Child Support Enforcement: Side-by-Side Comparison of Current Law and Welfare Reauthorization Bills (S. 667 and H.R. 240)
Released: 2005-06-07T00:00:00

Introduction

In the 109th Congress, the Senate Finance Committee and the House Ways and MeansSubcommittee on Human Resources have approved legislation that would reauthorize and revise theTemporary Assistance for Needy Families (TANF) Block Grant. (1) This legislation, S. 667 and H.R. 240 , also includes many changes to the Child SupportEnforcement (CSE) program, a component of the government's social safety net. In 1996, Congresspassed significant changes to the CSE program as part of its reform of welfare. S. 667 wasreported by the Senate Finance Committee on March 17, 2005 ( S.Rept. 109-51 ). H.R. 240was approved by the House Ways and Means Subcommittee on Human Resources on March 15,2005.

Overview of the Child Support Enforcement Program

Background

The CSE program, Part D of Title IV of the Social Security Act, was enacted in January 1975( P.L. 93-647 ). The CSE program is administered by the Office of Child Support Enforcement(OCSE) in the Department of Health and Human Services (HHS), and funded by general revenues. All 50 states, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands operate CSEprograms and are entitled to federal matching funds. The following families automatically qualifyfor CSE services (free of charge): families receiving TANF benefits (Title IV-A), foster carepayments (Title IV-E), or Medicaid coverage (Title XIX). (2) Collections on behalf of families receiving TANF benefits are usedto reimburse state and federal governments for TANF payments made to the family. Other familiesmust apply for CSE services, and states must charge an application fee that cannot exceed $25. Child support collected on behalf of nonwelfare families goes to the family (usually through the statedisbursement unit).

Between FY1978 and FY2003, child support payments collected by CSE agencies increasedfrom $1 billion in FY1978 to $21.2 billion in FY2003, and the number of children whose paternitywas established (or acknowledged) increased by 1,274%, from 111,000 to 1.525 million. However,the program still collects only 18% of child support obligations for which it has responsibility (3) and collects payments for only50% of its caseload. OCSE data indicate that in FY2003, paternity had been established oracknowledged for about 77% of the nearly 10.0 million children on the CSE caseload without legallyidentified fathers.

The CSE program is estimated to handle at least 50% of all child support cases; theremaining cases are handled by private attorneys, collection agencies, or through mutual agreementsbetween the parents.

Services

The CSE program provides seven major services on behalf of children: (1) parent location,(2) paternity establishment, (3) establishment of child support orders, (4) review and modificationof support orders, (5) collection of support payments, (6) distribution of support payments, and (7)establishment and enforcement of medical support.

Enforcement Techniques

Collection methods used by CSE agencies include income withholding, intercept of federaland state income tax refunds, intercept of unemployment compensation, liens against property,security bonds, and reporting child support obligations to credit bureaus. All jurisdictions also havecivil or criminal contempt-of-court procedures and criminal nonsupport laws. Building onlegislation ( P.L. 102-521 ) enacted in 1992, P.L. 105-187 , the Deadbeat Parents Punishment Act of1998, established two new federal criminal offenses (subject to a two-year maximum prison term)with respect to noncustodial parents who repeatedly fail to financially support children who residewith custodial parents in another state or who flee across state lines to avoid supporting them.

P.L. 104-193 required states to implement expedited procedures that allow them to secureassets to satisfy an arrearage by intercepting or seizing periodic or lump sum payments (such asunemployment and workers' compensation), lottery winnings, awards, judgements, or settlements,and assets of the debtor parent held by public or private retirement funds, and financial institutions. It required states to implement procedures under which the state would have authority to withhold,suspend, or restrict use of driver's licenses, professional and occupational licenses, and recreationaland sporting licenses of persons who owe past-due support or who fail to comply with subpoenasor warrants relating to paternity or child support proceedings. It also required states to conductquarterly data matches with financial institutions in the state in order to identify and seize thefinancial resources of debtor noncustodial parents. P.L. 104-193 authorized the Secretary of Stateto deny, revoke, or restrict passports of debtor parents. P.L. 104-193 also required states to enact andimplement the Uniform Interstate Family Support Act (UIFSA), and expand full faith and creditprocedures. P.L. 104-193 also clarified which court has jurisdiction in cases involving multiple childsupport orders.

Financing

The federal government currently reimburses each state 66% of the cost of administering itsCSE program. It also refunds states 90% of the laboratory costs of establishing paternity. Inaddition, the federal government pays states an incentive payment to encourage them to operateeffective programs. P.L. 104-193 required the HHS Secretary in consultation with the state CSEdirectors to develop a new cost-neutral system of incentive payments to states. P.L. 105-200 , theChild Support Performance and Incentive Act of 1998, established a new cost-neutral incentivepayment system. (4) Thestatutory limit of CSE incentive payments for FY2005 is $446 million.

S. 667 and H.R. 240: Major Provisions Related to Child Support Enforcement

Background

Over the years, the CSE program has evolved into a multifaceted program. Whilecost-recovery still remains an important function of the program, other aspects of the programinclude service delivery and promotion of self-sufficiency and parental responsibility.

The CSE program has helped strengthen families by securing financial support for childrenfrom their noncustodial parent on a consistent and continuing basis and by helping some families toremain self-sufficient and off public assistance by providing the requisite CSE services. Childsupport payments now are generally recognized as a very important income source for single-parentfamilies. On average child support constitutes 17% of family income for households that receiveit (2001 data). Among poor families who receive it, child support constitutes about 30% of familyincome (2001 data). (5)

Both S. 667 and H.R. 240 seek to improve the CSE program andraise collections so as to increase the economic independence of former welfare families and providea stable source of income for all single-parent families with a noncustodial parent. Although bothbills share identical objectives with respect to simplifying CSE assignment and distribution rules andstrengthening the "family-first" policies started in the1996 welfare reform law, the approaches useddiffer. Both bills revise some CSE enforcement tools and add others. The Senate FinanceCommittee-reported bill includes a larger list of CSE provisions than does the House Subcommitteebill. This section of the report does not discuss all of the CSE provisions included in S.667 and H.R. 240. For a description of all of the CSE provisions in S.667 as reported by the Senate Finance Committee and H.R. 240 as approved bythe House Ways and Means Subcommittee on Human Resources, see Table 1 in the last section ofthis report, which provides a side-by-side bill comparison.

Assignment of Child Support Rights

As a condition of receiving TANF benefits, a family must assign their child support rightsto the state. Assignment rules determine who has legal claim on the child support payments owedby the noncustodial parent. The child support assignment covers any child support that accrueswhile the family receives TANF benefits as well as any child support that accrued before the familystarted receiving TANF benefits. Assigned child support collections are not paid to families, butrather this revenue is kept by states and the federal government as partial reimbursement for welfarebenefits. Nonwelfare families who apply for CSE services do not assign their child support rightsto the state and thereby receive all of the child support collected on their behalf.

An extremely important feature of the assignment process is the date on which an assignmentwas entered. If the assignment was entered on or before September 30, 1997, then pre-assistanceand during-assistance arrearages are "permanently assigned" to the state. If the assignment wasentered on or after October 1, 1997, then only the arrearages which accumulate while the familyreceives assistance are "permanently assigned." The family's pre-assistance arrearages are"temporarily assigned" and the right to those arrearages goes back to the family when it leaves TANF(unless the arrearages are collected through the federal income tax refund offset program).

Under S. 667 as reported by the Senate Finance Committee, the child supportassignment would only cover any child support that accrues while the family receives TANFbenefits. This would mean that any child support arrearages that accrued before the family startedreceiving TANF benefits would not have to be assigned to the state (even temporarily) and therebyany child support collected on behalf of the former-TANF family for pre-assistance arrearages wouldgo to the family. In contrast, H.R. 240 as approved by the House Ways and MeansSubcommittee on Human Resources does not make any changes regarding the child supportassignment rules.

Distribution of Child Support

Distribution rules determine the order in which child support collections are paid inaccordance with the assignment rules. In other words, the distribution rules determine which claimis paid first when a child support collection occurs. The order of payment of the child supportcollection is of tremendous importance because in many cases past-due child support (i.e.,arrearages) are never fully paid.

TANF Families. While the family receives TANFbenefits, the state is permitted to retain any current support and any assigned arrearages it collects up to the cumulative amount of TANF benefits which has been paid to the family . The 1996 welfarelaw ( P.L. 104-193 ) repealed the $50 required pass through (6) and gave states the choice to decide how much, if any, of the stateshare (some, all, none) of child support payments collected on behalf of TANF families to send thefamily. States also decide whether to treat child support payments as income to the family. Whilestates have discretion over their share of child support collections, P.L. 104-193 required states topay the federal government the federal government's share of child support collections collected onbehalf of TANF families. This means that the state, and not the federal government, bears the entirecost of any child support passed through to (and disregarded by) families. As of August 2004, 18states were continuing the $50 (or higher in one state) pass-through and disregard policy that hadbeen in effect pre-1996. (7)

Both bills would provide incentives (in the form of federal cost sharing) to states to directmore of the child support collected on behalf of TANF families to the families themselves (oftenreferred to as a "family-first" policy), as opposed to using such collections to reimburse state andfederal coffers for welfare benefits paid to the families. However, the approaches of the bills differwith respect to the amount of federal cost-sharing provided and whether to help states pay for thecurrent cost of their CSE pass-through and disregard policies or to encourage states to establish suchpolicies or increase the pass-through and disregard already in place.

Under S. 667 as reported by the Senate Finance Committee, the federalgovernment would share in the costs of the entire amount of pass-through and disregard policiesused by states. S. 667 would allow states to pay up to $400 per month in child supportcollected on behalf of a TANF (or foster care) family ($600 per month to a family with two or morechildren) to the family and would not require the state to pay the federal government the federalshare of those payments. In order for the federal government to share in the cost of the child supportpass-through, the state would be required to disregard (i.e., not count) the child support collectionpaid to the family in determining the family's TANF benefit.

Unlike S. 667 , the House bill is intended to provide states with an incentive to increase their pass-through and disregard policies. H.R. 240 , as approved by the HouseSubcommittee on Human Resources, would allow states to increase the amount of collected childsupport they pay to families receiving TANF benefits and would not require the state to pay thefederal government the federal share of the increased payments. The subsidized child supportpass-through payments would be the amount above any payments the state was making on December31, 2001. The House bill would limit the federal government's cost-sharing of the new pass-throughpayments to the greater of $100 per month or $50 per month more than the state previously wassharing with the family. In order for the federal government to share in the cost of an increase in thechild support pass-through, the state would be required to disregard (i.e., not count) the child supportcollection paid to the family in determining the family's TANF benefit.

Former TANF Families. Pursuant to the 1996welfare reform law ( P.L. 104-193 ), beginning on October 1, 2000, states must distribute to formerTANF families the following child support collections first before the state and the federalgovernment are reimbursed (this is often referred to as the "family-first" policy): (1) all current childsupport, (2) any child support arrearages that accrue after the family leaves TANF (these arrearagesare called never-assigned arrearages), plus (3) any arrearages that accrued before the family beganreceiving TANF benefits. (8) (Any child support arrearages that accrue during the time the family is on TANF belong to the stateand federal government.)

One of the goals of the 1996 welfare reform law with regard to CSE distribution provisionswas to create a distribution priority that favored families once they leave the TANF rolls. Thus,generally speaking, under current law, child support that accrues before and after a family receivesTANF goes to the family, whereas child support that accrues while the family is receiving TANFgoes to the state. This additional family income is expected to reduce dependence on publicassistance by both promoting exit from TANF and preventing entry and re-entry to TANF.

S. 667 as reported by the Senate Finance Committee would give states the optionof distributing to former TANF families the full amount of child support collected on their behalf(i.e., both current support and all child support arrearages -- including arrearages collected throughthe federal income tax refund offset program). S. 667 would simplify the CSE distributionprocess and eliminate the special treatment of child support arrearages collected through the federalincome tax refund offset program. Under S. 667 the federal government would share withthe states the costs of paying child support arrearages to the family first.

Similarly, H.R. 240 would give states the option of distributing to former TANFfamilies the full amount of child support collected on their behalf. Under the House bill, the federalgovernment would share with the states the costs of paying child support arrearages accrued whilethe family received TANF as well as costs associated with passing through to the family childsupport collected through the federal income tax refund offset program, if the state chose the"family-first" option.

Expansion of Collection/Enforcement Tools

Both bills include identical or similar provisions with respect to (1) lowering the thresholdamount for denial of a passport to a noncustodial parent who owes past-due child support; (2)facilitating the collection of child support from Social Security benefits; (3) easing the collection ofchild support from veterans' benefits; (4) allowing states to use the federal income tax refund offsetprogram to collect past-due child support for persons not on TANF who are no longer minors; (5)authorizing the HHS Secretary to compare information of noncustodial parents who owe past-duechild support with information maintained by insurers concerning insurance payments and to furnishany information resulting from a match to CSE agencies so they can pursue child support arrearages;and (6) allowing an assisting state to establish a child support interstate case based on another state'srequest for assistance (thereby enabling an assisting state to use the CSE statewide automated dataprocessing and information retrieval system for interstate cases).

Additional provisions that would expand and/or enhance the ability of states to collect childsupport payments are contained in S. 667 as reported by the Senate Finance Committee. They include: (1) authorizing the HHS Secretary to act on behalf of states to seize financial assets(held by a multi-state financial institution) of noncustodial parents who owe child support; (2)requiring that medical support for a child be provided by either or both parents; and (3) requiring theCSE agency to notify health care plan administrators under certain circumstances when a child loseshealth care coverage.

Other Provisions

Both bills include provisions that would (1) require states to review and if appropriate adjustchild support orders of TANF families every three years; (2) require the HHS Secretary to submita report to Congress on the procedures states use to locate custodial parents for whom child supporthas been collected but not yet distributed; (3) establish a minimum funding level for technicalassistance; (4) establish a minimum funding level for the Federal Parent Locator Service; and (5)designate Indian tribes and tribal organizations as persons authorized to have access to informationin the Federal Parent Locator Service.

H.R. 240 includes a provision that would establish a $25 annual fee forindividuals who have never been on TANF but receive CSE services and who received at least $500in any given year.

S. 667 includes provisions that would (1) increase funding for the CSE accessand visitation program; (2) require states to adopt a later version of the Uniform Interstate FamilySupport Act (UIFSA) so as to facilitate the collection of child support payments in interstate cases;and (3) allow the state of Texas to continue to operate its CSE program for automatic monitoring andenforcement of court orders on behalf of nonwelfare families without applying for a federal waiver.

Detailed Comparison of CSE Provisions in S. 667 and H.R. 240

Table 1 provides a detailed and comprehensive comparison of the CSE provisions of S. 667 as reported by the Senate Finance Committee and H.R. 240 asapproved by the House Ways and Means Subcommittee on Human Resources with current law. Thetable specifies the section number in each of the bills in which the provision is found.

Table 1. Comparison of Current Law with S. 667, the "Personal Responsibility and IndividualDevelopment for Everyone Act (PRIDE)" as Reported by the Senate Finance Committee and H.R. 240, the "PersonalResponsibility, Work and Family Promotion Act of 2005": Child Support Provisions