The Financial Logic for Recruiting More Foster Parents

March 31, 2015


A new bill to revive the Adoption Tax Credit will likely be introduced soon. In addition, Senator Heitkamp (D-ND) introduced the Foster Care Tax Credit Act on March 5 to provide up to $1K in tax credits to parents who foster for six months or less. Both bills would provide incentive for more people to foster and adopt. 


In a perfect world, our government would be thrilled to spend as much money as possible to meet families' needs and also recruit more foster parents to fill the existing gaps simply because it's the right thing to do. Reality is... there are many competing priorities. And we live in a a return-on-investment (ROI) world. Money talks and there's never enough of it. 


In that spirit, I've done some research recently and here are the financial reasons why we need to pass these bills into law and generally put more effort and resources behing recruiting good, loving foster parents to care for our beautiful foster children. 


The Pathway to Adoption

The progression exists that short-term care givers often become longer-term care givers who in turn become adoptive parents, encouraging short-term foster parenting ultimately leads to more adoptive parents.


Foster parents don’t always jump into full-time foster parenting immediately. It’s not uncommon for foster parents to begin by providing shorter-term respite or emergency care before “graduating” into more full-time foster parenthood. Likewise, foster parents may intend to be full-time; however, their placements are reunified with biological families after short lengths of time, so they may have multiple placements for 3-4 months at a time, for example. In FY 2013, One-quarter (26 percent) of all children who exited foster care in 2013 lived in foster care for less than six months. (1)


The more we can encourage people to become foster parents, the more children who will be adopted from foster care. In FY 2012, 50,663 of children who exited foster care were adopted.(2) Of children adopted from foster care in 2012, 54% were adopted by former foster parents.(3) In 2012, that would equate to 27,358 children adopted by former foster parents. 


Potential Fiscal Impact of Recruiting more Foster Parents

Shorter-Term Fiscal Impact

A study conducted by Barth et al., and reported by the federal Children’s Bureau, showed that the government saves between $65,000 and $127,000 for each child who is adopted rather than placed in long-term foster care.(4)


Per the above, in 2012 about 27,358 children were adopted by former foster parents. This would create a cost savings range from $1.8B to $3.5B nationally. 


The National Adoption Council has reported estimates that align with the above: 

“Comparing the per-child cost of subsidized  adoption from foster care with the cost of maintaining a child in foster care, one concludes that the child adopted from foster care costs the public only 40 percent as much as the child who remains in foster care. The difference in cost per child per year amounts to $15,480 ($25,782minus $10,302). If the number of children adopted from foster care doubled (increased by57,500), the savings to the public would amount to $890 million per year. If more children in foster care were made available for adoption, even greater savings could result.”(5)


Longer-Term Social Issues & Their Fiscal Impact

Likewise, other social costs are offset when children are adopted from foster care. When comparing children who are adopted versus those who “age-out” of foster care at the state’s maximum age (up to 20 years old in CA if certain requirements are met) without having been adopted, those who “age out” are more likely to be incarcerated, homeless and/or require public assistance as adults at a considerable burden to the taxpayer. 


According to a 2010 study by the Universities of Chicago and Washington, nearly 30,000 youth age out of the U.S. foster care system annually without the emotional and financial support necessary to succeed. University researchers interviewed groups of “aged-out” foster children over the course of several years, and this is what they found:

• Nearly 40% had been homeless or couch surfed

• Almost 60% of young men had been convicted of a crime

• Only 48% were employed

• 75% of women and 33% of men received government benefits to meet basic needs

• 17% of the females were pregnant(6)


Number of Children who Age-Out of California Foster Care

• About 4,500 children age out of California foster care each year(7)



• According to HUD, it costs about $40,000/year for a homeless person to be on the streets.(8)

• If 40% of the 4,500 children become homeless each year, it equates to 1,800 homeless former foster children. 

• 1,800 homeless former foster youth cost taxpayers $40K/each = $72M

• The ultimate costs would be significant given the difficulty of emerging from homelessness and that this only represents on group. If each year, nearly 1,800 additional youth become homeless, the number would compound quickly.

• It should be noted that San Francisco alone spends $165.7M annually on homeslessness(9)



• Of those who aged-out of foster care, almost 60% of young men had been convicted of a crime. 

• In FY 2012, the proportion of males to females in foster care was 52%/48%(10)

• 52% of 4500 = 2,340 men. 

• California spends approximately $49K per year per inmate.(11)

• The cost of incarcerating 2,340 men in CA for just one year is ~$114.7M


Social Welfare

• As noted, 75% of women and 33% of men received government benefits to meet basic needs(12)

• California alone spends $19.9 billion annually on welfare(13)


Please encourage your representatives to support the proposed legistlation. To find your representatives, click here




1 Child Trends Databank, Foster Care, Accessed March 29, 2015.’s


2 Bureau, Foster Care 2012. Published November 2013. Page 6. Accessed March 27, 2015


3 U.S. Department of Health & Human Services, The AFCARS Report, estimates as of July 2012. Accessed March 27, 2015 


4 Save the Adoption Tax Credit Fact Sheet 2015 


5 Zill, Nicholas, Phd., “Better Prospects, Lower Cost: The Case for Increasing Foster Care Adoption,” National Council for Adoption, Adoption Advocate Newsletter, May 2011. Accessed March 27, 2015


6 Partners for our Children, Chapin Hall, Jim Casey Youth Opportunities Initiative, Center for the Study of Social Policy press release, “Major Study Shows Young People Who Age Out of Foster Care Continue to Face Joblessness, Homelessness and Low Educational Attainment into Their Twenties,” April 2, 2010. Accessed March 27, 2015


7 Public Policy Institute of California, “Just the Facts: Foster Care in California,” March 2010. Accessed March 27, 2015: 


8 Secretary Shaun Donovan, The U.S. Department of Housing and Urban Development (quoted March 5, 2012 on The Daily Show with Jon Stewart. Accessed March 27, 2015 Source:


9 Source: San Francisco Examiner:


10 Children’s Bureau, Foster Care Statistics 2012, published November 2013, page 12. Accessed March 27, 2015 


11 California spends an average of $49,000 per year to house one inmate in a state prison. Source:


12 Partners for our Children, Chapin Hall, Jim Casey Youth Opportunities Initiative, Center for the Study of Social Policy press release, “Major Study Shows Young People Who Age Out of Foster Care Continue to Face Joblessness, Homelessness and Low Educational Attainment into Their Twenties,” April 2, 2010. Accessed March 27, 2015 


13 U.S. Government Spending Website accessed March 27, 2015




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