The Seventy Percent: One State Published the Foster Care Split Washington Says No One Can Calculate
Investigation by Project Milk Carton
Part II of PMC's investigation into the privatized foster care contracting racket. Part I — "The Overhead Machine" (July 14, 2026) — established that no state or federal agency publishes a national accounting of what share of each per-child foster care dollar ever reaches the child. It ended with an honesty note: two of the directive's premises — agencies pocketing "40–70%" of the daily rate, and seven-figure CEO pay at child placing agencies — could not then be verified. Both are now verified. This is the follow-up, built on primary documents: state rate manuals, state budget bills, and IRS Form 990 filings.
Michigan Did the Math. Nobody Noticed.
The July 14 investigation's most damning finding was an absence: after four decades of Title IV-E, no federal agency can say what percentage of a foster child's daily rate reaches the foster child. The Government Accountability Office has admitted its improper-payment estimate covers only about a third of the program. The data system that tracks every foster child, AFCARS, records placements — not payments.
But at least one state has now published both halves of the arithmetic, in two separate public documents, apparently without anyone putting them side by side.
Document one. Michigan's Children's Foster Care Manual, FOM 905-3 ("Foster Care Rates," FOB 2025-004, issued 8-1-2025), sets the maintenance payment for a child in family foster care, effective October 1, 2024. These rates "cannot be negotiated":
That is what the person actually raising the child receives: $22.35 a day for a young child — $16.96 of it for housing and feeding a human being. About $679 a month. The state's holiday allowance for a foster child, raised in 2024 after sitting frozen for 23 years, is $75 a year.
Document two. Michigan's FY 2025–26 DHHS budget — the same figure appears in the Executive Budget Recommendation (Feb. 5, 2025), the Senate-passed appropriation (SB 180), and HB 5619 as passed by the House (April 22, 2026) — establishes for private child placing agencies under contract with MDHHS a foster care "administrative rate before incentive payments of not less than $60.20" per child, per day.
Put the two documents together and Michigan has published, in official state print, the ratio the federal government says cannot be calculated:
For every public dollar Michigan spends per day on a young child placed through a private agency, roughly 73 cents goes to the agency and 27 cents to the household raising the child. Even for a teenager, the agency's share is 69 percent. Even when a child qualifies for Michigan's highest standard special-needs supplement (Determination of Care Level III, +$15/day to the caregiver), the agency's share of the combined check is still above 61 percent.
Two points of precision, because precision is the brand. First, Michigan's administrative rate pays for real statutory functions — licensing, case management, home studies, supervision. The question this series raises is not whether those functions cost money; it is whether a system in which the supervising middleman's guaranteed floor is 2.7 times the child's subsistence rate is a system anyone would design on purpose — and why no federal auditor is required to examine that ratio anywhere. Second, the $60.20 is a floor ("not less than"), before incentive payments. The split can only be wider than the arithmetic above.
The July 14 directive's "40–70%" premise, which we declined to assert without evidence, turns out to be verified at — and slightly above — the top of its range, by the state of Michigan's own publications. California's published schedule (Part I) put the agency share of a young child's monthly check at roughly half. Michigan's puts it near three-quarters. The honest national answer is still: nobody knows — because no one has been made to publish the other 48 states.
The Seven-Figure Club Is Real
Part I reported that we could not verify a seven-figure individual CEO salary at a child placing agency and said so. Deeper into the Form 990 record, the verification is no longer in doubt. All figures below are from the organizations' own IRS filings (via ProPublica Nonprofit Explorer).
Context that matters for each row:
Southwest Key is the largest of them — $921.5 million in revenue in FY 2024, of which its own filings say 99.5–99.8 percent is "contributions," i.e., overwhelmingly government grants, chiefly HHS's Office of Refugee Resettlement shelter money for unaccompanied children. It has also operated as a licensed child placing agency in Texas. Sanchez's $3.56 million year — 2018 — came while the organization was already under public scrutiny; he departed in April 2019. His successor's successor now makes $1.13 million. And here is the pairing the topic directive asked about — executive pay at agencies simultaneously cited for abuse in care: on July 18, 2024, the U.S. Department of Justice sued Southwest Key (W.D. Tex.) under the Fair Housing Act for what its complaint describes as sexual abuse, harassment, and misconduct against children in its shelters. In March 2025, HHS removed the children from Southwest Key's shelters and paused its federal funding. Nine-figure annual federal revenue, seven-figure executive pay, and a federal abuse lawsuit — the same organization, the same years.
Compass Connections is the entity formerly known as BCFS Health and Human Services. Its filings show revenue of $352,191 in FY 2022 becoming $434 million by FY 2024 — a 1,200-fold jump reflecting the restructuring of the BCFS network's federal shelter business into a renamed entity. (Readers of Part I will recognize the move: National Mentor → Civitas → MENTOR Network → Sevita. In this industry, names are consumable.) Board chairman Kevin Dinnin's $1.74 million flows through related organizations in the network. The organization reported negative net assets (−$4.7 million) in its most recent filing while 99.9 percent of its revenue came from government contributions.
Youth Villages is the mainstream case — no abuse scandal in this record, a well-regarded evidence-based-programs reputation, and a licensed child placing function in Tennessee and beyond. Its CEO's total package crossed $1.5 million in FY 2025 on $483.5 million in revenue, 80+ percent of it program service fees — i.e., largely public child-welfare and behavioral-health dollars. Its most recent filing also discloses conflict-of-interest transactions on Schedule L. The point is not that Youth Villages is Sequel; it is that seven-figure executive pay is now normal at the top of the child-placing industry — which makes the $22.35/day on the other end of the pipeline a policy choice, not a scarcity.
And one contrast, for honesty's sake: Devereux — the nonprofit at the center of Part I's abuse reporting — pays its CEO $773,261 (FY 2025), under seven figures, while running $40 million annual deficits. The seven-figure club is real, but it is not universal; the system produces both under-water nonprofits and millionaire executives from the same public dollar, because no one audits what the dollar is for.
What Our Own Ledger Shows
Project Milk Carton's grant database (630K Form 990 Schedule I grant records, 1.05M USA Spending unaccompanied-children subgrant records, 23K TAGGS grant records — roughly $148 billion in tracked child-welfare money flows) puts scale on these organizations that annual-report language obscures:
National Youth Advocate Program (Columbus, OH — a foster care and child placing agency network that also became a major federal shelter contractor): our ledger tracks roughly $1.79 billion in cumulative federal receipts, including single HHS awards of $121.5 million (Sept. 2023) and $113.9 million (April 2023), and a $47.9 million award as recently as April 2026.
Bethany Christian Services, the country's best-known foster-care and adoption brand: roughly $671 million tracked, including a single $91.5 million HHS award (2024) — and $80.9 million more arriving as subgrants passed through Lutheran Immigration and Refugee Service (2021–24), plus $8.4 million routed via the U.S. Conference of Catholic Bishops.
That last mechanic deserves its own sentence: tens of millions of the money reaching child-placing organizations now arrives as subgrants through other nonprofits — a second layer of administrative skim before the dollar even reaches the agency that hires the caseworker who oversees the home that houses the child. Federal transparency tools track the prime award. The pass-through layer is where visibility goes to die — and it is exactly the layer our subgrant tables were built to expose.
The Yardstick
Convert the executive pay into the currency the system itself uses — the Michigan daily rate for a young foster child, $22.35:
Juan Sanchez's 2018 compensation worked out to about $9,760 per day — the daily maintenance of 436 foster children.
Kevin Dinnin's package: ~$4,780/day — 214 children.
Patrick Lawler's: ~$4,150/day — 185 children.
Anselmo Villarreal's: ~$3,080/day — 138 children.
No law was broken in any of those four compensation packages. That is the finding. The system that pays a caregiver $16.96 a day for a child's room and board and guarantees the supervising contractor $60.20 a day before incentives and supports seven-figure executive pay from budgets that are 99+ percent taxpayer-funded, is functioning exactly as designed. The design is the scandal.
What Would Fix It (Updated)
Part I proposed four fixes. Part II sharpens the first one, because Michigan just proved it costs nothing:
Publish the ratio — every state, every year. Michigan already prints both numbers; it simply never divides them. Require every state to publish, side by side, the per-diem paid to placing agencies and the per-diem paid to caregivers, by age group. One table. No new data collection — the numbers are already in rate manuals and appropriations bills.
Mandate per-child pass-through disclosure by every Title IV-E-funded agency (Part I).
Pay foster parents directly, Nebraska-style, cutting the intermediary out of the child's subsistence check (Part I).
Audit the administrative retention rate as a line item, the way indirect-cost rates are audited in every other federal grant program (Part I).
Extend disclosure through the subgrant layer. Where federal child-welfare money moves through intermediary nonprofits, require the full chain — prime, pass-through fee, and final recipient — to be published in USA Spending. Our own database shows nine-figure flows in that blind spot.
Part I ended by noting that nobody in the federal government can say what percentage of a foster child's daily rate reaches the foster child. Part II's answer: in Michigan, for a seven-year-old, it is about 27 percent — and the only reason we can say so is that one state accidentally published both halves of a division problem Washington has spent forty years refusing to perform.
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Sources:
Michigan DHHS, Children's Foster Care Manual, FOM 905-3 "Foster Care Rates" (FOB 2025-004, eff. 10/1/2024) — https://mdhhs-pres-prod.michigan.gov/olmweb/EX/FO/Public/FOM/905-3.pdf
Michigan DHHS, FOM 903-09 "Case Service Payments" (FOB 2025-004) — https://mdhhs-pres-prod.michigan.gov/olmweb/EX/FO/Public/FOM/903-09.pdf
Michigan House Fiscal Agency, DHHS Executive Budget Recommendation Summary FY 2025-26 (Feb. 5, 2025) — https://www.house.mi.gov/hfa/PDF/Summaries/DHHS_ExecRec_Summary_fy25-26.pdf
Michigan Senate-passed SB 180 appropriation (FY 2025-26) — https://legislature.mi.gov/documents/2025-2026/billengrossed/Senate/htm/2025-SEBS-0180.htm
Michigan HB 5619 as passed House, April 22, 2026 — https://legislature.mi.gov/documents/2025-2026/billengrossed/House/pdf/2026-HEBH-5619.pdf
IRS Form 990, Southwest Key Programs Inc (EIN 74-2481167), FY2014–FY2024 — via ProPublica Nonprofit Explorer, https://projects.propublica.org/nonprofits/organizations/742481167
IRS Form 990, Youth Villages Inc (EIN 58-1716970), FY2025 — https://projects.propublica.org/nonprofits/organizations/581716970
IRS Form 990, Compass Connections (EIN 46-1394166), FYE Aug 2025 — https://projects.propublica.org/nonprofits/organizations/461394166
IRS Form 990, The Devereux Foundation (EIN 23-1390618), FY2025 — https://projects.propublica.org/nonprofits/organizations/231390618
U.S. Department of Justice, "Justice Department Sues Southwest Key for Sexual Abuse and Harassment of Children in Shelters" (July 18, 2024) — https://www.justice.gov/archives/opa/pr/justice-department-sues-southwest-key-sexual-abuse-and-harassment-children-shelters
U.S. v. Southwest Key Programs Inc. (W.D. Tex.), Complaint (July 17, 2024) — https://www.justice.gov/d9/2024-07/complaint_-_united_states_v_southwest_key_0.pdf
U.S. Department of Justice / HHS joint announcement (March 12, 2025) — https://www.justice.gov/opa/pr/hhs-doj-move-end-sexual-abuse-and-harassment-unaccompanied-alien-children-shelters-operated
PMC CivicOps grant database (form_990_schedule_i, usaspending_uac_subgrants, taggs_ngo_grants) — National Youth Advocate Program and Bethany Christian Services federal receipt records
Part I: "The Overhead Machine" (PMC, July 14, 2026) — /root/GuardiansWatch/investigations/OPUS_The_Privatized_Foster_Care_Contracting_Racket_How_States_2026-07-14.html
Verification note: All compensation figures are from the named organizations' own IRS Form 990 filings. The Michigan 72.9%/69.3% figures are PMC's division of two published state rates (agency administrative floor ÷ [administrative floor + caregiver maintenance rate]) and are labeled as such; the administrative rate compensates statutory agency functions and is a floor, "before incentive payments." No individual foster child case data was used. Drafted 2026-07-23 by ARIA for PMC editorial review — not yet published.