Michigan law lets foster kids keep more of their money

Kara Berg, The Detroit News on Jul 26, 2026

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Foster children will now have more support when they age out of the foster care system after a new law was signed by Gov. Gretchen Whitmer that prevents the state from keeping children's full federal benefits to pay for the cost of their care.

The bill, spearheaded by state Rep. Kathy Schmaltz, R-Jackson, in 2023, was signed into law by Whitmer on July 21. It will go into effect in October.

The new law will ensure that when a child in foster care is 14 through 17 years old and until the Michigan Department of Health and Human Services no longer represents them, at least 50% of federal benefits owed to the foster child will be conserved for their own use.

Previously, the state kept all money children received from federal benefits to reimburse itself for children's foster care.

Justin Kasieta, who went into foster care at 15, spearheaded the push for the law change after he was shocked to find out the federal survivor benefits he and his siblings received after his father's death would no longer come to them.

This is not an uncommon practice, according to an April 2024 report by the Children's Advocacy Institute at the University of San Diego School of Law. For decades, states have intercepted federal benefits such as supplemental security income and survivor benefits for kids whose parents have died, as a “revenue maximization” strategy to offset their duty to pay for the kids' care, according to the report.

Kasieta said while Schmaltz's bill is a good start, he wants to see all ages of foster children able to keep 100% of their benefits.

"It's been a long road and we took a big step forward with getting what is, in my opinion, a partial reform signed into law," Kasieta said. "I'm really excited to get a full reform. ... I think it's only right we don't steal money from kids no matter how old they are, and we shouldn't just conserve 50%, we should give kids all their money."

The state took about $18,000 from Kasieta and his siblings, he said. Since he aged out of foster care in 2019, he has become an advocate for changing the laws around the country so other kids do not lose their money.

Schmaltz said in a press release the law also provides financial literacy education for children in foster care and ensures they are notified about federal benefits the state applies for and collects on their behalf.

“Many foster children enter adulthood without a financial safety net, family support, or the resources that other young adults can rely on,” Schmaltz said in a statement. “This law helps change that. Whether a young person wants to attend college, secure housing, start a career, or simply build some financial stability, these dollars should be available to support their future instead of being absorbed into the state budget.”

The practice of applying for and taking foster children's federal benefits began in the 1980s or '90s when cash-strapped child welfare agencies were looking for ways to stretch their budgets, said Amy Harfeld, the national policy director and senior staff attorney for the Children's Advocacy Institute. They made the "poor decision" to begin taking funds at the expense of the children they serve, she said.

Studies have found kids coming out of foster care face a host of challenges.

They have worse outcomes by age 21 than their peers, according to a 2018 Annie E. Casey Foundation report. In Michigan, 41% of former foster kids have full-time jobs, compared to 62% of children who were not in foster care, for example.

In addition, 30% of foster youth end up homeless after aging out of foster care, according to a 2017 Children and Youth Services Review study. Former foster children are also more likely to engage in risky behaviors and experience substance abuse disorders, according to the foundation.

The U.S. as a whole received a "resounding F" grade for protecting the rights and benefits of kids, according to the April report from the Children's Advocacy Institute, as did Michigan and 42 other states.

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