Child Support Enforcement: Side-by-Side Comparison of Current Law and Two Versions of H.R. 4 (108th Congress)
Released: 2004-12-22T00:00:00

Introduction

During the 108th Congress, the House of Representatives and the Senate Finance Committeeapproved two different versions of a bill that would have reauthorized and revised the TemporaryAssistance for Needy Families (TANF) Block Grant. This legislation, H.R. 4 , alsoincluded many changes to the Child Support Enforcement (CSE) program, a component of thegovernment's social safety net. In 1996, Congress passed significant changes to the CSE programas part of its reform of welfare. H.R. 4 was passed by the House in February 2003. TheSenate Finance Committee reported a substitute version of the bill in September 2003 ( S.Rept.108-162 ). On March 29-April 1, 2004, the Senate debated H.R. 4; disagreement aroseregarding amendments to the bill, a motion to limit debate was overruled, and the Senate did notvote on passage of the bill.

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 (or who formerly received) TemporaryAssistance to Needy Families (TANF) benefits (Title IV-A), foster care payments, or Medicaidcoverage. Collections on behalf of families receiving TANF benefits are used to reimburse state andfederal governments for TANF payments made to the family. Other families must apply for CSEservices, and states must charge an application fee that cannot exceed $25. Child support collectedon behalf of nonwelfare families goes to the family (usually through the state disbursement unit).

Between FY1978 and FY2003, child support payments collected by CSE agencies increased from $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 andcollects payments for only 50% of its caseload. Moreover, OCSE data indicate that in FY2003,paternity had been established or acknowledged for about 77% of the nearly 10 million children onthe CSE caseload without legally identified fathers. Total expenditures for the CSE program were$5.213 billion in FY2003; of this total, the federal share of state and local administrative costs of theprogram was $3.448 billion and the state share was $1.764 billion.

The CSE program is estimated to handle at least 50% of all child support cases; the remaining cases are handled by private attorneys, collection agencies, or through mutual agreements betweenthe 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 modification ofsupport 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 federal and state income tax refunds, intercept of unemployment compensation, liens against property, securitybonds, and reporting child support obligations to credit bureaus. All jurisdictions also have civil orcriminal contempt-of-court procedures and criminal nonsupport laws. Building on legislation ( P.L.102-521 ) enacted in 1992, P.L. 105-187 , the Deadbeat Parents Punishment Act of 1998, establishedtwo new federal criminal offenses (subject to a two-year maximum prison term) with respect tononcustodial parents who repeatedly fail to financially support children who reside with custodialparents 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 secure assets 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 its CSE 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. (1) The statutory limit of CSEincentive payments for FY2004 is $454 million.

H.R.4: Major Provisions Related to Child Support Enforcement

Background

Over the years, the CSE program has evolved into a multifaceted program. While cost-recovery still remains an important function of the program, other aspects of the program include servicedelivery and promotion of self-sufficiency and parental responsibility, even when one of the parentsis no longer living in the home.

The CSE program has helped strengthen families by securing financial support for children from 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). (2)

Both versions of H.R. 4 sought to improve the CSE program and raise collections so as to increase the economic independence of former welfare families and provide a stable sourceof income for all single-parent families with a noncustodial parent. Although both versions of thebill shared identical objectives with respect to simplifying CSE assignment and distribution rules andstrengthening the "family-first" policies started in the 1996 welfare reform law, the approaches useddiffered. Both versions of the bill revised some CSE enforcement tools and added others. TheSenate-approved version of H.R. 4 included a larger list of CSE provisions than did theHouse-passed bill.

This section of the report does not discuss all of the CSE provisions included in H.R. 4 . For a description of all of the CSE provisions in H.R. 4, as passedby the House and approved by the Senate Finance Committee, see Table 1 in the last section ofthisreport, 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 rights to the state. Assignment rules determine who has legal claim on the child support payments owed bythe noncustodial parent. The child support assignment covers any child support that accrues whilethe family receives TANF benefits as well as any child support that accrued before the family startedreceiving TANF benefits. Assigned child support collections are not paid to families, but rather thisrevenue is kept by states and the federal government as partial reimbursement for welfare benefits. Nonwelfare families who apply for CSE services do not assign their child support rights to the stateand 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 assignment was 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 leavesTANF (unless the arrearages are collected through the federal income tax refund offset program).

H.R. 4 as passed by the House did not make any changes regarding the child support assignment rules. In contrast, under H.R. 4 as approved by the Senate FinanceCommittee, the child support assignment would have only covered any child support that accruedwhile the family received TANF benefits. This meant that any child support arrearages that accruedbefore the family started receiving TANF benefits would not have to be assigned to the state (eventemporarily) and thereby any child support collected on behalf of the former-TANF family forpre-assistance arrearages would have gone to the family.

Distribution of Child Support

Distribution rules determine the order in which child support collections are paid in accordance with the assignment rules. In other words, the distribution rules determine which claim is paid firstwhen a child support collection occurs. The order of payment of the child support collection is oftremendous importance because in many cases past-due child support, i.e., arrearages, are never fullypaid.

TANF Families. While the family receives TANF benefits, 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 (3) and gave states the choice to decide howmuch, if any, of the state share (some, all, none) of child support payments collected on behalf ofTANF families to send the family. States also decide whether to treat child support payments asincome to the family. While states have discretion over their share of child support collections, P.L.104-193 required states to pay the federal government the federal government's share of childsupport collections collected on behalf of TANF families. This means that the state, and not thefederal government, bears the entire cost of any child support passed through to (and disregarded by)families. As of August 2004, 21 states were continuing the $50 (or higher in several states)pass-through and disregard policy that had been in effect pre-1996. (4)

Both versions of H.R. 4 would have provided incentives (in the form of federal cost sharing) to states to direct more of the child support collected on behalf of TANF families tothe families themselves, as opposed to using such collections to reimburse state and federal coffersfor welfare benefits paid to the families (often referred to as a "family-first" policy). However theapproaches of the bills differed with respect to the limitation on the federal cost-sharing and whetherto help states pay for the current cost of their CSE pass-through and disregard policies or toencourage states to establish such policies or increase the pass-through and disregard already inplace.

H.R. 4 as passed by the House would have allowed states to increase the amount of collected child support they pay to families receiving TANF benefits and would not have requiredthe state to pay the federal government the federal share of the increased payments. The subsidizedchild support pass-through payments would have been the amount above any payments the state wasmaking on December 31, 2001. In other words, the House-passed bill intended to increase theamount of child support that was passed through to TANF families (and disregarded) by the state. The House-passed bill would have limited the new payments to the greater of $100 per month or $50per month more than the state previously was sharing with the family. In order for the federalgovernment to share in the cost of an increase in the child support pass-through, the state would havebeen required to disregard (i.e., not count) the child support collection paid to the family indetermining the family's TANF benefit.

Unlike the House-passed bill, under the bill approved by the Senate Finance Committee the federal government would have shared in the costs of the entire amount of current pass-through anddisregard policies used by states. H.R. 4 as approved by the Senate Finance Committeewould have allowed states to pay up to $400 per month in child support collected on behalf of aTANF (or foster care) family ($600 per month to a family with two or more children) to the familyand would not have required the state to pay the federal government the federal share of thosepayments. In order for the federal government to share in the cost of the child support pass-through,the state would have been required to disregard (i.e., not count) the child support collection paid tothe family in determining the family's TANF benefit.

Former TANF Families. Pursuant to the 1996 welfare 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. (5) (Any child supportarrearages that accrue during the time the family ison TANF belong to the state and federal government.)

One of the goals of the 1996 welfare reform law with regard to CSE distribution provisions was to create a distribution priority that favored families once they leave the TANF rolls. Thus, generallyspeaking, under current law, child support that accrues before and after a family receives TANF goesto the family, whereas child support that accrues while the family is receiving TANF goes to thestate. This additional family income is expected to reduce dependence on public assistance by bothpromoting exit from TANF and preventing entry and re-entry to TANF.

H.R. 4 as passed by the House would have given states the option of distributing to former TANF families the full amount of child support collected on their behalf (i.e., both currentsupport and all child support arrearages -- including arrearages collected through the federal incometax refund offset program). Under the House-passed bill, the federal government would have sharedwith the states the costs of paying child support arrearages accrued while the family received TANFas well as costs associated with passing through to the family child support collected through thefederal income tax refund offset program, if the state chose the "family-first" option.

Similarly, H.R. 4 as approved by the Senate Finance Committee also would have given states the option of distributing to former TANF families the full amount of child supportcollected on their behalf. Further, the Senate Finance Committee version of the bill would havesimplified the CSE distribution process and eliminated the special treatment of child supportarrearages collected through the federal income tax refund offset program. Like the House-passedbill, the federal government would have shared with the states the costs of paying child supportarrearages to the family first.

Expansion of Collection/Enforcement Tools

Both versions of H.R. 4 included identical or similar provisions with respect to (1) allowing states to access information in the national new hires database to help detect fraud in theunemployment compensation program; (2) lowering the threshold amount for denial of a passportto a noncustodial parent who owes past-due child support; (3) facilitating the collection of childsupport from Social Security benefits; (4) easing the collection of child support from veterans'benefits; and (5) allowing states to use the federal income tax refund offset program to collectpast-due child support for persons not on TANF who are no longer minors.

Additional provisions that would have expanded and/or enhanced the ability of states to collect child support payments were contained in the Senate Finance Committee-approved version of H.R. 4 . They included (1) authorizing the HHS Secretary to act on behalf of states toseize financial assets (held by a multi-state financial institution) of noncustodial parents who owechild support; (2) authorizing the HHS Secretary to compare information of noncustodial parentswho owe past-due child support with information maintained by insurers concerning insurancepayments and to furnish any information resulting from a match to CSE agencies so they can pursuechild support arrearages; and (3) authorizing the HHS Secretary to compare information obtainedfrom gambling establishments with information on noncustodial parents who owe past-due childsupport and direct the gambling establishment to withhold from the customer's net winnings anychild support that is owed.

Other Provisions

Both versions of the bill included provisions that would have (1) required states to review and if appropriate adjust child support orders of TANF families every three years; (2) required the HHSSecretary to submit a report to Congress on the procedures states use to locate custodial parents forwhom child support has been collected but not yet distributed; (3) established a minimum fundinglevel for technical assistance; and (4) established a minimum funding level for the Federal ParentLocator Service.

The House-passed version of H.R. 4 included a provision that would have established a $25 annual fee for individuals who had never been on TANF but received CSE servicesand who received at least $500 in any given year.

The Senate Finance Committee-approved version of H.R. 4 included provisions that would have (1) increased funding for the CSE access and visitation program; (2) designatedIndian tribes and tribal organizations as persons authorized to have access to information in theFederal Parent Locator Service; and (3) required states to adopt a later version of the UniformInterstate Family Support Act (UIFSA) so as to facilitate the collection of child support paymentsin interstate cases.

Detailed Comparison of CSE Provisions of the House and Senate Finance Committee Bills

Table 1 provides a detailed and comprehensive comparison of the CSE provisions of theHouse-passed and Senate Finance Committee reported versions of H.R. 4 (the welfarereauthorization bill) with current law. The table specifies the section number in each of the bills inwhich the provision is found.

As noted earlier, H.R. 4 passed the House but not the Senate during the 108th Congress. There is some concern that the widely favored CSE provisions that were in H.R.4 were not debated as a separate stand-alone bill. Nevertheless, it seems likely that the109th Congress will consider the substantive and numerous CSE changes that were included in H.R.4 as part of any new TANF reauthorization bill.

Table 1. Comparison of Current Law with H.R.4, "Personal Responsibility, Work, and Family PromotionAct of 2003" as Passed by the House and "Personal Responsibility and Individual Development for Everyone Act(PRIDE)" as Reported by the SenateFinance Committee: Child Support Provisions

Source: Congressional Research Service.