March 9, 2021

A new report from Child Trends finds that child welfare agencies spent little on prevention in 2018, compared to their expenditures on other services and activities. The Child Welfare Financing Survey for state fiscal year (SFY) 2018 provides a national and state-by-state analysis of the composition of, and changes in, child welfare agency expenditures. State leaders can use the survey findings to understand how COVID-19, the passage of the Family First Prevention Services Act (Family First Act), and renewed mainstream attention to race equity may affect spending levels and priorities in the coming years.

“The pandemic, Family First Act, and important attention to race equity are likely to impact both what funds will be available and how state child welfare agencies use them,” said Kristina Rosinsky, a child welfare financing expert at Child Trends and lead author of the report.

When compared with surveys from previous years, child welfare agencies continue to use a significant portion of their funding to finance the cost of out-of-home placements: Among the 41 states with sufficient data, 45 percent of state expenditures went toward out-of-home placement costs, compared to 15 percent for preventive services that aim to support parents and keep children safe and in their homes. The proportion of spending on different activities is reflective of the cost, duration, and number of children receiving each type of service.

The SFY 2018 survey is the final year of state child welfare agency spending data to be collected before major provisions of the Family First Act were implemented in October 2019. This legislation gave states increased resources and opportunities to use the largest federal child welfare funding stream (Title IV-E) for services and supports that aim to prevent a child from entering foster care, among other goals. In SFY 2018, before Family First Act implementation started, states focused the majority of their prevention spending on skill-based programs for parents and on caseworker visits and administration.

“It will be important for leaders to examine how the implementation of the Family First Act has contributed to spending on prevention services, especially given that pandemic-related budget cuts may make it more difficult to focus on prevention in the short term,” said Sarah Catherine Williams, second author of the report. “While the Family First Act emphasizes the importance of prevention, the pandemic may make it more difficult for states to focus their efforts on these services, given competing needs.”

The report discusses ways in which the pandemic, the Family First Act, and renewed mainstream attention to racial equity may affect child welfare financing streams in the coming years. For example, the report raises questions about how the Family First Act will shift the child welfare service array toward prevention services in the future. The report also explores how some funding streams and eligibility requirements may perpetuate racial disparities seen in the child welfare system.

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