Saturday, 15 January 2005 - 8:00 AM

This presentation is part of: Foster Care and Adoption

Comparison of the Governmental Costs of Foster Care and Adoption

Child welfare policy and practice has increased its focus on the adoption of children who cannot rapidly be reunified from foster care. A result is a burgeoning number of children who are receiving adoption subsidies. Some states have begun to curtail adoption subsidy levels because of concerns about the cost of the adoption subsidy program. Yet, little is know about the comparable costs of children in foster care who are not adopted. We address shortcomings of previous research comparing long-term costs of foster care and adoption by using propensity score matching (PSM) and by including a variety of other sources of costs related to foster care and adoption.

Methods: In order to estimate foster care reimbursements and adoption subsidies, this study used an eight year placement dataset of children who entered foster care during North Carolina state fiscal year 1994 to 1996. This study used the PSM to reduce the bias and increase precision between similarly situated foster and adopted children in sample selection. Groups were matched on having been in foster care at least three years, age at placement, race, gender, previous group care, previous non-family placement, and number of prior placement moves. After the PSM, the sample comprised 513 cases of children who were in foster care longer than 3 years and the same number of adopted children. We compared foster care reimbursements and adoption subsidies by per diem costs, annualized costs, and total costs. Court-related costs, administrative costs, independent living costs, non child welfare costs and incarceration were included in the total cost estimate.

Results: The data show that the costs of foster children who were not adopted were much higher than those used by adopted children. Foster care costs total to approximately $83,400 per child. This figure derives from the estimated $6,200 in court-related costs, $12,000 in case management costs, $48,600 in direct reimbursement for care, $5,500 in the cost of independent living services, and $11,100 in medical costs. In comparison, the grand total costs estimate for the adopted child for 8 years starting from entry in foster care is about $47,600. This total arises from approximately $2,000 in court-related costs, $22,000 in direct costs, $20,000 in administrative costs, and $3,600 in medical costs. Thus, a child who is adopted rather than remain in foster care will cost the government $35,800 less over the first 8 years. For the approximately 50,000 children adopted each year, the savings would be $1,790,000,000 in government expenses. The accelerating rate of expenditures for children who remain in foster care suggests that the total savings from adoption, if children were followed to age 18, would be substantially greater.

Discussion: This study helps to illuminate the issues that child welfare agencies need to consider when trying to determine the cost-effectiveness of their services. The study offers an approach to estimating costs of services to children, with very similar backgrounds who have different service experiences, that could be applied to other areas of child welfare services.

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