This Memo requires counties to pay the foster parent directly for children placed
via For-Profit Child Placing Agencies
Based on recent clarification of Federal Title IV-E regulations, the Department is issuing this memo. Title IV-E regulations state that if a child is placed in Out-of-Home Care via a For-Profit Child Placing Agency and the monthly payment for the child is paid to the Child Placing Agency which in turn pays the individual foster parent, the maintenance payment to the foster parent cannot be claimed as Title IV-E reimbursable. In addition, the payment made to the foster parent by the For-Profit Child Placing Agency is considered taxable income to the foster parent.
The number of payments in this category represents a significant amount of Title IV-E revenue which, as you know, is a primary source of funding for Community Aids and is affected by the new IV-E Incentive Program. A listing of current For-Profit Child Placing Agencies is attached and on an ongoing basis counties should determine at the time of contracting with a Child Placing Agency whether they are for-profit or not-for-profit. Please ensure the county splits the payment that is currently made to the For-Profit Child Placing Agencies into two payments as described in this memo. The county should make one payment to the Child Placing Agency for their administrative cost and the other payment directly to the foster parent for the maintenance cost. By doing so, the payment to the foster parent from the county may then be reimbursable for Title IV-E purposes and would no longer be considered taxable income to the foster parent. Payments to Not-For-Profit Child Placing Agencies can continue to be made in one payment to the agency. Entry of financial information into the Human Services Reporting System (HSRS) for children placed via a Child Placing Agency should not change. Regardless of whether the agency is For-Profit or Not-For-Profit, counties should continue, as noted in MEMO SERIES DCS 95-26 (copy attached) dated April 28, 1995, to enter into the HSRS Substitute Care Module the amount of the payment going to the foster parent.
Thank you very much for your assistance in this important effort.