Withholding of Unemployment Benefits - Section 2335 of Public Law 97-35
Withholding of Unemployment Benefits - Section 2335 of P.L. 97-35
March 30, 1982
TO:STATE AGENCIES ADMINISTERING CHILD SUPPORT ENFORCEMENT PROGRAMS UNDER TITLE IV-D OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED INDIVIDUALS
SUBJECT: Withholding of Unemployment Benefits - Section 2335 of Public Law 97-35
ATTACHMENTS: Unemployment Insurance Program Letter and sample agreement issued by the Department of Labor
PURPOSES: This action transmittal provides States with information on the withholding of unemployment benefits as a method of collecting unmet support obligations and prescribes procedures to be used by State agencies in accomplishing the withholding of these benefits. The content of this action transmittal is based on the provisions of Section 2335 of P.L. 97-35, the Omnibus Budget Reconciliation Act of 1981. Regulations on the withholding of unemployment benefits for purposes of satisfying an unmet support obligation are currently being prepared by OCSE in coordination with the U.S. Department of Labor.
BACKGROUND: The Omnibus Budget Reconciliation Act of 1981 was enacted on August 13, 1981 as Public Law 97-35. Section 2335 of this law revises the Social Security Act by amending sections 303 and 454 to authorize the collection of unmet support obligations through the withholding of unemployment benefits under specific procedures set forth in the statute. States may implement the withholding process as of August 13, 1981; however, States should note that the process is mandatory as of October 1, 1982.
Under the provisions of the statute, the child support enforcement (IV-D) agency is required to collect unmet support obligations owed by an individual by having all or part of the individual's unemployment benefits withheld by the State employment security agency (SESA) and forwarded to the IV-D agency. The amount withheld is to be determined by the IV-D agency through an agreement with the individual or, if an agreement cannot be obtained, through legal process as defined in section 462(e) of the Social Security Act.
This process is explained more fully below. The SESA is required to withhold and forward to the IV-D agency the amount of the individual's unemployment benefits as specified by agreement or as required as a result of legal process. An arrangement to withhold less than the amount of the support obligation does not excuse the individual's legal obligation to pay the remaining amount. Section 2335 also specifies that the IV-D agency must reimburse the SESA for the administrative costs of carrying out its withholding activities.
Under Section 2335 of P.L. 97-35, the withholding of unemployment compensation is required for unmet child support obligations owed both in AFDC and non-AFDC cases. Since section 303 of the Social Security Act (the SESA provisions) defines the
term "child support obligations" as including any obligations which are being enforced pursuant to a plan described in section 454 of the Social Security Act, and section 454 of the Act is amended to authorize collection of certain spousal support at the option of the State, States that choose to collect spousal support may do so via withholding of unemployment compensation.
DEFINITIONS: For purposes of this action transmittal, the following definitions apply: (1) "unemployment compensation" means any compensation payable under State unemployment compensation law (including amounts payable in accordance with agreements under any Federal unemployment compensation law); it includes extended benefits, unemployment compensation for Federal employees, unemployment compensation for ex-servicemen, trade readjustment allowances, disaster unemployment assistance, and payments under the Redwood National Park Expansion Act. (2) "State employment security agency" or "SESA" means the agency charged with the administration of State unemployment compensation laws in accordance with title III of the Social Security Act.
CONTENT:I. ACTIVITIES OF THE CHILD SUPPORT ENFORCEMENT AGENCY
A. State Plan Amendment
Withholding of unemployment compensation for purposes of meeting support obligations was authorized beginning August 13, 1981. It becomes a requirement on October 1, 1982. States that desire to implement the new section 454(20) of the Social Security Act before October 1, 1982 must amend their IV-D State plans during the quarter in which they implement the section in order to receive FFP for associated costs for that quarter beginning with the date of implementation. A preprinted State plan amendment will be issued upon publication of final regulations. In the interim, a State that desires to implement withholding of unemployment compensation should consult the Regional Office for instructions on amending their State plans to include this process.
B. Interagency Agreement between IV-D Agency and SESA
Section 2335 of P.L. 97-35 imposes requirements for withholding of unemployment compensation both on the IV-D agency and the SESA. In order for the required withholding to take place, these agencies must make arrangements for information exchanges, for payments of amounts withheld and for reimbursement of SESA costs. To ensure that the requirements of each program are covered adequately and to prevent costly misunderstandings about procedures, time frames and financial matters, the State IV-D agency and the SESA in a State must negotiate a written interagency agreement. For guidance in doing so, States may wish to refer to OCSE-IM-81-8 dated June 22, 1981. Although this Information Memorandum provides guidance in developing agreements between State agencies for the purpose of medical support enforcement, the suggested steps to be followed and the elements of a well-written agreement are applicable to any agreement. In addition, the Department of Labor has prepared the attached sample agreement dealing specifically with the withholding of unemployment compensation for payment of support. The sample agreement language and provisions are not required; they are intended to provide guidance only.
To simplify and expedite negotiations between the two programs, the State IV-D agency must enter into the agreement on behalf of any local IV-D agencies that administer the State's Child Support Enforcement program. Since both the State and local IV-D agencies will be bound by the agreement, the State IV-D agency must ensure that the needs and concerns of the local agencies are addressed. This requirement is not meant to limit in any way the transmittal of information or monies directly to local agencies, as permitted by the statute. The purpose of this requirement is to facilitate negotiations with the SESA and promote coordinated, cost-effective planning on the part of the IV-D program in the State.
C. Periodic Determination of Whether an Individual Receiving Unemployment Compensation Owes Support
The IV-D agency must determine periodically whether individuals receiving any State or Federal unemployment benefits owe support obligations which are being enforced by the IV-D agency. The interval at which these determinations will be made is left to the discretion of the IV-D agency. The determination is to be made based on information provided by the SESA in accordance with Section 508 of the Unemployment Compensation Act of 1976. Under this act, information required to be supplied to IV-D agencies upon request includes: (a) whether an individual is receiving, has received, or has applied for unemployment compensation and the amount of any compensation being received by the individual;
(b) the most recent address of an individual; and (c) whether an individual has refused an offer of employment and, if so, a description of the employment offered including terms, conditions and pay.
It is not necessary for the IV-D agency to request information from the SESA on all IV-D cases at any given time. Depending upon the size of the caseload, case prioritization policies, and so forth, the IV-D agency may wish to limit the cases referred to the SESA for matching against, the SESA's records. Since the statute refers specifically to withholding of unemployment compensation to enforce "obligations which are owed . . . but are not being met", it may be more practical for a IV-D agency to request SESA information only for delinquent cases, although the information is available under Section 508 for any IV-D case and for any IV-D related activity.
D. Enforcement of Support Obligations Owed by Individuals Receiving Unemployment Compensation
The IV-D agency is required to enforce support obligations owed by individuals receiving unemployment compensation based on enforcement criteria established by the State. First, however, the IV-D agency must attempt to secure an agreement with the obligor to have an amount withheld from his or her unemployment benefits. The terms of the agreement should be based on the individual's ability to pay. If the individual signs an agreement, the SESA is entitled to receive a copy of it. If the SESA does not need a copy of each agreement, it will probably be more useful and less expensive to notify the SESA by manual or automated report. The agreement or report may include, but need not be limited to, the following information:
- name of obligor
- social security number of obligor
- amount of arrearage owed
- amount to be withheld from each check until arrearage is satisfied
If the IV-D agency and the individual receiving unemployment compensation cannot reach an agreement which satisfies both parties, the IV-D agency may use a legal process to require the withholding of unemployment compensation. The applicable legal process is defined in section 462(e) of the Act as a writ, order, summons, or other result of a legal process
in the nature of a garnishment and includes both court and administrative orders. We believe this definition is broad enough to encompass the pertinent legal processes in all States, since it does not require garnishment action per se, but permits legal action by "similar process". The decision to pursue the case via legal process should depend upon sufficient time being available for legal process to result in a withholding and the agency's determination of whether or not the individual possesses sufficient resources to warrant the additional action on the part of the IV-D agency. If, under legal process, an order for withholding is obtained, the SESA may be provided a copy of the order or may be provided with the same type of information in report form as would be provided if an agreement had been reached with the individual. In order to provide maximum flexibility to States with respect to information exchange, OCSE does not plan to impose specific requirements in this area.
The statute at section 454 (20)(B) provides that the IV-D agency "shall enforce any . . . child support obligations which are owed by . . . an individual but are not being met" through the withholding of unemployment compensation. OCSE interprets this language as permitting withholding to satisfy either current unmet obligations or arrearages that are owed. For AFDC cases, amounts collected must be treated first as payment on the current support obligation (as per 45 CFR 302.51(a)), if it is unmet, and any remainder must be applied to an arrearage. Incentive payments are also available on AFDC collections made via the withholding process.
E. Reimbursement of the SESA's Incremental Administrative Costs
The IV-D agency must reimburse the SESA for the administrative costs associated with the withholding of unemployment benefits for payment of support. The frequency and the amount of the reimbursement must be agreed to in writing by the State IV-D agency and the SESA. The amount of the reimbursement may not exceed the SESA's actual costs of providing services to the IV-D agency. This means that the SESA is to charge the IV-D agency only those actual incremental costs incurred with respect to IV-D related activities and that the SESA's normal "costs of doing business" are not to be absorbed by the IV-D agency.
It is important that the IV-D agency ensure that costs are kept to a minimum by considering whether high cost items are necessary to the withholding process. The IV-D agency should not agree to pay for those items that it considers unnecessary. For example, the IV-D agency may find it unnecessary for the SESA to question each new applicant to determine whether he or she owes a support obligation that is being enforced by the IV-D agency. If this is the case, the IV-D agency should not agree to pay the SESA for such questioning. As a final measure, we urge the IV-D agency to periodically review the withholding process to identify high cost procedures that could be modified or eliminated by the IV-D agency directly or through renegotiation of the agreement with the SESA.
F. Receipts to the Obligor
The Department of Labor and OCSE believe that it is important to ensure that individuals whose unemployment compensation is withheld receive receipts on a periodic basis so that they are able to prove payment of support in the amount withheld. Providing receipts may be handled in various ways through the SESA or the IV-D agency, depending upon the arrangements already in place for providing receipts and the working procedures preferred by the two agencies.
In some States, SESAs provide check stubs to the claimants which show the amount of unemployment compensation paid and deductions taken from it. This process constitutes one acceptable method for giving receipts for payment of support. In some States, the IV-D agency bills absent parents for the support they owe. Often these bills contain statements of the individual's account indicating amounts paid for a given period. This type of billing statement provides a second acceptable method for providing receipts. If these or other routine methods of providing receipts are not used in a State, the IV-D agency must provide receipts to individuals upon request. If requested, receipts must be provided at least annually.
II. ACTIVITIES OF THE SESA
A. Disclosure of Support Obligations by New Applicants for Unemployment Compensation
Under Section 2335 of P.L. 97-35, the SESA must ask each new applicant for unemployment compensation to disclose whether he or she owes support obligations that are being enforced by the IV-D agency.
The SESA and the IV-D agency in the same State may decide that it is more efficient and cost-effective to substitute a frequent cross-match of their respective case records for the SESA questioning of the applicant. This might be accomplished by forwarding a IV-D computer tape to the SESA which could be used in checking whether a new applicant for unemployment compensation owes support to the IV-D agency. This is permissible as long as it results in all applicants for unemployment compensation being quickly screened to determine their status with respect to the IV-D program. Secondly, the agencies may decide that the SESA should take no withholding action based solely on the word of the applicant, without prior consultation with the IV-D agency. This would eliminate the potential problem of withholding from individuals who are not IV-D cases. If withholding is initiated on the word of the applicant, it does not preclude the IV-D agency from attempting to increase the amount withheld or from pursuing other means to collect the support owed.
These modifications to the basic screening and withholding process are discretionary within a State and may be implemented if the agencies find them to be more appropriate and more effective than the SESA's questioning of each applicant.
A special situation arises when an individual applies for unemployment compensation in one State, but worked in another State. In these cases, the State where application is made is referred to as the "agent" State. The State where the person worked is known as the "liable" State. The latter is responsible for determining the applicant's eligibility for benefits and making benefit payments. In these SESA interstate cases, the agent SESA takes the application on the standard form IB-1. This form is being modified to include the following questions: "Are you required to make or do you owe child support payments? If yes, where? (City), (County), (State)." Upon completion ofthe IB-1, the agent SESA forwards the form and any supporting documentation to the liable SESA. All subsequent dealings with the applicant, including eligibility determination and payment of unemployment compensation, are handled by the liable SESA. The liable SESA will communicate with the IV-D agency in its own State concerning applicants who have responded positively to the questions on support included on the IB-1. Similarly, any withholding of unemployment compensation will be paid to the IV-D agency in the liable SESA's own State.
B.Withholding of Unemployment Compensation for Support Purposes upon Notification from the IV-D Agency
Upon receipt of notification from the State or local IV-D agency in its State that an amount must be withheld from an individual's unemployment compensation, the SESA will initiate the withholding as quickly as possible. The SESA will pay any amounts withheld to the State or local IV-D agency in its State on an agreed-upon schedule and notify that IV-D agency of the amount withheld from compensation for each individual, the total amount forwarded to the IV-D agency for the period, and any other information mutually determined to be necessary to the process. This information will enable the IV-D agency to apply the appropriate amount to each individual's account and to reconcile any discrepancies with respect to the total amount sent and received.
Communication with the SESA concerning withholdings should come from the State or local IV-D agency in the SESA's own State. Similarly, if unemployment compensation has been withheld by a SESA in one State and that support payment belongs to a IV-D agency in another State, the SESA will forward the amount withheld to the IV-D agency in its own State. That IV-D agency is responsible for transmitting the payment to the IV-D agency in the State where it appropriately belongs.
C. Reimbursement of Administrative Costs by the IV-D Agency
The SESA shall receive reimbursement from the IV-D agency for the administrative costs attributable to the withholding of unemployment compensation for payment of support. Reimbursement shall be on a periodic basis and in an amount agreed to in writing by the two State agencies. The IV-D agency will be reimbursed 75 percent of its costs by OCSE under routine reimbursement procedures. As noted above, it is vitally important that the IV-D agency take steps to ensure that the procedures for withholding unemployment compensation are the most cost-effective possible.
REFERENCES: Section 2335 of P.L. 97-35, enacted on August 13, 1981 (see OCSE-IM-81-13, dated August 19, 1981).
INQUIRIES TO: OCSE Regional Representatives
Office of Child Support
U.S. DEPARTMENT OF LABOR
Employment and Training Administration
Washington, D.C. 20213 Date: April 8, 1982
Directive: UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 15-82
To: ALL STATE EMPLOYMENT SECURITY AGENCIES
From: T. James Walker
Administration and Management
Subject: Child Support Intercept (Withholding from Unemployment Compensation)
1. Purpose. To inform State Employment Security Agencies (SESAs) of steps to implement the child support intercept program enacted in P.L. 97-35 and generally described in UIPL 1-82.
2. References. Section 2335 of P.L. 97-35; Section 303(a)(1), 303(e)(1), 303(e)(2) and 454(20) of the Social Security Act; Section 3 (a) of the Wagner-Peyser Act; P.L. 96-265; P.L. 94-566; and UIPL 1-82.
3. Background. Congress in the past (in Section 508,
P.L. 94-566) has required each SESA to exchange information about workers and claimants with the child support agency in its State. These agencies are commonly referred to as IV-D agencies, from the Title of the Social Security Act which authorizes them.
The 1981 Omnibus Budget Reconciliation Act extended that action to require SESAs to withhold funds from UI benefits in cases where a child support enforcement agency is enforcing either a voluntary support agreement, a court order or an administrative order pursuant to a court order or law to pay money for child support.
The requirement includes all unemployment insurance payments under a State law including extended benefits (EB), and Unemployment Compensation for Federal Employees (UCFE), Unemployment Compensation for Ex-service members (UCX), Trade Readjustment Allowances (TRA), Disaster Unemployment Assistance (DUA), and payments under the Redwood National park Expansion Act.
Please note that Section 2335 of P.L. 97-35 requires only that States make deductions from unemployment compensation for child support obligations being enforced through IV-D agencies and does not require deductions for spousal support. However, spousal support intercept is at the option of the State if permitted under State Law. (See page 2 of Attachment 4; Action Transmittal from the Department of Health and Human Services, Office of Child Support Enforcement). SESA's are required to furnish information to IV-D agencies in regard to spousal support because of a change in regard to spousal support because of a change in title IV-D by Section 2332 of P.L. 97-35. That section amended title IV-D to
include spousal support (under AFDC) with child support wherever
it appeared in title IV-D. The effect is to make the information requirements of Section 3(a) of the Wagner-Peyser Act apply with respect to spousal as well as child support. The reimbursement of costs requirement of Section 508(b) of P.L. 94-566 also applies.
No reliable figures exist as to how many claimants will have benefits withheld under this new requirement. However, some clue may be inferred from a brief study in two mid-west States. The States compared IV-D agency tapes with UI claimant records for a one-year period. Between 1.5 and 2 percent of the claimants were on the IV-D tapes. Even though this may not be typical of all States, it suggests a basis to approach development of needed systems.
A. State Child Support Enforcement Agencies. Under the
Social Security Act there is a State child support enforcement agency (known as the IV-D agency) in every State, D.C., Puerto Rico, the Virgin Islands and Guam. These agencies enforce collection of child support in all welfare cases (AFDC), for non-AFDC cases where the parent formerly was on welfare, for non-AFDC where the parent asked the IV-D agency to assist in enforcement and, in a few States, all child support payments. The agencies also locate missing parents, establish paternity and perform several other related functions.
B. IV-D Administrative Funds. The IV-D agency is financed by a mixture of State or local money, fees, and grants from the Department of Health and Human Services under the Social Security Act. Federal grants generally cover 75 percent of costs. Each State has a plan for child support enforcement. The plan must be approved by the Secretary of Health and Human Services (HHS) to qualify for Federal administrative funds. These plans vary, notably in how they organize activities of the enforcement agency (State agency vs. local) and how they get their State administrative funds.
C. Information Exchange Services. Under Section 303(e)(1) of the Social Security Act and Section 508 of P.L. 94-566 (amending the Wagner-Peyser Act), these IV-D agencies have been exchanging information which may include lists or computer tapes, with SESAs in an attempt to locate absent parents. This activity probably will increase in the future, since Section 454(20) requires IV-D agencies to obtain information "on a periodic basis." SESAs provide information from both wage record searches and comparison with active claimant records in such exchanges. Administrative costs are not reimbursed in UIS budget allocation to SESAs, but are negotiated in agreements between the SESA and the IV-D agency. This is also the method of financing used for the child support intercept. The applicable statutes require the IV-D agencies to bear the SESA costs.
D. Collection by IV-D agencies. There are two general patterns of collection, although there are variations within each pattern.
(1) State Office Collections.
In several States, the central State child support agency is the place where most actions occur. It assesses the absent parent's ability to pay and the custodial parent's needs. It prescribes the amount to be paid. It collects the child support money and disburses it to the proper places. The welfare agency which pays AFDC may also repay the Federal Government for its welfare costs using the child support money disbursed to it. In some cases, child support payments are made directly to the custodial parent. However, a court may issue an order in some legal action in such a State (e.g., a garnishment) which requires money to be paid to the court. Under Section 303(e)(2) all child support money the SESA withholds from benefits will be paid to the central agency.
(2) Local Collections.
In most States, the central State child support agency performs various supporting functions, but collections normally are made by a local (usually county) agency. In most cases, this is part of the local court function. Amounts are established by the court with the help of the office of the district attorney or a similar agency, and the clerk of the court or other local officer receives the money and distributes it to the proper places.
If your State is organized this way, a method is needed to transmit child support money from the SESA to the local agency. Cost effectiveness should govern the choice between two methods;
a) pay all the money to the central IV-D office, for distribution to the proper local agency (including agencies in other States).
b) pay the money directly to the appropriate local agency, (except those in other States, which your central IV-D agency should handle). No payments shall be made directly to custodial parents. If the case is being enforced by a State or local IV-D agency (the only cases which the SESA is required to withhold), the IV-D agency or appropriate local authority must get the money.
State IV-D agencies may vary in the amount of information they request, and in what cases they will request withholding. They may limit their concerns primarily to cases where the absent parent is delinquent in his/her payments or the custodial parent receives AFDC.
E. Withholding unemployment Compensation. The new law amends Section 303(e) of the Social Security Act to require every SESA to take these actions:
(1) New unemployment compensation claim
Ask every new claimant if he/she "owes" child support which is being enforced by a State or local Child Support Enforcement Agency. It goes on to say the SESA must tell the IV-D agency if the claimant who answers "yes" is eligible for benefits. The SESA is not required to requestion claimants, nor to question current claimants at the start of the program (to start when the State law permits and fiscal arrangements are made, but no later than October 1, 1982). The above term "owes" is interpreted to mean "is required to pay child support that is enforced by a State or local child support enforcement agency." That definition should be used as a guide in determining exact wording on the State initial claim form. The SESA should establish jointly with the State central child support agency questions for a revised initial claim form. The form must include whether the person "owes" child support which is enforced by a child support agency and include the place (city and State) where the person is required to pay child support. The question should be included in the next order for initial claim forms, even if implementation of the exchange of information must await legislative and fiscal actions. (If needed, a separate questionnaire may be used, pending use of revised forms).
The question will be standard for interstate claimants as follows: "Are you required to make or do you owe child support payments? If "yes", where? (City), (County), (State). Revision of the interstate initial claim form IB-1 is in process and will be issued separately. Some State IV-D agencies may decide that it is not cost-effective to have you perform this function at all. If you agree periodically to compare listings of IV-D cases with your claimant records, as indicated below in item 4, the cost of reporting on new claimants may be more than the value the IV-D agency sees in the service. If this service is not requested and paid for, the SESA should not do it. But interstate Form IB-1 must ask the questions in every State.
From State to State, the IV-D agencies will differ as to whether or not they want the SESA to report only claimants who are determined to be eligible. Because eligibility determinations will cause some delay, and because some IV-D agencies are strongly oriented to preventing delinquency, such an agency may ask the SESA to notify them at once of every "yes" answer even though some percent will not be eligible. At least, the IV-D agency will check their records and start negotiations with the claimant much earlier, and they are willing to act on some cases which will not result in recovery. If it is less costly for some SESAs to give the notice without the need to report after eligibility is determined, that may impel some IV-D agencies to choose this route.
Other IV-D agencies will prefer to wait and get a list of only eligible claimants, - perhaps to reduce the volume of paperwork or for cost considerations. However, the legal basis for such disclosures should be clear. Under Section 303(e)(2) the SESA is required to disclose information only on claimants determined to be eligible for unemployment compensation. Under Section 303(a)(1), a SESA may, but is not required to, disclose any UI information to a public official in the performance of such official's public duties. Section 303(a)(1) thus authorizes the disclosure to IV-D agencies of any UI information beyond that information that is required to be disclosed by Section 303(e)(2) or 303(e)(1). Every disclosure to a IV-D agency is subject to payment by the receiving IV-D agency of the full costs of the supplying SESA's services in collecting, processing and forwarding the information.
"Eligible" means an individual has sufficient wage credits to establish a claim and is monetarily entitled to unemployment compensation. The IV-D agency may choose merely to ask if a monetary determination is issued, if it is concerned chiefly with the weekly benefit amount. But the IV-D agency may choose also to ask for assurance that there is no non-monetary issue if the cost is such as to make it worthwhile.
Each SESA should try to accommodate its IV-D agency, at least to the extent required by Section 303(e)(1), and (2)and Section 3(a) of the Wagner-Peyser Act. Although the Section 303(e)(2) does not require any specific form of notice, a variety of patterns should be considered.
(a) In some States, notice to the central IV-D agency is adequate for all cases. A daily or weekly listing, or photo or carbon copies of claim forms in a non-mechanized State, should suffice. Costs will dictate the choice.
(b) In many States, the notice must go to the local agency. The same kind of listings (or individual slips, if preferred) might be prepared at less frequent intervals than weekly, depending on the terms of the agreement.
(c) If the supporting parent's agency is outside the State, the SESA should send the notices to its own State IV-D agency, for interstate clearance by that agency. That agency is likely to become involved in the collection of any amount withheld, and may set up some records as well as be in the best position to know just where the notice should go.
(d) The content of each notice is negotiated with the IV-D agency and included in the agreement. We suggest the SESA include claimant name, social security account number and address and the place to which the claimant says support payments are payable. In States which wait until the claimant is found eligible, the WBA and duration would also help the IV-D agency to determine how much deduction should be made.
(2) Benefit assignments. An agreement or benefit assignment may specify an amount to be withheld from every week's benefits and remitted to the appropriate IV-D agency at agreed upon intervals.
(a) The amount may be specified in several ways.
(1) The claimant may specify a deduction to be made by the SESA because he has been accustomed to that while he was working. Many employers make such deductions now based on either "voluntary" wage assignments agreed to by the claimant and the IV-D agency or based on court orders such as garnishments.
Such action presents problems.
i. It may not be a IV-D case in which case the SESA may not withhold and the IV-D agency is not the appropriate recipient of the amount withheld.
ii. The amount specified may be incorrect; the IV-D agency may want more, or might settle for less.
iii. The IV-D agency may be in pursuit of other collection methods such as garnishment, and too large an amount may be deducted or may conflict with action taken.
Accordingly, we urge a clearance system with the IV-D agency for voluntary benefit assignments. A simple method is to refer the claimant to the appropriate child support agency in person or by phone if he makes such an offer. (If it happens in the agent State in an IB case, the local IV-D agency can handle it: or the claimant can make the offer on an IB-11 and let the liable State clear it with its IV-D agency).
(2) The claimant and IV-D agency may jointly agree on an amount (in accordance with 2(A)(iii)Il) and the IV-D agency delivers that agreement to the SESA.
The deduction from UI benefits is only one of a number of "intercepts" available to IV-D agencies, such as deductions from income tax refunds due, either State or Federal. The
IV-D agency is responsible for coordinating its collection efforts to avoid over-collection.
(3) If all else fails, the IV-D agency may take action through "legal process" (as defined in Section 462(e)) to order the SESA to withhold a specified amount. Section 462(e) states in part the term "legal process" means any writ, order, summons or other similar process in the nature of garnishment, which is issued by (A) a court of competent jurisdiction within any State..., (B) a court of competent jurisdiction in any foreign country... or (C) an authorized official pursuant to an order of such a court...or pursuant to State or local law.
(b) The method of remitting amounts withheld to the IV-D agency will depend on SESA automation capacity. SESAs may store the needed data in the computer and issue one check to the IV-D agency, along with a list of the persons and amounts represented. A SESA with more limited automation may arrange for a separate check for each claimant. The IV-D agency should find either to be acceptable.
(c) Where to remit will vary, and is negotiable. Payment must go to a State or local child support enforcement agency. Many States can handle the payment through the central IV-D agency. In other States, payments will be made to the proper IV-D agencies. Child Support obligations which are being enforced by a State IV-D agency other than the IV-D agency of the liable State will be processed through the system for interstate co-operation between IV-D agencies by the liable State.
(d) Unless the accumulated sums become large, in a very big State, monthly payments seem reasonable, but this also must be negotiated with the IV-D agency. However, if payment data cannot be stored in the computer, much more frequent payments are advised.
SESA NOTICES TO CLAIMANTS
(4) State Employment Security Agencies must give each claimant an initial, written notice which explains the beginning date and amount of deduction from his/her weekly benefit amount in satisfaction of child support obligations to a child support enforcement agency. This notice may be issued at the time of or with the first benefit check from which a deduction is made. The notice must explain the authority for the deductions (State law, Court order, or administrative order by a IV-D agency) and include the claimant's right to appeal the SESA's action in deducting amounts for child support through the UI appeal process.
However, this appeal is limited to the validity of the agency's authority to make deductions and/or accuracy of the amount deducted. Claimants should be advised to seek remedy through the court or IV-D agency enforcing the child support obligation when the claimants question the "reasonableness" or "fairness" of the amount deducted in terms of their ability to pay.
Issuing notices and processing appeals are administrative costs in connection with child support intercept which require reimbursement by the State IV-D agency. The notice is not a nonmonetary determination nor is the appeal chargeable as appeals workload.
(5) SESA operating costs. It should be possible for the SESA to arrive at a reasonably accurate estimate of what each element of services will cost, to help the IV-D agency decide what services it can afford. Cost Model techniques should be applied, both to set the figure for negotiations and to assure the IV-D agency that costs are truly represented. Cost will include all expenses involved in collecting, finding, processing, and forwarding information and money withheld such as labor, machine rental and any increase in costs of supplies (forms, envelopes, etc.) attributable to these services. Prorated charges for some overhead items should be based on the overhead rate used for ETA State grants.
Costs should be reexamined periodically, both as to wage rates and amount of time needed for the services. SESAs must establish separate accountability to capture all costs related to child support intercept. Costs for child support intercept must not be charged to the State grants for administration. IV-D agencies shall pay SESAs for all child support intercept costs.
To make cost effective decisions, IV-D agencies will need estimates from SESAs regarding the costs of providing notices regarding new claims as well as cost estimates for providing notices continuing various levels of information. Therefore, SESA should be prepared to advise the IV-D agencies of the cost of giving notices which contain various levels of information. Note well that SESAs must provide notices about eligible claimants who indicate child support obligations to the IV-D agencies as required by Section 2335. However, SSAs have flexibility in making agreements with IV-D agencies to provide notices containing information beyond what is required by Section 2335.
A. Startup Costs. System design and programming costs will be needed before delivery of any services; some materials (a special form, or the added cost of an extra copy of an existing form, or envelopes, for example) will also be needed. The attached sample agreement provides for advance payment.
If computer preparation extends over a long period, periodic advances as work proceeds should be considered.
Many manual systems may have smaller initial costs than automated ones (and may therefore be preferred, at least at the start).
5. Postage. Procedures for covering postage costs are being developed and further instructions will be issued.
6. Agreements. A written agreement should be prepared. It should cover the information and services you are to supply, the prices, billing and payment arrangements, handling of errors, adjustment of prices and termination. A sample agreement (Attachment 2) is attached, designed to permit flexibility in making minor changes in how things are done, but clearly setting out the basic services and rates. Details of the flexible areas are covered in the attached "Specification." (Attachment c). It is not a required format. It is intended merely to suggest areas to be considered, and a possible way to handle them.
Billing is a matter left to SESA's needs and capabilities. While advances may be provided, on the grounds that Title III funds will not be made available, if SESAs are able to devise a way to meet expenses pending reimbursement they may simplify some accounting actions by changes in the suggested language. However, a centralized billing and reimbursement arrangement (as contrasted with separate billing to each local child support agency) is recommended. The agreement must assure that the SESA recovers from the child support enforcement agency all direct and indirect costs of this activity.
7. Reporting. ETA does not plan on any reporting requirements.HHS will obtain needed reports from the IV-D agencies. However, SESA separate accounting and billing records for child support intercept should support any needed audit by State or Federal agencies as well as administrative cost charges.
8. Required Compliance. As was pointed out in UIPL No. 1-82, P.L. 97-35 made this a requirement for certification of State laws starting October 1, 1982. Clearly, State laws must provide for such withholding by that date. However, until administrative funds for compliance are provided by a child support agency, a SESA cannot be expected to take action.
The requirement in the Federal law has been effective since August 13, 1981, so any action covered by this UIPL may be started at any time it is permitted by the State law and arrangements have been made for reimbursement of SESA costs.
States are urged to move promptly with any needed change in the State law and the negotiations with the State IV-D agency.
9. Actions Required. SESAs are requested to take the necessary actions to implement the requirements of P.L. 97-35 as follows:
1. Develop startup and ongoing costs for notification and intercept activities.
2. Meet with State IV-D agencies to work out agreements for child support intercept as soon as possible.
3. Forward copies of the agreements with the IV-D agencies to regional offices by July 1, 1982.
4. Advise regional offices of the status of negotiations and where SESA and IV-D agencies are unable to come to agreement by July 1, 1982.
10. Inquiries. Questions regarding this letter should be directed to the appropriate regional office.
11. Attachments. (1) Questions and Answers; (2) model agreement and specifications; (3) list of State IV-D agencies (4) Action Transmittal to State IV-D agencies from the Department of Health and Human Services.
Attachment No. 1 to UIPL No.15-82
Child Support Intercept Questions and Answers
1. Can the central State child support enforcement agency negotiate with us on behalf of all local and interstate child support agencies?
2. Can we arrange with that central agency for reimbursement of our administrative costs?
3. Who should take the first step, SESA or IV-D agency? We urge no delay. If you have not yet begun negotiations, you should initiate them now.
4. How should we word the question on our initial claim form?
Settle that jointly with your IV-D agency (but your IB-1 must use the wording approved by the IB Committee). As a starting point here are samples of language to consider:
a. Are you required to make or do you owe child support payments?
( ) Yes ( ) No.
If "YES", where?
_______________________ ______________________ __________
City County State
b. Are you required to pay child support to a State or local child support enforcement agency? Yes ( ) No ( )
__________________ If yes, where is it?_____________.
5. May we agree not to ask the questions?
Only if your IV-D agency will not pay for the use. If that agency concludes there is a more cost effective way to find the relevant claimants (e.g., by computer cross checks), it may refuse to pay for use of the questions.
6. Should SESAs impose penalties for willful misrepresentation if a claimant falsely answers "No," to the question about his/her child support obligation?
That depends on the wording of State law. It may not be a false statement to obtain benefits, since the amount to be withheld is considered benefits paid to the claimant and paid by him to the child support agency.
7. If a claimant answers "Yes", have we an obligation to do anything more than notify the IV-D agency?
Yes. The SESA must determine the claimants' eligibility for UI. The SESA must report to the State or local child support enforcement agency any claimant who answer the question "Yes" and notify the agency of the claimants' eligibility for UI, in every case where the claimant is determined to be eligible. SESAs need do nothing further until the CSEA confirms that the claimant owes such obligations which are enforced by it. If the CSEA submits to the SESA an agreement referred to in 303(e)(2)(iii)(II) or legal process referred to in 303(e)(2)(A)(iii)(III), the SESA will deduct and withhold in accordance with such agreement or legal process instead of the amount (if any) specified by the claimant. SESAs are not to encourage voluntary arrangements or accept oral or written agreements by the claimant; for all such matters refer the claimant to the local CSEA.
8. What kinds of written notices will we have as a basis for withholding?
(a)The amount specified in writing by the claimant as required by 303(e)(2)(A)(iii)I.
SESAs must not make agreements with claimants who volunteer to have amounts deducted from UI benefits for child support obligations because the child support obligation may not be subject to enforcement through a IV-D agency. Claimants who offer to have child support obligation deducted from UI benefits should be referred to the State or local IV-D agency.
(b)An agreement submitted by the child support enforcement agency to the SESA, in accordance with 303(e)(2)(A)(iii)(II).
(c) Legal process as provided in 303(e)(2)(A),(iii)(III).
9. How long does such an agreement or legal process remain effective?
Look to the agreement or legal process for any time limitations; SESAs will be bound by the time limits contained in the agreement or legal process. If no time limit is stated, SESAs shall continue to make deductions and withholdings until notified otherwise as through a new agreement or legal process.
10. Must SESAs issue a written notice of determination to claimant regarding deductions from his/her weekly benefit amount to satisfy child support obligations?
State employment Security Agencies must give each claimant an initial written notice which explains the beginning date and amount of deduction from his/her weekly benefit amount in satisfaction of child support obligations to a child support enforcement agency. This notice may be issued at the time of or with the first benefit check from which a deduction is made. The notice must explain the authority for the deductions (State law, Court order, or administrative order by a IV-D agency) and include the claimant's right to appeal the SESA's action in deducting amounts for child support through the UI appeal process. However, this appeal is limited to the accuracy of the amount deducted and/or the validity of the agreement or legal process. Claimants should be advised to seek remedy through the court or IV-D agency enforcing the child support obligation when the claimants question the "reasonableness" or "fairness" of the amount deducted in terms of their ability to pay.
Issuing notices and processing appeals are administrative costs in connection with child support intercept which require reimbursement by the State IV-D agency. The notice is not a nonmonetary determination nor is the appeal chargeable as appeal workload.
11. Must SESA give the claimant a weekly notice of or receipt for the amount withheld?
It is not a requirement. IV-D agencies will give a receipt on request. A claimant needs it to support income tax deductions.
It would be a useful control on internal agency fraud if you obtain agreement from the IV-D agency that the IV-D agency will issue notices and receipts to claimants and to include this in your agreement with the IV-D agency.
12. For the form 1099 UC, statement for recipients of unemployment compensation payments, do we report the gross amount of benefits for the year, or the net amount after child support withholding?
The gross amount.
13. If we are recouping an overpayment we made, does the withholding order take precedence?
No. It affects only benefits otherwise payable to the claimant. We consider that to mean only amounts which you do not recoup or deduct because of disqualifying income, or reduce for any other reason.
14. In a week for which benefits are reduced because of wages or other provisions of law, how is withholding affected?
SESAs can withhold only as much as the claimant would be paid after any other reduction under State law.
15. How much reimbursement of our expenses will the IV-D agency supply?
The statute requires IV-D agencies to pay all SESA direct and indirect costs, including startup costs in planning and preparation and negotiation of the agreement with the IV-D agency.
16. While estimated startup costs depend on the automation involved, what is the best way to compute and bill later operating costs?
In a highly automated system, little cost will exist except for data processing services. In largely manual systems, a cost model study should yield workable guidelines. Either should be reducible to a charge per transaction, and billing simply involves counting the actions taken and multiplying by the unit rate. A pattern is suggested in the attached model agreement.
17.If a SESA paid a claimant for a week and deducted an amount for child support but later established an overpayment for the week, is the claimant required to repay the entire amount or can we recover from the IV-D agency the amount we paid it?
The statute provides that the amount withheld is treated as if it had been paid to the claimant and been paid by the claimant to the child support agency. Therefore the claimant will have to repay the SESA the entire amount; the claimant may have recourse against the IV-D agency.
Attachment No. 2 to UIPL No.15-82
CHILD SUPPORT INTERCEPT AGREEMENT
The ________________________State Employment Security Agency, hereinafter referred to as the SESA, and the _______________
Child Support Enforcement Agency, hereinafter referred to as
the IV-D agency, in order to carry out the provisions of Section
of the unemployment compensation law (the "State law") (and Section 303(e)(2) of the Social Security Act), hereby agree as follows:
I. SESA actions
The SESA will (a) ask in writing each individual filing a new claim for unemployment compensation if the claimant owes a child support obligation, (b) notify the IV-D agency in writing of any such claimant who discloses such an obligation and is determined by the SESA to be eligible for unemployment compensation, (c) upon receipt of written confirmation from the IV-D agency that the claimant owes such obligation which is being enforced by such IV-D agency, deduct and withhold from each week of unemployment compensation otherwise payable to such claimant the amount (not exceeding the amount otherwise payable to the claimant for such week) specified by the individual to be deducted and withheld; or, if no such amount is specified by the claimant or the amount so specified differs from the amount (if any) determined pursuant to an agreement submitted to the SESA by the IV-D agency under Section 454(20)(B)(i) of the Social Security Act or the amount otherwise required to be deducted and withheld from such unemployment compensation through legal process, (as defined in State law and in Section 462(e) of the Social Security Act), (d) remit any amount so deducted and withheld to the State IV-D agency, and (e) notify the claimant of such deduction and remittance. The SESA will perform these services in accordance with procedural details set out in the attached SPECIFICATIONS, which are subject to revision by informal agreement from time to time as experience or changed legislation or capabilities demonstrate the need for modifications.
"Unemployment compensation" is any unemployment benefits payable under State law including any federal unemployment benefits and allowances being administered by the SESA under an agreement
with the U.S. Department of Labor including Extended Benefits, Unemployment Compensation for Federal Employee (UCFE),
Unemployment Compensation for Ex-Servicemen (UCX), Trade Readjustment Allowances (TRA), Disaster Unemployment Assistance (DUA), and payments under the Redwoods National Park Expansion Act.
II. State IV-D agency actions.
The State IV-D agency will (1) make agreements with individuals whose child support obligations are being enforced by the IV-D agency in accordance with Section 454(20)(B)(i) of the Social Security Act, and provide copies or information there from to the SESA, (2) accept all amounts deducted and withheld by the SESA and forwarded to the IV-D agency pursuant to such agreements or legal process, and (3) promptly pay each billing for the SESA's cost as determined by the SESA pursuant to Article VI of this Agreement.
III. Joint actions.
Both parties will assure that adequate bonds cover all employees who perform services under this Agreement, and that they will maintain such records as the State Department of Audits and the U.S. Department of Health and Human Services may require or as they may jointly agree to informally.
IV. Correction of errors.
If the SESA determines that it deducted and withheld from the unemployment compensation payable to an individual a greater amount than it should have deducted or withheld as a result of an error by either the SESA or the IV-D agency, (1) it will promptly pay the correct amount to the individual, (2) notify the State IV-D agency of the error and request return of the excess amount.*
*As an option, a IV-D agency may prefer to have the SESA reduce its next remittance accordingly.
The IV-D agency will promptly return the excess amount to the SESA, and will take action to correct any distribution it may have made of such amount.
If the SESA determines that a lesser amount of unemployment compensation was deducted and withheld from the unemployment compensation payable to an individual as a result of an error by either the SESA or the IV-D agency, the IV-D agency will decide if it wants to recoup the amount by a new or amended agreement or legal process.
V. Other services.
The SESA will perform other services at the request of the IV-D agency, including but not limited to, searching its records, matching lists of IV-D clients against claimant records or wage records, at reasonable times, as separately but informally agreed upon, provided that the SESA is promptly and fully reimbursed or paid in advance by the IV-D agency for the direct and indirect costs of providing such services as determined by the SESA.
VI. Administrative costs.
The IV-D agency will reimburse the SESA for all of the SESAs direct and indirect costs incurred in carrying out Article I to V of this Agreement, the SESAs' obligations under State law and
Section 303(e)(2) of the Social Security Act, as follows:
A. Initial costs to design and implement systems to achieve the above actions (including computer preparation, added costs for forms and training and the SESAs' costs in negotiating this Agreement in the amount of $_________ which shall be payable in the Fiscal Year in which such initial costs are incurred).
B. Costs to give notice to the IV-D agency of claimants who acknowledge child support obligations, in the amount of $_________ per such individual, payable quarterly in advance, based on estimated workloads, and adjusted in subsequent quarters for actual loads.
C. Costs to deduct and withhold unemployment compensation and remit to the IV-D agency in the amount of $_________ per payment thus withheld, payable quarterly in advance, based on estimated workloads, and adjusted in subsequent quarters for actual loads.
D. Costs of administering and processing an appeal or request for reconsideration respecting any issue arising from child support intercept operations.
If, because of changed wage or other cost levels, operating experience, changed procedures or other elements, and the reimbursement herein agreed upon becomes substantially changed, the costs payable by the IV-D agency will be revised as a condition to continuance of this Agreement.
VII. Suspension of services.
In the event of an emergency, the SESA may suspend services hereunder, with notice to the State IV-D agency, but will resume services at the earliest possible time.
Each of the two agencies and its employees will exercise due care in the performance of the functions and in the custody of the funds deducted and withheld from claimants and remitted to the IV-D agency. They will establish accounting controls to assure delivery of the correct amounts to the proper recipients.
Either the SESA or the IV-D agency may terminate this Agreement upon 30 days written notice to the other party and the SESA may terminate this Agreement without notice upon the failure of the IV-D agency to pay any billing within 30 days of the date of billing.
Pursuant to Article I of the Agreement Between
State Employment Security Agency, and
State Child Support Enforcement Agency
1.The State Employment Security Agency (SESA) will include on its initial unemployment compensation claim form a question worded as follows:
(Suggested text, subject to modification agreed upon between SESA and the Child Support Enforcement Agency (IV-D agency))
Are you required to pay child support to a court or other enforcement agency?_______________________________________
If YES, where? (City, State)
2.As to each claimant who answers "Yes", and who is determined by the SESA to be eligible for unemployment compensation, the SESA will notify the IV-D agency.
a.(Daily) (Weekly) of the names, addresses, Social Security Account Numbers of such claimants.
b.By sending to the State IV-D central office (a listing of the information for the period, in __________________________ sequence) (a photo copy of the relevant claim forms) (a separate slip notice for each individual).
3. Withholding agreements offered by benefit claimants to
If an individual offers, at the local SESA claim office, to agree to withholding an amount from benefits payable for child support, the SESA will require him to contact and enter into an agreement with the nearest IV-D agency office about the amount to be withheld. This is intended to assure that coordination of all enforcement efforts for an accurate determination of the amount to be withheld.
4. Withholding agreements made with IV-D agencies.
The State IV-D agency will assure that a uniform agreement form is used by local IV-D agencies or branch offices, to simplify SESA actions.
Agreements will be delivered (daily) (weekly) to the SESA (central office, addressed to (_______________________) (local claim office where the claimant is filing unemployment compensation claims), addressed to (________________) as specified by the SESA.
Each withholding agreement will provide a uniform amount in whole dollars to be withheld every week for a given claimant, and will assure furnishing the claimant a receipt for the amounts received by the IV-D agency within ___________ days after receipt by that agency. Agreements will make it clear that the amount to be withheld will not be affected by changes in the amount the individual has payable in any
given week, except as an amended agreement is made and unless the amount to be withheld exceeds the benefit amount payable. (It should be kept in mind that in some States the IV-D agency may not make such agreements at all, for example, if it has the power to make administrative orders. In any such cases, appropriate substitute provision would be made in this section).
5. Interstate cases.
a. If an individual claiming benefits against another State (where the SESA is the agent State), acknowledges a child support obligation, notice under item 2 will be given to
the IV-D agency in the liable State for communication as needed to the IV-D agency in another State. If such a
claimant asks to make an agreement for withholding benefits, item 3 will be applied. If he insists on dealing with the SESA, his offer will be recorded on a signed IB-11 and attached to material being sent to the Liable State SESA.
b. For an initial interstate claimant where the SESA is the liable State, if the claim form shows a IV-D agency in this State, item 2 will be applied. If an IB-11 agreement is received, the SESA will give it to the State IV-D agency in the liable State and await its instruction as to the actions to be taken. If so instructed, the SESA will withhold benefits in accordance with the offer of the claimant.
c. For a claimant where the SESA is the liable State, if the claim form shows a IV-D agency in another State, the SESA will follow the course set out in paragraph b, above.
6. SESA procedures to withhold benefits.
(Here the procedures might be summarized, so both parties know the actions to be expected. For example, it may
specify that a separate payment will be made for each check withheld, or that all amounts withheld for all claimants during a specified period will be accumulated and transmitted with a listing of the relevant claimants. It might also be clear that no amount will be withheld and given to the IV-D agency if no payment for a given period will be made to a given claimant.
Timing of remittances and the address (or addresses, if relevant) to which they go, and accompanying identification and receipts might be summarized).
(Whatever agreement is reached with the IV-D agency regarding receipts to claimants may be set out here. A claimant will need evidence of the payment of child support for income tax purposes, and a SESA may find such receipts useful to prevent internal agency fraud. However, the IV-D agency may object to the costs. If SESAs are to supply receipts, of course, the cost will need to be paid by the IV-D agency under its agreement. If costs by either agency were equal, a IV-D receipt is believed to be preferable).
9. Starting date.
Services covered by the agreement will begin as follows:
Initial design actions will begin within 30 days after the first advance of initial costs under Article VI A. Design actions will be completed by _______________ if possible. The agreed upon questions will be included
in claim forms ordered about (or has already been done). Pending receipt (if relevant), present claim forms will be (overprinted) (supplemented by an added form). Withholding orders should be postponed until about ___________ as a target date.