Statement of Olivia Golden
Assistant Secretary for Children and Families
Department of Health and Human Services
before the
House Ways and Means Committee
Subcommittee on Human Resources
U.S. House of Representatives
May 18, 2000

 

Madam Chairman and distinguished Members of the Subcommittee, thank you for giving me the opportunity to testify on important changes to the child support enforcement program being considered by the Subcommittee. Enhancements to this Nation's child support enforcement efforts were one of the cornerstones of the President's budget request this year and we are very pleased that a number of those measures are included in the two bills proposed by Chairman Johnson and Representative Cardin, in addition to being the topic of today's hearing. A common thread in all of our proposals is ensuring that families receive more of the child support collected on their behalf and given our successful track record in working together, I am confident that we can make this happen.

In September I testified before this Committee on the progress we have made in child support collections and paternity establishment. A new record announced since then confirms this progress. In FY 1999, a record of nearly $16 billion in child support was collected or double the amount collected in 1992. In addition, as I reported in September but I believe worth repeating, the number of paternities established or acknowledged has reached a record 1.5 million, almost tripling the 1992 figure of 512,000. Of these, over 614,000 paternities were established through in-hospital acknowledgement programs.

Through enactment of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), President Clinton and Congress provided the necessary tools to the Child Support Enforcement program to secure for many of our nation’s children the emotional and financial support that they need and deserve. Tools such as the expanded Federal Parent Locator Services (including the National Directory of New Hires and Federal Case Registry), the passport denial program, financial institution data match program, and license revocation programs have made a tremendous difference in improving our ability to collect child support. State Disbursement Units (SDUs) and central state registries of child support orders have paved the way for state child support agencies to operate more efficiently and for families to receive the support collected on their behalf more quickly.

We are excited about these dramatic achievements, and are convinced that the Child Support Enforcement program is on the right path. The next step is to ensure that working families truly benefit from the progress we have made. Today as requested by the Committee, I will focus my testimony on child support distribution and broadened access to organizations that can participate in the child support program. I would also like to take this opportunity to highlight other important provisions in Chairman Johnson's bill and Representative Cardin's bill. In addition, as the Administration continues to review other provisions of the bills, we may have further comments.

Simplified Distribution

I would like to focus first on the rules governing distribution of child support. As I mentioned at the outset, we are in agreement that child support distribution rules need to be changed to provide more child support to families who have left welfare. These families should be the first recipients of child support paid by non-custodial parents, rather than the government. Research shows that the receipt of child support can play an important role in ensuring that families who leave welfare do not end up back on the welfare rolls. It also creates a clearer connection between what the non-custodial parent pays and what the child receives.

The importance of child support to families leaving TANF is underscored by a recent study that found that women who did not receive child support had a 31 percent chance of returning to welfare after only six months off the rolls. In contrast, women who received as little as one dollar to one hundred dollars a month in support had only a 9 percent chance of returning to welfare.

The President and Congress took an important step in the passage of PRWORA in 1996 which provided for "Family First" distribution. This meant that families that left welfare would be first in priority for receipt of payment on past-due support. It was a huge step in the right direction. However, due to complexities caused by related assignment provisions and an exception for the tax refund intercept collections, the changes introduced an added measure of administrative complexity and did not go far enough in directing support to working families. Decisions on distributing collections to the Federal or state governments or the family now vary by the method of enforcement and the period of the child support assignment. This makes it burdensome for states to administer and difficult for families to understand.

Thus, in addition to making working families better off, simplifying distribution rules would make the program easier to administer for state child support agencies, allowing them to devote more attention to collecting support, rather than using resources to administer a complex set of rules that custodial and non-custodial parents do not understand.

So what does this mean in the real world of families struggling to meet their children’s basic needs? It can mean the difference in the housing and food and other necessities available to a growing child and it can make a critical difference in a child's well being. According to a recent Urban Institute study, for the average poor child with a nonresident parent, and whose family received child support, the child support received amounted to over one-quarter (26 percent) of their family income. Findings from the report indicate that receipt of child support reduces low-income families' dependence on welfare, reduces the poverty gap for poor children and reduces the income disparity between rich and poor children.

There is clearly a compelling case for directing more support to working families. The Administration's proposal for this is very simple: when a family is on welfare, the state retains the child support collections (not including any amount that the state passes through); when the family leaves welfare, the state has the option of distributing all child support collections to the family. The President's proposal would be a state option, maximizing state flexibility and, for a state that takes the option, it would be a Federal-state partnership in which both the Federal government and the state share the cost of the policy. We believe the Administration's bill strikes the right balance supporting state efforts that get more child support to families, and distributing the cost fairly between States and the Federal government.

We are very pleased that both Chairman Johnson and Representative Cardin have provided leadership in supporting simplified distribution. Both bills include distribution provisions which, like the Administration's proposal, increase the amount of child support going to families.

We commend Chairman Johnson, Representative Cardin, and Subcommittee staff for their work on this important issue for children and families and we look forward to continuing to work with this Committee on remaining differences.

Passthrough

The Administration is convinced that a second strategy is also important if we are to get more child support into the hands of children and support families as they move from welfare assistance to self-sufficiency. This second strategy is passthrough and disregard of child support to families receiving assistance - who may well, like one quarter of all welfare families, be working at the same time. The face of welfare is changing and more families receiving assistance are working and the assistance they receive is more temporary in nature. An ongoing and continued link between child support and family income is crucial in stabilizing their lives and preparing for self-sufficiency. In my travels around the country, I am hearing from more and more families on the importance of child support in ensuring their children's future success. For example, when I participated in a recent focus group in Michigan on child care, a number of mothers also wanted to share their experiences with child support enforcement and their thoughts on the importance of a strong and effective child support program in stabilizing their lives as they move forward in transitioning from welfare.

Child support passthrough and disregard policies are important to these families by allowing some portion of support paid on a family's behalf to be passed through to the family and disregarded for purposes of calculating assistance benefits. These payments are also important in creating a clearer connection between the child and the noncustodial parent and act as an incentive for custodial and non-custodial parents in cooperating with the child support enforcement agency. The President's child support package includes a proposal for sharing in the costs of providing passthrough payments for states choosing to begin making these payments or increasing current levels of passthrough payments.

Current welfare rules require that when someone applies for welfare (TANF), they must assign their right to child support payments to the state and cooperate with child support enforcement efforts. This is to help reimburse the government for the cash assistance provided to the family. The Federal government and the states each retain a share of the child support collected. Nineteen states "passthrough" to the welfare recipient some part of the state's share of retained child support (usually $50) and disregard it for purposes of determining the level of the benefit payment. Prior to the 1996 welfare reform law, a $50 passthrough was required and the Federal government shared in the cost with states.

In addition to stabilizing the income of families working to leave welfare, there are other benefits for the passthrough of child support to welfare recipients. First, the passthrough and disregard of child support may serve as an incentive for non-custodial parents, particularly low-income non-custodial parents, to pay child support. Organizations that work with low-income fathers report that fathers currently feel they have no incentive to pay child support to a mother on welfare because the money goes to the state and does not benefit the child. Second, the passthrough of child support also provides an incentive for mothers to cooperate actively and fully in child support collection efforts. This is especially critical now that welfare is temporary and parents are moving rapidly into the workforce. Like Medicaid and child care, regular child support can be a key part of moving into stable work for a single-parent family. As one of the studies cited earlier shows, having child support securely in place helps in a successful transition from welfare. Finally, TANF parents who receive support directly in the form of a passthrough are likely to be more familiar with the child support system than parents who do not receive a passthrough. For parents in the latter category, child support enforcement actions are invisible. Familiarity with and confidence in the child support system is critical for parents leaving welfare, who will often be relying heavily on child support to make ends meet and will need to act quickly if, for example, support payments are disrupted in the transition from assistance to work.

The Administration's proposal is to provide Federal matching funds for new state efforts to pass-through and disregard child support to TANF families. The Federal government would share in the cost of amounts above a state's current passthrough and disregard policy, up to the greater of $100 per month or $50 over current state efforts. We believe that sharing in the costs of pass-through and disregard payments will encourage additional states to opt for passthrough policies and encourage states currently providing passthrough payments to increase the amounts they passthrough and disregard.

We are very pleased that Representative Cardin has included a passthrough provision in his bill and look forward to working with the Committee to ensure this provision is included in the legislation you advance.

I would like to turn now to two provisions included in the Chairman's bill that were also included the President's proposal and that we think will make a significant difference to children: review and adjustment of child support orders and expanded use of passport denial for failure to pay support.

Review and Adjustment of Child Support Orders

An additional proposal that would ensure that families obtain more child support is to review and adjust child support orders periodically. Typically, the ability of obligors to pay child support increases over time. So generally, periodically reviewing and adjusting child support awards to reflect the current income of the obligor increases the amount of the support and the economic security of single parent families. It is especially important that TANF families have an updated award when they leave welfare.

We want to maximize the amount of child support available to a family leaving welfare in order to ensure that they have every opportunity to become self-sufficient. Let me offer an example: A mother goes on welfare at the birth of a child born out-of-wedlock. The putative father is found, a paternity action is brought, and he is found to be the father and ordered to pay child support. However, the father is employed only part time so the child support award is only $100 per month. Three years later, the mother leaves welfare. The father now has found a full time job, so that if the award is reviewed and adjusted he would pay $300 per month in support. That additional $200 per month can make a big difference in the financial security of the mother and the child and perhaps enable her to stay off welfare long term when combined with earnings of her own. Indeed, a recent report by the Health and Human Services Office of Inspector General concluded that, "Reviews conducted as parents exit from TANF would likely benefit the government through reduced welfare recidivism and avoidance of the costs associated with receipt of other public benefits."

There are also legitimate reasons to reduce an existing award, for instance, if the obligor has lost his job or suffered a major decline of income. In those cases, periodic review and adjustment means that the award amount is fair and that the child support agency is not wasting its efforts on pursuing a low-income father who does not have the current ability to pay support, and the father avoids building up a large and unmanageable arrearage. Research has shown that regular receipt of current support has a greater impact on reducing recidivism back to welfare than a larger monthly award that is only sporadically paid.

We commend Chairman Johnson for including periodic review and modification in the bill. This is an important provision that will help families and promote the success of welfare reform efforts.

Expanded Use of Passport Denial

The Administration’s child support package also includes initiatives to collect more child support. I urge you to look at the legislative language we sent to Congress earlier this year for the details on each of these provisions but I would like to take this opportunity to mention one in particular that was included in Chairman Johnson's bill, expanded use of passport denial.

PRWORA provided for the denial of passports for delinquent obligors. The passport denial program, run jointly by HHS and the Department of State, currently works to deny passports to delinquent parents owing more than $5,000 in past due support. The Passport Denial Program has collected more than $4 million in lump sum child support payments since its inception and is currently denying 30 to 40 passports to delinquent parents per day. Let me cite some examples: an obligor flew to Florida and paid $24,000 in cash toward a child support arrearage so he could play baseball overseas; an obligor from Missouri paid $36,000 in child support so he could travel to see his mother and to work in Pakistan; and an obligor from Maryland and Virginia paid $16,000 of child support arrears so that he could travel to England for an interview to attend college to obtain a Ph.D. All told, about 14,000 delinquent parents have had passport applications denied until they pay their child support. This year the Administration has proposed reducing the threshold for passport denial from $5,000 to $2,500. This will allow the program to be even more effective while providing a reasonable threshold for administrative efficiency. We are pleased that the Chairman's bill includes this provision and hopeful that it will be part of the bill reported by the Committee

Access to Child Support Information and Tools by Public Non-IV-D Child Support Enforcement Agencies

While we applaud the overall direction of the child support measures being considered by the Subcommittee, we have serious concerns about the recent proposal to provide access to public non-IV-D child support enforcement agencies and especially to private collection agencies. Let me first address our concerns with providing access to public non-IV-D child support enforcement agencies.

Congress has given specific statutory authority for the IV-D program to have access to a wide variety of information sources for purposes of enforcing child support obligations. Congress has also specified, in detail, the privacy requirements that come with this access and prohibited the unauthorized disclosure of child support data. The Office of Child Support Enforcement (OCSE) takes this responsibility very seriously. Because of the sensitive nature of the data needed to process and enforce child support cases, we are committed to ensuring that all uses and disclosures of state and Federal data sources on individuals comply with the highest standards for security and confidentiality.

While extending access to non-IV-D agencies would expand the program’s outreach to families needing service, there are practical issues to be addressed. For example, providing access to information in Federal databases to public agencies that are not part of the IV-D program, whether these outside agencies are clerks of court or other entities, raises serious concerns regarding the safeguarding of the data. Even with the best of intentions, sensitive data could be compromised if state IV-D agencies with the responsibility to protect the confidentiality of data do not have adequate safeguards once the data leaves the IV-D agency. The public non-IV-D agencies are not subject to the full range of IV-D security and other requirements specified by Congress. In addition, there is also a Federal oversight role in protecting confidential information that is not addressed in the proposal. The Federal government needs the authority to regulate access to confidential information in order to ensure the proper safeguarding of this information.

Moreover, all of the services to which public non-IV-D agencies would be given access are available to custodial parents directly from the State IV-D agency. In these cases, delivering the same services through another entity may prove not only inefficient but also costly to the Federal government and to state IV-D agencies. Providing access would require building an interface between each participating public non-IV-D agency and the IV-D certified computer system, resulting in additional reprogramming and other systems staff costs for the IV-D agency, in addition to the cost of monitoring use of the information and enforcement tools by outside agencies.

Given these concerns, we urge caution in providing access to public non-IV-D agencies and we would be happy to work with the Subcommittee to see if our concerns can be addressed.

Access to Child Support Information and Tools by Private Collection Agencies

A related measure being considered by the Subcommittee is to allow access to IV-D child support information and tools by private collection agencies. This proposal raises some very serious concerns, particularly regarding confidentiality of data, and consequently we must oppose it.

Private child support collection agencies are unregulated and as a result there is little ability to oversee their activities or use of information. The potential implications for abusing information are troublesome. For example, without tight control over the use of information, the location of domestic violence victims could be compromised. The current proposal opens up access to "an individual, a person, or any other non-public entity which seeks to establish and enforce an obligation to pay child support" which could give tens of thousands of individuals and private agencies access to sensitive and confidential information.

In addition, this provision would result in further extensive and expensive revisions to IV-D computer systems than would the public non-IV-D agency access, due to the greater number and diversity of private collection entities.

Under the proposal, the private entities could send their cases to the IV-D agency for enforcement activities. The IV-D agency would have no way to verify if the amount sought to be collected is correct and whether there was appropriate due process extended to the non-custodial parent. The IV-D agency would then be required to locate the parent, the Internal Revenue Service would be required to withhold the tax refund, the State Department would deny the passport, etc. And the IV-D program would be required to send the collection to the private agency, which could take its own fee off the top, often 30 percent or even more of each payment. If the services were provided to these families directly by the IV-D agency, the family would receive the full amount collected (except in some former TANF cases as discussed above). While families should theoretically be able to choose between public and private collection agencies, many custodial parents who have not had contact with the TANF program may not be aware of IV-D program services.

Given the privacy and security concerns and policy implications, we cannot support a proposal to give private collection entities access to IV-D information and enforcement tools.

Fatherhood Programs

Finally, I want to recognize the importance of promoting responsible fatherhood in the Administration's and this Subcommittee's efforts to strengthen families. With the President and the Vice-President's leadership, the Administration has worked throughout its tenure to strengthen the role of fathers in families. For example, we have funded eight child support enforcement responsible fatherhood demonstration projects that will help bolster fathers financial and emotional involvement with their children. The Office of Child Support Enforcement has provided over $1.5 million to the National Center for Strategic Nonprofit Planning and Community Leadership (NPCL) to work with grassroots fathers organizations to help unemployed and underemployed fathers become responsible parents. In addition, Secretary Shalala and the Vice President recently announced the approval of ten state waivers for the Partners for Fragile Families, a set of projects to improve the opportunities of young, unmarried fathers to support their children both financially and emotionally.

We commend Chairman Johnson and Representative Cardin for their leadership in focusing attention on responsible fatherhood. The Fathers Count Act of 1999, passed by the House last fall and included in this bill, is an important step in helping more fathers of low income children work and honor their commitments to their children. The President has proposed a "Fathers Work/FamiliesWin" initiative that shares many of the same goals as the legislation proposed by this Subcommittee. The Administration's FY 2001 proposal would provide $255 million for the first year of this new initiative to help low-income non-custodial parents and low-income working families work and support their children. Of this amount, $125 million would provide grants to help approximately 40,000 low-income non-custodial parents (mainly fathers) work, pay child support, and reconnect with their children. One hundred thirty million dollars would provide new grants to help hard-pressed working families - including mothers and fathers in single and two-parent families - get the supports and skills they need to succeed on the job and avoid welfare. This new initiative builds on the approximately $350 million in innovative local responsible parenthood projects funded through the Department of Labor Welfare-to-Work Grant program. These proposals are an important next step in welfare reform, and would build upon the Administration's efforts to help low-income families succeed in the workforce and help even more long-term welfare recipients go to work.

Conclusion

In closing, let me say that it is only through our partnership with the Congress and the states that we have been so successful in strengthening the Child Support Enforcement program. The many new tools provided by the Personal Responsibility and Work Opportunity Reconciliation Act are helping to improve the lives of our nation’s children. We can improve on existing efforts and get more money to families through the addition of some new enforcement tools, simplified distribution, and expanded passthrough and disregard. These measures move the program in the right direction and ultimately, help families remain self-sufficient and we look forward to working with you on this important legislation.

Thank you. I would be pleased to answer any questions you may have.