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Tuesday, April 9, 2013

Child Welfare: Structure and Funding of the Adoption Incentives Program along with Reauthorization Issues

Emilie Stoltzfus
Specialist in Social Policy

Under the Adoption Incentives program (Section 473A of the Social Security Act) states earn federal bonuses when they increase adoptions of children who are in need of new permanent families. All 50 states, the District of Columbia, and Puerto Rico have earned a part of the $375 million in Adoption Incentive funds that have been awarded since the program was established as part of the Adoption and Safe Families Act of 1997 (ASFA, P.L. 105-89). Funding authorized for this program has been extended twice since it was established, most recently in 2008 (P.L. 110- 351), but is currently set to expire on September 30, 2013. Congress may act to revise and/or extend this program in the 113th Congress.

Congress has long shown interest in improving the chances of adoption for children who cannot return to their parents and who might otherwise spend their childhoods in temporary foster homes before “aging out” of foster care. Since ASFA’s enactment in 1997, the annual number of children leaving foster care for adoption has risen from roughly 30,000 to more than 50,000 and the average length of time it took states to complete the adoption of a child from foster care declined by close to one year (from about four years to less than three). Over the same time period, and in significant measure due to the greater number of children leaving foster care for adoption and at a faster pace, the overall number of children who remain in foster care declined by 29%—from a peak of 567,000 in FY1999 to 401,000 in FY2011. Despite these successes, however, the number of children “waiting for adoption” (104,000 on the last day of FY2011) remains more than double the number of children who are adopted during a given year. Adoptions of older children remain far less common than adoptions of younger children, and some 26,000 youth aged out of foster care in FY2011, compared to just 19,000 in FY1999.

Under the current Adoption Incentive bonus structure, states earn $4,000 for each adoption of a foster child that is above the number of foster child adoptions finalized by the state in FY2007 and $8,000 for each adoption of an older child (9 years or older) above the number of older child adoptions it finalized in FY2007. If a state has earned an award in either of those categories—or if it improves its adoption rate—it earns $4,000 for each adoption of a special needs child (under age 9) that is above the number of such adoptions it finalized in FY2007. For improving its rate of adoption (above the rate it achieved in FY2002 or a later year with a higher rate), a state is eligible for additional incentive funds of $1,000 multiplied by the increased number of adoptions that are calculated to have resulted from the improved adoption rate. However, increases in incentive amounts states earn due to improved adoption rates are only paid to those states if sufficient program appropriations are available after all awards for increases in the number of adoptions have been made.

In the four years (FY2008-FY2011) that the current incentive structure has been in place, states were eligible for incentive payments of $166 million. Of that amount, states earned $74 million for increases in the number of foster child adoptions, $45 million for increases in older child adoptions, and $37 million for increases in special needs (under age 9) adoptions, and they were eligible for increases of $10 million in their incentive payments for improvements in their rates of adoption. However, most appropriations provided for the Adoption Incentives program were needed to pay awards for the increased number of adoptions, and states received less than $2 million of the incentives for which they were eligible due to improved rates. Therefore, states are expected to receive no more than $158 million of the $166 million of the bonus funds for which they were eligible for adoptions finalized in FY2008-FY2011.

Date of Report: March 27, 2013
Number of Pages: 46
Order Number: R43025
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