BILL ANALYSIS Senate Research Center S.B. 577 89R1527 MM-D By: West Health & Human Services 5/1/2025 As Filed AUTHOR'S / SPONSOR'S STATEMENT OF INTENT The Department of Family and Protective Services (DFPS) is currently taking foster children's federal assistance benefits to offset costs associated with the child's maintenance and support costs. Under Texas Family Code, 264.101, DFPS may accept and spend funds available from any source to pay for care. By rule, however, under 40 TAC Rule 700.330, DFPS will offset the costs of foster care assistance by utilizing any resource, including: Supplemental Security Income (SSI); Retirement, Survivors, and Disability Insurance (RSDI); and Veterans Administration benefits. This practice occurs nationwide and has substantial financial impacts. According to a Child Trends 2020 report, forty-two states used $251 million in third-party income, including federal assistance benefits, to offset costs for welfare services in 2020. According to DFPS, from September 1, 2023, through January 31, 2025, a total of $25,818,322.53 from 3,401 children has been swept to offset the cost of foster care in Texas. Under the General Appropriations Act for 20242025, the total method of finance for DFPS is $4,987,297,699. The financial impact of this practice is minimal for the agency. According to the Child Trends report, only one percent of the total expenditures by Texas on foster care in 2020 were from the "other" category which contains federal assistance benefits. Thus, for minimal gain, DFPS is taking a significant amount of foster children's federal assistance benefits. In actuality, amount taken from foster children to offset the cost of running foster care is less than one percent of the DFPS projected Method of Finance revenue for the entire biennium. States across the nation have addressed this issue. Arizona, in 2023, passed H.B. 2559 which prohibited the use of a foster children's benefits savings or assets to offset costs associated with foster care services. This legislation also established trust accounts for children to receive federal assistance benefits in a manner consistent with federal and state asset and resource limits. This legislation passed with unanimous Republican support. S.B. 577 would direct DFPS to establish a foster child trust account program for the deposit of foster children federal benefits in cooperation with the Comptroller of Public Accounts of the State of Texas (comptroller). This program will serve foster children under the conservatorship of the state who are eligible to receive Veteran Affairs benefits, SSI, or Social Security Disability Insurance. For these foster children, DFPS will serve as the payee for the benefits; deposit any benefits received into an interest-bearing trust account managed by the comptroller until all money is disbursed; save the benefits in a manner that does not violate federal asset or resource limits; and provide accounting to the child or their legal representative on the date the child is discharged from foster care. The comptroller will be directed to make funds available to a foster child leaving the system either: on the date the child leaves foster care if they are 18 and have had the disabilities of minority removed or on the child's 18th birthday if they leave foster care before the child turns 18. On the date that funds from the trust account may be disbursed to the child, the comptroller will disburse all of the child's funds if the balance does not exceed $5,000. In the case the account balance exceeds $5,000, the comptroller will disburse $5,000 on the date the child is eligible to receive funds, and will make quarterly disbursements up to $5,000 until no money remains. Neither the state, nor the child or their legal representative will be able to access funds in the account, except the state may deduct an amount equal to the interest earned on money in the account to use to administer the program. Once all of the funds in an account have been disbursed, the account will be closed. Interest earned on the accounts will not be disbursed to the foster child upon exit from the program; interest on the funds may be utilized to operate the program by the comptroller. As proposed, S.B. 577 amends current law relating to the establishment of the foster child trust account program. RULEMAKING AUTHORITY Rulemaking authority is expressly granted to the Department of Family and Protective Services in SECTION 2 of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter A, Chapter 264, Family Code, by adding Section 264.0112, as follows: Sec. 264.0112. FOSTER CHILD TRUST ACCOUNT PROGRAM. (a) Requires the Department of Family and Protective Services (DFPS), in cooperation with the Comptroller of Public Accounts of the State of Texas (comptroller), to establish and administer a foster child trust account program to hold federal benefits described by Subsection (b) received by children in DFPS's conservatorship. (b) Requires DFPS, for a child in DFPS's conservatorship who receives or is eligible to receive United States Department of Veterans Affairs benefits, Supplemental Security Income (SSI) benefits under 42 U.S.C. Section 1381 et seq., or Social Security Disability Insurance (SSDI) benefits under 42 U.S.C. Section 401 et seq., to: (1) serve as the representative payee for the benefits received by the child; (2) deposit any benefits received by DFPS on behalf of the child into an interest-bearing trust account maintained by the comptroller and manage the account until all money in the account is disbursed to the child; (3) save the benefits in a manner that avoids violating federal asset or resource limits that would negatively affect the child's eligibility to receive the benefits; and (4) provide an accounting to the child and the child's legal representative regarding the saving of the child's resources under the program on the date the child is discharged from or otherwise leaves foster care. (c) Authorizes the comptroller to contract with one or more financial institutions to establish and manage an account for each child who receives benefits described by Subsection (b). (d) Requires the comptroller to make funds in the account available to a child in accordance with Subsection (e) as soon as practicable after: (1) the date the child leaves DFPS's conservatorship if on that date the child is at least 18 years of age or has had the disabilities of minority removed; or (2) the child's 18th birthday if the child is younger than 18 years of age on the date the child leaves DFPS's conservatorship. (e) Requires the comptroller, on the date provided by Subsection (d), to make the entire balance of the account available to the child using a debit card or an online or electronic transfer payment service if the balance of the account does not exceed $5,000. Requires the comptroller, if the balance of the account exceeds $5,000, to make $5,000 available to the child on the date provided by Subsection (d), and pay the remaining balance of the account to the child in increments not to exceed $5,000 each quarter after the initial disbursement until no money remains in the account. (f) Provides that neither the state nor a child's guardian is authorized to access money in the child's account except that the state is authorized to deduct an amount equal to any interest earned on money in the account. (g) Provides that, on the date on which all money has been disbursed from a child's account, the child's account is closed. SECTION 2. Requires DFPS, not later than January 1, 2026, to adopt rules necessary to establish and administer the accounts required under Section 264.0112, Family Code, as added by this Act. SECTION 3. Effective date: September 1, 2025.
BILL ANALYSIS
Senate Research Center S.B. 577
89R1527 MM-D By: West
Health & Human Services
5/1/2025
As Filed
Senate Research Center
S.B. 577
89R1527 MM-D
By: West
Health & Human Services
5/1/2025
As Filed
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
The Department of Family and Protective Services (DFPS) is currently taking foster children's federal assistance benefits to offset costs associated with the child's maintenance and support costs. Under Texas Family Code, 264.101, DFPS may accept and spend funds available from any source to pay for care. By rule, however, under 40 TAC Rule 700.330, DFPS will offset the costs of foster care assistance by utilizing any resource, including: Supplemental Security Income (SSI); Retirement, Survivors, and Disability Insurance (RSDI); and Veterans Administration benefits.
This practice occurs nationwide and has substantial financial impacts. According to a Child Trends 2020 report, forty-two states used $251 million in third-party income, including federal assistance benefits, to offset costs for welfare services in 2020.
According to DFPS, from September 1, 2023, through January 31, 2025, a total of $25,818,322.53 from 3,401 children has been swept to offset the cost of foster care in Texas. Under the General Appropriations Act for 20242025, the total method of finance for DFPS is $4,987,297,699.
The financial impact of this practice is minimal for the agency. According to the Child Trends report, only one percent of the total expenditures by Texas on foster care in 2020 were from the "other" category which contains federal assistance benefits. Thus, for minimal gain, DFPS is taking a significant amount of foster children's federal assistance benefits. In actuality, amount taken from foster children to offset the cost of running foster care is less than one percent of the DFPS projected Method of Finance revenue for the entire biennium.
States across the nation have addressed this issue. Arizona, in 2023, passed H.B. 2559 which prohibited the use of a foster children's benefits savings or assets to offset costs associated with foster care services. This legislation also established trust accounts for children to receive federal assistance benefits in a manner consistent with federal and state asset and resource limits. This legislation passed with unanimous Republican support.
S.B. 577 would direct DFPS to establish a foster child trust account program for the deposit of foster children federal benefits in cooperation with the Comptroller of Public Accounts of the State of Texas (comptroller).
This program will serve foster children under the conservatorship of the state who are eligible to receive Veteran Affairs benefits, SSI, or Social Security Disability Insurance. For these foster children, DFPS will serve as the payee for the benefits; deposit any benefits received into an interest-bearing trust account managed by the comptroller until all money is disbursed; save the benefits in a manner that does not violate federal asset or resource limits; and provide accounting to the child or their legal representative on the date the child is discharged from foster care.
The comptroller will be directed to make funds available to a foster child leaving the system either: on the date the child leaves foster care if they are 18 and have had the disabilities of minority removed or on the child's 18th birthday if they leave foster care before the child turns 18.
On the date that funds from the trust account may be disbursed to the child, the comptroller will disburse all of the child's funds if the balance does not exceed $5,000. In the case the account balance exceeds $5,000, the comptroller will disburse $5,000 on the date the child is eligible to receive funds, and will make quarterly disbursements up to $5,000 until no money remains.
Neither the state, nor the child or their legal representative will be able to access funds in the account, except the state may deduct an amount equal to the interest earned on money in the account to use to administer the program. Once all of the funds in an account have been disbursed, the account will be closed.
Interest earned on the accounts will not be disbursed to the foster child upon exit from the program; interest on the funds may be utilized to operate the program by the comptroller.
As proposed, S.B. 577 amends current law relating to the establishment of the foster child trust account program.
RULEMAKING AUTHORITY
Rulemaking authority is expressly granted to the Department of Family and Protective Services in SECTION 2 of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Subchapter A, Chapter 264, Family Code, by adding Section 264.0112, as follows:
Sec. 264.0112. FOSTER CHILD TRUST ACCOUNT PROGRAM. (a) Requires the Department of Family and Protective Services (DFPS), in cooperation with the Comptroller of Public Accounts of the State of Texas (comptroller), to establish and administer a foster child trust account program to hold federal benefits described by Subsection (b) received by children in DFPS's conservatorship.
(b) Requires DFPS, for a child in DFPS's conservatorship who receives or is eligible to receive United States Department of Veterans Affairs benefits, Supplemental Security Income (SSI) benefits under 42 U.S.C. Section 1381 et seq., or Social Security Disability Insurance (SSDI) benefits under 42 U.S.C. Section 401 et seq., to:
(1) serve as the representative payee for the benefits received by the child;
(2) deposit any benefits received by DFPS on behalf of the child into an interest-bearing trust account maintained by the comptroller and manage the account until all money in the account is disbursed to the child;
(3) save the benefits in a manner that avoids violating federal asset or resource limits that would negatively affect the child's eligibility to receive the benefits; and
(4) provide an accounting to the child and the child's legal representative regarding the saving of the child's resources under the program on the date the child is discharged from or otherwise leaves foster care.
(c) Authorizes the comptroller to contract with one or more financial institutions to establish and manage an account for each child who receives benefits described by Subsection (b).
(d) Requires the comptroller to make funds in the account available to a child in accordance with Subsection (e) as soon as practicable after:
(1) the date the child leaves DFPS's conservatorship if on that date the child is at least 18 years of age or has had the disabilities of minority removed; or
(2) the child's 18th birthday if the child is younger than 18 years of age on the date the child leaves DFPS's conservatorship.
(e) Requires the comptroller, on the date provided by Subsection (d), to make the entire balance of the account available to the child using a debit card or an online or electronic transfer payment service if the balance of the account does not exceed $5,000. Requires the comptroller, if the balance of the account exceeds $5,000, to make $5,000 available to the child on the date provided by Subsection (d), and pay the remaining balance of the account to the child in increments not to exceed $5,000 each quarter after the initial disbursement until no money remains in the account.
(f) Provides that neither the state nor a child's guardian is authorized to access money in the child's account except that the state is authorized to deduct an amount equal to any interest earned on money in the account.
(g) Provides that, on the date on which all money has been disbursed from a child's account, the child's account is closed.
SECTION 2. Requires DFPS, not later than January 1, 2026, to adopt rules necessary to establish and administer the accounts required under Section 264.0112, Family Code, as added by this Act.
SECTION 3. Effective date: September 1, 2025.