LANSING, Mich. (WOWO) — Michigan is facing growing pressure to stop using federal survivor benefits belonging to foster children to help cover the cost of their care, even after a new state law began protecting a portion of that money for young people preparing to leave the foster care system. The law, which took effect October 1, prohibits Michigan from using the benefits as reimbursement for foster care and requires the state to preserve at least 50% of benefits for eligible foster youth ages 14 through 17. The money is intended to help those young people establish financial stability after leaving state custody. But advocates say the change does not go far enough because the state can still use some of the money for other needs and can spend benefits belonging to younger children on expenses not otherwise covered by the Michigan Department of Health and Human Services. The longstanding practice, often called an “orphan tax,” involves states collecting federal benefits owed to children whose parents have died, including Social Security survivor benefits, and using the money to offset foster care costs. Federal officials are now urging states to stop diverting those payments and allow foster youth to retain the financial support intended for them. Justin Kasieta, a former Michigan foster youth who has become an advocate for changing the policy, said the state’s new law is a step forward but leaves too many children without access to money that could help them build independent lives. Kasieta was 13 when his father died. Social Security survivor benefits helped support him, his siblings and his mother for two years before his mother’s struggles with addiction led to his entry into foster care. During his three years in the system, Michigan diverted about $18,000 in benefits that otherwise would have been available to him, according to Kasieta’s account to Bridge Michigan. “After prodding my caseworker for a few months I realized that I was effectively going to be forced to pay for my own foster care,” he said. Kasieta left the foster care system about seven years ago and has since worked to end the practice. He welcomed the new law but argued that protecting only part of the money does not fully address the problem. “Our opinion is that this process is either right completely or wrong completely,” Kasieta said. Under the new Michigan law, at least half of the federal benefits received for foster youth ages 14 through 17 must be saved for those young people to use after they leave care. The remaining funds can be used for needs not otherwise provided by the state, including financial literacy training. Benefits belonging to children 13 and younger are not subject to the same mandatory savings requirement. About 600 children eligible for these types of federal benefits enter Michigan’s foster care system each year, according to the state. The changes came through bipartisan legislation sponsored by Republican state Representative Kathy Schmaltz of Jackson and Democratic state Senator Jeff Irwin of Ann Arbor. Governor Gretchen Whitmer signed the legislation into law. The financial stakes are significant. A legislative fiscal analysis found Michigan collected $3.2 million in these benefits in 2023. The new law could increase expenditures at the Michigan Department of Health and Human Services by $3.5 million, although the analysis projected no significant financial impact on local governments. In a statement to Bridge Michigan, department spokesperson Erin Stover said the agency remains committed to supporting children in foster care through state and federal resources. The new policy, Stover said, “ensures that these federal benefits are used to support the child’s individual needs and future stability.” Federal officials, however, want Michigan to go further and preserve all benefits for the children entitled to them. Alex Adams, assistant secretary for the federal Administration for Children and Families, said the number of states and jurisdictions collecting all of these benefits has fallen from 39 to 13 over the past year as the federal government has pressed for changes. “Most states have addressed it fully and got it fully off the books,” Adams said. “Michigan was a little bit more tepid and dipped their toes in the water, but are still stealing from the majority of their orphans. But you know, all progress should be celebrated and will be celebrated.” The Administration for Children and Families is part of the U.S. Department of Health and Human Services. Its position reflects a broader federal effort to ensure children retain benefits connected to deceased parents rather than having those payments diverted to government agencies. According to the Children’s Advocacy Institute at the University of San Diego, 12 states and Washington, D.C., have enacted laws protecting all federal benefits for foster youth. Michigan is among six states that protect only a percentage of benefits or limit the protections to certain age groups. Michigan’s partial approach could also affect its chances of receiving some federal grant money tied to improving foster care placement. The federal government launched its “A Home for Every Child Innovation Challenge” on October 1. The initiative is designed to reward states that achieve strong ratios of foster homes to children and those that make the greatest improvements over a yearlong period. Michigan is participating in the program, which runs through September 2027. Awards range from $1 million to $3 million. Under the program’s tie-breaking criteria, funding goes to the state that does not divert Social Security survivor benefits away from foster children as of the end of the challenge. That provision adds another incentive for Michigan to reconsider its remaining benefit-diversion policies as it competes for federal support. Kasieta said the money can make a substantial difference for young people who leave foster care without the family support or financial resources many others rely on when beginning adulthood. He pointed to national data showing that between 18% and 32% of former foster youth ages 17 through 21 experience homelessness. Michigan’s rates are higher than the national average, according to the figures cited in the report. For young people aging out of care, access to survivor benefits could help cover the upfront expenses of establishing a household, securing transportation or meeting other basic needs. Kasieta said the money he lost could have helped him obtain his first apartment or car, providing what he described as “the basic launch pad that allows you to become self-sufficient.” He plans to continue pressing Michigan lawmakers to require that all federal benefits belonging to foster youth be preserved for those children. For advocates, the debate is about more than how the state finances foster care. It is about whether children who have already lost a parent should also lose access to the financial benefits intended to help support them as they grow up — and whether those funds should remain available when they need them most. The post Michigan Faces Pressure to End ‘Orphan Tax’ on Foster Children’s Social Security Benefits appeared first on WOWO News/Talk 92.3 FM and 1190 AM. ...read more read less