Funds for Independent Living initiatives were first made available in the United States under the Consolidated Omnibus Budget Reconciliation Act of 1985. This act authorized funds to states for programs, services, and activities to assist eligible youth 16 years of age and older to make the transition from foster care to independent living. The Independent Living Program (ILP) was initially authorized by Public Law 99-272, through the addition of section 477 to Title IV-E of the Social Security Act. The U.S. Department of Health and Human Services, Administration for Children, Youth and Families, issued the first set of program instructions to the states on February 10, 1987. A total of 45 million dollars was authorized for the program across the nation, with Pennsylvania receiving approximately 2 million dollars. Each state's authorization was based on the number of children/youth in foster care; e.g. the youth for which states were receiving Title IV-E foster care maintenance payments.

Each state was able to determine the nature and scope of their Independent Living Program, but guidelines that the federal government provided recommended specific program components. The recommended list included services such as GED or vocational training, daily living skills, job readiness and employability skills, and assistance obtaining higher education.

Funding for the Independent Living Program was determined on an annual basis until Congress passed the Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66) which permanently reauthorized the ILP effective October 1, 1992. This permanent reauthorization allows funding to be automatically authorized each year without any further action from Congress.

In 1999 Congress passed the Foster Care Independence Act of 1999 which was signed into law as the John H. Chaffee Foster Care Independence Program. This law: doubled the Federal Title IV-E Independent Living funding nationwide to approximately 140,000,000; required states to Serve youth up to age 21, for the first time, youth younger than 16 may receive age-appropriate independent living services; permits up to 30% of allocation to be used for room and board for youth ages 18-21 who have left foster care; allows states to provide Medicaid insurance to youth ages 18-21 who left foster care; increases youth’s savings account limit from $1,000 to $10,000 so that youth in foster care can save and still be eligible for Title IV-E foster care benefits; requires states develop outcome measures to assess state performance; requires states to use Title IV-E funds to train adoptive/foster care parents, workers in group homes, and case managers to help them address issues confronting adolescents preparing for independent living; and authorizes additional funds for adoption incentive payments to states that increased the number of children adopted from foster care. This law made substantial changes in the Federal efforts targeted toward youth and young adults (up to age 21) in the foster care component of the child welfare system. The law significantly improved States' ability to achieve the national goals of safety, permanence and well-being for youth and young adults in the child welfare system.