Foster Care Funding in Michigan: The New Welfare Moms

In the push to create a less burdened welfare system, has the child welfare system created the welfare mom of the new millennium?

In December of 2006, the Governor of the State of Michigan, Jennifer Granholm has stated that she will sign into law House Bills 6580 and 6587, as well as Senate Bills 1500 and 1501. These laws put strict rules in place regarding families receiving welfare benefits as well as establishing a time line of 4 years for eligibility for state funded welfare. The overall purpose of these laws is to push people out of the welfare system by offering them additional assistance in job training and to push them to stop receiving funding from the state and become self sufficient. However, there is one big glaring omission from these laws, that foster parents who receive benefits on behalf of the children they are caring for are not covered by the laws.

On the surface, of course you would not want children who have been placed in foster care to have caps on these issues, but the simple fact that homes with foster children are exempted from these changes bring up several concerning questions. First and foremost, children who are foster children have their benefits follow them, the benefits that go to the foster family caring for the children are not registered as the recipients of the benefits, just the children. On the surface, this seems like a viable idea until you see how these payments are calculated as well as the payments received for the foster children.

Below is the website, published by the State of Michigan Department of Human Services (Formally the Family Independence Agency) for the amounts paid per foster child.

HTTP://www.mfia.state.mi.us/olmweb/ex/cff/905-3.pdf

The above mentioned website is the calculators that are used for Foster Parents and the funding that they receive for fostering children, as well as the information regarding clothing allowances, adoption per diem (per day) payments as well as a holiday bonus. Not included is the payment adoption bonus that people receive for adopting a child ($4000.00) in a lump sum payment. Take into account, these amounts are tax free. One other item of note on these calculators, it does not take into account the amount of money that is paid out for child day care expenses, respite care payments, or SER (State Emergency Relief Fund) payments.

Additionally, below is the link to the State of Michigan website that shows the averages paid out to families for additional state aid. Unfortunately at the time of this article additional information regarding funding for families specific to foster children is not available.

HTTP://www.michigan.gov/documents/FIA-Pub615_14641_7.pdf

The above mentioned website shows the averages that the state of Michigan paid out per person. Unfortunately these numbers again do not show specific information regarding the recipients demographics.

In all instances of state paid assistance to families, the state of Michigan does not calculate simply the foster children in the home for assistance, even though that assistance is what is guaranteed with the child, it instead calculates all those living in the home. This creates a funding loop-hole overall, creating the ability for a family to continue to receive welfare and other forms of state aid without having the recent changes to the welfare system affect their ability to receive these benefits.

To put into terms the financial benefits attributed to being foster parents, lets meet the Smiths. The Smith family has been on state assistance for a number of years, and unfortunately are going to lose their welfare benefits because they will no longer be eligible under the 4 year rule. First we will look at what the Smiths are receiving from the State in aid prior to becoming foster parents and what the Smiths will make after receiving foster children. For arguments sake, the Smiths are a family of 4. Both parents and 2 children. For the sake of this comparison, the Smiths will not be receiving any additional funding besides the following:

FIP (Family Independence Program)

FAP (Family Assistance Program (Food Stamps))

*TANF (Temporary Aid to Needy Families, formally Aid to Families with Dependant Children)

*TANF Calculations based on 2004 averages submitted from Federal Records based on Averages for the State of Michigan

Prior to being foster parents, the following the calculations on what the parent would be receiving from the State and the Federal Government. Again, take into account this does not include EIC(Earned Income Credit), Section 8 housing allowances or any additional funding not mentioned above.

FIP $421.03 a month per the state average

FAP $3825.20 per year

TANF $6198.24 per year

Total: $10,444.47 per year

Now, the Smiths contemplating how to continue to receive welfare and other benefits from the State of Michigan come across Foster Parenting. After a short period of time getting approvals to become foster parents, they agree to accept 2 foster children, both siblings. The following is the new calculations that they will receive in aid after receiving these children:

FIP $421.03 per month per the state average

FAP $5,737.80 per year per the state average

AFDC $10,081.80 per year per the state average

Total: $16,240.63

Now lets add in the foster care payments as well. These payments are made with the children being at level 2 on the below linked form. The reason for this calculation being done at level 2 is that the requirements needed for level increases are not difficult to achieve and private agencies have incentives to achieve higher levels financially as well as all information provided on this form is provided by the foster parents. The foster children are ages 4 and 7, putting them into the 0-12 category.

www.mfia.state.mi.us/olmweb/ex/rff/470.pdf

Daily Foster Care Payment (calculated yearly without level increase) $10,395.20 per year

Level 2 Payment $7,300.00 per year

Clothing Allowance (Not including possible initial clothing allowance) $428.00 per year

Holiday Bonus $50.00 per year

Total: $18,173.20

Total of State of Michigan Assistance with Foster Child Payments: $34,413.83

Total increase of funding with the addition of the Foster Children: $23,969.36

As you can see by the numbers above, the Smiths have drastically increased the funding they receive from the State and Federal Government. The majority of the income listed above is tax exempt, and the parts that are taxed are covered by the family deductions within the state and federal tax codes. Again, another loop hole that is exploitable by those that are looking to use the foster care system for financial gains. Another matter is that both the State and Federal government have removed the timeline requirements for welfare reform from foster parents, giving further loop holes to avoid welfare reform.

With the calculations mentioned above, there is strong incentive to become foster parents for those that are already receiving state aid as well as for those that are not receiving aid. With the recent economic downturns in Michigan, there are many families who are now struggling to make ends meet. By opening their homes to foster children, many families are now covering financial difficulties by adding foster children to their homes. Another issue is privatized foster care providing agencies contracted by the State of Michigan to assist the state in finding placements for foster children.

Since 1997 and the enactment of the Binnsfield Legislation, the State of Michigan has had a large increase in those agencies that provide foster care services for the State. In an attempt to reduce staffing levels, the State of Michigan allowed the privatization of the foster care system. In doing so, the state has assisted in the creation of a $170 million a year industry based on fiscal year October 1999 to September 2000. This amount does not take into account the federal matching funds that come with these payments. Overall, the state of Michigan and the United States Social Security Administration paid out approximately $350 million in fiscal year 1999-2000 to the foster care system. Thats right, the United States Social Security Administration.*

*States receive Federal Funding from the Social Security Administration under three different titles within the Social Security code. Those codes are Title IV-B, Title IV-E and Title XX. Titles IV-B and XX are capped with spending limits, however most foster care expenses come out of the Title IV-E uncapped slush fund.

When you look at the direction that the State of Michigan has taken in regards to the foster care system, one has to ask the question of the motivation to become a foster parent. With increasing financial incentives, loopholes within the state of Michigan welfare laws as well as the tax laws, have we now created the new welfare system with a larger methodology for getting money from the state? Recent news reports of children being abused, tortured and murdered while the State of Michigan has these children placed in care raises psychological questions as to the new generation of foster parents.

In times past, people became foster parents because of the desire to help children. The financial incentives were there, but not to a degree where the foster care providers actually could profit from the system at hand. Now, with the financial incentives so high, and progressively getting larger, we are bringing in a new crop of foster parents who are now doing this for the money. Couple that with agencies who have profitability in mind, and you have now attached financial incentives to each and every child within the State of Michigan foster care system. Unfortunately it seems the State of Michigan in it's quest to find homes for foster children have created the next welfare crisis that will haunt our state for the foreseeable future.