A law passed by Congress in 1961 allowed AFDC (welfare) payments to pay for foster care which was previously made only to children in their own homes. This made aided funding foster care for states and localities, facilitating rapid growth. In some cases, the state of Texas paid mental treatment centers as much as $101,105 a year per child. Observers of the growth trend note that a county will only continue to receive funding while it keeps the child in its care. This may create a “perverse financial incentive” to place and retain children in foster care rather than leave them with their parents, and incentives are sometimes set up for maximum intervention. A National Coalition for Child Protection Reform issue paper states “children often are removed from their families `prematurely or unnecessarily’ because federal aid formulas give states `a strong financial incentive’ to do so rather than provide services to keep families together.”
The Grand Jury heard from staff members of the DFCS and others outside the department that the department puts too much money into “back-end services,” i.e., therapists and attorneys, and not enough money into “front-end” or basic services. The county does not receive as much in federal funds for “front-end” services, which could help solve the problems causing family inadequacies, as it receives for out-of-home placements or foster care services. In other words, the Agency benefits, financially, from placing children in foster homes.