When reporters cover government or industry they know they must “follow the money.” Yet when covering the child welfare system, that famous admonition often is ignored.

Critics of family preservation are quick to charge that governments establishing family preservation programs are doing so only to save money. But often the financial incentives favor keeping children in foster care.

Family preservation is less expensive than foster care in total dollars, but it may be more expensive for the government agencies that actually decide what to do when a child allegedly has been abused or neglected. Often these are county agencies that get back all or part of their foster care expenditures from the federal and state governments.

At the federal level, foster care is an “entitlement.” For every eligible child placed in care, a portion of the cost is reimbursed. There is no comparable “open spigot” for programs to keep children out of foster care. The National Commission on Children found that children often are removed from their families “prematurely or unnecessarily” because federal aid formulas give states “a strong financial incentive” to remove them.

The incentives can get worse when private agencies enter the picture. These agencies provide two-thirds of the foster care in Chicago and they are lobbying to do it all. They already do it all in New York City. Typically, they are paid on a per diem basis. That is, they are paid for every day they keep a child in care. Send a child home, and the money stops.

Agencies vigorously deny even thinking of such things. After all, they say, they’re nonprofit. But even nonprofit agencies want to survive. And the will to survive can induce in nonprofits a form of greed that is as corrosive to common decency as the worst corporate behavior.

This was documented in 1975 in a six-part New York Daily News series alleging that the city’s private agencies kept children trapped in foster care to keep the per diem payments rolling in. Fifteen years later, a New York social worker involved in a lawsuit stated in a sworn deposition that “I have recently been advised by a foster care agency caseworker that her facility has imposed a three-month moratorium on discharges because it was not receiving sufficient referrals to fill its beds.”

But in a page-one story last week about privatizing all foster care in Illinois, the Tribune did not even raise the issue of financial incentives.

I know of no news organization anywhere in the country that has systematically examined the financial incentives involved in foster care in the 20 years since the Daily News series.

New York State has begun to look at the issue, however. The state Department of Social Services is considering changing the financial incentives governing private agencies.

Following the money also is crucial to understanding why family preservation suddenly is so controversial.

Family preservation programs have existed since 1974, and have always been viewed with hostility by a child welfare establishment dominated by foster care providers. But until the late 1980s, family preservation programs were not a threat. They were confined to small pilot projects.

In 1993, the Clinton administration supported legislation that has been widely misreported as providing $1 billion for intensive family preservation programs.

In fact, the $1 billion, to be spread over five years, is up for grabs. It is available for almost anything allegedly related to child welfare, with state and local governments ultimately deciding how the money will be spent. The National Center for Youth Law, which favors family preservation efforts, has warned advocates that they will have to fight to make sure the money is not “captured by politically powerful service providers.”

One billion dollars is more than enough incentive to launch attacks against family preservation, yet reporters have not questioned the financial interests of the attackers.

Thus, the 16-page cover story in the July 1994 Atlantic Monthly extols the virtues of present-day orphanages and condemns family preservation–with almost every quote from someone with a financial interest in maintaining orphanages and stopping family preservation.

Author Mary-Lou Weisman writes that “directors of some children’s institutions are convinced that “family preservation’ will take money directly out of institutional pockets,” yet this prompts no skepticism from Weisman about everything else they tell her.

Without a trace of irony, Weisman writes that “Nan Dale of The Children’s Village [an orphanage in New York State] speaks for many others who believe that money, and not the needs of the children, drives the child-welfare system.” A few pages later she notes that for the first time in anyone’s memory Children’s Village doesn’t have a waiting list.