Since 1997, the federal government has rewarded states for finalizing the adoption of children in foster care. Aptly called the Adoption Incentives program, the name captures the reason for its existence: holding out a carrot to motivate states to find permanent homes for children in the system.
A bipartisan bill (H.R. 4980) agreed to by two major committees – Senate Finance and House Ways and Means – is an amalgamation of three laws on each side of the aisle.
It would very significantly alter the way that the incentives work. Among the changes: new incentive categories, new spending requirements for the incentives, and most importantly, a complete overhaul of how the incentive amounts are determined.
Here is a primer on what would change if H.R. 4980 gains the president’s signature.
How It Works Now
For the purposes of adoption incentives, states are currently measured on a fairly simple metric: current fiscal year performance compared to performance in fiscal year 2007, the existing “base year.”
There isn’t anything special about 2007. It was selected to mark a time at which many (but not all) states had reached a higher adoption rate after the first few waves of incentives.
Any positive difference between current year and 2007 yields an incentive award; any negative difference means no award.
There are three different incentives in play:
- $4,000 for overall adoptions of foster youth
- $4,000 for foster youth identified as “special needs”
- $8,000 for youth between nine and 18
If there is a positive difference between current year and 2007, that difference is multiplied by these figures to determine the amount a state receives.
So let’s say Hawaii completed 200 adoptions of foster youths between nine and 18 last year, and in 2007 it completed 125. The difference of 75 would be multiplied by $8,000 giving that state a $600,000 bonus for adoptions of older youth.
Conversely, if the same state completed 300 adoptions of special needs foster youths last year, but completed 500 in 2007, it would receive no incentive on that line, because the current year total was below the base year.
There is also an “increased incentive” that the feds pay if a state achieves its highest total ever in an incentive category. The award payment is determined by taking the new record and comparing it with what would be expected for that year based on the previous single-year record and the current number of youths in foster care.
Under H.R. 4980, the calculation of this increased incentive would become the basis for all of the incentive payments; more on that below.
How the New System Would Work
The legislation agreed to by the committees last week would change the process in three significant ways:
The bill replaces the existing three awards with four new categories:
- $4,000 each instance for overall guardianship placements
- $5,000 for overall adoptions
- $7,500 for improvement on guardianship and adoption of children between the ages of nine and 14
- $10,000 for improvement on guardianship and adoption of children older than 14
The new categories are aimed at pushing states to make more of an effort at finding adoptive homes for older youth, particularly those between the ages of 14 and 18. They also for the first time acknowledge guardianship placements as an incentivized option on par with adoption.
“Expected Adoptions” Instead of “Base Year”
The calculation under the new deal would scuttle the idea of a base year. It instead purports to measure the current “Performance Year” against what would reasonably be expected for that year based on recent performance.
This is determined by first establishing a base rate, which can be calculated in one of two ways:
1) Divide the previous year’s adoptions by the number of children in foster care before that year
2) Do the same thing, but for the previous three years to get their average
Either of those base rates is then multiplied by the number of children in foster care at the end of the year preceding the Performance Year.
Confused? Here’s an example using made-up numbers:
Suppose that, in 2015, Indiana finalizes adoptions for 540 children. In 2014, it finalized 400, and in 2013 there were 3,500 youths in foster care at the end of the year. At the end of 2014, there were 3,300 youths in foster care.
The equation: (400/3,500) x 3,300 = 377
So Indiana finalized 540 adoptions in 2015, 163 more than the 377 that recent history suggests it would have finalized. The state will receive an incentive of $815,000, which is the $5,000 award multiplied by 163.
What is the point of the extra math? To take into account that there is nothing really magical about the year 2007. Under the current system, the state might not have even received an incentive if it happened to have a boom year of finalized adoptions in 2007. If it had a lousy performance in 2007, it might have received more than the $815,000 under this new proposal.
The new structure would also reflect the fact that the incentives should take into account how many total youth were in foster care. Under this bill, Indiana received more money because it increased adoptions in a time period when the number of youth in care was declining; fewer potential adoptees yielded more adoptions.
It is worth mentioning that this concept of pegging incentives to continued performance will not be popular with everyone. The most consistent theme in the comments section of The Imprint is the belief that children are set on a path to foster care and/or adoption so that the state can make money on it.
While it is hardly the intent of its authors, this newly proposed system essentially says: “Keep increasing the number of adopted children, and you’ll probably keep getting paid.”
Guardianship on Equal Footing
The Fostering Connections to Success and Increasing Adoptions Act, passed in 2008, allowed states that were willing to develop kinship guardian programs to seek federal reimbursement for those placements. The idea was to establish a permanent home for a youth (who would otherwise be in foster care) with kin who might not be comfortable with adopting, or who needed more assistance than the adoption process offered.
Under H.R. 4980, guardianship placements are viewed as an option of equal value to adoption. No version of the incentives has ever before paid out to states for anything other than a finalized adoption.
Right now, there is not much regulation on what states do with adoption incentives. Under this bill, a state would have to spend 30 percent of any incentive money on post-adoption services.
This new requirement relates to another part of H.R. 4980 that requires states to track and report disruptions of finalized adoptions and guardianships, one of the most maddening blind spots in research in child welfare. The few sample studies on the subject suggest that up to 30 percent of adoptions fail.
The bill instructs the Secretary of Health and Human Services to develop a method for collecting data on youths who “enter foster care under supervision of the State after finalization of an adoption or legal guardianship.”