A new law signed by Gov. Katie Hobbs Monday makes Arizona the first state in the nation to stop child welfare agencies from seizing millions of dollars from foster care children’s federal benefits.
For decades, child welfare agencies in the U.S. have seized Social Security Administration disability and Veterans Affairs benefits from foster care children, reimbursing themselves for the cost of providing foster care to children.
The Arizona Department of Child Safety seized an average of $764 a month from nearly 700 foster children in Fiscal Year 2022, totaling nearly $6.25 million. In the state Legislature’s fiscal note of House Bill 2559, the department reported it spends about $4 million of seized benefits annually.
This practice, known as “benefits mining,” is coming to an end in Arizona.
“This bill signing is a tremendous win for kids in foster care,” said Darcy Olsen, the CEO for the Center for the Rights of Abused Children. “While it was legal for the agency to take those benefits, there’s a consensus that it is immoral,” she added.
Foster care children often have a state foster care agency named as their financial representative. A 2018 investigation from The Marshall Project and National Public Radio found that these agencies then take the money from the children’s federal benefits without notifying the child. The Alaska Office of Children’s Services claimed in a 2019 class action lawsuit filed against them for benefits mining that it was “too burdensome” to notify youths about taking their money.
An estimated 10% to 20% of foster care children qualify for federal Social Security, disability or veterans’ benefits. Olsen said the $6 million total for DCS amounts to a “rounding error” for the agency, but for each individual foster care child, the money taken from them is significant.
“That’s tuition, that’s a car, that’s an apartment, that’s a visit to the dentist’s office. It’s really enormous,” she said.
The new law requires DCS to determine if a foster care child is eligible for federal benefits and to continue applying for those benefits on behalf of eligible children. But DCS is now obligated to identify a “representative payee” for the child and is prohibited from reimbursing itself for the cost of care with children’s benefits.
Lawmakers widely supported the measure. It had unanimous support in the state Senate and while it passed on party lines in the House, that was due to Democrats voting against all legislation to protest Republican leadership regarding which bills were brought up for a vote.
The measure was sponsored by Rep. Steve Montenegro, R-Goodyear. Sen. Justine Wadsack, R-Tucson, wrote a mirror bill in the Senate.
Other major cities including Los Angeles, New York City and Philadelphia have already prohibited benefits mining at a municipal level, but Arizona is the first to enact policy for an entire state. Other states have similar bills, but no others have become law yet. A bill in Oregon would not only prohibit benefits mining, but it also would provide retroactive payments to impacted youth.
Some law advocates in Arizona are arguing the DCS’ actions were unlawful. The William E. Morris Institute for Justice, the Arizona Center for Law in the Public Interest, and the Arizona Center for Disability Law sent a letter to Hobbs on June 13 urging her to sign the bill and say DCS’ practices violate the due process and equal protection right of foster care youth.
“At a minimum, due process requires the state to notify the youth in writing that the youth is receiving benefits or that the youth is eligible for benefits, and that the state is attempting to be appointed to as the youth’s representative payee,” the letter states.
But DCS, like other state agencies, never provided written notice to children that are receiving or are eligible for benefits, that it was attempting to become the legal representative payee.
The groups also said DCS does not screen and take in other types of benefits for other youth, but has an entire unit, the “SSA Benefits Unit,” which was designed to apply for federal Social Security benefits on the behalf of foster care children.
The Children’s Advocacy Institute based at the University of San Diego law school recently sued San Diego County for benefits mining in San Diego County Superior Court, arguing that the county didn’t use the funds in its client’s best interests.
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