Legislative Analyst's Office
Analysis of the 2003-04 Budget Bill
The department administers a statewide program of services to parents who wish to place children for adoption and to persons who wish to adopt children. Adoptions services are provided through state district offices, 28 county adoptions agencies, and a variety of private agencies. Counties may choose to operate the Adoptions Program or turn the program over to the state for administration.
There are two components of the Adoptions Program: (1) the Relinquishment (or Agency) Adoptions Program, which provides services to facilitate the adoption of children in foster care; and (2) the Independent Adoptions Program, which provides adoption services to birth parents and adoptive parents when both agree on placement. The 2003-04 Budget Bill ends state support for independent adoptions, however, for a savings of $2.8 million.
In addition to the Adoptions Program, the Adoptions Assistance Program (AAP) provides grants to parents who adopt "difficult to place" children. State law defines these children as those who, without assistance, would likely be unadoptable because of their age, racial or ethnic background, handicap, or because they are a member of a sibling group that should remain intact.
The Governor's budget proposes expenditures of $93 million ($51 million General Fund) for the Adoptions Program in 2003-04. This represents a 2 percent increase in General Fund expenditures from the current year. This increase is primarily attributable to a workload increase, partially offset by the elimination of the independent adoptions program.
The Governor's budget proposes expenditures of $503.7 million for the AAP in 2003-04. Due to AAP`s inclusion in the proposed realignment, there are no General Fund dollars budgeted for 2003-04; this constitutes a decrease of $194 million, or 100 percent, compared to 2002-03. (For a discussion of the Governor's realignment proposal, please see "Part V" of The 2003-04 Budget: Perspectives and Issues.)
We recommend that proposed General Fund spending for the Adoptions Assistance Program be reduced by $2.6 million for 2002-03 and $4.6 million for 2003-04 because the caseload is overstated. (Reduce Item 5180-101-001 by $4,586,000.)
Historical Growth Rates. The AAP caseload has been growing steadily and rapidly since 1995-96. Until recently, the caseload was growing at an increasingly larger percentage rate each year, peaking in 2000-01 at a 21 percent growth rate. For 2001-02, the increase slowed slightly to 16 percent. However, an analysis of the last 12 months of caseload data shows that the growth has slowed even further to 10.5 percent.
Current- and Budget-Year Projected Growth. The department's most recent forecast projects that the caseload will grow by 13 percent in 2002-03 and 12 percent for 2003-04. In fact, the budget's monthly caseload forecasts for the first five months of 2002-03 are above the actual caseloads for those months. Our review of the last 12 months of caseload data suggests that the caseload growth is moderating more quickly than the Department of Social Services anticipates.
Although the most recent data suggest caseload growth will be 10.5 percent per year, in order to be conservative we have adjusted the current-year numbers to actual caseload levels and have assumed a 10.9 percent growth thereafter. Based on our forecast, we believe that the budget overstates AAP costs by $2.6 million in General Funds for 2002-03 and an additional $4.6 million in General Funds for 2003-04.
Impact of Realignment. If our recommendation is adopted and the Legislature also adopts the administration's realignment proposal for AAP, then the amounts shown represent reductions in the amount of revenue that could be transferred to the counties.