Since 1997, the federal government has paid states over $1 billion in adoption bonuses — and over $52 billion more to run the system that feeds it. The data shows exactly who collected, and how much the machine has grown.
By Michael Phillips | Riptide Investigations | Father & Co.
When Nancy Schaefer stood before audiences across Georgia, warning that child protective services had become a “criminal enterprise” rewarded for removing children from homes, critics called her a conspiracy theorist. The federal government’s own data suggests she was describing a real financial architecture — one that has paid out more than a billion dollars in performance bonuses to states for increasing adoptions since 1997.
Part I of this series examined Schaefer’s life, her report, and the circumstances of her death in 2010. This installment pulls the receipts: fiscal year data from the U.S. Department of Health and Human Services documenting exactly how much money flows to each state — and how dramatically those flows have grown even as the number of children in foster care has declined.
The bonuses — formally called Adoption and Legal Guardianship Incentive Payments — are paid to states that exceed their prior-year adoption totals. The more adoptions above baseline, the larger the check. The program was created by the Adoption and Safe Families Act of 1997 and has been reauthorized and expanded multiple times since.
“The more children removed from homes, the more money flows into state coffers. What began as a welfare reform measure mutated into a taxpayer-funded incentive structure hiding in plain sight.”
Adoption incentive bonuses by state (FY1998–FY2024)
Total payments earned since the program’s inception. Five states account for 37% of all bonuses paid nationally.
The incentive bonuses are only the most visible layer of the financial structure. Beneath them runs a far larger stream: Title IV-E federal matching funds that reimburse states for the operational costs of foster care, adoption assistance payments to adoptive families, and guardianship assistance. Between FY2018 and FY2023 alone, the federal government paid out $52.7 billion across these programs.
The trend lines within that total tell the story Schaefer was warning about. Foster care payments — money spent on children currently in the system — have held roughly flat, and the caseload has dropped 25%. But adoption assistance payments, which flow once a child is permanently removed from their biological family and placed for adoption, have risen nearly 43% over the same six years.
Title IV-E federal payments: adoption assistance vs. foster care (FY2018–FY2023)
Federal financial participation claims in billions of dollars. Adoption assistance has grown steadily while foster care caseloads declined.
The inverse relationship is striking. As the number of children in foster care fell by more than a quarter, the money paid to adoptive families — funded federally through Title IV-E adoption assistance — rose by nearly half. The financial rewards within the system increasingly flow toward permanent removal, not reunification.
Top states by combined Title IV-E adoption + foster care federal funding (FY2019–FY2023)
Five-year cumulative federal reimbursements. California alone received over $3.2 billion.
To be precise about what this data does — and does not — show: these are federal reimbursement programs, not simple bounties. States are not paid per child removed. The incentive bonus program pays for increases in adoption numbers above a prior-year baseline. Title IV-E adoption assistance is a matching payment to help adoptive families afford the ongoing costs of caring for children with special needs.
But the structure Schaefer identified is real. The financial incentives within the child welfare system run strongly in the direction of adoption and permanent removal — not reunification, which receives comparatively little dedicated federal funding. A state that reunifies a family collects nothing from the incentive program. A state that finalizes an adoption above its baseline collects a federal bonus. That asymmetry shapes institutional behavior, whether or not any individual caseworker intends it to.
The prevention services program — designed to keep families together — received $172 million in FY2023. Adoption assistance in the same year: nearly $4 billion. The ratio is roughly 23 to 1 in favor of the outcome that separates families permanently.
“Prevention services received $172 million in FY2023. Adoption assistance: nearly $4 billion. The ratio is 23 to 1 in favor of the outcome that separates families permanently.”
Part III of this series will return to the circumstances of Nancy Schaefer’s death — and ask why, fifteen years later, the questions she raised have received so little official scrutiny.
Data sources: HHS Children’s Bureau Adoption and Legal Guardianship Incentive Awards History (FY1998–FY2024); Title IV-E Programs Expenditure and Caseload Data (FY2019–FY2023); Title IV-E Six-Year Summary (FY2023). All figures reflect federal financial participation claims as reported on Form CB-496.
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