Foster Care and Adoption Assistance:

Federal Oversight Needed to Safeguard Funds and Ensure Consistent Support for States' Administrative Costs

GAO-06-649: Published: Jun 15, 2006. Publicly Released: Jun 15, 2006.

Additional Materials:

Contact:

Kay E. Brown
(202) 512-8403
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Policymakers have expressed concern over how costs to administer the Foster Care and Adoption Assistance programs are contributing to overall increased federal expenditures for these programs, estimated by the Congressional Budget Office to rise from about $6 billion in fiscal year 2003 to $8 billion in fiscal year 2008. The purpose of these programs is to provide financial support for the proper care of children who need placement outside their homes and find adoptive homes for children with special needs. They are authorized under Title IV-E of the Social Security Act and administered by the Department of Health and Human Services' Administration for Children and Families (ACF). GAO was asked to address (1) how the amounts and types of administrative costs changed from FY 2000 to FY 2004; (2) the reasons for differences in and among states in administrative spending and how these differences affect program services; and (3) whether HHS's oversight of administrative costs provides adequate controls over program spending.

Total federal expenditures to help states pay for the costs of administering their Foster Care and Adoption Assistance programs increased 7 percent between fiscal years 2000 and 2004 from approximately $2.5 to $2.6 billion, when adjusted for inflation. Over a third of states received increased federal assistance, but over 80 percent of the increase was limited to six states, as shown in the figure below. Nearly all of the federal expenditures--89 percent in fiscal year 2004--were for costs related to child placement services. However, inconsistencies in how states tracked and reported data precluded analysis of the types of cost incurred within this category. Our review of spending in 11 states between fiscal years 2000 and 2004 showed that the methods states used to identify eligible children and related staff costs for serving them were two primary reasons for differences in IV-E spending within and among states. One state changed how it identified eligible children and calculated the proportion of eligible children, resulting in higher IV-E costs. Other states varied in their practice of claiming costs for serving children not yet removed from their homes or living in places ineligible for foster care payments. Because states use other funding sources to supplement or supplant IV-E, the effect of IV-E spending on program services is unclear. HHS has not implemented a strategic approach in its monitoring efforts to ensure adequate control over program spending. Oversight staff located in the regional offices are not correlated with the risk of states claiming inappropriate costs. Oversight is also hindered by inadequate guidance, including lack of a current financial review manual. While HHS clarified policies concerning whether certain expenditures are allowable in critical areas, policies were not uniformly applied across regions.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To better safeguard federal resources and ensure consistent federal support for state administration of foster care and adoption assistance, the Secretary of the Department of Health and Human Services should direct the Assistant Secretary for the Administration for Children and Families to through ACF regional offices, remind states that reporting administrative costs by certain categories is a requirement and provide technical assistance to help states comply with the requirement.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Implemented

    Comments: HHS agreed to implement this recommendation. In FY09, HHS reported that the Administration for Children and Families (ACF) was developing a new Title IV-E reporting form and instructions for use by states and tribes, which will simplify and better categorize the reporting of state expenditures, including administrative costs. In FY10, HHS reported that it expects OMB approval of the new form by the end of the fiscal year. Use of the new form (Form 496) is expected to begin on October 1, 2010, and regional offices will provide technical assistance to states on completing the form.

    Recommendation: To better safeguard federal resources and ensure consistent federal support for state administration of foster care and adoption assistance, the Secretary of the Department of Health and Human Services should direct the Assistant Secretary for the Administration for Children and Families to standardize the method states use to calculate the percentage of children served by foster care and adoption assistance programs that are eligible for federal reimbursement of administrative costs.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Not Implemented

    Comments: HHS believes this calculation is straightforward and does not think inconsistencies among regions regarding this calculation is a widespread problem. The agency reported that it would address this topic with regional staff to determine if there is a problem and how best to address it. However, HHS did not provide any updated information in FY07, FY08 or FY09 and, as of FY10, HHS noted "activity still in process," but did not indicate whether and how it worked with regional staff to address this issue.

    Recommendation: To better safeguard federal resources and ensure consistent federal support for state administration of foster care and adoption assistance, the Secretary of the Department of Health and Human Services should direct the Assistant Secretary for the Administration for Children and Families to coordinate with other HHS offices such as the Division of Cost Allocation and the Centers for Medicare and Medicaid Services to ensure consistent policy implementation across regions and states.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Implemented

    Comments: HHS described some existing coordination activities: it coordinates with the Division of Cost Allocation on a regular basis, and continues to communicate with Centers for Medicare & Medicaid Services (CMS) staff regarding current and proposed policy as it affects the tile IV-E foster care program, particularly around target case management and its associate costs. In FY09, HHS reported that ACF conducted two national training sessions on cost allocation guidance in FY08 to all regional grants staff who have foster care and adoption assistance oversight responsibilities.

    Recommendation: To better safeguard federal resources and ensure consistent federal support for state administration of foster care and adoption assistance, the Secretary of the Department of Health and Human Services should direct the Assistant Secretary for the Administration for Children and Families to expedite the development of the financial review guide regions use to monitor state claims for federal reimbursement and develop an effective means of communicating current policy and oversight findings across regions and states.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Not Implemented

    Comments: HHS reported that staff were in the process of developing a financial review guide consisting of best review practices. In FY09, HHS reported that the Administration for Children and Families (ACF) completed a manual with financial review information, for central office and Child Welfare grant programs in FY08 and expects to complete fiscal review manuals for Foster Care and Adoption Assistance by 2012. HHS will continue to use the Child Welfare Policy Manual and Program Instructions to communicate pertinent program policy to the regions and states. In FY10, ACF reported that they are working on revising the Foster Care and Adoption Assistance manual to include provisions of the Fostering Connections to Success and Increasing Adoptions Act of 2008 (P.L.110-351), which is now expected to be completed in 2014.

    Recommendation: To better safeguard federal resources and ensure consistent federal support for state administration of foster care and adoption assistance, the Secretary of the Department of Health and Human Services should direct the Assistant Secretary for the Administration for Children and Families to assess the relative risk of improper federal expenditures to states for administrative costs and redistribute oversight staff accordingly.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Not Implemented

    Comments: HHS will take this recommendation under advisement as it undergoes an organizational restructuring. In a FY09 update, HHS reports that the Administration for Children and Families is in the process of hiring 50 grants staff nationally who will be used to assess and act upon improper federal expenditures to states for administrative costs, in addition to performing other activities. However, HHS did not provide any information indicating that they had assessed the risk of improper federal expenditures to states for administrative costs or redistributed oversight staff according to risk of improper expenditures.

    Jul 16, 2014

    May 29, 2014

    May 22, 2014

    Apr 24, 2014

    Apr 9, 2014

    Jan 30, 2014

    Sep 13, 2013

    May 15, 2013

    Mar 25, 2013

    Looking for more? Browse all our products here