Nebraska Supreme Court Derails Child Support Revenue Maximization Effort

A recent ruling issued by the Nebraska Supreme Court struck down efforts by the state’s child welfare agency to maximize revenue by deferring the adoption of a child.

Her parent had sought to relinquish her parental rights, but the state’s Health and Human Services System would not allow it due to financial considerations. As the Court explains:

It is clear from the record that DHHS declined to accept the relinquishment of parental rights because one of the parents was paying a ‘pretty substantial amount’ of child support which partially offset DHHS’ cost with respect to Gabriela’s care. While conservation of public resources is a worthy objective, it cannot justify the legal perpetuation of a parental relationship which no longer exists in fact, thereby permitting an abandoned child to linger indefinitely in foster care. We agree with the observation of the juvenile court that the position taken by DHHS has made Gabriela a “de facto orphan.”

RUNNING AGAINST THE GRAIN

States typically seek to offset foster care costs by imposing child support obligations against parents, and they terminate parental rights when the parents find themselves unable to maintain their state-imposed financial obligation.

As child support obligations are typically based on income, and the majority of children in foster care come from impoverished homes, other funding streams, such as Title IV-E, Medicaid, and SSI typically provide more lucrative streams from which agencies may draw reimbursements to offset their operating costs.

University of Baltimore School of Law professor Daniel L. Hatcher explains that of the total amount of foster care costs the states recover, far more stems from taking children’s Social Security benefits rather than from enforcing child support obligations against parents.

Washington State, for example, recovered approximately $7 million in foster care costs per year by becoming the representative payee for foster children’s Social Security benefits, while the state had only recovered approximately $790,000 in foster care costs per year by enforcing child support obligations, Hatcher explains.

What distinguishes this case from the majority is that there was a “pretty substantial amount” of child support available to be garnered from the parent. Simply put, it was more lucrative for the agency to maintain the child in foster care, rather than free her for adoption. So much for the “best interests of the child” being the determinative factor in decision-making.

Before dismissing the notion of a delayed adoption for reasons of a pecuniary motive as being either too far fetched or too uncommon, consider that Conna Craig notes that in her home state of Massachusetts child welfare agencies are known to defer requests for termination of parental rights until children reach the age of seven, as at that age children are deemed to have “special needs” for which child welfare agencies may claim additional federal reimbursements.

“Access to adoption is a cruel hoax,” explained Children’s Rights attorney Marcia Robinson Lowry to a Congressional Committee. “It does not exist for most of these kids. It takes such a long time to decide whether or not to free a child for adoption that by the time a child gets on an adoption track, the child is both so old and so damaged by his experiences in foster care that he becomes truly unadoptable.”

Little has changed since her testimony, save that Adoption and Safe Families Act has created a new category of “legal orphans” whose rights to their parents have been terminated, even as they continue to languish in state care – the adoption bonus that is often decried by advocates notwithstanding.

NO STRANGER TO REVENUE MAXIMIZATION

Nebraska is no stranger to revenue maximization.

In 1994, Nebraska contracted with Maximus to generate additional federal revenues for its health and human services programs, the HHS Inspector General explains. The consultant’s fee was contingency fee based, or dependent on the amount of additional revenue Maximus raised.

Maximus provided the revenue maximization service on a fee contingent basis, charging the state 12.5% of the federal revenue that it promised to produce.

In May 1998, the U.S. Department of Health and Human Services’ Departmental Appeals Board concluded that contingency fee contracts were not an allowable administrative cost under federal regulations, disallowing the $259,081 contingency fee. (Maximus is currently under close scrutiny by the federal government after an action was filed against it under the False Claims Act. As easy as it is to bilk the federal government out of millions for child welfare programs, the company was apparently just too obvious about what it was that it was actually doing. Nebraska eventually dropped Maximus in favor of Policy Studies, Inc.)

Efforts are currently underway in Nebraska to further maximize revenue by targeting child support enforcement in a programmatic manner.

Relatively speaking, the funds are a drop in the proverbial bucket, nevertheless: “The state treasurer is responsible for receipting and disbursing child support payments. The Health and Human Services System is responsible for providing the state treasurer with distribution instructions for the disbursement of child support,” according to the states’ summary of executive state job positions.

Under the federal Assistance for Unemployed Workers and Struggling Families program, Nebraska is to receive $10,300,000 in federal funds that provide “for the state to receive reimbursement of federal funds at 66% for state child support program expenses during the time frame from October 1, 2008 through September 30, 2010,” according to Recovery.Nebraska.gov – a site apparently devoted to the state’s revenue maximization efforts.

The funds “are to be used for operating expenses of child support enforcement,” and are targeted “to enforce the financial responsibility of parents.”

These funds are in addition to those already being received by the state for these purposes, and the sole beneficiaries are state and county government offices “providing child support services under section IV-D of the Social Security Act.”

So much for providing genuine assistance to unemployed workers and their struggling families.

Welcome to the Golden Era of revenue maximization at the expense of children and their families.