Issue Notes
Vol. 1, No. 5                                                                                                                  May 1997

Child Support Enforcement and Welfare Reform

by Jessica Yates

Background

Congress underscored its intention of holding parents accountable for supporting their families when it made improved child support enforcement a key component of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193). The law aims to improve child support collection in several ways.

As had been the case under Aid to Families With Dependent Children, states must increase their paternity establishment rates and reduce welfare benefits to families who do not cooperate in establishing paternity and obtaining child support orders. States’ non-compliance with these requirements brings a financial penalty under the new Temporary Assistance for Needy Families (TANF) Program. Accordingly, the law requires that states adopt specific procedures providing for a variety of child support enforcement actions, such as revoking licenses and imposing work requirements on delinquent, non-custodial parents of children whose custodial parents are receiving TANF benefits.

The expanded armory of enforcement tools will be used in the context of new administrative structures and expanded data systems, such as mandatory reporting of new hires, data matches with financial institutions, and centralized collection and disbursement of support payments. States must decide how to use these enforcement authorities and mechanisms efficiently to increase child support collections, particularly since families who need regular support payments to avoid welfare dependency now face time limits for receiving TANF benefits.

Policy Issues

The law requires that state agencies operating the federal child support program (known as title IV-D) have the authority to use a range of enforcement tools, which in many cases will require changes to state laws. The effective dates of many of these provisions will vary with the timing of state statutory changes; for information on the child support requirements of P.L. 104-193, see one of the summaries referenced at the end of this Issue Note or on WIN’s Internet site at http://www.welfareinfo.org/childsupport.htm.

Many of the enforcement procedures discussed below were inspired by state innovations and then became mandatory under the new law. State IV-D agencies and judicial systems have a great deal of discretion in implementing many of the requirements, such as deciding which cases warrant which types of enforcement tools. States will need to make broad decisions around resources, degree of automation and changes to management information systems, contracting out, extent of centralization, and the distribution of authority to the administrative and judicial branches of government. P.L. 104-193 anticipates that states will use expedited, administrative

procedures and central data systems to implement stronger enforcement mechanisms. Yet in this more aggressive child support collection environment, states are still expected to exercise due process and privacy protections.

One of the questions before states is how to implement the law’s provisions so they will be cost-effective and reduce welfare costs. Based on the success of states already using some of the procedures mandated by the welfare reform law, these enforcement tools will likely increase child support collections. However, increased collections do not necessarily translate into substantially reduced welfare expenses. Research indicates that many low-income non-custodial parents cannot afford to pay their full child support orders. Instead, most of the collection gains are likely to be in the cases of non-welfare families. Research published by the Urban Institute showed that if non-custodial fathers paid as much as they could ($34 billion more than they are currently paying), Aid to Families With Dependent Children costs for custodial mothers and their households would decrease by 21% (from $12 billion to $9.5 billion), reducing the program’s overall costs by 16% (Sorensen and Wheaton, 1997).

Determining the cost-effectiveness of a particular form of child support enforcement is difficult given that states use an array of inter-related policies, and the publicity of stronger enforcement (e.g. license revocations) can increase collections even from non-custodial parents who haven’t been targeted by the state. Many researchers also stress that cost-benefit analyses should reflect families who were vulnerable to going on welfare but did not because they received child support payments. (See the end of this Issue Note for a list of relevant resources.)

License Restrictions

States must have or adopt procedures to withhold, suspend or restrict the use of driver’s, professional, occupational and recreational licenses where individuals are overdue on child support or do not comply with subpoenas or warrants related to paternity establishment or child support proceedings. Thirty-nine states already have laws for using some form of licensing restrictions as an enforcement tool, but most of those laws have been enacted in the past year. Although most states have aimed solely to increase financial support for children, Michigan has started applying license suspension rules to custodial parents not honoring visitation agreements. States will need to conduct matches with other agencies, such as departments of motor vehicles and professional licensing agencies, to implement this enforcement rule.

States already using license restrictions generally mail notices to delinquent debtors after they hit a certain threshold, either in how much they owe or for how long they are overdue on payments. Experienced states report that the mere threat of losing a driver’s or business license usually is sufficient to enforce support.

Research:

Although states have been able to estimate increased collections through these initiatives, very little research or evaluation has been done. A federal Office of Child Support Enforcement (OCSE) fact sheet cites Congressional Budget Office estimates that the federal government could save $146 million in welfare payments over five years if all states used license revocation programs to increase child support collections.

Initiatives:

The Massachusetts IV-D agency conducts monthly matches with the department of motor vehicles and professional license agencies, and in June 1994, started sending warning letters to non-custodial parents who owed at least $1,000 and were eight weeks in arrears. Over $1 million in additional collections has been attributed to the roughly 63,000 letters mailed so far. Obligors have the option of requesting a hearing, although half the hearings are cancelled due to no-shows or payment arrangements made before the hearing dates. An additional $600,000 has been collected from parents going through the hearing process. From June 1994 to April 1997, 169 licenses were suspended. Contact Jack Dolan, Program Manager, Massachusetts Department of Revenue, Child Support Division, at (617) 577-7200, ext. 30155.

New York has a dual process for using license suspensions and revocations. An automated system run by the state IV-D agency in partnership with the department of motor vehicles suspends the driver’s licenses of non-custodial parents who owe at least four months of support. The agency sends these parents a warning, and if they do not contact the agency for payment or dispute the arrears within 60 days, the agency contacts the department of motor vehicles, who gives the parents an additional 15 days to contact the IV-D agency before suspending their licenses. Since the program began in March 1996, about 83,000 licenses have been suspended. The state collected $8 million more in child support in March 1997 compared to March 1996, but no analysis has been done to determine how much of the increase is attributable to the license suspension program. The program cost approximately $200,000 to start and operate to date, according to the IV-D agency. In contrast, state law also provides courts with the authority to request state agencies issuing professional, business or occupational licenses to hold suspension hearings for delinquent, non-custodial parents. Few of these licenses have been suspended. Contact: Lee Sapienza, Director, Program Operations Unit, N.Y. State OCSE, at (518) 474-1078.

Resources:

"OCSE Information Exchange: State Licensing: Restrictions and Revocations," January 1997. Contact Jeff Ball in the Technical Assistance Branch at (202) 401-5427. Also see: http://www.acf.dhhs.gov/ACFPrograms/CSE/fct/licmtx.html.

"License Suspension and Revocation," Legislative Implementation Guide. OCSE. 1996. Contact Jan Downing at (202) 401-9375.

"Compendium of State Best Practices," chapter on license revocation. OCSE. See "General Publications" in this Issue Note.

"Federal District Court Upholds Constitutionality of Driver’s License Restriction Statute," by David L. Braun, Assistant Attorney General, South Dakota’s OCSE. NCSEA News, Winter 1996. Contact the National Child Support Enforcement Association (NCSEA) at (202) 624-8180.

Work Requirement

Under the new law, states must adopt or have procedures to permit court or administrative orders requiring non-custodial parents who are past-due on support to participate in court- or agency-assigned work activities if the child receives public assistance. Also known as "pay-or-work" programs, they aim to increase a parent’s ability to pay child support, but have a secondary impact of "smoking out" parents who, when faced with a work requirement or jail, admit they are already employed, have resources or even pay the custodial parent "under the table."

As of autumn 1996, approximately 23 states had welfare reform waivers requiring job training or job referrals for non-custodial parents delinquent in their child support, although many had not implemented those provisions. At the same time, 17 states have had or recently started services and programs for low-income non-custodial parents, usually in just one or a few local jurisdictions (Sorensen, 1996). South Carolina and Georgia are now planning state-wide work programs for non-custodial parents. Many of these programs do not meet the spirit of the new federal requirements because they provide an incentive and are voluntary rather than court-ordered. Existing programs range both in scope of services and the extent to which child support orders are reduced during program participation. One issue related to programs for non-custodial parents is allowable funding. OCSE regulations do not address the issue. The Administration for Children and Families has taken the stance that a state can use TANF funds on such services if it is willing to define "family" as including non-custodial parents.

Research:

Preliminary research by the Manpower Demonstration Research Corporation (MDRC) indicates that programs for non-custodial parents may produce positive results. MDRC is evaluating the Parents’ Fair Share Demonstration, a program funded by a consortium of foundations and the federal government. The demonstration required non-custodial, delinquent parents in seven sites to receive employment services and attend peer support groups. MDRC observed the "smoke out" effect in uncovering non-custodial parents’ resources, but a more thorough evaluation is expected to be published later this year.

"Matching Opportunities to Obligations: Lessons for Child Support Reform from the Parents’ Fair Share Pilot Phase," by Dan Bloom and Kay Sherwood, MDRC. April 1994. Contact MDRC at (212) 532-3200.

"Low-Income Parents and the Parents’ Fair Share Demonstration: An Early Qualitative Look at Low-Income Non-Custodial Parents and How One Policy Initiative Has Attempted to Improve Their Ability to Pay Child Support," by Earl Johnson and Fred Doolittle, MDRC. June 1996.

"States Move to Put Low-Income Non-Custodial Parents in Work Activities," by Elaine Sorensen, Urban Institute. Published by APWA in Public Welfare, Winter 1997. Contact APWA at (202) 682-0100.

Young Unwed Fathers Demonstration. Contact Public/Private Ventures at (215) 557-4400.

Initiatives:

California’s Los Angeles County was one of the Parents’ Fair Share sites from March 1994 through 1996, and the county continues to collect data on participants through 1997. The county offered a six-month series of training, employment, mediation and peer support services to non-custodial, delinquent parents who came to Parents’ Fair Share either voluntarily or through a court order. Eligibility was limited to non-custodial parents whose children were receiving or previously had received public assistance. In welfare cases, support orders were reduced to $50 a month while parents sought full-time employment. According to data from the county district attorney’s office, 37% of participants were placed in jobs from March 1994 through January 1997. Total child support collections from Parents’ Fair Share were nearly $2 million, including about $760,000 from "smoke outs." During the phase in which a control group was used, the controls paid about $489,000 in collections; the demonstration group paid $602,000, even though many of the latter participants had their support orders reduced for part of the time. Contact Linda Jenkins, Director of the LA. County Parents’ Fair Share Program, at (213) 889-2950.

In Wisconsin, Children First is a child support initiative operated at a county’s option; 32 counties currently run the program. Courts order delinquent, non-custodial parents who are unemployed or underemployed to choose from three options: pay three consecutive months of child support; participate in 16 weeks of job search, training, parenting skills and other program components; or go to jail. It is not restricted to cases where the custodial parent is on welfare. Each county designs eligibility criteria and program components. State data on 1994 program participants indicate that the program increases the number of parents making child support payments and the number of parents employed. One county used a control group and found similar improvements in both participating and non-participating parents. The 1994 data also indicate that most participants elected to pay support for three months rather than attend program sessions, job searches and other scheduled activities. Contact: Barb Berlin, Bureau of Welfare Initiatives, Department of Workforce Development, at (608) 266-2828.  Also see: http://www.dwd.state.wi.us/reform/child1st.htm.

Resources:

National Center for Strategic Non-Profit Planning and Community Leadership: Partners for Fragile Families, (202) 429-6526. The Center is involved in fatherhood initiatives, child support peer learning networks and related policy work. Contact Jeff Johnson, president and CEO; Barbara Cleveland, director of peer learning and education; and Nigel Vann, director of partnership development.

Center for Fathers, Families and Public Policy. The Center focuses on child support and other issues pertinent to low-income fathers. Contact Daniel O. Ash at (312) 341-0900, ext. 106.

"Work Requirement for Persons Owing Past-Due Child Support," Legislative Implementation Guide. Draft, October 1996. OCSE. Contact (202) 401-9375.

Mechanisms Using Data on Parents’ Earnings and Assets

Building on successful practices targeting delinquent, non-custodial parents’ finances and assets, the federal welfare reform law strengthens existing income withholding, lien imposition and credit bureau reporting requirements. The new law also requires states to: conduct quarterly data matches with financial institutions; have laws that void any transfers of income or property where the transfers were made to avoid payment of child support; operate new hire reporting systems to more easily track employed parents; and certify and report to the federal government child support debts of more than $5,000 to facilitate passport revocation.

Research:

While states that have already implemented such mechanisms have increased child support collections, less is known about the efficiency of such tools. For example, according to the federal OCSE, Washington’s IV-D agency performed a cost/benefit analysis of its new hire reporting program, created in 1990, and found that $22 was collected for every dollar spent on the program. OCSE added that "more conservative" estimates prepared for the state legislature showed a collection/cost ratio of $4 to $1.

Innovative Practices:

Massachusetts has been conducting data matches with financial institutions since 1993 to get information on the assets of delinquent, non-custodial parents. Institutions choose between submitting lists of account information to the state Department of Revenue (DOR), or receiving lists of targeted parents from the state and then identifying matches. When DOR verifies a match, it executes a levy against that parent’s assets and the institution freezes the account. The bank is permitted to deduct up to $20 from an individual’s account as a service charge when the account is levied. The state’s system is automated, so levies and payments are transmitted electronically. In 1995, DOR attributed a 4% increase in support collections to the roughly $9.6 million in child support payments collected through its bank match program – about half of which was for custodial parents on welfare. This practice has been particularly helpful in dealing with self-employed or lying parents and may serve as a deterrent to hiding assets. Contact Jerry Faye, IV-D director at DOR, (617) 577-7200, ext. 30482.

Colorado uses an automated, administrative process to intercept workers’ compensation benefits for non-custodial parents owing child support. (State statute exempts permanent partial disability benefits.) The IV-D agency conducts daily matches with the state Department of Labor and Employment to identify obligors who are receiving benefits and immediately sends a benefit attachment to the insurance company, with a copy to the non-custodial parent. About $1,020,000 was collected from the program since its implementation in April 1995 through 1996. No cost/benefit analysis has been completed. The state’s previous system had required counties to go to court to seize workers’ compensation benefits of delinquent parents. Contact Anita DeVargas Field, supervisor of the state enforcement unit of Colorado’s Division of Child Support Enforcement, at (303) 866-5994.

Resources:

"Administrative Enforcement Remedies of the Massachusetts Department of Revenue Child Support Enforcement Division," Massachusetts Department of Revenue. August 1995. Contact DOR at (617) 577-7200.

American Payroll Association. Contact Rita Zeidner at (202) 682-4785.

"Child Support Enforcement: Credit Bureau Reporting Shows Promise," General Accounting Office (GAO). June 1994. GAO/HEHS-94-175. Contact GAO at (202) 512-6000.

"A Guide About Child Support Enforcement for Credit Grantors," OCSE. November 1988. Contact the OCSE National Reference Center at (202) 252-5430.

"OCSE Information Exchange: Immediate W-4/Employer Reporting of New Hires," December 1996. See: http://www.acf.dhhs.gov/ACFPrograms/CSE/fct/w4mtx12.html.

"15 Facts on Employer New Hire Reporting Child Support Enforcement: A Compilation of Evidence and Experience from the States." Prepared by SRA International Inc. for OCSE. Contact Karen Bartlett at OCSE’s Division of Program Operations at (202) 401-4630.

"Compendium of State Best Practices," chapters on enforcement and new hires reporting. OCSE. See "General Publications" in this Issue Note.

Enforcement of Orders Against Grandparents

Under the federal welfare reform law, states are allowed – but not required – to enforce child support orders against the parents of a minor who is the non-custodial parent of a child if the teenage, custodial parent is receiving TANF benefits. Arizona, Hawaii, Ohio, South Dakota, Wisconsin and the Virgin Islands already have laws holding grandparents responsible for children born to teen parents, but these laws are not seen as an important tool for increasing collections. A South Dakota official noted that the legislature had wanted the law to "send a message" about teaching teenagers about parental responsibility, and the IV-D agency has never used it to pursue child support from grandparents.

Research:

Little research has been done on the potential impact of this provision. Wisconsin has had a grandparent liability law since 1985 and evaluated its effectiveness in 1988. Most potential cases of grandparent liability were not referred to district attorneys, and of those that were, most did not result in court-ordered child support. No cost-benefit analysis was conducted on the program, but over 21 months, the program collected $15,000 from the 13 new support orders. A state audit report noted that nearly half the potential cases were not likely to be pursued by the courts because either the grandparents were receiving welfare (and therefore had a limited ability to pay) or the non-custodial, teen parent was close to turning 18. The report also concluded that the program was failing to increase substantially support collections and reduce welfare payments, but may be having more success in encouraging parents to communicate sexuality issues to their teens. In addressing concerns of "unintended consequences," the state IV-D agency reported no evidence of increased abortions or teen fathers denying paternity. Source: "An Evaluation of the Abortion Prevention and Family Responsibility Act: 1985 Wisconsin Act 56," Wisconsin Legislative Audit Bureau.

Initiatives:

Wisconsin’s law is stricter than the federal option, as it applies to the parents of both the custodial and non-custodial teen parents. The state also expanded it to include cases where the minor parents are not receiving welfare. As noted above, the program has the dual goal of increasing support collections and encouraging better communication between parents and teens about sexual behavior. Contact Todd Kummer, the Bureau of Child Support, Wisconsin Department of Health and Social Services, at (608) 266-8438.

Other Resources:

"Teen Parent Provisions in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996," by Jodie Levin-Epstein. Center for Law and Social Policy (CLASP). November 1996. Contact CLASP at (202) 328-5140.

"Enforcement of Orders Against Paternal or Maternal Grandparents," Legislative Implementation Guide. OCSE. Draft. September 1996. Contact OCSE at (202) 401-9373.

Other Tools States Can Use in Enforcement

States have other policy and management options available in strengthening child support enforcement. For example, P.L. 104-193 permits states to deny food stamps to parents during any month when a parent is delinquent in child support payments (unless a court has approved a delay in payment or compliance with a child support plan). To date, no state has informed the Food and Consumer Service that it plans to implement this provision. While this option could increase support collections, it raises a host of legal and resource questions in a program that has no experience with child support (Roberts, 1996). States would need to decide whether food stamp staff need training or a new appeals procedure is needed. Another hurdle is that the law appears to require that states opting for the sanction to enforce it in the same month of delinquency, and experts are skeptical of state systems’ current abilities to determine when a food stamp applicant is delinquent in child support.

As an incentive rather than punishment approach, the welfare reform law also authorizes a new formula grant program providing funds to states for access and visitation programs. Given research that shows the effectiveness of such programs in increasing child support collections, federal interest in access and visitation issues could help enforcement.

For More Information . . .

GENERAL RESOURCE CONTACTS

American Public Welfare Association. Contact Kelly Thompson at (202) 682-0100.

Center for Policy Research. Contact Jessica Pearson at (303) 837-1555.

Center for Law and Social Policy (CLASP). Contact Vicki Turetsky at (202) 328-5145.

National Child Support Enforcement Association (NCSEA). Contact Joel Bankes, Executive Director, at (202) 624-8180.

OCSE. Contact David Arnaudo at (202) 401-5364; Jeff Ball at (202) 401-5427; Duke Wilson at (202) 260-5981; or Debra Pontisso at (202) 401-4548.

Women’s Legal Defense Fund. Contact Joan Entmacher, at (202) 986-2600.

GENERAL PUBLICATIONS

CLASP, selected resources. Contact (202) 328-5140 or see: http://epn.org/clasp.

"Family Law Issues and the Personal Responsibility and Work Opportunity Reconciliation Act of 1996," by Paula Roberts. November 1996.

"Relationship Between TANF and Child Support Requirements," by Paula Roberts. September 1996.

"Child Support Administrative Processes: A Summary of Requirements in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996," by Vicki Turetsky. January 1997.

"Child Support Computer Systems Requirements in Welfare Bill," by Vicki Turetsky. August 1996.

Dubey, Sumati, University of Illinois at Chicago. "A Study of Reasons for Nonpayment of Child Support by Non-Custodial Parents." Journal of Sociology and Social Welfare. Spring 1996. Contact David Arnaudo at OCSE at (202) 401-5364, or see OCSE’s January 1997 "Child Support Report" at: http://www.acf.dhhs.gov/ACFPrograms/CSE/new/csr9701.html.

Garfinkel, Irwin, and Philip Robins. "The Relationship Between Child Support Enforcement Tools and Child Support Outcomes." May 1993. Discussion Paper #1004-93. Contact the Institute for Research on Poverty at (608) 262-6358.

General Accounting Office, (202) 512-6000, http://www.gao.gov.

"Child Support Enforcement: Early Results on Comparability of Privatized and Public Offices." Dec. 16, 1996. GAO/HEHS-97-4.

"Child Support Enforcement: States’ Experience with Private Agencies’ Collection of Support Payments." Oct. 23, 1996. GAO/HEHS-97-11.

"Child Support Enforcement: States and Localities Move to Privatized Services." Nov. 20, 1995. GAO/HEHS-96-43FS.

"Child Support Enforcement: Families Could Benefit from Stronger Enforcement Program." December 1994. GAO/HEHS-95-24.

Haskins, Ron, Staff Director for the House Ways and Means Subcommittee on Human Resources. "Seizing the Moment: Improving the Efficiency of Child Support Enforcement." NCSEA News. Winter 1997. Article includes anticipated cost savings from improving the child support program. Contact NCSEA at (202) 624-8180.

Legler, Paul, Attorney Advisor, Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. "The Coming Revolution in Child Support Policy: Implications of the 1996 Welfare Act." Family Law Quarterly, Vol. 30, No. 3. Fall 1996.

National Conference of State Legislatures (NCSL). "Summary of Child Support Provisions in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996." December 1996. Contact NCSL at (202) 624-5400 or see: http://www.ncsl.org/statefed/welfare/support.htm. For information on individual states’ child support legislation, contact NCSL at (303) 830-2200.

National Women’s Law Center (NWLC). "Analysis of the Child Support Provisions in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996." Contact NWLC at (202) 588-5180.

OCSE, U.S. Department of Health and Human Services. Contact the OCSE Resource Center at (202) 401-9383 or see: http://www.acf.dhhs.gov/ACFPrograms/CSE/.

"Child Support Enforcement Resource Persons." Forthcoming May 1997. Lists resource contacts on various child support areas addressed in P.L. 104-193.

"Compendium of State Best Practices," 3rd edition. Includes innovations in new hire reporting, license revocation and other enforcement tools. January 1996. Also see: http://www.acf.dhhs.gov/ACFPrograms/CSE/rpt/bp96.html.

"Legislative Implementation Guides." Series of brief descriptions of new statutory provisions, state initiatives, "talking points" and other information relevant to shaping state child support laws and policies. Contact (202) 401-9373.

Urban Institute, (202) 833-7200:

"A National Profile of Non-Custodial Fathers and Their Ability to Pay Child Support," by Elaine Sorensen. November 1996. Also see: http://www.urban.org/family/newprof.htm.

"Potential Effects of Increased Child Support on Welfare Costs and Welfare Dependency," by Elaine Sorensen and Laura Wheaton. January 1997. This report estimates welfare savings with full child support collection.

Welfare Information Network, (202) 628-5790:

"Privatization and Welfare Reform," by Jessica Yates. February 1997. See: http://www.welfareinfo.org/jessica.htm.

"Teen Parenting and Welfare Reform Policy," by April Kaplan. March 1997. See: http://www.welfareinfo.org/kaplan.htm.

The author wishes to thank Vicki Turetsky, Kelly Thompson and the many
other individuals who assisted in the compilation of this material.

Barry L. Van Lare, Executive Director - Welfare Information Network - www.welfareinfo.org