State child welfare agencies face pressure to improve safety, permanency, and well-being outcomes while managing rising costs, workforce constraints, and declining federal reimbursement under Title IV-E of the Social Security Act. At the same time, heightened scrutiny of congregate care has increased expectations for states to demonstrate accountability and improved outcomes. Children, youth, and families involved with the child welfare system often encounter fragmented services and missed opportunities for support because of the complex and frequently uncoordinated funding landscape.

This white paper outlines considerations for state agencies seeking to maximize federal funding sources while improving service delivery across the healthcare continuum. It is intended to support executive leadership decision making by showing how states can more strategically align child welfare and Medicaid financing to strengthen prevention, reduce unnecessary reliance on congregate care, and improve access to timely and appropriate behavioral health services.

The paper highlights opportunities for states to use Medicaid more effectively to support clinical services across the continuum of care while reserving Title IV-E funds for functions Medicaid cannot cover. It also responds to persistent gaps identified through national performance reviews, shifting a growing share of child welfare costs to state and local budgets. In this environment, Medicaid represents a critical, but often underutilized, tool for states seeking to stabilize financing while improving outcomes for children, youth, and families.

Considerations for state leaders include:

• Aligning Title IV-E and Medicaid to strengthen the behavioral health continuum through robust coverage of eligible behavioral health and treatment services across prevention, foster care, and congregate care settings—enabling Title IV-E to focus on safety and permanency-focused supports
• Strengthening cross-agency data sharing to inform financing and policy decisions to enable a full view of service utilization, costs, and outcomes
• Using cross-agency strategic planning to reduce duplication and support a coherent continuum of care to align policy, financing, and service delivery decisions