WA diverts benefits meant for foster youth. That practice may end

OLYMPIA — Washington state collects approximately $700,000 every month in federal benefits intended for about 750 eligible foster children to fund the agency overseeing their care.

The practice of intercepting those benefits — like Retirement, Survivors, and Disability Insurance and Supplemental Security Income — from foster youth who have lost parents or are living with disabilities is legal and not unique to Washington. 

But now, two lawmakers say they will propose legislation this session to end the practice. 

Sen. Judy Warnick, R-Moses Lake, who told The Seattle Times that she first heard about the practice last summer, saidshe is crafting a bill similar to one thatpassed in Arizona that not only ends the practice but also helps foster youth learn how to manage their money when they turn 18.

The state Department of Children, Youth and Families, which is on board with the push to reform the policy, says it would take nearly $12 million in the 2025-27 biennium budget to reimburse the agency for what would be lost revenue if the measure is successful. 

But a multibillion-dollar budget deficit looms over this year’s legislative session, as lawmakers must pass a balanced state budget by April 27. And even before he was sworn in last week, Gov. Bob Ferguson outlined that his approach is to reduce spending — calling for 6% cuts to most state agencies. 

The budget shortfall “certainly might” cause an extra hurdle for her bill, Warnick said. “But this is money that’s due to those children.” 

“One thing about foster youth — they’re in the foster system not because they’re bad kids or because of anything they’ve done,” Warnick said. “If we can tell the story and make our point, hopefully it’ll get done.” 

Sen. Emily Alvarado, D-West Seattle, is also proposing a bill this year to address the practice. She believes preserving benefits for foster youth increases opportunity and financial stability for them when they exit the system. 

“I think that we shouldn’t use vulnerable children’s property as a revenue source,” Alvarado said in a recent interview. 

A proposal to end the practice was first introduced by Alvarado in 2023, but the measure did not pass in the Senate, despite passing with overwhelming support in the House. A similar measure introduced in the Senate by Sen. Claire Wilson, D-Auburn, also failed to pass that year. The bill was not considered at all in 2024. 

Alvarado noted that a proviso was included in the 2023-25 budget that required DCYF to develop an implementation plan to end the diversion of benefits and develop a policy about preserving those benefits for children and youth. DCYF then convened a public benefit preservation work group which came up with recommendations on how to end the policy, and the bill comes out of those efforts, she said. 

Others have been working with Alvarado and Warnick to get a bill passed this session. 

Laurie Lippold, a senior policy adviser at Partners for Our Children, a research and policy center at the University of Washington School of Social Work, said a 2002 U.S. Supreme Court case — Washington State Department of Health and Human Services v. Guardianship Estate of Keffeler — upheld the practice of retaining foster children’s benefits with justices ruling unanimously to uphold the policy. It wasn’t a well-known practice until reporting by The Marshall Project and NPR in 2021, which led to efforts in Washington and other states to stop seizing foster youth’s money, she said. 

That report found that in 2018 alone, states collected more than $165 million from foster children. Payments to children typically amount to more than $700 a month, the report noted.

“I think the good news now is that our state is on a path to get rid of this practice,” said Kim Justice, the director of public policy at Partners for Our Children.

The challenging part, Justice said, is backfilling the revenue DCYF would lose. 

“I would say this policy probably represents the most regressive approach to funding state services, if you think about it,” Justice said. “Unfairly burdening the most vulnerable children in our state with contributing to their own care is not the right part of the solution to balancing our state’s budget, no matter what the budget climate is.”

Justice also added that about 15% of youth who exit the foster care system experience homelessness within 12 months, so withholding benefits means they are missing out on the ability to meet their basic needs. Withholding benefits could prevent stability for their families if children are reunited. She said some foster youth aren’t even aware they receive federal benefits. 

Distributing those benefits to youth, as intended, would be “wonderful,” said Julie Watts, a DCYF policy adviser. “We think that the overall benefit on the department is great. It’s wonderful because it benefits the children and youth that we serve and supports our goals to ensure that, particularly when youth are aging out of foster care, they make a successful transition to adulthood.”

Watts said the current policy predates the agency itself, which was established in 2017, and that when the issue came to light, the agency was not even certain if it engaged in the practice. 

The policy, she said, came from a “real push to maximize the use of federal funding in order to close state budgets” during a time when many states were facing budget shortfalls. Additionally, Social Security has a “rigid” cap on assets and did not have many ways in which they allowed people to save financial assets, meaning people either had to spend the money down, or send it back to Social Security.

Watts said the work group commissioned to look at the issue took careful consideration in crafting the policy by consulting with other states who have reformed the policy. The work group also considered the infrastructure needed to conserve benefits in accounts for foster youth.  

According to the Congressional Research Institute for Social Work and Policy, at least 1 in 10 foster youth nationally are eligible for federal benefits due to the death of a parent or disabilities. 

Arizona passed legislation in 2023 to stop seizing federal benefits for foster youth, and Washington, D.C., ended the practice in 2022. Most recently, Kansas Gov. Laura Kelly signed an executive order to end the practice in January.