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Center for Substance Abuse Treatment. Integrating Substance Abuse Treatment and Vocational Services. Rockville (MD): Substance Abuse and Mental Health Services Administration (US); 2000. (Treatment Improvement Protocol (TIP) Series, No. 38.)

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Integrating Substance Abuse Treatment and Vocational Services.

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Chapter 6 --Funding and Policy Issues

Public substance abuse treatment programs have traditionally relied on three funding streams: Federal substance abuse block grants, Medicaid reimbursement, and State general funds. These traditional funding sources have now been joined by new potential funding sources at both the Federal and State levels. Most of these provide funding for substance abuse treatment within the context of other services such as job training, child protective services, or criminal justice.

This chapter offers guidance for administrators and providers as they attempt to navigate through this changed funding environment. Because of the extreme complexity of this new environment, it is crucial that providers develop a strategic approach to obtain sustainable funding that supports the provision of client-centered services. The first question to ask before seeking funds from any funding source is, how would these funds help our agency to achieve our mission and meet our clients' needs?

The hidden costs involved in relying upon short-term grant funding are often not well understood. Not only is a cost incurred for every grant sought, but every grant obtained incurs costs to maintain, administer, and meet funders' reporting requirements. A strategic approach is to consider ways to reduce the burden of grant administration on a program's budget.

A client-centered funding strategy focuses on connecting clients with the services they need to achieve both recovery from substance abuse and self-sufficiency through sustainable employment--not necessarily with providing all these services within the substance abuse treatment program (as described in Chapter 5).

In addition to substance abuse treatment and vocational services, clients often need housing, child care, transportation, primary medical care, or protection from domestic violence before they can reasonably be expected to find and succeed in a job. As this section will show, public funds are available for all of these services through a variety of Federal, State, and local channels. Having first identified the services that their clients need, providers then should identify the funding streams for those services in their State and community.

The best way to obtain any of these services for clients may be to contract with an outside agency that specializes in the provision of that service. Such an agency may already have funding to provide services to individuals with substance abuse disorders or may be in a stronger position to obtain such funding than the substance abuse treatment program (see Chapter 5 concerning referral networking).

Managed Care Contracts As a Funding Source

The growth of managed care offers alcohol and drug counselors opportunities to contract to provide substance abuse treatment to the enrollees of managed care health plans. Such contracts can be a sustainable, flexible funding source without the restrictions that often apply to grant funding.

For example, nonprofit providers that receive publicly funded grants may not carry funds over from year to year and are restricted in the extent to which they can switch funds among budget categories. However, no such restrictions apply to payments received through managed care contracts. Any savings that a provider can make on a contract, while providing the agreed-upon level of service, represent funds that can be spent on other program services or set aside for future use. In addition, managed care contracts usually do not carry the sometimes onerous reporting requirements that may apply to grants.

Alcohol and drug counselors who are interested in obtaining managed care contracts must have an understanding of how managed care works. Managed care evolved as a system of controlling health care costs. Costs are controlled by limiting the length of care that is reimbursed and by negotiating costs on a capitated (i.e., per-patient) or fee-for-service basis. Contracts are awarded through a competitive bidding process. To achieve economies of scale, managed care companies generally prefer to contract with a single service provider. Small providers can improve their competitive position by collaborating with other providers to submit a single bid. It is also in providers' interests to form a coalition to establish reasonable contractual rates, thus minimizing managed care companies' ability to shop for the lowest cost provider.

Impact of Policy and Funding Shifts

Thus far, this chapter has offered a snapshot (which is, of necessity, partial and incomplete) of the highly complex new funding environment that has been created as a result of these policy shifts and in which alcohol and drug counselors must now learn to operate. This new environment necessitates a radical rethinking of traditional approaches to the provision of substance abuse treatment. The field has traditionally been independent and focused on the goal of helping clients achieve abstinence from substance use. However, the imperatives of welfare and health care reform mean that this traditional narrow focus can no longer be sustained.

To maintain financial solvency in this new era of policy and funding shifts, alcohol and drug treatment agencies must forgo their traditional independence and focus on building collaborative partnerships to meet their clients' needs. Substance abuse treatment must become an integral component of a community-based, collaborative network of services, including welfare, primary health care, mental health, vocational, and family support services. Some of the public funding sources that treatment providers and their community partners can use to support the range of services that clients with substance abuse disorders need were described above. The potential of managed care contracts as a funding source was also discussed.

The transformation of substance abuse treatment from an independent service to an integrated element in a community-based collaborative service network cannot be expected to occur overnight; rather, it is a process of transition. This section describes how providers can begin to make the changes and develop the relationships necessary to enable them to serve their clients effectively in an environment that operates under assumptions fundamentally different from those under which they operated in the past.

It must be noted that existing categorical funding mechanisms do not provide incentives for collaboration. Both State and Federal governments need to make policy changes to provide such incentives in order to foster the development of community-based collaborative service networks (see the subsection "Creation of Flexible Funding Mechanisms").

Like the process of recovery from substance abuse disorders, the process of change by providers in response to the imperatives of a new policy and funding climate can be broken down into a series of steps:

  1. Learn to be flexible.
  2. Understand the local implications of the new environment.
  3. Orient the program's mission to clients' needs.
  4. Assess the program's resources and those of the community.
  5. Embrace collaboration as a strategy for meeting clients' needs.
  6. Adopt a sustainable funding strategy.
  7. Accept accountability for outcomes.
  8. Advocate for substance abuse treatment services.

Step 1: Learn To Be Flexible

The defining feature of the new funding environment is change. Although the recent shifts in policy and funding are significant, there is no doubt that further change will occur in the future as new policies undergo further refinement and as States and localities embrace their devolved authority. For example, new Federal legislation affecting job-training reform was enacted shortly after the Consensus Panel convened for this TIP. The potential impact of this new legislation--the Workforce Investment Act of 1998--has not yet been assessed. Flexibility is a key attribute associated with success in an environment characterized by change.

Providers must accept not only the need to change in response to an altered environment, they must also accept the need to continually adapt. They must develop and implement flexible strategies that will continue to serve them as further change occurs. In addition, providers must learn to regard substance abuse treatment as a service that can be delivered in a variety of ways in a variety of settings rather than as a program characterized by a defined setting and defined, sequential components.

Step 2: Understand the Local Implications of the New Environment

A second defining feature of the new environment is local variability. Although certain features of new policies on welfare are, for example, federally mandated, in general States and localities have considerably more authority than they previously did to make decisions about policy implementation and funding that can significantly affect the provision of substance abuse treatment. One result of increased State and local discretion is that decisions implemented in one State or community may differ greatly from the choices made elsewhere.

As previously noted, in some States the Single State Agency (SSA) has been subsumed within a larger State agency, such as the department of community or behavioral health. Federal funds that are administered by the department of education in one State are the responsibility of the department of community health in another State and of the executive office of the governor in a third. In some States substance abuse treatment has become the responsibility of local communities, and it has become an optional service.

Given the extent of local variability, providers have no choice but to find out which agencies in their State and locality are making important policy and funding decisions that affect the delivery of substance abuse treatment. Contacts in the SSA may be a useful source of such information. Active involvement in a State or community providers association is another effective strategy for learning who the key "budget holders" are and where the key decisions are made. Subscriptions to journals in the substance abuse treatment field can also be important sources of information. Examples of journals include Alcohol and Drug Abuse Weekly, Substance Abuse Funding News, Substance Abuse Report, and Drug Abuse Monitor. In addition, a great deal of information about policy changes and funding sources can now be obtained via the Internet; for example, The Welfare Information Network (www.welfareinfo.org), The Finance Project (www.financeproject.org), and the National Performance Review (www.npr.gov).

Providers should ask their SSA for a copy of the agency's annual plan for the allocation of substance abuse prevention and treatment block grant funds. This plan can provide crucial information about the State's funding priorities for substance abuse treatment. Some States, for example, have made a policy decision not to allocate block grant funds to methadone maintenance programs or to give such programs low funding priority.

Providers can also ask their SSA to publish an annual inventory of all funding sources for substance abuse treatment services. The annual inventory published by the State of Arizona is a model that other States could emulate (see the section titled "The Role of the SSA" later in this chapter).

Other important pieces of information for providers to know are the amount that their State allocates from its general funds to support substance abuse treatment and the level at which their State provides matching funds when required to obtain Federal funds. Some States contribute the minimum required in matching funds, whereas others have set higher levels. A local providers association or sources in the SSA may be the best places for providers to begin their search for this information.

Step 3: Orient the Program's Mission to Clients' Needs

To succeed in the new environment, providers must have a clear understanding of the demographic characteristics and service needs of their client population. They must know, for example, how many of their clients are on welfare, how many have children, and how many are involved with the criminal justice system. Armed with this information, they are able to clarify their mission--what they need to do to meet their clients' needs, who they need as partners, and what resources are needed from partner agencies.

Step 4: Assess the Program's Resources and Those of the Community

Having thoroughly assessed their client population and aligned their mission to focus on their clients' needs, providers next need to assess their existing capability and resources to meet those needs. A realistic appraisal of the program's strengths and limitations is a crucial part of this process. It is not necessary--indeed, it is not possible--for any program to meet all its clients' needs with in-house resources. Rather, a program should begin to identify potential collaborators in its community that are already providing services needed by its clients (see Chapter 5).

Figure 6-1 outlines a process by which programs can assess their clients, their mission, their strengths and limitations, and their community resources and relationships.

Step 5: Embrace Collaboration as a Strategy for Meeting Clients' Needs

It must be acknowledged at the outset that collaboration presents many challenges. Collaboration is difficult for many reasons, not the least of which is that at some level it requires relinquishing control over certain processes.

Once a program has adopted an approach that is centered on meeting clients' needs and has realistically assessed its own strengths and limitations, collaboration becomes a strategy that enables it to meet its clients' needs more effectively than it otherwise could.

Collaborative relationships with providers of services whose clientele may overlap with that of the substance abuse treatment program (such as welfare, vocational rehabilitation, law enforcement, and public housing agencies) are also a strategy for ensuring that all individuals with substance abuse disorder problems--no matter what their point of entry into the human services system may be--have access to treatment. Providers may also find it mutually beneficial to collaborate with other substance abuse treatment programs. For example, a coalition of several providers may be in a better competitive position when seeking a contract to provide substance abuse treatment services to a managed care organization. One partner whose strength is screening and assessment can undertake that function for the entire coalition, whereas a partner who already has a highly developed information system can perform the coalition's data collection and analysis. Similarly, a provider that has specialized culturally sensitive services for one ethnic population may be able to help another agency that does not have such services.

Collaboration can also be a strategy for obtaining services such as cost-effective staff training. For example, two or more providers could share the cost of holding a staff training workshop on vocational and substance abuse issues.

Step 6: Adopt a Sustainable Funding Strategy

Once a program's mission becomes client-centered, the next step is to adopt a client-centered funding strategy. This means that rather than pursuing all possible sources of funding, a program focuses on seeking sustainable funds that will enable it to achieve its mission and meet its clients' needs.

Such an approach may initially seem counterintuitive. The experience of many substance abuse treatment programs is that competing for the largest and broadest range of funding is the key to success. However, this approach fails to take into account the hidden costs of reliance on short-term grant funding.

The U.S. Department of Housing and Urban Development (HUD) provides an example of collaboration encouraged by funding. To apply for funds to provide services for homeless individuals (many people in substance abuse treatment are homeless under HUD's definition), communities must form coalitions and work collaboratively toward implementing strategies aimed at eliminating homelessness. These collaborations must define how money will flow to ensure that clients receive the needed services, from substance abuse treatment and medical services to food, etc. HUD requires that these coalitions seek more involvement from the private sector, especially the business community. This holds tremendous potential for matching clients with jobs and pooling resources to ensure that clients are successful.

Adopting a sustainable funding strategy means identifying and pursuing institutional funding sources such as Title XIX of the Social Security Act (which covers Medicaid reimbursement), Title IV of the Social Security Act (which covers treatment for parents who are clients of child protective services agencies), private health insurance reimbursement, and contracts to provide substance abuse disorder services to managed care companies, welfare and public housing agencies, and so on.

Also part of a sustainable funding strategy is forging agreements with other agencies to provide services required by a substance abuse treatment program's clients. For example, clients on welfare who have substance abuse problems might be referred to a vocational services agency or a community-based organization (CBO) that has funding through the Department of Labor's Welfare-to-Work program. Such a strategy leverages nontreatment funds to meet clients' needs for services that will help them along the path to self-sufficiency through sustainable employment.

Before being ready to pursue sustainable funding mechanisms, an alcohol and drug administrator must understand how funding streams flow in its State and community (Step 2), must have identified potential collaborators that are providing services needed by the alcohol and drug agency's clients (Step 4), and must have accepted collaboration as a strategy for more effectively meeting its clients' needs (Step 5).

Step 7: Accept Accountability For Outcomes

There has been a trend in recent years toward demanding greater accountability by all kinds of publicly funded programs, including substance abuse treatment programs. Evidence of effectiveness is frequently a prerequisite for continued funding. Federal agencies such as the Department of Health and Human Services (DHHS) are known to be interested in offering more grants that are linked to performance.

Providers who recognize the need to form collaborative partnerships to meet clients' needs must be prepared to be accountable for treatment outcomes. The collection of outcomes data at the community level serves two purposes:

  1. Documentation of overlapping caseloads among substance abuse treatment, welfare, public housing, family services, criminal justice agencies, disability organizations, and health organizations.
  2. Evidence of the effectiveness of substance abuse treatment for specific groups of clients such as welfare recipients, public housing residents, clients of child protective services, individuals involved in the criminal justice system, and individuals with coexisting disabilities (mental, physical, emotional, HIV, etc.).

Outcomes data serve to document the value substance abuse treatment adds to the services of other agencies; that is, how substance abuse treatment helps reduce costs and enhance client success for other agencies. For example, substance abuse treatment can enable former welfare recipients to sustain employment, which in turn might decrease drug-related violence and criminal activity in a public housing complex.

Providers have a responsibility to make resources available for the collection of outcomes data, whether or not such resources are earmarked by funders. It is not sufficient to collect data about the numbers of clients treated. Although many States collect outcomes data, it is in programs' interests to collect and analyze their own data. Computer technology now makes it easier for programs to do this.

In addition, programs can use their clients' experiences to provide powerful anecdotal evidence of the benefits of treatment to individuals and communities. Examples include a woman who regained custody of her children or a man with a history of incarceration for drug-related offenses who now works to prevent substance abuse among at-risk youth in a public housing complex.

In the postwelfare-reform environment, it is essential that the practical effects of work-first policies are documented. A great deal of evidence demonstrates that mandatory work programs are unlikely to succeed when they fail to take into account individuals' needs for substance abuse treatment, vocational rehabilitation, and family and workplace support services.

Step 8: Advocate for Substance Abuse Treatment Services

As noted earlier under Step 2, States and communities now have much greater discretion over policy implementation in welfare, substance abuse treatment, and other related services. Increased State and local discretion means that providers must put a great deal of effort into understanding how the new policies are being implemented in their community. It also presents the substance abuse treatment field with much greater opportunities for influencing the direction of State and local policies on substance abuse treatment. Decisions made at the State and community levels can be changed by advocacy. It is more important than ever, therefore, for providers to become actively involved in the policymaking process, providing concrete data to document the effectiveness of substance abuse treatment services.

State and community provider associations, in addition to being useful arenas for providers to share information about policy developments and funding sources, can also be effective advocacy organizations for substance abuse treatment. In several States and communities, provider associations have sponsored town hall meetings and other forums to educate community leaders and legislators about the benefits of substance abuse treatment. In communities where no providers' association exists, providers are strongly advised to form one. For example, Rhode Island's provider trade association offers multiple services for alcohol and drug treatment staff, including a forum for meeting and discussion, education/training, and a political power base for client and provider advocacy. In California, statewide advocacy groups represent the county substance abuse treatment agencies, providers, and other related organizations. These groups meet regularly with the SSA in a policy forum that serves as an arena for exchanging information and providing the opportunity to influence policy decisions.

Providers have a responsibility to make their voices heard when States and communities set priorities that exclude or adversely affect substance abuse treatment. By presenting data on the extent of untreated substance abuse disorders among women on welfare, for example, they can draw attention to the shortage of publicly funded treatment slots for women and the need for support services such as child care that make it possible for women with children to obtain treatment.

The substance abuse treatment field in general has not advocated effectively for the benefits of treatment. Policymakers and many members of the public support reforms such as work-first initiatives because such policies are consistent with deeply held beliefs in mainstream American culture about personal responsibility for life choices, but also because they are often genuinely unaware of the substantial body of evidence that substance abuse treatment works.

Providers must become more actively involved in educating the public and community leaders about the effectiveness of substance abuse treatment. The ability to present compelling data that demonstrate the benefits of treatment not only to individuals but also to communities as well as to society in general is a prerequisite for effective advocacy. Thus, advocacy is strongly linked to accountability.

Future Considerations

Providers must clarify their mission, understand their clients' needs, develop a client-centered focus, and become full partners in a collaborative service network that endeavors to meet the multiple needs of clients recovering from substance abuse disorder. This represents nothing less than a transformation of the substance abuse treatment field.

State and Federal agencies have a responsibility to facilitate this transformation not only by adopting policies and procedures that encourage and reward collaboration, accountability, and client-centered approaches to care but also by embracing these principles in their own behavior. This final section examines the changes necessary at State and Federal levels to model the transformation of substance abuse treatment services at the provider level.

The Role of the SSA

The overarching message of this chapter is that substance abuse treatment services must cease to be a self-sufficient entity not engaged with the wider health and human services community and must become an integral part of a community-based service network. It follows, therefore, that the future role of the SSA must extend further outside the traditional boundaries of the substance abuse treatment field than has previously been the case for SSAs.

Welfare reform enacted by Congress in 1996 both created new Federal mandates for States to carry out and devolved to States many decisions about implementation of the new policy. Most of these mandates and decisions are not carried out by SSAs, yet their impact on both clients and providers of substance abuse treatment services is substantial. In addition, new funding streams controlled by other State agencies may be used to support the provision of substance abuse prevention and treatment services as well as vocational and other services needed by individuals with substance abuse disorders who are subject to the work requirements and benefit from time limits imposed by welfare reform.

As a result of State government restructuring, in many States the SSA is no longer a free-standing agency but a division within a larger department such as community or behavioral health. Such restructuring should not, however, be an excuse for lack of outreach efforts. It could, indeed, facilitate outreach because at least other divisions within the same agency may provide some of the other services that deal with clients with a substance abuse disorder.

These changes make it necessary for SSAs to adopt a much broader view of substance abuse policy and their role in its implementation. Although Federal substance abuse block grant funds still represent an important funding source for substance abuse treatment services, substance abuse policy at the State level must transcend decisionmaking about the distribution of the SSA's "own" block grant funds and take into account the reality that clients with substance abuse disorders are also likely to be clients of the State's welfare, criminal justice, public housing, child protection, and community health services.

SSAs, like providers, must adopt a client-centered approach that focuses on ensuring that the multiple needs of clients with substance abuse disorders are met across a spectrum of fragmented agencies and services. Outreach to other government agencies that provide services to individuals with substance abuse disorders must become a key objective for SSAs.

SSAs also have a responsibility, in addition to collecting and analyzing data on the outcomes of substance abuse treatment, to ensure that lessons learned through data analysis are applied in ways that improve outcomes for clients. Data collection is only useful if it results in policy and program changes that benefit clients. For example, the fact that nationally only 27 percent of all publicly funded treatment slots are allocated to women has great consequences for links between employment programs for welfare recipients and treatment programs needed to make these clients self-sufficient while addressing the critical needs of their children at the same time. The data point of 27 percent is the beginning of such a policy discussion, but when a community does not focus on gender in its discussion of who receives treatment benefits or amalgamates both genders and their needs into a single group, it becomes more difficult to use existing data to support requisite system reforms.

Creation of Flexible Funding Mechanisms

Most funding mechanisms remain narrowly focused and fail to provide incentives for the interagency collaboration that is required to make the envisioned client-centered care network a reality. At the Federal level, it is likely that a multiplicity of categorical funding sources will remain for the foreseeable future, although there is a trend in some Federal agencies toward awarding more performance-driven grants. It is extremely cumbersome for providers to have to deal with such a vast number of funding sources, all of which operate under different procedures and rules.

One approach that may represent a way out of this dilemma is to promote mechanisms that permit flexible or "wraparound" funding that involves a shared fiscal responsibility at the local level. Simply put, shared fiscal responsibility involves empowering local multidisciplinary coalitions to tie together funds from a variety of categorical sources to support an integrated network of services. This approach also might be termed "bottom-up block grants."

Several States--including Georgia, California, Minnesota, and Oregon--have passed legislative incentives for funding that allow wraparound or shared fiscal responsibility at the local level. In some States, the executive branch may be able to use existing authority to create such incentives. Nonlegislative approaches are also possible. The Federal government's National Performance Review is sponsoring several models of how shared fiscal responsibility might work (see their Web site, www.npr.gov), and the Washington, DC -based Finance Project has published a series of reports on shared fiscal responsibility outside the substance abuse treatment field (see www.financeproject.org).

At present, States that wish to provide incentives for some kinds of shared fiscal responsibility must obtain a waiver from the Federal government.

Family-Centered Treatment Strategies

The criminal justice orientation of the public substance abuse treatment system devalues the treatment of women and ignores the intergenerational effects of substance abuse on children. For example, as mentioned earlier, 27 percent of publicly funded admissions are women. Some treatment agencies and funders do not collect data on the children of their clients.

In addition to a reconsideration of the allocation of public treatment slots to women, there is a need to integrate prevention and treatment activities focused on families to recognize that substance abuse treatment for a mother represents substance abuse prevention for her children. Substance abuse treatment for the mother leads to better parenting skills, which in turn decreases the number of neglect and child abuse cases. Such prevention also may mean the difference between a child's continuing dependency on the social service and criminal justice systems or his becoming a contributing member of society.

Current categorical funding mechanisms and a traditional focus on clients over families serve as major disincentives to such integration.

Federal and State Funding Sources

While the major source of public funding for substance abuse treatment comes through the SSAs, a variety of funds useful to substance abuse treatment providers are also available from other sources. This chapter describes 12 major sources of public funding that may be of use to treatment programs. Different sources will pay for different types of services and many stipulate the specific population for which the funds can be used.

The agencies responsible for administering Federal funds at the State level vary enormously. For example, the department of economic development in one State, the department of education in another, and the department of health in a third may handle vocational rehabilitation (VR) funds. Also, in some States the SSA has been subsumed within another State agency.

Many States also offer their own funding sources that may be used to support substance abuse treatment and related services. However, State funding sources are too numerous, and the State-level administrative structures responsible for such funding too diverse, for a list to be useful. Providers need to become familiar with the organization of their State government and find out which divisions are responsible for which funds.

Federal sources of discretionary, time-limited project grants that may also be available are summarized in Appendix F.

Substance Abuse Prevention and Treatment (SAPT) Block Grant

The bulk of these funds, which support a full range of substance abuse prevention and treatment services, are awarded to States by formula (42 U.S.C. §300). Thirty-five percent of the SAPT block grant funds are earmarked for prevention and treatment activities relating to alcohol abuse and 35 percent for prevention and treatment activities relating to drugs. Twenty percent of the grant is to be used for primary prevention activities and 5 percent for the administration and support of the SSAs. Other SAPT block grant "set asides" were established for programs that target special populations, such as services for women, especially for pregnant and postpartum women and their substance-exposed infants, and, in certain States, for HIV screening.

Each State's SSA is responsible for delivering these Federal funds to counties and individual providers. Treatment programs should contact the appropriate SSA for more information.


Title XIX of the Social Security Act (42 U.S.C. §§1396-1396v) provides funding for substance abuse treatment of Medicaid-eligible individuals as an optional benefit at the States' discretion. The availability of Federal Medicaid funds is conditional upon the provision of State matching funds; the level of matching funds required is variable based on a number of factors. Medicaid eligibility varies by State and is based on income, age, participation in other Federal programs (such as Supplemental Security Income [SSI] and adoption assistance/foster care), and pregnancy status. States have discretion over whether to provide a substance abuse treatment benefit to their Medicaid populations, and different States have different levels of coverage (e.g., residential, outpatient, day or night treatment). Many States have opted not to provide such services.

In most States, Medicaid funds do not flow to the SSA, and the agency administering the Medicaid program varies by State. Many States now require Medicaid-eligible individuals to enroll in a managed care program. Interested parties should contact their State's Department of Health and Human Services for further information.

Welfare-To-Work Initiatives

The Temporary Assistance for Needy Families (TANF) program has several purposes: (1) to provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; (2) to end needy parents' dependence on government benefits by promoting job preparation, work, and marriage; (3) to prevent and reduce the number of out-of-wedlock pregnancies; and (4) to encourage the formation and maintenance of two-parent families. As discussed earlier (in Chapter 2), benefits are time-limited and work is mandatory; more information on TANF can also be found in Chapter 7.

Each State receives a block grant based on its previous level of spending on Aid to Families With Dependent Children (AFDC), the Federal welfare program that TANF replaces in accordance with the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. For many States, this block grant represents a financial windfall. Although TANF funds cannot be used to provide medical services, some substance abuse treatment (e.g., outpatient counseling, residential services) can be paid for by TANF funds. Providers need to know the amount of the grant in their State and whether any of those funds were set aside for substance abuse treatment services.

The U.S. Department of Labor's welfare-to-work program also awards grants to support employment services for TANF recipients and the noncustodial parents of children receiving TANF. Three-quarters of the funds go to States in the form of formula grants and one-quarter go to local communities in competitive grants. Any services that overcome barriers to employment, such as job training, transportation, child care, and substance abuse treatment, are eligible for funding. Formula funds are directed to Private Industry Councils (PICs) or Workforce Investment Boards (WIBs), Workforce Development Boards, and similar bodies at the State and community levels; the precise funding channels vary by State. This program's specific recognition of a substance abuse disorder as a barrier to employment is an innovation. As previously noted, some States consider participation in substance abuse treatment to be a valid work activity, whereas others do not.

The Department of Labor also offers job training funding for economically disadvantaged individuals through the Job Training Partnership Act (JTPA) (29 U.S.C. §§201-206). Eligible services include basic and remedial education, job skills assessment, on-the-job training, job-search assistance, work experience programs, internships, school-to-work transition programs, and transportation and relocation assistance. Specific groups eligible for services include unemployed adults, youth, the disabled, dislocated workers, Native Americans, migrant and seasonal farm workers, and veterans. Funds are channeled to States, which oversee the planning and operation of local programs; programs can contact their State department of labor for further information. Alcohol and drug counselors should consider partnering with agencies receiving JTPA funds in their locality to offer vocational services to the substance abuse treatment agency's clients. However, the JTPA act is superseded by the Workforce Investment Act of 1998 (P.L. 105-220) and was repealed July 1, 2000.

The Workforce Investment Act consolidates more than 60 Federal programs into 3 block grants to States for employment, training, and literacy. This job training reform measure replaces programs currently under JTPA, the Stewart McKinney Act, and the Carl Perkins Act. Under this new law, States will receive block grants for adult employment, training for disadvantaged youths and families, and literacy. The legislation establishes a system of "one-stop" centers that are intended to provide job seekers with the information and advice they need to obtain training and employment. Individuals who seek services at the one-stops will be given vouchers with which to fund training. The current local decisionmaking entities--PICs or WIBs--will continue to exist under a new name but will have less stringent membership requirements with respect to union- and community-based representation.

The bill establishes State WIBs and requires States to submit a plan that outlines a 5-year strategy for their statewide workforce investment systems. States are required to designate local workforce areas, and local WIBs are to be appointed by the chief elected local officials. Functions of the local WIBs include, among other things, development of the local plan; designation, certification, and oversight of one-stop operators; identification of eligible providers of intensive and training services; and development and entry into memoranda of understanding with one-stop partners.

The one-stop delivery system in each local workforce investment area is to provide core services and access to intensive services, training, and related services. Included in those program elements for youth activities are comprehensive guidance and counseling, which may include drug and alcohol use counseling and referral. For adult training, the bill requires use of Individual Training Accounts but allows for use of contracts for training services for CAOs or other private organizations that serve "special participant populations," defined as those who face multiple barriers to employment.

Furthermore, with regard to vocational rehabilitation, the bill calls for evaluation activities on identifying what works well rather than continuing to seek to define the chronic problems connected to the employment of individuals with disabilities.

Treatment and Prevention in Public Housing

HUD offers funding for substance abuse treatment of public housing residents under the Public Housing Drug Elimination Program (42 U.S.C. §11901). HUD awards grants to Public Housing Authorities (PHAs), Tribes, or Tribally Designated Housing Entities (TDHEs) in order to create programs to eliminate substance abuse and substance-abuse-related crime in their developments.

Services eligible for funding include substance abuse prevention, intervention, referral, and treatment as well as job training (aimed at assisting prevention efforts), and security improvements in public housing complexes. Funds are channeled to local public housing authorities, which contract with service providers.

Vocational Rehabilitation

These funds, administered by the U.S. Department of Education, support services to enable people with disabilities to participate in the workforce. Funds are provided according to the Workforce Investment Act of 1998 (P.L. 105-220 §106) and the Carl D. Perkins Vocational and Technical Education Act of 1998 (P.L. 105-220). Chapter 7 of this TIP provides further information on both of these Acts.

Services eligible for funding include substance abuse disorder assessment and treatment, prescription medications, equipment that enables disabled individuals to have access to and function in the workplace (such as wheelchairs, hearing aids, and adapted computers), and transportation. Vocational rehabilitation will also fund training and secondary education, as well as vocational testing and evaluation. Funds are channeled to State agencies with responsibility for vocational rehabilitation. The location of this agency within the State government varies by State.

Child Protective Services

Title IV of the Social Security Act (42 U.S.C. §1862) provides funding for foster care and services to prevent child abuse and neglect. Eligible services include substance abuse treatment for parents who are ordered by a court to obtain treatment and are at risk of losing custody of their children, and child care while a parent is in residential treatment. The estimated overlap between clients of child protective services agencies and parents with a substance abuse disorder is 60 to 80 percent (National Center on Addiction and Substance Abuse at Columbia University [CASA], 1999; Young et al., 1998). Title IV funds are usually administered by State social services departments.

Title IV funds represent a large, open-ended potential funding source for substance abuse treatment for women who are involved in the child welfare system, an underserved population. Women with children may be unlikely to enter residential treatment if the facility cannot accommodate their children, if adequate child care is not available, or if doing so means giving up their children to foster care (Strawn, 1997). For more information on child abuse and neglect issues and substance abuse treatment, see the TIP, Substance Abuse Treatment for Persons with Child Abuse and Neglect Issues (CSAT, 2000a).

Expanded Health Insurance Coverage for Children

Title XXI of the Social Security Act (P.L. 105-33 §4901a) provides Federal funding for the Children's Health Insurance Plan (CHIP), a public-private initiative to provide health insurance coverage for children who are ineligible for Medicaid and not covered by private insurance. Funds are awarded to States by formula, and States have considerable discretion in deciding what services to cover. In some States, substance abuse treatment for adolescents is a covered service. The agency administering CHIP funds varies by State; it may be a State agency or a private entity. Interested providers should contact their State's Department of Health and Human Services to find out what services are covered and who is the funding intermediary in their State.

Social Services Block Grant

Title XX of the Social Security Act (42 U.S.C. §§1397-1397f) provides flexible funding that States can use for child care, transportation, detoxification, and substance abuse treatment services, and social services for clients with substance abuse problems. This block grant is administered by DHHS, and eligibility is State-determined. Providers should contact State Departments of Health and Human Services for further information.

Criminal Justice

The U.S. Department of Justice (DOJ) Weed and Seed program administered under P.L. 105-277 is intended to reduce drug activity in target communities. Substance abuse treatment for residents of the target communities is an eligible service. Funds are channeled through the offices of State attorneys general. Most grantees are law enforcement agencies that are working as part of a community coalition. Treatment providers should contact the Executive Office for Weed and Seed (EOWS) at the DOJ for further information on this program.

The DOJ Office of Justice Program's (OJP) Drug Courts Program Office (DCPO) administers the Drug Court Grant Program, which originated under Title I, Subchapter XII-J of the Omnibus Crime Control and Safe Streets Act, as amended by Title V of the Violent Crime Control and Law Enforcement Act of 1994 ("the 1994 Act"). 1 This legislation authorized the Attorney General to make grants to States, State courts, local courts, units of local government, and Indian tribal governments to establish drug courts in response to the needs of increased numbers of nonviolent, substance-abusing adult and juvenile offenders. Congress has appropriated substantial sums of money for the Drug Court Grant Program each year since the program's inception. Most recently, in the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, of October 1998, Congress appropriated $40 million specifically for the Drug Court Grant Program, "as authorized by Title V of the 1994 Act." 2

In January 1997, the DOJ released Defining Drug Courts: The Key Components, a report developed through a cooperative agreement between the OJP, DCPO, and the National Association of Drug Court Professionals, that describes the 10 key components of a drug court and specifies performance benchmarks for each component. This report was endorsed by the Conference of Chief Justices, Conference of State Court Administrators, and National Association of Pretrial Services Agencies. The 10 key components and their performance benchmarks provide the foundation for the guidelines available on the DCPO Web site for those completing grant applications. The report is available through the National Criminal Justice Reference Service Clearinghouse at (800) 421-6770, and on the DCPO Web site (http:// www.ojp.usdoj.gov/dcpo/Define).

At its Web site, the DCPO specifies that drug courts funded under the grant program must be defined as "a specially designed court calendar or docket, the purposes of which are: to achieve a reduction in recidivism and substance abuse among nonviolent adult and juvenile substance abusing offenders; and to increase their likelihood for successful rehabilitation through early, continuous, and intensive judicially supervised treatment, mandatory periodic drug testing, and the use of graduated sanctions and other rehabilitation services. A separate or special jurisdiction court is neither necessary nor encouraged." 3 In addition, drug courts must include two specific critical elements:

  1. Diversion, probation, or other supervised release involving the possibility of prosecution, confinement, or incarceration based on noncompliance with program requirements or failure to show satisfactory progress
  2. Programmatic offender management and aftercare services 4

Funds available for the treatment of clients making the transition from incarceration to the community vary from State to State. Chapter 4 of TIP 30, Continuity of Offender Treatment for Substance Use Disorders From Institution to Community (CSAT, 1998d) describes the ways in which funding practices differ between States. Providers seeking additional information concerning Federal funding opportunities (such as vocational training pilot programs for criminal offenders) should contact the Office of Correctional Education (OCE) in the Department of Education. The OCE coordinates all correctional educational programs in the department, and provides technical support relating to correctional education (see their Web site at www.ed.gov/offices/OVAE/OCE/).


The Rehabilitation Services Administration (RSA), which is housed under the U.S. Department of Education's Office of Special Education and Rehabilitative Services, oversees programs that help individuals with physical or mental disabilities obtain employment (Rehabilitation Act of 1973, 29 U.S.C. §701ff). Employment is obtained through the provision of such supports as counseling, medical and psychological services, job training, and other individualized services. RSA's major formula grant program provides funds to State VR agencies to provide employment-related services for individuals with disabilities, giving priority to individuals who are severely disabled.

In addition, general equivalency diploma (GED) programs are offered free of charge by many public school systems. High school equivalency or remedial programs for students with special needs may also be offered by some State education departments. Academic tutoring is offered at many libraries by literacy volunteers. Other private, nonprofit social services agencies such as Travelers Aid and vocationally oriented mental health programs (e.g., Fountain House in New York City), also offer educational remediation and GED preparation.


Finding adequate transportation is a major challenge facing people who are making the transition from welfare to work. Two-thirds of new jobs are in the suburbs, but three of four welfare recipients live in rural areas or central cities. There are several programs that help to provide transportation for people transitioning to work (Federal Transit Administration, 1998). Under TANF, funds may be used for a range of transportation services as long as these expenditures reasonably accomplish a purpose of the TANF program, such as promoting job preparation and work.

The U.S. Department of Labor provides Welfare-to-Work (WtW) funds to States and local communities to help create additional job opportunities for the hardest-to-employ TANF recipients. WtW funds also can be used for transportation assistance to help these recipients move into unsubsidized employment.

The Federal Transit Administration, which is housed within the U.S. Department of Transportation, oversees the Job Access and Reverse Commute grant program. This program, funded under the Transportation Equity Act of 1998 (49 U.S.C. §5309), helps States and local communities develop flexible transportation services that connect welfare recipients and other low-income persons to jobs and other employment-related services. These projects are aimed at developing new or expanded transportation services, such as shuttles, vanpools, new bus routes, connector services to mass transit, employer-provided transportation, and guaranteed ride home programs. The Job Access and Reverse Commute grant program also is intended to establish a collaborative regional approach to job access challenges and involves organizations such as transportation providers, agencies that administer TANF WtW funds, human services agencies, employers, metropolitan planning organizations, States, and affected communities and individuals.

Empowerment Zones and Enterprise Communities

The Empowerment Zone and Enterprise Community Initiative (26 U.S.C. §1391) provides tax incentives and performance grants and loans to create jobs and expand business opportunities in the 87 urban areas and 38 rural areas that have been designated as Empowerment Zones (EZs) or Enterprise Communities (ECs). The initiative also focuses on activities to support people looking for work, including job training, child care, and transportation. Within each EZ or EC, residents decide what projects and activities should occur in their own neighborhoods. Grants can be used for a wide range of activities that assist residents, including job creation efforts linked to welfare reform, job training, and substance abuse prevention. Although the authorizing legislation made clear that the provision of substance abuse treatment services should be a priority, grantees have considerable discretion over the kind of activities they wish to support and in many cases have not chosen to fund substance abuse treatment services.

HUD and the U.S. Department of Agriculture (USDA) designated the original EZs and ECs; originally there were 72 urban areas and 38 rural areas, and 1997 legislation authorized HUD to designate 15 more urban areas and USDA to designate 5 more rural areas. HUD reviews the strategic plan and annual performance reports from each EZ or EC. Providers can contact HUD for a list of designated EZs and ECs as well as more information about activities funded under this program.

Community DevelopmentBlock Grants

Alcohol and drug counselors may apply for community development block grant funds to support capital improvements such as roof repairs and building renovations. These grants were authorized by the Housing and Community Development Act of 1974 (42 U.S.C. §5301). They are administered by HUD, are distributed by formula to qualifying cities and urban counties and, through the States, to small communities that do not qualify for direct entitlement grants. The program's objectives are to benefit low- and moderate-income persons, aid the elimination of slums or blight, and meet other urgent community development needs.

Funds may be used to carry out a wide range of community development activities directed toward neighborhood revitalization, economic development, and the provision of improved community facilities and public services.



Title I, Subchapter XII-J of the Omnibus Crime Control and Safe Streets Act, as amended by Title V of the Violent Crime Control and Law Enforcement Act of 1994 ("the 1994 Act"), 42 U.S.C. §§3796ii et seq. (1994 & Supp III 1998) (repealed 1996). U.S. DOJ regulations for the Drug Court Program can be found at 28 C.F.R.


Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, P.L. No. 105-277, 112 Stat. 2681-63 (1998).


U.S. DOJ, Office of Justice Programs, Drug Court Program Office. FY 1998 Program Plan [Online]. Available: http:// www.ojp.usdoj.gov./Plan/text/dcpo.txt [Accessed August 8, 1999].


U.S. DOJ, Office of Justice Programs, Drug Court Program Office. FY 1998 Program Plan [Online]. Available: http:// www. ojp.usdoj.gov./Plan/text/dcpo.txt [Accessed August 8, 1999].


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