Performance Improvement 2007. What Might Happen If States Allow Current and Former Welfare Recipients to Keep More of Their Child Support Money?

01/01/2007

Summary:

Predictions about current and former welfare recipients' receipt of child support under varying conditions were made using historical information about their household income. The analysis was carried out in order to provide States with cost and benefit data about different ways to increase child support distributions to both groups of welfare recipients. The analysis provided a general examination of possible effects of several types of state policy options similar to options that were recently made available to states through the Deficit Reduction Act of 2005. The analysis examined effects of changes to the amount of child support money states gave welfare recipients and former recipients rather than retaining it (that is, changes to the "pass-through" amounts). The analysis assumed that this additional child support money would not count (would be disregarded) for purposes of determining a family's eligibility for cash and other support. The study estimated the effects of program variables, such as changes in other public benefit payments and administrative costs, and some individual variables, such as non-custodial parents' payment of child support, to determine potential effects of state policy changes on family income, the poverty gap, self-sufficiency, and government costs.

There were several major findings. More generous child support pass-through and disregard policies might have several effects. Average annual cash income for welfare families and former welfare families who have child support collection made on their behalf would increase by up to 10%. The increase in average annual cash income for such families would be greater in states that do not currently have the pass-through. About 2/3 of the added income would reduce the poverty gap. The remaining 1/3 of the added income would replace benefits like food stamp and housing subsidies. A "behavioral response" to the more generous pass-through and disregard would increase the number of families with a child support collection. This would further reduce the poverty gap. Government costs would increase, but not as much as the net cash to families if there is a behavioral response to the policy changes.

Report Title: Benefits and Costs of Increased Child Support Distribution to Current and Former Welfare Recipients http://aspe.hhs.gov/hsp/05/cs-dist-TANF/index.htm
Agency Sponsor: ASPE, Office of the Assistant Secretary for Planning and Evaluation
Federal Contact: Burnszynski, Jennifer, 202-690-8651
Performer: The Urban Institute; Washington, DC
PIC ID: 8292

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