Bill
SB 872
The bill prevents state use of a foster child’s benefits to reimburse care costs, requires DHHS to manage and conserve assets in the child’s best interest, and transfer funds at ad
Status / Timeline
- Introduced: January 22, 2025 (Senate). Substitute versions were reported and the bill was enacted as Chapter 272 (Governor approved May 6, 2025).
- Effective date (as enacted / final substitute): October 1, 2026.
- Adds section 8f to the Foster Care and Adoption Services Act (commonly referenced as MCL 722.951–722.960).
Purpose / Intent
The bill is intended to protect income, benefits and assets belonging to children placed in foster care by (1) preventing the State from using those funds to reimburse the cost of foster care, and (2) requiring the Department of Health and Human Services (DHHS) to identify, secure, manage, and account for benefits appropriately in the child’s best interests.
Key provisions (major substantive elements)
- Screening and application
- DHHS must, at its discretion, screen a child for potential eligibility for state or federal benefits within 90 days of entry to foster care and annually thereafter, and apply for benefits the child appears eligible to receive (as appropriate to the child’s best interests).
- Prohibition on using benefits as reimbursement
- Beginning October 1, 2026, the State generally may not use a foster child’s state or federal benefits, assets, or income to reimburse the cost of the child’s care.
- DHHS may, after consulting parents or the child’s guardian ad litem, either use benefits for special‑needs services not otherwise provided or conserve benefits for foreseeable future special needs if doing so is in the child’s best interest.
- Representative payee / fiduciary duties
- If DHHS applies for benefits, it must help identify an appropriate representative payee or serve as payee/fiduciary when designated.
- While serving as representative payee/fiduciary, DHHS must conserve/use benefits in the child’s best interest, monitor asset/resource limits (to protect benefits eligibility), and provide an annual accounting to the child and guardian ad litem.
- Notices, reporting, and appeals
- DHHS must notify the child (through the guardian ad litem) of applications, decisions, appeals, or status changes related to benefits.
- Before each permanency planning hearing, DHHS must report amounts received and dispositions of funds when DHHS is payee/fiduciary.
- DHHS (or the guardian ad litem) must file timely appeals on a child’s behalf when appropriate.
- Financial literacy and transfers
- DHHS must provide financial literacy training to children age 14+ when able.
- DHHS must facilitate transfer of assets/income to the child when discharged or upon turning 18 (or to heirs if the child dies); transfers must follow Social Security Administration rules. DHHS’s transfer duties apply only to funds for which it is payee/fiduciary.
- Definitions
- “Federal benefits” in the text are identified to include Social Security and U.S. Department of Veterans Affairs benefits; “State benefits” refers to state supplemental payments for SSI recipients.
Who is affected
- Primary: children in foster care who receive or are eligible for federal/state benefits, trust proceeds, life insurance/annuity/pension proceeds, or other assets/income.
- State DHHS: new screening, application, fiduciary, accounting, notice and transfer responsibilities.
- Local governments: potential indirect fiscal impacts (see fiscal section).
- Courts/guardian ad litem: expanded notice and participation roles.
Fiscal impact (summary of analyses)
- The legislation reduces the State’s ability to offset foster care costs by collecting certain child benefits. Estimates cited during deliberations: FY 2024–25 authorization for offsetting foster costs was about $3.6 million (roughly $500,000 of which goes to local governments). That restricted funding would need to be replaced by General Fund/General Purpose (GF/GP), producing up to about $3.6–$3.7 million GF/GP net increased state/local cost (estimates vary by analysis).
Procedural / implementation notes
- DHHS discretion is emphasized for initial screening/application and for using vs. conserving benefits in a child’s best interest.
- Many operational details (e.g., means of conserving funds, specific accounting formats, mechanics of transfers) will require DHHS procedures consistent with federal payee rules and SSA regulations.
- Transfers and conservations must be done in ways to avoid violating federal asset/resource limits that could jeopardize benefits.
For further reading
- The bill text adds Section 8f to 1994 PA 203 (Foster Care and Adoption Services Act). Legislative fiscal and committee reports (House and Senate analyses) provide the detailed fiscal estimates, background, and the enacted substitute language.
Compiled from official sources — confirm details with the bill’s official record.
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