Child Welfare

A Common Sense Approach to Children’s Development
John Hood is the President of The John Locke Foundation

What Lawmakers Should Know About Child Care Vouchers
Douglas J. Besharov is a Resident Scholar at the American Enterprise Institute and a Professor in the School of Public Affairs at the University of Maryland. Nazanin Samari is a Research Assistant at the American Enterprise Institute.

Welfare: A Poverty Trap for Children
Naomi Lopez is the Director of the Center for Enterprise and Opportunity at the Pacific Research Institute.

The Child Abuse Industry
Mark Schiller, M.D. is a Senior Fellow in Medical Studies at the Pacific Research Institute, and an Assistant Clinical Professor at the University of California at San Francisco.

Privatization of Child Welfare Services in the States
Julie Sells is the Acting Director of the Health and Human Service Task Force at the American Legislative Exchange Council.

A Common Sense Approach to Children’s Development


"An ounce of prevention is worth a pound of cure," as the old saying goes. For the past three decades, politicians and policymakers attempting to close the gaps in educational achievement and social well being among American children have taken this sentiment to heart. From the creation of the Head Start program in 1965 to various preschool and child care programs today, government at all levels attempts to eliminate social problems such as poverty, illiteracy, crime, drug abuse, out-of-wedlock births, and welfare dependency by "investing" in early childhood. The case for such programs is seductive.

Why not inoculate youngsters against these social pathologies with a preschool program, much as public health departments inoculate youngsters against viral or bacterial pathologies?

In reality, the public health model has little relevance for early childhood development. The wide range of influences on young minds has proven resistant and sometimes impervious to government alteration.

No Magic Bullets

Head Start and other preschool programs are not "miracle drugs" that overcome the effects of poor parenting, poverty, and educational malpractice in the public schools. Nor is an institutional setting the preferred means of caring for preschoolers in most American families. Census data show that nearly three-quarters of all preschoolers are still cared for by parents or relatives at home, rather than in the day-care centers that benefit most from the new political initiatives.

It is, in other words, metaphysically impossible for preschool models, day-care subsidies, provider training, and new regulations to improve the early childhood development of most preschoolers. These children will never set foot in a day care center or preschool. What they and other children need are not new government programs but better schools and expanded tax relief for families that will allow them to make their own decisions and investments regarding their children’s development.

The National Experience

The granddaddy of the preschool movement is Head Start, a federal program that provides education, medical, and social services to disadvantaged preschool children. The program originated in 1965 as an eight-week summer program of the U.S. Office of Economic Opportunity. Over the next three decades, it grew into a $4 billion year-round program providing grants to local organizations to operate programs for about 800 thousand poor preschoolers. There are four major components to Head Start: 1) education, 2) health care,
3) parental education, and 4) social services.

Local programs provide these services in surprisingly different ways and at varying degrees of quality. Indeed, reports by the Inspector General’s Office in the U.S. Department of Health and Human Services have found that many programs fail to deliver the services for which they are paid. Many children fail to receive scheduled immunizations even after spending two or more years in Head Start.

Even given the spotty nature of Head Start performance, few analysts dispute that children who leave Head Start and enter elementary school exhibit some advantages over their non-Head Start peers in academic and emotional ways. Unfortunately, these benefits do not last long. By the third grade, according to the federal government’s own analysis of Head Start studies, the benefits of the programs "fade out." That is, disadvantaged youngsters with Head Start experience become indistinguishable from disadvantaged youngsters without such experience. Whatever Head Start is, it does not qualify as an inoculation against educational or social maladies later in life.

The States’ Experience

Fueled by Head Start’s public-relations successes in the mid- and late-1980s, several states began designing their own early childhood development initiatives in the early 1990s. With names such as "Smart Start" and "Success by Six," these programs mixed a variety of approaches to assisting families with preschoolers, including grants to local service providers, day care subsidies, home visitation by nurses or social workers, child care referral activities, and parent education efforts. In a 1998 report, Columbia University identified eight states as having the most comprehensive initiatives in the early childhood area. They included Colorado, Georgia, Minnesota, North Carolina, Ohio, Oregon, Vermont, and West Virginia. The Smart Start program, created by North Carolina Governor Jim Hunt in 1993, serves as a useful case study for how these programs have developed and what impact they have had on children’s lives.

Hunt made Smart Start the centerpiece of his election campaign in 1992. He promised not a traditional entitlement program but a public-private partnership to link preschool children with service providers in local communities. Very quickly, however, it became clear that Smart Start was in fact a government program paid for almost entirely by taxpayers and routing most dollars to service providers rather than parents. When fully funded, the program is expected to cost nearly $350 million a year—larger than entire departments of North Carolina’s state government. Smart Start will consume more resources than the state’s law enforcement budget and almost as much as the state’s entire judicial branch of government.

Smart Start may well be the most successful public policy initiative ever hatched in North Carolina—if one defines success as getting good press. Not just in North Carolina but nationally, the program has received lavish praise for making an investment in the future of the state. Most recently, the program was the recipient of the 1998 Innovation in American Government Award from Harvard University and the Ford Foundation. "North Carolina is making an effort for early childhood education that includes county by county, group after group, and business after business, and is making significant headway," said selection committee chairman David Gergen, former Clinton aide and editor-at-large for U.S. News & World Report. Other kudos for Smart Start come from national magazines such as Working Mother and Good Housekeeping.

After such heady praise, many state leaders seem to conveniently forget the purpose of Smart Start—to make a long-term impact on the education and social development of children. With only four years of operation under its belt, Smart Start cannot yet be judged conclusively by this criterion. Indeed, it is striking how many plaudits the program receives without any evidence that it is achieving its stated goals.

Like Head Start, Smart Start has been successful on a political level without establishing a demonstrable record of success in generating positive outcomes. Unfortunately for its boosters, the early evidence that does exist does not bear out Smart Start’s reputation.

Flimsy Evidence

Two studies, neither conducted by critics of the program, find it not to be the public-private partnership that Hunt promised in 1993, nor to likely be a successful "investment" in early childhood development.

In August 1998, North Carolina State Auditor Ralph Campbell released a Special Report on the Smart Start Program. It included financial data for FY 1995-96 and 1996-97. While Campbell’s office found some areas of improvement, particularly in the number of management problems at local partnerships, it concluded that Smart Start still operates without a uniform fund accounting system, without a uniform contract management and monitoring system, and without sufficient oversight by its non-profit parent, the N.C. Partnership for Children. Perhaps most significant, the audit found that Smart Start continually fails to meet its private fundraising goals.

For 1996-97, the program received $3.9 million in cash and in-kind contributions, far less than the $6.7 million in private funds required by the state legislature in exchange for past increases in taxpayer support. Even this standard was not particularly high; the legislature mandated only that Smart Start raise $1 in private funds for every $10 in taxpayer funds.

Given the early rhetoric about Smart Start not being a government entitlement program and instead being a public-private partnership, the failure to meet the legislature’s low fundraising target represents a major disappointment. Indeed, the N.C. Partnership for Children says it has exceeded the fundraising goal for 1997-98—but only after liberalizing the definition of fundraising to include gifts made directly to day-care centers, not to Smart Start itself. How much private support would flow to the centers anyway? It is impossible to tell.

With regard to the benefits of the program, only one study provides any useful information. Released in July 1998 by the N.C. Partnership for Children, the study examined the educational impact of Smart Start on kindergartners in Mecklenburg County, the state’s most populous county. The Charlotte-Mecklenburg Public Schools and Smart Start of Mecklenburg County conducted the study, surveying 5,715 parents of kindergartners, who provided demographic and Smart Start participation information. The study used the Kindergarten Awareness Profile (KAP) to identify the potential learning difficulties of incoming students. The Kindergarten Assessment in Reading and Mathematics (KARM), on the other hand, is a periodic observation of academic achievement given by classroom teachers. The results are combined at the end of the year and serve as a measurement of student achievement.

For three years, no statistically significant relationship was found between the KAP and KARM results and participation in Smart Start. That is, preschoolers who spent a single year in a Smart Start-supported day care center or simply received a Smart Start-sponsored vision or hearing screening did not perform any better on the KAP screening or the KARM achievement assessment than preschoolers who did not. For those who spent three years in a Smart Start-supported center, the study did find a statistically significant—but small—difference. On the KAP screening, long-term Smart Start kids scored an average of 93.35 (on a scale of 0-102) vs. 91.05 for kids without that experience. On the KARM, the point difference was similar: 32.18 vs. 29.83. Smart Start proponents trumpeted that last result as evidence of the effectiveness of the program.

"Smart Start is working in Mecklenburg County and this study proves it," said Ashley Thrift, chairman of the N.C. Partnership for Children. But he is mistaken.

The Head Start experience shows that the difference between participating and nonparticipating preschoolers will shrink as both groups go through the same schools. A large gain in early educational outcomes for participants might be sustained over time, but a tiny one—2 points on a test—is unlikely to persist. It is certainly not a worthwhile return on the huge investment that North Carolina taxpayers have made in the Smart Start program since 1993. Even the small jumps in scores for long-term Smart Start participants are suspect.

It is difficult if not impossible to rule out selection bias in such a study. That is, parents with other characteristics likely to improve student performance are probably more likely to get their children involved in Smart Start-type programs than are their peers. This effect may be small, but it would not take much to eradicate the small outcome differences the study found. And there is no great mystery as to why programs like Head Start and Smart Start don’t provide the long-term benefits they promise.

What Doesn’t Work

Two or three years of preschool are unlikely to make an indelible impact on children who will spend far more time with their parents than in what are often mediocre (or worse) public schools. There is no magic wand that can wish away the effects of poverty, family breakup, and educational malpractice. There are no short cuts in tackling these problems, nor are many of them amenable to governmental solutions at all—except, of course, for addressing failures in public education.

If we wish to "close the gap" between advantaged and disadvantaged children, educational services need to go beyond the provision of short-term interventions. Policy decisions that support the expansion of preschool programs without addressing the more fundamental question of trying to alter what happens to disadvantaged children in our nation’s public schools are shortsighted.

Furthermore, there is no reason to believe that government involvement or oversight of preschool and child-care arrangements will improve their quality. It is not obvious, for example, what specific factors make an early childhood program effective, so governments have little to go on in trying to mandate improvements. As the National Research Council stated in 1996, researchers do not know what constitutes the "basic ingredients" of high quality child care. The Council observed that "what is developmentally beneficial for one child may not be so beneficial for another."

The few studies that do exist suggest that the impact of day care and preschool, positive or negative, on a child’s readiness to learn is difficult to demonstrate. Only 1.3 to 3.6 percent of differences among children in cognitive and language performance has been significantly linked to child care factors; the vast majority of such differences among students when they enter school can be linked to factors such as family income, mother’s vocabulary, and family environment.

What Can Work

If policymakers really want to help all children grow and develop, the most important task is to alleviate the tax burden currently placed on families with young children. Over the years, the real value of income tax exemptions and deductions for children has eroded significantly. The recent Congressional passage of a $500 tax credit for each minor child is a good first step, but government should go further. Here is a three-part strategy for reforming the tax code to allow families to invest in programs and services that best meet the needs of their young children:

Expand the personal exemption for dependents. Families should be able to take a far larger personal exemption for each dependent. Most tax reform plans, such as the flat tax, include a more generous personal exemption. It is justifiable both on social policy grounds (it is better than spending money on a government program) and on tax policy grounds (because child development is a form of human capital investment and therefore, like other forms of investment, should not be taxed).

Expand the per-child tax credit and make it refundable. Congress should consider creating an additional $1,000 refundable tax credit for children of preschool age. This would allow parents to make their own decisions about how best to serve their children’s needs—be it a visit to the doctor, a new book or educational software, or an extra week off work for mom. The tax credit should be refundable so that families with little income tax liability, but substantial payroll tax liability, can benefit. States should convert existing day care and early childhood programs into preschool tax credits of their own. When fully funded, North Carolina’s Smart Start program, for example, will cost as much as would a $700 state tax credit for every preschooler in that state.

Allow tax-deductible Education Savings Accounts. Parents should be able to take a tax deduction for money spent on tuition, educational materials, and other costs at preschools and private schools. They should also be able to deduct every dollar they save for that purpose. Again, this would allow parents to make their own investments while being consistent with fundamental tax reform that recognizes the importance of exempting investments of any kind (in physical capital or human capital) from double-taxation.

Parents, freely making decisions without government interference, can and should be able to decide whether particular investments in early childhood education and development are worth the price they must pay in dollars and time. Perhaps, with the same dollars that governments might want to spend subsidizing preschools, parents would rather educate themselves about child development, or buy books and toys to enrich their children, or pay bus fare for a grandparent to come over three times a week to care for their child.

These are the trade-offs that real parents face every day. Parents do not automatically assume that a well-educated stranger will be a better educational and social influence on children than are themselves, their relatives, or their next-door-neighbors. In other words, they use a little common sense. Policymakers should take the same approach.

— John Hood

What Lawmakers Should Know
About Child Care Vouchers


In recent years, states have increasingly used vouchers to enable low-income parents to select the child care providers of their choice. It is generally believed that vouchers, by allowing parents to choose care based on their needs and preferences, is a superior alternative to the traditional government approach of using a single child care center to meet the needs of many children.

The cost of child care is a key issue for parents and governments alike. As they field various plans for reforms, legislators need to consider whether vouchers are also an effective way to lower those costs.


Between 1991 and 1997, government support to low-income families for child care increased from $1.8 billion to $4.9 billion. This figure is in addition to educational programs such as Head Start ($4 billion) and tax programs such as the Child and Dependent Care Tax Credit ($2.5 billion).

About one-quarter of the almost $5 billion for direct child care programs are subject to a requirement that parents be given the option of receiving a child care voucher, certificate, or voucher-like device.

The Family Support Act of 1988 created two new child care funding streams for the states to administer. States were authorized to use block grant funds to operate their own centers, to issue grants and contracts with private agencies, or—and this was the change from past rules—to give parents certificates (vouchers) or cash in advance of paying for child care, or to reimburse parents for part of their child care costs.

Some states took advantage of this new authority to provide parents with vouchers or even cash. While it was generally believed that such approaches could work, there was only limited enthusiasm for them in the organized child care field. This should not be surprising since vouchers undercut the existing semi-political world of government grants and contracts to private agencies.

In 1990, Congress acted again. At the urging of Representatives Charles W. Stenholm (D-Texas) and E. Clay Shaw Jr. (R-Florida), the certificate/voucher option was made mandatory under the new Child Care and Development Block Grant (CCDBG).

Smooth Implementation

Because of this statutory requirement, all states now offer child care vouchers, although their nature and extent varies. The U.S. Department of Health and Human Services (DHHS) reports that "During the last few years, certificate use has become the primary method of financing care." The DHHS Child Care Bureau, in its examination of CCDBG administration plans from each state and the District of Columbia, found that 32 states continue to use the Child Care Development Fund (CCDF) for grants and contracts with providers to reserve child care slots. However, grants and contracts are used primarily for before- and after-school care for school-age children; children with special needs (including infants and toddlers); and children needing protective services.

Although some communities have had operational difficulty launching their voucher systems, there seem to be no insurmountable barriers to successful implementation—or at least none is discussed in the literature. Mathematica Policy Research, Inc. researchers Christine Ross and Stuart Kerachsky found smooth implementation of 15 states’ child care agencies, a process aided by a functioning, decentralized market for child care services.

The Child Care Market

Unlike K-12 schooling, for example, the government did not maintain a near monopoly on services. Instead, the market shows a plethora of providers, both formal and informal, for-profit and not-for-profit. According to the National Child Care and Profile of Child Care Settings surveys, conducted by the Urban Institute and Mathematica Policy Research, Inc., there were eighty thousand early education and care centers providing 4.2 million slots and serving four million children in 1990. In addition, 118 thousand regulated family day care homes provided 860 thousand slots and served 700 thousand children.

Although the availability of nonregulated care is difficult to measure, the study estimated that there were from 550 thousand to 1.1 million nonregulated family day care homes.

Parental Views

Vouchers also appear to be popular with parents. Some parents want, or need, only half-day care while some need evening or after-hours care. Still others need full-day care, perhaps with extended hours. Some parents want their children cared for by other family members, but some want to use neighbors. Others want a nursery school, and still others a care center, perhaps in a church. Some parents may want all their children of different ages in one place while for others this may not be important. Some parents will want their children close to home; others will want them close to work.

The variations are almost infinite, which confirms the limitations of a top-down, one-size-fits-all approach. Based on their 1993 study of 15 states’ child care agencies, Ross and Kerachsky conclude that child care vouchers can successfully accommodate such variation more easily than centrally administered systems of grants and contracts to centers. According to Ross and Kerachsky,

Parents know best whether their children need small, quiet settings where providers can devote time to interacting with the children, or settings with larger groups of peers to provide social stimulation. Parents can also balance quality, location, and cost in a way that is best for their children and themselves. Current policies generally support parental choice in child care because it is believed to yield the best arrangement for both the children and the families. Over time, these choices should encourage providers to offer the types and qualities of child care that parents prefer.

But saying that implementation has been "smooth" does not mean there are no serious questions about the operation of child care voucher systems. Our recent, informal American Enterprise Institute (AEI) survey revealed one potential problem.

The Rough Spots

One might expect that making child care more affordable through the provision of a subsidy would increase the demand for care. If the supply of providers does not rise to meet this increase, the price of care would rise and the benefits of the subsidy would accrue to the providers instead of the families needing aid. A December 1997 report by the Council of Economic Advisors, which examines the effect of subsidies on the cost of child care, states that "the available evidence indicates that the supply of care will rise to meet an increase in demand for care without much of a change in the current price . . . As a result, in the absence of other changes, the benefits of a subsidy accrue to the consumer."

Some states, such as Alabama and Connecticut, have experienced increases in the market rates for child care, which state officials attribute to the increase in government subsidies. Moreover, some providers seem to be attempting price discrimination: They offer hefty discounts from their published rates for families not receiving government aid who pay in advance or by a certain date.

The AEI telephone survey confirmed that private payors are indeed being subsidized by government aid. These costs, of course, then accrue to the government—which means the taxpayer.

Child care funding has ballooned in recent years, and the proposed expansions in the President’s budget promise no end in sight. In part, this is a response to the government’s commitment to helping welfare recipients move from welfare to work. In the past, many low-income families turned to other family members for child care, and created community networks with neighbors and relatives that provided no-cost or low-cost care. The government now subsidizes most types of care, including care provided by relatives.

"Once child care money was available, grandma wouldn’t do it for free," said one Alabama official.

Do Vouchers Save Money?

While there is little hard evidence on either side, one can put together a fairly convincing story that vouchers could indeed raise total program costs.

On the one hand, on an individual basis, vouchers can certainly lower costs. Setting the amount of the voucher below market rates or imposing copayments saves money by encouraging parents to use relatively less expensive, informal care. On the other hand, there is reason to believe that voucher systems can raise total costs.

Some voucher systems do not make parents sufficiently cost conscious, either because they set payment rates too high, they do not require a copayment, or the copayment kicks in only at higher family incomes.

Further, vouchers seem to "monetarize" otherwise free child care services. Relative-provided care is the most frequently used form of child care for the preschool children of working mothers. According to the U.S. Bureau of the Census, in 1994, the primary child care arrangements for children under age four of working mothers were: relative-provided care (43.8 percent); organized day care facilities, including center-based and nursery school services (29.4 percent); family day care homes (15.4 percent); and in-home babysitters (5.1 percent). Regardless of income, family structure, race, or the age of the child, relative-provided care was the child care arrangement used most often.

In almost all states, parents can use vouchers to pay their own parents or other relatives to care for their children. Based on reports from state officials, some portion of voucher reimbursements is being used to pay relatives who previously were caring for the children at no charge. In addition, it appears that in some situations, the relatives are turning back to the parents some portion of the voucher’s value.

Child care vouchers may also make the rationing of services politically more difficult. If there are not funds to provide vouchers for all those formally eligible for them, a voucher system requires explicit rationing. Lawmakers, in a relatively visible manner, must decide who gets the voucher, what service is provided, and so forth. In systems based on grants and contracts to centers, on the other hand, the central authority’s rationing is less visible because it is more likely to appear to happen at the agency level, perhaps through a waiting list.

Care Without Government Planning

Lawmakers should be aware that, while there are limitations and obstacles to creating efficient voucher programs, the evidence suggests that smooth implementation of child care voucher programs is occurring throughout the nation. Although there are real gaps in child care services in some areas, especially for infants and toddlers, vouchers do seem to provide a means to reflect the needs and preferences of the great majority of children—without the central or government planning that has made so many other programs inefficient and expensive.

Child care is an urgent and difficult issue and every approach involves problems, real and potential, along with tradeoffs. At a time when the government still tries to function as a surrogate parent and child care advocates are lobbying for yet more government intervention, solutions that avoid the mistakes of the past deserve the most serious consideration.

— Douglas J. Besharov with Nazanin Samari

Welfare: A Poverty Trap for Children


Government-sponsored welfare is perhaps the greatest failure in the history of American social policy. Since President Johnson’s War on Poverty began in 1965, federal, state, and local governments have spent trillions of dollars, yet the poverty rate among children is actually higher than it was 35 years ago. The current government welfare system fails to make recipients self-sufficient, fosters out-of-wedlock births, creates long-term and inter-generational welfare dependence, and increases crime—all at a high cost to taxpayers and an even higher cost to those children trapped in the system.

When addressing the best approaches to reforming the nation’s welfare system, lawmakers frequently overlook the magnitude of efforts by the federal, state, and local governments. For example, the federal government alone operates almost eighty means-tested programs. This does not include the numerous state- and locally-operated programs. What’s more, many fail to examine the impact of these programs on children’s opportunity for a safe and prosperous future.

Ending Welfare As We Know It?

There is no doubt that the nation’s welfare system was in crisis earlier in the decade. The percent of the population on welfare hit an all-time high of more than five percent in 1993—up from less than two percent in 1960. Aid to Families with Dependent Children (AFDC) is now known as Temporary Assistance for Needy Families (TANF). TANF welfare caseloads have plummeted by almost 40 percent nationwide since the beginning of 1993. Some states, such as Wisconsin and Wyoming, have seen reductions of more than 80 percent in the number of welfare families. (See Table 2.)

But for all the good news and self-congratulations, there is still much work to be done.

The Reality

The Personal Responsibility and Work Opportunity Act of 1996 (PRWOA) was designed, by establishing time limits and work requirements, to end welfare as we know it. While many states have seen dramatic reductions in their welfare rolls, lawmakers still have a long way to go.

For starters, up to twenty percent of a state’s welfare recipients may be exempted from its welfare time limit. The work requirement, while an important component to achieving self-sufficiency, only requires single parents to work part-time and a two-parent family to work the equivalent of a full-time job between the two of them. Some welfare recipients participate in government-sponsored "work readiness" activities, rather than private-sector jobs, to meet the work requirement. In addition to the shortcomings in the welfare reform law, lawmakers should be aware that welfare reform will not be complete without examining the multitude of government welfare programs.

Contrary to popular belief, the federal government, as well as many state and municipal governments, provides a wide array of assistance and services to low-income individuals and families. Currently, the federal government operates 79 welfare programs administered by almost one dozen federal agencies. See Table 3. In this way, the generosity of the federal welfare benefits package—cash assistance, Food Stamps, Medicaid, housing assistance, etc.—may actually make welfare more attractive than seeking work. According to a Cato Institute study, the value of the welfare benefits package actually exceeds the minimum wage in most states and the average wage in several states. For many, opting for welfare is a rational decision.

Table 3 Federal Means-Tested Programs

Children on Welfare

Today, more than seven million children live in TANF families. The prospect of a bright, successful future for these children is dramatically diminished. For example:

What is perhaps even more surprising is that additional government funds do not brighten these prospects. Researchers have found that income inequality does not account for unequal opportunities and that government income transfers do not lead to improvements in children’s physical or mental health.

The Root of the Problem: Out-of-Wedlock Births

Policymakers have long understood the relationship between welfare and out-of-wedlock births. In 1960, only about five percent of all births were out-of-wedlock. Today, almost one-third of all births are out-of-wedlock and that number exceeds two-thirds for blacks. Academic research demonstrates a strong link between the availability of welfare and higher occurrences of out-of-wedlock births.

Children born out-of wedlock are more likely to be poor, and, therefore, on welfare. These children are seven times more likely to live in poverty than their intact family counterparts, these girls are more likely to bear children out-of-wedlock themselves, and these boys are more likely to engage in crime—even when compared to other poor boys living in poverty with intact families.

Today, less than seven percent of the national TANF caseload is composed of two-parent families. This problem leaves lawmakers’ well-intentioned solution of increasing aid to people in need with an even bigger problem, increased welfare dependency which can lead to higher social costs.

What Lawmakers Should Do

While welfare reform took a step in the right direction, there is far more work ahead. Lawmakers can take some important steps to end this perpetual cycle of dependence for millions of American families.

Children and the Future

Thirty-five years of misguided policies have left far too many children with an uncertain legacy. The nation’s welfare dilemma will not be resolved overnight but some issues are no longer in doubt. Passing legislation and spending taxpayers’ money does not guarantee that children will benefit. Legislators should understand that the present welfare system is the source of many problems that children face.

There are ultimately no substitutes for the benefits of work, family, and personal responsibility. Welfare reform based on these values gives legislators an opportunity to prove their claim that they have the best interest of children at heart.

— Naomi Lopez

The Child Abuse Industry


Child abuse is a horrible crime that merits the sternest of punishments our legal system can administer. Children deserve special protection and there can be no doubt that heightened awareness in recent years has helped to deter, identify, and prevent many instances of abuse. Unfortunately, this progress comes, in many cases, at a high cost to children, parents, and taxpayers, alike. Policies geared at prevention must be judged on whether or not they actually prevent abuse.

Today, many of our laws are geared to identifying and removing children from any possibility of abuse—with little or no evidence at hand. Not only do these "protections" run roughshod over parents’ rights, they can result in serious damage to the children who are ripped from their family’s homes, subjected to grueling investigations, and who are often placed in the homes of strangers (foster care), where they may be more likely to face abuse.

Government agencies spend billions of dollars investigating and prosecuting child abuse and large numbers of social workers, bureaucrats, mental health professionals, and family and juvenile lawyers hold a very real financial stake in the survival and expansion of the current system of handling child abuse. The clout of the stakeholders and the enormous funds involved have led many critics to call the system the "child-abuse industry," a direct product of federal legislation.

The Child Abuse and Prevention Act

President Nixon signed the Child Abuse and Prevention Act (CAPTA), also known as the Mondale Act, in 1974. This law provided federal reimbursements to states that set up child abuse reporting and investigation systems. Within five years, all fifty states had adopted such systems. The law required states to set up abuse reporting and investigative systems in which accusers of child abuse were provided with immunity from civil lawsuits. Further, it made failure to report suspicions of abuse a criminal offense for various groups, such as teachers and health-care workers.

Today’s system is based on production and statistics, driven by the number of allegations investigated and children removed from their homes. Indeed, federal funds are contingent on the outplacement and removal of children from their immediate family, extended family, or both. An explosion of child-abuse allegations followed the establishment of these rules. According to the government’s own data, reports increased 500 percent from 1972 to 1993, but false reports now approach ninety percent, affecting millions of families.

Is There a Crisis?

The constant barrage of media attention devoted to child abuse has led to the belief that child abuse is rampant, an epidemic. Dr. Richard Gardner, a child psychiatrist and well-known critic of the child abuse industry, maintains that we are now experiencing child-abuse hysteria—exaggerating the real incidents of abuse and steering resources away from instances of real concern. According to Gardner, the public has been told and increasingly believes that child abuse, particularly sexual abuse in childhood, is extremely common to the point of almost being universal. For instance, the Canadian government reported that about half of females and one-third of males have been the victims of sexual offenses, primarily in childhood.

It is generally agreed that childhood sexual abuse is more common than previously thought, though it is very difficult to accurately estimate its prevalence. Various surveys have tried to answer this question, but have come up with wildly differing figures—from less than two percent to fifty percent of children being abused. The discrepancy derives from a vague definition of sexual abuse.

Many surveys suffer from great vagueness of terminology, including anything from an inappropriate sexual remark to intercourse as sexual abuse. In many surveys, an unwanted sexual approach by one teenager towards another, even if refused without further incident, is included in sexual abuse statistics. But weak data and sensationalist reports have influenced the public to believe that sexual abuse by relatives is extremely common.

In reality, the majority of childhood sexual abuse appears to be single incidents perpetrated by non family members.

Problems with the Child Abuse System

The unchecked power and expansion of the child-abuse bureaucracy is fueled by a variety of factors. Reports can be made anonymously and thus are increasingly used as retribution in personal disputes. False allegations of child abuse, particularly sexual abuse, are a common tactic in divorce cases. Vague definitions of abuse also spur false allegations. Due to their vagueness and because it is a criminal offense not to report abuse, even an innocuous act, such as an adult innocently hugging a child, has frequently led to a report of child abuse. Thus, to avoid liability, even the most incredible and unsubstantiated suspicions of abuse will be reported. Financial incentives also fuel the system.

For example, employees of Florida’s Department of Health and Rehabilitative Services, District VI, sent the late Governor Lawton Chiles a letter stating: "The priority in the office is ‘making the numbers look good to Tampa’ regardless of the cost to the children and families. Management has exaggerated findings and mislead the court to allow them to remove children from a home." Though such pressure tactics are deplorable, an equally important influence directing the actions of child protective workers is their general acceptance of the epidemic proportions of child abuse, particularly that fathers cannot be trusted not to molest their children.

Child protective workers generally see themselves not as impartial judges but as child advocates who are taught to believe the children, no matter what they say. Dr. Richard Gardner notes that many child protective workers actually refer to themselves as "validators" and hold that " ‘...children never lie about sexual abuse,’ and they accept as valid every statement a child makes that might verify sex abuse."

These child protective workers, though often holding meager qualifications, wield enormous and amazingly unrestricted powers. At any suspicion of child abuse, they can generally remove children from their homes without a court order. Armed only with an anonymous allegation, they can often force parents and children into therapy, compel the accused to take lie detector or other diagnostic tests, and can deny a parent (generally a father in a divorce case) access to his children despite a court visitation order.

In addition, child protective workers frequently send children to outside mental health professionals of their own selection. Similarly, they may send children to their chosen therapists for ongoing treatment. These mental health professionals are often biased to substantiate allegations of abuse. They realize that the child protective workers, themselves biased to finding abuse, will not send referrals to therapists who do not agree with them. Such evaluations and treatment can be very lucrative. Even if government funding of therapy is unavailable, child protective workers can often force an accused parent to pay for lengthy therapy.

Recommendations for Change

The current reporting and investigative system for child abuse is based largely on the faulty assumption that abuse is rampant. This is not only detrimental to those falsely accused, it also diverts attention from the truly serious cases of abuse.

Reporting, investigating, and punishing childhood abuse should meet the standards of any other serious crime, and should respect the due process protections afforded to citizens in other criminal settings. These goals can be better achieved by:

In addition, the Mondale Act and other pertinent federal and state legislation should be repealed or amended to:

These reforms will help federal and state lawmakers to achieve their goal of protecting children from truly serious situations of abuse. At the same time, they also will be able to protect both children and parents from the abuse that flows from the false claims the current federally funded system encourages.

— Mark Schiller, M.D.

Privatization of Child Welfare Services in the States


Federal and state government programs intended to protect our children often subject them to further abuse and neglect. The perverse financial incentives inherent in the government child welfare bureaucracy often prevent the prompt and permanent placement of children into adoptive homes, and many children remain in foster care until they reach adulthood. Since the mid-1980s, the number of children in foster care has doubled while the number of children adopted has remained unchanged.

States receive federal funds for each child in the child welfare system, regardless of their progress toward permanent placement. Fortunately, this is starting to change.

Many states, without federal involvement, are reforming their child welfare systems through privatization. For example, Kansas reformed its child welfare services in 1996. A full year ahead of federal reforms, the state’s privatized approach increased adoptions during the first full year. Adoptions rose twenty-six percent in 1997.

Florida, Ohio, and Arizona also instituted similar innovative reforms to lessen the time children spend in foster care. Lawmakers around the country should apply the lessons learned from states, such as Kansas, which have successfully incorporated the private sector in child welfare services.


Fundamental restructuring of the child welfare system, specifically foster care and adoption services, is necessary to correct the systematic problems inherent in a service delivery system. Currently, the child welfare system continues to receive funding without concise standards of performance and outcome. Without accountability, there is no incentive for the state to ensure speedy adoption for children in the foster-care system.

Several states, including Kansas, restructured their child welfare systems by establishing accountability. Many states have varied ways of achieving accountability, including financial incentives and establishing performance and outcome standards. Also, state human resources departments and/or community-based agencies must develop permanency plans for children in foster care. Local providers would then be held accountable to the state for their progress. Other solutions include:

These four solutions could help alleviate many problems with failed child welfare services.

Foster Children Suffer; Adopted Children Prosper

The evidence is clear—children who are adopted fare better. For example, the results of a recent study conducted by Westat, Inc., a Rockville, Maryland research corporation, illustrate the extremely harmful and lasting effects of long-term foster care. The study concluded that "forty-six percent had not completed high school, thirty-eight percent had not held a job for more than one year, twenty-five percent had been homeless for at least one night, and sixty percent of young women had given birth to a child. Forty percent had been on public assistance, incarcerated, or a cost to the community in some other way."

Structural Options for the States

If one reviews the various governmental failures at improving the quality of children’s lives through child welfare services, attempted reform efforts, and different models, one might readily conclude government involvement does not alleviate the problems. Rather, it causes them. This is the fundamental premise of the shift to privatization.

To ensure the well-being of the child, certain aspects of the child welfare system must be met, such as focusing on the psychological needs of the child, accountability for government and agencies that do not meet rigid performance and outcome measures, and incentives for state and private agencies to effectively and efficiently place a child in an adoptive home.

Effective aspects of current programs can be applied to child welfare services in need of serious reform. The criteria for establishing reform are as follows:

1. Focus on the psychological needs of the child;

2. Minimum duration in out-of-homes services;

3. Specific definition of permanency planning;

4. Rigid performance and outcome standards;

5. Accountability;

6. Termination of parental rights;

7. Capitated or flat fee;

8. Limited bureaucracy; and,

9. Flexibility of programs to ensure improvement when a program fails.

The best option for substantial reform in child welfare services is to implement structural improvements at the state level. Nationwide, there is a wide disparity of child welfare systems in the states, from those controlled by the government to private agencies.

A Look at Kansas

In 1996, Kansas reformed its child welfare system, Social and Rehabilitation Services (SRS). This public-private partnership approach, or privatization program, which is lauded as a model for all states, increased adoptions within the first four months from thirty to fifty per month. Adoptions rose twenty-six percent in 1997 under the privatized system.

Child welfare in Kansas, prior to the 1996 reforms, was a convoluted, "crisis-oriented service delivery system" of bureaucrats and onerous regulations without accountability for costs or performance. Adoption and foster-care services were disregarded. Over a period of eight years, less than half of the legally free children were placed in homes within a year. Many children spent time in as many as eight foster homes.

In 1990, disarray in the child welfare system prompted the American Civil Liberties Union (ACLU) to file a class-action lawsuit against the state on behalf of the neglected children. The outcome was a judicial decree to review the Social and Rehabilitation Services every year. After SRS failed for five years, the state chose to restructure the agency, a move that became the impetus for immediate and significant reform. It was not until 1997 that Kansas privatized its child welfare services of family preservation, foster care, and adoption.

Although Kansas has made the most progress in privatizing its child welfare services, other states have succeeded in their own innovative reforms, specifically Michigan, Florida, North Dakota, and Arizona.

How Other States are Reforming Their Systems

The Reason Public Policy Institute named both Kansas and Michigan as being effective in their child welfare reforms by privatizing areas of the social service delivery system. Michigan reformed its child welfare system in 1992 by contracting to fifty-five providers, accounting for sixty percent of adoption and foster care services.

Since 1990, Florida has decentralized and completely restructured its Department of Children and Families. Four new departments were created and the district structure was revised, from an 11 to 15 district structure. This restructuring, in combination with newly created local volunteer oversight boards, has enabled participation to increase on the local level and has ensured involvement of communities, not government, in human services.

Subsequent to the Children’s Summit of 1995, which brought together business and community leaders to address the quality of life for foster care children, former Florida Governor Lawton Chiles launched the Governor’s Partnership for Adoption. This public-private partnership encouraged adoption by launching a public awareness campaign.

The media campaign highlighted Florida celebrities who have foster children as well as appealed to employers to be supportive of employees’ efforts to adopt. Florida’s reforms have produced a sixty-one percent increase in the number of foster children moving into permanent, adoptive homes since 1989-1990.

In 1996, Florida mandated a pilot project for privatization of child welfare services in four districts. An interim evaluation committee was created to determine the effectiveness of involving local service providers. The objective was to ascertain whether the private sector can deliver child welfare services more efficiently and effectively than government. Reports are forthcoming as other states also seek to privatize.

A unique and innovative feature of the North Dakota child welfare system is a collaboration of the state’s Child and Family Services (CFS) agency and three private providers. The resulting program is called Adults Adopting Special Kids (AASK). All foster children waiting for adoption whose parental rights were terminated are referred to AASK. AASK recruits and trains adoptive parents, provides information on special needs children, makes adoptive placements, provides supervision and consultation, and provides parental group support.

In 1997, Arizona state senator Tom Patterson initiated legislation that restructured Arizona’s child welfare funding system in a manner similar to the managed-care approach. This helped to establish financial incentives to ensure children are placed in a permanent adoptive home. This "Families First" approach revised Arizona’s service delivery system, which was wrought with systematic problems, by streamlining the process and establishing clear performance measures to guarantee the desired outcome of children being placed in adoptive homes.

The financial incentive for the child protection system to place children, quickly and sensibly, in adoptive homes was a one-time, flat-fee rate per child. Also, the foster-care payment structure reflects a new payment calculation to eliminate the higher foster-care payment compared with the adoption payment. The incentive now is to encourage adoption instead of foster care.

Privatization is Good for Children

Prior to the rise of government-sponsored child welfare services, communities rallied to ensure the safety of an abandoned or a neglected child. As federal and state governments became increasingly involved in social welfare concerns, community involvement declined. Due to the mounting child welfare crisis today, community groups, religious organizations, volunteer groups, and special-interest groups for adoption and foster-care services are once again becoming more involved.

In some states, the system has evolved into one in which accountability for children has replaced bureaucratic interests. The best example is perhaps Kansas, where legislators instituted child welfare services’ reforms to involve the private sector in foster care and adoption services.

The result has been, compared to most states, an efficient and results-oriented approach to child welfare. This has been achieved through removing the onerous state and federal regulations, allowing the states to contract with private agencies, and allowing privatization and community involvement. Legislators nationwide who seek to benefit children may now follow the path of proven results.

— Julie Sells

Nothing contained in this briefing is to be construed as necessarily reflecting the views of the Pacific Research Institute for Public Policy or as an attempt to thwart or aid the passage of any legislation.