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

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URL: https://www.frixlaw.com/law-library/documents/fr%3A98-24944

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** September 18, 1998
- **Citation:** 63 FR 50058

## Text

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

[[Page 50061]]

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 determin

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A98-24944. Public record. Not legal advice.