Title IV-E Foster Care Eligibility Reviews and Child and Family Services State Plan Reviews

SUMMARY: The Administration for Children and Families is proposing to

amend the current regulations for Child and Family Services by adding

new requirements governing the review of a State's conformity with its

State plan under titles IV-B and IV-E of the Social Security Act (the

Act). This Notice of Proposed Rulemaking (NPRM) implements the

provisions of the Social Security Act Amendments of 1994 (Pub. L. 103-

432), the Multiethnic Placement Act (MEPA) as amended by Pub. L. 104-

188, and certain provisions of the Adoption and Safe Families Act

(ASFA) of 1997 (Pub. L. 105-89).

In addition, this NPRM proposes to set forth regulations that

clarify certain eligibility criteria that govern the title IV-E foster

care eligibility reviews which the Administration on Children, Youth

and Families conducts to ensure a State agency's compliance with

statutory requirements under the Act.

The publication of a Notice of Proposed Rulemaking often engenders

confusion in the field regarding its applicability to existing policy.

The existing regulations and policy remain in full force and effect.

Regulations published in the final rule will be effective prospectively

from the date of publication and have no bearing on the application of

policy that was in effect prior to the publication of the final rule.

DATES: In order to be considered, written comments on this proposed

rule must be received on or before December 17, 1998.

ADDRESSES: Please address comments to Carol W. Williams, Associate

Commissioner, Children's Bureau, Administration on Children, Youth and

Families, 330 C Street, SW, Washington, DC 20447. Comments will be

accepted electronically at http://www.acf.dhhs.gov/hypernews. Comments

will not be accepted by telephone or fax.

Beginning 14 days after the close of the comment period, comments

will be available for public inspection in Room 2068, 330 C Street, SW,

Washington, DC, Monday through Friday, between the hours of 9:00 a.m.

and 4:00 p.m.

In order to ensure that public comments have maximum effect in

developing the final rule, please cite the section and paragraph number

of the proposed regulation that relates to each comment. Comments that

concern information collection requirements must be sent to the Office

of Management and Budget at the address listed in the Paperwork

Reduction Act section of this preamble. A copy of these comments also

may be sent to the Department representative cited above.

FOR FURTHER INFORMATION CONTACT: Kathleen McHugh, Director of Policy,

Children's Bureau, Administration on Children, Youth and Families,

(202) 401-5789.

SUPPLEMENTARY INFORMATION: The preamble to this Notice of Proposed

Rulemaking (NPRM) is organized as follows:

I. Summary of Proposed Review Processes

II. Introduction to the title IV-E eligibility and child and family

service reviews

A. Key features of the new reviews

B. Consultation with the field and pilot reviews

C. Reinventing the review process

III. Background

A. Legislative history

B. Interrelationship of titles IV-B and IV-E

IV. Overview of title IV-E eligibility reviews

A. Development of the reviews

B. Summary of the title IV-E eligibility review process

V. Overview of child and family service reviews

A. Development of the reviews

B. Summary of the child and family service reviews

VI. Interethnic Adoption Provisions of the Small Business Job

Protection Act of 1996 and the Multiethnic Placement Act of 1994

VII. Welfare reform legislation and title IV-E eligibility

VIII. The Adoption and Safe Families Act of 1997

IX. Strategy for Regulating the Adoption and Safe Families Act of

1997

X. Section-by-section discussion of the NPRM

XI. Impact analysis

I. Summary of Proposed Review Processes

This Notice of Proposed Rulemaking (NPRM) presents a revised

framework for reviews of Federally-assisted child and family services

and for reviews of related eligibility determinations for Federally-

assisted foster care programs. The revised review procedures for these

programs were developed in response to concerns expressed by the

Congress and the States regarding the effectiveness of the current

review procedures and the benefits to the States relative to the

efforts required of them. ACF had begun revising the review procedures

when Congress, through the Social Security Amendments of 1994 (Pub. L.

103-432), mandated changes in the Federal monitoring of State child and

family service programs funded under titles IV-B and IV-E. This

legislation directed the Department of Health and Human Services, in

consultation with State agencies, to promulgate regulations for child

and family service programs which will:

Determine whether these programs are in substantial

conformity with applicable State plan requirements and Federal

regulations;

Develop a timetable for conformity reviews; and

Specify the State plan requirements subject to review, and

the criteria to be used in determining a State's substantial conformity

with these requirements.

Since ACF was already revising its approach to monitoring

eligibility requirements for title IV-E foster care maintenance

payments at the time the legislation was enacted, we have also included

the proposed title IV-E eligibility review process in this NPRM. While

Pub. L. 103-432 also permits a program improvement process for

compliance issues associated with the Adoption and Foster Care Analysis

and Reporting System (AFCARS), we intend to propose an AFCARS program

improvement protocol in a separate NPRM.

The revised review processes, including the instruments used in the

reviews, grew out of extensive consultation with interested groups,

individuals and experts in the field of child welfare and related

areas. A series of focus groups related to the child and family service

reviews was conducted with representatives of State programs and

national organizations, as well as with family and child advocates.

Review teams consisting primarily of Federal and State agency staff

have conducted 20 pilot reviews of child and family services and foster

care programs using the proposed processes. We have taken seriously the

comments and suggestions received during the consultations, focus

groups and pilot reviews and have incorporated them in the development

and refining of the new monitoring approaches that are proposed in this

NPRM.

The revised review framework reflects the basic purposes of

publicly-supported child and family services: to

[[Page 50059]]

assure safety for all children; to assure permanent, nurturing homes

for these children; and to enhance the well-being of children and their

families. In support of these goals, this proposal is designed to

achieve the following objectives:

Reviews of child and family services programs will focus

on the results these programs achieve. In the past, review procedures

have focused almost entirely on review of the accuracy and completeness

of case files and other records to determine that required legal

processes and protections were being carried out. This proposal

provides for reviews that determine that child welfare practices,

procedures and requirements are achieving desired outcomes for children

and families. Reviews to assure eligibility for Federally-assisted

foster care will not only address conformity with key requirements, but

will assist States in improving their systems, thereby enhancing their

capacity to serve children needing foster care placements.

The revised framework for conducting reviews of both child

and family services and eligibility for Federal foster care payments

will promote partnerships between States and the Federal government. It

will strengthen Federal-State collaboration in achieving improvements

in child welfare systems. Joint reviews, with peer involvement, will

identify strengths and weaknesses, define corrective actions, and make

it possible to craft specific technical assistance plans that support

program improvements.

This proposed revision will promote greater public support

and collaboration for child and family services within each State. The

proposal for participation of interested and committed individuals and

organizations in the State self-assessment process, in the conduct of

on-site reviews, and in the development and evaluation of program

improvement plans will accommodate broader perspectives on the degree

to which the desired results are being achieved and encourage greater

commitment within the State to address areas where improvements are

needed.

The revised approach will shift the focus of reviews to

program improvement and away from financial penalties imposed on those

States that do not ``pass'' their reviews. States that do not achieve

expected results in areas related to child safety, permanency and well-

being may have a portion of their Federal funds withheld, but only if

the State's program improvement plan does not effectively correct the

identified problem(s).

The proposed new framework for reviews will be

comprehensive. It will address not only foster care and adoption but

the full range of child and family services, including family

preservation and support services, child protective services, and

independent living services.

The revised review procedures will generate a significant

amount of useful information on the State's child welfare system,

enabling policy makers, program managers, Federal program officials,

and concerned citizens to understand better the full range of issues

related to the State's child and family services. The dynamic process--

involving interviews with children, parents, judges, social workers,

foster parents, and other major service providers--will yield findings

of higher quality which will lead to improved outcomes in a way that

the previous reviews of case files could not.

II. Introduction to the Title IV-E Eligibility and Child and Family

Service Reviews

A. Key Features of the New Reviews

Both of the proposed review processes reflect significant

departures from the existing reviews. We have intentionally proposed

measures that will reduce the burden on States while balancing the need

to review for protections that are critical to the safety and well-

being of a vulnerable population of children and families. Wherever the

statute has permitted flexibility, we have attempted to reduce our

reliance on the paperwork and documentation requirements that

characterized prior reviews in favor of a more comprehensive

examination of the results of a State's efforts to alleviate the

problems of families and children. While the two procedures have unique

features and concerns, some key features are common to both:

The procedures have moved from a focus on total compliance

with statutory requirements to a determination of ``substantial

conformity'' or ``substantial compliance'' in an effort to avoid

penalizing States whose systems are generally performing well;

Both proposed processes now include a stage where program

improvement measures will be undertaken to correct areas of

nonconformity and noncompliance and strengthen State programs;

Both reviews provide opportunities for States to receive

technical assistance from the Federal government in implementing

program improvement plans;

The reviews operationalize partnership concepts through

joint Federal/State participation in the on-site reviews and in

developing and evaluating program improvement plans;

The reviews rely on existing sources of data, such as the

Adoption and Foster Care Analysis and Reporting System (AFCARS) and the

National Child Abuse and Neglect Data System (NCANDS), for information

needed in the reviews, rather than requiring States to duplicate

efforts in data collection and submissions;

Both reviews propose to focus attention on recent

practices in an effort to evaluate fairly the current status of child

and family services in the States;

The proposed regulations include various provisions for

flexibility and individualizing the reviews to States.

B. Consultation With the Field and Pilot Reviews

ACF has sought extensive consultation from the child welfare field

in a variety of ways. Experts in the field and representatives of

legal, advocacy, educational and research institutions provided

information to the teams on issues related to both reviews. A series of

focus groups related to the child and family service reviews was

conducted with representatives of State programs, national

organizations, family and child advocates, National Resource Centers,

child welfare experts and others. Drafts of instruments and procedures

were reviewed by similar individuals and organizations throughout the

developmental process. On-site review teams, composed primarily of

Federal and State agency staff, conducted 10 full child and family

service pilot reviews and two partial pilots in fiscal years 1995

through 1997 using the proposed process. Pilots of the title IV-E

eligibility reviews were conducted in 12 States during fiscal years

1995 through 1998.

C. Reinventing the Review Process

In 1994, the Administration for Children and Families commissioned

a team to develop recommendations for reinventing the review process

across the range of child and family services programs. Later, two

separate teams were established in the Administration on Children,

Youth and Families' Children's Bureau to identify ways that the Federal

process of reviewing State programs could be redesigned or

restructured.

In commissioning two teams to reinvent the review process, the ACF

leadership recognized that both the section 427 reviews and the title

IV-E eligibility reviews had led to a number

[[Page 50060]]

of improvements in child and family services, including written case

plans as a routine component of child welfare casework, periodic

judicial and administrative reviews of children in foster care,

increased capacity among States to identify and track children in

foster care, and an increased focus on permanency planning for children

in foster care. Other contributions included the establishment of

procedural protections for vulnerable children against remaining in

unsafe homes or in non-permanent placements, increased involvement of

the courts in making judicial determinations about removals of children

from their homes and the need to continue foster care placements, and

enhanced stewardship by ensuring that Federal funds were expended in

accordance with statutory requirements.

Along with these accomplishments, the ACF also recognized the

validity of a number of criticisms about the reviews. Because the

reviews relied heavily on case documentation and process, States that

provided and documented all the required protections were able to pass

compliance reviews without necessarily having practices and procedures

in place culminating in satisfactory outcomes for the children and

families served by the State. On the other hand, States that might be

achieving desirable outcomes, but whose case record documentation did

not reflect all of the required protections, were penalized through the

loss of incentive funds.

Additionally, the reviews focused only on foster care services and

adoption assistance rather than on the full range of child and family

services; therefore, they did not promote the development and

integration of a continuum of services needed by many of the families

and children served by State agencies. The absence of regulations

governing both review processes also complicated the goal of consistent

application of policies and review procedures across the States.

In June 1994, the Office of Inspector General, Department of Health

and Human Services, reported the findings of a study of oversight of

State child welfare programs that confirmed our concerns. The report

was based on information obtained from interviews with State child

welfare officials in 13 States, and other sources. It addressed a

number of issues about previous section 427 and title IV-E eligibility

reviews, including the following: review reports had not been issued in

a timely fashion; ACF had not provided sufficient technical assistance

to States; severe problems that were identified in successful lawsuits

against States had not surfaced during a review, and reviews focused

more on case record content than how well children were served. The

report delivered a clear message from State officials that the existing

review processes were not adequately meeting their needs and should be

revised substantially.

At the same time that ACF was taking steps to reinvent its review

processes, Pub. L. 103-432, the Social Security Act Amendments of 1994,

was signed by the President on October 31, 1994. The Conference

Committee report for the Social Security Act Amendments of 1994

outlined Congressional concerns with ACF review practices. It pointed

out that the review process did little to address quality of care for

children; that compliance criteria needed to be written clearly and

uniformly; and that review standards needed to be developed in a more

open setting which encouraged discussion and participation among

affected parties. The concerns of State officials, ACF and Congress

presented a clear case for reinventing the review process and form the

basis for the strategies proposed in this NPRM.

III. Background

A. Legislative History

The review structures for section 427 and title IV-E have been in

place since the early 1980s. They were authorized by the Adoption

Assistance and Child Welfare Act (Pub. L. 96-272), passed by Congress

in 1980, which amended sections of title IV-B and provided for

mandatory Federal reviews of State foster care services under section

427 of the Act. The statute also established Part E of title IV of the

Social Security Act, ``Federal Payments for Foster Care and Adoption

Assistance.'' The foster care component of the Aid to Families with

Dependent Children (AFDC) program, which had been an integral part of

the AFDC program under title IV-A of the Act, was transferred to the

new title IV-E, effective October 1, 1982.

The creation of title IV-E and amendments to title IV-B reflected

the perception of Congress and most State child welfare administrators

that the public child welfare agencies responsible for dependent and

neglected children had become holding systems for children living away

from their parents. Congress intended that Pub. L. 96-272 would

mitigate the need for the placement of children into foster care and

encourage greater efforts by State agencies to find permanent homes for

children--either by making it possible for them to return to their own

families or by placing them in adoptive homes. The goals of Pub. L. 96-

272 have not yet been fully realized, however, as evidenced by

continued increases in the numbers of children entering foster care,

increasing lengths of stay in care, and growing concerns about the

safety, permanency and well-being of children served by public

agencies.

In August 1993, under the Omnibus Budget Reconciliation Act of 1993

(Pub. L. 103-66), Congress again amended title IV-B, creating two

subparts and extending the range of child and family services funded

under title IV-B to include specific family preservation and family

support services designed to strengthen and support families and

children in their own homes, as well as children in out-of-home care.

Later, through the Social Security Amendments of 1994, Congress

repealed section 427 of the Act and amended section 422 of the Act to

include, as State plan assurances, the protections formerly required in

section 427. As a result, ACF is no longer conducting ``427'' reviews

to confirm whether (or not) a State is eligible to receive additional

title IV-B, subpart 1 funds. In addition to mandating the Secretary,

DHHS, to promulgate regulations for reviews of State child and family

service programs, the amendments to the Act also required the

Department to make technical assistance available to the States, and

afforded States the opportunity to develop and implement corrective

action plans designed to ameliorate areas of nonconformity before

Federal funds are withheld due to the nonconformity.

In 1994, Congress passed the Multiethnic Placement Act, Pub. L.

103-382, (MEPA) to address excessive lengths of stay in foster care

experienced by children of minority heritage. One factor contributing

to these excessive lengths of stay in foster care was State agencies'

attempts to place children of minority heritage in foster and adoptive

homes of similar racial or ethnic background. The MEPA forbids the

delay or denial of a foster or adoptive placement solely on the basis

of the race, color, or national origin of the prospective foster

parent, adoptive parent, or child involved. At the same time, Congress

added a title IV-B State plan requirement, section 422(b)(9), which

compels States to make diligent efforts to recruit and retain

prospective foster and adoptive parents who reflect the racial and

ethnic diversity of the children in the State for whom foster and

adoptive homes are needed. The MEPA, in section 553, permitted States

to consider the cultural, ethnic, or racial background of the child and

the capacity of the prospective foster or

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adoptive parent to meet the needs of a child of such background as one

of a number of factors in making foster and adoptive placements. In

1996, through section 1808, ``Removal of Barriers to Interethnic

Adoptions'' (Section 1808), of the Small Business Job Protection Act

(Pub. L. 104-188), Congress repealed section 553 of MEPA, believing

that the ``permissible consideration'' language therein was being used

to obfuscate the intent of MEPA. Section 1808 amended title IV-E by

adding a State plan requirement, section 471(a)(18), which prohibits

the delay or denial of a foster or adoptive placement based on the

race, color, or national origin of the prospective foster parent,

adoptive parent, or child involved. Section 1808 also dictates a

penalty structure and corrective action planning for any State that

violates section 471(a)(18) of the Act.

On November 19,1997, President Clinton signed the first child

welfare reform legislation since Pub. L. 96-272 in 1980. The Adoption

and Safe Families Act (ASFA) seeks to provide States the necessary

tools and incentives to achieve the original goals of Pub. L. 96-272:

safety; permanency; and child and family well-being. The impetus for

the ASFA was a general dissatisfaction with the performance of the

child welfare system in achieving these goals for children and

families. This dissatisfaction came as a result of:

(1) A number of high profile child deaths across the country, the

occurrence of which was often attributable to confusion and

misinterpretation over the reasonable efforts provision. This confusion

stems from the notion that there is a lack of clarity about the

relationship between reasonable efforts and child safety;

(2) growth in the foster care caseload. We are now slightly in

excess of a half-million children in foster care on any one day. This

number has almost doubled since the mid-eighties. More children are

coming into foster care each year than are exiting;

(3) increased costs of foster care; and,

(4) a need for greater emphasis on individual responsibility by

parents and accountability by States for moving children to permanency

in a timely manner.

The ASFA seeks to strengthen the child welfare system's response to

children's need for safety and permanency at every point along its

continuum of care. In this NPRM, we propose regulations for those

provisions in the ASFA which strengthen the child welfare system's

response to safety and certain provisions which address permanency.

B. Interrelationship of Titles IV-B and IV-E

Titles IV-B and IV-E are closely related parts of the Act. Each

title provides funds to States to serve large numbers of children and

families who are among the most vulnerable to harm and separation in

our society. The two programs help finance services to the almost

3,000,000 children who are reported annually as alleged victims of

maltreatment (data from 1994 NCANDS), and the approximately 469,000

children who are in foster care placements on a given day (estimates

from 1994 Voluntary Cooperative Information System (VCIS)/AFCARS).

Title IV-B, subpart 1 makes funds available to States for services

directed toward protecting children, strengthening families, preventing

unnecessary separation of parents and children, providing care and

services to children and families when separation occurs, and working

with parents and children to reunify families or achieve an alternate

permanent plan for the child. Subpart 2 initially provided funding for

family preservation and family support services. Under the ASFA,

subpart 2 funds must now also be used to provide time-limited

reunification services and services to promote and support adoption.

Title IV-E foster care funds enable States to provide foster care

for children who were or would have been eligible for assistance (Aid

to Families With Dependent Children) under a State's approved title IV-

A plan (as in effect on July 16, 1996) but for their removal from home.

The Act includes requirements which define the circumstances under

which a State shall make foster care maintenance payments (section

472(a)), and mandates a child's placement in an approved or licensed

facility (section 472(b)). The eligibility review is focused on these

requirements, so that ACF can verify that children in foster care for

whom Federal financial participation is being claimed (or can be

claimed) are eligible and are being placed with eligible foster care

providers.

Titles IV-E and IV-B are linked not only by common goals but by

numerous cross-references to detailed protections or safeguards for

children in foster care, e.g., a case review system which includes

periodic case reviews and permanency hearings. Further, while title IV-

E requires that reasonable efforts be made to prevent removal of

children from their homes when it is safe to do so, to safely reunify

children in foster care with their families, and to make and finalize

permanent placements for children who cannot return home, the services

needed to provide reasonable efforts are not funded by title IV-E, but

are made available in many circumstances through title IV-B and other

sources of State and Federal funds. While title IV-B requires States to

deliver child welfare services in order to be eligible for Federal

funds, title IV-E tests both the eligibility of each child on whose

behalf a payment is made and the eligibility of the foster home or

child-care institution in which the child is placed.

IV. Overview of Title IV-E Eligibility Reviews

A. Development of the Reviews

The title IV-E eligibility review process proposed in this NPRM

reflects a number of important lessons learned in the pilot reviews,

including the following:

Pilot reviews conducted jointly by a team of Federal and

State staff fostered working partnerships and assisted the States in

identifying strategies for corrective action where indicated in the

reviews and increased the knowledge of State staff on eligibility

requirements for title IV-E foster care maintenance payments.

Examining a sub-sample of non-IV-E cases during the

reviews, along with the IV-E cases, increased the potential for States

to receive Federal funding to which they are entitled by statute and

demonstrated the fairness of the reviews to States.

The emphasis on program improvement planning in the

reviews led to specific recommendations for improving title IV-E error

rates and the quality of services to children in such critical areas as

foster home licensing and services to prevent removal of children from

their families and reunify children in foster care with their families.

Examination of cases involving more recent foster care

entries linked the reviews and potential disallowances to current

practices and policies that impact both eligibility for services and

the quality of services provided, rather than focusing on older

practices inherent to the previous reviews.

The revised title IV-E review strategy incorporates these important

lessons learned from the pilots, while ensuring compliance with key

requirements of the statute regarding eligibility for funds. The

requirements are designed to enhance child safety, permanency and well-

being, and they provide a specific framework for reviewing State

compliance through the title IV-E eligibility reviews.

[[Page 50062]]

We believe that the proposed changes to the review process will

produce results which are more meaningful and helpful to States which

undergo a title IV-E eligibility review with the intention of improving

their State systems. Additional changes in the title IV-E eligibility

review process are included in the section-by-section discussion of the

NPRM.

B. Summary of the Title IV-E Eligibility Review Process

We are proposing to conduct title IV-E eligibility reviews in

States at three-year intervals. The review process includes an initial

review of foster care cases for the title IV-E eligibility requirements

defined in the statute. States determined to be in substantial

compliance based on the review will not be subject to another review

for three years. States that are determined not to be in compliance

will develop and implement a program improvement plan designed to

correct the areas of non-compliance, and a follow-up review will be

conducted after completion of the program improvement plan.

The reviews will be conducted by a joint team of Federal and State

staff in order to promote working partnerships through the review

process. In contrast to prior reviews, the sample for the reviews will

be drawn from the AFCARS data base, reducing the burden on the State to

select the sample.

The threshold error rate for a determination of non-compliance is

proposed at 15 percent in the first round of reviews following

publication of the final rule, and 10 percent for subsequent years.

States with error rates within the threshold will receive disallowances

only on the ineligible cases. Further, if the number of ineligible

cases in the review that follows the program improvement plan is within

the threshold, disallowances will be assessed only on those cases. If

the number exceeds the threshold in the review following the program

improvement plan, disallowances will be extrapolated to the universe.

V. Overview of Child and Family Service Reviews

A. Development of the Reviews

The child and family service reviews proposed in this NPRM are the

result of extensive piloting and consultation. Among the chief lessons

learned from the developmental process are the following:

Reviewing for outcomes, as opposed to procedural

indicators alone, is more likely to lead to improvements in State

programs;

Three outcome areas of safety, permanency, and child and

family well-being were identified and agreed upon as the areas in which

almost all outcomes associated with Federally-funded child and family

services fit;

Reviewing for documentation alone in case records is

insufficient for evaluating outcomes and the quality of services;

The pilots indicated that a smaller sample of cases

reviewed more intensely yielded more information about outcomes than

larger samples that involved only case record reviews;

The pilots indicated that State self-assessment is a

viable approach for identifying programmatic strengths and needs, for

building on the community planning process begun through implementation

of the Child and Family Services Plan (CFSP) planning requirements, and

for enhancing Federal/State partnerships (The final rule on Foster Care

Maintenance Payments, Adoption Assistance, and Child and Family

Services published November 18, 1996, contains the requirements

governing the CFSP (61 FR 58632).);

The review process is an effective means of assisting

States in examining the effects of practice innovations and technical

assistance and refining the indicators used to measure progress over

time; and,

A review team that includes State representatives from

outside the State agency helps broaden the perspective of the review,

supports locally-based partnerships between the State agency and the

communities it serves, increases the likelihood that the review will be

relevant to all populations served by the agency, and helps identify

training needs in the State.

With these lessons in mind, our primary goal in revising the

reviews for child and family services is to assist States in improving

outcomes for children and families by identifying the strengths and

needs within State programs and those areas where technical assistance

can lead to program improvements. Supporting goals include: (1)

reviewing for the actual outcomes of services as well as the procedures

that support desirable outcomes; and (2) using the reviews to promote

the integration of the range of Federally-funded child and family

services programs.

In developing the NPRM, we have followed the statutory requirements

closely when the statute has provided specific parameters for the

reviews. Where we were required to make decisions about issues, such as

the State plan requirements subject to review and the criteria for

determining substantial conformity, we have focused on the emphasis the

statute places on program improvements. We have integrated the proposed

review requirements with other requirements related to data collection

and the CFSPs in order to reduce the burdens on States whenever

possible. Finally, in emphasizing the importance of outcomes over

procedure, we are proposing a review process that States can adapt to

their ongoing self-evaluation and integrate into their own quality

assurance efforts, apart from periodic Federal reviews.

We chose not to emphasize the penalty structure associated with the

child and family services reviews. Rather, we have designed a review

process that will lead to meaningful improvements in the outcomes of

services delivered to children and families and will strengthen State

and Federal collaboration. We have purposefully crafted the regulation

to encourage States to make the necessary program improvements.

B. Summary of the Child and Family Service Reviews

We are proposing to review State programs in two areas: (1)

outcomes for children and families in the areas of safety, permanency,

and child and family well-being; and (2) systemic factors that directly

impact the State's capacity to deliver services leading to improved

outcomes.

The process we are proposing includes two stages: a State self-

assessment and an on-site review. The State self-assessment will be

completed by the State members of the review team, including staff of

the State agency and community representatives, in collaboration with

ACF Regional Offices. In the second phase, a representative team of

Federal, State and community reviewers will review a small ``discovery

sample'' of cases selected randomly and stratified by type of cases,

based on the findings of the self-assessment. The reviews will examine

cases which reflect a wide range of services provided by the State,

e.g., child protective services, out-of-home and in-home services, but

more emphasis will be placed on those cases reflecting State-specific

issues identified in the self-assessment. Information on each case will

be gathered from the case records as well as interviews with the

children, parents, social worker, foster parent and service providers

in the case. Systemic issues will be reviewed on-site, primarily

through interviews with State and community stakeholders from within

and outside the State agency.

[[Page 50063]]

As explained in the section-by-section discussion of the preamble,

we are proposing to make ``substantial conformity'' determinations for

each outcome and systemic factor reviewed, rather than an overall

determination of conformity for the State's entire title IV-B and IV-E

program. To be determined to be in ``substantial conformity,'' each

outcome reviewed on-site must be rated ``substantially achieved'' in at

least 90% of the cases examined in the first review, and 95% in the

subsequent reviews. To be determined to be in ``substantial

conformity'' for the systemic factors reviewed, each factor must be

operating in accordance with applicable statutory requirements. Federal

funds may be withheld from States that are determined to be in

nonconformity. However, States first will be required to implement

program improvement plans to correct areas of nonconformity and, if the

plans are implemented successfully, funds will not be withheld.

We propose that States determined to be operating in substantial

conformity be reviewed at five-year intervals and States not in

substantial conformity be reviewed at three-year intervals.

VI. Interethnic Adoption Provisions of the Small Business Job

Protection Act of 1996 and the Multiethnic Placement Act of 1994

On August 20, 1996, President Clinton signed the Small Business Job

Protection Act of 1996. Section 1808 of this Act (section 1808),

``Removal of Barriers to Interethnic Adoption,'' repeals and replaces

the nondiscrimination provision of the Multiethnic Placement Act of

1994 (MEPA). Section 1808 prohibits denial of or delay in the placement

of a child for adoption or foster care on the basis of race, color, or

national origin of the adoptive parent, foster parent, or child

involved. It also prohibits denying to any person the opportunity to

become an adoptive or foster parent, on the basis of the race, color,

or national origin of the person or child involved. This provision

became a new title IV-E State plan requirement, section 471(a)(18) of

the Act, effective January 1, 1997. Noncompliance with section

471(a)(18) constitutes a violation of title IV-E as well as a violation

of title VI of the Civil Rights Act of 1964.

The diligent recruitment requirement at section 422(b)(9) of the

Act in no way mitigates the prohibition on denial or delay of placement

based on race, color or national origin. However, the statute is clear

that the section 1808 prohibitions against delaying or denying

placement based on race, color, or national origin have no effect on

the application of the Indian Child Welfare Act of 1978.

In implementing the provisions of section 1808, we will identify

potential violations during the conduct of child and family services

reviews. We will refer cases so identified, as well as cases brought to

our attention by any other means, to the Department's Office for Civil

Rights (OCR) for investigation. Based on the OCR investigation in any

such case, we will determine whether a violation of section 471(a)(18)

has occurred. Under section 474(d) of the Act, States and other

entities receiving title IV-E funding are subject to financial

penalties and corrective action for such violations.

VII. Welfare Reform Legislation and Title IV-E Eligibility

On August 22, 1996, the Personal Responsibility and Work

Opportunity Reconciliation Act of 1996 (PRWORA) was signed into law

(Pub. L. 104-193). This law repealed the Aid to Families with Dependent

Children (AFDC) program and replaced it with the Temporary Assistance

for Needy Families (TANF) block grant. This change has implications for

the title IV-E foster care program since title IV-E eligibility is

predicated, in part, on the child's eligibility for AFDC. The PRWORA,

as amended by the Balanced Budget Act of 1997 (Pub. L. 105-33),

requires States to apply the AFDC eligibility requirements that were in

effect in the State on July 16, 1996, when determining whether children

are financially eligible for Federal foster care. Consistent with this

approach, we continue to use references which predate the passage of

TANF, but are to be applied as they were in effect on July 16, 1996.

VIII. The Adoption and Safe Families Act of 1997

On November 19, 1997, the President signed into law the Adoption

and Safe Families Act (ASFA) of 1997, Pub. L. 105-89. This legislation,

passed by the Congress with overwhelming bipartisan support, represents

an important landmark in Federal child welfare law. Its passage affords

us an unprecedented opportunity to build on the reforms of the child

welfare system that have begun in recent years in order to make the

system more responsive to the multiple, and often complex, needs of

children and families. The Adoption and Safe Families Act embodies a

number of key principles that must be considered in order to implement

the law:

The safety of children is the paramount concern that must

guide all child welfare services. The new law requires that child

safety be the paramount concern when making service provision,

placement and permanency planning decisions. The law reaffirms the

importance of making reasonable efforts to preserve and reunify

families, but also now clarifies instances in which States are not

required to make efforts to keep children with their parents, when

doing so places children's safety in jeopardy.

Foster care is a temporary setting and not a place for

children to grow up. To ensure that the system respects a child's

developmental needs and sense of time, the law includes provisions that

shorten the time frame for making permanency planning decisions, and

that establish a time frame for initiating proceedings to terminate

parental rights. The law also strongly promotes the timely adoption of

children who cannot return safely to their own homes.

Permanency planning efforts for children should begin as

soon as a child enters foster care and should be expedited by the

provision of services to families. The enactment of a legal framework

requiring permanency decisions to be made more promptly heightens the

importance of providing quality services as quickly as possible to

enable families in crisis to address problems. It is only when timely

and intensive services are provided to families that agencies and

courts can make informed decisions about parents' ability to protect

and care for their children.

The child welfare system must focus on results and

accountability. The law is clear that it is no longer enough to ensure

that procedural safeguards are met. It is critical that child welfare

services lead to positive results. The law contains a number of tools

for focusing attention on results, including an annual report on State

performance; the creation of an adoption incentive payment for States,

designed to support the President's goal of doubling the annual number

of children who are adopted or permanently placed by the year 2002; and

a requirement to study and make recommendations regarding additional

performance-based financial incentives in child welfare.

We are proposing regulations in this NPRM for the following

provisions in the ASFA:

Section 471(a)(15) of the Act regarding reasonable

efforts;

Section 471(a)(20) of the Act regarding criminal records

checks;

Section 475(1)(E) of the Act regarding documentation of

the State's

[[Page 50064]]

efforts to make and finalize a child's placement when the permanency

goal is adoption, guardianship, or some other permanent arrangement;

Section 475(5)(C) of the Act regarding permanency

hearings;

Section 475(5)(E) of the Act regarding requirements to

file or join a petition to terminate parental rights.

Section 475(5)(F) of the Act regarding the date a child

has entered foster care; and,

Section 475(5)(G) of the Act regarding notice of reviews

and hearings and an opportunity to be heard for foster parents,

relative caregivers, and preadoptive parents.

The proposed title IV-E review only monitors eligibility for foster

care maintenance payments. Therefore, those provisions in the ASFA

which amend title IV-B, subpart 2, and the Adoption Assistance program

will be regulated in a subsequent NPRM. We will propose regulations for

the following ASFA provisions in the next NPRM:

Title IV-B, subpart 2 of the Act regarding the Promoting

Safe and Stable Families program;

Section 471(a)(21) of the Act regarding health insurance

coverage for children with special needs for whom an adoption

assistance agreement is in effect; and,

Section 473(a)(2)(C) of the Act regarding a child's

continued title IV-E eligibility for adoption assistance in cases where

an adoption disrupts or the adoptive parent(s) die.

ACF does not intend to issue regulations to implement the adoption

incentive bonuses at section 473A of the Act because of the time-

limited nature of the provision. Rather, we have provided guidance

through policy issuance.

IX. Strategy for Regulating the Adoption and Safe Families Act of

1997

We have decided to regulate the provisions of ASFA and other recent

statutory amendments through two NPRMs. This, the first NPRM, transmits

ACF's proposed review systems for child and family services and title

IV-E eligibility, proposes an enforcement strategy for the statutory

prohibitions regarding race preference in foster and adoptive

placements, and addresses those provisions in the ASFA related to the

foster care maintenance program. The second NPRM will propose

codification of the remaining ASFA amendments to the Social Security

Act. Clarification and interpretation required by the field to

implement the time sensitive provisions in the ASFA will be addressed

by policy issuances prior to codification in a final rule.

We considered issuing a single comprehensive NPRM which would

encompass technical and programmatic changes to titles IV-B and IV-E

and the review processes, but rejected that approach in favor of the

alternative strategy for the following reasons:

(1) ACF is required by statute to promulgate regulations to

implement State plan compliance reviews. After extensive consultation

with the field to develop these proposed review procedures and several

years of pilot testing, it is critical that the field receive guidance

on the proposed review processes without further delay;

(2) The proposed review processes can easily accommodate revisions

to program operation and policy; and,

(3) ACF has a statutory obligation to enforce the provisions of

section 471(a)(18) of the Act.

Soon after the enactment of the ASFA, we held focus groups in

Washington, DC and in each of the 10 Federal regions to obtain input

from the field on the implementation of the new law. We learned a great

deal about the provisions in the law that require clarification and

guidance. The section-by-section discussion in the preamble offers

guidance on the intent of the ASFA and its implementation.

We want to be very clear about the effective dates in the ASFA. The

provisions in the ASFA were effective on the date of enactment,

November 19, 1997, except for those provisions which require action on

the part of the State legislature. The ASFA establishes a delayed

effective date (the first day of the calendar quarter following the

first legislative session which follows the enactment of the ASFA) for

States that must pass legislation to implement certain provisions.

States may not wait until final regulations are promulgated to come

into compliance with the ASFA provisions. States must adhere to the

effective dates in the statute.

X. Section-by-Section Discussion of the NPRM

A. Child and Family Service Reviews

Part 1355--General

Section 1355.20 Definitions

We have amended 45 CFR 1355.20 to include definitions of new terms

relevant to monitoring, including full review, partial review, and

State self-assessment. We have added a definition of the National Child

Abuse and Neglect Data System, since the term is not defined in other

regulations (See Part X.B. for other definitional revisions in

Sec. 1355.20.)

Section 1355.31 Elements of the Review System

Section 1355.31 is added to specify the scope of the reviews

covered in the NPRM.

Section 1355.32 Timetable for the Reviews

This section specifies the review timetable for the initial and

subsequent reviews as required by Section 1123A of the Social Security

Act.

In paragraph (a), we are proposing a six-month period following

publication of the final rule and prior to the commencement of Child

and Family Service reviews so that States can become knowledgeable

about the review process before the initial reviews begin in each

State. The extended time period proposed for completing the initial

reviews takes into account that: (1) States will need time to become

familiar with and prepare for these new reviews; and (2) the ACF

Regional Offices must schedule these reviews in all of the States

within each region, in conjunction with separate scheduling for the

newly revised title IV-E eligibility reviews. We learned from our pilot

reviews that approximately six months is required to prepare for and

conduct a review that examines the quality of services and outcomes.

In paragraph (b), we describe the timetable for reviews following

the initial review, in accord with the statutory requirement for less

frequent reviews of States that are determined to be in substantial

conformity. We propose that full reviews be conducted at five-year

intervals in States found to be in substantial conformity. We also

propose that the State self-assessment portion of the review be

completed three years after a review in which a State is found to be in

substantial conformity.

In addition, we propose that reviews for States determined not to

be in substantial conformity occur at three-year intervals. This

proposal is based on the recognition that many States have technical

assistance needs that will extend beyond a year or two in order for

them to implement program improvement plans designed to correct the

areas of nonconformity in their child and family services program.

In paragraph (c), we implement the provision at section

1123A(b)(1)(C) of the Act regarding the reinstatement of more frequent

reviews of States and also provide examples of information that might

indicate that the State is not operating in substantial conformity. We

propose that when information is received suggesting the possibility of

[[Page 50065]]

nonconformity, ACF will conduct detailed inquiries prior to initiating

an unscheduled review. We do not wish to pursue more frequent reviews

than are necessary and will conduct detailed inquiries prior to

initiating an unscheduled review. If the State, however, does not

provide the additional information requested, we will proceed with a

review. When a full review is not deemed necessary or appropriate, we

propose that a targeted partial review be conducted of the areas

indicated to be in nonconformity.

Section 1355.33 Procedures for the Review.

In paragraph (a), we propose a two-phase review process and suggest

that the joint State-Federal review team have multiple representation,

including individuals and organizations outside the State agency with

whom the State was required to consult in developing its State plan

(external members). Federal review team members will consist primarily

of staff from ACF, but may also include staff from other agencies

within HHS, including the Office for Civil Rights (OCR).

We received positive feedback from participants in the pilot

reviews that this approach encourages Federal-State collaboration

during the review, as well as during the development and implementation

of program improvement plans. We found that a team with a more diverse

composition:

Had a broader perspective of the extent to which outcomes

were being achieved, and was more comprehensive in its identification

of areas needing improvement within a State;

Would be better able to integrate the proposed review

process with the CFSP planning process by including the external

representatives in both processes and building on the existing

consultation requirements in place;

Satisfied a repeatedly expressed need on the part of the

focus group participants for a broad base of community involvement in

the new review process, including representatives other than staff of

the State agency; and

May lead to increased opportunities for technical

assistance from those involved in identifying the State's strengths and

needs.

In paragraph (b), we describe the proposed State self-assessment

process which is based on data, provided by ACF to the States in report

format, from their own most recent submissions to the AFCARS and NCANDS

systems. State review team members will review and analyze the data to

evaluate the strengths and needs of the child and family services

systems in the State. ACF will conduct an independent analysis of the

AFCARS and NCANDS data and provide consultation to the State during the

development of the self-assessment to ensure that it is complete and

accurate. In promoting the principles of State flexibility and program

improvement through the reviews, the analysis of the self-assessment

will provide the focus for the on-site review by identifying particular

aspects of State programs that need further review. This approach is

proposed as an alternative to conducting standard reviews on similar

populations in every State, absent any recognition of individual State

needs. State self-assessments were used successfully to structure the

on-site reviews around specific outcome areas, service areas, and

systemic issues. We think this approach will promote a more efficient

use of State and Federal resources.

In paragraph (c), we describe the proposed on-site review process.

The proposal that the on-site review be focused in specified geographic

locations in the State, including the State's largest city, reflects an

approach used in all of the pilots. It provided members of the review

team opportunities to speak to local stakeholders and conduct face-to-

face interviews with children and families, service providers, foster

families and staff from various localities. Because the nation's large

metropolitan areas are often characterized by complex social and

organizational issues that affect large numbers of children and

families, we propose that each State's largest metropolitan area be one

of the locations selected for an on-site review.

In paragraph (c)(3), we propose that ACF has final approval if

consensus cannot be reached regarding the selection of programmatic

areas of emphasis for the on-site reviews and the geographic locations

in which the on-site review will occur. However, our experience from

the pilot reviews suggests that, in most cases, the State and ACF will

reach consensus.

The proposed approach of using various sources of information to

determine substantial conformity with the outcomes and systemic factors

is also based on the pilot reviews. The comparative experiences in the

pilots revealed that the reviews yield findings of greater quality and

higher accuracy when they include case reviews and interviews rather

than rely solely on the case records.

The on-site review, by design, is qualitatively focused, reflecting

our belief that a small sample that examines outcomes thoroughly will

best promote the State/Federal partnerships and collaboration necessary

to achieve program improvements through the reviews. We propose that

the sample of cases be randomly selected and that the sampling plan be

approved by the ACF designated official in order to achieve an

objectively selected sample. We have not prescribed a specific number

of cases to be included in the sample, since the number will vary by

State, depending upon the size of the State and the areas under review.

However, we propose to select a relatively small sample, that is, 30-50

cases, and conduct an intense review, including interviews with the

relevant parties in each case.

In some pilot States, we used both the old review method of merely

reading case records and the proposed method of reading case records

and conducting interviews with families and other relevant parties. In

those pilot States where both the old and the proposed review methods

were deployed simultaneously, the review teams reported that the

proposed method provided a more accurate measure of the status of

outcomes in the States. Conducting interviews with families and other

relevant parties resulted in a more balanced approach by the review

team when considering the State's success in achieving outcomes for

families.

In paragraph (d), we propose that partial reviews be jointly

planned and conducted by the State and ACF. Partial reviews will be

targeted to the nature of the concern.

We believe the stated emphasis on program improvement will best be

served through timely feedback to the States on the review findings.

Therefore, in paragraph (e), we propose a time frame of 30 calendar

days in which to notify the State of ACF's determination as to whether

the State is operating in substantial conformity. However, the letter

of notification will not include a detailed report of the review.

Rather, it will summarize and confirm the findings of the review, many

of which will have been assembled and reported to the State at the

conclusion of the on-site review. We propose that the substance of

findings related to a determination of nonconformity be expounded upon

and developed in the context of the program improvement plan, which

will then serve as a guide to the State in achieving substantial

conformity (see section 1355.35).

Section 1355.34 Criteria for Determining Substantial Conformity

This section describes the criteria which will be used to determine

a

[[Page 50066]]

State's degree of conformity with specified State plan requirements for

each outcome and systemic factor of the State's service delivery system

that undergoes review.

We propose to base conformity on the specific outcomes and systemic

factors reviewed, rather than on the State program as a whole.

Accordingly, we have limited the State plan requirements subject to

review to those requirements related specifically to outcomes and the

delivery of improved services. We are, in effect, proposing that

conformity with these requirements constitutes ``substantial

conformity,'' rather than reviewing for and requiring some percentage

of compliance with all of the title IV-B and IV-E State plan

requirements. Also, making determinations of substantial conformity

based on specific outcomes and systemic factors will permit States to

take advantage of technical assistance opportunities to focus on those

aspects of their programs needing improvement.

In paragraphs (a)(1) and (2), we propose to determine the State's

substantial conformity with applicable CFSP requirements based on: (1)

the achievement of the seven outcomes specified in paragraph (b); and

(2) the functioning of seven core systemic factors directly related to

the State's capacity to deliver services leading to improved outcomes,

as specified in paragraph (c). In paragraph (a)(3), we propose that a

review and analysis of the aggregate data in the State self-assessment

should be consistent with, and support, the findings of the on-site

review. Significant discrepancies between the aggregate data and the

on-site review findings may be a contributing factor in determining

that a State is not in substantial conformity.

In paragraph (b)(1), we link substantial conformity to the outcomes

for children and families, and list the seven outcomes that are subject

to review. These outcomes were derived from discussions with numerous

focus groups, consultation with experts in the field, and from an

extensive review of the literature on the outcomes for children and

families served by the programs under review. The pilot reviews have

demonstrated them to be appropriate outcomes to measure.

In paragraph (b)(2), we propose that a State's level of achievement

(i.e., ``substantially achieved,'' ``partially achieved,'' or ``not

achieved'') with regard to each outcome, as determined by the review

team, reflect the extent to which a State has implemented the CFSP

requirements and assurances subject to review. We have specified those

CFSP requirements that are directly related to the outcomes that will

undergo review, including the new title IV-B State plan requirement to

make effective use of cross-jurisdictional resources to place children

in adoptive homes.

While the requirement at section 471(a)(18) of the Act has a direct

impact on permanency for the children affected, we have proposed only

to use the child and family services review as a mechanism for

identifying potential section 471(a)(18) compliance issues rather than

as a mechanism to determine compliance with this provision, hence its

exclusion from this paragraph. The statutory requirements for enforcing

section 471(a)(18) necessitate a different approach from that taken in

the child and family services review. However, the self-assessment and

the instruments for the on-site portion of the review will include

questions designed to probe for potential section 471(a)(18) compliance

issues. Once identified through a child and family services review, or

otherwise, potential noncompliance with section 471(a)(18) will be

addressed through the process proposed at section 1355.38.

In paragraph (b)(2)(vii), the proposed review of the title IV-E

requirement regarding reasonable efforts is not a duplication of the

review of reasonable efforts determinations performed in the title IV-E

foster care eligibility reviews. We are not proposing to review for

reasonable efforts determinations in court orders or other court

documentation, but for the actual services provided to prevent

removals, facilitate reunification, or, in conformance with the ASFA,

to make and finalize alternate permanent placements. This State plan

requirement clearly supports two of the outcomes proposed for review:

(1) children are, first and foremost, protected from abuse and neglect,

and are safely maintained in their homes whenever possible; and (2)

children have permanency and stability in their living situations.

In paragraph (b)(3), we propose that in order for a State to be

determined to be in substantial conformity, each outcome to be examined

must be rated as ``substantially achieved'' in at least 90 percent of

the cases reviewed on-site in the initial review and 95 percent in

subsequent reviews. For example, if 40 cases are reviewed as part of an

initial on-site review, each outcome must have been ``substantially

achieved'' for at least 36 (90%) of these cases as determined by the

review team. The rationale for the phased-in standard of outcome

achievement is that States will need time to focus their resources on

program improvements and the new approach to the reviews and may not be

able to conform to a 95 percent standard initially. However, given the

goal of the proposed review process to support practice improvements

over time, we believe a 95 percent standard better reflects the ongoing

quality of outcomes we are promoting.

The on-site review instruments are designed to guide reviewers in

determining the degree of outcome achievement. Specific items in the

on-site review instruments are indexed to each outcome. These items

will be examined collectively from a case-specific qualitative level in

determining if each outcome has been or is being achieved at a

satisfactory level, that is, ``substantially achieved.'' We have

published the items indexed to the outcomes at Attachment A, at the end

of this preamble, in order to give States a more specific idea of what

is reviewed during the on-site process. We do intend to publish the

self-assessment and on-site review instruments in meeting Paperwork

Reduction Act requirements. These documents provide detail regarding

the information to be collected and reviewed. We want to be clear,

however, that the items will not be published as part of the final rule

because they are subject to change as we learn more about how

particular issues affect outcomes for children and families.

In the pilot reviews, we invested considerable effort in preparing

reviewers to collect and consider the information needed to make

decisions about outcome achievement. In addition, we assembled a cross-

section of representatives from within and outside the State agency and

made numerous revisions to the instrument to increase the likelihood of

objective conclusions. We propose to require that conclusions about

outcomes be made on the basis of several perspectives, including those

of the children, parents, social worker and service providers involved

in the cases reviewed, in order to provide us with more comprehensive

information about each case undergoing review.

We believe that the proposed review of outcomes is necessary to

achieve the goal of improved services. In each of the pilots, reviewers

were able to apply the criteria to the outcomes in a manner that led to

decisions considered by the review team to be valid. Further, the

compilation of findings around outcomes by the review team was

generally consistent with the State agency's perception of the

strengths and needs of its programs which, we think,

[[Page 50067]]

adds further validity to the approach we are proposing.

In paragraph (c), we propose also to link substantial conformity to

a State's implementation of those CFSP requirements clearly related to

delivering child welfare services which lead to improved outcomes, in

addition to the review of the actual outcomes. We have identified the

seven core systemic factors that we propose to examine, along with the

specific criteria that will be reviewed to determine if each systemic

factor is operating in substantial conformity. The factors we have

chosen to examine emerged from a much longer list that was refined over

the course of the pilot reviews. The systemic factors to be reviewed

are those that seemed to most critically influence agency capacity at

both the State and local levels.

The nature of the systemic factors and criteria for determining

substantial conformity does not accommodate measurement at an interval

level, e.g., percentage of achievement. We are, therefore, proposing

that the review team apply specific criteria associated with each

factor and determine whether the State is operating in substantial

conformity with the CFSP requirements related to each factor. In

paragraphs (c)(1) through (7), we have identified the components of

each systemic factor that will be examined. The factors include: (1)

The Statewide information system; (2) the case review system (which

incorporates the new requirements in the ASFA for permanency hearings,

termination of parental rights, and notice of hearings for foster and

preadoptive parents); (3) the quality assurance system (which includes

the new State plan requirement to establish and maintain quality

standards for children in foster care); (4) training; (5) service array

(including the new services that must be provided under title IV-B

subpart 2, i.e., time limited reunification services and post-legal

adoption services); (6) agency responsiveness to the community; and (7)

foster/adoptive parent licensing, recruitment, and retention (which

includes the new State plan requirements for criminal record checks and

plans for effective use of cross-jurisdictional resources for making

adoptive placements).

Since these factors relate to systemic issues within State

agencies, the degree to which they are operating in substantial

conformity with CFSP requirements is a decision made with input from

the entire review team. The decision will be based on information

contained in the State self-assessment, as well as interviews with a

broad cross-section of internal and external stakeholders at the State

and local levels. In proposing the criteria to evaluate each systemic

factor, we have worked to stay within the limits of the statutory and

regulatory language related to the factors.

With regard to the case review system required in section 422 and

defined in section 475 of the Act, we will not base substantial

conformity on the documentation of these requirements for individual

children as was the practice in previous section 427 reviews. Rather,

the extent to which the State has in place a case review system that

effectively promotes desirable safety, permanency, and well-being

outcomes for the children and families served by the State will

determine the degree of conformity.

We propose in paragraph (d) that the review instruments be provided

to all States when the final rule becomes effective. This will ensure

that States are aware of the methodology that will be used to make

determinations related to outcome achievement and the functionality of

systemic factors. We are particularly interested in comments regarding

the most effective method for keeping States informed of the content of

the review instruments.

Section 1355.35 Program Improvement Plans

This section describes the requirements for developing,

implementing and reviewing State program improvement plans and for

providing technical assistance to States in implementing the program

improvement plans. It implements the requirement in section 1123A(b)(4)

of the Act that States found not to be in substantial conformity be

afforded the opportunity to develop and implement a corrective action

plan. We are proposing the term ``program improvement plan'' as an

alternative to corrective action plan, believing that it better

reflects the principles of program improvement and State/Federal

partnerships that we are attempting to cultivate through the reviews.

In paragraph (a)(1) we propose to require that the program

improvement plan be developed jointly between the State and HHS,

consistent with other regulatory requirements that the State plan be

developed jointly, and in keeping with the desire to promote State and

Federal partnerships through the reviews.

In paragraphs (a) (2) through (5), we describe the required content

of the program improvement plans, specifically that the plans address

the areas of nonconformity and identify the activities, time frames,

technical assistance and evaluations needed to achieve substantial

conformity.

In paragraph (b), we propose the option of a voluntary program

improvement plan for States that meet the criteria for substantial

conformity but yet have areas where program improvements are needed,

and we describe the requirements for such voluntary plans.

In paragraph (c)(1), we propose that a State's program improvement

plan be approved in accordance with section 1123A(b)(4)(A) of the Act.

In addition, we propose that a State submit its plan for approval

within 60 days following receipt of the written notice of nonconformity

so that a State found to be in nonconformity may receive prompt

assistance in achieving program improvements.

In paragraph (c)(2), ACF will approve the plan if it meets the

requirements for program improvement plans described in this section.

If the plan does not meet the requirements and is not approved, we

propose in paragraph (c)(3) that the State be given 30 additional days

to revise and re-submit the plan for approval. If the State does not

re-submit the plan, or if the re-submitted plan continues to fail to

meet the requirements and cannot be approved, we propose in paragraph

(c)(4) to initiate withholding of funds in accordance with the

provisions of Sec. 1355.36 of this part. We believe that reasonable

time frames must govern the submission of approvable program

improvement plans, and would appreciate comments as to whether the time

frame for the joint development of the program improvement plan is

adequate as proposed.

In paragraph (d), we are proposing that program improvement plans

be approved for time periods of up to two years, depending upon the

level of nonconformity. We do not expect all program improvements to

take two years to implement and expect States to address areas of

nonconformity expeditiously. States will be required to prioritize

areas needing improvement that pose risks to child safety and complete

the appropriate action steps within a time frame to be determined in

consideration with the level of risk. We do recognize, however, that,

in some circumstances, it will be impossible for the State to address

the areas needing improvement within the two year time frame, even with

technical assistance. In such situations we are, thus, proposing a

three-year period of time as the maximum implementation period for the

plans, consistent with the time frame for the ongoing full reviews.

[[Page 50068]]

In paragraph (e), we propose procedures for evaluating the

implementation of program improvement plans. We propose that the State

members of the review team and the ACF Regional Office determine the

appropriate intervals for evaluating the plans, since the content of

each plan and the needs of individual States will vary significantly.

Our proposal that the evaluations occur no less frequently than

annually is an effort to: (1) assure that delays in evaluation do not

prevent the State from correcting the areas of nonconformity in a

timely manner; (2) integrate the implementation of the plans with the

joint planning process between the State and ACF; and (3) reduce the

burden on States by using the existing annual CFSP progress review and

update as the vehicle for evaluating the plans, rather than create an

additional process.

In paragraph (e)(3), we address evaluation of individual components

of the program improvement plans. We are proposing that the areas of

nonconformity be addressed individually when evaluating the plans, so

that once they are determined to be complete they will not require

further evaluation.

In paragraph (e)(4), we propose the option for the State and ACF to

renegotiate the terms of the program improvement plans, as needed. This

is based on the fact that changes in approach may be needed during the

implementation of a plan, and we want to provide that flexibility for

the States.

In paragraph (f), we elaborate on the proposal that States

integrate their program improvement plans with CFSP planning and

implementation.

To the extent that ACF has the resources and funds available, it

shall make technical assistance available to improve the outcomes or

other factors that are outlined in a State's program improvement plan.

Our goals in this section and in the withholding section (45 CFR

1355.36) include: providing timely feedback on the findings of the

review to the State, based on joint planning, collaboration and

agreement on the strengths and needs of the program; avoiding the

``review and penalize'' approach used in prior reviews; and focusing

the period following the review on program improvement. In the pilot

reviews, we found that the final reports of the reviews, prepared by

ACF in collaboration with the State and the review team, required (at a

minimum) several months to complete and delayed the development of

program improvement plans well beyond the completion of the actual

review. We, therefore, have proposed that ACF develop a concise,

focused report of findings within 30 days of the review. This method

allows us to expeditiously engage the State in developing a program

improvement plan that addresses the mutually agreed upon areas of

nonconformity. We have proposed that program improvement plans be

developed within 60 days of ACF issuing a written confirmation to the

State of the findings of the review.

Section 1355.36 Withholding Federal Funds Due to Failure To Conform

Following the Completion of a State's Program Improvement Plan

This section describes the process for withholding funds due to the

failure of the State to meet the criteria for substantial conformity.

We have addressed statutory requirements by specifying the methods used

to determine the amount of Federal funds to be withheld due to a

State's failure to comply substantially, and the conditions under which

the funds will be withheld. In reviewing this section, the reader

should note that the withholding of funds is suspended during the

implementation period of a program improvement plan. Following the

completion of the program improvement plan, the amount of funds which

will be withheld and collected in arrears is the amount identified in

conjunction with those areas of nonconformity that remain uncorrected.

In paragraphs (a)(1) and (2), we define the pool of funds to which

any penalties should apply. Inasmuch as section 1123A(a) of the Act

requires that the Secretary review a State's conformity with State plan

requirements of both titles IV-B and IV-E, we have deemed it

appropriate and consistent to propose that funds under each of these

titles be subject to withholding. This approach is further supported by

the close linkages we see between both titles, for example, in the

areas of protections for children, the recruitment of foster and

adoptive families, and the development of training strategies. While

greater emphasis is placed on title IV-B State plan requirements in the

reviews of State child and family services programs, the requirements

within the two titles are sufficiently intertwined so as to justify a

pool of both title IV-B and title IV-E funds. However, in recognition

of this greater emphasis, we believe that it is appropriate that the

pool of funds subject to withholding be comprised of a State's total

title IV-B allocation. Since a smaller number of title IV-E State plan

requirements have been included as part of these reviews, we are

proposing that the pool of title IV-E funds subject to withholding be

limited to a State's claims for title IV-E foster care administrative

costs, and not include foster care maintenance payments.

In paragraph (b)(1), we propose that withholding funds based on a

determination that a State is not operating in substantial conformity

be delayed until the State has the opportunity to develop and implement

a program improvement plan.

In paragraph (b)(2), we propose that funds not be withheld from a

State if the determination of nonconformity is caused by the State's

correct use of formal statements of Federal law or policy provided by

DHHS.

In (b)(3), we are proposing that withholding apply to the year

under review and each succeeding year until the failure to conform ends

through the successful completion of the program improvement plan, or

until a subsequent review determines that the State is operating in

substantial conformity. The amount of funds subject to withholding that

we are proposing is relatively modest for a single year. We therefore

believe that for potential withholding to serve as an incentive for

program improvements, it must be applied over the entire period of

nonconformity.

In (b)(4) we address the statutory requirement that the amount of

funds withheld must be proportionate to the extent of nonconformity. In

paragraph (b)(4)(i), we define the pool of funds from which any funds

shall be withheld due to nonconformity. The pool includes the State's

entire title IV-B allocation, subparts 1 and 2, for the years to which

the withholding applies, plus an amount equivalent to 10 percent of the

State's Federal claims for title IV-E foster care administrative costs

(exclusive of training costs matched at 75 percent) for the years to

which the withholding applies. Only 10 percent of the title IV-E foster

care administrative claims is proposed since a smaller number of the

State plan requirements subject to review are specifically title IV-E

related.

In paragraphs (b)(4)(ii) and (iii), we are proposing that equal

weight be given to each of the seven core outcomes, described in

Sec. 1355.34(b)(2) of this part, and the seven core systemic factors,

described in Sec. 1355.34(c)(2) of this part, in determining

substantial conformity. We propose that the amount of funds subject to

withholding for each outcome and systemic factor be one percent of the

pool of the State title IV-B allocation and title IV-E foster care

administrative costs. We propose that funds be withheld only for those

[[Page 50069]]

particular outcomes and systemic factors that are determined not to be

in substantial conformity, whether as a result of a full or partial

review. Therefore, States determined not to be operating in substantial

conformity based on only one outcome would be subject to a one percent

withholding, and States with greater degrees of nonconformity would be

subject to proportionately higher withholding.

We think that our proposal for withholding provides a sufficient

penalty to serve as an incentive for program improvements as needed,

but does not withhold so much as to prohibit States from making

improvements or delivering services. Our definition of the pools of

funds to which penalties will apply is consistent with the extent to

which we will be reviewing State plan requirements for programs

administered under both funding sources. We anticipate that the maximum

penalty proposed for States determined not to be in substantial

conformity on all of the outcomes and systemic factors reviewed will be

less than penalties imposed under the section 427 reviews, on a year-

by-year basis. This is primarily due to our expectation that the

development and implementation of a program improvement plan, along

with the provision of technical assistance, will result in significant

progress by the State in achieving substantial conformity. This

proposal is consistent with our intent to de-emphasize penalties in

favor of efforts to improve services. We particularly invite comments

on this issue.

In paragraph (b)(5), we propose the maximum amount of funds to be

withheld if the State cannot achieve substantial conformity through the

implementation of a program improvement plan.

In paragraph (c), consistent with section 1123A(b)(4)(C) of the

Act, we propose that the amount of funds withheld not be deducted from

a State's allocation during the implementation period of the program

improvement plan, provided the plan conforms to the requirements in the

final rule.

The statute also requires that the Secretary rescind the

withholding of funds if the State's failure to conform is resolved by

successful completion of a corrective action plan. We have addressed

this requirement in paragraph (d), and also propose that the Secretary

not withhold any portion of funds that applies to individual outcomes

or systemic factors that are brought into substantial conformity

through partial completion of the program improvement plan.

In paragraph (e)(1), we propose that the statutory requirement that

ACF notify the State no later than 10 days following a final

determination of substantial failure to conform be interpreted as 10

business days. Although each State will be notified of whether it is,

or is not, operating in substantial conformity following the on-site

review, this earlier determination shall not be considered final for

States which are determined not to be in conformity. These States will

be notified of the final determination following the successful or

unsuccessful completion of a program improvement plan.

In paragraph (e)(2), we clarify when and under what circumstances

the actual withholding of funds will occur. The decision to withhold

funds from a State will be directly related to its progress in

implementing a program improvement plan. At the completion of the

program improvement plan, the amount of funds associated with any

remaining areas of nonconformity will be withheld by the Department for

the time period beginning with the year under review in which the

initial determination of nonconformity was made to the date of the

final determination of nonconformity, and from that date forward until

substantial conformity is achieved. In paragraph (e)(3), we propose

that the amount of funds withheld be computed to the end of the quarter

in which substantial conformity is achieved.

In paragraph (e)(4), we propose the penalty structure for States

that fail to participate in the development of a program improvement

plan, or in the implementation of a plan, as required by ACF.

Section 1355.37 Opportunity for Public Inspection of Review Reports

and Materials

In this section, consistent with the requirements for State plans

at 45 CFR 1355.21(c), we propose that the State make reports and

materials related to the child and family services reviews available

for public inspection. We think it is critical that States obtain the

broadest public involvement in the implementation of child welfare

programs. We are particularly interested in comments regarding the

method of dissemination of these materials in order to accomplish this

goal.

Section 1355.38 Enforcement of Section 471(a)(18) of the Act Regarding

the Removal of Barriers to Interethnic Adoption

In this section, we implement the provisions of sections 474(d)(1)

and (2) of the Act. Section 474(d) contains enforcement provisions

applicable to section 471(a)(18) of the Act, which requires the removal

of barriers to interethnic adoption. We have chosen to codify the

section 1808 enforcement procedures in regulations in conjunction with

the 1123A review process because the statute specifically identifies

the 1123A review process as a mechanism for assuring State compliance

with section 471(a)(18) of the Act. While the 1123A review process is

an appropriate mechanism for detecting possible violations of section

471(a)(18) of the Act, the corrective action and penalty structure

required by section 474(d) of the Act does not fit within the

``substantial conformity'' standard by which other title IV-B and title

IV-E State plan requirements are measured in the 1123A review process.

Therefore, ACF has developed a separate process for addressing

violations of section 471(a)(18), once identified.

After considering a number of options, we determined that

implementing section 474(d) of the Act requires collaboration with OCR

because it has significant expertise in investigating alleged civil

rights violations. Moreover, a State's noncompliance with section

471(a)(18) of the Act is also a violation of title VI of the Civil

Rights Act of 1964. OCR and ACF will collaborate throughout the process

of bringing the State into compliance with section 471(a)(18) of the

Act which includes consultation during the development, approval,

implementation, and evaluation of corrective action plans.

In paragraph (a)(1), we propose that ACF refer all cases involving

potential violations of section 471(a)(18) of the Act to OCR for

investigation. Such cases may come to our attention during the course

of a child and family services review or by other means, such as a

letter of complaint. Violations based on a court finding will not be

referred to OCR for investigation. Rather, ACF will invoke the

appropriate penalty and corrective action procedures described in the

regulation.

In paragraph (a)(2), we propose that after OCR completes its

investigative procedure, it will make its file available to ACF, which

will then make a determination, based on the OCR file, whether there

has been a violation of section 471(a)(18). In paragraphs (a)(2)(i) and

(a)(2)(ii), consistent with statutory language, we propose that a

violation of section 471(a)(18) occurs with respect to a person if the

agency delays or denies placement based on race, color, or national

origin. In paragraph (a)(2)(iii), we have included as a violation of

[[Page 50070]]

section 471(a)(18) of the Act a State's maintenance of any statute,

regulation, policy, procedure, or practice that would result in the

delay or denial of placement based on race, color, or national origin.

The statute requires immediate penalties for violations with respect to

a person while providing States the opportunity to implement corrective

action to avoid penalties in unspecified circumstances. Logically,

circumstances in which States should first have an opportunity for

corrective action prior to receiving a penalty include those that have

the potential to cause a violation of section 471(a)(18) with respect

to a person.

In paragraph (a)(3), we propose that ACF provide written

notification to the State or entity of its determination regarding

alleged section 471(a)(18) violations.

In paragraph (a)(4), we propose that if ACF determines that no

violation has occurred, it will take no further action. However, if ACF

determines that a violation has occurred, it will invoke the

enforcement process outlined in section 474(d) of the Act, which

includes penalties and corrective action. Penalties will be issued in

the form of disallowances and will thus be appealable to the

Departmental Appeals Board (DAB) under the procedures prescribed in 45

CFR Part 16.

In paragraph (a)(5), we make clear that the implementation of

section 471(a)(18) is to have no impact on the State's compliance with

the requirements of the Indian Child Welfare Act of 1978.

In paragraph (b)(1), we explain that, in accordance with section

474(d)(1) of the Act, an immediate penalty will be levied against a

State found to be in violation of section 471(a)(18) with respect to a

person or as the result of a court finding (see paragraph (g)(4) of the

proposed regulation and the corresponding preamble language). The

penalty will be imposed for the fiscal quarter in which the State

receives notification from ACF that it is in violation of section

471(a)(18), and for every subsequent quarter in that fiscal year, or

until the State successfully completes a corrective action plan. While

penalties resulting from violations of section 471(a)(18) are

appealable to the DAB, States that voluntarily engage in corrective

action may do so without prejudice during the appeal process in order

to correct deficiencies and come into compliance expeditiously. If the

violation occurs as a result of a court finding and the State is

appealing the court's decision, ACF will notify the State that the

violation has occurred and of the appropriate penalty structure,

however, it will not impose the penalty until there is a final

determination through the appeal process. The State may engage in a

corrective action plan during the judicial appeal process if it so

chooses.

Paragraphs (b)(2) and (b)(3) describe the approval process for

corrective action plans submitted in response to violations of section

471(a)(18) with respect to a person or as the result of a court

finding. Approval of such plans is at the sole discretion of ACF. We

did not prescribe time lines for submission of corrective action plans.

Clearly, it is in a State's best interest to come into compliance in a

timely fashion in order to minimize the length of time the penalty is

imposed.

In paragraph (c)(1), we explain that any State with a statute,

regulation, policy, procedure, or practice in place that, if applied,

would likely result in a violation of section 471(a)(18) of the Act

with respect to a person will be found in violation of section

471(a)(18). In conformance with the statute, a State will have up to

six months from the date it receives notification of the violation from

ACF to implement a corrective action plan for complying with section

471(a)(18). We chose to interpret the term ``implement'' to mean

``begin'' rather than ``complete.'' We think this interpretation is

consistent with Congress' intent to resolve noncompliance with section

471(a)(18) in a timely fashion and affords States sufficient time to

develop and implement corrective action. A State that fails to

implement a corrective action plan within the six months allotted, will

be assessed a penalty in accordance with section 474(d)(1) of the Act.

Paragraphs (c)(2) and (c)(3) describe the approval process for

corrective action plans submitted in response to violations of section

471(a)(18) caused by a statute, regulation, policy, procedure, or

practice that could result in a violation with respect to a person.

Approval of such plans is at the sole discretion of ACF. We did not

prescribe time lines for submission of corrective action plans, but

note that it is in a State's best interest to submit the plan at the

earliest possible date in order to effect implementation within the six

months allotted.

In paragraph (c)(4), we describe what constitutes ``implementing''

a corrective action plan. A corrective action plan will be considered

``implemented'' when a State begins to carry out the action step(s) in

the plan. ACF's approval of a corrective action plan is not considered

implementation of the plan.

In paragraph (c)(5), once the corrective action plan is

implemented, we propose to levy a penalty against a State that fails to

complete the corrective action plan within the time allotted in the

plan. Although the statute does not specifically address the completion

of corrective action plans, Congress clearly intended all States to

comply with section 471(a)(18) of the Act. Therefore, States that fail

to complete a corrective action plan within the time specified in the

plan will be subjected to a penalty in accordance with section

474(d)(1) of the Act.

Subsection (d) proposes requirements for corrective action plans

developed in response to a violation of section 471(a)(18).

In paragraph (e), we propose that the evaluation of a State's

corrective action plan be completed solely by HHS staff. We believe

that a joint evaluation would be inappropriate when a State has been

found to be in violation of this title IV-E State plan requirement. We

propose to evaluate the State's corrective action plan within 30

calendar days of the latest projected completion date specified in the

plan. We think this is a sufficient amount of time since ACF can

evaluate action steps as they are completed. Within the 30 days, ACF

will determine if the State has completed the corrective action plan.

If the corrective action plan has not been completed, ACF will

calculate the amount of reduction in the State's title IV-E payment and

notify the State agency accordingly.

In paragraph (f), we define ``title IV-E funds'' as the Federal

share of all expenditures made under title IV-E.

Paragraph (g)(1) reiterates the circumstances in which a State's

title IV-E funds may be reduced as the result of a violation of section

471(a)(18): the delay or denial of a foster or adoptive placement based

on race, color, or national origin; or, failure to implement or

complete a corrective action plan of the type described in subsection

(c).

In paragraph (g)(2), in accordance with section 474(d)(1) of the

Act, we propose to reduce the title IV-E funds of a State that has

violated section 471(a)(18) with respect to a person for the fiscal

quarter in which the State received notification of this violation and

for each succeeding quarter that fiscal year or until the State

completes a corrective action plan, whichever is sooner.

In paragraph (g)(3), for States that fail to implement or complete

a corrective action plan of the type described in subsection (c), we

propose to reduce the State's title IV-E funds for the fiscal quarter

in which the State received

[[Page 50071]]

notification of this violation. The reduction will continue for each

succeeding quarter within that fiscal year or until the State completes

the corrective action plan, whichever is sooner.

In paragraph (g)(4), a State determined to be in violation of

section 471(a)(18) on the basis of a court finding will have its title

IV-E funds reduced in accordance with section 474(d)(1) for the fiscal

quarter in which the court finding was made, and for each succeeding

quarter within that fiscal year or until the State completes a

corrective action plan, whichever is sooner.

In paragraph (g)(5), we propose that a State determined not to be

in compliance with section 471(a)(18) undergo a reduction in its title

IV-E funds for a period not to exceed the four fiscal quarters in the

fiscal year in which the State was notified of its noncompliance.

Should the State fail to come into compliance with section 471(a)(18)

of the Act during the fiscal year in which it was notified of its

violation, ACF will treat the violation as a new finding at the

beginning of the subsequent fiscal year and impose the penalty and

corrective action process accordingly.

In paragraph (h)(1), in accordance with section 474(d)(1) of the

Act, we propose the penalty structure for States that violate section

471(a)(18) with respect to a person or fail to implement or complete a

corrective action plan of the type described in subsection (c).

In paragraph (h)(2), we address the penalty structure for an entity

that has received title IV-E funds from a State and has been determined

to have violated section 471(a)(18) with respect to a person. We

propose that all title IV-E funds received by that entity from a State

agency for the quarter in which the entity receives a notification from

ACF that it is in violation of section 471(a)(18) be remitted directly

to the Secretary by the entity in accordance with section 474(d)(2) of

the Act. The penalty against the entity will be calculated based on the

State's documentation of expenditures.

Pursuant to section 474(d)(1) of the Act, in paragraph (h)(3) we

propose that the reduction of title IV-E funds due to a State's failure

to conform to section 471(a)(18) shall not exceed five percent of that

State's fiscal year title IV-E payment.

In paragraph (h)(4), we propose holding States or entities liable

for any interest accrued on the amount of funds reduced by the

Department, in accordance with the provisions of 45 CFR 30.13.

Section 1355.39 Administrative and Judicial Review

In this section, we implement the statutory provisions (section

1123A(c)(2) and (3) of the Act) under which States may appeal decisions

made by the Department with regard to determinations of substantial

conformity and the subsequent withholding of funds. We propose that

States be afforded the same opportunities for appeal upon being

notified by ACF of a violation of section 471(a)(18) of the Act.

In paragraph (c), we propose that no appeal be available to a State

when it has been determined to be in violation of section 471(a)(18) of

the Act based on a court finding.

B. Title IV-E Eligibility Reviews

Part 1355--General

Section 1355.20 Definitions

1355.20 is being revised to define terms used throughout the

proposed rule.

The definition of child care institution is primarily a reiteration

of the statutory definition at section 472(c)(2) of the Act.

The definition of original foster care placement has been removed

from Sec. 1356.21, moved to this section, and replaced with date the

child enters foster care to comply with the ASFA. The date the child

enters foster care determines when the case review system requirements

in section 475 of the Act have to be met, such as: administrative

reviews, permanency hearings, the new requirement for filing or joining

a petition for termination of parental rights, and the requirements for

providing ``time-limited reunification services'' funded under title

IV-B, subpart 2. This term has no significance for claiming Federal

financial participation for foster care maintenance payments. The rules

for obtaining Federal reimbursement for foster care maintenance

payments have not changed. This term should not be confused with the

date the child is physically removed from home.

We understand, through our consultation process, that there is a

need for clarification of the ``judicial finding of child abuse or

neglect'' language. We are interpreting this language as referring to

the hearing at which the court finds that the child has been abused or

neglected and gives placement and care responsibility to the State

agency; this usually takes place at what we refer to as the ``full

hearing.'' A finding of abuse or neglect does not occur at a shelter or

emergency placement hearing where the State is given temporary custody

of the child.

We propose that the date the child entered foster care on the basis

of a voluntary placement agreement be the date the agreement is signed

by all relevant parties.

We are proposing a revised definition of foster care which will

change the term ``family foster homes'' to ``foster family homes'', so

that it is consistent with the definition of ``foster family home'' in

this section. It also clarifies the status of a child as being in

foster care, even though an adoption subsidy payment has been made

prior to the finalization of the adoption.

The definition of foster care maintenance payments is derived from

section 475(4)(A) of the Act. In this definition, we elaborate upon the

meaning of ``daily supervision'' consistent with a policy

interpretation issued by ACYF (ACYF-CB-PIQ-97-01). States may claim

reimbursement under title IV-E foster care maintenance for child care

provided to title IV-E eligible children during the foster parent's

working hours while the child is not in school and in those situations

when a foster parent must participate in activities that are beyond the

scope of ``ordinary parental duties,'' but consistent with parenting a

child in foster care. According to the legislative history of Public

Law 96-272, `` * * * payments for the costs of providing care to

foster children are not intended to include reimbursement in the nature

of a salary for the exercise by the foster family parent of ordinary

parental duties * * *'' Since foster care maintenance payments are not

salaries, foster parents must often work outside the home; hence the

interpretation that licensed child care that provides daily supervision

during a foster parent's working hours when the child is not in school

is an allowable expenditure under title IV-E. Examples of other

allowable activities include licensed child care while the foster

parent is attending foster parent training, case conferences, or case

review hearings.

States have requested clarification regarding disbursement of funds

for allowable child care. States may include the cost of allowable

child care in the basic foster care maintenance payment or may make a

separate maintenance payment directly to the licensed provider. For

example, if, in a particular foster family, both parents work, the

State may include the cost of child care in the maintenance payment

made to that family or may pay the licensed provider directly.

Regardless of the payment method chosen, the State must be able to

provide documentation to verify allowable expenditures.

[[Page 50072]]

The definition of foster family home has been amended to clarify

that the statute makes no distinction between approved and licensed

foster homes. Consequently, approved foster homes must meet the same

standards as licensed homes. To date, there has been confusion in the

field regarding the statutory terminology of ``licensed or approved.''

Some States have interpreted this language to allow a type of two-

tiered system for approving foster family homes. This is an incorrect

interpretation of the statute. The terms ``licensed'' and ``approved''

are treated equally in the statute. Irrespective of the terminology,

licensure or approval for foster homes must be based on the same

standards. This clarification does not repeal the policy at ACYF-PIQ-

85-11 which permits States to waive certain licensing requirements,

such as square footage, for relative foster family homes.

Provisional licensure or approval is insufficient for meeting title

IV-E eligibility requirements. States may not claim reimbursement until

final licensure or approval is granted. The State may, however, claim

reimbursement back to the first of the month in which all title IV-E

eligibility criteria are met.

The definitions of full hearing and temporary custody proceeding

are being added to clarify the meaning of these terms as used by ACF in

these regulations.

We have added a definition of legal guardianship which reiterates

the statutory language found at new section 475(7) of the Act. In our

initial consultations on the implementation of the ASFA, questions were

raised regarding the applicability of this term to ``long-term foster

care.'' The statute no longer recognizes long-term foster care as a

permanency goal. A State is not precluded from establishing placement

in a permanent foster family home as a permanency goal if it has a

compelling reason to do so. However, placement in a permanent foster

family home does not fall within the definition of ``legal

guardianship,'' for the obvious reason that foster parents are not

granted the rights associated with guardianship.

The definition of permanency hearing recognizes the statutory

changes in terminology, timing, and purpose of these hearings contained

in the ASFA. Since the intent of the law, both prior and subsequent to

the ASFA, is to provide judicial oversight for children whom a State

has yet to place in a permanent setting, we propose to limit the court-

appointed or approved body for the conduct of permanency hearings to

one which is not a part of or under the supervision or direction of the

State agency. We also propose to exclude any hearings that do not

provide parents and other interested parties an opportunity to be

heard, as was the legislative intent (Congressional Record-Senate,

August 3, 1979, S. 11710).

In order to meet children's permanency needs and to create a child

welfare system that is responsive to a child's sense of time, Congress

moved the timing for the ``dispositional hearing'' to 12 months,

renamed it the ``permanency hearing,'' and clarified its purpose to

unequivocally establish that States must set and act on permanency

plans for children in foster care without delay. In our early

consultation with the field regarding the implementation of the ASFA,

we repeatedly heard that it was critical that the field understand that

permanency hearings must occur within 12 months of the child entering

foster care, but may occur sooner if reunification is appropriate or it

becomes clear that an alternate permanency plan must be established.

During the focus groups, we also learned that the language at

section 475(5)(C) is being misunderstood as requiring States to cease

reunification efforts at the permanency hearing. The State is not

obliged to set an alternate permanency plan at the permanency hearing

if the child and family are not able to reunify at that time. However,

the intent of the ASFA in shortening the time line for holding a

permanency hearing was to place greater accountability and

responsibility on parents for making their home ready and safe for the

child's return. Congress understood that families often present very

complicated issues that must be resolved prior to reunification. For

example, parents dealing with substance abuse issues may require more

than 12 months to resolve those issues. However, a parent must be

complying with the established case plan, making significant measurable

progress toward achieving the goals established in the case plan, and

diligently working toward reunification in order to maintain it as the

permanency plan at the permanency hearing. Moreover, the State and

court must expect reunification to occur within a time frame that is

consistent with the child's developmental needs. If this is not the

situation, the State is obliged to establish and act on an alternate

permanency plan for the child at the permanency hearing. Too often,

reunification is retained as the permanency goal when a parent is

negligent in complying with the requirements of the case plan until the

months or weeks immediately prior to the permanency hearing. A parent's

resumption of contact or overtures toward participating in the case

plan in the months or weeks immediately preceding the permanency

hearing are insufficient grounds for retaining reunification as the

permanency plan. In such situations, the parent must demonstrate a

genuine, sustainable investment in completing the requirements of the

case plan in order to retain reunification as the permanency goal.

The shortened time frames and increased accountability for parents

makes it incumbent on the State to begin providing services to families

as soon as it receives responsibility for the child's placement and

care. Ideally, the State will begin delivering services to resolve

those parental issues which lead to the removal as soon as the child is

removed from home.

Part 1356--Requirements Applicable to Title IV-E

Section 1356.20(e)(4) State Plan Document and Submission Requirements

Effective October 16, 1994, the Assistant Secretary of ACF

delegated the authority to the Commissioner, ACYF, to disapprove title

IV-E State plans which provide for foster care and adoption assistance

under section 471 of the Act. Accordingly, we have deleted the

pertinent language in this NPRM to conform with the revised delegation.

Section 1356.21 Foster Care Maintenance Payments Program

Implementation Requirements

In this section, we have clarified certain existing policies and

modified others which have a direct impact on determining the

eligibility of children in the title IV-E foster care program. We have

proposed additional foster care maintenance payment requirements, which

are consistent with the law and intent of Congress, that will apply to

States as they implement their title IV-E State plans.

Section 1356.21(a)

This paragraph remains unchanged from the current regulation.

Section 1356.21(b) Reasonable Efforts

We are amending the language at this section of the regulation to

implement the ASFA requirement that the State hold the child's health

and safety as its paramount concern when making reasonable efforts. The

reasonable efforts provision, as amended by the ASFA, has a threefold

purpose:

(1) To maintain the family unit and prevent the unnecessary removal

a child

[[Page 50073]]

from his/her home, when it can be done so without jeopardizing the

child's safety;

(2) If temporary out-of-home placement is necessary to ensure the

immediate safety of the child, to effect the expeditious reunification

of the child and family when reunification is the appropriate

permanency goal or plan; and,

(3) When reunification is not appropriate or possible, to effect an

alternate permanency goal in a timely manner.

During our consultation with the field, some recommended that we

define reasonable efforts in implementing the ASFA. We do not intend to

define ``reasonable efforts.'' To do so would be a direct contradiction

of the intent of the law. The statute requires that reasonable efforts

determinations be made on a case-by-case basis. We think any regulatory

definition would either limit the courts' ability to make

determinations on a case-by-case basis or be so broad as to be

ineffective. In the absence of a definition, courts may entertain

actions such as the following in determining whether reasonable efforts

were made:

Would the child's health or safety have been compromised

had the agency attempted to maintain him or her at home?

Was the service plan customized to the individual needs of

the family or was it a standard package of services?

Did the agency provide services to ameliorate factors

present in the child or parent, i.e., physical, emotional, or

psychological, that would inhibit a parent's ability to maintain the

child safely at home?

Do limitations exist with respect to service availability,

including transportation issues? If so, what efforts did the agency

undertake to overcome these obstacles?

Are the State agency's activities associated with making

and finalizing an alternate permanent placement consistent with the

permanency goal? For example, if the permanency goal is adoption, has

the agency filed for termination of parental rights, listed the child

on State and national adoption exchanges, or implemented child-specific

recruitment activities?

In order to strengthen the child welfare system's response to child

safety, Congress provided a list of circumstances in which reasonable

efforts are required. It also provided States the authority to identify

a list of aggravated circumstances in which reasonable efforts are not

required. Typically, State child welfare agencies and the courts

encounter cases in which it is appropriate to make reasonable efforts

to prevent a child's removal from home or to reunify the family. Quite

frequently, though, States are faced with circumstances in which it is

unclear how much effort is reasonable. At the initial stage of and

throughout its involvement with a family, the child welfare agency

assesses the family's needs and circumstances. The State agency should

make reasonable efforts to prevent the child's removal from home or to

reunify the family commensurate with the assessment . If the assessment

indicates that it is not reasonable to prevent the child's removal or

to reunify the family, the assessment itself satisfies the reasonable

efforts requirement, if the court makes such a determination. In such

cases, the court is not determining that reasonable efforts are not

required. Rather, the court is determining that it is not reasonable to

make efforts, beyond completing the assessment, to prevent the child's

removal from home or to reunify the family.

In proposing the application of the reasonable efforts requirements

for title IV-E eligibility determinations, this proposed rule effects a

significant change from existing policy. Under current ACF policy,

either a judicial determination regarding the reasonable efforts made

prior to the placement of a child or a determination to reunite the

child and parents, but not both, has been required for Federal

financial participation (FFP). Consistent with the statutory language

at section 472(a)(1) of the Act, we propose that, in order to satisfy

title IV-E eligibility requirements, there must be a judicial

determination that: (1) Reasonable efforts were made to prevent a child

from being removed from home; (2) reasonable efforts were made to

reunify the child with his/her family if the removal could not be

prevented; (3) if reasonable efforts were not made to prevent the

child's removal from home or to reunify the child with his or her

family, that reasonable efforts are/were not required; and (4) if the

permanent plan for the child is adoption, guardianship, or some other

permanent living arrangement other than reunification, that reasonable

efforts were made to make and finalize that alternate permanent

placement.

Section 1356.21(b)(1) Judicial Determination of Reasonable Efforts To

Prevent Removal in Non-emergency Situations

We propose to clarify the requirement that judicial determinations

of reasonable efforts to prevent removal in non-emergency situations

must be made prior to the removal of the child from home. If the

circumstances of the case were such that reasonable efforts were not

required, there must be a judicial determination to that effect.

Section 1356.21(b)(2) Judicial Determinations of Reasonable Efforts to

Prevent Removal in Emergency Situations

We propose new requirements regarding judicial determinations of

reasonable efforts to prevent removal in emergency situations in order

to take into account the fact that many children are removed from their

homes in emergency circumstances, primarily because of safety issues.

We are permitting State flexibility in the timing of this

determination in emergency situations, up to a maximum of 60 days,

recognizing that the initial proceeding leading to the removal may not

have been a full hearing. Additionally, the agency may not have had

time to prepare information regarding its reasonable efforts prior to

the emergency proceeding, nor would the judge have had time to make a

careful evaluation of such evidence. We think a 60-day period of time

is sufficient for involved persons to perform the appropriate duties,

while ensuring that a child is afforded the protection of the judicial

determination within a reasonable amount of time, irrespective of the

emergent circumstances leading to the removal.

While we recognize that concern for the child's safety may preclude

efforts to prevent removal, the court must make a reasonable efforts

determination. Even when children are removed in emergency

circumstances, the court must consider whether appropriate services

were or should have been provided. When the court determines that it

was reasonable for the agency to make no effort to provide services to

prevent removal in light of the exigent circumstances discovered

through the assessment of the family, such as the safety or protection

of the child, there must be a judicial determination to that effect.

If, at the time the court determines that reasonable efforts to prevent

a child's removal from home were not required, the court also

determines that reasonable efforts are not required to reunify the

child with his or her family, there must be a separate judicial

determination to that effect.

Section 1356.21(b)(3) Judicial Determination of Reasonable Efforts to

Reunify the Child and Family

We are proposing that a judicial determination of reasonable

efforts to

[[Page 50074]]

reunify be made at any time within a 12 month period following the date

the child enters foster care when the case plan goal is reunification,

and at least once every 12 months thereafter. Since the permanency

hearing must be held over the same 12 month interval, States may want

to consider seeking a judicial determination of reasonable efforts to

reunify at that hearing. Moreover, making reasonable efforts to reunify

the child and family affords the State the opportunity to assess the

appropriateness of reunification as a case plan goal and determine an

alternate permanency goal if necessary. Making reasonable efforts

typically provides the State the evidence it needs to support a

decision that an alternate permanency plan is appropriate. The State is

not precluded from seeking this determination at an earlier point in

time if it so chooses.

If the judicial determination regarding reasonable efforts to

reunify is not made within the proposed time frame, we propose that the

child become ineligible once 12 months has elapsed since the date the

child entered foster care or the most recent judicial determination of

reasonable efforts to reunify was made, and until such time as the next

reasonable efforts to reunify determination is made. We think this is

consistent with statutory intent to ensure that a State is continuing

to make reasonable efforts, subject to judicial review, to return a

child home as soon as it is safe and appropriate to do so.

If there is a judicial determination that reasonable efforts to

reunify the child with his or her family are not required and the State

has determined that it is not appropriate to attempt to reunify the

child with his or her family, a permanency hearing must be held within

30 days to establish an alternate permanent plan for the child. The

alternate permanency plan may be established at the same time the court

determines that reasonable efforts to reunify are not required.

Section 1356.21(b)(4) Judicial Determination of Reasonable Efforts to

Make and Finalize Placements When the Permanency Goal is Not

Reunification

We are proposing that the judicial determination regarding

reasonable efforts to make and finalize a permanent placement be made

within 12 months of the date the permanency goal of adoption,

guardianship, or some other permanent living arrangement is

established, and every 12 months thereafter. We considered requiring

this type of reasonable efforts determination to occur every six months

in response to the timeliness language in the statute but were

concerned about the burden this would impose on the State agency and

the courts. We would appreciate comments on the proposed time frame for

making judicial determinations of reasonable efforts to make and

finalize permanent placements.

If a judicial determination regarding reasonable efforts to make

and finalize a permanent placement is not made within the time frame

proposed, the child becomes ineligible under title IV-E from the end of

the twelfth month following the date the alternate permanency goal is

established, or the date of the most recent judicial determination of

reasonable efforts to make and finalize a permanent placement, and will

remain so until such a determination is made.

Section 1356.21(b)(5) Circumstances in Which Reasonable Efforts to

Prevent a Removal or to Reunify a Child With His or Her Family Are Not

Required

In this paragraph, we propose that the court that has

responsibility for hearing child welfare dependency cases must make the

determination that reasonable efforts to prevent a child's removal from

home or to reunify a child and family are not required. Depending on

the circumstances, this determination may be based on the findings of

another court or the findings of the court that is determining whether

reasonable efforts are required.

In subparagraph (i), the court that hears child welfare dependency

cases may find that the child has been subjected to aggravated

circumstances, if it has the authority to do so, and that reasonable

efforts are not required because the statutory language at section

471(a)(15)(D)(i) of the Act regarding aggravated circumstances does not

require a criminal conviction.

In subparagraph (ii), the court's determination that reasonable

efforts are not required must be based on the findings of a criminal

court. The statutory language at section 471(a)(15)(D)(ii) requires a

criminal conviction of one of the felonies identified therein. In

circumstances in which the criminal proceedings have not been completed

or are under appeal, the court that hears child welfare dependency

cases must determine whether reasonable efforts are required based on

the developmental needs of the child and the length of time associated

with completion of the criminal proceedings or the appeals process.

In subparagraph (iii), when the determination that reasonable

efforts are not required is based on a previous involuntary termination

of parental rights, that determination is clearly based on the findings

of another court decision.

During our consultation process, we heard that States wanted to

know if their laws must specifically use the ``aggravated

circumstances'' language in the ASFA and if we plan to provide a

definition of or parameters for defining ``aggravated circumstances.''

We do not think it is necessary or appropriate to be so prescriptive as

to require States to adopt the specific ASFA language in identifying

aggravated circumstances in which reasonable efforts are not required.

The ASFA clearly provides States the authority to determine what

``aggravated circumstances'' are. If a State already has laws that

would serve to define aggravated circumstances, it would not need to

amend or change those laws. We will not, therefore, define ``aggravated

circumstances,'' nor will we provide examples beyond those in the

statute.

States have expressed concern that the language at section

471(a)(15)(D) of the Act prohibits the State from making reasonable

efforts in certain circumstances. This is an incorrect interpretation.

The ASFA identifies when reasonable efforts are not required. The ASFA

upholds the State agency's authority to make reasonable efforts to

prevent a child's removal from home or to reunify a child with the

family even in situations in which it is not required to do so, if the

child's health and safety can be assured and it is in his/her best

interests.

Section 1356.21(b)(6) Concurrent Planning

This paragraph reiterates the statutory provision at section

471(a)(15)(F), affording States the option of making reasonable efforts

to make and finalize an alternate permanent placement concurrently with

reasonable efforts to reunify a child with his/her family. Concurrent

planning can be an effective tool for expediting permanency, and

Congress intended to offer it as such. However, since it may not be an

appropriate approach for every child or family, States are not required

to use concurrent planning and the decision to do so must be made on a

case-by-case basis. We urge States to obtain technical assistance and

provide appropriate training and supervision to agency workers prior to

deploying a concurrent planning strategy.

Section 1356.21(b)(7) Federal Parent Locator Service

The ASFA amended section 453 of the Act to specifically provide for

the

[[Page 50075]]

use of the Federal Parent Locator Service (FPLS) in expediting

permanency. We have included the use of the FPLS in the reasonable

efforts section of the regulation because Congress intended the FPLS to

be used as a tool for locating absent parents early in the case

planning process as a potential permanency option. Congress also

intended the FPLS as a tool for the States in completing termination of

parental rights proceedings.

Section 1356.21(c)(1) Contrary to the Welfare Determination--Non-

emergency Situations

We propose that in non-emergency situations the ``contrary to the

welfare'' determination must be made prior to the removal of the child

from home, and documented in the initial removal court order to enable

the child to be eligible for title IV-E foster care. The ``contrary to

the welfare'' determination is an important protection to safeguard the

rights of the child and his/her parents and to ensure appropriate

action by the State agency.

Section 1356.21(c)(2) Contrary to the Welfare Determination--Emergency

Situations

With regard to emergency situations, we propose that the ``contrary

to the welfare'' determination be included in the first court ruling

(including a temporary custody order, whether or not there was a

hearing) pertaining to removal.

The ``contrary to the welfare'' determination requirement in

section 472(a)(1) was a title IV-A provision dating back to 1961 which

was carried over into the title IV-E program. Congress included this

requirement in the belief that judicial oversight would prevent

unnecessary removal of children from their homes. It relied on the

courts to protect children and families, and to provide an important

safeguard against potential inappropriate agency action. The purpose of

the requirement is to minimize the number of children inappropriately

placed in foster care, and increase efforts at keeping families

together.

We do not intend to second guess the States as to when an emergency

exists and will, therefore, in the absence of contradictory

information, presume that there is an emergency when a child is removed

without a previously-issued court order (excluding those for previous

removals of the child, or in-home supervision orders). However, the

reasonable efforts determination must be made within a specified time

thereafter.

Section 1356.21(d) Documentation of Judicial Determinations

We have proposed modification of current documentation requirements

in paragraph (d) based on ACF's review of States' documentation of

judicial determinations over the past years. Consistent with language

in section 472(a)(1) of the Act, in paragraph (d)(1) we propose that

the judicial determinations regarding ``contrary to the welfare'' and

``reasonable efforts'' be stated specifically in the court orders

identified in Sec. 1356.21, paragraphs (b) and (c) and must include the

evidentiary basis for that determination. The judicial determinations

themselves need not necessarily include the exact terms ``contrary to

the welfare'' and ``reasonable efforts'', but must convey that the

court has determined that reasonable efforts have been made or are/were

not required (as described in section 471(a)(15) of the Act), and that

it would be contrary to the welfare of a child to remain at home. A

transcript of the court proceedings which verifies that the court

considered the facts of the case and made a finding with respect to the

reasonable efforts and contrary to the welfare requirements is the only

other form of documentation that will be accepted.

Given the fundamental importance of the protection of children as

required by the Act, we propose in paragraph (d)(2) that affidavits and

nunc pro tunc orders not be accepted as documentation of ``reasonable

efforts'' or ``contrary to the welfare'' findings for eligibility

purposes. Considering the large number of children for whom State

agencies are responsible, and the large number of cases that go before

the courts, affidavits or depositions created months or years after the

fact cannot be considered as reliable evidence of prior compliance with

Federal requirements. We believe that a prohibition on the use of

affidavits and nunc pro tunc orders is necessary in order to assure

children in foster care of the protections to which they are entitled

in a timely fashion.

In light of the significance of the judicial determinations, we are

proposing in paragraph (d)(3) that explicit evidence be provided that

the judge has made an individual determination which is to be stated in

the court order and not merely incorporated by reference to a State

law. We believe that judicial determinations should be as meaningful as

possible, and should be child-specific in order to ensure that the

circumstances of each child are reviewed individually. In the past, it

has been our experience that State laws often permit removal of a child

from home in a number of circumstances and not solely, for example,

based on a determination that remaining in the home would be contrary

to the child's welfare. When State law cites a number of circumstances

under which a child may be removed, it is not possible for a reviewer

to determine for which reason the judge authorized that removal.

However, even if State law allows only one reason for removal which

does meet Federal requirements, we are still proposing to require an

explicit determination.

Section 1356.21(e) Trial Home Visits

We believe that six months is a reasonable period of time for

States to determine the appropriateness of a child remaining at home or

returning to foster care, absent a court order that extends or shortens

the period of time. This is consistent with the statutory requirement

for the status of the child to be reviewed every 6 months. During the

period of time in which the child is on a trial home visit, no title

IV-E foster care maintenance payments are made since she/he is not

placed in a foster home or child care facility. However, administrative

costs may be incurred on behalf of the child and claimed subsequently

by the State agency. If the child is returned to foster care within the

six month period, the placement is considered continuous and title IV-E

foster care maintenance payments may resume, assuming all eligibility

requirements continue to be met.

Section 1356.21(f) Case Review System

Paragraph (c) in this section of the current regulation has been

re-designated paragraph (f).

Section 1356.21(g) Case Plan Requirements

Paragraph (d)(1)-(4) in this section of the current regulation has

been re-designated paragraph (g)(1)-(4). In paragraph (g)(1), we

propose that case plans be developed jointly with parents. We believe

this language serves the goal of the ASFA to begin the permanency

planning process and service delivery as soon as possible following a

child's removal from home. If the parent is not able or willing to

participate in the development of the case plan, it should be so noted

in the plan. We have also amended paragraph (g)(3) to include the ASFA

case plan requirement for States to include a discussion of the

reasonable efforts made to make and finalize a permanent placement for

the child in the case plan when the permanency goal is adoption or any

other permanent arrangement. A State must document its

[[Page 50076]]

efforts to make and finalize permanent placements for all permanency

goals. States should not interpret the statutory reference to adoption

exchanges as meaning this provision only applies to adoptions. The

statutory reference to the use of adoption exchanges was an example of

the types of efforts a State should make to make and finalize permanent

placements. Although placement in a permanent foster family home is not

a preferred permanency goal, it can be an appropriate one for some

children. Prior to establishing such a goal for a child, the State

should exhaust all efforts to place that child in an adoptive home,

with a legal guardian, or some other permanent arrangement outside the

foster care system.

Section 1356.21(h) Application of Permanency Hearing Requirements

We have redesignated paragraph (e) as paragraph (h), revised it to

recodify existing language, added four new provisions, and changed the

name to permanency hearing, consistent with ASFA.

In redesignated paragraph (h)(2), language has been added to

clarify that the exception to the requirement for permanency hearings

applies only to children placed in a court-specified long-term,

permanent foster family home placement (not in an institution or other

group living arrangement). We also propose that a permanency hearing be

conducted within three months of any change in a court-sanctioned long-

term, permanent foster family care placement. Under the existing

regulations, this exception also applies to children who were legally

freed for adoption and placed in a preadoptive home. Consistent with

the intent of the ASFA, children in such circumstances must be afforded

the protection of permanency hearings until the adoption is finalized.

In new paragraph (h)(3) we describe the requirement of amended

section 471(a)(15)(E) of the Act to hold a permanency hearing within 30

days of a judicial determination that reasonable efforts are not

required. We have written the regulation to clarify that States need

not hold a permanency hearing within 30 days if the court finds that

reasonable efforts to prevent a child's removal from home are not

required. A determination that reasonable efforts to prevent the

child's removal are not required does not negate the State's obligation

to make reasonable efforts to reunify the child. Only a judicial

determination that reasonable efforts to reunify a child with his or

her family are not required relieves the State of that obligation.

Consequently, the permanency hearing must be held within 30 days of the

determination that reasonable efforts to reunify the family are not

required.

The statute allows the State to set an alternate permanency goal of

placement in a permanent foster family home only if it demonstrates to

the court a compelling reason not to place the child in an adoptive

home, with a relative, or with a legal guardian. In new paragraph

(h)(4), we follow the statute in requiring the State to document, to

the State court, the compelling reason for placement in a permanent

foster family home.

In new paragraph (h)(5) we clarify that if an administrative body,

appointed or approved by a court, holds a permanency hearing,

procedural safeguards extended to parents in court hearings must also

be extended to the parents by the administrative body.

Section 1356.21(i) Requirements for Filing a Petition to Terminate

Parental Rights per Section 475(5)(E) of the Social Security Act

In this section, we describe the new requirements at section

475(5)(E) of the Act for termination of parental rights (TPR). Congress

passed this provision to compel States to quickly move those children

for whom adoption is the appropriate plan to permanency. It is not

intended to create a pool of legal orphans. Misinterpretation of the

reasonable efforts requirements and other factors have resulted in

children remaining in foster care for extended periods of time while

the State agency works to make the child's home safe for his or her

return. Congress passed this provision to end children's languishing in

foster care.

In paragraph (i)(1), we follow the statute in describing under what

conditions the State, through its authorized attorney, must file or

join a petition for TPR in accordance with section 475(5)(E) of the

Act.

In subparagraph (i)(1)(i), we propose the requirements for filing

or joining a petition to terminate parental rights when a child has

been in foster care for 15 of the most recent 22 months. We are

proposing that in such situations, the State must file the petition for

TPR by the end of the fifteenth month. We think that 15 months is more

than an adequate amount of time for States to assess whether

reunification is possible and if adoption is the most appropriate

permanent plan.

In subparagraph (i)(1)(i)(A), in accordance with the statute, we

propose that States must begin calculating when to file the petition

for TPR beginning on the date the child enters foster care under

section 475(5)(F).

In subparagraph (i)(1)(i)(B), we propose that for the purpose of

implementing the TPR provision for children with multiple foster care

placement episodes within the 22 month period, the State must use a

cumulative method of calculating 15 months in foster care. For example,

a child enters foster care on January 15, 2001 and is discharged from

foster care three months later on April 15, 2001. He remains home for

six months and then enters foster care again on October 15, 2001. The

State must apply the TPR requirement at section 475(5)(E) with respect

to this child based on the date he entered foster care for the first

foster care episode, or January 15, 2001. If this child remains in

foster care for another 12 months, the State will be obliged to comply

with section 475(5)(E) on October 15, 2002, because this child will

have been in foster care for a cumulative total of 15 out of the

previous 22 months. However, the time line for conducting case reviews,

permanency hearings, and providing time-limited reunification services

for the subsequent foster care episode must be based on the date the

child entered foster care for that episode, October 15, 2001.

If the child in the above scenario does not return to foster care

until January 15, 2003, the State must begin calculating a new 15 out

of 22 month period for applying section 475(5)(E), the other case

review requirements, and providing time-limited reunification services

as of January 15, 2003, because this most recent date of entry into

foster care is more than 22 months after the date the child entered

foster care during the prior episode.

In subparagraph (i)(1)(i)(C), we propose that the State not count

time spent on trial home visits or runaway episodes when calculating 15

out of 22 months.

Finally, in subparagraph (i)(1)(i)(D), we propose that States need

only apply section 475(5)(E) to a child once. If, when a child reaches

15 months in foster care, the State does not file a petition for TPR

because one of the exceptions applies, or the State does file such a

petition but the court does not sustain that petition, the State does

not need to begin calculating another 15 out of 22 months in foster

care for that child. We think the requirements at sections

471(a)(15)(C) and (E) and 475(1)(E) of the Act regarding reasonable

efforts to make and finalize alternate permanency placements and the

requirements at section 475(5)(C) of the Act regarding permanency

hearings

[[Page 50077]]

provide children sufficient protections with respect to achieving

permanency, thereby removing the need to require multiple applications

of section 475(5)(E) of the Act. However, this does not preclude the

State from filing, or the court from ordering, a petition for TPR upon

later review if the permanency plan has not been achieved.

In subparagraph (i)(1)(ii), we propose that, once a court of

competent jurisdiction (this could be the court that has responsibility

for hearing child welfare dependency cases) determines that a child is

an abandoned infant, the State has up to 60 days to file a petition for

termination of parental rights. We chose 60 days because this time

frame allows the State ample time to hold a permanency hearing, if

adoption is not established as the permanency goal at the hearing in

which the child is determined to be an abandoned infant, and to

complete the necessary procedures associated with filing a petition for

termination of parental rights. States have asked if we intend to

provide a definition of or parameters for the definition of ``abandoned

infant.'' The statute specifically provides that authority to the

States. If a State already has a statutory definition of

``abandonment,'' it is not necessary to enact statutory language

specific to abandoned infants.

In subparagraph (i)(1)(iii), we propose that the State agency file

a petition to terminate parental rights within 60 days of a judicial

determination that reasonable efforts to reunify the child and family

are not required because the parent has been found by a court of

competent jurisdiction to have committed one of the felonies listed at

paragraph (b)(5)(ii). We believe that 60 days from the judicial

determination that reasonable efforts to reunify the family are not

required is ample time for the State to hold a permanency hearing, if

adoption is not established as the permanency goal at the time the

court determines that reasonable efforts are not required, and to

complete the necessary procedures for filing a petition to terminate

parental rights. We have attempted to interpret the requirements for

filing a petition for TPR when the parent has committed certain

felonies based on how we think these circumstances will present

themselves in actual practice situations and to demonstrate the

relationship between sections 471(a)(15)(D) and (E) of the Act and

section 475(5)(E) of the Act. The following examples illustrate how the

foregoing procedure would operate:

(1) A parent with two children has been convicted of one of the

felonies enumerated at paragraph (b)(5)(ii) with respect to the older

child. The State agency petitions the court for jurisdiction of the

younger child and recommends that it not be required to make reasonable

efforts to reunify the younger child with the parent because of the

criminal conviction against the parent with respect to the older child,

and it does not believe the parent can be rehabilitated. The court

determines, in accordance with section 471(a)(15)(D) of the Act, that

reasonable efforts to reunify the younger child with the parent are not

required. In accordance with section 471(a)(15)(E) of the Act, the

State must hold a permanency hearing within 30 days of the judicial

determination that reasonable efforts to reunify the parent and child

are not required. If adoption becomes the permanency goal, the State

then has 30 days from the permanency hearing to file a petition to

terminate parental rights.

(2) A parent is convicted of one of the felonies listed in

paragraph (b)(5)(ii), serves his/her sentence and is released from

prison, and subsequently comes to the attention of the State agency due

to neglect. The State agency petitions the court for jurisdiction of

the child and recommends a permanency plan of reunification because it

believes the parent can be rehabilitated. The court's approval of

reunification as the permanency plan is the compelling reason for the

State not to file a petition to terminate parental rights in accordance

with section 475(5)(E) of the Act. The State would then be obliged to

hold a permanency hearing within 12 months of the child's entry into

foster care.

In paragraph (i)(2), we follow the statute in identifying the

exceptions to section 475(5)(E) of the Act. The decision to seek

termination of parental rights is one of the most difficult to confront

social workers and State agencies. Section 475(5)(E) of the Act is

intended to be a catalyst for making critical assessments of and

decisions regarding the viability and probability of reunification and

for expediting the adoption process when it is clear that reunification

can not occur and adoption is the appropriate plan. Congress did

recognize that, despite a family's diligent efforts, 15 months may be

an inadequate amount of time to make the home safe for the child's

return. Therefore, it stipulated three exceptions to section 475(5)(E).

In paragraph (i)(2)(i), we propose that the State may exercise its

statutory option to not apply section 475(5)(E) of the Act when a child

is placed with a relative.

In paragraph (i)(2)(ii), we propose that the State does not have to

apply section 475(5)(E) of the Act when there is a compelling reason,

documented in the case file and available for court review, for

determining that the application of section 475(5)(E) is not in the

child's best interests. We have not defined the term ``compelling

reason.'' Rather, we provide two broad examples:

(1) Adoption is not the appropriate plan for the child. This

category could include cases where an older child expresses a wish not

to be adopted and another permanency plan has been identified, a child

has a significant bond with a non-family member who wishes to serve as

legal guardian, the parent and child have a significant bond but the

parent is unable to care for the child because of an emotional or

physical disability and another permanency plan has been identified, or

the State agency and the Tribe have identified another permanency plan

for the child; or,

(2) Insufficient grounds for filing such a petition exist. This

category could include cases where the parent has made significant

measurable progress and continues to make diligent efforts to complete

the requirements of the case plan but needs more than 15 months to do

so, the State agency is working with a non-offending biological parent

to establish a permanent placement, or the State need not join an

existing petition if it does not agree with the arguments presented in

the petition or it believes that the petitioner would not serve as an

appropriate placement option for the child.

In paragraph (i)(2)(iii), we follow the statute in proposing that

the State need not apply section 475(5)(E) when the services identified

in the case plan have not been provided.

We think it is critical that we assess States' implementation of

this new provision for terminating parental rights, particularly the

extent to which States make use of the exceptions discussed above. In

the self-assessment completed for the child and family services

reviews, States will be asked to document the extent to which they make

use of the exceptions provided at section 475(5)(E) of the Act.

During the consultation process we learned of confusion regarding

the requirements for the court with respect to the compelling reason.

We are not interpreting the statutory language which requires that the

documentation of the compelling reason be ``* * * available for court

review * * *'' as a requirement that the court make a determination

with respect to the compelling reason. To interpret this language as

requiring a court

[[Page 50078]]

determination with respect to the compelling reason not to file a TPR

would place an unnecessary additional burden on the State agency and

the courts. We do anticipate, however, that the court will have the

opportunity to review the compelling reason not to file for TPR as part

of its ongoing oversight.

In paragraph (i)(3), we follow the statute in requiring States to

concurrently identify, recruit, process, and approve a qualified

adoptive family for the child when it files for or joins a petition to

terminate parental rights to that child.

Section 1356.21(j) Child of a Minor Parent in Foster Care

In this section, we paraphrase statutory language found in section

475(4)(B) of the Act.

Section 1356.21 (k) and (l) Removal From the Home of, and Living With,

a Specified Relative

In paragraphs (k) and (l), we propose a new policy regarding the

requirements in sections 472(a) (1) and (4) of the Act regarding a

child's removal from the home of a relative and the six month ``living

with'' exception. The purpose of this new policy is to provide a clear

statement about what constitutes a child's home or foster home for the

purpose of title IV-E eligibility and to ensure equitable treatment of

relative and non-relative foster care providers.

Eligibility for foster care under title IV-E, which is based on the

child's eligibility for AFDC (as in effect in the State on July 16,

1996), derives from the title IV-A (AFDC) requirement that the child

must be living in the home of a relative specified in section 406(a) of

the Act (as in effect on July 16, 1996). To be eligible for title IV-E,

the child must have been eligible for AFDC in the month court

proceedings leading to removal were initiated or the month in which a

voluntary placement agreement was signed. If the child had not been

living with a specified relative in the month that removal proceedings

were initiated or the voluntary agreement was signed, s/he must have

been: (1) Living with such a relative at some time within the previous

six months; and (2) AFDC eligible in the month of the initiation of

court proceedings leading to removal or the voluntary agreement if the

child had still been living with such relative in that month.

Obviously, the child must continue to be eligible at the time of entry

into foster care as well as throughout the placement.

In the absence of regulations specific to the foster care program,

we have previously followed the AFDC regulations at 45 CFR

233.90(c)(l)(v)(B). Under the AFDC definition, the child's home is the

family setting maintained or in the process of being established as

evidenced by assumption and continuation of responsibility for the day-

to-day care and control of the child by a relative with whom the child

is living, if the relative is one of specified degree. Under current

policy, if a parent who is eligible for AFDC leaves a child with

another relative and does not return, the child's home is considered to

have shifted to the home of the other relative. If legal custody or

responsibility for placement and care is given to the State agency and

the child remains with the relative, such transfer of responsibility

does not constitute removal, and the child is therefore ineligible for

title IV-E foster care. Thus, current policy does not recognize that

there can be a temporary or indefinite stay with another relative

without that relative's home becoming the child's home.

Under the proposed policy change, an otherwise eligible child who

had been living with a parent or other specified relative within six

months of the initiation of court proceedings or a voluntary placement

agreement would meet the ``living with'' requirement under the title

IV-E foster care program, regardless of the child's relationship to the

interim caretaker and regardless of whether the interim caretaker

becomes the subsequent foster care provider. The removal of the child

from the home of a specified relative within the six-month period can

be either a physical removal or a court-ordered removal of custody.

The following examples illustrate the operation of the proposed

rule:

(1) An AFDC eligible parent leaves the child with either a relative

or a non-relative caretaker for the weekend. Two months later the

parent has not returned. The caretaker contacts the State agency which

petitions the court to remove the child from the parent's custody due

to neglect. The court grants the petition and the State agency assumes

responsibility for placement and care. The agency licenses the same

caretaker's home as a foster home and decides that the child should

remain with this caretaker for the purpose of foster care. The AFDC

eligible child had been living with the parent within six months of the

initiation of court proceedings. Under the proposed regulation

(paragraph (j)(1)(iii) of Sec. 1356.21), the court's authorization of

the removal of the child from the parent's custody would meet the

eligibility requirements in section 472(a)(1) and the fact that the

child had been living with the parent within six months of the date of

petition would meet the eligibility requirements in section

472(a)(4)(B)(ii). Thus, the child, if otherwise eligible, would be

eligible for title IV-E foster care.

(2) The same situation as in (1) above exists, but the caretaker

waits seven months to contact the agency and the agency makes the

caretaker the foster care provider. The child would not be eligible for

title IV-E foster care, regardless of whether the caretaker is or is

not a relative, because she/he had not been living with the parent

within six months prior to the initiation of court proceedings

pertaining to removal. Thus, the requirements of section 472(a)(4)(B)

and subsection (j) of Sec. 1356.21 would not be met.

(3) An AFDC eligible parent leaves the child with a relative and

does not return. The relative, who meets the AFDC eligibility criteria,

keeps the child for seven months, but then requests that the child be

removed and placed in a foster home. The State agency petitions the

court to remove the child from the parent's custody. The court grants

the petition and gives the State agency responsibility for placement

and care. Although the court removes custody from the parent, the child

is physically removed from the caretaker relative's home and is placed

in a licensed foster family home. The child is eligible for title IV-E

foster care because she/he has been physically removed from the home of

a specified relative within six months of initiation of court

proceedings and was eligible for AFDC while living there, and the

``living with'' requirement has been met, thus meeting the requirements

of section 472(a)(1) and 472(a)(4)(B).

(4) The same situation as in (3) above exists, but the child had

been living with a non-relative caretaker for seven months prior to

placement in foster care. She/he would be ineligible for title IV-E

foster care since the ``living with'' requirement of section

472(a)(4)(B) would not have been met.

(5) A parent and child live in the home of the parent's mother, all

of whom are eligible for AFDC. The parent leaves the home and does not

return. Four months later, the child's grandmother contacts the State

agency which petitions the court to remove the child from the parent's

custody due to her neglect. The court grants the petition and gives the

State agency responsibility for placement and care. The agency licenses

the grandmother's home as a foster home and decides that the child

should remain with this relative caretaker for the purpose of foster

care. Since the child had been living with the parent within six months

of the initiation of court proceedings

[[Page 50079]]

and the court authorized removal of the child from the parent's

custody, this would meet the eligibility requirements in sections

472(a)(1) and 472(a)(4)(B) and the otherwise eligible child would be

eligible for title IV-E foster care. If the grandmother had waited

longer than six months to contact the agency, the child would have been

ineligible for title IV-E foster care in her home. However, if the

grandmother had waited longer than six months to contact the agency and

the agency physically removed the child from the grandmother and placed

him/her in another licensed home for the purpose of foster care, the

child would be eligible for title IV-E foster care because the child's

eligibility is then tied to the grandmother.

We think that the proposed policy which expands the circumstances

in which a child may remain with a relative and be eligible for foster

care accords with the statutory purposes. Foster care placement with

relatives can provide continuity during the period of separation from

the parent and enhance the possibility that a child will ultimately be

able to return home.

Section 1356.21 (m) and (n) Review of Payments and Licensing

Standards; Foster Care Goals

Paragraphs 1356.21(g) and (h) in the current regulation have been

re-designated paragraphs (m) and (n), respectively.

Section 1356.21(o) Notice and Opportunity To Be Heard

In this paragraph, we implement the new requirement for the case

review system at section 475(5)(G) of the Act that mandates giving

notice to foster parents, preadoptive parents and relative caregivers

of hearings and reviews and provides them an opportunity to be heard.

While Congress recognizes foster parents, preadoptive parents, and

relative caregivers as a valuable resource in obtaining information

regarding the progress of a case and in permanency planning, it

intended only to provide these individuals an opportunity to provide

input regarding the children in their care. Congress did not intend

giving notice of and an opportunity to be heard to be construed as

providing these individuals standing as a party to the case, as stated

in the statute and proposed regulation. This provision does not,

however, preclude the court from awarding foster parents, preadoptive

parents, and relative caregivers standing. Foster parents, preadoptive

parents, and relative caregivers must receive notice of permanency

planning hearings and reviews that occur while a child is placed with

them. We do not intend to prescribe how this noticing should occur. We

presume that a State will use the same procedure for giving notice to

foster parents, relative caregivers, and preadoptive parents as it does

for parents and others who are parties to the case.

Section 1356.22 Implementation Requirements for Children Voluntarily

Placed in Foster Care

This section has been redesignated and revised by updating the

statutory and regulatory provisions which include the requirements a

State must meet in order to receive title IV-E funds for voluntary

foster care placements. The ASFA requirements, including expedited

termination of parental rights, apply to all children in foster care,

regardless of whether the child entered as a result of a voluntary

placement agreement.

Section 1356.30 Safety Requirements for Foster Care and Adoptive Home

Providers

In paragraph (a), we propose that the State conduct or require

criminal records checks for prospective foster and adoptive parents

unless it elects to ``opt out'' of this provision as provided for at

section 471(a)(20)(B) of the Act. Section 471(a)(20) applies to all

foster parents, including those foster family homes that operate under

the auspices of a child placing agency's license rather than their own

license.

In paragraph (b), we propose that the State may not license or

approve any prospective foster or adoptive parent, nor may the State

claim Federal reimbursement for any foster care maintenance or adoption

assistance payment made on behalf of a child placed in a foster home

operated under the auspices of a child placing agency or on behalf of a

child placed in an adoptive home through a private adoption agency, if

the State finds that the prospective foster/adoptive parent has been

convicted of a felony involving child abuse or neglect, other crimes

against children, spousal abuse, or a violent crime.

In paragraph (c), we propose that the State may not license or

approve any prospective foster or adoptive par

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