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September 1999 - Vol. 1, No 6

• Income of Nation's Poorest Families Declined Since Welfare Reform
• Income More Heavily Concentrated Among Wealthiest 1% Than at Any Time Since 1977
• Child Support Caseload Characteristics Reported
• Updates on Legislation
• Guidebooks on Child Support and Fathers Available
• State Child Support News

Income of Nation's Poorest Families Declined Since Welfare Reform

A study released on August 22, 1999, by the Center on Budget and Policy Priorities (CBPP) reports that the income of the poorest 20% of female-headed families with children, representing 6 million people, fell by an average of $580 per family between 1995 and 1997. Approximately 80% of this income loss can be attributed to declines in means-tested assistance. In contrast, for the two-year period prior to welfare reform, from 1993 to 1995, incomes for this same group increased by 13.7%, due to increases in both earnings and means-tested assistance. The report also found that for the second poorest 20% of single-mother families, earnings increased from 1995 to 1997, but overall disposable income remained almost constant due to a sharp decline in means-tested benefits, suggesting that these families were working harder but were no better off for it. The study also cites evidence that a significant number of families who are leaving TANF but are still eligible for Food Stamps and/or Medicaid are not participating in these programs, in some cases because they are not aware or informed of their continued eligibility for these benefits. The authors conclude that it is premature to pronounce welfare reform a success since not all groups are faring equally since welfare reform. Also pointed out is the fact that lifetime time limits for welfare recipients have not yet been implemented, and that a true estimate of the impact of the reforms cannot be measured unless future economic downturns are taken into account.

The complete report can be obtained by contacting CBPP at 202/408-1080 or by visiting their website at http://www.cbpp.org/

Income More Heavily Concentrated Among Wealthiest 1% Than at Any Time Since 1977

Further evidence of the increasing gap in wealth in the United States comes from an analysis, also by the Center on Budget and Policy Priorities, The Widening Income Gulf, released September 4, 1999. CBPP analyzed data from the Congressional Budget Office (CBO) which are regarded as the best data available on income and tax trends. The data reveal that:

• From 1977 to 1999, projected household income has changed in the following directions, by percentiles: the lowest fifth of households have experienced a drop of 9%, the second fifth have increased by 1%, the middle fifth have increased 8%, the fourth fifth have increased 14%, the top fifth have increased 43% and the top 1% have increased 115%.
• Income disparities have widened to the point that the 2.7 million Americans with the largest incomes are expected to receive as much after-tax income as the 100 million Americans with the lowest incomes, representing greater disparities in income than at any time in at least the previous quarter century.
• Census data on before-tax income, available through 1997, and Congress' Joint Committee on Taxation have found similar trends using different methodologies, confirming the trends found in this analysis.
• A separate analysis of "wealth" disparities discussed in the report found that the bottom 80% of households owned only 16% of the nation's wealth, while the top 20% owned 84%, and the wealthiest 1% owned 39%, representing a greater concentration of wealth than at any time since the Great Depression.

The complete report can be obtained by contacting CBPP at 202/408-1080 or by visiting their website at http://www.cbpp.org/

Child Support Caseload Characteristics Reported

The following information has been compiled from reports by The Department of Health and Human Services (HHS) and the Center on Law and Social Policy (CLASP).

Of the total Child Support Enforcement cases in 1998 (19.7 million cases), 56% are non-welfare and 29% are current welfare cases. An additional 15% are welfare cases for which collections are for arrearages only. Arrearage-only cases have increased from 1.8 million cases in 1988 to 3 million cases in 1998. In 1997, collections from arrearage-only cases made up 22% of the collections from TANF cases overall.

From 1994-1996, the government retained approximately 80% of all collections from welfare cases, while approximately 18% was paid to families. In 1997 and 1998, the government retained more than 87% of collections, and less than 11% was paid to families (CLASP estimates, which include unreported state pass-through amounts).

In 1997, for every $1.00 spent nationally to administer the program of child support enforcement, almost $4.00 was collected in child support payments. However, for every $1.00 spent nationally on AFDC/TANF cases, only $0.83 was collected, leaving a deficit of $0.17 for every dollar spent to collect child support for a TANF case.

Updates on Legislation

Building Opportunities Bonus Act would strengthen TANF performance bonuses. The Building Opportunities Bonus Act (H.R. 699), was introduced in the House on February 10, 1999 by Representative Lynn Woolsey (D-CA) and in the Senate on May 18, 1999 by Senators Patty Murray (D-WA), Paul Wellstone (D-MN) and Chuck Schumer (D-NY) as part of the Battered Women's Economic Security and Safety Act (S. 1069). The bill would adjust the current system for rewarding state TANF performance by adding three additional criteria: adequate access to affordable and quality child care; job training, including nontraditional employment, to encourage placements in jobs with sustainable wages; and adequate safeguards against domestic violence in the lives of welfare recipients. Bonuses in the current law reward states based on their ability to move welfare recipients into jobs and based on their reduction of out-of-wedlock births for all women without increasing the rate of abortion. The bill authorizes $1 billion over five years to be awarded to the ten highest performing states, and would require HHS and other designated groups to develop a formula for measuring State performance. The full text of the legislation is available at http:\\thomas.loc.gov. For more information or to voice your support for the bill, contact Yolanda Wu, NOW Legal Defense Fund, 212/343-4324.

Hold Harmless provision passes House. The Foster Care Independence Act of 1999 (H.R. 1802), which contains a section that would narrow the "hold harmless" provision, recently passed the House of Representatives. The hold harmless provision guarantees states a minimum of funding equal to the amount of child support collected and retained in 1995, if the current level of retained child support falls below that amount. It was intended to ensure that this source of child support funding would not be affected by declining welfare caseloads. At a recent National Child Support Enforcement Association conference, House Ways and Means Subcommittee on Human Resources Chief of Staff Ron Haskins stated that it is his sense that the measure has strong support and could pass, affecting 21 states and reducing their federal funding for child support by approximately $190 million over 5 years.

Guidebooks on Child Support and Fathers Available

The Center for Law and Social Policy (CLASP) has recently issued an extensive monograph that describes most of the Action Transmittals and proposed/final regulations which have been issued through June 30, 1999 and are relevant to the child support sections of recent welfare and child support legislation. The monograph, Guidance from the Federal Government on Implementation of the Child Support Related Provisions of the Personal Responsibilities and Work Opportunity Reconciliation Act of 1996 as Amended by The Balanced Budget Act of 1997 and The Child Support Performance and Incentive Act of 1998, by Paula Roberts, can be obtained on-line at http://www.clasp.org/, or by contacting CLASP at 202/328-5140.

The National Conference of State Legislatures (NCSL) is accepting orders for its publication Broke But Not Deadbeat: Reconnecting Low-Income Fathers and Children. The book provides a review of the barriers to paying child support and remaining involved with their children encountered by low-income fathers. Also described are models and approaches some states and localities are following to provide services to this group. To reserve a copy, contact NCSL at 303/894-3191 or via fax at 303/863-8003.

State Child Support News

More than 700 arrest warrants for nonpayment of child support served in Los Angeles County law enforcement sweep. Illustrating the potential ramifications of the movement in some jurisdictions from civil to criminal contempt proceedings for nonpayment of child support, Los Angeles County Sheriff's Department and District Attorney's Offices served 728 arrest warrants during "Operation T.R.A.P." (Total Resources Against Absent Parents) in early August. The District Attorney's Office in Los Angeles files approximately 600 criminal charges for failure to pay child support each month. The number has risen dramatically in the past two years as the ability to process these types of cases has increased. According to Sheriff Lee Baca, "In past years, delinquent parents were handled primarily in the civil justice system. Now, the Sheriff's Departments and the District attorney intend to send a strong message to delinquent parents. Meet your obligations or go to jail!"

Illinois' Governor Ryan vetoes child support pass-through bill. On August 13, citing budgetary reasons, Governor Ryan of Illinois vetoed legislation that would have created the "Child Support Pays Program". The program would have required that working TANF families receive two-thirds of child support (or, at a minimum, the current $50 pass through) collected on their behalf without having their TANF grant reduced. The bill's sponsors plan to override the veto, and expect to have the necessary three-fifths vote in the House. The original vote in the Senate, however, was two votes short of the three-fifths majority.

Indiana social services agency fails to distribute $9 million in child support payments. The Associated Press reported on August 26, 1999, that the State of Indiana Family and Social Services Administration's Division of Family and Children is 'sitting on' $9 million in child support payments that are not going to families because of processing problems, including programming errors and wrong addresses.

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