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. 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. 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. 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. 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. 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. 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.