States have had many problem implementing State Disbursement Units. For example, in Illinois, the Clerk of Courts in some counties bundled checks, money orders, and cash brought in by non-resident parents and mailed them to the state without identifying information attached. Employers did not use the new case numbers assigned to them for income-withholding purposes. Each case was given a new number in the distribution unit system. The number was neither parent’s social security number nor the court docket number. Rather than obtaining a list of names and addresses from employers for whom the payments had been sent, the money was returned to the employers. Other families report massive problems because the statewide computer system cannot adequately interlink with the state distribution computer system to determine payment distribution in multi-family situations.

Many states have systems where undistributed and unidentified funds are deposited into state unclaimed funds accounts. Michigan has deposited $1.5 million to the state general fund account in the past two years. Families are not told about this process and there is no requirement for it to be publicized.

Federal law requires states to do an annual self-assessment in 42 USC Section 654(15)(A). The Secretary has the authority to issue regulations on what the self-assessment will cover.  Those regulations have been issued, but the distribution section does not require reports on undistributed funds or what efforts states are making to reduce this problem (45 CFR Section 308.2(d)). The regulations should be amended to require such reporting. It would at least get states to address the problem and make some plan for dealing with it.

The Federal law which gives OCSE authority to audit state programs to determine whether “collections and disbursements of support payments are carried out correctly and are fully accounted for”in 42 USC Section 652(a)(4)(C)(ii)(II).  Health and Human Services should be required to issue a regulation saying that this power would be exercised whenever a state reported undistributed funds in excess of  .03% of its total yearly collections. The auditors could then determine the source of the problem and require the state to correct problems that can be corrected.

There is currently a performance standard for state paternity establishment programs. If a state fails to meet this standard, it is not in substantial compliance with its IV-D obligations and that triggers financial penalties (42 USC Section 652(g)). Using this model, a similar penalty provision for states that have large amounts of undistributed collections should be developed.

In addition, states could be required to place all undistributed funds in an interest-bearing account. They should also be required to pay the interest to the custodial parent (when identified) or the non-custodial parent (if not found, the money should be returned to the obligor). If neither the custodial parent nor the non-custodial parent can be identified, the state could keep the interest but would have to report it as program income.

If the State Disbursement Unit (SDU) receives any information with a payment that indicates that the payment might be for one or more identifiable families, but the SDU holds the payment while it is trying to determine for which family the payment was intended, it should be obligated to notify all families potentially involved and give them a chance to come forward with information or claim the money.

OCSE should make it clear that SDUs, IV-D programs, and absent parent employers are legally required to send copies of their payment and collection records on request to the family and its representatives. This must be true even for out-of-state SDUs, IV-D programs, and absent parent employers.  It must also include records of an out-of-state SDU, IV-D program, or employer of child support being sent to the SDU, clerk of courts, or IV-D program in the family's state.  This change would better enable families to identify where in the process money is disappearing.

OCSE should make SDUs and IV-D agencies create publicly searchable databases containing the known information on all undistributed child support payments, so families and their representatives can look for, and claim, their money. OCSE regulations should require states to complete data entry setting up a new SDU account within three days of the first child support order in a case, regardless of whether data entry is done on the state level by SDU or the IV-D unit, or at the local level by IV-D staff or clerks of courts.

OCSE regulations should require states to have quality assurance programs to ensure that data entry creating new SDU accounts is performed accurately and within time deadlines.

OCSE regulations should require both IV-D and SDU customer service programs to be able to promptly resolve payee family complaints regarding non-processing or mis-processing by the SDU of child support it has received. This should include:

1. requirement that payee families receive toll-free customer service numbers at the time of the first child support order on their case
2. Limits on the percentage of calls that can result in a busy signal or no answer
3. Require that the customer service program be able to electronically access court orders; IV-D, SDU, and court payment ledgers; and SDU and IV-D account data for each complaining payee family
4. Require that the customer service program be accessible by telephone to legal counsel for the payee family pursuant to specified confidentiality protocols;
5. Require that the customer service program begin research regarding the payee family's complaint within one business day and have sufficient staff to do so
6. More generally, states should be required to send monthly payment and balance notices to all cases for both payee families and payors. States should no longer be permitted to obtain waivers of the monthly notice requirement.

5. Effective Child Support Enforcement

 Children who receive child support:

                  Are more likely to have contact with their fathers^[2]

                  Have better grade point averages and significantly better test scores^[3]

                  Have fewer behavior problems^[4]

                  Remain in school longer^[5]

Receipt of child support is associated with significantly higher expenditures on children than any other source of income.

 About 20% of our nation’s children have a parent living outside the household and are entitled to child support. They are four times more likely to be poor and five times more likely to receive food stamps than children who live with two biological parents. Child support, when received by low-income families, accounts for 26% of family income.

             Strong Child Support Enforcement:

                  Reduces the divorce rate^[5]

                  Reduces the number of births to never married parents^[6]

                  Reduces teenage pre-marital childbearing^[7]

New studies show that strong child support enforcement programs have far-reaching positive social impact that reduces the number of children living in fatherless households and promotes marriage. Many recent studies have shown that strict establishment and enforcement of child support obligations is leading to lower divorce rates and fewer illegitimate births. In  “The Effect of Child Support Enforcement on Marital Dissolution,” Lucia A. Nixon found that strong child support enforcement reduces marital breakups, and in “The Effects of Stronger Child Support Enforcement on Non-Marital Fertility,” Anne Case found that anything that increases the cost of fatherhood reduces the probability of children being born. “The Impact of Child Support Enforcement Policy on Non-Marital Child Bearing,” showed that in states with a strong child support enforcement programs, non-married women had fewer children.

State governments alone have been unable to collect sufficient back-support due

    (see Chart 3) 

State governments have been unable to collect support in interstate cases
    (see Chart 4)

Families Benefit From Effective Child Support Enforcement

ACES has been monitoring the current child support enforcement system since 1984. In addition to obtaining information about the child support enforcement system for our members, ACES operates a national toll-free Hot Line for families with child support problems, issues, and questions.  We receive up to 100,000 calls per year from parents throughout the U.S. From these calls and our members, we gather statistics and data on the status of the current child support enforcement system.

The average ACES member is a single-parent, and she has two children. About 50% of ACES members are divorced, and the other half were never married. Members average income is $15,000 per year as of the end of 2001, and 85% have, in the past, received some form of public assistance. At present, about 33% of our membership receives public assistance.  ACES members report that collection of child support, when joined with available earned income, allows 88% to get off public assistance. Collection of child support enables our low-income, working-poor members to stay in the job force long enough to gain promotions and better pay so that they can move their family out of poverty, and on to self-sufficiency. The collection of child support, when joined with earned income, means our members can pay their rent and utilities, buy food, pay for healthcare, and provide for their children’s educational opportunities. Lack of child support most often means poverty and welfare dependency. At the very least, it means having to work two or three jobs to survive. This leaves our children with literally no parent who spends time providing their children adequate nurturing, supervision, and the attention they need and deserve.

 Parents Have the Ability to Pay Child Support: 60% Have an Income of Over $30,000

 “Characteristics of Families Using Title IV-D Services in 1995”, a study by Matthew Lyon shows that 1% of families using IV-D services had $0 income; 10% had an income of $1-$5,000; 18% had an income of $5,000-$10,000; 15% had an income of $10,001-$15,000; 10% had an income of $15,001-$20,000; 7% had an income of $20,001-$25,000; 8% had an income of $25,001-$30,000 and 30.5% had an income above $30,000.  In the book, “Fathers Under Fire”, by Irv Garfinkel, data reported on the income of non-resident parents showed that 20% had an income under $6,000; 20% had an income of $10,000-$30,000; 10% had an income of $30,000-$40,000; 40% had an income of $40,000-$55,000 and 10% had an income in excess of $55,000 (Chart 5). 

Data from the 1997 National Survey of American Families showed that of the 11 million fathers who  weren’t living with their children, about 4 million paid formal child support while the other 7 million did not. Of these 7 million fathers, 4.5 million have sufficient income to pay support. About 2.5 million were poor and probably unable to contribute significant child support.

The Federal Office of Child Support, in its preliminary data for the year 2000, shows that collections rose from $15.4 billion to $18 billion, for families with cases open at a government child support agency. The 1999 data shows slightly less than 50% of the children still do not have orders and the collection rate is 37%. This increase from 23% in 1998 is in part due to new reporting requirements for states and new regulations which allow states to close old cases where collections had not been made.  U.S. Census Bureau data from the May 1999 Current Population Report, which includes data for families with and without a government child support case, for the year 1998, shows that the percentage of single-parent families who receive child support (some or all support due in 1998) was only 32%. The collection rate shows no significant improvement.

The most recent data available from the Federal Office of Child Support (Chart 1) shows that total collections for 2000 are $18 billion, up from $15.8 billion in 1999, up from the $14.3 billion in 1997, which was up from $13.3 billion in 1996. IV-D agencies spend $25 to collect $100, and 55.5% of collections are from payroll deductions.

5. Need Improved Interstate Collections

Chart 2 shows  interstate collections. In 2000, interstate collections of $1.1 billion out of a total $17.9 billion are 6.1%of total. This is a decrease from $1.08 billion out of $15.9 billion (6.7%) in total collections in 1999. Interstate child support cases make up 36% of the caseload.  UIFSA, the Uniform Interstate Family Support Act required PRWORA to be adopted verbatim by all states. PRWORA has not yet shown itself to be of any assistance in processing interstate cases faster or more effectively.  In fact, ACES has been told by several state IV-D agencies and state courts that it is more difficult to use than URESA, its complicated predecessor. Problems are being reported with the provision for direct income-withholding. If a non-resident parent receives an income-withholding order at their place of employment, and the order is for the wrong amount, wrong person, or contains some other mistake of fact, there is no mechanism in place to resolve problems. The state which sent the order is inaccessible to the non-resident parent and the state IV-D agency in their state is not even aware of the order or that a case exists in another state.

To increase the effectiveness on the interstate withholding process, ACES recommends that HHS be empowered to send income-withholding notices to employers on cases with existing income-withholding orders rather than just notifying the state of a new employer. States should be sent a copy of the income- withholding order listing the new employer so that, if needed, they can conduct a mistake-of-fact hearing and credit the case with payments which are received. This is needed because states often fail to act on data received from the Federal New Hire Registry. State governments report being too short-staffed to process the large amount of data received. For example Alabama received 56,000, Arizona 49,00, Florida 121,00, Illinois 105,00, Mississippi 50,000, Missouri 67,000, New York 117,000 , Texas 166,00, and VA 199,00 matches.

ACES recent survey of families about the impact of PRWORA child support laws revealed that, although adopted by local law and policy regulation, few provisions are being effectively utilized.  ACES members and clients were questioned regarding past welfare enrollment, existence and amount of arrears, credit bureau reporting, bank account attachments, driver’s license suspensions, professional license suspensions, income-withholding practices of the state child support agency, income tax refund seizures, and payment distribution.

Of the families surveyed,

            89% said they had received welfare benefits in the past
            44% had an order established before they went on welfare
Of those who had been on welfare,
            42% said that no support payments were collected while they were on welfare
            13% said that child support payments were collected and sent to them while they were on welfare
            44% said that child support payments were collected for them and kept by the state

When asked about arrears owed:
            89% of those responding to the survey said there were arrears owed more than the 
                  amount of support due in 30 days
            Of the 89% who are owed more than current support, only 12% affirmed that non‑payors
                  in their cases had been reported to credit bureaus
            26% answered negatively
            54% were unsure

18% added comments including reasons given by the local child support agencies for failing to institute this practice, including policies of waiting periods before taking action, and reports of filing grievances with the agencies with a continuance of inaction even after the grievance was filed

Answers to questions regarding wage withholding provided insight to reasons the child support program is performing so poorly:

41% of those polled said that the state or court had not attached the non‑payor’s  paycheck to collect child support payments
41% stated that the income withholding was instituted only after the custodial parent notified the state or court where the non‑payor was working
Only 4% answered that the state New Hire Registry was used to find the employer

The New Hire Registry was developed to ensure efficient collection methods by requiring employers to report new hires within 20 days. This data is to be measured against state and federal case registries and matches are sent back to the state for institution of income-withholding procedures.  The system is failing because states are not able to keep pace with the number of matches sent to them and because some states, including California, still do not have PRWORA compliant case registries, so they cannot send or deal with appropriate data.

Even more distressing were the results of questions asked regarding bank account attachments:

Only 1%  affirmed that bank accounts had been attached to collect overdue child support payments
56% stated that bank accounts had not been attached

Similar results were found when we asked about driver’s license and professional license suspension:

Only 2% reported professional license suspensions
9% responded affirmatively to the question of whether driver’s licenses had been suspended
6% reported that the non‑payor was notified of an impending driver’s license suspension, but that the state failed to take action

Expedited process and federal timeframes are not being followed by state IV-D agencies. ACES members report a 1-3 year wait to establish paternity, 2 years to establish an order, 6-9 months for an income-withholding, 6-9 months for a court hearing, and 1-3 years for modification, 5 years for medical support establishment and/or enforcement, 1 year for a Federal Parent Locator results, and 1-2 years for action on interstate cases.^[8]

About 50% of all children in the U.S. will spend part of their life growing up in a single-parent household. An effective and efficient child support enforcement system is needed. The only government system which affects more children is the public school system. Your action to assist America’s children receive the support of both parents is needed. Please act today to ensue the nation’s children the opportunity to grow and thrive.

Declaration

ACES, The Association For Children For Enforcement of Support, Inc. receives $15,000 in federal funding from the City of Toledo, Community Development Block Grant. We do not receive any state government funding

^[1] Certification Reviews of Child Support Enforcement Systems, Division of Child Support Information Systems, January 6, 2000

^[2] Argys, Peter, Brooks-Gunn, and Smith, “Contributions of Absent Fathers to Child Well-Being: The Impact of   Child Support Dollars and Father-Child Contact”, University of Colorado (1996).

^[3] Graham, Beller, and Hernandez, “The Relationship between Child Support Payments and Offspring Educational Attainment” in Child Support and Child Well-Being (Garfinkel, MacLanahan, and Robbins (eds), Washington, DC (1994).

^[4] H. McLanahan, et al, National Survey of Families and Households (1994)

^[5] Nixon, Lucia, The Journal of Human Resources, XXXII-1, Winter 1997,Vol. 32, No. 1 and Barnow, Burt S., et al, “The Potential of the Child Support Enforcement Program to Avoid Costs to Public Programs: A Review and Synthesis of the Literature”, U.S. Department of Health and Human Services, HHS 100-97-007 (2000)

^[6] Case, Anne, Fathers Under Fire, Chapter 7, “The Effects of Stronger Child support Enforcement on Non-marital Fertility” and Plotnick, Robert D., et al, “The Impact of Child Support Enforcement Policy on Non-marital Childbearing,” University of Washington (2000)

^[7] Plotnick, Robert D., et al, “Better Child Support Enforcement: Can It Reduce Teenage Premarital Childbearing?”, University of Washington (1998)

^[8] ACES annual membership survey (2000).