Chapter 14: Funding

In this chapter. . .

This chapter contains an overview of sources used to pay the costs associated with child protective proceedings. The chapter discusses government sources used to pay the costs of care and service provided to a child and family, and federal reimbursement of foster care costs under Title IV-E of the Social Security Act. The chapter also discusses parental reimbursement of the costs of care, and attorney and lawyer-guardian ad litem fees.

The chapter contains an overview of guardianship assistance and a juvenile guardian’s receipt of child support payments.

“Despite the public health crisis that exists, it is critical that child welfare agencies and courts work together to ensure that the requisite judicial proceedings continue during this time of uncertainty.” See Department of Health & Human Services, Children’s Bureau Letter to Child Welfare and Judicial Leaders, which details the judicial determinations and proceedings that must be held in order to satisfy Title IV-E requirements as well as suggestions for ensuring courts continue “to practice in a manner consistent with constitutional principles and to serve the best interest of children[.]”1 

14.1Federal, State, and County Sources of Funding2

Unless otherwise provided, expenses incurred in cases under the Juvenile Code must be paid “upon the court’s order by the county treasurer from the county’s general fund.” MCL 712A.25(1). See e.g., MCL 400.117c(1)-(3), which either allows or requires the county to use its Child Care Fund to pay for placement costs (depending on type of placement and other factors), and provides for reimbursement by the Department of Health and Human Services (DHHS) for a portion of such expenses.

MCR 3.926(C)(1) provides that when a disposition is ordered by a court other than the court in the county where the child resides, the court ordering disposition is responsible for any costs incurred in connection with the order unless the court in the county where the child resides agrees to pay such dispositional costs.

A.Generally

1.Funding

“Payments for out-of-home placement (hereafter called foster care payments) are made from legally defined fund sources for which specific eligibility must be determined. Funding comes from federal, state and county monies.” DHHS’s Children’s Foster Care Manual (FOM), Fund Sources FOM 901-8, p 1.3

Specific funding sources available:

•Title IV-E Funding: This fund source is “established by title IV-E of the Social Security Act to provide federal financial participation in the administrative costs and foster care maintenance payments for [children.]” Fund Sources FOM 901-8, supra at 2.4

•County Child Care Funding (CCF): “[This fund] is a state legislative appropriation to partially reimburse counties for the costs of foster care and other services provided for court wards.” Fund Sources FOM 901-8, supra at 2.

•State Ward Board and Care Funding (SWBC): “[This fund] is the state legislative appropriation to provide payment of foster care costs for state wards who are not eligible for title IV-E or the placement is not title IV-E reimbursable[.]” Fund Sources FOM 901-8, supra at 3.

•Limited Term/Emergency/General Funds: “Limited term/emergency/general funds is a limited funding source to assist MDHHS staff in providing foster care payment and service under . . . specific circumstances[.]”5 Fund Sources FOM 901-8, supra at 3.

“The fund source and payment procedures to be utilized in paying for the out-of-home care of [children] are determined by a combination of factors including legal status, living arrangement and federal regulations.” DHHS’s Children’s Foster Care Manual (FOM), Payment Source Guide FOM 901-9, p 1.6 For additional information on the payment systems used to execute foster care payments and a chart detailing which fund sources may be available, see the DHHS’s Children’s Foster Care Manual (FOM), Payment Source Guide FOM 901-9.

The DHHS must distribute money appropriated by the Legislature to counties for the cost of juvenile justice services7 as provided in MCL 400.117a(4)(a)-(j). MCL 400.117a(4). Payment for expenditures for children placed with the DHHS for care, supervision, or placement (including children who are within the court’s jurisdiction under MCL 712A.2(b)) must be paid by the DHHS and reimbursed by the county for all undisputed charges. MCL 400.117a(4)(a).8 Payment for expenditures9 for children not placed with the DHHS for care, supervision, or placement (including children who are within the court’s jurisdiction under MCL 712A.2(b)) must be paid by a county and be reimbursed by the DHHS for all undisputed charges. MCL 400.117a(4)(b).

Distributions under MCL 400.117a(4) may be allowed unless otherwise accessible and available by other public assistance programs necessary to achieve the goals and outcomes for in-home care10 or out-of-home care,11 and reimbursement must not be made “for costs associated with an otherwise eligible child or family, or both, if the reason for the unavailability of public assistance is due to intentional program violations and disqualification of any public assistance.” MCL 400.117a(6).

2.Assignment of Support to DHHS

If the DHHS is making state or federally funded foster care maintenance payments for a child that is either under the supervision of the DHHS or has been committed to the DHHS, all rights to current, past due, and future child support are assigned to the DHHS while the child is receiving or benefiting from those payments. MCL 400.115b(5). “When the [DHHS] ceases making foster care maintenance payments for the child, both of the following apply:

(a) Past due support that accrued under the assignment remains assigned to the [DHHS].

(b) The assignment of current and future support rights to the [DHHS] ceases.” MCL 400.115b(5).

“The maximum amount of support the [DHHS] may retain to reimburse the state, the federal government, or both for the cost of care shall not exceed the amount of foster care maintenance payments made from state or federal money, or both.” MCL 400.115b(6).

B.Federal Foster Care Maintenance Payments Under Title IV-E Funding12 

Title IV-E funding is a funding source “established by title IV-E of the Social Security Act[, 42 USC 670 et seq.,] to provide federal financial participation in the administrative costs and foster care maintenance payments for [children.]” DHHS’s Children’s Foster Care Manual (FOM), Fund Sources FOM 901-8, p 2.13 45 CFR 1355.20(a) defines foster care maintenance payments as “payments made on behalf of a child eligible for title IV-E foster care to cover the cost of (and the cost of providing) food, clothing, shelter, daily supervision, school supplies, a child’s personal incidentals, liability insurance with respect to a child, and reasonable travel for a child’s visitation with family, or other caretakers. Local travel associated with providing the items listed above is also an allowable expense. In the case of child care institutions, such term must include the reasonable costs of administration and operation of such institutions as are necessarily required to provide the items described in the preceding sentences. ‘Daily supervision’ for which foster care maintenance payments may be made includes:

(1) Foster family care - licensed child care, when work responsibilities preclude foster parents from being at home when the child for whom they have care and responsibility in foster care is not in school, licensed child care when the foster parent is required to participate, without the child, in activities associated with parenting a child in foster care that are beyond the scope of ordinary parental duties, such as attendance at administrative or judicial reviews, case conferences, or foster parent training. Payments to cover these costs may be: included in the basic foster care maintenance payment; a separate payment to the foster parent, or a separate payment to the child care provider; and

(2) Child care institutions - routine day-to-day direction and arrangements to ensure the well-being and safety of the child.”

“Title IV-E . . . requires all applicable federal regulations be followed for use of the fund.” DHHS’s Children’s Foster Care Manual (FOM), Funding Determinations and Title IV-E Eligibility FOM 902, p 1.14 “To be eligible for payment under title IV-E, children must, by Family Court or Tribal Court order, be under MDHHS supervision for placement and care or committed to MDHHS.” Id. at p 3. For more information on funding determinations and Title IV-E Eligibility, see the DHHS’s Children’s Foster Care Manual (FOM), Funding Determinations and Title IV-E Eligibility FOM 902.15

Note: The Child Welfare Funding Specialist (CWFS) must determine “the appropriate fund source for out-of-home placements at the time the [child] is referred for care and supervision by MDHHS regardless of actual placement[.]”16 Funding Determinations and Title IV-E Eligibility FOM 902, supra at p 1.

Family First Prevention Services Act (FFPSA). The FFPSA reforms the federal child welfare financing streams, Title IV-E and Title IV-B of the Social Security Act, to expand funding and eligibility of federal child welfare programs. United States DHHS’s Children’s Bureau, Information Memorandum-18-02.17 While the FFPSA was signed into law on February 9, 2018, Michigan requested and received approval for a two- year delay in meeting the FFPSA’s requirements. As a result of the 2-year waiver, Michigan has until September 29, 2021, to comply with the FFPSA’s requirements. See Pub L 115-123, div E, title VII, §50734(b)(1), §50746; United States DHHS’s Children’s Bureau, Information Memorandum-18-02.

C.County Child Care Fund (CCF)

“The county [C]hild [C]are [F]und [(CCF)] is a county-state fiscal program whereby the State of Michigan reimburses counties which provide care and service for children and their families.” DHHS’s Children’s Foster Care Manual (FOM), Fund Sources FOM 901-8,18 p 2.

A county CCF consists of funds appropriated by a county for foster care. MCL 400.117c(1)-(2). The CCF must be used to pay the costs of providing foster care19 for children “under the jurisdiction of the family division of circuit court or court of general criminal jurisdiction.” MCL 400.117c(2). The CCF may be used for paying the county’s share of the cost of placement in the Michigan Children’s Institute (MCI). MCL 400.117c(3).

Except as provided in MCL 400.117a(4)(j), the DHHS must reimburse 50 percent of a county’s eligible annual expenditures from a county’s CCF. MCL 400.117a(4)(c). The reimbursement of annual expenses does not include reimbursement for a county’s capital expenditures. Ottawa Co v Family Independence Agency, 265 Mich App 496, 502-504 (2005). In Ottawa Co, eleven Michigan counties filed suit seeking reimbursement from the DHHS for 50 percent of the costs they incurred for capital expenditures that included building, equipping, and improving juvenile detention facilities. Id. at 498. The Court of Appeals concluded that reimbursement of a county’s expenditure is conditional. Id. at 500. The DHHS “is obligated to establish standards for reimbursing the funds and may withhold reimbursement if certain expenditures violate its rules.” Id. at 501. The Court further noted that MCL 400.117a(13)20 and relevant administrative rules and policies limit the DHHS’s ability to reimburse a county by requiring reimbursements be “‘based on care given to a specific, individual child.’” Ottawa Co, 265 Mich App at 501-503, quoting MCL 400.117a(13). Thus, the counties were held financially “responsible for absorbing the large capital costs of building and equipping the facilities[.]” Ottawa Co, 265 Mich App at 503. The Court of Appeals also concluded that the DHHS’s failure to reimburse the counties for their capital expenditures did not violate the Headlee Amendment, Const 1963, art 9, § 29. Ottawa Co, 265 Mich App at 503.

“Notwithstanding the provisions in [MCL 400.117a(4)(c)[21]] and subject to appropriations, the department shall implement a prospective payment system as part of a state-administered performance-based child welfare system in a county with a population of not less than 575,000 or more than 750,000, for foster care case management in accordance with section 503 of article X of 2014 PA 252. The county is only required to contribute to foster care services payments in an amount that does not exceed the average of the annual net contribution made by the county for cases received under [MCL 712A.2(b)], in the 5 previous fiscal years before October 1, 2015. The prospective payment system as part of the state-administered performance-based child welfare system shall be implemented as described in this subdivision but shall not include in-home care service funding.”22 MCL 400.117a(4)(h). See also MCL 803.305(4), which contains substantially similar provisions under the Youth Rehabilitation Services Act.

If a child is committed to the MCI, the DHHS pays the entire cost of a child’s care and supervision, but the county is charged back 50 percent of that cost. See MCL 400.207(1); MCL 803.305(1). The DHHS may, subject to a county’s approval, offset the amount due by the DHHS to the county’s CCF. MCL 400.117a(4)(c).23

D.State Ward Board and Care Funds (SWBC)

The State Ward Board and Care Funds (SWBC) are available to support children in out-of-home placements when all of the following criteria are met:

•The child is a state ward committed to the DHHS.

•The child is in a DHHS supervised and approved out-of-home placement.

•The child or the placement is ineligible for Title IV-E funding.

•The child has not reached 19 years of age. DHHS’s Children’s Foster Care Manual (FOM), Fund Sources FOM 901-8, p 3.

“[SWBC] funds may be used to reimburse the foster family, placement agency foster care (PAFC) provider or residential facility for care provided, for certain intermittent or case service payments, and for independent living payments to the [child]” provided that specific criteria are met. Funding Sources FOM 901-8, supra.

E.Limited Term, Emergency, and General Foster Care Funding

“Limited term/emergency/general funds is a limited funding source to assist MDHHS staff in providing foster care payment and service under the following specific circumstances:

1. The child is a court ward . . . and title IV-E eligible except for the receipt of [Social Security Income (SSI)]

2. Former MCI wards between age 19 and 20 who are in foster care or independent living.

* * *

3. Emergency foster care for children in families receiving [Family Independence Program (FIP) assistance] and the caretaker is hospitalized or incarcerated and no other plan can be made through the FIP program. . . .

* * *

4. Children may be placed in foster care prior to release to MDHHS under the Michigan Adoption Code.” DHHS’s Children’s Foster Care Manual (FOM), Fund Sources FOM 901-8,24 pp 3-4.

1   The link to the previous resource was created using Perma.cc and directs the reader to an archived record of the page.

2   See the Department of Health & Human Services, Children’s Bureau Letter to Child Welfare and Judicial Leaders, which details the judicial determinations and proceedings that must be held in order to satisfy Title IV-E requirements as well as suggestions for ensuring courts continue “to practice in a manner consistent with constitutional principles and to serve the best interest of children[.]” Note: The link to the previous resource was created using Perma.cc and directs the reader to an archived record of the page.

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4   See the Department of Health & Human Services, Children’s Bureau Letter to Child Welfare and Judicial Leaders, which details the judicial determinations and proceedings that must be held in order to satisfy Title IV-E requirements as well as suggestions for ensuring courts continue “to practice in a manner consistent with constitutional principles and to serve the best interest of children[.]” Note: The link to the previous resource was created using Perma.cc and directs the reader to an archived record of the page.

5    See Section 14.1(E) for the list of circumstances.

6   The link to this resource was created using Perma.cc and directs the reader to an archived record of the page.

7    Juvenile justice service is a “service, exclusive of judicial functions, provided by a county for juveniles who are or likely to come within the court’s jurisdiction under . . . MCL 712A.2,” and includes, among other things, protective care services approved by the office. MCL 400.117a(1)(h).

8   “Implementation of [MCL 400.117a(4)(a)] takes effect on October 1 of the fiscal year following the appropriation to support new payment processes and the implementation of technological changes to the statewide automated child welfare information system.” MCL 400.117a(4)(a).

9   See MCL 400.117a(4)(b)(i)-(iv) for an inclusive list of expenditures.

10    “‘In-home care’ means expenditure of child care fund money for services and items listed in this section to be an alternative to out-of-home care or to provide an early return home for a child placed out of his or her home.” MCL 400.117a(1)(f).

11    “‘Out-of-home care’ means placement outside of the residence of the child’s parent, legal guardian, or, expect a provided in this subdivision, relative where the child is found, from which the child was removed by the authority of the court, or in which the child will be placed on a permanent basis.” MCL 400.117a(1)(i).

12   See the Department of Health & Human Services, Children’s Bureau Letter to Child Welfare and Judicial Leaders, a letter that addresses the requirements of Title IV-E during COVID-19, but that outlines the process required at all times. The letter details the judicial determinations and proceedings that must be held in order to satisfy Title IV-E requirements as well as suggestions for ensuring courts continue “to practice in a manner consistent with constitutional principles and to serve the best interest of children[.]” Note: The link to the previous resource was created using Perma.cc and directs the reader to an archived record of the page.

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16    “A written court order from the Family Division of Circuit Court must exist that makes the Michigan Department of Health and Human Services (MDHHS) responsible for the child’s placement, care, and supervision, unless the child is in a voluntary placement[.] . . . The department assumes legal, financial, and service responsibility at the point it accepts a child for placement and care.” DHHS’s Children’s Foster Care Manual (FOM), Foster Care - Entry into Foster Care FOM 722-01, p 1. The link to this resource was created using Perma.cc and directs the reader to an archived record of the page.

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19    MCR 3.903(C)(5) defines foster care as “24-hour a day substitute care for children placed away from their parents, guardians, or legal custodians, and for whom the court has given the Department of Health and Human Services placement and care responsibility, including, but not limited to, (a) care provided to a child in a foster family home, foster family group home, or child caring institution licensed or approved under MCL 722.111 et seq., or (b) care provided to a child in a relative’s home pursuant to an order of the court.” MCL 712A.13a(1)(e) contains a substantially similar definition of foster care.

20    Formerly MCL 400.117a(8). See 2018 PA 22, effective May 15, 2018.

21   Effective October 1, 2021, the distribution requirements outlined in MCL 400.117a(4)(c) apply unless the conditions in MCL 400.117a(4)(j) are applicable. MCL 400.117a(4)(c). See 2019 PA 114. MCL 400.117a(4)(j) details the state’s financial responsibility for “juvenile justice services when a court exercises jurisdiction over a juvenile who is 17 years of age, but under the age of 18 at the time of the offense.” MCL 400.117a(4)(j).

22    For purposes of MCL 400.117a, in-home care is “expenditure of child care fund money for services and items listed in this [MCL 400.117a] to be an alternative to out-of-home care or to provide an early return home for a child placed out of his or her home.” MCL 400.117a(1)(f).

23   Effective October 1, 2021, MCL 400.117a(4)(c) applies unless the circumstances require application of MCL 400.117a(4)(j), which requires “the state [to] pay 100% of the cost to provide juvenile justice services when a court exercises jurisdiction over a juvenile who is 17 years of age, but under the age of 18 at the time of the offense.” MCL 400.117a(4)(j). See 2019 PA 114. Beginning October 1, 2025, “the rate of reimbursement paid by the state for all juveniles will be” the percentage resulting from the specific equation provided in MCL 400.117a(5), “using actual expenditures for the fiscal years ending September 30, 2022, September 30, 2023, and September 30, 2024[.]” MCL 400.117a(5). See 2019 PA 114, effective October 1, 2021.

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