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 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

Using Federal Funds Effectively

Entitlements and Permanent Authorities

Whichever system of merging funds is adopted, it is important to understand fully the rules that govern the financing of services through federal programs and use them in the most advantageous ways. The interviewees urged system planners, when designing a sustainable funding strategy, to consider different ways of using two categiories of federal programs:

• ongoing funding streams such as block grants or entitlement programs that provide resources year after year in a reliable fashion, and
• discretionary grants, which are time-limited and often require state or local matching funds.

No state or local system of care can be sustained effectively without ongoing financial support from both state/local and federal sources using reliable funding streams. This means that the first and most important step for planners is to review federal programs that provide ongoing support without arbitrary federal time limits. Such programs exist to fund the activities of all core child-serving agencies. For example:

• Medicaid supports all agencies—mental health, child welfare, education and juvenile justice.
• Programs under the Individuals with Disabilities Education Act, the Elementary and Secondary Education Act and Vocational Education Act are available to school systems.
• Department of Justice Juvenile Justice and Delinquency Prevention Act programs can support a wide array of activities.
• Title IV-B and Title IV-E of the Social Security Act provide resources to child welfare systems.
• The mental health, substance abuse and Maternal and Child Health block grants fund specific services through three state agencies.
• Temporary Assistance for Needy Families (TANF) pays for services for low-income families.
• The Social Services block grant (Title XX) funds a range of services for many children.

The Bazelon Center has prepared a matrix that offers an overview of the services and other activities that can be funded through these and other major federal entitlement or block grant programs. All programs in this matrix provide ongoing resources without arbitrary time-limits, although the level of funding available may vary, depending on federal appropriations and the state and local resources available to provide a match.

The matrix is intended as a guide to specific opportunities for funding services and activities with these federal programs. Each program has its own restrictions on eligibility and on what can be funded, but it is impossible to show such level of detail in a chart. For example, Medicaid is shown as funding both therapeutic foster care and supported housing. However, Medicaid will fund only some of these activities’ costs (those related to services) and not others (such as rent or reimbursement to a foster family). Title IV-E funds certain expenses, but only when children are in foster care and only if costs are built into the foster care rate. Each program in the matrix, similarly, has limitations. Table 1 presents a few of the most important caveats regarding these programs.

Interviewees strongly recommend that to use these programs effectively, states and, to a lesser degree, localities should charge individual staff with the task of becoming experts on federal rules. Without a full understanding of federal program rules and what can be done with particular federal funds, significant opportunities to support the system of care with federal resources may be lost. Given the complexity of many federal programs, this is most effectively done by a team consisting of staff from all relevant agencies. The matrix identifies the potential of the various funding streams and can facilitate such work.

The first several lines of the matrix identify key aspects of eligibility rules, and can help planners identify whether:

• the program is means-tested, meaning that program eligibility is tied to family income and/or resources;
• only children and youth of a certain age range are eligible. Programs where no such limit is indicated may nonetheless define the end of childhood differently, such as at age 18, 20 or 21;
• children must have a certain level of impairment or disability before they can qualify for the program; or
• other eligibility criteria exist, such as being in foster care.

This allows system planners to see how certain children may qualify for some services through one program and other services through another. It thus shows planners which services are not adequately supported by federal sources and where alternative funding approaches will be needed.

The matrix also shows the services and activities that can be funded for eligible individuals under each of the listed federal programs. These are grouped into:

• screening and assessment;
• services for children and families (medical and clinical services are shown first, followed by rehabilitation and support services); and
• infrastructure funding (training, transportation, etc.).

Because this matrix is for use by interagency systems of care serving children whose mental health care needs have already been identified, it does not include the preventive programs that have a broad population-based public health approach.⁴

The matrix is based on federal rules governing the use of funds and on state efforts to fund specific mental health services or activities through the programs. With respect to Medicaid, services checked include those incorporated in a number of states’ definitions of rehabilitation services, even though, because of Medicaid’s reliance on state flexibility, there may be no federal rules defining these services.

To replicate this matrix at the state level—to show what is now funded through these various federal sources—key information is needed on who is eligible, who can provide services, how funds must be accounted for, and what are the administrative requirements. Administrative requirements include the rules on reimbursement (prospective and retrospective), reporting requirements and more. It is also important to identify the state and local agencies that can draw down funds from the various federal programs.

Interviewees suggested that one way to gather information is to send a questionnaire to agency personnel and to families, asking what works well in the current system of mental health service delivery and what does not. This can help identify services that require expansion and those viewed by key players in the system as not helpful.

Once the funding for various services and activities is mapped, it is then possible to engage in a meaningful process to identify opportunities in the major federal programs by matching the funding stream to the programmatic goals of the system of care. It is also important to consider how programs can work together to fund particular services. For example, Title IV-E can fund room and board for therapeutic foster care while Medicaid can fund training and services for the therapeutic foster family.

Such a comparison can also help states develop a strategy to divert residential-service spending to community care. Over the years, a number of states have found this an important tool for improving systems. Recently, New Jersey, as part of its statewide child services reform, was able to leverage federal funds for residential services that had been 100-percent state-funded. This enabled dollars previously used for long-term residential care to serve as the state Medicaid match in order to extend the array of services provided through local community-care organizations. As a result, children and families have access to a more diverse array of appropriate, individualized community-based services.

Part of this process should be the identification and removal of state and local barriers to tapping into federal resources in appropriate ways. The end result should be a coherent set of policies that allows programs to work together as much as is feasible under federal law. In some cases, this may require changing state rules and regulations or even state statutes.

You need the skill to identify rules you can change. Then change those rules you can through legislation, policy bulletins or whatever. It’s a skill to identify what you can change and what would be wasted energy. (State mental health official)

Those interviewed stressed that, while addressing all state-created barriers at once may not be manageable, states should begin this process by dealing with the most problematic constraints.

It is important to drop rules when they are out-of-date. (State mental health official)

Interviewees stressed that the process of removing program barriers and simplifying rules should not diminish accountability. Instead, the aim is to create flexibility and improve continuity of funding for systems of care. Systems of care should adopt appropriate performance measures to measure their outcomes.

How States Use Federal Entitlement and Block Grant Funds

Without exception, interviewees had found Medicaid to be the backbone of their funding strategies. Although federal Medicaid law allows states to fund a wide range of services, the interviewees knew that in many states either the state Medicaid agency or the federal regional office resists efforts to take full advantage of federal options. But not all states are so reluctant. New Jersey’s representatives described a strategy where several state officials—including those from the state Medicaid agency—went to the federal regional office to explain their plan for funding community mental health services for children, showing how it would make services more accessible and improve child outcomes. Federal approval of most of the state’s Medicaid proposals followed.

A second significant yet often underutilized federal entitlement for children with mental and emotional disorders is the Individuals with Disabilities Education Act (IDEA). The IDEA funds services for children of all income groups and is thus a critical adjunct to Medicaid funding. In Vermont, negotiations with the education system have led to school systems’ contributing to the state Medicaid match in order to support more than 300 school-based clinicians. Mental health centers provide significant backup once children are identified under the IDEA.

Child welfare resources are typically used to fund room-and-board costs for children in care (Title IV-E) or to support adoption and reunification. Federal funds for prevention of out-of-home placements (Title IV-B) are much scarcer, but the rules are very flexible as to the range of services that can be funded and more flexible than Title IV-E regarding the low-income children who can be targeted.

Juvenile justice funds flow in large formula-grant programs to states, which must funnel most of them to localities. As the matrix shows, very few restrictions are placed on the use of these funds for children with mental or emotional disorders. However, mental health and other eligible activities often compete for these funds locally. Ultimately, juvenile justice typically provides fewer dollars to a system of care than mental health, child welfare or Medicaid, but these funds can be used for activities other federal sources will not support.

Discretionary Programs Plug the Gaps

Interviewees reported using a number of federal categorical programs for children’s services to strategically supplement funds from entitlements and block grants. They suggest that states review the most relevant categorical programs to determine whether these dollars can fill gaps in funding of a particular system of care, provide start-up money for new services, underwrite infrastructure, support training or retraining, or finance strategy-planning processes.

Major discretionary programs authorized through each of the four core child-serving federal systems (mental health and substance abuse, child welfare, education and juvenile justice) are shown in Table 2. This is not a definitive list, but a listing of programs considered most relevant and useful by the officials who participated in the Bazelon Center study. Most of these programs are funded by the Department of Health and Human Services—particularly the Substance Abuse and Mental Health Services Administration—but the Departments of Education and Justice are also important sources to which state and local systems can look for discretionary funds.

Because it is important not to rely too heavily on discretionary programs that will inevitably end within a prescribed number of years, one strategy, according to those interviewed, is to use such programs to initiate the most critical services missing in the current system. In some cases, a federal entitlement program may pay for the service once it is in place, but it will not pay development costs. In other cases, once demonstrated effective, such services may be more readily funded through state or local sources. In adopting this approach, it is important to develop a strategy for how a reliable funding stream will eventually pay for the services or activity once discretionary funds are terminated.

Other activities that can often be best funded through federal discretionary programs are time-limited, such as planning, technical assistance, training or building data infrastructure.

Such time-limited activities can also be funded with private resources, such as grants by national and local foundations, corporations and community organizations. The interviewees pointed out that, while private grants or contributions provide lower funding levels than most government sources, they can be extremely flexible and therefore valuable to system planners.

Those interviewed saw many opportunities for states and localities to use federal programs to fund an expansive array of services for children with mental disorders who receive services through various child-serving systems. However, these funds will be more efficiently used if the core child-serving agencies collaborate around both service delivery and funding issues. The remainder of this report reflects the perspectives of these officials with respect to forging meaningful and long-lasting cross-agency collaborations better to meet children’s mental health care needs.

Next: Collaborations For Interagency Systems Of Care