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A Growing Number of States Vow to Stop Seizing Benefits Owed to Foster Youth

Oulu Noonan, whose benefits from her father’s disability were taken by Oregon’s child welfare agency, graduated last June from Mt. Hood Community College.

[IMPRINT] As she struggled to raise four children, Oulu Noonan longed for financial security, a spacious backyard for her kids and money to pay for college. Since leaving Oregon’s child welfare system at age 19, she grappled with poverty and homelessness.

Now, at age 33, Noonan knows what could have made a difference: access to more than $50,000 in benefits that had been set aside for her because of her father’s disability. Like other foster youth across the country, however, the child welfare agency kept the money.

Nationwide, an estimated 5% of all children and youth in foster care qualify for Social Security Administration disability and survivor benefits. But when they receive them, child welfare agencies often intercept payments that can amount to more than $900 a month. An investigation by the Marshall Project and National Public Radio estimated that in 2018 alone, child welfare agencies in 49 states and the District of Columbia seized at least $165 million owed to foster youth, and used the money to pay for the cost of their placements in the child welfare system.

“It’s not OK to basically leave us with nothing after forcing us to pay for our own foster care,” Noonan said. “It’s embarrassing that I’m still in poverty, living in Section 8 housing and on government assistance because I didn’t have resources like my peers who didn’t grow up in the system.”

These types of circumstances could soon change. Oregon is among numerous states now considering proposals to prohibit or limit child welfare agencies from seizing children’s federal survivor and disability benefits. New legislation ranges from flat-out bans to setting up savings accounts and forming commissions to study the problem.

In Oregon, the state’s child welfare agency halted the practice in 2021, vowing to continue “dismantling forms of oppression.” Driven by Noonan’s activism, newly proposed state laws advance the cause and include her name at the top of the official documents. Bills authored by Oregon state Sen. Sara Gelser Blouin (D) would create savings accounts for foster youth, and retroactively return stolen payments dating back to 1998, by drawing on unspent COVID-19 relief funds.

Other proposed laws nationwide take aim at a longstanding practice in which state and local governments hire private companies to determine which foster children are eligible for Social Security income. Then — without informing the recipients — child welfare agencies apply to become their financial representatives. Under federal law, family members, adoptive parents or even close family friends are supposed to be notified when a young person becomes eligible for these monthly benefits. Those close relations should be prioritized as payees on behalf of the children — not child welfare agencies, according to federal policy.

Following heightened media scrutiny in recent years, legislators in at least 11 states and four cities have introduced proposals to better ensure foster youth and their kin are notified — and that they receive what they are owed.

Not all the bills have become law. And some states have passed only modest reforms. Nebraska and Alaska, for example, have focused on ensuring that children are notified when a child welfare agency becomes the beneficiary of social security income, but have taken no action beyond that. Other states, such as Maryland in 2018 and Illinois in 2022, curbed the seizure of benefits, but only for older foster youth. Still other states are weighing the option of creating trust funds that could be accessed when young people leave state custody.

In Minnesota, current and former foster youth are leading efforts to halt the seizure of federal benefits for the second year in a row. Last year, a divided state Legislature failed to advance several key child welfare bills, including one that called on the state’s commissioner of human services to create a plan to phase out the practice by 2024.

Hoang Murphy, executive director of the St. Paul-based Foster Advocates, is hopeful a new proposal introduced earlier this month will be successful. The legislation would require the state to come up with a plan for ending benefit seizures and reimbursing foster youth whose benefits were previously taken.

The effort follows a budget proposal by Minnesota Gov. Tim Walz (D) that would direct surplus funds to a cash assistance program for young people exiting foster care at age 21, a demographic facing high rates of financial insecurity and homelessness. Murphy said the state budget should also be spent reimbursing the seized social security benefits.

“With a $17 billion surplus, we can certainly afford to stop stealing from children,” he wrote in an email to The Imprint.

In Washington state, leadership has come from Gov. Jay Inslee (D), who released a budget in December calling on the Department of Children, Youth and Families to create a long-term plan to abandon using income from children’s Social Security accounts and other public benefits to cover the cost of foster care. That builds on other recent efforts not to charge parents of children in foster care and in the juvenile justice system.

A resulting piece of legislation, Senate Bill 5397, would create a working group that would focus on ensuring the federal benefits do not jeopardize young people’s eligibility for other state and federal assistance programs. Under the current version of the bill, however, the practice would not end until 2026.

Home to the nation’s largest child welfare system, California may also soon tighten its laws. Assembly Bill 1512, authored by legislator Isaac Bryan, calls on the state to expand a policy passed by Los Angeles County supervisors in 2021. The state legislation would ensure that all counties conserve foster youths’ federal social security and veteran’s benefits for current unmet needs or future use when they turn 18. Under the proposed legislation, counties would be required to screen young people for benefits eligibility within 60 days of entering foster care, and young adults would receive financial literacy training.

As states weigh these measures, University of Baltimore law professor Daniel Hatcher said the federal government could also soon take a position. In June, the Administration for Children and Families issued policy guidance that encouraged states not to force parents to pay for their kids’ foster care placements with child support payments.

In his 2016 book “The Poverty Industry: The Exploitation of America’s Most Vulnerable Citizens,” Hatcher documented how child welfare agencies have long used private consulting companies to maximize revenue from federal funding streams. The practice treats kids like “a resource on a conveyor belt that is being mined and stripped for every possible penny,” Hatcher said.

“Immense harm occurs when child welfare agencies abdicate their mission by using vulnerable individuals as a source of revenue rather than serving them with welfare and justice,” he said in an interview.

A lawsuit filed this month in San Diego County illustrates another route advocates are using to push for policy change. Lawyers representing two foster children have sued the Southern California county’s child welfare agency, alleging that it unlawfully used their Social Security survivor’s benefits in “a manner violating both federal and state law.”

Known as V.R and B.R., the two sisters, ages 13 and 11, lost about $13,000 each to the county’s Health and Human Services Agency. Attorneys with the Children’s Advocacy Institute and the Sheppard Mullin law firm state in court documents that the money should be used to nurture their future career and educational goals through after-school activities and summer enrichment programs. The older sister plays several sports and hopes to participate in the San Diego County Sheriff Department’s Deputy Explorer Program when she turns 16. V.R. reads one to three books a week and takes ballet classes.

And after years of neglect of their teeth, both girls need significant reparative dental work that is not covered under the state’s Medicaid system. Because of the cost, only one of the sisters is able to receive those services, the lawsuit states.

For more than a decade, Noonan said she lobbied Oregon’s child welfare agency to disclose how much money it had siphoned from her account. It was only last year that she learned Oregon had taken $51,840 in her survivor’s benefits. During her time in foster care, she bounced between foster homes and institutions, experiencing abuse and homelessness.

“The fact that I paid for my own trauma in the system angers me,” she said.

Recently, Noonan learned how to drive, and she is finishing an undergraduate degree in social work at Portland State University, where friends are soliciting financial support from a GoFundMe account allowing her to finish her studies.

“I’m 33,” she said, “and I’m meeting milestones my peers met close to 10 years ago.”

The Imprint, Jeremy Loudenback, Senior Reporter

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