Title IV-E’s Quiet Makeover: From Foster Care to Permanency
By Laura Radel, MPP
Title IV-E’s Quiet Makeover: From Foster Care to Permanency
By Laura Radel, MPP
Title IV-E of the Social Security Act provides the bulk of federal child welfare funding. But if you think it’s mostly funding foster care, you’re missing a structural shift.
Today, only about half of program funds are devoted to foster care and only about 1 in 5 children receiving program subsidies are in foster care. Instead, the vast majority of program beneficiaries are children in adoptive homes and guardianships.
Title IV-E spent approximately $10.2 billion in Federal Fiscal Year (FFY) 2023,3reimbursing states for a portion of their costs for eligible expenditures in foster care, adoption, guardianship, and, in recent years, prevention services for eligible children. It also funds administrative and placement costs associated with these programs.
The program’s evolution began with an emphasis on permanency in the Adoption Assistance and Child Welfare Act of 1980 (P.L. 96-272), and was supercharged by the Adoption and Safe Families Act of 1997 (ASFA; P.L. 105-89).
In addition, as part of welfare reform in 1996, Congress restricted the program’s eligibility, over time decreasing the proportion of children in foster care eligible for federal reimbursement. As a result, what was a foster care program over time became largely an adoption program.
The Trends Behind the IV-E Transformation
ASFA in 1997 impelled states to increase adoptions from foster care. The 2008 Fostering Connections to Success and Increasing Adoptions Act (P.L. 110-351)introduced federally subsidized guardianships, expanding options for permanency.
Because adoptions and guardianships typically last longer than foster care stays, the number of children receiving permanency payments to stay with adoptive parents or guardians grew quickly in relation to children in federally funded foster care.
Child welfare funding changes contained in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193) restricted Title IV-E eligibility, contributing to the program’s transformation.
Congress tied Title IV-E eligibility to each state’s now-defunct Aid to Families with Dependent Children income limit, but with no inflation adjustment. It later phased out income limits for adoptions, but not foster care or guardianship, driving this structural shift.
As a result, the proportion of adopted children eligible for Title IV-E grew to 87% in 2023, while the proportion of eligible children in foster care declined to 34%.
There is considerable variation in these numbers among states, ranging from 5 states with IV-E foster care eligibility rates of less than 20% to 4 states with rates greater than 60%. States shoulder all foster care costs for children who are not IV-E eligible.
Two factors make the shift toward adoption (and, to a lesser extent, guardianship), less dramatic when you look at funding rather than at the population of participating children.
First, foster care has more administrative activity associated with it than do adoption and guardianship – the costs of court preparation, for example. Second, many states have sought to maximize claims for administrative costs, creating systems to document every possible claimable activity.
As a result, costs of administration, training, and data systems have grown as a proportion of overall program costs, representing 72% of foster care program claims in 2023. This compares to about 14% for adoption and 6% for guardianship.
While views of the system stayed fixed, we shifted from direct funding mostly for children’s care to supporting states’ child welfare system infrastructure. Missing that will focus you on the wrong cost and policy drivers.
In addition, this system tends to favor adoptive families, often with more resources and less prior connection to the child than kin or family-based caregivers.
Federal policy focus, as well as research, data collection and accountability systems, continue to focus on children in foster care. Even many knowledgeable observers still think of title IV-E as “mostly foster care.”
Lawmakers and advocates have also increasingly focused on the role of Title IV-E in financing prevention through Family First.
Meanwhile Title IV-E’s largest component shifted ever deeper into the child welfare system, focusing resources on those relatively few children permanently separated from their families of origin.
These changes have taken place largely under the policy radar, without attention, debate, or intentionality. But they’ve been right there in plain sight in the public data.
For 35 years Laura analyzed child welfare issues for the Office of the Assistant Secretary for Planning and Evaluation (ASPE), a combination research and policy office within the Office of the Secretary of the U.S. Department Health and Human Services. She retired this May, amid ASPE’s near elimination during reorganization.