Purpose

This bill would create a Foster Care Benefits Trust to hold and manage cash benefits for current and former foster youth. It would require agencies that pay these benefits to deposit them into the trust, establish reporting and oversight, and provide protections so funds are used for the youth’s care and future needs. It also creates a process to recover cash benefits that were diverted to a paying agency in the past.

Main provisions and objectives

• Establishment of the Foster Care Benefits Trust (Sec. 3)

  • Defines key terms (beneficiary, cash benefits, ombudsperson, financial institution, etc.).
  • Creates a separate trust funded by deposits from financially responsible agencies.
  • Requires segregated accounts for each beneficiary and management to protect assets and ensure tax compliance.
  • Allows accounts to use special needs trusts, ABLE accounts, or similar arrangements that don’t hurt other benefits.

• Treatment of benefits and payees (Sec. 1-2, plus related changes to 260C.331)

  • Agencies may apply to be the payee for a child’s benefits, and must provide written notices about the trust.
  • Notices must be sent to the child (if 13+), the child’s guardian or custodian, a guardian ad litem, the legally responsible agency, and the beneficiary’s counsel.
  • Agencies cannot commingle or use benefits for anything other than the child’s care.
  • Agencies must keep records of benefits received for each child and report data annually.

• Benefit priority and application (Sec. 3)

  • Agencies must apply for cash benefits the child is eligible to receive in this order: SSI, SSDI, veterans benefits, railroad retirement, civil rights settlements and crime victim restitution, then other benefits.
  • If eligible, agencies deposit benefits into the trust within 30 days and notify ombudsperson and commissioner. They must inform beneficiaries age 18+ about disbursement options and how to contact the commissioner.

• Disbursements and access (Sec. 3)

  • After a beneficiary turns 18, the trust can disburse up to 10,000 or the remaining account balance each year on the birthday, with provisions for tax implications and means-testing considerations.
  • The ombudsperson can authorize accelerated disbursements for documented needs (housing, education, transportation, health, legal fees, etc.) upon request.
  • Courts may order disbursements for a minor (14+) if advisable for the beneficiary’s benefit.
  • Options exist for partial early access (e.g., up to 50% for documented needs).

• Financial institution and oversight (Sec. 3)

  • The state must select a financial institution through a competitive process to manage the trust.
  • The institution must maintain separate accounts, report taxes, and protect principal while pursuing modest returns.
  • An oversight framework includes an ombudsperson, duties for the commissioner, audits, and a public dashboard showing compliance and disbursements.

• Reimbursement and repayment (Sec. 3)

  • The commissioner must reimburse agencies quarterly for cash benefits deposited into the trust, with rules about required documentation.
  • A repayment program is created to identify people whose benefits were diverted to agencies from 1976–2026 and to process claims for reimbursement.
  • Automatic deposits to the trust may be made for people who are already identified as affected; applications will be accepted starting in 2028 for others.
  • A process to notify individuals about any diverted benefits and how to apply for repayment is included.

• Fraud prevention and accountability (Sec. 3)

  • Agencies must submit documentation; annual audits of a portion of agency accounts will verify accuracy and deposits.
  • Civil liability, public reporting, and potential license actions for noncompliance.
  • A public dashboard will display total deposits and compliance information.

• Rulemaking and reporting (Sec. 3)

  • The commissioner and ombudsperson may adopt rules to run the trust and repayment program and to ensure fair outcomes.
  • Beginning December 1, 2027, and annually after, a comprehensive report is due outlining deposits, beneficiaries, disbursements, agency performance, tax compliance, and program effectiveness, with some reports having a sunset date or phased timing.

• Notices and related updates (Sec. 4)

  • When agencies receive certain benefits on behalf of a child, they must provide written notices about the foster care benefits trust and related requirements.
  • Notices and disclosures to the child and other interested parties are required, with privacy protections for account data.

Significant changes from current law

• Creates a centralized Foster Care Benefits Trust to hold cash benefits instead of keeping them solely with individual agencies.
• Establishes a formal, ongoing oversight structure (ombudsperson and commissioner) and a public dashboard for transparency.
• Introduces a structured reimbursement system for agencies acting as payees.
• Establishes a repayment program to recover diverted benefits dating back to 1976.
• Specifies annual reporting, audits, and accountability measures tied to foster youth benefits.
• Adds tax guidance, access rules, and restricted use provisions to protect beneficiary funds.
• Expands use of trust assets for beneficiary needs (including potential specialized accounts like special needs trusts, ABLE accounts).

Implementation timeline (highlights)

• By 2025: agencies must provide required reports; initial reporting framework starts.
• By 2027: start of the repayment program process; annual reporting continues; information on disbursements and compliance gathered.
• By 2028: start accepting applications for the repayment program for diversions from 1976–2026.
• Ongoing: selection of financial institution, annual audits, and continued reporting; rules may be adopted to refine operation.

Implications for beneficiaries and agencies

• Beneficiaries have a protected, centralized place for their cash benefits, with clearer notices, disclosures, and access options.
• Agencies face new duties to deposit benefits, maintain documentation, and provide data for oversight and repayment.
• There is stronger protection against improper use of benefits, with privacy protections for beneficiary data.

Potential challenges or considerations

• Complexity and administrative burden during rollout for agencies and the state.
• Need for clear communication to youth about trust existence, access, and tax implications.
• Ensuring timely deposits and accurate reporting to avoid delays in benefits and reimbursements.

Relevant Terms - foster care benefits trust - financially responsible agency - beneficiary - cash benefits - Supplemental Security Income (SSI) - Retirement Survivors and Disability Insurance (SSDI) - veterans benefits - railroad retirement benefits - black lung benefits - ombudsperson - commissioner - financial institution - trust accounts / segregated accounts - special needs trust - ABLE account - means testing - Chafee Foster Care Program for Successful Transition to Adulthood - disbursements - deposits - reimbursement - repayment program - fraud prevention and accountability - rulemaking - guardians ad litem - guardian or custodian - certified mail return receipt requested - social service information system - public dashboard - tax implications / tax compliance - beneficiary literacy and financial planning - data privacy (private/nonpublic data) - annual audits - claims process - prior benefit entitlement and diversion (1976–2026)