Phase 1 Report of Feasibility Study on New Hire Programs for Canada: New Hire Programs in the United States
Traditionally, family and domestic law has been under the jurisdiction of each state. State laws and state courts have been responsible for all aspects of paternity claims and marital dissolution, including custody, child support, property settlements and alimony. However, the federal government became involved because non-payment of child support was contributing to the “feminization of poverty” and to rising welfare costs for poor female-headed households with children (Mellgren, 1992:254‑5).
Starting in 1975, the federal government required state child support enforcement programs to locate non-custodial parents, to establish paternity and to enforce payments of awards. At least 60 percent of all American child support cases are estimated to be in the public collection system (Legler, 1996:522). Although the states operate their programs with “substantial discretion” (ibid.), federal law imposes many program requirements and the federal government provides partial funding. Enforcement agencies are located in a variety of state departments, including the offices of the attorney general, revenue and social services.
Under federal legislation, states must operate a child support enforcement program to be eligible for block grants under Temporary Assistance to Needy Families (TANF) (formerly Aid to Families with Dependent Children). The IV‑D agencies, named after Title IV‑D of the Social Security Act, are required to provide child support enforcement services to families receiving TANF, Medicaid and foster care, and to non-welfare families applying for IV‑D services.
Collections made in public assistance cases are treated as government revenues and are shared between state and federal governments. Collections made in non-welfare cases are paid directly to the families. Caseloads of support enforcement agencies in the United States are therefore made up of two types of clients:
- custodial parents who get public assistance, food stamps or Medicaid, or who have children in foster care, and who must seek child support and are, therefore, involuntary clients; and
- voluntary clients who apply for services such as support enforcement or paternity establishment.
For the former group, when non-custodial parents are located, the state government uses the child support payments and medical insurance coverage to offset public assistance, food stamp, foster care and Medicaid costs. Depending on the state, if applicants refuse to cooperate with child support enforcement, the state may deny them benefits, reduce their benefits, or subject them to progressive sanctions.
Before the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), when the custodial parent was getting benefits under Aid to Families with Dependent Children (AFDC), he or she received the first $50 of any current child support payment made each month, to encourage cooperation with the enforcement program. This payment, called a “disregard” or “pass-through,” was eliminated by the 1996 federal legislation, although states can continue making a “pass‑through” payment using state funds. Some states have apparently chosen to do so.
Nationally, 52 percent of the 19.3 million IV‑D cases were on public assistance in 1996, although there were variations by state. Of these cases, three quarters involved families currently on welfare. The remaining quarter involved families who had left welfare; these “arrears‑only welfare cases” were no longer on public assistance, but the arrears that accrued when they were on welfare remained assigned to the state. The state continued to pursue its interests in the assigned and unpaid support (Center for Law and Social Policy, 1998:2‑3).
When a parent voluntarily seeks support enforcement, the child support agency remits any payments it receives directly to the custodial parent. Anyone can apply for the service by paying a nominal registration fee, including non-custodial males who wish to establish paternity. The fee is typically $25. In 1996, three quarters of the child support collected by these agencies was collected from non-welfare cases, even though most voluntary clients are low-income families.
Wage withholding is the most common method of collecting child support in the United States. The withholding of wages from non-custodial parents in arrears of child support payments began in 1984, and the Family Support Act of 1988 expanded withholding to all new child support orders as of 1994. This law also required that a state agency that documented and tracked payments run the withholding. Under the PRWORA, all states must adopt the Uniform Interstate Family Support Act (1992), which permits child support agencies to send income withholding orders directly across state lines to employers. In addition, states must have procedures in place to withhold wages from an obligated parent if he or she is in arrears, without recourse to a judicial or administrative hearing. The PRWORA replaced “wages” with “income,” thereby encompassing a broader range of payment sources, such as disability and retirement benefits.
A five‑year analysis of the caseloads of IV‑D agencies found that, between 1991 and 1996, non‑welfare cases increased more than twice as fast as welfare cases. In two thirds of the states, welfare cases declined in 1995. The Center for Law and Social Policy commented that the decline in welfare cases will affect IV‑D collections in two ways.
- Welfare collections will decrease, “and may drop precipitously,” under TANF because families who used to receive AFDC benefits may become ineligible under the more restrictive TANF policies, which include time limits. Because the government keeps collections from welfare IV‑D cases, government revenues will be directly affected.
- The characteristics of non-welfare cases will likely begin to resemble those of welfare cases more closely, as former welfare families lose TANF eligibility and are transferred to the non-welfare caseload. This factor may lead to a decrease in non-welfare collection rates.
Since federal funding arrangements are based on performance-based incentives, the Center suggested that some states might try to extend IV‑D services beyond the public assistance and low-income groups that currently use the program. Also, increased enforcement capacity may increase collection rates.
“Thus, some states may be able to maintain current collection levels and performance rates even as caseloads become harder to work. However, non-welfare collections will not produce direct government revenues but instead will increase administrative costs” (Center for Law and Social Policy, 1998:6).
In addition, with the recent emphasis on linking federal funding for state agencies to their performance,
“states are likely to become increasingly concerned about duplicated case counts and multiple cases opened for the same children” (Center for Law and Social Policy, 1998:7), since these hurt performance.
Moreover, federal legislation now requires all states to computerize their information systems, which will eliminate duplicate cases and spur agencies to close unworkable cases.
“[S]tates often open multiple cases when, for example, children in the same family have different non-custodial parents; when more than one putative father is named; when families leave welfare, but have unpaid assigned support; or, when a Medicaid recipient has assigned medical support, but requests full child support services” (ibid.).
As such, the rapid expansion of state new hire programs in the United States and the implementation of the national program are occurring in the context of declining welfare caseloads and potentially reduced funding for IV‑D agencies. In addition, the state programs have largely been funded through collections made on behalf of families receiving welfare benefits.
Moreover, the national new hire strategy is only one component of a planned integrated approach to support enforcement—a “vision” (Legler, 1996) that includes many other mechanisms to encourage non-custodial parents to pay child support.
There are also new mechanisms to track data and find those who owe child support. For example, the state and federal governments were required to establish registries of all child support orders by October 1998.
The PRWORA includes other such mechanisms. It gives child support agencies access to a large number of information sources, from financial institutions to cable television companies, as well as to such public records as occupational and drivers' licences, state and local tax records, vital statistics, corrections records, business ownership records and property records. No judicial or administrative tribunal order is required.
The PRWORA also requires each state to centralize its computerized case information and payment records. States must also, for example, have specific “expedited procedures” for handling routine cases (meaning those not involving caseworkers), which can include processes such as ordering income withholding, intercepting lump‑sum payments, attaching assets in banks, imposing liens and increasing the monthly payment to make up arrears. The PRWORA also requires that payers in arrears be reported to credit bureaus.
The legislation is meant to automatically trigger such procedures when a payment is delayed. The state may also notify the payer before taking enforcement action. Many states are speeding up their child support systems by changing their administrative procedures, some of which can now establish and enforce child support orders without judicial involvement.
Therefore, new hire programs are just one of many federal mechanisms that increase the amount collected by child support agencies (see also Chapter V).
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