The Reinvestment Myth: Beyond the IBO Report

The idea of reinvesting savings from one part of the child welfare system into another sounded perfectly logical when it was first proposed in a city strategy paper in 2001, especially to anyone unfamiliar with the vagaries of government social services funding. More than a decade ago, before Michael Bloomberg became mayor, New York City policymakers saw a huge trend in the making: the number of children in foster care was tumbling downward, alongside crime rates and the once epidemic use of crack cocaine. Of course, there were other factors: families were helped by great improvements in the city's economy, for example, and there was also a growing realization in the child welfare field that placing 10,000 or more children in foster care each year was no panacea for what ails troubled families living in severe poverty.

So in 2001, the Administration for Children's Services (ACS) established a reform goal of reinvesting savings from the shrinking foster care system into social services, including case management, drug treatment, counseling, benefits advocacy, homemaking and more, all designed to help families, keep children safe and prevent placements in foster care.

Did it happen? Not so much. The charts below show there was very little reinvestment despite a huge, 40 percent decline in overall government spending on New York City foster care between 2000 and 2010. Remarkably, the number of foster children continues to fall. As of July 2011 there were 14,308 foster children, down 58 percent since 2000.

And yet, this year, New York City taxpayers' contribution to preventive family support services is almost exactly the same as it was 12 years ago.

With the help of the NYC Independent Budget Office (IBO), Child Welfare Watch mapped the impact of the last dozen years in budget and spending trends on ACS-funded services. The charts below show what we've found. Some of this analysis is found in a report published by the IBO last week. But with that agency's assistance, we chose a very different, and we think very useful, way to report and understand the numbers. And we've included some data here that are not in the IBO report.

Most importantly, in our charts and in the text below, all of the dollar figures are adjusted for the impact of inflation. In buying power, a dollar in 2010 had much less value than a dollar in 2000. Year after year, inflation wears away at the dollar's value. We believe inflation-adjusted dollars are a more logical way of comparing government spending over the years, rather than simply listing the actual (or "nominal") dollars spent each year in their value at the time. Why? Because the cup of coffee I bought at the deli for $1.45 this morning cost me just 65 cents in 2000. Much the same is true for the cost of salaries, benefits, office leases and all the other expenses that go into providing city-funded services.

When we adjust for inflation, for example, the $903.5 million that New York spent on foster care in 2000 has the buying power of $1.3 billion in 2010 dollars. (The IBO mostly uses nominal, unadjusted dollar figures in its reports).

These numbers tell a somewhat more sobering story than we heard from the IBO last week.

Chart 1. The Sharp Drop Foster care spending in New York City fell 40 percent from 2000 to 2010. Over the same period, the number of children in foster care declined by more than half. Foster care dollars go mostly to foster parents and to the nonprofit agencies that work with them, the children and their parents. (In all of these charts, we use the city fiscal year, which begins on July 1 and ends on June 30.)

Foster care spending and foster care population

Chart 2. Hundreds of Millions of Dollars Saved As the overall cost of foster care plummeted, total spending on preventive family support services increased, but the change was relatively modest.

preventative and foster care spending 2000-2010

Chart 3. Child Protective Services Grows Spending on child protective services, that is, the ACS Division of Child Protection's investigation of abuse and neglect reports, increased in the years following the murder of Nixzmary Brown in January 2006.

protective services spending FY 2000-2011

Chart 4: The Loss of Federal Funds Foster care is paid for with city, state and federal government dollars. The federal contribution collapsed in the middle part of the decade, when city officials acknowledged problems with the way they had been documenting claims for foster children's eligibility for funding under Title IV-E of the Social Security Act. So, despite the stunning decline in the number of foster children, the contribution to foster care from state coffers changed only modestly. And the contribution from city taxpayers was volatile across the decade, mostly plugging the huge hole opened up by the loss of federal funds.

Foster care funding by source

Chart 5: Who Pays for Preventive Programs? As with foster care, funding for ACS preventive family support services comes from the city, state and federal governments. The portion paid for by the city was lower in 2010 than in 2000. Since an agreement reached in 2006, an increase or decrease in city tax levy funds spent on preventive services is amplified by the state, because Albany matches local dollars spent on these services with a formula of its own.

preventative services by funding source

Chart 6: Preventive Services Funding Today In June 2011, the Bloomberg administration agreed to "baseline" ACS preventive family support services into the city budget at $230 million, almost exactly where it stood in 2010. This means that for the foreseeable future, the City Council may not have to fight to restore funding for preventive services every year. Dollars from the city still cover only a modest 20 percent of the preventive budget. (The figures in charts 6 and 7 are not adjusted for inflation, because they are so recent. The 2010 amount is actual expenditures. The 2011 and 2012 figures reflect what the city budgeted for these services.)

preventative family support services

Chart 7: Foster Care and Adoption Almost Below $1 Billion This final chart shows the four major areas of child welfare funding in New York City, excluding core administrative services. The "Adoption" category is mostly made up of subsidies provided to adoptive families. (Nearly 80 percent of the city"s adoption budget comes from the state and federal governments.) One interesting note: In Fiscal Year 2012, for the first time in decades, the combined budget of New York City foster care and adoption services is close to falling below $1 billion. If current trends continue, that may indeed happen in 2013.

child welfare funding 2010-2012 An important acknowledgement: Thanks to the IBO and analyst Kate Maher for their help crunching these numbers.

Deficit Reduction Hits NYC Child and Family Services

Mayor Michael Bloomberg's latest strategy to reduce city expenses includes yet another round of budget cuts for programs that serve low-income children, youth and families. As part of his midyear financial plan, released in late November, the mayor directed city agencies to cumulatively carve nearly $1.6 billion out of their budgets for Fiscal Years 2011 and 2012, in an attempt to help shrink a city deficit that amounts, by the mayor's reckoning, to more than $3 billion. Many of the cuts will likely go into effect on January 1st, causing programs to scale back or close immediately.

Among the agencies likely to take significant hits are the Administration for Children's Services (ACS), which must cut more than $60 million over the next two fiscal years, and the Department of Youth and Community Development (DYCD), which plans to pull close to $26 million from the community-based organizations it funds. This is the ninth time the agencies have been called on to trim their programs since 2008.

The mayor contends the city has no choice but to cut costs, and starting well in advance of the next fiscal year will minimize the damage to city programs. "The idea is if you start now you make it a more gradual process," says Marc LaVorgna at the mayor's press office. "The further ahead you're planning, the better the chance you have of lessening the impact on people and families served."

Advocates and providers counter that the mayor's plan hurts vulnerable New Yorkers at a time when the safety net has already been weakened. "The agencies that protect and nurture children have already eliminated any duplicative or nonessential services," Stephanie Gendell, an associate director at Citizen's Committee for Children, testified to the City Council last week. Further cuts, she said, "will have a profound negative impact on children."

The mayor's planned cuts have not yet been approved by the City Council, but fiscal analysts on both sides say the legislative nod is likely for the reductions in current fiscal year spending. The larger proposed cuts for the fiscal year that begins in July 2011 will be part of the spring budget negotiations between the mayor and the council.

CHILD PROTECTIVE SERVICES

Over the last few years, ACS has lost 1,000 staff through layoffs and attrition, coupled with a reorganization within the agency. With the November cuts, ACS will eliminate 257 more positions, including 80 managers in the division that investigates allegations of child abuse and neglect. Since the 2006 death of 7-year-old Nixzmary Brown, a child known to ACS who was killed by her stepfather, the number of abuse and neglect reports ACS investigates has remained far higher than it was even at the height of the crack epidemic in the early 1990s. Managers in child protection will now supervise more frontline workers.

ACS will also lay off 118 clerical workers by early spring, while further reducing staff at the agency's training academy. The agency also plans to cut 27 specialists who facilitate case conferences, scaling back a key initiative.

HOMEMAKING SERVICES

ACS plans to restructure homemaking services, a foster care prevention program that provides several months of in-home support to families who might otherwise lose children to foster care. Going forward, the program will focus on short-term help for families with children in danger of imminent removal from their home. While providers support using homemaking services as a way to stabilize families in immediate crises, they say it's critical the program continue serving families who have longer term needs, as well.

About one-third of the families that Brooklyn Community Services now serves are headed by a parent with a medical or mental disability, says Norma Martin, the organization's assistant executive director. One mother in her mid-sixties has cancer and is very sick, says Martin. A homemaker helps her take care of her 13-year-old daughter, who was adopted as an infant and has special needs. "What's going to happen to the little girl?" asks Martin. "Where is she going to go? Foster care?"

HOMELESS AND RUNAWAY YOUTH

DYCD plans to eliminate street outreach for homeless and runaway youth, and to cut funding to drop-in centers for young people on the street.

Youth shelters have been filled to capacity for more than two years, and often turn away youth who have nowhere to sleep. "Balancing the budget on the back of children sleeping on the streets is absolutely unacceptable," Councilmember Lewis Fidler said at a council hearing last week.

At the hearing, DYCD Commissioner Jeanne Mullgrav testified that very few young people went to shelters as a direct result of street outreach, making the program vulnerable to being shut down.

But staff at Safe Horizon's street outreach program point out that their mission goes far beyond steering young people to shelters. Outreach workers bring young people on the streets supplies like food, condoms and coats. It can take weeks or months of outreach before a young person visits a drop-in center or accepts other services.

Johanna Westmacott of Safe Horizon's street outreach program testified that the new cuts will force her organization to turn away even more young people with no place to go. "I cannot describe what it feels like to look a child in the eye who is desperately seeking help and the best advice you can offer them is to find a buddy to take turns sleeping in public and try not to get arrested for trespassing," she said.

AFTER-SCHOOL AND HOLIDAY PROGRAMS

The cuts also hit families who depend on city-run programs that provide child care, academic enrichment and social support to kids outside of school hours.

Each of the 66 city-funded Beacon programs, which serve as school-based community centers, will lose 10 percent of their DYCD fundingâ€, or about $38,000. Though the programs have been much lauded by the city, they already operate on less funding than when they were launched 19 years ago.

"Working families need a safe place for their children to go so they can keep working," says Anthony Ng, deputy director of policy and advocacy at United Neighborhood Houses. "Beacons are already operating on bare bones and the funding continues to erode."

DYCD has attempted to help programs absorb cuts by reducing the number of people each center is contractually required to serve, but providers say they're not willing to turn young people away half-way through the program year. "No one's going to tell the 101st kid who comes to the door, "Sorry, you can't come in,'" says Gigi Li, a policy director at the Neighborhood Family Services Coalition.

DYCD also funds nearly 500 after-school programs across the city through its Out-of-School Time (OST) initiative. Beginning January 1st, those programs will lose 9 percent of their OST budgets.

The city adjusted after-school agencies' contracts, allowing programs to operate on fewer holidays than are currently mandated, but providers say the money they'll save through holiday closings doesn't make up for the funding that's being cut.

"We just can't see where the money's going to come from," says Amy Mereson, director of youth education and arts programs at University Settlement. "Our options are to close down for significantly more time, or we cut all the stuff that makes programs rich, chess, dance, theater, sports, the things that make a quality program, it's all taken away."

"The city's approach to trying to find what's ultimately pocket change on the backs of these populations that we serve, I can't wrap my brain around it," Mereson adds. "The assumption is always that community-based organizations will find a way. We're getting to the point where we can't find a way."

Half Full, Half Empty: Children and Families with Special Needs

The Winter 2006/2007 issue of Child Welfare Watch describes the impact of a longstanding dispute that has left children and families without the respite care, in-home assistance and other family supports that can help make it possible for young people with disabilities to live healthy and more fulfilling lives.

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