Children's Advocacy Institute Report: States Systematically Siphoning Money from Foster Children

States are reviewing these policies, but most leave foster youth without a safety net

SAN DIEGO, April 17, 2024 /PRNewswire/ -- For decades, states across the country have improperly and secretively siphoned benefits intended for foster children to reimburse themselves for the cost of their care. This practice infringes upon the property and due process rights of our nation's most vulnerable children, and all but ensures they are left destitute as they transition into adulthood.

In a report released today - Foster Care or Foster Con: Preserving the Federal Benefits of America's Most Vulnerable Children - the Children's Advocacy Institute (CAI) at the University of San Diego School of Law (USD) reviews how states apply for foster children's benefits for their own financial gain, and looks at which states are taking a second look at this indefensible practice.

Federal law requires foster care agencies to prioritize the best interests of children, and the Social Security Administration (SSA) requires that a foster child's benefits must be used - in consultation with the child - to pay for unmet needs or saved for their future. Though federal and state law clearly require the state to pay for foster care for all children, states routinely screen children, apply for federal benefits, request the checks, and deposit the children's funds into their own coffers - all without any notice to, or engagement with, the children, their parents, or their attorneys.

Affected benefits include Supplemental Security Income (SSI), survivor benefits via the Old-Age, Survivors, and Disability Insurance Program (OASDI), and the Veterans Administration (VA) Dependency and Indemnity Compensation (DIC) benefits for eligible children who have a deceased parent who died while in active duty.

CAI researchers examined policies in all 50 states plus the District of Columbia and assigned grades based on their policies. Only two jurisdictions, Arizona and the District of Columbia, received A's, while two received B's (New Mexico, Oregon), three received C's (Illinois, Maryland, Washington), and 44 received F's.

"Our foster care agencies and SSA are violating their legal and moral duty to do right by these most vulnerable children and center the child's best interests at all times," Amy Harfeld, CAI's National Policy Director, said. "Children in foster care are not a revenue source. They are children who have experienced trauma who need the adults in their lives fully committed to their well-being. These funds amount to nothing but a rounding error for most state budgets, but would be life-changing for impacted youth."

Studies show that educational, employment, and housing outcomes for youth aging out of foster care are dismal. Less than three percent will go on to obtain a bachelor's degree, and a third of youth who remained in foster care beyond their 17th birthday will experience homelessness. Former foster youth grapple with significant physical and mental health needs - which is amplified for disabled youth. Former foster youth also experience high levels of incarceration, substance use disorders, and underemployment. 

The report recognizes that 28 states have taken, or are currently considering, actions to limit or reform this practice.

"There is some momentum building to reverse these shameful policies," Harfeld said. "We applaud the compassionate leadership driving these reforms and encourage all states and the federal government to make this right."

About The Children's Advocacy Institute 
The Children's Advocacy Institute is an academic, research, and advocacy organization that works to strengthen the rights and improve the health, safety, and well-being of all children and youth. For more information, visit sandiego.edu/cai.

SOURCE Children's Advocacy Institute