The Impact of Title IV-E Waivers on the Number of Children in Foster Care from 2012 to 2016

Title IV-E of the Social Security Act provides federal funding for children who are under the supervision of the state. Title IV-E waivers provide flexibility to states to use federal dollars to pay for prevention services to families with children at risk of removal and to pay for post-placement services for children returned to their biological parents or placed in adoptive homes. From 2013 to 2016 IV-E waivers were offered to states with the stipulation that federal payments were flat funded based on the three years prior to waiver implementation and with the stipulation that states had to implement two program improvement policies listed in the statute. Roughly half of the states implemented waivers from 2013 to 2016. This study uses state level panel data from 2006 to 2016 to compare changes in the number of children in foster care before and after policy implementation in the states that obtained waivers vs. the states that did not obtain waivers. To determine the causal effect of the waivers, this study uses both difference-in-differences and the synthetic control method. The difference-in-differences estimate is done two ways, both with and without a state specific time trend to model pre-intervention trends in the number of children in foster care. Using these methods, the reduction in the number of children in foster care in the states implementing a waiver is estimated to be between 5 to 7% in the first year of the intervention and 14 to 18% by the 3rd year. These results are statistically significant at the p<.05 level or less for all three methods employed and for all three years after the policy implementation. The measured effects are robust to alternative model specifications and sensitivity analyses