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H.R. 866, TO PROHIBIT THE PROVISION OF FINANCIAL ASSISTANCE BY THE FEDERAL GOVERNMENT TO ANY PERSON WHO IS MORE THAN

60 DAYS DELINQUENT IN THE PAYMENT OF

ANY CHILD SUPPORT OBLIGATION

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT EFFICIENCY,

FINANCIAL MANAGEMENT AND

INTERGOVERNMENTAL RELATIONS

OF THE

COMMITTEE ON GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

ON

H.R. 866

TO PROHIBIT THE PROVISION OF FINANCIAL ASSISTANCE BY THE FEDERAL GOVERNMENT TO ANY PERSON WHO IS MORE THAN 60 DAYS

DELINQUENT IN THE PAYMENT OF ANY CHILD SUPPORT OBLIGATION

JUNE 6, 2001

Serial No. 107–72

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

BOB BARR, Georgia

DAN MILLER, Florida

DOUG OSE, California

RON LEWIS, Kentucky

JO ANN DAVIS, Virginia

TODD RUSSELL PLATTS, Pennsylvania

DAVE WELDON, Florida

CHRIS CANNON, Utah

ADAM H. PUTNAM, Florida

C.L. ‘‘BUTCH’’ OTTER, Idaho

EDWARD L. SCHROCK, Virginia

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

JANICE D. SCHAKOWSKY, Illinois

WM. LACY CLAY, Missouri

——— ———

——— ———

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

JAMES C. WILSON, Chief Counsel

ROBERT A. BRIGGS, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT EFFICIENCY, FINANCIAL MANAGEMENT AND

INTERGOVERNMENTAL RELATIONS

STEPHEN HORN, California, Chairman

RON LEWIS, Kentucky

DAN MILLER, Florida

DOUG OSE, California

ADAM H. PUTNAM, Florida

JANICE D. SCHAKOWSKY, Illinois

MAJOR R. OWENS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

J. RUSSELL GEORGE, Staff Director and Chief Counsel

BONNIE HEALD, Professional Staff Member and Director of Communications

SCOTT R. FAGAN, Staff Assistant

MICHELLE ASH, Minority Counsel

(III)

C O N T E N T S

Page

Hearing held on June 6, 2001 ................................................................................. 1

Text of H.R. 866 ....................................................................................................... 5

Statement of:

Bilirakis, Hon. Michael, a Representative in Congress from the State

of Florida ....................................................................................................... 8

Fuentes, Frank, Acting Commissioner, Office of Child Support Enforcement, Department of Health and Human Services; Hon. J.B. Penn,

Under Secretary for Farm and Foreign Agricultural Services, Department of Agriculture; Daniel L. Hatcher, senior staff attorney, Children’s

Defense Fund; Wendell Primus, director of income security, Center

on Budget Policy Priorities; and Geraldine Jensen, president, Association for Children for Enforcement of Support, Inc. .................................... 19

Letters, statements, etc., submitted for the record by:

Bilirakis, Hon. Michael, a Representative in Congress from the State

of Florida, prepared statement of ................................................................ 11

Fuentes, Frank, Acting Commissioner, Office of Child Support Enforcement, Department of Health and Human Services, prepared statement

of ..................................................................................................................... 23

Hatcher, Daniel L., senior staff attorney, Children’s Defense Fund, prepared statement of ........................................................................................ 42

Horn, Hon. Stephen, a Representative in Congress from the State of

California, prepared statement of ................................................................ 3

Jensen, Geraldine, president, Association for Children for Enforcement

of Support, Inc., prepared statement of ...................................................... 65

Penn, Hon. J.B., Under Secretary for Farm and Foreign Agricultural

Services, Department of Agriculture, prepared statement of .................... 32

Primus, Wendell, director of income security, Center on Budget Policy

Priorities, prepared statement of ................................................................. 55

Schakowsky, Hon. Janice D., a Representative in Congress from the

State of Illinois, prepared statement of ...................................................... 16

(1)

H.R. 866, A BILL TO PROHIBIT THE PROVISION OF FINANCIAL ASSISTANCE BY THE

FEDERAL GOVERNMENT TO ANY PERSON

WHO IS MORE THAN 60 DAYS DELINQUENT

IN THE PAYMENT OF ANY CHILD SUPPORT

OBLIGATION

WEDNESDAY, JUNE 6, 2001

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON GOVERNMENT EFFICIENCY, FINANCIAL

MANAGEMENT AND INTERGOVERNMENTAL RELATIONS,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 10:05 a.m., in room

2154 Rayburn House Office Building, Hon. Stephen Horn (chairman of the subcommittee) presiding.

Present: Representatives Horn and Schakowsky.

Staff present: J. Russell George, staff director and chief counsel;

Bonnie Heald, professional staff member and director of communications; Scott Fagan and Chris Barkley, staff assistants; Alex

Hurowitz and Ryan Sullivan, interns; Michelle Ash, minority counsel, David McMillen, minority professional staff member; Jean

Gosa, minority assistant clerk.

Mr. HORN. The Subcommittee on Government Efficiency, Financial Management and Intergovernmental Relations will come to

order.

Today’s hearing will examine the merits and challenges of H.R.

866, sponsored by the gentleman from Florida, Representative Michael Bilirakis. This proposed legislation is designed to send a loud

and clear message to all parents that regardless of means and despite other responsibilities, they must support the children they

bring into this world.

In essence, this is a hearing about the family, the soul of society

and the cornerstone of our Nation. As we are all aware, however,

the nature and structure of today’s family is vastly different from

that of a century ago or even 50 years ago.

Today, 20 percent of all children live with only one parent, a

mother or a father; more likely a mother. According to the 2000

census figures, 11 million American families are owed support and

7 million of them never receive any payment toward the cost of

raising their children.

There are State and Federal laws to track down deadbeat parents and make them pay their delinquent child support.

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The problem transcends economic status. Consider just three examples of several hundred deadbeat parents who were prosecuted

by the Department of Justice and convicted of failing to support

their children last year.

A plastic surgeon pled guilty to willfully failing to pay his child support, despite his yearly net income of more than $200,000. The

physician still owes $50,000 for his two children.

A Florida chiropractor pled guilty to a felony for his failure to pay approximately $87,000 in delinquent child support. His income

averaged about $100,000 a year.

A former NBA basketball player waited until he was arrested in an unrelated charge before paying the $173,000 he owed in five

separate child support enforcement orders in five separate States.

As a father and grandfather, I cannot understand those who

walk away from the fundamental responsibilities and true joy of

parenthood.

As legislators, we cannot force these irresponsible parents to love

and nurture their children. We can, and we must, however, do everything in our power to ensure that at a minimum they provide

the financial support those children need and deserve.

Our witnesses today will present a variety of perspectives on

H.R. 866 to help us in our examination of this bill. I welcome all

of you and look forward to your testimony.

[The prepared statement of Hon. Stephen Horn and the text of

H.R. 866 follow:]

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Mr. HORN. I am especially pleased to welcome as our first witness my colleague from Florida, Mr. Michael Bilirakis, who will

speak on behalf of his legislation.

Without objection, I would like to have Mr. Bilirakis join us on

the dais after his testimony so we can have a useful dialog. Without objection, that will be done.

I am delighted to have you here. Thank you very much. Please

proceed in any way you would like.

STATEMENT OF HON. MICHAEL BILIRAKIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. BILIRAKIS. Thank you very much, Mr. Chairman, for your interest in this legislation, as much as your interest in doing what

is really best for the children out there who have been the innocent

of wayward fathers.

I do want to apologize for coming in a little late. I don’t really

know what transpired, but we were advised that 2247 was going

to be the hearing room. That is where we went. I appreciate you

waiting for me.

Mr. Chairman, you have basically said it. Child support is certainly a very critical problem in this great country. Our system for

enforcing child support orders has failed miserably. We all have to

realize that. By current estimates, at least 30 million children are

now owed $50 billion in unpaid child support.

Payment is received, we know, in less than a quarter of all cases. Even though the government spends nearly $4 billion per year, and

employs more than 50,000 people, to collect child support, billions

and billions remain uncollected. I would like to think that we all

would agree, that this certainly cannot be tolerated.

Individuals who neglect their parental obligations simply transfer the costs to the rest of society. They should not be rewarded for

such action. That is the point behind the legislation. It is designed

to deny a broad range of Federal benefits to individuals who willfully refuse to pay child support.

It requires applicants to sign an affidavit to certify, applicants

for Federal financial assistance, to certify that they are not more

than 60 days delinquent in the payment of any child support obligation or if so delinquent, that they are in compliance with an approved repayment plan. It is really quite simple, maybe a little too

simple.

It is intended to encourage payment of child support and to preclude the use of Federal taxpayers dollars to assist individuals who

neglect their children.

Mr. Chairman, back in the 103d Congress I introduced a piece

of legislation which was enacted into law to amend the Small Business Reorganization Act to deny small business loans and loan

guarantees to individuals who refuse to pay child support. My prepared remarks say that the Small Business Administration has implemented these provisions. We should have said that the Small

Business Administration should have implemented these provisions

because it is our understanding that they have not done so. We can

talk about that later, if you would like.

Mr. Chairman, failure to pay child support is not merely being

late or forgetful of one’s obligation. It is a violation of a lawful court

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order. It is considered contempt of court. It is not unreasonable, I

submit, to require applicants for Federal assistance to comply with

their legal duties. There is precedent for that.

I would like to clarify a few points on this legislation. The Federal agency involved is not required to research the applicant’s status. Rather, an applicant for assistance must make a simple, affirmative statement of compliance. This requirement will be enforced through existing provisions of Federal law, which establish

penalties for fraud in obtaining Federal financial assistance.

We are talking about a line on a form, an affidavit line on a form

when they apply for some sort of Federal assistance. The agency

is not required to research the applicant’s status. But if it turns out

downstream somewhere that there is a determination that the applicants have lied under oath, then the fraud provisions come into

play and the applicant could be hit over the head.

I think just the fact that they would have to certify, by an affidavit, that they are in compliance would if nothing else, play a terrific role psychologically.

The bill does include a good cause exception to avoid penalizing

parents who are unable to satisfy their child support obligations

due to factors beyond their control. It is necessary, I think, to avoid

penalizing parents in situations where, despite a good faith effort,

they are unable to modify the terms of their child support obligation or obtain a repayment agreement.

This is designed to emphasize that the payment is a fundamental

civic responsibility. I think it is going to help to ensure that individuals who fail to satisfy their most basic parental obligation are

not rewarded for such action.

Sir, I know that in your mind and certainly in our minds, we

don’t want to do something where the consequences would turn out

to be worse than the intent of the legislation. We don’t intend to

prevent parents from obtaining Federal benefits that directly aid

children or that provide a subsistence level support to parents.

Family programs, such as Medicaid and the Temporary Aid to

Needy Families program provide assistance that may be necessary

for the well being of other children currently living in the household or of the parent’s own survival.

I have not included a list of all Federal programs. There are hundreds of Federal programs, although we have not included a list of

programs to be exempted in the bill text. We really believe that

each Federal agency can best determine which types of assistance

should be excluded.

However, direction from Congress in report language, can guide

the rulemaking process regarding necessary exemptions to the act.

We are very much aware of that particular concern. We have been

working with the Office of Legislative Counsel to discuss possible

modifications. We want to work with the various organizations,

such as the Children’s Defense Fund, to try to work out language

if it is felt by this committee that it is necessary.

There is no pride in authorship. I wish to make clear, Mr. Chairman, that I am not concerned about having my name on anything

at all. I am concerned about the fact that bad parents, mostly fathers, are out there taking advantage of the system and being reVerDate 11-MAY-2000 09:56 Jul 17, 2002 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 C:\DOCS\80138.TXT HGOVREF1 PsN: HGOVREF1
10

warded by the Federal Government in spite of the fact that they

are not doing what they should do for the benefit of their children.

That is really all I am concerned with. If we could only do something that would be consistent with trying to reach that goal, then

we can call it whatever we want to call it. It can be part of the

basic legislation or whatever the case may be.

[The prepared statement of Hon. Michael Bilirakis follows:]

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Mr. HORN. I agree with the gentleman. I think all of us who try

to legislate feel exactly as you do, let us get the job done and we

don’t care who takes credit for it.

You mentioned yourself, before I yield to the ranking member,

that the Small Business Administration delegates the task of the

SBA loan applicant’s child support certifications to the financial institutions handling the loan and that these certifications are not

being checked against a Federal registry such as the Federal Parental Locator Service, unless someone makes a request to do so.

According to the Small Business Administration’s Inspector General, that simply has not occurred. What is your feeling and the intention you have on the self-certifications?

Mr. BILIRAKIS. Well, Mr. Chairman, I think the intent of the legislation back in the 103d Congress was clear about what should

have been done. We went into this. When we have our oversight

hearings, we sometimes find that agencies just don’t follow through

with what we mandated them to do.

I am very disappointed to see that the SBA apparently, and I say

this only because I have not really seen their forms, does not even

include the line on the form to the effect that certification that we

insist be in there. This means there are an awful lot of bad parents

out there who are taking advantage of taxpayers’ dollars and still

not complying.

Do you think it is the best thing to leave it open to the Secretary

or the Administrator, or would you want to make it very clear in

this current bill what should be done?

I have found that legislative intent doesn’t mean a thing around

here when they all go to court. If we are going to do it, we ought

to stick it in the law and follow up on it.

I believe that we have to mandate that the certification and affidavit language has to be on the Federal form. Now insofar as the

exceptions are concerned, that is the will of this committee.

I should think that because it is so complex with so many government programs out there we probably ought to leave it to the

discretion of the particular agency whether exceptions should apply

in certain cases.

There is language that exempts programs that directly aid children in the household, ‘‘or to provide subsistence level assistance

for the parent.’’ In other words, if the agency determines that programs fall within those types of categories, they could make that

decision or we could leave it up to them completely.

We are all human beings, and we know when we put up our

hand swear to or certify something, it is very meaningful. I think

that psychologically, certification could really play a role.

Mr. HORN. Well, I thank you.

I now yield to the ranking member. I am delighted to have you

here.

Ms. SCHAKOWSKY. Thank you so much, Mr. Chairman. Mr.

Chairman, I want to thank you for holding this hearing. It is vitally important that Congress continually review opportunities to

strengthen our child support system. I support using a strong hand

to ensure that deadbeat parents pay the child support they owe

their children.

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This hearing can demonstrate how seriously all of us regard a

parent’s responsibility to support his or her children. In 1997, there

was an estimated 11.8 million single-parent families, 9.8 million

maintained by the mother. Of that 11.8 million, about 40 percent

of those families had incomes below the poverty threshold.

When a poor family receives child support, the child support

amounts to about 26 percent of the family’s budget. There is evidence that fathers who pay support are more involved with their

children, providing them with emotional support as well as financial support.

Of the total $29.1 billion owed for child support in 1997, $12 billion was not paid. Among those due support, 40.9 percent received

the full amount, 26.5 received partial payment, and 32.6 percent

received nothing.

In 1997, the Urban Institute, using the assumption that all custodial parents had child support orders and that all orders were

paid in full, estimated that $51 billion should be collected in child

support each year, compared to the $18 billion that was collected

in 2000, we have a long way to go.

Although these numbers are startling, I do not think we can understate how far we have come. State agencies have been given a

number of tools to enforce child support orders. For example, agencies can garnish IRS refund checks, strip a parent of his or her professional licenses, report delinquency to credit reporting bureaus,

take away drivers licenses and deny passport requests.

Progress has been made. Identification of the non-custodial parents has increased dramatically. In the year 1994, 676,000 paternities were established and acknowledged. In the year 2000,

1,600,000 paternities were established and acknowledged.

In addition, collections have increased. In 1995, 34 percent of

custodial parents received some child support when an order was

in place. In 2000, 68 percent of custodial parents received some

child support when an order was in place.

Today, we are here to discuss whether a parent should be denied

Federal financial assistance if he or she is delinquent in child support payments.

I want to commend the author of this legislation for highlighting

the need for strong child support enforcement. I have been talking

with some of the child advocacy groups who have some concerns

about this particular proposal, but I would really like to work with

the sponsor, because I think we absolutely share the same goal

here.

So, I am eager to hear from our witnesses. I want to thank them

for being here today. Perhaps our witnesses can help us understand whether Congress should be increasing the number of punitive tools available and also to see if there are other alternatives

such as working with parents, giving them the support systems

they need to find and keep jobs.

In Illinois, we have had a persistent problem. There have been

a number of different proposals that have been made, but yet we

still continue to be, in my State, one of the worst in terms of our

record in child support collection.

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So, I really appreciate this effort. There is a growing public

awareness of the problem of nonpayment of child support. I am

very hopeful that this hearing will shed more light on the issue.

Thank you.

[The prepared statement of Hon. Janice D. Schakowsky follows:]

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Mr. HORN. We thank you. Would you have some questions of Mr.

Bilirakis now? He is going to join us up here, as we do with all authors. So, without objection, you can come up to the dais, if you

were like.

Mr. BILIRAKIS. May I, Mr. Chairman, respond very briefly? First

of all, you are right. There are an awful lot of loopholes, and a lot

of questions, and changes that need to be made. We are not really

talking only about our legislation, although we are very grateful

that it is the subject of this hearing. It is a subject we have to address.

You have talked about the improvements in collections. But we

are told, and Ms. Jensen will testify to this later on and do a much

better job than I could, that a lot of the money is collected, is not

being distributed to the kids.

That is another point that the committee may want to address.

Ms. SCHAKOWSKY. Let me just ask you, are you talking about the

percent of those that are receiving any kind of assistance? It goes

to the States rather than to the families?

Mr. BILIRAKIS. I am talking about child support collections.

Ms. SCHAKOWSKY. Yes. I fully agree with you.

Mr. BILIRAKIS. Thank you, Mr. Chairman.

Mr. HORN. Thank you.

We will now have the second panel join us. That is Mr. Fuentes,

Mr. Penn, Mr. Hatcher, Mr. Primus and Ms. Jensen.

Let me go through the ground rules on this. This is an investigating unit under the Government Reform Committee. We do

swear in all witnesses except Members of Congress. I realize that

some of you have not had a chance to really be in your own position

in these agencies and we appreciate your coming here to give us

some views on this—realizing this is all that you are going to do.

So, now, if you will stand and raise your right hands, and if

there are any assistants who are going to assist, please get up. The

clerk will take your names. So, the people back of you, let us do

it once and not have to swear everybody in individually.

[Witnesses sworn.]

Mr. HORN. The clerk will note that all five witnesses and five assistants have affirmed the oath.

We will go down in the agenda that is before us. We are delighted to have Mr. Frank Fuentes, the Acting Commissioner, Office of Child Support Enforcement, Department of Health and

Human Services. I assume, Mr. Fuentes, you are new to this role,

with another administration.

Dr. J.B. Penn, Under Secretary for Farm and Foreign Agricultural Services, Department of Agriculture. Have both of you been

confirmed by the appropriate people in the Senate or is that currently underway?

Mr. Penn. I have.

Mr. HORN. Mr. Fuentes, has the Senate confirmed you or is that

a secretarial appointment?

Mr. FUENTES. I am the senior civil servant in the Office of Child

Support Enforcement. My regular position is that of Deputy Commissioner. Until someone is appointed, I am the Acting Commissioner.

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Mr. HORN. Well, maybe in the year 2002 we will have these confirmations. Be of good cheer until then.

Then we have Mr. Primus, director of Income Security Center on

Budget Policy Priorities. That is a nonprofit, I believe, is that correct?

Mr. PRIMUS. That is correct.

Mr. HORN. Is that funded by HHS, essentially?

Mr. PRIMUS. No. We receive no government moneys.

Mr. HORN. I see. OK. President Jensen, Association for Children

for Enforcement of Support, Inc. Is that a nonprofit also?

Ms. JENSEN. Yes, it is.

Mr. HORN. Who funds that?

Ms. JENSEN. We are mainly privately funded but we do receive $15,000 through the city of Toledo block grant program, which is

a Federal program.

Mr. HORN. That is interesting. So, one city has decided you are

a good place to get some things done. That is fascinating.

Ms. JENSEN. ACES was founded in Toledo, OH, and we have an

office there.

Mr. HORN. That is interesting.

So, let us go now with Frank Fuentes, the Acting Commissioner,

Office of Child Support Enforcement, Department of Health and

Human Services.

May I say, don’t read it to us. I have stayed up most of the night

reading it all. I have read every sentence. But what we would like

you to do in the 5 to 10 minutes you have is to talk from the heart

as to what the key things are and the rest we can bring out in the

questions by the Members here and also some of your colleagues

here. So, go ahead.

STATEMENT OF FRANK FUENTES, ACTING COMMISSIONER,

OFFICE OF CHILD SUPPORT ENFORCEMENT, DEPARTMENT

OF HEALTH AND HUMAN SERVICES; HON. J.B. PENN, UNDER

SECRETARY FOR FARM AND FOREIGN AGRICULTURAL

SERVICES, DEPARTMENT OF AGRICULTURE; DANIEL L.

HATCHER, SENIOR STAFF ATTORNEY, CHILDREN’S DEFENSE

FUND; WENDELL PRIMUS, DIRECTOR OF INCOME SECURITY,

CENTER ON BUDGET POLICY PRIORITIES; AND GERALDINE

JENSEN, PRESIDENT, ASSOCIATION FOR CHILDREN FOR ENFORCEMENT OF SUPPORT, INC.

Mr. FUENTES. Thank you, Mr. Chairman. Good morning. Distinguished members of the subcommittee, it really is a wonderful opportunity to share with you what we have been doing in the Office

of Child Support Enforcement. So, we very much appreciate the opportunity to come before you.

As I stated before, my name is Frank Fuentes. I am the Acting

Commissioner for the Office of Child Support Enforcement.

The program has been truly successful in its Federal-State partnership effort fostering family responsibility and promoting the

well-being and self-sufficiency of children and their parents, especially by providing the financial and emotional support children

need in order to thrive.

The goals of the program are to identify and locate custodial parents, establish paternity, establish child support obligations and

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then to enforce those support orders so that children receive what

they need.

The welfare reform legislation, the Personal Responsibility and

Work Opportunity Reconciliation Act of 1996, gave us some very effective tools that we have been using to produce significant improvements and achievements.

My purpose in being here is to share that information with you,

but then, as requested, to also share some initial thoughts on Mr.

Bilirakis’ proposal to further strengthen our child support enforcement efforts. This, of course, is a goal that we all share.

But to give a little background on what we have been doing with

the tools that Congress provided, in fiscal year 2000, we collected

a record $17.9 billion in support of children. In addition, this number of child support cases with collections rose to 7.2 million. I

think you would agree that those are impressive results.

To add to the magnitude of the improvement, if you look over the history of the Child Support Enforcement Program, $100 billion

has been collected in that 25-year period. Approximately 20 percent

of that was collected just last year. So, we are seeing progress your

tools have allowed us to use.

In addition to collections, we have had similar success in the establishment of paternity. The numbers there have also increased in

the voluntary acknowledgement of paternities. We have now

reached in fiscal year 2000, 1.6 million voluntary paternity establishments. Of these, over 688,000 were done through in-hospital acknowledgement programs and another 867,000 were done through

the establishment by State Child Support Enforcement Programs.

The interesting part of this, of course, and the most exciting, is

that in addition to being the first step in collecting child support,

it is also through the establishment of paternity the first opportunity to engage dads in the lives of their children, create the kinds

of emotional bonds, and the security, that are really crucial to the

continued emotional and financial support of their children.

Some of the tools we have utilized have been the National Directory of New Hires, Automatic Wage Withholding, the streamlining

of paternity establishment, creating uniform interstate child support forms, computerizing statewide collections, and authorizing

tough new penalties for nonpayment of support; such as the revocation of drivers’ licenses.

We are excited about the dramatic results we have seen and the

changes that have been generated by the use of these tools. OCSE

and the States are convinced that as we mature in the use of these

tools that future child support enforcement will continue down a

successful path.

At this point, I would like to turn to a brief discussion of H.R.

866. First, I would like to acknowledge the importance, again, of

the bill’s goal which is the improvement of child support and to

strengthen our abilities to enforce it.

While we are proud of the inroads we have made there is no

question there is still room for improvement. We certainly realize

there are areas that by working with the Congress we can continue

to improve and build on the record we have already achieved.

The administration has not taken a formal position on H.R. 866

at this time; however, I would like to share some serious technical

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concerns of this bill. As we understand it, the intent of H.R. 866

is to help improve the collection of support.

The bill would provide some limited exceptions requiring applicants for any form of Federal financial assistance to certify they

are not more than 60 days delinquent in their child support obligations. If the applicant is delinquent, they would be required to comply with a repayment plan or an agreement as conditioned by the

Federal agency administering that benefit.

The bill provides exceptions if assistance is subject to garnishment for payment of overdue support or if the assistance agency

determines that the applicant has good cause, for failing to pay the

support or entered into or complying with a repayment plan.

Our comments focus on two concerns. The first is what we believe are structural difficulties that would impede the effectiveness

of the bill. Second is questions on the efficacy of potentially targeting the low-income population for nonpayment of child support.

With respect to the first issue, the sole enforcement tool envisioned is self-certification of compliance. That is, there would be no

mechanism to verify an applicant’s certification of payment of child

support. While this might serve as an incentive for some to become

current in their support, or enter into a payment agreement, the

value of this approach without subsequent verification seems unclear. Further, if verification were required, its effectiveness would

be hampered by the fact that many cases remain outside of the

Title IV-D Child Support Program.

On the other hand, modification of a child support order following a change in a particular non-custodial parent’s circumstances,

such as the loss of a job, can take significantly longer than 60 days.

Arrearages often buildup during that time period.

Withholding of Federal financial assistance at this point may

only worsen the impact of the change that necessitated the modification request. Now, we note that the bill provides for good cause

exemptions, presumably to address situations like these and others. However, these provisions are currently undefined and therefore ambiguous. Also undefined is the broad reference to Federal financial assistance programs. There is a wide range of such programs and the implementation and impact of the bill would vary

greatly depending on the breadth of that definition.

With respect to the second broad issue, the lack of clarity in the

bill raises the potential of focusing on applicants for basic Federal

assistance. In potentially targeting those parents who themselves

are impoverished and least able to pay child support, rather than

those who can provide the support but refuse to, the result could

be denying assistance to destitute individuals without increasing

the payment to the children who are owed the support.

The administration is committed to supporting efforts to improve

the Child Support Program; however, we are concerned about

whether the approach taken in H.R. 866 will accomplish its intended goal.

In closing, I would like to reiterate the positive impact that the

existing enforcement tools are having in helping to improve the

lives of the Nation’s children. We look forward to building on these

successes with the Congress and with the State to ensure that the

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program is most effective in addressing the needs of children and

families.

Thank you, Mr. Chairman. I would be pleased to answer any

questions that you may have.

[The prepared statement of Mr. Fuentes follows:]

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Mr. HORN. We are going down the line first and then we will

come back to ask questions generally.

Dr. J.V. Penn is the Under Secretary for Farm and Foreign Agricultural Services of the Department of Agriculture. Like Mr.

Fuentes, you are both new on the job, but you have now been confirmed by the Senate. So, you can say what you want now.

Proceed and just give us the overview of it for 5 to 10 minutes.

Mr. PENN. Thank you very much, Mr. Chairman. I, too, am very

pleased to be here today to share the Department of Agriculture’s

views on H.R. 866. Also, like the previous witness, we also very

much support the goals of this legislation, but we, too, have some

serious concerns about the impact that it might have on the programs we operate at the Department of Agriculture.

Now, in terms of the applicability of this legislation to USDA

programs, I want to note at the outset that 43 percent of the total

budget of the Department of Agriculture is for food assistance programs that are primarily administered through the States.

Second, another 36 percent of the Department’s budget provides

a host of program benefits to farmers and rural communities all

across the country. Some of our programs are for emergencies in

response to natural and other disasters such as hurricanes, floods

and droughts. Thus, we are a bit concerned at the outset that H.R.

866 doesn’t define the term, ‘‘financial assistance.’’

That is important to us, as you will note, when I describe some

of our programs. First, addressing our food assistance programs,

strictly speaking, these programs provide nutrition assistance rather than financial assistance. We do this through the use, as everyone knows, of Food Stamps, coupons or vouchers or through actual

service of meals in school daycare homes, or through the distribution of commodities themselves.

So, if H.R. 866 is intended to apply to these programs, then we

would have the following observations: The first is that these programs need to be implemented by the States or by local governments acting in their role as partners with Federal agencies. That

is certainly the case for the Food Stamp Program.

We already have an enormous amount of complaints and criticism from the States in that these programs are terribly complex

and that they are not being reimbursed properly for their administration.

Our fear would be that enactment of this legislation might further complicate the administration of the program and make it

even more costly and more difficult, and provide an even greater

burden on the States.

Second, I would like to note that the Food Stamp Act of 1977 already allows the States the option to disqualify individuals from receiving Food Stamp benefits if they are delinquent in court-ordered

child support payments or they fail to cooperate with child support

enforcement programs in establishing paternity and obtaining child

support.

So, we are not certain of our further ability to promote personal

responsibility that would be needed for the Food Stamp Program.

I would like to note it is unclear from this legislation whether

the disqualification would apply just to the individual who is delinVerDate 11-MAY-2000 09:56 Jul 17, 2002 Jkt 000000 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 C:\DOCS\80138.TXT HGOVREF1 PsN: HGOVREF1
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quent in payments or to other members of the household living

with that individual.

Our department in the past has not supported penalizing entire

households where only one member of the family failed to comply

with some program rule.

So, any legislation that would potentially deny food assistance to

low-income households needs to be very carefully considered because, I want to note, 50 percent of the Food Stamp recipients are

children and the Food Stamp Program, we think, already has existing authority that encourages personal responsibility.

So, we think any modifications to this authority might be more

appropriately considered when the Food Stamp Act comes up for

reauthorization in fiscal year 2003.

Now, turning to the Child Nutrition Programs, H.R. 866, as introduced, we think presumes that the benefits denied are those to

which the applicant alone is entitled. But in almost all cases, the

benefits under the Child Nutrition Program are intended for someone other than the applicant and so, as with the Food Stamp Program, we think it would be counterproductive to deny benefits to

others who may be associated with the individual who is not in

compliance.

So, benefits under both the Child Nutrition Program and the

Special Supplemental Nutrition Program for Women and Children,

the WIC Program, and our commodity distribution programs are

provided by local schools, childcare centers, health clinics and similar entities under arrangements with the States.

We think any additional responsibilities for collecting, monitoring

and carrying out the administration of this process could prove to

be extremely burdensome and costly and would have a negative impact on the overall administration of the program.

One other point, Mr. Chairman, we think is important is the exemptions already made for means-tested programs. The Debt Collection Improvement Act of 1966 has uniformly included language

that exempts benefit payments made in means tested programs or

it allows the delegation of authority to make such exemptions.

We would suggest that just to be in conformance with the existing legislation H.R. 866 might include similar language.

I just talked about the food assistance programs and now want

to note the impact on the farm programs.

We are troubled by the lack of a clear definition of the term ‘‘financial assistance,’’ because without it we don’t know how broadly

H.R. 866 might apply to these programs.

We operate a host of programs that provide assistance to farmers

and rural communities, as well as farm loan and debt restructuring

programs. We certainly think that H.R. 866 would apply to the

farm loan and debt restructuring programs and we are not certain

how that would affect co-obligors if there is more than one borrower and only one borrower was in default. How would that affect

the other parties?

Also, we are concerned that the certification process might add

to delays in making these loans to farmers. As we know, there is

a seasonal element involved here and loans have to be timely or

otherwise the season moves along.

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We are also concerned about the direct payments made to farmers. The payments made under the marketing loan programs and

a whole variety of other programs as well as the loan and loan restructuring programs—how all of those might be affected without

a clear definition of the term ‘‘financial assistance.’’ Finally, Mr. Chairman, let me end by saying again, USDA

strongly supports the intent of the legislation, but we would like

to see further analysis to ensure that administrative costs and

processes don’t inadvertently reduce benefits to children and others

in need.

I would note that the bill touches on some very complex issues

such as cause and effect, State versus Federal roles, and we have

some serious concerns about those issues. Additional concerns include the denial of financial assistance benefits to children and diminishing the applicant’s subsequent earnings and thus the means

to pay the child support payments.

With that, I will stop. Thank you.

[The prepared statement of Mr. Penn follows:]

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Mr. HORN. Thank you.

We now have Daniel L. Hatcher, the senior staff attorney for the

Children’s Defense Fund. Mr. Hatcher, we are glad to have you

here. We know of a lot of the work of the Children’s Defense Fund.

That, too, is an NGO, or a nonprofit.

Mr. HATCHER. It is. We receive no government funds as well.

Mr. HORN. We would like you to summarize your statement and

then get to the key things.

Mr. HATCHER. Thank you, Mr. Chairman, and good morning. We

also commend the subcommittee for holding this hearing on H.R.

866 and the very important issue of child support enforcement. We

appreciate the opportunity to testify.

Children need support from both parents, both financial support,

and when possible, emotional support. The Children’s Defense

Fund applauds Representative Bilirakis for introducing H.R. 866

and making an important statement about parent’s responsibility

to support their children.

However, we do have a number of reservations about this legislation. Everyone agrees that the continued improvement of child support enforcement is vital. The question really begins to come down

to the focus. With State programs facing limited resources, how

should those resources be best used to best help children, especially

low-income children?

Rather than implementing a new set of penalties at this time, we

believe that the limited resources of the State child support programs can be better used to continue improvements to existing enforcement tools, including the tools already mentioned that came

out of the 1996 Welfare Reform Law, to reform child support distribution rules to get more child support that is already being collected to the families with children, especially those families that

are now leaving welfare for work, and to provide supportive services to both low-income custodial and non-custodial parents to be

better equipped to better support their children.

First, turning to the issue of child support distribution, I would

like to spend just a couple of minutes discussing what we believe

to be the most important issue. Reform to the Child Support Distribution rules is needed to help low-income children.

The reform that is included in the Johnson-Cardin Child Support

Distribution Act of 2001 and also incorporated into the act, to leave

no child behind, an omnibus bill for children, is crucial for several

reasons. Families that receive welfare under current law have to

assign their child support benefits to the government.

When families leave welfare, they often end up in a situation

where some of the child support is owed to the government and

some is owed to the children, which then creates a very complex

set of distribution rules to decide when the money comes in how

much goes to the government, to the State, the Federal Government and when and how much goes to the children.

Child support that is owed to the government rather than children can work against families, where non-custodial fathers can become more alienated from their families when they struggle to pay

child support that they know is being taken from the children and

kept by the government. Poor mothers and fathers that reunify are

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often still forced to pay child support arrearages that are owed to

the State government even though the children are now with them.

Now, the States do have the option to give some of this assigned

child support back, but only after they pay the Federal Government

its share. So, they don’t have the option to give it all back at this

point.

The Child Support Distribution Act would change this to give

States the option to pass through all assigned child support to children with Federal participation in the pass-through.

Also, another troubling aspect of the current child support distribution rules is that the most effective means of collecting child

support arrears for low-income families, those families who have

received or are receiving TANF tax intercepts, is often not available to low-income families.

Now, changing the child support distribution rules, the reason I

am spending time on this is that it is so important. It would take

some funding from State child support programs that are already

facing limited resources, which adds to our concern of adding a new

set of administrative burdens on the Child Support Program.

It is clear, it is very clear that H.R. 866 has the obvious intent

to serve the best interests of children. But in addition to some of

these concerns we have with the limited resources, there are concerns that have already been mentioned with some of the language

in H.R. 866.

I won’t spend a lot of time, since some of these items have already been discussed. We do have concerns with the fact that financial assistance is not defined and that the failure to adequately

define ‘‘financial assistance’’ could lead to the unintended result of

denying benefits when in some circumstances they could actually

help children. They could help low-income non-custodial parents

work toward self-sufficiency and then be better able to help their

children.

Some good examples could be legislation which is introduced in

the Senate and House now for Federal funding for fatherhood programs, to provide assistance to low-income, non-custodial parents

in the form of responsible fatherhood programs, job training, parental counseling, domestic violence counseling and the like; all geared

toward the goal of helping these low-income, non-custodial parents

be more involved with their families when appropriate and provide

better support to their children.

Also, we take concern with the good cause exception, although it

is clear the good causes exception is there with the intent to take

into account these situations where it might be better for the noncustodial parent to get the benefits to help the children. As has already been said, the exception is not defined.

We also have concerns about who would make the decision on

good cause, what would be the procedure? There are no provisions

for protecting against due process concerns, for providing the right

to contest and appeal the good cause decisions.

It seems most likely that the place where the decision would fall

for determining good cause would end up on the child support programs, otherwise there would be great difficulty if each agency was

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cumstances without really having a lot of information about the

personal facts of these families and children.

Possible modifications to H.R. 866 could definitely be made to improve upon some of these concerns. For example, changes could be

made to clarify which specific types of financial assistance would

be targeted. Rather than adding a growing list of exemptions of

programs that would not be denied, it would likely be a better approach to only add those programs that would be specifically targeted and only after very careful consideration is given to those

specific programs to ensure that their denial would actually encourage more child support payments rather than in some circumstances hurting the situation further, as has already been discussed.

Also, changes to the good cause exception could be made to better

indicate what factors are going to be considered on good cause. Is

it the best interest of the children that is the over-riding standard?

Specific examples could be listed as examples of what meets good

cause such as when a family reunifies and the non-custodial parent

now lives with the children for whom child support is owed.

It would also be important to add in the right to contest and appeal good cause decisions, both to protect against due process concerns and to better ensure that when a good cause determination

is made that it is not made in error. Again, as I have already said,

it would be important to decide where that decision is made and

come up with the structure for that decision.

That leads me to some of the concerns on the additional administrative burdens that this could have on the child support programs.

Even with these potential changes to the legislation, the Children’s

Defense Fund fears that H.R. 866 could place an undue administrative burden on State Child Support Enforcement Offices.

Now, I am aware that the idea is that this would be through selfcertification, but it does seem difficult that the self-certification

would, when carried out, not include significant involvement from

the child support enforcement agency, either in tracking a situation

where reports are made where there may have been false certification filed and looking at situations where the parent was at first

not in compliance but then came into compliance.

The self-certification does allow for working out an agreement

even if the parent is behind on child support but questions can

come up about who would they work out the agreement with. It

seems like it would have to be with the child support enforcement

offices.

Initial conversations with some child support IV-D Directors confirm these concerns, that the serious funding difficulties that the

State child support enforcement programs are facing, at the same

time that they are trying to step up enforcement activities and

really get up to speed on all the existing child support tools that

are now available, including those new tools that were made available through welfare reform.

They are providing new services to both custodial and non-custodial parents to really look at the holistic approach to serving lowincome families and to helping both custodial and non-custodial

parents better serve their children and have more involvement

with their children when appropriate.

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In developing and implementing State-wide computer systems,

there is concern that implementing this new set of penalties could

require some very complicated interaction between the child support enforcement agencies and several different Federal and State

agencies in determining when parents are or are not in compliance.

So, again, rather than adding the burden on State programs at

this time to implement this new set of penalties, we believe that

a better use of the limited funds available to child support programs at this time is to continue improvements to the existing

tools, to continue reform of child support distribution to get that

child support that is already being collected to these families with

children, and to provide additional supportive services both to custodial and non-custodial parents so they can better provide for

their children.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Hatcher follows:]

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Mr. HORN. Thank you very much. We now go to Wendell Primus,

the director of income security, Center on Budget Policy Priorities.

Mr. PRIMUS. Mr. Chairman and members of the subcommittee,

thank you for the opportunity to testify today on H.R. 866. I will

summarize my testimony and try not to repeat what has been

raised by the three witnesses to my right.

We basically agree with the three previous statements and believe that H.R. 866 is flawed and could have a number of harmful

and counterproductive effects.

We strongly agree with Representative Bilirakis that the payment of child support is a fundamental civic responsibility and parents who do not live with their children have an obligation to provide both financial and emotional support to them. Research also

shows that strong child support enforcement programs reduce entrances into and hastens exits out of welfare and reduces divorce

and out-of-wedlock childbearing.

I think the real issue is: Does the child support enforcement program need another tool or should we use the existing tools we have

better? I think having watched this program over the last 25 years,

we have given the program many more tools and the key ones were

added in the Welfare Reform Act of 1966.

That was through the New Hire Directory. Every time a person

is hired today in the United States, the employer must forward a

form which is matched against a registry of all the child support

orders. If there is a match, you can immediately order automatic

wage withholding.

I think we are on the threshold of seeing enormous increases in

performance and just in the last 5 years, the probability of collecting from someone with an order in the IV-D system hearings doubled from 34 percent to 68 percent. So, I think we have made enormous strides.

So, I think rather than adding another penalty, I believe our

focus should be on ensuring that States use the tools they already

have as effectively as possible.

Going through your two or three examples at the beginning of

the hearing, Mr. Chairman, the question is, why didn’t that NBA

star get an automatic wage withholding so that his salary was reduced and sent to child support? I mean, why wasn’t the State involved doing that?

In terms of the other two examples, the question was, you know,

why didn’t we take away their professional licenses? Those tools

are available. It is not that we really want to take it away, because

then we have destroyed probably his ability to earn a livelihood,

but my point is that the system already has sufficient tools.

The question is: Should we be using those tools better and how

can we help States utilize those tools better?

But I am also concerned that this bill could make it more difficult for low-income non-custodial parents to become employed and

meet their parental responsibilities.

Many dads in the current IV-D system need support and probably need financial assistance such as job training and education

programs. I think in the next round of welfare reform we have got

to be more concerned about the non-custodial parents’ involvement

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in the lives of their children and helping them move into the labor

force, retain employment and make payment.

As Dan has already indicated, I think the first step in that process is really passing H.R. 4678, a bill that passed last September

by a margin of 405 to 18 in the House. The Senate, unfortunately,

did not take it up. But this really was the first step. It would also

have assured that more of the child support actually gets from the

dads to the children.

Today, we have a 100 percent tax rate in the case of low-income

dads where mothers are on welfare. The dad is ordered to pay. If

he pays, all of the moneys accrue to the benefit of the State or Federal Government.

I know that Illinois has considered passing through. The problem

is that the Federal Government doesn’t help them in that effort. I

know the bills have actually passed the House. I think the last one

was vetoed by the Governor. My understanding of the situation is

if you passed H.R. 4678 and had the Federal Government participate partially in getting those payments to the mother, many

States would take advantage of that.

So, I share the concerns about the definition of good cause and

what is financial assistance. I worry that might be applied to job

training programs. Since my time is up, I do want to emphasize

that this issue of arrearages is a big issue among low-income, noncustodial parents.

In Baltimore City, I have looked carefully at Maryland and the

State did runs for me. The average arrearage for a low-income

male in Baltimore City was $9,000. We are hearing lots of anecdotal evidence that is forcing them to go underground and is doing

just the opposite of what we intended.

So, I think our emphasis has got to be on getting those low-income, non-custodial parents to meet their parental responsibility.

That is different from the three examples that you cited earlier. I

don’t think another punitive tool is the right way of going about

that.

Thank you.

[The prepared statement of Mr. Primus follows:]

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Mr. HORN. Thank you.

Our last presenter is Geraldine Jensen, president of the Association for Children for Enforcement of Support, Inc.

Ms. JENSEN. Thank you, Mr. Chairman, members of the committee and thank you, Representative Bilirakis, for introducing the

STOP Act.

I am here today to represent ACES members who are typical of the over 20 million families who are now owed $71 billion in unpaid child support. The STOP Act will assist these children and it

will send a strong message that child support is a fundamental responsibility.

Examples of Federal programs where parents who fail to pay

child support can and do receive Federal grants and loans includes

venture capitalists for high-risk technologies from the National Institute of Standards and Technologies, doctors who are remodeling

their offices and receive money from HUD, sponsors of festivals and

exhibits who receive funding from the National Endowment of the

Arts.

We believe that the ‘‘good cause’’ provisions in the bill and the

requirement to make arrangements for payments will improve

child support collections and promote payment. Certification that

one pays, done in the same way as one certifies that they have reported for the draft on a college loan is not burdensome.

The bill does, however, need the clarification to ensure that programs such as Food Stamps and Medicaid and TANF are exempted.

The STOP Act will increase collections, but it will be important

that these payments as well as all child support payments be

quickly and efficiently distributed to families. ACES is very concerned about a recent report from HHS which shows that at the

end of 2000, $644 million in child support was collected, but not

distributed to families.

States cite the lack of being able to locate the custodial parent

and the complicated welfare distribution regulations as among the

reasons that payments are not distributed.

California has the largest amount of undistributed funds at $176

million. They are currently surveying counties to validate this

total.

In Illinois, the only State with the new State disbursement unit

online, it was so plagued with problems and payments were so delayed that it shut the system down and returned payment distribution to the counties. They are currently rebidding the contract in

Illinois to put a new system in place.

Michigan reports $26 million in undistributed payments. Problems with locating custodial parents in Michigan resulted in

$300,000 being credited to unclaimed funds departments in 1999.

After the State disbursement unit went online, undistributed payments more than doubled to $700,000 in 2 months, between October to December, and another $2.7 million has gone unclaimed this

year.

Michigan received $327 million in Federal funding to computerize child support. At present, 13 counties, including Detroit, are

still not on-line and the system does not meet Welfare Reform requirements.

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Ohio, knowingly and purposely put a computer system on-line

which miscalculates the amount of child support due to families

leaving welfare. This has literally stolen $10 million from the

State’s neediest families. Ohio tries to justify this behavior by stating that they were trying to avoid Federal penalties for missing

deadlines.

Ohio has received $250 million from the Federal Government for

developing this broken system. The Ohio State Disbursement Unit

is run by Bank One under a contract that pays them out of interest

earned on collections and rewards them for slow distribution. Families report delays of weeks and months in receiving payments.

ACES recommends that the Federal law that would require

States to notify parents about unclaimed funds, require them to

use the Federal locator to find the custodial parent, and prohibit

vendors from being paid out of the interest. In fact, all interest

earned should go to the children. It requires State auditors to annually certify that the State is meeting its fiduciary responsibility

in processing these payments.

It recommends that the States return unclaimed funds when

they can’t find the custodial parent after 3 years, to the non-custodial parent, rather than to the State coffers, and setup a fair hearing process for parents so that if we have a dispute we can have

a way to resolve the problems with payment distribution with the

State.

New studies show that child support enforcement reduces the divorce rate, reduces the number of births of never-married parents,

and reduces teenage premarital child bearing. Children who receive

support are more likely to have contact with their fathers, have

better grade point averages and significantly better test scores.

They have fewer behavioral problems and remain in school longer.

Your support of the STOP Act will help children. We ask you to

please act to ensure that the support paid reaches the children

rather than enriching the State coffers.

Thank you.

[The prepared statement of Ms. Jensen follows:]

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Mr. HORN. Thank you very much.

Now, we are going to go on 5 minutes for the Members. We will

start with the ranking member from Illinois, 5 minutes. Then Mr.

Bilirakis will have 5 minutes and back and forth so we get the

questions out of us and the information out of you.

The gentlewoman from Illinois has 5 minutes.

Ms. SCHAKOWSKY. In Illinois, you are right, Mr. Primus, the Gov- ernor vetoes a bill that would have allowed more than $50 to go

to parents who receive TANF, but also then they don’t receive it

through child support payments. They just get the flat $50. That $50 goes to support the entire child support collection system of Illinois, which serves not only low-income children, but also

all children who are receiving child support. So, you have poor kids

really subsidizing this child support system. Also, 10 percent of the

money then just goes to run activities of Illinois government.

It seems to me that one of the rationales requiring—as does Wisconsin, by the way—my understanding is that there is a Federal

waiver in Wisconsin so that all money collected for families on public aid goes to those families and that Wisconsin, which is experiencing a 90 percent drop in welfare caseloads, didn’t penalize a person’s cash grant due to child support.

So, it seems to me that if some States, Wisconsin, Vermont, and

Connecticut could get that Federal waiver, that surely we ought to

figure out some way for more of that money to be able to go to

those children and it would be an incentive for the working parent

to provide more child support, knowing that more than $50, in the

case of Illinois, is going to go directly to the children and would encourage, also, the custodial parent to help find the other parent to

contribute to their support. That is one question.

The other was, I am trying to understand how that interfaces

with the Cardin legislation and if that is what this addresses, that

more money would go to the kids?

Any one can answer that.

Mr. PRIMUS. Yes. The Nancy Johnson-Ben Cardin legislation of

last year speaks directly to the issues you have raised. I agree with

Geraldine. I think one of the chief problems in the system right

now is the distribution rules.

I defy anyone to explain those in cases where the arrearages

have been accumulated before the mother went on welfare, what

happens to arrearages accumulated while she was on welfare and

then afterwards. So, the Johnson-Cardin legislation of last year

would have done two primary things. It would have said, ‘‘When

we intercept the IRS refund check, if the mother is owed money or

the State is owed money, you must give it to the mother first.’’

That was a mandatory provision and Nancy Johnson was the primary sponsor of that.

Congressman Cardin added another provision which would have

gone to your Illinois example and said, if the State disregards—

right now if the mother is on welfare, half of the child support, in

some cases more, goes to the Federal Government, regardless of

what the State does in terms of disregarding the child support and

calculating the TANF payment.

What the Cardin amendment would have done is said if the

State of Illinois wants to disregard $200, then it no longer has to

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send to the Federal Government $100. It participates in the cost

of providing that assistance to the mother.

I think all of us would agree that really is the legislation that

you want to support. I think that would do a lot for the system.

We need to simplify these distribution rules.

Ms. SCHAKOWSKY. In a June 4, 2001 article in the Chicago SunTimes, it mentions there is enormous dissatisfaction right now with

the State disbursement unit. It seems that, though, is in compliance with fairly new Federal regulations that require disbursement

to go on this way.

Did we create a system that further exacerbates the problem? Is

that what we have done, in your view?

Ms. JENSEN. Yes. The State disbursement unit has caused many

more problems in States that have a State-supervised county-run

system. In those States in the past, mainly the county clerk of

courts disburses payments.

Instead it said we will have one place that all the payments come

into and go out of. The vendors that were hired in many States did

a very poor job. Those payments went in and they couldn’t identify

which families to send them to. There have been many problems.

We would like to see reform to that system that would allow

States to let money come in locally and just send the records back

and forth. Right now, in places like Michigan, money comes into

the State disbursement unit. They then take the money and send

it to the county friend of the court who then sends it to the family.

It seems to us they should send the money to the family and

send a record to the county so that they quit passing this money

between agencies.

We also would like to see it easier for people to pay, so that you

could pay with your credit card or your ATM card at the bank.

Mr. HORN. Thank you. We will get back to that.

The gentleman from Florida, Mr. Bilirakis, 5 minutes.

Mr. BILIRAKIS. Thank you very much, Mr. Chairman.

I want to thank the panel, and I mean that sincerely. We get so

darned frazzled sometimes, and often our intentions don’t always

make it into the legislation.

I said at the outset, that there are a lot of loopholes and a lot

of corrections and improvements that need to be made. I have no

pride in authorship.

If the only thing that comes out of this hearing and the introduction of our legislation is prudence, then I think it is worthwhile.

I guess one of the questions I would ask Ms. Jensen is what happens to the money that is collected that doesn’t get down to the

families, to the children?

Ms. JENSEN. The States have not been able to give us a good answer. Most of them can say that a portion of it is unidentified.

They don’t know which custodial family to send it to. We ask them

to do the Federal parent locator to find the custodial parents because, you know, they are not hiding. They would want these payments.

The other money, I just think they need to be better monitored

and they need better fiscal controls because it is very hard to determine where the rest of those un-issuable payments are going.

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Mr. BILIRAKIS. I am sure we could try to help in that regard. I

just want to point out, do we want grant money, Federal taxpayers’ grant money, to go to Creators for Literary Publishing, cultural festivals and various types of artistic and cultural exhibits given by

the National Endowment for the Arts?

When those people have been bad actors in terms of not caring

enough about their children, do we want money to go to venture

capitalists as Ms. Jensen mentioned for the creation of high-risk

technologies given by the National Institute of Standards Technology? Do we want money to go to developers for modernizing or

purchasing land, building or machinery given by every one of these

departments and agencies when there have been bad actors?

Do we want grant money to go to creators and inventors for

projects that present to the public conservation of art exhibits,

again the National Endowment of the Arts? Do we want money to

go for the construction of doctors’ offices?

Ms. Jensen shared this with us. I find it hard to believe that we

spent money for it. I have been here 19 years and I still get surprised.

Money to doctors for constructing medical facilities, incorporating

new construction concepts given by HUD? I mean, do we want Federal dollars to go to those types of people making applications for

grants and getting them when in fact they have been bad actors

as far as their children are concerned?

That is really the intent of our legislation. I want to apologize

that we didn’t make that clear. Obviously the way it is worded, as

you and I have said, the intent is not there.

We are not talking about the impoverished. We are not talking

about people on Food Stamps. We are talking about people who

clearly earn enough to support their children and are coming to the

Federal Government as bad actors, getting these grants.

I guess I would ask the question: Would you all support this legislation, more fully if it focused on Federal loans, loan guarantees

and grants rather than Federal assistance in general? Of course, it

would more clearly define good cause to include economic necessity.

That is a little bit tough because it is ambiguous but that can all

be worked out.

Let me ask the question. Mr. Fuentes.

Mr. FUENTES. Congressman Bilirakis, there is no question that

we share the goal.

Mr. BILIRAKIS. But would you support that type of legislation?

Mr. FUENTES. I would say that the administration would be

happy to review any revisions and modifications to the proposal

that you put forward and get back to you with a very thoughtful

and constructive response.

Mr. HORN. Without objection, it will be put at this point in the

record.

It seems to me it is very simple. You either say artists can go

out and leave their kids in the gutter and you people getting HUD

grants can go get them and they are left on the curbs. So, it is very

simple, yes or no?

Mr. Penn.

Mr. PENN. We support the objective of the legislation. Our only

concern is with the way you implement it. If we can find a way to

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implement it that doesn’t overly burden the effectiveness of the

programs, we would be happy to support it.

Mr. BILIRAKIS. Just a little line or two on an application form.

Mr. Hatcher.

I am sorry, Mr. Chairman.

Mr. HORN. No. I just wanted to get it going down there. You

asked a question. Let’s see if it is yes or no.

Mr. HATCHER. Thank you, Mr. Chairman. I will start with ‘‘yes,’’ but add clarification. We definitely support the intent that Mr. Bilirakis has described and would not like to see those types of services going to parents who can afford to pay child support and who

aren’t paying child support.

We still do have concerns on the timing questions and the ability

to implement additional penalties at this time.

If I could use an example, I just bought an old house that I am

trying to fix up. I get restless as I move from one room to the other

room. I start tearing into something and then I get bored with that

project and pretty soon my whole house is a shambles. Now, I have

a new baby and it is a mad house. Nothing ever gets completely

fixed.

So, our concern here is that we really spend the limited resources

of State child support programs to fix the current things that need

to be fixed rather than trying to implement new programs.

Mr. HORN. Mr. Primus.

Mr. PRIMUS. We also support the intent of the legislation. But I

guess we really question the effectiveness. I mean, if it is a bad

actor and you just have a line on the form, I am not so sure that

does much. I worry that we will create more cost trying to route

out the bad actors, as you put it.

I would rather see those moneys and efforts spent making the existing tools more effective so we weed out the bad actors before

they even get around to applying for any Federal grants.

I also share some concerns, you know, if you have a farmer who

is behind, but he is behind for other reasons. Then you have to sort

out whether he should get assistance or not. I am not so sure we

should put that burden on every program that supplies assistance.

I would rather focus on getting the current tools working and

working better and getting this system funded better.

Mr. HORN. Ms. Jensen.

Ms. JENSEN. Yes, absolutely. We believe the certification process

will help based on the experience of when the law was passed for

revocation of drivers’ licenses. For example, the State of Maine just

sent a letter out to people telling them that they can lose their license and they collected millions of dollars.

So, just bringing this to people’s attention and saying that the

Federal Government is concerned about this issue will have a big

impact for the children.

Mr. HORN. OK. We will now move back to the ranking member,

Ms. Schakowsky, for 5 minutes of questioning.

Ms. SCHAKOWSKY. Thank you, Mr. Chairman.

Mr. Fuentes, does the Secretary of HHS support the JohnsonCardin legislation?

Mr. FUENTES. My understanding, Congresswoman, is that Secretary Tommy Thompson has gone on record as supporting simVerDate 11-MAY-2000 09:56 Jul 17, 2002 Jkt 000000 PO 00000 Frm 00096 Fmt 6633 Sfmt 6633 C:\DOCS\80138.TXT HGOVREF1 PsN: HGOVREF1
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plified distribution and that there are a number of proposals. The

Department, I believe, is reviewing the bill and at the appropriate

time will provide an answer to that.

But there is no question that he is very supportive of simplifying

and certainly helping welfare families become self-sufficient and remain self-sufficient.

Ms. SCHAKOWSKY. So, at this point do you have any legislation

addressing this issue that is being promoted by the Department

and the Secretary or are you in the process still of considering it?

Mr. FUENTES. The administration is in the process of considering

it.

Ms. SCHAKOWSKY. We are reauthorizing TANF this Session, are

we not? Might this be part of that?

Mr. FUENTES. We will see exactly what the best approach might

be. Certainly the consideration of TANF reauthorization will be an

opportunity to touch on many of these areas.

Ms. SCHAKOWSKY. Ms. Jensen, regarding the issue of the State

disbursement unit, you suggested a number of corrections that

could be made. Are these incorporated in any legislation right now?

Is there any activity now in either body?

Ms. JENSEN. The only legislation I am familiar with is the thing

that everyone has been talking about, the Johnson-Cardin bill. I

think we have a need for some new laws to deal with some of the

problems that have come out of the State disbursements units,

with timeliness of payments and unclaimed funds and all those

other issues.

Ms. SCHAKOWSKY. In Illinois, a committee of the legislature, a

task force of the House of Representatives, which I used to serve

on, was created. They are going to hold hearings on whether to create a new State agency with child support its sole responsibility.

One of the Republican members was quoted as saying that this

program is broken. It doesn’t need another band-aid. It needs either a private contractor or it needs a director to go to Washington

and say, ‘‘Look, the old system worked fairly well. This new system

has been a disaster.’’

What would you say about that characterization around the

country of this system?

Ms. JENSEN. We have been very involved in Illinois with the task

force and with the need of moving child support out of the Illinois

Department of Public Aid and into a different State agency where

it is a priority. We think that would help a great deal.

We do need to be computerized. It is amazing that in this century child support is not yet computerized in States effectively.

So, I don’t think we need to go backward, but they do need to

make sure that the computer systems for payments distribution,

for tracking cases actually work and help families instead of hurting them.

So, there needs to be a tooling of that system to get it up and

running.

Ms. SCHAKOWSKY. Are you talking about just Illinois or in general?

Ms. JENSEN. I am talking throughout the whole country. The system they setup was that each State developed its own computer

system. So, California and Michigan and, I forget the other State,

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Ohio is not certified but is in the process of getting certified, along

with Nebraska.

Those systems are all going to need to be updated at different

times. They are all different from each other. So, the Federal Government, if it continues to fund this, is going to pour millions and

millions of dollars into something that doesn’t work and probably

has no hope of really working.

Plus, the systems don’t talk to each other. It would make much

more sense to revisit that whole issue and maybe adopt one system

that all the States used, kind of like everyone using Windows.

Ms. SCHAKOWSKY. It seems so reasonable. The Department of

Public Aid has said, ‘‘Non-payment of child support is a primary

reason almost half a million children in Illinois receive welfare.’’ The Federal role is so critical here. I would certainly like to work

with everyone, Mr. Bilirakis and everyone, to see if there isn’t

something that we can do, particularly with perhaps this new opportunity with the TANF reauthorization, although it certainly extends beyond that, to come up with something that is really going

to work.

This is a persistent problem that doesn’t defy solution. We just

have to come up with a better one. Thank you.

Mr. HORN. The gentleman from Florida, Mr. Bilirakis, 5 minutes.

Mr. BILIRAKIS. Thank you, Mr. Chairman.

You know, we have talked about improvements made over the

last few years. God knows that has been the case and we are very

grateful for that. Ms. Jensen shared with us about how collections

have been improved. But an awful lot of that money, as much as

half a billion dollars, is really not going down to the children.

HHS has furnished us with State breakdowns. So I guess a question ought to be raised as to where that money went. Where is it?

It was intended for a certain purpose.

Mr. Chairman, not belittling any of these other areas, and the

ranking member is quite correct, if we don’t improve the collection

and distribution process, getting it to where it is supposed to go,

we are not really accomplishing very much.

I still say that there are people out there who are receiving Federal dollars who are not impoverished, who are not on Food

Stamps, who can well afford to pay child support for their children

and who are not doing it.

There seems to be a reluctance to supplement all of the good

things that are now taking place by basically having a certification.

Now I assure you, and I guess we all have different opinions in

this, but we are talking about people who are, doctors, lawyers, engineers, scientists, painters. We can go on and on here.

I don’t think that they would be willing to sign a statement

under oath to the effect that they have not followed the law in

terms of their children and still go forward and try to get Federal

dollars.

In any case, the point of the matter is that I don’t think we

ought to get away from the purpose of the legislation and that is

to prevent those kinds of people from getting Federal dollars.

The purpose is not to go after the impoverished and people on

Food Stamps or welfare. As far as farmers are concerned, there are

an awful lot of big farmers out there who get a lot of subsidies and

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Federal loans who may be bad actors. Is it intended to reach them?

You are right it is. I think so.

Thank you, Mr. Chairman. I appreciate very much your giving

me this time.

Mr. HORN. Well, I agree with you on those last remarks. I

wouldn’t give them an inch.

Let me get down to the Federal Parental Locator Service. Under

whose responsibility is that? Mr. Fuentes.

Mr. FUENTES. Yes, that is an activity of the Office of Child Support Enforcement.

Mr. HORN. How many employees are currently assigned to updating and checking the Federal Parental Locator Service and associated systems?

Mr. FUENTES. Federal employees, we currently have 12. We have

123 contractor staff working specifically on that system.

Mr. HORN. And that is spread out over all 50 States?

Mr. FUENTES. The 12 Federal staff and the contractors are

housed specifically in Washington and the surrounding area.

Mr. HORN. OK, so all the work is done here.

Mr. FUENTES. It is all done here, but it is communicated on a

regular automated basis with all the States.

Mr. HORN. How long does it take to verify whether a person is

listed on the Federal Parental Locator Service? How long does it

take; 5 seconds; 5 minutes?

Mr. FUENTES. It is a very quick process. It is instantaneous. It

really is tape-to-tape. All of these machines have their data bases.

The work that is done is actually creating matches between numerous data bases and then providing the State the necessary information.

Mr. HORN. Now, is there ever a breakdown on this or how does

that work?

Mr. FUENTES. From time to time there are systems failures in

terms of the computers, but there are redundant and backup systems. We utilize the data system at SSA, which is state-of-the-art.

So, as soon as one system or one series of computers go down, there

are those that back it up. So, the matches are continual. They go

back to the States on a daily basis.

Mr. HORN. Do we know what type of person is locating this? Is

this a city or a county where the welfare department is delegated

or where Federal agencies—what is the profile of people that you

are serving?

Mr. FUENTES. That we are serving?

Mr. HORN. Yes.

Mr. FUENTES. Our primary clients are the States. The States provide us on a regular basis information from their State case registry, their requests for the locator service. Within 20 days of a person being hired, the employer must provide certain information to

the State and then the State automatically provides that to our

data base.

Mr. HORN. Are there any lawsuits or anything where people have

tried to interfere with that and say, ‘‘What do you mean? I am entitled to that million dollars of Federal taxpayers’ money and I can

still not give a dime to my kid.’’ Mr. FUENTES. Not to my knowledge, sir.

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Mr. HORN. No lawsuits on that? Sometimes there are weird

groups.

Mr. FUENTES. In the last 15 months that I have been there, I

have learned all manner of kinds of groups. But the fact of the

matter is this has not happened.

Mr. HORN. Now, with some of the States not having much of a

system, should we just do it for them? What would we miss if it

weren’t the States that was doing it?

Mr. FUENTES. Sir, we are working with all of the States in bringing their systems up. All but four States are certified for the FSI–

88 requirements. We have just finished full certification of six

States for the PRWORA requirements. We have a number of other

States ready to be certified.

We continue under the current arrangement to provide technical

assistance, but also, where necessary, invoking the penalties if

States are not moving on the timeline that they are required to.

Mr. HORN. Where is California in all this? As I remember a couple of years ago, the Los Angeles District Attorney, which represents one-third of the State of California, which is 32 million people, they have 10 million. The smaller counties didn’t want to have

the same computing ability that the Los Angeles District Attorney

had.

I am just curious about what happened on that. Have you been

in the middle of that?

Mr. FUENTES. Well, sir, the way that has been working out, Mr.

Chairman, is that in working with the State of California, because

of the circumstances that came about there and the desperate conditions, the State legislature created a separate agency for child

support enforcement. It removed responsibility from the counties

and provided it to a statewide agency. I believe by this October all

of the personnel working in the District Attorney’s Offices or other

county offices across the State will now be part, officially part of

the new child support agency.

In addition, working with them on their automated systems, we

have been supporting an interim system of six, taking all of the 58

counties. Am I correct?

Mr. HORN. Yes, 58.

Mr. FUENTES. Taking all of the 58 counties, the State probably

had 50 different approaches. We have taken an interim step to get

one system in place because it is a very laborious and time-consuming process.

We have authorized six systems so any one of the counties can

now come on to one of the six approved systems. They are approved

because they meet the criteria laid out in PRWORA and FSA-88.

The State has indicated by 2006 that they will have a statewide

system across the country. However, again, because we implement

the law, California this year paid $113 million in penalties. Until

their system is up and running or unless those requirements

change, those penalties will continue to be invoked.

Mr. HORN. Where does that money go to, the U.S. Treasury?

Mr. FUENTES. Currently, it reverts to the Treasury, sir.

Mr. HORN. That is a good place for it to revert. Thank you. I am

sorry my people in California don’t seem to know what they are

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doing. But that is not the only issue they have out there. So, if you

are going to go out there, take a candle with you.

Mr. FUENTES. If I could just add something, because we have

talked about the undistributed collection issue and I would just like

to take the opportunity to share with you what the Office of Federal Child Support Enforcement has been doing about that issue.

First, it was the No. 1 priority the last fiscal year and it remains

this fiscal year one of our top three priorities.

Second, just as recently as yesterday morning we were meeting

with the IV-D Director Association in a panel discussion that was

all morning long in identifying approaches to resolving those undistributed collections.

We have also come to understand, because of the attention we

have put on it, both with the States, but also nationally, that at

any given time about half of that money is explainable. The Federal tax offset requirements includes a provision for the injured

spouse. So, States routinely hold that money up to 6 months. So,

half of the undistributed amount is allowing time for an ‘‘injured

spouse claim’’ to be processed and acted on.

We are still working with the States through a task order that

we have offered to identify best practices and to provide technical

assistance to them on how to reduce that other half of the amount.

Mr. HORN. That is very well said. My last question, because we

have two votes on the floor. Ms. Jensen, I am curious, you suggested in your testimony that custodial parents should also be listed in the Federal system so they could be located for issuing child

support payments.

What would it take to accomplish that?

Ms. JENSEN. It would take a regulation from HHS. They already

have all the names and Social Security numbers of the custodial

parents when you apply for services. It would just be a regulation

requiring the States to use that tool to track down parents that

they need to find to get this money to.

Mr. HORN. Well, we thank you all. You have all been great witnesses. We appreciate your answers to the questions. The majority

staff and the minority staff might well have questions to send to

you. If you would be as nice on those questions as you were on

ours, they will put it in the record at this point.

With that, we are in adjournment.

[Whereupon, at 11:45 a.m. the subcommittee was adjourned, to

reconvene at the call of the Chair.]

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