Fast Facts

Legislation enacted in 2008 increased federal reimbursement of state assistance payments to adoptive families, saving states more than $800 million from FY 2015-19. But, states must reinvest all of these "adoption savings" back into child welfare services.

We found that states' rates of reinvestment varied widely. Some states spent little or none of their savings—in part due to issues like difficulty understanding what services they were allowed to fund.

We recommended that the Department of Health and Human Services provide more guidance to help states spend this money faster to help children in the child welfare system.

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Highlights

What GAO Found

From fiscal years 2015 through 2019, states collectively reinvested $516 million of the $843 million they accrued in “adoption savings” (see figure). Adoption savings are state funds saved due to the increasing number of children eligible for federal adoption assistance payments. States spent $224 million of these savings on post-adoption or post-guardianship (“post-permanency”) services, $67 million on services for youth at risk of entering foster care (“preventative services”), and $225 million on other child welfare services. States' individual spending varied widely. For example, 10 states spent all of their adoption savings, but 23 spent less than half, and nine of those spent none.

Spent and Unspent State Adoption Savings, Fiscal Years 2015 through 2019

Spent and Unspent State Adoption Savings, Fiscal Years 2015 through 2019

The Children's Bureau—part of the Department of Health and Human Services' (HHS) Administration for Children and Families (ACF)—monitors states' adoption savings reinvestment, but its oversight is hindered by a lack of detailed data. Further, there is no statutory deadline for states to spend their savings, and Children's Bureau officials said states can delay their spending indefinitely. Also, the state data the Children's Bureau collects annually does not always allow it to definitively determine states' compliance with the requirement to spend at least 30 percent of their annual adoption savings on post-permanency and preventative services, including at least 20 percent on post-permanency services (the 20 and 30 percent requirements). If states do not reinvest their adoption savings or meet the 20 and 30 percent requirements, children will not benefit from the additional spending as intended by the law.

Nearly half (23 of 52) of the states reported in GAO's survey at least one significant challenge to reinvesting their adoption savings, most often citing early spending difficulties such as needing time to understand the new requirements and competing state budget priorities. Most of the 28 states that received technical assistance from the Children's Bureau in fiscal year 2019 reported it was helpful, but 22 states wanted more assistance. Of those, 13 wanted more guidance on allowable adoption savings expenditures and/or other states' best practices and strategies for spending their savings. Further, 10 of these states had not yet spent 30 percent of their cumulative savings on required services. Without additional guidance or technical assistance, states may have difficulty meeting the 20 and 30 percent requirements or reinvesting their savings overall.

Why GAO Did This Study

The Fostering Connections to Success and Increasing Adoptions Act of 2008 expanded eligibility for federal adoption assistance and required states to reinvest any resulting adoption savings in their child welfare systems. The Preventing Sex Trafficking and Strengthening Families Act required states to spend a minimum percentage of these savings on specific types of services starting in fiscal year 2015. The Bipartisan Budget Act of 2018 included a provision for GAO to study states' adoption savings reinvestment.

This report examines (1) the extent to which states are reinvesting their adoption savings, (2) how the Children's Bureau monitors these reinvestments, and (3) any challenges states face in reinvesting savings and what guidance the Children's Bureau provides. GAO analyzed state adoption savings and spending data for fiscal years 2015 through 2019, all available years of data at the time of this review. GAO surveyed 53 state child welfare agencies and 52 completed the survey. GAO also interviewed child welfare officials in eight states selected to provide variation in several areas, including the percent of adoption savings they had reinvested.

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Recommendations

GAO recommends ACF 1) collect additional state data to improve its oversight, and 2) provide guidance or technical assistance to states on services that count toward the 20 and 30 percent requirements and on timely reinvestment of their adoption savings. HHS disagreed with the first recommendation and agreed with the second. GAO maintains that additional data would improve ACF oversight.

Recommendations for Executive Action

Agency Affected Recommendation Status
Administration for Children and Families The Assistant Secretary for ACF should develop a method to collect information from states on the year that reinvested state adoption savings were accrued to improve its oversight of states' compliance with the reinvestment requirements. For example, ACF could require states to submit this information along with their annual data reports. (Recommendation 1)
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HHS agreed with this recommendation. The agency noted that the Children's Bureau provides training and technical assistance to facilitate states' sharing of experiences and best practices and will develop opportunities for states to share information on best practices and strategies for meeting the reinvestment requirements. We will monitor their progress on developing better data collection to improve oversight.
Administration for Children and Families The Assistant Secretary for ACF should provide additional guidance or systematic technical assistance to states on examples of services that would count toward the 20 and 30 percent requirements and on how to overcome challenges to spending adoption savings in a timely manner. These examples could take the form of a list of specific services that states could provide that would count toward these requirements or a compilation of best practices or strategies that some states have used to meet the 20 and 30 percent requirements and reinvest their adoption savings overall. (Recommendation 2)
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HHS did not agree with this recommendation. The agency stated that its processes for reviewing state compliance with the 20 and 30 percent requirements provide sufficient information to identify circumstances where further documentation is needed from a particular state. HHS also said that collecting these data would impose a significant burden on states and that this burden is not warranted since states have, in the aggregate, exceeded the 20 and 30 percent requirements. However, HHS stated that it plans to enhance its training of Children's Bureau staff to prevent any further occurrences where potential non-compliance is not properly identified. We continue to believe that collecting additional information from states would improve the Children's Bureau's oversight. The Children's Bureau already requires states to maintain data on the year that reinvested adoption savings were accrued, so any additional burden on states would be limited to reporting the data. Further, we found a case in which Children's Bureau did not identify a state that was potentially out of compliance with the 20 percent requirement and misidentified a second state as being out of compliance when it was not. We believe that annually collecting additional data on the year in which reinvested adoption savings were accrued, as we recommended, could help prevent similar errors in the future. Finally, although it may be true that most states are either meeting, or potentially able to meet, the 20 and 30 percent requirements, the requirements apply to each state individually, not states in the aggregate. While we encourage the Children's Bureau to provide additional training to its staff, the Children's Bureau will continue to have to rely on estimates and assumptions if it does not gather more specific data.

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