Child Support Pass-Through Amounts Must be Increased
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.