HF4872

Purpose

• Establish a dedicated Foster Care Benefits Trust to hold and manage cash benefits and other income for current and recent foster youth.
• Ensure funds are used for the care and support of the youth and are managed with oversight, transparency, and accountability.
• Create a framework for rulemaking, reporting, and potential repayment for past misuses of benefits.

Key Provisions

• Creation of the Foster Care Benefits Trust (the “trust”) funded by deposits from financially responsible agencies.
• Beneficiaries are current or former foster youth who are entitled to cash benefits from programs like SSI, SSDI, veterans benefits, railroad retirement, black lung benefits, and other eligible sources.
• The trust assets are held by a financial institution in segregated accounts for each beneficiary and managed under fiduciary standards.

How the Foster Care Benefits Trust Works

• Eligibility and priority for benefits:
  • Financially responsible agencies must assess if a child is eligible for cash benefits and apply for them in a specific order: SSI, then SSDI, then veterans benefits, then railroad retirement, then civil rights settlements/crime victim restitution, and then other eligible benefits.
  • If eligible, the agency acts as payee for the duration of the foster-care placement and deposits benefits into the trust within 30 days of receipt.
• Notices and disclosures:
  • Agencies must provide written notice to the child (if 13+) and to the child’s parent/guardian, relatives, guardian ad litem, the legally responsible agency, and the child’s counsel.
  • Notice must be delivered by certified mail and, for youth 13+, in a way that helps the child understand.
• Use of funds:
  • Benefits deposited on behalf of a child must be used for the child’s care.
  • Funds cannot be commingled or placed into a general fund.
  • Agencies must keep records of amounts deposited and beneficiaries.
• Benefits reporting and oversight:
  • Agencies must report benefit deposits and related information to the ombudsperson and the commissioner, and provide annual documentation.
  • The commissioner must compile and report to legislative chairs, detailing deposits, beneficiaries, and program performance.

Responsibilities and Oversight

• Ombudsperson and commissioner duties:
  • The ombudsperson monitors compliance, provides beneficiary notifications, and coordinates with the Chafee program to ensure proper treatment of trust disbursements.
  • The commissioner maintains records, audits, and a public dashboard on compliance and deposits.
• Reimbursement and accountability:
  • The commissioner reimburses agencies quarterly for cash benefits deposited into the trust, subject to documentation requirements.
  • Agencies must maintain documentation and face civil liability, public reporting, or license actions for improper handling of benefits.
• Rulemaking:
  • The commissioner and ombudsperson may adopt rules as needed to run the trust and repayment program and to ensure fair outcomes for beneficiaries.

Financial Management and Disbursements

• Financial institution duties:
  • A qualified financial institution manages the trust with segregated accounts for each beneficiary, tracks interest and capital gains, and safeguards assets.
  • Accounts may include special needs trusts, pooled special needs trusts, ABLE accounts, or other arrangements that don't interfere with means-tested benefits.
• Disbursement rules (post-18 and for special cases):
  • Once a beneficiary turns 18, the institution must disburse up to $10,000 per year (or the remaining balance) on the beneficiary’s birthday until the account is depleted.
  • Each disbursement must explain tax and benefits consequences and provide resources for tax filing and financial planning.
  • For minors (age 14+), a court may order disbursement if it’s in the beneficiary’s best interest.
  • A beneficiary or guardian may petition for up to 50% of the account balance for documented needs (housing, education, transportation, mental health, etc.), with the ombudsperson approving the request and coordinating with the financial institution.
• Reinvestment and protections:
  • Trust assets must be protected from creditors, not counted in the general fund, and not subject to seizure or garnishment for the beneficiary’s income or assets.
  • Data related to accounts and beneficiaries is private or nonpublic.
  • Authorities must use the funds to meet current, unmet, and future needs of the beneficiaries.

Repayment Program and Fraud Prevention

• Repayment for diverted benefits:
  • By 2027–2028, the commissioner must identify individuals whose cash benefits were diverted to a financially responsible agency (between 1976 and 2026) and establish a simple claims process for repayment.
  • Applications begin in 2028, with priority given to those currently in or recently out of foster care and high-value cases (e.g., more than $5,000 diverted).
  • The commissioner automatically screens beneficiaries for eligibility and deposits amounts back into their trust accounts as appropriate.
• Fraud prevention and accountability:
  • Agencies must submit beneficiary and cash-benefits documentation annually and undergo periodic audits (at least 10% sample).
  • Noncompliant agencies may face civil liability, public reporting, and possible license action.
  • A public dashboard will display total deposits by agency, noncompliant agencies, and disbursements.

Timeline and Implementation

• By July 1, 2025: Agencies must begin reporting required information; the trust framework begins to take shape.
• December 1, 2027 and annually thereafter: Commissioner, with the ombudsperson, must report on deposits, beneficiaries, disbursements, and program performance.
• By December 31, 2027: Prepare and issue a repayment program report to legislators.
• Throughout implementation: Rulemaking authority to finalize procedures and ensure equitable outcomes.

Relationship to Existing Law and Changes

• Updates to existing statutes (e.g., sections dealing with SSI, SSDI, veterans benefits, and foster-care-related notices) to require the establishment of the foster care benefits trust and to codify notice, reporting, and management requirements.
• Adds a new governance and oversight framework for how cash benefits are handled for foster youth, with dedicated mechanisms for accountability, transparency, and beneficiary protections.

Potential Impacts and Considerations

• Benefits for youth: clearer protection of their cash benefits, potential long-term savings through a managed trust, and access to financial planning resources as they age.
• Administrative burden: increased reporting, auditing, and oversight obligations for agencies and the state.
• Financial implications: creation of a new funding stream for the trust and a repayment program for past diversions; potential costs and resource needs for administration and compliance.
• Privacy and rights: emphasis on privacy of account data and careful handling of disbursements to support beneficiaries’ needs.

Relevant Terms - foster care benefits trust - financially responsible agency - ombudsperson - beneficiary - cash benefits - Supplemental Security Income (SSI) - Social Security Administration - SSDI (Social Security Disability Insurance) - veterans benefits - railroad retirement benefits - black lung benefits - special needs trust - ABLE account - Chafee Foster Care Program - means testing - guardian ad litem - legally responsible agency - financial institution - fiduciary standards - deposits into the trust - disbursements - repayment program - fraud prevention - reimbursement - social service information system - notice - means-tested benefits - public dashboard - data privacy - fiduciary duties - eligible cash benefits - noncompliance penalties