A Benefit-Cost Analysis of Extending State Care of Foster Children into Early Adulthood

Purpose: Each year, over 24,000 young people “age out” of foster care, generally around age 18. Whether states should alter their policies to allow young people to remain in state-supervised out-of-home care past age 18 is currently a topic of considerable attention. Recently introduced federal legislation would provide federal reimbursement for the care and supervision of young adults until age 21. Legislators' assessments of whether the benefits of such a policy change would outweigh the costs will undoubtedly factor into debates over this legislation, but little evidence exists to inform the discussion. Recent research (Courtney, Dworsky, and Pollack, 2007) provides evidence of the potential benefits of extending care on several important outcomes (e.g., education, crime, pregnancy), but these benefits have not been monetized, nor has the cost of extending care been estimated. This study is an initial attempt to estimate the costs and benefits of extending care from the perspective of taxpayers and broader society.

Methods: Our analysis used data from three sources: 1) Survey and administrative data from a sample of 474 young people from Illinois who participated in the Midwest Evaluation of the Adult Functioning of Former Foster Youth, a longitudinal study following foster youth transitioning to adulthood; 2) administrative data for 23,022 young people who left foster care between 1991 and 2006 when they were at least 17 years old, and 3) data from a web-based survey of 1,022 child welfare caseworkers. The study employed econometric methods, including instrumental variable models, to estimate the effects of remaining in care on four major outcomes: educational attainment, earnings, criminal justice system involvement and public assistance receipt. Our focus on Illinois reflects the fact that it is one of the few jurisdictions that discharges a significant number of its foster youth at age twenty-one (Bussey et al., 2000).

Results: The biggest cost savings emerged from the relatively small reductions in criminal offending, suggesting that the societal benefits of reductions in serious crime more than offset the costs associated with extending care. While remaining in care is associated with several other positive outcomes—including lower rates of early pregnancy and increased earnings and higher rates of college enrollment—ratios of costs to benefits were more equivocal.

Conclusions and Implications: The government, acting in loco parentis for foster youth, ends support far earlier than that extended to most young adults in the U.S. (Schoeni and Ross, 2004). This study suggests that ending care short of 21 may be leading to avoidable social costs, especially in the form of higher rates of criminal offending. Subsequent studies should examine whether allowing youth to remain in care until age 21 may have other long-term benefits.