Updating Minimum Adequate Foster Care Costs

Background and Purpose: Although state and local child welfare systems are obligated to provide payments to foster parents to “cover the expenses of caring for children in foster care placements, such as food, clothing, shelter, daily supervision, school supplies etc.” (U.S. Social Security Administration, 2016), there is no federally required minimum rate and states vary widely in the basic rates provided to care for a child in placement (Ahn et al., 2018; Committee on Ways and Means, 2016). The purpose of this study is to update the real costs of caring for a child in foster care to serve as a foundation for a state to set adequate foster care reimbursement. In 2007, a university conducted a study in collaboration with several national organizations to estimate standardized calculations of real expenses associated with caring for a child in foster care in the United States. The current study provides the updated minimum adequate costs for a state to change and update the foster care payment policy annually.

Methods: The original study used the Consumer Expenditure Survey to develop an economic model for foster care reimbursement rates using an average expenditure per child approach. Researchers estimated the average costs of food, clothing, shelter, daily supervision, school supplies, personal incidentals, liability and property damage insurance for children of different ages (0-4, 5-13, 14-18). Geographic costs of living adjustments were also made to reflect variations of the costs of caring for children in different states. To update the 2007 study, inflation adjustments were made to estimate recent values using the CPI-U-RS which was developed by the U.S. Bureau of Labor Statistics to serve as a valuable proxy for researchers needing a historical estimate of inflation.

Results: In 2007, a state’s foster care rates were, on average, lower than the adequate costs of caring for children 14-18 years of age by 5%. In, 2016 a state’s rates were, again, lower than the adequate costs. State would need to increase the payment for children 5-13 years of age by 3% and for children 14-18 years of age by 11% in order to reach the target adequate foster care rates.

Implications: This study’s findings contributed to a state’s increase in foster care rates to achieve recommended rates. The findings also suggest that, at the federal level, enhanced precision in operational definitions of care categories would increase consistency in the way that states reimburse foster families for meeting the basic needs of children in their care.