Some States May Be Able to Increase Foster Parent Payments During COVID-19

Posted April 30, 2020, By the Annie E. Casey Foundation

Child welfare professionals calculate foster care rates

The COVID-19 pandemic is undermining child welfare systems’ efforts to foster stability and support for children, young people and caregivers. Now is the time for agencies to consider a temporary raise in foster parent rates — to promote family care and stability for young people and help foster parents weather these extraordinary circumstances. In March, two federal bills were enacted that can provide additional, temporary streams of money to agencies facing fiscal challenges related to the pandemic.

While these measures won’t be enough to address the upheaval affecting children and families in the child welfare system, they do allow agencies to draw on increased federal reimbursements and repurpose existing streams to best support children, young people and caregivers through the crisis.

“Foster parents are critical to the work of child welfare systems — they’re at the front lines of ensuring the well-being of the youth in their care,” says Sandra Gasca-Gonzalez, vice president of Casey’s Center for Systems Innovation. “Many of these kids are already dealing with trauma and instability — and that’s without a global pandemic thrown into the mix. The normal challenges foster families face on a day-to-day basis have been amplified by this emergency, and we must respond accordingly to support them.”

Child welfare financing expert Dennis Blazey worked for the Ohio state government for 30 years and now advises child welfare agencies on how to maximize funds.

Leveraging the Federal Medicaid Assistance Percentage (FMAP) rate

One strategy Blazey has developed in partnership with the Annie E. Casey Foundation involves repurposing a temporary 6.2 percentage point increase in the Federal Medicaid Assistance Percentage (FMAP) rate for certain child welfare costs to the states. These increased dollars can be repurposed to self-finance immediate, short-term raises in foster parent rates for the duration of the federal emergency.

“If your state draws IV-E reimbursement for these types of costs, you can potentially use those monies to help self-finance increases in foster parent payments,” Blazey says. “It would be a temporary gesture — but if you act quickly, it could be an efficient way to shore up foster parents.”

Some Title IV-E child welfare costs for eligible children are reimbursed to states at the FMAP rate. This includes foster care maintenance payments (for example, payments for youth in Title IV-E–approved extended care programs), adoption subsidies and guardianship assistance payments. Blazey notes the increase is available to all states. It is currently unclear if the enhanced FMAP will be extended to Title IV-E programs in the District of Columbia, Puerto Rico or the U.S. Virgin Islands or to several tribes.

State agencies in Oklahoma and New Mexico moved quickly to take advantage of the expanded opportunities for federal dollars to support foster families. Higher expenses for food and utilities, technology costs for remote learning and income shortfalls due to job loss have resulted in unforeseen financial burdens many families might not be able to shoulder without additional assistance — jeopardizing the stability of the children and youth in their care. Both states have implemented rate increases for foster parents in the form of supplemental monthly payments.

“Being a foster parent has its own unique stressors, which are now being compounded by these extremely difficult circumstances,” says Andrea Buck, deputy director of Oklahoma Child Welfare Services. “We hope that the additional payments will alleviate some of the added stress families are experiencing during this time.” Oklahoma’s emergency supplement for foster families — an additional $250 per child each month — began in March and will extend at least through May, and kinship families and new foster families are eligible for the higher rate.

In New Mexico, a $175 monthly supplement for each child in care — an approximately 25% increase from the normal average rate — is effective in April and will continue until emergency restrictions are lifted. The state is also issuing a supplement directly to young people in independent living programs. “By helping to stabilize our youth where they are, we hope to prevent placement instability or homelessness during the surge or after,” says Brian Blalock, cabinet secretary for New Mexico’s Children, Youth and Families Department. “That’s why it was critical to provide this relief as soon as possible.”

“Agencies will have to evaluate whether this approach works for their specific situation,” Blazey says. “Our goal is to give young people in foster care stability and keep them in family-based care — and to support the foster parents who are first responders in the crisis.”

Three-step process to determine foster parent rates

Blazey suggests a three-step process to help agencies determine if this approach will work for them.

1. Examine your priorities. Determine:

  • where you can have a significant impact;
  • which options align with your values and require few or no structural changes; and
  • how to articulate the benefits of your selected approach.

2. Review your authorizing and operating environment. Ask these questions:

  • Can you get approval for reusing this money — the dollars gained from the temporary FMAP increase — to self-finance a temporary foster parent rate increase?
  • Can you see a clear path to making this happen? Remember — legal and regulatory environments vary widely by state.
  • Can you execute? This will likely require changes in IT and accounting systems that process payments.

3. Do the math. Here are the steps:

  • Use Blazey’s rate supplement calculator to estimate how much your state can self-finance additional, short-term supports for foster parents by repurposing funds gained from the temporarily higher FMAP rate. To use the model, you’ll need access to Title IV-E claims data from your state’s Title IV-E quarterly claim report (Form CB-496) and to bed-day census data for the population you want to cover with supplemental payments.
  • Insert the data into the spreadsheet model in the cells mapped for input.
  • Compute the rate increase per child, per diem and per month that can be self-financed by the expanded FMAP pay. FMAP gains begin with January–March 2020 claims.
  • Remember that using this model simply identifies a potential source of additional monies to help your agency assess the feasibility of a temporary raise in foster parent rates — whether to take this approach is ultimately about your agency’s values.

Download the rate supplement calculator

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