Introduction Federal Programs for Child Mental Health Services Principles for a Successful Funding Strategy Blending or Braiding Federal Funds Using Federal Funds Effectively Entitlements and Permanent Authorities How States Use Federal Entitlement and Block Grant Funds Discretionary Programs Plug the Gaps Matrix of Federal Entitlement and Block Grant Programs to Support Systems of Care for Children with Serious Mental and Emotional Disorders Matrix of Federal Entitlement and Block Grant Programs to Support Systems of Care for Children with Serious Mental and Emotional Disorders Collaborations for Interagency Systems of Care Who Collaborates? First Steps to Take Getting Down to Business Barriers to Overcome Keeping Collaborations Going Managing Change in Difficult Times Conclusion Notes Further Readings Tables 1. Purposes of and Constraints in Major Federal Programs 2. Discretionary Federal Programs Supporting Services and Activities of Interagency Systems of Care for Children with Mental Health Needs Principles for a System of Care for Child and Adolescent Services

Blending or Braiding Federal Funds

Blending or braiding federal funds allows decisions on services to be made with the family and by those working most closely with the family. Both strategies offer local flexibility and allow providers to focus on outcomes. However, this flexibility must be accompanied by accurate measurement of outcomes. Those interviewed stressed that systems of care must track, document and account for the funds they spend, whether using a blended or a braided funding approach. To collect the information needed to demonstrate effective outcomes for children served and accountability to taxpayers, systems of care must coordinate monitoring across agencies and strive to demonstrate total costs and benefits across systems.

Blended funding—even on a small scale – has advantages over braiding of funds because it offers significant flexibility for state and local agencies and reduces the work required for reporting and accountability measures. Blended funding can allow systems to fund activities that are not reimbursable through specific categorical programs. In so doing, blended funds can help plug funding gaps in the services continuum. This is particularly true when blended funding includes flexible dollars such as those available through a state’s general fund.

Braiding, on the other hand, allows resources to be tracked more closely for the purpose of accounting to federal program administrators. It thus recognizes the categorical nature of existing programs and avoids some of the conflicts that can arise in blended funding pools.

Blending funds is often more politically difficult than the newer approach of braiding because agencies lose control; the ability to track funds to the service-delivery point may also be lost. Those interviewed pointed out that agencies are often reluctant to contribute to a blended pool or, if they do, contribute only small sums, which they generally expect will be used to pay for activities that cannot be billed to a specific funding source. Braided funding approaches tap into the larger funding sources in a manner that allows both for accountability and local flexibility in meeting individual children’s needs.

We use woven funding. Financing streams in the state are mapped out. (State mental health official)

Implementing a braided funding approach involves significant attention to administrative issues, according to those interviewed. It requires that states or communities ensure that there is a single point of responsibility for assessing services and the funding stream that can pay for them. Large provider agencies may be able to handle the fiscal accounting of braided funding themselves, but small providers cannot. To implement a braided funding approach, states may wish to make available to smaller providers a skilled fiscal agent who is responsible to all agencies participating in the braided funding approach. This agent would address the various requirements of funding programs, such as different funding cycles, different payment arrangements (prospective, retrospective) and different reporting requirements. This approach would provide a single point of accountability for funders, but would also require its own administrative funds. Braided funding can be a cost-accounting challenge, but it can be done and ultimately is an important strategy for making the best use of the significant federal resources available for children’s services.

A discussion of these mechanisms and examples of blended and braided funding approaches are available in this issue brief.

Next: Using Federal Funds Effectively