top of page

Unveiling the Financial Exploitation of Black and Brown Children in the Foster Care System

I entered Maryland's foster care system after my mother’s violent death in 1996. I grew up in a myriad of homes and facilities, without ever knowing stability, safety, or a sense of identity. The system ripped away my resources and my family connections. Years later I would learn that my mother had left me a modest amount of money. The state foster care system devoured all of my Survivors Benefits and Disability Aid. Those resources could have changed the entire trajectory of my life, rather than leaving me with a childhood of abuse, dispossession, and instability. Instead, I was told, as many kids are, that foster care had used that money for my "care" and maintenance.

Findings suggest that Black and Brown youth are disproportionately caught up in the foster care system, raising concerns about potential systemic biases. But there is an even more sinister issue hidden from public view: the financial exploitation of children by organizations and child welfare agencies. Foster care agencies are intentionally selecting children with disabilities, inheritances, or other certain criteria that boost their caretakers’ monthly payouts.


"The foster care system often operates as a hidden revenue stream, quietly absorbing the financial benefits meant for the children it is supposed to protect,” said Professor of Law and author Daniel Hatcher.



Hatcher explained how he previously learned all of this through contract documents he obtained through a public records request. He stated that documents he received revealed a contract between MAXIMUS and the Maryland agencies, which describes foster youth as a "revenue generating mechanism." Agencies have developed revenue maximization strategies by using the foster youth to generate revenue, often with the assistance of revenue maximization contractors, like MAXIMUS and the Public Consulting Group.


"Through these strategies, the agencies look for youth who have deceased parents or who can be potentially labeled as disabled," says Hatcher. "The agencies often use data mining and algorithms, rank the children based on how much potential revenue they can generate, apply for the survivors and SSI benefits - and then the agencies apply to become the representative payees - and take the children's funds to repay state costs that the children have no legal obligation to pay for."


Opportunists target federal IV-D and IV-E funds, established under the Social Security Act to support child welfare services. Title IV-D primarily focuses on child support enforcement, while Title IV-E funds foster care, adoption assistance, and other services that ensure the well-being of children. The states' foster care systems and its defenders claim the funds are being used to provide the child's welfare, but investigations and testimonies from victims reveal misappropriation occurs without the knowledge or consent of the children or their legal guardians. Victims assume the funds are being managed appropriately.


"One common form of exploitation involves the system collecting reimbursements from public benefits provided to the child, such as survivors benefits and SSI,” Hatcher said. "This practice diverts crucial financial resources from the intended recipients, leaving them in vulnerable positions."


In addition to Title IV-D and IV-E funds, foster care opportunists potentially have access to the child’s Social Security benefits, and they may also collect fees from the child’s legal settlements or inheritances by imposing fees or charges for “managing” the funds. As a result, when many children age out of the foster care system, they are financially ill-equipped for the challenges of adulthood. Struggling with limited resources, they find themselves at a severe disadvantage, which could perpetuate a cycle of poverty.


Last month, the Supreme Court of Alaska heard arguments in State of Alaska v. Z.C., where plaintiffs are suing the state's foster care agency for collecting benefits without notice. Plaintiffs argue that children “have a constitutional right to notice when the state obtains and seeks to control federal benefits on their behalf.


Hatcher advises more transparency and accountability within the foster care system, primarily in the form of comprehensive financial tracking mechanisms, stringent auditing processes, and independent accounting oversight. Achieving this will require raising public awareness of the injustice, however.


“By exposing the financial exploitation faced by foster care children, we've hoped to generate new policies," Hatcher said. “…The reality is what happens to one child in West Baltimore has larger ramifications for us all."


Legal shifts are slow, and foster care children—who are already burdened with systemic inequalities—are still being targeted for exploitation. But advocates, experts, and policymakers are working toward a better system. Advocates say financial institutions and community organizations can speed that effort by providing mentorship, financial counseling, and access to affordable banking services to foster care children.


In a just society there should be no reason to think an orphaned child is being exploited by their caretakers, but facts suggest otherwise, and financial watchdogs must commit themselves to curtailing the damage.

Opmerkingen


bottom of page