Child welfare agencies use a variety of funding sources to pay for their work—primarily Title IV-E and Title IV-B of the Social Security Act, Medicaid, the Social Services Block Grant (SSBG), and Temporary Assistance for Needy Families (TANF). Other smaller federal funding sources include the Child Abuse Prevention and Treatment Act (CAPTA) and the Adoption Opportunities Program.
Over the past decade, child welfare agencies have been spending more federal dollars overall. In state fiscal year (SFY) 2022, child welfare agencies expended $16.8 billion in federal funds, representing a 6 percent increase over the past decade (after accounting for inflation).
Child welfare agencies’ use of federal funds, SFYs 2012-2022
Source: SFY 2022 Child Welfare Financing Survey
Note: All dollar amounts have been inflated to 2022 levels. The figures presented in this graph reflect an analysis of 37 states with sufficient data across all six surveys conducted by Child Trends from 2012 to 2022 (surveys are conducted every two years). Therefore, the total amount of SFY 2022 federal expenditures presented in this graph ($14.2 billion) differs from the total amount presented in the text ($16.8 billion).
The increase in child welfare agencies’ use of federal funds over the past decade is due to:
- The creation and expansion of programs funded by Title IV-E of the Social Security Act. More children became eligible for Title IV-E adoption assistance, states created and expanded their Title IV-E guardianship assistance programs, and states began implementing new Title IV-E prevention and kinship navigator programs.
- A large influx of pandemic relief dollars supplemented child welfare funding streams like Title IV-B of the Social Security Act and provided general funds to states that could be used for a wide range of purposes, including child welfare. Pandemic relief legislation also temporarily increased the rate at which the federal government reimbursed states for Title IV-E and Medicaid expenditures.
More recently, expenditures of federal funding by child welfare agencies decreased by 4 percent from SFY 2020 to SFY 2022. This decrease was influenced by:
- Fewer children entering foster care
- New restrictions on the use of Title IV-E for congregate care placements and the elimination of a Title IV-E program that provided states flexibilities in the use of Title IV-E dollars
- Reduced child welfare agency spending of TANF and SSBG
- Stable Title IV-B appropriation levels from FYs 2013-2017 that lost value over time due to inflation
Child Trends and Child Welfare Financing
Child Trends helps keep the field aware of financing trends by conducting a national survey every two years of how each state finances child welfare. With support from Casey Family Programs and the Annie E. Casey Foundation, data from this survey are used to create a national report, state-level factsheets, funding source factsheets, and other products that describe funding sources such as Title IV-E, TANF, state/local funding, and more.
This expertise allows Child Trends to work directly with states on examining the financing of their unique child welfare systems. This can help child welfare leaders make decisions, budget, and promote best practices to improve outcomes for children and families. If you are interested in learning more about our work in this area, please contact Kristina Rosinsky.