Statement of the Association for Children for Enforcement of Support, Inc., Sacramento, California

ACES has 47,000 members and almost 400 chapters located in 48 states. We are representative of the families whose 20 million children are owed over $71.9 billion in unpaid child support. We have banded together to work for effective and fair child support enforcement. ACES believes that parents who fail to meet legal and moral child support obligations should not benefit from federal government funding. We support The Child Support Distribution Act of 2001, H. R.1471 which will ensure that children benefit from support paid and simplified support payment distribution.

There are 20 million U.S. children owed over $71.91 billion in unpaid child support

Children who receive child support:

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:

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 a lower divorce rate 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 which increases the cost of fatherhood reduces the probability of the 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 program non-married women had fewer children.

States have more undistributed funds on hand than ever before: $63.84 million.

Undistributed funds are payments collected not sent to families due to problems identifying payee or payor, location of payee, or problems determining how to distribute payments if the family was or is on public assistance. This means thousands of families leaving the welfare rolls are not receiving child support collected by the state. This undermines their self-sufficiency efforts.

In February, 2001, ACES filed a Writ of Mandamus in State Appeals Court against the Ohio Department of Jobs and Family Services (ODJFS). ODJFS knowingly brought online a computer system in October 2000 that miscalculates distribution of child support payments owed families in order to avoid further late penalties from being assessed against the State under Federal Law. The net effect is to reduce monthly payments to families under terms mandated by the 1996 welfare reform law. In doing so, ODJFS put the interests of the State ahead of those of affected children. Legal action was taken only after negotiations with ODJFS failed to produce an acceptable plan for fixing the problem.

Also, The Ohio State State Disbursement Unit, (SDU) is contracted to Bank One who is paid $125 million out of interest collected on child support payments which accumulates during the two days they are legally allowed to hold money. Families throughout Ohio are experiencing delays much longer than two days. ACES believes families, not Bank One or ODJFS, are due interest on these delayed payments.

In Michigan, the lack of the state having valid addresses for custodial parents has led to $303,000 being sent to the state’s coffers in 1999, then in 2000 after the State Disbursement Unit (SDU) was established, $700,000 between October and December 2000. Another $2.75 million or more could go to the state coffers if not claimed by families for 2001.The SDU is only operational in some Michigan counties. The process used is for some employers in the state to send child support withheld from employees pay to the SDU, where it is recorded and then sent to the county Friend of the Court, the local IV-D agency, for disbursement to the family. This cumbersome process of transferring money between agencies rather than transferring records and sending payments directly to families is responsible for some of the undistributed funds. Additionally, the Michigan statewide child support computer system funded 90% by the federal government for $327 million does not calculate family-first disbursement as required under PRWORA, and these distributions are being done manually case by case. This results in families receiving two checks for each payment made and further increases the distribution errors.

Texas failed to implement family-first distribution until March 2001 when the law required it by October 1, 2000. California reports the largest amount of undistributed funds at $176 million and no SDU. Officials there tell us this amount is incorrect due to previous record keeping practices. They are in the process of surveying each of California’s 58 counties to determine exactly how much there is in undistributed/unidentified funds.

Many states have systems whereby undistributed and unidentified funds are sent to the state unclaimed funds. However, IV-D child support recipients are not told of this process and it is not required to be publicized.

Our members in North Carolina report delayed and missing payments since September 24, 1999, when the new State Disbursement Unit went into operation. Reasons cited are that Clerk of Courts bundled checks, money orders, and cash brought in by non-resident parents and mailed them to Raleigh 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 cases.

In Illinois, ACES members report the same types of problems as experienced in North Carolina. County Clerks of Courts mailed checks and money orders paid to them by non-resident parents to the state with no identifying social security numbers. The state cancelled the contract with Dupage County for the SDU and hired a private contractor. They are in the process of replacing the current SDU and hiring a new vendor.

States chose to set up systems where all payments are sent to a central intake and then disbursed. This process has made it more difficult for parents to pay. The lack of adequate planning and testing has led to missing payments, long delays, and other problems for some of the poorest families in our nation. North Carolina made families pay back emergency aid checks out of the first child support check issued, after months of not receiving any payments. This newest bureaucratic glitch has caused thousands of children to go to bed hungry.

In a survey done by the Inspector General, the percentage of states that report the following problems with implementation of SDU’s are:

The Office of Inspector General recent report, Child Support Enforcement State Disbursement Units, August 2000, reported that 38 states have fully implemented the federal law to centralize payment processing of most child support payments. Indiana, Wyoming, and South Carolina ask for waivers to link local disbursement units. Arkansas, Georgia, Kentucky and Oklahoma report they have central payment processing but are not yet using it for the federally required caseload. Michigan and Nevada were granted extensions to implement their SDU’s until October 1, 2000 and October 1, 2001, respectively. Alabama, California, Kansas, Nebraska, Ohio and Texas report they have not yet begun central payment processing.

ACES recommends changes in the federal law which require:

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 $14,400 per year as of the end of 1999, 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 over $55,000 (Chart 3).

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. 2.5 million were poor and probably unable to contribute significant child support.

Government child support enforcement avoids costs to public programs

The principal finding of the U. S. Department of Health and Human Services study, " The Potential of the Child Support Enforcement Program to Avoid Costs to Public Programs: A Review and Synthesis of the Literature," was that child support payments can decrease TANF participation and increase labor participation. For example, a $1,000 increase in child support payments received by woman on TANF, conditional on remaining unmarried, will decrease TANF participation among these households and will increase the average hours worked. Part of this change is mechanical, 61%, but 39% is a behavior change.

The study also finds the child support could have a long-term cost avoidance and tax revenue implications because of its impact on increasing the number of children who have access to higher education. Educational attainment is a leading indicator of future financial and social success. Individuals who attain higher levels of education have a higher income and a more stable family life. Child support enables families ability to afford to send children to private schools, purchase tutoring services, and to invest money in a college fund. Also, it allows families to purchase goods and services that increase cognitive stimulation in the home and thus indirectly affects educational attainment.

Other studies outlined in the report find that collection of child support avoids cost in the Title XX Child Care Program. For every $1,000 in child support received it is estimated that a low- income single mother would reduce work hours to 22-25 hours and with each additional $1,000 received work hours would be reduced by 54 hours. Since almost 50% of single parents who do not receive child support work two jobs to support their family, this would also have the very beneficial effect for children of having at least one parent being able to spend more time with them, to nurture, assist with home work, and care for the children in a way that day care cannot.

State child support agencies fail to collect significant amounts of child support

A whole generation of our children have not received adequate and regular child support payments as promised when the Title IV-D child support system was introduced in 1975. The system was supposed to establish paternity, establish child support orders, and enforce orders. Children born in 1975 were 9 years old when Congress acted to improve the child support system for the first time in 1984. The number of cases without orders was about 50% and the collection rate was 15% when income-withholding laws, liens on property, posting of bonds, attachment of tax refunds, and reporting of child support debt to credit bureau laws were passed as part of the 1984 Child Support Amendments. When the children were 13 years old in 1988, Congress acted again because only about 50% of the children had orders and the collection rate was only 18%. In the 1988 Family Support Act, income-withholding was to begin at the time of divorce or establishment of paternity, modification of orders were to occur every 3 years, child support guidelines were required to be followed by the courts, and paternity was to be established via genetic tests and through voluntary programs.

When the children were 17 years old in 1992, about 50% of the children still did not have orders and the collection rate was 19.7%. Congress again acted in the Child Support Recovery Act to assist children with interstate cases. The collection rate on interstate case was less than 50% of the other cases. When the children were 18 in 1993, about 50% of the children still did not have orders and the collection rate was 18.2%, Congress acted yet again. This time, medical support orders were required and a better system for establishing paternity was put in place as part of the budget. When the children were 19 in 1994, about 50% of the children still did not have orders and the collection rate was 19.4%. Congress enacted the Full Faith and Credit Act in another attempt to correct problems with interstate cases. When the children reached age 21 in 1996 and slightly fewer than 50% of the children still did not have orders and the collection rate was 20%, Congress acted again as part of the Personal Responsibility and Work Opportunities Act (PRWORA) establishing the New Hire Directories, Case Order Registries, and State Distribution Units (SDU), professional driver’s and recreational license revocation, and required states to adopt UIFSA (Uniform Interstate Family Support Act). UIFSA is the third attempt to remedy interstate case problems.

The Federal Office of Child Support, in its preliminary data from 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. 1999 data shows that 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 allowed 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 collection rate remained about 30%.

The most recent data available from the Federal Office of Child Support (Chart 4) shows that the 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.

In Chart 2, interstate collections are listed from 1993 to the present. Collections have risen from 1993 (pre-PRWORA) $725 million to $983 million in 1997, and to $1 billion in 1998 and 1999. Collections on interstate cases have risen about $100 million/year before and after PRWORA. 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 more 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.

Families report PRWORA has not helped and has hurt!

Statistics indicate little or no effect from any portion of PRWORA. Lack of results from the expanded Federal Parent Locator System with the National New Hire Directory and Case Order Registry are particularly disheartening.

ACES members report no noticeable improvements since enactment of PRWORA, even with the National New Hire Directory reporting that 3.5 million matches were found in 2000, more than triple the 1.2 million matches in 1998. Our research shows that the majority of the 3.5 million data matches made by the National New Hire/Case Order Registry have not been acted on by the State IV-D agencies. Certainly collections have not tripled since 1998. For example:

Texas processed 2,481 income-withholding orders due to New Hire information from the National Directory in three months. Texas received over 300,000 matches from state and the National New Hire directories.

Virginia reports averaging 100,000 matches/year with their State New Hire Directory, resulting in collections of $7.5 million. This is $75/match. For 180,000 matches/year with the National Directory, collections of $13 million resulted. This is $72/match.

Iowa reported 20,000 matches to date with the National New Hire Directory and has collected $365,297. This is $18/match.

Arizona, in three months of comparisons with the National New Hire Directory, located 11,218 matches. No data is available for the number of cases where action was successfully taken to collect support. The intrastate New Hire Reporting System resulted in collections of $13 million on 45,083 matches. This is $288/match.

Minnesota, in FY 1999, had 39,078 matches with its state directory, and collections increased by $11.6 million (3%). This is $296/match. Minnesota is averaging 166 matches/day with the National New Hire Directory, but no data is available on the action taken on these matches.

The Federal Office of Child Support reports they have made matches of delinquent parents with financial institutions for 900,000 accounts since August 1999. The accounts are valued at about $3.5 billion. No data is available about whether any of these accounts were successfully attached to collect child support.

Problems exist with the bank account attachment process. Administrative Process is used by 31 states to attach bank accounts; 12 states use Judicial Process; and 7 states use both. Twenty-six states do not accept orders from other states, 2 states sometimes accept orders from other states, 1 state leaves it up to the financial institution, 8 states have not yet made decisions about whether or not they will accept out-of-state attachment orders, and 2 states have state laws which are silent on the issue.

Automation problems

Since the 1984 Child Support Amendment passed, Congress has been giving states incentives and funding to put statewide computer systems in place. Many deadlines have passed or have been extended. In the 1988 Family Support Act, states were told to have computers in place by Oct. 1, 1995 in order to receive 90% federal funding. When only 1 state met this deadline, it was extended to October 1, 1997. When only 21 states met this deadline, penalties were changed so that states could get waivers to penalties if they were making sufficient progress on computerization.

The Federal Office of Child Support reports the following10

Montana was the only state to the meet the October 1, 1995 deadline.

The October 1, 1997 deadline was met by Delaware (conditional), Georgia (conditional), Virginia, Washington, West Virginia (conditional), Arizona (conditional), Utah, Connecticut (conditional), Wyoming, Mississippi, Louisiana (conditional), New Hampshire, Idaho, Colorado, Oklahoma (conditional), Wisconsin, Rhode Island (conditional), Guam, New York (conditional), Iowa, and Alabama (conditional)

Certified in 1998: Texas (conditional), Arizona(conditional), North Carolina (conditional), New Jersey (conditional), Vermont (conditional), Puerto Rico (conditional), Maine, Tennessee (conditional), Minnesota (conditional), Kentucky, South Dakota, Arkansas, Massachusetts, Florida, Missouri, and Hawaii

Certified in 1999: New Mexico (conditional), Illinois (conditional), Oregon (conditional), Maryland, Pennsylvania (conditional), Arkansas

Certified in 2000: Washington DC, Indiana, Kansas, North Dakota, Nevada

States NOT Certified (representing 4.6 million children owed $24 billion in unpaid child support): California, Michigan, Nebraska (report pending), Ohio, South Carolina, and the Virgin Islands

Conditional Certification for many states is due to the inability of their computer systems to process referrals. Because of lack of action by the U. S. Justice Department, few charges have been filed under the federal criminal non-support statue. In 1995, charges were filed on only 82 cases. In 1996, charges were filed in 104 cases. In 1997, charges were filed in 212 cases. In 1998, charges were filed in 249 cases; and in 1999, charges were filed in 396 cases. In 2000, charges were filed in 405 cases. There are 7 million children owed $25 billion in unpaid child support with interstate cases.

Poor customer service

The number one complaint that ACES receives from families is about state IV-D child support agencies on our Hot Line is that they are provided poor customer service from local agencies. Families report that they are victimized by caseworkers who tell them, "What do you expect, you went out and got yourself pregnant?" or "What did you do to make him so mad he won’t pay?". Not even one state has a system for notifying clients of actions taken on their case. Families report that they are unable to understand quarterly distribution notices, if received, and that there is no system in place for the notices to be explained to them. Families report that many IV-D agencies restrict hours when they will accept phone calls from families to obtain or give caseworkers information. This is a major barrier to families providing agencies needed information about location and employment status of non-payors. We have not found even one state which sends delinquency notices to non-payors when they miss a monthly payment.

Liens on property not routinely used

Only 15 states report routinely placing liens on property of non-payors. Twenty six states report that placing liens is a difficult and technical legal action.

Suspension/revocation of licenses rarely used

Although proven effective, suspension or revocation of professional licenses is rarely used by any states. Suspension/revocation of fishing and hunting licenses is rarely used by states. Most states do not have any effective system for recreational license suspension/revocation. Several states identify non-payors who buy fishing or hunting licenses and ask them to voluntarily report themselves when making a license purchase at a local carry-out, sporting goods store, etc. This has been very ineffective. Colorado recently did a study of suspension/revocation of driver’s licenses and their reporting to credit bureaus for failure to pay child support. Support collections increased 20% within the first six months following notices being sent to non-payors. Only a few states have an on-going program for driver license suspension and/or credit-reporting, and often these states only make the threat action. Thousands may receive notices of potential suspension but only a small percentage are actually suspended.

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 court hearing, 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.11

Private child support collection agencies prey upon desperate families

"I signed the contract with a private child support collection agency because the District Attorney office had done nothing in two years to collect the $10,000 in child support due to my children. I didn’t realize that I had given the company power of attorney so payments go to them not to the DA and then onto me. I didn’t realize the contract defined current support as back support. I thought the private collector would only get 33% of any back support collected as a recovery fee. Instead, the contract gave them 33% and attorney fees so it added up to 44% or more of any support collected. When I got my first check, and 44% was missing. I called to complain and found out the truth. Now I have to hire an attorney to try to break this contract. I don’t have the money to pay the attorney. How can this company advertize one thing and do another? My children are the real losers here and I was the pawn" ---- a caller to ACES Child Support Hotline from Los Angeles, CA (January 2001)

Families entitled to child support enforcement services, who are mainly low income face a new problem---being preyed upon by unscrupulous private child support collection agencies. The private companies are not licenced or regulated by state or federal laws because child support is not considered a debt under the Fair Debt Practices Act. Private collection agencies have been soliciting families via TV and Radio ads, promising much needed child support payments. Often they require the custodial parent to sign a power of attorney and contracts which are adhesion by legal definition. These contracts are almost impossible to break, have many hidden clauses, and usually result in the family losing 40-50% of the child support due to them to the private collector as a fee for services.

Private collection agencies for child support do not work any better than the government child support agencies. These agencies do not and should not have access to confidential IRS information. They should also not have access to state information; such as tax records, employment records, worker's compensation records, and any other protected government records. The private agencies collecting child support are currently not regulated. In fact, the U.S. Supreme Court recently ruled that these agencies do not fall under the regulations of the Consumer Credit Protection Act.

Custodial parents who have used private collection agencies have encountered many problems:

Other pending federal legislation ACES supports

H.R. 866, sponsored by Rep. Bilirakis (R-FL) would assist millions of children. The intent of the bill is to ensure that children benefit from federal assistance received by a low-income non-custodial parent. Language needs to be added to the bill to make sure that receipt of food stamps, TANF, medicaid and other means tested programs needed for basic necessities are exempted. Other programs such as job training and college education should not be affected due to the good cause provision and the payment arrangement section.

Here are a few examples of federal programs where parents who fail to pay child support currently can and do receive federal funding which does not benefit their children. HR 866 is needed to prevent those who neglect their children from receiving these types of federal assistance.

H. R. 1618 (Rep.Zoe Lofgren, D- CA). The bill will allow child support to be treated in the same manner as taxes by allowing the custodial parent to receive a tax credit for unpaid child support and essentially turning the unpaid support into a tax bill for the obligor.

H. R. 413 (Andrews, D-NJ 1st) - Will create child support trust accounts to hold profits from sale of real estate in trust for children, if the seller owes child support. This will stop non-payors from profiting on real estate sales while avoiding their obligations to their children.

H. R. 869 (Castle, R-DE) Will allow federal income tax refund intercepts to be applied to child support that is owed for children who are older than 18. This stops the incentive for active evaders to hide from their families until the children reach age 18.

1 Preliminary Statistics 1999, Federal Office of Child Support
2 Chart 10 shows $634 million in undistributed funds. $120 million of this could be due to the 2-day
legal delay in distribution of funds ($15.8 billion in 260 workdays/year).
3 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).
4 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).
5 H McLanahan, et al, National Survey of Families and Households (1994)
7 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)
8 Case, Anne, Fathers Under Fire, Chapter 7, The Effects of Stronger Child support Enforcement on Nonmarital Fertility and Plotnick, Robert D., et al, "The Impact of Child Support Enforcement Policy on Nonmarital Childbearing," University of Washington (2000)
9 Plotnick, Robert D., et al, "Better Child Support Enforcement: Can It Reduce Teenage Premarital Childbearing?"University of Washington (1998)
10 Certification Reviews of Child Support Enforcement Systems, Division of Child Support Information Systems, January 6, 2000
11 ACES annual membership survey (2000).

IRS Offset
Chart 5

 

IV-D Collections
Chart 4
Number of Cases: 16.4 Million
Dollars Collected: $15.4 Billion

$25 in costs for every $100 collected

55.5% from payroll deductions

 

IRS Collections
Chart 4a

Number of Taxpayers

268 Million

Dollars Collected

$1.9 Trillion

$0.44 in costs for every $100 collected

83% from payroll deduction

 

IV-D Summary
Chart 6

IRS Summary
Chart 7