1 The Impact of the Fostering Connections Act on Your Children and Families July 23, 2010 Presenters: Joe Kroll Josh Kroll North American Council on Adoptable Children

Overview of Session Review of Fostering Connections law and adoption-related provisions of the Act Adoption Incentive Awards: increases in awards and time to use Federal Adoption Tax Credit: amendments to the credit, new requirements for States, implications for families De-link of Adoption Assistance to AFDC: changes to title IV-E program, eligibility, estimating savings, reinvestment Basics of Adoption Assistance Benefits 2

The Fostering Connections to Success and Increasing Adoptions Act (Public Law ) 3

4 Progress for Children and Families The Fostering Connections to Success and Increasing Adoptions Act (P.L ): Was signed into law on October 7, 2008 Includes most significant federal child welfare financing reform in 28 years

5 Adoption Provisions Creates Fiscal Incentive for States to Find Adoptive Families for Older Youth By: Phasing in expanded federal adoption assistance eligibility, focusing on the oldest and longest waiting children Increasing adoption incentive awards—from $4,000 to $8,000 per child for increasing adoptions for children 9 and older and from $2,000 to $4,000 for younger children with special needs

6 Adoption Provisions Removes the link between a child’s birth parents’ income and eligibility for federal adoption assistance payments Requires states to reinvest any state funds saved as a result of the de-link provision in child welfare services Increases and extends the Adoption Incentive program Requires states to share information about the federal adoption tax credit Enables children in IV-E guardianship placements to receive IV-E adoption assistance if they are adopted Defines children who are SSI eligible as having special needs; doesn’t otherwise alter a state’s ability to define special needs

Adoption Incentives Provisions Renews current Adoption Incentive program for five years Resets the baseline to the number of adoptions in 2007 Doubles the incentive payments for adoptions of older children and younger children with special needs—each additional older child adoption earns $8,000; bonuses for children under 9 with special needs are $4,000; bonuses for overall increases in adoptions are still $4,000 7

Adoption Incentives Awards incentive payments to states that exceed their highest adoption rates since 2002 (if funds are left after other awards) Only gives incentive payment if the state increases older child or all adoptions (not just adoptions of younger children) Gives states 24 months (from the time of payment) to spend their adoption incentive bonuses; previously they had 24 months from the beginning of the fiscal year for which bonuses were awarded, in effect giving them only about 12 months 8

Adoption Tax Credit The Fostering Connections Act requires states to inform current and prospective adopters about the credit The tax credit enables families who adopt from foster care to claim a federal adoption tax credit without documenting expenses. If the adopted child has special needs and therefore receives adoption assistance, the adopting family is eligible as long as their income isn’t above $222,

2010 Amendments to the Tax Credit The Patient Protection and Affordable Care Act, extended the tax credit through December 31, For tax year 2010, the amount of the credit was increased to $13,170. The credit was made refundable for all types of adoption for tax years 2010 and

Implications of Refundable Tax Credit Because the adoption tax credit will be refundable, families who have smaller tax liability will now be able to benefit for adoptions finalized in 2010 and It may create an incentive to adopt older youth, because the credit can offset other lost benefits. Families adopting siblings groups could receive large credit. 11

12 De-link Provision/Expanded Adoption Assistance Background In the past eligibility for Title IV-E adoption assistance was, for most children, linked to the birth families’ eligibility for the now-defunct Aid to Families with Dependent Children (AFDC) program. Because the link was tied to 1996 levels, each year fewer and fewer children were eligible for IV-E assistance. Some states offer less adoption assistance to children who are not IV-E eligible.

Fostering Connections Act De-Link Provision Beginning October 2009, newly adopted children who are older or who have been in care for five years or more and their siblings are eligible for federal adoption assistance regardless of their birth parents’ income. By October 1, 2017, the law ensures that no child is excluded from federal adoption assistance due to the income of the child’s birth parents 13

Evolving Target Population by Age In FY 2010 any child born on or before September 30, 1994 is eligible for Title IV-E adoption assistance (children who turn 16 during the fiscal year) In FY 2011 any child born on or before September 30, 1997 will be eligible for Title IV-E adoption assistance (children who turn 14 during the fiscal year) States should begin enhanced adoption planning for children currently 13 and older who have adoption as their plan. They will be Title IV-E eligible in FY

Children in Care Longer than 60 Consecutive Months Nationally, about 14% percent of waiting children who have been in care for five years are younger than 9. We encourage states to look at all foster children who have been in care for longer than 60 months. They are much less likely to be reunified after so long in care, and adoption may well be the best option for them. Placing a younger non-Title IV-E eligible child in an adoptive family with Title IV-E adoption assistance could save a state $30,000 to $80,000 over a 10-year period. 15

Siblings Placed Together Children placed with siblings who qualify due to age or length of time in care will also be eligible. One state estimates that 90% of children waiting to be adopted are members of sibling groups. 16

17 Adoption Assistance De-Link: Implementation Issues States with low IV-E penetration rates stand to gain the most. This provision provides an opportunity to further promote adoption for waiting children, older children, children of color, etc. States could assign staff to child-specific recruitment focusing on older and longer waiting children. Investing in adoption for non-IV-E children will reap additional rewards because the state will be reimbursed for adoption assistance when it was not reimbursed for foster care payments. This is in addition to the funds saved by all adoptions.

18 How May States Reinvest Maintenance of Effort Funds Promoting adoption of newly eligible children will probably be the first priority of states. Successful adoptions will generate both Adoption Incentive awards and additional Title IV-E Adoption Assistance reimbursement payments. As MoE monies increase states should involve stakeholders in planning for reallocation of state savings. States should consider reinvestment in post- permanency services to support and sustain adoptive, guardian, and reunified families.

19 Strategies States are Considering Two states are exploring investing Adoption Incentive funds in preparing TPR petitions for older children who are living with foster parents who want to adopt. One state may reinvest MoE in increasing adoption assistance monthly payments. (MS) Another state would like to reinvest MoE in adoption assistance payments for non-Title IV-E eligible children whose adoptive families whose incomes exceed state guidelines. (AR)

20 Outcome New Adoptive Families for Children

21 Additional Provisions Maintains current provision allowing states to continue adoption assistance to age 21 for youth with a “mental or physical handicap” and extends the option to youth in youth in states that have taken up the Guardianship Assistance Program Makes children 16 and older who are adopted from foster care, or who enter into legal guardianship with a relative, eligible for Chafee independent living services and education and training vouchers

Adoption Assistance—How children are eligible? For a child to be eligible for adoption assistance they must be considered special needs. The child must meet one of the state definition of special needs which can include: – Various types of disabilities, including emotional and behavioral, and physical – Age – Race – Siblings 22

Adoption Assistance—What are the benefits? Adoption Assistance typically includes – Monthly payment Basic rate for children without disabilities Specialized, Level of Care, etc… for children with a disability – Medicaid Children are not required to go on the family’s private insurance. – Other services—depends on the state and if they offer any other services 23

Adoption Assistance—How it is funded Two types of adoption assistance, Title IV-E and non Title IV-E. Title IV-E has federal and state dollars (sometimes county also) – Federal reimbursement is 50-75% depending on the state Non Title IV-E is only state dollars (sometimes county also) 24

Adoption Assistance—Interstate adoptions When placing a child with a family in another state these are the things you need to know The definition of special needs and rates are set by the placing state (a few states may pay the receiving states rate if higher) Medicaid needs to be established in the receiving state for the child – Children receiving Title IV-E adoption assistance are statutorily eligible for Medicaid – Children receiving non Title IV-E adoption assistance will receive Medicaid unless placed in these states: District of Columbia, Hawaii, Illinois, Nebraska, Nevada, New Hampshire, and New Mexico 25

Adoption Assistance—How it interacts with other assistance programs Food stamps count 100% of adoption assistance towards family income. School lunch programs count 100% of adoption assistance towards family income Section 8 housing counts $480 per child per year towards family income Low Income Home Energy Assistance Program (heating assistance) allows states to determine what is excludable income 26

Adoption Assistance—Social Security Benefits If a child receives SSI because of their disability, the adoption assistance must be reduced dollar for dollar. If a child receives dependent benefit because their parent (can include birth parent) received a social security benefit, that does not require a dollar for dollar reduction. – If the child is receiving Title IV-E adoption assistance, the state cannot reduce the amount of an existing agreement without the concurrence of the adoptive parent. A state can consider a dependent benefit from the birth parent as a resource to the child to negotiate lower adoption assistance amount. 27

28 Wrap-Up Visit to access tools, analyses, and other information on each provision of the Act reviewed today, including:  A resource for adoptive families on the adoption tax credit  HHS guidelines on spending and reporting expenditures of Adoption Incentive awards  A fiscal analysis spreadsheet (demo’ed today) to help project the number of children who are, or will be, newly eligible for IV-E Adoption Assistance and estimate the state savings that will results  An implementation guide for the IV-E delink provision, including key questions states should consider when planning for savings and reinvestment And much more!

Thank you! Contact us: -Joe Kroll, Executive Director - Josh Kroll, Project Coordinator, Adoption Subsidy Resource Center, NACAC – x15, 29