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The Effects of Federal Adoption Incentive Awards for Older Children on Adoptions from U.S. Foster Care | JPAM Featured Article

February 13, 2018 10:02 AM

By Maggie Brehm, Oberlin College and Conservatory

Article Introduction

When children in foster care cannot be reunified with their parents, adoption is considered a better option for permanent placement over long-term foster care. The federal Adoption Incentives program was established in 1997 to provide annual performance bonuses to states for increases in adoptions from U.S. foster care. This paper uses changes to the Adoption Incentives program in 2003 and 2008 to analyze states’ responses to the federal performance bonuses. Both changes provided payments to states for increases in adoptions of children aged 9 and older, and were implemented to address the increasing proportion of older children in foster care waiting for adoption.

Using a discrete hazard model cast in a difference-in-differences framework, this study does not find robust evidence that the incentives increased the probability of adoption for older children relative to younger children following the policy changes. Additionally, the results do not indicate that the incentives affected the timing of adoption, likelihood of termination of parental rights, or the amounts of adoption assistance for older children relative to younger children. The findings illustrate the incentives are unable to help states overcome many of the challenges associated with achieving adoption for older children.

This article preview is from the Spring 2018 issue of the Journal of Policy Analysis and Management (JPAM). APPAM invites authors from each issue to asnwer a few questions about their research to further promote the quality work in the highly-ranked research journal. Check out this and other JPAM articles online.

Author Interview

What spurred your interest in this research on older-child adoptions, or foster care and adoption more broadly? 

This paper is part of a larger research agenda to understand ways in which financial incentives influence foster care placement and adoption of children in foster care. The existing research on financial incentives and adoption focuses on the effect of monthly adoption assistance subsides made directly to adoptive families. I am interested in adding to this literature with evidence on how federal funding to states that supports adoption-related activities influences adoption. Given that adopted children have better outcomes than their peers in long-term foster care, as well as the substantial long-term cost savings to adoption compared to foster care, it is important to understand the challenges states face in achieving adoption and which barriers policy can help to address.  This is particularly important for older children, who are more likely to remain in foster care and less likely to be adopted than younger children.

Considering the shortcomings of state baselines to determine the adoption increase awards, what could be an alternative measure, based on your research and experience with this data? 

This shortcoming of the baselines using absolute numbers of adoptions is addressed in the most recent update to the program in the Preventing Sex Trafficking and Strengthening Families Act (P.L. 113-183). The new structure is based on increases in rates of adoptions, which takes into account the fluctuation in the number of children in foster care. It remains to be seen whether states have responded to the new structure of the incentives. However, it is possible that states remain unresponsive to the awards; the structure of the award around noisy baselines is one of several explanations for a lack of response.

You write that the incentives may be more successful when awarded to the families instead of the states. Are any states currently doing this with any noticeable success? Can you speak more to the possible impact on adoptions this shift might have? Should states be required to pass on more of the award to the families?

Yes, an alternative policy approach might instead involve financial incentives directly to families, rather than to states. Many states provide adoptive families with monthly adoption assistance amounts based on a child’s age, however, I am not aware of states providing explicit bonuses to families for adopting older children.

While it is possible that states passing the award on to families, either through higher monthly adoption subsidy amounts or a one-time payment at the time of adoption, could increase adoptions of older children, there are caveats to such a policy. First, the success of pass-through of the award is still limited by whether states, and caseworkers in particular, are aware of and able to respond to the award, specifically in terms of exceeding noisy baselines and whether there are additional adoptions be gained. Second, an equitable pass-through mechanism might bypass the baseline structure to provide a bonus to every family adopting an older child, rather than for just those above the baseline. This would result in a potentially much lower award to each family that would be small relative to the costs families face for adopting an older child.

Are states operating similar programs with the goal of reuniting children with a birth parent? Could the timing of or an increase in such programs impact the success of the adoption awards?

I am not aware of states operating incentive programs specifically to reunite children with their removal families. However, it is important to note that foster care is intended to provide a temporary living situation and that a primary goal of child welfare is to reunify foster children with their families whenever possible. While incentive programs for permanent placement, whether reunification or adoptions, might appear to result in competing policy objectives, it is not clear that a reunification incentive program would affect adoptions. In this paper, I do not find evidence that states responded to the adoption incentives, and states may already do all they can to maximize permanent placements, including both adoptions and reunifications.

What challenges, if any, did you find when conducting this research? How can further study overcome these challenges?

I had to understand the structure of the Adoption and Foster Care Analysis and Reporting System (AFCARS) data in order to follow children’s spells in foster care over time and develop an appropriate empirical method (a discrete hazard model cast in a difference-in-differences framework) to evaluate the effects of the incentive program on the probability of adoption for older children.

How does this study impact or add to the existing research that can inform policy for the foster system and adoption programs? What would be the ideal next step for your research findings? How would you like to see your findings implemented?  

While existing research provides evidence that adoptive families respond to monthly adoption assistance, little is known about whether and how federal expenditures to states increase adoptions.  This paper provides a causal estimate of the state response to the Adoption Incentives program with respect to the awards for increases in older child adoptions. I do not find evidence that the awards increased the probability of adoption for older children relative to younger children, suggesting that the current design of the well-intentioned federal award to states to encourage adoption among older children is not sufficient to meet this goal. A next step might be to further understand why exactly states likely did not respond to the award. This will help to inform how either state or federal policy might be designed to more directly and effectively address the challenges states face to achieve adoption for older children.

About the Author

Maggie_Brehm Maggie Brehm, from Oberlin College and Conservatory, conducts research in the fields of labor economics, public economics, and economics of education. Her current research in child welfare and public policy examines the extent to which federal spending affects foster care placement and adoption from foster care. She teaches courses in principles of economics, poverty and inequality, and econometrics.

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