STEVE INSKEEP, HOST:
Many children in this country who are in foster care are entitled to receive Social Security benefits from the federal government. It's big money - at least $165 million per year. So why do so many of those kids never see the money? An investigation by NPR and the Marshall Project found some states pay private companies to figure out which foster children might be most lucrative. Here's NPR investigative correspondent Joseph Shapiro.
JOSEPH SHAPIRO, BYLINE: Malerie Shockley had no idea that Social Security was sending disability checks in her name or that the state of Alaska was cashing those checks to reimburse itself for the costs of her foster care. There was a time when Shockley needed that money.
MALERIE SHOCKLEY: I was homeless for quite a while, wasn't - while being pregnant with my daughter.
SHAPIRO: So where were you? Were you on the street, or were you in a shelter?
SHOCKLEY: I was living in a tent in the woods here in Anchorage.
SHAPIRO: That was six years ago. She was 18, pregnant and living in a tent in a wooded city park. She was about to age out of foster care and had run away from her foster family. It was September, October, the start of November. The snow was coming, and she was trying to survive.
SHOCKLEY: Telling myself, I can't die if I'm having a child, so pushing myself mentally to - you can do this until we figure out what's going to happen.
SHAPIRO: So if the Social Security check had gone to you, what would you have done with it?
SHOCKLEY: I would have gotten my own place, thinking ahead and then getting myself, you know, a little beater with a heater to do for now.
SHAPIRO: What is that?
SHOCKLEY: It's a crappy car to get you from point A to point B. If it - if the heat works, you're good.
SHAPIRO: NPR and the Marshall Project investigated a little-known practice by state child welfare agencies. They take the benefit checks of children and youth in foster care. That was around $700 a month for Malerie Shockley. Social Security pays benefits to children who have significant disabilities, when their parents are disabled or if a parent has died. When the check goes to a minor, someone is designated as the representative payee, trusted to use that money in the best interest of the child. States routinely take that money to cover the cost of foster care, even though there are already state and federal sources to pay for it and even though other impoverished children and youth who don't get Social Security checks aren't responsible for paying for their foster care.
(SOUNDBITE OF ARCHIVED RECORDING)
UNIDENTIFIED PERSON: At Maximus, we help governments assist millions of families through child support and related programs.
SHAPIRO: There is so much Social Security money at stake that it's a business to find who's eligible to get those checks, to sign them up and collect the money. Like many states, Alaska turned to a consulting company, Maximus. Consultants like Maximus and another big company, the Public Consulting Group, navigate the ins and outs of government regulations and help states find funding and run complex programs.
(SOUNDBITE OF ARCHIVED RECORDING)
UNIDENTIFIED PERSON: Our decades of experience mean we can deliver best practices and innovations that result in unmatched operational efficiencies and...
SHAPIRO: NPR obtained the hiring proposal that Alaska put out in 2013. The state wanted to find at least 50 new foster youth a year to sign up for Social Security. That would bring in more than $400,000 a year. The state says it's money that's needed to help foster children. Maximus got the contract. A spokesperson for Maximus says its workers perform an important service. They link children to benefits, and they free up caseworkers to spend more of their time helping children. Under the contract, Maximus was to get about $1,600 - from state funds, not the kids' check - every time Social Security approved benefits to a new foster child.
DANIEL HATCHER: Some of the proposals are really striking to read through 'cause they talk about foster children as a revenue-generating mechanism.
SHAPIRO: Law professor Daniel Hatcher criticized the practice in a book, "The Poverty Industry."
HATCHER: They use algorithms, data mining. They'll literally talk about in their proposals how they're going to rank children - right? - not based upon those children who have the most needs and how to serve those needs, but rank the children based on how much money they're going to bring in to the state. It's all about the money.
SHAPIRO: In his office at the University of Baltimore Law School, Hatcher has collected stacks of the state proposals and contracts. He read from one proposal where Maximus lists the money it's found and the states it's helped, including Alaska, California, Florida, Illinois, Iowa, Nebraska...
HATCHER: ...Nebraska, New York, Maryland, South Carolina and Wisconsin.
SHAPIRO: At least 15 states or county agencies have signed these contracts, now or in the past, with consulting groups.
HATCHER: In Iowa - $42,888,000, and revenue was generated.
SHAPIRO: Maximus, in these documents, says 15% to 20% of foster youth are eligible for Social Security benefits. Probably no more than 10% get signed up, which is why these consulting companies can play a role. Still, it's a small part of child welfare funding overall - Hatcher figures about 1%.
HATCHER: So it's not a huge impact to the state foster care agencies, but to the kids, that's an enormous lost potential benefit.
SHAPIRO: One worker on these contracts, who asked not to be named, told us how he'd look through a child's personal records, talk to the case manager to find children with disabilities who could be signed up for Social Security benefits. He never even met the foster children. He said, it's all about finding a new source of revenue for the child welfare agency. When Malerie Shockley was pregnant and living in that tent in the woods, that's when she says she found out the state had been cashing her checks. A helpful state caseworker told her.
SHOCKLEY: I don't know what a SSI check was.
SHAPIRO: That's Supplemental Security Income.
SHOCKLEY: And then she sat me down and explained, you're 18 now; you're going to have to fill out all these paperworks to keep it up to date.
SHAPIRO: Because she was aging out of foster care, which meant the checks would stop. None of that money had been saved for her. She'd have to reapply to get that money for herself.
SHOCKLEY: And you're going to have to go see a special therapist, make sure that you're still eligible. I'm like, OK.
SHAPIRO: She qualified because she says she was diagnosed with depression and anxiety. Those are pretty common for people who've grown up in foster care. Shockley, who is Alaska Native, eventually got access to those Social Security checks and other state funds for Alaskans. The benefit checks helped her get her life on track. More recently, she's married. She just had her second child. She no longer qualifies for those benefit checks, and the former foster youth says she no longer needs them.
Joseph Shapiro, NPR News.
(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.