This memo describes the reimbursement rates for Title IV-E pass-through contracts and the availability of Title IV-B funds for counties and universities in 2006. The IV-E reimbursement rate for pass-through contracts will decline in 2006. IV-B funds will be available on a one-time basis for certain contracts.
The Division has contracts with counties and universities to pass through federal Title IV-E foster care reimbursement based on expenses incurred by the contract agencies. The IV-E reimbursement rate for pass-through contracts is determined by the federal IV-E rate (75% for foster care-related training and 50% for other activities,) and the state IV-E eligibility ratio or "penetration rate" used for claiming IV-E administrative costs. The penetration rate varies depending on IV-E eligibility trends for children in out-of-home care (OHC) and federal IV-E policy.
Due to federal policy changes, the penetration rate will decrease in 2006 and thus reduce IV-E reimbursement for pass-through contracts. To offset the impact of the federal policy changes and sustain the important training and legal services activities of contract agencies, DCFS will make federal Title IV-B funds available to most contract agencies on a one-time basis in 2006.
Changes in Reimbursement Rates
Budget reconciliation legislation has been approved by Congress making IV-E policy changes that will adversely affect the Wisconsin penetration rate. The most significant provision will restrict states from claiming Title IV-E administrative reimbursement for children placed with unlicensed relatives. The legislation is expected to be signed into law in early February. The legislation will reduce the reimbursement rate that DCFS can provide for pass-through contracts for all activities, including training.
In addition, DCFS has received federal direction regarding cost allocation for reimbursement of eWiSACWIS local costs. DCFS must apply the ongoing operational cost allocation rate to local costs and can no longer use the developmental cost rate allowed during system implementation.
The following revised IV-E reimbursement rates apply to Calendar Year (CY) 2006 contracts and expenses incurred after January 1, 2006 for Fiscal Year (FY) 2006 contracts:
Note: The * indicates which programs will receive Title IV-B funds
Impact on 2006 Contracts
Given the immediate effective date of the federal IV-E policy changes, DCFS will make federal Title IV-B Subpart II (Promoting Safe and Stable Families) funds available to most pass-through contract agencies for the 2006 contract period. The IV-B funds can be used for activities related to family support, preservation and reunification. CHIPS legal services, foster parent training, partnership training for child welfare staff, and student stipend programs fit into one or more of these categories. These IV-B funds will be provided on a one-time basis only in 2006 to allow contractors to adjust their programs to the reduced rate of IV-E reimbursement. The IV-B funds cannot be used for automated system activities, so IV-B funds will not be available for eWiSACWIS local agency costs. DCFS will also make IV-B funds available to universities only to offset the impact of the federal IV-E policy changes on training activities and not for indirect costs.
CHIPS legal services and foster parent training contracts for 2006 will keep the current CARS lines and DHFS will allocate costs between IV-E and IV-B at the state level. The total reimbursement rates will be 33% (27% IV-E plus 6% IV-B) for CHIPS legal services and 50% (40% IV-E and 10% IV-B) for foster parent training. For counties that have already submitted CY 2006 budgets, it is not necessary to submit adjusted program budgets. For pass-through contracts, the budgets establish the maximum amount of federal reimbursement. The amount of federal reimbursement is based on actual expenses and controlled by the CARS lines in the pass-through contracts. The combined IV-E/IV-B reimbursement rates will apply to requests by counties for new contracts in CY 2006 that are received by November 15, 2006. For CY 2007 contracts, counties will receive only the reduced rate of IV-E reimbursement.
University training partnership and student stipend program contracts will receive IV-B funds on CARS profile 521068. For training partnerships and student stipend programs, the amount of IV-B funds will be equal to the difference between the amount of IV-E reimbursement received for 2005 contracts and the projected IV-E reimbursement for 2006. The amount of IV-B funds for FY 2006 contracts will be prorated based on the portion of the contract period in CY 2006. The objective is to keep the total federal reimbursement rate for raining activities in 2006 at approximately 50%. For FY 2006 contracts, expenses incurred prior to January 1, 2006 will be reimbursed at the 2005 rates and expenses incurred on or after January 1, 2006 will be reimbursed at the 2006 rates. For FY and CY 2007 contracts, universities will receive only the reduced rate of IV-E reimbursement.
More specific direction will be provided to contractors on their 2006 contracts, cost reporting and the availability of IV-B funds by the DCFS contract managers for the pass-through contracts.