SECTION 9. CHILD SUPPORT ENFORCEMENT PROGRAM --------------------------------------------------------------------------- The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 changed this program; see appendix L for details. --------------------------------------------------------------------------- CONTENTS Background Overview Demographic Trends Program Trends The Federal Role The State Role The Child Support Enforcement Process Locating Absent Parents Establishing Paternity Establishing Orders Reviewing and Modifying Orders Promoting Medical Support Collecting Child Support Interstate Enforcement Bankruptcy and Child Support Enforcement Automated Systems Audits and Financial Penalties Assignment and Distribution of Child Support Collections Funding of State Programs How Effective is Child Support Enforcement? Impact on Taxpayers Impact on Poverty Impact on National Child Support Payments Legislative History Statistical Tables References BACKGROUND Overview In 1950, when only a small minority of children were in mother-only families, the Federal Government took its first steps into the child support arena. Congress amended the Aid to Families with Dependent Children (AFDC) law by requiring State welfare agencies to notify law enforcement officials when benefits were being furnished to a child who had been abandoned by one of his parents. Presumably, local officials would then undertake to locate nonresident parents and make them pay child support. From 1950 to 1975, the Federal Government confined its child support efforts to these welfare children. With this exception, most Americans thought that child support establishment and collection was a domestic relations issue that should be dealt with at the State level by the courts. By the early 1970s, however, Congress recognized that the composition of the AFDC caseload had changed. In earlier years the majority of children needed financial assistance because their fathers had died; by the 1970s, the majority needed aid because their parents were separated or divorced or because their mother was never married to their father. The Child Support Enforcement and Paternity Establishment program (CSE), enacted in 1975, was a response by Congress to reduce public expenditures on welfare by obtaining support from noncustodial parents on an ongoing basis, to help non-AFDC families get support so they could stay off public assistance, and to establish paternity for children born outside marriage so child support could be obtained for them. The 1975 legislation (Public Law 93-647) added a new part D to title IV of the Social Security Act. This statute, as amended, authorizes Federal matching funds to be used for enforcing support obligations by locating nonresident parents, establishing paternity, establishing child support awards, and collecting money. Since 1981, child support agencies have also been permitted to collect spousal support on behalf of custodial parents, and in 1984 they were required to petition for medical support as part of most child support orders. Basic responsibility for administering the program is left to States, but the Federal Government plays a major role in: dictating the major design features of State programs; funding, monitoring and evaluating State programs; providing technical assistance; and giving direct assistance to States in locating absent parents and obtaining support payments. The program requires the provision of child support enforcement services for both AFDC and non-AFDC 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 obtain additional information. Local family and domestic courts and administrative agencies handle the actual establishment and enforcement of child support obligations according to Federal, State, and local laws. With minor exceptions, the child support program does not provide services aimed at other issues between parents, such as property settlement, custody, and access to 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 (or who formerly received benefits) under the 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. In the non-AFDC Program, States also can charge fees on a sliding scale, pay the fee out of State funds, or recover the fees from the noncustodial parent. Demographic Trends The need for an effective child support program is clearly supported by a brief review of the demographic trends of the American family. By 1994, there were an estimated 11.4 million single-parent families with children under age 18; about 9.9 million (87 percent) maintained by the mother and roughly 1.6 million maintained by the father. It appears that the rate of growth in the number of single parents has stabilized (Office of Child Support, 1995a, p. 5). The average annual percent increase in the number of one-parent families was 3.9 percent from 1990-94 and 3.4 percent from 1980-90 as compared with 6 percent from 1970-80. In 1994, one-parent families comprised 31 percent of all families. The corresponding share of single- parent families in 1970 was 13 percent. In 1994, about 39 percent of the mothers had never been married, 36 percent were divorced, 21 percent were separated from their spouse, and about 5 percent were widowed (U.S. Bureau of the Census, 1994, p. xviii). Of equal concern, dynamic estimates indicate that at least half of all children born in the United States during the late 1970s and early 1980s will live with a single parent before reaching adulthood. For black children, the projection is about 80 percent (Bumpass, 1984). Currently, nearly one-fourth of the 69 million children under age 18 living in the United States reside in a one-parent family. Moreover, a 1990 current population survey indicated that about 16 percent of children living in married-coupled families were living with a stepparent. Although the number of families with a mother who has divorced has tripled since 1970, the number with a mother who has never married has increased fifteenfold from 248,000 to 3,829,000. In these latter cases, paternity must be determined before the other parent has a legal obligation to financially support the child. The 3.8 million families maintained by a never-married mother in 1994 represent a major concern because only about one-third of the children in these families have had their paternity established; for the other two-thirds, a child support obligation cannot be established until a paternity determination is made. Poverty is endemic among mother-headed families. In 1994, 44 percent of the 8.7 million families maintained solely by the mother with children under 18 had incomes below the poverty threshold. Almost 12 percent of these families were poor despite the fact that the mother worked year round, full time. Today, an unprecedented number of children live in single- parent homes, nearly half are poor, and many lack adequate or any support from the nonresident parent. Program Trends In response to these demographic trends, the Federal-State child support program grew rapidly. By 1995, about half of all child support eligible families were actually receiving government funded child support services. Most of the information in this chapter applies to the families receiving these government services. Table 9-1 summarizes trends for the child support program since 1978. In 1995, almost $3 billion was spent by State child support programs to collect $10.8 billion. The combined Federal-State program had more than 51,600 employees. A sum of $3.60 was collected for every $1 of administrative expense, up by 25 percent from the low point of only $2.89 per dollar of administrative expense in 1982, but down nearly 10 percent since 1992, the year of peak child support efficiency. In addition, over 5 million absent parents were located; 661,000 paternities were established; over 1 million support orders were established; more than 3.4 million cases had collections; 269,333 families were removed from AFDC because of child support collections (not shown in table 9-1); and 13.6 percent of AFDC payments were recovered as a result of child support enforcement. These program trends demonstrate that more and more child support activities and outcomes are achieved by the Federal- State program. But whether these trends indicate program success is a complex matter. We turn now to a detailed explanation of the Federal-State child support program and both its achievements and problems. THE FEDERAL ROLE The Federal statute requires the national child support program to be administered by a separate organizational unit under the control of a person designated by and reporting directly to the Secretary of the Department of Health and Human Services (HHS). Presently, this office is known as the Federal Office of Child Support Enforcement (OCSE). The Family Support Act of 1988 required the appointment of an Assistant Secretary for Family Support within HHS to administer a number of programs, including the Child Support Enforcement Program. Currently, this position is entitled the Assistant Secretary for the Administration for Children and Families. A primary responsibility of the assistant secretary is to establish 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 child is living. In addition to this broad statutory mandate, the assistant secretary 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 assistant secretary to provide technical assistance to States to help them establish effective systems for collecting support and establishing paternity. To fulfill this requirement, 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 assisting major urban areas in improving program performance, have also been undertaken by OCSE. TABLE 9-1.--SUMMARY OF NATIONAL CHILD SUPPORT PROGRAM STATISTICS, SELECTED FISCAL YEARS 1978-95 [Numbers in thousands, dollars in millions] -------------------------------------------------------------------------------------------------------------------------------------------------------- Year ---------------------------------------------------------------------------------------------------------------------- 1978 1980 1982 1984 1986 1988 1989 1990 1991 1992 1993 1994 1995 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total child support collections.. $1,047 $1,478 $1,770 $2,378 $3,246 $4,605 $5,241 $6,010 $6,886 $7,965 $8,907 $9,850 $10,753 In 1995 dollars \1\.......... 2,407 2,715 2,726 3,395 4,363 5,783 6,281 6,861 7,483 8,386 9,394 10,129 10,753 Total AFDC collections \2\....... 472 603 786 1,000 1,225 1,486 1,593 1,750 1,984 2,259 2,416 2,550 2,693 Federal...................... 311 246 311 402 369 449 458 533 626 738 777 762 824 State........................ 148 274 354 448 424 525 563 620 700 787 847 891 941 Total non-AFDC collections....... 575 874 984 1,378 2,019 3,119 3,648 4,260 4,902 5,705 6,491 7,300 8,060 Total administrative expenditures 312 466 612 723 941 1,171 1,363 1,606 1,804 1,995 2,241 2,556 2,991 Federal...................... 236 349 459 507 633 804 938 1,061 1,212 1,343 1,517 1,741 2,081 State........................ 76 117 153 216 308 366 426 545 593 652 724 816 910 Federal incentive payments to States and localities........... 54 72 107 134 158 222 266 264 278 299 339 407 400 Average number of AFDC cases in which a collection was made..... 458 503 597 647 582 621 658 701 755 836 879 926 1,050 Average number of non-AFDC cases in which a collection was made.. 249 243 448 547 786 1,083 1,247 1,363 1,555 1,749 1,958 2,169 2,405 Number of parents located........ 454 643 779 875 1,046 1,388 1,628 2,062 2,577 3,706 4,499 4,204 5,082 Number of paternities established 111 144 173 219 245 307 339 393 472 512 554 592 661 Number of support obligations established..................... 315 374 462 573 731 871 938 1,022 \4\ 821 879 1,026 1,025 1,050 Percent of AFDC assistance payments recovered through child support collections............. (\3\) 5.2 6.8 7.0 8.6 9.8 10.0 10.3 10.7 11.4 12.0 12.5 13.6 Total child support collections per dollar of total administrative expenses......... 3.35 3.17 2.89 3.29 3.45 3.93 3.84 3.74 3.82 3.99 3.98 3.86 3.60 -------------------------------------------------------------------------------------------------------------------------------------------------------- \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, U.S. Department of Health and Human Services. The Child Support Enforcement amendments of 1984 (Public Law 98-378) extended the research and demonstration authority in section 1115 of the Social Security Act to the Child Support Enforcement Program. This authority makes 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. The 1984 amendments also authorize $15 million for each fiscal year after 1986 for special project grants to promote improvement in interstate enforcement. The Assistant Secretary for Children and Families has full responsibility for the evaluation of the Child Support Enforcement Program. 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 not more than 2 percent for the first failure to comply substantially with the standards and requirements, at least 2 but not more than 3 percent for the second failure, and at least 3 but not more than 5 percent for the third and subsequent failures. The statute creates several Federal mechanisms to assist 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 assistant secretary must approve a State's application for permission to use the courts of the United States to enforce orders upon a finding that either another State has not enforced the court order of the originating State within a reasonable time or Federal courts are the only reasonable method of enforcing the order. Although Congress authorized the use of Federal courts to enforce interstate cases, this mechanism has gone unused, apparently because States view it as costly and complex. Finally, the statute 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 noncustodial 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 also must make available the services of the FPLS to any State that wishes to locate a missing parent or child for the purpose of enforcing any Federal or State law involving the unlawful taking or restraint of a child or the establishment or maintenance of a child custody or visitation order. THE STATE ROLE The Social Security Act requires every State operating an AFDC Program to conduct a child support enforcement program. Federal law requires applicants for, and recipients of, AFDC to assign their support rights to the State in order to receive benefits. In addition, each applicant or recipient must cooperate with the State to establish the paternity of a child born outside marriage and to obtain child support payments. 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. This 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.) Cooperation may be found to be against the best interests of the child if cooperation can be anticipated to result in physical or emotional harm to the child or caretaker relative; if the child was conceived as a result of incest or rape; or if legal procedures are underway for the child's adoption. Each State is required to designate a single and separate organizational unit of State government to administer its child support 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 a social or human services umbrella agency which also administers the AFDC Program. However, Florida, Massachusetts, Rhode Island, Arkansas, and Alaska have placed the agency in the department of revenue and Guam, Hawaii, Texas, and the Virgin Islands 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 OCSE, which set forth the details of their child support program. States must also enter into cooperative arrangements with 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 also must operate a parent locator service to find 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 securing compliance with an order issued by another State. States are required to use several enforcement tools. They must use the Internal Revenue Service (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. The State Employment Security Agency (part of the Federal-State Unemployment Insurance System), 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. Other enforcement techniques States must use include: 1. Imposing liens against real and personal property for amounts of overdue support; 2. Withholding State tax refunds payable to a parent who is delinquent in support payments; 3. Reporting the amount of overdue support to a consumer credit bureau upon 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 that payments in cases not enforced by the State must be made through the State's income withholding system if either the custodial or noncustodial parent requests that they be made in this manner. Each State's plan must provide that the child support agency will attempt to secure support for all AFDC children. The State must also provide in its plan that it will undertake to establish the paternity of an AFDC child born out of wedlock. These requirements apply to all cases except those in which the State finds, in accordance with standards established by the Secretary, the best interests of the child would be violated. 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. 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 under title IV-E of the Social Security Act. State child support agencies are also required 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. In addition, States must provide services to families covered by Medicaid who are referred to the State IV-D agency from the State Medicaid agency. With respect to non-AFDC families, States must provide, once an application is filed with the State agency, the same child support collection and paternity determination services which are provided 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 noncustodial parents and are to be collected only after the full amount of the support has been paid to the child. States may also recover costs in excess of the application fee from either the custodial or 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. 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. Finally, each State must comply with any other requirements and standards that the Secretary determines to be necessary to the establishment of an effective child support program. THE CHILD SUPPORT ENFORCEMENT PROCESS The goal of the child support program is to combine these Federal and State responsibilities and activities into an efficient machine that provides seven basic products: locating absent parents, establishing paternity, establishing child support orders, reviewing and modifying orders, promoting medical support, collecting and distributing support, and enforcing child support across State lines. Each of these services deserves extensive discussion. Locating Absent Parents In pursuing cases, child support officials try to obtain a great deal of information and several documents from the custodial parent or other sources. These include the name and address of the noncustodial parent; the noncustodial 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 noncustodial parents that might help locate them. 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 sources such as telephone directories, motor vehicle registries, tax files, and employment and unemployment records. 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, the National Personnel Records Center, and State Employment Security Agencies. The FPLS provides Social Security numbers, addresses, and employer and wage information to State and local child support agencies to establish and enforce child support orders. The FPLS obtains employer addresses and wage and unemployment compensation information from the State employment security agencies. This information is very useful in helping child support officials work cases in which the custodial parent and children live in one State and the noncustodial parent lives or works in another State. Employment data are updated quarterly by employers reporting to their State employment security agency; unemployment data are updated continually from State unemployment compensation payment records. The FPLS conducts weekly or biweekly matches with most of the agencies listed above. Each agency runs the cases against its data base and the names and Social Security numbers that match are returned to FPLS and through FPLS to the requesting State or local child support office. Since October 1984, OCSE has participated in Project 1099 which provides State child support agencies access to all of the earned and unearned income information reported to IRS employers and financial institutions. Project 1099, named after the IRS form on which both earned and unearned income is reported, is a cooperative effort involving State child support agencies, the Federal Office of Child Support Enforcement, and the Internal Revenue Service. 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. The Project 1099 information is used to locate noncustodial parents and to verify income and employment. Project 1099 also helps locate additional nonwage income and assets of noncustodial parents who are employees as well as income and asset sources of self-employed and nonwage earning obligors. Establishing Paternity Paternity establishment is a prerequisite for obtaining a child support order. In 1993, 31 percent of children born in the United States 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 child support 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 the 1980s, legislation was enacted that contained provisions aimed at increasing the number of paternities established. Public Law 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. Under the Family Support Act of 1988 (Public Law 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 1988 law encourages States to create simple civil procedures for establishing paternity in contested cases, requires States to have all parties in a contested paternity case take a genetic test upon the request of any party, requires the Federal Government to pay 90 percent of the laboratory costs of these tests, and permits States to charge persons not receiving AFDC for the cost of establishing paternity. The 1988 law also sets paternity establishment standards for the States and stipulates that each State is required, in administering any law involving the issuance of birth certificates, to require both parents to furnish their Social Security number, unless the State finds good cause for not doing so. Congress took additional action to improve paternity establishment in the Omnibus Budget Reconciliation Act of 1993. This law required States to have in effect, by October 1, 1993, the following: 1. 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. A law under which the voluntary acknowledgment of paternity creates a rebuttable, or at State option, conclusive presumption of paternity, and under which such voluntary acknowledgments are admissible as evidence of paternity; 3. A law under which the voluntary acknowledgment of paternity must be recognized as a basis for seeking a support order without requiring any further proceedings to establish paternity; 4. Procedures 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; if no objection is made, the test results must be admissible as evidence of paternity without the need for foundation testimony or other proof of authenticity or accuracy; 5. A law which creates 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. Procedures 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. Expedited processes for paternity establishment in contested cases and full faith and credit to determinations of paternity made by other States. The 1993 reforms also revised the mandatory paternity establishment requirements imposed on States by the Family Support Act of 1988. The most notable provision increased the mandatory paternity establishment percentage, which is backed up by financial penalties linked to a reduction of Federal matching funds for the State's AFDC Program (see Audits and Financial Penalties section). While employing these laws and procedures to establish paternity, States follow a predictable sequence of events. In cases for which paternity is not voluntarily acknowledged (which is still the majority of cases), the child support agency locates the alleged father and brings him to court or before an administrative agency where he can either acknowledge or dispute paternity. If he claims he is not the father, the court can require that he submit to parentage blood testing to establish the probability that he is the father. If the father denies paternity, a court usually decides the issue based on scientific and testimonial evidence. Through the use of testing techniques, a man may be excluded as a possible natural father, in which case no further action against him is warranted. Most States use one or more of several scientific methods for establishing paternity. These include: ABO blood typing system, human leukocyte antigen (HLA) testing, red cell enzyme and serum protein electrophoresis, and DNA testing. There are two types of testing procedures for paternity cases: (1) probability of exclusion tests, and (2) probability of paternity tests. Most laboratories perform probability of exclusion tests. This type of testing can determine with 90-99 percent accuracy that a man is ``not'' the father of a given child. There is a very high probability the test will exonerate a falsely accused man (Office of Child Support Enforcement, 1985). Since the question of paternity is essentially a scientific one, it is important that the verification process include available advanced scientific technology. Experts now agree that use of the highly reliable deoxyribonucleic acid (DNA) fingerprinting test greatly increases the likelihood of correct identification of putative fathers. DNA tests can be used either to exclude unlikely fathers or to establish a high likelihood that a given man is the father (Office of Child Support, 1990, see pp. 59-74). One expert, speaking at a recent child support conference, summed up the effectiveness of DNA testing as follows: The DNA fingerprinting technique promises far superior reliability than current blood grouping or HLA (human leukocyte antigen) analyses. The probability of an unrelated individual sharing the same patterns is practically zero. The ``DNA fingerprinting'' test, developed in England in 1985, refines the favorable statistics to an even greater degree, reducing the probability that two unrelated individuals will have the same DNA fingerprint to one in a quadrillion (Georgeson, 1989, p. 568). If the putative father is not excluded on the basis of the scientific test results, authorities may still conclude on the basis of witnesses, resemblance, and other evidence that they do not have sufficient evidence to establish paternity and, therefore, will drop charges against him. Tests resulting in nonexclusion also may serve to convince the putative father that he is, in fact, the father. If this occurs, a voluntary admission often leads to a formal court order. When authorities believe there is enough evidence to support the mother's allegation, but the putative father continues to deny the charges, the case proceeds to a formal adjudication of paternity in a court of law (McKillop, 1981, pp. 22-23). Using the results of the blood test and other evidence, the court or the child support agency, often through an administrative process, may dismiss the case or enter an order of paternity, a prerequisite to obtaining a court order requiring a noncustodial parent to pay support (U.S. General Accounting Office, 1987). In fiscal year 1995, 661,000 paternities were established, up from 232,000 in fiscal year 1985. While the number of paternities established through child support agencies reached a record high in 1995, huge disparities exist among States. In that year, for example, the percentage of children in the child support program for whom paternity was established averaged 41 percent nationally, but ranged from 4 percent in the District of Columbia to 80 percent in Wisconsin (see table 9-21 below). Establishing Orders A child support order legally obligates noncustodial parents to provide financial support for their children and stipulates the amount of the obligation (current weekly obligation plus arrearages, if any) and how it is to be paid. Many States have statutes that provide that, in the absence of a child support award, the payment of AFDC benefits to the child of a noncustodial parent creates a debt due from the parent or parents in the amount of the AFDC provided. Other States operate under the common law principle, which maintains that a father is obligated to reimburse any person who has provided his child with food, shelter, clothing, medical attention, or education. States can establish child support obligations either by judicial or administrative process. Judicial and administrative systems The courts have traditionally played a major role in the child support program. Judges have established orders, established paternity, and provided authority for all enforcement activity. The child support literature generally concludes that the judicial process offers several advantages, especially by providing more adequate protection for the legal rights of the noncustodial parent and by offering a wide range of enforcement remedies, such as civil contempt and possible incarceration. A major problem of using courts, however, is that they are often cumbersome, expensive, and time consuming. The advantages of an administrative process are very compelling. These include offering quicker service because documents do not have to be filed with the court clerk nor await the signature of the judge, eliminating time consuming problems in scheduling court time, providing a more uniform and consistent obligation amount, and saving money because of reduced court costs and attorney fees. The 1984 child support amendments required States to limit the role of the courts significantly by implementing administrative or judicial expedited processes. Most child support officials view this development as an improvement in the child support program. An expedited judicial process is a legal process in effect under a State's judicial system that reduces the processing time of establishing and enforcing a support order. To expedite case processing, a ``judge surrogate'' is given authority to: take testimony and establish a record, evaluate and make initial decisions, enter default orders if the noncustodial parent does not respond to ``notice'' or other State ``service of process'' in a timely manner, accept voluntary acknowledgement of support liability and approve stipulated agreements to pay support, and if the State establishes paternity using the expedited judicial process, to accept voluntary acknowledgement of paternity. Judge surrogates often are referred to as court masters, referees, hearing officers, commissioners, or presiding officers. The purpose of an expedited administrative process is to increase effectiveness and meet specified processing times in child support cases and, if the State so chose, paternity actions. The Federal regulations implementing this law specify that 90 percent of cases must be processed within 3 months, 98 percent within 6 months, and 100 percent within 12 months. The Federal regulations also contain additional requirements related to the expedited process. Proceedings conducted pursuant to either the expedited judicial or expedited administrative process must be presided over by an individual who is not a judge of the court. Orders established by expedited process must have the same force and effect under State law as orders established by full judicial process, although either process may provide that a judge first ratify the order. Within these broad limitations, each State is free to design an expedited process that is best suited to its administrative needs and legal traditions. Determining the amount of support orders Before October 1989, the decision of how much a parent should pay for child support was left primarily to the discretion of the court. Typically, judges examined financial statements from mothers and fathers and established awards based on children's needs. The resulting awards varied greatly. Moreover, this case-by-case approach resulted in very low awards. As late as 1991, the average amount of child support received by custodial parents was $2,961, less than $250 per month. In an attempt to increase the use of objective criteria, the 1984 child support amendments required each State to establish, by October 1987, guidelines for determining child support award amounts ``by law or by judicial or administrative action'' \1\ and to make the guidelines available ``to all judges and other officials who have the power to determine child support awards within the State.'' Federal regulations made the provision more specific: State child support guidelines must be based on specific descriptive and numeric criteria and result in a computation of the support obligation. The 1984 provision did not make the guidelines binding on judges and other officials who had the authority to establish child support obligations. However, the Family Support Act of 1988 required States to pass legislation making the State child support guidelines a ``rebuttable presumption'' in any judicial or administrative proceeding and establishing the amount of the order which results from the application of the State- established guidelines as the correct amount to be awarded. --------------------------------------------------------------------------- \1\ Fitzgerald v. Fitzgerald, No. 87-1259 (D.C. Ct. App. Oct. 10, 1989): In October 1989, the District of Columbia Court of Appeals struck down child support guidelines adopted in October 1987 in response to the Federal requirement. The court held that the Superior Court Committee that drafted the guidelines lacked authority to do so. It did not rule on the fairness of the guidelines, which awarded children a fixed fraction of the gross income of the noncustodial parent. --------------------------------------------------------------------------- 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 (31 States); ``percentage of income,'' in which the number of eligible children is used to determine a percentage of the noncustodial parents' income to be paid in child support (15 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 (Delaware, Hawaii, West Virginia). Two jurisdictions (the District of Columbia and Massachusetts) use variants of one or more of these three approaches (Williams, 1994; see table 9-24 below). The income shares approach is designed to ensure that the children of divorced parents suffer the lowest possible decline in standard of living. The approach is intended to ensure that the child receives the same proportion of parental income that he would have received if the parents lived together. The first step in the income shares approach is to determine the combined income of the two parents. A percentage of that combined income, which varies by income level, is used to calculate a ``primary support obligation.'' The percentages decline as income rises, although the absolute amount of the primary support obligation increases with income. Many States add child care costs and extraordinary medical expenses to the primary support obligation. The resulting total child support obligation is apportioned between the parents on the basis of their incomes. The noncustodial parent's share is the child support award (Office of Child Support, 1987, pp. II 67-80). The percentage of income approach is based on the noncustodial parent's gross income and the number of children to be supported (the child support obligation is not adjusted for the income of the custodial parent). The percentages vary by State. In Wisconsin, a highly publicized percentage of income guideline State, child support is based on the following proportions of the noncustodial parent's gross income: one child--17 percent; two children--25 percent; three children--29 percent; four children--31 percent; and five or more children-- 34 percent. There is no self support reserve in this approach nor is there separate treatment for child care or extraordinary medical expenses. The States that use a percentage of income approach are Alaska, Arkansas, Connecticut, Georgia, Illinois, Minnesota, Mississippi, Nevada, New Hampshire, New York, North Dakota, Tennessee, Texas, Wisconsin, and Wyoming. The Melson-Delaware formula starts with net income. \2\ After determining net income for each parent, a primary support allowance is subtracted from each parent's income. This reserve represents the minimum amount required for adults to meet their own subsistence requirements. The next step is to determine a primary support amount for each dependent child. Work-related child care expenses and extraordinary medical expenses are added to the child's primary support amount. The child's primary support needs are then apportioned between the parents. To ensure that children share in any additional income the parents might have, a percentage of the parents' remaining income is allocated among the children (the percentage is based on the number of dependent children). The States that use the Melson-Delaware approach are Delaware, Hawaii, and West Virginia. --------------------------------------------------------------------------- \2\ Net income equals income from employment and other sources plus business expense accounts if they provide the parent with an automobile, lunches, etc., minus income taxes based on maximum allowable exemptions, other deductions required by law, deductions required by an employer or union, legitimate business expenses, and benefits such as medical insurance maintained for dependents. --------------------------------------------------------------------------- Award rates In 1991, of the 11.5 million custodial parents of children under the age of 21 whose other parent was not living in the household, only 6.2 million or 54 percent had a child support award. Award rates were higher for mothers than for fathers: 56 percent of the custodial mothers had an award versus 41 percent of custodial fathers. About one-third of the 5.3 million custodial parents without awards chose not to pursue a child support award. In other cases, custodial parents were unable to locate the noncustodial parent or the noncustodial parent was unable to pay. Never-married custodial parents were the group least likely to have a child support award. Only 27 percent of never-married custodial parents had support awards compared with 69 percent of divorced custodial parents. Moreover, black custodial parents and custodial parents of Hispanic origin were much less likely than their white counterparts to have child support awards. About 64 percent of whites had child support awards, compared with 35 percent of blacks and Hispanics (U.S. Bureau of the Census, 1995, p. 13). Unresolved issues As noted by Garfinkel, Melli, and Robertson (1994), there are a host of controversial issues associated with child support awards. These include whether child care costs, extraordinary medical expenses, and college costs are taken into account in determining the support order; how the income of the noncustodial parent is allocated between first and subsequent families (e.g., whether the children from a second marriage are provided child support payments equal to those of the children from the first marriage); \3\ how the income of stepparents is treated; whether a minimum child support award level regardless of age or circumstance of the noncustodial parent should be imposed; whether income earned as a result of a custodial parent's participation in an AFDC work, education, and training program is taken into account; and the duration of the support order (i.e., does the support obligation end when the child reaches age 18; what happens to arrearages). --------------------------------------------------------------------------- \3\ Traditionally, the courts have taken the position that the father's prior child support obligations take absolute precedence over the needs of the new family. They have disregarded the father's plea that his new responsibilities are a ``change in circumstance'' justifying a reduction in a prior child support award or at least averting an increase. --------------------------------------------------------------------------- Reviewing and Modifying Orders Without periodic modifications, child support obligations can become inadequate and inequitable. Historically, the only way to modify a child support order was to require a party to petition the court for a modification based on a ``change in circumstances.'' What constituted a change in circumstances sufficient to modify the order depended on the State and the court. The person requesting modification was responsible for filing the motion, serving notice, hiring a lawyer, and proving a change in circumstances of sufficient magnitude to satisfy statutory standards. The modification proceeding was a two step process. First the court determined whether a modification was appropriate. Next, the amount of the new obligation was determined. Because this approach to updating orders was so cumbersome, the Family Support Act of 1988 required States both to use guidelines as a rebuttable presumption in all proceedings for the award of child support and to review and adjust child support orders in accordance with the guidelines. These provisions reflected Congressional intent to simplify the updating of support orders by requiring a process in which the standard for modification was the State child support guidelines. They also reflect a recognition that the traditional burden of proof for changing the amount of the support order was a barrier to updating. Finally, the new law signaled a need for States to at least expand, if not replace, the traditional ``change in circumstances'' test as the legal prerequisite for updating support orders by making State guidelines the presumptively correct amount of support to be paid (Federal Register, 1992, p. 61560). The Family Support Act also requires States to review guidelines at least once every 4 years and have procedures for review and adjustment of orders, consistent with a plan indicating how and when child support orders are to be reviewed and adjusted. Review may take place at the request of either parent subject to the order or at the request of a State child support agency. Any adjustment to the award must be consistent with the State's guidelines, which must be used as a rebuttable presumption in establishing or adjusting the support order. The Family Support Act also required States to review all orders being enforced under the child support program within 36 months after establishment or after the most recent review of the order and to adjust the order in accord with the State's guidelines. Review is required in child support cases in which support rights are assigned to the State, unless the State has determined that review would not be in the best interests of the child and neither parent has requested a review. This provision applies to child support orders in cases in which benefits under the AFDC, foster care, or Medicaid Programs are currently being provided, but does not include orders for former AFDC, foster care, or Medicaid cases, even if the State retains an assignment of support rights for arrearages that accumulated during the time the family was on welfare. In child support cases in which there is no current assignment of support rights to the State, including former recipients of AFDC, foster care, or Medicaid benefits receiving continued child support services, review is required at least once ever 36 months only if a parent requests it. If the review indicates that adjustment of the support amount is appropriate, the State must proceed to adjust the award accordingly. The Family Support Act also required States to notify parents in cases being enforced by the State both of their right to request a review at least 30 days before it begins and of any proposed adjustment or determination that there should be no change in the award amount. In the latter case, the parent must be given at least 30 days after notification to initiate proceedings to challenge the proposed adjustment or determination. The frequency of review and updating of support orders has increased greatly since the 1984 amendments. As a result, several issues have become apparent. When an initial child support amount is established under guidelines, it generally is reasonable to apply the guidelines to later modification. However, when newly adopted guidelines are used to modify old orders, some noncustodial parents may have to pay substantially higher child support. Noncustodial parents who decided to start second families based on financial calculations which assumed the amount of the original order argue that it is unfair for States to use new State-established guidelines to update or revise their preexisting award obligations (Malone, 1989, pp. 31-32). Other issues associated with updating child support awards include the expected increased resources necessary to review and update orders, and the disinclination of child support staff to initiate downward modifications. Another major issue in the modification of awards was that 18 States permitted retroactive modifications. The vast majority of such retroactive modifications had the effect of reducing the amount of child support ordered. Thus, for example, an order for $200 a month for child support, which was unpaid for 36 months, should accumulate an arrearage of $7,200. Yet, if the obligor was brought to court, having made no prior attempt to modify the order, the order might be reduced to $100 a month retroactive to 36 months prior to the date of modification. This retroactive modification would reduce the arrearage from $7,200 to $3,600. Cases such as this, which had serious impacts on custodial parents and their children, convinced Congress to take action. Thus, in 1986 Congress enacted section 9103 of Public Law 99-509 (section 466(a)(9) of the Social Security Act) to change State practices involving modification of child support arrears. The provision required States to change their laws so that any payment of child support, on and after the date due, is a judgment (the official decision or finding of a court on the respective rights and claims of the parties to an action) by operation of law. The provision further requires that the judgment be entitled to full faith and credit in the originating State and in any other State. Full faith and credit is a constitutional principle that the various States must recognize the judgments of other States within the United States and accord them the force and effect they would have in their home State. The 1986 provision also greatly restricts retroactive modification to make it more difficult for courts and administrative entities to forgive or reduce arrearages. More specifically, orders can be retroactively modified only for a period during which there is pending a petition for modification and only from the date that notice of the petition has been given to the custodial or noncustodial parent. Promoting Medical Support Section 16 of Public Law 98-378, enacted in 1984, requires the Secretary of HHS to issue regulations to require that State child support 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 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 1993 study by Cooper and Johnson that analyzed 1987 data from the Center for Health Expenditures and Insurance Studies indicated that, for low-wage (i.e., poor--income below poverty line) employees with employer-provided family health insurance coverage, 77 percent of the premium was paid for by the employer. On October 16, 1985, OCSE published regulations amending previous regulations and implementing section 16 of Public Law 98-378. The regulations require State child support agencies to obtain basic medical support information and provide this information to the State Medicaid agency. If the custodial parent does not have satisfactory health insurance coverage, the child support 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 regulations also require child support agencies to enforce medical support that has been ordered by a court or administrative process. In addition, these regulations permit the use of child support matching funds at the 66- percent rate for required medical support activities. Before these regulations were issued, medical support activities were pursued by child support agencies only under optional cooperative agreements with Medicaid agencies. Some of the functions that the child support agency may perform under a cooperative agreement with the Medicaid agency include: receiving referrals from the Medicaid agency, locating noncustodial 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. On September 16, 1988, OCSE issued regulations expanding the medical support enforcement provisions. These regulations require the child support 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. The child support agency also is required to provide the custodial parent with information regarding the health insurance coverage obtained by the noncustodial parent for the child. Moreover, the regulation deletes the condition that child support 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 reduce Medicaid costs for both the States and the Federal Government. Before late 1993, employees covered under their employer's health care plans generally could provide coverage to their children only if the children lived with the employee. However, as a result of divorce proceedings, employees often lost custody of their children but were nonetheless required to provide their health care coverage. While the employee would be obliged to follow the court's directive, the employer that sponsored the employee's health care plan was under no similar obligation. Even if the court ordered the employer to continue health care coverage for the nonresident child of their employee, the employer would be under no legal obligation to do so (Shulman, 1994, pp. 1-2). Aware of this situation, Congress took the following legislative action in the Omnibus Budget Reconciliation Act of 1993: 1. Insurers were prohibited 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. Insurers and employers were required, in any case in which a parent is required by court 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 the 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 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. Employers doing business in the State, if they offer health insurance and if a court order is in effect, were required 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 HHS 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. Insurers were prohibited from imposing requirements on a State agency acting as an agent or assignee of an individual eligible for medical assistance that are different from requirements applicable to an agent or assignee of any other individual; 5. Insurers were required, 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. The State Medicaid agency was permitted 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 is the amount required to reimburse the State agency for expenditures for costs of medical services provided under the Medicaid Program. Claims for current or past due child support take priority over any claims for the costs of medical services. These provisions appear to be having an impact on the number of children in single-parent families with medical coverage. According to OCSE data, 58 percent of support orders established in fiscal year 1994 included health insurance, up from 46 percent in fiscal year 1991. Nevertheless, only 32 percent of support orders enforced or modified in fiscal year 1994 included health insurance, down slightly from 35 percent in 1991. These figures indicate that many children still lack coverage. One way to increase medical support may be to require withholding of health insurance premiums in all cases with medical support orders (Gordon, 1994). Collecting Child Support Local courts and child support enforcement agencies attempt to collect child support when the noncustodial parent does not pay. The most important collection method is wage withholding. Other techniques for enforcing payments include regular billings, delinquency notices, liens on property, offset of unemployment compensation payments, seizure and sale of property, reporting arrearages to credit agencies, garnishment of wages, seizure of State and Federal income tax refunds, and Federal imprisonment, fines or both. In addition to approaches authorized by the Federal Government through the child support program, States use a variety of other collection techniques. In fact, States have been at the forefront in implementing innovative approaches. Some States revoke or deny various types of licenses (drivers', business, occupational, recreational) to persons who are delinquent in their child support payments; some States attach lottery winnings and insurance settlements of debtor parents; and some States hire private collection agencies to collect child support payments. Some States even bring charges of criminal nonsupport or civil or criminal contempt of court against noncustodial parents who fail to pay child support. These court proceedings usually involve much time because of court backlogs, delays, and continuances. Once a court decides the case, noncustodial parents are often given probation or suspended sentences, and occasionally they are even awarded lower support payments and only partial payment of arrearages. To combat problems associated with court delays, the child support statute requires States to implement expedited processes under the State judicial system or State administrative processes for obtaining and enforcing support orders. Given the pivotal role of collections in the child support process, this section now turns to detailed discussion of the most effective collections procedures. Summary data on the effectiveness of four of the most effective collection methods are presented in table 9-2. Wage withholding The Family Support Act of 1988 greatly expanded wage withholding by requiring immediate withholding to begin in November 1990 for all new or modified orders being enforced by States. Equally important, States were required to implement immediate wage withholding in all support orders initially issued on or after January 1, 1994, regardless of whether a parent has applied for child support services. The child support amendments of 1984 also required that States have in effect two distinct procedures for withholding wages of noncustodial parents. First, for existing cases enforced through the child support agency, States were required to impose wage withholding 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 orders 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 child support agency contain the authority necessary to permit wage withholding to be initiated by someone other than the child support agency. According to the Federal statute, State due process requirements govern the scope of notice that must be provided 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 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); and 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 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, arrearage or both) or the identity of the noncustodial parent. TABLE 9-2.--CHILD SUPPORT COLLECTIONS MADE BY VARIOUS ENFORCEMENT TECHNIQUES, SELECTED FISCAL YEARS 1989-95 [Dollars in millions] -------------------------------------------------------------------------------------------------------------------------------------------------------- Child support collections Percent of total collections Enforcement technique ------------------------------------------------------------------------------------- 1989 1991 1993 1994 1995 1989 1991 1993 1994 1995 -------------------------------------------------------------------------------------------------------------------------------------------------------- Wage withholding.................................................. $2,144 $3,266 $4,743 $5,429 $6,111 40.9 47.4 53.2 55.0 56.8 Federal income tax offset......................................... 411 476 570 623 734 7.9 6.9 6.4 6.3 6.8 State income tax offset........................................... 62 72 78 88 97 1.2 1.0 0.9 0.9 0.9 Unemployment compensation intercept............................... 54 143 286 223 187 1.0 2.1 3.2 2.3 1.7 Other \1\......................................................... 2,570 2,929 3,232 3,506 3,624 49.0 42.6 36.3 35.5 33.7 ------------------------------------------------------------------------------------- Total collections........................................... $5,241 $6,886 $8,907 $9,869 $10,753 100.0 100.0 100.0 100.0 100.0 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ The Office of Child Support Enforcement (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 child support agency. Moreover, the OCSE officials maintain that reliability of collection data lessen when specified by techniques of collection. Source: Office of Child Support Enforcement, U.S. Department of Health and Human Services. When withholding is uncontested or when a contested case is resolved in favor of 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, including 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. Employer fees per wage withholding transaction range from nothing to $3 per pay period to $5 per attachment to $10 per month (Office of Child Support, 1986, p. 7). The Federal Consumer Credit Protection Act limits garnishment to 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 a withholding 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 child support 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. The State must then 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 when all of the children are emancipated and no arrearage exists. As shown in table 9-2, the Congressional emphasis on wage withholding has paid off handsomely. Not only has the total amount of support collected through wage withholding increased each year, reaching $6.1 billion in 1995, but the percentage of total collections achieved through wage withholding has also increased steadily, growing from about 41 percent in 1989 to nearly 57 percent in 1995. Federal income tax refund offset Under this program, the IRS, operating on request from a State filed through the Secretary of HHS, simply intercepts tax returns and deducts the amount of certified child support arrearages. The money is then sent to the State for distribution. The availability of the IRS collection mechanism for child support was strengthened by the Omnibus Budget Reconciliation Act of 1981 (Public Law 97-35). IRS can now withhold past due support from Federal tax refunds upon a simple showing by the State that an individual owes at least $150 in past due support which has been assigned to the State as a condition of AFDC eligibility. The withheld amount is sent to the State agency, together with notice of the taxpayer's current address. The 1984 amendments 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 noncustodial parent and his spouse (if any) be informed of the impending use of the tax offset procedure. The purpose of this notice is to protect the unobligated spouse's portion of the tax refund. The 1988 provision applied to refunds payable after December 31, 1985, and before January 1, 1991. Public Law 101-508, enacted in 1990, makes permanent the IRS offset program for non-AFDC families. In fiscal year 1995, according to IRS, more than 1 million cases were offset. The total amount intercepted was $804 million, up by a factor of four since 1985. State income tax refund offset The child support amendments of 1984 mandate that States increase the effectiveness of the child support program by, among other things, enacting several collection procedures. Among the required procedures is the interception of State income tax refunds payable to noncustodial parents up to the amount of overdue support. As in the case of liens and bonds, this procedure need not be used in cases found inappropriate under State guidelines. The State tax intercept program allows a State to collect overdue child support payments by intercepting State tax refunds due a noncustodial parent. The State tax refund is applied to a support arrearage to reduce or eliminate through an ``offset'' the debt of an obligor that is owed either to the State or to the custodial parent. In order for the State tax refund offset to work effectively, cooperation between the State's department of revenue and the child support agency is crucial. The names and Social Security numbers of delinquent noncustodial parents are submitted to the department of revenue for matching with tax return forms. If a match occurs and a refund is due, the refund or a portion of it is transferred from the State department of revenue to the child support agency and then credited to the appropriate noncustodial parent to offset his support debt. The child support agency must give advance notice of the impending offset to the noncustodial parent and must also inform him of the process for contesting and resolving the proposed action. If the custodial parent does not respond to the notice, the money is intercepted and forwarded to the child support agency for distribution. In fiscal year 1995, the State tax intercept program collected $97 million (table 9-2). Unlike the Federal program, which requires that States certify a specified amount before the offset can be applied ($150 for AFDC families and $500 for non-AFDC families), States choose their own level for certification. In many States, the amount is the same for both AFDC and non-AFDC families. Although the amounts vary greatly from State to State, the amount in the typical State is about $100. Unemployment compensation intercept Public Law 97-35, the Omnibus Budget Reconciliation Act of 1981, requires State child support agencies to determine on a periodic basis whether individuals receiving unemployment compensation owe support obligations that are not being met. The Act also requires child support agencies to enforce support obligations in accord with State-developed guidelines for obtaining an agreement with the individual to have a specified amount of support withheld from unemployment compensation or, in the absence of an agreement, for bringing legal proceedings to require the withholding. The child support agency must reimburse the State employment security agency for the administrative costs attributable to withholding unemployment compensation. The unemployment compensation intercept program collected $187 million in fiscal year 1995 (table 9-2). A number of States, especially those with high levels of unemployment (but where the noncustodial parent has had some attachment to the labor force), are finding that the unemployment offset procedure can raise collections significantly. Property liens A lien is a legal claim on someone's property as security against a just debt. The use of liens for child support enforcement was characterized during congressional debate on the child support amendments of 1984 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'' (U.S. House, 1983). The Ways and Means Committee report stated 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. The 1984 legislation 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.'' Liens can apply to property such as land, vehicles, houses, antique furniture, and livestock. The law provides, however, that States need not use liens in cases in which, 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 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 her judgment by execution and levy against the property if she believes 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. Initiated in 1984 to assist in location efforts, since the fall of 1988 Project 1099 has routinely provided wage and employer information as well as location and asset information on noncustodial parents. Bonds, securities, and other guarantees The 1984 child support amendments require States to have in effect and use procedures under which noncustodial parents must post security, bond, or some other guarantee to secure payment of overdue child support. This technique is useful where significant assets exist although the noncustodial parent's income is sporadic, seasonal, or derived from self-employment not accessible to more traditional enforcement methods. As in the case of liens, this procedure need not be used in cases found inappropriate under State guidelines. The State guidelines should define and target assets that can appropriately be sought to secure or guarantee payment (but not hinder or prevent the noncustodial parent from effectively pursuing his livelihood). IRS full collection process Since 1975, Congress has authorized the Internal Revenue Service (IRS) to collect certain child support arrearages as if they were delinquent Federal taxes. This method is known as the IRS full collection process. It works as follows. The Secretary of HHS must, upon the request of a State, certify to the Secretary of Treasury for collection by the IRS any amounts identified by the State as delinquent child support. The Secretary of HHS 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. This full collection process is used only when there is a good chance that the IRS can make a collection and only for cases in which a child support obligation is delinquent and the amount owed has been certified to be at least $750. Use by the States of this regular IRS collection mechanism, which may include seizure of property, freezing of accounts, and use of other aggressive procedures, has been relatively infrequent. In fiscal year 1994, collections were made in only 327 cases nationwide, for a total collection of $532,618. Credit bureau reporting The 1984 Federal child support legislation required States to develop procedures for providing child support debt information to credit reporting agencies (sometimes referred to as credit bureaus). The primary purposes for reporting delinquent child support payers to credit reporting agencies are to discourage noncustodial parents from not making their child support payments, to prevent the undeserved extension of credit, and to maintain the noncustodial parent's ability to pay his child support obligation. Other benefits include access by child support agencies to address, employment, and asset information. The 1984 amendments require States to report overdue child support obligations exceeding $1,000 to consumer reporting agencies if such information is requested by the credit bureau. States have the option of reporting in cases in which the noncustodial parent is less than $1,000 in arrears. States must provide noncustodial parents with advance notice of intent to release information on their child support arrearage and an opportunity for them to contest the accuracy of the information. The child support 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 requires States to authorize 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. The information is provided by or verified by State or local child support agencies. Public Law 103-432, enacted in October 1994, includes a provision that requires States to periodically report to consumer reporting agencies the name of parents owing at least 2 months of overdue child support, and the amount of the child support overdue. Federal garnishment The 1975 child support legislation included a provision allowing garnishment of wages and other payments by the Federal Government for enforcement of child support and alimony obligations. The law also provided that moneys, payable by the United States to any individual for employment, are subject to legal proceedings brought for the enforcement of child support or alimony. 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 pay including Social Security, and other kinds of Federal payments. Several sources of Federal payments, however, may not be garnished. These include 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 Child support enforcement workers face unique difficulties when working on cases in which the absent parent is an active duty member of the military service. Learning to work through military channels can prove both challenging and frustrating, especially if the child support agency is not near a military base. As a result, military cases are often ignored or not given sufficient attention (Office of Child Support, 1991). Public Law 97-248, the Tax Equity and Fiscal Responsibility Act of 1982, requires allotments from the pay and allowances of any active duty member of the uniformed service who fails to make child or spousal support payments. This 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. Since October 1, 1995, the Department of Defense has consolidated its garnishment operations at the Defense Finance and Accounting Service in Cleveland, Ohio. Support orders received by the Service are processed immediately and notices are sent to the appropriate military pay center to start payments in the first pay cycle (Office of Child Support, 1995c). Small business loans The 103d Congress passed legislation, the Small Business Administration Reauthorization and Amendments Act of 1994 (Public Law 103-403), which included the requirement that recipients of financial assistance from the Small Business Administration, including direct loans and loan guarantees, must certify that the recipient is not more than 60 days delinquent in the payment of child support. The new law requires the administration to promulgate, no later than 6 months after enactment, regulations to enforce compliance with the provision. Other provisions On February 27, 1995, President Clinton signed an Executive order establishing the executive branch of the Federal Government, including its civilian employees and the uniformed services members, as a model employer in promoting and facilitating the establishment and enforcement of child support. The Executive order states that the Federal Government is the Nation's largest single employer and as such should set an example of leadership and encouragement in ensuring that all children are properly supported. Among other measures, the order requires the Federal agencies and the uniformed services to cooperate fully in efforts to establish paternity and child support orders and to enforce the collection of child and medical support. The order also requires Federal agencies to provide information to their personnel concerning the services that are available to them and to ensure that their children are provided the support to which they are legally entitled (Office of Child Support, 1995b). Interstate Enforcement The most difficult child support orders to enforce are interstate cases. States are required to cooperate in interstate child support enforcement, but problems arise from the autonomy of local courts. Family law has traditionally been under the jurisdiction of State and local governments, and citizens fall under the jurisdiction of the courts where they live. State laws require parents to be responsible for the financial support of their children. During the 1930s and 1940s, 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 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 (Hill, 1988) of separated parents found that 12 percent lived in different States 1 year after divorce or separation. That proportion increased to 25 percent after 3 years, and to 40 percent after 8 years. Estimates based on the Federal Income Tax Refund Offset Program and other sources suggest that approximately 30 percent of all child support cases involve interstate residency of the custodial and noncustodial parents (Weaver & Williams, 1989, p. 510). According to U.S. Census Bureau data (1991), 20 percent of noncustodial parents lived in a different State than their children, 3 percent lived overseas, and the residence of 11 percent of the noncustodial parents was unknown. Uniform Reciprocal Enforcement of Support Act (URESA) Starting in 1950, interstate cooperation was 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 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. Thus, even though every State has passed some provisions of URESA, many provisions vary greatly from State to State. URESA, in short, is uniform in name only. 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 across State lines. 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 child support 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 in a State of which he is not a resident, that person may be subjecting himself to the jurisdiction of that State. The long arm of the law of the State where the event occurs 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 jurisdiction over the alleged father even if he lives in another State. Long arm statute language usually extends the State's jurisdiction over an out-of-State defendant to the maximum extent permitted by the U.S. Constitution under the 14th 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 child support law mandated that the State plan for child support require States to cooperate with other States in establishing paternity, locating absent parents, and securing compliance with court orders. Further, it authorized the use of Federal courts as a last resort to enforce an existing order in another State if that State were uncooperative. Section 460 of the Social Security Act states 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 HHS 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) states that the Secretary of HHS shall receive applications from States for permission to use the courts of the United States to enforce court orders for support against noncustodial parents. The Secretary must approve applications if she finds both that a given State has not enforced a court order of another State within a reasonable time and that using the Federal courts is the only reasonable method of enforcing the order. As a condition to obtaining certification from the Secretary, the child support agency of the initiating State must give the child support agency of the responding State at least 60 days to enforce the order as well as 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 all the requirements outlined above 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 child support program in 1975, there has only been one reported case of its use by a State (the initiating State was California; the responding State was Texas). Interstate income withholding Interstate income withholding is a process by which the State of the custodial parent seeks the help of the State in which the noncustodial parent's income is earned to enforce a support order using the income withholding mechanism. Pursuant to the child support amendments of 1984, income withholding was authorized for all valid instate or out-of-State orders issued or modified after October 1, 1985, and for all orders in child support enforcement (i.e., IV-D) cases regardless of the date the order was issued. Although Federal law requires a State to enforce another State's valid orders through interstate 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 child support agency to another. In child support enforcement 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. In a 1992 report (U.S. General Accounting Office, 1992a, p. 4 & pp. 21-28), GAO indicated that the main reason for the failure of interstate income withholding was the lack of uniformity in its implementation. Full faith and credit One of the most significant barriers to improved interstate collections is that, because a child support order is not considered a final judgment, the full faith and credit clause of the U.S. Constitution does not preclude modification. Thus, the order is subject to modification upon a showing of changed circumstances by the issuing court or by another court with jurisdiction. Congress could prohibit inter- or intrastate modifications of child support orders, but many students of child support hold that a complete ban on modifications would be unrealistic and unfair. A more likely approach would be one under which States were required to give full faith and credit to each other's child support orders under most circumstances. The Omnibus Budget Reconciliation Act of 1986, Public Law 99-509, took a step in this direction by requiring States to treat past due support obligations as final judgments entitled to full faith and credit in every State. Thus, a person who has a support order in one State does not have to obtain a second order in another State to obtain the money due should the debtor parent move from the issuing court's jurisdiction. The second State can modify the order prospectively if it finds that circumstances exist to justify a change, but the second State may not retroactively modify a child support order. Public Law 103-383, the Full Faith and Credit for Child Support Orders Act (signed into law Oct. 20, 1994), restricts a State court's ability to modify a child support order issued by another State unless the child and the custodial parent have moved to the State where the modification is sought or have agreed to the modification. Commission on interstate child support enforcement The Family Support Act of 1988, Public Law 100-485, included several provisions affecting interstate child support enforcement. The law required States to establish automated statewide, comprehensive case tracking and monitoring systems, which would improve each State's ability to manage interstate cases. But most importantly, the law 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, issued in 1992, includes 120 recommendations for improving the Child Support Enforcement Program. The report highlights several recommendations deemed essential to improving interstate enforcement: 1. Establishment of an integrated, automated network linking all States to provide quick access to locate and income information (which would include new hire information based on W-4 forms); 2. Establishment of income withholding across State lines from the person seeking enforcement directly to the income source in the other State; 3. Enactment by States of the Uniform Interstate Family Support Act (UIFSA; which would replace URESA); 4. State use of early, voluntary parentage determination for children born outside marriage and uniform evidentiary rules for contested paternity cases; 5. Universal access to health care insurance for children of separated parents; 6. More emphasis on staff training and increased resources to ensure that all cases are processed on a more timely basis; and 7. Revision of child support funding to ensure that action is taken on cases most in need of attention (U.S. Commission on Interstate Child Support, 1992, p. xiii). Federal criminal penalties The Child Support Recovery Act of 1992 imposed a Federal criminal penalty for the willful failure to pay a past due child support obligation to a child who resides in another State and that has remained unpaid for longer than a year or is greater than $5,000. For the first conviction, the penalty is a fine of up to $5,000, imprisonment for not more than 6 months, or both; for a second conviction, the penalty is a fine of not more than $250,000, imprisonment for up to 2 years, or both. Uniform Interstate Family Support Act (UIFSA) One of the Commission on Interstate Child Support Enforcement's major recommendations to Congress was to replace URESA with UIFSA, the Uniform Interstate Family Support Act, a model State law for handling interstate child support cases drafted by the National Conference of Commissioners on Uniform State Laws and approved by the Commissioners in August 1992. UIFSA is designed to deal with desertion and nonsupport by instituting uniform laws in all 50 States and the District of Columbia. The core of UIFSA is limiting control of a child support case to a single State, thereby ensuring that only one child support order from one court or child support agency will be in effect at any give time. It follows that the controlling State will be able to effectively pursue interstate cases, primarily through the use of long arm statutes, because its jurisdiction is undisputed. Many, perhaps most, child support officials believe UIFSA will help eliminate jurisdictional disputes between States and lead to substantial increases in interstate collections. UIFSA allows: (1) direct income withholding by the controlling State without second State involvement; (2) administrative enforcement without registration; and (3) registered enforcement based on the substantive laws of the controlling State and the procedural laws of the registering State. The order cannot be adjusted if only enforcement is requested, and enforcement may begin upon registration (before notice and hearing) if the receiving State's due process rules allow. Under UIFSA, the controlling State may adjust the support order under its own standards. In addition, UIFSA includes some uniform evidentiary rules to make interstate case handling easier, such as using telephonic hearings, easing admissibility of evidence requirements, and admitting petitions into evidence without the need for live or corroborative testimony to make a prima facie case. As of February 1996, 26 States and the District of Columbia had adopted UIFSA (Office of Child Support, 1992b, pp. 4-5). 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. An advantage of UEFJA is that it does not require reciprocity (i.e., it need only be in effect in the initiating State). A disadvantage is that UEFJA is limited to collection of arrearages; it cannot be used to establish an initial order or to enforce current orders. Summary information on collection methods Table 9-2 shows that 66 percent of the roughly $10.8 billion in child support payments collected in fiscal year 1995 was obtained through four enforcement techniques: wage withholding; Federal income tax refund offset; State income tax refund offset; and unemployment compensation intercept. The remaining 34 percent is listed as collected by ``other'' means. Federal child support officials informed us that most of these ``other'' collections came from noncustodial parents who comply with their support orders by sending their payments to the CSE agency. The ``other'' category also includes collections from noncustodial parents who voluntarily sent money for their children even though a support order had never been established (about 1 percent of all collections), and enforcement techniques such as liens against property, the posting of bonds or securities, and use of the full IRS collection procedure. Table 9-2 indicates that by fiscal year 1991 wage withholding had become the primary enforcement method, producing nearly 47 percent of all child support collections. By 1995, the percentage had increased even further, reaching 57 percent. BANKRUPTCY AND CHILD SUPPORT ENFORCEMENT Giving debtors a fresh start is the goal of this country's bankruptcy system. Depending on the type of bankruptcy, a debtor may be able to discharge a debt completely, pay a percentage of the debt, or pay the full amount of the debt over a longer period of time. However, several debts may not be discharged, including debts for child support and alimony (U.S. Commission on Interstate Child Support, 1992, p. 209). The 1975 child support legislation included a provision stating that an assigned child support obligation was not dischargeable in bankruptcy. In 1978 this provision was incorporated into the 1978 uniform law on bankruptcy. The bankruptcy law also listed exceptions to discharge including alimony and maintenance or support due a spouse, former spouse, or child. In 1981, a provision stating that a child support obligation assigned to the State as a condition of eligibility for AFDC is not dischargeable in bankruptcy was reinstated. In 1984, the provision was expanded so that child support obligations assigned to the State as part of the child support program may not be discharged in bankruptcy, regardless of whether the payments are to be made on behalf of an AFDC or a non-AFDC family and regardless of whether the debtor was married to the child's other parent. Some noncustodial parents seek relief from their financial obligations in the U.S. Bankruptcy Courts. Although child support payments may not be discharged via a filing of bankruptcy, the filing may cause long delays in securing child support payments. Pursuant to Public Law 103-394, enacted in 1994, a filing of bankruptcy will not stay a paternity, child support, or alimony proceeding. In addition, child support and alimony payments will be priority claims and custodial parents will be able to appear in bankruptcy court to protect their interests without having to pay a fee or meet any local rules for attorney appearances. AUTOMATED SYSTEMS In 1980, Congress authorized 90 percent Federal matching funds on an open-ended basis for States to design and implement automated data systems. Funds go to States that establish an automated data processing and information retrieval system designed to assist in administration of the State child support plan, and to control, account for, and monitor all factors in the enforcement, collection, and paternity determination processes. Funds may be used to plan, design, develop, and install or enhance the system. The Secretary of HHS must approve the State system as meeting specified conditions before matching is available. In 1984, Congress made the 90-percent rate available to pay for the acquisition of computer hardware and necessary software. The 1984 legislation also specified that if a State met the Federal requirement for 90 percent matching, it could use its funds to pay for the development and improvement of income withholding and other procedures required by the 1984 law. In May 1986, OCSE established a transfer policy requiring States seeking the 90 percent Federal matching rate to transfer existing automated systems from other States rather than to develop new ones, unless there were a compelling reason not to use the systems developed by other States. In 1988, Congress required States without comprehensive statewide automated systems to submit an advance planning document to the OCSE by October 1, 1991, for the development of such a system. Congress required that all States have a fully operating system by October 1, 1995, at which time the 90 percent matching rate was to end. The 1988 law allowed many requirements for automated systems to be waived under certain circumstances. For instance, the HHS Secretary could waive a requirement if a State demonstrated that it had an alternative system enabling it to substantially comply with program requirements or a State provided assurance that additional steps would be taken to improve its program. As of May 1, 1996, OCSE had approved the automated data systems of only five States--Delaware, Georgia, Montana, Virginia, and Washington. Most observers agree that States were delayed primarily by the lateness of Federal regulations specifying the requirements for the data systems and by the complexity of getting their final systems into operation. Thus, on October 12, 1995, Congress enacted Public Law 104-35 which extended for 2 years, from October 1, 1995 to October 1, 1997, the deadline by which States are required to have statewide automated systems for their child support programs. On October 1, 1995, however, the 90 percent matching rate ended; State spending on data systems is now matched at the basic administrative rate of 66 percent. The purpose of requiring States to operate statewide automated and computerized systems is to ensure that child support functions are carried out effectively and efficiently. These requirements include case initiation, case management, financial management, enforcement, security, privacy, and reporting. Implementing these requirements can facilitate locating noncustodial parents and monitoring child support cases. For example, by linking automated child support systems to other State databases, information can be obtained quickly and cheaply about a noncustodial parent's current address, assets, and employment status. Systems can also be connected to the court system to access information on child support orders (U.S. General Accounting Office, 1992b). AUDITS AND FINANCIAL PENALTIES Audits are required at least every 3 years to determine whether the standards and requirements prescribed by law and regulations have been met by the child support program of every State. If a State fails the audit, Federal AFDC matching funds must be reduced by an amount equal to at least 1 but not more than 2 percent for the first failure to comply, at least 2 but not more than 3 percent for the second failure, and at least 3 but not more than 5 percent for the third and subsequent failures. According to OCSE, two States that had followup reports issued in fiscal year 1993 and failed to achieve substantial compliance had a 1 percent penalty imposed during fiscal year 1994. If a penalty is imposed after a followup review, a State may appeal the audit penalty to the HHS Departmental Appeals Board. Payment of the penalty is delayed while the appeal is pending. The appeals board reviews the written records which may be supplemented by informal conferences and evidentiary hearings. The penalty may be suspended for up to 1 year to allow a State time to implement corrective actions to remedy the program deficiency. At the end of the corrective action period, a followup audit is conducted in the areas of deficiency. If the followup audit shows that the deficiency has been corrected, the penalty is rescinded. However, if the State remains out of compliance with Federal requirements, a graduated penalty, as provided by law, is assessed against the State. The actual amount of the penalty--between 1 and 5 percent of the State's AFDC matching funds (see above)--depends on the severity and the duration of the deficiency. If a State is under penalty, a comprehensive audit is conducted annually until the cited deficiencies are corrected (Office of Child Support, 1994, pp. 14-16). Penalty disallowance collections from five States (Mississippi, New Mexico, Ohio, Wyoming, and the District of Columbia) totaled $1.253 million in fiscal year 1994. ASSIGNMENT AND DISTRIBUTION OF CHILD SUPPORT COLLECTIONS Two parties have claims on child support collections made by the State. The children and custodial parent on behalf of whom the payments are made, of course, have a claim on payments by the noncustodial parent. However, in the case of families that have received public aid, taxpayers who paid to support the destitute family by providing a host of welfare benefits also have a legitimate claim on the money. Thus, over the years a series of somewhat complex rules have developed to determine who actually gets the money. It is helpful to think of these rules in two categories. First, there are rules in both Federal and State law that stipulate who has a legal claim on the payments owed by the noncustodial parent. These are called assignment rules. Second, there are rules that determine the order in which child support collections are paid in accord with the assignment rules. These are called distribution rules. As long as families remain on welfare, the distribution of child support is straightforward. When families apply for AFDC, the custodial parent must assign to the State the right to collect any child support obligations that accumulated before the family joined welfare as well as support that comes due while the family is receiving welfare benefits. As long as the family remains on welfare, then, all but the first $50 (see below and table 9-10 for information about the $50 passthrough) is kept by the State and split with the Federal Government. Consider a simple example. Suppose that when a given mother signed up for welfare, the child support agency was successful in locating the father, establishing a support order for $200 per month, and collecting the payments. Each month, the State would ``pass through'' $50 to the mother and children and retain $150, which in turn would be split with the Federal Government. In addition, the amount of welfare reimbursement owed to the State by the noncustodial parent would be reduced by $200 each month. If the AFDC benefit were $300 per month, the amount owed to the State by the noncustodial parent would increase by only $100 each month rather than the full $300. Once families leave welfare, the amount of support assigned to the State is the amount that equals total AFDC payments to the family minus any child support paid by the noncustodial parent while the family was on welfare. At the moment the family leaves welfare, then, the noncustodial parent usually owes child support to both the government and the family. The amount owed the family is the amount of payments that accumulated before the family went on welfare plus any amount that accumulates because of nonpayment after the family leaves welfare. The real issue, of course, is the order in which these debts will be paid once the family leaves AFDC. The first rule is straightforward: Payments against current support always go to the family. In the case above, no matter how long the mother was on welfare, the first $200 of monthly payments is assigned to and distributed to the mother once the family leaves welfare. If the father never pays against arrearages, the government never gets repaid for the AFDC benefits it provided and the mother never gets repaid for arrearages that accrued before or after the family was on welfare. Now assume that the father begins to make payments in excess of the current support amount of $200. The issue arises of whether the State can keep the amount above the current support order as repayment for AFDC benefits or whether the State must give the arrearage payments to the family. Here we see that distribution law trumps assignment law under some circumstances; namely, whenever two or more parties have been assigned child support that is past due. Both parties have legal claims; the issue is which one is paid first. Not surprisingly, Federal law allows States to make their own distribution rules to determine who gets arrearage collections. If the State so chooses, once current support has been paid to the family, it can keep the entire arrearage (part of which must be paid to the Federal Government) to pay for AFDC benefits previously paid to the family. Once the State and Federal Governments have been repaid the entire amount of AFDC benefits provided to the family, the State must pay arrearages to the family. On the other hand, the State may allow the family to keep the arrearage payments. This decision may not be as costly to the State as at first appears. The extra money could be enough of a boost to the mother's financial position that she would be able to continue avoiding welfare, in which case the State would save the money that would otherwise have been paid as AFDC benefit