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Child
Support Issues in Welfare Reform Reauthorization
by Michelle Ganow Jones
INTRODUCTION
The 1996 Personal Responsibility and Work
Opportunity Reconciliation Act (PRWORA), besides overhauling the nation’s welfare system and creating the Temporary
Assistance for Needy Families (TANF) program, made significant changes to the Child Support Enforcement and Paternity
Establishment Program (CSE). PRWORA strengthened the enforcement tools available to states, required states to create an
integrated information network, and amended the child support distribution rules. These changes have improved the
performance of the CSE program. Since 1995 child support collections have increased by more than 60 percent.
While Congress is deliberating on TANF reauthorization, it will consider proposals to modify the CSE program.
Modifications to this program have been proposed since PRWORA’s enactment. Most notably, the House passed The
Child Support Distribution Act of 2000 (H.R. 4678) with strong bipartisan support, but the bill failed to come to a
vote in the Senate. Reauthorization presents a significant opportunity to amend the child support program. Proposals
focus on the importance of child support payments to families working toward self-sufficiency, ways to strengthen the
enforcement tools used to collect child support payments, and the provision of services such as employment and training
to noncustodial parents.
This Reauthorization Note
explores child support issues and proposals in the TANF reauthorization debate. For information on child support, see the
Welfare Information Network (WIN) web page at http://www.welfareinfo.org./childsupport.asp.
For more information on TANF reauthorization, see the WIN web page at http://www.welfareinfo.org/tanf_reauthorization.asp.
POLICY QUESTIONS
How has the TANF caseload reduction affected the child
support program? The mission of the child support
enforcement program has evolved since its enactment in 1975. The program was conceived primarily as a mechanism for
states to recover the cost of providing welfare payments to families. Families on welfare must assign their child support
rights to the state, allowing the state and federal governments to keep the noncustodial parent’s child support
payments as reimbursement for providing welfare. Cost recovery remains an important feature of the program; in fiscal
2000 the state and federal governments retained more than $2 billion in child support collections.
The child support program’s responsibilities have expanded over
time to include more than cost recovery. Child support is an important source of income support to low-income families
and ensures that children benefit from the financial support of both parents. CSE agencies provide services to families
regardless of their welfare status. The child support caseload is increasingly composed of families that have left
welfare or have never received welfare. Just 20 percent of the 17.4 million child support cases in fiscal 2000 were
current assistance cases. Former assistance cases comprised 46 percent of the caseload and 35 percent were never
assistance cases.
The proportion of former assistance cases is increasing. The child support caseload remained
relatively constant between fiscal 1999 and fiscal 2000, growing only 0.3 percent. Yet former assistance cases increased
7.5 percent and current assistance cases decreased by 12.4 percent; never assistance cases declined by less than 1.0
percent. For more information, see U.S. Department of Health and Human Services, Office of Child Support Enforcement, FY2000
Preliminary Data Preview Report (Washington, D.C., July 2001), at http://www.acf.dhhs.gov/programs/cse/pubs/2000/datareport/.
The CSE program provides a vital source of income support for
families that are no longer receiving welfare, most of which continue to be poor. For poor families that receive
payments, child support comprises more than one quarter of family income. The importance of regular child support
payments to these families cannot be overemphasized. For more information, see Elaine Sorenson and Chava Zibman, To What Extent Do Children Benefit from Child Support? (Washington, D.C.: Urban Institute, January 2000), at http://newfederalism.urban.org/html/discussion99-19.html.
The changes in the child support caseload mix have some negative
implications for state financing of the child support program. According to a Lewin Group study, states that rely heavily
on retained welfare collections and federal incentives to finance child support enforcement anticipate a need to change
their child support program financing because of the declining share of current assistance cases and the resulting
decrease in retained welfare collections. For more information, see Michael E. Fishman, Kristin Dybdal, and John Tapogna,
State Financing of Child Support Enforcement Programs: Final Report
(Washington, D.C.: U.S. Department of Health and Human Services, Assistant Secretary for Planning and Evaluation and
Office of Child Support Enforcement, September 24, 1999), at http://www.acf.dhhs.gov/programs/cse/rpt/financing.htm.
How would families be
affected by changes in the assignment and distribution of child support collections? Policymakers are considering changes to the child support assignment and distribution rules, including proposals
to encourage or even require states to pass through more child support to families. Families that receive welfare must
assign their child support rights to the state. Assignment rules determine who has a claim to unpaid child support. The
state and federal governments have a claim to any unpaid support while the family receives welfare benefits and to any
unpaid support accrued before the family applied for welfare benefits, up to the amount of welfare assistance provided.
After leaving welfare, the family has a claim to any unpaid support that accrues during the
post assistance period, but
the claim reverts to the state if the family returns to the rolls.
Distribution rules dictate the order in which the state disperses
monies collected on a family’s behalf. Distribution depends on when child support is collected—before or after a
family has left welfare. Generally, the state and federal governments retain any support collected while a family
receives welfare to pay for the family’s welfare claim. After a family leaves welfare, support first goes to pay the
family’s claim. However, any child support arrears the federal government intercepts from federal tax refunds are first
given to the state. Such intercepts account for more than half of all collected arrears. For more information, see the
Center for Law and Social Policy fact sheets on child support assignment and distribution rules at http://www.clasp.org/pubs/childenforce/child_support_enforcement.htm.
People criticize child support assignment and distribution rules
for a number reasons. First, families and caseworkers often find the rules complex and difficult to understand. Second,
the discouragement non-custodial parents feel when the child support they pay does not directly benefit their children can
lead them to reduce their payments. Many advocates argue that families should receive more of the child support collected
on their behalf.
PRWORA eliminated the requirement under Aid to Families with
Dependent Children (AFDC) that states pass through the first $50 of child support to families receiving welfare. Some
states have continued to pass through funds to families receiving welfare and to disregard some or all of the
pass-through amount in determining eligibility and benefits. However, about half of the states eliminated their
pass-through policies after PRWORA. The requirement for states to reimburse the federal government for its share of
welfare expenditures from money passed through to families creates a disincentive for states to pass through payments. In
addition, states with child support financing crunches may be reluctant to pursue a policy that would reduce the state
share of collections. Proposals to change child support assignment and distribution rules must address these concerns.
What challenges must TANF and CSE agencies overcome to ensure
current and former TANF recipients receive the child support they are owed and cooperate with enforcement requirements? While
families are receiving TANF they must assign the state the right to keep child support collected on their behalf, up to
the amount of cash welfare assistance provided. When families leave the welfare rolls, the assignment of their current
support to the state ends. Child support is an important source of income to families leaving welfare, especially during
the first few months after exiting the rolls.
Child support agencies do not always succeed in
transferring child support to families that have left welfare. A recent government report evaluating the process state
child support agencies use to transfer child support to families leaving TANF indicates some states experience delays and
difficulty in redirecting child support to these families. It recommends that welfare and child support offices improve
information sharing about their joint caseloads to more accurately disburse payments. The report also emphasizes the
importance of comprehensive automated systems to increase payment timeliness and accuracy. For more information, see U.S.
Department of Health and Human Services, Office of Inspector General, Distributing
Collected Child Support to Families Exiting TANF (Washington, D.C., October 2001), at http://oig.hhs.gov/oei/reports/oei-05-01-00220.pdf.
TANF clients are required to cooperate with child support enforcement. Federal law mandates that failure to cooperate
will result in a reduction of a family’s cash assistance payment by at least 25 percent. TANF caseworkers typically
collect information from TANF applicants on noncustodial parents, and the child support agency pursues enforcement. A
government study unveiled concern among child support staff about the usefulness, accuracy, and completeness of
information received from TANF caseworkers. CSE staff experience frustration when they must pursue paternity
establishment cases with incomplete or inaccurate information. In addition, poor information can negatively impact an
agency’s performance and result in financial penalties.
The report revealed some of the reasons why TANF
clients may not cooperate fully with caseworkers charged with obtaining sometimes-sensitive information. For example,
clients may lack information on the noncustodial parent or fail to understand the need to cooperate with enforcement
requirements. Clients may also have personal or financial reasons for not cooperating, including having their own
informal child support arrangements or fearing repercussions from the noncustodial parent if they were to cooperate. The
report recommends rethinking policies that create disincentives for client participation, training frontline staff in
skills that encourage cooperation, using innovative strategies to make it easier for clients to cooperate, and evaluating
the policy of delaying cash assistance until the CSE agency determines a client has cooperated. For more information, see
U.S. Department of Health and Human Services, Office of Inspector General, Client
Cooperation with Child Support Enforcement: Challenges and Strategies to Improvement (Washington, D.C., March 2000),
at http://oig.hhs.gov/oei/summaries/b442.pdf.
How effective is the CSE
program and what strategies could Congress consider to make the program more effective? Child support enforcement efforts have been extremely effective, collecting a record $17.9 billion in payments and
establishing nearly 1.6 million paternities in fiscal 2000. Nationally, $4.21 was collected for every administrative
dollar spent, according to the U.S. Department of Health and Human Services. Yet Congress is likely to be asked to
consider strategies to strengthen the program further, such as more aggressive wage withholding, regular review and
adjustment of child support orders, improved medical support enforcement, and permission for collection agencies to
pursue delinquent obligors.
Some argue that strengthening enforcement tools such as these is
not enough. They claim enforcement can be effective only if noncustodial parents have the ability to pay. Many of the
noncustodial parents who fail to make child support payments do so because they are “dead broke” rather than
“deadbeat.” In addition, sizable arrears may overwhelm noncustodial parents, leading them to underground employment
or landing them in jail. More and more, the TANF, child support, and child welfare systems are being asked to focus on
the role of fathers in promoting their children’s well-being. Effective program coordination is critical to the success
of these efforts. Some reauthorization proposals address this issue by recommending policies that encourage program
coordination and authorizing demonstration funds to test promising new approaches.
CURRENT PRACTICE AT THE STATE
LEVEL
Prior to welfare reform, states were required to pass through to
families the first $50 of child support collected on their behalf, which was then disregarded in determining their AFDC
eligibility. Welfare reform eliminated this requirement; under current law, states can continue to pass through child
support payments to welfare families, but the state bears the full cost of the program and must continue to pay the
federal share of collections. A Center for Law and Social Policy analysis of state policies reports that 26 states retain
all support collected for families receiving TANF. Sixteen states pass through between $40 and $75 to families and
disregard that amount in determining eligibility and benefits. Three states pass through and disregard some or all
support to fill budgeting gaps.
Like state pass-through policies, child support program financing
varies among states. In a study for the U.S. Department of Health and Human Services, the Lewin Group reports that states
are using diverse and complex strategies to finance their share of program expenditures. They found a relationship
between the financing structure a state uses to fund its child support program and the state’s belief it will need to
make financing changes. This relationship was attributed to declining TANF caseloads. States that rely heavily on federal
incentives and retained welfare collections to finance child support activities anticipate having to make financing
changes.
In contrast, states that rely primarily on state and/or county
general revenue fund appropriations do not anticipate having to make financing changes. If the current trend in caseload
reductions continues, states that have historically relied on retained collections for child support program financing
will confront an ever-shrinking source of funds. For more information, see Michael E. Fishman, Kristin Dybdal, and John
Tapogna, State Financing of Child Support Enforcement Programs: Final Report
(Washington, D.C.: U.S. Department of Health and Human Services, Assistant Secretary for Planning and Evaluation and
Office of Child Support Enforcement, September 24, 1999), at http://www.acf.dhhs.gov/programs/cse/rpt/financing.htm.
OVERVIEW OF RELATED RESEARCH
Sorenson and Zibman of the Urban Institute analyzed 1997 data from
the National Survey of America’s Families to assess the impact of child support payments on family income. Only 29
percent of all children with a parent living elsewhere receive child support. For these children, child support accounts
for 16 percent of their family’s income. Poor children are less likely than nonpoor children to receive child support,
but the support they receive is a sizable percentage of family income. For poor children whose families receive child
support, payments comprise 26 percent of family income. Sorenson and Zibman estimate that without child support payments,
child poverty would increase by about 5 percent (See Elaine Sorenson and Chava Zibman, To
What Extent Do Children Benefit from Child Support? (Washington, D.C.: Urban Institute, January 2000), at http://newfederalism.urban.org/html/discussion99-19.html.)
Sorenson and Oliver assessed the effect of automating child support
enforcement systems, improving the paternity establishment process, adopting comprehensive new hire directories, and
enacting license revocation—all child support provisions of the 1996 welfare reform law. They found that children who
were living in low- and middle-income families with a never-married mother and who were unlikely to receive child support
in the past, experienced gains in their child support outcomes. Multivariate analysis shows the use of new hire
directories and improvements in the paternity establishment rate have led to increases in child support payments. For
more information, see Elaine Sorenson and Helen Oliver, Child Support Reforms in
PRWORA: Initial Impacts (Washington, D.C.: Urban Institute, February 2002), at http://www.urban.org/Template.cfm?Section=ByTopic&NavMenuID=62&template=/TaggedContent/View
Publication.cfm&PublicationID=7524.
Other research has examined the impact of child support
pass-through policies. Wisconsin’s random assignment pass-through experiment divided families into two groups: one
received a 100 percent pass-through and disregard and the other received a $50 pass-through and disregard. A higher
percentage of fathers in the full pass-through group paid child support (52 percent) compared with fathers in the partial
pass-through group (50 percent), a small but statistically significant difference. The differences were even greater
among fathers who were new to the child support and welfare systems. For more information, see Daniel R. Meyer and Maria
Cancian, W2 Child Support Demonstration Evaluation—Phase I: Final Report
(Madison, Wis.: University of Wisconsin, Institute for Research on Poverty, April 2001), at http://www.ssc.wisc.edu/irp/csde/phase1-tocs.htm.
INTERESTED PARTIES AND RESOURCES
National Organizations and
Interest Groups:
Advocacy groups as well as national organizations representing state and local officials are recommending changes to the
child support program.
American Public Human
Services Association (APHSA). APHSA makes the following recommendations in Crossroads:
New Directions in Social Policy and in addendums to the report, available at http://www.aphsa.org/reauthor/reauthor.asp.
For more information, contact Elaine Ryan at 202/682-0100. APHSA calls on Congress and the administration to:
·
Allow states to pass through more child support to
families, with the federal government sharing the costs, and to count the pass-through toward the maintenance-of-effort
requirement;
·
Provide federal financial support to states for
computer systems associated with assignment and distribution changes;
·
Remove the cap on the Child Support Incentive
Fund, which rewards states for high performance in operating their child support programs;
·
Oppose private-sector access to state information
and enforcement tools, such as the Federal Parent Locator Service and the National Directory of New Hires;
·
Coordinate any newly created programs for
fatherhood with related state and federal programs, such as TANF, child support, child welfare, and the Workforce
Investment Act;
·
Review recommendations to improve medical support
enforcement and develop a broader input process;
·
Work with states and tribes to provide federal
guidance for tribal child support programs; and
·
Allow states to reinvest child support penalties
in program improvements.
Center for Law and Social Policy (CLASP). CLASP’s
reauthorization positions are available at http://www.clasp.org/pubs/TANF/TANF%20comments%201101.pdf.
For more information, contact Vicki Turetsky, 202/906-8000. CLASP asserts Congress and the administration should:
·
Expand services to low-income fathers to help them
gain employment, pay their child support, learn to parent cooperatively, and be positively involved with their children;
·
Change child support assignment and distribution
rules so families receive more child support paid by fathers; and
·
Bar recovery of Medicaid birthing costs and
forgive state-owed arrears if the parents subsequently marry.
National Association of Counties (NACo). NACo’s
recommendations for the child support program are described in its 2002–2003 resolutions on child support and family
formation, available at http://www.naco.org/leg/platform/human/childsupp03.cfm
and http://www.naco.org/leg/platform/human/famTANF03.cfm.
For more information, contact Marilina Sanz, 202/ 393-6226. NACo supports policies that:
·
Provide incentives to states to pass through a
higher percentage of child support collections to families on welfare by reimbursing the state child support enforcement
program on a dollar-for-dollar basis;
·
Make any pass-through program optional and not
carved out of existing funding;
·
Accompany any new child support enforcement
mandates with enhanced federal reimbursement;
·
Remove the cap on the Child Support Incentive
Fund;
·
Ensure privacy by opposing private-sector access
to child support data and enforcement tools;
·
Maintain the existing flexibility within TANF and
oppose carve-outs for “marriage-promotion” programs and fund any incentive programs aimed at marriage promotion with
new money, not TANF funds;
·
Maintain existing flexibility for states to
promote marriage without mandating a fifth TANF purpose regarding marriage;
·
Fund and disseminate further research on family
formation and marriage promotion;
·
Maintain state flexibility to use TANF support
services for noncustodial parents in coordination with the Workforce Investment Act to enhance their ability to increase
earnings over time; and
·
Allow states to extend Medicaid and the State
Child Health Insurance Program to noncustodial parents.
National Conference of State Legislatures (NCSL).
NCSL’s policy positions are available at http://www.ncsl.org/statefed/HUMAN.HTM
and http://www.ncsl.org/programs/press/2002/WRRPolicy2.htm.
For more information, contact Sheri Steisel at 202/ 624-5400. NCSL supports policies that:
·
Give states the option to use a disregard as a
minimum financial incentive for TANF recipients to participate in the child support program;
·
Eliminate the requirement in federal law that
states reimburse the federal government if the state opts to pass through child support to families;
·
Enhance funding for automated data systems
required by federal law;
·
Develop clear, understandable criteria for a new
incentive system that is based on performance outcomes rather than administrative procedures and processes and does not
require incentives received by the state to be reinvested in the child support program;
·
Allow states to reinvest their child support
penalties in the child support system;
·
Focus more attention on fathers, especially
low-income non-custodial fathers. States with innovative programs to reach out to low-income non-custodial parents should
share their successes with the federal government; and
·
Grant state legislatures the authority to
appropriate any block grants to states that the federal government might establish to examine ways to involve
noncustodial parents in their children’s lives.
National Governors Association (NGA).
NGA’s positions on child support issues and fatherhood are available at http://www.nga.org/nga/legislativeUpdate/1,1169,C_POLICY_POSITION^D_530,00.html
and http://www.nga.org/nga/lobbyIssues/1,1169,D_1253,00.html.
For more information, contact Gretchen Odegard at 202/624-5300. NGA calls for policies that:
·
Provide options for states to pass through a
greater share of child support collections to families that are on welfare or that have left welfare;
·
Include a commitment from the federal government
to provide its share of child support collections as part of any proposal to allow for greater pass-through to families;
·
Count the state share of collections passed
through to families toward the state maintenance-of-effort requirement;
·
Develop options for penalty reinvestment for all
accrued child support penalties and take into consideration state investments in technology-related expenditures when
penalties are assessed; and
·
Provide support for, and coordination between,
existing programs to promote fatherhood and do not fund any new federal funding streams designated for fatherhood
initiatives at the expense of another vital human service program.
National League of Cities (NLC). NLC’s
recommendations for the child support program are included in its human development policy, available at http://www.nlc.org/nlc_org/site/files/reports/hd02.doc.
For more information, contact Jennifer McGee or Pam Konde at 202/ 626-3000. NLC urges Congress and the administration to:
·
Consider state collection of support payments through payroll tax deductions, with payments being made
to legal guardians of children;
·
Standardize child support levels to ensure the courts order adequate amounts of support, base child
support payments on a specific percentage of the nonresidential parent’s income according to the number of children
being supported, and periodically review such standards; and
·
Improve the collection of child support both through direct federal action and through federal
encouragement of state coordination through financial and other incentives.
Bush Administration Proposal. In Working Toward Independence, the Bush administration describes its
agenda for TANF reauthorization, including a few child support provisions. For more information, see http://www.whitehouse.gov/news/releases/2002/02/welfare-reform-announcement-book.html.
The proposal would:
·
Expand pass-through and disregard policies with
the federal government sharing in the costs of state efforts, beginning in fiscal 2005;
·
Give states the option to pass through intercepted
tax refunds to families that have left TANF;
·
Charge non-TANF families a $25 annual user fee;
·
Require states, every three years, to review child
support orders of families receiving TANF;
·
Give states
access to other enforcement tools, including a lower threshold for passport denial from $5,000 to $2,500, and allow
states to collect limited amounts of past-due child support from Social Security payments; and
·
Target $300 million for programs that encourage
healthy, stable marriages, including premarital education and counseling, as well as research and technical assistance on
promising approaches.
House Reauthorization Legislation.
On May 16, 2002, the U.S. House of Representatives passed H.R. 4737, The Personal Responsibility, Work, and
Family Promotion Act of 2002, by a vote of 229-197. The bill echoes most of the provisions put forth in the
President’s proposal. It would:
·
Provide healthy marriage promotion grants totaling
$300 million to explore innovative programs that promote and support healthy, married, two-parent families.
·
Authorize the Secretary of Health and Human
Services to award $20 million to public and nonprofit community entities for demonstration projects to promote
responsible fatherhood;
·
Expand child support pass-through and disregard
policies with the federal government sharing in the costs of state efforts;
·
Give states the option to pass through intercepted
tax refunds to families that have left TANF;
·
Charge non-TANF families a $25 annual user fee;
·
Require states, every three years, to review child
support orders of families receiving TANF; and
·
Give states access to other enforcement tools,
including a lower threshold for passport denial from $5,000 to $2,500, and allow states to collect limited amounts of
past-due child support from Social Security payments.
For more information, see http://thomas.loc.gov/cgi-bin/bdquery/z?d107:H.R.4737:.
Pending Senate Proposals.
Senator John D. Rockefeller IV (D-W.Va.) introduced S.2052, The Personal
Responsibility and Work Opportunity Reconciliation Act Amendments of 2002. Provisions of the bill would:
·
Establish a $100 million fund to encourage the
formation and maintenance of two-parent families and healthy marriages; reduce non-marital births, including first and
subsequent teenage pregnancies; and increase the ability of noncustodial parents to financially support and be involved
with their children
For more information, see http://thomas.loc.gov/cgi-bin/bdquery/z?d107:s.02052:.
Senator Evan Bayh (D-Ind.) introduced S. 2524, The Work and Family Act of 2002. S. 2524 proposes to:
·
Provide a credit to reduce a state’s work
participation rate for increasing child support collections on behalf of current and former TANF recipients;
·
Encourage responsible fatherhood by funding
programs that promote and sustain marriage, promote responsible parenting, and help fathers and their families avoid or
leave cash welfare and improve their economic status. Establish a $30 million demonstration project to test innovative
policies and to better coordinate policies and services for low-income, noncustodial parents. Authorize $50 million to
fund a media campaign to promote responsible fatherhood and to develop a national clearinghouse for responsible
fatherhood.
·
Provide $200 million for court-supervised
employment programs for noncustodial parents who have a history of nonpayment of child support obligations and who are in
need of employment services.
·
Give states the option to pass through child
support to current or former TANF families with no obligation to pay the federal government its share of passed-through
collections and ;
·
Give states the option to adopt a simplified
distribution system for past-due support;
·
Strengthen child support enforcement measures,
including a lower threshold for passport denial; and
·
Encourage cooperation between child support
enforcement and related agencies through demonstration projects.
For more information, see http://thomas.loc.gov/cgi-bin/bdquery/z?d107:s.02524:.
- For more
information, contact: TANF
Reauthorization Resources, The Welfare Information Network,
