Summary of Proposals to Address Income Eligibility Requirement for Federal Foster Care Reimbursement

GAO-13-323R: Published: Mar 25, 2013. Publicly Released: Mar 25, 2013.

Additional Materials:


Kay E. Brown
(202) 512-7215


Office of Public Affairs
(202) 512-4800

What GAO Found

Twelve of the 14 proposals we identified would eliminate means testing altogether as a requirement for states to receive federal funding to help pay for the costs associated with supporting children in foster care. Two other proposals would link means testing to a different benchmark. Half of the proposals would mitigate a potential increase in federal costs due to the elimination of means testing by either changing the rate of federal reimbursements, capping federal funding, or both. Additionally, half would attempt to mitigate the potentially negative effects of lowering the reimbursement rate on states by, for example, allowing states to access additional funding in the event of an unanticipated increase in foster care placements. All five proposals that specify how states should use any foster care maintenance savings they incur would require states to reinvest these savings in child welfare services that benefit all children at risk of neglect or abuse.

Why GAO Did This Study

In fiscal year 2011, 400,540 children--many of whom were abused or neglected--had been removed from their homes and placed in foster care. The responsibility for providing safe and stable out-of-home care for these children rests with the states, although states can claim federal reimbursement for a portion of the cost of providing this care. For states to receive federal reimbursements, which are authorized by Title IV-E of the Social Security Act, as amended, the child must (1) have been removed from a home that meets the income eligibility standard established under the discontinued Aid to Families with Dependent Children (AFDC) program, and (2) meet other nonfinancial eligibility requirements. When children in foster care do not meet these requirements, the state bears the full cost of providing their out-of-home care.

In 1996, when Congress repealed the AFDC program, it did not amend Title IV-E to remove the link between income eligibility standards for AFDC and federal reimbursements to states for foster care. Due, in part, to fewer families meeting these income standards, the number of children who currently meet Title IV-E eligibility requirements has declined. As a result, states have shouldered the full costs for a higher proportion of children in foster care. Since 1996, several proposals to remove the link between AFDC income eligibility and Title IV-E foster care reimbursements have been put forward by the Department of Health and Human Services (HHS), Members of Congress, and interested organizations. GAO was asked to compile and review these proposals. Although most of the proposals we identified are broad in nature and propose reforms beyond changing the Title IV-E income eligibility requirement, we focused on how the proposals would address the link between AFDC income eligibility and Title IV-E foster care reimbursements. Specifically, we reviewed whether or how they included four different components:

  • changes to income eligibility criteria,
  • measures to mitigate any potential impact on federal program costs,
  • measures to mitigate the potential impact on funding to states, and
  • requirements regarding how states should use any dollar savings that they incur from changes to Title IV-E eligibility, or from other changes designed to reduce the number of children who need foster care placement.

For more information, contact Kay E. Brown at (202) 512-7215 or