New York Kept Social Security From Some Kids, New Documents Reveal

New documents revealed that foster children in New York City have had their Social Security benefits stripped from them despite the mayor’s new policy pledging the funds would go into savings accounts.

Mayor Eric Adams implemented a policy calling for all federal benefits for foster kids to go into a personal savings account that they could use upon leaving the system. Instead, foster kids who qualify for the checks have had their money go to cover their housing and other services.

Many children, ranging from those with learning disabilities or mental disorders, qualify for the money but miss out on it because of past policies in effect.

“This is their money and they deserve to use it as they see fit,” Jess Dannhauser, Adams’ children’s services commissioner, said when the policy went into effect in 2022, as reported by New York Daily News.

However, newly released documents from the Administration for Children’s Services last month showed the agency hasn’t let foster kids tap into those savings if they receive Supplemental Security Income (SSI).

The agency told the Social Security Administration to suspend benefits altogether for the time the children stay in the city foster care system. Because it suspended benefits, the city was still able to receive other federal funding to help pay for foster care, New York Daily News reported.

Newsweek reached out to Adams for comment.

Previously, an official for the Administration for Children’s Services told the local publication that the city gets $200 million a year through Title IV-E funding, which can be impacted by SSI stipulations. If all children were able to get their specific benefits in a savings account, that’s estimated to cost the city $10 million, the city official said.

There’s also a federal rule that doesn’t permit children from earning more than $2,000 in SSI benefits in any one bank account, so historically, New York foster kids have been limited to that amount.

While this puts New York City in a bad situation, other states and cities have found ways to get around the guidelines. Washington, D.C., and Arizona, for example, have created systems allowing foster children to accrue as much as $100,000 while in the foster system.

“The discovery of this setback is a true disappointment for everyone involved,” Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek. “There are other states that have used different forms of banking accounts to capture the SSI funding directed at these children and save it for future use, use that could be everything from rent to groceries to even a higher education degree.”

Children who qualify for SSI could earn as much as $943 each month, meaning they could lose $11,316 every year if the policy isn’t corrected. New York City took a unique position that differed from most states and cities when it decided to attempt to save this money for the children upon their graduation from foster care.

“The fact that funding was suspended really calls into question the city’s commitment it outlined two years ago of providing this fiscal safety net for children in foster care,” Beene said.

“This is a situation where, as of this moment, there are no winners, outside of a local government who was afraid of losing additional funding and didn’t look at what other states had done to better serve these children. It’s maddening to think some of the most disadvantaged are failing to see help through no fault of their own, but rather government mistakes.”

Kevin Thompson, a finance expert who founded 9i Capital Group and the father of a child with special needs who will be eligible for SSDI, echoed this sentiment.

“This was a numbers game and NYC did this strictly due to Title IV -E funding which to me only makes sense if there is more money to be possessed in the aggregate,” Thompson told Newsweek. “It sounds like the state was wanting to spend federal funds instead of state funds.”