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December 1999 - Vol. 1, No 9

• Welfare-to-Work and SDU Penalty Relief Legislation Passed By Congress
• Bill To Expand Child Support Enforcement Tools To Private Sector Introduced in Senate
• Congress Passes Modified Child Support Hold Harmless Provision
• Child Support Enforcement Contempt Procedures Violate Due Process Rights

Welfare-to-Work and SDU Penalty Relief Legislation Passed By Congress

The Fathers Count Act of 1999 was not acted on in the Senate prior to adjournment, but two provisions contained in the bill that were not related to grants to fatherhood programs were passed as separate bills:

Welfare-to-Work Program Eligibility

While Congress did not reauthorize the Welfare-to-Work program before adjourning, language was added to the appropriations bill, H.R. 3194, that would provide more flexible and expanded criteria for eligibility for Welfare-to-Work. The complicated eligibility criteria prevented many programs from being able to utilize program funds and left many potentially eligible clients from participating. The current program is authorized through September 2002. These changes will be in effect beginning January 1, 2000 for competitive grants and October 1, 2000 for formula grants.

The following groups will now be eligible for Welfare-to-Work program services:

• Custodial parents who have received TANF for at least 30 months (whether or not consecutive)
• Custodial parents who are within 12 months of losing eligibility for TANF
• Custodial parents with income below the poverty line who are not on welfare
• Noncustodial parents who meet all three of the following criteria:
  1. Are unemployed, underemployed, or having difficulty paying child support.
  2. Have a minor child who: is or has a custodial parent who has received TANF for at least 30 months or is within 12 months of losing eligibility for TANF; is eligible for or receiving TANF assistance; has received TANF assistance in the preceding 12 months, or is eligible for or receiving Food Stamps, SSI, medical assistance or child health assistance.
  3. Comply with an oral or written personal responsibility contract with the entity providing Welfare-to-Work services and the State IV-D agency containing a commitment by the noncustodial parent to: cooperate in the establishment of paternity and a child support order; cooperate in the payment of child support; participate in employment or related activities which, for participants under 20 years old, could include education to complete a high school or equivalency degree, and a description of the services to be provided to the noncustodial parent.
• Children, between 18 and 25 years of age, who are aging out of foster care
• Assistance recipients with significant barriers to self-sufficiency, according to criteria established by the local PIC

Vocational training or job training have also been added as allowable Welfare-to-Work activities, with an individual's participation in these activities limited to 6 months.

State Disbursement Unit (SDU) Penalty Relief.

The SDU is a single state unit for the disbursement of collected child support which states are required to establish and operate under the Personal Responsibility and Work Opportunities Reconciliation Act of 1996 (PRWORA). Without SDU penalty relief, the Secretary of HHS would be forced by current legislation to disapprove a child support enforcement state plan (which would in turn result in the disapproval of the state TANF plan) if the state was not in compliance with establishing the SDU. Several states were at risk of these severe penalties. States are now allowed to submit corrective compliance plans and receive reduced penalties.

Bill To Expand Child Support Enforcement Tools To Private Sector Introduced in Senate

Senate Bill 1882, introduced by Senator Hutchison

(R-TX) on November 8, 1999, would provide private attorneys and public non-IV-D agencies access to tools to enforce child support, such as the Federal Parent Locator Service (which can provide information on wages, assets, health insurance as well as employment and location), federal and state income tax intercepts, denial of passports, and reporting to consumer credit bureaus of noncustodial parents who are delinquent in child support payments. The bill has been challenged in several testimonies for its expansion of the use of private information on noncustodial parents to unregulated and unpredictable private entities.

Although the stated intent of the bill is to better serve custodial parents, several concerns have been raised regarding its potential to create greater problems for them. The bill allows private attorneys, including attorneys working on behalf of private child support collection companies, to require that the IV-D agency send any collected child support to the private attorney or collection company, if a contract between an attorney and the custodial parent contains such a provision. This would allow the private company to deduct their share of the payment before forwarding the remaining child support on to the family. Joan Entmacher, Vice President and Director of Family Economic Security for the National Women's Law Center, stated in testimony before the House Ways and Means Subcommittee on Human Resources that this provision would give largely unregulated private collection companies that charge a standard rate of 25 to 40% of collected child support as fees, direct access to child support payments. "We are concerned that such proposals would divert much of the child support intended for, and desperately needed by children into the hands of for-profit collection agencies, even when that child support actually had been collected by the IV-D program." Feeding concern over this bill are the unscrupulous practices of some existing private collection companies. According to Ms. Entmacher, private collection companies often include current support payments as past-due child support by redefining "past-due" in contracts that are often difficult for the custodial parent to negotiate,leaving the custodial parent paying more for the collection of the past-due support than it was initially worth.

Congress Passes Modified Child Support Hold Harmless Provision

The hold harmless provision of Title IV of the Social Security Act was a federal guarantee to states of the right to retain as the state's share of child support collections, an amount equal to the amount of child support collected and retained in 1995. The provision applied when a state's current level of retained child support fell below the amount retained in 1995. It was intended to ensure that this source of child support funding would not be affected by declining welfare caseloads. Only states that have dramatically reduced their welfare caseloads would be likely to be affected by any changes in the hold harmless provisions.

The Foster Care Independence Act of 1999, which was passed by Congress prior to adjournment on November 18, contains a section that will fund the bill through cuts in child support funds that narrow the hold harmless funding guarantee. An earlier version of the bill, passed in the House, would have repealed the provision entirely, reducing state child support funds for 21 states by approximately $190 million over 5 years. In its final version, however, the House and Senate agreed to a narrowing of the provision in which states that pass through and disregard 80% of current support payments to families on assistance or that pass through child support collected through a tax intercept to families formerly on assistance would still qualify for 50% of the funds guaranteed under the hold harmless provision. The limitations may serve as an incentive to some states to pass through child support payments; estimates are that under current state policy, two states would benefit from the modified hold harmless guarantee, but as welfare caseloads continue to decline, more states may be subject to the new provision.

Child Support Enforcement Contempt Procedures Violate Due Process Rights

On September 30, 1999, a U.S. District Court in Eastern Michigan issued a declaration stating that the Wayne County child support enforcement use of pre-printed, pre-signed forms for both "orders to show cause", and bench warrants for the arrest of persons delinquent in child support payments without the review and the actual signature of a Circuit Court Judge violate that person's Fourth Amendment rights to due process. The decision is said to represent the first case in which a federal court has reviewed state proceedings in this area in regard to violations of federal constitutional rights, and recognized the existence of a federally protected constitutional liberty interest.

The declaration states that when the pre-printed orders to show cause and bench warrants for a person's arrest are issued against a person, that person is facing a loss of liberty which the state cannot impose without notice and a meaningful opportunity to defend.