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NYC suspends Social Security payouts to some disabled foster kids to protect federal funding

Some disabled foster children in New York City’s care aren’t receiving individual Social Security payments — even though Mayor Adams’ administration rolled out a policy two years ago designed to let the vulnerable kids use the federal benefits to build up personal savings, the Daily News has learned.

The policy, enacted in summer 2022, required the city Administration for Children’s Services to stop using the Social Security payments to cover the cost of housing and other services for foster kids entitled to the payments due to qualifying disabilities. Under the 2022 policy shift, the money instead was to be put into savings accounts the kids could tap into upon exiting the foster system — a move Jess Dannhauser, Adams’ children’s services commissioner, was quoted as lauding at the time.

“This is their money,” he said then, “and they deserve to use it as they see fit.”

Commissioner of the Administration for Children's Services Jess Dannhauser is pictured in 2018 in New York City. (Photo by Jim Spellman/WireImage)

Jim Spellman/WireImage

ACS Commissioner Jess Dannhauser is pictured in 2018 in New York City. (Photo by Jim Spellman/WireImage)

But new documents quietly released by the  Administration for Children’s Services last month reveal the agency hasn’t allowed foster kids to amass those nest eggs if the benefit they’re eligible for is a form of Social Security called Supplemental Security Income, or SSI.

In SSI cases, the agency has instead since 2022 been telling the U.S. Social Security Administration to suspend benefits for those kids for the duration of their stays in the city foster care system, the documents say. The agency does so because if it allowed those children to receive SSI, the city would be ineligible under a federal restriction to receive a separate form of funding that helps it cover overall foster care costs, according to the documents.

One of the roughly 6,455 young people currently in New York City foster care is Shirley, a 20-year-old eligible for SSI due to a learning disability and a mood disorder. Disabilities that make kids eligible for SSI include everything from learning impairments to mobility issues.

Shirley, who has been in foster care since 2016 and spoke on condition that her last name not be used, said she recently found from the Social Security Administration that it paid out $27,956 in SSI in her name to the  Administration for Children’s Services between 2018 and 2021. Shirley said she didn’t see any of that money because the agency used it to cover the cost of her foster care during those years without informing her the benefits were being issued in her name.

Given the 2022 reform prohibiting that practice, she said she’s working with a lawyer to try to retroactively recoup her SSI benefits.

“That money I can use to pay my rent for years to come, I can go to college with that money,” Shirley told The News. “That’s what I’m most scared of — when I leave foster care, I don’t get this money.”

An  Administration for Children’s Services official, who spoke on condition of anonymity, said the city receives about $200 million annually in Title IV-E funding, the form of federal aid that could be partially curtailed by SSI. If it allowed all SSI-eligible foster kids in its care to receive their individual benefits, the city would have to forgo about $10 million in Title IV-E funding annually, the official said.

Even without the issue of the at-risk funding, the  Administration for Children’s Services official argued the problem is moot because of a federal restriction barring children from accruing more than $2,000 in SSI benefits in regular bank accounts. Upon exiting the foster system, the official told The News, the Administration for Children’s Services gives SSI-eligible children $2,000 to bridge that gap, using city funds.

“Because of New York City’s commitment to children and youth, we now conserve money for young people eligible for SSI,” agency spokeswoman Maya Kaufman said.


The city's Administration for Children's Services.

Jefferson Siegel for New York Daily News

The city’s Administration for Children’s Services. (Jefferson Siegel/for New York Daily News)

But foster care youth advocates say those arguments overlook a potential solution.

Anna Blondell, a Legal Aid Society attorney representing city foster care kids, noted other states and cities, including Washington, D.C., and Arizona, have developed systems using different forms of savings accounts into which as much as $100,000 in SSI benefits can legally be accrued for foster care children.

Blondell said there’s no reason the city can’t adopt similar systems and argued its decision to instead suspend SSI benefits for foster kids flies in the face of the city’s 2022 announcement.

“It’s really harmful,” said Blondell. “To secure federal funds is one thing, but to do it on the backs of disabled children in foster care — what a population to take money from.”

The  Administration for Children’s Services official said the city continues to research the possibility of opening other forms of savings accounts for foster kids so the $2,000 cap can be exceeded.

It’s unclear exactly how much Supplemental Security Income has gone undistributed due to the Adams administration’s suspension rule. Based on federal guidelines, a child eligible for the maximum monthly $943 in SSI benefits would be entitled to $11,316 annually.

It’s unclear exactly how many of the roughly 6,400 children in city foster care are eligible for SSI.

Some foster children receive RSDI, another form of Social Security known as survivors’ benefits because they’re generally issued to minors whose caregivers have died. The Administration for Children’s Services isn’t asking the Social Security Administration to suspend RSDI, and has set up savings accounts into which they deposit those benefits for eligible foster kids because, unlike SSI, that form of Social Security can be collected without jeopardizing Title IV-E funding, according to the documents reviewed by The News.

Most states and cities in the country still take Social Security issued to foster kids and use it to cover the cost of their care.

When the city announced in March 2022 — two months after Adams became mayor — that it would let foster kids save their benefits instead, Dannhauser told NPR the move could help them pay basics like rent or college tuition upon exiting the system.

“Those resources can mean the difference between a really rocky start to that transition or one that they really have a foundation to launch from,” he said.


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