Part #14 Hot Topic: Foster Care System Funding Scam - the Money
Article #14 of 15 Part Series
Follow the Money: Is America’s Foster Care System a Child Welfare Program — or a Federal Funding Scam?
Not officially.
But functionally.
Per‑diem rates.
Federal reimbursements.
Administrative overhead.
Private contractor fees.
Some children are worth more than others.
Because the more “difficult” a child is,
The more money the system makes.
The Issue: When Child Welfare Becomes a Revenue Model
America’s foster care system is heavily funded by federal dollars.
States receive reimbursement for:
foster placements
group homes
administrative costs
training programs
But they receive far less for:
family reunification
prevention services
long‑term therapy
permanency support
Which creates a perverse incentive:
It is more profitable to keep children in foster care
Than to send them home.
Evidence and Analysis: The Placement Economy
The longer a child stays,
The more money flows.
High‑needs children generate:
higher daily rates
special service payments
psychiatric add‑ons
This creates a quiet business model:
More trauma = more revenue.
More placements = more funding.
More delays = more profit.
The Incentive Nobody Admits
Reunification closes cases.
Closed cases stop payments.
Prevention stops placements.
No placements = no funding.
So agencies talk about family preservation.
But their budgets depend on family separation.
The Counterpoint: “Funding Is Needed to Care for Kids”
foster care is expensive
providers deserve reimbursement
oversight costs money
funding shortages already hurt kids
They say critics misunderstand how public funding works.
From this view, money is not corruption.
It’s necessity.
This argument contains truth.
But ignores incentives.
Why the Counterpoint Fails
Good intentions do not cancel bad incentives.
Any system that pays more for failure than success
Will quietly prefer failure.
Right now, the system is rewarded for:
longer stays
more placements
higher acuity
And punished for:
prevention
reunification
permanency
That’s not a safety net.
That’s a subscription model.
Voices From Inside the System
Former agency administrators admit:
budgets are built on placement projections
closing cases hurts revenue
prevention programs are underfunded
They don’t call it a scam.
They call it “the way funding works.”
The Real Incentives
No one has to be evil.
They just have to follow the rules.
And the rules reward removal.
Unapologetic Opinion
It is financially rigged against families.
And until funding follows children home,
Children will keep being held for profit.
Evidence‑Based Solutions
Reunification bonuses
Pay states for safe family returns.Prevention funding parity
Fund prevention equal to placement.Permanency deadlines
Financial penalties for delays.Contractor profit caps
Limit private agency margins.Public transparency dashboards
Show money flows.
Closing Challenge
If the foster care system makes money when families fail,
Then family failure is not a tragedy.
It’s a business model.
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