.
We often find the data from the Child Welfare Financing Survey serves as the catalyst behind deeper explorations like these. So go forth and explore, fellow wonks!
As you review the latest products on the Child Trends website, do not hesitate to reach out; I’m always happy to chat about financing! (krosinsky@childtrends.org)