In Focus

Sep 16, 2016  |  PERMALINK »

Child Support Pass-Through Amounts Must be Increased

By Victoria Palacio

Children need the emotional and financial support of their parents, whether or not they live with them. Child support paid by non-custodial parents can be an important part of an anti-poverty strategy but some poor children don’t receive any of the child support paid on their behalf. In more than half the states, when child support is paid on behalf of a family that receives cash assistance under Temporary Assistance for Needy Families (TANF), the money is kept by the state and federal governments to offset the cost of welfare. However, under current federal law, states have the flexibility to “pass through” some or all of the child support payment to families, who are not required to count it as income when calculating their TANF benefit.

Last month, Illinois Governor Bruce Rauner signed SB 2340 into law, which takes effect January 1, 2017 and will increase the amount of child support income that is passed through to families who receive TANF from $50 to $100 for one child, and up to $200 for families with two or more children. These are the maximum amounts that federal regulations allow states to pass through and disregard without having to pay additional money back to the federal government. This follows Colorado, which enabled full pass through of all collected child support.

These policies provide much-needed income to deeply poor families as TANF benefits alone are inadequate to meet families’ needs. In 2015, TANF cash benefits in every state for a family of three without additional income equated to less than 50 percent of the poverty line. In 33 states, such a family would qualify for benefits equal to less than 30 percent of the poverty line. Allowing low-income families to receive a greater portion of their child support payment, in addition to their TANF benefit, would enable them to be more financially stable.

Research indicates that retaining child support payments has hindered long-term support for poor children, because it has discouraged child support compliance. Passing through additional revenue to these families is beneficial to both the family and the state. Non-custodial parents are more likely to pay child support when they know that their children are the beneficiaries of their hard-earned money. Furthermore, the current system has led some parents to avoid the formal child support system, choosing to pay custodial parents directly "under the table." However, this is problematic; custodial parents risk being prosecuted for welfare fraud if they do not report the income, and non-custodial parents won't receive credit for their payments. Moreover, research suggests that payment of informal support declines over time.

Currently, 27 states do not pass through any child support to families. Prior to the passage of SB 2340, Illinois was one of 9 states that limited the pass through amount to a maximum of $50, regardless of the number of children in the household. The additional income that families in Illinois will receive once the new increase goes into effect can assist families in their transition from welfare. Illinois has recently shown leadership on this issue, other states should follow their lead by increasing their pass through amount to the federal cap as well.

Aug 31, 2016  |  PERMALINK »

Child Support is an Effective and Important Program for Families

By Nune Phillips

For single-parent families, child support from non-custodial parents is a critical way to reduce poverty. The Child Support Enforcement program (CSE) serves 16 million children as well as 22 million parents and caregivers each year. A recent report from the Office of Child Support Enforcement (OCSE) highlights significant progress with the program over the past decade:

  • Total collections have increased to $29 billion—a $5 billion increase over 2006.
  • The rate of orders being established through the child support program increased from 77 percent to 86 percent from 2006 to 2015.
  • The rate of collections for all current support is 65 percent, while the rate for arrears (debt) is 64 percent—an increase from 60 percent and 61 percent, respectively, in 2006.
  • For every dollar spent on child support enforcement, $5.26 is collected—up from $4.58 in 2006.

OCSE credits the increased collections to state modernization and enforcement efforts, such as child support being collected from employers before paychecks are distributed and tax refund interception. OCSE also identifies its shift to a family-centered approach as a main factor in increasing collections.

The family-centered model consists of six activities; among them are engaging fathers, promoting economic stability, and ensuring meaningful health care coverage. Increasingly, child support agencies recognize that unrealistic orders lead to unpayable arrears, which does not help custodial parents receive any more money. In fact, it can actually interfere with non-custodial parents’ ability to support their children. Positive strategies states can implement include establishing and modifying orders so they are realistic, reducing debts owed by non-custodial parents, and intervening early when payment struggles arise.

Building on these approaches, OCSE has an opportunity to strengthen the child support program and implement administrative rules to support the family-centered model. In late 2014, the U.S. Department of Health and Human Services (HHS) released proposed administrative rules that would, among other improvements:

  • Require states to  establish realistic child support orders as well as modify orders when  a change is warranted;
  • Allow states to use child support funds to provide employment services to non-custodial parents so they can secure a job and make their payments;
  • Prohibit states from classifying incarceration as “voluntary unemployment” so that child support debts do not continue to accrue during periods of incarceration (making it nearly impossible for a non-custodial parent to meet their obligation upon release);
  • Allow courts to consider the availability of public health coverage through Medicaid or CHIP as meeting the requirement for non-custodial parents to provide health coverage to their children.

The proposed rules would further modernize the child support program, bringing effective state practices to the national level. HHS should finalize and implement them immediately to ensure the program can build on recent success with the family-centered approach.

Jun 9, 2015  |  PERMALINK »

For Father’s Day, Let’s Support and Honor All Dads, Both Custodial and Non-Custodial

By Elizabeth Lower-Basch

During the annual rite of honoring fathers with their special Sunday in June, we should be mindful that most fathers—regardless of whether they live with their kids or not—want to do the best they can for their kids. As a special Father’s Day gift to those non-custodial fathers who struggle to provide financial support for their children, CLASP urges the adoption of a proposed rule from the federal Office of Child Support Enforcement (OCSE) to make child support orders more realistic—and effective.  

Child support enforcement exists because we, as a society, agree that children deserve the financial support of both parents, regardless of whether those parents are married or live together.  In 2014, the federal-state system of child support enforcement served more than 16 million children, representing nearly 1 in 4 children in the United States.  Over the years, child support programs have gotten more effective, using tools such as wage garnishment and tax refund interception to ensure that non-custodial parents who have the ability to pay child support, do so.  In 2014, 60 percent of child support cases had collectionsup from 51.5 percent in 2004.

However, many non-custodial parents are failing to pay child support, not because they are unwilling to support their children, but because they simply do not have the financial resources to do so.  For example, one study found that 70 percent of unpaid child support debt is owed by parents with no or low reported earnings. All too often, the child support enforcement system does not help these low-income non-custodial parents, but becomes yet another obstacle in their path to supporting themselves and their families.  Last fall, OCSE issued a proposed rule that would take a big step toward requiring states to establish child support orders that reflect non-custodial parents' true ability to pay and that would minimize the likelihood of their accruing insurmountable child support debt that itself acts as a barrier to employment. 

Specifically, the proposed rule would:

  • require states, as they set orders, to consider non-custodial parents’ “actual” earnings and incomes, rather than imputing their income;
  • require state guidelines to draw upon all available information regarding the non-custodial parent’s ability to pay; and
  • prohibit the treatment of incarceration as “voluntary unemployment.” When this occurs, income is imputed and support orders cannot be modified downward even though the incarcerated parent has little, if any, income.

Some members of Congress have described the proposed rule as undermining child support enforcement.  Nothing could be further from the truth.  While these policies may result in lower child support orders, what matters to the well-being of children is actual payments.  Custodial parents cannot pay for rent or child care with artificially high orders that will never be paid. And setting the order unrealistically high means that non-custodial parents rapidly accumulate large—and demoralizing—amounts of debt that they have no hope of being able to pay off. Moreover, this debt has negative consequences on credit scores.

This can actually reduce the child support collected. In a study of child support orders set for low-income parents, the U.S. Department of Health and Human Services (HHS) Office of Inspector General found that compliance was significantly lower when a monthly order was more than 20 percent of a parent’s income than when orders were 15 percent or less of income.  In some cases, the simple fact of owing child support debt can make it harder to get a job -- nearly half of employers check credit scores when hiring for some or all positions.  In other cases, the tools used to enforce child support orders, such as loss of drivers' licenses or professional credentials, make it impossible to earn the money needed to pay support.  The National Child Support Enforcement Association agrees that orders should be based on actual ability to pay, and notes that "When current child support is set, or allowed to remain, at an inappropriate level, there is an increase in non-compliance and ever-increasing arrears."

The proposed rule specifically addresses the use of contempt orders leading to jail time for parents who are unable to pay child support orders. It would require states to take into account actual earnings and income and the subsistence needs of the non-custodial parent when setting the "purge amount" that must be paid to avoid incarceration.  It is unjust to jail non-custodial parents for nonpayment when they have no ability to comply by paying. Moreover, it is absolutely counterproductive to the goal of ensuring support for children, as jail time is likely to make it even harder for the non-custodial parent to find or keep employment needed to pay child support, creating a downward spiral.

Another key provision of the proposed rule would allow employment services for non-custodial parents to be included as child support enforcement activities.  The concept here is simple -- if we help parents obtain the skills needed to find and keep jobs, they will be more able to pay child support.  This is not a new concept, and more than half the states already offer some sort of employment services to non-custodial parents in one or more counties.  But these programs have typically been funded with temporary grants, or have had to compete for limited federal Temporary Assistance for Needy Families (TANF) funding, which has prevented the programs from reaching the majority of non-custodial parents who could benefit.  Allowing such activities to be included under the child support enforcement program would help expand and institutionalize them.

CLASP submitted comments at the time in support of the proposed rule, and urges the Administration to finalize the regulation promptly.  When a non-custodial father gets a job and is able to help support his family, he will feel better about being honored on Father's Day—and every day.

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