How NYC’s child welfare system is currently funded and how funding can shift

The majority of federal, state and local dollars now spent on child welfare in NYC are flexible funds that do not need to be spent on child welfare. Indeed, millions in federal funding now entwined with the system, such as TANF, are actually intended to enhance economic and community conditions for low-income families. Others are specifically earmarked for community-led initiatives, including “parent mutual support,” with an emphasis on “promoting parent leadership and participation in the planning, implementation and evaluation of prevention programs.” Through city and state-level advocacy, families and communities impacted can be much more involved in these spending decisions.

This Deep Dive walks through ACS’ spending and budget sources with an eye toward how current funding streams could be shifted.

What is ACS’ budget and how is it spent?

ACS’ Fiscal 2022 Executive Budget totals $2.69 billion, or 2.7 percent of the City’s total budget of $98.6 billion. ACS administers juvenile justice and childcare, but the majority of its budget is child welfare—investigations, preventive services, foster care and adoption.

From 2019-21, ACS expenditures went to the following (note that these are millions of dollars, not thousands): 

Continued High Cost of Foster Care: The number of children in foster care continues to fall, yet more than 3,000 children enter foster care each year, and foster care and adoption costs top $900 million. Foster care and adoption are paid for by federal funds including Title IV-E, adoption assistance and others, as well as the state foster care block grant and city tax levy funds. 

Enormous Spending on Investigations: ACS spends over $300 million on investigations – as much as it spends on preventive services. This is because of multiple factors: mandated reporters are encouraged to report any suspicion; NY’s State Central Register screens out a very low percent of hotline calls alleging maltreatment; and ACS and the county CPS agencies must investigate any report accepted by the SCR, which is not true in all states. The result is that 50,000 families are investigated each year, mostly concentrated in Black and Latino communities. FPP estimates that investigations cost a minimum of approximately $6,100 per investigation. In communities such as Morrisania, Mott Haven and Hunts Point, in the Bronx, we estimate that spending on investigations alone reaches close to $10 million in each neighborhood every year. 

ACS’ “Secondary Prevention” System: The vast majority of city and state funding that could be flexibly spent on family support and community investment now goes to “secondary prevention” – services provided families after an allegation of abuse or neglect is made and investigated. ACS spends more than $300 million on preventive services. 

Although preventive services are technically voluntary, they have come to function as mandated extensions of child protective investigations. Parents fear that refusing services or closing their “case” will result in their child’s removal. In addition, preventive service regulations require caseworkers to assess and monitor families, not simply assist. They must do an extensive safety assessment and meet frequently in the provider office and the family’s home. Parents cannot just drop in to get help, and agencies are not allowed to spend preventive dollars on family’s basic needs, such as food, transportation, or diapers. Currently, 80% of families enroll in preventive services because of a CPS referral. In many communities, only 2% of families are walk-ins.

The latest 10-year city contracts funded: 

• 1,800 slots of “family support/general preventive,” which largely consists of case management to support parents in accessing services and resources such as economic supports and therapy. 
• 3,000 therapeutic and treatment programs, including clinical supports like Child-Parent Psychotherapy and Trauma Systems Therapy, as well higher-risk clinical programs such as wraparound interventions in families with teens (MST and FFT), and higher-risk Family Treatment and Rehabilitation programs (FT/R), which provide in-home addiction treatment and support. 

See this overview of NYC preventive models, and service slots by type and borough, and this overview from the Independent Budget Office of NYC’s shift to prevention, particularly evidence-based prevention models. 

ACS-Contracted “Primary Prevention” – In concept, “primary prevention” is the array of community institutions, resources and services that broadly support healthy family life. In the ecosystem of healthy family development, this includes public amenities like playgrounds, parks and libraries, schools, transportation, childcare, pre-K, after-school programs, mental health and health care, and financial supports such as TANF and SNAP. It can also include universal services, such as home visiting, parenting classes, peer care, community-led programming and family fun. In higher-income neighborhoods, primary support is also provided through private sector or fee-for-service organizations like YMCAs, children’s sports and arts programs, and privately-run indoor playspaces. Strong primary systems of family well-being and support available to all families can reduce stress and prevent maltreatment and investigations. 

A multitude of city agencies oversee resources and services that are part of community life and primary support. These include DYCD, DSS and Health, as well as the Mayor’s Office to End Domestic and Gender-Based Violence, the Mayor’s Office on Immigration and the Children’s Cabinet. However, no office is tasked with envisioning primary support or innovation focused on family life, and coordinating cross-agency collaboration and funding.

In recent years, ACS itself has begun to spend millions of dollars on “primary prevention” under its oversight. It established an Office of Primary Prevention and piloted Family Enrichment Centers, which are set to expand to 30 sites in the next three years, despite parent organizing against placing primary supports under the oversight of a system with the power to separate families. The Enrichment Centers are funded through City tax levy dollars, which are entirely flexible and could be spent on any number of family priorities. 

One note is that contracting through ACS (and other LDSS county agencies) increases families’ mandated reporter exposure. State law mandates that all staff working for agencies that contract with ACS and other child welfare agencies are mandated reporters. Otherwise, mandated reporting is limited to people who hold a specific role, such as a social worker. Contracting through ACS turns staff including receptionists, parent advocates, drivers and others into mandated reporters.

How is ACS currently funded?

ACS’ $2.69 billion 2022 budget is funded by federal, state and city dollars. The city funds ACS at approximately $1 billion/year, through a combination of city tax levy dollars and City Council funds. These charts from City Council show ACS’ federal and state income sources 2018-19; for the current budget, see this update. Changes between 2019 and 2021 are minor, except that some of the city’s childcare programs (EarlyLearn) were moved out of ACS and into the Department of Education. 

Federal Funding

The largest federal funding stream that supports foster care (Title IV-E) is not flexible but other federal dollars could be used to enhance economic and community conditions for low-income families, including some funding now directed to the child welfare system. Former Children’s Bureau Special Assistant David Kelly has said, “Federal dollars hold a lot of opportunity to support what I would categorize as child well-being, and could be structured in a way that largely keeps the child welfare agency out of it.” 

Federal Spending on Child Welfare NY State (2018) from Child Trends

TANF – TANF is designated to provide families with financial support and related services, and NY state spends more than $5 billion under TANF. However, a significant portion of TANF dollars that could go directly to families or to supports outside of the child welfare system are spent on child welfare. In fact, 2021 changes shifted more TANF dollars to secondary preventive services. NY state’s TANF-funded Flexible Fund for Family Services (FFFS) can be spent on multiple forms of assistance, including addressing employment readiness, domestic violence, substance use. It can also be spent on child welfare, and under state law, localities must spend a minimum amount of FFFS dollars on child welfare before being able to tap into the state’s funding stream for prevention. In 2020, that amount was $193.6 million. In 2021, the state budget raised that requirement for the city by $22.9 million without increasing FFFS spending as a whole, meaning that NYC lost almost $23 million in flexible family support funds when they were diverted to preventive services. Reporting in Arizona has called attention to the ways families are made less safe when TANF dollars are repurposed to cover child welfare costs, and legislation in NY could limit the practice. 

Another issue with TANF is that families receiving TANF still live in poverty. In New York, a fair amount of TANF goes to direct family needs, including 28% to basic assistance for families (largely cash), 25% to tax credits and 18% to child care and pre-K/Head Start. However, compared to the high cost of living in NYC, TANF benefits are extremely low. Benefits in NYC for a single-parent family of 3 were $789 per month (or $9,468 per year) in July 2020. Even combining TANF and SNAP benefits only brought NYC families to $15,421 for a family of three. By contrast, annual full-time pay at NYC’s $15 minimum wage nets more than $30,000.

Title IV-B – Unlike IV-E funds, IV-B is one of the most flexible bigger streams dedicated to family preservation and support. New York State spends about $29 million of Title IV-B funds on child welfare. Some Title IV-B funds are available to be spent outside of child welfare, on other forms of family support and family preservation. 

Social Services Block Grant – This flexible funding can be used to “promote self-sufficiency, prevent or remedy child maltreatment, reduce inappropriate use of institutional care, and more.” New York spent $172 million of SSBG dollars on child welfare in 2016, including on prevention and child protection through child welfare. 

CB CAP – While only $2 million in NY, these funds are intended “to support community-based efforts to develop, operate, expand, enhance, and coordinate initiatives, programs, and activities to prevent child abuse and neglect and to support the coordination of resources and activities to better strengthen and support families to reduce the likelihood of child abuse and neglect.” According to ACF, these funds are supposed to have “an emphasis on promoting parent leadership and participation in the planning, implementation and evaluation of prevention programs” and can be used for “parent mutual support.” In May 2021, CB CAP funds were part of a one-time emergency funding through the American Rescue Plan Act (ARPA), and the Children’s Bureau memo “strongly encourages lead agencies to reach out to families and community-based agencies to plan for the use of these funds, so that they may be used to increase supports especially for Black, brown, indigenous, and LGBTQ+ children and families, as well as communities who have been historically underserved, marginalized, and adversely affected by persistent poverty.” This funding could function as an innovation fund to develop new forms of community healing and support.

Children’s Trust Fund – The Trust Fund is another small but highly flexible funding source, led by an advisory board, which currently supports family resource centers and other primary and secondary prevention. In New York State, Trust Fund dollars are combined with CB CAP as well as private and local funding. In NYC, this funding goes to social service agencies that also contract with ACS to provide foster care and preventive services. These flexible dollars could be assessed for impact and repurposed to primary supports and community-led initiatives disconnected from child welfare.

Medicaid – Medicaid billing is complicated but it can be used to expand peer support, mental health support and other services. 

State and Local Funding

NYC spends a lot more local dollars on prevention than any other system, but as described above, are highly prescriptive and restrictive. Advocacy at the state and city level has the power to change how these funds are directed. 

Foundation/Private Dollars

ACS as well as foster care and preventive provider agencies also receive millions in support from national and local foundations. 

What Are Some Immediate Opportunities to Shift Spending?

The upcoming state budget and legislative session contains multiple opportunities to shift toward family support priorities that can narrow the front door. For instance:

Primary Preventive – NY state and city could also create brand-new funding streams for primary supports and resources. (See “Deep Dive #3 for examples of primary investments.) A primary preventive funding stream could be designed to address disparities, support innovation, intentionally build the capacity of small community-led organizations and be led by an advisory board that includes impacted parents and youth as members. 

NY State Prevention Regulations – This statute, which is currently up for reauthorization, could be amended to more flexibly respond to community needs, such as: 

• Community Optional Preventive Services (COPS) program – This subset of about $12 million preventive dollars allows counties to apply for funds to provide preventive services based on community eligibility (versus individual risk of child removal). COPS services are intended to be available without “imminent risk” or the threat of family separation, and do not require individual eligibility determinations or the establishment of case records for the child and family, as required for preventive services cases. COPS includes a wide range of services, such as home visiting programs, mental health services, respite, day treatment programs, after-school and summer programs, PINS/JD diversion, family engagement, mediation services, relative/kinship assistance, and mentoring programs. This subset could be expanded to NYC and potentially could even be structured not to flow through child welfare agencies (ACS).

• Light-Touch, Voluntary Supports – While not addressing all of the problems with secondary preventive, a waiver or carve-out that allows providers to skip many of the case requirements when serving parents who voluntarily seek services could better align “family support” programs with community needs. Providers can already waive some reporting requirements on community referrals. Adjustments to state regulations could enable providers to spend prevention funding on community outreach; to waive the full risk assessment and monitoring requirements for walk-ins to be able to provide drop-in responsive care; and to be able to meet basic needs for transportation, food and cash emergencies. While still investing in system-aligned providers, this could incentivize outreach and customization to family needs. 

Child Care – NY State expanded childcare in 2022, but it falls short of universal child care and does not include universal pre-K upstate. Advocacy could support those goals, as well as seek to ensure that the specific needs of communities highly impacted by child welfare receive priority. That means expansion of slots, adding enrollment outreach efforts and ending restrictive regulations on child care that limit access, especially to parents in the process of seeking work. 

TANF – Some NYC organizations are looking at the potential for TANF to better support families, and there is a national workgroup that supports state-level advocacy as well. Examining how TANF is spent in NY could be an immediate step toward using TANF to lift families out of poverty, rather than maintaining families in poverty, and toward uncoupling TANF and child welfare.

Title IV-B – This flexible federal fund will be up for reauthorization next year and could be expanded with advocacy at the federal level, with state-level advocacy to shift funds away from child welfare. 

That said, federal, state and city funding streams are incredibly complex. In addition, the NYC human services sector is deeply underfunded so all flexible funds are likely to be highly contested. A next step might be to study in depth how funds are currently spent in order to identify specific opportunities for shifting spending or advocating for increases.

– Reported by Keyna Franklin and Nora McCarthy for the Narrowing the Front Door Work Group