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Other Budget Issues

Last Updated: 5/20/2011
Budget Issue: Adoption Assistance Program Rate Increase
Program: Department of Social Services (DSS)
Finding or Recommendation: Consider redirecting $6.6 million ($2.8 million General Fund) from the Adoption Assistance Program (AAP) to Child Welfare Services (CWS). In addition to funding a court-imposed 31 percent Foster Care home rate increase, the May Revision proposes a similar discretionary grant increase for prospective AAP cases. We believe the issue of parity between AAP grants and Foster Care home rates should go through the policy committee process. Temporarily redirecting funds preserves legislative control.
Further Detail

Adoptions Assistance Program (AAP). The AAP provides monthly cash grants to parents who adopt foster children. Although the program is intended to encourage the adoption of children who would otherwise be difficult to place, virtually all children adopted out of Foster Care in California receive AAP benefits.  The AAP grant is equivalent to the amount of the foster family home (FFH) rate that the child was receiving in Foster Care. In addition, if the child has special needs covered by Foster Care, the AAP grant typically includes an additional amount of funding called a specialized care increment (SCI). Families receive their AAP payment pursuant to an agreement, and it is very difficult for the state to modify the AAP terms after it is signed.

LAO Concerns with Current System. California’s AAP is among the most generous of such programs in the country due to its broad eligibility categories and relatively high payment levels. 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 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. In addition, California has chosen to pay the maximum allowable amount to AAP families. Some states cap the AAP basic grant at a level below the Foster Care rates. (For more on our recommendations to reform AAP, see the Analysis of the 2009-10 Budget Bill and the Analysis of the 2004-05 Budget Bill.)

Governor’s Proposal. The Governor’s May Revision provides funding for a recent court decision which raises Foster Care rates by about 31 percent.  In addition, the May Revision proposes $6.6 million ($2.8 million General Fund) to fund a similar rate increase for prospective AAP cases. This would keep AAP rates for prospective cases at the same level as those for Foster Care family homes. The Governor’s 2011-12 budget assumes about 3,500 AAP cases would receive this increased payment.

LAO Alternative. Given the difficulty in reducing AAP grants once an agreement with adoptive parents is signed, we suggest the Legislature hold off on increasing prospective AAP rates as the Governor proposes.  This would result in savings of $6.6 million ($2.8 General Fund).  The Legislature could score this savings in the budget year or redirect the savings to Child Welfare Services (CWS).  (One key function of CWS is finding adoptive parents.) Ultimately, we believe the issue of whether to maintain parity between Foster Care and AAP rates is an important issue that should go through the regular policy bill process.  Rejecting the Governor’s May Revision AAP increase will allow time for this deliberation to take place.  This approach would be consistent with our previous recommendation that the Legislature cap the AAP grant at a level below the Foster Care rate to recognize adoptive parents’ financial responsibility. The cap would not apply to the SCIs which play a critical role in helping parents adopt Foster Children with special needs. Finally, the Legislature should consider this issue in the context of the Governor’s realignment proposal, which would shift primary responsibility of child welfare programs to the counties. Redirecting the funds to CWS would provide counties with greater flexibility to serve local needs.