Home > Child Welfare Waiver Demonstration Projects > Lessons Learned

 

Lessons Learned from States' Experiences with Flexible Funding Waivers

The flexible funding waivers reflect State efforts to seek new and creative ways of using title IV-E funds. The States have longed believed that the imbalance between federal funds available for foster care placement versus those available for services created incentives for foster care placement rather than for the provision of services aimed at preventing placement or hastening permanency. Nevertheless, findings from these early demonstrations suggest that issues driving the use of title IV-E funds are more complex than initially anticipated. Surprisingly, localities did not extensively embrace the use of IV-E funds for services. In addition, evaluation findings were not consistent and the benefits of using IV-E dollars more flexibly are not entirely clear. Key lessons learned through the flexible funding waiver demonstrations are outlined below.

States needed 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.

Localities were often reluctant to use title IV-E funds for services other than placement. This finding was somewhat surprising given the expectation that child welfare agencies were eager to use IV-E funds more flexibly. Both Indiana and North Carolina noted that several counties with access to flexible funds did not use them or did not use them to any great extent. It appears that States may not have anticipated the amount of training and technical assistance required for local agencies to fully understand the waiver and to use the newly available flexibility to the greatest advantage. In addition, localities in States with capped IV-E allocations (Ohio and Indiana) were responsible for covering all or most of the costs of child welfare expenditures that exceeded their capped allotment. In light of these financial risks, local child welfare agencies in these States may have been reluctant to use flexible IV-E dollars to a fuller extent.

The availability of flexible funds does not automatically lead to the development of new or innovative service delivery programs.

Flexible funds were typically used to address case-specific needs rather than to undertake the development of new service delivery programs. For example, States often used waiver funds to meet basic physical needs (e.g., rental assistance, food, utilities) and to purchase some services from existing providers (e.g., mental health or substance abuse services). Although these represent perfectly legitimate approaches to the use of flexible funds, the assumption that flexibility in the use of funds would generate new, creative approaches to meeting family needs did not materialize. The reasons underlying the limited development of innovative service strategies are not fully known; however, several factors may have affected how local agencies used their flexible dollars. First, as noted above, uncertainties about procedures and policies for using flexible funds and concerns about assuming financial risks may have encouraged local agencies to take a more cautious, incremental approach to the allotment of flexible dollars. Second, the design and establishment of completely new programs requires greater up-front expenditures of funds that may presumably save money at a later date. Currently, no mechanism exists for local governments to draw down more IV-E funds at the outset of a demonstration to finance new and innovative programs. Localities would have had to spend their own funds in the hope of realizing savings in title IV-E dollars at a later date to cover their initial financial investments.

Approaches to sharing risk among Federal, State and local governments need to be more fully developed and tested.

Under the waiver demonstrations, the Federal government passes all financial risks to the States in exchange for giving them greater flexibility in the use of these funds. In turn, Indiana, North Carolina, and Ohio passed some or most of the financial risks associated with the waiver down to local child welfare agencies. In contrast, Oregon bore all costs of local agency efforts that did not prove to be cost neutral. As a result, the State scrutinized local plans more carefully and quickly discontinued any local agency effort that was not cost neutral. The greater degree of risk assumed by localities in some States may have negatively affected their willingness to participate in the demonstrations and test innovative approaches to service delivery.

It is difficult for managed care strategies alone to improve child welfare outcomes while containing costs.

Ohio initially expected that its experimental counties would control the growth of foster care placement costs by instituting a variety of managed care strategies. Although experimental counties initially implemented several managed care strategies, many counties later discontinued some of these approaches. At the same time, several comparison counties implemented similar managed care strategies, making it difficult to identify any positive effects of such strategies on child welfare outcomes. Ohio now believes that its initial focus on instituting financial controls on child welfare spending was insufficient to achieve desired outcomes for children and families.

Improved evaluation strategies are needed to enhance understanding of the effects of the flexible funding waivers.

As previously noted, the inability of most demonstrations to link the use of funds to specific interventions that, in turn, affected outcomes, limited the utility of their evaluation findings. It is also possible that designs that relied on aggregate county-level data experienced more difficulty teasing out the effects of the waiver. Indiana, which had the most consistently positive findings, analyzed case-level data from matched experimental and comparison cases. It is understandable that flexible funding demonstrations supporting an array of interventions did not lend themselves to the use of experimental evaluation designs. The systemic nature of these interventions makes it difficult to isolate the impact of a specific service on child welfare outcomes. Nevertheless, it should be possible to compare outcomes for children and families that actually received a service funded using flexible funds with outcomes for children and families without access to these funds. Improved evaluation strategies will enhance future knowledge regarding the effectiveness of these demonstrations.

Back to Table of Contents

Next Steps

All four States - Indiana, Ohio, Oregon, and North Carolina - have received five-year extensions of their original flexible funding demonstrations. As States prepare to evaluate their extended waiver projects, the Children's Bureau will work with States to address issues identified in earlier evaluations. In particular, States will be encouraged to implement improved research designs that enhance the robustness of evaluation findings, for example, by incorporating case-level analysis of child welfare data.

Through these waiver extensions, the States are refining some aspects of their original flexible funding models or introducing new innovative services and interventions:

• Ohio received a five-year extension through September 2009 that will operate in the 14 counties that participated in the first phase of the State's waiver demonstration, with the option to expand the demonstration to additional counties. During this extension, the State will place less emphasis on the use of managed care strategies and will instead focus on the use of capped allocations of IV-E funds to implement a more limited range of services. All participating counties will implement a Family Team Meeting service component to involve family members in case planning and decision making. In addition, each participating county will implement at least one and up to four other service components:

  • Visitations between parents/caregivers and children in out-of-home placement to promote reunification;

  • Services and supports to facilitate and maintain kinship and adoptive placements (e.g., post-placement support services, peer mentoring, counseling, and assessments of the child's interest in adoption);

  • Managed care strategies; and

  • Enhanced mental health and substance abuse services.

• Oregon has received a five-year waiver extension through March 2009, during which it will continue its demonstration of the flexible use of title IV-E funds and undertake a special study of Family Decision Meeting Service Coordination (FDM-SC) for families newly entering Oregon's child welfare system. The State plans to implement the FDM-SC study in five counties, with families in three counties receiving FDM-SC services and families in two counties serving as a comparison group. Oregon's evaluation plan for its waiver extension includes several new features and requirements. For example, each participating county must develop and submit to the State a logic model that illustrates the linkages between its proposed services and desired child welfare outcomes. In addition, the State will use case-level data to evaluate the FDM-SC component of its waiver, while the evaluation of other waiver components will rely on an analysis of aggregate county-level data. As an alternative to random assignment, the State will explore using a statistical technique known as the Propensity Scoring Method (PSM) to facilitate selection of the most comparable cases in comparison counties.

• North Carolina began a five-year extension of its flexible funding waiver that will continue through June 2009. During its extension, the State will continue to explore the use of flexible funds to improve child welfare outcomes in 17 of its original experimental counties while expanding the demonstration to 21 newly selected volunteer counties. In addition, North Carolina has modified its original evaluation design to place more emphasis on the collection and analysis of case-level process and outcome data.

• Through its five-year waiver extension, Indiana will continue efforts to build local capacity to provide community-based services and home-based placement alternatives to restrictive institutional placements. The State will maintain its existing funding mechanism of capitated waiver "slots," with slots allocated to counties based on variables such as population size, poverty rates, and number of children in out-of-home placement.

Evaluation findings from these ongoing demonstrations will add to the knowledge base on flexible funding demonstrations and will shed further light on the issues presented in this paper.

 

Back to Table of Contents