|
NOTE: Hyperlinks provided in this policy fax briefing were correct as of the time of publication.
September 2000 - Vol. 2, No 7
House Passes Child Support Distribution Act
The Child Support Distribution Act of 2000 (HR 4678) passed the House by a vote of 405-18 yesterday, September 7, 2000. The President has called on the Senate to take action on the bill this year. Updates and analyses will be provided in future fax briefings as the bill is considered and potentially amended by the Senate. For a summary of the bill's current provisions, see the Center on Budget and Policy Priorities website at www.cbpp.org.
Three New Reports Question Impacts of Child Support Policies on Low-Income Fathers Low-Income Parents
Two recent reports from the Office of the Inspector General, The Establishment of Child Support Orders for Low Income Non-custodial Parents, and State Policies Used to Establish Child Support Orders For Low Income Non-custodial Parents, examine the policies and practices used to determine the amount of child support orders for low-income noncustodial parents and the relationship of these practices to the dollars collected from these parents. Among the reports' findings:
- Forty-four states charge noncustodial parents for welfare debt or retroactive support. Welfare debt is the amount of welfare paid to a family for which the state holds the noncustodial parent liable; retroactive support is the amount of the monthly child support order times a variable number of months prior to the order establishment. Retroactive support can go back to the date of birth, paternity establishment or welfare receipt.
The report finds that the greater the amount of retroactive child support/welfare debt charged, the less likely any payments are made. When no retroactive support was charged, 14 percent of noncustodial parents made no payments in the first 32 months of the child support obligation. When 1 - 12 months of retroactive support were charged, 23 percent made no payments, and this rose to 34 percent when more than 12 months of retroactive support was charged.
- Income imputing occurs when there is no available evidence of a noncustodial parent's income or when the parent does not appear in court when the order is set. Typically, income is imputed at minimum wage times 40 hours per week. The practice of imputing income, according to this report, appears to provide a disincentive to the payment of child support. Where income imputation was used to set a child support order, almost 50 percent of the cases made no payments over a 32 month period. For cases that were not based on income imputation, only 11 percent made no payments. In a subsample of three states, 45 percent of the child support orders established in 1996 were based on imputed income.
- Noncustodial parents who were charged front end costs were more likely to fail to make child support payments than were parents who were not charged with such costs. Front-end costs can include retroactive support, birth-related medical costs, service of process, court or attorney fees, and/or the costs for paternity testing.
Copies of both of these reports can be obtained at the home page address of the Office of the Inspector General, http://www.hhs.gov/oig/oei.
In a separate report from the Abell Foundation, Improving Child Well-Being By Focusing on Low-Income Noncustodial Parents in Maryland, the impact of child support guidelines and policies in Maryland are criticized for having a detrimental effect on low-income fathers and their families. Key findings of the report include:
- Maryland has the fourth-highest child support guidelines for low-income families in the country; a parent with two children who earns $10,000 per year must pay about $2,900 in child support.
- The state's policy of retaining child support paid on behalf of families on welfare in order to reimburse its welfare costs provides further disincentive for fathers to pay.
- Due in part to these policies, many noncustodial parents face high arrearages. Of fathers who owe child support in Baltimore, 84 percent have accumulated a child support arrearage. The average arrearage amount is about $9,100.
The final report will be available from the Center on Budget and Policy Priorities, www.cbpp.org.
Wisconsin W-2 Contractors' Use of State Funds Questioned
Two recent reports have investigated the practices of private agencies that provide W-2 services in Milwaukee County. PRWORA gave states the option to delegate the responsibility and funds for welfare service provision away from the county to private agencies. Milwaukee County, with 85% of the state's welfare recipients, contracted out its W-2 programs to five private agencies.
A report by the Wisconsin chapter of the American Federation of State, County, and Municipal Employees (AFSCME) Legislative Council, in June 2000 analyzed data from the first contracted cycle and concluded that private agencies earned a total of $27 million in unregulated profits from September 1997 through December 1999 with the following implications and results:
- The incentive for profits inherent in the contracts has led to increased pressure to push clients into short-term jobs or even to decline services before determining what is in the best interest of the client.
- The $27 million profit acquired by these agencies is tax-payer funded money that could have been reinvested to serve low-income or TANF recipient families in Milwaukee county, as is done in county-run W-2 programs.
- The report cites a decline in referrals for safety net services such as medical assistance, food stamps, and childcare. Because the first point of contact for public assistance is often the W-2 office, clients eligible for these services may not be thoroughly informed of their options for financial support.
AFSCME recommends that Milwaukee County be the fiscal agent of their W-2 program and subcontract out to private agencies, thus entitling the citizens of Milwaukee County to any surplus funds. In addition, they support increased agency accountability for programs and spending of surplus funds, and enhanced case management to direct clients to all financial assistance for which they may be eligible.
The full report may be accessed at www.afscme.org/pol-leg/pppntc.htm.
In a separate investigation, the Wisconsin Legislative Audit Bureau published their audit of Maximus, a large corporation contracted by the state to provide W-2 services in Milwaukee County, on July 28, 2000. The report suggests that the Department of Workforce Development increase its role in program guidance and financial oversight in the future to insure that public funds are used solely for W-2 program purposes. Among their findings:
- $51,304 was charged to W-2 but used for programs, proposals, and marketing in New York and other states.
- $138,840 were used for unallowable expenditures, including $23,000 to a popular music performer, $15,741 for employee benefits including a meeting at the Interlaken Resort, a holiday party at the Milwaukee Clarion Hotel, and other social events. Also unallowable was a donation made to a political campaign.
- $276,407 of charges are being questioned due to lack of sufficient documentation. These include $195,745 for corporate advertising, a total of $24,000 in restaurant and flower expenses with no documented business purpose including $3789 charged by the former head of Maximus for 90 meals in the Milwaukee area.
- Maximus hired temporary employees from MaxStaff, the temporary staffing agency created by Maximus in 1998. Only 62% of the cost for hiring a temporary employee from MaxStaff went to pay for actual labor, the rest of the money went back to Maximus in the form of commissions which is money that would have been saved had employees been hired directly through their human resources department. The use of MaxStaff was determined to be a conflict of interest in that W-2 money represented 17% of MaxStaff's total revenue in commissions, and that there existed the opportunity to place W-2 clients into staffing positions at MaxStaff. In both instances, Maximus could glean a double profit.
The state auditor's report can be accessed at www.legis.state.wi.us/lab/maximus.pdf.
In addition, yet another private agency, Employment Solutions Inc. of Milwaukee, is currently being investigated for charging $140,000 to the state in W-2 costs for an attempt to secure a WtW contract in Arizona.
Food Stamp Application Process Prevents Many Eligible Families From Receiving Benefits
America's Second Harvest recently published a study examining the food stamp application process to determine why the caseload of food stamp participants has declined by 33% in the last four years while the number of those eligible has remained constant. Food stamp applications from the fifty states and DC were investigated with the following findings:
- The average length of the application was twelve pages with the longest being 36 pages long. Much of this length can be attributed to questions which were irrelevant to determining food stamp eligibility.
- Applications were complex with incomprehensible questions and terms such as "deprivation factor" and "deemor expenses". Forty-nine of the states had applications written at the 9th-12th grade reading level which is often beyond the education attained by most applicants.
- The application process can be invasive and intimidating. Some states require fingerprinting, house checks, or personal references. In addition, many applicants are threatened with fines for perjury when they could in fact be misrepresenting themselves due to misunderstood questions.
- The process of applying at the agency can require numerous days to enroll and eventually recertify, with visits often lasting "several hours" in length (as applications warn), which may be impossible for working families.
The report makes the following recommendations:
- Simplified and accessible application processes including extending food stamp office hours to evenings and weekends, and lengthened periods between required recertification.
- Better-trained and less overworked caseworkers to focus on assistance and outreach to the many who are not applying to the program.
The full report can be found at www.secondharvest.org
California Child Support Amnesty Bill Passes
The California legislature is preparing to provide significant child support relief to low-income fathers and their families. Assembly Bill 1995 passed the Senate and Assembly with 80% of support from both houses and will become law if, as expected, Governor Davis signs the bill. The bill would create a one-time child support amnesty program for child support arrearages that are owed to the state as reimbursement for welfare payments and that, as of January 2000, exceed $5,000. See the May 2000 Policy Fax Briefing for a more detailed summary of the bill. A copy of the bill can be found at: http://www.leginfo.ca.gov
|
