Nearly all states take foster kids' federal benefits and use them to offset cost of foster care: Report

A disturbing report from the Children’s Advocacy Institute at the University of San Diego School of Law indicates that nearly all states routinely take federal benefits from children in the foster system and use those benefits to offset the cost of foster care.

Like their counterparts who are not in the foster care system, some foster kids are entitled to receive federal money, including disability benefits associated with Social Security as well as survivor benefits associated with the Veterans' Administration and the Old-Age, Survivors, and Disability Insurance program, which are issued upon the death of a parent, the Children's Advocacy Institute study noted.

However, of all 50 states and the District of Columbia, only seven received a passing grade in the study: Arizona, D.C., New Mexico, Oregon, Maryland, Illinois, and Washington state. The rest received an F because they otherwise abscond with the foster kids' federal money in the name of "revenue maximization," oftentimes without even bothering to tell the children first.

"For this subset of foster youth, who face tremendous obstacles when they transition out of care, these assets can serve as a lifeline, contributing to economic stability, self-sufficiency, and successful outcomes," the study said. "Most foster youth eligible for these federal benefits will never see a dollar of their money, or even know that someone has applied for and received benefits on their behalf."

The Detroit Free Press investigated the issue in Michigan, one of the 44 states to receive a failing grade in the study. According to the outlet, in fiscal year 2022-23, Michigan collected $3.2 million in federal benefits designated for foster children, all of which went toward reimbursing "the state for the cost of caring for kids in the child welfare system."

The only way a Michigan foster child may begin receiving some of his or her federal benefits or have those benefits saved on the child's behalf is when "the child’s total income exceeds the cost of care," the Michigan Department of Health and Human Services indicated.

Yet, the state has apparently failed to deliver in some of those cases as well. The Free Press noted that one former foster youth whose father died did not receive federal benefits for the first six months after he was returned to the care of his birth mother, meaning the state collected nearly $5,400 to which the young man was entitled.

"I don’t understand how they can do that to kids when they’re trying to move forward with their life," said the boy's mother, Jenny Bowden.

"It makes you feel like they really don’t care about it, or they’re trying to have a good image without having to do the work," Bowden's son added.

When asked for comment, the Michigan DHHS made no attempt to deny denying foster kids their federal benefits. "This is common practice among many states," the agency said.

"When a child is placed in an out-of-home situation with MDHHS, income or funds available to the child are secured and used to reimburse the public taxpayer dollars that provide payment for the child's care. If the child's total income exceeds the cost of care, the excess is saved for the child," the agency helpfully explained.

Jill Bauer, a staff attorney at Legal Services in Washtenaw County in Michigan, took a decidedly different view. "Why should kids with Social Security have to pay for their own foster care?" she asked rhetorically.

Elisa Weichel, administrative director of the Child Advocacy Institute, even suggested that the state practice of taking federal money that belongs to foster children just reinforces to such children that they are viewed as possible revenue sources rather than as human beings.

"We believe that the state is choosing to put its own financial interests above the best interests of the children in its care," Weichel told the Free Press, "which unfortunately is a message these children probably also get in other ways."

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