NEW YORK (AP)—With a lawsuit, congressional efforts and a stinging new report, critics of current foster-care policies are accusing child welfare agencies of unfairly confiscating foster youths' government benefits and undermining their prospects when they age out of the system.
At the heart of the controversy is a practice common nationwide -- state agencies taking control of Social Security benefits that are earmarked for foster children with disabilities or a deceased or disabled parent.
The agencies, many of them struggling with tight budgets, say they are legally entitled to use these benefits to help cover the basic cost of foster care. Critics say the policy is immoral and counterproductive, and the money should be managed in ways that will best assist the youths after they turn 18.
"In state after state, we are sabotaging foster children's futures rather than providing guidance and help," says a detailed report on the issue being released Wednesday by First Star, a national nonprofit which advocates for abused children, and the University of San Diego School of Law's Children's Advocacy Institute.
The report, titled "The Fleecing of Foster Children," urges Congress to mandate changes by supporting legislation that Rep. Pete Stark, D-Calif., plans to introduce soon.
Stark says his Foster Children Self-Support Act would "correct a long-standing injustice" by requiring child welfare agencies to screen all foster children for Social Security eligibility and notify their attorney or legal guardian if the child is eligible. The agencies then would be required to develop an individualized plan and personal account for each eligible child, so Social Security assets could be conserved to help the youth securing housing, education or job training after leaving foster care.
Many child-advocacy groups say such assistance could be crucial in reducing the high rates of homelessness, unemployment and substance abuse among the roughly 30,000 youths who age out of foster care each year without a permanent family of their own.
"Foster children are removed from their homes by the state for their own protection," said Robert Fellmeth, executive director of the Children's Advocacy Institute. "For the states to turn around and punish them by taking the children's own money and leaving them destitute when they age out of the system is a violation of these vulnerable kids."
At any given time, more than 460,000 U.S. children are in foster care, according to federal figures. The Congressional Research Service estimates that 30,000 of them receive Social Security benefits.
Coinciding with the new report, Baltimore lawyer Dan Hatcher is pursuing a lawsuit alleging that the county social services department acted illegally in using his client's Social Security survivor benefits as reimbursement for the costs of his basic care.
Hatcher argues that the department violated its fiduciary duty to Alex Myers by using the money in its financial self-interest while Myers "was shuffled between over 20 different placements, was not provided adequate care by the agency, and left foster care penniless."
Myers, now 23, entered the foster care system at age 12 and became eligible for Social Security in 2001 after his father died.
The lawsuit was dismissed in a lower court; a hearing took place last week on Hatcher's appeal to the Maryland Court of Special Appeals.
"The agency has a statutory obligation to pay the foster care costs of children in their care, while the children do not," Hatcher argued in his brief, which alleges that the department never notified Myers about its use of the benefits.
Maryland child welfare officials are frustrated by the lawsuit, saying they are following federal and state regulations -- as well as a 2003 U.S. Supreme Court ruling -- in using Myer's benefits to cover the costs of basic foster-care necessities.
"States are not in fact maliciously stealing children's money," said Judith Schagrin, assistant director for children's services with the Baltimore County social services department.
She expressed dismay at what she called "inflammatory language" being used by critics of the current policy.
In opposing Hatcher's appeal, Maryland officials say federal regulations do not require child welfare agencies to implement individualized spending plans for the benefit funds it uses. Any such mandate would be a "tremendous burden," their brief says.
The brief also says the state was under no legal obligation to notify Myers or his legal guardian that it had been designated to handle the benefits.
The total sum that Myers wants returned is $11,500.
"Not a lot of money from the perspective of the state," Hatcher said. "But for Alex, it could have made a world of difference when he was leaving foster care."
According to the new report by the two advocacy groups, state agencies have been collecting more than $150 million a year in foster children's survivor and disability benefits.
"It's not a huge sum of money compared to the total child welfare budget," said Children's Advocacy Institute staff attorney Elisa Weichel, the report's lead author. "But when you look at the impact on the kids' lives, it's huge for them."
Amy Harfeld, a policy consultant with the institute, said two factors were behind the widespread use of children's benefits to fund their foster care.
"It's a combination of agencies being financially strapped to the point of desperation, and foster kids being so disenfranchised that they're the easiest targets to take advantage of," she said.
Linda Spears, the Child Welfare League of America's vice president for policy, expressed empathy with both the state agencies and their critics.
"In tough economic times, the states are between a rock and a hard place -- they can't afford services beyond the basic necessities," Spears said. "But the young person is there saying, `What about me?' ... There's so much in foster care that makes young people feel they're not in charge of their lives, and that could be changed to give kids more say."
Beyond the issue of financial benefits, the new report asserts that foster children are often the victims of identity theft because their Social Security numbers and other personal information circulate widely among relatives, foster parents and agency employees.
"Too often, this access is abused for everything from opening credit cards to fraudulently providing identification for criminal matters," the report says.
It cites the case of Jaleesa Suell, 21, a George Washington University student who was in foster care in California. In applying for a student credit card, she said she discovered that someone had stolen her Social Security number and defaulted on a loan, jeopardizing her prospects for a good credit rating.
Rep. Jim Langevin, D-R.I., is working on a bill to curtail the identify theft problem.
It would require state agencies to review the credit reports of all foster children and take steps to clear them if there is an inaccuracy. The agencies would be required to ensure that youths leave foster care with necessary documents, help them apply for state benefits and financial aid, and set up individual development accounts for their finances.
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Online: Children's Advocacy Institute: http://www.caichildlaw.org