Executive Summary

Synthesis of Findings from the Title IV-E Flexible Funding Waiver Demonstrations Executive Summary

Throughout the 1990s, several trends in child welfare services contributed to a growing interest in waivers that offer flexibility to States and local municipalities in spending Federal title IV-E funds while limiting the total IV-E allocations available for services. Key factors that have provided impetus to the development of flexible funding waivers include growth in out-of-home placement costs, increasing complexity in the risk profiles and service needs of children and families, and Federal limitations on the use of title IV-E funds. Since 1996, four States - Indiana, Ohio, Oregon, and North Carolina - have implemented flexible funding waiver demonstrations. Although all States with flexible funding waivers sought to reduce the number of children entering out-of-home placement, facilitate more timely exits from placement, and decrease the number of children in costly placement settings, each State adopted a different approach to providing services and controlling expenses:

Indiana focused on building local capacity to provide community-based services and home-based alternatives to restrictive institutional placements by allocating "flexible funding slots" to participating counties based on the size of their foster care populations. A sum of $9,000 was assigned to each slot to provide any type of service that would facilitate permanency, including foster care, child and family counseling, parenting and homemaker education, job-related services, and legal assistance. Counties bore the financial risk for costs exceeding this per slot allocation.
In North Carolina, counties received title IV-E funds from the State that could be used to provide a flexible array of services and supports to meet the needs of children and families in the child welfare system. Each county was allowed to develop its own initiative, contingent on State approval, to provide a range of new or expanded services, promote organizational changes within child welfare services, or to support court reform activities. Although not limited in the amount of flexible waiver funds they could spend, counties were expected to remain cost neutral by not spending more title IV-E dollars than they would have spent without the waiver.
In Ohio, counties experimented with a diverse array of managed care strategies to improve child welfare outcomes while controlling costs. The State provided participating counties with a capped amount of IV-E funds; each county then developed its own strategy for managing expenditures within this allotment.
Local child welfare agencies in Oregon developed plans to use flexible funds for (1) "innovative services," such as enhanced visitation, in-home parenting, and early childhood assessments; (2) expansion of existing services, especially Family Decision Meetings; and (3) emergency one-time payments to prevent foster care placement.

All States with flexible funding waiver demonstrations were required to conduct process and outcome evaluations, as well as a cost analysis. Indiana's evaluation employed a matched case comparison design, in which each child assigned to a waiver slot was matched with a corresponding non-waiver child based on demographic, geographic, and case-related variables. North Carolina and Ohio used comparison group designs that assessed outcomes for families in counties with access to flexible funds against those of families in comparison counties without access to flexible funds. These States selected comparison counties based on variables such as population size, demographic and socio-economic characteristics, and the number of title IV-E eligible children. For its evaluation, Oregon compared outcomes for a sample of child welfare cases in localities with access to flexible funds with outcomes for a selected sample of cases in localities that did not have access to flexible funds.

States encountered several special challenges in evaluating the effects of their flexible funding demonstrations on child welfare and fiscal outcomes:

Some States did not identify logical linkages between specific services or interventions and observed changes in child welfare outcomes, thereby limiting their ability to isolate the effects of the flexible funding demonstrations.
Many local governments without access to flexible funding dollars were able to access other funding sources to implement innovative child welfare services similar to those employed in jurisdictions with access to flexible funds. The availability of alternative funding sources attenuated observable differences in child welfare outcomes between waiver and non-waiver jurisdictions.
Incomplete, inconsistent, or delayed implementation of demonstration activities and services further limited States' ability to measure the effects of the flexible funding waivers.
Because flexible funding demonstrations are often systemic in nature, encompassing entire geographic regions and serving a wide range of children and families, States were sometimes unable to implement the most rigorous research designs, such as random assignment.
Some States' use of aggregate, county-level evaluation data made it more difficult to isolate the effects of other, non-waiver initiatives on observed child welfare outcomes.

Major Process Findings

The mere availability of flexible funds was not always sufficient to encourage active participation in the waiver demonstration by local child welfare agencies. Indiana and North Carolina in particular noted wide disparities among counties in their use of flexible funds to develop new or to expand existing services.
The cost neutrality requirement of the waiver demonstration - the stipulation that States receive reimbursement for no more title IV-E funds than they would have received in the absence of the waiver - emerged as a challenge for some local child welfare agencies. For example, many innovative service projects in Oregon funded through the flexible funding waiver were curtailed, discontinued, or shifted to other funding sources by the State because they failed to remain cost neutral.
States encountered both successes and challenges in establishing service contracts with outside providers. For example, Oregon cited problems with the recruitment and retention of qualified service providers and the complexity and lengthiness of the contract process as barriers to increasing the availability of high-quality contracted services.
The flexible funding waivers in all four States appeared to exert a positive influence on the development of collaborative relationships among public child welfare agencies and community-based social service organizations.
Families in Indiana with access to flexible funds received more and a greater diversity of services than families without access to flexible funds. Ohio observed few or no differences between waiver and non-waiver jurisdictions in the quantity or diversity of child and family services.
Indiana and Oregon reported that inadequate staff training regarding flexible funding rules and procedures had a negative effect on waiver implementation.

Major Outcome Findings

Foster Care Placement Rates: In the three States that studied placement avoidance (Indiana, North Carolina, and Oregon), the flexible funding demonstrations were associated with a significantly reduced probability of out-of-home placement. In Indiana, 45.6 percent of children assigned to the experimental group never entered placement compared to 38 percent of control group children. In Oregon, children in child welfare branches with access to services paid for using flexible funds were over three times more likely to remain home as children in comparison sites. North Carolina reported that the likelihood of entering placement for children with a substantiated report of abuse or neglect declined significantly more in experimental counties than in comparison counties or in other counties not participating in the waiver demonstration.
Placement Duration: Indiana observed a significant positive association between the availability of the waiver and reduced length of stay in foster care placement. North Carolina and Ohio observed no significant effects of their waivers on placement duration.
Permanency Rates: The States defined permanency in somewhat different ways for the purposes of their waiver evaluations. Two States - Indiana and Oregon - focused on exits to reunification. In Indiana, the flexible funding waiver had a significant positive effect on reunification rates, with nearly 77 percent of experimental group children in out-of-home placement reunified either with the original caregiver or a non-custodial parent compared with 66 percent of control group children. Oregon found no association between access to flexible funds and the likelihood of children returning home within one year of placement. Ohio, which examined exits to reunification, adoption, and relative custody following an initial placement in out-of-home care, found that exits to reunification actually declined in experimental counties while no significant effects on adoption rates emerged. However, Ohio did report a statistically significant increase in exits to relative custody in experimental counties. North Carolina, which studied the overall rate of exit from out-of-home placement, found no conclusive evidence that access to flexible funds had an independent positive effect on the likelihood of leaving foster care.
Maltreatment Recurrence: Of the States that studied maltreatment recurrence (Indiana, Ohio, and Oregon), none observed changes in subsequent maltreatment rates in either direction as a result of the flexible funding waiver.
Foster Care Re-Entry: Among the States that studied foster care re-entry (Indiana, North Carolina, and Ohio), access to services paid for using flexible funds had no significant effects in either direction on the likelihood of foster care re-entry.
Child and Family Well-Being: Indiana's evaluation found a positive association between access to waiver-funded services and school attendance, with a higher percentage of school-age children assigned to the experimental group in school at case closure than children assigned to the matched comparison group. No other State examined the effects of its flexible funding demonstration on child well-being outcomes.

Lessons Learned from the Flexible Funding Waiver Demonstrations

States need to provide more training and technical assistance to local child welfare agencies if the flexible funding waivers are to be used to their maximum potential.
The availability of flexible funds does not automatically lead to the development of new or innovative service delivery programs.
Improved evaluation strategies are needed to enhance understanding of the effects of the flexible funding waivers on child welfare and fiscal outcomes.