State Foster Care Agencies Take Millions Of Dollars Owed To Children In Their Care
Tristen Hunter was 16 and preparing to leave foster care in Juneau, Alaska, when a social worker mentioned that the state agency responsible for protecting him had been taking his money for years.
Hunter's mother died when he was little, and his father later went to prison, court records show, leaving him in a foster home. In the years that followed, he was owed nearly $700 a month in federal survivor benefits, an amount based on Social Security contributions from his mother's paychecks. He doesn't remember Alaska's Office of Children's Services ever informing him that it was routing this money — his safety net — into state coffers.
"It's really messed up to steal money from kids who grew up in foster care," said Hunter, now 21, who says he is struggling to afford college, rent and car payments. "We get out and we don't have anybody or anything. This is exactly what survivor benefits are for."
Roughly 10% of foster youth in the U.S. are entitled to Social Security benefits, either because their parents have died or because they have a physical or mental disability that would leave them in poverty without financial help. This money — typically more than $700 per month, though survivor benefits vary — is considered their property under federal law.
The Marshall Project and NPR have found that in at least 36 states and Washington, D.C., state foster care agencies comb through their case files to find kids entitled to these benefits, then apply to Social Security to become each child's financial representative, a process permitted by federal regulations. Once approved, the agencies take the money, almost always without notifying the children, their loved ones or lawyers.
At least 10 state foster care agencies hire for-profit companies to obtain millions of dollars in Social Security benefits intended for the most vulnerable children in state care each year, according to a review of hundreds of pages of contract documents. A private firm that Alaska used while Hunter was in state care referred to acquiring benefits from people with disabilities as "a major line of business" in company records.
Some states also take veterans' benefits from children with a parent who died in the military, though this has become less common as casualties have declined since the Iraq War.
State foster care agencies collected more than $165 million from these children in 2018 alone, according to the most recent survey data from the research group Child Trends. And the number is likely much higher, according to Social Security Administration data for 10 states obtained by a member of Congress and shared with The Marshall Project and NPR. In New York, California and a handful of other states, foster care is run by counties, many of which also take this money, our reporting shows.
Nationwide, foster care agencies are funded through a complicated web of federal and state grants and subsidies, paid for by taxpayers. Children's Social Security benefits were not intended to be one of those funding streams, according to federal law.
In a Marshall Project/NPR survey of all 50 state child services agencies, most pointed out that it is legal for them to apply to the Social Security Administration to become the financial representative for foster children's benefits — though federal regulations state that a parent, foster parent, relative or family friend is preferred. Almost all said they take kids' money as reimbursement for the cost of foster care, putting the funds in individual accounts to recoup what the state has paid for each child's room and board.
In interviews, several officials also said that children in foster care are not mature enough to make good financial choices on their own and that their family members or foster parents may have ill intentions and pocket the cash.
Clinton Bennett, a spokesperson for Alaska's Department of Health and Social Services, said the agency — like any parent — uses kids' funds to pay for their daily expenses, such as shelter and food, rather than just giving them cash. Bennett added that because of confidentiality laws, he could not comment on individual cases like Hunter's.
The state of Alaska is currently facing a landmark class action lawsuit over this practice that may reach the state Supreme Court later this year.
To youth advocates, the fact that many agencies spend children's money on children's services doesn't make it better. That means kids are being made to pay for their own foster care — a public service that federal law and laws in all 50 states require the government to pay for.
"It's like something out of a Charles Dickens novel," said Rep. Jamie Raskin, a Democrat from Maryland. "This is like confiscating someone's Social Security benefits because they availed themselves of the fire department."
As a state senator, Raskin introduced what appears to be the nation's only law that curbs the practice, by requiring that the state save foster teens' money for them. The measure passed in 2018.
Raskin is now working with Democratic Rep. Danny K. Davis of Illinois, who plans to introduce federal legislation later this year to ban all states from taking foster children's money to reimburse themselves.
But many state officials and experts say there isn't the political will in conservative-leaning statehouses to spend additional taxpayer dollars on poor youth, which is what it would take to stop using children's own Social Security benefits to fund their foster care.
"Anyone in their right mind would tell you that we're not to the level of full funding needed to care for these kiddos," said Thomas McCarthy, spokesperson for the Wisconsin Department of Children and Families, which pays a Northern Virginia-based private company called Maximus Inc. to obtain Social Security benefits from children in Milwaukee. "Like many states, we're doing our best to make sure the foster system stays intact."
In the 2003 U.S. Supreme Court case Washington State v. Keffeler, 39 state attorneys general argued that losing foster children's survivor and disability benefits could potentially cost state governments billions of dollars for years.
Daniel L. Hatcher, a law professor at the University of Baltimore and a leading expert on this practice, said it invites a larger question about the role of government. "I think sometimes these officials are so in the weeds of getting funding however they can, they don't even realize that this is not just another funding stream — this is literally children's own money," Hatcher said. "This is about whether we're going to use abused and neglected children's own money to pay for what we're supposed to be providing them as a society."
"Business management to the heart of the American underclass"
States first turned to for-profit companies to mine foster children for cash during the Reagan era. In a 1989 profile, The Washington Post reported that Maximus had brought "modern business management to the heart of the American underclass."
The firm gets paid by public agencies to help them reduce costs and increase the efficiency of programs intended for people in poverty, including public assistance, health care and child support. Its motto is "Helping Government Serve the People."
In 2005, the U.S. government said that Maximus was submitting false claims in the name of foster youth to Medicaid, another federal program, in order to collect revenue for the District of Columbia. The company agreed to pay more than $30 million to settle the case, court records show.
There are no accusations that Maximus is engaging in unlawful behavior related to its work regarding foster youths' Social Security benefits.
Documents from 2013 to 2019 show that Maximus's consultants evaluate each foster child to see whether they previously had a "representative payee" for their Social Security benefits — a parent, grandparent or other guardian — who could be replaced by the state via paperwork submitted to the Social Security Administration.
The company also looks at private health records, caseworker notes, school performance and other information to see whether the children have PTSD, depression, anxiety or other mental health issues, often stemming from the trauma that led to them being in foster care. If so, the kids could be classified as having an emotional disability and additional benefits obtained for the state.
James Dunn, vice president for marketing and public relations at Maximus, said in a statement that the company's "success in helping connect foster children with these benefits is not only a success for the child, but also for caseworkers who are freed up to focus on the day-to-day well-being of these vulnerable children, and for the state or government agency paying for services that keep foster children safe, secure and cared for."
Dunn added that at no time does Maximus take possession of kids' Social Security funds; the money all goes to the state agencies.
States often pay Maximus a flat fee for this work, sometimes only after children's benefits have been secured.
In a status report submitted to Florida in 2012, another firm called Public Consulting Group Inc. discussed using data-mining techniques and predictive analytics to more efficiently "target" and "score" children in order to maximize Social Security dollars. And a PCG proposal submitted in 2018 to Delaware said the company has made millions for child welfare agencies — which it referred to as "customers" — by applying for benefits for children with physical and emotional disabilities.
Stephen P. Skinner, spokesperson for Public Consulting Group, said in a statement that obtaining kids' Social Security dollars is a service requested by the state agencies and is consistent with federal regulations. How children's money is spent is the responsibility of each state, he said, not the company.
"PCG is proud of the work it does to effectively support child welfare agencies and the children who depend on them," Skinner said.
"What did I get in return for my money? More trauma"
In Alaska, more than 250 current and former foster children — many of them Alaska Native — are part of the class action lawsuit demanding that the state pay their Social Security money back.
The state children's services office initially claimed in court that it shouldn't have to notify youths about taking their money because such a process would be too burdensome.
The judge, William F. Morse, rejected that argument in 2019. But he ruled this past January that although it was "undoubtedly true" that the state obtained these kids' benefits for its own coffers, the young people seeking to be repaid would have to prove there is someone who could have been a better financial representative for them.
Lawyers for the children said they plan to appeal that decision.
The Marshall Project and NPR asked six current and former foster youth in Alaska how they could have put their money to use. Some said they might have saved for college, tutoring, therapy, a phone or laptop, or clothes suitable for job interviews. Others needed a security deposit so they could finally have their own apartment after bouncing among foster homes for so many years.
During Malerie Shockley's time in Alaska's foster system, she was moved more than 20 times between homes and facilities, according to notes she took, and she was abused in several of them, she says. Shockley, now 24, had her disability benefits taken by the state to help pay for that foster care experience, records show. "What did I get in return for my money? More trauma," she said.
Just over 80% of older youth in foster care have experienced one or more situations that could result in them having post-traumatic stress disorder, according to one 2012 study. Another study found that at least 36% of all kids who age out of the system become homeless by age 24.
Cornelius Levering, 27, a former foster youth in Nebraska, says he struggled to get by after the state took his Social Security benefits. At one point, he says, he had to walk more than a dozen miles every day to and from a job because he couldn't afford to put gas in his car.
"I don't think people realize the intensity of the position you're in when you age out of foster care," said Levering, who now works as a youth advocate for Nebraska Appleseed. "They kick you out the door and say, 'Figure it out,' usually without a dime to your name."
Finding out about the money
Youth advocates say that at the very least, every child in foster care and their lawyer, if they have one, should be notified that the state has taken their benefits. It's in the Constitution, they say: The government can't take your possessions without giving you a chance to contest it.
In the Marshall Project/NPR survey of state foster care agencies, about half of the 30 states that responded said that if a child was already receiving Social Security benefits before entering foster care, officials notify the child's parent or previous financial representative that the state will be taking over the money. A few states also said that information about these benefits is in the kids' case files, which their lawyer should have access to.
But almost all of the agencies either declined to answer questions about their notification practices or said they do not provide an explanation to children or their loved ones or advocates about the money the state takes from them.
As a result, youths typically don't find out about their cash until it is already gone. This is often just a few months before they exit foster care, when they start talking to a social worker about applying for benefits as an adult. Some said they didn't figure it out until they applied for food stamps or other federal assistance — and were told they already should have been receiving Social Security.
A Social Security spokesperson said that when a state foster care agency is named a child's financial representative, the Social Security Administration notifies the child's current guardian and sometimes their parents, too. But critics note that in the case of many foster children, their guardian is the agency itself.
The spokesperson also pointed out that per federal law, the Social Security Administration conducts regular oversight of state foster care agencies that obtain kids' benefits. These reviews, the spokesperson said, occur about every four years and include interviews with a sample of children as well as people in their lives, asking them if their money is being used in their best interests.
But the Office of the Inspector General for the Social Security Administration has found in at least four reports that this oversight is inconsistent, resulting in young people's savings being spent in ways that do not benefit them.
"Hopeful about the future"
In 2003, the U.S. Supreme Court rejected a case brought by a Washington state family that claimed it was a violation of federal law for the state to take Social Security benefits from foster youth.
The court's ruling left several questions unresolved, including whether states must notify youth when obtaining their Social Security benefits. The decision also didn't address whether the practice raises an "equal protection" problem because only foster children with disabilities or a deceased parent are in effect paying for their own care, while other foster children are not.
Now Congress could take up the matter, possibly as soon as this summer. The proposed legislation would prohibit states from taking kids' cash to cover public expenses, require that every foster child and their lawyer be regularly notified about their benefits, and offer protected trust accounts to hold the money in until recipients reach adulthood.
The bill would also require that states continue to screen foster children for Social Security eligibility so that these agencies don't stop helping kids get benefits just because they no longer have a financial incentive to do so. (A similar bill is making its way through the Texas Legislature.)
In the meantime, some young people in Alaska are already starting to see progress.
Mateo Jaime is among them. Raised in Texas, he was 15 when his father murdered his mother in their family home. In shock, Jaime moved in with a relative in Alaska but was soon left in the foster system.
Jaime was passionate about playing cello; he'd been preparing to audition for all-state orchestra before the murder happened. But he had to leave his instrument at the crime scene and couldn't afford a replacement. In fact, in the years that followed, he could hardly afford to eat, he says.
As Jaime struggled, Alaska's Office of Children's Services was taking survivor benefits from him — more than $20,000 in total — that he was owed as a result of his mom's death. But last year, the agency paid him back without explanation, he says.
Jaime now has his own bank account and car — and finally, a new cello. Now 19, he is in college and leaning toward a major in music. He has an upcoming recital where he'll play Rachmaninoff before a jury of professors. "For the first time," he said, "I'm hopeful about the future."
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