SECTION 8. CHILD SUPPORT ENFORCEMENT PROGRAM
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
State Collection and Distribution of Support Payments
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 her 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, divorced, or never
married. 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 child support payments. 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 welfare and nonwelfare families and requires States to
publicize frequently, through public service announcements, the
availability of child support enforcement services, together
with information about the application fee and a telephone
number or address to 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.
The child support program generally 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 successor program to AFDC (Temporary Assistance for Needy
Families), 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 nonwelfare 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.
In 1996, Public Law 104-193, the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996, abolished AFDC
and related programs and replaced them with a block grant
program of Temporary Assistance for Needy Families (TANF).
States had to begin TANF by July 1, 1997. Under the new law,
each State must operate a CSE Program meeting Federal
requirements in order to be eligible for TANF funds.
In addition to abolishing AFDC, Public Law 104-193 made
about 50 changes to the CSE Program. These changes include
requiring States to increase the percentage of fathers
identified, establishing an integrated, automated network
linking all States to information about the location and assets
of parents, requiring States to implement more enforcement
techniques, and revising the rules governing the distribution
of past due (arrearage) child support payments to former
recipients of public assistance.
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 1996, there were an estimated 11.7 million
single-parent families with children under age 18; about 9.9
million (84 percent) maintained by the mother and roughly 1.9
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 to 1994 and 3.4 percent from 1980 to 1990 as compared
with 6 percent from 1970 to 1980. In 1996, one-parent families
comprised nearly 32 percent of all families. The corresponding
share of single-parent families in 1970 was 13 percent. In
1996, about 38 percent of the mothers had never been married,
37 percent were divorced, 21 percent were separated from their
spouse, and about 4 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 1-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 3.7 million families maintained by a
never-married mother in 1996 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 1995,
41.5 percent of the nearly 8.8 million families maintained
solely by the mother with children under 18 had incomes below
the poverty threshold. A little more than 13 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 1996, 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 8-1 summarizes trends for the child support program
since 1978. In 1996, $3 billion was spent by State child
support programs to collect $12 billion in child support. The
combined Federal-State program had more than 51,600 employees.
A sum of $3.93 was collected for every dollar of administrative
expense, up by 36 percent from the low point of only $2.89 per
dollar of administrative expense in 1982, but down about 2
percent since 1992, the year of peak child support efficiency.
In addition, nearly 5.8 million absent parents were located;
717,000 paternities were established; over 1 million support
orders were established; 3.5 million cases had collections;
294,000 families were removed from AFDC because of child
support collections (not shown in table 8-1, fiscal year 1995
data); and 15.5 percent of AFDC payments were recovered as a
result of child support enforcement.
These program trends demonstrate that more and more
positive child support 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 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.
TABLE 8-1.--SUMMARY OF NATIONAL CHILD SUPPORT PROGRAM STATISTICS, SELECTED FISCAL YEARS 1978-96
[Numbers in thousands, dollars in millions]
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Year
Measure ----------------------------------------------------------------------------------------------------------------------
1978 1980 1982 1984 1986 1988 1990 1991 1992 1993 1994 1995 1996
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Total child support collections.. $1,047 $1,478 $1,770 $2,378 $3,246 $4,605 $6,010 $6,886 $7,965 $8,907 $9,850 $10,827 $12,019
In 1996 dollars \1\.......... 2,555 2,882 2,885 3,591 4,609 6,125 7,272 7,919 8,921 9,620 10,441 11,152 12,019
Total AFDC collections \2\....... 472 603 786 1,000 1,225 1,486 1,750 1,984 2,259 2,416 2,550 2,689 2,855
Federal...................... 311 246 311 402 369 449 533 626 738 777 762 821 888
State........................ 148 274 354 448 424 525 620 700 787 847 891 939 1,013
Total non-AFDC collections....... 575 874 984 1,378 2,019 3,119 4,260 4,902 5,705 6,491 7,300 8,138 9,164
Total administrative expenditures 312 466 612 723 941 1,171 1,606 1,804 1,995 2,241 2,556 3,012 3,055
Federal...................... 236 349 459 507 633 804 1,061 1,212 1,343 1,517 1,741 2,095 2,040
State........................ 76 117 153 216 308 366 545 593 652 724 816 917 1,015
Federal incentive payments to
States and localities........... 54 72 107 134 158 222 264 278 299 339 407 400 409
Average number of AFDC cases in
which a collection was made..... 458 503 597 647 582 621 701 755 836 879 926 976 940
Average number of non-AFDC cases
in which a collection was made.. 249 243 448 547 786 1,083 1,363 1,555 1,749 1,958 2,169 2,409 2,564
Number of parents located........ 454 643 779 875 1,046 1,388 2,062 2,577 3,152 3,777 4,204 4,950 5,769
Number of paternities established 111 144 173 219 245 307 393 472 512 554 592 659 717
Number of support obligations
established..................... 315 374 462 573 731 871 1,022 \3\ 821 879 1,026 1,025 1,051 1,083
Percent of AFDC assistance
payments recovered through child
support collections............. NA 5.2 6.8 7.0 8.6 9.8 10.3 10.7 11.4 12.0 12.5 13.6 15.5
Total child support collections
per dollar of total
administrative expenses......... 3.35 3.17 2.89 3.29 3.45 3.93 3.74 3.82 3.99 3.98 3.86 3.60 3.93
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\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\ Data beginning in 1991 exclude modifications of support orders.
NA--Not available.
Note.--Data is preliminary for fiscal year 1996. Paternities established do not include the paternities esablished through the In-Hospital Paternity
Acknowledgement Program. In fiscal year 1994, 84,411 paternities were established in hospitals; 244,078 paternities were established in hospitals in
fiscal year 1995, and 277,274 paternities were established in hospitals in fiscal year 1996.
Source: Office of Child Support Enforcement, U.S. Department of Health and Human Services.
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.
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. Currently 36 States have waivers which
directly impact child support: 23 States have waivers to
provide work and training services to noncustodial parents; 14
States have waivers to disregard a portion of child support
payments from being counted as income in determining TANF
eligibility and benefit amounts; 19 States have waivers that
modify cooperation standards and/or penalties; and several
States have waivers to provide paternity establishment bonuses,
child support assurance payments, custody and visitation
mediation and responsible fatherhood services.
The Assistant Secretary for Children and Families has full
responsibility for the evaluation of the CSE Program. Pursuant
to Public Law 104-193, States must annually review and report
to the HHS Secretary information adequate to determine the
State's compliance with Federal requirements for expedited
procedures, timely case processing, and improvement on the
performance indicators. To measure the quality of the data
reported by States and to assess the adequacy of financial
management of the State program, the Secretary must conduct an
audit of every State at least once every 3 years and more often
if a State fails to meet Federal requirements.
Under the penalty provision, a State's TANF Block Grant
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. The role of the FPLS was expanded by Public Law
104-193. For purposes of establishing parentage, establishing,
setting the amount of, modifying, or enforcing child support
obligations, or enforcing child custody or visitation, the FPLS
is to provide information to locate any individual: (1) who is
under an obligation to pay child support or provide child
custody or visitation rights; (2) against whom such an
obligation is sought; or (3) to whom such an obligation is
owed. 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 a
TANF Program to conduct a Child Support Enforcement Program.
Federal law requires applicants for, and recipients of, TANF 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.
TANF recipients or applicants may be excused from the
requirement of cooperation if the CSE agency determines that
good cause for noncooperation exists, taking into consideration
the best interests of the child on whose behalf aid is claimed.
If good cause is found not to exist and if the relative with
whom a child is living still refuses to cooperate, then the
State must reduce the family's TANF benefit by at least 25
percent and may remove the family from the TANF Program.
(Federal law also stipulates that no TANF funds may be used for
a family that includes a person who has not assigned child
support rights to the State.) Before Public Law 104-193,
cooperation could have been found to be against the best
interests of the child if cooperation could 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 were underway for the child's
adoption.
Unlike previous law, Public Law 104-193 provides States
rather than the Federal Government with the authority to define
``good cause.'' The law now requires States to develop both
``good cause'' and ``other exceptions'' to the cooperation
requirement. The only restriction is that both the ``good
cause'' and ``other exceptions'' must be based on the ``best
interests of the child.'' In addition to defining good cause
and other exceptions, States must establish the standard for
proving a claim. States also will have to decide which agency
will inform TANF caretaker relatives about the cooperation
exemptions, and which agency will make the decision about the
validity of a given claim. These responsibilities can be
delegated to the TANF agency, the CSE agency, or the Medicaid
agency.
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 TANF Program. However,
Florida, Massachusetts, 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 at 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 welfare and nonwelfare 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 determining
paternity. These expedited procedures include giving
States authority to secure assets to satisfy payment of
past-due support by seizing or attaching unemployment
compensation, worker's compensation, judgments,
settlements, lotteries, asset held in financial
institutions, and public and private retirement funds;
6. Withholding, suspending, or restricting the use of driver's
licenses, professional and occupational licenses, and
recreational licenses of noncustodial parents who owe
past-due support;
7. Denying passports to persons owing more than $5,000 in
past-due support;
8. Requiring unemployed noncustodial parents who owe child
support to a child receiving TANF benefits to
participate in appropriate work activities;
9. Performing quarterly data matches with financial
institutions; and
10. Voiding of fraudulent transfers of assets to avoid payment
of child support.
Each State's plan must provide that the child support
agency will attempt to secure support for all TANF children.
The State must also provide in its plan that it will undertake
to establish the paternity of a TANF 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 TANF eligibility ends due to the receipt of
or an increase in child support, States must continue to
provide CSE 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 TANF
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-TANF 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 TANF families. The State must charge
non-TANF 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. During fiscal year 1995,
the FPLS processed approximately 4.3 million requests for
information from State and local CSE agencies.
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 by
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. In fiscal year 1995, OCSE submitted about 3.9 million
cases to the IRS under Project 1099 and over 2.5 million cases
were matched (65 percent).
To improve the CSE agency's ability to locate absent
parents, Public Law 104-193 requires States to have automated
registries of child support orders containing records of each
case in which CSE services are being provided and each support
order established or modified on or after October 1, 1998.
Under Public Law 104-193, local registries could be linked to
form the State registry. The State registry is to include a
record of the support owed under the order, arrearages,
interest or late penalty charges, amounts collected, amounts
distributed, child's date of birth, and any liens imposed. The
registry also will include standardized information on both
parents, such as name, Social Security number, date of birth,
and case identification number.
Beginning October 1, 1997, States are required to
establish an automated directory of new hires containing
information from employers, including Federal, State, and local
governments and labor organizations, for each newly hired
employee. The directory must include the name, address and
Social Security number of the employee and the employer's name,
address, and tax identification number. This information
generally is to be supplied to the State new hires directory
within 20 days after the employee is hired. Within 3 business
days after receipt of new hire information from the employer,
the State directory of new hires is required to furnish the
information to the national directory of new hires. The new law
also requires the establishment of a Federal case registry of
child support orders and a national directory of new hires. The
Federal directories are to consist of abstracts of information
from the State directories and are located in the FPLS.
Public Law 104-193 allows all States to link up to an
array of data bases and permits the FPLS to be used for the
purpose of establishing parentage; establishing, setting the
amount of, modifying, or enforcing child support obligations;
or enforcing child custody or visitation orders. By May 1,
1998, a designated State agency must directly or by contract
conduct automated comparisons of the Social Security numbers
reported by employers to the State directory of new hires and
the Social Security numbers of CSE cases that appear in the
records of the State registry of child support orders. (The new
law requires the HHS Secretary to conduct similar comparisons
of the Federal directories.) When a match occurs the State
directory of new hires is required to report to the State CSE
agency the name, date of birth, and Social Security number of
the employee, and the name, address, and identification number
of the employer. The CSE agency must, within 2 business days,
instruct appropriate employers to withhold child support
obligations from the employee's paycheck, unless the employee's
income is not subject to withholding.
There are two exceptions to the immediate income
withholding rule: (1) if one of the parties demonstrates, and
the court (or administrative process) finds, that there is good
cause not to require immediate withholding; or (2) if both
parties agree in writing to an alternative arrangement. Public
Law 104-193 requires employers to remit to the State
disbursement unit income withheld within 7 business days after
the employee's payday. States also are required to operate a
centralized collection and disbursement unit that sends child
support payments to custodial parents within 2 business days.
Moreover, Public Law 104-193 expands the scope of the FPLS
to provide information on the location of custodial parents.
Federal law requires the HHS Secretary to operate a FPLS that
contains information on, or that facilitates the discovery of,
the location of individuals who are under obligation to pay
child support, or against whom such an obligation is sought, or
to whom such an obligation is owed. The FPLS also is used to
find abducted children and to make or enforce a child custody
or visitation determination.
Establishing Paternity
Paternity establishment is a prerequisite for obtaining a
child support order. In 1994, 32.6 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 TANF Program (see Audits and
Financial Penalties section). Legislation passed in 1996
further strengthened the Nation's paternity establishment
system. More specifically, Public Law 104-193 streamlines the
paternity determination process; raises the paternity
establishment requirement from 75 to 90 percent; implements a
simple civil process for establishing paternity; requires a
uniform affidavit to be completed by men voluntarily
acknowledging paternity and entitles such affidavit to full
faith and credit in any State; stipulates that a signed
acknowledgment of paternity be considered a legal finding of
paternity unless rescinded within 60 days and thereafter may be
challenged in court only on the basis of fraud, duress, or
material mistake of fact; and provides that no judicial or
administrative action is needed to ratify an acknowledgment
that is not challenged. The new law also requires States to
publicize the availability and encourage the use of procedures
for voluntary establishment of paternity and child support.
Paternity acknowledgments must be filed with the State
birth records agency. Public Law 104-193 requires that before a
mother or alleged father can sign a paternity acknowledgment,
each must be given notice (both orally and in writing) of the
alternatives to, legal consequences of, and rights and
responsibilities arising from the signed acknowledgment.
Moreover, in the case of unmarried parents, the father's name
shall not appear on the birth certificate unless he has signed
a voluntary acknowledgment or a court has issued an
adjudication of paternity.
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.
Public Law 104-193 mandates that the State CSE agency have
the power (without the need for permission from a court or
administrative tribunal) to order genetic tests in appropriate
CSE cases. These CSE agencies also must recognize and enforce
the ability of other State CSE agencies to take such actions.
Moreover, genetic test results must be admissible as evidence
so long as they are of a type generally acknowledged as
reliable by accreditation bodies recognized by HHS and
performed by an entity approved by such an accredited body.
Finally, in any case in which the CSE agency ordered the tests,
the State must pay for the initial tests. The State is allowed
to recoup the cost from the father if paternity is established.
If the original test result is contested, further testing can
be ordered by the CSE agency if the contestant pays the cost in
advance.
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 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 1996, 717,000 paternities were established,
up from 245,000 in fiscal year 1986. While the number of
paternities established through child support agencies reached
a record high in 1996, huge disparities exist among States. In
the previous year (latest available data), for example, the
percentage of children in the Child Support Enforcement Program
for whom paternity was established averaged 50 percent
nationally, but ranged from 14 percent in Wyoming to 91 percent
in Georgia.
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 TANF benefits to the
child of a noncustodial parent creates a debt due from the
parent or parents in the amount of the TANF benefit. 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 establish orders, establish
paternity, and provide 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. States are
required to have quasi-judicial or administrative systems to
expedite the process for obtaining and enforcing a support
order. Since 1993, State have been required to extend these
expedited processes to paternity establishment. These
requirements can be waived--either statewide or in a locality--
if the judicial system is able to process cases expeditiously.
Most child support officials view the growth of expedited
administrative processes 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 acknowledgment of support liability and approve
stipulated agreements to pay support. In addition, if the State
establishes paternity using the expedited judicial process, the
surrogate can accept voluntary acknowledgement of paternity.
Judge surrogates are sometimes 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. Federal regulations 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.
Under Public Law 104-193, the expedited procedure rules
were broadened to cover modification of support orders. The new
law also requires that State tribunals--whether quasi-judicial
or administrative--must have statewide jurisdiction over the
parties and permit intrastate case transfers from one tribunal
to another without the need to refile the case or re-serve the
respondent. In addition, once a support/paternity order is
entered, the tribunal must require each party to file and
periodically update certain information with both the tribunal
and the State's child support case registry. This information
includes the parent's Social Security number, residential and
mailing addresses, telephone number, driver's license number,
and employer's name, address and telephone number.
Moreover, the 1996 reforms require States to adopt laws
that give the CSE agency authority to initiate a series of
expedited procedures without the necessity of obtaining an
order from any other administrative agency or judicial
tribunal. These actions include: ordering genetic testing;
issuing subpoenas; requiring public and private employers and
other entities to provide information on employment,
compensation, and benefits or be subject to penalties;
obtaining access to vital statistics, State and local tax
records, real and personal property records, records of
occupational and professional licenses, business records,
employment security and public assistance records, motor
vehicle records, corrections records, customer records of
utilities and cable television companies pursuant to an
administrative subpoena, and records of financial institutions;
directing the obligor to make payments to the child support
agency in public assistance or income withholding cases;
ordering income withholding; securing assets to satisfy
judgments and settlements; and increasing the monthly support
due to make payments on arrearages.
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. October
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 8-24
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.
---------------------------------------------------------------------------
Pirog, Klotz, and Buyers (1997) have examined the
differences in child support guidelines across States. Their
approach was to define five hypothetical cases of custodial
mothers and noncustodial fathers that capture a range of
differences in income, expenses, and other factors that
influence the amount of child support payments computed under
the guidelines adopted by the various States. State 1997
guidelines were then applied to each of the five cases to
compute the amount of child support that would be due. In each
of the five cases, the mother and father are divorced. The
father lives alone while the mother lives with the couples' two
children, ages 7 and 13. The father pays union dues of $30 per
month and health insurance for the children of $25 per month.
The mother incurs monthly employment-related child care
expenses of $150. The income of the fathers and mothers are:
Case A: father--$530; mother--$300
Case B: father--$720; mother--$480
Case C: father--$2,500; mother--$1,000
Case D: father--$4,400; mother--$1,760
Case E: father--$6,300; mother--$4,200
Arguably, the most striking generalization that emerges
from table 8-2 is the remarkable differences across States in
the amount of the child support obligation established by the
guidelines, particularly at the lower income levels.
TABLE 8-2.--AMOUNT OF CHILD SUPPORT AWARDED BY STATE GUIDELINES IN VARIOUS CASES
----------------------------------------------------------------------------------------------------------------
Case
State ------------------------------------------------------
A B C D E
----------------------------------------------------------------------------------------------------------------
Alabama................................................. $216 $280 $433 $634 (\1\)
Alaska.................................................. 38 38 312 546 $1,193
Arizona................................................. (\1\) 75 482 628 1,061
Arkansas................................................ (\1\) 150 305 475 1,025
California.............................................. 236 278 478 770 1,457
Colorado................................................ 231 261 409 610 1,066
Connecticut............................................. 0 0 404 703 1,198
Delaware................................................ 91 91 467 626 1,157
District of Columbia.................................... 50 208 458 821 1,495
Florida................................................. 135 261 463 721 1,186
Georgia................................................. 210 210 383 673 1,607
Hawaii.................................................. 100 100 470 610 1,260
Idaho................................................... 122 166 345 566 913
Illinois................................................ 102 136 294 485 1,020
Indiana................................................. 215 327 692 899 1,462
Iowa.................................................... 50 189 358 566 1,047
Kansas.................................................. 188 227 390 582 1,195
Kentucky................................................ 221 293 445 637 1,017
Louisiana............................................... 207 292 451 667 1,052
Maine................................................... 52 290 437 619 1,031
Maryland................................................ 249 295 449 655 1,060
Massachusetts........................................... (\1\) 137 471 789 (\1\)
Michigan................................................ 128 141 468 657 1,078
Minnesota............................................... 62 84 376 606 1,228
Mississippi............................................. 92 124 251 427 908
Missouri................................................ 149 265 447 609 1,032
Montana................................................. 6 15 26 456 908
Nebraska................................................ 50 50 390 677 1,035
Nevada.................................................. 200 180 375 660 1,575
New Hampshire........................................... 50 50 424 667 1,473
New Jersey.............................................. 112 267 452 710 (\1\)
New Mexico.............................................. 183 291 468 588 1,095
New York................................................ 25 50 436 699 1,548
North Carolina.......................................... 50 57 463 600 1,012
North Dakota............................................ 68 126 356 582 1,231
Ohio.................................................... 150 278 465 609 1,045
Oklahoma................................................ 171 171 295 415 801
Oregon.................................................. 73 159 343 587 1,027
Pennsylvania............................................ (\1\) 257 415 554 (\1\)
Rhode Island............................................ 252 315 480 677 1,170
South Carolina.......................................... 58 183 463 574 1,000
South Dakota............................................ 275 275 486 652 1,032
Tennessee............................................... 153 200 393 665 1,422
Texas................................................... 109 147 298 517 1,114
Utah.................................................... 83 131 447 616 (\1\)
Vermont................................................. (\1\) (\1\) 428 642 1,025
Virginia................................................ 231 289 446 641 1,042
Washington.............................................. 50 50 412 641 1,054
West Virginia........................................... 50 117 364 539 1,742
Wisconsin............................................... 133 180 375 660 1,575
Wyoming................................................. 105 200 348 519 882
----------------------------------------------------------------------------------------------------------------
\1\ In these cases, courts have the discretion to set the amount that seems appropriate to the court.
ANote.--See text for explanation of cases A, B, C, D, and E.
Source: Pirog, Klotz, & Buyers, 1997.
Award rates
In 1993, of the 11.5 million custodial mothers of children
under the age of 21 whose father was not living in the
household, only 6.9 million or 60 percent had a child support
award. About one-third of the 4.6 million custodial mothers
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 44 percent of never-
married custodial mothers had support awards compared with 70
percent of divorced custodial mothers. Moreover, black
custodial mothers and custodial mothers of Hispanic origin were
much less likely than their white counterparts to have child
support awards. About 57 percent of whites had child support
awards, compared with 46 percent of blacks and 38 percent of
Hispanics (U.S. Bureau of the Census, 1997).
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; \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 1988 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 required 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 TANF, foster care, or Medicaid Programs are
currently being provided, but does not include orders for
former TANF, 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
TANF, foster care, or Medicaid benefits receiving continued
child support services, review is required at least once every
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.
Public Law 104-193, the 1996 welfare reform law, somewhat
revised the review and modification requirements. The mandatory
3-year review of child support orders is slightly modified to
permit States some flexibility in determining which reviews of
welfare cases should be pursued and in choosing methods of
review. States must review orders every 3 years (or more often
at State option) if either parent or the State requests a
review in welfare cases or if either parent requests a review
in nonwelfare CSE cases. States must notify parents of their
review and adjustment rights at least once every 3 years.
States will be able to use one of three different methods for
adjusting orders: (1) the child support guidelines (i.e.,
current law); (2) an inflation adjustment in accordance with a
formula developed by the State; or (3) an automated method to
identify orders eligible for review followed by an appropriate
adjustment to the order, not to exceed any threshold amount
determined by the State. If either an inflation adjustment or
an automated method is used, the State must allow either parent
to contest the adjustment.
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 also 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. The purpose of
medical support enforcement 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. 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. These regulations also 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.
Before late 1993, employees covered under their employer's
health care plans generally could provide coverage to 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
to: (a) provide the custodial parent with the
information necessary for the child to obtain benefits;
(b) 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) 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, 67 percent of support orders
established in fiscal year 1996 included health insurance, up
from 46 percent in fiscal year 1991. Nevertheless, only 34
percent of support orders enforced or modified in fiscal year
1996 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).
Under last year's welfare reform legislation (Public Law
104-193), the definition of ``medical child support order'' in
the Employee Retirement Income Security Act (ERISA) is expanded
to clarify that any judgment, decree, or order that is issued
by a court or by an administrative process has the force and
effect of law. In addition, the new law stipulates that all
orders enforced by the State CSE agency must include a
provision for health care coverage. If the noncustodial parent
changes jobs and the new employer provides health coverage, the
State must send notice of coverage to the new employer; the
notice must serve to enroll the child in the health plan of the
new employer.
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; revocation of various types of licenses (drivers',
business, occupational, recreational) to persons who are
delinquent in their child support payments; attachment of
lottery winnings and insurance settlements of debtor parents;
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 hire private collection agencies to collect child
support payments. Some States bring charges of criminal
nonsupport or civil or criminal contempt of court against
noncustodial parents who fail to pay child support. These court
proceedings are usually lengthy 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 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 top collection methods are presented in
table 8-3.
TABLE 8-3.--CHILD SUPPORT COLLECTIONS MADE BY VARIOUS ENFORCEMENT TECHNIQUES, SELECTED FISCAL YEARS 1989-96
[Dollars in millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Child support collections Percent of total collections
Enforcement technique -------------------------------------------------------------------------------------------------------
1989 1991 1993 1994 1995 1996 1989 1991 1993 1994 1995 1996
--------------------------------------------------------------------------------------------------------------------------------------------------------
Wage withholding................................ $2,144 $3,266 $4,743 $5,429 $6,111 $6,731 40.9 47.4 53.1 55.1 56.9 56.0
Federal income tax offset....................... 411 476 570 623 734 906 7.9 6.9 6.4 6.3 6.8 7.5
State income tax offset......................... 62 72 78 88 97 112 1.2 1.0 0.9 0.9 0.9 0.9
Unemployment compensation intercept............. 54 143 286 223 187 211 1.0 2.1 3.2 2.3 1.7 1.8
Other \1\....................................... 2,570 2,929 3,232 3,506 3,624 4,059 49.0 42.6 36.3 35.5 33.7 33.8
-------------------------------------------------------------------------------------------------------
Total collections......................... $5,241 $6,886 $8,907 $9,869 $10,753 $12,019 100.0 100.0 100.0 100.0 100.0 100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\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. OCSE officials maintain that reliability of collection data lessen when specified by techniques of collection.
Note.--Data is preliminary for fiscal year 1996.
Source: Office of Child Support Enforcement, U.S. Department of Health and Human Services.
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, with some
exceptions, 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 if and when an arrearage occurs.
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.
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 the 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.
Federal law provides two exceptions to the income
withholding rule: (1) if one of the parents demonstrates, and
the court (or administrative process) finds, that there is good
cause not to require immediate income withholding or (2) if
both parents agree in writing to an alternative payment
arrangement. For income withholding purposes, ``income'' means
any periodic form of payment due an individual, regardless of
source, including wages, salaries, commissions, bonuses,
worker's compensation, disability, payments from a pension or
retirement program, and interest.
As shown in table 8-3, 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 $6.7 billion in 1996, 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; in 1996, it dropped back slightly to
56 percent.
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 1996, according to IRS, more than 1 million
cases were offset. The total amount intercepted was $1 billion,
up by a factor of well over three since 1986 ($308 million).
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 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 1996, the State Tax Intercept Program
collected $112 million (table 8-3). 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 collected $211
million in fiscal year 1996 (table 8-3). 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). A 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, they
determine 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.
A procedure developed by the IRS, known as Project 1099
(that is, the number of the IRS form used), has helped several
States increase their use of liens by identifying individuals
who possess appropriate assets. 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.
The welfare reform legislation passed in 1996 (Public Law
104-193) requires States to have procedures under which liens
arise by operation of law against property for the amount of
the past-due support. States must grant full faith and credit
to liens of other States if the originating State agency or
party has complied with procedural rules relating to the
recording or serving of lien. These rules, however, cannot
require judicial notice or hearing before enforcement of the
lien.
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.
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 without
hindering the noncustodial parent from effectively pursuing his
livelihood.
IRS full collection process
Since 1975, Congress has authorized the Internal Revenue
Service 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 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 1995, collections were made in 939 cases
nationwide, for a total collection of $764,697.
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.
In order to facilitate the access of child support
officials to credit information, the 1996 welfare reform
legislation states that in response to a request by the head of
a State or local CSE agency (or by a State or local government
official authorized by the head of a CSE agency), consumer
credit agencies must release information if the person making
the request makes all of the following certifications: that the
consumer report is needed to establish and individual's
capacity to make child support payments or determine the level
of payments; that paternity has been established or
acknowledged; that the consumer has been given at least 10 days
notice by certified or registered mail that the report is being
requested; and that the consumer report will be kept
confidential, will be used solely for child support purposes,
and will not be used in connection with any other civil,
administrative, or criminal proceeding or for any other
purpose. Consumer reporting agencies also must give reports to
a CSE agency for use in setting an initial or modified award.
These provisions amend the Fair Credit Reporting Act.
The new law also requires States to periodically report to
consumer reporting agencies the name of any noncustodial parent
who is delinquent in the payment of support and the amount of
past-due support owed by the parent. Before such a report can
be sent, the obligor must have been afforded all due process
rights, including notice and reasonable opportunity to contest
the claim of child support delinquency.
Enforcement against Federal employees
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.
The 1996 welfare reform law substantially revised child
support enforcement for Federal employees, including retirees
and military personnel. As under prior law, Federal employees
are subject to income withholding and other actions taken
against them by State CSE agencies. However, every Federal
agency is responsible for responding to a State CSE Program as
if the Federal agency were a private business. The head of each
Federal agency must designate an agent, whose name and address
must be published annually in the Federal Register, to be
responsible for handling child support cases. The agency must
respond to withholding notices and other matters brought to its
attention by CSE officials. Child support claims are given
priority in the allocation of Federal employee income.
Enforcement against military personnel
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).
As a result of the 1996 welfare reform law, the Secretary
of Defense must establish a central personnel locator services,
which must be updated on a regular basis, that permits location
of every member of the Armed Services. The Secretary of each
branch of the military service must grant leave to facilitate
attendance at child support hearings and other child support
proceedings. The Secretary of each branch also must withhold
support from retirement pay and forward it to State
disbursement units.
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).
The 1996 welfare reform law requires States to implement
expedited procedures that allow them to secure assets to
satisfy arrearages by intercepting or seizing periodic or lump
sum payments (such as unemployment and workers' compensation),
lottery winnings, awards, judgments, or settlements. States
must also have expedited procedures that allow them to seize
assets of the debtor parent held by public or private
retirement funds and financial institutions. States also must
have the authority to withhold, suspend, or restrict the use of
driver's licenses, professional and occupational licenses, and
recreational licenses of persons who owe past-due support or
who fail to comply with subpoenas or warrants relating to
paternity or child support proceedings. The 1996 law also
authorizes the Secretary of State to deny, revoke, or restrict
passports of debtor parents.
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.
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 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 resulted in lower orders for both
current support and arrearages. They also contend that few
child support agencies attempted 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 provides 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 of 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.
The 1996 welfare law requires the HHS Secretary, in
consultation with State CSE directors, to issue forms by
October 1, 1996 that States must use for income withholding,
for imposing liens, and for issuing administrative subpoenas in
interstate cases. States must begin using the forms by March 1,
1997.
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 October 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.
The full faith credit rules of Public Law 104-193 clarify
the definition of a child's home State, make several revisions
to ensure that the rules can be applied consistently with
UIFSA, and clarify the rules regarding which child support
order States must honor when there is more than one order.
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 child support 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.
In 1995, 748 cases were referred to U.S. attorneys. So far
42 (6 percent) of those cases have resulted in convictions and
a total of $1.2 million in restitution.
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.
The model law was 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 given 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 such enforcement. 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.
Pursuant to Public Law 104-193, all States must enact
UIFSA, including all amendments, before January 1, 1998. States
are not required to use UIFSA in all cases if they determine
that using other interstate procedures would be more effective.
As of early September 1997, 42 States and the District of
Columbia had adopted UIFSA.
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 8-3 shows that 66 percent of the $12 billion in child
support payments collected in fiscal year 1996 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 8-3 indicates that by fiscal year 1991 wage withholding
had become the primary enforcement method, producing nearly 47
percent of all child support collections. By 1996, the
percentage had increased even further, reaching 56 percent.
STATE COLLECTION AND DISTRIBUTION OF SUPPORT PAYMENTS
One of the major child support provisions of the 1996
welfare reform legislation was the requirement that by October
1, 1998, State CSE agencies must operate a centralized,
automated unit for collection and disbursement of payments on
two categories of child support orders: those enforced by the
CSE agency and those issued or modified after December 31, 1993
which are not enforced by the State CSE agency but for which
the noncustodial parent's income is subject to withholding.
The State disbursement unit must be operated directly by
the State CSE agency, by two or more State CSE agencies under a
regional cooperative agreement, or by a contractor responsible
directly to the State CSE agency. The State disbursement unit
may be established by linking local disbursement units through
an automated information network if the HHS Secretary agrees
that the system will not cost more, take more time to
establish, nor take more time to operate than a single State
system. All States, including those that operate a linked
system, must give employers one and only one location for
submitting withheld income.
The disbursement unit must be used to collect and disburse
support payments, to generate orders and notices of withholding
to employers, to keep an accurate identification of payments,
to promptly distribute money to custodial parents or other
States, and to furnish parents with a record of the current
status of support payments made after August 22, 1996. The
disbursement unit must use automated procedures, electronic
processes, and computer-driven technology to the maximum extent
feasible, efficient, and economical.
The disbursement unit must distribute all amounts payable
within 2 business days after receiving the money and
identifying information from the employer or other source of
periodic income if sufficient information identifying the payee
is provided. The unit may retain arrearages in the case of
appeals until they are resolved.
States must use their automated system to facilitate
collection and disbursement including at least: (1)
transmission of orders and notices to employers within 2 days
after receipt of the withholding notice; (2) monitoring to
identify missed payments of support; and (3) automatic use of
enforcement procedures when payments are missed.
The collection and disbursement unit provisions go into
effect on October 1, 1998. States that process child support
payments through local courts can continue court payments until
September 30, 1999.
Following enactment of this provision in August 1996, there
was widespread misunderstanding about its breadth of
application. Thus, it is useful to emphasize here that not all
child support orders must be a part of the State disbursement
unit. First, orders issued before 1994 that are not being
enforced by the State Child Support Enforcement Agency are
exempt. Second, parents can avoid both wage withholding and
involvement in the child support enforcement system if at the
time the original order is issued, the judge determines that
private payments directly between parents is acceptable.
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 types of debts are
not dischargeable, 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 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.
The 1996 welfare reform legislation amends the U.S.
Bankruptcy Code to ensure that any child support debt that is
owed to a State and that is enforceable under the CSE Program
cannot be discharged in bankruptcy proceedings.
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 September 30, 1995, OCSE had approved the automated
data systems of only six States--Delaware, Georgia, Utah,
Virginia, Washington, and West Virginia. 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 was ended; the Federal matching rate for State spending on
data systems reverted back to 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).
Under the 1996 welfare reform legislation, States are
required to have a statewide automated data processing and
information retrieval system which has the capacity to perform
a wide variety of functions with a specified frequency. The
State data system must be used to perform functions the HHS
Secretary specifies, including controlling and accounting for
the use of Federal, State, and local funds and maintaining the
data necessary to meet Federal reporting requirements in
carrying out the CSE Program. The automated system must
maintain the requisite data for Federal reporting, calculate
the State's performance for purposes of the incentive and
penalty provisions, and have in place systems controls to
ensure the completeness, reliability, and accuracy of the data.
Final regulations for implementation of automated systems must
be issued by the Secretary by August 22, 1998.
The statutory provisions for State implementation of
Federal automatic data processing requirements are revised to
provide that, first, all requirements enacted on or before the
date of enactment of the Family Support Act of 1988 (i.e.,
October 13, 1988) are to be met by October 1, 1997. Second,
requirements enacted on or before August 22, 1996 must be met
by October 1, 2000. The October 1, 2000 deadline is to be
extended by 1 day for each day by which the HHS Secretary fails
to meet the 2-year deadline for regulations. The Federal
Government will continue the 90 percent matching rate for 1996
and 1997 in the case of provision outlined in advanced planning
documents submitted before September 30, 1995; the enhanced
match also is provided retroactively for funds expended since
expiration of the enhanced rate on October 1, 1995.
The Secretary must create procedures to cap payments to
the States to meet the new requirements at $400 million for
fiscal years 1996-2001. The Federal matching rate for the new
requirements will be 80 percent. Funds are to be distributed
among States by a formula set in regulations which takes into
account the relative size of State caseloads and the level of
automation needed to meet applicable automatic data processing
requirements.
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.
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).
The welfare reform law of 1996 requires States to annually
review and report to the HHS Secretary, using data from their
automatic data processing system, both information adequate to
determine the State's compliance with Federal requirements for
expedited procedures and case processing as well as the
information necessary to calculate their levels of
accomplishment and rates of improvement on the performance
indicators.
The Secretary is required to determine the amount (if any)
of incentives or penalties. The Secretary also must review
State reports on compliance with Federal requirements and
provide States with recommendations for corrective action.
Audits must be conducted once every 3 years, or more often in
the case of States that fail to meet Federal requirements. The
purpose of the audits is to assess the completeness,
reliability, and security of data reported for use in
calculating the performance indicators and to assess the
adequacy of financial management of the State program.
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 has
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 TANF,
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, child support collections are
generally 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 retain the $200, 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 TANF 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 TANF 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 child
support collections will be paid against these debts once the
family leaves TANF. 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
TANF 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 TANF 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.
Before the 1996 welfare reform law was enacted, Federal law
allowed States to design their own distribution rules to
determine who got arrearage collections. States could even keep
the entire arrearage payment and not share any of it with the
family. Only when the State and Federal Governments had been
repaid the entire amount of TANF benefits provided to the
family were States required to pay arrearage collections to the
family.
During the 1995-96 welfare reform debate, the Federal
policy of allowing States to decide who gets arrearage payments
once the family leaves welfare received intense criticism. With
the increased emphasis on helping mothers leave welfare and
achieve self support, the additional money mothers could
receive from past-due child support took on additional meaning.
Thus, Federal law on distribution of child support arrearage
payments was substantially revised and States were given both
mandates and options designed to increase the amount of money
received by families, especially after they left welfare. Here
is an overview of these new provisions.
In the case of families receiving assistance, the new law
gives States the option of passing the entire child support
payment through to families. If a State elects this option, it
must still pay the Federal share of the collection to the
Federal Government.
In the case of families that have left welfare, current
child support payments go to the family as they always have.
Payments on arrearages that accrued after the family stopped
receiving cash assistance and that are collected before October
1, 1997 are to be paid in accordance with the law in effect
before enactment of the 1996 welfare reform law, which means
that these arrearage payments generally are to be paid to the
State as reimbursement for welfare payments (with appropriate
reimbursement of the Federal share of the collection to the
Federal Government).
However, with respect to arrearages that accrued after the
family stopped receiving cash assistance that are collected on
or after October 1, 1997 (or at the option of the State, before
such date), the arrearage is to be paid to the family unless it
is collected through the Federal income tax offset program, in
which case it is to be paid to the State (and the State must
pay the Federal share). Any remaining money is paid to satisfy
arrearages that accrued before the family started receiving
cash assistance. If there is still money remaining, the State
retains its share of the amount and pays to the Federal
Government the Federal share of the collection (to the extent
necessary to reimburse amounts paid to the family as cash
assistance). Any remaining money is then paid to the family.
Arrearages that accrued before the family starting
receiving cash assistance and that are collected before October
1, 2000 are to be paid in accordance with the law in effect
before enactment of the welfare reform legislation of 1996,
which means that these arrearage payments generally are paid to
the State to reimburse it for any arrearages owed under the
welfare assignment (with appropriate reimbursement of the
Federal share of the collection to the Federal Government).
Arrearages that accrued before the family starting
receiving cash assistance and that are collected on or after
October 1, 2000 (or before such date, at the option of the
State), must be paid to the family unless it is collected
through the Federal income tax offset program, in which case it
is paid to the State (and the State pays the Federal share). If
any money remains, it is paid to satisfy arrearages that
accrued before the family starting receiving cash assistance.
If there is still money remaining, the State retains its share
of the amount and pays to the Federal Government the Federal
share of the collection (to the extent necessary to reimburse
amounts paid to the family as cash welfare). If any money
remains, it is paid to the family.
With respect to any arrearages that accrued while the
family received cash assistance, States are given the option of
passing the child support arrearage payment through to
families. If a State elects this option, it must pay the
Federal share of the collection to the Federal Government.
As noted above, arrearages collected through the Federal
income tax offset program must be paid to the State. The State
may only retain arrearages that have been assigned to the State
and only up to the amount necessary to reimburse amounts paid
to the family as cash welfare. If the amount collected through
the tax offset exceeds the amount of cash welfare, the State
must distribute the excess to the family.
Effective October 1, 2000, the State must treat any
support arrearages collected, except for those collected
through the Federal income tax offset program, as accruing in
the following order: (1) to the period after the family stopped
receiving cash assistance, (2) to the period before the family
received cash assistance, and (3) to the period while the
family was receiving cash assistance.
Finally, in the case of families that never received
assistance, the entire amount of the child support collection
is distributed directly to the family as it always has been.
FUNDING OF STATE PROGRAMS
The child support program conducted by States is financed
by three major streams of money. The first and largest is the
Federal Government's commitment to reimburse States for 66
percent of all allowable expenditures on child support
activities. Allowable expenditures include outlays for locating
parents, establishing paternity (with an exception noted
below), establishing orders, and collecting payments.
There are two mechanisms through which Federal financial
control of State expenditures is exercised. First, States must
submit plans to the Secretary of HHS outlining the specific
child support activities they intent to pursue. The State plan
provides the Secretary with the opportunity to review and
approve or disapprove child support activities that will
receive the 66 percent Federal reimbursement. Second, as
discussed previously, HHS conducts a financial audit of State
expenditures.
In addition to the general matching rate of 66 percent, the
Federal Government provides 90 percent matching for two
especially important child support activities. First, the
Federal Government pays 80-90 percent of approved State
expenditures on developing and improving management information
systems. Congress decided to pay this enhanced match rate
because data management, the construction of large data bases
containing information on location, income, and assets of child
support obligors, and computer access to and manipulation of
such large data bases were seen as the keys to a cost effective
child support system. In spending the additional Federal
dollars on these data systems, Congress hoped to provide an
incentive for States to adopt and aggressively employ efficient
data management technology.
Second, Congress also provides 90 percent funding for
laboratory costs of blood testing. As in the case of data
management systems, Congress justified enhanced funding of
blood tests because paternity establishment is an activity
vital to successful child support enforcement. Historically,
establishing paternity in cases of births outside marriage has
proven to be surprisingly difficult. Especially since the
1960s, more and more children have been born outside marriage;
today nearly a third of all children are born to unwed mothers,
and nearly 50 percent of these babies wind up on welfare. Thus,
establishing paternity has become more and more important
because a growing fraction of the welfare caseload is children
whose paternity has not been established. Congress hopes to
stimulate the use of blood tests as a way of improving State
performance in establishing paternity, especially given that
recent experience in the States shows that many men voluntarily
acknowledge paternity once blood tests reveal a high
probability of their paternity.
In addition to the Federal administrative matching
payments, the second stream of financing for State programs is
child support collections. As we have seen, when mothers apply
for welfare, they assign the child's claim rights against the
father to the State. As long as the family receives TANF
payments, the State can retain the entire payment. As explained
in detail above in the section on distribution of child support
payments, States retain the right to pursue repayment for TANF
benefits from the parent who owes child support even after the
family leaves welfare.
Recovered payments are split between the State and the
Federal Government in accord with the percentage of Federal
reimbursement of Medicaid benefits. In the Medicaid Program,
the Federal Government pays States a percentage of their
expenditures that varies inversely with State per capita
income--poor States have a high Federal reimbursement
percentage, wealthy States have a lower Federal reimbursement
percentage. Mississippi, for example, one of the poorest
States, receives a reimbursement of about 80 percent for its
Medicaid expenditures. By contrast, States like California and
New York that have high per capita income receive the minimum
Federal reimbursement of 50 percent.
Since Federal dollars are used to finance a portion of the
State TANF payment, States are required to split child support
collections from TANF cases with the Federal Government. The
rate at which States reimburse the Federal Government is the
Federal matching rate in the TANF Program. Thus, Mississippi
must send 80 percent of child support collections made on
behalf of TANF families to the Federal Government. New York and
California send only 50 percent of TANF collections back to
Washington.
The third stream of child support financing is Federal
incentive payments. The current incentive system is designed to
encourage States to collect child support from both TANF and
non-TANF cases. Under the incentive formula, each State
receives a payment equal to at least 6 percent of both TANF
collections and of non-TANF collections. States that perform
efficiently as indicated by the ratio of collections to
administrative expenditures can receive incentive payments of
up to 10 percent of collections in both the TANF and non-TANF
Programs. The specific incentive percentage between 6 and 10
for which a State qualifies is based on the collections-to-
expenditures ratios (see table 8-4).
TABLE 8-4.--INCENTIVE PAYMENT STRUCTURE
------------------------------------------------------------------------
Incentive
payment
Collection-to-cost ratio received
(percent)
------------------------------------------------------------------------
Less than 1.4 to 1...................................... 6.0
At least 1.4 to 1....................................... 6.5
At least 1.6 to 1....................................... 7.0
At least 1.8 to 1....................................... 7.5
At least 2.0 to 1....................................... 8.0
At least 2.2 to 1....................................... 8.5
At least 2.4 to 1....................................... 9.0
At least 2.6 to 1....................................... 9.5
At least 2.8 to 1....................................... 10.0
------------------------------------------------------------------------
Source: Office of Child Support Enforcement, U.S. Department of Health
and Human Services.
Incentive payments for non-TANF collections have been
controversial since the inception of the child support program,
especially given the guarantee of an incentive payment equal to
6 percent of collections (table 8-4). Until fiscal year 1985,
nonwelfare (AFDC) collections were not eligible for incentive
payments at all. Congress adopted this policy because welfare
collections are retained and split between State and Federal
Governments while all nonwelfare collections are paid to
custodial parents.
In 1984 (effective for 1985 and thereafter), Congress
extended incentive payments to nonwelfare collections. To limit
Federal costs and to retain a substantial incentive for welfare
collections, nonwelfare incentive payments were capped as a
percentage of welfare incentive payments. The 1984 law (Public
Law 98-378) stipulated that nonwelfare incentive payments were
not to exceed welfare incentive payments in fiscal years 1986
and 1987, were not to exceed 105 percent of welfare incentive
payments in 1988, and were not to exceed 110 percent in 1989.
Since 1990, the 1984 law has allowed States to receive
incentive payments in the nonwelfare program of up to 115
percent of those in the welfare program.
Two criticisms of the current incentive payment structure
are that it focuses only on comparing collections to the cost
of making them, while ignoring measures such as paternity and
support order establishment, and that States currently receive
a minimum level of incentive payments regardless of their
performance. The 1996 welfare reform law required the HHS
Secretary, in consultation with the State CSE directors, to
develop a performance-based, revenue neutral system of
incentive payments, and report to the appropriate congressional
committees the details of the proposed incentive system by
March 1, 1997.
The Secretary's report, submitted on March 13, responds to
the flaws in the current incentive system by recommending that:
(1) the incentive system provide additional payments to States
based on five performance measures related to establishment of
paternity and child support orders, collections of current and
past-due support payments, and cost effectiveness; (2)
incentive payments available to each State be based on a
percentage of the State's collections (with no cap on
nonwelfare collections); (3) the incentive system be phased in
over a 1-year period beginning in fiscal year 2000; (4)
incentive payments be reinvested in the State CSE Program; (5)
the Federal Government maintain its 66 percent matching rate of
CSE expenditures; and (6) the new incentive system be reviewed
on a periodic basis. It is expected that legislation based on
the Secretary's recommendations will be introduced and
considered during the 105th Congress.
Given this overview of the three streams of money that
support State CSE Programs, we can now examine the basic
financial operations of the child support system. Table 8-5
summarizes both child support income and expenditures for every
State. The first three columns show State income from each of
three funding streams just described; the fourth column shows
State spending on child support. As demonstrated in the fifth
column, the sum of the three streams of income exceeds
expenditures in some 34 States. In other words, most States
make a profit on their child support program. States are free
to spend this profit in any manner the State sees fit.
TABLE 8-5.--FINANCING OF THE FEDERAL/STATE CHILD SUPPORT ENFORCEMENT PROGRAM, FISCAL YEAR 1996
[In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
State income
---------------------------------------- State Collections-
State Federal State share Federal administrative State net to-costs
administrative of incentive expenditures ratio
payments collections payments (costs)
----------------------------------------------------------------------------------------------------------------
Alabama....................... $31,161 $5,737 $3,548 $46,314 ($5,868) 3.41
Alaska........................ 11,517 8,085 2,973 17,439 5,136 3.31
Arizona....................... 31,177 6,647 3,842 46,909 (5,244) 2.41
Arkansas...................... 19,048 4,163 3,195 28,669 (2,263) 2.77
California.................... 293,731 222,548 66,752 437,991 145,040 2.36
Colorado...................... 25,399 15,001 5,590 38,361 7,628 2.82
Connecticut................... 29,035 12,645 7,086 43,027 5,740 2.91
Delaware...................... 9,941 3,393 1,112 14,168 279 2.50
District of Columbia.......... 7,731 2,526 1,103 11,696 (336) 2.38
Florida....................... 86,999 30,216 13,501 131,363 (647) 3.13
Georgia....................... 45,496 16,780 15,110 68,505 8,881 3.92
Guam.......................... 1,744 289 281 2,624 (310) 2.57
Hawaii........................ 16,113 5,396 1,758 23,907 (640) 2.18
Idaho......................... 12,535 2,942 1,961 18,928 (1,490) 2.32
Illinois...................... 68,905 28,513 10,691 103,803 4,304 2.41
Indiana....................... 21,416 14,186 7,658 30,091 13,170 6.54
Iowa.......................... 19,209 12,911 6,319 29,048 9,391 5.23
Kansas........................ 12,296 10,704 5,265 18,489 9,776 5.82
Kentucky...................... 27,927 9,646 5,514 42,210 877 3.43
Louisiana..................... 23,058 6,266 4,270 34,495 (900) 4.16
Maine......................... 10,224 9,459 4,907 15,435 9,155 4.05
Maryland...................... 43,688 19,120 6,540 66,017 3,332 4.36
Massachusetts................. 40,626 30,494 9,828 61,286 19,662 4.05
Michigan...................... 94,572 60,098 22,323 143,132 33,860 6.63
Minnesota..................... 48,457 25,680 9,017 73,195 9,960 4.36
Mississippi1.................. 9,522 3,959 3,553 29,463 (2,430) 2.87
Missouri...................... 52,173 22,161 9,635 74,419 9,549 3.75
Montana....................... 8,038 2,122 1,326 12,120 (634) 2.42
Nebraska...................... 20,007 3,964 1,750 30,179 (4,457) 3.16
Nevada........................ 14,782 3,737 2,279 22,346 (1,548) 2.53
New Hampshire................. 9,377 4,518 1,539 14,091 1,343 3.42
New Jersey.................... 73,147 39,238 12,698 110,735 14,348 4.52
New Mexico.................... 15,914 1,344 975 21,129 (2,896) 1.43
New York...................... 115,020 79,891 28,461 174,183 49,188 4.03
North Carolina................ 59,282 20,653 10,732 89,147 1,521 2.94
North Dakota.................. 4,352 1,662 990 6,563 441 4.34
Ohio.......................... 106,594 41,141 17,008 161,618 3,125 6.07
Oklahoma...................... 16,968 6,674 3,666 24,040 3,269 3.06
Oregon........................ 21,129 10,544 5,480 31,874 5,278 5.60
Pennsylvania.................. 82,784 49,576 18,619 123,808 27,171 7.74
Puerto Rico................... 19,504 291 372 28,569 (8,401) 4.44
Rhode Island.................. 5,451 6,839 3,262 8,251 7,300 4.31
South Carolina................ 23,296 6,797 4,154 35,100 (853) 3.37
South Dakota.................. 3,173 1,936 1,399 4,770 1,738 5.87
Tennessee..................... 26,165 10,195 5,328 39,342 2,347 4.06
Texas......................... 96,614 32,915 15,873 144,984 418 3.71
Utah.......................... 19,497 5,136 3,217 29,170 (1,321) 2.66
Vermont....................... 4,467 2,602 1,346 6,701 1,714 3.79
Virgin Islands................ 1,597 94 67 2,418 (660) 2.25
Virginia...................... 40,844 18,475 5,988 61,507 3,800 4.18
Washington.................... 76,319 49,348 16,449 115,322 26,795 3.53
West Virginia................. 15,578 3,230 2,065 23,358 (2,484) 3.61
Wisconsin..................... 50,394 19,115 10,659 74,058 6,110 5.94
Wyoming....................... 5,575 1,835 647 8,455 (398) 2.96
--------------------------------------------------------------------------------
Nationwide................. 2,039,569 1,013,437 409,681 3,054,821 407,866 3.93
----------------------------------------------------------------------------------------------------------------
Note.--The ``State net'' column in this table is not the same as the comparable figure presented in annual
reports of the Office of Child Support Enforcement (see for example, 1996, p. 78 and table 8-23 below) because
estimated Federal incentive payments are used in the annual reports while final Federal incentive payments
were used in this table.
Source: Office of Child Support Enforcement, U.S. Department of Health and Human Services.
The method of financing child support enforcement has
received considerable attention in recent years. Perhaps the
most important issue is that States have little incentive to
control their administrative spending. The last column of table
8-5 presents a measure of State program efficiency obtained by
dividing total collections by total administrative expenses.
The table shows the dramatic differences among States in how
much child support is collected for each dollar of
administrative expenditure--a crude measure of efficiency--
ranging from only $1.43 in New Mexico to $7.74 in Pennsylvania.
And yet, most States, including those that spend up to three or
four times as much per dollar of collections as more efficient
States, still make a profit on the program.
Table 8-6 shows one consequence of child support's
financing system. The first two columns of the table show the
net impact of program financing on the Federal and State
governments respectively. The Federal Government has lost money
on child support every year since 1979, and the losses have
grown almost every year since then. Overall, losses jumped
sharply from $43 million in 1979 to $1.257 billion in 1995, and
then fell back slightly to $1.152 billion in 1996.
State governments by contrast have made a profit on the
program every year. In 1979, the first year for which data are
available, States cleared $244 million on child support. By
1996, States cleared $407 million (the peak year was 1994, when
States cleared $482 million). As Federal losses have mounted,
State profits have increased.
The last column in table 8-6 portrays an unfortunate
historical progression in child support financing. Beginning in
the very first year of the child support program and for nearly
a decade thereafter, the net impact of Federal losses and State
profits was a net savings for taxpayers. Thus, in 1979,
although the Federal Government lost money, State savings more
than made up for the loses. As a result, from a public finance
perspective, taxpayers were ahead by $201 million (see last
column). Total Federal and State child support expenditures, in
other words, were more than offset by collections from parents
whose children had been supported by AFDC payments. These AFDC
collections were retained and used to reimburse the Federal and
State governments for previous AFDC expenditures. The savings
produced in this manner exceeded overall expenditures.
TABLE 8-6.--FEDERAL AND STATE SHARE OF CHILD SUPPORT ``SAVINGS,'' FISCAL
YEARS 1979-96
[In millions of dollars]
------------------------------------------------------------------------
Federal State
share of share of
Fiscal year child child Net public
support support savings \1\
savings \1\ savings
------------------------------------------------------------------------
1979............................... -$43 $244 $201
1980............................... -103 230 127
1981............................... -128 261 133
1982............................... -148 307 159
1983............................... -138 312 174
1984............................... -105 366 260
1985............................... -231 317 86
1986............................... -264 274 9
1987............................... -337 342 5
1988............................... -355 381 26
1989............................... -480 403 -77
1990............................... -528 338 -190
1991............................... -586 385 -201
1992............................... -605 434 -170
1993............................... -740 462 -278
1994............................... -978 482 -496
1995............................... -1,274 421 -853
1996 (preliminary)................. -1,152 407 -745
------------------------------------------------------------------------
\1\ Negative ``savings'' are costs.
Source: Office of Child Support Enforcement, Annual Reports to
Congress, 1996 and various years.
Unfortunately, net public savings declined over the years.
A major explanation for the negative public savings was that
beginning in 1985, as explained above, new Federal legislation
required States to give the first $50 per month of collections
in welfare cases to the custodial parent. This $50 passthrough
had an immediate impact; in its first year, combined Federal-
State savings fell to $86 million from $260 million the
previous year. By 1989 the overall ``savings'' in the combined
program went negative. For the first time that year, Federal
losses exceeded State gains--by $77 million. The net losses
have increased almost every year, reaching $853 million in 1995
before declining somewhat to $745 million in 1996.
Reflecting on these numbers, two perspectives should be
considered. One perspective, the finance perspective, attends
simply to the measurable costs and benefits of the child
support program. But a second, broader perspective includes
more diffuse social benefits of child support that are
difficult to measure.
From the finance perspective, perhaps the most important
question about child support financing is why the Federal
Government, which loses money on the program every year, should
provide such a high reimbursement level for State expenditures
when nearly all States make a profit on their child support
program. In the past, this issue has prompted Congress to
reduce the basic administrative reimbursement rate on several
occasions. As a result, the rate has declined from its original
level of 75 percent to 66 percent. But some Members of
Congresss have suggested that, because most States are still
making a profit while the Federal Government is losing money,
Congress should reduce the Federal administrative reimbursement
rate below 66 percent. Defenders of child support financing
respond by pointing out that allowing States to profit from the
program makes it very popular with State policymakers who
control funding of the State share of expenditures. Without
financing arrangements favorable to State interests, according
to this view, the child support program would not have posted
the impressive gains that have characterized the program since
its inception in 1975.
The 66 percent Federal reimbursement of State
administrative expenditures raises a second issue of program
financing: Why is such a large percentage of State expenditures
financed without regard to performance? Even if States spend a
great deal of money on activities of dubious value in
collecting child support, they can nonetheless count on 66
percent reimbursement from the Federal Government. The flat 66
percent reimbursement rate may provide States with an incentive
to spend money inefficiently. A potential solution would be for
the Federal Government to provide States with less money based
on gross spending and relatively more money based on
performance.
However, there is widespread criticism of the current
incentive system. First, some critics of child support
financing question whether incentives should be provided for
non-TANF collections. With regard to program financing, there
is a striking difference between the TANF and non-TANF
Programs; namely, government retains part of TANF collections
but non-TANF collections are given entirely to the family. When
Congress enacted the Child Support Enforcement Program in 1975,
the floor debate shows that members of the House and Senate
supported the program primarily because retaining AFDC
collections would help offset AFDC expenditures.
But program trends since 1975 show that the non-AFDC
Program is actually much bigger than the AFDC Program and grows
faster each year than the AFDC Program. As shown in table 8-1
above, AFDC collections have grown from about $0.5 billion in
1978 to $2.9 billion in 1996, a growth factor of five. But non-
AFDC collections have grown from about $0.6 billion to more
than $9 billion over the same period, for a growth factor of
nearly 15.
The point here is that although TANF collections are
growing, non-TANF collections are growing much faster. And
since the State and Federal Governments receive virtually no
direct reimbursement for non-TANF expenditures, the child
support program loses more and more money every year. Why,
then, critics ask, should the Federal Government encourage
greater expenditures by providing incentives for non-TANF
collections. Ignoring for the moment possible social benefits
from the non-TANF Program and based entirely on a finance
perspective, some critics argue that non-TANF incentives
encourage inefficiency.
A second issue raised about the current incentive system is
that it does not necessarily base rewards on the best measure
of performance. Just as the basic 66 percent reimbursement rate
ignores efficiency by relying exclusively on expenditures, the
incentive system ignores efficiency by relying exclusively on
collections. A better measure of efficiency may be one that
combines expenditures and collections in a single measure. If
incentive payments were based on child support collections per
dollar of administrative expenditure, States would have
incentive to collect more money while holding down
expenditures. An incentive system based just on expenditures or
just on collections is at best half an incentive system.
Third, the incentive system is also criticized because
States receive an incentive payment of 6 percent of collections
regardless of program efficiency. One might question whether a
system that guarantees substantial payments independent of
performance is really an incentive system.
A final issue of program financing is whether government
should pay such a high percentage of costs in the non-TANF
Program. States must charge an application fee that can be no
more than $25 for the non-TANF Program, but this amount doesn't
even pay the full cost of opening a case file. In 1996, more
than 2.5 million non-TANF families received services resulting
in child support collections that averaged around $3,600 per
case. By collecting this money, government is providing a
useful service to millions of families, many of which are not
poor. Rather than have taxpayers pick up the cost of this
service, some critics argue that families receiving the
services should pay more of the costs. Federal law allows
States to charge additional fees, but few do so. States argue
that, because many of the non-TANF families are poor or low-
income, charging them for child support services would decrease
their already tenuous financial stability. States also argue
that setting up an administrative system to establish and
collect the fees would cost more money than the fees actually
collected.
The account of child support from the finance perspective
given above relies on measurable spending and collections.
However, defenders of the current child support program argue
that it may produce social benefits that are not captured by
mere spending and collections data. These program defenders
claim that a strong child support program produces ``cost
avoidance'' by demonstrating to noncustodial parents who would
try to avoid child support that the system will eventually
catch up with them.
Although there is little evidence that would allow an
estimate of the cost avoidance effect, there is nonetheless
good reason to believe that at least some noncustodial parents
make child support payments in part because they fear detection
and prosecution. Even more to the point, a strong child support
program may change the way society thinks about child support.
As in the cases of civil rights and smoking, a persistent
effort over a period of years may convince millions of
Americans, both those who owe child support and those concerned
with the condition of single-parent families, that making
payments is a moral and civic duty. Those who avoid it would
then be subject to something even more potent than legal
prosecution--social ostracism.
To the extent that this reasoning is correct, the public
and policymakers may come to regard child support enforcement
as a long-term investment similar in many respects to
education, job training, and other policies that help families
support their children. In each of these cases, there is
expectation that society will be better off in the long run
because the government invests in helping individuals and
families. But the expectation that investments will lead to
immediate payoffs, or even that we can devise evaluation
methods that adequately capture the long-term payoffs, is much
less than the expectation of immediate and measurable payoffs
that characterizes the kind of public finance reasoning
outlined above. Of course, even if the public is willing to
continue paying for child support enforcement as a social
investment, Congress and child support administrators may
nonetheless find it desirable to intensify their efforts to
make the program as efficient as possible.
Continue to the next part of this section.