Using braiding and blending to adapt to administration social welfare policy changes

The problem

Most community-based organizations (CBOs) delivering social care, health care, and other services are facing considerable challenges due to recent federal spending curbs and new work reporting requirements in such programs as Medicaid and the Supplemental Nutrition Assistance Program (SNAP). In the face of this severe funding instability and uncertainty, many must make severe cuts and try to restructure services to comply. Faced with this new reality, CBOs could adapt more successfully if they could make more flexible use of funds from public and private programs while remaining faithful to the objectives of each program. For complex community challenges such as care for older people, tackling homelessness, or assuring the healthy growth of children, granting greater authority to organizations to braid or blend funds from different programs would enable CBOs to use reduced funding streams more creatively to mitigate the impact of deep cutbacks.

Braiding and blending refer to combining or mixing funds from multiple sources to support a common goal. Braiding involves coordinating multiple funding streams to reach a common goal, but with each funding stream separately tracked. Blending, on the other hand, involves combining multiple streams into a single pool or budget, tracked as a single consolidated budget.

Today, the ability of organizations to braid or blend funds in innovative ways is limited. When CBOs receive funds from multiple sources for a particular population or objective, they typically encounter spending restrictions, restrictive budgeting rules, unclear or rigid audit requirements, and similar obstacles that impede efficient adaptation. These constraints make it more difficult for both CBOs and government agencies to achieve their goals.

For instance, CBOs typically must:

• Devote time and resources to identifying new ways to finance priority services that comply with changed funding levels and requirements.
• Navigate narrow requirements for grants (private as well as public) that make it difficult for organizations to adapt to changing needs in their communities and to serve people with needs who fall outside pre-defined categories.
• Struggle to obtain consistent guidance from federal agencies and auditors on the degree to which the CBOs can use funds more flexibly or combine funds from multiple programs for broader policy objectives, and how the use of funding should be documented. Given that local government and CBO officials can face criminal penalties if federal officials conclude that funds were misused, any uncertainty or differing opinions by federal auditors about a plan to braid funds or otherwise use funds creatively typically means the plan will not go forward.

Meanwhile, government program managers are also often constrained in how they can help CBOs adapt through braiding or blending funds. For instance:

• Many managers in government departments at all levels are frustrated with their inability to agree to reasonable CBO requests for flexibility in the use of funds that are in line with grant or program objectives but conflict with specific department rules. They also face political, institutional, or management disincentives to collaborate with other departments to find ways of braiding funds.
• Some administration policy objectives are less likely to be achieved efficiently because of inadequate collaboration between departments. For instance, successfully addressing chronic illness or homelessness in America will take collaboration and the coordinated use of funds from multiple programs in different agencies.
• Poor interdepartmental collaboration is often exacerbated by the “wrong pockets problem.” This occurs when funds come from one agency’s budget but primarily benefit the budget or objectives of another agency (e.g., public housing funds for bathroom safety renovations that primarily benefit Medicare through reduced falls and other accidents). A perceived cost-benefit imbalance by one agency can easily derail collaboration or permission to braid or blend funds.

The current round of budget reductions further underscores systemic rigidities that reduce government efficiency at all levels and restrain the ability of CBOs to adapt and innovate to meet changing needs. Fortunately, over the last several years, there has been important progress, particularly at the state and local level, in experimenting with techniques to provide greater opportunities for both government and CBOs to braid and blend funds and spur innovation. By building on this experience, the Trump administration, as well as states and localities, can take specific steps to enable CBOs to adapt to change efficiently and creatively.

The story so far

In the last two decades, there has been a growing recognition that good public policy outcomes, especially in social policy but also in other areas, require close collaboration between agencies and among organizations and the coordination of funds from multiple programs. The increased focus on “social determinants of health” (SDOH) and “health-related social needs” (HRSN) has helped this development by underscoring the importance of spending on non-clinical factors, such as improved housing conditions and good sources of nutrition, in improving family and community health.

Providing guidance

One area of progress has been in improving the information available at the state and local level on what forms of braiding and blending, and other ways to use funds creatively, are permitted. For instance, several years of cross-sector meetings of officials, researchers, and practitioners led to a series of related publications, including a Brookings primer on braiding and blending. Other research and policy organizations, such as the Trust for America’s Health and the Urban Institute, have in recent years clarified opportunities to braid and blend funds.

The federal government has also taken some steps to address gaps in information about what local governments and CBOs can do. The Department of Labor’s Office of Disability Employment Policy, for instance, maintains an online guide on braiding, blending, and sequencing funds. In the context of addressing health-related social needs, the Biden administration developed guidance on using a range of strategies, including braided funds. Meanwhile, the Administration for Community Living (ACL), within the Department of Health and Human Services (HHS), has been funding pilots and introducing greater flexibility in cross-sector funding to encourage the development of “community care hubs” to coordinate a range of federal and other funds for older or disabled people.

Finally, the federal government has provided limited technical assistance for states and communities interested in braiding and blending. The Cost Allocation Methodologies (CAM) Toolkit was designed to support software development initiatives that would ultimately benefit multiple programs within a state. The toolkit provides a cost allocation Excel template, which then helps to expedite approval processes at the federal level. However, this toolkit was developed in a partnership between HHS (specifically its Administration for Children and Families (ACF) and the Office of Child Support Enforcement (OCSE)) and the Department of Agriculture’s Food and Nutrition Service (FNS). It is only available for programs funded under these departments. In its current form, the toolkit’s restricted applications make it difficult to translate to other efforts which could benefit from the braiding and blending of funds.

Section 1115 waivers

A provision of the Social Security Act permits the federal government to approve state proposals to use Medicaid funds more flexibly for temporary demonstrations and pilots intended to promote Medicaid’s objectives. Under the Center for Medicare and Medicaid Services (CMS) practice, codified last year in statute, a waiver must not result in any net increase in federal spending. Especially since the passage of the Affordable Care Act, states and the federal government have used this waiver authority to allow Medicaid to pay for housing- and nutrition-related services, to explore whole-person ways of addressing social factors that affect health.

1115 waivers are now used widely and have expanded state opportunities to braid program funds, with some promising results, such as in North Carolina. Nevertheless, states often encounter administrative and other obstacles when attempting to use the waivers, especially when attempting to address HRSN. In addition to data integration and similar technical issues and reporting challenges, the application process can be lengthy and complex. Since the waivers are typically approved for only five years (though renewals for an additional five years are common), states are still vulnerable to changes in the priorities and attitudes of federal administrations, increasing the degree of uncertainty associated with 1115 waivers.

State hubs

Several states and the federal government have improved the process of blending and braiding of funds by encouraging or creating “hubs”—institutions designed to improve the mechanics of coordinating funds. New Jersey, for instance, in 2020 designated four organizations to function as regional health hubs working with health providers, social service organizations, and other services for Medicaid beneficiaries. Maryland has been a pioneer in developing hubs at the county level through its local management boards. Since the 1990s, the state has designated county-level public or nonprofit bodies to braid or blend state, federal, and private funds to improve services for children and families. Among other activities, the boards use braided or blended funds to make direct grants to CBOs, and in many cases, provide “back-office” services to assist CBOs with the often-complex financial management and reporting requirements associated with multi-program funding. These coordinating entities can also function at the state-wide level. For instance, Alabama created a Governor’s Office of Education and Workforce Transformation in 2019 to braid education and workforce development funding to create apprenticeship programs, improve educational attainment, and create a state-wide database for evaluation and research.

Integrated data systems

Several communities and states have successfully advanced braiding and blending initiatives through improved integration of their data systems. North Dakota invested in a childhood integrated data system linking the Emergency Rental Assistance Program, implemented during the COVID-19 pandemic, with other social service programs and early childhood support programs. The state combined funding from pandemic relief with an HHS block grant and the Preschool Development Grant. New York City linked student-level data with the research hub for NYC human services agencies to identify risk factors for student homelessness and inform the design of prevention efforts.

Some jurisdictions have used cost allocation methods to create a sustained funding stream for these centralized data platforms, which staff then use to improve coordination and effectiveness across a broad set of programs. Allegheny County, Pennsylvania, is considered a leader in this area. The county pools the costs for all services shared across its human services programs—including its data, analysis, and research activities—and then allocates them to specific programs using Random Moment in Time Studies (RMTS). Data from these brief, automated studies are aggregated to produce an accurate representation of the proportion of staff time invested across various programs and grants—costs are then allocated accordingly.¹

One-door approach

The one-door model is a unique blending initiative which integrates workforce programs with social safety net programs. The model was first implemented in Utah in the 1990s, which integrated 36 separate job training and public assistance programs. Under the new model, welfare recipients would go through one eligibility process and then receive support from one caseworker who would assess the individual’s needs and barriers to work. Other states have not been able to fully replicate Utah’s one-door model because Congress passed the Workforce Innovation and Opportunity Act in 2014, dictating that funds for workforce development would go directly to local workforce boards rather than state administrations. Only Utah’s one-door model was grandfathered in. However, in 2025, Louisiana began implementing a one-door model integrating federal assistance programs with state-administered workforce development services.

Recommendations for action

The federal government and states can do much to encourage CBOs to engage in braiding and blending of funds to improve efficiency and to foster flexibility and innovation in the use of funds. A common theme of what is needed is more coordinated guidance and messaging from federal agencies, and tools to make it possible for CBOs and government jurisdictions to braid and blend funds while satisfying legal requirements. And a key lesson from the experience throughout the federal system is that government leaders must make very clear to department managers that achieving greater coordination of agencies and programs is a priority for reaching leadership goals, and managers will be held accountable for doing so.

Streamline reporting for CBOs

Innovative local action by CBOs is often hindered by federal reporting requirements. For example, Allegheny County’s innovative cost allocation processes are only possible because they primarily rely on state money.² Meanwhile, the federal government primarily approves RMTS for Medicaid-funded school-based services. States must seek approval for expanded applications. These requirements prevent RMTS from being universally applied—not only across all Medicaid direct services, but across federally-funded direct service programs more broadly. CMS should expand approved use of RMTS-style cost-allocation methods to support braiding and blending beyond the Medicaid context.

At the same time, states have significant leeway in supporting localities and CBOs. States have the authority to integrate funds across different departments, allow localities to act with broader autonomy, and establish special bodies to help manage these funds. Allegheny County’s success points to the importance of supportive state infrastructure. Pennsylvania has leveraged block grants to make flexible funding more accessible for localities across the state. States can and should also establish local boards that can assist CBOs in combining funds and meeting reporting requirements, like Maryland’s Local Management Boards (LMB). By aggregating reporting to the LMB level, CBOs could then focus on service provision with a county-level group of experts managing all financial reporting.

Develop pools of funds drawn from different agencies and programs

The reluctance of budget managers to blend their agency’s funds with those of other agencies may be ameliorated by establishing common pools of money that can address local needs through CBOs. As noted earlier, braiding and blending at all levels is made more difficult by the reluctance of many budget managers to “give up” funds to a joint project that primarily benefits another department, even though there may be a net benefit to the whole jurisdiction.

As noted, strong direction from the top is needed to achieve cross-department collaboration, but new procedures and even new bodies may be needed. Some jurisdictions have tried to address these wrong pockets problems by creating a common-managed fund drawn from multiple department budgets. Virginia’s Children’s Services Act, for example, was enacted in 1993 and created a single, blended state-wide pool of money to address the needs of high-risk children and families across the state, drawn originally from eight funding streams spanning several departments. The pooled funds are distributed to localities and administered through local interagency teams. In this way, funds are blended from different agencies, but program managers and political leaders have a direct say over how the money is used.

Some other states, such as Minnesota, have developed models more similar to Maryland’s LMBs, empowering coordinated spending across departments. Rather than a single county-level organization, and depending on the objective, Minnesota’s “collaboratives” consist of a range of required organizations, such as school districts, public health departments, and community action agencies, who commit resources to an integrated, braided fund that is coordinated by each collaborative. Costs are then allocated using RMTS.

Provide improved technical assistance and more playbooks

Technical assistance is essential to encouraging braiding and blending. The previously described CAM toolkit provides an important example of what multi-agency technical assistance can look like. However, its creation also did not include other key federal agencies such as the Department of Housing and Urban Development (HUD) and the Substance Abuse and Mental Health Services Administration (SAMHSA) within HHS. Additionally, as the previously discussed examples show, the potential of braiding and blending goes far beyond software and infrastructure investments. Thus, the federal government should provide more generalizable technical assistance, which can then be adapted to local contexts and individual program goals. Importantly, this should be a cross-agency initiative that includes agencies which are already thinking about braiding and blending, like CMS, ACF, and FNS, alongside agencies which have historically not been included in these efforts, like the Department of Labor and HUD.

In addition to customized technical assistance, the federal government should spur more creative braiding and blending initiatives at the state and local levels by assuring consistent information and answers to questions from federal auditors and program managers within and across departments. That would require greater interagency collaboration and information sharing. It would also be enhanced by making greater use of “playbooks” issued by agencies that indicate braiding and blending approaches that generally would comply with federal rules.

Improve and speed up the waiver process

Several steps are needed to enhance the Medicaid 1115 waiver and evaluation process, especially given the Trump administration’s reluctance to allow the waivers to be used for HRSN strategies. The most urgent is to expand the CMS staff reviewing waiver applications. Obtaining a decision often takes over six months to as much as two years, leaving a state in limbo and impeding reform. Creating “safe harbors” would also be helpful—essentially standardized, fast-track pathways for common waiver requests for pilots and procedures based on approaches already approved for other states. The administration should also reinstate the guidance on using 1115 waivers for HRSN, which it rescinded after taking office, and which discourages states from proposing waivers that involve services outside of Medicaid. 

Revisiting the federal budget neutrality requirement for waivers would create opportunities to test the wider budget impacts of a waiver on multiple programs, including housing and social services. Long a matter of CMS policy rather than statute, budget neutrality is now being written into law under the One Big Beautiful Bill Act (OBBBA) for waivers approved after 2027.

One problem is that projecting “budget neutrality” for the federal budget is rarely clear-cut and easily agreed upon between a state and the federal government, often leading to time-consuming disagreements over assumptions and projections. Another is that “downstream” savings outside of Medicaid are typically not counted towards the requirement, even if federal savings accrue in other programs, such as Medicare.

Congress could help improve the waiver process. It could give clearer direction to agencies and states regarding which savings may be counted when assessing federal budget neutrality—and specify more clearly what projected costs and savings in other parts of the federal budget (such as Medicare) may be included. Congress could also replace the need for a state to apply repeatedly for 1115 waivers by allowing successful waivers to be made permanent.

In addition to 1115 waiver reforms, the federal government could foster broader braiding and blending of funds for specific objectives by creating a cross-agency waiver process involving several programs and agencies. The Office of Management and Budget (OMB) could be responsible for coordinating the process, including assembling officials from different departments, as well as state officials, to consider proposals and waiver designs needed to address a specific state or national challenge.

Use braiding to advance administration goals

The Trump administration has cut grants, programs, and government employees without enabling agencies at all levels of the federal system to adapt to these reductions by using funds more flexibly. By overlooking the importance of braiding and blending funds, the administration is also blunting its own ability to pursue important initiatives.

For example, states and local governments would make greater progress in addressing chronic disease and help “Make America Healthy Again” by actively encouraging states and counties—through “safe harbor” guidance, active support, and technical assistance—to braid Medicaid, SNAP, housing assistance, and other funds to achieve broad public health objectives and foster innovative and customized strategies. The administration’s decision to rescind cross-sector SDOH approaches using 1115 waivers, noted earlier, makes it harder for the administration to tackle chronic illness.

The administration’s quest to reduce homelessness and improve public safety is also hampered by not actively encouraging greater braiding and blending of funds. In the last several years, we have learned much about the connections between homelessness, mental illness, and street violence, and how creative collaboration between law enforcement, crisis intervention services, supportive housing, and other services is needed for success. Making it easier for state and local governments to braid funds from HUD, Veterans Affairs, Medicaid, law enforcement grants, and other programs would boost progress.

Similarly, braiding and blending would support the implementation of the new eligibility requirements for SNAP and Medicaid established under OBBBA. The most efficient method of implementing these eligibility verification requirements involves improvements in shared data infrastructure and enhanced data sharing between state health and human service agencies and labor or workforce agencies. The administration could support this initiative by providing updated guidance on data sharing and cost allocation models and providing enhanced funding for states pursuing data integration efforts.

More broadly, the administration could work with the states to develop a cross-agency waiver process to encourage multi-program waivers designed to improve efficiency and results. Organized by the OMB, such a process would improve the ability of both the federal government and the states to braid funding to address policy objectives.

Conclusion

CBOs are facing substantial challenges, including funding cuts, new administration priorities, and changing guidance, making it more compelling to allow them more flexibility to braid and blend funds. Thanks to earlier work and several successful examples, policy experts within CBOs and budget managers at all levels of government have the tools to implement braiding and blending on a larger scale. By taking further steps to address complex reporting requirements, develop pools of flexible funding, provide enhanced technical assistance, and improve the waiver process, the federal government will reap the dual benefit of supporting CBOs while advancing several of the administration’s policy priorities.