By Reuters

Published: Wednesday, January 30, 2013, 7:10 p.m.
Updated: Wednesday, January 30, 2013

WASHINGTON — States are patching together funds from a variety of sources to care for thousands of children who have been abused or neglected, but they are struggling to meet demand for services, a federal watchdog agency said on Wednesday.

“Child welfare agencies, like other state agencies, operate in an environment of ongoing fiscal constraint,” the Government Accountability Office said in a special report. “They must make difficult choices about how to allocate their limited resources.”

In 2011, an estimated 6.2 million children were referred to child welfare agencies because they showed signs of possible maltreatment, GAO said.

According to the Health and Human Services agency, the number of referrals has increased since 2007. An estimated 5.9 million children were referred to agencies in 2010. HHS estimates 1,570 children died from abuse and neglect in 2011.

Many of those referred to agencies received counseling or home visits or were put into foster care, where families temporarily look after them. The agencies also provided help for parents, including training and substance-abuse treatment.

The majority of federal funding that year for child welfare, $7.1 billion, went to states for foster care, while $730 million was distributed through formula grants to address child abuse and safety. Congress also appropriated $189 million for child-abuse prevention, GAO said.

According to the National Conference of State Legislatures, states and the federal government spend about $25 billion every year on child welfare services.

Many states had to use money from other federal programs, with more than half in 2011 pulling money from the aid that replaced welfare known as Temporary Assistance to Needy Families, GAO found.

Some agencies also tapped Medicaid, the health insurance for the poor that states administer with partial reimbursements from the government. For example, Minnesota claimed $24 million in Medicaid reimbursements for helping children at risk of being placed in foster care and their families. Medicaid can take up to a third of a state's budget and is the fastest growing expense for almost all states.

Even with budgetary maneuvering, many states cannot meet demands. GAO canvassed 13 welfare agencies and found most are straining to provide substance-abuse treatment and material needs such as housing. Almost all said there is a shortage of mental health services, such as child psychiatry.

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