North Carolina is among 39 states that received a letter last month from the federal government to stop taking foster children’s Social Security survivor benefits and using them for the state’s foster care expenses. But are states doing so, or is it a misunderstanding based of a legally approved practice for covering the children’s living expenses?
Under federal law and the Social Security Administration (SSA) regulations, Social Security survivor benefits earned on a parent’s work record belong to the child. If a child can’t manage them directly, a representative payee can be appointed, and they must use the benefits only for the child’s use and benefit. Any funds not used immediately need to be saved for the child’s future needs.
The Administration for Children and Families (ACF) at the US Department of Health and Human Services (HHS) sent the letters on Dec. 11.
ACF said in a press release that state child welfare agencies often intercept federal benefits, such as Social Security survivor benefits earned through a deceased parent’s lifetime contributions, which are intended for a child in foster care. ACF says these agencies then use the funds to reimburse their own costs. ACF said the goal is to stop the practice and preserve the benefits to support foster children as they transition out of state care.
“At HHS, our guiding principle is simple: every child deserves a home and a fair chance to thrive. But when state agencies stack the deck against children, we step in,” said HHS Secretary Robert F. Kennedy, Jr. “In the Trump Administration, we are committed to ensuring every child in America has the chance to reach their full potential.”
In an article for the conservative Manhattan Institute’s City Journal, columnists Emily Putnam-Hornstein, a professor for the School of Social Work at UNC Chapel Hill; and Naomi Schaefer Riley, senior fellow at the American Enterprise Institute, say this fear is not based on the reality on the ground. They said, “More than 20 years ago, the Supreme Court unanimously affirmed that states can use a foster child’s Social Security benefits to cover the cost of care.” The authors say that after losing the case, an odd alliance of those like US Sen. Elizabeth Warren on the left and RFK Jr on the right have continued to agitate against the practice.
Putnam-Hornstein and Schaefer Riley said preventing states from being representative payees makes fraud more likely, and without states in the role, troubled parents could continue to receive the checks even while their children are in foster care.
“Such a policy could result in states cutting checks for tens of thousands of dollars to the same adults whose behavior prompted removal in the first place, with no guarantee that the conserved money will be used to for their children’s needs,” the pair told City Journal.
The article, titled “No, States Aren’t ‘Stealing’ From Foster Children: Allowing state entities to handle federal benefits prevents fraud,” admit that states are sometimes permitted to place survivor benefits in their general fund for accounting purposes while moving it to sub-accounts, but say this doesn’t mean the money has been “stolen.”
To date, 11 states have enacted policies to stop the practice of spending this money for the child’s living expenses. The ACF and the Social Security Administration plan to provide additional resources, in conjunction with existing technical assistance, to influence the remaining 39 states change this practice.
In 2021, the Marshall Project-National Public Radio project found that 49 states received foster children’s federal benefits in this way.
In an emailed statement to Carolina Journal, a spokesperson for the North Carolina Department of Health and Human Services (NCDHHS) said, “North Carolina did receive the letter from our federal partners at the U.S. Department of Health and Human Services. The North Carolina Department of Health and Human Services will be working with them to implement.”
The spokesperson stated that North Carolina has a county-administered child welfare system, with local departments of social services having the authority and responsibility to administer child welfare services for their respective counties in compliance with local, state, and federal laws, rules, and codes, and that NCDHHS is the supervising and oversight agency.
When asked how long North Carolina has participated in the practice, NCDHHS said that to date, discretion regarding the administration of Social Security survivor benefits for children in foster care who have lost a parent has been at the county level, with the expectation that county DSSs make decisions — in compliance with SSA law — based on a child’s specific needs and best interests.
“In September 2024, NCDHHS began the process to create a statewide policy regarding survivor benefits to create uniformity across the system and comply with emerging federal guidance and requirements related to these funds,” the spokesperson told CJ. “The department is working with NC Medicaid, the Social Security Administration, and other partners to ensure this policy aligns across services and doesn’t inadvertently impact eligibility. Our goal is to finalize and implement the policy next year.”
E. Gregory Wallace, law professor at Campbell University School of Law, told CJ in an emailed statement that while there’s nothing wrong with state child welfare agencies acting as representative payees if no family or friends are available to use those payments to defray the costs for things like foster care maintenance, therapeutic services, and medical care, they should not divert any of those benefit payments to defray agency overhead or administrative costs or to pay foster care expenses for other children.
“States should provide evidence that benefits are not being diverted to pay for things unrelated to the foster child’s maintenance,” he said. “States are required by law to document foster care payments and other costs tied to specific children that plainly fall within ‘current maintenance’ under SSA regulations. The easiest way to determine whether states are complying with the law is for them to release audits or other documentation of how they are spending the benefit payments.”