A cost-benefit analysis of transitional services for emancipating foster youth

Over 24,000 youth "aged out" of the nation's foster care system in FY 2005. While independent living programs and other services are available to foster youth, and almost all states allow dependency courts to retain jurisdiction of foster youth beyond age 18, outcomes for former foster youth are disturbing. This paper describes a program to address these challenges by providing extended foster care benefits and support to former foster youth from their 18th to 23rd birthdays. A detailed cost-benefit methodology documents expected costs and key benefits of the program. According to this cost-benefit analysis, a program providing funding and guardian support for former foster youth is projected to result in net benefits to the State of California over the 40-year careers of participating former foster youth. The program, if successful for all youth, would increase lifetime earnings and taxes paid due to increased education and would lower use of TANF and prison, resulting in a benefit-cost ratio of 1.5 to 1, using discounted present value dollars. Even at 75% success, the ratio is 1.2 to 1, showing a net benefit to society. This methodology can also be used to assess the costs and benefits of similar programs.