An issue brief responding to the Department of Health and Human Services' analysis of the relationship between federal funding and child outcomes at the state level finds the analysis incomplete on key points, and thus inconclusive about the connection between federal spending and outcomes.

Changing how the federal government reimburses states for foster care has been on the mind of reformers for more than 15 years. In an effort to advance the debate, the Department of Health and Human Services published an issue brief in 2005 that examines the relationship between federal Title IV-E funding and child outcomes at the state level. The conclusion reached: outcomes and federal spending are not closely linked inasmuch as states that receive more federal revenue do not accomplish more. In this paper, we examine how HHS went about establishing the link between federal revenue and outcomes to determine whether the conclusions reached are supported by the available data. Our analysis found that there are three basic ways the analysis should be strengthened. First, the federal CFSR outcome measures on which the analysis depends do not cover the full range of outcomes that states must manage. Second, the measure of average per child federal spending used in the analysis is not a true average cost per child. As a consequence, the connection to money spent is not as clear as it first appears. Third, states differ with respect to how much federal revenue they claim, given the unit cost of a particular service. States with higher reimbursement rates will have higher average federal costs even if the outcomes are the same. Our conclusion: Without a more comprehensive understanding of outcomes and the cost of providing services, the link between federal spending and outcomes will remain obscure.

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