Section 11. Child Support Enforcement Program BACKGROUND The enactment of the Child Support Enforcement (CSE) program in 1975 represented a major new commitment on the part of the Congress to address the problem of nonsupport of children. Although prior to that time the Social Security Act had included provisions which were aimed at improving the collection of support on behalf of children, these provisions had not proved to be effective. The 1975 amendments were aimed at strengthening in a very significant way the efforts of the Federal and State Governments to improve the enforcement of child support obligations. The 1975 legislation (Public Law 93-647) added a new part D to title IV of the Social Security Act. The statute, as amended, authorizes Federal matching funds to be used for enforcing the support obligations owed by noncustodial parents to their children and the custodial parent, locating absent parents, establishing paternity, and obtaining child and spousal support. Basic responsibility for administering the program is left to the States, but the Federal Government plays a major role in funding, monitoring and evaluating State programs, providing technical assistance, and in certain instances, in giving direct assistance to the States in locating absent parents and obtaining support payments from them. The program requires the provision of child support enforcement services for both welfare and nonwelfare families and requires States to publicize frequently, through public service announcements, the availability of child support enforcement services, together with information about the application fee and a telephone number or address to be used to obtain additional information. PROGRAM TRENDS Table 11-1 summarizes child support enforcement program trends since 1978. In 1993, $2.2 billion was spent to collect $9.0 billion. A sum of $3.98 was collected for every $1 of administrative expense. This was up by 38 percent from the low point of only $2.89 per dollar of administrative expense in 1982. Also, 553,000 paternities were established; 4,481,000 absent parents were located; 1,038,000 support obligations were established; collections were made for an average of 2,827,000 cases, 241,880 families were removed from AFDC because of child support collections; and 12.0 percent of AFDC payments were saved as a result of child support enforcement. Table 11-2 compares various measures of the effectiveness of the child support enforcement program between administrative data and census data. The first four rows of table 11-2 are from the Office of Child Support Enforcement and illustrate huge increases in total constant dollar collections, the number of absent parents located, and paternities and awards that were established between 1978 and 1989. The bottom portion of the table based on census data presents an entirely different picture of the effectiveness of the child support enforcement program. For example, rather than having total real collections increase by 165 percent, it shows that total real collections increased by only 26 percent between 1978 and 1989. Other measures of effectiveness from census data illustrate a similar picture. One possible explanation for this different picture is that the official child support enforcement statistics are capturing collections that were being made anyway. Since income from census survey data tends to be underreported on household surveys, the truth may lie somewhere in between. To receive AFDC, mothers must assign their support rights to the AFDC agency. As a result, another problem with survey data is that AFDC mothers included in the CPS survey are asked only to report child support received and are not supposed to report any portion of their AFDC grant as child support, except for the $50 pass-through. The terms in table 11-2 from the Census are defined as follows. The term ``demographically eligible'' includes all women who are living with children under 21 years of age whose natural fathers are not living in the household. This includes ever-divorced (including remarried) or currently separated women. The percent with awards are the women with court-ordered payments. The reason the percent ``supposed to receive payment'' is different from the percent with awards is that some mothers awarded payments were not due them for the year in question. DEMOGRAPHIC TRENDS A sizable and growing proportion of American households are families that consist only of a mother and her children. Between 1970 and 1992, the number of female-headed families with children under 18 increased 164 percent; the number of such two-parent families declined by 4 percent. As a result, by 1992 nearly one out of every four children under 18 in the United States lived in a family where the mother was never married or the father was not living with his child or children because of death, divorce, or separation. An unprecedented number of children live in single-parent homes, many without adequate or any support from the other parent. TABLE 11-1.--PROGRAM OPERATIONS, SUMMARY OF NATIONAL (FEDERAL AND STATE) STATISTICS, FISCAL YEARS 1978-93 [Numbers in thousands, dollars in millions] -------------------------------------------------------------------------------------------------------------------------------------------------------- 1978 1980 1982 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total child support collections.... $1,047 $1,478 $1,770 $2,378 $2,696 $3,246 $3,917 $4,605 $5,241 $6,010 $6,886 $7,965 $8,909 In 1993 dollars\1\............. $2,282 $2,574 $2,585 $3,219 $3,523 $4,137 $4,854 $5,483 $5,955 $6,505 $7,095 $7,951 ....... Total AFDC collections\2\.......... $472 $603 $786 $1,000 $1,092 $1,225 $1,349 $1,486 $1,593 $1,750 $1,984 $2,259 $2,417 Federal........................ $311 $246 $311 $402 $341 $369 $413 $449 $458 $533 $626 $738 $777 State.......................... $148 $274 $354 $448 $415 $424 $473 $525 $563 $620 $700 $789 $847 Total non-AFDC collections......... $575 $874 $984 $1,378 $1,604 $2,019 $2,569 $3,119 $3,648 $4,260 $4,902 $5,706 $6,493 Total administrative expenditures.. $312 $466 $612 $723 $814 $941 $1,066 $1,171 $1,363 $1,606 $1,804 $1,995 $2,241 Federal........................ $236 $349 $459 $507 $571 $633 $750 $804 $938 $1,061 $1,212 $1,343 $1,517 State.......................... $76 $117 $153 $216 $243 $308 $316 $366 $426 $545 $593 $652 $724 Federal incentive payments to States and localities............. $54 $72 $107 $134 $145 $158 $185 $222 $266 $264 $278 $299 $339 Average number of AFDC cases in which a collection was made....... 458 503 597 647 684 582 609 621 658 701 755 831 873 Average number of non-AFDC cases in which a collection was made....... 249 243 448 547 654 786 934 1,083 1,247 1,363 1,555 1,749 1,954 Number of parents located.......... 454 643 779 875 878 1,046 1,145 1,388 1,628 2,062 2,577 3,706 4,481 Number of paternities established.. 111 144 173 219 232 245 269 307 339 393 472 516 553 Number of support obligations established....................... 315 374 462 573 669 731 812 871 938 1,022 \4\821 894 1,038 Percent of AFDC assistance payments recovered through child support collections....................... (\3\) 5.2 6.8 7.0 7.3 8.6 9.1 9.8 10.0 10.3 10.7 11.4 12.0 Total child support collections per dollar of total administrative expenses.......................... $3.35 $3.17 $2.89 $3.29 $3.31 $3.45 $3.68 $3.93 $3.84 $3.74 $3.82 $3.99 $3.98 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\Adjusted for inflation using fiscal CPI. \2\AFDC collections are divided into State/Federal shares and incentives are taken from the Federal share thereby reducing the Federal amounts. \3\Not available. \4\Data beginning in 1991 exclude modifications of support orders. Source: Office of Child Support Enforcement. TABLE 11-2.--COMPARISON OF MEASURES OF IV-D EFFECTIVENESS WITH CENSUS CHILD SUPPORT DATA, 1978-89 ------------------------------------------------------------------------ Year Percent Measure ----------------------------------------- change, 1978 1983 1985 1987 1989 1978-89 ------------------------------------------------------------------------ From program statistics: Total collections (1989 dollars in billions)\1\..... $2.0 $2.5 $3.1 $4.3 $5.3 165 Parents located (thousands)...... 454 831 878 1,145 1,624 258 Paternities established (thousands)...... 111 208 232 269 339 205 Awards established (thousands)...... 315 496 669 812 936 197 From Census surveys: Total collections (1989 dollars in billions)\1\..... $8.9 $8.8 $8.3 $10.9 $11.2 26 IV-D collections as percent of total collections 23 28 37 39 47 104 Of demographically eligible, percent with awards...... 59 58 61 59 58 -2 Of demographically eligible, percent supposed to receive payment.. 48 46 50 51 50 4 Of demographically eligible, percent who received some payment.......... 35 35 37 39 37 6 Of mothers supposed to receive payment, percent who received full amount........... 49 50 48 51 51 4 Percent of poor female-headed families with child support or alimony.......... \2\18. 6 NA NA 26.0 26.9 \3\45 Child support and alimony as a percent of total income received by poor female- headed families.. \2\4.7 NA NA 5.5 5.8 \3\23 Percent of female- headed families with child support or alimony.......... \2\33. 9 NA NA 35.8 37.4 \3\10 Child support and alimony as a percent of total income received by female-headed families......... \2\7.4 NA NA 6.8 7.7 \3\4 ------------------------------------------------------------------------ \1\Constant (1989) dollars using CPI. \2\1979 data. \3\Percentage change 1979 to 1989. NA--Not available. Note.--Demographically eligible means women with own children under 21 years of age living with them from an absent father. Sources: U.S. Bureau of the Census, Child Support and Alimony, Current Population Reports, Series P-23, 1978, No. 112; 1983, No. 141; 1985, No. 152; 1987, No. 67; and 1989, No. 173. In 1992, nearly 46 percent of the 8.2 million families maintained solely by the mother with children under 18, had incomes below the poverty threshold. Almost 11 percent of the mothers of these poor children worked full-time, full-year. In 1992, 17.6 million children (under 18) lived with only one parent, 114 percent more than in 1970. Even though the total number of children under 18 years old in the United States declined from 69.2 million in 1970 to 66 million in 1992, the number of children affected by divorce, separation, and unmarried status of mother continued to rise. Almost 27 percent of all children lived in a one-parent family in 1992, compared with 12 percent in 1970. A 1985 current population survey indicated that about 15 percent of children living in two-parent married-coupled families were living with a step- parent. Of the 17.6 million children living with one parent, 88 percent lived with their mothers and 12 percent with their fathers. Between 1970 and 1992 the number of children living with only their fathers grew by 192 percent (from 748,000 to 2,182,000). The proportion of all children who lived with only their fathers rose from 1.1 percent to 3.3 percent. The largest number of children in one-parent families had a parent who was divorced, followed by children whose parents were never married. In 1992, of the children who lived only with one parent, 37 percent had a parent who was divorced, 24 percent had a parent who was separated, and 34 percent had a parent who had never been married. The number of children living with a divorced parent has almost tripled since 1970, but the number with a never-married parent grew nearly elevenfold. THE PROCESS OF CHILD SUPPORT ENFORCEMENT Local family and domestic courts and administrative agencies handle the establishment and enforcement of child support obligations according to Federal, State, and local laws. Working with the parents and considering the best interests of the children, the courts decide which parent will have custody of the children, the amount of the child support obligation of the noncustodial parent, the rights of access to the children by the noncustodial parent, and how the support obligation will be enforced. The federally mandated child support enforcement program provides services aimed at locating absent parents, establishing paternity, establishing a support obligation, and enforcing the support obligation. The child support enforcement program does not provide services aimed at other issues between parents, such as property settlement, custody, and access to the children. These issues are handled by local courts with the help of private attorneys. Any parent who needs help in locating an absent parent, establishing paternity, establishing a support obligation, or enforcing a support obligation may apply for services. Parents receiving benefits under the Aid to Families with Dependent Children (AFDC) program, the federally assisted foster care program or the Medicaid program automatically receive services. Services are free to such recipients, but others are charged up to $25 for services. States can charge fees on a sliding scale, pay the fee out of State funds or recover the fees from the noncustodial parent. When a parent applies for child support enforcement services, the following information aids the process: the name and address of the noncustodial parent; the absent parent's Social Security number; children's birth certificates; the child support order; the divorce decree or separation agreement; the name and address of the most recent employer of the noncustodial parent; the names of friends and relatives or organizations to which the noncustodial parent might belong; information about income and assets; and any other information about absent parents that might help the locating process. Once this information is provided, it is used in strictest confidence. If the child support enforcement program cannot locate the noncustodial parent with the information provided by the custodial parent, it must try to locate the noncustodial parent through the State parent locator service. The State uses various information such as telephone directories, motor vehicle registries, tax files, and employment data. The State also can ask the Federal Parent Locator Service (FPLS) to locate the noncustodial parent. The FPLS can access data from the Social Security Administration, the Internal Revenue Service, the Selective Service System, the Department of Defense, the Veterans' Administration, and the National Personnel Records Center. Under the Family Support Act of 1988 (P.L. 100-485), States are required to initiate the establishment of paternity for all children under the age of 18, including those for whom an action to establish paternity was previously dismissed because of the existence of a statute of limitations of less than 18 years. The act also sets paternity establishment standards for the States, and encourages them to create simple civil procedures for establishing paternity in contested cases. All parties to a contested case may be required to submit to genetic testing. The Federal Government pays 90 percent of the laboratory costs, and States may charge persons not receiving AFDC for the cost of establishing paternity. Under the Family Support Act of 1988, a State must use its child support award guidelines in establishing the child support obligation of the noncustodial parent. Also, the State must review and adjust individual awards every 3 years under certain circumstances beginning October 13, 1993. Some States base their guidelines on net income and others on gross income. Some States factor in health care, day care, and extraordinary expenses while other States allow for deviation from the guideline if an extraordinary expense is shown. States generally use one of three basic types of guidelines to determine award amounts. ``Income shares,'' which is based on the combined income of both parents is used in 32 States; ``percentage-of-income,'' which is based on the number of eligible children, which is then used to determine a percentage of the noncustodial parents' income to be paid in child support is used in 17 States; and ``Melson-Delaware,'' which provides a minimum self-support reserve for parents before the cost of rearing the children is prorated between the parents to determine the award amount is used in 3 States. Local courts and child support enforcement agencies attempt to collect child support when the noncustodial parent does not pay. Under the Family Support Act of 1988, the State must impose wage withholding on the noncustodial parent in all newly issued or modified child support enforcement program cases. As of October 1, 1990, wage withholding will apply to all other newly issued child support orders beginning in 1994. Other techniques for enforcing support include regular billings, delinquency notices, liens on property, seizure and sale of property, reporting arrearages to credit agencies, garnishment of wages, and offsetting of State and Federal income taxes. States might bring charges of criminal nonsupport against noncustodial parents if they cannot collect, or they might use civil or criminal contempt-of-court charges. These court proceedings usually involve much time because of court backlogs, delays, and continuances. Once a court decides the case, noncustodial parents often have been given probation or suspended sentences, and lower support payments and only partial payment of arrearages. To combat problems associated with court delays, the statute requires States to implement expedited processes under the State judicial system or State administrative processes for obtaining and enforcing support orders and at State option for establishing paternity. The most difficult child support orders to enforce are the interstate cases. States are required to cooperate in interstate child support enforcement, but problems arise from the additional autonomy of the local courts. Family law has been under the jurisdiction of State and local governments, and citizens fall under the jurisdiction of the courts where they live. If the noncustodial parent lives out of State, the primary tool for interstate enforcement is the Uniform Reciprocal Enforcement of Support Act (URESA). All States have their own URESA laws. Under these laws, the child support enforcement official or private attorney files a two-State petition with the enforcement agency or a court in another State. Where the URESA provisions in the two States are compatible, the law can be used effectively. However, many of these laws are out of date and incompatible, which makes interstate child support enforcement relatively ineffective. The National Conference of Commissioners on Uniform State Laws originally drafted a model URESA in 1950. Since then, amendments have been made in 1952, 1958, and 1968. The Family Support Act of 1988 authorized a commission to study problems in interstate child support enforcement. One of the Commission's recommendations to Congress is to replace URESA with UIFSA, the Uniform Interstate Family Support Act, a model State law for handling child support cases drafted by the National Conference of Commissioners on Uniform State Laws. Child support awards In 1989, of the 10.0 million women who had children present under the age of 21 from a noncustodial father, 42 percent never were awarded child support rights (nor had an agreement to receive child support payments) and, thus, were dependent for income on sources other than the father. For poor mothers, the proportion without child support awards was even higher at 57 percent (see table 11-4). TABLE 11-3.--CHILD SUPPORT PAYMENTS IN 1978, 1981, 1983, 1985, 1987, AND 1989 [Women as of spring 1979, 1982, 1984, 1986, 1988, and 1990. Child support payments for women with own children under 21 years of age present from an absent father: alimony payment for ever-divorced women] -------------------------------------------------------------------------------------------------------------------------------------------------------- Number (thousands) Percent distribution ----------------------------------------------------------------------------------------------- 1978 1981 1983 1985 1987 1989 1978 1981 1983 1985 1987 1989 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total............................................. 7,094 8,387 8,690 8,808 9,415 9,955 100.0 100.0 100.0 100.0 100.0 100.0 ----------------------------------------------------------------------------------------------- Awarded\1\.............................................. 4,196 4,969 5,015 5,396 5,554 5,748 59.1 59.2 57.7 61.3 59.0 57.7 Supposed to receive payments........................ 3,424 4,043 3,995 4,381 4,829 4,953 48.3 48.2 46.0 49.7 51.3 49.8 Not supposed to receive payments.................... 772 926 1,020 1,015 725 795 10.9 11.0 11.7 11.5 7.7 8.0 Not awarded\1\.......................................... 2,898 3,417 3,675 3,411 3,861 4,207 40.9 40.7 42.3 38.7 41.0 42.3 Supposed to receive payments............................ 3,424 4,043 3,995 4,381 4,829 4,953 100.0 100.0 100.0 100.0 100.0 100.0 Actually received payments.......................... 2,455 2,902 3,037 3,243 3,676 3,725 71.6 71.8 76.0 74.0 76.1 75.2 Received full amount............................ 1,675 1,888 2,018 2,112 2,475 2,546 48.9 46.7 50.5 48.2 51.3 51.4 Received partial amount......................... 779 1,014 1,019 1,131 1,201 1,179 22.8 25.1 25.5 25.8 24.9 23.8 Did not receive payments................................ 969 1,140 958 1,138 1,153 1,228 28.4 28.2 24.0 26.0 23.9 24.8 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\Award status as of spring 1979, 1984, 1986, 1988, and 1990. Source: U.S. Bureau of the Census. Current Population Reports, Series P-23, No. 112 Child Support and Alimony 1978, No. 141 Child Support and Alimony 1983 (advance report), No. 152 Child Support and Alimony 1985 (advance report), No. 167 Child Support and Alimony: 1987, and No. 173 Child Support and Alimony: 1989. Washington, U.S. Government Printing Office. TABLE 11-4.--CHILD SUPPORT PAYMENTS FOR ALL WOMEN, WOMEN ABOVE THE POVERTY LEVEL, AND WOMEN BELOW THE POVERTY LEVEL, SELECTED YEARS 1978-89 [Child support payments for women with own children under 21 years of age present from an absent father as of spring 1979, 1982, 1984, 1986, 1988, and 1990] ---------------------------------------------------------------------------------------------------------------- 1978 1981 1983 1985 1987 1989 ---------------------------------------------------------------------------------------------------------------- All women: Total (in thousands).................................. 7,094 8,387 8,690 8,808 9,415 9,955 Percent awarded\1\.................................... 59.1 59.2 57.7 61.3 59.0 57.7 Percent actually received payment..................... 34.6 34.6 34.9 36.8 39.0 37.4 Percent received full payment......................... 23.6 22.5 23.2 24.0 26.3 25.6 Women above poverty level: Total (in thousands).................................. 5,121 5,821 5,792 6,011 6,224 6,749 Percent awarded\1\.................................... 67.3 67.9 65.3 71.0 66.5 64.6 Percent actually received payment..................... 41.1 41.4 42.6 44.1 44.8 43.1 Women below poverty level: Total (in thousands).................................. 1,973 2,566 2,898 2,797 3,191 3,206 Percent awarded\1\.................................... 38.1 39.7 42.5 40.4 44.3 43.3 Percent actually received payment..................... 17.8 19.3 19.6 21.3 27.7 25.4 Aggregate payment (in billions of dollars):\2\ Child support due..................................... 12.6 13.7 12.5 12.6 15.9 16.3 Child support received................................ 8.1 8.4 8.8 8.3 10.9 11.2 Aggregate child support deficit....................... 4.5 5.3 3.7 4.3 5.0 5.1 ---------------------------------------------------------------------------------------------------------------- \1\Award status as of spring 1979, 1982, 1984, 1986, 1988, and 1990. \2\In 1989 dollars. Source: U.S. Bureau of the Census. Current Population Reports, Series P-60, No. 173 Child Support and Alimony: 1989, Washington, U.S. Government Printing Office. Approximately 5.7 million women with children under age 21 (58 percent) had been awarded child support or had an agreement to receive child support payments, but only 5.0 million (50 percent) of the women were actually ``supposed to receive'' child support in 1989. The rights of the remaining 8 percent were no longer in force because the father who owed payments had died, the children had grown past the age of eligibility for payments, or because of another reason. Many of the women who were awarded child support payments did not receive the full amount they were due. In 1989, about half (51 percent) of the 5.0 million women owed child support payments received the full amount, about 24 percent of the women received less than they were owed, and 25 percent received no payment at all. Table 11-5 shows that average amount of child support for women who received payments in 1989 was $2,995, about 19 percent of their average total income. In 1978, the average amount of child support was $1,800, about 20 percent of the woman's income. TABLE 11-5.--CHILD SUPPORT PAYMENTS AWARDED AND RECEIVED IN 1989--WOMEN WITH CHILDREN PRESENT, BY SELECTED CHARACTERISTICS [Women with own children under 21 years of age present from an absent father as of spring 1990] ---------------------------------------------------------------------------------------------------------------- Supposed to receive child support in 1989 Percent ---------------------------------------- awarded Actually received support Characteristics of women Total child in 1989 (thousands) support Total --------------------------- payments\1\ (thousands) Mean Percent child Mean support income ---------------------------------------------------------------------------------------------------------------- ALL WOMEN Total................................. 9,955 57.7 4,953 75.2 $2,995 $16,171 Current Marital Status Married\2\.................................. 2,531 79.0 1,685 72.1 2,931 14,469 Divorced.................................... 3,056 76.8 2,123 77.0 3,322 19,456 Separated................................... 1,352 47.9 527 79.7 3,060 14,891 Widowed\3\.................................. 65 (B) 34 (B) (B) (B) Never married............................... 2,950 23.9 583 73.2 1,888 9,495 Race and Spanish Origin White....................................... 6,905 67.5 4,048 76.5 3,132 16,632 Black....................................... 2,770 34.5 791 69.7 2,263 13,898 Spanish origin\4\........................... 1,112 40.6 364 69.8 2,965 14,758 Years of School Completed Less than 12 years.......................... 2,372 36.9 741 66.7 1,754 8,201 High school: 4 years........................ 4,704 62.0 2,470 76.4 2,698 13,535 College: 1 to 3 years............................ 1,988 65.0 1,139 76.6 3,338 18,462 4 years or more......................... 891 74.5 603 77.9 4,850 30,872 WOMEN BELOW POVERTY Total................................. 3,206 43.3 1,190 68.3 1,889 5,047 Current Marital Status Married\2\.................................. 176 72.2 106 67.0 2,275 4,351 Divorced.................................... 820 70.4 525 66.3 2,112 5,581 Separated................................... 612 47.1 221 74.2 1,717 4,917 Widowed..................................... 8 (B) 4 (B) (B) (B) Never Married\3\............................ 1,590 24.5 334 68.6 1,553 4,543 Race White....................................... 1,763 54.6 827 67.8 1,972 5,010 Black....................................... 1,314 29.2 325 69.8 1,674 5,174 Spanish origin\4\........................... 536 33.0 148 63.5 1,824 4,958 ---------------------------------------------------------------------------------------------------------------- \1\Award status as of spring 1989. \2\Remarried women whose previous marriage ended in divorce. \3\Widowed women whose previous marriage ended in divorce. \4\Persons of Spanish origin may be of any race. Note.--B base less than 75,000. Source: U.S. Bureau of the Census. Series P-23, No. 173, Child Support and Alimony: 1989. Of the 10 million women with children by a noncustodial father, 25 percent were remarried, 45 percent were divorced or separated, and 30 percent were never married. About 32 percent had incomes below the poverty level. Of these poor women, only 43 percent had agreements to receive child support and were due payments in 1989. Another 6 percent had agreements but were not due payments in 1989 (see table 11-5). Of the poor mothers who were supposed to receive child support payments in 1989, 68 percent (813,000) actually received payments, while 32 percent did not. For women who actually received child support payments in 1989, the amount of payment tended to be higher than average for divorced women, white women, and women who had gone to college for at least a year. Those with lower than average payment amounts included never-married women, black women, and women who had not completed 12 years of school (see table 11- 5). Only 24 percent of women who had never married were awarded child support payments; compared with 77 percent of divorced women, 79 percent of remarried women and 48 percent of women who were separated. Moreover, among the 5.0 million women who were supposed to receive child support, the percentages of those who actually received payments were: 73 percent of never- married mothers, 72 percent of remarried mothers, 80 percent of separated mothers, and 77 percent of divorced mothers. Of the 3.7 million women who actually received child support payments in 1989, 44 percent were divorced, 33 percent were remarried, 11 percent were separated, and 11 percent were single (never married). The women who had never married received, on the average, the lowest amount of child support payments. Among women who were poor despite having been awarded child support, the percentages differed. Of the 813,000 poor women who received child support payments in 1989, 43 percent were divorced, 9 percent were remarried, 20 percent were separated, and 28 percent were never married. Black mothers and mothers of Spanish origin living apart from the father of their children were much less likely than their white counterparts to be awarded child support. Almost 68 percent of white mothers were awarded child support payments, compared with 35 percent of black mothers, and 41 percent of mothers of Spanish origin. Further, both black and Spanish- origin mothers received smaller payments, on the average, than did white mothers. Mothers who were not high school graduates were less likely than the average to be awarded child support, and their support payments were on the average much smaller than those of mothers who had completed more than 12 years of school. In addition, the age of the woman was related to the awarding of child support payments. Women aged 30 to 39 were the most likely to be awarded child support. Women 40 years of age and older were the most likely to actually receive payments and they received, on average, higher support payments. Women under age 30 were the least likely to be awarded payments, and those who were awarded support received smaller payments, on average, than older women. Another factor related to child support was the number of children the mother had with her in the absence of their father. Women with two children were the most likely to receive support. SERVICES FOR AFDC AND NON-AFDC CASES Each State's child support plan must provide that the child support agency will undertake to secure support for an AFDC child whose rights to support have been assigned to the State. This includes nearly all AFDC children, since assignment of rights to support is a condition of eligibility for AFDC benefits. The State must also provide in its plan that it will undertake to establish the paternity of an AFDC child who is born out of wedlock. These requirements apply in all cases except where, in accordance with standards established by the Secretary, the State finds that to apply them would be against the best interests of the child. For families whose AFDC eligibility ends due to the receipt of (or an increase in) child support, States must continue to provide child support enforcement services, without imposing the application fee. This policy was established by Public Law 98-378, the Child Support Enforcement Amendments of 1984. With respect to non-AFDC families, the law provides that the State must make available, once an application is filed with the State agency, the child support collection and paternity determination services which are provided under the plan for AFDC families. The State must charge non-AFDC families an application fee of up to $25. The amount of the maximum allowable fee may be adjusted periodically by the Secretary of the Department of Health and Human Services to reflect changes in administrative costs. States may charge the fee against the custodial parent, pay the fee out of State funds, or recover it from the noncustodial parent. States also have the option of charging a late payment fee equal to between 3 and 6 percent of the amount of overdue support. Late payment fees may be charged to the noncustodial parents of AFDC and non-AFDC families and are to be collected only after the full amount of the support has been paid to the child. In addition, a State may at its option recover costs in excess of the application fee. Such recovery may be from either the custodial parent or the noncustodial parent. If a State chooses to make recovery from the custodial parent, it must have in effect a procedure whereby all persons in the State who have authority to order support are informed that such costs are to be collected from the custodial parent. Finally, child support enforcement services must include the enforcement of spousal support, but only if a support obligation has been established with respect to the spouse; the child and spouse are living in the same household; and child support is being collected along with spousal support. THE FEDERAL ROLE The Federal statute provides that the child support program must be administered by a separate organizational unit under the control of a person designated by and reporting directly to the Secretary of Health and Human Services (HHS). Under the present organizational structure of the Department, this office is known as the Federal Office of Child Support Enforcement (OCSE). The Family Support Act of 1988 requires the appointment of an Assistant Secretary for Family Support within HHS to administer a number of programs, including the Child Support Enforcement program under title IV-D of the Act. Currently, this is the Assistant Secretary for the Administration for Children and Families. A primary responsibility of the director is to establish such standards for State programs for locating absent parents, establishing paternity, and obtaining child support and support for the spouse (or former spouse) with whom the absent parent's child is living as he determines to be necessary to assure that the programs will be effective. In addition to this broad statutory mandate, the director is required to establish minimum organizational and staffing requirements for State child support agencies, and to review and approve State plans. The statute also requires the director of the OCSE to provide technical assistance to the States to help them establish effective systems for collecting child and spousal support and establishing paternity. To fulfill this requirement, the OCSE operates a National Child Support Enforcement Reference Center as a central location for the collection and dissemination of information about State and local programs. OCSE also provides, under a contract with the American Bar Association Child Support Project, training and information dissemination on legal issues to persons working in the field of child support enforcement. Special initiatives, such as a recent effort to assist major urban areas in improving program performance, have also been undertaken by the OCSE. The Child Support Enforcement Amendments of 1984 (Public Law 98-378) extend the research and demonstration authority in section 1115 of the Social Security Act to the child support enforcement program. This will make it possible for States to test innovative approaches to support enforcement so long as the modification does not disadvantage children in need of support nor result in an increase in Federal AFDC costs. Public Law 98-378 also authorizes special project grants to promote improvement in interstate enforcement. The authorization is $15 million for each fiscal year after 1986. The director of the OCSE has full responsibility for program evaluation. Audits are required at least every 3 years to determine whether the standards and requirements prescribed by law and regulations have been met. Under the penalty provision, a State's AFDC matching funds must be reduced by an amount equal to at least 1 but no more than 2 percent for the first failure to comply substantially with the standards and requirements, at least 2 but no more than 3 percent for the second failure, and at least 3 but no more than 5 percent for the third and subsequent failures. FEDERAL ENFORCEMENT TOOLS The statute creates several Federal mechanisms to assist the States in performing their paternity and child support enforcement functions. These include use of the Internal Revenue Service, the Federal courts, and the Federal Parent Locator Service (FPLS). The statute requires the Secretary of HHS, upon the request of a State, to certify to the Secretary of Treasury for collection by the IRS any amounts identified by the State as representing delinquent child support payments. The Secretary may certify only the amounts delinquent under a court or administrative order, and only upon a showing by the State that it has made diligent and reasonable efforts to collect amounts due using its own collection mechanisms. States must reimburse the Federal Government for any costs involved in making the collections. Collections may be made on behalf of both AFDC and non-AFDC families. Use by the States of this regular IRS collection mechanism (which may include seizure by the IRS of property, freezing of accounts, and other procedures) has been relatively infrequent. Using IRS collection methods, in fiscal year 1993, collections were made in only 329 cases nationwide, for a total collection of $155,677. The availability of the IRS collection mechanism for child support was amplified in amendments enacted as part of the Omnibus Budget Reconciliation Act of 1981 (Public Law 97-35) to allow the collection of past due support from Federal tax refunds upon a simple showing by the State agency that an individual owes at least $150 in past-due support which has been assigned to the State as a condition of AFDC eligibility. Upon receiving this showing, the Secretary of Treasury is required to withhold from any tax refunds due that individual an amount equal to any past-due support. The withheld amount is sent to the State agency, together with notice of the taxpayer's current address. Public Law 98-378 created a similar IRS offset program for non-AFDC families owed child support. States must submit to the IRS for withholding, the names of absent parents who have arrearages of at least $500 and who, on the basis of current payment patterns and the enforcement efforts that have been made, are unlikely to pay the arrearage before the IRS offset can occur. The law establishes specific notice requirements and mandates that the absent parent and any spouse be informed of the procedures which may be taken to protect the unobligated spouse's portion of the refund. The 1988 provision applied to refunds payable after December 31, 1985, and before January 1, 1991. Public Law 101-508 makes permanent the IRS offset program for non-AFDC families. In fiscal year 1993, a total of 925,264 cases were offset, which resulted in child support collections of $609 million. States also may have access to the Federal courts to enforce court orders for support. The director of the Office of Child Support Enforcement must approve a State's application for permission to use the courts of the United States to enforce court orders for support upon a finding that: (1) another State has not undertaken to enforce the court order of the originating State against an absent parent within a reasonable time; and (2) that use of the Federal courts is the only reasonable method of enforcing such order. This mechanism, designed to assist the States in enforcing interstate cases, has gone unused, apparently because the States view it as costly and complex. Finally, the statute also requires the establishment of a Federal Parent Locator Service to be used to find absent parents in order to secure and enforce child support obligations. Upon request, the Secretary of HHS must provide to an authorized person the most recent address and place of employment of any absent parent if the information is contained in the records of the Department of Health and Human Services, or can be obtained from any other department or agency of the United States or of any State. The Secretary must also make available the services of the FPLS to any State that wishes to locate an absent parent or child for the purpose of enforcing any Federal or State law with respect to the unlawful taking or restraint of a child, or making or enforcing a child custody determination. THE STATE ROLE Each State is required to designate a single and separate organizational unit of State government to administer the program. Earlier child support legislation, enacted in 1967, had required that the program be administered by the welfare agency. The 1975 act deleted this requirement in order to give each State the opportunity to select the most effective administrative mechanism. Most States have placed the child support agency within the social or human services umbrella agency which also administers the AFDC program. However, two States have placed the agency in the department of revenue and two States have placed the agency in the office of the attorney general. The law allows the programs to be administered either on the State or local level. Ten programs are locally administered. A few programs are State administered in some counties and locally administered in others. States must have plans, approved by the director of the OCSE, which set forth their functions and responsibilities. Both AFDC and non-AFDC families must be served. States must also enter into cooperative arrangements with appropriate courts and law enforcement officials to assist the child support agency in administering the program. These agreements may include provision for reimbursing courts and law enforcement officials for their assistance. States must operate a parent locator service to locate absent parents, and they must maintain full records of collections and disbursements, and otherwise maintain an adequate reporting system. In order to facilitate the collection of support in interstate cases, a State must cooperate with other States in establishing paternity, locating absent parents, and in securing compliance with an order issued by another State. The law requires the States to use several enforcement tools. They must use the IRS tax refund offset procedure for AFDC and non-AFDC families, and they must also determine periodically whether any individuals receiving unemployment compensation owe child support obligations. The State employment security agency is required to withhold unemployment benefits, and to pay the child support agency any outstanding child support obligations established by an agreement with the individual or through legal processes. Public Law 98-378 mandated that States use a number of other enforcement techniques. These include: (1) imposing liens against real and personal property for amounts of overdue support; (2) withholding of State tax refunds payable to a parent who is delinquent in support payments; (3) making available information regarding the amount of overdue support owed to a consumer credit bureau upon a request; (4) requiring individuals who have demonstrated a pattern of delinquent payments to post a bond or give some other guarantee to secure payment of overdue support; (5) establishing expedited processes within the State judicial system or under administrative processes for obtaining and enforcing child support orders, and, at the option of the State, determining paternity; (6) notifying each AFDC recipient at least once each year of the amount of child support collected on behalf of that recipient; (7) permitting the establishment of paternity until a child's 18th birthday; and (8) at the option of the State, providing for cases not enforced by the State CSE agency, that child support payments must be made through the agency that administers the State's income withholding system if either the custodial or noncustodial parent requests that they be made in this manner. State child support agencies are required to undertake child support collections on behalf of children receiving foster care maintenance payments under title IV-E of the Social Security Act, if an assignment of rights to support has been secured by the foster care agency. In addition, foster care agencies are required to take steps, where appropriate, to secure an assignment to the State of any rights to support on behalf of a child receiving foster care maintenance payments. State agencies are also required, as a result of Public Law 98-378, to petition to include medical support as part of any child support order whenever health care coverage is available to the noncustodial parent at a reasonable cost. And, if a family loses AFDC eligibility as the result of increased collection of support payments, the State must continue to provide Medicaid benefits for 4 calendar months beginning with the month of ineligibility. States also must provide services to medically needy (Medicaid only) families referred to the State IV-D agency from the State Medicaid agency. Finally, the statute requires each State to comply with any other requirements and standards that the Secretary determines to be necessary to the establishment of an effective child support program. PATERNITY ESTABLISHMENT Paternity establishment is a prerequisite for obtaining a child support order. In 1990, 28 percent of children born in the U.S. were born to unmarried women. According to the OCSE, paternity is established in less than one-third of these cases. Without paternity established, these children have no legal claim on their fathers' income. A major weakness of the CSE program is its poor performance in securing paternity for such children. In addition to financial benefits, establishing paternity can provide social, psychological, and emotional benefits and in some cases the father's medical history may be needed to give a child proper care. In 1991, 35 percent of the 14.6 million children living solely with their mothers had a mother who had never married. Inasmuch as the percentage of children born to parents that are not married has been increasing during the last two decades, paternity establishment has become one of the more crucial elements of the CSE program. In the 1980s legislation was enacted that contained provisions aimed at increasing the number of paternities established. P.L. 98-378, the Child Support Enforcement Amendments of 1984, required States to implement laws that permitted paternity to be established until a child's 18th birthday. P.L. 100-485, the Family Support Act of 1988 stipulated the following. States are required to meet Federal standards for the establishment of paternity. States are required to have all parties in a contested paternity case take a genetic test upon the request of any party, and are permitted to charge non- AFDC individuals for the costs of the paternity test. States are encouraged to adopt simple civil processes for voluntarily acknowledging paternity and civil procedures for establishing paternity in contested cases. States are reimbursed at a 90-percent Federal matching rate for laboratory testing to establish paternity. Each State is required, in administering any law involving the issuance of birth certificates, to require each parent to furnish his or her SSN, unless the State finds good cause for not doing so. Retroactive to 1984, any child for whom a paternity action was brought but whose suit was dismissed because of statute of limitations less than 18 years must be allowed to bring a new suit. A 1992 OCSE report on paternity establishment says that paternity establishment has improved because of Federal requirements, improved genetic testing, and innovative State and local programs. Many States now have procedures through which a man may legally admit paternity (by signing a document that legally establishes paternity) without court involvement. Many States contend that voluntary acknowledgement of paternity procedures save money and require less time than paternity establishment procedures that involve the courts. While the number of paternities established through CSE reached a record high in 1991, huge disparities exist among States. OBRA 93 required States to have in effect by October 1, 1993, the following paternity establishment procedures: (1) for a simple civil process for voluntarily acknowledging paternity under which the State must explain the rights and responsibilities of acknowledging paternity and afford due process safeguards. Procedures must include a hospital-based program for the voluntary acknowledgment of paternity during the period immediately preceding or following the birth of a child; (2) under which the voluntary acknowledgment of paternity creates a rebuttable, or at the option of the State, conclusive presumption of paternity, and under which such voluntary acknowledgments are admissible as evidence of paternity; (3) under which the voluntary acknowledgment of paternity must be recognized as a basis for seeking a support order without first requiring any further proceedings to establish paternity; (4) which provide that any objection to genetic testing results must be made in writing within a specified number of days prior to any hearing at which such results may be introduced in evidence, and if no objection is made the test results are admissible as evidence of paternity without the need for foundation testimony or other proof of authenticity or accuracy; (5) which create a rebuttable or, at the option of the State, conclusive presumption of paternity upon genetic testing results indicating a threshold probability of the alleged father being the father of the child; (6) which require default orders in paternity cases upon a showing that process has been served on the defendant and whatever additional showing may be required by State law; and (7) which require States to have expedited processes for paternity establishment in contested cases and to require that a State give full faith and credit to determinations of paternity made by other States. A 1993 Urban Institute report\1\ analyzes national survey data that was obtained to provide a better understanding of how paternity establishment is handled by CSE agencies in counties throughout the U.S. The study found: --------------------------------------------------------------------------- \1\Washington, D.C. The Urban Institute. ``Promising Approaches to Improving Paternity Establishment Rates at the Local Level,'' Sonenstein, Freya L., Pamela A. Holcomb and Kristen S. Seefeldt. Feb. 1993. --------------------------------------------------------------------------- At the local level paternity establishment is usually located in one of three settings: a legal agency like a prosecuting attorney's office or court, a non-legal agency like the human services department responsible for welfare, or a shared situation in which cases with cooperative fathers are handled by the human service agency and contested cases are transferred to a legal agency [35 percent of the counties transferred contested cases from the non-legal agency to the legal agency]. Counties generally use one of four approaches to establish paternity: A no-consent process wherein all paternity cases are handled through the court and there are no opportunities to consent voluntarily outside a court hearing; a one-time consent process: alleged fathers are given one opportunity to consent voluntarily, usually right after notification of the allegation; a multi-consent process: alleged fathers are given at least two opportunities to consent, usually after notification and also after genetic testing; and a court-as-last-resort process: alleged fathers have to respond to a notification by filing with the court their intention to consent to or contest the allegation. The court's role after the initial notification is generally limited to handing contested cases after genetic tests. Multiple opportunities for consent are available. [The most common approach, used by 37 percent of the counties, was the multi-consent approach]. The report found that counties with the highest rate of paternity determinations offer multiple opportunities for voluntary consent and have adopted an organizational approach in which cooperative fathers are handled by the welfare agency and contested cases are transferred to a legal agency. The 27 counties that used these combined approaches show an average paternity rate of 65 percent when other factors are held constant. Given that it is unrealistic that other factors can be held constant (compared to rates between 22 and 45 percent in counties where other approaches were used). The report cautions readers that the findings from the analysis are merely suggestive of possible avenues to follow in seeking improvements in paternity establishment. ENFORCEMENT OF MEDICAL SUPPORT Health care for children can be a major expense for the custodial parent, and can be a burden for the State if public assistance is being provided to the children. Public Law 95- 142, the Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977 (Section 1912 of the Social Security Act), permits State Medicaid agencies to use the CSE agency to assist in the enforcement of medical support rights due from or through a noncustodial parent, since it was not intended that the Medicaid agency establish a separate system for the enforcement of medical support obligations. On February 11, 1980, the OCSE and the Health Care Financing Administration (HCFA) published joint regulations to implement section 1912 of the act through optional cooperative agreements between the State Medicaid agency and the State CSE agency. Under these agreements the Medicaid agency reimburses the CSE agency for medical support enforcement activities performed pursuant to the agreement. In 35 jurisdictions the Federal Medicaid reimbursement rate is lower than the 66 percent matching rate for CSE activities (based on fiscal year 1993 rates), and nationwide it averages about 56 percent. Section 16 of Public Law 98-378 requires the Secretary of the Department of Health and Human Services (DHHS) to issue regulations to require that State CSE agencies petition for the inclusion of medical support as part of any child support order whenever health care coverage is available to the noncustodial parent at reasonable cost. According to the Federal regulations, any employment-related or other group coverage is considered reasonable, under the assumption that health insurance is inexpensive to the employee/noncustodial parent. A 1983 study by the National Center for Health Services Research of the Public Health Service indicated that, for low-wage employees with employer-provided insurance coverage, 72 percent of the premium was paid for by the employer. On October 16, 1985, the OCSE published regulations amending previous regulations and implementing section 16 of Public Law 98-378. The regulations stated that the CSE agency must obtain basic medical support information and provide this information to the State Medicaid agency. Also, if the custodial parent does not have satisfactory health insurance coverage, the CSE agency must petition the court or administrative authority to include medical support in new or modified support orders and inform the State Medicaid agency of any new or modified support orders that include a medical support obligation. The 1985 regulations also required the CSE agency to take steps to enforce medical support that has been ordered by a court or administrative process under State law. In addition, these regulations permit the use of CSE matching funds at the 66 percent rate for required medical support activities. Before these regulations were issued, medical support activities were pursued by CSE agencies only under optional cooperative agreements with Medicaid agencies. Some of the functions that the CSE agency may perform under a cooperative agreement with the Medicaid agency include: receiving referrals from the Medicaid agency, locating absent parents, establishing paternity, determining whether the noncustodial parent has a health insurance policy or plan that covers the child, obtaining sufficient information about the health insurance policy or plan to permit the filing of a claim with the insurer, filing a claim with the insurer or transmitting the necessary information to the Medicaid agency, securing health insurance coverage through court or administrative order (when it will not reduce the noncustodial parent's ability to pay child support), and recovering amounts necessary to reimburse medical assistance payments. A report by the Urban Institute stated that although the practice of including medical coverage provisions in child support orders had increased, the priority and emphasis given such provision was still quite low (as of September 1985). It reported that child support staff were reluctant to go to court just for medical support, and that many judges would not order medical support if it might cause a reduction in cash support payments. The report also said that enforcing medical coverage provisions once they are established is very difficult, and that it requires the agency to monitor continuation of coverage and to act to restore coverage when it lapses.\2\ --------------------------------------------------------------------------- \2\Nightingale, Demetra Smith, and others. ``The Inclusion of Medical Coverage in Child Support Cases: Current Status and Options for the Future.'' Draft. Washington, Urban Institute, May 1986. p. vi. [Hereafter cited as Urban Institute, ``The Inclusion of Medical Coverage in Child Support Cases.''] --------------------------------------------------------------------------- The Urban Institute study reported that in 1983, 4.6 million children with an absent parent were without public (Medicaid) or private health insurance. This represented 34 percent of all children with an absent parent. Another 4.9 million children with an absent parent were covered solely by Medicaid. The study estimated that including medical coverage in child support orders in 1984 might have benefited 1,353,000 totally uninsured children (those without Medicaid or private insurance) and perhaps another 300,000 to 466,000 children covered only by Medicaid at that time.\3\ --------------------------------------------------------------------------- \3\Ibid., p. 24-25. --------------------------------------------------------------------------- According to the Census Bureau data on child support and alimony, 40 percent of the 5.7 million women who had a child support award in 1989 received health insurance coverage in their awards. For white women, the figure was 43 percent; for black women, 28 percent; and for women of Hispanic origin, 21 percent. For divorced women, the figure was 44 percent and for women who had never married, the figure was 26 percent. On September 16, 1988, the OCSE issued regulations amending the medical support enforcement provisions. These regulations require the CSE agency to develop criteria to identify existing child support cases that have a high potential for obtaining medical support, and to petition the court or administrative authority to modify support orders to include medical support for targeted cases even if no other modification is anticipated. In addition, the CSE agency is required to provide the custodial parent with information regarding the health insurance coverage obtained by the noncustodial parent for the dependent child or children. Moreover, the 1988 regulation deletes the condition that CSE agencies may secure health insurance coverage under a cooperative agreement only when it will not reduce the noncustodial parent's ability to pay child support. The purpose of the medical support provisions is to expand the number of children for whom private health insurance coverage is obtained by increasing the availability of third- party resources to pay for medical care and thereby result in Medicaid cost savings to the States and the Federal Government. The Urban Institute report, however, concluded that while there is no doubt that many children could benefit from inclusion of medical insurance, especially those who currently have no public or private health care coverage, Medicaid savings would be relatively modest compared to total annual Medicaid costs.\4\ --------------------------------------------------------------------------- \4\Urban Institute, ``The Inclusion of Medical Coverage in Child Support Cases,'' p. vi. --------------------------------------------------------------------------- According to OCSE data, 53 percent of support orders established in fiscal year 1993 included health insurance, whereas only 30 percent of support orders that were enforced or modified in fiscal year 1993 included health insurance. OBRA 93 included the following health insurance support provisions: (1) prohibit an insurer from denying enrollment of a child under the health insurance coverage of the child's parent on the grounds that the child was born out of wedlock, is not claimed as a dependent on the parent's Federal income tax return, or does not reside with the parent or in the insurer's service area; (2) require an insurer and an employer doing business in the State, in any case in which a parent is required by court or administrative order to provide health coverage for a child and the child is otherwise eligible for family health coverage through the insurer, (a) to permit the parent, without regard to any enrollment season restrictions, to enroll such child under such family coverage; (b) if the parent fails to provide health insurance coverage for a child, to enroll the child upon application by the child's other parent or the State child support or Medicaid agency; and (c) with respect to employers, not to disenroll (or eliminate coverage of) the child unless there is satisfactory written evidence that the order is no longer in effect, or the child is or will be enrolled in comparable health coverage through another insurer that will take effect not later than the effective date of the disenrollment; (3) require an employer doing business in the State, in the case of health insurance coverage offered through employment and providing coverage for a child pursuant to a court or administrative order, to withhold from the employee's compensation the employee's share of premiums for health insurance, and to pay that share to the insurer. The Secretary of Health and Human Services may provide by regulation for such exceptions to this requirement (and other requirements described above that apply to employers) as the Secretary determines necessary to ensure compliance with an order, or with the limits on withholding that are specified in section 303(b) of the Consumer Credit Protection Act; (4) prohibit an insurer from imposing requirements upon a State agency, which is acting as an agent or assignee of an individual eligible for medical assistance and covered by the insurer, that are different from requirements applicable to an agent or assignee of any other individual; (5) require an insurer, in the case of a child who has coverage through the insurer of a noncustodial parent, (a) to provide the custodial parent with the information necessary for the child to obtain benefits; (b) to permit the custodial parent (or provider, with the custodial parent's approval) to submit claims for covered services without the approval of the noncustodial parent; and (c) to make payment on claims directly to the custodial parent, the provider, or the State agency; and (6) permit the State Medicaid agency to garnish the wages, salary, or other employment income of, and to withhold State tax refunds to, any person who: (a) is required by court or administrative order to provide health insurance coverage to an individual eligible for Medicaid; (b) has received payment from a third party for the costs of medical services to that individual; and (c) has not reimbursed either the individual or the provider. The amount subject to garnishment or withholding would be the amount required to reimburse the State agency for expenditures for costs of medical services provided under the Medicaid program. However, claims for current or past-due child support shall take priority over any claims for the costs of medical services. These provisions are effective April 1, 1994, or, if the Secretary determines that State legislation is needed, the State plan shall not be regarded as failing to comply with the requirements of title IV-D because it has not met these additional requirements before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after August 10, 1993. In the case of a State that has a two-year legislative session, each year of such session shall be deemed to be a separate regular session of the State legislature. TABLE 11-6.--CHILD SUPPORT AWARD STATUS AND INCLUSION OF HEALTH INSURANCE IN AWARD, BY SELECTED CHARACTERISTICS OF WOMEN [Women 15 years and older with own children under 21 years of age present from absent fathers as of spring 1990] ------------------------------------------------------------------------ Awarded child support payments ---------------------------------- Health insurance included in child Total support award Characteristic (thousands) Total --------------------- (thousands) Percent Number of (thousands) total awarded ------------------------------------------------------------------------ Total............. 9,955 5,748 2,307 40.1 Current Marital Status\1\ Remarried\2\............ 2,531 1,999 755 37.8 Divorced................ 3,056 2,347 1,038 44.2 Separated............... 1,352 648 298 46.0 Never married........... 2,950 704 186 26.4 Race and Hispanic Origin White................... 6,905 4,661 1,992 42.7 Black................... 2,770 955 271 28.4 Hispanic\3\............. 1,112 452 96 21.2 Age 15 to 17 years.......... 128 23 ........... ....... 18 to 29 years.......... 3,086 1,408 572 40.6 30 to 39 years.......... 4,175 2,685 1,097 40.9 40 years and over....... 2,566 1,632 638 39.1 Years of School Completed Less than 12 years...... 2,372 875 233 26.6 High school: 4 years.... 4,704 2,916 1,218 41.8 College: 1 to 3 years........ 1,988 1,293 575 44.5 4 years or more..... 891 664 281 42.3 Number of Own Children Present from an Absent Father One child............... 5,721 3,274 1,316 40.2 Two children............ 2,873 1,812 739 40.8 Three children.......... 1,030 537 220 41.0 Four children or more... 331 125 33 26.4 ------------------------------------------------------------------------ \1\Excludes a small number of current widowed women whose previous marriage ended in divorce. \2\Remarried women whose previous marriage ended in divorce. \3\Persons of Hispanic origin may be of any race. Source: U.S. Bureau of the Census. Current Population Reports. Child Support and Alimony: 1989 (Supplemental Report). Series P-60, No. 173, September 1991. Washington, U.S. Government Printing Office, 1991. p. 11. WAGE WITHHOLDING The Family Support Act required immediate income withholding to begin in November 1990 for all new or modified orders being enforced by the State's CSE agency. As of January 1, 1994, States were required to provide for immediate wage withholding for all support orders initially issued on or after that date, regardless of whether a parent has applied for CSE services. Immediate income withholding has been enacted by about half of the States. Public Law 98-378 required that States have in effect two distinct procedures for withholding wages of noncustodial parents. First, for cases enforced through the CSE agency, States were required to use a procedure that imposed wage withholding in child support cases whenever an arrearage accrued that was equal to the amount of support payable for 1 month. Second, for all child support cases, all new or modified support orders issued in the State were required to include a provision for wage withholding when an arrearage occurs. The intent of the second procedure was to ensure that orders not enforced through the CSE agency contain the authority necessary to permit wage withholding to be initiated by someone other than the CSE agency. The Family Support Act of 1988 (P.L. 100- 485) extended the use of mandatory wage withholding to nondelinquent support. In fiscal year 1993, 53 percent of total collections or about $4.7 billion were made through wage withholding. According to the Federal statute, State due-process requirements govern the scope of notice to provide to an obligor (i.e., noncustodial parent) when withholding is triggered. As a general rule, the noncustodial parent is entitled to advance notice of the withholding procedure. This notice, where required, must inform the noncustodial parent of the following: the amount that will be withheld; the application of withholding to any current or subsequent period of employment; the procedures available for contesting the withholding and the sole basis for objection (i.e., mistake of fact); the period allotted the noncustodial parent to contact the State to contest the withholding and the result of failure to contact the State within this timeframe (i.e., issuance of notification to the employer to begin withholding); the steps the State will take if the noncustodial parent contests the withholding including the procedure to resolve such contests. If the noncustodial parent contests the income withholding notice, the State must conduct a hearing, determine if the withholding is valid, notify the noncustodial parent of the decision, and notify the employer to commence the deductions if withholding is upheld. All of this must occur within 45 days of the initial notice of withholding. Whether a State uses a judicial or an administrative process, the only basis for a hearing is a factual mistake about the amount owed (current and/or arrearage) or the identity of the noncustodial parent. When withholding is uncontested or when a contested case is resolved in favor of the withholding, the administering agency must serve a withholding notice on the employer. The employer is required to withhold as much of the noncustodial parent's wages as is necessary to comply with the order. This will include the current support amount plus an amount to be applied toward liquidation of any arrearage. In addition, the employer may retain a fee to offset the administrative cost of implementing withholding. The Federal Consumer Credit Protection Act (FCCPA) determines the maximum portion of an individual's total disposable earnings that is subject to garnishment. The FCCPA limits apply when enforcing an order for support. These limits are 50 percent of disposable earnings for a noncustodial parent who is the head of a household, and 60 percent for a noncustodial parent who is not supporting a second family. These percentages increase by 5 percentage points, to 55 and 65 percent, respectively, when the arrearages represent support that was due more than 12 weeks before the current pay period. Upon receiving the notice, the employer must begin withholding the appropriate amount of the obligor's wages no later than the first pay period that occurs after 14 days following the date the notice was mailed. The 1984 amendments regulate the language in State statutes on the other rights and liabilities of the employer. For instance, the employer is subject to a fine for discharging a noncustodial parent or taking other forms of retaliation as a result of a withholding order. In addition, the employer is held liable for amounts not withheld as directed. In addition to being able to charge the noncustodial parent a fee for the administrative costs associated with wage withholding, the employer can combine all support payments required to be withheld for multiple obligors into a single payment and forward it to the CSE agency or court with a list of the cases to which the payments apply. The employer need not vary from his normal pay and disbursement cycle to comply with withholding orders; however, support payments must be forwarded to the State or other designated agency within 10 days of the date on which the noncustodial parent is paid. When the noncustodial parent changes jobs, the previous employer must notify the court or agency that entered the withholding order and provide specified information. The State must notify the new employer or income source to begin withholding from the obligor's wages. In addition, States must develop procedures to terminate income withholding orders, for example, when all of the children are emancipated and no arrearage exists. PROPERTY LIENS The use of liens for child support enforcement was characterized during congressional debate on Public Law 98-378 as ``simple to execute and cost effective and a catalyst for an absent parent to pay past due support in order to clear title to the property in question.'' (H. Rept. 527, 98th Cong., 1st sess., 1983) The report said that liens would complement the income withholding provisions of the 1984 law and be particularly helpful in enforcing support payments owed by noncustodial parents with substantial assets or income but who are not salaried employees. Public Law 98-378 required States to enact laws and implement ``procedures under which liens are imposed against real property for amount of overdue support owed by an absent parent who resides or owns property in the State.'' This can apply to such things as land, vehicles, houses, antique furniture, livestock, etc. The law provides, however, that States need not use liens in cases where, on the basis of guidelines that generally are available to the public, it determines that lien procedures would be inappropriate. This provision implicitly requires States to develop guidelines about use of liens. Generally, a lien for delinquent child support is a statutorily created mechanism by which an obligee (i.e., custodial parent) obtains a nonpossessory interest in property belonging to the noncustodial parent. The interest of the custodial parent is a slumbering interest that allows the noncustodial parent to retain possession of the property, but affects the noncustodial parent's ability to transfer ownership of the property to anyone else. A child support lien converts the custodial parent from an unsecured to a secured creditor. As such, it gives the custodial parent priority over unsecured creditors and subsequent secured creditors. In some States a lien is established automatically upon entry of a support order and the first incidence of noncompliance by the obligor. Frequently, the mere imposition of a lien will motivate the delinquent parent to do whatever is necessary to remove the lien (i.e., pay past due support). When this is not the case, it may become necessary to enforce the lien. Liens are not self-executory. They merely impede the debtor's ability to transfer property. If a lien exists, a debtor must satisfy the judgment before the property may be sold or transferred. However, it is not necessary for the obligee to wait until the obligor tries to transfer the property before taking action. The obligee may enforce his judgment by execution and levy against the property if he believes that the amount of equity in the property justifies execution. Several States have increased their use of liens by identifying individuals who possess appropriate assets through use of information obtained from Project 1099. Project 1099 is a cooperative effort involving State CSE agencies, the OCSE, and the IRS. It is named after the IRS form on which both earned and unearned income is reported. (Examples of reported earned and unearned incomes include: interest paid on savings accounts, stocks and bonds, and distribution of dividends and capital gains; rent or royalty payments; prizes, awards, or winnings; fees paid directors or subcontractors; and unemployment compensation.) Project 1099 was initiated in 1984 to assist in location efforts. Since fall 1988, Project 1099 routinely provides wage and employer information as well as location and asset information on noncustodial parents. CREDIT BUREAU REPORTING Public Law 98-378 requires that States establish procedures for reporting overdue child support obligations exceeding $1,000 to consumer reporting agencies (generally referred to as credit bureaus), if such information is requested by the credit bureau. States have the option of using such procedures in cases where the noncustodial parent is less than $1,000 in arrears. (Moreover, as in the case of liens, this collection procedure need not be used in cases found inappropriate under State guidelines.) The 1984 law requires States to provide the noncustodial parent an advance notice of its intent to release information regarding his child support arrearage and an opportunity for him to contest the accuracy of the information. The CSE agency may charge the credit bureau a fee for the information. Although some States and counties had agreements in place with credit bureaus to obtain information about the location of absent parents, the 1984 provision authorizes the routine transfer of information concerning overdue child support to credit bureaus on a much broader basis. Moreover, it is in the interest of credit bureaus to request such information because overdue child support adversely affects an obligated parent's ability to pay other debts. Public Law 102-537, the Ted Weiss Child Support Enforcement Act of 1992, amends the Fair Credit Reporting Act to require consumer credit reporting agencies to include in any consumer report information on child support delinquencies provided by or verified by State or local CSE agencies, which antedates the report by 7 years. FEDERAL GARNISHMENT The 1975 CSE legislation included a provision allowing garnishment of wages and other payments by the Federal Government for enforcement of child support and alimony obligations. The 1975 law provides that moneys (the entitlement to which is based upon remuneration for employment) payable by the United States to any individual are subject to legal proceedings brought for the enforcement against such individual of his legal obligation to provide child support or make alimony payments. The law sets forth in detail the procedures that must be followed for service of legal process and specifies that the term ``based upon remuneration for employment'' includes wages, periodic benefits for the payment of pensions, retirement or retired pay (included social security and other retirement benefits), and other kinds of Federal payments. The following Federal income sources may not be garnished: any payment as compensation for death under any Federal program, Federal black lung benefits, veterans' pensions or compensation benefits for a service-related disability or death, and amounts paid to defray employment- related expenses. MILITARY ALLOTMENTS Public Law 97-248, the Tax Equity and Fiscal Responsibility Act of 1982, requires allotments from the pay and allowances of any member of the uniformed service (on active duty) when he fails to make child (or child and spousal) support payments. The requirement arises when the service member fails to make support payments in an amount at least equal to the value of 2 months' worth of support. Provisions of the Federal Consumer Credit Protection Act apply, limiting the percentage of the member's pay that is subject to allotment. The amount of the allotment is the amount of the support payment, as established under a legally enforceable administrative or judicial order. INTERSTATE ENFORCEMENT State laws require parents to be responsible for the financial support of their children. During the 1930's and 1940's, such laws were used to establish and enforce support obligations when the noncustodial parent, custodial parent, and child lived in the same State. But when noncustodial parents lived out of State, enforcing child support was cumbersome and ineffective. Often the only option in these cases was to seek to extradite the noncustodial parent and, when successful, to jail the person for nonsupport. Extradition is the process used to bring an obligor charged with or convicted of a crime (in this case, criminal nonsupport) from an asylum State back to the State where the children are located. This procedure, rarely used, generally punished the irresponsible parent, but left the abandoned family without financial support. A University of Michigan study of separated parents nationwide found that 12 percent lived in different States 1 year after divorce or separation. That proportion increased to 25 percent 3 years after, and to 40 percent 8 years after. Estimates based on the Federal income tax refund offset program and other sources suggest that approximately 30 percent of child support cases involve interstate residency of the custodial and noncustodial parents.\5\ --------------------------------------------------------------------------- \5\Weaver, Ray L., and Robert G. Williams. ``Problems With URESA: Interstate Child Support Enforcement Isn't Working But Could.'' Paper prepared for ABA Third National Child Support Conference, May 10-12, 1989. Washington, American Bar Association 1989, p. 510 [Hereafter cited as Weaver and Williams, ``Problems With URESA''] --------------------------------------------------------------------------- Uniform Reciprocal Enforcement of Support Act (URESA) Since 1950, interstate cooperation has been promoted through the adoption by the States of URESA. This act, which was first proposed by the National Conference of Commissioners on Uniform State Laws in 1950, has been enacted, in substance, in all 50 States, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands. The act was amended in 1952 and 1958 and revised in 1968. It is generally maintained that the increasing number of children who received AFDC benefits because of the absence of their father, together with the more frequent instances in which the father lived in another State, led many States to quickly adopt URESA. In 1940, 30.3 percent of AFDC children had an able-bodied father who was living away from the home. By 1950, the figure had reached 49.3 percent. About 32 States had enacted the original version of URESA within 5 years of its promulgation by the National Conference. The purpose of URESA was to provide a system for the interstate enforcement of support orders without requiring the person seeking support to go (or have her legal representative go) to the State in which the noncustodial parent resided. Where the URESA provisions between the two States are compatible, the law can be used to establish paternity, locate an absent parent, and establish, modify, or enforce a support order. However, some observers note that the use of URESA procedures often result in lower orders for both current support and arrearages. They also contend that few CSE agencies attempt to use URESA procedures to establish paternity or to obtain a modification in a support order. Long-arm statutes Unlike URESA, interstate cases established or enforced by long-arm statutes use the court system in the State of the custodial parent rather than that of the noncustodial parent. When a person commits certain acts within a State, that person may be subjecting himself to the jurisdiction of that State, even if he does not live in that State. The long-arm of the law of the State where the event happens may reach out to grab the out-of-State person so that issues relating to the event may be resolved where it happened. Under the long-arm procedure, the State must authorize by statute that the acts allegedly committed by the defendant are those that subject the defendant to the State's jurisdiction. An example is a paternity statute stating that if conception takes place in the State and the child lives in the State, the State may exercise personal jurisdiction over the alleged father. Long-arm statute language usually speaks of extending the State's jurisdiction over an out-of-State defendant to the maximum extent permitted by the U.S. Constitution under the Fourteenth Amendment's Due Process Clause. Long-arm statutes may be used to establish paternity, establish support awards, and enforce support orders. Federal courts The 1975 CSE law mandated that the State plan for CSE require States to cooperate with other States in establishing paternity, locating absent parents, and securing compliance with court orders and authorized the use of Federal courts as a last resort to enforce an existing order in another State if that State were uncooperative. Federal law allows the U.S. district courts to be used for the enforcement of child support orders in interstate cases. If another State fails to undertake to enforce a child support order on behalf of the requesting State within a reasonable time, the requesting State may ask the OCSE to certify the case for use of the Federal courts. If the application meets certain procedural requirements and it is determined that use of the Federal courts is the only reasonable method of enforcing an order, the case is to be certified for action by the U.S. district court. (OCSE officials say that Federal courts also can establish support orders.) Section 460 of the Social Security Act says that the district courts of the United States shall have jurisdiction, without regard to any amount in controversy, to hear and determine any civil action certified by the Secretary of DHHS under section 452(a)(8) of the act. A civil action under section 460 may be brought in any judicial district in which the claim arose, the plaintiff resides, or the defendant resides. Section 452(a)(8) says that the Secretary of DHHS shall receive applications from States for permission to use the courts of the United States to enforce court orders for support against noncustodial parents and, upon a finding that (A) another State has not undertaken to enforce a court order of the originating State against the noncustodial parent within a reasonable time, and (B) that using the Federal courts is the only reasonable method of enforcing such order, approve such applications. As a condition to obtaining the certification from the Federal OCSE, the CSE agency of the initiating State must give the CSE agency of the responding State at least 60 days after first seeking assistance in enforcing the order, a 30-day warning of its intent to seek enforcement in Federal court. If the initiating State receives no response within the 30-day limit, or if the response is unsatisfactory, the initiating State may apply to the OCSE Regional Office for certification. The application must attest that the above requirements have been satisfied. Upon certification of the case, a civil action may be filed in the U.S. District Court. Although this interstate enforcement procedure has been available since enactment of the CSE program, there has only been one reported case of its use by a State (the initiating State was California, and the responding State was Texas). Interstate income withholding Interstate income withholding is a process in which the State of the custodial parent seeks the help of the State in which the noncustodial parent's income is derived to enforce a support order using the income withholding mechanism. Pursuant to Public Law 98-378, income withholding availability has been universal for all valid in-State or out-of-State orders issued or modified after October 1, 1985, and for all orders in CSE cases regardless of the date the order was issued. Although Federal law requires a State to enforce another State's valid orders through interstate income withholding, there is no Federal mandate that interstate income withholding procedures be uniform. Approaches vary from the Model Interstate Income Withholding Act to URESA registration. The preferred way to handle an interstate income withholding request is to use the interstate action transmittal form from one CSE agency to another. In CSE cases, Federal regulations required that by August 22, 1988, all interstate income withholding requests be sent to the enforcing State's central registry for referral to the appropriate State or local official. The actual wage withholding procedure used by the State in which the noncustodial parent lives is the same as that used in intrastate cases. States decide whether or not to make interstate income withholding available in non-CSE cases. Some States do not allow non-CSE interstate income withholding, insisting that all such requests be channeled through the CSE agency. In those States, it is necessary for a private attorney to refer his client to the local CSE office. 1988 law Public Law 100-485 includes some provisions affecting interstate child support enforcement. The law requires States to establish automated statewide, comprehensive case tracking and monitoring systems, which would improve each State's ability to manage interstate cases. The law also required the establishment of a 15-member commission to study interstate child support establishment and enforcement. The U.S. Commission on Interstate Child Support's report to Congress includes 120 recommendations for improving the CSE program. The report highlights the following recommendations: Establishment of an integrated, automated network linking all the States to provide quick access to locate and income information (which would include new hire information based on W-4 forms); Establishment of income withholding across State lines from the person seeking enforcement directly to the income source in the other State; Identical enactment by States of the Uniform Interstate Family Support Act (which would replace URESA); State use of early, voluntary parentage determination for child born outside of marriage and uniform evidentiary rules for contested paternity cases; Universal access to health care insurance for children of separated parents; More emphasis on staff training and increased resources to ensure that all cases can be processed on a more timely basis; and Revision of CSE funding to ensure that action is taken on cases most in need of attention.\6\ --------------------------------------------------------------------------- \6\U.S. Commission on Interstate Child Support. ``Supporting Our Children: A Blueprint for Reform.'' 1992. p. xiii. --------------------------------------------------------------------------- 1992 law Public Law 102-521, the Child Support Recovery Act of 1992, imposes a Federal criminal penalty for the willful failure to pay a past-due child support obligation with respect to a child who resides in another State that has remained unpaid for longer than a year or is greater than $5,000. For the first conviction the penalty would be a fine of not more than $5,000 and/or imprisonment for not more than 6 months; for a second conviction, a fine of up to $250,000 and/or imprisonment for up to 2 years. Other procedures that aid interstate enforcement In 1948, the National Conference of Commissioners on Uniform State Laws and the American Bar Association approved the Uniform Enforcement of Foreign Judgments Act (UEFJA), which simplifies the collection of child support arrearages in interstate cases. Revised in 1964 and adopted in only 30 States, UEFJA provides that upon the filing of an authenticated foreign (i.e., out-of-State) judgment and notice to the obligor, the judgment is to be treated in the same manner as a local one. A judgment is the official decision or finding of a court on the respective rights of the involved parties. UEFJA applies only to final judgments. As a general rule, child support arrearages that have been reduced to judgment are considered final judgments and thus can be filed under UEFJA. SUMMARY INFORMATION ON COLLECTION TECHNIQUES Table 11-7 shows the percentage of child support collections obtained through the use of selected enforcement techniques. According to the OCSE, most CSE collections come from noncustodial parents who are complying with their support orders. However, the information is not provided in the OCSE annual report, which identifies only collection techniques that are concentrated on delinquent payments. The report for fiscal year 1993 shows that 64 percent of the $8.9 billion in child support payments collected that year was obtained through the more publicized enforcement techniques: wage withholding, Federal income tax refund offset, State income tax refund offset, and unemployment compensation intercept. The remaining 36 percent is listed as collected by other means. Officials said most of these other collections come from noncustodial parents who were complying with their support orders by sending their payments to the CSE agency. The other category also included collections from noncustodial parents who voluntarily sent money for their children even though a support order had never been established for them (less than one percent of all collections), and other enforcement techniques, such as liens against property, by posting of bonds or securities, and use of the full IRS collection procedure. TABLE 11-7.--CHILD SUPPORT COLLECTIONS MADE BY VARIOUS ENFORCEMENT TECHNIQUES, FISCAL YEAR 1989-93 [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- Child support collections Percent of total collections Enforcement techniques ------------------------------------------------------------------------------------ 1989 1990 1991 1992 1993 1989 1990 1991 1992 1993 ---------------------------------------------------------------------------------------------------------------- Wage withholding........... $2,144 $2,636 $3,266 $3,971 4,743 40.9 43.9 47.4 49.9 53.2 Federal income tax offset.. 411 444 476 585 570 7.9 7.4 6.9 7.3 6.4 State income tax offset.... 62 70 72 80 78 1.2 1.2 1.0 1.0 .9 Unemployment compensation intercept................. 54 80 143 269 286 1.0 1.3 2.1 3.4 3.2 Other\1\................... 2,570 2,780 2,929 3,060 3,232 49.0 46.2 42.6 38.4 36.3 ------------------------------------------------------------------------------------ Total collections.... 5,241 6,010 6,886 7,965 8,909 100.0 100.0 100.0 100.0 100.0 ---------------------------------------------------------------------------------------------------------------- \1\The OCSE does not designate the source of most of these collections. According to the OCSE, the majority of collections in the other category came from noncustodial parents who were complying with their support orders by sending their payments to the CSE agency. Moreover, the OCSE officials maintain that reliability of collection data lessen when specified by techniques of collection. Source: U.S. Department of Health and Human Services. Office of Child Support Enforcement. ``Child Support Enforcement Statistics, Fiscal Year 1993.'' BANKRUPTCY AND CHILD SUPPORT ENFORCEMENT The 1975 child support legislation included a provision that stated that an assigned child support obligation was not discharged in bankruptcy (i.e., a person filing bankruptcy was not relieved of his child support obligation). In 1978 this provision was repealed and incorporated into the 1978 uniform law on bankruptcy. The bankruptcy law also listed exceptions to discharge including alimony, maintenance or support due a spouse, former spouse, or child of the debtor in connection with a separation agreement, divorce decree, or property settlement. In 1981, the provision stating that a child support obligation assigned to the State as a condition of AFDC eligibility is not dischargeable in bankruptcy was reinstated. In 1984, a provision was enacted that provided that child support obligations that have been assigned to the State as part of the CSE program may not be discharged in bankruptcy, regardless of whether they are on behalf of an AFDC family or a non-AFDC family and regardless of whether the debtor was married to the child's other parent. LINKAGE BETWEEN AFDC AND CHILD SUPPORT ENFORCEMENT The Social Security Act requires every State operating an AFDC program to run a CSE program. Federal law requires applicants for, and recipients of, AFDC to assign their support rights to the State in order to receive AFDC. In addition, each applicant or recipient must cooperate with the State if necessary to (1) establish the paternity of a child born outside of marriage, and (2) obtain child support payments, unless it is found not to be in the best interest of the child to do so. Under the law, AFDC recipients or applicants may be excused from the requirement of cooperation if the AFDC agency determines that good cause for noncooperation exists, taking into consideration the best interests of the child on whose behalf aid is claimed. The determination is made according to standards in Federal regulations, the so-called good cause regulations. If good cause is found not to exist and if the relative with whom a child is living still refuses to cooperate, the relative is to be disqualified from AFDC and the child's benefits are to be sent in the form of a protective payment to a person other than the caretaker relative. (The same is true of refusal to assign to the State support rights: the child will not be disqualified from AFDC, but will receive AFDC benefits only in the form of protective payments.) Circumstances under which cooperation may be found to be against the best interests of the child are defined to include: situations in which cooperation is reasonably anticipated to result in physical or emotional harm to the child, or physical or emotional harm to the caretaker relative, of such nature that it reduces the capacity to care for the child adequately; situations in which the child was conceived as a result of incest or rape; and situations in which legal procedures are underway for the child's adoption. Families who do not receive AFDC assistance also are eligible for CSE and paternity determination services if they apply for services. FUNDING The Federal Government currently reimburses each State 66 percent of the cost of administering its CSE program. When the program began in 1975, the Federal match was 75 percent. In 1982, Public Law 97-248 reduced the Federal match to 70 percent (fiscal years 1983-87). In 1984 Public Law 98-378 reduced the Federal match to 68 percent in fiscal year 1988 and fiscal year 1989, and to 66 percent in fiscal year 1990 and years thereafter. These costs include moneys for locate services, paternity establishment, establishment of child support orders, and enforcement services. The Federal Government also pays 90 percent of State costs of developing and improving management information systems, including expenditures on the hardware (i.e., computers) and 90 percent of laboratory costs incurred in determining paternity. The Federal Government pays most of the costs of State CSE programs. States receive Federal funds to pay a majority share of the costs of operating CSE programs plus Federal incentive payments based on total collections and cost-effectiveness of their programs. State programs receive additional funding from the State government. Although the actual dollars contributed by the Federal Government are greater, the level of funding allocated by the State or local government determines the amount of resources available to the CSE agency. INCENTIVE PAYMENTS TO STATES In most States, the State share of CSE collections made on behalf of AFDC families can be calculated by subtracting the Federal medical assistance percentage from 100 percent (in some States, local governments also are entitled to part of the State's share of collections). In addition, States and localities receive Federal CSE incentive payments that come entirely from the Federal share of child support collections. The revised incentive formula, effective October 1, 1985, was designed to encourage States to develop CSE programs that emphasize collections on behalf of both AFDC and non-AFDC families, and to improve the program's cost effectiveness. Under the incentive formula, each State receives an incentive payment equal to at least 6 percent of the State's total amount of AFDC support collections for the year, plus at least 6 percent of the State's total amount of non-AFDC collections for the year. The amount of the State's incentive payment could reach a high of 10 percent of the AFDC collections plus 10 percent of the non-AFDC collections, depending on the State's ratio of child support collections to administrative costs. (See table 11-8.) There is a limit, however, on the incentive payment for non-AFDC collections. The incentive payments for such collections may not exceed 115 percent of incentive payments for AFDC collections. (This percentage was 100 percent in fiscal year 1986 and fiscal year 1987, 105 percent in fiscal year 1988, 110 percent in fiscal year 1989, and 115 percent in fiscal year 1990 and each year thereafter.) TABLE 11-8.--INCENTIVE PAYMENT STRUCTURE ------------------------------------------------------------------------ Incentive payment received (percent) ------------------------------------------------------------------------ Collection-to-cost ratio: Less than 1.4 to 1....................................... 6.0 At least 1.4 to 1........................................ 6.5 At least 1.6 to 1........................................ 7.0 At least 1.8 to 1........................................ 7.5 At least 2.0 to 1........................................ 8.0 At least 2.2 to 1........................................ 8.5 At least 2.4 to 1........................................ 9.0 At least 2.6 to 1........................................ 9.5 At least 2.8 to 1........................................ 10.0 ------------------------------------------------------------------------ The incentive formula seeks to assure that States provide equitable treatment for both AFDC and non-AFDC families. Under the old system, a State that incurred administrative costs to collect support for a non-AFDC family did not receive an incentive payment since incentives were paid only for AFDC collections. This practice generally resulted in the neglect of non-AFDC cases. The new incentive formula aims to remedy that by making payments for non-AFDC collections. At the same time it has placed a limit on non-AFDC incentive payments so as to lessen the possibility that States would merely transfer to the CSE program child support activities which were previously financed out of State and/or local moneys, with no increase in the level of child support services. At State option, laboratory costs (for blood testing, etc.) to establish paternity may be excluded from the State's administrative costs in calculating the State's collection-to- cost ratios for purposes of determining the incentive payment. In addition, for purposes of calculating these ratios, interstate collections are credited to both the initiating and responding States. Incentives are paid according to the collection-to-cost ratios (ratio of AFDC collections to total administrative costs and ratio of non-AFDC collections to total administrative costs) shown in table 11-8. Before 1984, a State that initiated a successful action to collect child support from another State generally did not receive an incentive payment. Rather, the jurisdiction that made the collection received the incentive payment. Public Law 98-378 provides that both States involved in an interstate collection be credited with the collection for purposes of computing incentive payments. This double-counting is intended to encourage States to pursue interstate cases as energetically as they pursue intrastate cases. States now will pay incentive for interstate cases to themselves out of the Federal share of collections they distribute. In addition to substantial Federal reimbursement, States may use fees and cost recovery to help finance the CSE program (discussed later). Such fees and costs recovered from non-AFDC cases must be subtracted from the State's total administrative cost before calculating the Federal reimbursement amount; however, the lower administrative cost figure may result in greater Federal incentive payments by improving the State's collection-to-cost ratio. PAYMENTS TO AFDC FAMILIES Families receiving AFDC benefits automatically qualify (free of charge) for CSE services. Their cases are referred to the CSE agency. Federal law requires AFDC families (and applicants), as a condition of eligibility for aid, to assign their support rights to the State, to cooperate with the State in establishing the paternity of a child born outside of marriage, and to cooperate with the State in obtaining support payments. The provision requiring the AFDC applicant or recipient to assign to the State her rights to support covers both current support and any arrears which have accrued, and lasts as long as the family receives AFDC. When the family no longer receives AFDC, the mother or caretaker relative regains her right to collect current support, but if there are arrears, the State may claim those arrears up to the amount paid out as AFDC benefits. Child support payments made on behalf of a child receiving AFDC are supposed to be paid to the CSE agency rather than directly to the family. If the child support collection is insufficient to disqualify the family from receiving AFDC payments, the family receives its full monthly AFDC grant plus the first $50 of the child support payment made in the child's behalf for that month. The remainder of that monthly child support payment is distributed to reimburse the State and Federal Governments in proportion to their assistance to the family. If the family's income, including the child support payment, is sufficient to make the family ineligible for AFDC payments, the family's AFDC benefits are ended, and future child support payments are paid directly from the noncustodial parent to the family. Supplemental payments in ``fill-the-gap'' States Notwithstanding the above procedures, some States are required to provide monthly supplemental payments to AFDC recipients who have less disposable income now than they would have had in July 1975 because child support is paid to the CSE agency instead of directly to the family. States required to pay supplemental payment are often referred to as ``fill-the- gap'' States. These States pay less assistance than their full need standard, and allow recipients to use child support income to make up all or part of the difference between the payment made by the State and the State's need standard. Section 402(a)(28) of the Social Security Act requires States that had a fill-the-gap policy in 1975 and currently have such a policy, to add to the AFDC benefit all or part of the child support collection (the amount which would have caused no reduction in the AFDC benefit if it had been paid directly to the family). Information obtained from the Office of Child Support Enforcement (June 1990) indicates that seven States that had fill-the-gap policies in July 1975 also have them now and thus must follow the benefit calculation rules of section 402(a)(28) when taking account of child support collections for AFDC families. They are: Georgia, Maine, Mississippi, South Carolina, Tennessee, Virginia, and Wyoming. Another 13 jurisdictions, which had fill-the-gap policies in July 1975, no longer have them. Were they to resume a fill-the-gap practice, they also would be required to treat child support collections as though they were paid directly to the family. These jurisdictions are: Alabama, Alaska, Arizona, Arkansas, Delaware, Indiana, Missouri, New Mexico, Puerto Rico, Texas, Virgin Islands, Washington, and West Virginia. PAYMENTS TO NON-AFDC FAMILIES Families who do not receive AFDC assistance also are eligible if they apply for services, unless they have left the AFDC rolls and are automatically provided continued CSE services. The entire amount of child support payments collected on behalf of a non-AFDC child is paid directly to the family. Even so, the State still receives the Federal reimbursement (currently 66 percent) for the costs of establishing and enforcing child support obligations for these non-AFDC cases. In some States, parents may be ordered by the court to make and receive support payments directly or through a court registry or State child support clearinghouse without any formal application to the CSE agency. When this occurs, the money collected, since it is outside the CSE system, cannot be counted in determining the amount of Federal reimbursement to the State. Non-AFDC families participate in the CSE program on a voluntary basis, except for Medicaid-only cases. Federal funding for services to non-AFDC families was made a permanent part of the program in 1980 by Public Law 96-272. Federal law requires the State to charge an application fee of up to $25 for CSE services for non-AFDC families. Some States charge the full $25, some less, and others use State funds to pay the fee or seek collection from the noncustodial parent. In addition, CSE agencies are allowed to recover the actual costs of their services to non-AFDC families from either the custodial parent or the noncustodial parent, once current support has been covered. In practice, this means that costs are deducted from arrears that otherwise would be paid directly to the non-AFDC client. Recovery of these costs is contingent on payment of the arrears. However, it is the practice of most States not to recover the cost of their services. The amount of fees collected by the States for purposes of processing non- AFDC cases plus the amount of processing costs recovered by the States in excess of the fees charged decreases the amount of States' expenditures eligible for Federal CSE funding. Moreover, any interest earned on money from fees or recovered costs is considered CSE program income and must be used by the States to offset program expenditures. In fiscal year 1992, fees received and costs recovered for non-AFDC cases amounted to $29.2 million. Several States try to recoup costs in non-AFDC cases by deducting their costs from the actual child support payment before sending it to the custodial parent. Because some of these custodial parents are only dollars away from qualifying for AFDC and because it generally is easier to get on welfare than to earn one's way off, some policymakers argue that this practice can result in welfare dependency; others maintain that it is unfair to the children. ARREARAGES To receive AFDC benefits, a custodial parent must assign to the State her right to collect child support payments. This assignment covers current support and any arrears, and lasts as long as the family receives AFDC. When the family stops receiving AFDC, the assignment ends. The mother regains her right to collect current support. However, if there are arrears, the State may claim those arrears up to the amount paid out in AFDC. As described earlier, when a mother receives AFDC and the CSE agency makes a collection on her behalf, it must distribute the collection in accordance with Federal law. First, up to the first $50 collected is given to the family (a disregard that does not affect the family's AFDC benefit or eligibility status). Second, the Federal and State Governments are reimbursed for the AFDC benefits paid to the family in that month. Third, if there is money left, the family receives it up to the amount of the current month's child support obligation. Fourth, if there is still money left, the State keeps it to reimburse itself for any arrears owed to it under the AFDC assignment. If no arrears are owed the State, the money is used to pay arrears owed to the family. Such moneys are considered income under the AFDC program and would reduce the family's AFDC benefit. In the case of non-AFDC families, the sequence is different. First, if the family never received AFDC, all child support collections made on the family's behalf are sent to the family. Second, if the family had received AFDC before, collections go toward payment on the current month's support obligation. If any money is left, and it is considered an arrearage, the State decides whether the arrears will be paid to the family or State first. If the arrears are paid to the State, they are distributed between the Federal and State Governments as reimbursement for past AFDC benefits. Third, if there are no arrears, the collection is forwarded to the family and is credited toward future CSE payments. According to the OCSE 17th annual report, in fiscal year 1992, the amount of total prior year support due, i.e., arrearages, amounted to $23.9 billion; $1.8 billion (8 percent) was paid in fiscal year 1992 on prior years' arrears. Distribution of Collections Collections made on behalf of families receiving AFDC directly offset AFDC benefit costs and (except for the first $50 of current monthly support payments, which go directly to the family, and are disregarded as income for AFDC purposes) are shared between the Federal Government and the States in accordance with the matching formula used for the individual State's AFDC program. In general, the initial determination of the Federal share of CSE collections is based on the rate of Federal financial participation in AFDC benefit costs. The Federal share of AFDC benefit costs generally is determined by the Federal medical assistance percentage. The Federal share of AFDC benefit costs (and, therefore, the Federal share of CSE/AFDC collections) is inversely related to State per capita income; within limits, the lower the State per capita income, the greater the Federal share. Nationally, this figure is about 55 percent. It ranges from a minimum of 50 percent to a statutory maximum of 83 percent. In fiscal year 1993, the highest matching rate was 79.01 percent (the Federal match for AFDC benefit costs in Mississippi). In fiscal year 1994, Mississippi's Federal AFDC matching rate dropped to 78.85 percent. Even though the national average (gross) Federal share of AFDC collections is about 56 percent, Federal funds reimburse States for 66 percent of their CSE administrative costs. This lowers the net Federal share of support collections. USE OF SUPPORT COLLECTIONS The Federal share of child support collections paid by noncustodial parents of children receiving AFDC benefits is used first to pay incentives to States on their AFDC and non- AFDC collections. The remainder is used to offset Federal AFDC benefit costs. In fiscal year 1993, incentive payments amounted to $339 million, 44 percent of the Federal share of CSE collections. Payments made on behalf of non-AFDC families go to the family. Neither Federal law nor regulations dictate the use of the State's share of child support savings; there are no Federal strings attached. However, child support collections in and of themselves can (1) prevent families from qualifying for welfare programs, (2) remove families from welfare rolls when the amount collected is sufficient, (3) partially offset State AFDC payments to families whose monthly child support is insufficient to remove them from welfare rolls, (4) recover or prevent the need for Medicaid payments through reimbursement from private health insurers in cases where the noncustodial parent has coverage, or where coverage is available, and (5) offset AFDC foster care costs. In addition, many States have chosen to reinvest child support savings back into the CSE program to increase the quality and effectiveness of the program. Some States use child support savings in other children and family programs. Others use child support savings wherever the State budget indicates the need. EXTENT TO WHICH FEDERAL GOVERNMENT BEARS COST OF THE CHILD SUPPORT ENFORCEMENT PROGRAM One of the purposes of the CSE program is to reduce public expenditures on welfare by obtaining support from noncustodial parents on an ongoing basis. The CSE program also provides services to nonwelfare parents who apply for services. One purpose of the non-AFDC component of the program is welfare cost avoidance, that is, preventing families from going on AFDC (or other welfare programs) by collecting child support from noncustodial parents. Even with the reduced Federal matching rate (from 75 percent in 1975 to 66 percent in 1991), the Federal Government has never recovered its costs from the CSE program. Under the current financing arrangement, States can run inefficient programs and still make a profit from the CSE program. The cost of the CSE program to the Federal Government, however, has continued, since 1984, to increase steadily. To illustrate, assume that an inefficient State spends $200 to collect a $300 child support payment from a noncustodial parent whose children are receiving AFDC benefits. Such a State (with a collection-to-cost ratio of 1.5) would qualify for an incentive payment of $19.50 (6.5 percent of AFDC collections, see table 11-9). Since the State pays 34 percent of administrative costs, the collection would cost the State $68, but the State's share of the collection would total $144.50. This means that the State would pay 34 percent of the cost and get 48 percent of the collection. Thus, the net gain to the State would be $76.50.\7\ On the other hand, the collection would cost the Federal Government $132, and its share of the collection would amount to $105.50. Thus, the collection would cost the Federal Government $26.50. In other words, the Federal Government would pay 66 percent of the cost and get 35 percent of the collection. The recipient would get nearly 17 percent of the collection (the $50 passthrough). Table 11-11 shows that although the CSE program is a net gain for the States, it is a significant net cost to the Federal Government. --------------------------------------------------------------------------- \7\This is a simplified example. Actually, the State's share of savings is determined by adding the State's share of AFDC collections to the State's AFDC and non-AFDC incentive payments. Its share of total administrative costs is subtracted from these revenues. The calculations assume a 50-50 matching rate for AFDC benefits. --------------------------------------------------------------------------- TABLE 11-9.--STATE AND FEDERAL SHARE OF CHILD SUPPORT COLLECTIONS [AFDC Family] ------------------------------------------------------------------------ Cost of Collections collections Net gain ------------------------------------------------------------------------ State share.......... $125+$19.50=$144.50 $68 +$76.50 Federal share........ 125- 19.50= 105.50 132 -26.50 Payment to recipient. 50.00 0 + 50.00 -------------------------------------------------- Total.......... 300.00 200 +100.00 ------------------------------------------------------------------------ The point at which a State breaks even (exactly recovers collection costs) in child support payments on behalf of AFDC recipients primarily depends on the share of AFDC benefit costs that it pays, and this, in turn, is related inversely to State per capita income. This can be shown by calculating the approximate breakeven ratios (collections needed per dollar of administrative cost) for States with different Federal AFDC matching rates, but the same collection cost per case. In the followin