California has ended the long-standing practice of using Adoption Assistance Program (AAP) funds to place adopted former foster youth in residential treatment programs outside the state. Included in this year’s budget follow-through, the change took effect July 1, 2025, and brings most residential placements back under California’s oversight while aligning supports for adoptees with the rules already applied to youth in state custody.
The move follows scrutiny over how, even after California stopped sending foster youth to out-of-state facilities because of safety and accountability concerns, counties continued to fund placements for adopted youth in many of those same programs. Over the past five years, at least 676 adopted children were sent to residential programs across the country. At the time of review, at least 112 were living out of state, with monthly costs that could reach roughly $17,000 per child.
County records also revealed instances where adoptive parents continued receiving monthly AAP stipends while their children lived in publicly funded residential programs. Since 2020, Kern County alone issued more than a thousand such payments totaling nearly $700,000, and other counties reported substantial spending as well. Fourteen counties reported a combined $53.2 million in out-of-state placement costs since 2020, while Los Angeles County—home to the state’s largest child welfare system—did not provide figures without a large processing fee.
Supporters of the policy change argue that if out-of-state institutions are considered too risky for children in foster care, they should not be financed for adoptees either. Keeping children closer to home, they say, strengthens family ties and natural support systems and allows for better oversight under California standards.
Some county leaders and treatment providers warn the prohibition could reduce options for families caring for children with complex needs and, in some cases, raise the risk of a child reentering foster care. They favor tighter screening of programs rather than a broad ban. But state leaders point to repeated allegations of unsafe practices, abusive discipline, and excessive restraints at a number of out-of-state facilities as justification for drawing a firm line.
AAP will continue to offer monthly stipends, Medi-Cal coverage, and therapeutic supports designed to stabilize adoptions. Under the new rules, however, residential treatment—when needed—must generally occur within California, bringing care back under state oversight and keeping children closer to their families and communities.