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Date: Thursday, Nov. 14, 1996
FOR IMMEDIATE RELEASE			
Contact:  Michael Kharfen (202)401-9215

"This approval demonstrates the Clinton administration's support for North Carolina's efforts to better the lives of children and improve the child welfare system," said Secretary Shalala. "The state will make a significant change in the management of its child protective system, by promoting, measuring and rewarding successful outcomes for children.

"These innovations are critical to ensuring that the best interest of children are served -- whether by returning them to their family if possible or into an adoptive home," added Secretary Shalala.

Under the demonstration, North Carolina can use title IV-E foster care funds to provide a broad range of new services to children and families. Funds can be used for services that can prevent the need for placement of children in foster care or to relieve the problems that caused the child to be removed from the home. Previously, these funds could be used primarily to pay for the room and board of children in out-of-home care.

In as many as five counties, the additional funding flexibility will be combined with a Kellogg Foundation initiative, "Families for Kids" which is designed to reform the non-financial aspects of the foster care system, such as policy formulation, legal process, communications infrastructure, and advocacy.

North Carolina's project consists of two parts. In part one, the state will change foster care financing to create incentives for participating county agencies to improve performance, making North Carolina the first state to use performance bonuses as part of a child welfare waiver. When a participating county achieves savings through better management or better service delivery, including reducing the number of children in foster care; how long they stay there; and increasing the number of children diverted from foster care through kinship placement with relatives, they will retain the value of the savings and reinvest them in child welfare services and prevention. For example, this bonus can be used for intensive family preservation and reunification services, respite care, family mediation, court-approved assisted guardianship, and post-placement support.

In the second part, participating counties will use federal IV-E maintenance funds to develop effective strategies for preventing out-of-home placement of children without jeopardizing their safety. County departments of social services will be encouraged to shift expenditures away from foster care maintenance to prevention, returning children to their families, and adoption. Emphasis will be placed on kinship ties when making decisions on long-term placement of children.

"This promising demonstration gives North Carolina unprecedented flexibility with federal funds to make a thorough assessment of the child's safety and the family's condition to tailor the appropriate services for the child's best possible future," said Olivia Golden, acting assistant secretary for children and families. "By providing a performance bonus to successful counties, North Carolina is offering an important incentive for improving child welfare services."

The demonstration will operate for five years and include a rigorous evaluation.