A Foster Care Racket – Pacific Research Institute

A Foster Care Racket

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In a page right out of Charles Dickens, California’s most desperate foster children, orphans and the disabled have their Social Security (SSI) benefits seized by State of California.

“You will be glad my lord, that I possess such an unsentimental view when I am managing your investments”
– Ralph Nickelby in Nicholas Nickleby by Charles Dickens

According to the California Children’s Law Center, in 2023 California housed and cared for as many as 60,000 children who, for a variety of reasons that include neglect, drug abuse, caretaker inability to cope, physical abuse, and the death of one or both parents where there are no extended family placement options, are placed in foster care.

Yet, in a page right out of Charles Dickens, California’s most desperate foster children, orphans and the disabled have their Social Security (SSI) benefits seized by State of California.  The state  does so by hiring professional benefits management companies to identify the eligible children, then use their authority as Guardian Ad Litem of the child to apply for and collect their benefits – ostensibly applying them to their care.

In the case of all other foster children, the state pays the entire cost of care.  Yet, these  children will be reunited with their parent or parents in three out of five cases.

While federal law allows the collection of SSI benefits on a child’s behalf, it is strongly suggested that those benefits be held in trust by either a social services agency, adult relative, or even a friend to protect these resources for the child’s use once they age out of foster care.

The Children’s Law Center reports that rates of homelessness of former foster children can be as high as 38 percent. They also have higher chances for engaging in criminality, being sexually exploited, and abusing drugs without the support of a family or dedicated support system. Simply graduating from high school on time is a challenge as children are shuffled from one placement to another.

I spoke with a high school age foster child in Monterey County who has been placed in three different counties and was facing yet another move after having found success on his current school’s football team and the Naval JROTC program.  Not surprisingly, one of his instructors said that he struggles academically and was anxious that his next placement would cause him to change schools for a fourth time.

In 2023, Assemblymember Isaac Bryan, himself a former foster child, authored Assembly Bill 1512 to eliminate the practice and require that counties hold SSI benefits in trust.  It passed by a vote of 80-0.

Governor Newsom vetoed AB 1512 stating:

Both Supplemental Security Income (SSI) and foster care benefits are intended to provide for the daily care and supervision of youth, including costs for housing and food. If counties are not permitted to use SSI to cover the cost of providing care to foster youth, the General Fund will need to offset those costs. This was not contemplated as part of the budget process.

How much the cost offsets are is up for debate.

A recent Cal Matters report notes that, “California does not know how much the counties actually take from children’s benefits each year or how much it would cost to backfill those funds.”

A clue may lie in the same report, which says that Los Angeles County, which cares for nearly one third of California’s foster children, seized $5.4 million in SSI benefits in 2023 for the 600 or so children who qualify for them less, of course, the commission charged by the private collection agency.

If the Los Angeles statistics are indicative of the number of children qualifying for SSI benefits statewide, roughly 1,800 children are eligible for SSI benefits – which shows that the cost to the state could be less than $20 million dollars.

This year, Assemblymember Bryan is trying again by authoring AB 2906 to try and preserve these funds for the children’s benefit.   Bryan said in a recent interview with KCRA in Sacramento, “these are benefits that belong to these young people (and) we are stealing those benefits, but we’ve treated it as a revenue stream for decades.”

Let’s hope that unlike Ralph Nickleby, who stole children’s money for his own benefit, one of Governor Newsom’s “investments” this year are California’s most vulnerable children.

Steve Smith is a senior fellow in urban studies at the Pacific Research Institute, and the author of the recent PRI study on California’s growing crime problem, “Paradise Lost.”

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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