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Child Support Project

State Child Support Programs: Necessity Inspires Ingenuity

Not long ago, child support enforcement was rarely discussed inside state capitols. "A personal matter" between parents and the exclusive domain of state family court judges, child support was essentially below the notice or concern of those not paying or receiving it. Dodging child support orders was easy; collecting support was quite often impossible. In recent years, state legislators and child support agency administrators have re-invented child support enforcement in America. Faced with a crippled child support system and the increasing needs of that system, state officials got creative.

One of the most obvious gauges of any child support program is its ability to deliver support to the children relying on it. Unfortunately, child support collection rates have been persistently low. A 1994 study by the Urban Institute reported that 62 percent of all custodial mothers in the United States did not receive child support in 1989. The same study also found an enormous gap between what was then being collected and what could possibly have been collected under an ideal system. It estimated that gap to be many billions of dollars. State data reported to the federal Office of Child Support Enforcement (OCSE) indicated that only 19 percent of all custodial parents served by the nation's child support system in 1992 actually received child support payments. Numbers like these echoed through legislative chambers and administrative offices in the early 1990s, vexing legislators and administrators and prompting initiatives to improve collection services.

State legislators in Maine, Illinois, South Dakota and a few other states enacted legislation to create the earliest driver's license suspension programs for delinquent obligors. Alaska, Washington and California created the first directories for employers to report new hires. Lawmakers and administrators in Washington, Michigan, Virginia and Ohio began innovative paternity establishment procedures resulting in improved child support collections. With legislative oversight and broad statutory authority, agency administrators pioneered other initiatives. The work of these legislators and those in other states provided the framework for the federal mandates that spread the reform movement to the rest of the nation.

When Congress enacted the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, it not only upended the welfare system as we'd come to know it, but it also outlined a plan for the legislative and administrative reconstitution of the country's ailing child support enforcement programs. That historic welfare reform legislation includes dozens of pages of child support reforms to create a uniform and efficient nationwide child support enforcement system. Most of the reforms are replicas or extensions of programs already being tested and refined in the states, emphasizing automation, creative enforcement and interstate cooperation. Failure by state legislatures to enact the required reforms could result in a complete loss of federal welfare funding to the state.

The federal mandates not only required state legislators to concentrate on child support as a serious and contemporary public policy issue, they also inspired debate and exploration beyond the federal requirements. The federal mandates are basically a compilation of the best state ideas of the previous 15 years, so very few of the mandates were truly revolutionary. More importantly they drew public and legislative attention to the issue and forced a speedy education of legislators with little or no prior experience with the issue. This education and awareness enabled state legislatures and agencies to attack the child support problem with new knowledge, determination and focus. Using the federal mandates as a baseline for improvement, state officials went further-embellishing on new tools and strengthening program areas that had proved resourceful.

The result? Things are slowly getting better for American children relying on a child support check. Between 1992 and 1996, every state increased its child support collection rates by at least 20 percent and 16 states improved their rates by 70 percent or more. Arizona, Texas, West Virginia and Wyoming improved by more than 100 percent over that period. States collected more than $13 billion in child support in 1997, an increase of 68 percent over 1992. Also, more children are receiving child support-almost 1.5 million more than in 1992. Finally, states established two and a half times more paternities in 1997 than in 1992-1.3 million compared with 510,000.

These numbers are confirmed by individual state experiences. Minnesota, which currently has the highest collection rate per case in the country, collected more than $360 million last year, with 81 percent of that being current support owed and the other 19% reflecting arrearage payments. "Minnesota had a longtime commitment to collecting child support and now we're seeing the benefits of initiatives we began in the early 1990s," explains Representative Matt Entenza. Further south is more evidence of recent reform successes. Between 1992-1996, collection rates in Texas increased 117 percent. With nearly 500,000 active child support orders, Texas' child support program collected $700.3 million in FY 1997 and will top that personal best again in FY 1998.

Statistics like these are prompting state legislators nationwide to ask the obvious question: "Why? What's working?" Officials in most states, including Minnesota and Texas, attribute their recent successes to several key enforcement tools: income withholding, including state and federal tax intercepts, license suspension programs for delinquent parents, and employer reporting of new hires, all of which were included in the 1996 federal mandates and are currently in various stages of implementation nationwide. These cornerstone tools-plus updated automation systems and aggressive paternity establishment and asset seizure programs-are the keys to current state progress. This report will examine some of the tools that are giving states the edge in establishing and enforcing child support orders.

Income withholding is no doubt the king of child support collection tools. Minnesota, which has been conducting income withholding since the mid-1980s, collected $237 million through income withholding in FY 1997 and Texas received 60 percent of its collections during the same period through wage withholding. Nationwide, more than $6.7 billion was collected from parents' paychecks in 1996.

Tax offset collections were also a huge source of revenue for families receiving a child support check. In FY 1996, states collected nearly $316 million from state and federal tax refund checks diverted from owing parents to the state child support division. Wisconsin was the most aggressive in seizing tax offsets from state income taxes-collecting more than $6 million in 1996. Alabama, California, Florida, Michigan, North Carolina, Ohio, Pennsylvania and Texas all generated more than $10 million each through federal tax offsets.

For those owing child support but not subject to income withholding, Arkansas has pioneered a checkstub and coupon system that encourages compliance by offering clear information and instructions about obligations and fees. The coupons tell the obligor how their most recent payment was distributed, even among multiple families, any arrearages outstanding, and what service fees are owed, if any. Likewise, related notices are sent to the custodial parent and, in interstate cases, the other state agency, detailing how the obligor's recent payments were spent and any fees deducted. "If we make it easy for them, they're more likely to pay, and the custodial parents like it, too," says Mary Smith, quality assurance manager for the Arkansas child support enforcement agency. "This was a pretty simple thing to implement and it's worked very well."

One of the most controversial and most effective enforcement tools is suspending the licenses of seriously delinquent or otherwise noncompliant parents. Under these enforcement programs, parents owing child support that are several months in arrears can have their state driver's, professional, occupational, business and recreational licenses suspended, restricted or revoked. The success of these programs has delighted the state legislators who championed them.

Maine, one of the first states to use license suspensions, has demonstrated how powerful a license suspension program can be. Between the program's inception in August 1993 and July 1998, 18,257 targeted individuals have paid more than $89 million of overdue support. In the first three months, in fact, the state received $3.5 million. Maine authorities have suspended 1,573 licenses, but have reinstated 757 of them as the parents came into compliance with their child support responsibilities.

Maine's experience also reflects one of the most attractive features of the license suspension program: Rarely is the parent permanently deprived of the license. The threat alone is usually sufficient. In Texas, payments began rolling in as soon as warning letters went out. "Money started coming in before the law even went into effect, $97,000 in fact," reports Alicia Terry of the Texas child support enforcement division. "We got lump sum payments ranging from $500 to $16,000. They had it, they just weren't paying it." Statistics in other states demonstrate that this phenomenon is not limited to the Lone Star state:

According to OCSE Commissioner Judge David Gray Ross, "New hire reporting programs are probably the single biggest innovation in child support recently." Few state legislators or administrators would disagree. By using new hire reporting to locate absent noncustodial parents, state agencies are able to establish child support orders for cases that need them and order income withholding for cases that already have valid court orders. Under federal law, all states have to enact legislation requiring employers to report newly hired employees within 20 days. Before the 1996 federal reforms, some states had been running new hire reporting programs, but the data was often submitted quarterly by employers and was outdated by the time the agency received it.

Testifying before the U.S. House of Representatives Subcommittee on Human Resources in May 1998, Connecticut child support administrator Diane Fray described the success of that state's new hire reporting program. According to Fray, Connecticut located more than 30,600 noncustodial parents through the new hire program in 1997, placed more than 3,300 new income withholding orders, and transferred another 5,000 income withholding orders to new employers. During that same year, Connecticut's child support agency located over 10,200 noncustodial parents without child support orders and new support orders were established for more than 5,500 families. Locating the parents is just the start. Since the beginning of the new hire program in 1995, Connecticut's yearly child support collections due to employer reporting have increased 13 fold, to a projected high of $9.6 million in 1998. Fray's testimony exhibited the enthusiasm many state officials have for new hire reporting programs. "The combination of new hire reporting and the resulting issuance of income withholding orders has been one of the most significant improvements in the way we do business," she reported.

Other states are reporting similar results. Idaho's new hire reporting program, in operation since Oct. 1, 1997, had logged 4,200 matches by April 30, 1998, and generated almost $1 million of additional collections. State officials credit the new program with generating child support payments for nearly 7,000 Idaho children. New hire reporting in Virginia has located more than 90,000 obligors and generated $41 million in child support collections since 1993.

State success with new hire reporting is largely due to cooperative employers and education regarding the program. Many states are making an extra effort to encourage employer participation. Arkansas child support officials created a handbook for employers, explaining the goals and operation of the program, as well as familiarizing businesses with the forms and requirements of the law. The guide is distributed through child support offices and by the Chamber of Commerce in Arkansas. Connecticut offers toll-free fax lines, electronic reporting, and a hotline for employer questions. Several states, including Massachusetts and Virginia, permit employers to report their new hires over the Internet. Despite minimal marketing efforts, at least 2,000 Massachusetts employers have reported more than 11,000 new hires since March 1997. Diana Obbard, spokesperson for the Massachusetts child support agency, applauds the employers' cooperation and says, "This is the quickest, cheapest, easiest way to get money to the kids, and employers have really helped make it a success."

New hire reporting doesn't stop at the state level; new hire information is also compared with other interstate information at the national level by the National New Hire Directory. The federally managed directory has located 1 million delinquent parents for state agency caseworkers since October 1997.

Automation is the cornerstone of the modern child support enforcement program. In 1988, Congress enacted new requirements for state child support computer systems and supplemented those mandates with additional directions in the 1996 welfare reform legislation. All state automation systems must be evaluated and certified by the federal OCSE or else states face progressive financial penalties (see appendix 2). The automation requirements are intended to create an efficient, timely and responsive national child support enforcement system. Congress and advocates envision a fully computerized child support system that locates and tracks parents who owe child support, issues notices, processes payments, and responds to interstate and federal requests for information. As many states struggle to update their systems and gain certification that vision remains an elusive reality. Even so, some states are beginning to reap the benefits of the many years and many millions of dollars devoted to modernizing their child support systems. As we witness their successes, we glimpse the future of child support enforcement.

To the uninitiated, Washington state's automated child support system sounds like something from a science fiction novel. Washington is fully automated and federally certified. The state agency's mainframe computer interfaces with 17 other state and local agencies to identify and locate parents who owe child support. The "quick locate" program is responsible for all interstate requests for location information, as well as all Washington cases. The automated "Autotroll" program "trolls" the various interface sources for potential information 24 hours a day, seven days a week. The program boasts a one-day response time. "Locating parents is at the heart of what we do," explains Robin Wohl, program manager for the state central registry. "It's the first step in enforcing any child support order and we take it very seriously. We're always looking for new ideas and ways to improve our system." The state agency's closed child support network was updated to facilitate the new and improved location capabilities. Extensive training is periodically conducted to ensure that child support caseworkers and location staff understand and are comfortable with the locate system.

Arizona's automated locate system, known as ATLAS, has been working since March 1996 and was certified later that year. The system is able to conduct automated searches of state and national data bases-searches that caseworkers had to conduct manually and over the telephone as recently as three years ago. Arizona's system is probably most noteworthy for its relatively smooth implementation. Many states have spent a considerable amount of time and money developing automated systems, only to encounter user-related problems. To avoid this, child support authorities in Arizona devoted considerable time to the design phase. County attorneys and clerks, child support caseworkers, and state computer designers met to develop a system that would serve the needs of a diverse group of offices and needs. "We partnered with our county officials, so our system didn't have a state-centered perspective that would alienate them later," relates Steve Esposito of the Arizona child support enforcement agency. "Everyone was on board early, so when we went 'live,' everyone was ready." Training caseworkers to handle the new automated system was admittedly a challenge, according to Esposito. "We had to break the old paradigms and introduce the new efficiency model," he admits. "Not everyone took it so well and some people left, but we brought in a lot of new people. At this point, nobody would want to go back to the old system."

Child support advocates and government officials are buzzing about Puerto Rico's automated payment processing system. The processing system, initially modeled after Montana's, was implemented in 1994 and processes nearly $250,000 in payments daily. Incredibly, the system has handled up to $1 million in child support payments on some days. Payments with complete case information are usually processed and distributed within 24 hours, but no payment takes longer than 48 hours to process before being mailed. The success of the system is a point of pride for officials in the small territory. "It's important to get the money to the children," explains Margarita Jacobs of the child support division. "We have a dedicated computer staff and we're proud of what we've been able to do."

Establishing the paternity of a child is often the first obstacle on the road to child support. In many of the cases before state caseworkers, the parents are unmarried and no longer romantically involved, or the mother may be uncertain about or reluctant to reveal the child's father. In recent years, states have been pursuing paternity establishment more aggressively than ever, both because of federal funding incentives and a growing recognition of the emotional impact on the children involved.

State paternity establishment programs have focused on better partnerships with hospitals, as well as additional voluntary acknowledgment services at state and local agency offices. New Jersey's Paternity Opportunity Program (POP) is a model of recent paternity reform. During 1996, its first full year of operation, POP established paternity for 71 percent of the out-of-wedlock births in the state and reached more than 74 percent in 1997. Since November 1995, more than 45,000 voluntary acknowledgments have been obtained and 3,958 children brought onto the child support enforcement case rolls with paternity already established. New Jersey credits its coordinated and focused approach with these vast improvements. "Success depends on an investment of time, money, resources in building partnerships and implementing new technology," explains Alisha Griffin, assistant director for the state division of family development. "In our experience, this increased investment pays off."

Some states, like New Jersey and New York, are offering financial incentives to hospitals participating in the paternity acknowledgment program. This year, New York Governor George Pataki created a $1 million program to encourage voluntary paternity acknowledgments at hospitals. Hospitals in New York are now offered $20 for each paternity established, money that the hospitals will use to offset the additional paperwork and staff costs related to the acknowledgments. Pataki spokesman Michael McKeon justifies the incentives. "Establishing paternity is the most important step in the process," he insists.

Admittedly, some paternities are more difficult to establish than others. The parents may be hesitant to admit paternity for fear of losing public assistance benefits, the mother may not welcome the father's presence in the child's life, or she may be genuinely unsure who the father is. These situations confound caseworkers and demand a more aggressive approach. In North Carolina, this has meant the creation of a paternity establishment "SWAT" team. Rhonda Little, public awareness consultant for the state child support enforcement section describes the SWAT team as a "roving troubleshooting team." Comprised of caseworkers, an attorney and a paralegal, the six to eight member team has already trained hospital staff in the state and are now working with birthing hospitals statewide. The team explains the acknowledgment process, provides the facilities with copies of videotapes for the parents to view prior to signing the acknowledgments, and helps staff with particularly complex or difficult cases.

Seemingly impossible cases prompted Nevada's child support division to create a team of paternity investigators. Like North Carolina's SWAT team, the Nevada investigative unit handles only cases that caseworkers have deemed unworkable due to unknown paternity or multiple possibilities. Using detective methods not unlike their law enforcement counterparts, these investigators are able to provide caseworkers with names and other identifying information in 60 percent of the cases, according to unit manager Gary Stagliano. Unfortunately, the unit's efforts only result in acknowledgments in 5 percent to 8 percent of the cases. "Usually the mothers voluntarily remove themselves from the public assistance rolls when they're informed that the agency has enough information to pursue paternity, so then the caseworkers have to drop the case," reports Stagliano. "It's really frustrating and something we're trying to change because we think the unit could have a really positive impact for these kids."

State officials recognize that there are basically two types of people with child support delinquencies: those who can't pay and those who won't pay. As Representative Matt Entenza from Minnesota acknowledges, "Many of our most powerful tools are aimed at the parents who just don't want to pay." With a little ingenuity, states are discovering how to wring child support payments from the most reluctant group of obligors. The 1996 federal mandates included a section requiring state legislative authorization for use of administrative liens in child support enforcement. Under these programs, state child support enforcement agencies can issue liens on real and personal property for certain child support debts. Both Massachusetts and New York implemented their programs before the federal mandates, and these serve as models for states currently updating their systems.

In Massachusetts, the Individual Case Enforcement Team investigates cases where state officials know the obligated parent is working and suspect he is hiding significant assets to avoid his full child support responsibility. According to Diana Obbard, spokesperson for the Massachusetts child support enforcement division, the team has seized approximately 50 boats, cars, trucks, and real estate holdings. It has even seized state subsidies for rent-controlled real estate and frozen more than $23 million in liquid assets in financial institutions since its beginning in June 1995. Even more important, state authorities only have had to auction a handful of the seized properties. "Somehow," reports Obbard, "they always come up with the money to pay off the debt, no matter how large it is. It's amazing how many people simply don't want to fulfill their responsibility. That makes these collections all the more rewarding." The team usually informs the local media of the impending seizures. "People hate the publicity so much that TV news producers tell us they get phone calls from worried parents who owe support wanting to know when the next seizure might be," says Obbard.

New York's Property Execution project, or PEX, was started in 1994. It is an automated system that identifies bank accounts that may possess hidden assets of delinquent parents. In the past four years, the PEX program is credited with an additional $4.5 million in child support collections. Project workers pursue only liquid assets, but refer cases with real property assets to the state Department of Taxation and Finance, including a recent case that resulted in the seizure of a New York beauty salon.

Given the early successes of these state administrative lien programs, no doubt more states will be taking a second look at the resources of "won't pay" child support obligors.

Many commentators will remark that these success stories in child support enforcement are too few right now and unfortunately they might be right. There are more than 4 million unmarried couples in America today. Nearly 25 percent of children now live with a single parent and about 50 percent of all children are likely to spend some time in a single-parent home at some point. Millions of people are leaving or being forced off the welfare rolls. Every statistic confirms that more and more families will be needing and relying on a child support check in the years to come. Our nation's ability to meet those needs will be one of the great challenges of the new welfare reform structure. Results from child support initiatives like these suggest that we're on the right track. Although they may not have found all the solutions yet, state legislators and agency administrators are proving that ingenuity and determination can make a real difference in the struggle to deliver support to America's children.

The next few years promise to be just as interesting as the last as child support reforms continue and states struggle with new, unexpected issues resulting from those reforms.

Federal certification of state child support automation systems will continue to be a major issue for several states as they strive to update their systems and avoid federal financial penalties. As shown in figure 1, 36 states and territories currently boast complete federal certification; many of these states and territories, however, are still struggling with system breakdowns or incompatibility with need. As a result, even states that have dodged the million-dollar bullet may be faced with persistent automation concerns in the next few years.

Figure 1. States and Territories That Have Received Federal Certification of Child Support Automation Systems
Alabama	Arizona	Arkansas
Colorado	Connecticut	Delaware
Florida	Georgia	Guam
Idaho	Iowa	Kentucky
Louisiana	Maine	Massachusetts
Minnesota	Mississippi	Missouri
Montana	New Hampshire	New Jersey
New York	North Carolina	Oklahoma
Puerto Rico	Rhode Island	South Dakota
Tennessee	Texas	Utah
Vermont	Virginia	Washington
West Virginia	Wisconsin	Wyoming

More than a year after the original federal deadline, state officials are still busy implementing the complicated statewide financial institution data matching requirements for child support enforcement. Included in the 1996 federal reform package, the state data matching programs will allow child support workers to locate more hidden assets of delinquent obligors. Data matching on this scale is sure to be a huge undertaking for state agencies and participating financial institutions, but it is also expected to recover millions of dollars in additional collections. Most states are still working out the logistics and negotiating agreements with the financial institutions.

A serious concern lurking just over the horizon for many state child support enforcement programs is funding. Under the new federal block grant structure, state child support divisions receive less funds as public assistance recipients leave the TANF rolls, which they're doing by the millions. Most of these divisions have relied heavily on federal funding for even basic operation expenses, but will now be forced to seek additional funding from their state legislatures. A handful of states that had previously been self-supporting, through federal funds and service fees charged to obligors, will be seeking general fund appropriations for the first time. "As TANF rolls decrease and the current federal cap on non-IV-D cases continues, we have no choice but to ask for the state to support our child support efforts through general appropriations," explains Senator Jodie Mahony of Arkansas, one of the states that relies on federal funds and service fees for child support division operating costs. "That's why we were supportive of a change in federal law that would tie funding to state performance. It's probably the only chance we'll really have to guarantee continuity of service and still be able to improve our enforcement abilities."

On the heels of massive child support reform in 1996, Congress returned to the issue of child support this year. Two new laws, one that reduces potential penalties for noncompliance with automation requirements and another that strengthens criminal penalties for noncustodial parents who avoid their child support obligations, are discussed below.

On July 16, 1998, President Clinton signed into law legislation providing relief to states and territories that did not meet the child support automation requirements of the 1988 Family Support Act. The Child Support Performance and Incentive Act changes the landscape for both child support automation penalties and incentive payments.

Before enactment of the law, 15 states, the District of Columbia and the U.S. Virgin Islands received notice from the federal Office of Child Support Enforcement that they were out of compliance with the federal child support automated systems requirements of the 1988 Family Support Act and would be subject to a penalty. These states faced significant financial penalties in child support as well as the potential loss of federal Temporary Assistance to Needy Families (TANF) block grant funds.

Under the new law, states that are making good faith efforts to comply with the automation requirements of the Family Support Act and that have submitted corrective compliance plans that describe how, when and at what cost they will comply, would be exempt from penalties under TANF and be subject to a reduced child support penalty. The law provides a complete penalty waiver for states that, by Aug. 1, 1998, submitted a request to the Secretary of HHS to certify the state as meeting the 1988 data processing requirements and the state is subsequently certified. Partial penalty forgiveness is also available under the new law for states that have received a penalty in a given fiscal year but that come into compliance by the beginning of the succeeding fiscal year. The law also includes a waiver provision of the single statewide automated system requirement of the 1988 Family Support Act and removes some barriers to state medical child support enforcement of companies covered by ERISA.

The law additionally changes the federal financial incentives in the child support program to reflect changes in the population receiving child support services-including former TANF recipients-and a wider range of state performance criteria. Incentive calculations will now be based on five incentive performance measures: establishment of paternity; establishment of support orders; collections on current payments; collections on arrearages; and cost effectiveness. The law requires states to reinvest federal child support incentive funds into the child support program or closely related activities. By achieving maximum scores for any of the new incentive performance measures, states could qualify for penalty reductions if they fail to comply with the additional data processing requirements of the 1996 welfare reform law (P.L. 104-193) by Oct. 1, 2000.

The Deadbeat Parents Punishment Act of 1998 was signed into law by President Clinton on June 24, 1998. The law amends federal criminal law to prescribe criminal penalties (including mandatory restitution) for willful failure to pay child support obligations. The law makes it a criminal offense for any person who 1) fails to pay a child support obligation for a child residing in another state, if the obligation has not been paid in more than a year or exceeds $5,000; or 2) travels nationally or internationally to evade a support obligation, if the obligation has not been paid in more than a year or exceeds $5,000. First-time offenders under this law are subject to a fine and/or imprisonment for not more than six months. Repeat offenders, those individuals described in 2), or those who fail to pay a child support obligation for a child residing in another state if the obligation has not been paid in more than two years or exceeds $10,000, are subject to a fine and/or imprisonment for not more than two years.

 State Legislative Reports

STATE LEGISLATIVE REPORT is published 12 to 18 times a year. It is distributed without charge to legislative leaders, council and research directors, legislative librarians, and selected groups for each issue. For further information on STATE LEGISLATIVE REPORT or to obtain copies, contact the NCSL Book Order Department in Denver at (303) 364-7700.

© 1998 by the National Conference of State Legislatures.

For additional information on state child support enforcement contact the Child Support Project at 303/364-7700.