Child Welfare Funding in South Dakota (Again)

Way back in October of 2011, I posted this brief look at child welfare funding.  Since that time, I have learned more about the topic.  More significantly however, false information on the subject continues to infect and distort the discussion regarding Indian child welfare in South Dakota.  In this post, I will further examine the claim that South Dakota gets $100 million each year to support its foster care system.  I will also examine just what federal funds are available to the tribes to run their own child welfare systems, and why simply shifting existing federal funding to tribes is not going to be sufficient to enable the creation of strong tribal systems.

The Claim:  “Nearly $100 million in federal funding is being sent to South Dakota to administer foster care each year.” 

The claim above is taken verbatim from page 3 of the report submitted to Congress by the “Coalition of Sioux Tribes for Children and Families” titled “Reviewing the Facts: An Assessment of the Accuracy of NPR’s Native Foster Care: Lost Children, Shattered Families.”  Despite the really long and inclusive sounding name, this report was essentially written by the Lakota People’s Law Project, which then solicited support for it from ICWA directors and tribal governments.  It is notable that support was not unanimous among either group.  In my previous posts, I referred to this document as the “ICWA Directors Report.”  Almost exactly the same statement was made in the 2011 NPR reports by Laura Sullivan and Amy Walters, which claimed that South Dakota receives “almost $100 million a year to subsidize its foster care program.”  I have a strong suspicion that the Lakota People’s Law Project was the source used by these reporters for this $100 million number.  I also heard this same claim made repeatedly at the ICWA Summit that I attended a couple weeks ago.

The problem with this $100 million claim is that it is demonstrably and objectively false.  The Assessment done by the Lakota People’s Law Project sets forth the method for how their number was calculated, namely by including “$55 million for Children’s Services, $48 million to fund foster children’s health care, and $4 million for administration.”  I’m not convinced that the methodology to calculate the $4 million for administration is especially sound, but I don’t care too much about that number.  The other two numbers are worthy of more consideration.

The $55 million number for Children’s Services is derived from the 2012 Governor’s Budget, although I am not sure exactly which year’s numbers in that budget were used, as the “other funds” cited in that budget appear to also be federal dollars.  The problem with citing the entirety of federal funds received by the Division of Children’s Services is that Children’s Services does more than just child protection.  The State’s child support enforcement agency and its daycare licensing and subsidies are both also included in that division.  Child Support Enforcement, as would be expected, assists in the enforcement of child support orders.  Child Care Services licenses daycares in the State and provides daycare subsidies.  According to pages 24 and 25 of South Dakota’s 2010 Budget in Brief, the following federal funds were allocated to Children’s Services in state fiscal year 2010:

  • Child Support Enforcement:  $4,534,873
  • Child Protection Services:  $33,713,717
  • Child Care Services:  $21,249,655

As is objectively demonstrated by the numbers, Child Protection Services, which is the division of DSS that investigates child abuse and oversees children in foster care, received a maximum of about $34 million in federal funding in recent years (that amount is currently closer to $31 million annually).  The $55 million number cited in the Assessment is therefore at least $21 million too high.

The other large number cited on page three of the Assessment was “$48 million to fund foster children’s health care.”  This “figure of $48 million was derived by calculating the percentage of total persons served by DSS that are foster children (10%) and then multiplying that by the total amount of federal money spent on medical care by DSS ($479 million).” (footnote 43 of the Assessment).  Essentially, this number is a rough estimate of the federal dollars (mostly Title XIX Medicaid funds) South Dakota gets to provide for the routine healthcare and counseling needs of children in foster care.  The first problem I have with this number is that I can’t figure out where the 10% figure came from, and I suspect it to be too high.  The bigger problem with this number is that it does not consider the fact that South Dakota would be receiving federal funds to provide healthcare for most of these children even if they were not in foster care.  According to the 2010 South Dakota Medicaid Overview, about one third of South Dakota’s children get their health coverage from the State through either the Medicaid or CHIP program, which combined will cover any child in a family living at less than 200% of the federal poverty guidelines.  As the vast majority of foster children come from low-income families, most of them are already covered by Medicaid or CHIP before they enter care.

I feel the need to stray slightly at this point from just analyzing the numbers to analyzing the context they are being used in.  The Assessment uses the $100 million dollar number to advance an argument that “South Dakota is removing children…for what appears to be profit.”  The essence of this argument is that the money coming into the state stimulates South Dakota’s economy and provides “a positive and measurable impact on state business activity, available jobs, and overall state income.”  The form of this argument completely ignores South Dakota politics.  In recent years, South Dakota has had to pay a match of approximately 33 cents per 66 cents of federal medicaid and Title IV-E funds received.  The amount of this match is based on the Federal Medical Assistance Percentage (FMAP), which is going to require South Dakota to pay a higher percentage in the very near future.  There is still significant discussion going on about whether South Dakota will even accept the Medicaid expansion provided for by the Affordable Care Act (Obamacare), which would be financed 90% by the federal government.  The expansion has thus far been opposed by Governor Daugaard.  The economics of that decision are straight-forward.  Accepting the Medicaid expansion would be worth vastly more money to the State and come at a much lower relative cost than taking children.  However, this argument has yet to carry the day.

Another argument that I heard at the Summit regarding Medicaid was that the Indian Health Service (IHS) pays for the care of Indian children before they are taken into foster care, so they only get on Medicaid after being taken into State custody.  There are two main problems with this argument.  The first is that it is factually false.  Indian children who qualify for Medicaid can be enrolled just like anyone else, and Medicaid pays the IHS for the care of eligible children at IHS facilities.  In fact, the IHS views Medicaid as a primary source to increase its funding.  The second problem with this argument is that, even if true, it wouldn’t make sense.  If Indian children’s healthcare was paid for using entirely federal funds, why would South Dakota want to move those children to a program that required matching funds from the State?

What federal money does South Dakota get for its child welfare system? 

As noted earlier in this post, it is fair to say that South Dakota gets somewhere in the neighborhood of $34 million to finance its child welfare system.  But, the 2010 state budget cited for that number doesn’t provide a breakdown of those federal funding resources.  The State Child Welfare Policy Database managed by Casey Family Programs provides the best breakdown of South Dakota’s child welfare spending that I have found.  This source indicates that South Dakota spent $32,173,323 in federal funds in State Fiscal Year (SFY) 2010.  Those funds broke down as follows:

  • Title IV-E: 35%
  • Title IV-B: 4%
  • Medicaid: 35%
  • TANF: 15%
  • SSBG: 8%
  • Other: 3%

The Medicaid funds accounted for here are used primarily to pay for residential placements.  The general healthcare expenses for children in foster care are not included in this amount.  SSBG stands for the Social Services Block Grant, which has few restrictions on use.  TANF stands for Temporary Assistance for Needy Families.  TANF funds are used in part to support kinship placements where the placement is not a licensed foster home.  Title IV-B funds are used for prevention services.  I am not sure what the “Other” category consists of.  Title IV-E funds are what most people are talking about when they describe the State getting money for taking children.  These funds are used for foster care maintenance payments ($3,503,056 in SFY 2010), administration, placement, and training ($3,158,044 in SFY 2010), and adoption subsidies ($3,764,361 in SFY 2010).  Title IV-E funds are received per eligible child, and not all children are eligible to receive IV-E funds.

What federal funds are available to tribes?

As Indian children qualify for Medicaid just like anyone else, I believe that Medicaid funds are available to pay for the residential treatment of such children who are under the jurisdiction of tribal rather than state systems.  I also know that Title IV-B funds are available to tribes, although the bureaucratic requirements attached to those funds make them less cost-effective for small governmental entities like tribes.  I do not think that TANF funds can be used by tribes in the same manner as by states, and tribes do not receive SSBG funds to the best of my knowledge.

Title IV-E funds seem to be at the heart of the current discussion.  The Fostering Connections to Success and Increasing Adoptions Act of 2008 changed the law so that tribes could receive Title IV-E funds directly from from the federal government.  As of the date of the Summit, only three tribes in the country had established such a direct-funding relationship, although more were working on it.  No tribes in South Dakota receive direct IV-E funding or are very close to doing so.  However, tribes can receive IV-E funding funneled through a state through state-tribal agreements.  In South Dakota, four tribes currently take advantage of this option.  They are the Sisseton-Wahpeton Oyate, Oglala Sioux Tribe, Standing Rock Sioux Tribe, and Flandreau Santee Sioux Tribe.  Foster care maintenance payments are definitely funneled to these tribes in this manner, and my understanding is that the State provides not only these federal dollars to the tribes, but also the required matching funds.  I have been told that administration, placement, and training funds are also available to tribes in this fashion, but I don’t know how often such expenses are claimed by tribes or paid by the State.  I strongly suspect that adoption subsidies are not used very often by tribes, as most tribal courts never terminate parental rights.

Is sending Title IV-E funding directly to the tribes the answer? 

A common theme of the Summit was that the federal government should send the money it sends to the State for foster care directly to the tribes instead so that they can run their own child welfare systems.  This proposed solution is a favorite of the Lakota People’s Law Project, which has used the slogan “Tribe is Family, State is Not! We Can Take It From Here!” on their literature.  The general sentiment of many advancing this argument seems to be that tribes will be best served by burning all their bridges with the State and using the seemingly ample federal funds to run their own systems.

The biggest problem with this is of course that the seemingly ample federal funds are not so ample.  South Dakota doesn’t get the $100 million that is casually tossed around, it gets closer to $32 million.  Many of the same funding sources, such as Medicaid, are already available to and being used by the tribes.  Others, such as the Social Services Block Grant, are not available to tribes at this time.  The biggest pot of money tribes can currently get their hands on directly is Title IV-E funds, which amounts to about $10.5 million of the State’s budget.  About a third of this is adoption subsidies, which are not likely to be useful to tribes, thereby cutting that pool of money down to about $7 million.  At least half of that is going to be for children, both Indian and non-Indian, who are in State custody, which cuts that pool down to about $3.5 million.  Three and a half million dollars divided among South Dakota’s nine tribes is woefully insufficient to fund quality child welfare systems.  The director of ONTRAC, the Oglala Sioux Tribe’s ICWA office (which is distinct from LOWO, their child welfare program) estimated at the summit that her office alone would need a budget of about $1.2 million to operate fully (their budget is currently about $350,000).  I would call the State’s child welfare system underfunded, and it is getting close to receiving almost half of its funding from State general funds.

The second problem with the “burn the bridges” mentality is that it does nothing for those Indian children who are going to remain in the State’s system.  Over half of the Native people in South Dakota do not live on reservations, and I would venture a guess (I don’t have any data) that most Indian children who come into the State child welfare system do not have parents who are both from the same tribe.  As such, many ICWA cases would not be transferred to tribal courts even if they had strong child welfare systems.

The third problem with the “burn the bridges” mentality is that cooperation is necessary in order to achieve the best outcomes for Indian children.  In situations where tribes have arranged to receive direct Title IV-E funding, cooperation with the State was often vital in doing so.  The Port Gamble S’Kallam Tribe was the first tribe in the nation to receive Title IV-E funding directly, and two of its members presented at the Summit.  I spoke to them after their presentation, and they indicated that they could not have created such an arrangement without the cooperation of the State of Washington, which still finances the required matching funds.

To actually answer the question I posed, no, sending Title IV-E funding directly to the tribes is not the answer.  It may, however, be a small part of the answer.  The prospect of such an arrangement should be looked into by tribes, but there should be no illusions that it is some sort of magic bullet that will provide tribes with ample resources or prompt changes to the State’s child welfare system.  Collaboration between all of the stakeholders will remain vital to making significant improvements in the lives of South Dakota’s Indian children.