New Survey Finds that State Child Welfare Budgets May Face Perfect Storm

Washington, DC — Although child welfare spending has increased for at least a decade, several factors driven by the current recession may be converging to threaten states’ capacity to serve abused and neglected children.A new Child Trends study, Federal, State, and Local Spending to Address Child Abuse and Neglect in SFY 2006, summarizes key findings from a survey of all 50 states and the District of Columbia regarding their child welfare expenditures in state fiscal year (SFY) 2006 the latest year for which data are available. As the current recession deepens, many states are scaling back Medicaid services and are facing increased demand for Temporary Assistance for Needy Families (TANF) funds. TANF is the main federal program that provides financial and employment support for low-income families, but has also historically been used by states to fund a range of child welfare services.In past years, both programs have been significant sources of funds for child welfare services. At the same time, states’ proportion of child welfare spending has increased, while the federal share has declined.And reports of abuse and neglect often increase in difficult economic times suggesting that many states may face increased demand for child welfare services just as their capacity to pay for these services diminishes. Among the findings of the study: States spent at least $25.7 billion in federal, state, and local funds for child welfare purposes in SFY 2006, a 9% increase in spending since SFY 2004 and a 55% increase since SFY 1996, after adjusting for inflation. With state budgets now in crisis, it is noteworthy that in SFY 2006 states relied more heavily on their own resources to pay for child welfare services.After increasing every two years between SFY 1996 and SFY 2002, the federal share of total child welfare spending declined and accounted for less than 48% of all spending.Many states relied on their own funds to an even greater extent; in 9 states, state and local funds accounted for at least 60 percent of all child welfare spending. Between SFY 2004 and SFY 2006, Medicaid was the source of federal funding for child welfare that increased most substantially (19%).The current economic crisis has caused many states to enact cuts in their Medicaid programs, even on mandatory services, while many of the child welfare services funded by Medicaid are actually offered at state option. In SFY 2006, states used at least $3.1 billion of TANF funds to pay for child welfare services.The current economic crisis will likely put added pressure on states’ TANF programs, placing child welfare agencies’ continued access to these funds in doubt. Kerry DeVooght, the lead author of the new report, notes, We have already witnessed a number of states proposing cuts to their child welfare programs at a time when the need for child welfare services may be increasing.Research and past experience have demonstrated that during poor economic times, reports of abuse and neglect tend to rise. The study was funded by the Annie E. Casey Foundation, headquartered in Baltimore, MD, and Casey Family Programs, headquartered in Seattle, WA. Child Trends is a nonprofit, nonpartisan research center that studies children at all stages of development. Its mission is to improve outcomes for children by providing research, data, and analysis to the people and institutions whose decisions and actions affect children. Child Trends / 4301 Connecticut Avenue, NW, Suite 350 / Washington, DC 20008 Phone:202-572-6000; Fax:202-362-8420; Privacy Statement ©1996-2006 Child Trends All rights reserved