Reinvesting Upstream

By Nora McCarthy and Tim Ross

This brief is a collaboration between NYC Family Policy Project and Action Research, where Tim Ross is the managing partner. NYC budget numbers were provided by the Administration for Children’s Services.

Almost 25 years ago, New York state made an unprecedented financial commitment to invest in child welfare prevention. At the time, approximately 42,000 children were in foster care. It was clear that preventive services could keep many of these children safe at home, without the trauma of removal.

Establishing a new fund that provided an uncapped two-to-one match to local spending on preventive services, the state set in motion a new approach that—combined with other family investments and innovations—helped reduce the number of children in foster care by 70 percent between 2001 and 2025.^[1] Today, New York state has one of the lowest rates of foster care placement nationwide.

That investment not only spared children trauma, it saved the state billions. If the same number of children were in foster care today as in 2001, New York City alone would be spending $1 billion more on foster care costs annually.

Today, advocates and child welfare leaders agree that a new wave of investment is needed to better meet families’ needs.

Despite critical progress, child protective investigations remain pervasive and often traumatic, with disparate impacts on Black and Latino families. In 2024, New York’s investigation rate was 17 percent higher than the national average, with upstate investigation rates 37 percent higher than in New York City. Statewide, one study estimated that 35 percent of all children can expect an investigation by age 18, including 53 percent of Black children and 42 percent of Latino children, even though nearly 80 percent of investigations are not substantiated.

As one parent testified to the State Assembly, “In my community, an accident, a conflict with a child’s school, or one overheated moment in our family life can turn into a knock on the door.”

In recent years, New York child welfare officials have begun to express urgency to address the harm of over-investigation and have taken initial steps to change practices. Both the city and state child welfare agencies have trained tens of thousands of mandated reporters that they can “support, not report” families when children are not in danger. As the state Office of Children and Family Services (OCFS) put it in 2022: “Our goal is to significantly reduce, if not eliminate, the need to call the SCR by meeting families’ needs long before the crises emerge.”

Still, it can be much easier to report a family than support a family. Parents in poverty face significant barriers and gaps in accessing critical supports—like grief counseling, respite, or emergency cash—that can help families stabilize and reset.

Targeted investments in community supports can keep family challenges from becoming crises, yet this perennial goal gets pushed out of reach with each budget cycle.

In the coming years, however, it’s possible for New York City and state to capitalize on new opportunities for shifts and reductions in certain child welfare costs.

This year, the state will receive its first federal reimbursements made possible by the Family First Prevention Services Act, a new funding stream established in 2018 that covers 50 percent of state costs for a select set of evidence-based programs. In 2027, these federal reimbursements for prevention services may reach $16.1 million for NYC programs alone. Potentially, New York can use these federal dollars to cover some costs that the state prevention fund currently covers while reinvesting those dollars upstream, increasing the types of supports available for families.

In the longer term, anticipated reforms that would continue efforts to reduce mandated reporting and investigations also can lead to significant cost reductions. The New York State Central Register (SCR), which determines whether calls to the hotline require an investigation, screens out only 25 percent of calls, compared to a national average of 50 percent. Updating New York’s screening process to use data-driven tools consistent with national best practices can be expected to substantially reduce investigations. So can legislative efforts to narrow reporting. The Supporting Families Together Act, for instance, would end penalties for not reporting suspected maltreatment, reducing the likelihood that mandated reporters call the hotline out of fear of liability even when they don’t believe that a child is in imminent danger. With child protection cases costing the state an estimated $400 million in personnel costs alone, substantial and sustained reductions could save tens of millions of dollars annually.^[2]

With planning, cost reimbursements and reductions can be reinvested in a dedicated new funding stream for family supports. While initial investments would likely be modest, they can have a synergistic effect, building up the support pathways needed to better “support, not report” families. Just as the city and state reduced unnecessary and traumatizing foster care placements by funding prevention 25 years ago, establishing a new funding stream today can enable New York to reduce unnecessary and traumatizing investigations while increasing child well-being.

State and city leaders agree that continued child welfare reductions require new and sustained upstream investments. In its Family First plan, OCFS noted that “many stakeholders…urged New York State to continue its robust commitment to sharing costs for preventive services falling outside the scope of Family First.”

City leadership has echoed support for reinvestment. In testimony to City Council, former Commissioner for the NYC Administration for Children’s Services (ACS) Jess Dannhauser emphasized that federal prevention reimbursement can be paired with new supports for families: “The real hope I would have…is that [Family First] would provide resources for some of the existing system,” he said. “If we could infuse that money into the system, there would be more and more resources for additional upstream investment—some of the things that community advocates and providers have been asking for. I think that’s something we need to keep pushing on together.”

Leveraging these shifts, however, will require legislative action. Currently, the city and state have no mechanism to capture and reinvest these funds; agencies that produce cost reductions cannot repurpose the unspent funds. In the last five years, for instance, New York City saw significant declines in investigations (10 percent), court supervision (more than 50 percent) and foster care (12 percent)—but $10 million in cost reductions went to budget cuts rather than being repurposed for innovations that could enhance family safety and well-being.

A state reinvestment plan can change that, producing a virtuous cycle: reducing painful and costly crisis intervention can net new savings and further investments that strengthen family well-being.

This brief outlines upcoming reimbursements and cost reductions that could be shifted to targeted upstream supports, using NYC budget numbers to project potential reinvestments, and details how legislation could structure these shifts.

Background: Sustained Investment Has Reduced System Involvement in New York City and State Over the Past 25 Years

At the end of 2001, approximately 42,000 New York state children were in foster care, with most—about 28,000 children—coming from New York City communities. Since then, the number of children in foster care has plummeted, declining almost 70 percent. In 2023, New York’s foster care entry rate was the 6^th lowest in the country at 1.2 entries per 1,000 children, compared to the national average of 2.4.

OCFS reports that 3,079 children entered foster care in NYC in 2024 and 3,593 upstate; an additional 130 NYC children and 1,290 children in the rest of the state were placed directly with kin by the court. Statewide, an estimated 1 in 14 Black children and 1 in 50 Latino children as well as 1 in 50 white children can expect to spend time in foster care during childhood, according to a study using 2015-2019 data.

Use of congregate facilities, the most expensive and restrictive setting, also fell from over 3 million “bed days” to about 660,000 across New York state from 2001 to 2024—a total reduction of 79 percent. Today, congregate care accounts for 9 percent of NYC placements.

To support the shift away from a child welfare approach that defaulted to family separation, the city added more intensive prevention services for the highest need families. In 2024, 7,000 families in NYC and 8,000 families in the rest of state entered new preventive service cases, according to OCFS data.^[3]

Importantly, the most extreme form of child abuse—child maltreatment fatalities—has also fallen in the past 25 years. Even as the number of children in foster care in NYC fell by almost half between 2001 and 2010, the number of fatalities of children known to ACS, which fluctuates within a tight range, did not increase. A 2025 study of all 50 states across 14 years found that child maltreatment deaths did not increase when foster care entries decreased, nor did they decrease when foster care entries increased. This pattern is also true for NYC.

Today, child welfare intervention in NYC—including preventive services, court supervision and foster care—is at its lowest point in 25 years (apart from the pandemic). In addition to substantial changes in ACS practice, this likely reflects a constellation of demographic and policy shifts: improved legal representation for parents, declining numbers of children in poverty (although child poverty rates began ticking back up in 2023), minimum wage increases, paid family leave, declines in teen birth rates, universal pre-K and expanded childcare access, more accessible birthing care and home visiting.

Dozens of studies find that economic policies that protect against hardship and setbacks may produce declines in child welfare involvement. A 2021 study, for instance, found that each additional $1,000 that states spend annually on public benefit programs per person living in poverty is associated with a reduction of 4.3 percent in hotline calls, 4 percent in substantiated maltreatment, 2.1 percent in removals and 7.7 percent in child fatalities.

In NYC specifically, research shows that implementation of Pre-K for All, which for the first time made free child care available for all 4-year-olds, was associated with a reduction in ACS investigations for families of 4-year-olds.

Holistic and high-quality legal representation also has a major influence on the trajectory of child welfare involvement. When compared to representation by solo practitioners, NYC children spend significantly less time in foster care when their families receive holistic legal representation, with no compromise in safety.

Even so, in contrast to the sharp reduction in foster care, the number of families experiencing child protective responses each year has barely shifted in 25 years. In 2024, NYC received approximately 49,900 referrals for investigation compared to just over 56,750 referrals in 2001, reflecting a 12 percent decline, while the rest of the state received 93,930 referrals in 2024 and 96,000 referrals in 2001, a reduction of only 2 percent.

Clearly, with the same kinds of focused and sustained efforts that reduced the most serious forms of child welfare involvement, New York can safeguard children’s safety while making much more progress in reducing over-reliance on investigations.

The Need for Targeted New Investments in Neighborhood Supports

When New York state first created its preventive funding stream, the hope was that state funding might cover a wide array of community-based, walk-in family supports. Good Shepherd’s pioneering Family Reception Center, for instance, hosted everything from family and teen nights and camping trips to legal assistance, mental health treatment and educational coordinators. “We were able to really give families what they need,” remembered former Executive Director Sister Paulette at a 2019 forum.

In the end, the state’s uncapped funding match took a narrower route, funding only “secondary prevention” services—interventions to prevent foster care placement. These services require families to submit to a safety assessment and home visits to get support. The federal Family First Act, passed in 2018, focused even more tightly on a narrow band of evidence-based services to prevent foster care.

In NYC, that drew concern from impacted parents and child welfare leaders who had seen prevention became more aligned with child protection, leading walk-in numbers to fall. Advocates told City Limits in 2015 that they hoped that new federal dollars “would free up New York state and local funds to create a more robust system of primary supports available to all parents.”

A 2018 Children’s Bureau memorandum highlighted this unmet need for more flexible and less invasive supports, writing: “While some families may benefit from an evidence-based clinical intervention, many families, jurisdictions, and programs report that families would benefit from a temporary boost, someone to listen and provide good counsel, or very basic concrete supports such as help paying rent or a security deposit for housing, child care, transportation, legal services, or brief periods of respite care to allow parents time to seek help and work through a challenging situation.”

Today, advocates in New York have developed two concrete proposals to deliver on these kinds of community supports—a state Child and Family Wellbeing Fund and a new city Office of Family Well-Being. Both would support community-led planning and grantmaking in neighborhoods highly impacted by investigations and family separation, operating separately from the child welfare system.

A particular focus of both proposals would be to invest in coordinated, safe and accessible pathways to family supports in every neighborhood. As the parent peer support organization Rise described in its 2021 report, An Unavoidable System, “For a large majority of families, system involvement is tied to economic stress, racism and community conditions that make it difficult for families to find support and resolve problems.”

In conversations with the public policy consulting group Behavioral Insight Team (BIT) this fall, parents who rely on city programs and services reported barriers addressing the hardships that strongly predict neglect reports, including food shortages, difficulty paying rent, utility shutoffs, unstable housing and inability to access medical care. These common issues can often be resolved if a parent receives the right referral, but most neighborhoods do not have trusted one-stop shops where families can access a wide range of supports.

These parents also named other barriers to accessing help, including mistrust, stigma and shame, and fear of judgment and consequences, including concerns about being reported to ACS. Parents told BIT that they received most information about resources by word of mouth, through people and organizations they trust. They reported wanting navigation support that is cross-agency, supportive and peer-centered, delivered by groups in their neighborhood and through proactive outreach.

Research has shown that local community groups are often central sources of support, restorative care and healing. In much the same way that community-led initiatives have brought down crime—including in New York City—grassroots groups can act as primary responders to families in need.

Community-led planning would identify local capacities to build on and gaps to fill, while strengthening the informal community care networks that parents turn to day-to-day. Grantmaking tied to the planning process would allow for immediate, flexible spending on small and medium-sized projects. For instance, at a community conversation in Brownsville this fall, residents shared what they wish for neighborhood investment, including: community clean-up initiatives, grief counseling, respite childcare, and music, art and dance programs, among other needs. A neighborhood-based strategy that invests in grassroots organizations and the social fabric can help ensure that families find the support they need.

Opportunities to Restructure Child Welfare Funding and Reinvest

Family First Reimbursement

The first opportunity for a shift is to reinvest new federal Family First dollars upstream. Family First implementation has been slow nationwide, with only about a dozen states currently claiming more than $5 million for reimbursement. New York City and state have just begun to submit claims.

Currently, 62 percent of certain prevention services costs are paid for by the state, and 38 percent are covered by the city.^[4] With Family First, that breakdown shifts to 50 percent federal / 31 percent state / 19 percent local for some programs, meaning that half of the current costs of these services will start to be covered by the federal government. While federal compliance comes with costs, the fact that half of the ongoing funding of these prevention services will be covered by the federal government opens a significant opportunity for the state to begin to shift spending to new family supports.

New York state’s plan limits eligibility for most services to children with open child welfare cases. Eligible programs also are limited to a small selection of evidence-based models.^[5]

However, New York state could pass legislation requiring that Family First reimbursement for programs that NYC and some county systems have been running for years be reinvested to fund family supports outside the child welfare system that would be available to all families who sought them.

In 2026, for example, ACS expects to spend approximately $15.6 million on two federally approved evidence-based models, Brief Strategic Family Therapy and Functional Family Therapy. New federal dollars available through Family First should provide reimbursement for these services of approximately $7.8 million to the state and city put together.^[6]

In addition, ACS invested in training prevention provider staff in Motivational Interviewing, an approved evidence-based approach that is used across many programs. Staffing, training and monitoring costs are all significantly higher for Family First programs, and claiming federal funds for Motivational Interviewing requires additional, ongoing staffing to support fidelity, and documentation and claiming processes. Still, once these requirements are in place, the agency anticipates that total spending of $14.7 million on Motivational Interviewing will result in approximately $7.35 million in federal reimbursement.

That means that, with administrative costs, total federal reimbursement just for NYC evidence-based programs could reach more than $16.1 million in 2027. (Only a handful of upstate counties have implemented evidence-based programs; they can begin the process to claim reimbursement once the state reaches a cost-allocation agreement with the federal Children’s Bureau on county-provided services. It may be that funding for the home visiting program Healthy Families New York, which is run through county health departments, can also be a source of savings.)

Table 1: ACS Preventive Services (FY26)

Family First reimbursement will grow in the coming years, as more evidence-based programs are approved by the federal clearinghouse and claiming processes become routinized. In February, the federal Administration for Children and Families (ACF) announced efforts to expedite approvals of some new programs, which could significantly expand reimbursement to New York.^[7]

ACS already operates several modifications of the approved evidence-based programs Functional Family Therapy (FFT) and Multisystemic Therapy (MST), but the modifications in the programs have, thus far, made them ineligible for Family First reimbursement.^[8] Should ACF approve these adaptations, as much as $61.8 million in evidence-based service costs would become claimable, resulting in a total federal reimbursement to the state of approximately $30.9 million annually.

While these amounts are modest relative to total child welfare spending, they represent a new, recurring funding stream. Even if approval and implementation of new evidence-based programs occur gradually, establishing a clear structure for capturing and reinvesting Family First savings now would position both the city and state to benefit as federal reimbursement expands.

These investments can further reduce crisis spending in the future. ACS spends over $320 million on preventive services each year at well over $25,000 per slot for some intensive clinical or high-risk models, and almost $18,000 per slot for family support services. The agency recently cut $6 million in unused preventive slots as well as shifted about $7 million in annual prevention spending to the health department so that families can access support through a less stigmatized pathway. These promising shifts can be accelerated with reinvestment planning.

SCR and Mandated Reporter Reforms

Reducing investigations presents a second, longer-term opportunity for cost shifts. In recent years, New York City and state have taken steps to reduce high rates of child protective investigations. Research shows that investigations alone leave damaging effects. Fearful of another contact with a system that has the power to remove children, parents confide less in friends and family and conceal the depth of their needs when seeking help, increasing family precarity.

It is also far more expensive to address family needs through a child protective case than through direct support. Even when children are quickly assessed not to be in imminent danger, investigations are expensive. Training for investigators is lengthy and regulations require that each investigation or assessment case includes multiple visits to the home, interviews with people who know the family, record gathering and extensive documentation.^[9]

Statewide spending on child protection was $820 million in 2022, according to Child Trends, with NYC spending approximately $142 million of its $411 million Division of Child Protection FY26 budget on its teams that conduct investigations and assessment cases.

City and state officials acknowledge that the concerns driving investigations can often be resolved without a child protective response. Since 2023, OCFS has redesigned its training for mandated reporters. ACS has trained more than 27,000 mandated reporters and instituted a new Family Support Line to help reporters make resource referrals instead of calling the child abuse hotline when children are not in danger.^[10]

These shifts already have shown impact. In the past two years, SCR reports from schools have decreased by 16 percent, social service agencies by 16 percent, and health and mental health personnel by 7 percent. ACS received approximately 5,000 fewer reports from these sectors in 2025 than it did in 2023, with more than 4,000 calls per year now going to the Family Support Line. However, these training efforts have not been replicated upstate.

Reports have also fallen because of policy shifts. For instance, NYC’s public hospitals ended a practice of drug testing pregnant patients without their consent and the city issued updated guidance clarifying that, under federal law, substance use does not constitute neglect and does not require a report to the SCR unless there are additional reasons to suspect that a child is in danger. These shifts reduced investigations of NYC families with newborns by more than 50 percent between 2017 and 2024.

Further reductions in hotline calls can be expected as frontline professionals continue to develop stronger practices for providing direct support to families, and through legislative reforms, such as the Supporting Families Together bill, which would end penalties for not reporting.

Far more substantial reductions also can be made by instituting best practices in the state child abuse and neglect hotline. As a 2024 report documented, New York’s SCR has one of the lowest screen-out rates in the country. This reflects screening practices in the SCR. While many other states use standardized and rigorous tools to support hotline decision-making, New York does not. Implementation of a set of tools to bring the SCR up to best practice standards can lead to far fewer child protective cases statewide.

Currently, New York’s SCR receives approximately 200,000 reports annually. If the state screened out 50 percent of calls, in line with the national average, that would reduce CPS cases by approximately 50,000 annually. More conservatively, even if the SCR screened out only 10,000 more calls—or 5 percent more—that would net a reduction of approximately 20,000 CPS cases. At an estimated cost of approximately $2,200-2,800 per case in both the city and state, declines in investigations can reduce costs by tens of millions.

With about 41 percent of protective services costs coming from local funds and state taxes covering 46 percent (only 14 percent is covered by federal funding) the city and the state have significant flexibility in determining how any savings are spent.

These reductions would need to be significant and sustained for agencies to safely shift spending. Keeping child protective caseloads low, which has corresponded with decreases in court supervision and foster care filings, requires guarding against fluctuations. For instance, high profile tragedies have, in the past, suddenly increased hotline calls and investigations. Sustained reductions, however, would allow city and county agencies to reallocate staff from child protection while preserving low caseloads.

Structuring a Reinvestment Strategy

As NYC has shifted away from responding to maltreatment through family separation, children and families have benefited while overall system costs have declined. The next phase of reform requires a similar shift: from crisis intervention to crisis prevention. Even modest reinvestment can meaningfully reduce reliance on the most expensive components of the system over time.

Current funding structures and mechanisms make this impossible. When child welfare expenses decline, city and state coffers absorb those dollars rather than reinvesting them into new efforts to keep children safer. The formula for the state foster care block grant, for example, is based on service use from the prior 12 months. When it’s reset each year, that usually wipes out any cost reductions that could flow from decreases in days that children spend in foster care. Other funding structures operate in different ways, but the end result is that child welfare agencies cannot reinvest cost reductions into beneficial new approaches.

In contrast, when NYC proposed and the federal governments approved a federal “waiver” in 2014, the city was able to continue to receive federal funding at the 2014 level even as the number of children in foster care dropped. (Normally, annual reimbursement is based on the number of children in foster care from the prior 12 months.) With the steady funding provided by the waiver, the city was able to invest in reducing caseloads and enhancing case practice, which led to reductions in family separation and the foster care census. On average, youth left foster care in 50 fewer days beginning in 2014, according to an evaluation conducted by Chapin Hall. By the time the waiver ended, NYC was spending approximately $20 million less each year on foster care.

A structured reinvestment strategy offers a way to sustain reductions in child welfare involvement and increase child and family well-being. Below we describe two pathways that city and state lawmakers could use to further this goal.

Family First Reinvestment. Most immediately, the state legislature can commit to dedicating federal Family First reimbursements in support of the proposed state Child and Family Wellbeing Fund.

Designed as a five-year pilot, the proposed fund would target $30 million to 10 communities with the highest rates of child welfare involvement. Funding would support community-led planning and grantmaking, with contracts and grants limited to grassroots organizations (such as those with budgets of less than $5 million) that are not connected to the local child welfare agency.

The fund specifies priority uses that impacted parents and young people as well as research identified as beneficial to reducing family stress, keeping children safer and enhacing their well-being, and reducing contact with the child welfare system. These include neighborhood-based support in accessing public benefits, emergency cash, transportation, back-up babysitting and other concrete supports, as well as peer support and civic engagement efforts that build community care networks for families.

Family First reimbursements of even $10 million would support local planning, grantmaking and piloting in three communities with high rates of child welfare investigations.

Reductions in child protective cases. The clearest path for substantial reductions in investigations is for the state legislature to compel comprehensive updates to how the SCR screens hotline calls and to ensure local discretion to close out certain hotline referrals more quickly. Implementation of a Structured Decision-Making tool at the SCR as well as a secondary screen conducted in limited cases by local authorities would better ensure that concerns about a family are routed to the right pathway for the least intrusive response.

As part of a package of SCR reform bills, the legislature could provide counties with an option to freeze state support for child protective services at its current levels, like the IV-E waiver instituted in New York City. Counties that take this option would be able to invest savings from SCR reform into other approaches that keep children safer and support family well-being. These funds could be tied to a local plan for allowable expenses based on local needs. To ensure that counties have the resources needed for spikes in investigations that may occur in the wake of a highly publicized tragedy, the state could reserve a pool of funding for such emergencies.

It may be that some local agencies will need to spend a portion of these funds to institute practices to reduce child protective investigations as a first measure. For instance, in New York City, staff positions for ACS’ training on mandated reporting and the creation of the Family Support Line have directly led to reductions in unnecessary cases and are complementary of SCR reforms and other legislation to right-size mandated reporting.

More broadly, however, these funds could be dedicated to support local efforts to strengthen community pathways to support and to provide more concrete resources as envisioned by the Child and Family Wellbeing Fund and, in NYC, a proposed city Office of Family Well-Being.

Ever since New York state established its preventive fund almost 25 years ago, advocates have lamented its narrow focus on crisis intervention. At the time, the city’s public advocate noted that “many of the city’s most needy fear child welfare authority and remain isolated rather than seek help.” A 2001 report called on NYC to adopt “a more far-reaching family crisis prevention strategy” with supports “rooted in neighborhoods, coordinated by both government and community organizations, and readily available.” And 10 years ago, advocates called for family supports to be “housed in agencies that residents trust are there to help them: agencies that draw residents to them by providing services like a food pantry, or help with housing or immigrant services, have a good rap in the community, and are not seen as closely connected to child protection.”

Today, with concrete proposals for structuring these supports—and new opportunities to fund them—the governor and state legislature should act, once again setting in motion a new approach that can better meet families’ needs.

Editing by Rachel Blustain; Mahima Golani contributed research and writing. Tim Ross founded Action Research, which works with government, service providers and foundations to improve outcomes for children and families involved in the child welfare system.

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