States may use federal funds for foster care contracts. Federal funding has rules that, for example, forbid religious discrimination against foster parent applicants.

South Carolina is one of two states that have requested an exception to the religious discrimination rule. It argued that the rule violated faith-based foster care agencies’ rights because they had to abandon their beliefs or forego funding. HHS granted the exception.

HHS’s review of South Carolina’s request involved officials from across the department, including the Deputy Secretary and officials from the Administration for Children and Families and the Office for Civil Rights.

Department of Health and Human Services seal

Reissued with Revisions Jul. 09, 2020

This report was revised July 9, 2020 to remove the “Draft” label on page 1.

• View Highlights

What GAO Found

State child welfare agencies receive federal funding to help cover the costs of operating their foster care programs from the Department of Health and Human Services (HHS) under title IV-E of the Social Security Act. States participating in title IV-E are required to ensure that their programs comply with various program-specific requirements established by the statute and regulations. In addition, as recipients of HHS funding, these states and any subrecipients of these funds, including private child welfare agencies, are also required to comply with HHS's general administrative grant regulations. The regulations also provide that HHS may authorize certain exceptions from its administrative grant requirements on a case-by-case basis.

HHS has approved one exception from its administrative grant regulations, in response to a request from the state of South Carolina. Specifically, HHS granted an exception from a regulatory provision that prohibits discrimination on the basis of religion, with respect to private, faith-based child welfare agencies that work with the state's foster care program. South Carolina addressed the request to HHS's Acting Assistant Secretary for the Administration for Children and Families (ACF). ACF officials determined which HHS offices should be involved in considering whether to grant the exception. ACF's Children's Bureau reviewed the request because of its role in providing support and guidance to state child welfare programs, and ultimately determined the request posed no issues from a programmatic perspective. Officials from the Office of the Assistant Secretary for Financial Resources reviewed the request because of its role in overseeing the grant regulations from which South Carolina sought an exception. These officials determined that approving the request was not in direct conflict with policies and regulations and that approval would not have long-term implications. Officials from the Office for Civil Rights reviewed the request because the request alleged that the regulation from which South Carolina was seeking an exception infringed upon the free exercise of religion by faith-based private child welfare agencies. This office concluded that in this case, requiring faith-based private child welfare agencies to comply with the religious nondiscrimination requirement would violate the Religious Freedom Restoration Act, and therefore recommended approval of the exception. HHS's Office of the General Counsel provided legal counsel throughout the review and approval process.

Why GAO Did This Study

In February 2018, on behalf of the private, faith-based child welfare agencies that assist in recruiting foster families for the state, the South Carolina governor requested an exception from an HHS administrative grant requirement that prohibits discrimination on the basis of religion, among other characteristics.

This report describes HHS's process for reviewing and approving requests for exceptions from its administrative grant regulations, including nondiscrimination requirements. GAO focused this review on any requests for exceptions that would apply to programs operated under the Children's Bureau, the specific office within HHS that oversees the federal foster care program, from 2014, the year the exception provision took effect, through 2019. GAO reviewed relevant federal laws and regulations, agency documents, and both the letter from South Carolina requesting the exception and HHS's response letter granting it. GAO also interviewed HHS officials representing the range of offices involved in reviewing and approving requests for exceptions from administrative requirements.

For more information, contact Kathy Larin at 202-512-7215 or larink@gao.gov.

Reissued with Revisions Jul. 09, 2020

This report was revised July 9, 2020 to remove the “Draft” label on page 1.