Federal Legislative Initiatives

[as incorporated in the Senate Finance Committee Markup of PRIDE (Personal Responsibility and Individual Development for Everyone, H.R. 4, 108 th Cong.)]

Introduction

The Eastern Regional Interstate Child Support Association (ERICSA) is a not-for-profit organization of child support professionals that promotes the interests of children who are owed child support. ERICSA members work for or with state, tribal and local child support agencies as public or private-sector participants.

Founded in 1963, ERICSA historically has drawn its membership from persons working for or doing business with tribes and states and their local jurisdictions that border on, or are east of, the Mississippi River . ERICSA holds an annual training conference and provides policy positions on key issues affecting child support.

Congress is considering an important bill that impacts not only the Temporary Assistance for Needy Families (TANF) program but also the child support program. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) included many important child support provisions, as does the lead TANF reauthorization bill. The lead reauthorization vehicle as of January 2004 is the Senate Finance Committee's marked up version of H.R. 4, currently entitled the Personal Responsibility and Individual Development for Everyone Act (PRIDE).

This paper will take positions on issues that are contained in this version of PRIDE, plus some other issues that have received congressional consideration. Our emphasis will not be on specific language but on the concepts behind PRIDE's Title III, which contains the child support provisions.

II. ERICSA's Prior, Related Positions

ERICSA supports secure and confidential access to IRS data by the public and private partners of child support enforcement (CSE or IV-D) agencies, but solely for purposes consistent with the operation of the IV-D program.

ERICSA supports a congressional amendment to IV-D legislation to require states to have and use UIFSA 2001.

III. Current Positions

a. Distribution of child support benefits collected by states on behalf of children receiving certain welfare benefits (PRIDE section 301)

ERICSA recommends that Congress act to allow states to provide additional support to families attempting to reach self-sufficiency and to provide relief for states and families from the burdensome complexity of PRWORA distribution rules. In the seven years since federal welfare reform, the child support program has emphasized efforts to increase families' income so that they can leave public assistance and remain self-sufficient.

While we acknowledge that current child support distribution does not fully promote welfare reform's goal of personal responsibility and independence from public assistance, we also recognize that many states rely on public assistance collections to fund programs important to families. For these reasons, we believe that the changes to distribution should be optional until state economies sufficiently improve and funding structures of some IV-D programs change from a TANF-recoupment basis. Once states reach that point, it would be appropriate to require a universal switch to a family-first distribution policy in former TANF cases.

The success of welfare reform has required IV-D programs to focus on supporting families in transition to self-sufficiency, while at the same time child support distribution rules continue to emphasize the recovery of public assistance. Simplification of child support distribution is necessary to meet the needs of families and to clarify the role of IV-D agencies in a post-welfare reform world.

Distribution

ERICSA supports distribution reform that includes the following provisions:

Families applying for TANF assistance would assign the right to support owed during the assistance period, but would retain the right to pre-assistance support, effective the date of enactment of such legislation or earlier if a state exercised that option. Such a provision would allow states to adopt a true family-first policy, and it would allow families to keep child support owed to them during periods in which they are not receiving a TANF grant.

States would have the option to keep or eliminate older pre-assistance assignments.

While the family is receiving assistance, the state would keep the support and apply it to the amount due during the assistance period. If a state collected more money than the amount assigned to it, the family would get the remainder and, in most cases, would lose eligibility for TANF.

States would have the option to distribute child support collected through the federal tax offset program, as they do all other collections. If a state chose such an option, the federal tax refund offset collections for families no longer receiving TANF would be paid first to the families instead of to the state. In such cases, the state would only be paid after the family is fully paid off. The state would still have the right to retain the offset when the family is receiving TANF. Optionally, the state could retain the current distribution scheme that gives priority to TANF arrears owed to the state, with a lower priority for arrearages owed to the family.

ERICSA supports moving the program forward toward more family-friendly distribution policies; the Association encourages states not to maintain the status quo but to adopt the options when they can afford to do so. However, many states are still in severe budget crises, and while these states want to move toward policies that provide for family self-sufficiency rather than cost-recovery, they need to move in that direction in increments.

ERICSA also supports provisions that allow a state to exercise the option to give IRS offset collections to former TANF families before reimbursing the state. The combination of the pre-assistance assignment mandate and this option allows a state to give more support to families (the pre-assistance arrears) without taking away all of the collections necessary to support the program at this time (the IRS offset). As state budgets improve, more states also will be able to give the IRS offset money to the families first. Eventually, all states should be required to move to family-first IRS offset distribution for all former TANF cases.

The above distribution-related recommendations will create unique situations among states. For that reason, ERICSA notes the following issues that must be addressed by the states and OCSE in implementing such a new structure:

Changes to the amount of support owed to the custodial parent or to the state must be clearly communicated among states.

ERICSA recognizes the complexities of assignments, and recommends that OCSE promulgate regulations to define the priority of competing assignments, as well as how they should be handled for customers who receive TANF in one state, assign pre-assistance arrears there, and then move to another state and apply for TANF. OCSE should provide guidance regarding the state entitled to the collection of the pre-assistance arrears in such situations. Providing information among states regarding different state distribution priorities is a crucial role that OCSE should facilitate.

Pass-through

As noted, ERICSA strongly believes that TANF reauthorization legislation should include proposals to increase the amount of child support going to families. Providing additional child support to customers who are receiving TANF is a key to family self-sufficiency.

Research shows that families who receive regular child support payments are more likely to retain employment, and less likely to return to welfare, than those who do not receive child support. The pass-through proposals set forth in the current legislative initiatives reflect sound public policy that builds upon the philosophy of parental responsibility and family self-sufficiency embodied in welfare reform. As states already have different pass-through programs, ERICSA does not anticipate any additional burdens or complexities for interstate processing based on the suggested changes. Any automated system costs for states choosing to adopt a pass-through change would only be borne by that state, and would not have an impact on other states collecting support for that state.

Changes to child support pass-through should require the federal government to fully participate in the cost of passing through child support to TANF families. The federal government should waive its share of child support collections for a state that chooses to pass through its share of support and to disregard such amounts from affecting TANF eligibility or benefits. The changes also should allow states to benefit that already pass through child support to current TANF families and disregard such support in the calculation of TANF eligibility.

Federal participation in existing pass-through costs will reward states that are passing support directly to families, and it will help states to maintain existing pass-through policies. Without federal participation in the costs, some states are considering eliminating existing pass-throughs – a reversal that would be detrimental to family self-sufficiency in those states. Again, the key is flexibility. It is important to allow the states to provide more support to assistance families in years when states' budgets can afford to do so. With fiscal relief provided for the pass-through, however, state legislators are more likely to consider retaining and expanding such programs.

b. Mandatory review and adjustment of child support orders for families receiving TANF (PRIDE section 302)

ERICSA neither favors nor opposes mandatory review and adjustment for TANF cases. Many states kept the three-year review and adjustment cycle for TANF cases to determine if adjustments are appropriate. ERICSA believes that it is prudent state policy to ensure that orders adequately reflect changes in parental income.

Measures such as opt-out Cost of Living Adjustments (COLAs) keep awards inflation-neutral -- one of the reasons for changes in circumstances that lead to modifications. When combined with an automated review, based on new income data maintained by State Employment Security Agencies, review and adjustment can be done fairly expeditiously. This helps to ensure that child support orders accurately reflect the appropriate sharing of child-rearing costs based on a parent's ability to pay.

ERICSA also acknowledges that other states ended the triennial review process for legitimate state reasons. It is important to note, though, that states in this latter group continue to provide notice to parents regarding their right to optional reviews of their orders. A state may determine it is a better use of resources not to automatically engage in labor-intensive reviews and adjustments in TANF cases, using the resources for other child support case-processing activities. Because either parent may still apply for a review and adjustment, no parent is limited in his or her ability to seek an adjustment based on changes in circumstances.

c. Report on undistributed child support payments (PRIDE section 303)

ERICSA is fully committed to maintaining the spotlight on the undistributed collections (UDC) issue and ensuring that all collected child support is sent to families. ERICSA commends both Office of Child Support Enforcement (OCSE) and the National Council of Child Support Directors (NCCSD) for their significant work, undertaken during this past year, to reduce the amount of UDC. The revision to the reporting form OCSE 34A by OCSE, with assistance from NCCSD, was instrumental in defining the specific categories of UDC. Additional OCSE task orders and other state studies have assisted some states in determining the underlying causes for UDC. Further, we commend both NCCSD and OCSE on the initiatives that have identified best practices for resolving or preventing situations in which UDC is created.

ERICSA supports legislation to require a report of undistributed collections. Such a report would identify for each state the total amount of UDC in each of the newly created categories, the amount of time that the UDC remains in such categories, and the average length of time to distribute UDC. The report should also examine the causes of UDC for each of the categories as well as identify best practices to resolve UDC, including methods used to locate custodial parents (CPs). In addition, ERICSA recommends that a workgroup, composed of OCSE and members of the child support community, be established to identify an appropriate standard/goal for UDC.

d. Use of new hire information to assist in administration of unemployment compensation program (PRIDE section 304)

ERICSA does not object to this provision, which allows new hire information from the National Directory of New Hires to be used in the administration of the unemployment compensation program by state employment security agencies. ERICSA emphasizes, however, that the security and confidentiality standards surrounding the sharing of data for unemployment compensation purposes should be at least as strong as those for the child support program.

e. Decrease in amount of arrearage triggering passport denial (PRIDE section 305)

In PRWORA, Congress empowered the State Department to deny a request for a passport from a noncustodial parent (NCP) if he or she owed more than $5,000 in past-due child support. Beginning in fiscal year 2005, this section would lower that threshold and deny a passport to a NCP owing $2,500 or more.

Generally, when an NCP seeks to restore eligibility for a passport, he or she arranges to pay the past-due amount down to the threshold level. The State Department currently denies about 15,000 passport requests annually. Data from HHS shows that there are 4.2 million NCPs owing more than $5,000 in past-due child support and an additional 1.0 million owing between $2,500 and $5,000.

If NCPs owing between $2,500 and $5,000 apply for passports at the same rate as those owing more than $5,000, then the proposal would generate an additional 3,400 denials annually, leading to payback arrangements in most cases. The Congressional Budget Office estimates that the policy would result in new payments of child support of about $8 million annually.

ERICSA supports the lowering of the threshold to include more NCPs who owe child support.

f. Use of the tax refund intercept program to collect past-due child support on behalf of children who are not minors (PRIDE section 306)

In 1981, Congress allowed child support agencies under Title IV-D to intercept federal income tax refunds to pay arrears owed to the state and to the families. The thresholds and priorities for the interception of the refunds differed depending on whether the arrearage was owed to the state or to the family. Additionally, the statute prohibited the interception of the refund in non-welfare cases in which the children were no longer minors.

Since 1981, Congress has taken many measures to increase the reach of IV-D agencies to collect past-due support. Laws generally allow for the collecting of arrears owed to the state or the family for many years after the child's emancipation, and some states do not have a limit at all. It seems incongruous today to limit this effective program's reach, in non-welfare cases, to the arrears owed on behalf of minor children, especially when the state can collect arrears for post-minor children in TANF cases.

ERICSA believes it is long overdue that non-welfare arrears owed on behalf of minor children be available for offset through the Federal Tax Refund Interception Program after the children reach the age of majority, and the Association supports Congress' efforts to enact this change.

g. Garnishment of compensation paid to veterans for service-connected disabilities in order to enforce child support obligations (PRIDE section 307)

ERICSA supports the garnishment of service-connected, nontaxable disability payments made to veterans in order to enforce child support obligations, regardless of whether those payments are chosen in lieu of taxable retirement pay.

Whether wounded or not, whether a veteran or not, every NCP receiving income or other periodic payments should be required to use some of the payment to support children not residing with him or her. The election of disability pay over retirement pay should have no consequence in collecting support.

h. Improving federal debt collection practices (PRIDE section 308)

ERICSA supports the ability to reach every form of income that is not means-tested, and we applaud the expansion reflected in this section. However, we believe that the power already exists to reach Social Security Disability and Retirement payments, without the restrictions imposed by the administrative offset. This provision may confuse local SSA offices that may refuse to honor income withholding notices and require the more indirect use of administrative offset. We also have concerns that the garnishment limits regarding the amount and percentage of payment that can be garnished under this provision are too restrictive.

i. Maintenance of technical assistance funding (PRIDE section 309)

ERICSA supports floor funding for technical assistance to the IV-D community.

j. Maintenance of federal parent locator service funding (PRIDE section 310)

ERICSA supports floor funding for the Federal Parent Locator Service.

k. Identification and seizure of assets held by multi-state financial institutions (PRIDE section 311)

Financial institution data matching (FIDM), as well as the ability to freeze and seize delinquent obligors' assets found in those institutions, has been an important addition to the enforcement arsenal of state child support programs. Although not perfected, the states have worked diligently with the finance community to launch this effort and to begin making it an effective vehicle for enforcing child support. PRWORA required states to give full faith and credit to child support liens on personal and real property that arise in other states as a result of delinquent child support under a valid order. Once the lien is filed according to the procedures of the filing state, but without the need for a separate judicial action, it is to be honored by all entities holding property affected by the lien, which may include financial institutions. PRWORA also requires entities in a state to honor out-of-state requests for information and administrative subpoenas.

ERICSA recognizes that the FIDM process, especially as it relates to multi-state financial institutions, could benefit from federal assistance, and the Association applauds our federal partners for their support in this area. However, ERICSA believes that, due to a range of state-based constraints, such as system reconfiguration costs, due process issues, etc., the FIDM process would be better served by a few strategic improvements rather than by the creation of a new, federally-administered system.

Accordingly, to assist states to meet the challenges related to the current FIDM process, ERICSA recommends that:

Congress authorize the Secretary to increase the level of support available to help the states broker FIDM agreements with the relevant institutions, especially those conducting business in multiple states;

Congress strengthen existing statutory language in two ways – first, by specifying the authority of IV-D agencies to encumber and seize financial institution funds across state lines through interstate levies, notwithstanding any other federal law or regulation; and second, by requiring financial institutions to give full faith and credit to valid lien or levy orders entered by state child support tribunals, irrespective of the issuing state, and to honor them by forwarding the levied amount to the state that issued the levy;

The Secretary issue regulations setting out a consistent set of data elements to be included in child support lien and levy documentation in an effort to facilitate the ability of financial institutions to determine the validity of such orders and to process them; and

Congress ensure that states afford due process not only to the delinquent obligors whose assets are subject to the FIDM process, but also to individuals who jointly hold affected accounts with such people. Congress should choose in which state a contested hearing should occur.

l. Information comparisons with insurance data (PRIDE section 312)

The current proposal would give the Secretary, through the FPLS, the authority to compare insurance claim, settlement, award, and payment information for people owing past-due child support. Following the matching, the Secretary is authorized to supply resulting information to child support agencies in the State(s) responsible for collecting support from identified individuals. Through this provision, all state IV-D agencies would have access to an additional means of locating potential income for delinquent child support obligors.

ERICSA supports this federal match with personal injury insurance data provided by insurance carriers. We also support aggressive activity to enlist the voluntary involvement of as many insurance carriers as possible. If voluntary involvement lags, despite strong attempts by OCSE to increase participation by the insurance community, ERICSA would ultimately support a federal mandate for insurers to participate.

m. Tribal access to the federal parent locator service (PRIDE section 313)

ERICSA supports tribal access to the FPLS. Tribes that are certified as IV-D programs should have access to the same information as state IV-D programs do, in an effort to increase locate, establishment, enforcement, and interstate reconciliation efficiency and success.

n. Reimbursement of the Secretary's costs of information comparisons and disclosure for enforcement of obligations on higher education act loans and grants (Pride section 314)

ERICSA takes no position on this provision.

o. Technical amendment relating to cooperative agreements between states and Indian tribes (PRIDE section 315)

ERICSA welcomes the technical amendment changing "child welfare" to "child support enforcement" programs as eligible for cooperative agreements with IV-D programs.

p. Claims upon longshore and harbor workers' compensation for child support (PRIDE section 316)

The Longshore and Harbor Workers' Compensation Act provides workers' compensation to dock workers, offshore platform workers, etc. The Act exempts the compensation from all garnishments from any creditor.

ERICSA supports ending this exemption, putting this category of workers' compensation into the same position as that of all other workers' compensation programs – money that can be garnished for the purpose of paying child support. There is no reason to exempt this category of disability income from garnishment when the worker's family is owed child support.

q. State option to use statewide automated data processing and information retrieval system for interstate cases (PRIDE section 317)

ERICSA supports the change to allow states to claim as an "open case" those cases in which they are providing high-volume administrative enforcement services for another state. The original provision did not allow this recognition, and it has hindered states' ability to use all of their resources on behalf of another state. Further, onerous reporting requirements contained in PRWORA for this provision only could be eliminated.

r. Interception of gambling winnings for child support (PRIDE section 318)

The gambling provision would require that, prior to paying out any gambling winnings in the amount of $600 or more, the gambling establishment submit information on the winning individual for comparison with information held by the OCSE regarding individuals owing past-due child support. If the winning individual is found to owe past-due child support, the gambling establishment must withhold the past-due amount from the winnings, and it must transmit the money to OCSE for transmittal to the appropriate State agency.

ERICSA supports the concept of interception of gambling winnings for repayment of past-due child support. Gambling winnings have not been previously subject to interception for child support purposes, although lottery winnings have been. This section would bring gambling winnings in line with lottery winnings as vehicles for collection of unpaid child-support.

Notwithstanding ERICSA's support of gambling winning intercepts, we strongly recommend that participation for tribes be voluntary. Tribal sovereignty should be respected. ERICSA is concerned that tribes will be discouraged from seeking IV-D status, as authorized by PRWORA, by requiring a mandatory gaming interception provision in the tribal code as a condition of being a tribal IV-D agency. Current federal law does not specify what type of locate, establishment, and enforcement services a tribe must provide. As long as the tribe provides for the enforcement of child support orders, it is inappropriate to single out in federal law one particular type of enforcement method. Each tribe should be able to determine what is the best policy for its membership, unfettered by attempts to impinge sovereignty.

s. State law requirement concerning the Uniform Interstate Family Support Act (UIFSA) (PRIDE section 319)

ERICSA is on record as strongly supporting the 2001 version of UIFSA and its universal enactment. This provision requires states to have and use the 2001 version rather than the 1996 version, which improves the delivery of interstate child support services. ERICSA also supports the amendments to the Full Faith and Credit for Child Support Orders Act to ensure consistency with UIFSA 2001.

t. Grants to states for access and visitation programs (PRIDE section 320)

ERICSA supports the gradual increase in the amount of funds available for access and visitation programs. While child support and access/visitation issues are legally separate concepts, parents often merge them in their dealings with one another and use the withholding of one as punishment for not providing the other. Programs that address access and visitation issues, with sensitivity to domestic violence concerns, should be supported and funded adequately.

u. Disclosure of certain income tax return information to child support enforcement agencies and agents (including contractors) to administer title IV-D programs (PRIDE section 321)

The location of individuals and their assets is a critical component of the work of federal, state, local, and tribal IV-D entities. The data maintained by the United States Department of the Treasury, Internal Revenue Service (IRS) is an invaluable source of location information. Currently, authority to disclose tax data for IV-D program purposes is contained in three separate provisions in section 6103 of the Internal Revenue Code of 1986 (IRC).

The current federal statute has resulted in a lack of consensus between the IRS and HHS regarding the persons and entities permitted to receive the data as well as the authorized uses for that information.

OCSE and the IRS have reached agreement on language for proposed legislation, which consolidates the authority to disclose and use tax data for IV-D purposes into a single, comprehensive provision of section 6103 of the IRC and which has been shared with child support organizations. That proposal acts to eliminate much of the uncertainty regarding the disclosure and use of tax data for IV-D purposes; it also grants federal, state, local, and tribal IV-D agencies, as well as agents of those entities, access to that data for the purpose of conducting child support enforcement functions. The proposal also clarifies the permissible uses of that data and the safeguard responsibilities of the IV-D agencies and their agents. Further, it provides a set of definitions that would control the interpretation and implementation of the new provisions.

ERICSA urges Congress to pass the IRS/OCSE proposal (dated July 10, 2002) regarding the disclosure and use of tax data by federal, state, local, and tribal IV-D entities, and their agents, for the purpose of conducting the nation's child support enforcement program.

v. Timing of corrective action year for state noncompliance with child support enforcement program requirements (PRIDE section 322)

ERICSA supports the proposal changing the timing of the corrective action year for state noncompliance, as it more realistically reflects the program cycle of underperformance, review, report, and corrective action. The change allows the state to have the fiscal year following the fiscal year of the noncompliance finding in which to perform corrective action before facing sanctions. This change gives states more time to respond appropriately to the deficiencies cited, without retroactive consequences.

w. Requiring a $25 annual fee from all never-TANF applicants (contained in Presidential Initiative, not in PRIDE)

While the Congressional proposals do not include a $25.00 annual fee from never-TANF CPs, it was a Presidential Initiative for FY03 and FY04, and it may be offered again in next year's budget. ERICSA is opposed to this fee.

The proposed $25 annual fee would apply to families who have never received public assistance. This fee would be charged in addition to other fees related to child support enforcement that a family might be required to pay. It would burden low-income families, especially those who receive little support and struggle to avoid using the welfare system. Public policy does not support such an additional fee as it discourages, rather than encourages, families from requesting child support enforcement services.

Additionally, state agencies' automated systems would have to be updated to accommodate this change in financial processing. This would be costly as well as time consuming, and the money collected would not justify this burdensome effort, especially as the state agencies would only retain one-third of the collected amount.

IV. Closing

ERICSA believes that these positions will strengthen child support nationally. For inquiries regarding our position, please contact ERICSA President Chrissy Brogdon-Dingeldine at (803) 413-4374.

Approved by the ERICSA Board on ______________, 2003.

Chrissy Brogdon, ERICSA President