[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
    MODIFYING CHILD SUPPORT PENALTIES FOR AUTOMATIC DATA PROCESSING

=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                 OF THE

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 29, 1998

                               __________

                           Serial No. 105-88

                               __________

         Printed for the use of the Committee on Ways and Means



                     U.S. GOVERNMENT PRINTING OFFICE
60-882                       WASHINGTON : 1999



                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman
PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
BILL THOMAS, California              FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida           ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut        BARBARA B. KENNELLY, Connecticut
JIM BUNNING, Kentucky                WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana               JIM McDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania      KAREN L. THURMAN, Florida
JOHN ENSIGN, Nevada
JON CHRISTENSEN, Nebraska
WES WATKINS, Oklahoma
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
                     A.L. Singleton, Chief of Staff
                  Janice Mays, Minority Chief Counsel
                                 ------                                

                    Subcommittee on Human Resources

                  E. CLAY SHAW, Jr. Florida, Chairman
DAVE CAMP, Michigan                  SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana               FORTNEY PETE STARK, California
MAC COLLINS, Georgia                 ROBERT T. MATSUI, California
PHILIP S. ENGLISH, Pennsylvania      WILLIAM J. COYNE, Pennsylvania
JOHN ENSIGN, Nevada                  WILLIAM J. JEFFERSON, Louisiana
J.D. HAYWORTH, Arizona
WES WATKINS, Oklahoma

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.





                            C O N T E N T S

                              ----------                              
                                                                   Page
Advisory of January 16, 1998, announcing the hearing.............     2

                               WITNESSES

U.S. Department of Health and Human Services, John Monahan, 
  Principal Deputy Assistant Secretary, Administration for 
  Children and Families..........................................    29
                              ----------                              
Association for Children for Enforcement of Support, Inc., 
  Geraldine Jensen...............................................   104
California Department of Social Services, Leslie L. Frye.........    59
Cardin, Hon. Benjamin L., a Representative in Congress from the 
  State of Maryland..............................................   129
Center for Law and Social Policy, Vicki Turetsky.................    94
Center on Budget and Policy Priorities, Wendell E. Primus........    80
Children's Rights Council, Ronald K. Henry.......................   116
Feinstein, Hon. Dianne, a United States Senator from the State of 
  California.....................................................    11
Michigan Family Independence Agency, Wallace N. Dutkowski........    67
New York State Office of Child Support Enforcement, and New York 
  State Office of Temporary and Disability Assistance, Robert 
  Doar...........................................................    46

                       SUBMISSIONS FOR THE RECORD

Alameda County District Attorney's Office, Oakland CA, statement.   134
Thomas, Hon. William M., a Representative in Congress from the 
  State of California, statement and attachments.................   136


 THE AUTOMATIC DATA PROCESSING REQUIREMENTS OF THE 1988 FAMILY SUPPORT 
              ACT AND THE 1996 WELFARE REFORM LEGISLATION

                              ----------                              


                       THURSDAY, JANUARY 29, 1998

                  House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Human Resources,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:03 a.m., in 
room B318, Rayburn House Office Building, Hon. E. Clay Shaw, 
Jr. (Chairman of the Subcommittee) presiding.
    [The advisory announcing the hearing follows:]


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    Chairman Shaw. I have been told that Mr. Levin is on his 
way down, and I will go ahead and proceed with my opening 
statement and then yield to whomever on the Democrat side who 
might want to make a statement. Mr. Levin can read mine if he 
wishes.
    This morning we are going to conduct our final hearing on 
the penalties imposed on States that fail to meet the automatic 
data processing requirements of the 1988 Family Support Act or 
the 1996 welfare reform legislation. Mr. Levin and I have 
introduced legislation to address the penalty issue as well as 
the issue of child support incentive payments, and we have 
asked our witnesses today to give us their reactions to the 
introduced bill.
    Getting these penalty provisions right may not be very 
exciting, but I believe that the task is very important. The 
Federal Government is spending lots of money on child support 
in general and on computer systems in particular. I think that 
it's fair to say that nearly everyone believes that good 
computer capabilities is at the heart of child support 
enforcement. Even more important, we have a major obligation to 
ensure that our children receive the child support that they 
are due. Thus, once we agree on requirements for States, we 
must have credible penalties, swift and certain penalties. 
Otherwise, we will only have Federal suggestions, not Federal 
requirements.
    Both the penalty provisions and the incentive provisions of 
this bill were developed on a bipartisan basis between me and 
Mr. Levin. We have met with State officials, child and family 
advocates, and parents. In addition, we have circulated draft 
copies of the legislation widely and have responded to several 
suggestions for improvements in the bill. Equally important, 
the groups that made the drafting decisions about the bill 
included Democrats and Republicans from the Committee on Ways 
and Means in the House and the Committee on Finance in the 
Senate as well as representatives from the Clinton 
Administration. I might say also, representatives from the 
California delegation and other States that were affected. We 
have also enjoyed excellent support from the Congressional 
Budget Office, the Congressional Research Service, and the 
General Accounting Office.
    The result of this work is a bill which I believe achieves 
balance between the various competing interests. At least 16 
States that missed that October 1, 1997, deadline will be 
penalized. On the other hand, rather than the nuclear-type 
penalty of losing all their Federal child support money and all 
the TANF block grant money, these States will lose 4 percent of 
their child support administrative money. Moreover, if 
penalized States can achieve certification before October 1 of 
this year, they will have 75 percent of the penalty refunded to 
them. If States do not complete their computer systems, the 
penalty increases because States that are not certified after 
more than a year are substantially out of compliance with 
Federal requirements that have been in place since 1988. But 
States can always receive a 75 percent refund in the year that 
they achieve certification.
    For the States that are still having difficulty building a 
single statewide system, we have included a provision that 
would allow alternative systems configurations. These 
alternative systems, however, must be capable of meeting the 
goals of the child support program with the same speed, 
effectiveness, and efficiency as a single State-wide system. If 
they do not, the Secretary may not approve the waiver request.
    I think that we have found just about the right compromise 
and balance in this bill. Even so, I know that not everybody is 
going to be completely satisfied. For this reason, I plan to 
listen carefully to the testimony today and then discuss that 
with Mr. Levin and others and decide whether we should make 
further changes in the bill.
    [The opening statement follows:]


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    Sandy, first let me thank you for all the help on this 
bill. Given all the cooperation you and I have demonstrated 
lately, I'm not looking around for something to be partisan 
about, but I'm sure we will find it or it will find us. Would 
you like to make an opening statement?
    Mr. Levin. Thank you, Mr. Chairman, and to my colleagues 
and everybody here. Actually the statement that you read could 
have been read for both of us. I have an opening statement, but 
because we have witnesses here who have other things to do, I'm 
going to ask that my statement be placed in the record and 
simply say a few things. Just a very few, because again, Mr. 
Chairman, your statement, I think, hits the nail on the head. 
Our staffs have worked together. We have worked with the 
administration. We have tried to tap into the information and 
the knowledge of the various States.
    We have made progress in this area, and we can be proud of 
it. There has been a substantial increase in collections in 
recent years. But I'm not even sure that the issue is if the 
glass is half full or half empty. I don't think that we are 
probably halfway there yet. And moving further ahead is 
critical for the children of this country. It is also critical 
for the implementation of welfare reform that we worked so hard 
on.
    We now have the methodology to attack this issue much more 
effectively than was true a decade ago. Some years ago we said 
to the States, ``Use this technology and we'll help fund the 
most of it.'' It did not work as well as we'd hoped. There is a 
lot of blame, as I say in my statement, to go around. And I 
don't think that we need to dwell on it, but we need to 
essentially face the future.
    And so our task is to make sure that we have a system that 
not only is in place but is implemented. And yesterday, Mr. 
Chairman, you and I introduced a bill to carry that out. You 
made a pledge in October or November, I think it was, that we 
were going to do this, and we're meeting this pledge right now. 
I think there have to be penalties that are meaningful. We have 
to remember that these problems cut across State lines, and we 
simply have to have a system that is a system of effectiveness 
in every State. And as you indicated, Mr. Chairman, we not only 
have graduated them, but with teeth, so that there are 
penalties if they are not met, but we've provided an 
alternative option, a waiver availability to the Secretary when 
a State can indicate and can show that they can integrate 
components that are effectively operating into a single-State 
system.
    So, like you, I look forward to the testimony. We're 
willing to listen to suggestions for changes, but I must alert 
everybody, a lot of work has been done on this. We're behind 
the curve. It's children's lives that are at stake. And I think 
the burden, if I might say so, of people who propose changes to 
this bill we've worked so hard on, the burden is on those who 
suggest changes.
    Chairman Shaw. Thank you, Sandy. Without objection, your 
full statement will be placed in the record.
    [The opening statement follows:]


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    Chairman Shaw. Do any other members wish to make any 
opening statement at this time? If not, I'll call our first 
panel.
    Senator Feinstein, it's nice to have you with us. We also 
are looking forward to hearing from our colleague, Mr. Cardin. 
He has advised us that he is going to be late, so we will fit 
him in at the proper time.
    We have the written statements of all the witnesses. We 
would, of course, include that in the record. We would 
appreciate it if all the witnesses could limit their statements 
to five minutes.
    Senator, proceed as you wish. And welcome.

  STATEMENT OF THE HONORABLE DIANNE FEINSTEIN, A U.S. SENATOR 
                  FROM THE STATE OF CALIFORNIA

    Senator Feinstein. Thank you very much, Mr. Chairman. Mr. 
Levin and Members of the Subcommittee, I thank you very much.
    Chairman Shaw. We start Senators with a yellow light.
    Senator Feinstein. Well--[Laughter.]
    Mr. Levin. Senators do not see any light. [Laughter.]
    Senator Feinstein. Actually, you have a point.
    Mr. Levin. I say that in a very friendly way.[Laughter.]
    Senator Feinstein. Thank you.
    Mr. Levin. In fact, we don't see any light.
    Chairman Shaw. It's called, ``Family Feud'' in his case.
    Senator Feinstein. I want to thank you, Mr. Shaw, for being 
available and for recognizing the concerns of California.
    California isn't alone. I believe that there are about 14 
other States that aren't going to meet the deadline. And I very 
much appreciate the moratorium that you and the committee have 
agreed to accept.
    I would like my statement to go into the record and 
justinformally talk.
    I think the problem is, with the legislation, that it's not 
going to have enough flexibility and, very candidly, that the 
penalties are going to be too high. We have here today Mr. 
Lawrence Silverman who is the special assistant in the 
legislative and policy development area of the Bureau of Family 
Support Operations of the County of Los Angeles, and also the 
chief of the Department of Social Services, the Office of Child 
Support in the State of California, Leslie Frye. And I 
understand that they are both going to make a statement, or I 
hope that they are. And let me see if I can summarize the 
problem.
    The big States have had problems. And it is my 
understanding that the loss of the AFDC and child support funds 
from the 14 States that aren't going to make the March deadline 
is going to be some $8 billion a year. California will lose 
$4.3 billion; Illinois, $654 million; Michigan, $857 million, 
and Pennsylvania, $794 million. Now, since 30 percent of all of 
the child support cases cross State lines, the consequence of 
the penalties are going to be serious, and children in Kansas 
or Georgia are going to be clearly affected by the 
unavailability of child support from parents in California, in 
Pennsylvania, or any other of the 14 States who face the 
penalties.
    So I am here to ask, and you have been very gracious 
already, for some additional legislative flexibility. I would 
like to ask this committee if they would change the penalties 
from your 4, 8, 16, 20 percent penalties to 2, 4, 6, and 8 
percent penalties over four years.
    California alone, under your legislation, would face 
penalties of $12 million in the first year and $60 million in 
the fourth year. So the bottom line is that the 2.36 million 
families in California that are affected by this--2.36 million 
families are affected by it--aren't going to help children in 
other States. It's my understanding that Illinois has 
approximately 730,000 families with children who won't get 
their child support because the State will face $2.7 million in 
penalties in the first year and up to $13 million in the fourth 
year. In Michigan, it is my understanding, 1.5 million families 
with children may not get their child support because the State 
faces $3.27 million in penalties during the first year and 
$16.3 million in the fourth year.
    Now I know, and I talked to the organizations that argue 
that the cuts are necessary, that you have to punish people for 
not having a seamless system. And respectfully, I must disagree 
with that. I don't think that legislation that punishes 
families is really the way to accomplish this. The States 
aren't penalized. The bureaucrats that may or may not do the 
right thing aren't penalized, but the families are penalized. 
And it's my understanding--first of all, let's take the County 
of Los Angeles. I would like to enter into the record a 
memorandum of understanding that was developed in 1989 between 
HHS and the County of Los Angeles. I could be wrong, but it is 
my understanding that this memorandum was entered into at the 
request of HHS. And in fact, HHS provided approximately $50 
million for a separate Los Angeles county system. And LA County 
serves 550,000 families. It is 25 percent of the California 
caseload. And it is a huge system with its own systems. In some 
respects it is equal to the system of another State. And I 
would hope that there should be--could be some accommodation in 
this legislation for Los Angeles County.
    Clearly, as you know, California isn't going to meet the 
deadline. It has canceled the contract with the existing 
purveyor who was not able, I gather, to meet the contract 
criteria, and it will have to develop a new State-wide 
contractor. But in the meantime, it is my understanding--and 
Mr. Silverman is here--that LA County anticipates that its 
system can be fully capable within the time deadline.
    So essentially, Mr. Chairman, I am asking for two things. 
The second is some flexibility in the penalties. Specifically, 
a four-year system of 2, 4, 6, and 8 percent. That will be bad 
enough if California isn't able to meet this six-month 
moratorium. I believe that within two years it will be 
possible, but not within the six-month period.
    So that is the thrust. It is my intention to introduce a 
bill in the Senate that would have the 2, 4, 6, and 8 percent 
penalties and to try to provide some form of flexibility in the 
legislation so that we meet this problem, this enormous problem 
of Los Angeles.
    If there are specific questions, I think that the people 
best able to answer them, Mr. Chairman, are Ms. Frye and Mr. 
Silverman. Ms. Frye from the State and Mr. Silverman from the 
County of LA.
    [The prepared statement and attachments follow:]


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    Chairman Shaw. Thank you, Senator. I don't see Mr. 
Silverman on our list, but I see Ms. Frye on our list, and I 
assume that she can answer the questions that we are talking 
about.
    I don't have any questions. I just want to point out one 
thing which I think is quite important. Most of the States will 
have--and I'm sure that California will be one of them, and I 
know that Michigan will certainly be one of them--will be 
experiencing some savings from TANF because of the tremendous 
success of welfare reform and the fact that the TANF funds have 
been block granted. In those situations, some of those savings, 
particularly as it applies to low-income recipients of child 
support, can be transferred over to take care of any shortfall 
that might be experienced. So that the question of pulling back 
funds that would be available should not happen if the surplus 
within the TANF continues.
    Mr. McCrery.
    Mr. McCrery. Thank you, Mr. Chairman.
    Ms. Feinstein, California is not the only State that has 
had trouble implementing the data processing requirements, but 
we're curious as to why the State of California has had so much 
trouble coming up to speed on these requirements. Can you shed 
any light or is there anybody with you that could shed some 
light on the troubles that have been encountered?
    Senator Feinstein. Perhaps the Chief of the Child Support 
Division of the State, if you would have no objections, Mr. 
McCrery, could answer that question.
    Mr. McCrery. If the chairman has no objection.
    Chairman Shaw. And you are?
    Ms. Frye. I'm Leslie Frye.
    Chairman Shaw. If we might hold the question, because Ms. 
Frye will be a witness on the third panel.
    Ms. Frye. Sure, I'd be happy to do it then. Thank you.
    Mr. McCrery. That's all I have, Mr. Chairman.
    Mr. Levin. Welcome.
    Senator Feinstein. Thank you.
    Mr. Levin. Let me just mention briefly, because we're going 
to take a hard look at this, the reference to billions of 
dollars that would be lost is, I think, is a reference to what 
would happen if the States were not making a good-faith effort 
to implement the law. If they were, there would be a far lesser 
set of penalties. And I would assume that every State would be 
making a good-faith effort. So what we would be talking about 
primarily is the legitimacy and the efficacy of the lesser set 
of penalties if they did not meet the timetable. And I've 
talked this over with the State of Michigan, and if it is 
likely that there would be a loss of several million if they 
did not meet the first stage--the problem with it is this: if 
we don't have even this, I think, relatively modest set of 
penalties, what is the assurance that we are going to have, 
that there will be implementation of a system that is federally 
subsidized to a certain extent and is essentially a national 
problem for the very reason that you stated--that is a third, 
more or less, of the child-support orders in a State relate to 
people who are no longer in the State. And if every State isn't 
pulling its load, then no matter how effectively California or 
Michigan or Florida or Louisiana or any State is trying to 
carry out its plan, there is a one-third hole that can't be 
filled.
    So the large amount that you mention is most unlikely to 
occur. What may well happen is that the smaller sums will be 
imposed--a small fraction of the amount of Federal money that 
is being received by each State to implement the plan. I don't 
have the exact--it's less than 10 percent, I think, 
considerably less than that in the State of Michigan. And we 
want our States, with our help, to bring their programs up to 
speed. So we'll look at this issue. And we know that whatever 
goes through here has to go through the Senate, so we're 
anxious, very much, to work together. But I hope that we can do 
so realizing, as Mr. Shaw stated in October or November, we'll 
have a moratorium, but only to allow implementation of a new 
system that is so realistic that it will indeed be implemented.
    Senator Feinstein. May I just briefly respond to that?
    Mr. Levin. Yes.
    Senator Feinstein. First of all, I agree with what you are 
saying. I don't pretend to know the ins and outs of this. I 
intend to learn and try to learn.
    What I've been told is that California is so big and all 
these counties have different systems and the contractor just 
couldn't put the thing together. Now where exactly the State is 
right now, I don't know. I intend to find out. I agree that 
there has to be this more seamless, interdigitating system. I'm 
really concerned by--I'll be candid with you--by the welfare 
bill and its impact on California because the bill is kind of 
backloaded as the penalties come on. And down line--at one 
point when I was entertaining the possibility of running for 
Governor, I was very concerned because I thought that most of 
this bill is going to come down to land on California around 
the year 2000. The State is huge in the sense of what it has to 
do to be able to meet the strictures of that bill. I don't have 
to worry about that now as a chief executive officer----
    Mr. Levin. I hope that wasn't the reason that you didn't 
run----
    Senator Feinstein. But I intend to get much more familiar 
with it. I do want to work in a bipartisan way. Ido understand 
what you are trying to do. I agree with it. It's just with this vast 
sprawling entity of all of these different systems, whether they really 
can be brought together in time, I don't know. So what I would like to 
offer to do is meet with Mr. Silverman and Ms. Frye as soon as you are 
finished and get more involved and try to see what I might be able to 
do to be helpful.
    Mr. Levin. We'll welcome that. I think that States need to 
remember--and I'll finish with this--that other larger States 
have made very considerable progress. And my own State isn't 
100 percent there, but it has made some very considerable 
progress, as New York and most other States have, and I think 
that there is a very particular set of issues relating to 
California that may not only have to do with size. I think that 
you have done your job, if I might say so, as a legislator. I'm 
not sure why there has been a failing on the part of the State 
of California to be much further along when it has so many of 
these children in need.
    So we look forward to working with you and trying to have a 
bill out of the Congress and on the President's desk by the 
spring.
    Senator Feinstein. Thanks very much.
    Chairman Shaw. Mr. Collins.
    Mr. Collins. I'll pass.
    Chairman Shaw. Mr. Coyne.
    Mr. Coyne. No questions.
    Chairman Shaw. Senator, thanks very much for being with us.
    Senator Feinstein. Thank you, Chairman Shaw. I appreciate 
it.
    Chairman Shaw. You put forth a very forceful case.
    Our next witness, who is the principal Deputy Assistant 
Secretary of the Administration for Children and Families of 
the United States Department of Health and Human Services, John 
Monahan. Welcome. Proceed as you may. We have your full 
statement which is going to be made part of the record.

     STATEMENT OF JOHN MONAHAN, PRINCIPAL DEPUTY ASSISTANT 
   SECRETARY, ADMINISTRATION FOR CHILDREN AND FAMILIES, U.S. 
            DEPARTMENT OF HEALTH AND HUMAN SERVICES

    Mr. Monahan. Thank you very much.
    Mr. Chairman and members of the subcommittee, thank you for 
providing me with the opportunity to testify today on child-
support systems penalties. As the Principal Deputy Assistant 
Secretary for Children and Families, I appreciate the 
leadership of the committee in fashioning a bipartisan solution 
to this important issue.
    Let me thank, in particular, the chairman and the ranking 
member for introducing the bill that you introduced yesterday.
    We believe that child support is a critical part of welfare 
reform. And the President--President Clinton has made improving 
enforcement and increasing child-support collections a top 
priority. We are proud of this administration's record on 
child-support enforcement, but as the President said in his 
State of the Union on Tuesday night, ``We must do more.''
    He has set a goal of increasing collections to $20 billion 
a year by the year 2000 through the implementation of tough new 
measures enacted in the 1996 welfare reform laws. However, 
these new rules can only be implemented if every State is fully 
automated. When Child Support Deputy Director, David Ross, 
testified before you in September, 16 States were certified as 
having operational child support enforcement systems. As of 
today, 36 States and two territories have informed us that they 
have State-wide operational child-support systems that meet the 
functional requirements set forth in the 1988 act. We have 
certified 22 of these jurisdictions and are in the process of 
conducting reviews or writing certifications review reports for 
the remaining 16. And many other systems are very close to 
completion. And while the focus of today's hearings is how to 
address State systems which have not been certified, I would 
like to acknowledge the States which have worked diligently to 
meet the October 1, 1997 deadline and succeeded. Those States 
deserve our sincere congratulations.
    However, continued efforts to meet the certification 
requirements are crucial. Any State without a certified system 
in place has been notified that we intend to disapprove its 
State plan and informed of its appeal rights. The financial 
consequences for failure to meet the statutory deadline are, 
after appropriate due process, the cessation all Federal child-
support funding. If the State is not operating a child-support 
enforcement program under an approved State plan, its TANF 
funds are also in jeopardy.
    The statute provides the Secretary no latitude on 
thisissue. Accordingly, we issued letters to 14 States, the District of 
Columbia, and the Virgin Islands providing notice of our intent to 
disapprove their child-support enforcement plans.
    This is clearly not a situation that anybody favors. 
Eliminating all Federal child-support enforcement funds would 
unfairly penalize children who rely on a State's child-support 
system. At the same time, though, because the State's failure 
to automate is unacceptable and has repercussions which reach 
beyond its borders, it is essential that States which have not 
complied be held accountable.
    We believe the proposal in the bill under consideration 
incorporates this need for balance. The proposal creates an 
additional penalty which the Secretary may impose in lieu of a 
full sanction in a case of a State that has made a good-faith 
effort to meet the automation requirements and that enters into 
an approved corrective-compliance plan for completion of its 
system. Such States would be subject to an automatic penalty 
equal to 4 percent of their Federal reimbursement for Fiscal 
Year 1997 administrative costs. The penalty would grow annually 
up to a maximum of 20 percent of Federal IV-D funding for 
failure to have a certified system. These automatic, escalating 
penalties would give States a strong incentive to complete 
their child-support systems quickly.
    We believe that the approach in this bill is tough, but 
fair. However, we have serious concerns with the provision in 
this bill that permits States to link local computer systems 
instead of creating functioning State-wide systems. The 
proposal requires that States with linked systems have the same 
functionality of the State-wide system and take no more time 
nor cost more money to the Federal Government to develop, 
operate, and maintain. And we very much appreciate the 
committee's efforts to put these elements in the bill.
    Experience shows, however, that meeting these elements will 
be difficult for most States. Developing separate systems and 
linking them together represents a major technological task 
more complicated than a single system. Further, with this new 
authority, some States may use precious time and resources to 
demonstrate that they can develop an approvable link system 
rather than move forward on a single State-wide system. In 
short, we are very concerned that the concept of a link system 
is unproven and thus poses an unnecessary risk of failure.
    In conclusion, Mr. Chairman and members of the committee, 
while we have reservations about the feasibility of the 
alternative systems aspects of the bill, we nonetheless 
appreciate the swift, open, bipartisan and balanced approach 
this subcommittee has taken to examining child-support systems 
compliance and penalties. We anxiously await enactment of this 
proposal. On our part we will continue, in the meantime, to 
work closely with the States and provide them any technical 
assistance necessary to help them in completing their 
implementation efforts.
    Thank you.
    [The prepared statement follows:]


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    Chairman Shaw. Thank you, Mr. Monahan.
    I would like to say that the administration has been 
tremendously helpful, and it has been a pleasure to work with 
you on this particular matter.
    Mr. McCrery.
    Mr. McCrery. Thank you, Mr. Chairman.
    Mr. Monahan, as I think you know, Louisiana has perhaps a 
unique problem in trying to comply with the law. And it is 
ironic that their system is causing problems because they 
implemented this system in good faith and in a way that allowed 
them to develop an expedited procedure for processing child-
support claims in a very efficient manner. And they have done 
very well with their system. But because of the requirement for 
a single form of collection, they have had some problem in 
complying with the new law.
    Recently, in an attempt to comply, the Supreme Court of 
Louisiana agreed to be the single collection point. And for 
some reason, State officials were advised that that would not 
be in compliance with the law. And I'm just wondering--in my 
reading of a black-letter law, there doesn't seem to be any 
requirements that it be the IV-D agency that is the single 
collection point, and yet, State officials have been told that 
that is a requirement. Can you shed some light on that?
    Mr. Monahan. Sure, Mr. McCrery.
    I think two things. One is Louisiana is to be congratulated 
because it has a certified computer system in place.
    The second thing is, on the point that you raise, it is 
true that the welfare reform law in 1996 required all States to 
have a single State dispersement unit for collecting checks and 
for making sure that payments get to families. And it is up to 
each State to decide to choose to be that single dispersement 
unit. And a court can serve in that role. And so if State 
officials feel like they got the message that a court couldn't 
serve in that role, that is not true. I think that your reading 
of the law is accurate in that regard.
    I will mention, though, that I know that Judge Ross and 
other members of the child support enforcement staff have been 
to Louisiana to meet with justices and other members of the 
court systems, and there are a number of complicated issues 
here. While the court can serve in that role, we certainly 
intend--and I think the judge made clear when he was down 
there, but you certainly have my commitment--that we would try 
to work with those officials to find a solution to the problem 
they face consistent with the law as it is currently written.
    Mr. McCrery. Well, I appreciate that. It would be a shame 
for Louisiana to have to dismantle a very efficient system and 
in effect defeat the purpose of the law that weimposed. So I 
hope that you will work with them. I'm not quite sure that I understand 
your answer because State officials advised me that they were told 
unequivocally that their proposal was not acceptable, and I seem to 
hear you saying that it is not clearly unacceptable, we're going to 
work with them. So can you clarify that?
    Mr. Monahan. Sure. I think that--as I understood in your 
question, State officials had heard that the State Supreme 
Court couldn't serve as the State dispersement unit----
    Mr. McCrery. Well, as I understand the proposal, the State 
Supreme Court would be the single collection point, and then 
they would transfer the funds to the State IV-D agency for 
dispersement.
    Mr. Monahan. And I think that that's where--the 
complication was that the proposal that the courts have 
raised--when our staff was in Louisiana--is something--because 
it involves two units of the State government, it was something 
that doesn't comply with the provisions of the welfare reform 
law of 1996.
    Mr. McCrery. But the black letter law doesn't say anything 
about dispersement. It says, ``In addition, employers shall be 
given one location to which income withholding is sent.''
    Mr. Monahan. And that requirement is clear in the law that 
it has to have one point at which employers have to send their 
checks. But I believe that there is also a requirement that the 
State establish a single unit for doing the collection and 
dispersement. And I think that the complication is that at 
least in the initial proposal that the State had brought forth 
to us is that we couldn't--we weren't able to determine that 
aspect of the requirement.
    So I guess that what I'd like to do, if it is all right 
with you, is consult with our staff, look at what our most 
recent discussions have been with Louisiana officials and 
report back to you, if I could on the status of this----
    Mr. McCrery [continuing]. Yes, that would be great. It 
would really be nice for you all to be able to work out 
something with a State that has tried not only to comply, but 
go further than required in an effort to make their system 
efficient and effective----
    Mr. Monahan. Absolutely.
    Mr. McCrery [continuing]. Rather than have us have to go 
back and re-engineer the welfare law to try to accommodate one 
State that has gone over and above what is required. So I 
appreciate your willingness to work with the State. Thanks.
    Mr. Monahan. Thank you, sir.
    Chairman Shaw. Mr. Levin?
    Mr. Levin. Thank you very much, Mr. Chairman.
    Just briefly on the waiver proposal. We've had a lot of 
discussion about it, and I think it has been very carefully 
drafted and I think it is an important part of this 
legislation, and I just want you to know--I want to reiterate 
that I very much agree with your statements and the 
administration's statements on page nine that the 
administration will set a rigorous standard of proof and also 
that the burden of proof will be on the State. I think that 
strikes the right balance.
    Thank you, Mr. Chairman.
    Chairman Shaw. Mr. Collins. Mr. Coyne.
    Mr. Coyne. Thank you, Mr. Chairman.
    Mr. Monahan, thank you for your testimony. I appreciate it.
    Several States have said that late regulations and changing 
system requirements and lack of technical support are part of 
the reason that they have not completed their systems. I wonder 
how you would respond to that?
    Mr. Monahan. Well, I think from the standpoint of the 
Federal Government it is true that initial regulations to 
implement the computer-system requirements we're talking about 
here that were in the 1988 law took several years--I think took 
four years before they were issued in 1992. And it is true that 
in response to State concerns, the transfer policy that you 
alluded to was changed to not require States that transfer in 
systems that have been certified in other States.
    But I would also say that I've been confident that for more 
than five years now at least States have been clear about what 
has been required of them. And we have tried our best with the 
resources that we have available to provide technical 
assistance and guidance for the States.
    Mr. Coyne. Well, I know that Congress has extended the 
deadline for finishing the system several times, partially 
because we acknowledge that changing requirements created 
problems for the States.
    What steps, if any, has HHS taken to compensate for the 
fact that the regulations for State-computer systems have 
sometimes been issued late or have been very unclear and that 
technical support has not always been available to them?
    Mr. Monahan. Well, sir, I think the first thing is, I think 
that you are right. I think that Congress has compensated. The 
deadline here has been extended by two years. I think that five 
years is a long period of time for States to be aware of what 
the requirements are. I think that we have actually been fairly 
clear on what has been expected in terms of having a certified 
system.
    In terms of technical support, we have tried to have staff 
available for States to identify what the requirements are, to 
be very specific about what the review standards are, so when a 
State is developing a system it knows what toexpect on the 
front end and can adequately procure the right system.
    I can tell you that we have our staff working as hard as we 
can to provide that kind of support but obviously we were 
limited by resources, but we are trying to do as much as we 
can.
    Mr. Coyne. Mr. Dutkowski of Michigan's Child Support 
Center, in his prepared testimony, suggested that the penalties 
for States be administered quarterly with States having a 
higher percentage of the penalty forgiven if they complete 
their systems earlier in the year. How would such a penalty 
structure change the difficulty of administering the penalties 
for your department, for HHS, and do you think it would 
encourage States to comply faster?
    Mr. Monahan. Obviously, we would administer whatever 
penalty that Congress passes in the best way that we could. I 
think that one of the advantages of the committee's--
subcommittee's proposal is that an annual penalty is somewhat 
clearer and easier to fix than having to fix one four times a 
year. I think it is also easier--the provision that permits 
States to earn back a portion of that penalty is easier to 
administer on an annual basis. But I think--I also think that 
there are--that clarity and simplicity have some real 
advantages here, too, in terms of--and I think when you have a 
penalty every quarter it can become more complicated.
    Chairman Shaw. Would the gentleman yield on that?
    The legislation does have up to a 75-percent refund. It 
doesn't exactly track what you're talking about for early 
compliance within the year. But the mechanism is in there so 
that we don't impose a full penalty if in the first few months 
they comply or the first three-quarters they can get some of 
that penalty back. So we have addressed that, but not exactly 
the way--and I know the gentleman is talking about 
Pennsylvania's particular request. It doesn't do all of that, 
but it does go in that direction.
    I thank you for yielding to me.
    I do have a question and it follows on the track of what 
Mr. Coyne was talking to you about in one of your answers with 
regard to helping the States to plan. And my question focuses 
on the $400 million that was funded for the 1996 processing 
requirement. When does the Secretary plan to let the Congress 
and the States know how these funds will be distributed and can 
you give us an idea of how far along you are in making that 
decision if indeed the decision has not already been made and 
when we might expect a decision in this regard?
    Mr. Monahan. Well, we hope to have a proposed rule out very 
soon, Mr. Chairman, but we haven't issued it yet. As you know, 
the 1996 law did provide this $400 million fund, and in August 
of last year, the Congress changed it by adding an additional 
jurisdiction to be eligible for the $400 million fund. And I 
regret the fact that we haven't been able to get the proposed 
rule more quickly, but we are certainly--we are working hard 
with every administration to try to get it out as soon as 
possible.
    Chairman Shaw. Without asking you to divulge exactly what 
that is going to say, if you could tell us when we might expect 
to have that, it might be helpful to us.
    Mr. Monahan. I think very soon, sir, and we'll certainly--
we will try to communicate with you----
    Chairman Shaw. Is April very soon? Is August very soon?
    Mr. Monahan. I hesitate to give you a date because I--there 
are--it's--I can assure you that it's getting a thorough review 
by all the different aspects of the administration--but I 
can't--I hesitate to give you a date, sir.
    Chairman Shaw. If the Secretary could advise us as to when 
we might expect that, it would be helpful to us, and it would 
be helpful to the States.
    Mr. Monahan. I would be pleased to do so.
    Chairman Shaw. Mr. Collins had an additional question.
    Mr. Collins. Thank you, Mr. Chairman.
    Mr. Monahan, the subcommittee is considering a request from 
the American Association of Motor Vehicle Administrators 
dealing with social security numbers and drivers' licenses. 
They want us to change the date--and I want to know if you see 
any problem from their request to change the date when States 
must begin to collect these social security numbers from 
January 1, 1998 to October 1, 2000.
    Mr. Monahan. I haven't had a chance to look at a specific 
legislative proposal, but I do know of the issue that they have 
raised, and we have--at least based on our initial review where 
we understand and appreciate the concern that they are raising 
which is that we might as well make a requirement for social 
security numbers consistent this law and the immigration bill 
that had passed last year. And so I think that we would support 
that in concept, but I would like to take a look at the 
specific language that might be proposed.
    Mr. Collins. Well, basically you don't see any problem with 
this?
    Mr. Monahan. Not at this point, but we would love to take a 
little bit of a closer look at it as well.
    Mr. Collins. Very good. Thank you.
    Chairman Shaw. Thank you, Mr. Monahan. We appreciate it.
    The next panel of witnesses. If they would come to the 
table. We have Robert Doar as the Director of the Office of 
Child Support, Department of Social Services from Albany, New 
York. We have the much talked about Leslie Frye, Chief of the 
Office of Child Support, Department of Social Services from 
Sacramento, California. And we have Wallace Dutkowski--am I 
getting that correct? Thank you. He is the Director of the 
Office of Child Support, Department of Social Services from 
Lansing, Michigan.
    We thank you for being here. Your full statement is being 
made a part of the record. We would appreciate it if you could 
summarize for us.
    Mr. Doar.

 STATEMENT OF ROBERT DOAR, DIRECTOR, OFFICE OF CHILD SUPPORT, 
           DEPARTMENT OF SOCIAL SERVICES, ALBANY, NY

    Mr. Doar. Thank you, Mr. Chairman. On behalf of Governor 
George Pataki and the New York State Office of Temporary and 
Disability Assistance, thank you for giving me this opportunity 
to testify.
    My name is Robert Doar, and I am the Director at the New 
York State Office of Child Support Enforcement.
    I also want to thank you, Mr. Chairman and the members of 
this committee, for introducing the bill that you have. It 
represents great progress in where we were only six months ago.
    It seems to me that the approach that you have taken, 
Chairman Shaw, in conducting these hearings and all you have 
done on welfare reform has been to focus on two primary 
objectives: outcomes for people and accountability to 
taxpayers. Both of the issues that we are discussing here 
today, penalties for States that fail to receive Federal-
certification requirements and the appropriate structure and 
formula for child support incentive funding are very much tied 
to those objectives. In New York, focusing on outcomes while 
remaining accountable to taxpayers has been our first priority. 
By modifying our existing State-wide system, we were able to 
achieve certification by HHS at a reasonable cost. But more 
importantly, we have a State-wide automated system that allows 
us to help the families that we serve.
    Unfortunately, many aspects of the certification process 
had very little to do with outcomes for children. Instead it 
was concerned with ensuring that States conform to a rigid, 
federally-mandated prescription for how the task should be 
accomplished. This emphasis on uniformity of process has far 
outweighed a proper emphasis on results. Thus, scarce resources 
which should have been directed to program improvement and to 
helping children have instead been expended on system 
modifications. What is ironic about all these problems is that 
despite them great strides have been made in improving the 
program in all States, including the States that have not met 
the certification requirement. This disconnect between the 
failure on systems and improvements in the program shows that 
certification does not equal results.
    The bill under consideration today is a strong step forward 
to resolving the question of how to deal with States that have 
failed the certification test. New York is grateful for being 
given the opportunity to express support for an approach which 
allows States which meet milestones set out in mutually agreed 
to corrective-action plans to be granted a 75 percent refund. 
And permits waiver of the penalty entirely to States that are 
certified by June 1, 1998.
    That brings me to outcomes and why we in New York believe 
that the proposed incentive-funding formula is so important. 
The new formula will result in focused attention being placed 
on the right outcomes. It will also provide the proper 
accountability to taxpayers. Under Governor Pataki's direction, 
New York social services agencies have been strong proponents 
of managing through monitoring of key outcomes. He has 
challenged all of us at human services to determine appropriate 
outcomes and to develop ways to measure progress toward goals. 
For the past three years we have aggressively used numbers to 
manage our program and would like to see the implementation of 
an incentive structure for child support which supports us in 
that endeavor.
    We need that support because in New York we must bring this 
focus on outcomes to the county level. In my testimony I have 
provided sample charts showing county-specific performance on 
the measurements required by the proposed incentive package. 
These charts show a county's performance on percentage of cases 
with orders, attorney-establishment percentage and the other 
key measurements in the incentive-funding formula.
    We have distributed these charts to all the county child 
support offices in New York State. Everyone in the child 
support enforcement program needs to be aware of their 
performance in critical areas and where they stand in relation 
to past performance and in relation to colleagues in other 
geographic areas.
    We also believe that the proposed incentive formula 
provides a rational solution to the problem posed by States 
failing to meet the certification deadline. By setting goals 
and providing for fiscal incentives, States will be forced to 
make the necessary changes, including changes to their systems, 
needed to improve performance. Though New York has been 
certified, we are uncomfortable with the imposition of fiscal 
penalties on States that have not. We believe that a 
thoughtfully constructed incentive funding formula will provide 
the accountability necessary to ensure that States move their 
programs in the right direction.
    Also, from a purely selfish standpoint, we feel that any 
penalty which cripples another State's program or unwisely 
diverts resources to a system project, will lead to a poorer 
and not better performance for the interstate case in which we 
have a direct self interest.
    I am attaching to my testimony two American Public Welfare 
Association resolutions which New York urges you to consider. 
The first concerns the proper response to States which have 
failed to achieve certification.
    The second, and perhaps more important one, makes the 
argument for significant change in the development and funding 
of all automated information systems. If we do not tackle that 
bigger problem--and now may not be the time--I think that we 
will be back here again in two years talking about penalties 
again.
    Thank you, Mr. Chairman.
    [The prepared statement follows:]


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    Chairman Shaw. Thank you, Mr. Doar.
    Ms. Frye.

   STATEMENT OF LESLIE FRYE, CHIEF, OFFICE OF CHILD SUPPORT, 
         DEPARTMENT OF SOCIAL SERVICES, SACRAMENTO, CA

    Ms. Frye. Good morning, Mr. Chairman and distinguished 
members of the subcommittee.
    My name is Leslie Frye, and as you have heard, I am the 
Chief of California's Office Child Support. I really appreciate 
the interest of the committee in this complicated and somewhat 
technical area and the leadership that you have shown in making 
important changes in child support and welfare.
    I do appreciate the concern shown by many Members of 
Congress, the administration and the advocate community who 
realize that the penalties in current law would eliminate 
essential services to families and who are now willing to 
discuss changing those penalties. The question we are all 
struggling with is finding the appropriate punishment for the 
crime of failing to meet deadlines which does not also cause 
irreparable damage to States's programs. It is widely accepted 
and well documented that the failure of the Family Support Act 
systems--of the delay of them--are many and that many entities, 
including States, Federal oversight agencies, and private-
sector vendors contributed to the widespread non-compliance 
with the original and extended deadlines.
    As we look forward to the next round of systems development 
required by welfare reform, any difficulties in meeting those 
deadlines will likely result from similar factors and players. 
We read daily that the year 2000 crisis is gobbling up scarce 
programming resources and driving up the price of software 
development.
    States are still waiting for directions from OCSE before 
they can proceed with some of the key changes. As you 
mentioned, the funds that Congress appropriated for--to pay for 
these changes have still not been allocated and the hoped for 
reform and procurement and approval processes have yet to 
materialize.
    Yet it seems to be a fait accompli that penalties will 
ensue for the States who are struggling to meet the Family 
Support Act expectations. Why should States alone shoulder the 
blame when no other contributor to the problems of the past and 
likely problems of the future must do so? Why the 
accountability here by virtue expected uniquely of States?
    As a practical matter, I strongly support the bipartisan 
bill that is before the subcommittee. I would make several 
suggestions that we would like to see for improvements in it.
    First, the annual penalty should be--the forgiveness of the 
annual penalty should be available to States which are 
continuing development of their systems under structured 
corrective-action plans and meet those milestones. DHHS has had 
a lot of experience monitoring State's corrective-action plans 
as they relate to audit findings and would be able to determine 
if measurable milestones are met.
    Between 1984 and 1994 OCSE conducted 154 program audits and 
required corrective action for 115 times. For nine States, they 
failed OSCE's first followup review and a sanction was 
assessed. Seven States failed the second followup review and a 
bigger sanction was assessed. And only one State failed the 
third follow-up review. This process can work. The corrective-
action process is widely used by DHHS in its oversight of many 
social service programs as well as by the USDA in its oversight 
of the food stamp program.
    Second, we would recommend that the penalty structure 
overall should be reduced to 2 percent initially with two 
percentage points increments as Senator Feinstein indicated. 
The objective of the sanction is to create the motivation for 
States to complete their projects quickly. There must be a 
balance between this goal and damaging programs to the point 
that they cannot provide services.
    The penalty structure in the subcommittee's bill would cost 
California about $12 million a year in the first year. That is 
about $33,000 a day, or one case worker.
    Many players, as I said before, contributed to this 
problem. Yet only States must pay the penalties. We believe 
that a lower overall structure meets the goal of underscoring 
the importance of project completion without making it 
impossible for States to succeed.
    Last, we would like to see a reinvestment provision whereby 
States could choose to put the penalty dollars out of their 
general fund into the child support program rather than sending 
those dollars or having the Federal Government retain those 
dollars with no assurance that those dollars will improve the 
program in the State in question or anywhere in the country.
    I thank you very much for the opportunity to testify, and I 
would be happy to answer any questions that you have.
    [The prepared statement follows:]


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    Chairman Shaw. Thank you, Ms. Frye.
    Mr. Dutkowski.

   STATEMENT OF WALLACE DUTKOWSKI, DIRECTOR, OFFICE OF CHILD 
        SUPPORT, FAMILY INDEPENDENCE AGENCY, LANSING, MI

    Mr. Dutkowski. Thank you, Mr. Chairman and members of the 
subcommittee, for the opportunity to testify today. The State 
of Michigan would like to extend its thanks to the chairman, 
Mr. Clay Shaw, and members of the subcommittee for the 
leadership they have displayed by introducing this bill. I 
would also like to thank both Michigan members of this 
subcommittee, Representative Dave Camp and Representative 
Sandua Levin, for their work in this important bill.
    Today I would like to present Michigan's perspective 
regarding this legislation, but I urge you to review Michigan's 
written testimony for more in-depth information about key 
issues regarding the Title IV-D systems specifically and about 
all of human services automated systems in general.
    Today in Michigan, every child support enforcement office 
is automated. Forty-five enforcement offices are using the 
State-developed child support enforcement system, or CSES. 
Nineteen are using county-developed systems.
    How well does Michigan do? In the Federal Child Support 
Enforcement's twentieth annual report to Congress, the most 
recent data publicly available, Michigan ranks number one in 
total distributed collections, number two in support 
collections for dollar expended and is one of only seven States 
reporting program savings in Title IV-D. Michigan's child 
support program accomplished this in spite of not having a 
federally certified system. Could we do better with an approved 
system? Yes we could, and we will.
    To complete our system, we must be allowed to link some 
existing local systems with the current State-developed system. 
I am here today to thank the subcommittee for the language 
included in the Shaw-Levin bill which supports the ability of 
States to select an alternative system design. By utilizing an 
alternate system strategy, large counties in Michigan will not 
have to surrender additional functionality already built into 
their systems. At the same time, Michigan will be able to 
perform all the mandated functions required of a federally-
certified system.
    It is important to note that Michigan did not get into this 
position all by itself. Both my State and HHS must share 
responsibility for our lack of certification. We began 
development of our system, we asked HHS for approval to build a 
system based on linking existing local systems. Our proposed 
design was denied. To better explain what we were requesting 
then and what we are requesting again now, I brought with me 
today two graphics which are on my left on the easel and are 
also at the end of each of your packets.
    [Displays graphics.]
    The first graphic depicts the Federal single State-wide 
system design; the second provides a graphic depiction of 
Michigan's proposed alternate system. I would like to draw your 
attention to how similar these two designs are. Please notice 
there is a single point of access for all users of the system. 
So to users and to the external world our design looks and 
feels like a single State-wide system. I would also like to add 
here that in Mr. Monahan's testimony--written testimony--he 
identified a number of functionality requirements--a number of 
things that these systems must do. I want you to know that 
those things already exist in Michigan's system today. We 
expect our system to do much more than that when it is 
completed.
    Is such a system possible? Absolutely. By using existing 
technology similar to that used with the Internet, all of our 
users can be linked to interact with each via a single, 
central-processing center. Using this linked system design, 
counties will not have to give up functionality. They now just 
have to participate in our State-wide system.
    We are also pleased that this subcommittee is recommending 
a change to the current fiscal penalty for not meeting the FSA 
1988 systems deadline. The current penalty would effectively 
result in the elimination of Michigan's child support program. 
Even the proposed penalty will have a detrimental effect on 
Michigan. A productivity loss of 4 percent due to the 4 percent 
fiscal penalty would result in a $43 million loss in support 
payments for families, 706 fewer paternities established, and 
nearly 11,300 child-support cases not being enforced.
    The key question that needs to be addressed is what do you 
want from a penalty? If it is to encourage States to complete 
their systems then a modification to the proposed penalty 
language is necessary. We recommend that the subcommittee add a 
corrective-action plan process, as Ms. Frye has identified, as 
an additional tool for addressing the systems-deadline issue. 
The corrective-action plan would require each State not yet 
certified to develop a plan that contains specific deliverables 
with associated timeframes. The penalty forgiveness provisions 
of this bill should also apply for States not certified if they 
complete all the requirements of their corrective-action plan. 
If States do not complete their corrective-action plan, the 
full penalty would and should be applied.
    Michigan achieved the results I mentioned earlier, even 
though we have lost approximately $20 million in Federal child 
support incentive payments since Fiscal Year 1992. These 
payments were lost due to the dramatic reduction in the 
caseload brought about because of our successful welfare reform 
effort To Strengthen Michigan Families. Under welfare reform, 
the current child support incentive formula has actually become 
a disincentive for States. Moving people offwelfare actually 
reduces resources for the child support program.
    We want to thank the members of this committee for 
including the modified incentive language in this bill. It is 
critical that the incentives and the entire Title IV-D program 
begin to reward States for results that they produce not the 
activities they perform. The proposed new incentive structure 
does just that.
    In closing, Mr. Chairman, Michigan's performance reflects 
its commitment to the child support program. We are making 
these recommendations so that we have the flexibility that we 
need to continue our excellent performance.
    We look forward to working with you on these support issues 
and hope that our comments today have been helpful.
    Thank you again for the opportunity to testify, and I will 
be happy to answer any questions that you may have.
    [The prepared statement follows:]



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    Chairman Shaw. Thank you.
    Mr. Levin?
    Mr. Levin. Thank you, Mr. Chairman, and thanks to each of 
you for your testimony.
    Mr. Dutkowski, it has been a pleasure working with you. I 
know that Mr. Camp feels the same way. And I think that 
everybody should know that the development of the waiver 
language occurred only after we became assured that it could be 
applied in a way that would enhance child support collections 
not undermine them. And that is why I referred to the language 
from the administration that they were going to be rigorous in 
its application and that really the burden of proof would be on 
the State.
    We do not need to have one made in Washington structure, 
however we have to have an assurance of a system that is State-
wide and that will work. And if there is an adaptation that a 
State can introduce, fine. But it is going to have to meet it.
    And this gets to the penalty issue which some of us have 
discussed. The problem of leaving it to the discretion of HHS 
is that they don't believe that they should have that 
discretion. They think that there has to be some penalties with 
some teeth in it. And it isn't going to be a very substantial 
portion of what's received in the administrative funding. It 
won't be meaningless otherwise it isn't an incentive. But I 
think that if you look at the amount of monies that the States 
have received for administrative purposes over the years, 
forgetting for a moment, just for a moment, Mr. Shaw's point 
about the gangs from TANF, just in terms of administrative 
funding, I think that States, in some cases have made money. 
They have received more money than they have spent. And to 
simply--to say to the States that they can, instead of paying a 
penalty, reinvest it, I'm afraid takes the balance here that 
has a bit of meaningful stringency to it. And every State has 
to act because when one doesn't it penalizes every single other 
State.
    So, we'll look at that. But I think again the burden is to 
show how we're going to achieve the result if we ease the 
penalties even further. Or if we leave it open-ended and let 
them reinvest--we're reasonable people, but we're tough 
reasonable people. And I'm proud to have worked with Mr. Shaw 
and with our colleagues on this bill and will continue to work 
with you and take your ideas.
    And Ms. Frye, I very much appreciate the spirit of your 
testimony. You are not coming in here and saying, ``Forget it. 
Leave us on our own.'' We need a system. You basically support 
this kind of a structure. You would like some amelioration. But 
it's been a long time for the State of California to bring 
itself up to speed hasn't it?
    Ms. Frye. I appreciate that, Mr. Levin, and I would like an 
opportunity, if I might, to respond to Mr. McCrery's question 
earlier. Is that okay if I do that?
    Mr. Levin. Sure.
    Ms. Frye. He had asked me why was the State of California 
having such a difficult time meeting the requirements of the 
Family Support Act, and I think that many States face the 
issues that have been raised: the transfer system, the delay in 
the change of Federal guidance, the resources and so on across 
the country. Those did affect California.
    But I did want to say one thing about why--a reason that 
did not cause our system to fail. And that is that the State of 
California, unlike Michigan, never pursued an alternative-
system configuration until it became clear that the product 
that our contractor was delivering to us was not working. And 
the counties--you did not see the counties here asking for 
alternative-system configuration support until we rolled this 
system out in the counties and found that because it was a 
transfer system built on small States and all these systems 
were small State transfer systems, it could not work as 
developed by our contractor in California. And it was only as a 
measure of attempting to continue to deliver services as a 
survival mechanism that we came around to saying that the best, 
fastest, easiest, cheapest way for us to meet these 
requirements and to provide the services is to look at the 
alternative-system configuration. It was not theother way 
around which is, I think, held to be believed to be the truth.
    Mr. Levin. Thank you.
    Chairman Shaw. Mr. Collins.
    Mr. Collins. I'll pass.
    Chairman Shaw. Mr. Coyne.
    Well, I want to thank these witnesses. I think that it's 
important to realize--and Sandy--I was noticing in his line of 
questioning and in his statement that he was sounding very much 
like a hard-hearted Republican----
    [Laughter.]
    Mean spirited is the word.
    I think it's important to realize here that this is--and I 
don't want to appear that we're having a hearing and that we're 
all closed-minded--even though that point could be argued. 
There has been a great deal of compromise and give and take 
between these witnesses and our staff and the staff over on the 
Senate side to get to where we are. And if you look at where we 
are now and the direction we're going, the penalties are going 
from a--as I mentioned in my opening statement--to a nuclear-
type penalty, to a slap on the wrist even though--I mean we're 
still talking about a great deal of money, but when you're 
talking about four percent as compared to 100 percent and 
including in that 100 percent the TANF, this is just a 
different--it's not a different world, it's a different 
universe that we've already travelled to. So I don't want to 
appear that we are being stubborn or that we're not going to 
compromise because I think that we've already shown compassion 
for the problem that some of the States are going through. And 
we do certainly recognize that--all this welfare reform--I feel 
awkward here in talking about penalties for some of the States 
that really have led the way and shown us the way as to welfare 
reform in general. But these are not punishments. Ms. Frye, it 
is not a crime we're looking at, it's a question of just trying 
to work it out and be sure that incentives are still in place 
to move forward and to reaching the objective that all of us 
would like to reach.
    And I would also like to mention that my own State of 
Florida--and I think that this would apply to Michigan's 
situation--they have testified before this committee that in 
order to come into compliance they had to renovate a Model T 
rather than going ahead. So there are some problems that we 
have created also for the States that have found that they had 
to rush to compliance in order to meet the deadline and avoid 
the nuclear penalty that is in existing legislation.
    I thank this panel very much for your very fine testimony 
and also congratulate you for the work that you are doing.
    Our final panel. It is my pleasure to welcome back Wendell 
Primus the--formerly of this committee--consultant for the 
Center on Budget and Policy Priorities here in Washington, D.C. 
Vicki--I am known for slaughtering names----
    Ms. Turetsky. Turetsky.
    Chairman Shaw. Thank you. The senior staff attorney at the 
Center for Law and Social Policy here in Washington. Geraldine 
Jensen, president of the Association for Children for 
Enforcement of Support of Toledo, Ohio. And Ronald K. Henry who 
is a partner of Kaye, Sholer, Fierman, Hays and Handler on 
behalf of the Children's Rights Council here in Washington, 
D.C.
    As with other panels, we have your full statements which 
become part of the record. I welcome you and thank you for 
being with us. And Wendell, if you could head off.

 STATEMENT OF WENDELL PRIMUS, CONSULTANT, CENTER ON BUDGET AND 
               POLICY PRIORITIES, WASHINGTON, DC

    Mr. Primus. Mr. Chairman and members of the subcommittee, 
it is good to be back, and I very much appreciate your 
invitation to testify.
    My name is Wendell Primus, and I am director of Income 
Security at the Center on Budget and Policy Priorities.
    The center strongly endorses the basic approach outlined in 
your bill on child-support penalties. Withdrawing full Federal 
funding for both the TANF and the child-support programs would 
seriously jeopardize assisting needy families and collecting 
child support.
    On the other hand, it is also inappropriate to grant 
another one or two-year extension of the deadline without any 
serious consequences. It sets a bad precedent.
    The approach adopted in the bill is correct. It sends a 
very strong message that States should get their systems 
certified as quickly as possible and that the longer they delay 
the greater penalty they will face. Yet it also sets reasonable 
penalties that will not jeopardize States' abilities to assist 
families and collect child support.
    If anything, Mr. Chairman, I would urge that the penalties 
be increased and that at a minimum, as the bill proceeds 
through the legislative process, that you resist efforts to 
lower these penalties. I say this--what happened to the chart? 
Oh. [Laughter.]
    I say this not because I want States to pay penalties to 
the Federal Government, but so that appropriate attention, 
energy, and effort are focused at the State level on getting 
their computer systems completed and certified as soon as 
possible.
    To bolster the argument for increased penalties, see that 
table.
    [Chart.]
    It compares the TANF work penalties to the computer 
penalties in the draft bill. The work penalty amounts are the 
maximum allowed under the TANF statute and assume no corrective 
compliance plans or reduction in the penalty due to reasonable 
cause or some degree of compliance. They are hypothetical 
because most States will meet the work requirements in TANF and 
several of the States identified with an asterisk have already 
developed a certified computer system.
    But as you can see, the penalty for failing the work 
requirement is much more severe than the penalty for not having 
the computer system certified. These penalties should not be so 
disparate. Not having the child-support system fully automated 
and consequently allowing some parents toescape paying child 
support in a timely manner is as serious as not having sufficient 
custodial parents engaged in work activities.
    The relationship of those penalties is obviously a value 
judgment. But using the TANF penalties as the guideline, I 
would argue that the penalties in this bill are not severe, and 
as a result, I would argue for increasing for increasing them 
somewhat and continuing to escalate them each year instead of 
capping the penalty at the end of the fourth year.
    Another reason to increase penalties is that many States 
are making a profit off of the child-support system. The 
penalties you authorize in this bill are not really increasing 
State costs, rather they are lowering the amount of monies the 
States make off the child support enforcement system.
    Some States affected by this legislation would have you 
believe that imposing this penalty would cause States to reduce 
the amount of resources flowing into the program. However, most 
States have budget surpluses thanks to a strong economy. 
Obviously States can choose to reduce resources. But it is a 
choice and not an outcome that this bill forces or mandates.
    As your bill is formulated--which I strongly support--you 
would not forgive any further penalties until the year the 
computer system is actually completed. It is too difficult for 
HHS to administer and determine whether progress is being made 
each year in accordance with a compliance plan. It also dilutes 
significantly the incentive to get the computer system 
certified if they ultimately know that there will be no 
consequences.
    The center has one overriding concern about mandating a 
waiver of the requirement of the single State-wide system if 
certain conditions are met. We feel that it will cause further 
delay. Moreover, the authority to waive this requirement 
already exists. Placing the authority in statute runs the real 
risk, by the time the bill is enacted, regulations are 
promulgated, the States and computer vendors understand it, the 
bidding process goes through--it will be a very long time. And 
I think that you run the real risk that we will delay State 
implementation of computer systems longer--a result we are all 
trying to avoid.
    That the new child-support incentive systems reward 
positive outcomes is an important step which we strongly 
endorse. I have one major concern with the bill as currently 
drafted. The section entitled ``reinvestments'' states that the 
incentive payments must be used on the child support system or 
activities approved by the Secretary. Because money is 
fungible, the purpose of this language is not achieved. In my 
written testimony it outlines, I think, a suggestion, on how 
that section could be tightened.
    I would make two further suggestions. Aggressive 
enforcement of medical support could be enhanced by adding to 
the base of collections any medical support for any Medicaid 
child that reduces the cost of Medicaid. And I think that 
giving States incentive for collecting for noncustodial parents 
with lower incomes could be more readily achieved by rewarding 
payments from noncustodial parents with low awards with a 
higher rate than payments from noncustodial parents with high 
child-support awards.
    In closing, Mr. Chairman, I want to compliment you and your 
staff on the processes you have gone through in developing this 
legislation. I look forward to working with this subcommittee 
in the future as it continues to strengthen the child-support 
enforcement program and focuses on the contribution that non-
custodial parents can make to the well being of their children.
    Thank you.
    [The prepared statement follows:]


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    Chairman Shaw. I'll try it again. Ms. Turetsky. How did I 
do?

STATEMENT OF VICKI TURETSKY, SENIOR STAFF ATTORNEY, CENTER FOR 
             LAW AND SOCIAL POLICY, WASHINGTON, DC

    Ms. Turetsky. Very well, thank you.
    Mr. Chairman and Members of the Subcommittee, I appreciate 
the opportunity to testify today.
    When Congress passed the requirements that States implement 
one statewide system in 1988, it passed a solid, workable piece 
of legislation. The idea was that States could improve program 
productivity not only by automating but by streamlining and 
standardizing routine child support activities. Congress should 
not change the single Statewide requirement or the waiver 
process currently administered by HHS. There are two reasons 
why.
    First, most States say that the requirement has helped them 
operate better child support programs. Recently, CLASP surveyed 
State child support directors to ask them directly to describe 
the benefits and drawbacks of the single statewide requirement 
in Federal law. So far, three-fourths of the States have 
responded, and while the survey results are preliminary, States 
mostly reported benefits rather than drawbacks. At the top of 
the list were program standardization throughout the State, the 
ability to pull up cases anywhere in the State and simplified 
computer development and upgrades.
    What was particularly striking about the survey responses 
was that nearly every State with a county-based program 
reported that it was harder and more costly to implement the 
statewide computer. Three-quarters of these States with county-
based programs reported additional problems with their program. 
The problems were with the program structure rather than with 
the Federal requirement for a single statewide computer. They 
said that the decentralized structure of their program hampered 
performance, decreased program accountability and made it 
harder to maintain reliable data.
    Second--and let me emphasize the importance of this, as 
Wendell has--there is a serious risk of further delay if State 
planning and implementation of the system are diverted by the 
waiver process. If Congress sends an unequivocal message that 
it's not going to change the law on this--my understanding is 
that California, for example, could finish by expanding one of 
its county systems. However, so long as the waiver legislation 
is pending, State planning efforts may stall. If the waiver 
door is widened, it is likely that States will feel pressures 
from some of its counties to pursue a waiver.
    The legislative process in Congress could take several 
months. The waiver process will take several months. Yet there 
is no assurance that in the end the result will be a more 
effective system if the State pursues a waiver or that the 
system will be approved.
    Other States that are well on their way to certification 
may well decide to switch tracks to pursue a multiple system 
strategy because of internal political pressures.
    If the legislation includes waiver language, Congress must 
preserve the key benefits of the single statewide system: 
program standardization, access to cases throughout the State 
and simplified computer upgrades. The subcommittee should make 
clear its intent that a State must implement an integrated 
system.
    Let me explain what I mean by an integrated system. I've 
heard States actually discuss two visions of multiply-linked 
systems. The first vision focuses on technological flexibility, 
and the second vision focuses on local program control.
    The first vision is a Wide Area Network or similar kind of 
technological system. Although there are multiple computers, 
they operate together. They operate as though they are one 
system through shared software. A case is entered in one 
location and can be pulled up in another. Data is only entered 
once. Program procedures are standardized throughout the State. 
System software is developed and updated statewide and 
installed on all computers at the same time.
    The second vision is of county systems that interface for 
some but not all purposes. Local programs develop and run 
separate programs and separate software that incorporates local 
policies and procedures. Each county system separately meets 
functional requirements and counties upgrade their own 
computers. Some functions are performed at the State level and 
there is shared data, reporting data, shared at the State 
level.
    The practical implications are very different for these two 
visions. For example, consider how a State's linked multiple 
system would respond to a custodial parent who moves from 
County A to County B. Can the worker in County A electronically 
transfer the case to County B or will County A close out the 
case and ship the file to County B? When the person walks into 
County B's office, is she told that County B is already working 
on her case or is she told to start over again and file a new 
application? Can the worker in County B go to the computer and 
find her case anywhere in the system?
    In addition, States should show the linked multiple systems 
are cost effective and this should apply not only to initial 
implementation but to upgrades and replacements, and to 
maintenance.
    Let me turn to penalties briefly. The proposed penalty 
structure is a balanced approach designed to encourage States 
to finish sooner rather than later, and CLASP strongly endorses 
the subcommittee's basic approach and commends it for its work 
in this area. However the penalties are on the low side. The 
point is to convince the State legislature and local players 
that they cannot afford further delay. The subcommittee should 
consider increasing the third year penalty to 20 percent 
particularly if it adopts a waiver provision so that States 
will think very carefully before pursuing a waiver.
    Mr. Chairman, because there is forgiveness in the year of 
completion, our hope is that no State will end up paying 20 
percent. Forgiveness, however, should only be in the year of 
completion.
    Members of the subcommittee and Mr. Chairman, I refer you 
to my testimony for incentive payments recommendations I make.
    Thank you very much for the opportunity to testify.
    [The prepared statement follows:]


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   STATEMENT OF GERALDINE JENSEN, PRESIDENT, ASSOCIATION FOR 
     CHILDREN FOR ENFORCEMENT OF SUPPORT, INC., TOLEDO, OH

    Ms. Jensen. Good morning, Mr. Chairman and members of the 
committee. Thank you for this opportunity.
    I am here today to represent the 35,000 ACES members across 
the country who are families whose children are owed child 
support. There are now 39 million children owed $41 billion. 
The average ACES member is a single mother. She earns $12,000 a 
year. She has two children, and she has been waiting for over 
two years for the State government to act on her case.
    Today we view the decisions you make as the first test 
about how serious Congress is of welfare reform. Are you truly 
serious about helping us move from welfare dependency to self 
sufficiency? Eighty-seven percent of the families on welfare 
are there because they are owed child support.
    We ask you to say no to the States as they ask for county 
and regional-based computer systems. Single parent families 
need a single State system. It is more expensive for States to 
put in computers in the counties because it costs more for the 
hardware. It is more expensive because it costs more for the 
software. It is more expensive because you have to upgrade each 
individual system instead of being able to upgrade one single 
State system.
    Yes the technology exists today to have an Apple computer 
talk to an IBM, but often the results are jumbled and 
ineffective. And just because we have the technology does not 
mean that we should use it. Just because we can clone a human 
does not mean that we should do so.
    California is a perfect example of this problem. 
California's welfare computer system consists of four systems 
linked together. It takes one-and-a-half years to transfer a 
welfare case between counties in California. On the other hand, 
their MediCal system, which is a single State-wide system, 
handles millions of transactions every day efficiently and 
effectively--at least as many as a child-support system will.
    Asking or allowing HHS to determine if the multi-system 
will meet the requirements, to us, is very worrisome since they 
are the group that just monitored the States that spent $2.6 
billion on broken and non-existent systems. They are the same 
group that didn't issue the regulations in a timely fashion in 
the past. We do not believe that they will be capable of 
determining if these proposed multi-systems will actually work.
    Families also ask you why shouldn't States be penalized for 
failure to comply with the Personal Responsibility Act. Mothers 
who are required to cooperate to establish paternity, they lose 
25 percent of their Federal funding if they don't follow the 
law. Mothers who don't find a job within two years could lose 
all their Federal funding, their TANF benefits, if they don't 
follow the law. It's seems to us that if it is required for the 
people to follow the law, so should the government. And it 
seems very far away from the Bill of Rights concepts of ``for 
the people'' and ``by the people'' when the government is 
exempt.
    Mothers might try to get out of losing the TANF benefits by 
saying to their case worker, ``Well, the babysitter didn't show 
up.'' or ``The car wouldn't start, or I couldn't get to my 
job.'' They will still lose their Federal funding.
    States use excuses of, ``We had to transfer a system. The 
regulations were slow in coming out. The vendors ripped us 
off.'' These excuses are just as unacceptable and should not be 
allowed and States should be punished.
    We do not support taking TANF funds or taking Federal 
Financial Participating Funds or any operating funds. We do 
support, however, that you withhold their incentive and bonus 
payments until their computers are in place and working. Most 
States, in the past, have put those incentive payments into 
their general fund and have used it for other State programs 
such as paving roads and maybe other social service programs. 
We feel that they are more likely to respond quickly if they 
lose their incentive money.
    We also believe that it is time for Congress to consider 
looking at completely reshaping the child-support system. It is 
like we built a one-bedroom home in 1975 when you passed the 
initial child-support laws. We added on a room in 1984 when you 
passed the Child-Support Amendments. We added on another room 
in 1988 as the number of children began to grow in the family 
when you passed the 1988 Family Support Act. Last year, 1996, 
we built a whole new wing when you added the Personal 
Responsibility Act.
    When we first built the house, we had a small furnace to 
heat all the rooms. As we began to grow, we put these space 
heaters in all these rooms to heat them. But we found several 
things happened. They don't work very well. The utility bills 
are higher. Heat certainly isn't even throughout the house, and 
there's definitely not enough heat getting in the children's 
bedrooms.
    We're asking you to consider having hearings on H.R. 2189, 
a bill sponsored by Congressman Henry Hyde and Lynn Woolsey, to 
look at setting up a new State and Federal partnership. Not the 
current one where the Federal Government provides all the money 
and the States do what they want, but a partnership where 
States would establish orders, establish paternity and modify 
orders, and the Federal Government would participate by 
payroll-deducting support from all workers just like we do 
social security tax, collecting child support from the self-
employed through the Social Security quarterly self-employment 
tax. And the Social Security Department, then, would distribute 
payments to families just like they do Social Security checks.
    In a country that has a Social Security system that 
guarantees a child who has a dead or disabled parent support, 
isn't it time that we have a system that ensures children with 
living and working parents regular and adequate child-support 
payments?
    Thank you.
    [The prepared statement follows:]


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    Chairman Shaw. Thank you, Ms. Jensen.
    I'd like to say to the people that are standing in the back 
of the room, there are a few seats here that are reserved that 
are no longer reserved if you care to come up and sit down.
    Mr. Henry.

STATEMENT OF RONALD K. HENRY, PARTNER, KAYE, SCHOLER, FIERMAN, 
 HAYS AND HANDLER, REPRESENTING THE CHILDREN'S RIGHTS COUNCIL, 
                         WASHINGTON, DC

    Mr. Henry. Thank you, Mr. Chairman and Committee Members. 
The Children's Rights Council appreciates the opportunity to 
speak to you today.
    The Children's Rights Council is a non-profit, educational 
organization, whose sole purposes are to encourage family 
formation, family preservation, and what we like to call the 
demilitarization of divorce to keep both parents actively 
involved in the child's life even if the parents aren't under 
the same roof any longer.
    We've attended the group meetings that were scheduled by 
staff. We've listened to the testimony here today. And we 
believe, quite simply, that the staff has struck the right 
balance on the incentive-formula-penalty issue and urge you to 
move forward with the legislation that is under your 
consideration. Accordingly, what I would like to do in the few 
moments that I have is focus on another aspect of the 
legislation that I don't believe has gotten any attention yet 
this morning.
    You will recall that last fall the House acted upon 
revisions to the child support incentive formula, but no action 
was taken by the Senate. The goal, of course, was to remove 
some of the unintended consequences that had existed in the old 
incentive formula where the States were basically being paid to 
focus on the wrong thing. You are trying to redirect their 
energies by redirecting the incentive formula. We agree that 
this needs to be done and that it needs to be done in a way 
that is consistent with the underlying congressional goals that 
have been set forth in TANF. We want to make sure that the new 
incentive formula does not inadvertently create some new 
unintended consequences or preserve the prior unintended 
consequences, and assure that, in fact, we do achieve the TANF 
goals. Now, of course, one of the core TANF goals was the 
encouragement of marriage as a vehicle for reducing welfare 
dependency. We recognized in Congress over the last several 
years that marriage is the single most powerful vehicle for 
reducing and preventing welfare dependency.
    With that in mind, when you restructure the child-support 
incentive formula, we'd urge you to look at a couple of 
specific items because the way that the incentive formula 
language has been drafted to date does not operate in a way 
that is consistent with the TANF goal. Look, for example, at 
the paternity-establishment subfactor. As currently written, 
the paternity-establishment subfactor looks only at unwed 
births. It doesn't look at children who are born into marriage 
or marriages which occur after birth.
    Now take, for example, a case worker who is counseling a 
young couple before the birth of their child. That case worker 
looks at the language of the incentive formula and knows that 
if they get a child-support order in place, if they get a 
voluntary acknowledgement of paternity, they will score a point 
and get credit under the incentive formula. If the caseworker 
encourages that young couple to get married, the way the 
formula is written right now, they don't get credit. Now that 
is an oddity, and it really shouldn't exist. We should 
recognize in the Federal Government and in our incentives to 
the States that getting that couple married is every bit as 
beneficial to the child, and is, in fact, as we all know, much 
better for the child than getting a support order or a 
voluntary acknowledgement of paternity. If you're going to 
write a formula which gives the States credit for establishing 
paternity, we ought to write that formula in a way that 
recognizes a marriage license as being every bit as important 
to the child as a voluntary acknowledgement of paternity.
    You will find the same problem under the subfactor that 
talks about the establishment of support orders. If a young 
couple gets married, they don't need a support order. They 
don't need to establish paternity. They don't need to enforce a 
support order. That childis supported under the life and 
opportunity that it has within the marital unit. The incentive should 
be written, very simply, to give credit for children in a State who are 
given their support through marriage, not just children who are given 
their support through a support order.
    I think that this is important from the standpoint of 
equity to the States as well because all children, of course, 
are born with a biological father even though there are 
variations in rates of illegitimacy among the States. So if you 
want to treat the States equitably, if you want to increase the 
number of children who are supported, if you want to be 
consistent with the TANF goal of encouraging marriage, let's 
give the States credit in the incentive formula for children 
who are supported through marriage as well as children who are 
supported through a judicial order.
    The third factor in the incentive formula is the question 
of current payments. Now this was rewritten specifically 
because there was a problem in the old incentive formula in 
that the States were just encouraged to look at the big money 
cases and they were looking at gross dollars rather than 
looking at the number of children supported. That problem has 
not been cured with the language that exists right now.
    Take, for example, a caseworker who has got, say, ten cases 
at $200 per month per child and one case at $2,000 per month 
per child. The way the incentive formula is written right now 
in the proposed legislation, that caseworker gets as much 
credit for taking care of the one $2,000-a-month child as she 
would for getting the support required for all ten of the $200-
a-month children. If you revise the incentive formula to say 
that we are going to look at the percentage of cases which are 
in compliance with their order rather than simply the 
percentage of gross dollars that are collected, you will be 
focused on children and you will remove the incentive for the 
caseworkers to only work on the handful of big cases that they 
view as easier.
    Finally, with respect to the arrearage payments, when you 
look at that issue, you need to look at its interaction with 
what is known as the Bradley Amendment. If you take, for 
example, a worker whose only offense is that he was downsized 
out of a job, is no longer employed, no longer bringing in a 
paycheck, you don't want to turn that person into a deadbeat. 
You want to have a system which encourages modifications to the 
support order, encourages people to be able to get new work.
    Right now, the way the Bradley Amendment is written, that 
worker, on the day he loses his job, he automatically becomes a 
deadbeat because the Bradley Amendment currently is structured 
to make unmodifiable any arrearages which accrue beginning the 
first day of unemployment.
    Now this is bad for the States also because the way the 
Bradley Amendment currently works forces the States to spend 
their resources chasing after people who simply don't have the 
money. I brought one example. This is the ``Most Wanted'' list 
from the State of Virginia's Bureau of Child Support 
Enforcement. You will see that it's got a gentleman listed 
named Willie Bibbins who owes $42,000 and you think, ``Well, 
that is probably some plastic surgeon running around with a 
trophy wife in a Mercedes.'' until you look and you see that 
Mr. Bibbins' occupation is ``poultry catcher.'' Now you don't 
know and I can't tell you whether Mr. Bibbins is a good person 
or a bad person, but I can assure you that a poultry catcher is 
never going to have the $42,000 that Virginia is being asked to 
collect from him.
    We need to look at how the pieces of the system fit 
together and the ways in which some of our impositions, such as 
the Bradley Amendment, may have created deadbeats. Not all 
deadbeats are born. Some of them are made by restrictions and 
lack of flexibility in our system. I would ask you to look at 
how the pieces of the system fit together.
    Mr. Chairman, in closing, as you work to improve child 
support collection, let's make sure that we come up with an 
incentive formula that doesn't simply replace one group of 
unintended consequences with another. Let's look specifically 
at how we can incentivize the bureaucratic workers within each 
State to make sure that they are working to achieve the goals 
that Congress has set for them.
    Thank you.
    [The prepared statement follows:]

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    Chairman Shaw. Mr. Collins.
    Mr. Collins. Mr. Henry, your story about the collection 
reminds me of the Hee Haw program when Buck Owens wanted to 
rent a room from Roy Clark and he asked if he had a room 
available at the Empty Hearts Hotel, and he said that he did. 
So he said, ``How much is it a night?'' And he said ``A million 
dollars.'' And he said, ``Well, you don't rent many, do you?'' 
And he said, ``We only have but one.'' It's kind of like your 
collections, you know.
    Mr. Henry. Right.
    Mr. Collins. I want to ask the same question that we asked 
earlier to the administration about the drivers license and 
social security numbers. You probably heard the question. The 
American Association of Motor Vehicles wants to change the 
effective date of that from January 1, 1998 to October 1, 2000. 
Do either of you all have any objection to that date change? Or 
do you have an opinion on it?
    Ms. Turetsky. Mr. Collins, I would like to look at the 
proposal more closely and talk with APWA officials and States 
and advocates about the issue. I would be happy to get back to 
you, however.
    Mr. Collins. Good. If it hasn't raised an antenna by now, I 
don't think it is really going to have any negative effect on 
anyone.
    Chairman Shaw. Would the gentleman yield?
    I think that date change brings it into compliance with 
something that the Judiciary Committee did with regard to 
immigrants. And that's the reason for the change.
    Mr. Collins. That's the basis for it.
    Mr. Henry. And I would specifically recommend the granting 
of a little extra time on that. You may have seen in this 
morning's paper the fact that Virginia is facing significant 
embarrassment because they threatened license revocation for 
over 2,000 people erroneously.
    They don't have the databases in place. They don't have the 
mechanisms right now to properly enforce the mandates that are 
already in place. Part of what you are doing to force them to 
get the computer systems in place will help with that. But you 
don't want to be in a position where the credibility of the 
entire program is undermined by mass errors of this sort.
    Mr. Collins. Yes, I'm amazed at our collection process. And 
sometimes I wish that when I get my American Express bill that 
they did the same thing that we did to child support and I 
wouldn't have to worry about sending them a check for a long 
time.
    I thank each of you for coming.
    Chairman Shaw. Mr. Levin.
    Mr. Levin. I don't have as good a story as Matt about the 
million dollar room, but let me just say briefly, thanks. It's 
really interesting testimony. In terms of the waiver provision, 
I think it can be safely said that as to its revision, Ms. 
Turetsky, it is clearly essentially the first and not the 
second. There may be some details that have to be looked at, 
and I think that the question is this. If you have a system 
that is workable and effective, why require that it be taken 
apart and discarded? I have some faith that with some rigor 
that HHS can implement it in view of its dedication to making 
this child-support system work. And it opposes relaxation of 
the penalties, for example. I don't think that there is any 
question of the seriousness of the intention of HHS. And I hope 
that we not only talk about the benefits of modern technology, 
but we let them be utilized.
    So I just hope that we will all continue to work together 
and work on the problems that are real and not overstate 
problems that we really can solve.
    Ms. Turetsky. Mr. Levin, I appreciate your comments. 
Technology has changed. However, the clearer the language can 
be made in the waiver provisions toward the integrated and 
cost-effective system, I think the more helpful it will be. And 
in addition, I do, again, stress that the problem is delay both 
in the inevitable legislative cycle and in any waiver request 
process.
    Mr. Levin. I don't envision--I don't see why there would be 
any delay. I think that the legislation is written clearly, and 
if it isn't clear enough, we can write it still more clearly. I 
think that the intent is clear, and indeed the intent, I think, 
really binds us all together, and I don't think that we should 
allow anybody to separate us.
    And as to your other suggestions, I hope that we will take 
them under advisement--all of your suggestions. And I hope we 
will do that very quickly because I believe that the intent is 
to mark-up this bill very soon. So we have all worked together 
these last months, so let's finish doing that in the next week 
or so. Let's get this moving.
    Ms. Turetsky. Thank you, Mr. Levin.
    Chairman Shaw. Ms. Turetsky, the bill that is before us 
lists specific and detailed requirements that States must 
demonstrate to the Secretary in order to be granted a waiver 
for an alternative-system configuration. Is there anything that 
you see that is missing from this list? And in that regard, I 
would say to you and to all the witnesses and people that are 
here this morning that anything--any suggestions that they 
might have, we are open to suggestions in this area, and we 
would be glad to include them in the bill if we agree as to the 
wisdom of them. Do you have anything that you would like to add 
at this point?
    Ms. Turetsky. Chairman Shaw, we did send some comments over 
to Mr. Haskins for your review. I think that there are 
threeambiguities in the language.
    The first ambiguity is the question of, what role do these 
factors play with respect to the rest of certification 
requirements? The problem there is the word ``functional.'' The 
word ``functional'' applies to most of the requirements in the 
certification guide, but not all of the requirements. Computers 
are required to be able to enforce support and send out notices 
and interface with other agencies. Those are all functional 
requirements. But in addition, the system is required to be 
cost effective and cost beneficial for the program, and the 
system is required to be integrated meaning shared software, 
seamless linkages, no-one-can-tell kind of integration. And so 
I would suggest removing the word functional to refer back to 
the body of the certification guide.
    I would also make the list one of structurally including 
but not limited to these factors. I understand that the factors 
hit some of the highlights that the administration may be 
concerned about with the multiple system, but they are not 
inclusive.
    And I would explicitly make a cost-effective standard, 
which is in the statute but which gets muddied by the issue of 
functionality. I would make it explicit that it be cost 
effective and refer back to the statute.
    There are some other wording changes that I would make with 
respect to integration and with respect to the ability to pull 
down cases from anywhere in the State. But those are the big 
areas.
    Chairman Shaw. Mr. Henry, you brought up the point that we 
should be scoring marriage along with support, and you also 
brought up another interesting point as to percentage of 
collections as opposed to the dollar amount which I think is 
something that we ought to look at.
    How would you, however, go through and score or be able to 
detect the marriages that are brought about by way of 
counseling by the State?
    Mr. Henry. Well, it is actually quite simple, Mr. Chairman.
    The States have data on the number of births in each State. 
You have the hospital records. You have all the information 
that comes forward under the existing child support data 
reporting requirements.
    Chairman Shaw. They tie in the date of marriage?
    Mr. Henry. Yes. And----
    Chairman Shaw. Well, how would you know that the State had 
anything to do with that?
    Mr. Henry. Well, I'm not necessarily saying that the State 
has to claim credit for any particular marriage. I'm simply 
saying that you know in a State that there are a given number 
of births each year. From the Federal Government's standpoint, 
it is every bit as good for that child to be born into and 
supported by marriage as it is for that child to subsequently 
get a voluntary paternity acknowledgement or a child-support 
order. I'm simply saying that the calculation can be done on 
quite an easy basis.
    You take the total number of children, both marital and 
non-marital, and that becomes your denominator. Your numerator 
is the number of children for whom there is either marriage or 
a support order established or a voluntary paternity 
acknowledgement so that you are capturing the State's effort, 
if you will, and looking at it more broadly as to how that 
State stacks up in encouraging marriage and in encouraging that 
child to be supported by two parents.
    All we are really doing is looking at all of the children 
in the State rather than simply the subset who are born 
illegitimately. What you find when you do that is that it sends 
the message to the States and to the bureaucracy that marriage 
is favored by this government. Marriage is, in fact, not to be 
discouraged by the State worker.
    The problem that we have right now is that the message that 
goes out to the worker is that marriage is just kind of 
irrelevant. It doesn't enter into their thinking at all. They 
think that they are only dealing with illegitimacy, and their 
only mission in life is to get that voluntary paternity 
acknowledgement. I want to send to them the message that 
encouraging marriage is a good thing for them, and not only in 
terms of the incentive formula, but also throughout the entire 
TANF program because we know that marriage reduces welfare 
dependency, length of time, even the likelihood that they will 
go into welfare.
    Chairman Shaw. Okay, it is in TANF.
    Mr. Henry. Yes.
    Chairman Shaw. We are waiting for some regulations to come 
down because there is something in the welfare bill that 
rewards States. Yes ma'am?
    Ms. Jensen. There is one aspect that might be helpful. 
Families who do subsequently, after a paternity has been 
established and an order has been established, end up in a 
situation where the father's paycheck may continue to be 
attached for the child support even though they are married 
because she was on welfare during the time period before they 
got married. So it would be good if there would be a waiver and 
that the welfare debt would not have to be paid off since the 
mother and the father are living there and taking care of the 
children and it is very difficult for them to do that plus pay 
the State.
    Chairman Shaw. Thank you.
    And Wendell, just a quick comment. The part of your 
testimony contained on page 5 with regard to the medical 
payments, that is something that, as I'm sure you know, that 
our committee does have interest in and that we will be 
addressing probably somewhere down the line. But it is a point 
well made, and I don't want to look like we are glossing over 
it.
    Mr. Primus. Thank you, Mr. Chairman.
    Chairman Shaw. Thank you. I would like to thank this entire 
panel for being with us this morning.
    Mr. Cardin, wherever you are comfortable, sir.
    Our next witness is Mr. Cardin from the State of Maryland, 
a--not a member of this subcommittee but a member of the Ways 
and Means Committee.
    Ben, we have your complete statement which will be made a 
part of the record, and you may proceed as you wish.

  STATEMENT OF THE HONORABLE, BEN CARDIN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MARYLAND

    Mr. Cardin. Thank you, Mr. Chairman.
    First, let me thank you for allowing me to testify out of 
order. I very much appreciate the legislation that you are 
considering. It is important for my State as one State that is 
impacted by it, and I think that the way that you have modified 
the penalty proposals for the States is commendable. I would 
hope that this legislation could move quickly.
    I would like to comment on a provision that I hope you will 
consider adding to the bill that deals with child-support 
enforcement, H.R. 2985. It would cover foreign nationals, and 
Mr. Chairman, I appreciate your interest in this matter and 
encouragement.
    For foreign nationals who are $5,000 or more behind in 
their child support amounts, H.R. 2985 would deny these 
individuals visas to come into the United States residency 
status here, or the ability to proceed with naturalization in 
our country. It tries to put establish parity for foreign 
nationals with the way we treat our own citizens. Americans who 
are behind in child support are denied passports. I think that 
it is only appropriate that we take a very tough position in 
regards to foreign nationals.
    This matter was brought to my attention by a person who 
lives in my district. The noncustodial parent of this 
constituent's child was coming back and forth to this country 
regularly and owed significant amounts of money in child 
support. This irresponsible parent was taking advantage of the 
economics of our Nation and yet not paying for the child 
support of his child.
    The bill also would add a provision that has been suggested 
by the administration that would allow subpoenas, court orders 
and other legal procedures to be served at the border. This 
proposal was shaped with a great deal of input from the 
interagency group that deals with international child-support 
enforcement issues within the administration, and I would hope 
that you would be able to add this improvement in child support 
to the legislation as it moves forward.
    Thank you, Mr. Chairman.
    [The prepared statement follows:]

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    Chairman Shaw. Thank you, Mr. Cardin.
    Does anyone have any questions for Mr. Cardin?
    Ben I've looked over the legislation. I think that it is 
very well thought out, and as I mentioned to you, we are 
considering supporting you as an addition to the bill, although 
the decision has not been made.
    Mr. Cardin. Thank you.
    Chairman Shaw. Thank you, sir.
    That concludes today's hearing. I thank you all for being 
here. As I'm sure that most of you know, the House is not in 
session today. Many of our members have gone back to their home 
districts and that is the reason why we have had a low 
attendance. I think that our committee is singularly good in 
the attendance and their interest with regard to this 
legislation and other legislation within our jurisdiction.
    We stand adjourned.
    [Whereupon, at 10:54 a.m., the hearing adjourned subject to 
the call of the Chair.]
    [Submissions for the record follow:]



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