Maximize Federal Funding for Child Welfare Programs

The state should take advantage of opportunities to maximize federal funding of child welfare programs under Title IV-E of the federal Social Security Act.


Background
The recently created Department of Protective and Regulatory Services (DPRS) administers Texas Foster Care and Adoption Assistance Program under Title IV-E of the federal Social Security Act. Prior to September 1992, the program was administered by the De partment of Human Services (DHS). The federal government provides matching funds for three types of costs associated with out-of-home placement programs under Tit le IV-E. Maintenance payments are reimbursed at the same federal financial participation (FFP) rate as Medicaid about 64 percent in Texas. Child placement and administrative costs are reimbursed at 50 percent and training costs at 75 percent.

During fiscal 1992, DHS reported average quarterly administrative costs for foster care and adoption assistance of about $14.5 million and quarterly federal reimbursements of about $7.3 million. These costs indicate that Texas could be underclaiming admini strative costs by as much as 55 percent and losing as much as $5 million per quarter in federal funds. Texas also could be forfeiting as much as 40 percent or $6 million per quarter of allowable maintenance costs that could be claimed for reimbursement under Title IV-E.

Finally, DHS submitted claims for training costs averaging about $300,000 per quarter in 1992. Illinois, a state of comparable population, claimed as much as $2 million per quarter. Texas should be able to support claims of at least $500,000 more per quarter for eligible training costs.

Some states that have hired Title IV-E expert consultants have increased their federal reimbursements by as much as $20 million or more per year. These consultants work with child welfare program staff to improve policies, forms, training and other program elements to generate additional federal reimbursements.


Recommendations
A. The Legislature should direct the Department of Protective and Regulatory Services (DPRS) to immediately contract on a no-risk, contingency basis with a consulting firm experienced in Title IV-E revenue enhancements to assist the state in reviewing its federal reimbursements under the program.

Revenue resulting from the contract should be appropriated to DPRS. The contractors should be paid from these appropriated funds.

B. The savings achieved by this recommendation should be obtained by reducing the general revenue appropriations to DPRS by the indicated amount and increasing funding from estimated federal funds by the same amount.


Implications
This recommendation would produce a much more efficient child welfare program and enable the state to receive its fair share of federal funds.

Fiscal Impact
Based on the amount indicated by current claims and other states experience, this recommendation should net Texas $25.7 million more in fiscal 1994 and $165 million over the next five years. The state could also receive a one-time retroactive paymen t of about $9.2 million in additional federal reimbursements for the current fiscal year.

Gain to the Net Gain to the
Fiscal General Revenue Administrative General Revenue Change in
Year Fund 001 Costs Fund 001 FTEs

1994 $28,575,000 $2,858,000 $25,717,000 0
1995 38,700,000 3,870,000 34,830,000 0
1996 38,700,000 3,870,000 34,830,000 0
1997 38,700,000 3,870,000 34,830,000 0
1998 38,700,000 3,870,000 34,830,000 0