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September 2003Vol. 4, No. 7Flexible Funding Demonstration Projects Show Promise

The President's recent child welfare proposal would allow States the option to receive their foster care funding as a flexible grant. This flexibility will help States enhance the array of services for families and improve outcomes for children. While this proposal is still pending, demonstration projects are already exhibiting some of its promise on a smaller scale.

Under the child welfare waiver demonstration authority, four States--Indiana, North Carolina, Ohio, and Oregon--are providing counties or other local entities the opportunity to use Title IV-E funds more flexibly to prevent foster care placement, facilitate reunification and otherwise ensure safe, permanent outcomes for children. Participating counties' total Title IV-E allotment is fixed by agreement with the State. These States have arrangements with participating counties to share risks and rewards if expenses are either below or above their planned Title IV-E allotment.

Three of the States have submitted final evaluations reporting outcomes for children based on their first 5 years of implementation. Selected findings include:

  • In North Carolina, researchers found the probability of out-of-home placement following a substantiated report of abuse or neglect declined more dramatically in the demonstration counties than in comparison counties during the 5 years of the project.
  • In Ohio, researchers found demonstration counties were more likely than comparison counties to express a strong commitment to prevention, target new prevention activities to areas previously identified as insufficient, and target services to particular populations identified as in need of services. The evaluation's analysis of outcomes did not suggest significant differences between demonstration counties as a group and the comparison counties on either safety outcomes or permanency rates; however, individual demonstration counties did show significant differences that could be attributed to the waiver (e.g., in two counties children had shorter stays in foster care before being adopted).
  • Oregon's final evaluation report found children were more likely to remain in their own homes in localities where the child welfare agency had access to flexible funds through the Title IV-E waiver or through a State-funded System of Care initiative. Children in the localities with access to both waiver and System of Care funds were more than 3 times as likely to remain at home as children in localities that did not have access to either source of flexible funding.

Strategies employed to achieve these outcomes varied greatly by State and locality. Some of the services funded through the waiver include:

  • Assessment
  • Family support, family reunification, and child and family counseling
  • Enhanced visitation
  • Family decision meetings
  • Parenting, homemaker, and job-related education
  • Adoption services
  • Substance abuse and mental health treatment

In Ohio, counties developed their own managed care strategies for expenditures, including establishing capitated or case-rate contracts with private providers; developing utilization review strategies such as pre-placement and period review processes; increasing incentives to enhance foster care provider networks; and establishing quality assurance procedures.

These demonstration projects show that, when coupled with strong leadership and a willingness to deploy new practice tools, flexible funding can be an important catalyst toward achieving better outcomes for children and families. Detailed information about these and other demonstration projects can be found on the Children's Bureau website at

Related Items

Read more about the proposed Child Welfare Program Option in "HHS Assistant Secretary Testifies Before Congress on the President's Child Welfare Proposal" in the August issue of Children's Bureau Express.