Why It Matters

A recent Congressional Research Service report on federal child welfare programs shows a system financed through a mix of federal, state and local resources, with states retaining primary responsibility for protecting children while relying on federal programs to support foster care, adoption, prevention services and other child welfare activities.

The report captures the current scale of the child welfare system. During fiscal 2024, child protective services agencies screened abuse and neglect allegations involving 7.7 million children, conducting investigations or other responses involving about 3 million children. By Sept. 30, 2025, more than 331,700 children and youth were in foster care, with roughly 175,000 entering care during the fiscal year.

Federal child welfare policy centers on three primary goals, ensuring children's safety, enabling permanency and promoting the well-being of children and their families.

Title IV-E, the largest dedicated federal child welfare funding stream, operates on a mandatory, open-ended and permanent basis. Federal support for Title IV-E foster care, prevention and permanency programs is estimated at $10.1 billion for fiscal 2026. Total federal child welfare funding for the fiscal year is about $11.7 billion.

Yet federal funding represents only part of the system's financing. State child welfare agencies spent more than $34.3 billion on child welfare activities during state fiscal 2022, according to a Child Trends survey cited by the report. State and local funds supported more than half of that spending nationally. Among federal funding streams, Title IV-E accounted for 56%, while Medicaid, Temporary Assistance for Needy Families and the Social Services Block Grant collectively accounted for another 34%.

The president's fiscal 2027 budget requests $11.619 billion for federal child welfare programs, compared with an estimated $11.662 billion in comparable fiscal 2026 funding. The budget does not propose changes to federal child welfare program law.

The One Big Beautiful Bill Act, signed by President Donald Trump in July 2025, could nevertheless affect one of the nondedicated funding streams available for child welfare services. The law establishes Medicaid community engagement requirements for certain adults beginning Dec. 31 and makes other changes to Medicaid eligibility. Medicaid is among the federal programs states may use to support child welfare-related services.

The Big Picture

The Family First Prevention Services Act expanded Title IV-E to allow federal support for qualifying evidence-based services intended to prevent children from entering foster care. As of early 2026, 46 states, the District of Columbia, Puerto Rico and four tribes had approved Title IV-E prevention plans. South Dakota's plan remained under review, while Alabama, Alaska and Texas had not submitted plans.

Congress expanded other child welfare funding through the Supporting America's Children and Families Act, enacted in January 2025 as P.L. 118-258. The law extended Child Welfare Services and Promoting Safe and Stable Families authorities through fiscal 2029 and increased mandatory PSSF funding by $75 million beginning in fiscal 2026. Most of the additional funding supports state and tribal child and family services, with portions reserved for other child welfare programs.

The outcomes data reflect the system's focus on permanency. Among the more than 169,900 children and youth who left foster care during fiscal 2025, 52% returned to their parents or went to live with relatives, while 36% left through adoption or legal guardianship. Another 9% aged out of the system. Among children in foster care on Sept. 30, 78% lived in foster family homes, including placements with relatives and nonrelatives.

Kinship navigator programs are intended to help relatives caring for children access services and other support. Title IV-E can cover 50% of the cost of qualifying programs, but participation remains limited. As of January, seven programs met federal requirements and 11 states and Puerto Rico were approved to claim Title IV-E funding for them.

The Bottom Line

State and local governments remain central to financing the nation's child welfare system, providing more than half of child welfare spending nationally in the most recent state spending data cited by the report. At the federal level, Title IV-E remains the largest dedicated source of child welfare funding and provides open-ended federal support for eligible costs rather than operating under a fixed annual funding cap.

At the same time, changes to broader programs could affect resources available to families and child welfare agencies. The One Big Beautiful Bill Act establishes Medicaid community engagement requirements for certain adults beginning Dec. 31 and makes other eligibility changes, while Congress has separately expanded dedicated child welfare funding and prevention programs.

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