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Child Welfare Financing in Nebraska

Last week, the Nebraska Children’s Commission released a back-to-basics primer that lays out in detail the full picture of how child welfare is financed in Nebraska. Authored by the national nonprofit ChildFocus, the document is the result of meticulous investigation. The authors completed a comprehensive review of state and federal budget documents and spending reports, and received input from multiple stakeholders, including Voices for Children.

The primer can be accessed through the Children’s Commission website here, and we would strongly encourage you to take the time to read it in its entirety.  It contains important information for anyone interested in child welfare in our state.  In the meantime, here are some of our major takeaways:

1. We need a more effective and accountable financing system to ensure there is adequate funding to support a full continuum of child welfare services.  We can’t know whether we are using taxpayer dollars effectively to achieve the best outcomes for children if we don’t know how we are spending our money. Currently, there is no publicly available data on a major category of state child welfare spending, totaling over $120 million (71% of DHHS Program 354). We also do not know how certain money returning to the state from changes in federal law is being used. Increased transparency will ensure that our investments in child welfare are targeted to the outcomes we seek.

2. Nebraska is under-utilizing federal funding sources to support child welfare services.  Our ratio of state spending to federal funding is the second-highest in the nation: 77% of our child welfare spending comes from the state general fund and only 23% from federal sources, compared with an average across all states of 54% federal money and 46% state investment. Nebraska’s state investment in vulnerable children is commendable; however, we should be prioritizing state funding for services and supports that cannot be paid for with federal dollars.  More effective use of federal funds would free up state child welfare funding to fill in gaps and implement creative approaches to improve outcomes.

3. Nebraska’s total spending per child is higher than the national average.  Nebraska spends an average of $471 per child in the system, compared with an average across all states of $381. To understand why, the first step will be to implement better accountability in how we are spending state dollars.  We can’t make good decisions about how to prioritize our funding if we don’t know how we are spending the money currently.  We do know that some placements (group homes, shelters, and residential placements) are more expensive than others (in-home, kinship, and community-based foster homes).

4. There is a cost shift from Medicaid to child welfare.  Nebraska’s Medicaid spending has declined dramatically in recent years, illustrating a shift towards more narrowly defined allowable services and increasing denials for services.  Meanwhile, other states use Medicaid dollars for a range of rehabilitative and case management services for children and families.  When Medicaid denies a covered service, the cost is often shifted to the child welfare side, where NFC or DHHS must pay for the services out of state-only funds. Better coordination between Medicaid and child welfare will make more efficient use of these resources to improve outcomes for child and families.


A fundamental principle of an effective child welfare system is ensuring that spending is aligned with the outcomes we know are best for children and families. At Voices, we are hopeful that our new governor and Department administration will reach some of the same conclusions that we have in reading this report, and begin their tenure with an emphasis on increasing transparency, maximizing state investment and the effective use of all possible funding streams on behalf of Nebraska’s vulnerable children.


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