Minnesota counties use federal benefits intended for foster children

Ada Smith left foster care as a new mom with no place to call home.

She didn’t know then that her mother’s death years before meant she qualified for survivor benefits. Or that Hennepin County, like communities across the nation, had a longstanding practice of spending foster kids' federal benefits.

If that money had been saved for her to receive at 18, she said she could have avoided living in homeless shelters and had extra support for her entrepreneurial dreams.

“This would have meant housing for me and my child. This would have meant child care for me and my child,” said Smith, now 26. “Every good house has a foundation. This would have been stability for me and my child; this would have been the foundation.”

A report published last week aims to shift Minnesota toward preserving federal cash benefits for foster youths and stopping counties from using the benefits to cover their care while they are in the system — a move that can leave young people with little cushion as they enter adulthood.

For many young people in foster care, that’s a precarious moment. Just 52% of young Minnesotans who had been in foster care reported having stable housing by age 21 and 56% were employed at that point, according to the Annie E. Casey Foundation.

Government agencies' use of the federal benefits has landed in the national spotlight in recent years and a number of states and cities are curtailing the practice. Most recently, Kansas Gov. Laura Kelly signed an executive order this month requiring the state to apply for the benefits on behalf of eligible children and blocking the state from using the money to reimburse itself for foster care services.

But Minnesota’s newly released report doesn’t offer a plan for fast change. It describes a deeply complicated situation and it calls for more input as the Legislature considers its next steps.

The plan highlighted concerns, including how the funds would be preserved and managed, who would be in charge of managing the money and how that process would be funded. It also raised questions about when youths would be able to receive the money and what guidance they would get around accessing the funds.

“We know it’s a complicated issue but that doesn’t mean we should do nothing. And it also doesn’t justify that we continue, every day, to choose to steal from our young people and make them cover the cost of their care,” said Ariana Chamoun, interim co-executive director of the group Foster Advocates.

Minnesota counties handled federal benefits for more than 600 children in 2022, according to surveys conducted for the report. That involves a range of benefits, including survivor and disability benefits and Supplemental Security Income.

About 60 counties reported receiving a total of about $2.8 million through the benefits that year. They used more than $2.5 million of that sum to cover the cost of care for the foster kids.

“That’s a lot of money, but it’s a drop in the bucket of the state’s budget. And that money, cash in hand to young people, could make a real difference in their lives,” said Karina Hunt with the nonprofit Connections to Independence, which supports current and former foster youths.

A survey of former foster youths found 35% said they knew whether they were eligible for federal benefits when they were younger than 18, and fewer than half were aware of how their money was used.

Lawmakers took a step to change that with a law that took effect last summer requiring counties to notify a child when they are taking control of their federal cash benefits.

When legislators directed state staff in 2023 to come up with a plan to preserve the benefits and make them available to foster youths, they asked for a timeline, cost estimates and required legislative actions so they could make changes.

But the 161-page report from the Department of Children, Youth, and Families (DCYF) said to pin down a cost or timeline, the Legislature first needs to answer many questions, such as what circumstances young people should have access to their funds and what happens to the money if a kid is reunified with their family or adopted.

“I know this report leaves additional questions to be answered through discussions among policy makers, community members and advocates, counties, Tribes, and state agencies, but if we want to do right by our children and youth those discussions will be well worth the continued effort,“ DCYF Commissioner Tikki Brown wrote in a letter prefacing the plan.

In a statement Tuesday, Brown added that it’s hard to say how long it could take before counties can no longer spend federal benefits on foster care.

“We are committed to working with advocates, counties, Tribal governments, and Urban Indian organizations while policymakers make final decisions on the most complex aspects of implementation and how to pay for a preservation program,” she said.

Officials with Hennepin County, which reportedly used $444,502 in benefits to cover care costs in 2022, said in a statement that the county agrees with the state’s goal of shifting away from the practice and the recommendations in the report. As of Dec. 23, officials said the county is no longer receiving federal benefit funds “on new cases, except for those that reach termination of parental rights.”

Meanwhile, the report offered a clear answer on how former foster youths want the benefits to be handled. A survey found 95% of participants supported having the money invested in a savings plan.

Smith, the former foster youth from Hennepin County, also believes the money should be saved and given out in installments after someone turns 18. Before they can get the cash, she said they should be required to meet with a financial adviser.

“They should be able to handle their own money,” she said.