Despite its substantial caseload and the frequent media attention drawn to the tragic failures of its young charges, foster care remains a poorly studied and poorly understood social service program. A current case in point concerns the unexamined relationship between foster care and Aid to Families with Dependent Children (AFDC). The makers and analysts of poverty policy have largely ignored the foster care program, even though it is a direct programmatic outgrowth of AFDC and about half of the children in care come from families that are eligible for or receiving AFDC. This lack of attention to foster care is a serious and potentially costly oversight. In light of troubling trends in the foster care caseload, welfare reform plans currently under discussion may well reap unanticipated--and expensive--consequences.
Federal assistance to help states make maintenance payments for children placed out of their homes by child welfare agencies was first provided in 1961 under the old Aid to Dependent Children (ADC) program, Title IV-A of the Social Security Act--now known as AFDC. The federal role grew out of the recognition that some states were denying ADC payments to children when they determined that a child's home was "unfit." The 1961 regulations required that states either continue ADC payments while making efforts to improve conditions in the home or provide out-of-home care for the child. Federal financial participation was only available for the placement of children who had been receiving ADC in the month preceding foster care placement. Later amendments made the program permanent; made it mandatory for the states; allowed for payments to children in private, not-for-profit institutions; and expanded eligibility to include children from families who were eligible for ADC when the child was removed from the home, regardless of whether the family was actually receiving ADC at the time.
Comparing the size of the foster care program with AFDC itself provides a strong argument for a better understanding of foster care and its relationship to overall poverty policy.(1) The number of child recipients of AFDC has increased by 29 percent, from approximately seven million in 1985 to about nine million in 1992. Over the same period, the foster care population grew by 60 percent--twice the rate of AFDC growth--from around 276,000 in 1985 to about 442,000 in 1992.(20
The relative growth in the federal costs of both programs provides an even more striking contrast. (See Figures 1 and 2.)(Figures 1 and 2 omitted) Federal expenditures for AFDC benefits and administration grew from $7.76 billion in 1981 to $13.79 billion in 1993. In contrast, federal expenditures for foster care maintenance payments and administration leapt from $309 million to $2.55 billion over the same period. Under current law, the House Ways and Means Committee's Green Book estimates that by 1999, federal AFDC expenditures will increase to $16.43 billion, while federal foster care expenditures will grow to $4.38 billion. Thus, as Figure 2 indicates, although estimated federal spending on AFDC in 1999 will have grown by about 112 percent from 1981 levels, federal foster care spending will have grown by over 1,300 percent. From another perspective, while the ratio of federal AFDC costs over foster care costs was 25 to 1 in 1981, it may well decline to less than 4 to 1 by 1999.
The higher per capita cost of foster care is partly a function of the much higher administrative costs of supervising the care of children than of distributing AFDC checks. It also costs more to entice foster care providers to raise children than we currently pay AFDC recipients. The median monthly AFDC payment of $212 for one child is about $100 per month less than the median foster care rate. Costs of group care--group homes and residential treatment centers, for example--generally range from $2,000 to $6,000 per month. Furthermore, foster care rates are proportional to the number of children placed--two children generate twice the foster care rate of one child, for example--whereas AFDC per capita payment rates decrease as family size increases. …