Statement of Daniel Hatcher, Assistant Professor of Law, University of Baltimore School of Law, Baltimore, Maryland

Testimony Before the Subcommittee on Income Security and Family Support
of the House Committee on Ways and Means

May 23, 2006

Mr. Chairman and Members of the Subcommittee:

Thank you for the opportunity to testify.  My name is Daniel L. Hatcher, Assistant Professor of Law in the University of Baltimore’s Civil Advocacy Clinic.  Recognized as a national leader in clinical education, the University of Baltimore School of Law provides as many as 200 students each year the opportunity to participate in a broad range of clinical programs and internships.

In addition to my work at the University of Baltimore, I have direct experience representing clients involved with the child welfare system as a former attorney with the Maryland Legal Aid Bureau.  I most recently served in a statewide position focusing on public benefits, and I previously worked as a staff attorney representing hundreds of children in abuse and neglect proceedings and adult clients in public benefits, housing, consumer and family law issues.

My testimony will focus primarily on a proposal I have developed with congressional staff that results from my recently published law review article, Foster Children Paying for Foster Care.[1] The proposal will improve the use of foster children’s Social Security benefits as part of a Plan for Achieving Self Support that will be individually tailored for each child, and will encourage much needed coordination of the children’s resources with other federally funded child welfare services.     

Improved Coordination Between Federal Programs

State child welfare agencies continue to be over-stretched and are unable to provide adequate services to children and families.  Children involved with the child welfare system are therefore not doing well, resulting in enormous short-term and long-term societal costs.  For example, the GAO surveyed several studies regarding the problems facing children after recently aging out of foster care and noted several findings: 40 % of the former foster children were dependent on public assistance or Medicaid; 51 % were unemployed; 25 % were homeless at least 1 night; and 27 % of males were incarcerated at least once.[2]

Addressing the system failings will require increases in both federal and state funding for child welfare services.  Federal programs such as the Child Welfare Services and Promoting Safe and Stable Families programs provide an important source of federal funds for supporting state child welfare systems.  Increased funding in these programs is an important step, as are the suggestions to use funds to encourage at least monthly case worker visits.  Along with ensuring frequent caseworker visits, it is also critically important to provide improved training and other mechanisms to increase not only the quantity but also the quality of caseworker services.   

Also, improvements are necessary such as those recommended by the Pew Commission on Children in Foster Care - including better coordination of child welfare system services with other federal and state programs.[3]  The following provides background for a proposal that would encourage such coordination. 

Foster Children’s Social Security Benefits: Current State Practices

Because state child welfare agencies are significantly under-funded, they seek to maximize revenues from every available source.  Unfortunately, the insufficient funding has led to a situation where the agencies are seeking resources from the very children they serve.  State agencies are systematically converting Social Security benefits belonging to foster children into a source of state funds rather than using the benefits as a crucially needed resource in planning for the children’s current and future needs.

Child welfare agencies screen children in state care to determine those who are eligible to receive Social Security benefits because of the children’s disabilities (SSI benefits) or because the children’s parents are deceased or disabled (OASDI benefits).  The agencies apply for benefits on the children’s behalf, interject themselves as the children’s representative payees, and then side-step their fiduciary obligations by taking the children’s benefits to reimburse foster care costs for which the children have no legal obligation.  Foster children are being forced to pay for their own care. 

It is understandable and desirable that state agencies seek to maximize funds available for child welfare services.  However, the source of funds should not be the children.  Further, when states take foster children’s Social Security benefits, there are insufficient assurances that the converted funds are used to supplement and not replace other state spending on child welfare services. 

The Story of John G.[4]

   John G. is a fifteen year-old foster child who inherited a habitat for humanity home with a $221 monthly payment.  John receives Social Security survivor benefits (OASDI) that are more than enough to cover the mortgage payments.  However, the state agency representative payee put the house at risk of foreclosure by refusing to use John’s benefits to make the house payments, following instead its policy of taking all foster children’s Social security benefits to pay state costs.    

   John’s attorneys challenged the practice, and the agency is now appealing a state court ruling that the agency must use John’s benefits to pay the mortgage.  If the state succeeds in its appeal, John will lose a home to return to when he ages out of foster care.   Also, John’s benefits left over after the mortgage payments could be conserved as part of a plan for his transition to independence.  Several options are possible.  For example, the benefits could be used to save for college or for vocational education and training.  The benefits could be saved to purchase a car - now virtually a necessity for independent living. Or, the benefits could simply be conserved in a savings account that can serve as an emergency fund for the many unforeseen expenses that John will likely encounter. 

A Plan for Achieving Self Support for Foster Children

The current practice of state agencies taking foster children’s Social Security benefits is occurring due to a lack of clear federal guidance.  Therefore, such guidance should be provided through the following proposal:

• Issue: When state agencies claim foster children’s Social Security benefits, a crucially needed resource is taken from children that could be used to improve their stay in foster care by helping with the children’s disabilities and special needs and could be conserved to help the children in their transition to independence when they leave foster care. 

Solution: Clarify that state agency representative payees may not use foster children’s Social Security benefits to reimburse or pay state costs rather than using the benefits for the children’s current and future needs.

• Issue:  Current law only allows individuals to have $2,000 in resources in order to be eligible for SSI.  For some foster children, saving the funds to help plan for the children’s future transition to independence may be more beneficial than immediately spending the funds. 

Solution: Create a new plan for achieving self-support (PASS) program for foster children that encourages use of foster children’s Social Security benefits to improve planning for the children’s current and future needs, and that is exempt from the SSI resource limit.  Clarify that representative payees for foster children must manage the children’s Social Security benefits as a part of such a plan developed to best meet the current and future needs of each foster child.   

• Issue: Foster care maintenance payments are currently counted as income for foster children in determining SSI benefit payments, resulting in a dollar-for-dollar reduction in foster children’s SSI benefits.    

Solution: Ensure state agencies can receive full federal foster care funding (IV-E) for eligible foster children who are also eligible to receive SSI by excluding federal and state foster care maintenance payments from the determination of children’s SSI payment amounts. 

• Issue:  Advocacy groups have expressed concern that if state child welfare agencies are not provided with the incentive of retaining foster children’s Social Security benefits, the agencies will no longer apply for benefits for   the children or screen the children for disabilities and special needs. 

Solution:  (1) Require states to establish procedures to screen foster children for potential eligibility for Social Security benefits and provide assistance in the application and appeal process. (2) In addition to allowing state agencies to receive IV-E funding for eligible children, allow state agency representative payees to charge a monthly $25 administrative fee.  (3) Also, require the Government Accountability Office to do a study three years after these provisions are enacted to determine if states have established successful procedures to screen foster children for potential eligibility for Social Security benefits and to provide the children assistance in the application and appeal process.

• Issue: State agencies are currently selected as representative payees through a virtually automatic process without an appropriate search for whether other more preferred representative payees may be available.

Solution: Clarify that the notice regarding proposed representative payees must be provided to attorneys for children in foster care, and require that state agencies apply to become representative payees when no more preferred individual or organization is available. 

This proposal will ensure that foster children’s Social Security benefits are used as intended - to help the children.  Used in coordination with other child welfare programs and services, the benefits will provide a much needed resource to help meet the current specialized needs of foster children who are disabled or have deceased or disabled parents, and conserved benefits will be utilized in improved planning for the children’s transition to adulthood and struggle for self sufficiency. 

[1] Daniel L. Hatcher, Foster Children Paying for Foster Care, 27 Cardozo L. Rev. 1797 (2006). 

[2]United States Government Accountability Office (GAO), Foster Care: Challenges in Helping Youth Live Independently, GAO/T-HEHS-99-121 (1999). 

[3]Pew Commission on Children in Foster Care, Fostering the Future: Safety, Permanence  and Well-Being for Children in Foster Care (2004). 

[4] Summarized from a recent New York Times story.  See Erik Eckholm, Welfare Agencies Seek Foster Children’s Assets,N.Y. Times, Feb. 17, 2006, at A1.