Adoption Assistance Program

The AAP provides monthly cash grants to parents who adopt foster children. State law defines eligible children as those who, without assistance, would likely be unadoptable because of their age, racial or ethnic background, or handicap; because they are a member of a sibling group that should remain intact; or because they come from an “adverse parental background.”

The AAP grants are limited to the amount of the foster family home rate that the child would have received if she or he had remained in Foster Care. In addition, if the child has special needs that would have been covered had the child remained in Foster Care, the AAP grant typically includes an additional amount of funding called a specialized care increment (SCI).

Growth of AAP

As previously mentioned, the AAP is one of the fastest growing children’s programs within DSS. The General Fund budget for AAP has grown from $150 million in 2001–02 to a proposed funding level of approximately $360 million for 2009–10, an increase of over 139 percent, or 11.6 percent a year. This cost increase is mostly attributable to caseload growth and higher average monthly grant payments.

AAP Eligibility and Payment Levels

Because of broad eligibility requirements and relatively high payment levels, California’s AAP is among the most generous of such programs in the country. The state’s inclusion of adverse parental background as an eligibility factor allows virtually all children adopted out of the foster care system to qualify for AAP, regardless of whether or not they would otherwise be hard to place. This is because any child removed from his or her parents and placed in Foster Care must have had an adverse parental background. Other states have more limited eligibility criteria.

As for grants, some states choose to cap the AAP basic grant or SCI amounts. California, however, has chosen to pay the maximum allowable amount to AAP families, which is the amount the child would have received in Foster Care, including any SCI payments.

Reform AAP to Improve Its Cost–Effectiveness

Based on our review of the program, we recommend enactment of a series of legislative reforms to AAP to improve its cost–effectiveness. These reforms would only apply to prospective cases, and would not affect agreements already in place with existing adoptive parents. We summarize these proposed changes below.

Narrow the Definition of AAP Eligibility. We recommend eliminating the adverse parental background category from AAP eligibility requirements. In other words, the AAP program would only be available for those children who are truly hard to place. This means, for example, that healthy children under the age of three would generally be ineligible for immediate financial support through AAP. We note that many persons become foster parents to infants and young children as the first step toward intended adoption. Therefore, the “incentive” for adoption provided by AAP may be unnecessary for these families.

Set Grant Levels to Recognize Adoptive Parents’ Financial Responsibility. We recommend capping the basic AAP rate paid to adoptive parents at 75 percent of the foster care rate. Although this reform would recognize that when adoptive parents take over the role of parenting, they assume some measure of financial responsibility for their children, the parents would still receive some financial assistance for adopting a child who may be hard to place. This 75 percent cap would not apply to the SCI, which can range from zero to over $2,000 per month.

Better Tie Benefit Levels to Need. Currently, parents generally receive an automatic increase in their AAP grant as their children age. Because these age–driven grant increases are not based on a demonstration of need, we recommend such increases be eliminated. Grants should be increased only for more narrowly defined reasons, including increased costs due to physical, mental, emotional, or medical problems that the child may have, which are directly tied to their birth parents or the child’s circumstances before they were adopted.

Estimated General Fund Savings. The changes outlined above would require the enactment of statutory changes and regulations as well as the issuance of guidance letters to counties. Assuming these steps occurred by January 2010, our recommendations for reform of AAP would result in General Fund savings of approximately $2 million in 2009–10, increasing to about $12 million in 2010–11, and with greater savings in the out–years. For more details on these proposals, please see Reforming the Adoptions Assistance Program on page C–255 in our Analysis of the 2004–05 Budget Bill.