A provision in H0657 will redirect approximately $700,000 annually in foster children's Social Security benefits away from state cost-offsets and toward the children themselves—a shift that affects ho
Most Vermont child care owners don't realize that the state has been using foster children's Social Security benefits to help pay for their own care. That practice is about to end.
Buried in H0657—An act relating to various programming and requirements within the Department for Children and Families—is a provision that fundamentally changes how the state handles federal Social Security income for children in foster care. Understanding it matters if you work with DCF, accept state placements, or operate in the foster care ecosystem.
Currently, when a foster child receives Social Security Disability Insurance (RSDI) or Supplemental Security Income (SSI), the state Department for Children and Families has been applying those benefits to offset state maintenance costs—essentially using the child's federal benefits to reduce what the state spends on care.
Section 3 of H0657, codified at 33 V.S.A. § 4907(a), prohibits this practice. Going forward, those federal benefits must be conserved or used to address the child's unmet needs instead. The state will no longer be able to redirect that money to cover its own expenses.
The financial impact is real: this shift moves approximately $700,000 in annual costs back onto the state budget.
The change requires DCF to establish and maintain accounts for these benefits, monitor federal income limits (which determine SSI eligibility), and ensure funds are managed according to the child's actual needs rather than state accounting priorities.
For child care providers and foster care agencies, the practical effect is that DCF's budget constraints may shift. The state will need to absorb costs it previously offset through children's benefits, which could influence placement decisions, reimbursement rates, or service availability over time.
The provision becomes effective July 1, 2028. That gives DCF roughly three and a half years to restructure how it accounts for and manages these funds, establish new systems, and adjust its budget planning accordingly.
Even though the effective date is years away, the legislation is already law. Providers and agencies working with DCF should be aware of this shift as they plan contracts, staffing, and service models. It signals a policy direction: federal benefits intended for children's welfare will be treated as such, not as a revenue source for state operations.
If you're involved in foster care, residential treatment, or state-funded child services in Vermont, it's worth understanding how this change may eventually affect your relationship with DCF and the resources available for the children you serve.
Source: H0657, Section 3, 33 V.S.A. § 4907(a), effective July 1, 2028.