[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]




 
                       CHILD SUPPORT ENFORCEMENT

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

                                HEARING

                               before the

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 18, 2000

                               __________

                             Serial 106-82

                               __________

         Printed for the use of the Committee on Ways and Means



                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
66-898                     WASHINGTON : 2000

_______________________________________________________________________
            For sale by the U.S. Government Printing Office,
Superintendent of Documents, Congressional Sales Office, Washington, DC 
                                 20402


                      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        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
WES WATKINS, Oklahoma                LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida

                     A.L. Singleton, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                    Subcommittee on Human Resources

                NANCY L. JOHNSON, Connecticut, Chairman

PHILIP S. ENGLISH, Pennsylvania      BENJAMIN L. CARDIN, Maryland
WES WATKINS, Oklahoma                FORTNEY PETE STARK, California
RON LEWIS, Kentucky                  ROBERT T. MATSUI, California
MARK FOLEY, Florida                  WILLIAM J. COYNE, Pennsylvania
SCOTT McINNIS, Colorado              WILLIAM J. JEFFERSON, Louisiana
JIM McCRERY, Louisiana
DAVE CAMP, Michigan


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 May 11, 2000, announcing the hearing.................     2

                               WITNESSES

U.S. Department of Health and Human Services, Hon. Olivia A. 
  Golden, Ph.D., Assistant Secretary for Children and Families...    16

                                 ______

Castle, Hon. Michael N., a Representative in Congress from the 
  State of Delaware..............................................     9
Center for Law and Social Policy, Vicki Turetsky.................    56
Center on Budget and Policy Priorities, Wendell Primus...........    30
Cox, Hon. Christopher, a Representative in Congress from the 
  State of California............................................    13
Dads Against Discrimination, Victor Smith........................    95
Harris County, Texas, Office of the District Clerk, Charles 
  Bacarisse......................................................   106
Massachusetts Department of Revenue, and Massachusetts Commission 
  on Responsible Fatherhood and Family Support, Marilyn Ray Smith    47
Minnesota Department of Human Services, Laura Kadwell............    87
National Child Support Enforcement Association, Dianna Durham-
  McCloud........................................................    42
National Women's Law Center, Joan Entmacher......................    79
Supportkids.com, Vanessa Diaz....................................   100
Texas Child Support Division, Howard G. Baldwin, Jr..............    66

                       SUBMISSIONS FOR THE RECORD

Association for Children for Enforcement of Support, Inc., 
  Toledo, OH, Geraldine Jensen, statement........................   117
Children's Defense Fund, Deborah Weinstein, statement............   123
Children's Rights Council, David L. Levy, statement..............   125
Cooperative Parenting for Divided Families, Pittsburgh, PA, 
  Denise Simpson, letter and attachments.........................   126
Fathers are Parents, Too, Lilburn, GA, John Haeger, statement....   129
Hatfield, Malcolm, Racine, WI, letter and attachments............   132
Jeanes, Hon. Michael K., Clerk of the Superior Court, Maricopa 
  County, AZ, statement and attachment...........................   134
Men's Defense Association, Forest Lake, MN, Richard F. Doyle, 
  statement......................................................   137
NOW Legal Defense and Education Fund, New York, NY, Martha Davis, 
  statement......................................................   139
Policy Studies Inc., Denver, CO, Robert G. Williams, statement...   141
Women for Fatherhood, Honeoye, NY, Becky Kiely, statement........   143


                       CHILD SUPPORT ENFORCEMENT

                              ----------                              


                         THURSDAY, MAY 18, 2000

                  House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Human Resources,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:02 a.m. in 
room B-318, Rayburn House Office Building, Hon. Nancy L. 
Johnson (Chairman of the Subcommittee) presiding.

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                                CONTACT: (202) 225-1025
FOR IMMEDIATE RELEASE
May 11, 2000
No. HR-21

         Johnson Announces Hearing on Child Support Enforcement

    Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on 
Human Resources of the Committee on Ways and Means, today announced 
that the Subcommittee will hold a hearing on child support enforcement. The hearing will take place on Thursday, May 18 , 2000, in room B-318 
Rayburn House Office Building, beginning at 10:00 a.m.
      
    Oral testimony at this hearing will be from invited witnesses only. 
Witnesses will include Members of Congress, an official 
from the U.S. Department of Health and Human Services, State child 
support administrators, representatives of advocacy groups, and 
advocates for local government and private child support entities. 
However, any individual or organization not scheduled for an oral 
appearance may submit a written statement for consideration by the 
Committee and for inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    The Child Support Enforcement (CSE) program, created in 1975 and 
authorized under Title IV-D of the Social Security Act, is a State-
Federal partnership developed to collect child support payments from 
parents who do not live with their children. In 1998, the most recent 
year for which data are available, the program collected nearly $14.4 
billion in child support payments for single parents and their 
children, located 6.5 million noncustodial parents, established 848,000 
paternities, and established 1.1 million child support orders. 
Collections by the CSE program have increased more than 60 percent 
since 1993.
      
    The 1996 welfare reform law (P.L. 104-193) reformed and improved 
the CSE program by providing: immediate reporting of employer address 
and wages for every person hired in the United States, strong paternity 
establishment requirements, new mechanisms to collect child support 
payments such as revocation of hunting, fishing, and drivers licenses, 
and greater automation of the child support system. These provisions 
are widely believed to be the major reasons child support collections 
have improved so much in recent years. However, as the States work 
toward even more effective implementation of the welfare reform 
provisions, there are several issues that were not fully addressed by 
the 1996 legislation.
      
    The most important is the question of whether the family or Federal 
and State Governments get to keep collections on past-due child 
support. When families are on welfare, Federal and State Governments 
keep all child support collections. Once families leave welfare, the 
Federal and State Governments are allowed to keep up to half of the 
money collected on past-due child support. A series of hearings by the 
Subcommittee showed that many observers, including State child support 
enforcement officials, believe most or all of this money should go to 
mothers and children.
      
    Another issue is that a large number of local child support 
enforcement agencies and private entities are involved in collecting 
child support. Current Federal laws restrict the amount of government 
information and the child support collection methods to which these 
entities have access. It might be possible to improve child support 
collections if more information and enforcement methods from the 
Federal-State program were shared with these other child support 
entities.
      
    In announcing the hearing, Chairman Johnson stated: ``Despite the success of recent bipartisan efforts to improve 
child support collections, a significant amount of child support goes 
uncollected. We must use all the tools available to get the child 
support owed and hold noncustodial parents accountable. Even then we 
must take the necessary steps to make sure mothers leaving welfare get 
all the child support they are due.''
      

FOCUS OF THE HEARING:

      
    The hearing will focus on child support enforcement issues and 
proposals to improve the CSE program, including proposals by Chairman 
Johnson and Rep. Ben Cardin (D-MD), to increase the amount of child 
support money going to custodial parents and children.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Any person or organization wishing to submit a written statement 
for the printed record of the hearing should submit six (6) single-
spaced copies of their statement, along with an IBM compatible 3.5-inch 
diskette in WordPerfect or MS Word format, with their name, address, 
and hearing date noted on a label, by the close of business, Thursday, June 1, 2000 , to A.L. Singleton, Chief of Staff, 
Committee on Ways and Means, U.S. House of Representatives, 1102 
Longworth House Office Building, Washington, D.C. 20515. If those 
filing written statements wish to have their statements distributed to 
the press and interested public at the hearing, they may deliver 200 
additional copies for this purpose to the Subcommittee on Human 
Resources office, room B-317 Rayburn House Office Building, by close of 
business the day before the hearing.
      

FORMATTING REQUIREMENTS:

      
    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.
      
    1. All statements and any accompanying exhibits for printing must 
be submitted on an IBM compatible 3.5-inch diskette WordPerfect or MS 
Word format, typed in single space and may not exceed a total of 10 
pages including attachments. Witnesses are advised that the Committee 
will rely on electronic submissions for printing the official hearing 
record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.
      
    4. A supplemental sheet must accompany each statement listing the 
name, company, address, telephone and fax numbers where the witness or 
the designated representative may be reached. This supplemental sheet 
will not be included in the printed record.
      
    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
material submitted solely for distribution to the Members, the press, 
and the public during the course of a public hearing may be submitted 
in other forms.
      

    Note: All Committee advisories and news releases are available on 
the World Wide Web at ``http://www.house.gov.ways__means/''.
      

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.
      

                                


    Chairman Johnson of Connecticut. The hearing will come to 
order.
    I have been looking forward to today's hearing. Ben Cardin 
and I both introduced legislation that would result in poor and 
low-income families and their children getting a lot more money 
from child support. I have fought for this provision since 
1995, and know that, working together and with the support of 
the administration, we should be able to pass a good bill this 
year.
    Here is how important it is: As compared to 5 years ago, we 
now have at least a million additional former welfare mothers 
working to support their children. This is an immense 
achievement, not just for public policy but for these women and 
their children, themselves. But they are in jeopardy of having 
so low incomes, or even of being forced to go back on welfare, 
that they cannot survive, so we want to get them as much money 
as we can, especially when the money was paid by the children's 
father.
    When fully implemented, my bill would provide these mothers 
and children with an additional $3.5 billion over 5 years after 
they leave welfare. I doubt that the Congress will do anything 
more important than that this year.
    There are some points of difference between Ben's and my 
bill. They are significant and they are worth talking about. 
One of them provides, through Ben's bill, a lot more money to 
women on welfare and doesn't allow the States to count that 
toward their welfare eligibility. My bill does not do that. One 
of the things that I think has been successful about welfare 
reform is that it gives the States great latitude over how they 
phase out welfare payments as a woman moves into the work 
force, and the child support money is just one piece of all 
that money they use to provide benefits and to adjust benefits 
as earnings rise. That is something we will discuss at greater 
length and think about more deeply throughout this process. It 
is an important difference, but not one I think that should be 
allowed to hold up this bill.
    There is a second issue that divides us, and this is the 
concern in some quarters about provisions in my bill that allow 
the private sector to help mothers establish and enforce child 
support orders. In fact, I used to think that no force known to 
God or man could bring together the mothers' groups and the 
fathers' groups lobbying child support issues, but I have found 
it.
    [Laughter.]
    The limited provision that I have put in my bill seems 
reasonable to me, because it is another way to get dollars to 
mothers and children.
    First, according to our calculations--well, the 
calculations of the Congressional Research Service--there is 
about $40 billion in past due support. In fact, we now make 
collections in only 14 percent of welfare cases and less than 
25 percent of non-welfare cases.
    I find it hard to believe and think of all the States that 
have surpluses and what are happening to those surplus dollars, 
of what is happening to the Federal surplus dollars--I find it 
very hard to believe that we are going to put up the additional 
Federal or State dollars that would be required to greatly 
improve this collection record. It is not my judgment that the 
States are inefficient; it is my judgment they are working 
hard. And if you are only collecting 14 percent of welfare 
cases and 25 percent of non-welfare cases, you had better start 
asking yourself: What is our obligation to the majority of 
American women who need child support and are not getting any 
help?
    We need all the help we can get in collecting this money, 
and desperate mothers need choices. Furthermore, my provision 
involving the private sector puts that involvement completely 
under the control of State government and has a 2-year delay in 
implementation following guidance issued by the Secretary of 
HHS and requires a signed contract by private companies, in 
which they agree to observe all the due process, privacy, and 
data security issues that the regular Federal and State program 
must follow.
    I cannot imagine, I simply cannot imagine that any State 
would make contracts with private collection agencies and allow 
them to tithe 30 percent of the child support payment, but they 
have total control over that. They can say, ``Your charge can't 
be more than 5 percent.'' They can say whatever they want.
    One benefit of where we are now is that we have some 
excellent private agencies at work and we have some terrible 
private agencies at work. We are doing a scandalous job of 
ripping off mothers who are truly desperate. And from that 
information and evidence I see absolutely no reason why any 
State in their right mind can't utilize private agencies to 
expand the power to collect child support for women and 
children without allowing that women and children could be 
exploited. That is why I left the control completely with the 
States and gave HHS the opportunity to write guidance.
    Now, I see no danger in this, but, as I always do--
remember, this is one of the few Committees that develops a 
legislative proposal and actually puts it out for hearing 
before we go to the floor. As I have in the past, I will 
certainly listen carefully to the testimony and think over the 
points that you have raised. But I ask only that you think over 
the details of how my bill is written, because it is clear from 
some of the comments that there was no attention to that.
    My legislation is not a wide-open, carte blanche 
opportunity for private firms to get in there and help collect 
child support, but you know and I know that we have used 
private collection agencies in every other aspect in the public 
and private sector. While we have used them in partnership with 
the private sector, we have always governed those relationships 
very carefully because they are a public concern.
    I ask for not only your input today; I ask for your follow 
on input to think of that issue of governance. Regardless of 
these two provisions, I hope that we can get a bill passed this 
session that will, when fully implemented, put $3.5 billion 
more in the hands of mothers needing welfare.
    I have requested a reaction to Representative Cox's 
proposal from the Department of the Treasury and will include 
their reponse in the record when we receive it.
    [The information was subsequently received:]

                                 Department of the Treasury
                                       Washington, DC 20220
                                                       May 23, 2000

The Honorable Nancy L. Johnson
Chairperson, Subcommittee on Human Resources
Committee on Ways and Means
U.S. House of Representatives
Washington, DC 20515

    Dear Madam Chairperson:
    Secretary summers asked me to respond to your letter of May 10, 
2000, in which you request the views of Treasury on H.R. 816, the Child 
Support Enforcement Act (the ``Act''). The Act would require 
individuals who fail to make their child support payments to include 
the unpaid amounts in their gross income and would allow custodial 
parents to claim a deduction for unpaid child support payments.
    As you are aware, the Administration has made child support 
enforcement a critical priority. The Federal and state Child Support 
Enforcement program broke new records in nationwide collections in FY 
1999, reaching an estimated $15.5 billion, nearly twice the amount 
collected in 1992. This Spring, the Administration submitted to the 
Congress a comprehensive child support bill that proposed incentives 
for states to direct more child support payments to families, as well 
as new child support enforcement tools. Although we share the goal of 
ensuring that families get the child support they need and deserve, and 
look forward to working with the Congress and the Committee on 
developing an effective approach, Treasury cannot support the Act.
    The Act generally may not be effective in increasing child support 
payments. In certain circumstances, the Act could actually discourage 
the payment of child support by imposing a higher tax bill on a 
delinquent parent, just when he or she might be attempting to marshal 
resources to pay child support. By providing custodial parents a tax 
benefit for unpaid child support payments, the Act might also 
discourage custodial parents from enforcing their rights to receive 
such payments.
    The Act also raises significant tax policy concerns. Under present 
law, an unpaid debt generally is included in the income of the debtor 
and deducted by the creditor when it is certain that the debt will not 
be paid. The Act would prematurely treat unpaid support obligations as 
if they were certain not to be paid. This premature treatment would 
require offsetting adjustments if the obligation were paid in the 
future. By determining the tax treatment of unpaid support obligations 
before it is certain whether or not they will be paid, the Act would 
create complexity and be difficult to administer. The Act would also 
impose administrative burdens on custodial parents by requiring them to 
provide identifying information on their returns and to send notices to 
delinquent parents. In addition, the Act as drafted would be extremely 
complex and difficult to administer.
    We thank you for inviting us to share our views with you, and look 
forward to working with you to continue to develop effective child 
support enforcement strategies.
    OMB has advised that there is no objection to the presentation of 
this report from the standpoint of the Administration's program.

            Sincerely,

                                          Jonathan Talisman
                            Deputy Assistant Secretary (Tax Policy)
      

                                


    I look forward to working with all of you and to working 
with Ben Cardin in this matter.
    Ben.
    Mr. Cardin. Thank you, Madam Chair. I, too, look forward to 
this hearing and I thank you very much for holding this 
hearing.
    You observed correctly that we don't normally get the 
groups representing the custodial mothers and the noncustodial 
fathers together on an issue, but we also have the State 
agencies in agreement with the Federal Government here as to 
what the policy should be, so we have the four major 
stakeholders all in agreement that we need to do one thing, and 
that is to get more of the child support to the families.
    Second, Madam Chair, they agree on a second point, and that 
is that we should not provide child support private agencies 
with more of the power that we have here in government.
    Let me cover that second point first, and then I will come 
back to the area of child support.
    I think there is very serious problems with extending the 
authorities that we have to private collection agencies. You 
mentioned that we allow the States to regulate. Well, the 
States should regulate first. We should have a system in place 
first before we extend the powers that we have at the Federal 
level for the collection of child support.
    There are serious problems there now. The witnesses that 
are going to be testifying later will testify as to fraud and 
abuse among collection agencies. We know that an awful lot of 
the moneys that are collected through the agencies, when they 
use private agency, they take credit for money that has already 
been collected through the government. We also know it is very 
expensive--a one-third fee is customary--so less money gets to 
the families, themselves.
    These are all issues that I think need to be addressed 
first, before we look at expanding and extending the power of 
government in collection to private agencies.
    Madam Chair, it is very interesting to refer to an article 
that appeared in the ``Washington Post'' today that documents 
many of these cases, that points out that private companies 
frequently charge for child support payments they had no role 
in collecting. I think we need to deal with these issues first, 
before we extend the power.
    In regards to the pass-through of the child support, you 
observed that I have filed H.R. 3824, along with my democratic 
colleagues on the Subcommittee, and it is true that this bill 
would allow for more of the pass-through of child support to 
the families. I want to make it clear, it maintains the States' 
flexibility in determining eligibility. We have not affected 
that. The States can still determine eligibility based upon the 
income.
    Let me also point out that I appreciate the fact that you 
have filed legislation, and I would hope that you will keep an 
open mind, and I promise that I will keep an open mind, because 
one of the things that has been the hallmark of this 
Subcommittee's work is that we have been able to work in a 
bipartisan manner to bring forward some very important 
legislation.
    I think there is a problem out there with the pass-through 
of child support. I think it is affecting noncustodial parents' 
willingness to cooperate with the system because they do not 
believe the money is going to the family, and that if we had a 
better pass-through policy we would have more child support 
compliance and more money going to help families and more 
connection between noncustodial parents and the rearing of 
their child. So I would hope that the two of us will find a way 
that we can bridge the gap on the pass-through of child support 
so that we can agree on bipartisan legislation in this 
Congress, have it moving so that we can continue the record 
that this Subcommittee has made in helping children and 
families.
    Thank you, Madam Chair.
    [The opening statement follows:]

Opening Statement of Hon. Benjamin Cardin, a Representative in Congress 
from the State of Maryland

    Madame Chairwoman, during past debates on child support, 
there has rarely been consensus between the groups representing 
custodial mothers and those representing non-custodial fathers 
and between the Federal Department of Health and Human Services 
and the State Child Support Agencies.
    Today, however, we have two issues before us that unite all 
four of these stakeholders in our Nation's child support 
enforcement system.
    First, all of them support sending more collected child 
support to the families for whom it was intended. And second, 
all of them oppose providing private child support collection 
agencies with more government information and collection tools.
    I therefore hope we can move forward on sending more child 
support to families, rather than getting mired in a debate 
about greater authority for private collectors. Our focus 
should be on increasing resources for children, not on raising 
profits for collection agencies.
    Along with my Democratic colleagues on this Subcommittee, I 
recently introduced the Child Support for Children Act, HR 
3824, which would require all current support be given to 
families, regardless of their welfare status. This is known as 
``passing through'' child support.
    States would then be permitted to determine how much of 
this income should be disregarded for TANF eligibility and 
payment purposes. However, unlike current law, my bill would 
require the Federal government to split the cost with the 
States of passing through and disregarding child support to 
welfare families.
    In addition to requiring a pass-through of current child 
support, my legislation would simplify the distribution of 
past-due support. In short, the legislation would require that 
all arrears that accrue when a family is not on TANF be 
directed to the family.
    For arrears that accrue while the family is on welfare, 
States would have a choice to send that money to the family or 
retain it. Finally, all debts owed to families must be repaid 
before any debts owed to the State.
    Madame Chairwoman, I want to commend you for introducing a 
proposal to address this second issue, namely sending more 
child support arrears to families that have left welfare.
    I hope you will keep an open mind about expanding this 
distribution scheme to families on public assistance, 
especially since such a policy would provide increased 
simplification for the States, more resources for low-income 
families, and a greater incentive for non-custodial parents to 
pay child support. Furthermore, I do not think we can defend a 
system that gives non-custodial fathers with families on TANF 
the following choice--you can obey the law, or you can provide 
more resources for your children--but you can't do both.
    Finally, I want to express my concern about opening up 
personal financial information and government collection tools 
to private collection agencies. I have three basic concerns.
    First, providing collection agencies with increased access 
to the wage and bank data of every American is surely going to 
raise serious privacy issues. Even if private collectors are 
required to adhere to certain privacy standards, it is not all 
clear that State child support agencies could monitor and 
enforce those requirements. Ultimately, abuse in this area 
could jeopardize the same tools and data bases to which private 
collectors are seeking access.
    Second, providing private collection agencies with access 
to certain governmental collection tools, such as the tax 
refund offset, will lead to a system of private profit at 
public expense. In short, the government agencies will do all 
the work, the private companies will reap all of the rewards, 
and the family will receive one-third less than if they got 
that exact same service directly from the public agency. What 
public interest could possibly be served in such a system.
    Finally, this committee will hear testimony from several 
witnesses about cases of deception and fraud perpetrated by 
private collection agencies on both custodial and non-custodial 
parents. Some of this abuse may result from the fact that child 
support collection agencies are exempt from the Federal Debt 
Collection Practices Act, which prevents deception and 
harassment. When Members hear some of these stories, they may 
want to reduce the authority of private child support 
collectors, rather than increase their power.
    I look forward to hearing our distinguished guests explain 
their views on this issue.
    Thank you.
      

                                


    Chairman Johnson of Connecticut. Now I would like to 
recognize my colleague, Mr. Castle, from the State of Delaware. 
It is a pleasure to have you before us.

   STATEMENT OF HON. MICHAEL N. CASTLE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF DELAWARE

    Mr. Castle. Thank you very much, Madam Chairwoman and Mr. 
Cardin, Mr. Cox, and Mr. Jefferson. I am delighted to be here 
to discuss a certain portion of child support that concerns me. 
This is a fundamental principle. It is one that a lot of men, 
in particular, have trouble understanding, but it is a 
fundamental principle that a parent who brings a child into 
this world is responsible for providing for that child's 
physical needs, regardless of any conflicts of the child's 
custodial parents.
    I say some people have trouble understanding it because, 
due to lack of visitation, they feel they don't have to pay the 
support, but support, indeed, does have to be paid. As a result 
of that, we often get backlogs in child support and uncollected 
child support, which is a tremendous problem for many 
supportive parents who actually have the children in custody.
    I want to take a few moments to discuss the Child Support 
Fairness and Federal Tax Refund Interception Act of 2000. I 
recently introduced this bill to remove a legal barrier that is 
preventing the Federal tax refund offset program from more 
effectively ensuring that child support is paid to all those 
children who deserve it. This bill has been incorporated into 
the Committee's bipartisan Child Support Distribution Act of 
2000, section 403, which I greatly appreciate.
    As most of us know, under current law the Federal tax 
refunds of parents who owe back child support can be 
intercepted and used to reduce that debt. After garnishing 
wages, this program is the most effective means of recovering 
back child support.
    This statistic surprised me when I learned it, but the back 
taxes actually account for one-third of all back child support 
collected.
    However, unlike garnishing wages and many other child 
support enforcement tools, eligibility for the program is 
restricted by the age of the child. Eligibility for the program 
is limited to cases where the child is still a minor, the 
parent is receiving public assistance, or the child is a 
disabled adult. This fails to protect non-disabled, college-
aged children and their custodial parents, even if a child 
support deficit accrued while the child was a minor.
    The unintended effect of the program is that it rewards 
noncustodial parents who are successful in avoiding their child 
support obligations while their children were minors--and, 
believe me, there are many individuals who do attempt to avoid 
that responsibility.
    The age limit removes the threat of one of the most 
effective child support enforcement tools, the tax refund 
intercept.
    Rather than recount the legislative history behind this 
program, I think we should just ask ourselves whether there is 
any good reason why we should allow delinquent parents to 
collect Federal tax refunds to use for their enjoyment while 
custodial parents struggle to recover from years of raising 
their children alone on one income.
    There are no statistics kept that tell us exactly how many 
Federal tax refunds cannot be intercepted due to this age 
limitation, but there is at least one person in my home State 
of Delaware who is adversely affected by this limitation. Last 
summer, Lisa McCave, who is with us today, sitting right here 
behind me, and who is from Wilmington, Delaware, where I am 
from, had to stand by and watch a $2,426 Federal tax refund go 
to her husband in Georgia, even though he owed her nearly 
$7,000 in back child support.
    This frustration prompted her to write me a letter that I 
would ask unanimous consent to place into the record. It 
describes how, since her son was three, she has raised him 
alone. During that time, she often had to work two jobs to 
compensate for child support installments that were never paid. 
She has spent the better part of her time away from work 
tracking down her former husband, who has often quit his job as 
soon as his wages were garnished to repay this debt. Obviously, 
she could have used the $2,426 tax refund to help pay down the 
$55,000 in parent loans she incurred to send her sons to 
college. In fact, I thought I would read a portion of the 
letter, if I could.
    ``If we single parents can gain moneys from other sources 
from the noncustodial parent, such as property income and 
access their bank records for arrearage, why is the Federal 
income tax refund exempt? It should not be.
    ``I am writing to say that, on behalf of all struggling 
single parents, this law must be changed. We must be able to 
get all moneys available toward paying child supports in 
arrearage, no matter if the child has become an adult when the 
arrearage is being paid. We should not have to make our 
children do without necessaries, nor should we have to work two 
and three jobs to make up for an irresponsible, non-
contributing parent.''
    I want to thank Lisa McCave for bringing this issue to my 
attention. I hope that Congress can alleviate the tremendous 
burden on single parents--and I congratulate all of you who are 
working on this, by the way--who have to work even harder to 
provide for their children.
    To me, an artificial barrier such as the age limit on the 
Federal tax refund offset program should be torn down, the 
sooner the better. A noncustodial parent should not be able to 
escape their child support responsibilities by playing a 
waiting and avoidance game until their child is 18 years of 
age.
    The Federal tax refund offset program is responsible for 
retrieving, as I already indicated, about one-third of these 
funds, and I think it should be used after the child has become 
of age, but that incurred while the child was still a minor.
    I would urge my colleagues to support this legislation and 
section 403, and I really appreciate the opportunity of being 
here--and I am sure Lisa does, too--to present what I think is 
an injustice that hopefully we can correct as soon as possible 
in this Congress.
    Chairman Johnson of Connecticut. Thank you very much, 
Congressman Castle. And thank you for being here, Lisa, and for 
your letter. We appreciate having that.
    Mr. Castle. Thank you.
    [The prepared statement and attachment follow:]

Statement of Hon. Michael N. Castle, a Representative in Congress from 
the State of Delaware

    Chairman Johnson, ranking member Cardin, members of the 
subcommittee, I want to thank you for giving me this 
opportunity to testify on the important subject of child 
support.
    It is a fundamental principle that a parent who brings a 
child into this world is responsible for providing for that 
child's physical needs regardless of any conflicts with the 
child's custodial parent. It is rewarding for me to join you 
here today to discuss how we can improve the laws of this 
country to enforce that principle.
    I want to take a few moments to discuss the ``child support 
fairness and federal tax refund interception act of 2000.'' I 
recently introduced this bill to remove a legal barrier that is 
preventing the federal tax refund offset program from more 
effectively ensuring that child support is paid to all those 
children who deserve it. This bill has been incorporated into 
the committee's bipartisan ``child support distribution act of 
2000'' as section 403.
    As you know, under current law, the federal tax refunds of 
parents who owe back child support can be intercepted and used 
to reduce that debt. After garnishing wages, this program is 
the most effective means of recovering back child support. It 
accounts for one-third of all back child support collected.
    However, unlike garnishing wages and many other child 
support enforcement tools, eligibility for this program is 
restricted by the age of the child. Eligibility for the program 
is limited to cases where the child is still a minor, the 
parent is receiving public assistance or the child is a 
disabled adult. This fails to protect Non disabled, college-age 
children and their custodial parents, even if the child support 
deficit accrued while the child was a minor. The unintended 
effect of the program is that it rewards noncustodial parents 
who are successful in avoiding their child support obligations 
while their children were minors. The age limit removes the 
threat of one of the most effective child support enforcement 
tools the tax refund intercept.
    Rather than recount the legislative history behind this 
program, I think we should just ask ourselves whether there is 
any good reason why we should allow delinquent parents to 
collect federal tax refunds to use for their enjoyment, while 
custodial parents struggle to recover from years of raising 
their children alone on one income.
    There are no statistics kept that tell us exactly how many 
federal tax refunds cannot be intercepted due to this age 
limitation, but there is at least one person in my home state 
of Delaware who was adversely affected by this limitation. Last 
summer, Lisa McCave, who is with us today from Wilmington, 
Delaware, had to stand by and watch a $2,426 federal tax refund 
go to her husband in Georgia even though he owed her nearly 
$7,000 in back child support.
    This frustration prompted her to write me a letter that I 
would like to place into the record. It describes how since her 
son was three, she has raised him alone. During that time, she 
often had to work two jobs to compensate for child support 
installments that were never paid. She has spent the better 
part of her time away from work tracking down her former 
husband, who has often quit his job as soon as his wages were 
garnished to repay this debt. She could have used that $2,426 
tax refund her exhusband received to help pay down the $55,000 
in parent loans she incurred to send her son to college.
    I want to read a section from her letter:
    ``If we single parents can gain monies from other sources 
from the noncustodial parent, such as property income, and 
access their bank records for arrearage, why is the federal 
income tax refund exempt? It should not be. . . . I am writing 
to say that on behalf of all struggling single parents, this 
law must be changed. We must be able to get all monies 
available toward paying child support and arrearage-no matter 
if the child has become an adult when the arrearage is being 
paid. We should not have to make our children do without 
necessaries, nor should we have to work two and three jobs to 
make up for an irresponsible, non-contributing parent.''
    I want to thank Lisa McCave for bringing this issue to my 
attention. I hope that congress can help alleviate the 
tremendous burden on single parents who have to work even 
harder to provide for their children. Artificial barriers, such 
as the age limit on the federal tax refund offset program, 
should be torn down. A noncustodial parent should not be able 
to escape their child support responsibilities by playing a 
waiting game until their child is eighteen. The federal tax 
refund offset program is responsible for retrieving nearly one-
third of all back child support collected. The time has come to 
make it a greater success by helping all children who deserve 
support. I urge my colleagues to support this legislation and 
section 403.
    Thank you, Chairman Johnson for your commitment to this 
important issue. I look forward to working with you to move 
this bill to the full house in the near future.
      

                                


                                    Lisa K. McCave         
                                       Wilmington, DE 19803
                                                      July 17, 1999

The Honorable Michael Castle
The House of Representatives
Washington, DC 20510

Dear Congressman Castle:

    Senator William V. Roth, Jr. (R-Del) is currently presenting a tax 
package before the Senate, House and White House. As part of the 
proposed changes, I urge you to consider another critical change which 
is of great urgency to single parents. It is a change to the current 
Federal Tax Refund Offset Program for Child Support monies.
    The Law (section 2331, P.L. 97-35) states in Section #2 under Non-
AFDC Cases that, ``Non-AFDC referrals on behalf of an individual who is 
no longer a minor even if the arrearage accrued while the person was a 
minor child may not be submitted for offset.'' In other words, the 
child must be a minor as of December 31 of the year in which that case 
is submitted to OCSE for offset to be eligible to receive the Federal 
income tax refund.
    The Law affects me adversely in this way. It means that in spite of 
a court order against my ex-husband, William David Wilson (who lives in 
Albany, Georgia), to collect more than $19,000 in back child support 
over the last nine years, I cannot collect any money from his Federal 
income tax refund now because it is arrearage, and my child is an 
adult. I consider this law outrageous and stupid. It makes no sense.
    When my son was seven years old in 1982, my ex-husband ceased to 
pay child support. When I initiated proceedings against him seven years 
later, the amount of money he owed in back support was $19,000! He was 
ordered to continue paying child support until my son was 18 years old, 
and then the $19,000 arrearage was to be paid at the rate of $200 per 
month. During the last five years, my ex-husband has been late many 
times and stopped paying in 1994, 1995 and 1998, each time being 
summoned to appear in a Georgia court. In spite of the Agreement 
between Delaware and Georgia, which states that failing to make a 
payment will result in the full amount being due, the judge just 
slapped my ex-husband on the wrist each time, and re-instituted the 
$200/month payment. Again in June 1999, he did not make a payment. And 
again, his wages will be garnished, which will only be effective until 
he quits his job, which he has done in the past.
    On July 7, 1999, I called my caseworker with the Delaware Child 
Support Office to inquire about my late June check. She informed me 
that a Federal Income Tax refund check in the amount of $2,426 had come 
from the State of Georgia and would be mailed to me. As an aside, I 
receive a notice twice a year from the Delaware Division of Child 
Support notifying me that if a Federal Income Tax refund check is due 
my ex-husband, it will be sent to me.
    On July 12, she informed me that because of this Federal Law in the 
Refund Offset Program, the check will be returned to my ex-husband 
because my son is no longer a minor! I was incredulous. If we single 
parents can gain monies from other sources from the non-custodial 
parent, such as property income, and access their bank records for 
arrearage, why is a Federal Income Tax refund exempt? It should not be.
    I am absolutely furious! And this Law--is ridiculous! This Law must 
be changed. The fact that my son is 23 years old and an adult has 
NOTHING to do with the fact that I am collecting back child support 
now. It should not affect this Law. If my ex-husband had paid the child 
support from the time my son was seven until he was fourteen, as he 
should, he would not have accumulated an arrearage of $19,000! But 
since he still owes child support, this Federal Income Tax refund check 
should be applied to satisfy the arrearage of child support he owes. 
This is money that is coming to me--not my son. I paid the total 
support of my son for seven years when his father did not, and that 
money belongs to me. The fact that my son is an adult should have no 
bearing. That should not be a stipulation of the Federal Tax Refund 
Offset Program Law.
    From the time my son was three years old, I raised him alone. I 
have had to work a second job to supplement my income when I did not 
receive child support, and to pay for my son's college education. I am 
paying more than $55,000 in parent loans for the Purdue University 
education my son received. David Wilson did not contribute any money 
toward his son's education--he barely pays the child support. He 
continues to avoid his responsibility and will continue to do so 
because he is irresponsible and manipulates the child support system. 
And the Law continues to give him opportunities to escape his 
responsibilities by failing to enforce the Delaware/Georgia Agreement, 
and with loopholes like this Refund Offset Program Federal Tax Law. 
Without the $2,426 refund I should have received, I will probably 
continue to deal with stretches of missed payments in the future. And 
there will be delays for court appearances caused by my ex-husband as 
he finds ways to avoid paying the remaining $6,900 in child support 
arrearage he owes.
    I am writing to say that on behalf of all struggling single 
parents, this Law must be changed. We must be able to get all monies 
available toward paying child support and arrearage--no matter if the 
child has become an adult when the arrearage is being paid. We should 
not have to make our children do without necessaries, nor should we 
have to work two and three jobs to make up for an irresponsible, non-
contributing parent.
    We are constantly seeing media attention given to the struggles of 
single parents. Some laws have begun to give more exposure to the issue 
of child support issues. But every avenue for pursuing all financial 
resources must be explored. Laws must be fairly and sensibly enforced. 
Please vote to change this Law as you study the tax package. Thank you 
for considering my request.
            Sincerely,
                                             Lisa K. McCave
    cc: All United States Senators
    All United States Representatives
    The White House
      

                                


    Chairman Johnson of Connecticut. We have a long string of 
votes at 10:45, so it is my intention to forego questions to my 
colleagues, if that is acceptable to Ben Cardin, so we can get 
on to hear the Deputy Secretary and have a little time to 
question her.
    Mr. Cox.

STATEMENT OF HON. CHRISTOPHER COX, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Cox. Thank you, Madam Chairman, Mr. Cardin, Mr. Castle, 
and the professional staff that are here, for holding your 
third hearing on this topic. This Subcommittee has done a great 
deal of work in this area, and I think there are a lot of happy 
Americans on account of that. The progress that we are making, 
the focus that we are putting on these important issues is good 
news, indeed.
    In recent years, Congress has done a great deal to improve 
our Nation's welfare system. The welfare reform law, as 
President Clinton points out, as the leaders in Congress often 
point out, is galvanizing a series of new enforcement 
mechanisms to help States improve child support collections. 
That is one of the dividends of our welfare reform. But, 
despite the gains that we are making, a lot more needs to be 
done.
    It is still true that almost 12 million custodial parents 
won't receive even a nickel in child support payments over the 
next year. Only one in five dollars in child support 
obligations are collected by the child support enforcement 
program. Of child support obligations, $47 billion went unpaid 
in the most recent year for which we have complete statistics. 
That is an extraordinary amount of money. It is a staggering 
figure. Of child support arrears, 92 percent remain 
outstanding.
    With such a disproportionate share of child support in 
arrears--92 percent--we have to give delinquent parents a 
strong financial incentive to pay, and we have to give relief, 
even more importantly, to the custodial parents who aren't 
getting the help they need to raise their kids.
    I have introduced legislation titled ``The Child Support 
Enforcement Act'' to help accomplish these goals, and I am 
pleased that this important legislation has received, from the 
get-go, bipartisan support, including sponsorship by 
Representative Carolyn Maloney and Representative Patsy Mink, 
active members of the Women's Caucus. It has also been endorsed 
by a variety of organizations, including the Association for 
Children for Enforcement of Support and Child Help USA, which 
I, like a number of Members, have been associated with for many 
years.
    Under current law, custodial parents receive no tax relief 
when a noncustodial parent fails to meet his or her legal and 
moral obligations to pay child support in full and on time. I 
have a very interesting law review article from the ``NYU Tax 
Law Review'' that chronicles the court decisions in this area 
that, in the estimation of the writer--and perhaps to many 
objective observers--fly in the teeth of what Congress had in 
mind when it wrote section 61-A-12. That section of the Tax 
Code makes it very plain that a taxpayer is supposed to 
recognize income from the discharge of indebtedness. And the 
mirror provision, the bad debt provision, seemingly also ought 
to apply for treating parents involved in disputes about paying 
the money, the same as every other taxpayer, but we don't.
    If we did, two good things would happen. First of all, we 
would be giving tax relief to the parents who need it because 
they are not getting the money that legally they are owed. 
Second, we would be imposing an appropriate economic penalty on 
people who aren't paying their debts, just as we do for all 
other debts in society.
    Third, according to the scorers of this legislation, we 
will actually raise $394 million in revenue over 10 years. The 
only reason for that is because we are treating both the income 
from cancellation of one joint obligation and the bad debt as 
mirror images and equally, is that statistically the 
noncustodial parents--the people who owe the child support--
typically are in higher tax brackets than the custodial 
parents, who aren't working as much because they have got 
child-rearing responsibilities. That mismatch in tax brackets 
is the reason that, even though we had an even-handed treatment 
of both sides of the debt, that it actually raises money--a 
modest amount $394 million over 10 years--but the point is that 
this is something big that we can do without a charge to the 
Treasury.
    There have been a few questions raised about the 
legislation. First is whether or not we intend to give the IRS 
additional power. The legislation gives the IRS no additional 
power. In my view, that isn't necessary. Other legislation has 
done that.
    Congress, in 1998, passed the Dead Beat Parents Punishment 
Act and made it a Federal penalty to willfully fail to pay 
child support, and so on. There are no criminal provisions of 
this bill, and I don't think we need any. We have already taken 
care of that elsewhere. This is just a tax provision, an 
explanation of what section 61-A-12, for example, is all 
about--nothing more, nothing less. Enforcement of the Tax Code 
is left to the rest of--the provision would be treated the same 
as any other provision of the Tax Code.
    Another question that has been raised about it is what 
happens in subsequent tax years if the child support is then 
paid. I would certainly favorably consider any proposal by the 
Subcommittee to amend the legislation to simply say that 
nothing happens. Given these statistics, so much of child 
support is being never paid, in any case. The simplicity that 
that would afford and the fairness that that would afford to 
the custodial parent I think would make it worth the effort, 
because right now, of course, child support payments are not 
included in income, in any case.
    That is the entirety of my presentation. I tried to 
anticipate the questions that you are not asking, Madam 
Chairman. [Laughter.]
    Mr. Cox. So I both delivered testimony and answered 
questions.
    Mr. Cardin. If I might just quickly, Madam Chair.
    Chairman Johnson of Connecticut. Yes.
    Mr. Cardin. First, to Governor Castle, let me say thank you 
very much for your testimony. I would hope that we could move 
that as quickly as we could, because it seems like a common-
sense correction to our Tax Code.
    To Representative Cox, let me just put on the record--and 
we will come back to it--there have been some concerns raised 
about the complexity in enforcement of the provision. We all 
support what you are trying to do, as far as offering financial 
incentives for individuals to pay child support. That is what 
you are trying to do, and we want to do that. We will talk 
about this at a later point.
    But the concern is how would IRS be able to monitor 
whether, in fact, the right child support was paid or not paid 
and written off, and whether there is consistency between the 
noncustodial and custodial parents' tax returns.
    We need, as you point out, to make sure that the proposal 
is enforceable, it doesn't add additional complexity to the Tax 
Code, and it accomplishes the purpose for which you are 
seeking. We need to talk a little bit more about that.
    Mr. Cox. Yes. I have taken to heart the expressions of 
interest and concern in that area. I think that simplification 
is the answer, that we simply ought not to impose any new 
administrative burdens. We ought to treat this precisely the 
same as we would treat any other income and any other 
deduction, and we ought to put in the hands of the taxpayer 
most motivated to help us out here any administrative 
responsibility, and that administrative responsibility could be 
as simple as sending a 1099. There is already a Form 1099C for 
cancellation of indebtedness, and the parent who is owed the 
money and doesn't get it could send that 1099 off to his or her 
spouse or former spouse and the IRS already knows how to handle 
1099s. It would be no more complex than that.
    Chairman Johnson of Connecticut. Thank you very much for 
your testimony. It is a very big idea and one we need to work 
through. I am concerned about complexity from the IRS' point of 
view, but we do need to look at that, because it is an idea 
that would be very powerful.
    Mr. Cox. Yes. The answer, by the way, that I just gave is a 
supplement to and a change in the legislation I have 
introduced, so the question was fairly put. The way the 
legislation is written, I think the problem is easily answered, 
as I just answered it.
    Thanks.
    Chairman Johnson of Connecticut. And Mr. Castle's proposal 
is included in my underlying bill, much simpler and very fair. 
But thank you for your powerful presentation on behalf of your 
ideas, and also thank you for the quality of your ideas, both 
of you. We appreciate it.
    It is my pleasure to invite now Olivia Golden, the 
Assistant Secretary for Children and Families, to testify. As I 
say, we will then have a series of votes, so the next panel 
probably won't be called before 11:30, if any of you have 
things that you need to do, and then we will have to try to 
keep it fairly tight in the questioning of the other two 
panels.
    Welcome, Secretary Golden.

STATEMENT OF HON. OLIVIA A. GOLDEN, PH.D., ASSISTANT SECRETARY 
FOR CHILDREN AND FAMILIES, U.S. DEPARTMENT OF HEALTH AND HUMAN 
                            SERVICES

    Ms. Golden. Thank you.
    Madam Chairman and Members of the Subcommittee, thank you 
for the opportunity to testify on important changes, to the 
child support enforcement program. We are very pleased that 
several provisions from the President's child support 
initiative are included in the bill as proposed by Chairman 
Johnson and Representative Cardin and are the subject of 
today's hearing.
    Through enactment of the Personal Responsibility and Work 
Opportunity Reconciliation Act, President Clinton and Congress 
provided the necessary tools to the child support enforcement 
program to secure for our Nation's children the emotional and 
financial support they need and deserve.
    In fiscal year 1999, a record of nearly $16 billion in 
child support was collected, or double the amount collected in 
1992. We are excited about these dramatic achievements and we 
believe the next step, as both of you said in opening 
statements, is to ensure that working families truly benefit 
from the progress we have made.
    Simplified distribution is a common thread in all of our 
proposals to ensure that families receive more of the child 
support collected on their behalf. Additional support can make 
a critical difference in a child's well-being, and receipt of 
child support can play an important role in ensuring that 
families who leave welfare do not end up back on the welfare 
roles. This is underscored by a study which found that women 
who did not receive child support had a 31 percent chance of 
returning to welfare after only 6 months off the rolls. In 
contrast, women who received as little as $1 in support had 
only a 9 percent chance of returning to welfare.
    The President and Congress took an important step in 
welfare reform to move toward family first distribution, but 
the changes introduced administrative complexity and did not go 
far enough. The Administration's proposal for the next step is 
very simple: When a family is on welfare, the State retains the 
child support collections, not including any amount the State 
passes through. When the family leaves welfare, the State has 
the option of distributing all child support collections to the 
family. We are very pleased that both Chairman Johnson and 
Representative Cardin have included in their bills distribution 
provisions that increase the amount of child support going to 
families.
    A second strategy--passthrough and disregard of child 
support to families receiving assistance--is also important if 
we are to get more child support into the hands of children and 
support families as they move from welfare to self-sufficiency. 
These families may well be working, like one-quarter of all 
welfare families.
    An ongoing link between child support and family income is 
crucial in stabilizing the lives of these families and 
preparing for their self-sufficiency. These payments are also 
important in creating a clear connection between the child and 
the noncustodial parent and act as an incentive for custodial 
and noncustodial parents in cooperating with the Child Support 
Enforcement Agency.
    The Administration's proposal is to provide Federal 
matching funds for new State efforts to passthrough and 
disregard child support to TANF families. We are very pleased 
that Representative Cardin has included a passthrough provision 
in his bill, and look forward to working with the Committee to 
ensure this provision is included in the legislation you 
advance.
    We applaud the overall direction of the child support 
measures being considered by the Subcommittee, including 
additional proposals that are discussed in my written testimony 
for review and adjustment of child support orders and expanded 
use of passport denial.
    However, we do have serious concerns about the proposal to 
provide access to public non-IV-D child support enforcement 
agencies, and especially to private collection agencies. 
Congress has given the IV-D program access to a wide variety of 
information sources, along with detailed privacy requirements. 
Even with the best of intentions, sensitive data could be 
compromised if State IV-D agencies with the responsibility to 
protect the confidentiality of data do not have adequate 
safeguards once the data leaves the agency. Further, delivering 
the same services available through the IV-D program through 
another entity may prove not only inefficient but also costly. 
Given these concerns, we urge caution in providing access to 
public non-IV-D agencies.
    Extending the measure to allow access to IV-D child support 
information and tools by private collection agencies is an even 
more serious concern. Private child support collection agencies 
are unregulated, and, as a result, there is little ability to 
oversee their activities or use of information. The potential 
implications for abusing information are troublesome. The 
current proposal could potentially give tens of thousands of 
individuals and private agencies access to sensitive and 
confidential information. Given the privacy and security 
concerns and policy implications, we cannot support a proposal 
to give private collection entities access to IV-D information 
and enforcement tools.
    Finally, I want to recognize the importance of promoting 
responsible fatherhood in the administration's and the 
Subcommittee's efforts to strengthen families. The 
Administration has worked throughout its tenure to strengthen 
the role of fathers and families, and we commend Chairman 
Johnson and Representative Cardin for their leadership in 
focusing attention on fatherhood.
    In closing, let me say that it is only through our 
partnership with the Congress and the States that we have been 
so successful in strengthening child support enforcement. We 
can improve on existing efforts and get more money to families 
through the addition of some new enforcement tools, simplified 
distribution, and expanded passthrough and disregard.
    We look forward with enthusiasm to working with you on this 
important legislation.
    Thank you.
    Chairman Johnson of Connecticut. Thank you very much, Madam 
Secretary.
    [The prepared statement follows:]

Statement of Hon. Olivia A. Golden, Ph.D., Assistant Secretary for 
Children and Families, U.S. Department of Health and Human Services

    Madam Chairman and distinguished Members of the 
Subcommittee, thank you for giving me the opportunity to 
testify on important changes to the child support enforcement 
program being considered by the Subcommittee. Enhancements to 
this Nation's child support enforcement efforts were one of the 
cornerstones of the President's budget request this year and we 
are very pleased that a number of those measures are included 
in the two bills proposed by Chairman Johnson and 
Representative Cardin, in addition to being the topic of 
today's hearing. A common thread in all of our proposals is 
ensuring that families receive more of the child support 
collected on their behalf and given our successful track record 
in working together, I am confident that we can make this 
happen.
    In September I testified before this Committee on the 
progress we have made in child support collections and 
paternity establishment. A new record announced since then 
confirms this progress. In FY 1999, a record of nearly $16 
billion in child support was collected or double the amount 
collected in 1992. In addition, as I reported in September but 
I believe worth repeating, the number of paternities 
established or acknowledged has reached a record 1.5 million, 
almost tripling the 1992 figure of 512,000. Of these, over 
614,000 paternities were established through in-hospital 
acknowledgement programs.
    Through enactment of the Personal Responsibility and Work 
Opportunity Reconciliation Act (PRWORA), President Clinton and 
Congress provided the necessary tools to the Child Support 
Enforcement program to secure for many of our nation's children 
the emotional and financial support that they need and deserve. 
Tools such as the expanded Federal Parent Locator Services 
(including the National Directory of New Hires and Federal Case 
Registry), the passport denial program, financial institution 
data match program, and license revocation programs have made a 
tremendous difference in improving our ability to collect child 
support. State Disbursement Units (SDUs) and central state 
registries of child support orders have paved the way for state 
child support agencies to operate more efficiently and for 
families to receive the support collected on their behalf more 
quickly.
    We are excited about these dramatic achievements, and are 
convinced that the Child Support Enforcement program is on the 
right path. The next step is to ensure that working families 
truly benefit from the progress we have made. Today as 
requested by the Committee, I will focus my testimony on child 
support distribution and broadened access to organizations that 
can participate in the child support program. I would also like 
to take this opportunity to highlight other important 
provisions in Chairman Johnson's bill and Representative 
Cardin's bill. In addition, as the Administration continues to 
review other provisions of the bills, we may have further 
comments.

                        Simplified Distribution

    I would like to focus first on the rules governing 
distribution of child support. As I mentioned at the outset, we 
are in agreement that child support distribution rules need to 
be changed to provide more child support to families who have 
left welfare. These families should be the first recipients of 
child support paid by non-custodial parents, rather than the 
government. Research shows that the receipt of child support 
can play an important role in ensuring that families who leave 
welfare do not end up back on the welfare rolls. It also 
creates a clearer connection between what the non-custodial 
parent pays and what the child receives.
    The importance of child support to families leaving TANF is 
underscored by a recent study that found that women who did not 
receive child support had a 31 percent chance of returning to 
welfare after only six months off the rolls. In contrast, women 
who received as little as one dollar to one hundred dollars a 
month in support had only a 9 percent chance of returning to 
welfare.
    The President and Congress took an important step in the 
passage of PRWORA in 1996 which provided for ``Family First'' 
distribution. This meant that families that left welfare would 
be first in priority for receipt of payment on past-due 
support. It was a huge step in the right direction. However, 
due to complexities caused by related assignment provisions and 
an exception for the tax refund intercept collections, the 
changes introduced an added measure of administrative 
complexity and did not go far enough in directing support to 
working families. Decisions on distributing collections to the 
Federal or state governments or the family now vary by the 
method of enforcement and the period of the child support 
assignment. This makes it burdensome for states to administer 
and difficult for families to understand.
    Thus, in addition to making working families better off, 
simplifying distribution rules would make the program easier to 
administer for state child support agencies, allowing them to 
devote more attention to collecting support, rather than using 
resources to administer a complex set of rules that custodial 
and non-custodial parents do not understand.
    So what does this mean in the real world of families 
struggling to meet their children's basic needs? It can mean 
the difference in the housing and food and other necessities 
available to a growing child and it can make a critical 
difference in a child's well being. According to a recent Urban 
Institute study, for the average poor child with a nonresident 
parent, and whose family received child support, the child 
support received amounted to over one-quarter (26 percent) of 
their family income. Findings from the report indicate that 
receipt of child support reduces low-income families' 
dependence on welfare, reduces the poverty gap for poor 
children and reduces the income disparity between rich and poor 
children.
    There is clearly a compelling case for directing more 
support to working families. The Administration's proposal for 
this is very simple: when a family is on welfare, the state 
retains the child support collections (not including any amount 
that the state passes through); when the family leaves welfare, 
the state has the option of distributing all child support 
collections to the family. The President's proposal would be a 
state option, maximizing state flexibility and, for a state 
that takes the option, it would be a Federal-state partnership 
in which both the Federal government and the state share the 
cost of the policy. We believe the Administration's bill 
strikes the right balance supporting state efforts that get 
more child support to families, and distributing the cost 
fairly between States and the Federal government.
    We are very pleased that both Chairman Johnson and 
Representative Cardin have provided leadership in supporting 
simplified distribution. Both bills include distribution 
provisions which, like the Administration's proposal, increase 
the amount of child support going to families. We commend 
Chairman Johnson, Representative Cardin, and Subcommittee staff 
for their work on this important issue for children and 
families and we look forward to continuing to work with this 
Committee on remaining differences.

                              Passthrough

    The Administration is convinced that a second strategy is 
also important if we are to get more child support into the 
hands of children and support families as they move from 
welfare assistance to self-sufficiency. This second strategy is 
passthrough and disregard of child support to families 
receiving assistance--who may well, like one quarter of all 
welfare families, be working at the same time. The face of 
welfare is changing and more families receiving assistance are 
working and the assistance they receive is more temporary in 
nature. An ongoing and continued link between child support and 
family income is crucial in stabilizing their lives and 
preparing for self-sufficiency. In my travels around the 
country, I am hearing from more and more families on the 
importance of child support in ensuring their children's future 
success. For example, when I participated in a recent focus 
group in Michigan on child care, a number of mothers also 
wanted to share their experiences with child support 
enforcement and their thoughts on the importance of a strong 
and effective child support program in stabilizing their lives 
as they move forward in transitioning from welfare.
    Child support passthrough and disregard policies are 
important to these families by allowing some portion of support 
paid on a family's behalf to be passed through to the family 
and disregarded for purposes of calculating assistance 
benefits. These payments are also important in creating a 
clearer connection between the child and the noncustodial 
parent and act as an incentive for custodial and non-custodial 
parents in cooperating with the child support enforcement 
agency. The President's child support package includes a 
proposal for sharing in the costs of providing passthrough 
payments for states choosing to begin making these payments or 
increasing current levels of passthrough payments.
    Current welfare rules require that when someone applies for 
welfare (TANF), they must assign their right to child support 
payments to the state and cooperate with child support 
enforcement efforts. This is to help reimburse the government 
for the cash assistance provided to the family. The Federal 
government and the states each retain a share of the child 
support collected. Nineteen states ``passthrough'' to the 
welfare recipient some part of the state's share of retained 
child support (usually $50) and disregard it for purposes of 
determining the level of the benefit payment. Prior to the 1996 
welfare reform law, a $50 passthrough was required and the 
Federal government shared in the cost with states.
    In addition to stabilizing the income of families working 
to leave welfare, there are other benefits for the passthrough 
of child support to welfare recipients. First, the passthrough 
and disregard of child support may serve as an incentive for 
non-custodial parents, particularly low-income non-custodial 
parents, to pay child support. Organizations that work with 
low-income fathers report that fathers currently feel they have 
no incentive to pay child support to a mother on welfare 
because the money goes to the state and does not benefit the 
child. Second, the passthrough of child support also provides 
an incentive for mothers to cooperate actively and fully in 
child support collection efforts. This is especially critical 
now that welfare is temporary and parents are moving rapidly 
into the workforce. Like Medicaid and child care, regular child 
support can be a key part of moving into stable work for a 
single-parent family. As one of the studies cited earlier 
shows, having child support securely in place helps in a 
successful transition from welfare. Finally, TANF parents who 
receive support directly in the form of a passthrough are 
likely to be more familiar with the child support system than 
parents who do not receive a passthrough. For parents in the 
latter category, child support enforcement actions are 
invisible. Familiarity with and confidence in the child support 
system is critical for parents leaving welfare, who will often 
be relying heavily on child support to make ends meet and will 
need to act quickly if, for example, support payments are 
disrupted in the transition from assistance to work.
    The Administration's proposal is to provide Federal 
matching funds for new state efforts to pass-through and 
disregard child support to TANF families. The Federal 
government would share in the cost of amounts above a state's 
current passthrough and disregard policy, up to the greater of 
$100 per month or $50 over current state efforts. We believe 
that sharing in the costs of pass-through and disregard 
payments will encourage additional states to opt for 
passthrough policies and encourage states currently providing 
passthrough payments to increase the amounts they passthrough 
and disregard.
    We are very pleased that Representative Cardin has included 
a passthrough provision in his bill and look forward to working 
with the Committee to ensure this provision is included in the 
legislation you advance.
    I would like to turn now to two provisions included in the 
Chairman's bill that were also included the President's 
proposal and that we think will make a significant difference 
to children: review and adjustment of child support orders and 
expanded use of passport denial for failure to pay support.

             Review and Adjustment of Child Support Orders

    An additional proposal that would ensure that families 
obtain more child support is to review and adjust child support 
orders periodically. Typically, the ability of obligors to pay 
child support increases over time. So generally, periodically 
reviewing and adjusting child support awards to reflect the 
current income of the obligor increases the amount of the 
support and the economic security of single parent families. It 
is especially important that TANF families have an updated 
award when they leave welfare.
    We want to maximize the amount of child support available 
to a family leaving welfare in order to ensure that they have 
every opportunity to become self-sufficient. Let me offer an 
example: A mother goes on welfare at the birth of a child born 
out-of-wedlock. The putative father is found, a paternity 
action is brought, and he is found to be the father and ordered 
to pay child support. However, the father is employed only part 
time so the child support award is only $100 per month. Three 
years later, the mother leaves welfare. The father now has 
found a full time job, so that if the award is reviewed and 
adjusted he would pay $300 per month in support. That 
additional $200 per month can make a big difference in the 
financial security of the mother and the child and perhaps 
enable her to stay off welfare long term when combined with 
earnings of her own. Indeed, a recent report by the Health and 
Human Services Office of Inspector General concluded that, 
``Reviews conducted as parents exit from TANF would likely 
benefit the government through reduced welfare recidivism and 
avoidance of the costs associated with receipt of other public 
benefits.''
    There are also legitimate reasons to reduce an existing 
award, for instance, if the obligor has lost his job or 
suffered a major decline of income. In those cases, periodic 
review and adjustment means that the award amount is fair and 
that the child support agency is not wasting its efforts on 
pursuing a low-income father who does not have the current 
ability to pay support, and the father avoids building up a 
large and unmanageable arrearage. Research has shown that 
regular receipt of current support has a greater impact on 
reducing recidivism back to welfare than a larger monthly award 
that is only sporadically paid.
    We commend Chairman Johnson for including periodic review 
and modification in the bill. This is an important provision 
that will help families and promote the success of welfare 
reform efforts.

                    Expanded Use of Passport Denial

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

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

    While we applaud the overall direction of the child support 
measures being considered by the Subcommittee, we have serious 
concerns about the recent proposal to provide access to public 
non-IV-D child support enforcement agencies and especially to 
private collection agencies. Let me first address our concerns 
with providing access to public non-IV-D child support 
enforcement agencies.
    Congress has given specific statutory authority for the IV-
D program to have access to a wide variety of information 
sources for purposes of enforcing child support obligations. 
Congress has also specified, in detail, the privacy 
requirements that come with this access and prohibited the 
unauthorized disclosure of child support data. The Office of 
Child Support Enforcement (OCSE) takes this responsibility very 
seriously. Because of the sensitive nature of the data needed 
to process and enforce child support cases, we are committed to 
ensuring that all uses and disclosures of state and Federal 
data sources on individuals comply with the highest standards 
for security and confidentiality.
    While extending access to non-IV-D agencies would expand 
the program's outreach to families needing service, there are 
practical issues to be addressed. For example, providing access 
to information in Federal databases to public agencies that are 
not part of the IV-D program, whether these outside agencies 
are clerks of court or other entities, raises serious concerns 
regarding the safeguarding of the data. Even with the best of 
intentions, sensitive data could be compromised if state IV-D 
agencies with the responsibility to protect the confidentiality 
of data do not have adequate safeguards once the data leaves 
the IV-D agency. The public non-IV-D agencies are not subject 
to the full range of IV-D security and other requirements 
specified by Congress. In addition, there is also a Federal 
oversight role in protecting confidential information that is 
not addressed in the proposal. The Federal government needs the 
authority to regulate access to confidential information in 
order to ensure the proper safeguarding of this information.
    Moreover, all of the services to which public non-IV-D 
agencies would be given access are available to custodial 
parents directly from the State IV-D agency. In these cases, 
delivering the same services through another entity may prove 
not only inefficient but also costly to the Federal government 
and to state IV-D agencies. Providing access would require 
building an interface between each participating public non-IV-
D agency and the IV-D certified computer system, resulting in 
additional reprogramming and other systems staff costs for the 
IV-D agency, in addition to the cost of monitoring use of the 
information and enforcement tools by outside agencies.
    Given these concerns, we urge caution in providing access 
to public non-IV-D agencies and we would be happy to work with 
the Subcommittee to see if our concerns can be addressed.

  Access to Child Support Information and Tools by Private Collection 
                                Agencies

    A related measure being considered by the Subcommittee is 
to allow access to IV-D child support information and tools by 
private collection agencies. This proposal raises some very 
serious concerns, particularly regarding confidentiality of 
data, and consequently we must oppose it.
    Private child support collection agencies are unregulated 
and as a result there is little ability to oversee their 
activities or use of information. The potential implications 
for abusing information are troublesome. For example, without 
tight control over the use of information, the location of 
domestic violence victims could be compromised. The current 
proposal opens up access to ``an individual, a person, or any 
other non-public entity which seeks to establish and enforce an 
obligation to pay child support'' which could give tens of 
thousands of individuals and private agencies access to 
sensitive and confidential information.
    In addition, this provision would result in further 
extensive and expensive revisions to IV-D computer systems than 
would the public non-IV-D agency access, due to the greater 
number and diversity of private collection entities.
    Under the proposal, the private entities could send their 
cases to the IV-D agency for enforcement activities. The IV-D 
agency would have no way to verify if the amount sought to be 
collected is correct and whether there was appropriate due 
process extended to the non-custodial parent. The IV-D agency 
would then be required to locate the parent, the Internal 
Revenue Service would be required to withhold the tax refund, 
the State Department would deny the passport, etc. And the IV-D 
program would be required to send the collection to the private 
agency, which could take its own fee off the top, often 30 
percent or even more of each payment. If the services were 
provided to these families directly by the IV-D agency, the 
family would receive the full amount collected (except in some 
former TANF cases as discussed above). While families should 
theoretically be able to choose between public and private 
collection agencies, many custodial parents who have not had 
contact with the TANF program may not be aware of IV-D program 
services.
    Given the privacy and security concerns and policy 
implications, we cannot support a proposal to give private 
collection entities access to IV-D information and enforcement 
tools.

                          Fatherhood Programs

    Finally, I want to recognize the importance of promoting 
responsible fatherhood in the Administration's and this 
Subcommittee's efforts to strengthen families. With the 
President and the Vice-President's leadership, the 
Administration has worked throughout its tenure to strengthen 
the role of fathers in families. For example, we have funded 
eight child support enforcement responsible fatherhood 
demonstration projects that will help bolster fathers financial 
and emotional involvement with their children. The Office of 
Child Support Enforcement has provided over $1.5 million to the 
National Center for Strategic Nonprofit Planning and Community 
Leadership (NPCL) to work with grassroots fathers organizations 
to help unemployed and underemployed fathers become responsible 
parents. In addition, Secretary Shalala and the Vice President 
recently announced the approval of ten state waivers for the 
Partners for Fragile Families, a set of projects to improve the 
opportunities of young, unmarried fathers to support their 
children both financially and emotionally.
    We commend Chairman Johnson and Representative Cardin for 
their leadership in focusing attention on responsible 
fatherhood. The Fathers Count Act of 1999, passed by the House 
last fall and included in this bill, is an important step in 
helping more fathers of low income children work and honor 
their commitments to their children. The President has proposed 
a ``Fathers Work/FamiliesWin'' initiative that shares many of 
the same goals as the legislation proposed by this 
Subcommittee. The Administration's FY 2001 proposal would 
provide $255 million for the first year of this new initiative 
to help low-income non-custodial parents and low-income working 
families work and support their children. Of this amount, $125 
million would provide grants to help approximately 40,000 low-
income non-custodial parents (mainly fathers) work, pay child 
support, and reconnect with their children. One hundred thirty 
million dollars would provide new grants to help hard-pressed 
working families--including mothers and fathers in single and 
two-parent families--get the supports and skills they need to 
succeed on the job and avoid welfare. This new initiative 
builds on the approximately $350 million in innovative local 
responsible parenthood projects funded through the Department 
of Labor Welfare-to-Work Grant program. These proposals are an 
important next step in welfare reform, and would build upon the 
Administration's efforts to help low-income families succeed in 
the workforce and help even more long-term welfare recipients 
go to work.

                               Conclusion

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

                                


    Chairman Johnson of Connecticut. On the issue of pass-
throughs, we do, in our bill, fund the pass-through of the 
Federal amount to families that have left--that are leaving 
welfare. We do, after 5 years, compel the States to passthrough 
their amount. In our first draft we did that immediately. They 
are very concerned about the resources they have for child 
support enforcement, and we figure over 5 years they can figure 
out how to do this. That is a very expensive provision.
    I think, if you force pass-through immediately and don't do 
what Ben does in his bill, which is prohibit disregard, you 
won't make a substantial change in the current situation, so my 
bill concentrates on pass-throughs when you leave, and that 
difference between legislating that people on welfare would get 
their child support plus the welfare benefit has, for me, some 
very troubling aspects.
    You will have people on welfare getting a welfare benefit 
earning more than their neighbor, if the two are combined--
child support and the welfare benefit. I think that is going to 
cause a lot of problems and begin to re-ignite some of the old 
feelings about welfare and fairness.
    Ms. Golden. I appreciate your extraordinary leadership on 
ensuring that we focus on distributing child support dollars to 
families after they have left the welfare rolls. The 
administration also believes it is important to provide a 
Federal incentive with some cost-sharing, for passthrough while 
families are on the rolls but not a mandate an incentive. With 
the progress of welfare reform, these are the very same 
families a couple of months apart. Four times the percentage of 
families on welfare are working now than were a few years ago. 
I have been talking to a lot of those parents, and I really 
believe that it is enormously important both that they have the 
stability of regular child support and that they become 
connected to the child support system in order to have 
stability as they move off welfare.
    I also believe--and these are similar points that Mr. 
Cardin made earlier--that there is some evidence that providing 
that direct link to child support encourages the payment of 
more child support and more active cooperation.
    On the technical questions of the different approaches, the 
administration's approach to the passthrough while parents are 
on welfare is an approach which provides a Federal share as 
States expand their use of passthrough and disregard. As you 
know, some States do it now, but we would provide an incentive 
for States to do more in this important area. Mr. Cardin's 
approach is technically slightly different, but our view is 
that on both distribution and passthrough the similarities are 
the important thing, and we are very eager to work with the 
Committee on any of the technical issues.
    Chairman Johnson of Connecticut. I am very interested in 
the child support flowing directly to the family while on 
welfare so that that connection is made between the supporting 
parent and the custodial parent, but to prohibit the States 
from counting that income and eligibility I think is going to 
create some very serious fairness issues. Some States are not 
counting it. Connecticut doesn't count it.
    Ms. Golden. Right.
    Chairman Johnson of Connecticut. They have chosen not to 
count it. But, you see, they coordinate that.
    Ms. Golden. Right.
    Chairman Johnson of Connecticut. They also have the 
shortest length of stay on welfare.
    Ms. Golden. Correct.
    Chairman Johnson of Connecticut. So they have designed a 
system that maximizes income, but after 21 months you are into 
the extent you have to prove you are eligible for an extension.
    I think that is one of the good things about the current 
system is that the States are showing a lot of variation in how 
they are managing this issue of incentives and supports. And I 
think for us to go back to the old system of saying, ``This is 
how you should do it,'' is unfortunate.
    I would not be opposed at all to us requiring them to 
passthrough the original check for child support to the mother, 
because I think that connection is very important.
    There are some that say this would be extremely complicated 
for the States to do, but I do believe the concept is so sound 
that we ought to be doing it.
    Ms. Golden. The key part of the administration's proposal 
is to make sure that States aren't at a fiscal disadvantage if 
they choose to do what Connecticut is doing. In other words, we 
are trying to make sure that there is not a discouragement for 
States to disregard, as well as passthrough, because I think 
you are right--there is one set of advantages that come from 
connecting a mother to the system, there is a second set of 
advantages that come from stabilizing the income as she is 
moving through that transition. So it is an incentive approach, 
a cost-sharing approach with the State that we have taken to 
passthrough.
    Chairman Johnson of Connecticut. By funding the Federal 
share, we do encourage--I mean, we could actually pass the 
child support and the Federal share directly, but, since we 
don't mandate payment for the State share, I don't feel that we 
can do that.
    I think there are some ways we can improve the system so 
that the custodial parent understands where the money is coming 
from and who is helping them, but I am very troubled by the 
proposal that we would go back to saying that then States could 
not disregard this. I think the question of disregard is so 
integral to the total structure of their welfare-to-work 
programs.
    Ms. Golden. I am not sure in which proposal you are seeing 
a requirement that the State could not disregard the 
passthrough. There are certainly provisions about incentives. 
There certainly are proposals linking the extra dollars to 
their choosing to do it that way. But I don't think there are 
any prohibitions on disregarding the passthrough in any of the 
proposals.
    Chairman Johnson of Connecticut. We will get into the 
details of more of this, because actually I did read your bill 
as mandating that. I am sorry.
    Thank you.
    Ms. Golden. OK.
    Mr. Cardin. Madam Chair, thank you very much. One of the 
purposes for a hearing is to see whether we can't bridge some 
of the gaps.
    Chairman Johnson of Connecticut. Yes.
    Mr. Cardin. I agree with the Chair's comments about making 
sure we do not take away from the States the flexibility of 
being able to determine eligibility.
    There are two parts to the passthrough proposals. One deals 
with arrearages. We make it clear in our legislation that the 
arrearages that are as a result when the person was not on 
welfare goes to the family, and the arrearages from when they 
were on welfare we simply the distribution. But for a family 
that is currently receiving TANF benefits, my legislation would 
require those funds to go to the family, but then allow the 
States the ability to determine eligibility--how much of that 
income would be used for eligibility. And, of course, we share 
the cost with the States.
    Let me just make one other observation, because the Chair 
mentioned the fact that two families in the same economic 
circumstance might be treated differently, and that is true 
under current TANF rules because a family might be receiving 
some income from work, which is permitted under certain 
circumstances, so we could have two families in a similar 
situation receiving different income because of the 
circumstance of one family versus the other.
    My question to you is: As far as passing through child 
support or a family receiving welfare, I wanted you to comment 
at least on two aspects of this. First, what impact, if any, 
does that have on encouraging the person to leave welfare, to 
become self-sufficient? Second, do we have any information 
about how many noncustodial parents are paying support under 
the table so that they can get the money to the family rather 
than paying it through the welfare agency where they know the 
money will not get to the family.
    Ms. Golden. I think they are both areas that deserve much 
more systematic research, because the quality of the 
information is not as extensive as I hope it will be soon.
    On the first question, in terms of as an incentive to leave 
welfare, I very much believe, from the parents that I have been 
talking to, that right now many parents who are on welfare, as 
the chairman said about Connecticut, are there for a relatively 
brief period of time. They are either preparing to work or they 
are working, and they are in the process of putting together 
pieces of the puzzle to get off welfare and achieve self 
sufficiency. I really believe that child support, like health 
care, is one of the key pieces that contributes to economic 
stability. I believe that it can be a key part of a transition 
off of welfare.
    The statistics I offer in my testimony focus on reducing 
return to welfare. I don't know that we have very specific 
statistics on speeding up departure, but from what we know, I 
believe that having stable and regular child support very is 
really important in contributing to the ability of a custodial 
parent to maintain her children, understanding that work may be 
pretty insecure as low-wage jobs usually have varied hours 
producing fluctuating income from week to week.
    Mr. Cardin. Before you get on to the second point, what you 
are suggesting is that here you have a person who is trying to 
go through a transition to being self-sufficient.
    Ms. Golden. Yes.
    Mr. Cardin. That individual who receives regular child 
support knows that that is part of what the family has as 
income. They are ready to start planning how to make it without 
necessarily a cash payment through TANF. That is in place.
    Ms. Golden. Exactly.
    Mr. Cardin. It makes it easier for the person to get to the 
next step.
    Ms. Golden. Exactly. It is not such a leap into the 
unknown. It is not the sense of ``anything could change week to 
week.'' I have heard that from many parents.
    On the second question about noncustodial parents, again we 
are in the process of doing some research to help us know the 
answers more systematically, but there is widespread belief 
that one of the difficulties in persuading noncustodial parents 
to fully cooperate as fully as possible is that they can't see 
how the dollars get to their children.
    Again, I hear mothers being satisfied with way too little 
in the sense of, ``He's buying Pampers, and I know that that's 
all he can do,'' when, if there were even modest support 
payments it could lay the basis for a regular child support 
payment as the parents' income goes up. Note this also is the 
argument for another provision in Chairman Johnson's bill on 
reviewing adjustments--that if you can get started, you then 
can have secure, regular payments that increase as income 
increases.
    Mr. Cardin. So, again, just trying to summarize what you 
are saying, if there were child support going directly to the 
family on TANF assistance, it is more likely that the dollar 
amount would be more realistic? Is that what you are saying?
    Ms. Golden. A more regular payment process would get those 
dollars to the people.
    Mr. Cardin. Because today many cases the custodial parent 
is taking lower expectation because the person is not receiving 
the funds.
    Ms. Golden. That is right.
    Mr. Cardin. Thank you, Madam Chair.
    Chairman Johnson of Connecticut. There is a little problem 
with your last exchange. In talking with fathers and fatherhood 
groups, it was very clear that they want to provide things for 
their children and they want their children to know.
    Ms. Golden. Yes.
    Chairman Johnson of Connecticut. And they need to know that 
the parent is getting the check, too.
    Ms. Golden. I agree.
    Chairman Johnson of Connecticut. They also need to have a 
little disposable income so, in addition, they can buy Pampers 
or something.
    Ms. Golden. Yes. I agree with that.
    Mr. Cardin. I didn't mean to imply--my concern is, and I 
think what Secretary Golden was referring to, is that you get a 
circumstance where the money is not going directly to the 
family. The noncustodial parent and the custodial parent are 
going to be less likely to develop a realistic level to make a 
regular payment.
    Chairman Johnson of Connecticut. I appreciate that. I am 
concerned that sometimes support orders so strap particularly 
low-income fathers that really the transaction between that 
low-income father and the mother, while the support might be 
his check, isn't present. I think we need to really think this 
through. How can we get not only the support directly to the 
mother, but the supporting noncustodial parent to be a part of 
that moment, because what we are trying to build here are human 
relations, not monetary relations. Monetary relations are 
important, but in the end what is going to support this kid is 
love.
    So I think we need to begin thinking about what are the 
transaction circumstances that we could encourage so that that 
money not only flowed directly but flowed through the father 
being present.
    Ms. Golden. I think we have, in what we have all 
accomplished together and what we hope to accomplish, some 
examples of how to move forward in that arena. We have tripled 
paternity establishments since 1992.
    Chairman Johnson of Connecticut. Right.
    Ms. Golden. That is about fathers saying they want to be 
part of their children's lives.
    Chairman Johnson of Connecticut. Right.
    Ms. Golden. I think that has huge potential.
    Chairman Johnson of Connecticut. I think it is.
    I want to give Mr. Jefferson a chance and I will come back 
to this.
    Mr. Jefferson.
    Mr. Jefferson. Thank you, Madam Chair.
    I don't have a question. I just want to make a brief 
observation.
    The welfare system operated for many years on the 
assumption it was better for families to have a parent at home 
with young children and all the rest of it, and States 
determining eligibility and the Federal entitlement system. We 
have gone from that to one where flexibility is a hallmark of 
our discussion, and different States have room to shape how 
they are to determine aid to these families.
    This is still an experimental effort. No one knows how well 
over time it is going to do. I have seen some signs of progress 
and some signs of stress in this whole system.
    I think what is important is, if we can find things that 
are worthy of replication, that we don't, in the name of 
flexibility, disregard them, so that we can make things work 
for families right now, rather than 10 years from now when the 
child is already grown.
    I think that one of these things that has been talked about 
is this whole issue of connecting fathers with families with 
children, and the issue of passing through and distribution. 
You know, a lot of folks right now who are going back on 
welfare have gone to work, and they are largely unskilled and 
still trying to figure this whole thing out.
    In the midst of all this turbulence, there is a need to try 
to find something that can be stable, and I think that the idea 
of connecting, as both Mr. Cardin and Ms. Johnson talk about, 
are important, but I also think, if we are of a mind that it is 
important to have passthrough and distribution provisions, 
particularly the passthrough one we are talking about now, I 
would hope that we would not abandon it in the name of 
flexibility when we can, on our end of it, adjust these issues 
that may be a problem among States, and how States treat 
eligibility issues from our end of it a little bit better.
    I just say that I hope we will keep an open mind on these 
questions, rather than to give in to the notion that what is 
the ultimate goal here is State flexibility, when the ultimate 
goal really ought to be how do we find things that work for 
families, and, when we do, how do we fix on those things to 
make sure that it is happening for every child across the 
country and every State, no matter where the child lives.
    Ms. Golden. A couple of brief comments.
    The first is that I completely agree with your description 
of needing peace and stability as things are changing for a 
family. The very first parent I talked to after welfare reform 
who had begun working in the State of New Hampshire talked to 
me about having a stable child support check. This helped her 
make all those changes, so I think you are right.
    In terms of the flexibility, I would say for us it is very 
important for families to move forward on families first 
distribution policies. We believe that passthrough and 
disregard are also very important for families. We are prepared 
to work with the Committee on all of the technical issues in 
whatever way we can be helpful, in the hope that those 
provisions will be included as you move forward.
    Chairman Johnson of Connecticut. We only have four or 5 
minutes, so I won't be able to go into much detail, but I do 
want to put a couple of things on the table.
    Ms. Golden. OK.
    Chairman Johnson of Connecticut. On your comments on 
private agencies, this is in a totally unregulated sector of 
economic activity, and that concerns me, in and of itself.
    Ms. Golden. Yes.
    Chairman Johnson of Connecticut. Now, it is an area of 
State law, and they will have to come to their senses. Maybe 
they will and maybe they won't. But I do regret--I say this 
with all due respect, Madam Secretary. You certainly are not a 
defeatist person, but I find your comments on that issue sort 
of defeatist. I mean, why shouldn't we begin to look at how do 
we protect privacy, how do we deal with the data issues, and 
yet how do we partner, because no matter how much better we are 
doing--and we are doing a lot better--I think what the 
statistics show us is that we are doing a lot better with cases 
that are coming into the system, and if you have any way to get 
the data about this I would be interested. But my belief is--
and I can't remember whether it comes from data or whether it 
doesn't--that we are doing better with cases coming in, but we 
still don't have the sufficient resources to deal with the 
volume of current cases, and that we have a terrible problem 
with backlog, some of which is real and some of which is 
apparent.
    I would like you to think about it.
    Ms. Golden. Sure.
    Chairman Johnson of Connecticut. If you think the language 
in the bill doesn't require the States to govern the right 
issues in developing these relationships, it doesn't restrict 
them from addressing other issues, like percentage, and other 
things.
    I think today's article in the ``Washington Post'' 
demonstrates the need to get control of this sector and protect 
women against what are basically shyster operations.
    Ms. Golden. Right.
    Chairman Johnson of Connecticut. The very fact that they 
are getting paid for cases that they didn't even collect on--
and we have had this in some other areas of Social Security 
law. I think this is a case to support why we ought to be 
taking up my option.
    Now, that much said, there is one other issue that has 
really come to my attention since the first time we passed our 
fatherhood bill. In talking to people who run the homeless 
shelter in my own hometown of New Britain, and also to people 
who are really in the know about Hartford, they say there are 
hundreds of fathers that cannot work legally because their 
arrearages are so great, and that the longer we delay in having 
some system--we let teachers who will work in cities earn 
credit toward their student loan. We let physicians who have 
loads of debt, if they work in certain areas, relieve that 
debt.
    We have got to come to terms with the fact that we have a 
lot of men out there who care about their families, they are 
unskilled, they will never earn much. I talked to a guy earning 
$6.45 an hour. He was separated from his wife for a couple of 
years during her third pregnancy. They are now back together. 
He is supporting the family. He is still paying off arrearages.
    You often have no way to look back, and even the IRS has a 
way to look back and say what is owed in child support here, we 
must say to this father: ``If you adopt this payment schedule, 
we will forgive some on all of your arrearages.''
    So we will not bring non-supporting fathers into the system 
and into the employment system that offers them their only hope 
of a career, a higher salary, and health benefits if we aren't 
honest about the extraordinary burden, particularly for people 
who got into this when they were in high school, into this 
arrearage problem.
    If you can develop any data--see, nobody knows about this. 
They say this is all underground, and I think it is, because 
they won't work in the upper ground.
    I ask you to help me think about that data--
    Ms. Golden. Sure.
    Chairman Johnson of Connecticut.--see what we can do, and 
maybe this time around in the fatherhood bill we can do better.
    I must excuse myself. We will reconvene at 10:30. Thanks 
for coming.
    Ms. Golden. Thank you.
    [Recess.]
    Chairman Johnson of Connecticut. So much for my best 
estimates. Sorry to keep you all waiting.
    Now we will turn immediately to the first panel, and I 
think we will just start right in. Mr. Primus from the Center 
on Budget and Policy Priorities.

   STATEMENT OF WENDELL PRIMUS, DIRECTOR OF INCOME SECURITY, 
             CENTER ON BUDGET AND POLICY PRIORITIES

    Mr. Primus. Madam Chairman and Members of the Subcommittee, 
I thank you for the opportunity to testify today on both H.R. 
4469 and H.R. 3824. The center supports the basic goals of both 
of these bills. We believe that the complex rules for 
distributing child support to families that are current or 
former recipients of TANF needs to be simplified, and that 
these recipients should benefit more from child support paid on 
their behalf. These two bills represent a major step toward 
meeting these goals. We strongly support the changes H.R. 4469 
makes in child support assignment and distribution rules.
    Under the proposed legislation, the State could not claim 
rights to arrearages accrued before or after the family 
received welfare assistance. Limiting the amount of support 
that the States may claim means that, once families leave cash 
assistance, children in custodial families would benefit from 
more of the child support that is collected on their behalf. 
For those families that have left welfare, this bill emphasizes 
a true family first policy on arrearage payments by eliminating 
the Federal tax intercept exception for those custodial 
families who have left welfare.
    The proposal requires States to distribute to the custodial 
family all arrears that accrued before and after a family went 
on welfare before repaying arrearages owed to the State for 
periods while the family was receiving welfare.
    In the State of Maryland, one-third of the total 
collections in the State are arrearage collections, and 
nationally, for former welfare families, two-thirds of the 
arrearage collections come from the Federal tax intercept. But 
I would urge the Subcommittee to go further and add to H.R. 
4469 some of the provisions of H.R. 3824. For example, 
mandating 100 percent passthrough policy, as in the Cardin 
billion, would eliminate many of the administrative problems 
that are part of the current system and may also encourage some 
of the fathers to pay child support more regularly.
    A family first distribution should also apply to all 
arrearage collections, regardless of the family's TANF status. 
Why should a family that is currently receiving welfare and is 
owed an arrearage from the custodial parent while that family 
was not on welfare be penalized just because when the IRS 
intercept was made the family was back on welfare? The very 
fact that the family was on welfare probably means need is 
greater.
    But, most importantly, include in H.R. 4469 the provision 
in H.R. 3824 which would encourage, not mandate, States to 
disregard more child support as income in determining TANF 
benefits.
    Currently, in States without a disregard, when noncustodial 
parents pay child support to children in a family receiving 
cash welfare assistance, they face 100 percent effective tax 
rate.
    The majority on this Committee I know prides itself on 
reducing tax rates. Earlier this year the Committee and the 
Congress passed a bill reducing the perceived tax rate on 65-to 
69-year-olds who are earning money and collecting or wanting to 
collect Social Security.
    In your question to Olivia, you mentioned the inequity of 
two mothers on welfare got differing amounts of income. Take a 
State that paid a $400 grant. One mother gets a $300 child 
support from a former partner, one mother gets zero. I don't 
think they would blame welfare for the fact that they would end 
up with differing amounts of income. I think the fact that 
these two different situations--one mother getting 300, the 
other not--end up with the same $400 grant is what is 
inequitable.
    The other argument that has been levied is we shouldn't 
give any more money to mothers on welfare from child support. 
There are two answers to that. One is the welfare levels have 
been cut in half since the early seventies, but, most 
importantly, Madam Chairman, is that this does not change one 
iota the work participation requirements, the ability for the 
States to sanction mothers who don't participate in work.
    In short, if we really believe that these dads should pay, 
we should not put 100 percent tax on that activity which every 
one of us supports.
    I have listened carefully to your comments about the 
private access, and I guess what I would say, in summary, is I 
think the provisions in your bill have put the cart before the 
horse. I am concerned that maybe we have given some of these 
firms too much access to data already. I think what ought to be 
done, as your bill partially does, is have HHS study it, make 
some recommendations, and then require the States to regulate 
this industry first, perhaps leaving the details to the State, 
maybe setting up a minimum, but I think that has to happen 
first, and then decide whether some of these firms should be 
given access to more enforcement tools.
    I worry that, if we don't do it in this manner, giving 
private entities access to additional information could bring 
on a privacy backlash that would undermine support for all of 
the data that we currently use to enforcement child support 
payments.
    I am also worried about the competition that we set up 
between the private firms and the State-funded agencies. I am 
worried that we will not fully fund or State legislators will 
find an excuse to not fully fund their State agencies if there 
is a lot of competition from these private firms.
    Turning for a moment to State financing--
    Chairman Johnson of Connecticut. If I may, you must wrap 
up, please. We have so many people to hear.
    Mr. Primus. I am sorry. I will just be very quick.
    I think there is an inadvertent mistake in your bill that 
would allow States to supplant more than they currently have.
    Chairman Johnson of Connecticut. To do what?
    Mr. Primus. To supplant.
    Chairman Johnson of Connecticut. OK.
    Mr. Primus. Finally, I understand your concern about 
holding the States harmless, but I don't think that provision 
should continue forever. This is a Federal/State partnership, 
and I think you should come to that. The fact that the Federal 
Government would pay the entire cost of these distribution 
changes should not be something that is grandfathered forever.
    And my final concern is about how you close the financing 
gap remaining in this bill. I would argue you should move this 
bill forward and worry less about closing that financing gap 
completely.
    Thank you.
    Chairman Johnson of Connecticut. Thank you.
    [The prepared statement follows:]

Statement of Wendell Primus, Director of Income Security, Center on 
Budget and Policy Priorities

    Madame Chairman and Members of the Subcommittee on Human 
Resources:
    Thank you for the opportunity to testify today on child 
support legislation, specifically H.R. 4469, ``Child Support 
Distribution Act of 2000'' and H.R. 3824, ``Child Support for 
Children Act.'' My name is Wendell Primus and I am Director of 
Income Security at the Center on Budget and Policy Priorities. 
The Center is a nonpartisan, nonprofit policy organization that 
conducts research and analysis on a wide range of issues 
affecting low-and moderate-income families. We are primarily 
funded by foundations and receive no federal funding.

                                Overview

    The Center supports the basic goals of both of these bills. 
We believe that the complex rules for distributing child 
support to families that are current or former recipients of 
TANF need to be simplified. We also believe that children in 
families that are current or former TANF recipients should 
benefit more from child support paid on their behalf. H.R. 3824 
and H.R. 4469 represent a major step toward accomplishing these 
goals. Most of our comments relate to H.R. 4469.
     The assignment period during which states may 
claim a share of child support would be limited to the period 
in which a custodial family is receiving TANF assistance.
     Under H.R. 4469, states would continue to have the 
option to distribute all current child support to families on 
TANF, although the proposal offers no further incentives to 
pass through and disregard child support in calculating the 
welfare benefit level of custodial families.
     For those families that have left welfare, the 
proposal emphasizes a true ``family first'' policy on arrearage 
payments, by eliminating the federal tax intercept exception 
for those custodial families who have left welfare.

    H.R. 4469 is a positive step in moving the child support 
enforcement system away from its historical cost-recovery 
mission and toward a program that benefits all custodial 
families and children.
    We also support the basic goals of the Fatherhood Program 
contained in H.R. 4469. Title V of this bill contains several 
provisions that would increase employment services to low-
income custodial and noncustodial parents. In addition, funds 
are provided on a competitive basis to encourage child support, 
TANF, and workforce development organizations to work together 
with community-based organizations in the delivery of a variety 
of services to noncustodial parents to help them increase their 
employment rates, become more involved in the lives of their 
children, and meet their parental responsibilities.
    We commend you for addressing the issues of fatherhood as 
well as for proposing substantial improvements in child support 
assignment and distribution, and for sending the message about 
the importance of non-custodial parents (primarily fathers) 
assuming financial, child-rearing and emotional responsibility 
for their children.
    Much work remains to be done to improve the child support 
enforcement system for low-income families. Both bills make 
substantial progress in ensuring that once custodial families 
leave cash assistance, more collected child support will reach 
them instead of reimbursing federal and state governments. The 
policies reflected in this legislation would make the goals of 
the child support enforcement system more consistent with the 
welfare reform goal of promoting financial self-sufficiency. We 
encourage the Subcommittee take up provisions in H.R. 3824 to 
provide additional incentives to states to distribute all 
current support directly to families that are on public 
assistance and to disregard a substantial portion of those 
support payments in calculating a family's monthly cash 
assistance benefit.
    We do, however, have serious reservations about two areas 
of H.R. 4469. We are strongly opposed to the provisions in 
Title III that extend access to enforcement tools and to 
additional personal information to private child support 
entities and public non-IV-D agencies. Private child support 
enforcement entities currently have access to some private 
information through the Federal Parent Locator Service, but 
there are not adequate protections guarding private entities' 
use of that information. Courts have ruled that the federal 
Fair Debt Collection Practices Act does not extend to private 
child support collection companies and there is growing 
anecdotal evidence that several of these private entities are 
taking unfair advantage of both custodial and noncustodial 
parents.
    Some privacy advocates believe that personal information is 
too easily accessible to private child support entities. 
Granting these entities access to additional sensitive 
information could lead to invasion of privacy and misuse of 
information and the further fragmenting of the child support 
enforcement system. The Center strongly encourages the 
subcommittee to bring private child support entities under 
regulatory authority and to require HHS to issue a report on 
the amount of access private and public non-IV-D entities 
currently have before considering the extension of additional 
data and enforcement tools.
    In addition, while we support the intent of the hold 
harmless provision in Title I of H.R. 4469, which will allow 
states to use their federal TANF grant or use MOE funds to help 
finance changes in the distribution rules, we are concerned 
that the way the provision is currently drafted allows states 
to supplant TANF dollars.
    Finally, we have concerns about how H.R. 4469 will 
ultimately be financed. Currently, the bill is not fully 
financed and we have heard several possibilities for how this 
financing gap will be closed. Even though many aspects of this 
bill are positive, financing it by cutting other programs 
benefiting low-income people could jeopardize the support of 
ourselves and others for this legislation. For example, we 
would oppose cuts in the TANF supplemental grants or in the 
EITC for childless workers as potential offsets for this bill. 
In general, we find it problematic that at a time when the 
budget surplus is substantial, Congress is willing to pass 
large tax cut bills that primarily benefit more affluent 
individuals without any offsets, while proposals such as this 
one that could significantly help low-income families become 
economically self-sufficient are subject to an offset 
requirement. This seems unbalanced and inequitable.

 Assignment and Distribution of Child Support Provisions in H.R. 4469 
                             and H.R. 3824

    The Center strongly supports the intentions of Title I of 
H.R. 4469, which would simplify the child support assignment 
and distribution rules for families receiving Temporary 
Assistance for Needy Families (TANF). As both the child support 
enforcement system and cash welfare programs have evolved over 
the last 25 years, the rules determining assignment of rights 
and distribution of support have become highly complex. This 
section focuses primarily on H.R. 4469, which would (1) 
substantially improve assignment provisions, primarily by 
further simplifying the ``on/off'' rule, and (2) substantially 
improve distribution rules by ensuring that once families leave 
cash assistance, they benefit first from all child support 
collected on their behalf.

Assignment

    ``Assignment'' rules determine who has a legal claim on 
child support collections. When a custodial family applies for 
welfare, it must assign its legal claim to child support 
collections to the state. Under AFDC, families were required to 
assign to the state all rights to child support, including 
child support debt that accrued before a family started 
receiving welfare assistance. Under welfare reform, the child 
support assignment rules were amended, and assignment was 
determined by an ``on/off rule,'' whereby support payments are 
assigned to the state or the family, depending on whether the 
family is on or off welfare. These assignment rules were phased 
in gradually, and should be fully in effect by October 1, 2000. 
However, several major and troubling exceptions to the on/off 
rule remain. The assignment provisions in H.R. 4469 are a good 
first step in addressing these concerns by simplifying the 
``on/off'' rule and limiting assignment to periods of time when 
the family is actually receiving cash welfare assistance.
    The first exception to the on/off rule under current law is 
that states keep arrears that were owed before the family 
received assistance if they are collected after the family 
starts receiving assistance.\1\ This provision under current 
law works against those custodial parents who try to survive 
financially without child support payments, but do eventually 
turn to cash welfare assistance as a last resort. The current 
system punishes these families because they can lose all of the 
support owed to them if it is collected after they start 
receiving cash welfare assistance. By contrast, families that 
start receiving cash assistance immediately after the 
noncustodial parent fails to pay child support, and that leave 
cash assistance once child support payments are made again, 
have fewer arrearages assigned to the state.
---------------------------------------------------------------------------
    \1\ See OCSE Action Transmittal 97-17, Case Scenario 5. For 
example, a family fails to receive child support regularly; by October, 
2000, $500 in child support arrears are owed to the family. The family 
starts receiving cash welfare assistance in November, 2000. The family 
must temporarily assign the rights to the $500 in arrears to the state 
and permanently assign any rights to child support owed while the 
family is receiving cash assistance. The custodial family typically 
regains rights to the temporarily assigned arrears after leaving 
welfare. However, if child support is not fully paid while the 
custodial family is receiving cash assistance and the noncustodial 
parent owes child support arrears to both the family and the state, 
arrearage collections can reduce the amount of the $500 in temporarily 
assigned arrearages, which means that once the custodial family leaves 
cash welfare assistance, the custodial parent regains a claim to only a 
portion of the total arrearages that accrued before the family started 
receiving cash assistance.
---------------------------------------------------------------------------
    The second exception under current law concerns arrears 
accrued during a period that a family was not receiving 
welfare, but that were assigned to the state before October 1, 
1997 as a condition of the family's subsequent receipt of cash 
welfare assistance. These arrearages continue to be permanently 
assigned to the state.
    H.R. 4469 would address these two problems by limiting the 
period of assignment to the state to that time when the family 
is receiving TANF assistance. In other words, the state could 
not claim rights to arrearages accrued before or after the 
family received welfare assistance. States would retain 
assignment rights to an amount of support equal to the lesser 
of 1) the number of months the family is on assistance times 
the monthly amount of current child support due to the 
custodial family; or 2) the total amount of cash welfare 
assistance provided to the family. Limiting the amount of 
support that states may claim means that once families leave 
cash assistance, children in custodial families would benefit 
from more of the child support that is collected on their 
behalf.

Distribution

    The Child Support Distribution Act of 2000 also makes 
changes to the rules governing the distribution of child 
support for families that are former cash welfare recipients.
    The proposal make significant improvements to distribution 
rules for families that have left welfare, allowing them to 
benefit more from child support that is collected on their 
behalf. The proposal requires states to distribute to the 
custodial family all arrears that accrued before and after a 
family went on welfare before repaying arrearages owed to the 
state for periods while the family was receiving welfare. Under 
current law, including arrearages collected from federal tax 
refund intercepts are applied first to the debt owed to 
custodial families and then to the debt owed to the state and 
federal governments. However, there was one major exception to 
that rule. Any collections from intercepting an noncustodial 
parent's federal tax refund are applied towards child support 
arrears owed to the state before they are applied to child 
support arrears owed to the children in the custodial family. 
About one-third of all arrears collections occur through the 
federal tax refund intercept, but two-thirds of arrears 
collections for families on welfare are collected through the 
federal tax refund intercept.\2\ Ensuring that this money is 
distributed according to the family first rules would improve 
the well being of custodial families and simplify the 
distribution rules.
---------------------------------------------------------------------------
    \2\ OCSE Annual Report and OCSE press release, January 27, 2000.
---------------------------------------------------------------------------

             Other Changes in Titles I and II of H.R. 4469

Limit the Recovery of Medicaid Birthing Costs

    We strongly support the provision that prevents states from 
recovering Medicaid birthing costs from noncustodial parents. 
Requiring noncustodial fathers to pay the Medicaid costs of 
birth discourages fathers from establishing paternity. It also 
can dissuade pregnant women from seeking important prenatal 
medical care.

Review and Adjustment of Child Support Orders

    We are pleased that H.R. 4469 requires that TANF agency to 
contact the IV-D agency when a custodial family leaves welfare 
and provide information regarding the change in welfare status. 
We support the provision requiring the child support agency to 
conduct a review of child support obligations when a family is 
about to leave TANF. This review process is important to both 
custodial and noncustodial parents. A review of child support 
orders at this time helps to ensure that child support orders 
reflect NCPs' current income, and to prevent the build-up of 
large arrearages. A review of the support order at this time 
would be especially helpful to the custodial family if an 
upward modification is appropriate. In addition, requiring 
communication between the welfare and child support agencies 
may help avoid delays of three to six months in child support 
receipt that occur when families leave cash assistance. These 
delays occur when the child support office is unaware of the 
change in status, and continues to retain support checks for 
several months. This delay is especially problematic for 
families making the transition from welfare to work, a time 
when such families are financially vulnerable. This provision 
should help ensure that families leaving welfare start 
receiving child support sooner once they leave cash assistance.

State Financing Options

    H.R. 4469 authorizes states to use TANF funds or MOE credit 
to finance changes in assignment and distribution. The Center 
believes that the state financing provision allows states to 
supplant TANF dollars to finance changes in the distribution 
rules.
    We support the intent of the provision, which is to hold 
states harmless from additional costs associated with 
distributing the state's portion of child support collected to 
custodial families. Under this proposal, states may use their 
federal TANF grant or use TANF MOE funds for the state share of 
the amount of support distributed to former recipients. 
However, as a result of this proposal, the amount of additional 
child support distributed to the custodial family also counts 
as a state child support expenditure and could be used to draw 
additional federal child support funds. States would receive 
credit as a TANF expenditure for the amount of support 
distributed (the portion that formerly would have belonged to 
the state) and would count this pass-through as a child support 
expenditure, thereby drawing down federal matching dollars for 
child support at the 66 percent FMAP rate. In effect, states 
would be allowed to use federal dollars to draw down other 
federal dollars. Allowing the funds to be used in this manner 
will result in a significant amount of supplantation of TANF 
dollars--an undesirable result.
    The Center also believes that states should not receive 
this credit indefinitely. After all, the bill is mandating that 
custodial families be given what they are owed when child 
support is collected from the noncustodial parent. In 
principle, states should not continue to be held harmless for 
years to come from changes made to distribution rules. These 
changes will cost the federal government, and since the child 
support enforcement program is a federal/state partnership, 
states should ultimately bear some of the cost. The additional 
TANF credit for full distribution should be applicable until 
2004 to give the states an incentive to implement these changes 
in distribution rules as soon as possible.

             Further Suggestions for Child Support Changes

    In this section, we suggest several additional changes 
regarding child support assignment and distribution that would 
solidify the role of the child support enforcement agency as an 
income support program for low-income children in families, 
rather than a system that serves to recover costs associated 
with cash welfare payments. A few of our suggestions are 
reflected in H.R. 3824.
     Mandate a full distribution or a 100 percent pass-
through policy.
    H.R. 4469 continues the practice under current law of 
allowing states the option to fully pass through child support 
to families currently receiving welfare. We believe that a 
mandatory full distribution policy, as reflected in H.R. 3824, 
would further simplify administration and would benefit both 
custodial families and noncustodial parents. A full 
distribution policy may also encourage more fathers to pay 
child support more regularly because the custodial parent would 
know when the NCP (noncustodial parent) paid child support and 
how much he paid. We urge the subcommittee to consider 
legislation that moves closer to full distribution by 
eliminating entirely the on/off rule and allowing all child 
support payments to be distributed to the family, regardless of 
its TANF status. TANF disregards would remain a state option.
    To work properly, the current system requires constant, 
immediate, and substantial flows of information in both 
directions between the TANF, food stamp, and child support 
offices. To determine benefit levels accurately, the TANF and 
food stamp offices must know whether the custodial family has 
cooperated with the child support enforcement agency (in terms 
of establishing paternity and assigning child support rights to 
the state), as well as the amount of child support that has 
been collected. Substantial anecdotal information and reports 
from state non-profit organizations suggest that this system is 
not working well because there is a significant delay before 
the child support office becomes aware of changes to the 
custodial family's TANF status. The result is that families 
that leave TANF frequently do not receive the current child 
support collections to which they are entitled until 3 to 6 
months later.
    Under a full distribution policy, there would be no 
assignment rights to the state. Communication between child 
support and TANF would flow in one direction; the child support 
office would keep the TANF office informed of the amount of 
child support paid by the noncustodial parent. No information 
would have to flow from TANF back to the child support office. 
Alleviating the administrative hassles so common under current 
law also could potentially result in significant government 
savings: when asked to estimate the proportion of 
administrative resources that State IV-D agencies expend on 
distribution issues (excluding systems development costs), the 
answers of four former IV-D directors clustered around 6 to 8 
percent, or in the range of $250 million per year.\3\
---------------------------------------------------------------------------
    \3\ Letter from Bob Williams to Ron Haskins, November 1, 1999.
---------------------------------------------------------------------------
    If states are unwilling to forego assignment and to 
distribute all child support to families regardless of TANF 
status at this time, the next best option is to limit the state 
and federal government's assignment rights to those periods of 
time when the custodial family is actually receiving 
assistance. As noted earlier, the Johnson bill makes 
significant progress here.
     ``Family First'' distribution should apply to all 
arrearage collections, regardless of the family's TANF status.
    This would mean, for example, that for a family currently 
receiving welfare, any arrearage collections would be applied 
to arrearages owed to the family before the collections are 
applied towards arrearages owed to the state. Depending on the 
custodial family's welfare status, current law treats families 
in similar situations very differently. For example, assume two 
cases where the family is owed $5,000 in arrearages and the 
state is owed $2,000. A total of $1,500 in arrearages is 
collected through the federal tax refund intercept. If the 
family is currently on welfare, the money would go to the 
state, but if the family is a former welfare recipient, it 
would go to the family.
    States could also be given the option of an even simpler 
system that would allow the state to eliminate all arrearages 
owed to it and to the federal government after a family leaves 
cash assistance. While a family is a current welfare recipient, 
states could require the family to assign its child support 
rights to the state, and could would still have the option of 
retaining any current support collected. However, if an 
arrearage accrues during the period of time that the family 
receives cash welfare assistance, once the family leaves cash 
assistance, this debt would be owed only to the custodial 
family rather than to the state. This step would dramatically 
simplify the accounting that states must do by eliminating the 
need to keep track of arrearages owed to the state after a 
family has left welfare.
     Encourage states to ``disregard'' more child 
support as income in determining TANF benefit.
    Currently, states determine whether or not to ``disregard'' 
child support income in determining the size of a family's 
monthly cash assistance check. The 1996 federal welfare law 
repealed a requirement that states pass-through and disregard 
the first $50 per month in child support payments to custodial 
parents and their children, rather than retaining the full 
amount as reimbursement for cash assistance. To ensure that 
custodial families are made better off financially when 
noncustodial parents pay child support, states should be 
encouraged to disregard child support payments when calculating 
the TANF benefit.
    In states where the $50 disregard was eliminated, many 
noncustodial fathers (and custodial mothers) are discouraged 
and frustrated by the fact that child support payments yield no 
benefits for their children. In these states, child support 
payments are counted dollar for dollar against TANF benefits, 
effectively resulting in a 100 percent tax rate on those child 
support payments. Under these circumstances, fathers have no 
economic incentive to pay child support to their children 
because no matter how much they pay, their children are not 
better off economically. Of the $2.6 billion dollars of child 
support collected on behalf of all children in custodial 
families receiving TANF in 1998, only $152 million, or less 
than 6 percent, was distributed to TANF families.\4\
---------------------------------------------------------------------------
    \4\ Office of Child Support Enforcement administrative data 
reported in Department of Health and Human Services, Temporary 
Assistance to Needy Families (TANF) Program: Second Annual Report to 
Congress, August, 1999.
---------------------------------------------------------------------------
    States should be encouraged to disregard more child support 
that is passed through to the custodial family when calculating 
TANF benefits. States have a number of options in structuring 
this disregard. The disregard could equal all child support 
paid; or equal a fixed amount of child support each month, or 
equal a specific percentage of paid child support. For example, 
with a 50 percent disregard, every dollar of child support 
would reduce welfare payments by 50 cents (rather than by a 
dollar), thus ensuring that custodial families are better off 
when child support is paid.
    We believe the best way to encourage, not mandate, states 
to disregard child support payments when calculating TANF 
benefits is to relieve states from their obligation to 
reimburse the federal government for its share of disregarded 
child support. We would suggest two modifications to current 
law. The text of H.R. 3824 reflects our first suggestion. 
First, we recommend that states no longer be required to 
reimburse the federal government for child support that is 
distributed to the custodial family. For example, under current 
law, if a state collects $400 in current support for a 
custodial family that is receiving welfare, and disregards 
$200, the state would still be required to send the federal 
share of the entire amount of child support collected (a 
percentage equal to its Medicaid match rate) to the federal 
government. In this case, we assume the match rate is 50 
percent: the state would be required to send $200 (50 percent 
of the $400 collected), to the federal government. We suggest 
that in this situation, the state would only be required to 
send a portion of the child support that it retains to the 
federal government--in this example, this would equal $100, or 
50 percent of the $200 that the state government retained after 
distributing and disregarding $200 to the custodial family.
    Our second suggestion for creating incentives for states to 
disregard a substantial portion of child support collections 
would apply to states that disregard at least 80 percent of the 
aggregate amount of child support for current cash welfare 
recipients. States that could show that they disregarded at 
least 80 percent of the aggregate amount of child support 
collected for current cash welfare recipients would not have to 
send any child support payments to the federal government.
    In general, mandating a full pass-through and creating 
economic incentives for states to disregard a significant 
portion of paid child support disregard would solidify the role 
of child support in improving the living conditions of 
children, especially children in low-income families. It would 
rationalize the message of the child support office, and make 
it consistent with that of the welfare program in promoting and 
facilitating financial responsibility and self-sufficiency.

                             Fathers Count

    On a previous occasion, I testified in support of the 
Fathers Count bill, much of which has been incorporated into 
Title V of H.R. 4469. We support the basic goals of the 
``Fathers Count'' provision in the bill and believe this 
legislation is a good first step in funding services for low-
income noncustodial parents to help them build the capacity to 
support their children both financially and emotionally. We 
believe the federal government should take more steps to 
promote the development of effective strategies for providing 
services to low-income noncustodial parents. These services 
would include encouraging marriage where appropriate, 
strengthening fragile families, and increasing the likelihood 
that children will benefit from the financial support as well 
as the personal involvement of two parents. Efforts to promote 
financial support and personal involvement of noncustodial 
parents in the lives of these children are likely to be 
successful only if they reflect a comprehensive approach.
    Given the lack of financing for broader efforts to promote 
fatherhood or assist non-custodial parents in meeting their 
parental responsibilities, this bill is helpful, although 
considerably more remains to be done. There is much we need to 
learn about how government policies should be structured and 
coordinated to make them most effective in assisting non-
custodial parents to become self-sufficient and meet their 
parental responsibilities. That is why Subtitle A is the right 
place to begin. This title funds a series of fatherhood grants 
to launch and evaluate pilot programs to improve noncustodial 
parents' ability to pay child support, make child support 
policies for those parents more responsive and more appropriate 
for low-income families, improve the parenting skills of 
noncustodial parents, and increase contact and interaction 
between these fathers and their children.
    We commend the changes to the fatherhood provisions in H.R. 
4469 that address domestic violence. These changes provide an 
exception to helping fathers arrange and maintain a consistent 
visitation schedule with their children in situations where 
these visits would be unsafe. The changes also give a funding 
preference to entities that cooperate with community-based 
domestic violence programs. The prevalence of domestic violence 
is high in low-income communities, especially among women who 
are current or former recipients of cash welfare assistance. As 
policies are put in place to increase noncustodial fathers' 
involvement with their children, care must be taken to ensure 
the safety and well-being of children and their mothers.
    Title V of this proposed legislation also should be 
improved by limiting the charitable choice language. Faith-
based organizations should be involved in providing services to 
low-income noncustodial parents. However, we have serious 
concerns about discrimination in hiring that would be allowed 
under this charitable choice provision.

Expanding Child Support Enforcement to Public Non-IV-D Agencies and to 
                            Private Entities

    The Center strongly opposes Title III of H.R. 4469, which 
would allow states to provide additional information and 
enforcement mechanisms to public non-IV-D agencies and to 
private child support agencies for the purpose of collecting 
child support. Private and Public non-IV-D child support 
entities currently have access to some private information by 
requesting ``locate only'' data through the Parent Locator 
Service. Private child support entities are unregulated and 
there is anecdotal evidence that many are engaged in 
irresponsible practices that are harmful to consumers--both 
custodial and noncustodial parents. Private collection agencies 
may already have too much unrestricted access to private 
information and ought to be subject to regulations on the use 
of the data they currently have. We urge the Subcommittee to 
study and to regulate the industry's current level of access 
before allowing them additional data and enforcement tools. 
Allowing private companies and non-IV-D public agencies access 
to new data sources, including the National Directory of New 
Hires, could jeopardize families' right to privacy and will 
raise concerns about the ability of IV-D agencies to monitor 
and regulate private contractors use of the data. Ultimately, 
supporting the growth of private child support agencies will 
further fragment the child support enforcement system and 
potentially divert resources from state agencies.
    Extending access to the additional information and 
enforcement tools to non-IV-D entities, public or private, 
raises serious concerns about privacy. The 1996 welfare reform 
law gave child support enforcement agencies access to 
additional personal information through the creation of the 
National Directory of New Hires. The legislation drew a 
carefully constructed line that defined what information IV-D 
agencies could collect and access and how that information 
could be used. With these new tools, the child support 
enforcement system has been successful in significantly 
increasing the amount of child support collected. If the data 
available through these enforcement tools are made more widely 
available, there is a very real danger of a ``privacy 
backlash'' that would undermine support for using the data to 
enforce child support payment. Advocates of privacy rights have 
legitimate concerns about the importance of protecting personal 
information. Although this proposal allows child support 
entities to require private entities to follow privacy 
guidelines set up by the state, we have concerns that state 
agencies will be limited in their ability to enforce these 
rules. If there is a perception that information in the New 
Hire Database is not protected, there will be many who advocate 
eliminating the Directory entirely.
    Extending the information to outside entities also raises 
concerns about the continued efficacy of the National Directory 
of New Hires. Although legislation mandates that employers 
provide information about new hires to the Directory, employers 
comply with this system on an essentially voluntary basis. 
There is no strong enforcement mechanism if employers do not 
provide data to the New Hire Directory. If New Hire information 
is distributed to non-IV-D agencies, and employers become wary 
of how the information is used, the progress in child support 
collections that the Directory of New Hires has made possible 
in the past years in collecting data may be eroded.

Extending enforcement to private entities

    There are actually two forms of privatization within the 
child support enforcement world. One form of privatization 
adopted by many state child support agencies involves an 
outside contractor bidding to act as ``an agent of the state'' 
to carry out parts of the child support enforcement mission. 
These contractors, such as Maximus and Lockheed-Martin, are 
performing many functions that were once performed by state 
child support enforcement agencies. States hold these ``agents 
of the state'' accountable to the same rules guarding privacy 
and access to information as state agencies themselves. 
Subtitle B of Title III of this bill is not concerned with this 
type of privatization.
    Instead, the Title III option to extend to private child 
support enforcement entities the information and tools of the 
child support agencies applies to private companies working 
outside the child support enforcement system. This provision 
gives states the option to require state child support 
enforcement agencies to provide any data relevant to seeking or 
establishing child support obligations to private entities. 
Currently, some custodial parents are willing to pay private 
entities for the service of retrieving child support 
obligations from noncompliant noncustodial parents. Under 
current law, these private entities operate independently of 
the child support enforcement system, with no obligation to 
follow child support enforcement's regulations, and also 
without access to the state Directory of New Hires that 
contains sensitive information.
    Custodial families that turn to private child support 
entities pay a premium for their services. Private child 
support entities retain between one-quarter to one-third of the 
support they collect. Under this proposal, private entities 
would be required to pay a fee to cover the child support 
agency's costs associated with obtaining information about 
noncustodial parents; however, these private entities would 
nevertheless benefit substantially from the work performed by 
public child support agencies in issuing wage withholding 
orders or intercepting federal tax refunds. This amounts to a 
diversion of federal and state resources to help generate 
profit for private businesses.
    In addition, many of these private child support 
collections companies use problematic means to collect child 
support. Numerous instances of these companies using harassment 
and threats to collect support have been documented. Courts 
have ruled that the federal Fair Debt Collection Practices Act 
(FDCPA) does not extend to private child support companies, so 
clients and debtors do not have the same consumer protections 
that cover private collection agencies. Title III would grant 
these unregulated private entities access to sensitive 
information stored in state databases but would not require 
them to follow state agency rules and regulations.
    Furthermore, extending information and tools to non-IV-D 
entities will undercut the efforts of state child support 
enforcement agencies and could fragment the child support 
enforcement mission. In the past several years, the child 
support enforcement system has made great progress in building 
a central state-based system that serves both welfare and non-
welfare families, with central state disbursement units, and a 
National Directory of New Hires. A competition between a 
private child support agency that can pick and choose which 
delinquent fathers to pursue and a public child support agency 
that must enforce all court-ordered support is an unfair 
competition. If private child support companies out-perform 
state agencies by ``creaming'' those debtors whose delinquent 
payments are easiest to retrieve, the child support agency will 
be left with a considerably more difficult caseload. In an 
unfair competition, state agencies' performance may suffer.
    Without a full understanding how reliant these private 
child support collection entities are on the work of public 
agencies, state legislatures may be encouraged to underfund the 
publicly-funded child support agency on the rationale that the 
services are available through the private sector. Because 
private entities do not receive state funding, state 
legislators may assume that it is more cost-efficient to allow 
private agencies to perform child support enforcement 
functions, and thus underfund public agencies. Underfunding 
public child support agencies could fragment child support 
enforcement so that middle and upper income custodial families 
relied more heavily on private collection agencies, where they 
paid fees as high as one-third of the amount collected, and 
lower-income custodial families relied on the public IV-D 
agency. A two-tiered system of child support would be 
inefficient and would stigmatize low-income mothers who rely on 
state-funded system.

                           Enforcement Tools

    Title IV of H.R. 4469 expands the use of several child 
support enforcement tools. Several Administration proposals 
have been made to expand child support enforcement tools; this 
proposal has selected the best of these proposals:
     Lowering the amount of arrearages that must 
accumulate before a passport denial is triggered;
     Garnishing compensation paid to veterans for 
service-connected disabilities to enforce child support 
obligations; and
     Expanding the use of the tax refund intercept 
program to collect child support arrearages on behalf of 
children who are not minors.
    Lowering the level of arrearages that must have accumulated 
before a passport can be denied from $5,000 of arrearages to 
$2,500 seems reasonable. We believe it would be helpful to fund 
a study that determines why noncustodial parents who apply for 
a passport are not being caught earlier in the system. One 
assumes that people who apply for passports and can afford 
overseas travel are not low-income fathers, but rather middle-
and upper-class fathers with regular employment who should have 
been forced to pay regular child support at an earlier date 
through other enforcement mechanisms, such as automatic wage-
withholding.

                    Possible Financing of H.R. 4469

    While H.R. 4469 contains commendable provisions on 
simplifying assignment and distribution of child support and 
expanding services to low-income fathers, the Center is very 
concerned about how this bill may be financed. The bill has 
several offsets, but they cover only a portion of the costs 
associated with the bill. A financing gap still exists. We have 
heard of several options for closing this gap, including 
cutting the Earned Income Tax Credit (EITC) for childless 
workers, and cuts to TANF supplemental grants. The Center 
strongly opposes any attempt to finance this proposal using an 
offset that cuts the Earned Income Tax Credit for childless 
workers or cuts the TANF supplemental grants.
    The EITC for childless workers is a tax credit for poor 
workers between the ages of 25 and 64 who do not live with 
minor children. Only two percent of EITC benefits goes to poor 
working individuals and married couples not raising minor 
children. Abolishing this small EITC would result in a tax 
increase for some of the nation's poorest workers. Single 
workers are the only group in the United States who begin to 
owe federal income tax before their income reaches the poverty 
line. The federal income tax code consequently taxes them 
somewhat deeper into poverty. Abolishing the EITC for which 
they qualify would make their tax burdens larger and push them 
farther below the poverty line.
    Moreover, the EITC for poor workers and couples who are not 
raising minor children never exceeds 7.65 percent of their 
wages, the amount withheld from their paychecks for the 
employee share of payroll taxes. Thus, if this small EITC is 
abolished, these workers will receive no offset to their 
payroll tax burdens. Even for those workers too poor to owe any 
federal income tax, abolition of this credit would result in a 
tax increase; since none of their payroll taxes would be 
offset, their net tax burden would rise.
    Eliminating the EITC for poor workers not raising minor 
children thus would result in an increase in the tax burdens of 
more than three million very poor workers. If such a step were 
taken, and some of the tax measures the House and Senate have 
passed this year also were enacted, the result would be that 
some of the nation's poorest workers would have their taxes 
raised at the same time that some of the nation's wealthiest 
individuals in the country received substantial tax cuts.
    These poor workers already pay an unusually high percentage 
of their small incomes in federal taxes. A Congressional Budget 
Office analysis showed that between 1980 and 1993, the average 
federal tax burden of the poorest fifth of non-elderly 
households climbed 38 percent, dwarfing the increase in tax 
burdens borne during this period by any other group of 
households in any income category. CBO data also show that 
today, even with the EITC, the poorest fifth of non-elderly 
individuals who live alone is estimated to pay an average of 
17.1 percent of income in federal taxes,\5\ a percentage that 
far surpasses the percentage of income that poor elderly 
individuals and poor families with children pay. In fact, this 
percentage is nearly as large as the average tax burden that 
the middle fifth of families with children bear. A single 
worker with income equal to the poverty line, which is 
projected to be $8,884 in 2000, currently pays $1,500 in 
federal income and payroll taxes after the EITC is taken into 
account.\6\
---------------------------------------------------------------------------
    \5\ CBO Memorandum, ``Estimates of Federal Tax Liabilities for 
Individuals and Families by income Category and Family Type for 1995 
and 1999,'' May 1998, pp. 28-9. In accordance with standard economic 
analysis, the figures in the CBO analysis, as well as in the CBO data 
in Table 2, include both the employer and the employee share of the 
payroll tax.
    \6\ This includes both the employee and the employer share of the 
payroll tax. Most economists believe that both the employee and the 
employer shares of the payroll tax are borne by workers in the form of 
lower wages.
---------------------------------------------------------------------------
    Finally, financing this proposed legislation by eliminating 
the EITC for individuals who are not living with their children 
would contradict the message and intent of this bill. On one 
hand, this proposed legislation aims to help low-income NCPs by 
improving the child support system, and providing parenting and 
employment services. On the other hand, financing this bill by 
cutting the childless worker credit would harm the same 
population it intends to serve by eliminating a valuable work 
support.
    The Center also strongly opposes using cuts in the TANF 
supplemental grants as an offset for this proposal. The 
Administration has proposed these cuts as a potential offset, 
but that does not mean these cuts are a wise idea. Madame 
Chairman, you have successfully fought back previous attempts 
to cut TANF. We commend you for those efforts and urge you to 
not change your position with regard to cuts in the TANF block 
grant. The supplemental TANF grants were enacted to provide 
additional resources to poor states whose TANF block grants 
were small relative to wealthier states with similar 
populations. The original formula for calculating TANF block 
grants was inadequate because the size of the TANF grant was 
based on historical AFDC spending, and the poor states were 
spending significantly fewer dollars per poor child under AFDC 
than were wealthier states.
    The TANF expenditure rates of the 17 states that received a 
supplemental grant in 1999 \7\ are comparable to the 
expenditure rates of all states: the median state nationwide 
has 13 percent of its TANF money unspent (unobligated or 
unliquidated). Seven of the 17 states that received a 
supplemental grant have a lower percentage unspent. In 
addition, the 1999 spending level of five of the states that 
received a supplement (Alaska, New Mexico, North Carolina, 
Texas, and Utah) exceeds their basic TANF allocation (not 
including the supplement). These states would face fiscal 
trouble if their supplemental grants were cut.
---------------------------------------------------------------------------
    \7\ The 17 states that received a supplemental TANF grant include: 
Alabama, Alaska, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho, 
Louisiana, Mississippi, Montana, Nevada, New Mexico, North Carolina, 
Tennessee, Texas, and Utah.
---------------------------------------------------------------------------
    Clearly no cuts should be made to the supplemental grants 
of those states that have been spending down their TANF funds. 
Nor should cuts be made to those states that have not yet spent 
all of the TANF monies available to them. Cutting the 
supplemental TANF block grants would put Congress at the top of 
a troubling slippery slope in which the grants to other states 
ultimately could be reduced as well.
    In considering offsets for H.R. 4469, it should be 
remembered that offsets were not required for the tax measures 
being passed by Congress this session, some of which would 
reduce the taxes of the nation's wealthiest individuals. It is 
troubling that Congress would find that such measures need no 
offset, while a much less costly measure to support low-income 
fathers in meeting their duties to their families does require 
an offset.

                               Conclusion

    In sum, we:
     Support changes in the assignment and distribution 
rules and encourage the Subcommittee to simplify the current 
rules even more by mandating a full pass-through of child 
support to families on welfare, and encouraging states to 
disregard child support payments in calculating custodial 
families' TANF benefits;
     Support the goals of Fathers Count, which will 
encourage low-income noncustodial parents to provide financial 
and emotional support to their children, and we commend the 
improvements the Subcommittee made in adding domestic violence 
language;
     Support the expansion of child support enforcement 
tools and encourage the funding of a study examining why some 
noncustodial parents are not caught until they apply for a 
passport;
     Oppose allowing states to finance changes in the 
distribution rules by supplanting TANF dollars;
     Oppose extending enforcement tools to the public 
IV-D agencies and private entities, which could jeopardize 
privacy data, encourage states to under-fund state child 
support agencies, and fragment the child support enforcement 
system; and
     Oppose using the EITC for childless workers or the 
TANF supplemental grants as offsets for this proposal.
    Because the H.R. 4469 advances the goals of better child 
support enforcement and better opportunities for low-income 
fathers, it would be a shame if the provisions of Title III or 
the offsets that are chosen prevent the enactment of the rest 
of the bill.
      

                                


    Chairman Johnson of Connecticut. Ms. McLoud of the National 
Child Support Enforcement Association.

 STATEMENT OF DIANNA DURHAM-MCLOUD, PRESIDENT, NATIONAL CHILD 
                SUPPORT ENFORCEMENT ASSOCIATION

    Ms. Durham-McLoud. Good morning, Madam Chairman. Thank you. 
I am Dianna Durham-McLoud, and I am testifying this morning on 
behalf of the National Child Support Enforcement Association. I 
am the former director of the Illinois IV-D program and NCS 
current President.
    NCS is an association representing over 55,000 child 
support professionals from public agencies and private firms 
nationwide. Our mission is to ensure that, through education, 
training, and advocacy, that children receive the financial and 
emotional support they need from both of their parents.
    I thank you, Representative Johnson, for inviting me to 
share our views on the Child Support Distribution Act of 2000, 
and I want to commend you and your Committee for addressing the 
complexity of the distribution rules.
    NCS, too, has heard the frustrated voices of America's 
parents as they move to try to understand these convoluted, 
hard-to-explain, difficult-to-administrate provisions that have 
even confounded some of our most sophisticated computer 
programmers. This distribution simplification should bolster 
public confidence in the program. When you cannot explain to an 
intelligent constituent who is trying and motivated to 
understand what is going on in the distribution because of the 
pots or the killer bees or whatever the distribution scheme was 
that was in place at the time, they really think you are simply 
out to get them.
    This act moves us significantly in the right direction in 
order to assist people continue to take on more personal 
responsibility.
    Our recent experience with PRWORA shows that, when we give 
appropriate support, people will take on the additional 
responsibility that we are asking them to do. So we are also 
saying that we should expand IV-D child support priority so 
that we are enabling, as well as enforcing, for parents, and 
not doing a one-size-fits-all approach. We want to have the 
strict enforcement for the deadbeats, but, of course, we want 
to have the enablement for the dead broke.
    We think that this greater emphasis is in line with the 
PRWORA spirit, if you will, but in the interest of time written 
testimony has been submitted. Let me just hit a couple of high 
points.
    One, we believe that there is a need for a new financing 
scheme for child support. My learned colleague to my immediate 
right said that we need not worry greatly about that, and my 
immediate thought was, ``Spoken like someone who has never sat 
in the chair, someone who has never had to try to explain to a 
State Appropriations Committee why the heck it is this program 
that was originally presented as one that would make money for 
the State, now here you are talking about you want a $40 
million supplement in order to do this. What is up?''
    And you say, ``Well, they've changed the rules in 
Washington.'' ``Well, no one told us they were getting ready to 
change the rules.'' ``Well, you know, sir, here's the law and 
this is the mandate.''
    I remember, with cold sweat running down my face, standing 
on the floor of the Illinois House when we said, if we told 
them what to do with their mandate, we wouldn't have the 
problems we had in Medicaid now, so maybe we should start in 
child support, since we didn't have the nerve to start with the 
medical program.
    Well, you know, when you are the person trying to get 
through the legislation, that is a little bit different. All 
right?
    We would like for this Committee to seize the opportunity, 
modeled on the U.S. Commission on Interstate, to, in fact, have 
some U.S. Commission on Financing for the child support 
program. Let us stop the patchwork quilt approach. Let us put 
it together so that it really works.
    You will see more details in the written testimony. We are 
opposed to a mandate of a 3-year adjustment. We understand the 
rationale; however, that did exist prior to PRWORA. We suggest 
that that is not necessarily helpful.
    In the interest of time, I will end my remarks by simply 
saying that we did not comment to every issue raised in your 
legislation. In your opening, Madam Chair, you said that you 
had found an issue that brought together the mothers, the 
fathers, the Feds, the State, public sector, private sector, 
and everyone else on one issue. Ma'am, they all belong to NCS, 
and so we represent that broad sense here today.
    Thank you for the opportunity. I will be more than happy to 
respond to any questions.
    Chairman Johnson of Connecticut. Be prepared in the 
questions, then, if you represent all those groups, to comment 
on the privatization issue.
    [The prepared statement follows:]

Statement of Dianna Durham-McLoud, President National Child Support 
Enforcement Association

    Madame Chair and Distinguished Members of the Subcommittee:
    Good Morning. My name is Dianna Durham-McLoud, and I'm 
testifying on behalf of the National Child Support Enforcement 
Association (NCSEA). I'm a former director of the Illinois IV-D 
agency, and the current President of NCSEA--an association 
representing over 55,000 child support professionals, from 
public agencies and private firms nationwide. Our mission is to 
ensure, through education, training and advocacy, that children 
receive financial and emotional support from both parents.
    I thank you Representative Johnson for inviting me to share 
our views on the Child Support Distribution Act of 2000. I want 
to commend your efforts to simplify the complexity of the 
distribution rules we have today. NCSEA has heard the same 
frustrated voices as you have, upset that distribution is. . . 
too convoluted to understanda. . . too convoluted to explaina. 
. . too convoluted to administera. . . and even too convoluted 
for some of our most sophisticated computer programmers!
    The distribution simplification reforms in this legislation 
should bolster public confidence in the child support program 
as a reasonable and just public policy in harmony with the 
civic values of our society. It should also ease the often-
strained predicament child support professionals face trying to 
explain to parents such peculiar quirks as requiring the state 
retain an IRS intercept, while if the same arrears had been 
collected by any other means, it would go to the family.

                      Alignment with PRWORA Values

    This bill represents a significant step forward in 
synchronizing child support policy with PRWORA's new paradigm. 
PRWORA told people on welfare they must take greater personal 
responsibility to work towards self-reliance. But PRWORA also 
helped them with a plethora of new supports. Our IV-D 
priorities must also expand more towards enabling as well as 
enforcing parents' responsibility to support their children. 
Yes, that means strict enforcement against dead-beats. . . but 
it also means helping dead-broke dads who genuinely want to 
meet their obligations to cultivate their ability to do so.
    Greater emphasis on personal responsibility also means we 
must reduce our historic emphasis on welfare cost-recovery. 
Increasing families' reliance on parentally-paid child support 
in place of publicly-paid welfare support obviously promotes 
personal responsibility. But how can we distribute more 
parentally-paid support to needy families when many states must 
retain those collections to fund the very operations that 
collect the support in the first place? This cost-recovery 
rationale is still deeply embedded in the financing system for 
many states. Thus, we find ourselves fiscally restrained from 
promoting the new philosophy of personal responsibility we all 
want! So, what can be done?
    Your bill, Madam Chair, is a helpful interim solution that 
moves closer to NCSEA's general thinking about this issue over 
the years:
     ``Allow States, at their option, to distribute all 
child support collections, current and arrears, directly to 
families.'' (NCSEA Board Resolution adopted 1/17/95)
    It's true that your bill does permit states the option to 
pass-through to families on TANF any part of the state share of 
what would be assigned (i.e., current child support and the 
arrears that accrued while on TANF). This changes the current 
rules that require retaining all arrears accrued while on TANF. 
But practically, as long as the federal share must be paid, 
it's not realistic to expect that states will be able to afford 
to do a 100% pass-through (i.e., distribute all child support 
collections, current and arrears, directly to families), 
because then states would have to pay the federal share out of 
the state treasury. Further, that amount would not even qualify 
for reimbursement using TANF Maintenance of Effort (MOE) credit 
or TANF block grants funds, as your bill permits for the state 
share that is distributed.
    On the other hand, by no longer assigning pre-assistance 
arrears to the state, this bill sends a strong message to TANF 
families that the support they should have received before 
going on welfare (which might have even prevented that 
necessity), will henceforth remain rightfully theirs. So, while 
the government has been encouraging these families to be more 
reliant on their own resources, it is also now willing to 
prioritize that self-sufficiency ahead of the historic emphasis 
on welfare cost recovery. This message is similarly echoed by 
removing the mandate to pay the federal share from collections 
of pre-assistance arrears for families who've left TANF when 
those arrears are collected via the federal income tax refund 
intercept (but waiving them if collected by any other method). 
We all know that policy was born to allay fears that retained 
collections would dry up in the wake of the PRWORA revolution.
    This new emphasis on promoting self-reliance is further 
reflected by your proposal to pay pre-assistance arrears to 
``families first'' once they leave TANF. This is obviously when 
their struggle to develop self-reliance can be most daunting.
    Finally, your bill's new option allowing states to 
distribute arrears that accrued while on TANF to families who 
have left TANF, represents a further step in emphasizing self-
reliance. When post-TANF families start receiving support 
that's always been non-optionally retained as ``the state's 
arrears,'' they will get the clear message that their 
government believes in personal responsibility strongly enough 
to sacrifice this money in order to facilitate families' 
transition to self-reliance. However, you should also recognize 
that by not also relinquishing the federal share, states will 
be less likely use this approach.
    To help finance these reforms that will deprive states of 
what they formerly retained, your bill permits states to access 
TANF block grant funds, or claim TANF Maintenance of Effort 
(MOE) credit. We recognize your bill only permits this on 
amounts distributed beyond the baseline of what states are (or 
will be) doing, in order to prod expanded efforts. But 
instituting such a baseline means states will no longer get MOE 
credit on the existing extent they've opted (or will have opted 
prior to enactment) to distribute to families. Indeed the 2005 
enactment date will likely cause states to forestall any 
expansion until after 2005 to avoid boosting their baseline.
    While NSCEA has not yet formally adopted positions on 
whether or how to allow states to use TANF block grants or TANF 
MOE credit, we commend you for recognizing the necessity of 
reforming the present child support financing system. NCSEA 
completely shares this recognition that we desperately need to 
forge a new blueprint for financing the child support program 
in the 21st Century. During this present transitional period 
however, we want to emphasize that ``NCSEA opposes any 
reduction in federal, state and local funding to the child 
support program, and urges continued partnership to provide 
adequate program funding.'' (1/30/99 NCSEA Board Resolution). 
We remain concerned about becoming too reliant on TANF sources 
of funding, especially in light of the possible repercussions 
on the IV-D program that could result from changes made in TANF 
funding during PRWORA's upcoming reauthorization.

                  A New Financing Blueprint is Needed

    The new blueprint for financing the child support program 
must reflect our Post-PRWORA world. That's why I'd like to 
renew our long-standing call, most recently reiterated in a 
January 1999 NCSEA Board Resolution, that
    ``The federal government should create a formal workgroup 
that involves all appropriate players. . . [to] identify the 
appropriate method for ensuring an increased level of 
investment in the program by federal, state, and local 
governments in a way that. . . adheres to a set of principles 
that properly relate funding approaches to program needs, goals 
and performance. . .''
    NCSEA believes such a group could devise proposals as 
profoundly successful as the 1992 recommendations of the 
Congressionally empanelled U.S. Commission on Interstate Child 
Support--most of whose suggestions were eventually enshrined in 
PRWORA. NCSEA recommends that Congress establish a similar 
high-profile group, perhaps called the U.S. Commission on Child 
Support Financing, which could explore ways to reinvent a new 
balance between the evolving goals of the child support program 
and its financing mechanism. This Commission should also 
fashion a new federalism formula for equitably and affordably 
sharing this responsibility between the federal, state and 
local levels of government.
    Madam Chair, Congress has asked IV-D agencies to take-on 
more and more duties, and we have agreed because they help us 
better achieve our mission. But you must also ensure we have 
the financial ability to fulfill these added duties. Declining 
TANF rolls and growing non-TANF cases invariably mean that our 
IV-D financing dilemma will only worsen. Let's start working on 
a solution now!

                         Cost-Benefit Research

    In the meantime, the present financing dilemma for many 
states will only be aggravated by the welcome but costly 
distribution reforms in this bill. Those states that heavily 
rely on retained collections to fund their IV-D operations will 
now have to persuade their legislatures to substitute new 
financing means. For many states, that means lobbying for IV-D 
appropriations for the first time ever. These states will be 
challenged to change the mind-set of their Governors and 
legislatures from viewing child support as cost-recovery 
income, as the program was originally framed, to instead see it 
as a valuable investment that makes both economic and social 
sense.
    To help persuade state leaders to make this transition to a 
post-recoupment era, we need research documenting the cost-
benefit value of public investments in child support. That's 
why NCSEA is recommending that Congress seize the opportunity 
with this bill to establish a juried research panel to 
orchestrate quality studies on the fiscal and social impact of 
child support.
    OCSE recently released a research literature review (The 
Lewin Group, April, 2000) that surveyed existing findings in 
this area. But that comprehensive report concludes, ``The 
existing cost avoidance literature as a whole is of limited use 
to policymakers'' due to such snags as outdated studies 
conducted before PRWORA, small samples, and neglect of the 
impact on SSI, WIC, public housing, school lunch, CHIP and 
other public assistance programs whose costs are also avoided 
when child support is collected. As our Board concluded in the 
aforementioned resolution:
    ``NCSEA believes that a cost avoidance analysis will show 
that the payoff from investing financially in the child support 
program is greatly underestimated.''
    Definitive cost-benefit research would surely build 
stronger public and political backing for increased investment 
in the child support mission. I personally think the findings 
will show there is no better investment we could make in 
today's robust economy than to strengthen our child support 
program so that all children can enjoy the full financial and 
emotionally support from their parents that they're entitled 
to.

            Fathers Count. . . For Money. . . and Much More

    Speaking of children's rights, I want to applaud you, Mrs. 
Johnson and Mr. Cardin, for your commitment to fostering the 
ties between fathers and their children. NCSEA continues to 
support your ``Fathers Count Act'' whose provisions are 
included in this legislation. Like you, NCSEA believes that 
every child has a right to both parents. As you likely already 
know, I'm deeply involved in the responsible fatherhood 
movement that happily is gaining ground today. I can tell you 
from personal and professional experience, that when kids see 
that Dad cares enough to support them, and Dad sees that his 
support matters immeasurably, then voluntary compliance 
replaces more costly and confrontational enforcement methods. 
Unfortunately, and unintentionally, our child support program 
has too often ended up as a wedge between dead-broke dads and 
their children. These fathers, who honor their responsibility 
to support their children, deserve the kind of enabling 
supports promised in the Fatherhood Programs contained in Title 
V of this bill.
    NCSEA supports responsible fatherhood initiatives because 
our members are increasingly working with community based 
organizations running these programs, and we're seeing results. 
More than any other agency in state government, the child 
support program is in a position to reach out to fathers 
separated from their children. We believe everybody wins--
fathers, children, mother, and society in general--by helping 
fathers fulfill their responsibility.
    Perhaps just as important as the simplification rationale 
is the fact that the expanded distribution to families 
contained in this bill will help remove the disincentive 
fathers face when they know their payments will end up retained 
by the state rather than helping their children. Eliminating 
the assignment of pre-assistance arrears, and paying them to 
the family first once off TANF, will help reduce this 
disincentive appreciably.
    In order to determine more scientifically the impact of 
these Fatherhood programs and incentives, NCSEA recommends a 
strong research and evaluation component, to assess how 
participation in fatherhood program affects such desired 
outcomes as encouraging regular child support payments, 
facilitating fathers' involvement with their children, and 
boosting the employment, substance abuse rehabilitation, and 
credit rating of these participants.

                 Don't Mandate 3-Year Review and Adjust

    I'd like to turn now to one provision in this bill that 
NCSEA opposes--the reinstatement of mandatory review and 
adjustment of all TANF child support orders every three years. 
There were very good reasons why this was made voluntary back 
in 1996--a widespread consensus that it just was not efficient. 
Think about it, if doing this is so lucrative, then why do 
states need to be mandated to do what would be in their best 
financial interest?
    That's why NCSEA passed a resolution in 1995 declaring 
that:
    ``All notice provisions related to the review and 
adjustment of child support orders, with the exception of a 
one-time notice of a right to review and adjustment, should be 
eliminated from Federal law and regulations. Any further 
noticing should be determined by the state in accordance with 
their individual due process or other noticing requirements.''
    This is still our position. NCSEA strongly recommends that 
the scheduling of any review and adjustment remain at the 
request of the parents involved, or the discretion of the IV-D 
agency. These parties have a built-in incentive to ensure 
orders are appropriately modified when circumstances change.
    I understand that this change is being driven by the need 
to find money to pay for the costs of expanding distribution to 
families. But the budgetary assumptions behind this policy are 
based on dated research conducted prior to PRWORA, in a much 
different environment that we have today. Also, a recent review 
(Lewin, ibid.) of these early 1990s studies pointed out another 
flaw: ``support orders with greater potential for an upward 
adjustment were selected for review and modification during 
these demonstrations.'' Let IV-D agencies similarly select 
which cases have the potential to cover the increased costs and 
staffing necessary to do these reviews.
    The above reasoning is just as germane regarding the bill's 
mandating of a review and adjustment for every family who 
leaves TANF. Again, sometimes this will be prudent, but not 
always. Let's not foist any more unfunded mandates on states. 
Let's just let the IV-D agencies decide.
    This concludes my statement. Once again thank you Madame 
Chair and distinguished Members of this Subcommittee for 
allowing me the privilege to testify today.
      

                                


    Chairman Johnson of Connecticut. Ms. Smith?

  STATEMENT OF MARILYN RAY SMITH, CHIEF LEGAL COUNSEL, CHILD 
   SUPPORT ENFORCEMENT DIVISION, MASSACHUSETTS DEPARTMENT OF 
 REVENUE, AND EXECUTIVE DIRECTOR, MASSACHUSETTS COMMISSION ON 
           RESPONSIBLE FATHERHOOD AND FAMILY SUPPORT

    Ms. Smith. Good afternoon, Madam Chairman, Mr. Cardin, 
Members of the Committee. Thank you for the opportunity to 
testify on the Child Support Distribution Act of 2000.
    My name is Marilyn Ray Smith. I am chief legal counsel for 
the child support enforcement division at the Massachusetts 
Department of Revenue.
    The bill you are considering today has several provisions 
of interest. I would like to comment on two provisions. The 
first is simplifying the rules for distributing child support 
collections, which I strongly support, and the second is 
providing access to child support information to certain non-
IV-D public and private entities, which I strongly oppose.
    I would like to first commend you, Madam Chairman, for your 
leadership and the leadership of the Members of this 
Subcommittee for your work on the distribution rules. The 
current distribution rules are a failure, by almost any 
measure. They are difficult for States to follow, for staff to 
explain, for parents to understand, and for computers to 
implement. Computers have to keep track of six buckets as 
payments move, depending on the source of the payment and when 
the person was on public assistance. Their rules are a hold-
over from the days when child support was seen as a cost 
recovery program rather than a path to self-sufficiency.
    The bill before you completes the changes started by 
welfare reform and will initiate a full ``Families First'' 
policy, including giving families priority in the Federal tax 
refund intercept. Families will assign child support rights 
only for the period they are on the welfare, while arrears that 
accrue before and after the family is on welfare will belong to 
the family. If the family is on welfare, the State arrears get 
paid first. If the family is not on welfare, the family arrears 
get paid first. It is very simple. Instead of six buckets on 
the computer, there are only two.
    But, more importantly, it will give families an incentive 
to go off and stay off welfare, because if they are not on 
welfare, they get paid first. And in the long run, I believe 
the child support program will collect more money because it 
will no longer be wasting valuable time on consuming expensive 
computer resources as we try to operate under the existing 
incomprehensible rules.
    Therefore, I applaud you and the Subcommittee for proposing 
simple, clear rules that will help more families obtain self-
sufficiency, and I enthusiastically support this proposal.
    Next I would like to address the proposal to give States 
the option to release confidential employment and financial 
information from the State new hire directory and the Federal 
Parent Locator Service to certain non-IV-D public and private 
entities that meet the State's criteria for participation.
    Over the years, I have had the privilege on several 
occasions to appear before this Committee seeking your support 
for many positive enhancements to the Nation's child support 
program, which this Committee has always graciously received 
and often adopted. Therefore, I must regretfully proffer that 
this proposal, in my view, is not in the best interest of the 
child support program or the children that it serves.
    Last October I provided extensive testimony on a similar 
proposal, expressing concerns that the ultimate goal of private 
collection agencies is to be able to deduct fees ranging from 
30 to 40 percent from child support collections made by the IV-
D agency. I have similar concerns about this proposal, ranging 
from disclosure of confidential information to entities that 
realistically will be difficult to regulate, to the impact that 
this proposal will have on employers, banks, and the State 
child support enforcement agencies.
    I have a number of practical questions about 
implementation. How will the IV-D agency be able to monitor 
these agencies to ensure that they comply with data security, 
privacy protection, and due process requirements? In 
Massachusetts, the child support program is housed in the 
Department of Revenue, which is a repository not just for tax 
and child support information, but also new hire, wage 
reporting, and bank account information. We have more data in 
our State agency probably than any other agency in the country, 
and protecting this confidential data is a top priority for our 
commissioner. We receive regular training and we are audited 
periodically, both manually, as well as through a computer 
program that keeps track of who gets access to what information 
for what purpose.
    How can confidentiality safeguards realistically be put in 
place for the range of diverse entities contemplated in this 
proposal? Private child support collection agencies are not 
regulated by other Federal or State law, so the brunt of the 
monitoring and auditing duties will fall on the IV-D child 
support agency. Custodial and noncustodial parents alike may be 
mistreated through harassing collection practices or unfair 
contracts.
    We had one recent case in Massachusetts, where the 
collection agency threatened the noncustodial parent that it 
would send a public notice with personal information to his 
relatives, friends, and neighbors if he did not pay up. 
Confused, since his case was already being enforced by the 
Massachusetts child support program, he sent a cashier's check 
for $9,930 made payable to the Commonwealth of Massachusetts to 
the collection agency in California. The agency promptly cashed 
the check by endorsing it, ``Child Support Services,'' closed 
the bank account, disconnected phones and disappeared. The 
mother did not get one cent.
    This is not an isolated incident. Other abuses we have 
encountered include altering court orders to change the payee 
from the Massachusetts child support agency to their company, 
and then sending the altered order to the employer with a 
demand for payment; using Federal forms to gain unauthorized 
access to interstate locate information; threatening employers, 
custodial parents, and the Massachusetts child support agency 
with a variety of lawsuits based on specious claims; and 
misleading unsophisticated custodial parents into thinking they 
are dealing with the State child support program by calling 
themselves ``CSE of Massachusetts,'' ``Office of Child Support 
Enforcement Services,'' or ``Child Support Collections of 
Massachusetts.''
    Our experience to date has not been positive. We are not 
coming at this from a monopolistic attitude, but rather from a 
worry of how can we monitor every letter, every form, every 
contract to prevent these abuses.
    What if one State permits easy access with few controls to 
its information and accepts requests from these entities and 
sends them to another State? Will other--
    Chairman Johnson of Connecticut. I am sorry. I do have to 
note that the red light is on, if you want to just wind up.
    Ms. Smith. Just one more point.
    Chairman Johnson of Connecticut. OK.
    Ms. Smith. It is a very important point. What if one State 
provides access and then it becomes a gateway to the Federal 
parent locator service for all States? The State which doesn't 
want to go this way is not able to protect the privacy of its 
citizens because the private collection agency can make all the 
requests to one state through the parent locator system. They 
really only have to have contracts with one State to open up 
the system for the entire country.
    I think that broad access to confidential data will run the 
risk of jeopardizing the entire program.
    Chairman Johnson of Connecticut. Thank you. We will discuss 
these issues at more length.
    Ms. Smith. Thank you.
    [The prepared statement follows:]

Statement of Marilyn Ray Smith, Chief Legal Counsel, Child Support 
Enforcement Division, Massachusetts Department of Revenue, and 
Executive Director, Massachusetts Commission on Responsible Fatherhood 
and Family Support

    Madam Chairman, distinguished Members of the Human 
Resources Subcommittee: good morning, and thank you for the 
opportunity to testify on the Child Support Distribution Act of 
2000.
    My name is Marilyn Ray Smith. I am Chief Legal Counsel for 
the Child Support Enforcement Division of the Massachusetts 
Department of Revenue. I also serve as Executive Director of 
the Massachusetts Commission on Responsible Fatherhood and 
Family Support, which is chaired by Governor Paul Cellucci. The 
Commission is composed of a broad range of representatives from 
state agencies and community-based organizations devoted to 
improving the lives of Massachusetts children by promoting 
responsible fatherhood initiatives. Before joining the 
Department of Revenue in 1987, I practiced family law in 
Boston, representing both custodial and noncustodial parents in 
divorce, paternity, child support and custody and visitation 
matters.
    The bill that you are currently considering has several 
proposals of interest. The two that I would like to address in 
my testimony today are quite disparate: one would simplify the 
rules for distributing child support collections by giving more 
money to former welfare moms, while the other would give states 
the option of turning over confidential data about income and 
assets of noncustodial parents to a broad range of public and 
private entities that met certain requirements. I 
enthusiastically support the former, but I most respectfully 
question the wisdom of the latter and suggest that it will 
distract us in our mission to help children receive the child 
support to which they are entitled.

  Simplify the Distribution Rules: More Money for Former Welfare Moms

    Madam Chairman, I would like to commend the leadership of 
this Subcommittee for your work on the distribution provisions 
of this bill. The current rules for distributing child support 
collections are far too complex and undermine the effectiveness 
of our nation's child support enforcement program. This bill 
will simplify the rules for distributing collections, while 
providing more money for former welfare families. It also 
provides the flexibility that is needed to help states finance 
these changes.
    The rules for distributing child support collections have 
been complex from the program's beginning in 1975. I thank you, 
Madam Chairman, for your valiant efforts during the 1995 
welfare reform debate to streamline the rules and to put 
families first in distributing collections. Despite those 
efforts, some states--which were dependent on welfare 
reimbursement collections to fund the child support and welfare 
programs--successfully pushed for a compromise. The resulting 
system, enacted in 1996, was more confusing and unintelligible 
than ever. Child support distribution rules make the Railroad 
Retirement Act and the Medicaid regulations look like child's 
play. No business in America could survive under the kinds of 
complex rules that Congress imposes on the nation's child 
support program.
    Simpler rules would permit states to fully concentrate on 
the larger mission of the child support program, such as 
supporting former welfare mothers in making the transition off 
public assistance and encouraging fathers to pay past-due 
support as they see more of their money going to the family 
instead of to the state. The proposal before you today includes 
the kind of straightforward distribution rules that our 
nation's child support program and the families we serve 
desperately need. This proposal is remarkably similar to what 
the House passed in 1995 as part of H.R. 4. By enacting these 
provisions now, Congress can complete the unfinished business 
of welfare reform.
    The current distribution rules are a failure by almost any 
measure. They are difficult for states to follow, for staff to 
explain, for parents to understand, for computers to implement. 
They create accounting nightmares for customers, litigation 
from advocacy groups, headaches for computer programmers, audit 
deficiencies for states. Instead of supporting the goals of 
welfare reform, the current rules are particularly harsh for 
families who leave public assistance or who delay seeking 
benefits during hard times.
    Two aspects of the current system--the assignment of ``pre-
assistance'' arrears and the treatment of federal tax intercept 
collections--lead to the need for complicated distribution 
rules. States are required to create six different categories, 
or ``buckets,'' of child support arrears. The names alone are 
mind-numbing: permanently assigned, temporarily assigned, 
conditionally assigned, never assigned, unassigned during 
assistance, and unassigned pre-assistance. Child support 
payments migrate among these buckets, depending on whether the 
family is receiving public assistance, when the arrears accrued 
and the source of the collection. The result is a maze of 
buckets, rules and exceptions, through which it becomes almost 
impossible to track accurately who gets which money when.
    These complex rules are holdovers from the days when child 
support was seen solely as a cost recovery program for states 
to recoup welfare costs. Today, with welfare reform and time-
limited benefits, we have moved to a new paradigm. Child 
support has become an integral part of a strategy to promote 
self-sufficiency because it gives families additional income to 
reduce their need for welfare or avoid public assistance 
altogether.
    In this new context, the current requirement that families 
must assign to the state all child support arrearages that 
accrued before they received public assistance is outdated and 
counterproductive. Families who suffer a hardship and return to 
welfare for just a few months can end up losing thousands of 
dollars in arrears that were due for the period that they 
struggled to make it on their own. By doing without both child 
support and welfare, these families lose the debt owed to them 
so that the state can recoup more welfare money. In contrast, 
families who turn to welfare right away assign fewer pre-
assistance arrears to the state and get a welfare grant in 
return.
    Under current law, the assignment rules will change to 
become more family friendly on October 1, 2000. The similarly 
unfair treatment of federal tax refund intercept collections, 
however, will remain unchanged. Under the Personal 
Responsibility and Work Opportunity Reconciliation Act 
(PRWORA), collections from this highly lucrative enforcement 
measure must always be applied first to arrears owed to the 
state, even when arrearages are also owed to the former welfare 
family. By paying these tax refund collections to government 
first, we deprive former welfare families of the child support 
they need to remain off public assistance. There is no policy 
rationale to explain to a parent why the family gets payments 
from a bank levy, insurance settlement lien or even a state tax 
refund, while the state keeps the money from a federal tax 
refund.
    In marked contrast to the intricacies of the current rules, 
the distribution rules proposed by this bill are simple and 
equitable. Under the legislation before you, families will 
assign their rights to support only for the period that they 
receive assistance. Child support collections will follow the 
status of the case: the family is paid first when the family is 
off welfare; the state is paid first when the family receives 
assistance. Former welfare families will receive all of their 
arrears, no matter how collected, before the state is 
reimbursed for welfare costs. The pre-welfare assignment and 
the state's priority for federal tax intercept collections are 
gone. The six buckets of arrears become two: assigned and 
unassigned. These are rules that are easy to explain, easy to 
follow and easy to program. More importantly, this policy sends 
the message to low-income families that their government is 
willing to put families' financial needs first, giving them an 
incentive to attain self-sufficiency and the money they need to 
remain that way.
    Implementing these distribution changes will lead to lower 
retained collections, which is a particular concern for states 
that fund their child support programs through public 
assistance collections. The financing options included in this 
bill will give states the flexibility they need to make a 
transition to the new distribution scheme. In the long run, the 
child support program may well save money because we will no 
longer be wasting valuable staff time and consuming expensive 
computer resources as we try to operate under incomprehensible 
rules.
    Again, I applaud this Subcommittee's leadership in slicing 
through the Gordian knot of the current distribution rules and 
proposing clear rules that will help more families remain 
independent of public assistance.

 State Option to Expand Information and Remedies to Public and Private 
                                Entities

    The Subcommittee is currently considering a proposal that 
would give states the option to release confidential employment 
and financial information to certain public and private 
entities that operate outside the child support enforcement 
program mandated by Title IV, Part D, of the Social Security 
Act (the IV-D program). The public non-IV-D child support 
agencies would include any state or local agency (other than 
the IV-D child support agency) which is principally responsible 
for the operation of a child support registry or for 
establishing or enforcing obligations to pay child support. The 
private child support enforcement agencies would include any 
individual, person, or other non-public entity which seeks to 
establish or enforce an obligation to pay child support. Both 
types of entities would have to agree to follow certain 
requirements established by the state, including adhering to 
the same state and federal requirements relating to data 
security, privacy protections, and due process as are 
applicable to the state IV-D agency, as well as other 
procedures set by the IV-D director.
    If the state elected one or both of these options, the IV-D 
child support program would provide the public and/or private 
entity with all information in the State Directory of New Hires 
relating to an individual against whom the entity sought to 
establish or enforce a child support obligation, such as name, 
address, Social Security number of the individual, and the 
name, address, and employer identification number of the 
individual's employer, as well as any other information the 
State Directory of New Hires collects, such as date of birth, 
or health insurance information. In addition, all information 
in the Federal Parent Locator Service (FPLS) would be made 
available, including date of birth, telephone number, income, 
group health insurance coverage and other employment benefits, 
and types, status, location and amounts of assets and 
liabilities of the noncustodial parent.
    The enforcement remedies available for cases being enforced 
by public or private non-IV-D entities would include, at state 
option, the federal tax refund intercept and passport denial 
programs, reporting to credit agencies, and inclusion in 
financial institution data match for issuance by the entity of 
a levy on any identified account. Under current law these 
remedies are available only to cases which are receiving child 
support services from the state IV-D child support program.
    Over the years I have had the privilege on several 
occasions to appear before this distinguished Subcommittee 
seeking your support for many positive enhancements to the 
nation's child support program, which this Subcommittee has 
graciously received and often adopted. Therefore it is with 
some reluctance that I must respectfully proffer that this 
proposal is not in the best interests of the nation's child 
support program or the children it serves.
    On October 5, 1999, I provided extensive testimony on a 
similar proposal, expressing in detail my concerns about the 
ultimate goal of the private collection agencies to deduct fees 
ranging from 30 to 40 percent from child support collections 
made by the IV-D agency at taxpayer expense. This includes 
collecting fees from tax refund intercepts and income 
withholding from current support, which require little if any 
work on the part of the collection agency to justify such high 
fees.
    I have similar concerns about this proposal, ranging from 
disclosure of confidential information to entities that will 
realistically be difficult to regulate, monitor, and audit, to 
operational and computer programming costs, to the impact of 
this proposal on employers, financial institutions, the 
Departments of State and Treasury, the state unemployment 
insurance agencies, and the state IV-D child support 
enforcement agencies. These questions regarding implementation 
include the following:
    How many public and private agencies are likely to 
participate in this program?
    The definition of public non-IV-D child support agency as 
currently drafted would appear to cover any court in the United 
States having jurisdiction to establish or enforce child 
support orders, as well as any entity operating a child support 
registry. This could include thousands of local courts, 
including those that currently operate child support programs 
under cooperative agreements with state IV-D child support 
programs. Will these entities set up parallel non-IV-D child 
support enforcement programs?
    The definition of private non-IV-D child support agency is 
even broader, and could include any individual, person, or 
entity that met the state's criteria and entered into an 
agreement. There are literally tens of thousands of private 
attorneys, private investigators, private collection agencies, 
and other private individuals and entities that could seek to 
get into the child support enforcement business.
    If these entities come forward, child support agencies will 
be deluged with requests to negotiate agreements, with the 
concomitant burden of overseeing implementation and responding 
to inquiries from parents, employers, and banks who are trying 
to figure out who to deal with, all while sorting out data 
matches from new hire reporting, bank match, tax refund 
intercept and the FPLS. This will result in a significant 
diversion of staff energy and computer resources from core 
child support functions.
    How will the IV-D child support agency be able to regulate 
the non-IV-D public and private entities? What procedures, 
staff and training will be necessary and how much will it cost? 
While this proposal purports to promote ``privatization'' of 
government functions, it would in fact require significant 
federal and state taxpayer resources to expand the regulatory 
bureaucracy. In Massachusetts, the child support program is 
housed in the Department of Revenue. Because the department is 
the repository not only for tax and child support data, but 
also for new hire reporting, quarterly wage reporting, and 
financial institution account information, protecting 
confidential data is a high priority for our commissioner. 
Employees of the department receive regular training reminding 
us that we are entrusted with information that is among the 
most sensitive in government, and that any access to, or use 
of, confidential information must be only by an authorized 
person for an authorized purpose. Computers containing tax and 
child support information are monitored by a program that 
captures every access to these systems, so that internal 
auditing staff may conduct random testing for unauthorized 
access. Infractions are investigated and offending employees 
are subject to a range of disciplinary actions, including fines 
and dismissal. In addition, violation of child support 
confidentiality rules is a criminal offense.
    It is simply not realistic to expect that similar 
safeguards could be put in place for a range of diverse 
entities as contemplated by these proposals. Attorneys are 
likely to assert attorney-client privilege in response to any 
effort to review their files, while private child support 
collection agencies in most states are not regulated by other 
state or federal law, leaving the brunt of the regulatory, 
monitoring and auditing duties on the IV-D agency.
    Because they are driven by the profit motive, private 
collection agencies are all too likely to take actions for 
which state IV-D child support agencies will ultimately pay the 
price. Custodial and noncustodial parents alike may be 
mistreated through harassing collection strategies or unfair 
contracts. It will be up to the state IV-D agency to straighten 
out the mess later, when things go wrong. For example, in one 
Massachusetts case involving a collection agency with 
headquarters in California, the collection agency first 
recruited its local Massachusetts sales representative by 
inviting her to join other successful entrepreneurs ``who have 
tapped into an untouched $70 billion industry .... a lucrative 
business opportunity.'' When the noncustodial parent resisted 
paying, the agency sent dunning notices to his mother and 
letters to him threatening to send a ``public notice'' 
containing his photograph and personal information to his 
relatives, neighbors, friends, co-workers and community if he 
did not pay up. Confused since his case was already being 
enforced by the Massachusetts IV-D child support agency, the 
noncustodial parent sent a cashier's check for $9,930 made 
payable to the Commonwealth of Massachusetts to the collection 
agency in California. The agency promptly cashed the check in a 
California bank by endorsing it as ``Child Support Services--
For Deposit Only,'' closed the bank account, disconnected their 
telephones, and disappeared.
    Other abuses we have encountered include agencies that: 
harass noncustodial parents at home and at work; threaten 
employers; alter court orders to change the payee from the 
Massachusetts child support agency to their company; issue 
illegal withholding orders on their own stationery; use federal 
forms to gain unauthorized access to interstate locate 
information; falsely represent a special relationship with the 
Massachusetts child support program; engage in unauthorized 
practice of law by signing court pleadings and appearing in 
court; demand that noncustodial parents or employers make 
payments directly to the collection agency instead of to the 
Massachusetts child support agency, as specified in the court 
or administrative order; threaten to sue the Massachusetts 
child support program in federal court or state court for 
violation of constitutional rights; credit payments to arrears 
before current support; threaten to sue custodial parents who 
complain about high fees and poor service; and use names that 
mislead unsophisticated custodial parents into thinking they 
are dealing with the Massachusetts child support program (such 
as CSE of Massachusetts, Office of Child Support Enforcement 
Services, Child Support Collections of Massachusetts).
    Proponents of this proposal will respond that it will be up 
to the IV-D agency to prevent these abuses. However, it is 
simply unrealistic to think that the IV-D child support agency 
can regulate this industry. How can we monitor every letter, 
every telephone call, every form, and every copy that is made 
of sensitive data? Some may answer that upon discovery of 
abuses, an entity's relationship with the IV-D agency could be 
terminated. But what of the parents who have already been 
harmed? What of the employers and financial institutions who 
get pulled into the middle, when all they want to do is follow 
the rules?
    What if one state permits access to its information and 
other states do not? It is unlikely that all states will opt to 
permit non-IV-D public and private entities to have access to 
employment and financial institution records, or that all 
states will have the same standards and procedures for 
monitoring the use of any such data that is released. What if 
one state permits easy access with few controls, accepts 
requests from private collection agencies and forwards those 
requests, without identifying their source, to a second state 
that maintains strict controls on the release of confidential 
data? How would the second state's standards provide protection 
for its noncustodial parent citizens? Would the first state in 
effect serve as gateway to information in the FPLS and the 
National Directory of New Hires for all the states--access that 
would be barred if the collection agency went directly to the 
other states maintaining the data? Because states transmit new 
hire data to the National Directory of New Hires where it 
becomes part of the FPLS and because the Federal Office of 
Child Support Enforcement operates the Multi-State Financial 
Institution Data Match, will one state's acceptance of this 
proposal give their collection agencies access to data from all 
the other states?
    This possible backdoor approach would subvert the whole 
purpose of providing a state option. Once one state elects to 
allow access to child support information and remedies, the 
other states' information would be readily available, with no 
ability for the other states to monitor the use or misuse of 
data on their citizens. Investigating abuses, breaches of data 
security, violations of privacy protection and due process will 
be difficult enough in in-state cases, and virtually impossible 
in interstate cases. While Massachusetts may not elect these 
options, we are very concerned about what goes on in other 
states. We have a deep commitment to protecting the privacy of 
our citizens, and many of the abuses cited above have come from 
agencies based in other states.
    What is to prevent confidential information from being used 
for other collection activities? The risks that information 
will be misused by private collection agencies is particularly 
grave, since many engage in other types of collection 
activities. The collection agency would learn where the 
noncustodial parent works and banks if there is a successful 
wage assignment or bank match. It will be virtually impossible 
to prevent aggressive collection agencies from using this 
information for other purposes. Not only might they use the 
information to collect unrelated debts, they could also sell it 
for use by anyone, from telemarketers to identity thieves, a 
growing threat in the age of technology.
    What impact will releasing data to non-IV-D entities have 
on the willingness of employers and financial institutions to 
cooperate with IV-D child support enforcement agencies? New 
hire reporting has been remarkably successful in its relatively 
short history, largely because employers voluntarily comply. 
State IV-D child support agencies have developed cooperative 
relationships with employers, responding to their needs and 
inconveniencing them as little as possible. Similarly, 
financial institutions for the most part have cooperated in 
developing procedures that will work for them and their 
customers. But we must be careful not to overload a system that 
is not yet fully operational. OCSE currently sends 3.8 million 
records to nearly 3000 financial institutions. It takes some of 
these institutions three days to process the data. Not only 
will more records threaten to choke the system, misuse of this 
data by anybody will jeopardize the entire program. All it 
takes is one or two well-publicized abuses by overreaching 
collection agencies for employers and banks to curtail their 
cooperation. We also have worked hard to ensure that employers 
and banks need to deal with only one child support agency in 
each state. These efficiencies will be at risk if there are 
suddenly multiple entities sending wage assignments and bank 
levies to the same overloaded payroll departments and bank data 
processing centers.
    Will the inevitable abuses in one locality jeopardize the 
national child support program? As one who worked extensively 
with members of Congress in the adoption of the provisions of 
PRWORA, I found that the primary concern about the IV-D 
program's access to information was privacy protection. In 
weighing privacy concerns against the duty to support one's 
children, Congress tilted the balance in favor of strong child 
support provisions. However, even as these provisions are being 
implemented, concerns have been raised in state legislatures, 
in the press, and elsewhere about ensuring that appropriate 
privacy safeguards are in place and that IV-D agency staff are 
trained and monitored to protect confidentiality of personal 
data. Regardless of how a problem arises, in this era of mass 
media, it will have national repercussions. Already there have 
been articles in the New York Times and Washington Post 
questioning the scope of information available to the child 
support program.
    Expanding access to child support data is like sliding down 
the proverbial slippery slope. Where should we draw the line? 
Child support information is immensely attractive to all sorts 
of public and private interests. Every Congressional session 
seems to bring forth a new proposal. Once you open the door, 
you will be hard pressed to close it again for others who come 
forward with a plausible proposal.
    Who is going to process the money and keep track of the 
records, especially when there are multiple families for the 
noncustodial parent and diverse points of collection? What 
about cases where the custodial parent goes on and off public 
assistance, while using the services of one of these entities? 
What if the noncustodial parent exercises his right to apply 
for IV-D services in a case in which the public non-IV-D or 
private collection agency is providing services to the 
custodial parent? Which agency trumps? Since 1975, in response 
to consistent and widespread criticism that one of the major 
weaknesses in the child support program has been its historic 
fragmentation, federal legislation has pushed states to 
consolidate child support functions under a single entity in 
state government. We have spent years trying to get accurate 
pay histories by having child support payments go to one 
location in each state, and are now developing registries of 
support orders. This proposal will fracture that work, and 
encourage development of diverse systems, just as the systems 
mandated under PRWORA are beginning to come together.
    Is this proposal consistent with our recent work on 
responsible fatherhood initiatives? In recent years, largely 
inspired by the visionary work of this Subcommittee, child 
support programs have been developing ways to be more ``father 
friendly,'' identifying and addressing the multiple barriers 
which fathers encounter in paying child support. These range 
from no or poor job skills, interference with custody and 
visitation, orders that are not consistent with ability to pay, 
to a bureaucracy that focuses only on collections and is 
resistant to responding to legitimate concerns raised by 
noncustodial parents. As Executive Director of the 
Massachusetts Commission on Responsible Fatherhood, I have 
become increasingly aware and responsive to the barriers faced 
by fathers--whether ``dead broke'' or ``deadbeat.'' Turning 
private collection agencies loose on these noncustodial parents 
is hardly consistent with this expanded mission of the child 
support program.
    Can information relating to victims of domestic violence be 
protected under this proposal? The proposal provides for states 
to set up certain requirements to ensure that public and 
private non-IV-D entities have procedures for protecting 
privacy, particularly in cases involving domestic violence. 
States and OCSE are still working to fully implement the family 
violence indicator required by PRWORA. It is unclear how the 
current safeguards, many of them tied to IV-D automated 
systems, will translate into requirements for non-IV-D 
agencies. For instance, how will private agencies transmit 
family violence indicators to the FPLS, or set up procedures 
for judicial overrides of the indicator in the appropriate 
cases? How will they gather information from their customers 
about who needs a family violence indicator? How will the state 
verify this information?
    Are we prepared to give private entities quasi-law 
enforcement powers to seize income and assets? Giving law 
enforcement powers to seize income and assets to private 
collection agencies raises the specter of private law 
enforcement, a concept of questionable constitutionality. Law 
enforcement is a public function, not one delegated to private 
citizens or private entities. This too presents opportunities 
for abuse of power. We have already seen some collection 
agencies who ``issue'' income withholding orders on their own 
stationery, ordering the employer to withhold child support and 
threatening to impose sanctions that can be imposed only by IV-
D agencies or the courts if the employer does not comply.
    Should we instead move to eliminate the FPLS ``locate 
only'' access that is available to custodial parents under 
current law? Instead of expanding access to child support data 
to a wide variety of public and private non-IV-D entities, 
perhaps the time has come to curtail some of the direct access 
granted to custodial parents by current law. The statute that 
makes custodial parents and attorneys or agents of a child 
``authorized persons'' to seek FPLS information was enacted in 
1975, when the information in the FPLS scarcely extended beyond 
the local telephone book. By contrast in the age of information 
technology, the FPLS encompasses a broad range of databases, 
with information on employment, income and child support 
obligations of millions--a vast store of sensitive, private 
information that cannot be found anywhere else. Just as with 
the public and private non-IV-D entities, there is no way the 
child support agency can ensure that custodial parents or their 
attorneys will not use the data for a purpose other than child 
support enforcement, such as alimony, property division in a 
divorce, custody and visitation, or even continuation of the 
parties' interpersonal struggle. Yet the existence of this 
provision is the justification used by private collection 
agencies that they should also get direct access to this 
information, since ``they can get it anyway from the custodial 
parent.'' Perhaps Congress should revisit this provision and 
evaluate whether in the era of a more effective IV-D child 
support program it is necessary and appropriate to give 
custodial parents access to this kind of information about 
noncustodial parents.
    Would it be simpler to incorporate the non-IV-D court cases 
into the IV-D program? Any entity gaining access to IV-D 
information and remedies will have to follow the same 
procedures relating to data security, privacy protection and 
due process that apply to the child support program. As a 
practical matter, many states electing this option will simply 
require the participating entities to use the notices, forms, 
data elements, computer formats, and procedures that the IV-D 
agency has already developed. Moreover, many of the objections 
relating to data security, privacy protection and due process 
are not applicable to courts that may wish to have their cases 
benefit from the IV-D information and remedies. Courts after 
all have as one of their primary functions to enforce such 
requirements on others and already have a culture receptive to 
these protections. Rather than ``reinventing the wheel,'' the 
most efficient solution is to convert the courts' cases to IV-D 
cases through cooperative agreements. This route is already 
permitted under current law, and would require no additional 
Congressional legislation. The cases could be either eligible 
for the full range of IV-D services or designated as ``tax 
refund and passport sanction only,'' or ``new hire or financial 
institution data match only.'' This approach would give the 
courts the information and remedies they seek, while minimizing 
any disruption to the IV-D program. It also keeps us on our 
twenty-five year path of consolidating child support functions, 
rather than fragmenting them.

                               Conclusion

    Passing this controversial issue on to the states and 
telling us to figure it out may not be the best course of 
action. Even states that do not want to go this route will have 
an endless stream of lobbyists for private attorneys and 
collection agencies beating down our doors and the doors to our 
state legislatures, trying to cash in on the ``lucrative'' 
child support business. This is not a diversion that we need at 
this juncture. We are on the verge of getting the new hire and 
bank match systems to work. We are coordinating interstate 
cases as never before, working out compatible procedures among 
the fifty-four jurisdictions. We are branching out into 
responsible fatherhood and access and visitation programs and 
addressing domestic violence issues in ways we never 
contemplated ten years ago. We have heeded your call throughout 
the welfare reform debate to take a broader view of self-
sufficiency, and to address whatever barriers stand in the way 
of a better future for the families we serve.
    This proposed legislation has much of value in it. It 
simplifies the distribution rules while giving more money to 
former welfare families, it lowers the threshold for passport 
denial, it places a priority on making sure welfare mothers 
have an adequate child support order in place before they leave 
welfare, and it provides for demonstration grants to promote 
responsible fatherhood for low-income fathers, bringing them 
into the fold by working with them to get jobs, learn parenting 
skills, and form lasting relationships with their children who 
so desperately need their responsible involvement. The 
provisions opening up child support enforcement to private, 
profit-driven entities appear out of place in this otherwise 
progressive legislation. Private collection agencies are not 
likely to care about these broader goals, and indeed their 
efforts may thwart them.
    Child support legislation has always enjoyed a special 
place in Congress, passed with strong bipartisan support, and 
based on broad consensus within the child support professional 
and advocacy community. By contrast, this proposal to extend 
child support information and remedies to non-IV-D public and 
private entities has met widespread and deep opposition from 
custodial and noncustodial parent advocacy groups and most IV-D 
directors. Our opposition stems not from a desire to maintain a 
monopoly, but from our commitment to helping our most 
vulnerable families receive the child support they need to stay 
off public assistance and remain independent. This proposal 
seems inconsistent with the other provisions of this 
legislation, which are designed to help mothers and fathers 
have the resources and tools to achieve self-sufficiency.
    Madam Chairman, thank you for inviting me to comment on 
this complex area. I look forward to working with you and other 
members of the Subcommittee to come up with practical solutions 
to the problem of nonsupport and the goal of achieving self-
sufficiency.
      

                                


    Chairman Johnson of Connecticut. Ms. Turetsky?

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

    Ms. Turetsky. Chairwoman Johnson and Members of the 
Subcommittee, my name is Vicki Turetsky, and I am a senior 
staff attorney at the Center for Law and Social Policy. I 
appreciate the opportunity to testify before you today.
    My testimony will focus on the proposed changes in the 
child support distribution rules. I am pleased to give my 
enthusiastic support both to the distribution proposal that you 
have made, Chairwoman Johnson, and Mr. Cardin's bill. I commend 
each of you for your efforts to address this very important 
area of child support policy, and I also commend the 
administration for its efforts.
    Welfare reform has had a profound impact on the child 
support program. Enforcement tools enacted into PRWORA are 
steadily improving the effectiveness of the program. The child 
support caseload has shifted dramatically toward low-income 
working families who no longer receive welfare benefits or who 
never did. In about one-third of the States, declining welfare 
collections have destabilized program funding, and there is a 
new understanding about the diversity of fathers within the 
child support caseload.
    Originally set up to recover welfare cost, the child 
support program has emerged as one of the largest human 
services programs dealing with mothers, fathers, and children. 
This program has much potential to help low-income families; 
however, it has an albatross around its neck, and the albatross 
is the mandate to collect and recover welfare costs. The 
program is often seen as a program to make money from, not a 
program to help families.
    The changes brought about by welfare reform have prompted 
the child support community to engage in an earnest and ongoing 
discussion about the central role of the child support program 
in supporting the goals of welfare reform. In many ways we are 
at a crossroads. The program has outgrown its original cost 
recovery purpose, yet its cost recovery financing structure 
holds it back.
    The legislation under consideration by this Subcommittee 
would substantially increase the amount of child support going 
to families and help set a clear direction for the program.
    Mrs. Johnson, your proposed legislation would build on the 
1996 distribution changes, but greatly simplify and clarify 
distribution rules for former welfare families.
    Mr. Cardin, your bill would go further, not only by 
simplifying post-TANF distribution, but with passing through 
and disregarding child support to families while on TANF.
    I believe that down the road all child support should be 
paid to the family, regardless of TANF status. Full family 
distribution that treats all child support as family income 
would be the simplest distribution rule, and the rule that best 
complements the family support goals of the Welfare Reform Act.
    The best way to get there may be in a couple of steps, with 
a clear picture of where we are going at the end.
    The main stumbling block is fiscal at both the Federal and 
the State level. Because States use their retained welfare 
collections to operate their TANF or child support programs, 
attention to the fiscal impact, the financing alternatives, and 
the implementation flexibility is warranted.
    Here I think the bipartisan record of this Committee will 
serve us well. I think that the legislation that could be 
advanced this year is one that meets in the middle of the two 
bills under consideration here--combining simplified post-TANF 
distribution with State options to distribute child support to 
families while they are on TANF--without making a disregard a 
condition of releasing the Federal share of welfare 
collections.
    There are really two separate policy issues involved with 
giving child support to families while they are on welfare. One 
is who keeps the money, and that is the distribution question, 
whether the State or the family keeps the money. The second 
question is how the income is treated under the TANF program 
and other assistance programs, and that is the disregard 
question.
    The option to distribute child support, to give money to 
families during TANF, I think should be left to the State. The 
State should be given an option in that area. The question 
about whether the support should be disregarded also should be 
decided by the States separately from the question of whether 
to release the Federal share of collections. I think this kind 
of in-the-middle proposal would have broad appeal.
    Distribution reform is important for several reasons. 
First, child support is the next most important income source 
to families after the mother's earnings for families that do 
get child support. A welfare policy that builds on the earnings 
of both parents sends the clearest message about personal 
responsibility and avoids welfare costs.
    By having child support in place and budgeted for at the 
time the family exits TANF, a full distribution policy would 
help families transition off of TANF, avoid administrative 
delays in getting support to former TANF families, and help 
stabilize the families budget.
    The other reasons are well known to this Committee for why 
to support getting child support to the family, including 
father involvement and simplicity.
    The proposed legislation is very positive; however, the 
expanded access provisions we strongly oppose, and for the very 
reasons that have and will be testified to here today.
    [The prepared statement follows:]

Statement of Vicki Turetsky, Senior Staff Attorney, Center for Law and 
Social Policy

    Chairwoman Johnson and Members of the Subcommittee:
    I very much appreciate the opportunity to testify before 
you today. My name is Vicki Turetsky. I am a Senior Staff 
Attorney at the Center for Law and Social Policy. CLASP is a 
non-profit organization engaged in research, analysis, 
technical assistance and advocacy on issues affecting low-
income families. CLASP has worked on child support issues for 
many years. CLASP does not receive government funds.
    Most of my testimony today will focus on the proposed 
changes in the child support distribution rules. I am pleased 
to testify in strong support of the distribution provisions in 
the legislation sponsored by Chairwoman Johnson, H.R. 4469. 
Mrs. Johnson has worked on this issue for years, putting 
``families first'' in distribution rules enacted in the 
Personal Responsibility and Work Opportunity Act of 1996 (the 
welfare reform law). The proposed legislation would build on 
the 1996 changes, but greatly simplify and clarify distribution 
for former TANF families.
    CLASP also strongly supports the pass-through legislation 
sponsored by Mr. Cardin, H.R. 3824, which would not only would 
get more support to families when they leave TANF, but would 
distribute support to families while they are still on TANF. 
There is a growing consensus in the child support community 
that all child support should be paid to the family, regardless 
of TANF status. Full family distribution would be the simplest 
rule. While both bills would move the child support program 
toward a full family distribution policy, H.R. 3824 would get 
us there faster.
    I commend both of you for your efforts in this area, and 
hope you will be able to join in bipartisan legislation that 
would both simplify post-TANF distribution and allow states to 
start paying families their child support while they are still 
on TANF.

        The proposed changes would advance welfare reform goals.

    The child support program originally was set up to 
reimburse federal and state welfare costs. As a condition of 
receiving cash assistance, welfare families must assign their 
rights to child support and to cooperate with the child support 
program. These welfare collections are not paid to the 
families, but instead kept by states as partial reimbursement 
for welfare benefits. The welfare collections are shared with 
the federal government and treated as government revenues. The 
child support program also serves non-welfare families who have 
requested child support services and receive all of the support 
collected on their behalf.
    At its inception, the child support program almost 
exclusively served welfare families. However, the sharp decline 
in welfare caseloads, combined with long-term trends, have 
dramatically reduced the proportion of welfare cases in the 
child support caseload. Today, only about 20 percent of child 
support cases involve families who currently receive cash 
assistance.
    The vast majority of families in the child support caseload 
are low-income working families who have left welfare or who 
never received it. After the custodial parent's earnings, child 
support is the next most important income source for poor 
single female-headed families receiving child support. For poor 
families who get child support, the child support amounts to 
26% of the family's budget, or $2000 per year. When families 
headed by single mothers get at least some child support during 
the year, their poverty rate drops significantly, from 33% to 
22%. The research shows that families who get regular child 
support are less likely to return to welfare, thus avoiding 
welfare costs.
    These families desperately need the child support income to 
make ends meet. If low-income single mothers receive child 
support, they often can forego a second or third part-time job. 
In 1995, over three-fourths of the non-welfare families in the 
child support caseload had incomes below 250% of poverty. About 
half of the non-welfare families receive other forms of public 
assistance, such as Medicaid or Food Stamps.
    Just as a job is about more than a paycheck, child support 
is about more than money. Child support has a dual quality, 
important both as cash income for the family and as a way to 
encourage paternal involvement. Establishing regular payment of 
child support appears to increase the fathers' involvement in 
their children's upbringing and improve child outcomes. It may 
also increase the availability of paternal relatives as a back-
up system for child care and family emergencies. Although 
domestic violence is a concern to some families, many mothers 
report that they encourage their children's emotional 
relationship with their father and his family, and try to keep 
the father involved in the children's lives when feasible.
    However, the current child support assignment and 
distribution rules (which determine whether the state or the 
family keeps support collected by the state) discourage the 
poorest fathers from staying connected to their children. The 
current rules treat child support as repayment for welfare 
benefits, rather than as a father's financial contribution to 
his children. These rules work against poor mothers and fathers 
who want to use their own money to support their own children. 
Poor fathers and mothers who want to improve their children's 
financial circumstances, but can not fully support their 
children without some public help, sometimes agree to informal 
contributions that by-pass the formal child support system. In 
addition, the child support program's welfare cost recovery 
focus often results in child support orders inflated by welfare 
and Medicaid costs, and uncollectible arrearages that sometimes 
drive poor fathers underground.
    The goals of welfare reform--to promote work and to 
encourage the formation and maintenance of two-parent 
families--are best complemented by a child support strategy 
that respects child support as the family's own money and as 
the father's financial contribution to his children. The 
proposed distribution provisions would substantially increase 
the amount of child support going to families. These provisions 
(especially Mr. Cardin's approach), would help reorient the 
child support program toward the goals of welfare reform. The 
ban on using the child support system to recover Medicaid costs 
(in both bills), the review and adjustment provisions (in the 
Johnson bill), and the federal grants program to help support 
responsible fatherhood programs (in the Johnson bill) are also 
important elements that help reorient the child support program 
toward supporting and strengthening working families.

The proposed changes would simplify and rationalize the current system.

    The changes proposed by Chairwoman Johnson and Mr. Cardin 
would make the child support distribution rules much easier to 
understand and administer. Under welfare reform, the 
distribution rules were amended to allow families to keep more 
of the child support that was owed to the family before going 
on welfare. In addition, the rules changed the order of 
payment, so that the family's debt is paid before the state 
debt.
    Although the rules were intended to get more money in the 
hands of families who have left welfare, they are the uneasy 
result of legislative compromise between contradictory program 
goals of recovering welfare costs and helping families become 
self-supporting. The current law is based on an ``on-off'' 
approach. Under an ``on-off'' approach, child support owed 
while the family is off of welfare belongs to the family, while 
support owed while the family is on welfare belongs to the 
state. However, there are several exceptions to the basic on-
off approach in the current law. As a result, the rules are 
difficult to understand and costly to administer.
    The main exception is that support recouped from federal 
tax refunds are kept by the state. This amounts to more than 
half of the welfare arrears collected by the state. In 
addition, the state keeps arrears that were owed before the 
family received assistance if they are collected after the 
family starts receiving assistance. This means that families 
who tried to hold out the longest before going on welfare can 
lose all of the support owed to them if it is collected after 
they go on welfare. Finally, there are various phase-in 
exceptions for families who received welfare at some time 
before 2000.
    The current distribution rules require states to keep track 
of several different kinds of support payments, depending on 
time, type, and collection method--``assigned'' current 
support; ``never-assigned'' current support; ``temporarily 
assigned'' arrears; ``conditionally assigned'' arrears; 
``permanently assigned'' arrears; ``unassigned during 
assistance'' arrears; ``unassigned pre-assistance'' arrears; 
``never assigned'' arrears.''
    States have tried to implement them, but the current 
distribution rules are, frankly, unworkable. Parents, state 
legislators, and workers do not understand them. They are 
snarling up computer programs and delaying system development. 
They are leading to accounting, audit and litigation problems. 
And they are resulting in less money going to families than 
envisioned during welfare reform.
    Simplicity, not complexity, must be the basic principle 
behind distribution rules. The legislation proposed by 
Chairwoman Johnson and Mr. Cardin each reflects a commitment to 
simplify post-TANF distribution rules and to greatly increase 
the amount of support going to families that have left TANF. 
The proposed post-TANF distribution rules are simple and clear, 
and go a long way to addressing the problems with the current 
rules. However, the Johnson proposal would continue to require 
that families assign to the state the support owed to them 
while they were receiving welfare.
    The simplest distribution rule is to treat all child 
support as support for children and income to the family. 
Researchers studying the Wisconsin demonstration to pass 
through all current support to families receiving W-2 
assistance are finding important administrative advantages to a 
very simple distribution system. By having child support in 
place and budgeted for at the time of TANF exit, the child 
support system would help families transition off of TANF.
    Distribution rules which depend on states to identify and 
change the family's TANF status result in administrative delays 
in getting support to former TANF families. Families are 
supposed to start getting current support as soon as their TANF 
benefits end. However, the child support agency sometimes 
retains the support improperly for months after welfare exits, 
because of administrative delays in identifying and changing 
the family's case status. Instead of stabilizing the family's 
income before the family leaves TANF, child support is 
interrupted right at the point of exit and for some months 
thereafter.
    There may be a reluctance to move to a full family 
distribution system because of concern about retaining families 
on TANF for longer periods if they receive child support 
income. However, preliminary results from the Wisconsin 
demonstration include findings that families move off of TANF 
faster when they receive child support, that fathers pay more 
support, and that administrative costs under the waiver are not 
increased. Preliminary findings in a similar Vermont 
demonstration also include increased child support payments.
    It is our position that all of the money should be 
distributed to the family, regardless of TANF status. How that 
child support income is treated in the TANF program (whether it 
reduces the TANF grant or is disregarded) should be left to 
states to decide. While there are a number of reasons to 
support a disregard policy, the main point of a full-family 
distribution policy is simply to treat all of the child support 
as family income. A full distribution policy (with or without a 
disregard) would help families transition off of welfare. It 
would increase family income once off TANF by encouraging 
parents to pay through the formal system. It would simplify and 
rationalize program administration. And it would help change 
the culture of the child support program by eliminating its 
cost recovery focus.

   The welfare cost recovery mission of the child support program is 
                               obsolete.

    State child support administrators, advocates, and other 
members of the child support community are increasingly 
questioning the fundamental cost recovery premise of the child 
support program. This program has much potential to help low-
income families. However, it has an albatross around its neck--
the mandate to recover welfare costs. While welfare cost 
recovery seemed like a good deal to states in the beginning, 
there is increasing evidence that it has actually weakened the 
program's ability to attract adequate resources to the program. 
From the start, the program was sold to state legislatures as a 
``money maker.'' In some states, the political imperative to 
produce state revenues has forced child support to make do with 
a too-meager budget and staff.
    Its cost recovery role has also undercut the visibility and 
status of the child support program within the human services 
community. Even though the child support program now serves 
several times as many families as the TANF program, closely 
fits the goals of welfare reform, and is a key income support 
program for low-income working families, the child support 
program sometimes has trouble getting a seat at the welfare 
reform table. The program is often seen only as a limited 
reimbursement program--a program to make money from, not a 
program to help families. In order to attract new resources and 
realize its potential, the message of the child support program 
has to change. For this to happen, state legislators have to 
make sense of the program, and the distribution rules make this 
hard to do.\1\
---------------------------------------------------------------------------
    \1\ The answer to the problem of strengthening child support 
program capacity is not, as Supportkids.com proposes, to fragment and 
weaken the program further by expanding the access of non-IV-D clerks 
of court and unregulated private collectors to divert program 
resources. The answer is to simplify the message and mission of the 
child support program so that state legislators can begin to see this 
program as a key program to advance welfare reform goals. Simplifying 
distribution will help increase the political standing of the program.
---------------------------------------------------------------------------
    The proposed distribution provisions in both the Johnson 
and Cardin legislation represent very positive and exciting 
steps forward for families and the child support program. State 
financing options would help states make this transition. To 
move to a full distribution system, however, both federal and 
state shares of retained collections should go to families. In 
the long run, eliminating the program's reliance on declining 
welfare collections and moving the program to a more stable 
state appropriations basis will help stabilize and even 
increase program funding. In the short run, expanding family 
distribution policies mean divesting retained welfare 
collections now used by states to help pay for TANF MOE 
expenditures or (in a third of states) child support program 
costs.

    Expanded access is inconsistent with welfare reform and program 
                             improvements.

    Expanding access to IV-D data and tools to unregulated, and 
often predatory, private child support collection companies 
will hurt, not help families who need child support. The 
Appendix incorporated into this testimony cites complaints 
alleging abusive, deceptive, and unfair practices by private 
child support collectors. Unlike private collectors that pursue 
consumer debt, these companies are not regulated under the Fair 
Debt Collection Practices Act, 15 U.S.C. 1692. Unlike private 
companies performing contractual work for IV-D agencies, they 
are not subject to state oversight and controls. Yet the 
proposed provisions would turn over vast amounts of data and 
legal authority to these companies and eviscerate current 
confidentiality and due process protections for parents, 
contrary to Congressional promises to preserve the 
confidentiality of new child support data bases. They would 
divert public resources for private profit, allow private 
companies to cream the most lucrative cases from the public 
system, and claim credit and fees for work performed by the IV-
D system.
    Expanding access to IV-D data and tools by clerks of court 
raise a somewhat different set of problems. IV-D structural and 
work load considerations weigh against expanding this access to 
non-IVD public agencies. Over the last several years, many IV-D 
programs have successfully consolidated and streamlined their 
procedures to improve their performance. Some of these programs 
include clerks of court who have entered into cooperative 
agreements with the state and perform as IV-D agencies.
    However, some states with locally-elected clerks of court 
have had difficulty maintaining sufficient political clout to 
manage the program, resulting in a fragmented state system, 
weakened political support for the IV-D program, and limited 
resources committed to the program. Several of these states 
have had difficulty implementing a statewide computer system 
and state disbursement unit. Whereas the IV-D program mostly 
serves low-income families entering through the welfare system, 
the clerks of court mostly serves better-off families who have 
entered the system through divorce proceedings and often can 
afford a private attorney. Given the demographic differences in 
the caseloads, we are concerned that limited IV-D resources 
would be diverted away from the low-income families who are in 
greatest need of public services.

                               Conclusion

    The distribution provisions of the Johnson and Cardin 
legislation (and the responsible fatherhood and review 
provisions of the Johnson bill) would build on the reforms in 
the 1996 law, and set a clear direction for the child support 
program. These provisions would put families front and center 
of the child support program. They would put families first in 
child support distribution. They would help poor fathers to 
begin paying monthly support payments and connect with their 
children. They would help the child support program become more 
parent-friendly and service-oriented. They would help states 
further automate and streamline their activities.
    However, the expanded access provisions of the Johnson 
legislation send an entirely inconsistent message to states and 
families, with potentially devastating results. These 
provisions would allow the child support program to be used as 
a money maker for private collection companies. They would put 
the fee claims of private collectors ahead of support payments 
to families. They would sanction and extend the abusive 
practices used against fathers. They would fragment and distort 
IV-D program operations. We strongly oppose the expanded access 
provisions and urge you to strike them from otherwise very 
positive legislation that builds on welfare reform and helps 
families support their children.

     Appendix: Complaints About the Practices of Private Collectors

Complaints About Abusive and Unfair Practices

    ``Recently we began receiving calls from [a private 
collection company]. He was leaving messages for one of our 
employees. . . . When [our employee] was not able to contact 
[the company representative], he started getting rude via the 
phone to myself and my clerk. ``He `ordered' me to withhold 
from [our employee's] wages. . . . He told my clerk that if I 
didn't comply with his order that our business license would be 
pulled. When he was told that he must comply with F.D.C.P.A. 
not to call again, he stated that there were no laws regulating 
what he did.'' Source: Letter from an Arizona concrete company 
dated May 20, 1998.
    ``In the spring of 1994, Lester Brown's neighbors began 
receiving `Wanted' posters. These posters referred to Mr. Brown 
as a `Dead Beat Parent,' stated how much unpaid child support 
he allegedly owed, and claimed that he ``has plenty of money to 
spend on himself but has never paid one dime of child 
support.'' A few months later a `Wanted' poster with Mr. 
Brown's picture was mailed to his home, accompanied by the 
threat that the poster would be ``mass mail[ed]'' to his 
neighbors if he did not pay off his child support debts.'' 
Source: Brown v. Child Support Advocates, 878 F. Supp. 1451, 
1452 (C.D. Utah 1994).
    ``The collection agency. . . .has harassed our son. . . 
.called his home at 6:00 a.m., called him at work, and 
threatened him with jail.'' Source: Letter from a mother of a 
Texas noncustodial parent, filed with the Texas Attorney 
General's Office and dated Oct. 23, 1998.
    ``They demanded $11,000.00 or they would put me in jail. I 
proposed a payment plan that would allow me to current and pay 
all the arrearage payments. They responded with threats, 
disgust, and harassment. They called me names and have gone as 
far as to boldly state that they want to destroy me personally 
and professionally.'' Source: Complaint filed by a Texas 
noncustodial parent with the Texas Attorney General's Office, 
dated April 10, 1988.
    ``In March 1998, [a private collection company] called me 
and said she was to collect child support. . . .I told my 
mother about the phone call and she talked to [the company 
representative], which ended in my parents paying her $2,000 on 
their credit card. . . .On Aug. 19, 1998, [the company 
representative] made a call to my parents in another attempt to 
collect back child support. She apparently told my mother that 
if [$4,200.00] was not paid by Aug. 21st, that I would be 
arrested. . . .She went directly to my parents because she had 
gotten money from them before. They are in their 70's and are 
being harassed emotionally, verbally over the phone. They are 
not physically well right now, due partly to all this. . . .My 
parents, without my consent, are charging $3100 today on their 
credit card. . . .[The company representative] has used 
threatening, abusive, and emotional tactics in order to try and 
collect a debt. Since I have refused to pay any thing to a 
collection agency, she has gone to my parents and harassed 
them, before all this, she called my church and left a message 
for my pastor. This has caused a lot of stress to my family, my 
parents, and myself.'' Source: Complaint filed by a California 
noncustodial parent with the Texas Attorney General's Office, 
dated Aug. 31, 1998.
    ``[My client] again contacted me to discuss the harassing 
nature of [the company representative.] At this time I asked 
her for his phone number so I could call him to attempt to get 
him to cease and desist in his obnoxious and illegal behavior. 
I had previously, in my initial conversation with [my client], 
instructed her to tell [the company representative] never to 
call or contact them again[.] [S]he informed me that she had so 
instructed him and he completely ignored her and repeatedly had 
continued to harass them over this matter. . . .[The client] 
repeatedly asked them to stop harassing them, to no avail. I 
then instructed him to never make any telephone or written 
communications with [my clients] again on this matter. He told 
me. . . .that he would do as he pleased and he hung up on me. 
Within five minutes after he terminated our conversation, he 
called [my clients] and further harassed them on the phone and 
taunted them about how an attorney would do them no good. . . . 
Since that date, he has again called and continued to harass 
[my clients.]'' Source: Letter from attorney for Ohio 
noncustodial parent's wife, filed with the Texas Attorney 
General's Office and dated March 16, 1999.
    ``They obtained information about myself and my company by 
not only misrepresenting themselves to a credit agency, but out 
and out lying regarding their intentions. . . .But in doing 
this, they have damaged my credit report, as I am in the 
process of buying a home and the mortgage company keeps getting 
these reports of me applying for extension of credit, which I 
have not done, and it further delays the progress of my 
closing, and interfering with my life.'' Source: Letter from a 
wife of a noncustodial parent, filed with the Texas Attorney 
General's Office and dated Aug. 26, 1997.

Complaints About False, Deceptive and Misleading 
Representations

    ``Child Support Advocates (CSA), a private child support 
collection agency, then employed other harassing techniques 
including `numerous harassing telephone calls.' All of this 
occurred after Mr. Brown had received a letter `formatted to 
give the appearance of a court document' from CSA, causing his 
attorney to inform CSA that all further correspondence should 
come to his office.'' Source: Brown v. Child Support Advocates, 
878 F. Supp. 1451, 1452 (C.D. Utah 1994).
    ``Please find enclosed a copy of the documents my client 
received from ``Child Support Enforcement.'' She believed that 
this was an attempt by the State to collect child support and 
as you can see from the forms, it appears reasonable that my 
client believed this was an official child support collection 
case by the State[.] I believe that the collection actions by 
the ``Child Support Enforcement'' company are, at the very 
least, misleading and lacking in the statutory language to 
collect a private debt.'' Source: Letter from an attorney for 
an Oklahoma noncustodial parent, filed with the Oklahoma 
Attorney General Office and dated Jan. 21, 1999.
    ``[My client] states that the Division of Child Support 
Enforcement of Virginia (DCSE) [the public child support 
agency] was not able to collect the monies owed to date and 
sought my help. . . .After reviewing her paper work it turns 
out that she was not working with DCSE but with a corporation 
by the name of Child Support Enforcement located in Austin, 
Texas. . . .As you can see the corporation sent her forms 
which, to the normal citizen, would appear to make one think 
that Child Support Enforcement (CSE) is a government agency. 
However, they are charging unconscionable fees for said 
collection. The use of this name appears fraudulent and 
misleading.'' Source: Letter from attorney for a Virginia 
custodial parent, filed with the Texas Attorney General's 
Office and dated June 5, 1998.
    ``The manner in which [the company representative] spoke 
was convincing to us, to think she was a governmental agency.'' 
Source: Letter from a Texas noncustodial parent, filed with the 
Texas Attorney General's Office and dated Aug. 31, 1998.
    ``Her legal question. . . .concerned harassing phone calls 
she was repeatedly receiving from [a private collection 
company]. Also she was receiving written correspondence from 
him of a threatening nature[.] [T]he letterhead is entitled 
``Child Support Enforcement Division.'' I believe, based upon 
my conversations with [the client] that the [company 
representative] was strongly implying, if not outright 
representing, that he was an agent of the Child Support 
Enforcement Division of the Texas Attorney General's Office. 
When I made initial contact with [the client], she was of the 
opinion that the Attorney General's office was responsible for 
these threatening calls and other communication. . . .I very 
strongly inquired of him if he was a private collections form 
or if he was a representative of the Child Support Enforcement 
Division of the Texas Attorney General's Office. He refused to 
answer my question and wanted my Bar card number. . . .He, 
although asked repeatedly by me this question, wholly refused 
to answer same.'' Source: Letter from attorney for Ohio 
noncustodial parent's wife, filed with the Texas Attorney 
General's Office and dated March 16, 1999.
Complaints About Contractual Practices and Unreasonable Fees

    ``The reason for this complaint is that these people keep 
50% of the money until the administration is paid off, and then 
they keep 33% of the amount each time its received there after, 
until when ever they want. . . .This is an outrageous fee that 
[the private collection company] receives and for what service 
that they don't even provide.'' Source: Complaint filed by 
Texas custodial parent with the Texas Attorney General's 
Office, dated March 30, 1998.
    ``I feel that this company is really taking advantage of 
people like me. While I realize that I should have made sure I 
totally understood the contract, which I thought I did, I 
believe they misrepresented themselves. I believe that the 
entire agreement is very deceptive. . . .[The private 
collection company] is taking 50% of my daughter's child 
support. . . .They're stating that they're getting the amount 
that's late, but what I want to know is: if they are currently 
collecting the late part of what he owes me, what happens to 
the portion that he should actually be paying me now[.] I 
basically want to say that they are very misleading and are not 
being of a service to anyone of than themselves.'' Source: 
Complaint filed by Texas custodial parent filed with the Texas 
Attorney General's Office, dated May 21, 1997.
    ``I sent a request to [the private collection company] to 
help me try to collect past due child support. . . .When I 
asked this agency. . .to represent me and before I signed the 
enclosed document sent to child support of Hawaii, I called and 
asked [the private company] ``Does this document mean you can 
intercept child support they [the public agency] have already 
intercepted? I was told no, they were not allowed to take money 
from an active court order and lead me to believe they. . .be 
would be trying to get unpaid child support from my ex-husband 
directly, or at least from his insurance co. Recently [the 
private company] began taken the child support that [the public 
agency] got from his [paycheck]. Also they may have intercepted 
his tax returns plus one small payment he made on his own to 
[the public agency.] So far this agency has done me no good 
whatsoever. They have only managed to help themselves & pay 
themselves for their services with money I would have gotten 
without their help, from [the public agency]. I am worse off 
financially now with their help. If this is all they are able 
to do for me I'd like them to stop helping me & return my 
contract. If they continue to take current support paid to [the 
public agency] and putting it toward arrears he owes which is 
over $11,500.00 at this point he will never catch up and they 
[the private company] will continue indefinitely to take my 
child support and take out their cut first which they have not 
earned at all.'' Source: Complaint filed by Texas custodial 
parent with the Texas Attorney Generals' Office, dated July 9, 
1997.
    ``In the 4 year time I was on this contract they collected 
$16,000.00 which means they went 3000 over the amount. I would 
like to have that money back. Can you help? Please help us. 
Please help us. Please Please help us.'' Source: Complaint 
filed by Texas custodial parent filed with the Texas Attorney 
General's Office and dated Nov. 3, 1998.
    ``I was contacted by the [private collection company) in 
regards to my child support. . . .They explained that payments 
to me would be arriving soon and that they alone were 
responsible for me getting back support payments. Based on this 
information, they further stated that I owed a 35% fee on all 
monies paid since they were the ones to collect it. Since at 
that time I had a collection agreement with them. . .I did pay 
them a 35% fee. . .As it turns out, it was DCSE [Arizona public 
agency] that collected the money, not [the private company.]'' 
Source: Letter sent to Arizona Department of Economic Security, 
dated Oct. 29, 1999.
    ``Signing the [private collection company] contract was a 
HUGE mistake. About one month after I signed the. . .contract, 
[the public agency] found Brian and began enforcing my support 
order. . .I have asked [the private company] to terminate my 
contract and they refuse to do so. . . .This particular problem 
is just one of many that I am having with [the private 
company]. I am in the process of seeking legal counsel in both 
the states of Arizona and Texas.'' Source: Letter sent to 
Arizona Department of Economic Security, dated June 2, 1999.
    ``I was amazed that [the private company] had initiated all 
this paperwork in a remarkably short amount of time, when in 
fact, everything had already been initiated and finalized [by 
the public agency]. (The private company] had collected 35% of 
my support checks for the past two years. . . .'' Source: 
Letter sent to Arizona Department of Economic Security, dated 
April 6, 2000.

Complaints About Lack of Verification, Accessibility, and 
Accountability

    ``Plaintiff heard nothing from CSE for three years, except 
for an annual letter informing her that no settlement had been 
reached on her behalf. Plaintiff told Schultz [disbarred 
attorney employed by CSE] that she did not wish to settle her 
claim, which by then had reached an aggregate sum of almost 
$32,000, for only $10,000. Schultz pressured Plaintiff to 
settle. . .Plaintiff called Schultz to inform him that she 
would not accept the offer. . .Plaintiff received a check from 
CSE in the amount of [$6,700.00]. . .Plaintiff contacted CSE 
repeatedly, but was informed by. . .the receptionist that 
everyone refused to speak with her.'' Source: Plaintiff's 
Petition in McDaniel v. Child Support Enforcement, Inc., Cause 
No. 99-05098 in the District Court of the 353rd Judicial 
District in Travis County, Texas, filed April 30, 1999.
    ``The only reason I went to this agency they told me they 
worked hand and hand with the Attorney General office, whenever 
they need information from them. What I want is for these 
people to let me know in full details how much back pay is it 
left to pay. And I want a statement from them when its paid. . 
. .And after it's paid out I want them to turn my case back 
over to the Attorney General's office to the state of Texas. I 
want to close out for good with C.S.E. I went to these people 
in 1996 and all I have done is lost a lot of money. I am a poor 
hardworking divorce mother who's just trying to make ends meet 
the best I can. . . .who are these people. . . .'' Source: 
Complaint filed by Texas custodial parent with Texas Attorney 
General's Office, dated July 18, 1998.
    ``[The private company] refuses to cancel my contract. . . 
.They have not satisfied my repeated requests to furnish info 
about my account & how things are handled. They haven't by 
feedback from NCP been professional or courteous in the 
approach to NPC. . .[They] put me off by telling me I need to 
speak with supervisor who is never available.'' Source: 
Complaint filed by Texas custodial parent with Texas Attorney 
General's Office, dated July 20, 1999.
    ``They shouldn't be taking my money. They have not done 
anything on this case like they said.'' Source: Complaint filed 
by Texas custodial parent with Texas Attorney General's Office, 
dated May 12, 1997.
    ``They were not suppose to take any of that money, as a 
matter of fact this check should not have been mailed to this 
agency from the Attorney General's office. This agency will not 
respond to me or the Attorney General's Office by returning our 
calls. . . .I do not want their services.'' Source: Complaint 
filed by Texas custodial parent with Texas Attorney General's 
Office, dated Sept. 30, 1997.
    ``Also the last check they sent me, I could not cash 
because an authorized signature was on it[.] I called about it 
and they said we will send you another on the next day. That 
did not happen until one month later. That one too was not 
authorized to cash.'' Source: Complaint filed by Texas 
custodial parent, dated Nov. 3, 1998.
    ``However, the agency fails to inform the `debtor' that 
they are attempting to collect a debt as required by state and 
federal consumer law. When asked how they verified that my 
client in fact owed any debt, there was no response.'' Source: 
Letter from an attorney representing an Oklahoma noncustodial 
parent, filed with the Oklahoma and Texas Attorneys General 
Offices and dated Jan. 21, 1999.
    ``Our research revealed that the Missouri employer was 
garnishing wages based on the [federal form] issued by a 
[private collection company], not the IV-D agency. I have not 
been able to determine the basis on which Mr.------'s wages 
were subject to attachment. It does not appear that any current 
support is due, and any past due support would have been very 
minimal. In fact, it is not clear what authority [the private 
company] has to issue an order to compel an employer to 
withhold[.]'' Source: Letter from Mary Ann Wellbank, Montana 
IV-D Administrator to private collection company, dated March 
10, 2000.

Confusion Created By Multiple Collectors

    ``Please help me get this situation straightened out. When 
[the private collection company] contacted me, they told me to 
stop sending payments to both you and the Clerk of the Court. . 
. . At the present time I am having difficulty even making 
payments, so finding out that they weren't even being handled 
properly really hurts. . . . I will not make any more payments 
until I find out who to make payments to, and have some 
official, legal documentation from the State of Arizona 
clarifying that your office is the correct place to send 
payments.'' Source: Letter from noncustodial parent to the 
Arizona Department of Economic Security, dated February 21, 
1998.
    ``It is possible there are too many private companies 
hoping to cash in on the child support bonanza as we have 
gotten complaints and demands from [an attorney] in Texas and 
[the attorneys] purporting to represent a phony company calling 
themselves Child Support Enforcement Company and the Utah 
Department of Human Services representing the enforcement arm 
of Utah. . . . In any event we do not owe nor intend to make 
payment to you unless and until we have proof of a formal 
assignment form from Arizona Welfare and termination of Central 
Clearing House.'' Source: Letter from Utah attorney to a 
private collection agency, dated March 21, 1997.
    ``My problem is, I will never know how much money is being 
sent from the Attorney General's Office to the independent 
organization. I am very concerned about this, because to be 
quite honest, I am not sure that I trust this independent 
organization. My question to you is, would you please send me a 
copy of the monetary transactions that have been made and will 
be made in the future from you to the independent organization? 
'' Source: Letter from custodial parent, filed with the Texas 
Attorney General's Office and dated May 5, 1998.
    ``In communicating with Plaintiff, Defendant made several 
false representation including, but not limited to: 1) 
attempting to collect on a debt that is not owed to the alleged 
creditor, rather it is a child support arrearage owed to the 
State of Michigan; 2) not verifying the validity of the debt; 
3) informing Plaintiff that it would be sending an income 
withholding order to Plaintiff's place of employment for 
collection on this debt, and there is already an income 
withholding order in effect from the Friend of the Court in 
Wayne County, Michigan.'' Source: Plaintiff's Complaint in 
Child Support Network, Inc. v. UAW-GM Legal Services Plan., 
Case No. 60454 (U.S. District Court, ED, filed Nov. 30, 1998).
      

                                


    Chairman Johnson of Connecticut. Mr. Baldwin?

 STATEMENT OF HOWARD G. BALDWIN, JR., DEPUTY ATTORNEY GENERAL, 
                  TEXAS CHILD SUPPORT DIVISION

    Mr. Baldwin. Madam Chair, Representative Cardin, 
distinguished Member, my name is Howard Baldwin. I am the 
deputy attorney general for child support for the State of 
Texas. Today I am representing myself and Attorney General John 
Cornyn, State of Texas.
    Although many things in these bills are very positive, I 
really want to focus on two aspects--one is the distribution 
changes and the second is non-IV-D access.
    With regard to the distribution changes, passing through 
100 percent of the child support to former TANF families, what 
I call ``full family first,'' is very good public policy. Of 
our 1.2 million cases and two million children served in Texas, 
17 percent are TANF recipients, 50 percent are former TANF 
recipients. This change will provide $30 million a year to help 
those families reach self-sufficiency, just in the State of 
Texas.
    This change, however, comes with a cost. The loss of 
retained collections impacts program funding. There is a 
study--I believe it is last year--from the Office of Child 
Support Enforcement, the Lewin Study, that indicates that 16 
States fund their program in part or in whole with child 
support retained collections. Those States include Texas, 
Kentucky, Louisiana, and Oklahoma, which are of interest, I 
know, to this Committee, as well.
    The bill attempts to deal with that issue in two different 
ways. One, it delays mandatory implementation of the bill until 
October 1, 2005, to give the States time to prepare. That would 
give Texas three legislative sessions--we have biennial 
sessions. That helps. The second issue is it allows retained 
collections that are lost to be used for TANF maintenance of 
effort, to be claimed as that. It also allows TANF to be used 
to replace lost retained collections to the extent it is 
available.
    My concern is that TANF dollars will not be available to 
the States that need those dollars; that this will force tough 
decisions for State legislatures that have many worthy programs 
and waiting lists for certain social services, and that the 
choice will be cutting child support program funding. To put it 
in perspective, if that funding is cut, that $30 million 
becomes $90 million when you lose the Federal match. That cuts 
my program, for example, in one half if it is not replaced. And 
I understand the State would have some flexibility to replace 
it.
    What I respectfully recommend is that you study this issue 
and deal with it in TANF reauthorization to ensure that this 
issue is there and that there is a funding source available to 
deal with this issue.
    Second, I want to talk about non-IV-D access. First, the 
bill provides the mechanism for access by public non-IV-D 
agencies. In most States, counties or parishes contract to 
provide IV-D child support services and they get access to 
every one of these tools. In Texas and some other States we 
have non-IV-D public child support agencies that have a long 
history--in fact, a longer history--of providing services than 
the IV-D program to our citizens. These programs report to 
elected officials--to district judges who are elected by the 
people or to county commissioners court, the governing body of 
the county. They are accountable to the people. They should be 
trusted with this information with appropriate safeguards, and 
parents should be able to choose to go to their local county 
child support office and have the same tools made available to 
them.
    Today, private attorneys cannot access tools available to 
IV-D agencies. All IV-D agencies do not oppose giving this 
access. I should state that. There was a statement earlier that 
implied that. All do not. But, with appropriate safeguards, 
parents choosing to go to a private attorney should be allowed 
the same tools that we have paid for with government dollars to 
create. Parents should be able to choose a private lawyer if 
they want to do so and have the freedom to make a contract. 
Admittedly, there are lots of issues that need to be dealt 
with. We see giving public and private agencies access, with 
appropriate safeguards, to these services to being akin to 
putting more troops on the battlefield.
    I have 2,500 employees handling 1.2 million cases in the 
State of Texas. We need more help, and this is a mechanism to 
get it.
    Thank you very much.
    Chairman Johnson of Connecticut. Thank you very much.
    [The prepared statement follows:]

Statement of Howard G. Baldwin, Jr., Deputy Attorney General, Texas 
Child Support Division

    Chairwoman Johnson, Congressman Cardin, and other 
distinguished members of the Subcommittee, I am Howard G. 
Baldwin, Jr., Deputy Attorney General of the State of Texas and 
Director of the Attorney General's Child Support Division which 
administers the Title IV-D program in the State of Texas. I 
also serve as a board member of NCSEA, the National Child 
Support Enforcement Association.
    I want to thank you for the opportunity to offer testimony 
today on the legislative proposal the Subcommittee is 
considering with respect both to changes in the rules for the 
distribution of child support collections and to providing 
State Title IV-D agencies the option of allowing public and 
private non-IV-D enforcement entities access to certain 
enforcement resources and remedies.
    First, let me offer some observations about the proposed 
changes in the rules for the distribution of child support 
collections made by a State Title IV-D agency. There is no 
question that many State IV-D agencies have found the 
implementation of the distribution rules prescribed by the 
Personal Responsibility and Work Opportunity Act of 1996 
daunting, at the least. Making requisite changes to automated 
systems, training agency staff, explaining the order of 
distribution to custodial parents--all these tasks have been 
challenging, particularly in the face of the statutory 
deadlines within which the 1996 requirements have to be met.
    The real problem confronting State IV-D agencies has been, 
perhaps, the complex scheme of assignment of support rights 
that underlies the 1996 distribution rules. As you know, 
families must assign their rights to child support as a 
condition for receiving public assistance. This has been true 
since the beginning of the Title IV-D program. The 1996 Act 
sought to implement the principle of paying the former family 
first all of the arrearages owed the family, that had accrued 
before and after the family received assistance, before 
reimbursing the state and federal governments for the amounts 
of assistance paid the family. While this is, unquestionably, a 
worthy goal, the actual process of achieving that end has been 
fettered by the requirement that State IV-D agencies keep track 
of the several categories of arrearages that arise from the 
different kinds of assignments that operate under the Act's 
provisions.
    The legislative proposal before you, which extends the 
principle of ``family first'' advanced by PRWORA, constitutes 
sound public policy. Any amendment of the assignment/
distribution rules must comport with that principle, to the 
extent possible. This proposal would dramatically change the 
scheme of assignments and, thereby, greatly simplify the rules 
for distributing support in the case of families formerly 
receiving public assistance. As you consider this proposal, I 
would, however, respectfully ask this Subcommittee to keep in 
mind that historically the distribution of support collections 
by State IV-D agencies in current and former assistance 
families is a matter linked to State funding of the Title IV-D 
program. States have looked to their share of collections in 
current and former assistance cases--those amounts assigned to 
the State for reimbursement of public assistance--as an 
important source of funding for their IV-D programs. A recent 
study indicates that this continues to be true for 
approximately 16 States, including Texas. The complete loss of 
these ``retained collections''--including collections made 
through the Federal income tax intercept--imposes a difficult 
fiscal burden on those States, one that requires the 
replacement of the lost funding with State general revenues, 
unless some alternative source is available. My concern is that 
state legislatures confronted with difficult choices about 
which worthy programs to fund may find it necessary to cut 
child support program funding, thereby depriving families of 
the services they need to achieve self-sufficiency.
    While the proposal before you contains an option for states 
to use funds appropriated as Temporary Assistance for Needy 
Families, TANF, some states, including Texas, are concerned 
that TANF may not be available for this purpose at the time 
such funding is needed.
    Because of the significant fiscal ramifications of the 
proposed changes to the distribution rules, as well as because 
of other key issues associated with any change in the 
distribution process--not the least of which is distribution 
when two or more States have assignment claims--I would 
respectfully ask the Subcommittee to defer action on changes at 
this time. We in Texas share the concern that members of this 
Subcommittee and other members of Congress have that there be 
an increased flow of collected support to vulnerable, former 
assistance families. We want, as do our sister States, to 
achieve a far simpler financial accounting system in support 
collection and distribution than the current scheme of 
assignment and distribution rules allows. We certainly seek to 
be able to make the assignment and distribution process more 
intelligible to the families we serve. But we believe that any 
amendment of the current process requires a more searching 
analysis of the complex issues inherent in the process than we 
have thus far been able to undertake. Such issues would be 
appropriate for consideration during the TANF reauthorization 
process.
    With respect to extending access to certain enforcement 
resources and remedies to public and private non-IV-D 
enforcement entities, I am happy to say that we in Texas 
support the proposal. Indeed, the organizational 
characteristics of the Texas IV-D program, as well as the 
structure of Texas Family Law developed by our legislature, 
already provides a firm foundation for productive interaction 
and cooperation with non-IV-D enforcement agencies in the 
State. Let me explain.
    Texas has the only Title IV-D child support enforcement 
program in the country that reports directly to a statewide 
elected official, and it is one of only a few states that does 
not place its IV-D program under the umbrella of a human 
services agency. That was not always the case. Initially, the 
Texas IV-D program was situated in the State's Department of 
Human Services, but in 1985, the Texas Legislature acted to 
assign the administration of the program to the Attorney 
General. That move meant that the Texas IV-D program would be, 
as it currently is, a centrally administered, statewide 
program, delivering services through local field offices 
(currently numbering 68) and using its own staff (currently 
numbering 2,524 employees) including its own attorneys 
(currently numbering 200) to perform enforcement actions under 
the aegis of the Attorney General. Unlike many states that 
deliver services by contracting with counties, the Texas 
program has only two county-based projects in which, under a 
Federal waiver and contracts with the counties, all new child 
support orders are processed as Title IV-D cases, unless the 
custodial parent declines services.
    The 1.2 million child support cases handled by the Title 
IV-D agency constitute about one-half of all child support 
cases in Texas. The other one-half is handled by county child 
support entities, such as domestic relations offices, a 
``Friend of the Court'' system, and local court registries, and 
by private agencies and private attorneys.
    What, I think, is particularly noteworthy about the child 
support enterprise in Texas is that the Texas Legislature has 
made available to non-IV-D enforcement entities all the 
enforcement tools authorized by Congress, as these tools were 
developed and to the extent permitted by Federal law. For 
example, public and private non-IV-D providers of enforcement 
services may--independent of the IV-D agency--use statutorily 
prescribed procedures for the imposition of liens or license 
sanctions for child support enforcement. This, I know, is not 
true in all States, even though there is no restriction under 
Federal law with respect to the use of these enforcement 
mechanisms outside the IV-D arena. Similarly, the Texas 
Legislature has provided under the Texas Family Code access by 
non-IV-D public and private enforcement entities to a broad 
range of enforcement information available through the Title 
IV-D agency--again, subject to any limitations under the 
Federal code.
    The point I would stress with respect to the provisions you 
are considering for allowing State IV-D agencies to extend 
certain resources and remedies to non-IV-D enforcement entities 
is that Texas law already contains all the statutory mechanisms 
for doing that. There would be no need in Texas for further 
enabling legislation.
    I believe that--at least in Texas--there can never be too 
many resources brought to bear on the problem of nonsupport. 
The Texas Legislature has known this and has acted to ensure 
that, to the extent possible, all available resources in the 
State--public and private, IV-D and non-IV-D--are enlisted in 
the fight on behalf of our children to secure for them the 
financial support they are owed and need.
    The legislative proposal before you would enable States to 
establish more effective relationships between their IV-D 
programs and non-IV-D providers of enforcement services. No 
State would be required to extend access of IV-D enforcement 
procedures to non-IV-D entities. Instead--as I understand the 
proposal--each State could determine the extent to which its 
IV-D program entered into a collaborative relationship with a 
public or private enforcement agency. The option provided by 
the proposal would ensure that a State IV-D agency could pace 
itself with respect to its own workload so that, in processing 
requests from non-IV-D entities, it did not slight its own 
responsibilities. Personally, I do not see that what is being 
proposed would bring an excessive or unmanageable increase in 
State IV-D agency activity. What I do see is that it would 
provide the State IV-D agency with more effective partnership 
with the valuable resources outside the agency.
    As for any concerns about misuse of information or of 
enforcement mechanisms by non-IV-D entities, I should note that 
county child support offices report to either elected district 
judges, or to the elected governing body of the county, the 
Commissioners Court. I believe that these elected officials can 
ensure that adequate safeguards are in place to prevent any 
inappropriate use of these tools and information. I also note 
that the proposal calls for the Secretary of Health and Human 
Services, in consultation with appropriate parties, to develop 
sets of recommendations, including substantive and procedural 
rules, for the extension of enforcement mechanisms and 
information to public and private non-IV-D agencies. Moreover, 
any non-IV-D public and private enforcement agency seeking use 
of information and remedies would have to satisfy standards and 
procedures set by the State IV-D agency with respect to data 
security and the protection of confidentiality, privacy rights, 
and due process. I cannot imagine a more thorough process for 
protecting the integrity and appropriate use of the enforcement 
information and procedures.
    Madam Chairwoman, I would respectfully urge you and your 
distinguished colleagues on this Subcommittee and in the 
Congress to support this proposal as yet another step we can 
take in strengthening the child support effort in our nation. 
Parents seeking child support need all the help we can 
provide--and their children deserve no less.
    Thank you.
      

                                


    Chairman Johnson of Connecticut. I appreciate your 
comments, Mr. Baldwin, because I really find it hard to 
understand those of you who are just radically opposed to this 
proposal.
    First of all, I do think there is a difference between non-
IV-D public agencies. Do you see that as a difference? I don't 
see why we shouldn't let Texas use its county structure the 
same way we let States use their State structure. Now, do I 
have objection to that? I am trying to narrow the focus here..
    Ms. Turetsky. Madam Chairwoman, I will speak for myself. I 
do have concerns about expanding non-IV-D access to public 
agencies. There are somewhat different concerns than with the 
private agencies, and they have to do with the history of the 
child support program and how the fragmentation of the program 
has hurt performance and a consolidation of the program has 
helped. That is one set of issues. I think it had a lot to do 
with the political structure of the State, but also the 
political dynamics of the State, and we have seen some concrete 
evidence of where a fragmented program has great difficulty 
implementing some of the tools enacted by Congress, such as the 
statewide system and the State disbursement unit, and it is 
because of the fragmentation of authority and the ability of 
locally elected officials sometimes to block requirements from 
Congress.
    Our concerns are structural. Our concerns are the 
proliferation of access and a lack of--not of due process, but 
of many users using the system, and our concern that it is a 
different set of families, and so families being served by the 
clerk of the court system are entering the system in a 
different way and they tend to be better off. Since we are 
advocates for low-income families, we are concerned about 
conserving resources for them in the public system.
    Chairman Johnson of Connecticut. Ms. Smith, do you have 
anything to add to that in terms of non-public agencies?
    Ms. Smith. Yes. There are two issues--
    Chairman Johnson of Connecticut. I mean non-IV-D.
    Ms. Smith. Right, with respect to public non-IV-D. The 
first is dealing with employers and financial institutions--
banks, in particular--employers with wage assignments and banks 
with levies to collect arrearages. We spent a lot of time 
developing relationships with those entities, and they like 
having one agency that they can deal with for processing any 
wage assignments and levies and any questions they come up 
with, so that the process for them is consistent and simple as 
possible and it minimizes any inconvenience to them.
    Having multiple entities dealing with employers and banks 
is going to make it more complicated. We are concerned that it 
will erode the great deal of cooperation that we have gotten 
from employers and banks so far.
    The second issue has to do particularly with noncustodial 
parents who have multiple families. One case may be enforced by 
one entity, and the other case may be enforced by another 
entity, with the result you don't have a coordinated way of 
dealing with the enforcement processes that go on.
    Chairman Johnson of Connecticut. Say that more clearly.
    Ms. Smith. Suppose a noncustodial parent has two families 
and one family's case is being enforced by the child support 
agency and the other case is being enforced by the local 
circuit court--
    Chairman Johnson of Connecticut. But is that likely to 
happen?
    Ms. Smith. It happens all the time.
    Chairman Johnson of Connecticut. All right.
    Ms. Smith. Yes, it does.
    Chairman Johnson of Connecticut. So the problem of multiple 
fathers equals multiple enforcement cases.
    Ms. Smith. Right. Multiple mothers. A father who has 
several families, and we have some--
    Chairman Johnson of Connecticut. Often the mother has 
several fathers.
    Ms. Smith. That is also true. When the money comes in, for 
example, if there is enough money to meet all the obligations, 
we pro rate it according to the amount of the current support 
order. If you have two different entities that are processing 
the money, then you don't get the kind of equity to the 
different families that we are able to organize by virtue of 
the fact that all the money comes to us.
    The other issue relates to computer linkages and hookups. 
There are a lot of technical details that would have to be 
worked out. But I certainly think that courts are much more 
aware of and conscientious about privacy protection and due 
process than the private sector.
    Chairman Johnson of Connecticut. Anyone else want to 
comment?
    Ms. Durham-McLoud. Simply to say that this is an 
exceedingly complex issue and very heartfelt by all of the 
participants in this process. I can tell you we have our work 
groups in place working on this issue, trying to come to a 
consensus, because we believe that if we can form a consensus 
it will be better for everyone. But I can tell you that Mr. 
Baldwin and Ms. Smith are both active members of the board, and 
Ms. Turetsky belongs, as well, so we are not currently in a 
position to do a positive position.
    Chairman Johnson of Connecticut. Well, you might take note 
that if you can't resolve it I might.
    Ms. Durham-McLoud. Thank you.
    Chairman Johnson of Connecticut. Mr. Primus?
    Mr. Primus. I think it goes in the opposite direction of 
where we have been headed. In other words, the child support 
system has to deal with employers, banks, credit bureaus, and 
so forth., and if you have more than one agency in a State 
responsible for that, I think it sets up fragmentation.
    The fact that we have had fragmented programs and we have 
decisionmaking at many different levels in the system, you 
know, frankly, has deterred our efforts, for example, getting 
all of our automation tools up and running. I mean, I really 
think we come to a place now where we stand on the threshold, 
because of the new higher database, the child support registry, 
the disbursement unit, where we can make substantial advances, 
and now, going in the other direction and allowing more 
fragmentation, I think is not good.
    Chairman Johnson of Connecticut. OK. Mr. Baldwin?
    Mr. Baldwin. First, with regard to wage assignments, we 
have universal wage withholding in Texas. Private attorney, a 
domestic relations office, or the IV-D agency, or the parent 
who is owed the support, the obligee, can all serve withholding 
on people today. Employers do not have one person, one entity 
to deal with in most States.
    Second, most programs are county based in this country, 
they are not State-administered, State-delivered. We are 
unusual in that respect. Because of that, employers and other 
folks are used to dealing with a multitude of people--and I am 
talking specifically now on the county issue.
    With regard to levies, I hear what Ms. Smith says, and we 
are concerned enough that we are considering centralizing other 
States to come through us to deal with Texas banks and credit 
unions when they want to serve a levy on a Texas institution 
because they won't know our law, and it is very complex, and we 
are thinking about providing that as a service and have, 
indeed, applied for a grant from the Federal office to look at 
that.
    With regard to cases handled in multiple places, it happens 
today. I have it within the State with two child support 
offices that are both State-administered and try to get them 
moved in the same location.
    When you have a county-based system--California would be a 
good example--you have 57 counties that potentially could all 
have a child support case for the same noncustodial parent that 
you have to deal with in multiple families, so you have 
problems like that.
    There is an answer to some of these issues. That is to 
require public non-IV-D agencies to come through the State IV-D 
agency, to let that State agency control that process.
    In the day of computerization with web-based technology, we 
are not talking an incredibly difficult process to resolve. 
People can enter data on a web application and upload it to the 
State. If they are big enough, counties can do a data exchange 
with the State.
    We don't see those to be insurmountable problems, and the 
same thing, frankly, can be done with privates if the will of 
the Congress is to extend that remedy to them, as well.
    Chairman Johnson of Connecticut. Thank you. You made two 
points that I think are important.
    First of all, these contracts will be controlled by the 
State. They don't have to do them at all if they don't want to, 
and there is no reason why they can't say, ``This is the 
information you can have if you apply to us on the forms we 
tell you to use, and we will give you the information.''
    Current law allows the custodial parent or their attorney. 
Now, you are forcing them to buy an attorney. You don't have to 
be TANF-eligible to not be able to afford an attorney. So yes, 
you can allow the custodial parent--it is pretty formidable, 
and it says also under current law, ``or their agent,`` to 
obtain through a written application process available in the 
parent locator service, so they can already do that.
    All we are talking about really is an agency that can do 
that for them, and aren't you better off with an agency that 
can help them, because now it already says their agent. This 
just isn't being used much. Why don't you want to get control 
of it before it is used much?
    They can use the parent locator system to get their Social 
Security number, address, employer, and employer's address, and 
similar information, and then they can serve the order.
    Now, all we do is to say that, by 2001, a report providing 
guidance to States on how to implement access to information 
and enforcement tools would be--this is not direct access. We 
don't say ``direct access will be published by the Secretary of 
HHS.'' These recommendations will include substantive and 
procedural rules that should be followed with respect to 
privacy safeguards, data security, due process rights, 
administrative capability with State and Federal automated 
systems eligibility requirements, such as registration, 
licensing, posting for bonds, for access to information and use 
of enforcement tools. Penalties for violations of the rules 
will also be recommended.
    We do not say that the contracts can cover nothing else. We 
just say, at the very least, HHS is going to make some 
recommendations about these critical privacy data management 
issues.
    Now, we do say it is State option, and, with appropriate 
protections beginning in 2002, that then States could, at their 
option, contract with IV-D public programs and with private 
agencies.
    Now, second, under enforcement options, this is current 
law: ``Private child support agencies--'' I am doing this not 
so much for the benefit of you who work in this all of the 
time, but I think all of us need to be reminded that under 
current law agencies have access to enforcement tools such as 
wage withholding, license revocation, and child support liens.
    Now, liens are one of the most hostile tools you can 
possibly use, in my estimation, because they can cripple the 
ability of the non-supporting parent to earn a living. So why 
would you want to have access to liens and not have access to--
now, I appreciate we don't want everyone and his brother going 
to the bank. And I think Mr. Baldwin's idea that they are going 
to think about having everybody come through their State agency 
makes a lot of sense.
    Current law doesn't prevent you from doing that, right?
    Mr. Baldwin. No.
    Chairman Johnson of Connecticut. So we don't want to 
prevent the development of a system that can honestly deal with 
information, but when you professionals sit there and say that 
one of the problems with this is that there are going to be 
more users, when we were only collecting 22 percent of the 
child support, listen to what you are saying. We are doing a 
terrible job. We have better tools. They are improving our 
effectiveness. We are proud of that. But, in terms of how much 
of the total child support non-collected money we are getting, 
it is still bad news.
    So it is not an excuse that there would be more users. It 
is not an excuse that it is a different set of families. In 
fact, talk about blood boiling, no, if you are rich and you get 
divorced, you have got the money for a lawyer if there is not a 
lot of child support. It is the $30,000 families who divorce 
and then they each have got 15 or less, I mean, there is no 
room for lawyer payments here.
    If I were a State child support enforcement person, I would 
no more contract with an agency that was going to take 33 
percent of the child support than jump over the moon.
    Would you, Mr. Baldwin?
    Mr. Baldwin. I have to say this--and I want to be fair 
about this--there are private contracts between private 
individuals. If we did our job, people wouldn't make that 
choice.
    Chairman Johnson of Connecticut. Right. OK.
    Mr. Baldwin. If we were available, they wouldn't make that 
choice.
    Chairman Johnson of Connecticut. Because, in my estimation, 
the States are not going to contract with everybody. They are 
going to contract with specific agencies, and there will still 
be these other agencies out there. And if, for some reason, 
they are desperate enough, or whatever--I don't know what the 
circumstances would be that would lead someone to choose that. 
I hope in the next panel we will get a little bit better 
insight on that.
    But I will tell you, I see no hope. You mentioned, Ms. 
Turetsky, that the current welfare reform system is depriving 
our child support agencies of their level of funding. I guess 
you mentioned that too, Ms. McLoud. I see no hope. I mean, the 
most we are going to be able to do is somehow get it back up to 
hold harmless, but there is no big money out there that is 
going to flow into the system for enforcement. And our 
enforcement agencies are doing much better, our tools are much 
better. Why shouldn't some other agency be able to work through 
the State and the State give them the information from the bank 
or notify the bank or whatever? Let us work this out. But don't 
just tell me we can't do it.
    We need to identify the problems, we need to identify the 
solutions, and we give ourselves in this bill a whole year to 
think about it, then we don't let them in for 2 years. Come on, 
kids, let us get courage out here. We are serving a pathetic 
number--I mean, we collected 14 percent of TANF cases, 22 
percent of non-TANF. Not a record I am proud of.
    That is how strongly I feel about this, to give you some 
sense of indicator here, and what we need to work on. But I 
appreciate your going through your concerns, and I understand 
the concern about too many people using the system, but we have 
to overcome that. We have to be able to govern the system 
better than that.
    I am aware of all the abuse that has gone on in this, but 
there are also some good actors, so I think--get your board 
together. If you can figure it out, you know, how receptive we 
are to think that you have figured out for yourselves, so you 
have got your work cut out for you.
    Mr. Cardin.
    Mr. Cardin. Thank you, Madam Chair.
    Dr. Primus, did you want to respond to that last point? You 
seemed very anxious.
    Mr. Primus. Yes, I would, if I could.
    I really do appreciate the chairman's intent behind this 
provision. I mean, I understand that. I guess the question is: 
What do you do first? I think the evidence, as some of my 
colleagues in the second panel suggests, that what you ought to 
do first is get a hold of this unregulated industry and make 
sure--it is not just the access to the information. It is the 
charging. It is the advertising practices, and so forth. Then, 
again, decide what to do about that and mandate that the States 
regulate, and then decide what additional tools they should be 
given.
    So it is not a question--we are not disagreeing with the 
intent here.
    Chairman Johnson of Connecticut. Would you yield on that 
point though?
    Mr. Cardin. I am glad to yield to my chairman.
    Chairman Johnson of Connecticut. See, the problem is that, 
first, we don't like to mandate. It would be hard to get a bill 
through the Congress mandating that States pass laws to 
regulate this whole sector when they haven't been regulating 
them.
    Second, they don't know enough to regulate them, frankly. 
If we let States--if we do this, through those contracts we 
will see a variety of State solutions, and then we will know 
whether there needs to be, and so will the States.
    In instance after instance, welfare reform, disability 
reform, many instances, it has been the State experimentation 
that has led to improved public policy.
    I think what you are saying is, ``Wait 3 years while we 
mandate this in the States and they do something.'' With this 
collection record, Wendell, do you really want to do that?
    Mr. Cardin. Let me reclaim my time. I happen to agree with 
the Chair on this point. That is, I don't have a great deal of 
confidence that this Congress will pass legislation that would 
set up the regulatory protection for these types of collection 
agencies for the States to act. I also do not have a lot of 
confidence that the States have performed very well in this 
area.
    So, getting back to Mr. Baldwin's point, which I think is 
the right point, that the use of these additional tools should 
be with appropriate safeguards--quoting your language--
appropriate safeguards. We don't have the appropriate 
safeguards. States already have certain options available to 
them that they have not used.
    Mr. Baldwin, I don't mean to put you on the spot, but you 
are the only Attorney General that I have here. Looking at 
Texas, we have some--Ms. Turetsky has attached to her exhibit 
some rather difficult cases to understand. We don't know how 
accurate all the information is on complaints that are filed, 
but in one case the parents of a noncustodial parent were 
terribly harassed and intimidated to put child support 
arrearages on their credit card. In another case, a spouse of a 
noncustodial parent's credit was affected by the way that the 
private collection agency performed. In another case, abusive 
practices were used. All of these are pending, I assume, before 
Texas.
    I guess my point is that--and it is Dr. Primus' point--it 
seems to me that, before you look at expanding and giving this 
additional power to non-IV-D parties, we should be assured that 
there are appropriate safeguards in place, and the State record 
here has not been very good.
    The Chair points out--and rightly so--that there is certain 
information currently available. That is correct. But what the 
legislation would make available is everything we have under 
the new hires and under the financial information from the 
banks, which is pretty powerful material. This is a new level 
of information that would now be available that is very 
sensitive on privacy, very sensitive type of information on 
which we depend. We have had hearings before our Committees. We 
depend upon the good will of the private sector to help us in 
getting this information together, because they are interested 
in helping us collect child support. They are. But if it is 
used to get an elderly couple intimidated the use their charge 
accounts, credit cards, more than they should to help a 
noncustodial parent who is their son in an inappropriate way, 
that is something we need to protect against. That could very 
much compromise the credibility of this information that is 
currently being made available to collect child support.
    I appreciate what everybody is saying here, but I really 
don't believe we have the appropriate safeguards in place, and 
I don't think this Congress is going to mandate that you put in 
the appropriate safeguards.
    I will be glad to let you respond to that.
    Mr. Baldwin. Thank you.
    One, I think that there is a distinction between where we 
are now and where we would be with this bill. Where we are now 
is, as a IV-D program, I have zero authority to regulate 
private collection agencies. It is not a IV-D function. I 
couldn't do that today.
    The Texas Legislature has considered and passed out of the 
Senate but not the House last session a regulation, but--
    Mr. Cardin. But the State of Texas could give you that 
authority?
    Mr. Baldwin. State of Texas could not give me, as the IV-D 
agency, but could give an entity of the State that authority. 
You would have to authorize--
    Mr. Cardin. Couldn't they give the Attorney General the 
authority to do it?
    Mr. Baldwin. Sure.
    Mr. Cardin. So that is--
    Mr. Baldwin. Can I make a distinction? I am not trying to 
be pedantic here. It is that it is not a IV-D function. It is 
not reimbursable from the Federal Government for me to 
regulate. It is absolutely an authority that could be granted 
to the State Attorney General. We already have a consumer 
protection division that investigates these complaints. I do 
not. That is the appropriate forum to investigate.
    That is just one point.
    Under the bill, if it were passed, I could extract some 
measure--you could call it regulation or some measure of 
control over a private or public entity that wanted access to 
this information through the contract, through the agreement, 
that I don't have today, because today I have to comply with 
the Federal law and regulation and release locate information 
to firms with no control other than--
    Mr. Cardin. I guess my point would be: Why do you think the 
States would perform better under this authority, where they 
haven't performed very well under the current authority--that 
is, the general authority you have in the States?
    And it gets me to the second point that I am a little bit 
perturbed about on the finance. I understand that you work from 
one budget year to the next and we never really look at the 
philosophy on how these things are funded and rationale, but if 
all programs were financed by the Federal Government as well as 
we finance child support collection administrative costs, the 
States wouldn't have to impose any taxes. In fact, they could 
do some other things, because the system pays, in some cases, 
over 100 percent.
    So there is something here about a partnership and there is 
something here about trying to develop good policy, and the 
Federal Government has a major responsibility as a major 
partner in this, but I think it is a little bit unfair to 
suggest that, because you--and Mrs. Johnson's bill gives it 5 
years before we really implement this, and we do have to give 
the States an opportunity to adjust to whatever changes we 
make, and I fully agree with the Chair on that point.
    But when we look as to what is the right policy here, the 
States should be putting more resources into these areas. The 
Federal Government has done an extremely effective job and a 
very generous job here, and I think it is not fair to say that 
the financing here has every--we have got to reimburse the 
States for all these additional burdens that we are putting on 
here.
    Mr. Baldwin. I wouldn't contend you have to reimburse the 
States. We have granted to the States TANF dollars to use in 
providing services to families to reach self-sufficiency. There 
is no better program to help a family reach self-sufficiency 
than the child support program.
    A University of Texas study shows that the impact of the 
child support dollar collected is three times greater than a 
dollar of earnings.
    There is no question. What I just don't want to see happen 
is the legislature is confronted--and I know you know this--
confronted with a tough choice for many worthy programs, that 
program funding could be cut in the short term while we are 
dealing with this issue.
    Mr. Cardin. That is fair enough, just so that we start 
getting some support at the State level for recognizing the 
fact that the funding here is somewhat out of balance between 
the Federal and the State in that regard.
    Dr. Primus.
    Mr. Primus. Just adding to your point, Congressman, I mean, 
if the States spend an additional dollar, they would 
automatically get two additional from the Federal, so, I mean, 
the control of how much we are actually investing here is very 
much at the State legislative level, and there is an open-ended 
match.
    My concern with the Johnson bill is that, you know, it 
grandfathers the fact that the Federal Government is going to 
pay 90, 95 percent of the cost of these distribution changes 
forever. I think, because it is a Federal/State partnership, 
you should look at that and see whether that grandfather should 
last in perpetuity.
    Mr. Cardin. Ms. McLoud?
    Ms. Durham-McLoud. To go back to the call that we made for 
a commission to look at the financing, let me say quickly that 
it is not simply a matte of trying to get more money for the 
program. Anyone who says that they don't want more money for 
their program, you probably wouldn't believe anything else they 
said, either. But it also, in addition to the dollars, provides 
an educational process for the policy-makers who are addressing 
that program.
    Let me suggest that would work at both the Federal and the 
State level, because we bring all of those players to the 
table.
    The policy issue I think is just as important as where the 
dollars will come from. This is a personal Dianna Durham-McLoud 
opinion, not necessarily endorsed by anyone I know on or off 
the Board, but I don't believe that many of our State 
legislators had a real sense of the comprehensive nature of the 
child support program until PRWORA passed. It was when the 
PRWORA bill showed up in some legislatures that they went, 
``Wait a minute. Hold it.'' Now, I am perfectly prepared, as a 
former administrator, to say in part that may have been my 
fault for not doing a better job of getting that message out, 
but I think the attention to the program is just now, in the 
last 10 years, starting to be focused there, and you have been 
very helpful in making that happen.
    Mr. Cardin. Let me just conclude by just focusing, Ms. 
Smith, on the last point that you were making, because I am not 
sure I fully understood the issue.
    That is, if one agency enters into an arrangement, because 
these are State options, it affects other States as far as the 
information. I didn't fully understand that point, if you 
could--
    Ms. Smith. The way I read the proposal, if in Texas, for 
example, where they seem more receptive to this proposal than 
elsewhere, private collection agencies from all over the 
country entered into agreements, or an agency in Texas that had 
custodial parents from all over the country entered into an 
agreement with Texas, they could submit those requests to Texas 
and it would go up to the Federal Parent Locator Service, and 
they would have access to all of the information that comes 
from Massachusetts, where I do come from, which has a culture, 
by virtue of being in the tax department, that is very, very 
strict about guarding confidential data. I mean, we are as 
strict as the IRS, if not stricter, because of the amount of 
information that we have.
    So we would be very resistant to allowing our citizens, 
whose privacy we are committed to protecting, having their 
information being submitted to the Federal Parent Locator 
Service and people from all over the country could access that 
by virtue of going through one State that has elected this 
option.
    There is a little bit of a Trojan Horse component to this 
bill, because it looks like there are lots of options here, but 
the way I read it, and my colleagues have read it the same way, 
is that if one State goes down this path, the rest of us are 
automatically on that path, whether we like it or not.
    Chairman Johnson of Connecticut. He is shaking his head. I 
just want to make sure--
    Mr. Baldwin. I actually believe that she is correct that 
under current Federal law--let me just do it that way--anyone 
can apply in any State and cannot be denied services, so non-
Texas residents can apply to the Texas IV-D agency or someone 
on their behalf, their attorney, can access parent locate today 
by going through me. In fact, we have a very sizeable private 
parent locate number of requests.
    Mr. Cardin. Thank you.
    Thank you, Madam Chair.
    Chairman Johnson of Connecticut. If the next panel will 
come forward, we will be able to hear at least one and maybe 
two of them.
    Thank you very much for your testimony, for your 
thoughtfulness, and for the dialog. Thank you.
    We will be hearing first from Ms. Joan Entmacher, vice 
president and director, Family Economic Security from the 
National Women's Law Center.
    Ms. Entmacher.

   STATEMENT OF JOAN ENTMACHER, VICE PRESIDENT AND DIRECTOR, 
     FAMILY ECONOMIC SECURITY, NATIONAL WOMEN'S LAW CENTER

    Ms. Entmacher. Chairwoman Johnson and Members of the 
Subcommittee, thank you for this opportunity to testify on 
behalf of the National Women's Law Center and for the work you 
have done to develop the Federal/State child support 
enforcement program.
    The Center strongly supports the assignment and 
distribution changes proposed in the Child Support Distribution 
Act, and the even more comprehensive reforms of the Child 
Support for Children Act. These proposals would move the 
program even further toward the goal of increasing child 
support for children.
    Unfortunately, the proposal to allow States to increase the 
powers of private collection companies and non-IV-D agencies, 
Title III of H.R. 4469, would move in exactly the opposite 
direction. The Center is concerned that those provisions divert 
child support intended for children, and collected by the IV-D 
program, to for-profit companies.
    Representatives of the private child support collection 
industry often justify their high fees--typically one-third of 
collections, by saying that two-thirds of something is better 
than nothing. But too often, parents pay one-third for nothing 
because IV-D has actually collected the money.
    Another argument private companies make for increased 
powers is that they offer consumers a choice. The complaints in 
my testimony highlight complaints from consumers who tried to 
cancel the contract and were told they were on the hook 
indefinitely paying a portion of their child support.
    I appreciate, Madam Chairwoman, your statements recognizing 
the seriousness of the problems that exist, so I won't go 
through those complaints in my testimony, but I have to 
respectfully disagree that H.R. 4469 would help solve the 
problems that already exist. I believe that a better approach 
would be to study the issues, make sure that effective privacy 
and consumer protections are in place nationwide to deal with 
the existing issues before any expansion of authority of these 
institutions is considered.
    I don't want to be defeatist, but I do want to go through 
some of the issues that should be considered.
    First, giving access to additional IV-D tools, such as the 
tax refund intercept, would just expand companies' ability to 
take a cut of child support actually collected by IV-D for 
children.
    Second, the bill leaves it to the States to develop 
protections. You have said that one of the advantages of that 
approach is that States could experiment with different 
approaches. I believe Ms. Smith gave the response to that, 
which is that if one State develops weak protections, the 
privacy of all Americans would be jeopardized. That is one 
reason why the Consumer Federation of America, Consumers Union, 
and U.S. PIRG joined together to express concerns about the 
privacy implications of this proposal.
    The third point is that just verifying that a request is 
being made for child support purposes is difficult or 
impossible, since there is no all-inclusive Federal registry of 
child support orders. The Federal case registry only includes 
information on non-IV-D orders entered or modified after 
October, 1998, and it doesn't include any payment information 
on non-IV-D cases.
    Next, the States also will find it difficult to prevent 
erroneous or abusive collection practices. Since the Federal 
Fair Debt Collection Practices Act has been held not to apply 
to child support debts, each State will have to develop its own 
legislation to curb the kinds of abuses that are suffered by 
noncustodial parents that are highlighted in testimony 
submitted by several witnesses. And, verifying arrearages in 
non-IV-D cases before sending cases on for such tough tools as 
tax refund intercept, passport sanctions, and others will be 
difficult because there is no way to match those arrearage 
claims against automated records. They don't exist for non-IV-D 
cases.
    Errors that were made in intercepting tax refunds could 
affect citizens in several States who are owed the refund or 
who have another claim on those tax refund proceeds.
    Finally, the cost of implementing these options would 
divert IV-D resources away from providing services to families 
and re-fragment the child support system. I fear that this 
proposal would reduce rather than help children get child 
support.
    Thank you.
    [The prepared statement follows:]

Statement of Joan Entmacher, Vice President and Director, Family 
Economic Security, National Women's Law Center

    Chairwoman Johnson and Members of the Human Resources 
Subcommittee, thank you for this opportunity to testify on 
behalf of the National Women's Law Center. The Center is a 
nonprofit organization that has worked since 1972 to advance 
and protect women's legal rights. It has been a strong advocate 
of improved child support enforcement for more than two 
decades. I and other Center staff have presented testimony on 
child support issues to this subcommittee on several occasions, 
commented on child support regulations of the Department of 
Health and Human Services, litigated child support cases and 
met with officials in the Administration, Congress and the 
states in furtherance of the Center's efforts to improve child 
support enforcement. The Center also provides information to 
women across the country in English and Spanish on how to 
exercise their rights to child support through state child 
support offices, and assists low-income women in the District 
of Columbia with child support and family law issues.
    Since the creation of the child support enforcement program 
under Title IV-D of the Social Security Act in 1975 (the ``IV-D 
program''), the program has evolved in important ways. 
Initially, the primary mission of the program was to recover 
welfare costs, though it also provided services to families 
that had never received public assistance. Today, the majority 
of families served by IV-D have not received public assistance, 
but most are low and moderate income.\1\ Since the passage of 
the the Personal Responsibility and Work Opportunity 
Reconciliation Act (PRWORA) of 1996, the number of families 
receiving public assistance has declined sharply. More single 
mothers are working, but they are still struggling to make ends 
meet. It is time to complete the transformation of the IV-D 
program into a program that helps families achieve greater 
economic security by securing child support for children.
---------------------------------------------------------------------------
    \1\ A recent analysis by the Assistant Secretary for Planning and 
Evaluation, ``Characteristics of Families Using Title IV-D Services in 
1995'' (May 1999), found that 63% of custodial parents eligible for 
child support used the IV-D system. Only 23% of custodial parent 
families in the IV-D system had family incomes of 250% of poverty or 
above (in 1995, 250% of poverty was $30,395). Over half (53%) of the 
custodial parent families not using the IV-D system had incomes of 250% 
of poverty or greater.
---------------------------------------------------------------------------
    Some of the proposals the Subcommittee is considering 
represent significant steps toward this goal, giving greater 
priority to the child support claims of families over 
government claims for welfare reimbursement. Unfortunately, the 
proposal to allow states to increase the powers of private 
collection companies and non-IV-D agencies (Title III of H.R. 
4469, the Child Support Distribution Act of 2000) would move in 
exactly the opposite direction. Those provisions would increase 
the profits of private child support collection companies at 
the expense of children and undermine the IV-D child support 
enforcement program which members of this subcommittee and 
staff have worked hard, on a bipartisan basis, to develop over 
the years.

                  Assignment and Distribution Reforms

    The Center strongly supports the assignment and 
distribution changes proposed in Title I of H.R. 4469, and H.R. 
3824, the Child Support for Children Act. PRWORA gave families 
that had left public assistance increased claims to child 
support arrearages, but fell short of a true ``Families First'' 
distribution policy. Under PRWORA, collections made through the 
federal tax refund intercept, the single most effective 
technique for collecting arrearages, continue to go first to 
the state. Even after the PRWORA distribution changes are fully 
phased in, families applying for Temporary Assistance to Needy 
Families (TANF) still will be required to temporarily assign to 
the state their rights to pre-TANF child support arrears. These 
and other exceptions to ``Families First'' distribution create 
a complex, expensive-to-administer, and virtually inexplicable 
distribution system.
    The assignment and distribution reforms in Title I of H.R. 
4469 would give families that have left TANF more of the child 
support paid on their behalf. They also would simplify the 
administration of the IV-D program, reducing delays in 
distributing funds to families and freeing resources for other 
activities. The requirement in Title II that IV-D programs 
review the cases of families leaving TANF also would help 
families secure the child support they need to achieve self-
sufficiency.
    Both custodial and noncustodial parents also would benefit 
from the provisions of H.R. 4469 and H.R. 3824 that would limit 
the amount of the assignment while a family receives assistance 
and direct IV-D agencies not to collect Medicaid birthing 
costs. Some states require noncustodial parents to reimburse 
the state for birthing costs and past public assistance 
expenditures, creating large debts to the state that are 
unrelated to and far exceed their ability to pay. These 
practices can deter fathers from establishing paternity, 
discourage low-income pregnant women from seeking proper health 
care, and discourage both parents from working with IV-D. The 
proposed changes will make it easier for noncustodial parents 
to focus on providing support to their children, not 
reimbursing state debt.
    H.R. 3824 would provide a more comprehensive reform of 
distribution than H.R. 4469. It would require states to pass 
through all current child support payments, including payments 
for families currently receiving public assistance. This would 
ensure that custodial parents know how much child support was 
being collected and eliminate the delays in payment that often 
occur when families leave welfare. In addition, under H.R. 
3824, the federal government would share the cost if a state 
chose to disregard some of the child support for TANF purposes. 
This would encourage states to allow the child support payments 
made by noncustodial parents of children receiving public 
assistance to make a direct difference in their children's 
lives. This is an important ``fatherhood''--and 
``motherhood''--issue.\2\
---------------------------------------------------------------------------
    \2\ The National Women's Law Center and the Center on Fathers, 
Families, and Public Policy in Madison, Wisconsin have collaborated in 
the ``Common Ground'' project to bring together practitioners, 
advocates, and researchers that work with low-income mothers and 
fathers to develop public policy recommendations to increase the 
likelihood that children will receive financial and emotional support 
from both parents. Participants have emphasized that policies that 
direct all of the child support paid by the noncustodial parents of 
children receiving public assistance to the state not only deprive poor 
children and custodial parents of needed economic resources, but 
increase conflict and stress within the family.
---------------------------------------------------------------------------
    The Center applauds the bipartisan support for distribution 
reform, and hopes that real progress will be made this year.

Proposals to Allow Private Collection Companies and Public Non-
IV-D Agencies Access to IV-D Information and Enforcement Tools

    The Center is strongly opposed to Title III of H.R. 4469, 
which would allow States to give private child support 
collection companies and non-IV-D agencies greater access to 
confidential information and IV-D enforcement tools. We 
recognize all too well that although the IV-D program has 
improved, progress has been painfully slow and uneven. We 
appreciate this Subcommittee's commitment to continue to 
explore ways of increasing support for children.
    We are concerned, however, that Title III would reduce the 
child support actually going to children and undermine child 
support enforcement by:
     diverting much of the child support intended for 
children, and actually collected by IV-D agencies, into the 
hands of for-profit collection companies;
     jeopardizing individuals' privacy;
     increasing the risk of erroneous and abusive 
collection practices; and
     diverting IV-D resources away from providing 
services for families and re-fragmenting the child support 
program.

Diverting much of the child support intended for children, and 
actually collected by IV-D agencies, into the hands of for-
profit collection companies

    Given the current, largely unregulated state of the private 
child support collection industry, increasing their access to 
the information and tools of the IV-D system would expand the 
potential for exploitation of custodial parents and children. 
Fees in the child support collection industry are high: 25 to 
40 percent of collections, often with additional administrative 
fees and expenses. Some industry representatives justify these 
fees by saying ``two-thirds of something is better than 
nothing.'' But what happens all too often is that custodial 
parents pay one-third or more of their child support to a for-
profit collection company for nothing--because IV-D has 
actually collected the money. For example \3\:

    \3\ Examples are taken from complaints on file with State Attorneys 
General, collected by Amy Collins and Vicki Turetsky, Center for Law 
and Social Policy. For additional examples, see Testimony of Vicki 
Turetsky to the Subcommittee on Human Resources, May 18, 2000 and 
Testimony of Joan Entmacher to the Subcommittee on Human Resources, 
October 5, 1999.
---------------------------------------------------------------------------
        A mother in Phoenix, Arizona complained that when she signed a 
        contract with a private collection company, she was not 
        informed that the State IV-D agency had already located the 
        absent parent and arranged for the garnishment of his wages. 
        ``[The company] has collected 35% of my support checks for the 
        past two years for an investigation that was already 
        finalized."
        A mother in Plano, Texas wrote that she had asked a private 
        collection company for help in collecting past due child 
        support from her ex-husband. She was already receiving current 
        support through the IV-D program. She was told that the company 
        would not intercept those payments, but would make additional 
        efforts to get unpaid child support. Instead, she complained, 
        the company simply took its percentage out of payments made to 
        the IV-D agency. ``They have only managed to help themselves 
        and pay themselves for their services with money I would have 
        gotten without their help. . . I am worse off financially now 
        with their so-called help.''
        A Red Oak, Texas mother had an open case with the IV-D agency 
        when she signed a contract with a private company. She 
        complained: ``They take the check. They shouldn't be taking my 
        money. They have not done anything on this case like they 
        said.''

    In the private child support collection industry, the way 
to maximize profits is to take a cut of collections while 
letting IV-D do the work. Expanding the access of private 
collection companies to IV-D information and enforcement tools, 
as Title III would do, would only increase the ability of 
private companies to profit from the work of IV-D at the 
expense of children.
    Some may think that while it is unfortunate that consumers 
enter into unwise contracts--especially when children owed 
support pay the price--the best approach is to let the buyer 
beware. But contracts frequently used in this industry are 
confusing, even misleading. Even more disturbing, if custodial 
parents realize they have made a bad deal, contract provisions 
attempt to limit their ability to terminate the contract. 
Industry representatives have cited ``consumer choice'' as a 
reason to give them access to IV-D systems. But many companies 
try to restrict the ability of a custodial parent to choose to 
terminate the contract and seek services from IV-D or another 
entity.
    Some companies emphasize in their advertising that they 
help collect ``past due'' support.\4\ However, they then claim 
a percentage of current support payments under difficult-to-
understand contract clauses that redefine ``current support'' 
as ``past due support.'' \5\ By applying current support 
payments first to the arrearage, and refusing to allow the 
custodial parent to cancel the contract until the arrearage is 
paid in full, companies can take their cut of child support 
indefinitely, leaving custodial parents with less child support 
than if they had written off the arrearage completely.\6\

    \4\ See, for example, the website of CSE* Child Support Enforcement 
(supportkids.com): ``Founded in 1991, Supportkids.com has achieved 
unprecedented success in collecting past-due child support. . ..'' The 
CSE contract begins, ``I am asking CSE to enforce and collect ``Past-
Due Support Owed. . ..''
    \5\ For example, the standard contract of CSE* Child Support 
Enforcement, Co. (supportkids.com), states: `` `Past-Due Support Owed' 
also includes any support and interest that become past-due after the 
first payment is received by CSE. Regardless of how payments are 
designated by NCP, a party making payments on behalf of NCP, court 
records, or any other documents, it is specifically agreed that any and 
all amounts received by CSE will be first credited to reduce 'Past-Due 
Support Owed.' ''
    \6\ See, for example, the termination clauses in the standard 
contracts of CSE* Child Support Enforcement, Co. 
(supportkids.com)(available on-line), NationalChildSupport.com 
(available on-line), KIDS, Ltd. (available on-line from their website, 
collectchildsupport.com). For an explanation of how such provisions can 
leave custodial parents with less child support than they would have 
had if they had written off the arrearage completely, see Testimony of 
Joan Entmacher to the Subcommittee of Human Resources of the House 
Committee on Ways and Means, October 5, 1999.
---------------------------------------------------------------------------
        A custodial parent from Fort Worth, Texas told the State 
        Attorney General she had written the company in an attempt to 
        terminate her contract: ``It was my understanding that you all 
        would take 30% of the part that he was in arrears. It was 
        certainly not my understanding that you would take away what I 
        was getting currently. This is ridiculous. So cancel the 
        proceedings.'' They refused. She wrote the Texas Attorney 
        General, ``I believe that the entire agreement is very 
        deceptive. . .. They're stating that they're getting the amount 
        that's late, but what I want to know is: if they are currently 
        collecting the late part of what he owes me, what happens to 
        the portion that he should actually be paying me now. . ..? ''
        A mother from Seagoville, Texas had sought help from a private 
        company in collecting $7,130 in child support arrears. She 
        wrote the Texas Attorney General, ``The contract states. . 
        .[o]nce total amount owed was collected then I would receive 
        100%. However that was not done-- In the 4 years time I was on 
        this contract they collected $16,000, which means they went . . 
        . over the amount. I would like to have that money back. Can 
        you help? Please help us. Please help us. Please, Please help 
        us.''

    These common practices also have critics within the 
industry. One company representative stated, ``The entire 
private child support collection industry needs to admit that 
it has been taking unfair advantage of custodial parents.'' He 
said his company ``has looked at the fee structure that is in 
place throughout the industry and realized that we are charging 
parents a sizable amount of money when we are no longer 
providing any viable services.'' \7\
---------------------------------------------------------------------------
    \7\ Michael McCoy, Managing Director, Child Support Intervention, 
Press Release dated October 4, 1999 (http://www.deadbeatparent.com/
media/contract--pr.htm). While the CSI contract available on-line 
provides for reduced fees after a period of regular payments, it also 
restricts the ability of the custodial parent to cancel the agreement.
---------------------------------------------------------------------------
    In some cases, custodial parents end up getting none of the 
child support payments intercepted by private collection 
companies. The Illinois Attorney General sued one company for 
retaining all current support payments until its undisclosed 
administrative fees were reimbursed.\8\ Other companies 
advertise their low percentage rates, failing to call attention 
to contract provisions that allow them to claim 100 percent of 
collections until administrative or legal fees are reimbursed 
in full.\9\
---------------------------------------------------------------------------
    \8\ Office of Attorney General Jim Ryan, Press Release dated 
September 28, 1999.
    \9\ For example, the website of KIDS, Ltd. of San Antonio, Texas 
(www.collectchildsupport.com) announces, ``Lowest rate and no set up 
fees!'' ``We even pay the attorneys' fees for you, in some cases.'' But 
paragraph 8 of the ``Exclusive Agency Contract'' available on-line 
states, ``That if the AGENCY has made any advanced distribution on 
behalf of the APPLICANT for attorney fees, court cost, filing fees, and 
or any other cost of enforcement, that said fees will be reimbursed 
from the initial proceeds until paid.''
---------------------------------------------------------------------------
    Finally, private child support collection is being touted 
as a hot, new money-making venture, attracting scam artists and 
individuals and companies that simply get in over their head. 
One company solicited individuals to become licensees:

        Imagine, for less than an initial $1,000, you can actually own 
        and operate your own prestigious business with a ready market 
        which constantly renews itself and provides an unlimited and 
        unending earning potential for you. (Emphasis in original) \10\

    \10\ Advertisement by Child Support Collection Agency of America, 
Inc.
---------------------------------------------------------------------------
    Another advertises opportunities to ``Own Your Own Child 
Support Collection Agency'';

        The private child support collection industry is still growing, 
        and it is not too late to enter into this industry as an 
        independent agency. This is still a ground floor opportunity! . 
        . . Operating a private agency can be a profitable venture that 
        can begin as a part-time home-based business. As with any 
        business, the more time and effort that is devoted to the 
        business, the more it will grow, and the profits will grow 
        accordingly. Most agencies are reporting growth rates in terms 
        of revenue in excess of 50% each year. Annual growth of 90% or 
        better is not uncommon in this industry.\11\

    \11\ Collection Solutions, Inc., http://members.aol.com/gocsinow/
private/agencyop.html.
---------------------------------------------------------------------------
    Better Business Bureau records reflect complaints against 
companies that quickly started up and almost as quickly 
disappear, leaving behind frustrated custodial and noncustodial 
parents and no forwarding address or telephone number.\12\ 
Custodial parents have complained of money lost to scam artists 
who collect application fees then vanish into the night, and to 
companies that collect money from the noncustodial parent--and 
keep it for themselves.\13\
---------------------------------------------------------------------------
    \12\ Information from Better Business Bureau files in the National 
Information System compiled by Amy Collins and Vicki Turetsky, Center 
for Law and Social Policy, 1999.
    \13\ Office of Attorney General Jim Ryan, Press Release dated 
September 9, 1999; Testimony of Geraldine Jensen, President of 
Association for Children For Enforcement of Support, Inc. (ACES) to the 
Human Resources Subcommittee, Nov. 7, 1997.
---------------------------------------------------------------------------
    Before measures to expand the powers and encourage the 
growth of such companies are considered, effective prohibitions 
and remedies against unfair and predatory practices by the 
private child support collection industry should be put into 
effect nationwide.

Jeopardizing individuals' privacy.

    Title III of H.R. 4469 also would give States the option of 
expanding the access of private collection companies and 
public, non-IV-D agencies to confidential information. States 
would have the option of giving private collection companies--
indeed, any individual or entity seeking to establish or 
collect child support--access to any information available in 
the State Directory of New Hires and any information obtained 
through data matches with any information in the expanded 
Federal Parent Locator Service, including the Federal New Hire 
Directory and Federal Case Registry. States also could make 
this information available to non-IV-D state and local agencies 
for child support activities. Private collection companies and 
non-IV-D agencies also could have access, at state option, to 
information from private financial institutions--banks, savings 
and loan institutions, credit unions, money-market mutual 
funds--under the provisions for expanding the financial 
institution data match.
    Under Title III, states would have to devise their own 
methods for protecting privacy. No federal consumer 
protections, enforcement mechanisms or rights of action against 
private collectors or non-IV-D agencies would be created. 
Sections 311 and 321 state that private collection companies 
and non-IV-D agencies must ``meet such requirements as the 
State may establish'' and enter into a ``binding agreement'' 
with the state ``to carry out establishment and enforcement 
activities with respect to the child support obligation subject 
to the same data security, privacy protection, and due process 
requirements applicable to the State agency and in accordance 
with procedures approved by the head of the State agency.'' 
Section 301 of H.R. 4469 does call upon HHS to develop 
recommendations about how to implement expanded private and 
non-IV-D access, in consultation with state IV-D agencies and 
public and private companies knowledgeable about involving non-
IV-D entities in support enforcement. However, the consultation 
would not consider whether expansion was feasible or 
appropriate, nor what consumer protections or rights of action 
should be developed. It would not include representatives of 
custodial or noncustodial parents, children, or consumers, or 
privacy experts. Recommendations concerning access by private 
collection companies would not be due until after the effective 
date of the provision. Most importantly, states would have no 
obligation to adopt the HHS recommendations or something 
stronger.
    It is difficult to imagine how privacy rights could be 
protected effectively. In theory, information would only be 
available to private child support collectors and public non-
IV-D agencies about ``an individual with respect to whom [the 
entity] is seeking to establish or enforce a child support 
obligation.'' In practice, however, it would be virtually 
impossible for a state IV-D agency to verify that requests were 
for the purpose of establishing or enforcing a child support 
obligation. There is no central registry that includes 
information about all non-IV-D cases. State Case Registries are 
only required to include information about non-IV-D support 
orders established or modified on or after October 1, 1998, 42 
U.S.C. Sec. 654A(e)(1)(B). Registries do not include 
information about non-IV-D cases where orders have not yet been 
established. And, as of October 1, 1999, 12 states--including 
California, Illinois, New York and Texas--had not provided any 
information about non-IV-D cases to the Federal Case 
Registry.\14\
---------------------------------------------------------------------------
    \14\ HHS, Office of Child Support Enforcement, FY FCR [Federal Case 
Registry] Statistics.
---------------------------------------------------------------------------
    States confronted by requests for information about 
hundreds or thousands of individuals purportedly for the 
purpose of establishing or enforcing child support could 
respond in different ways. To avoid the cost and burden of 
obtaining independent verification for every request, some 
states might decide to accept a general statement from the 
company that all of the information it requested related to 
child support. A decision by just one state to allow easy 
access to information would jeopardize the privacy of 
individuals across the country, including residents of states 
who choose not to expand access to information. State New Hire 
Directories contain information about individuals residing in 
several states, because they work for an employer located in 
the state. The Federal Parent Locator Service is a nation-wide 
system. And financial institution data matches are performed 
with multistate financial institutions.
    Even if the information were sought for a legitimate child 
support purpose, protecting against its further dissemination 
and use will be difficult. Personal financial information is a 
valuable commodity, and many collection agencies seek more than 
child support debt; the potential for abuse is great. Apart 
from deliberate abuse, assuring the security of information 
given to multiple public non-IV-D agencies, and potentially 
hundreds of private companies and thousands of private 
attorneys and individuals, with diverse computer systems and 
staffs with varying degrees of training, will be difficult if 
not impossible.
    Expanded access to information could jeopardize the safety 
of battered women in particular. Title IV-D requires federal 
and state IV-D agencies to implement special confidentiality 
protections to protect the safety of battered women, some of 
whom, despite the dangers, want to seek child support to become 
more financially independent. Under the proposal, thousands of 
individuals and entities could be authorized to request 
information. It will be difficult for state IV-D agencies to 
screen all of the requesters and all of the information 
requested to ensure that release of information will not 
jeopardize domestic violence survivors.
    Ultimately, the privacy problems that are likely to result 
could undermine all child support enforcement efforts. Over the 
years, Congress has worked to increase the effectiveness of 
child support enforcement while protecting the privacy of 
individuals. In the Family Support Act of 1988 and PRWORA, 
Congress required the creation of the automated systems and 
databases essential to effective state child support 
enforcement, and addressed legitimate privacy concerns by 
carefully limiting access to and use of the information. If 
access to these databases is expanded, and abuses occur, a 
future Congress or state legislatures may conclude that the 
only way to protect privacy would be to dismantle these 
databases altogether, permanently setting back child support 
enforcement.

Increase the risk of erroneous and abusive collection 
practices.

    Title III of H.R. 4469 would allow states to give private 
child support collectors and non-IV-D agencies access to 
certain child support enforcement tools now available only to 
IV-D agencies. These would include intercepting Federal tax 
refunds, credit bureau reporting, passport sanctions, financial 
institution data matches, and income withholding from 
Unemployment Insurance benefits.
    Expanding the powers of private child support collection 
companies would open the door to further abuse. The industry is 
largely unregulated; courts have ruled that child support 
collection activities are not covered by the federal Fair Debt 
Collection Practices Act, which prevents harassment or 
deception.\15\ Noncustodial parents, employers, IV-D 
representatives and others have complained about deception 
(e.g., falsely representing oneself as a state IV-D 
representative or law enforcement officer; claiming powers not 
granted by law; generating or altering wage withholding orders 
and presenting them as court orders); harassing collection 
practices against the obligor and his family; demands that 
noncustodial parents make payments directly to the collection 
agency, rather than to the court or IV-D agency, resulting in 
the failure of the noncustodial parent to get credit for 
payments made; and inability to reach company representatives 
to resolve questions or complaints.\16\
---------------------------------------------------------------------------
    \15\ See, e.g., Mabe v. G.C. Services Limited Partnership, 32 F.3d 
86 (4th Cir. 1994)(child support is not a consumer debt within the 
meaning of the Fair Debt Collection Practices Act, 15 U.S.C. 1692-
1692o).
    \16\ A summary of such complaints is included in the testimony of 
Vicki Turetsky, Center for Law and Social Policy, to the Human 
Resources Subcommittee, May 18, 2000.
---------------------------------------------------------------------------
    Title V of H.R. 4469 encourages programs applying for 
``fatherhood'' grants to work with IV-D agencies to help 
fathers reduce the arrearages owed to the state if they 
maintain a consistent payment schedule, and to help cooperating 
fathers improve their credit rating. But Title III, by 
encouraging greater use of private collection companies, would 
make it harder to accomplish those goals. Fathers making 
regular child support payments under a plan approved by IV-D 
could be harassed at work by private collection companies 
seeking full payment, or reported to credit bureaus by the 
private companies.
    State IV-D agencies are subject to constitutional and 
statutory due process requirements. For example, before 
notifying the Secretary of the Treasury that an individual owes 
past-due support and initiating the tax intercept process, IV-D 
must notify the individual of the possible withholding, and 
instruct the individual on how to contest the determination of 
the amount of arrearage and how, in the case of a joint return, 
to protect the share of the refund which may be payable to 
another person, 42 U.S.C. Sec. 664(a)(3)(A). To initiate 
passport sanctions, IV-D must certify that each individual 
concerned has been notified of the determination that there is 
an arrearage sufficient to initiate the sanction, of the 
consequences of that determination, and an opportunity to 
contest the determination, 42 U.S.C. Sec. 654(31). Arrearages 
may be reported by IV-D to credit bureaus only after the 
noncustodial parent has been afforded all due process required 
under state law, including notice and a reasonable opportunity 
to contest the accuracy of such information, 42 U.S.C. 
Sec. 666(a)(7).
    Although H.R. 4469 says that to have access to these 
remedies, private child support collectors and non-IV-D 
agencies must make a ``binding commitment'' to carry out their 
activities subject to the same due process requirements and 
procedures applicable to the state agency, it is unclear what 
this means. ``Due process'' is not a concept that has meaning 
against private companies. It is unclear if, or how, IV-D is 
supposed to verify arrearage balances or the amounts of 
withholding orders submitted by private child support 
collectors or public, non-IV-D agencies before forwarding this 
information on for federal tax refund intercept, passport 
sanctions, unemployment withholding, credit bureau reporting, 
or financial institution data match. Verification of arrearages 
could require time-consuming, case-by-case investigation. 
Federal and state case registries are not required to maintain 
payment records for any non-IV-D cases, 42 U.S.C. 
Sec. 654A(e)(4).
    Under H.R. 4469, it is unclear if the responsibility for 
providing notice and a hearing in case of disputes would rest 
with IV-D, or with the private company or non-IV-D agency 
requesting the enforcement action. It is difficult to see how a 
``hearing'' before a representative of a private collection 
company could provide meaningful due process protection. And 
even if the private company or non-IV-D agency agreed to create 
some type of procedure, it is unclear whether IV-D--which would 
be transmitting the requests for use of these tools--could 
avoid responsibility and liability for their misuse.
    An increase in erroneous, unfair or abusive child support 
collection practices would hurt noncustodial parents most 
directly. But the adverse effects of these practices would be 
felt more broadly. They can create increased tensions between 
noncustodial and custodial parents, who may be unaware of the 
tactics being used or the fact that payments were made. They 
also can undermine the whole IV-D system by discrediting child 
support enforcement efforts; causing employers to doubt and 
refuse to comply with legitimate wage withholding orders; 
creating confusion about when child support payments have been 
made; and undermining support for tough enforcement tools.

 Diverting IV-D Resources Away From Providing Services to Families and 
                Re-fragmenting the Child Support System

    Encouraging the growth of private collection companies and 
non-IV-D agencies would increase, not relieve, the burdens on 
the IV-D program, making it more difficult for state child 
support agencies to provide the enforcement services families 
need. As discussed above, any IV-D agency that seriously tried 
to prevent privacy abuses or misuse of enforcement tools would 
have to devote substantial resources to the task. The potential 
burdens posed by the public, non-IV-D provisions would be less 
than those posed by the private access provisions, but there 
still is no apparent rationale for them. The IV-D system has 
developed effective, automated enforcement procedures; there is 
no reason to duplicate those systems in non-IV-D agencies.
    After struggling to overcome the historic problem of 
fragmentation of child support enforcement services, the IV-D 
program is finally moving toward the automated, integrated, 
nationwide system envisioned by PRWORA. The centralized 
computer systems and new databases that make IV-D automated 
case processing and data matching work are producing results. 
That is why representatives of for-profit companies and non-IV-
D agencies want access to IV-D tools. But allowing the IV-D 
system to be used in that way could destroy it, and undermine 
child support enforcement efforts now and for years to come.
      

                                


    Chairman Johnson of Connecticut. I guess I had better go 
vote. We do have one vote after this, so it will be about 10 
minutes, or maybe 15.
    [Recess.]
    Chairman Johnson of Connecticut. OK. Sorry for that break.
    Ms. Kadwell.

STATEMENT OF LAURA KADWELL, DIRECTOR, CHILD SUPPORT ENFORCEMENT 
        DIVISION, MINNESOTA DEPARTMENT OF HUMAN SERVICES

    Ms. Kadwell. Madam Chair and Members, my name is Laura 
Kadwell. I am director of the child support program in the 
State of Minnesota. I am pleased to be here this morning, and I 
thank you for the opportunity to comment on the bills now under 
consideration by the Subcommittee.
    Since passage of the Personal Responsibility Act, I believe 
we have all come to realize that the bill set the stage for a 
radical change in the mission of child support. As long as AFDC 
provided cash for families, child support functioned largely as 
a reimbursement program. After passage of the act, however, we 
all began to realize that the end of the entitlement, coupled 
with universal access to child support under the 1984 
amendments, positioned the program for a mission consistent 
with its name, a program supporting children.
    I will make three points in my remarks this morning. One, 
the Child Support Distribution Act of 2000, your bill, Mrs. 
Johnson, takes several solid steps consistent with the new and 
evolving mission of the child support program.
    Second, the bill responds to taxpayers' legitimate desire 
for cost effectiveness and consumer service in the child 
support program.
    Third, provisions in the act that would allow non-IV-D 
access to data and collection tools jeopardize many of the 
steps taken for families and taxpayers.
    First, the steps taken by the act that will increase 
support for children. Under the bill, except for the time when 
the family is on assistance, arrears are paid to families 
before they are paid to the State, regardless of the source of 
payment. We applaud this change in the bill from the current 
policy, primarily because it is good for families. Families 
leaving welfare, as has been noted many times this morning, are 
often in the most precarious financial position. This change 
will give them the very best chance of remaining free of 
dependency on public assistance, and we applaud this step.
    This bill limits assignment to the lesser of unreimbursed 
assistance or the amount of support that comes due while a 
family is on assistance. In addition to making more money 
available to families through this provision, it acknowledges 
that noncustodial parents, primarily fathers, usually do not 
have unlimited capacity to repay the State for assistance, 
another positive families first provision.
    By funding fatherhood programs, the bill underscores the 
importance of fathers to their children and acknowledges the 
relationship between child support and other contributions 
responsible fathers make to their children. For too long, the 
child support program has acknowledged only one kind of father, 
the one who evades his responsibilities if he can. Some fathers 
fit this mold. Most, however, pay their support when they can. 
In Minnesota, for example, over 70 percent of our collections 
come through income withholding. Other fathers may be reluctant 
to pay for some reason--may not know their responsibilities or 
may be unable to pay. Fatherhood programs will allow States to 
work more realistically with these fathers.
    We were pleased to see that preference is given in 
fatherhood programs to agencies that have agreements with the 
IV-D program. This is important, because it will help ensure 
that fathers get consistent messages about the importance of 
establishing paternity and support.
    The act also responds to taxpayers' needs for cost-
effectiveness and good customer service. In addition to helping 
families, again, as you have heard this morning, the proposed 
distribution changes simplify what is now a complex and 
incomprehensible system of distribution child support payments.
    We thank you, Madam Chair, for moving the program toward 
simplification. This is important because it is more cost 
efficient and because it is more customer friendly.
    We in Minnesota now spend about 6 percent of our State 
administrative costs on maintaining the distribution system. 
This will increase as time goes on and we implement the 10/1/
2000 changes. Each bucket has its price. The more complex the 
system is, the more time it takes to accomplish a task in the 
system. All tasks--adjusting payments, running monthly 
processes that calculate interest and arrears, training workers 
and community partners--all take longer, cost more, and present 
more risk when the system is more complex. If we can simplify 
distribution, we will stem the rising cost of maintaining the 
infrastructure. We will also be able to provide better customer 
service. You have heard about this also this morning, in that 
we will be able to explain better to parents where payments are 
going.
    We would like to see the bill move further by allowing full 
distribution of child support to families while they are 
receiving assistance. Child support is income and should be 
treated as income. It is really that simple. The relationship 
between child support and other programs should be reversed. 
Other programs can decide how to take into account the income 
that families get from child support.
    I am troubled, however, by the non-IV-D access provisions. 
I know you have spent a lot of time on these provisions this 
morning. I will just summarize my concerns.
    First, I am concerned about releasing powerful data to 
private businesses, not because some will not be able to handle 
the data well and do ``what they are supposed to do,'' but 
because we will be left with the responsibility of regulating 
the use of that data. Ms. Smith referred to this earlier in her 
testimony. We spend a lot of energy and effort making sure that 
the data that are in our program are carefully guarded and that 
the information is used for the purposes for which it is 
supposed to be used.
    I am very concerned about taking on the role of regulating 
private businesses that are using government data, and I am 
worried because--and this goes to Mr. Primus' point from 
earlier--if the data are not carefully guarded by everyone who 
has access to these data, the ultimate result will be a 
retrenchment of the program. Policymakers like yourself at the 
Federal level and like State legislators will take back the 
power that we have to use the data and ultimately hurt the 
families that are now in the system getting services.
    I am also concerned about what I believe to be some very 
basic inconsistencies between allowing non-IV-D access to 
information and enforcement tools and other parts of this bill.
    In the bill, Congress would prohibit States from keeping 
collections that now go to States, but allow States to give 
information to private businesses, who then can keep a similar 
share of the collections they make using that information. This 
does not seem to be consistent public policy.
    In the bill, Congress says, ``Families first,'' yet, the 
non-IV-D access provisions open the door to all manner of 
unregulated arrangements for distributing child support. 
Federal law says current support gets paid first. Current 
support is not paid first when collected by entities other than 
IV-D. I am troubled by these inconsistencies.
    I will make just one other short point, and that is: I 
would encourage you to look at the non-IV-D access provisions 
from the point of view of the noncustodial parent. To the 
extent that some States allow access and others don't--and we 
had a noncustodial parent, for example, in Minnesota whose bank 
account is being attached from another State--He will turn to 
us for information, for help, for understanding how this 
attachment relates to other cases he has in our system, and we 
will not be able to answer his questions to ensure that the 
money he pays is handled according to Federal law.
    We have been striving for the past couple of years to 
consolidate cases, to distribute money across cases, and to 
distribute them based on the noncustodial parents' orders. And 
if we are now opening the door to an entry into the system that 
really is based on custodial parents turning to private 
agencies for assistance, I fear that we are going to erode the 
progress we have made toward consistency in the child support 
system.
    Thank you, Madam Chair, for your attention. Again, we 
applaud the direction that this bill is taking, and the 
distribution changes, especially.
    [The prepared statement follows:]

Statement of Laura Kadwell, Director, Child Support Enforcement 
Division, Minnesota Department of Human Services

    Madame Chair and members of the Subcommittee, my name is 
Laura Kadwell. I am the IV-D Director for the state of 
Minnesota. I am very pleased to be with you here today to offer 
my thoughts on the ``Child Support Distribution Act of 2000'' 
and thank you for the opportunity to do so. The topics with 
which you are grappling are complicated and important to the 
families and children of this country. I commend you for 
attempting to resolve these difficult issues in a way that will 
meet the needs of many stakeholders in the child support 
program while remaining focused on the well being of children.
    As you are well aware, the child support program is both 
increasing in complexity and growing in importance. No longer 
simply a cost recovery program, the program is charged with 
helping to move families off assistance and keep them self 
sufficient in this era of welfare reform. This is a simple 
mission with complex ramifications. Those of us who administer 
the child support program spend countless hours and many 
resources navigating program intricacies in a technically 
sophisticated world, with myriad interfaces to other programs 
and systems that help us get support to children. The challenge 
we are all facing is to honor the importance of the program by 
reducing its complexity and increasing its accessibility to 
families.
    It is in this light of a simple goal, yet complex world, 
that I reviewed the bill before the committee. I think there 
are several changes in the bill that will help states like 
Minnesota continue to use our finite resources wisely and 
achieve our mission. At the same time, there are some 
provisions of the bill which could divert us from the mission 
on which we need to stay highly focused. I will discuss these 
in turn.

         Distribution Changes are a Step in the Right Direction

    I cannot emphasize enough the importance of the changes to 
simplify the distribution process as outlined in section 101. 
As I mentioned, we have a multitude of factors that add layers 
of complexity to our job. We do not need to make the job more 
complicated than it needs to be. It seems to me that the 
proposal in the bill will make it markedly easier for states to 
focus their technical resources where they can be most 
productive. More importantly, the program will be more 
understandable and beneficial to families.
    The current distribution scheme is neither family friendly 
nor comprehensible. I know that you have heard from many people 
about the problems with the current distribution scheme so I 
will not belabor them here. Suffice it to say, we need to 
simplify distribution if we are ever to achieve our actual 
potential. Expending valuable resources to program, operate and 
explain the current distribution is extremely unproductive and 
wasteful.
    I applaud the committee for eliminating the provisions with 
regard to assignment of pre-assistance arrears and for limiting 
the amount of the assignment. Also, removing the exception for 
the treatment of collections made through the federal tax 
intercept will get more money to economically fragile families 
and make distribution much easier for families to understand.
    Simplifying distribution will help taxpayers as well as 
families. In Minnesota, we now spend approximately 6% of our 
state administrative costs on distribution. This percentage 
will rise with implementation of the 10/1/2000 changes. What it 
boils down to is that every bucket of arrears has its costs. To 
the extent that we can simplify distribution, we will need less 
time to adjust payments; to run monthly processes that 
calculate arrears, interest and bills; to explain to parents 
how distribution works (whether by notice, automated phone 
system or brochures); and to train workers and community 
partners who need to understand child support. These are just a 
few examples of the costs now incurred by state and federal 
governments to maintain the current distribution scheme--costs 
that will be ameliorated by the changes in the bill.
    Minnesota supports the changes you are contemplating even 
though we know it will mean less money recovered by the state. 
Some of the lost recoveries will not be actual losses but 
rather delays in recovery since the family, and not the state, 
will get paid back first from collections. And some of the lost 
recoveries will be permanent losses. This bill ameliorates the 
financial impact of distribution changes on states by (1) 
allowing states to finance the distribution changes with TANF 
dollars or MOE credit, at least for the short term, and (2) 
delaying the date by which states are required to complete the 
changes. This choice is important to states. Some states, 
including Minnesota, may choose to implement these changes 
earlier than others. Because states vary widely in the way they 
finance their child support programs, however, the option to 
delay implementation is important to the financial stability--
and, therefore, the continued operation--of the program.

  A Full Passthrough of Child Support is the Ultimate Simplified and 
                         Family Friendly Policy

    The changes you are making in this bill do facilitate the 
transformation from child support as a cost recover program to 
child support as a program that supports families and children. 
However, while the distribution provisions of the bill are 
commendable, I encourage you to go even farther toward making 
the program more family friendly. I encourage you to think 
about reversing the roles of child support and other family 
assistance programs by treating child support as a primary 
source of family income, even when the family is receiving 
assistance. Because child support has been a cost recovery 
program, we have been the ``clean up crew.'' The AFDC program, 
for example, paid families a grant and then asked us to help 
collect back from the other parent. We should reverse this 
order. The first source of support for families should be the 
money parents earn--both parents, father and mother. If one of 
the parents needs assistance, the assistance program can then 
figure out how to treat all income of the family (earned 
income, child support, etc.). We have it backwards now.
    The child support program should collect child support and 
distribute it to families. All families. In all situations--
regardless of their receipt of TANF benefits or medical 
benefits or any other kind of public assistance that that 
family might be getting. When a family receives child support, 
it is up to the other agencies administering the various 
assistance programs to figure out how to treat that child 
support money. Some of them, like TANF programs, may decide 
that they are going to count some or all of the child support 
collected as income available to the custodial parent. Others, 
like low-income energy assistance programs, might decide they 
are not going to count child support income. That is their 
responsibility and prerogative.
    As things stand now, we are spending resources trying to 
figure out what is assistance and what is not assistance--so 
that child support can be assigned against assistance payments. 
These discussions are vestiges of the outmoded cost-recovery 
mission of the program. Child support needs to be in the 
business of collecting and distributing money to families, not 
in trying to figure out whether certain kinds of support are or 
are not assistance. Distributing all child support is the way 
to accomplish the true mission of the program.
    The bill before you allows states to pass through the state 
share of collections for families that are receiving TANF or 
for arrears assigned to the state by TANF families. I encourage 
you to allow, if not require, states to distribute all child 
support to all families. Distributing--or passing through--all 
child support is the ultimate distribution simplification; it 
will also make the child support program more family friendly 
and accessible to noncustodial parents.
    This past legislative session, the Governor of Minnesota 
sought legislation authorizing the full passthrough of child 
support and a 50% disregard of the child support for TANF 
purposes. We did this, in part, because of our conviction that 
it is the right policy for Minnesota families. The disregard 
did not pass the Legislature, but the passthrough did. 
Beginning January 1, 2001, we will be distributing all child 
support to all families. We will be paying the federal 
government its share of collections; so we will be putting in 
place the financial and technical infrastructure to support a 
``partial passthrough.'' This distribution will help fathers 
see how they contribute to the well-being of their children. It 
will also prepare families for their exit from TANF by showing 
them what income they will have from child support when they 
leave assistance.
    We are beginning to learn more about the passthrough of 
child support through our participation in one of the NPCL 
Fragile Families Demonstration Projects. Our project, called 
the FATHER (Fostering Action to Help Earning and 
Responsibility) Project, assists young, unmarried and un-or 
under-employed fathers in gaining employment and getting 
involved in the lives of their children. The Project is a 
collaborative venture between Minneapolis Way to Grow, the 
State of Minnesota IV-D agency, the Hennepin County IV-D 
agency, the Minneapolis Neighborhood Employment Network and the 
Minneapolis Employment and Training Program. The FATHER Project 
director, Mr. Guy Bowling, recently submitted a letter to a 
conference committee at the Minnesota legislature that was 
contemplating a child support passthrough proposal. He wrote: 
``As the FATHER project director, I work each day with fathers 
who have difficulty paying their support. In discussions with 
these fathers, I hear that they are frustrated by a system 
which requires them to pay child support but if their child and 
his or her mother is receiving [TANF], the child support is 
kept by the state. Passing through child support directly to 
these families would help low income fathers feel like they are 
really contributing to the support of their child. They feel a 
sense of empowerment that motivates them to fulfill their 
obligation as a responsible dad.''
    In addition to fostering the involvement of noncustodial 
parents, full distribution has other tangible benefits to 
offer. It will result in administrative simplification that can 
not be achieved by a passthrough of the state share alone. Full 
distribution will reduce the level of effort to develop, 
support and maintain many parts of the existing infrastructure. 
Costs for information materials, functional and technical work, 
reporting, staffing and training would all be reduced. I need 
to note that these savings are available in the long term only. 
In the short term, full distribution will require significant 
effort, primarily in the costs of design, development and 
education. These costs will be incurred in both the child 
support and TANF programs.
    The bottom line is that children need fathers, and child 
support has a role to play in facilitating fathers' 
involvement. A full passthrough of child support is one crucial 
step. While I appreciate the option to pass through the state 
share to the families, the potential of passthrough will not be 
attained until and unless the federal government shares in its 
cost. There are two reasons for this. The first, mentioned 
earlier, is that we cannot achieve full simplification while 
still paying the federal share of collections. Second, state 
legislators will not be inclined to give up the state share if 
the federal government retains its share. Over the past four 
months, we have been trying to convince our state legislature 
to pass through and disregard the state share while returning 
the federal share. One of the common refrains we encountered 
was hesitation by state legislators to give up the state share 
of collections while still having to pay the federal share of 
collections.

     Fatherhood Grants Can Play a Significant Role in Child Support

    We support the inclusion of money for Fatherhood grant 
programs contained in the Child Support Distribution Act. 
Fatherhood programs can contribute enormously to the mission of 
the child support program by (1) helping us learn what public 
policies advance the purposes outlined in the Act, (2) giving 
us a positive opportunity to emphasize the importance of 
financial and emotional support to children, (3) providing an 
excellent means for Child Support Enforcement to communicate 
its goals and methods to parents, and (4) allowing us to 
communicate the message that we are willing to work with 
parents to help them gain the skills they need to support their 
children. Through Fatherhood programs, child support gains an 
opportunity to eliminate negative perceptions and convey the 
positive message that we put children first.
    Just within the past few days, I received a letter from a 
Minneapolis low-income social services program, commending us 
on publishing a booklet of services for fathers. The writer 
said, ``I see this as tangible evidence of the changing 
atmosphere in Child Support Enforcement (and in all DHS for 
that matter) with regards to helping fathers be the parents 
their children want and need them to be.'' This is an excellent 
example of the strides we can make by partnering with 
community-based fatherhood programs.

Some Suggestions for Eligibility for the Fatherhood Grants

    We support the basic eligibility criteria outlined in the 
draft legislation, especially the fact that a father could 
qualify simply by being low-income. We would also support 
raising the ceiling to 200% in order to allow fathers to 
support themselves after paying child support.
    We support the inclusion of a preference in awarding grants 
to organizations that obtain written agreements from state IV-D 
agencies, although we caution against allowing local IV-D 
agencies to enter into agreements without the explicit 
agreement of the state agency. It is critical that IV-D 
agencies be involved in Fatherhood programs so that all parents 
get consistent messages about the importance of establishing 
paternity and paying child support. It is also critical that 
IV-D agencies be permitted to make such agreements conditional 
on continued payment of current support, to consider whether 
there are domestic violence concerns in the case, and to avoid 
encouraging situations that may be detrimental to the best 
interests of children. The IV-D agencies must be allowed to 
create agreements that contain appropriate incentives and 
penalties for failure to comply with an agreement.
    It is important and constructive that the legislation 
encourages collaboration among TANF agencies, Welfare to Work 
agencies, and IV-D agencies. As I mentioned earlier, 
Minnesota's FATHER Project includes several of these partners. 
The working relationship we have established has helped us to 
target a variety of intensive resources to fathers in an effort 
to improve their ability to find a job, keep a job, and/or to 
enhance their employability and increase their earnings. The 
comprehensive goal of these efforts is to increase the parents' 
ability to support their children.
    Collaborative efforts like PFF and the FATHER Project are 
valuable because they facilitate communication among state 
agencies with similar goals and clientele. With each 
collaborative effort agencies establish working relationships 
that will facilitate future coordinated activities and in the 
process are able to deliver comprehensive services to families 
in need.
    The remaining preference criteria--rapid enrollment, 
practical recruitment strategies, assistance with visitation, 
improving credit rating--are important elements of a successful 
program. We caution against expanding the role of IV-D agencies 
to include providing some of these services (visitation, credit 
rating). These are appropriate activities for the programs, but 
they should be the responsibility of the program sponsors, and 
not the IV-D agencies.

Access to IV-D Collection Tools Problematic

    While I support many of the provisions of this bill, I 
cannot support the sections of the bill that give states an 
option to allow access on the part of nonIV-D agencies to 
certain IV-D collection tools, namely federal tax refund 
intercept, credit bureau reporting, passport sanctions, 
financial institution data match, and income withholding for 
unemployment insurance benefits. The bill addresses separately 
the issues of access for private vendors and access for public 
nonIV-D agencies. I believe that is wise because I believe 
nonIV-D access raises different issues with regard to private 
vendors than it does with regard to other public agencies.
    Since the onset of discussions about expanding access to 
IV-D enforcement remedies, the committee has been trying to 
balance the interests of expanding access while protecting 
consumers and safeguarding information. This bill attempts to 
reach those goals by creating a state option to expand access 
and requiring the Secretary to develop recommendations that 
states would use in regulating access. The question is whether 
this combination of state option with federal recommendations 
will adequately protect consumers and safeguard information. I 
believe it will not.
    On the surface, state options always have a certain appeal. 
As a state administrator, I appreciate having the ability to 
set policies and procedures for the program in my state. It 
would certainly seem as if states should be able to expand 
access to child support services in ways of their choice. The 
problem in this instance is that one state's decision can erode 
another state's work. In order to be effective, the child 
support program must operate efficiently, fairly and, at least 
to some extent, uniformly across state lines. State option for 
private access jeopardizes this goal.
    Here is an example: The State of Wisconsin decides to 
contract with a private vendor to collect child support. On 
behalf of a custodial parent, the private vendor gets 
information from the State of Wisconsin that the noncustodial 
parent has a bank account in Minnesota. The private vendor 
seizes the bank account. Even under the best of circumstances, 
where the private vendor secures all data and follows all due 
process laws, the noncustodial parent will expect the Minnesota 
child support agency to be able to tell him what is going on. 
This is especially true if he has other child support cases in 
Minnesota or in other states. He will complain to us if things 
don't work out the way they should. He will ask us what due 
process protections he can expect. He will turn to our Attorney 
General if he has consumer complaints or questions. And the 
public will assume that if mistakes are made, we made them.
    These issues are especially troubling because the child 
support program does not enjoy a sterling reputation in the 
eyes of either noncustodial parents or legislators at this 
time. As I have indicated earlier, Minnesota, like most other 
states, strives daily to change the culture of the child 
support program to one that is family friendly, one that works 
with fathers, rather than against them. One of the ways we 
believe the child support program can be more responsive to 
fathers is to honor all the responsibilities fathers have. To 
that end, we have all invested technical and customer services 
resources in programming computers and explaining to parents 
how child support is distributed across cases. When a father 
has more than one family, the money we collect is distributed 
according to an algorithm developed by the federal government. 
If private collectors are allowed to go around the IV-D 
program, we will be shortchanging the families we are striving 
to serve.
    In addition to our concern about fathers who have more than 
one child support order, we are concerned about our ability to 
retain the powerful tools now at our disposal should these 
tools be misused by vendors over which we have no control. This 
year in Minnesota, we returned to the Legislature to refine the 
seizure laws we use when we find matches with accounts in 
financial institutions. Many legislators expressed reluctance 
to use the FIDM (financial institution data match) procedures; 
and they increased protections for obligors whose accounts are 
matched in this process. Across the country, legislators are 
already skittish about protecting and using wisely the enormous 
amount of data we have in the child support program. It would 
be extremely counterproductive to put data in the hands of 
private entities not subject to the same controls governing use 
of the data by all levels of government.
    Legislators in Minnesota are listening to noncustodial 
parents who feel as if the child support program already has 
too much power and too much information. Most legislators 
become comfortable with our authority when they understand the 
due process and privacy safeguards that are in place, when they 
know who to call with questions, and when they can be assured 
that their constituents will be treated fairly. We can give 
them no such assurances under the example I described earlier. 
Private companies are not held to the same standards as are IV-
D agencies through state and federal laws, rules and 
constitutional protections. I am concerned that activities 
beyond our control will lead to legislative retrenchment at the 
state or federal level, ultimately eroding our ability to do 
the job for families in the IV-D program. Legislators are not 
shy about challenging our tools if they feel their constituents 
are being harmed.
    The last concern I want to discuss about private access to 
IV-D tools and data is the fees charged by some private 
companies. Simply put, I am having trouble reconciling the 
distribution mandates on states with expanding private access. 
States must distribute money to families first, a direction we 
applaud; and we must pay current support before any arrears. 
But private companies can pay arrears first (against federal 
law for states to do this) and can charge fees that reach 25, 
30% or more. Where is the ``families first'' provision for 
private companies? I understand why collection companies charge 
fees. What is hard to understand is why Congress would allow 
this option while so strongly promoting ``families first.''
    I would like to share with the committee a perspective I 
bring to this issue from my earlier years of practicing law. I 
was in private practice and I saw clients who simply could not 
afford to bring private actions to set, modify or enforce child 
support. I needed to tell them what it would cost for me to do 
what they wanted to do and often sent them to the local IV-D 
agency for assistance. They could not pay me for the work 
needed to establish an order of, for example, $100 a month, 
even though that $100 meant everything to that family.
    The government provides IV-D services in large part because 
that scenario is repeated over and over and over among families 
in this country. It is cost-effective for government to provide 
child support services that individual families cannot afford. 
The difficulty with now providing access to government data for 
private companies is that government and families both will be 
paying the cost of getting, assembling and distributing the 
data needed to enforce the cases.
    While access to public nonIV-D agencies is less problematic 
because data will be subject to the same protections as in the 
IV-D program, the issue with access for these agencies is one 
of cost-effectiveness. Does it make sense for a state to fund 
two agencies to do the same kind of work?
    The Personal Responsibility and Work Opportunity 
Reconciliation Act (PRWORA) promotes mass processing of cases, 
efficiency of state operations, and consistent handling of 
cases statewide and nationwide. These changes are supposed to 
benefit taxpayers by producing savings. We are just now 
beginning to see the savings promised by PRWORA. In Minnesota, 
for example, federal fiscal year 1999 marked the first time 
automation produced savings in the child support program. We 
went from a net expenditure of $16 million in systems costs to 
a net savings of $17 million. Two other facts about automation 
may be of interest: (1) Minnesota shows an increase in 
collections of over $30 million per year because of six 
specific highly automated changes: on-line manual, voice 
response system, COLA (automated adjustment of orders), 
driver's license suspension, new hire reporting, and locate 
enhancement. (2) We are also seeing a dramatic increase in 
collections per worker, from $292,583 in fiscal year 1998 to 
$348,530 in fiscal year 1999 (19%). It seems to me that 
allowing other publicly funded child support programs the use 
of IV-D data and collection mechanisms will at best dilute 
these efficiencies. At worst, it invites chaos.
    I have one strong suggestion regarding the sections on 
expanded access to IV-D tools: do nothing now. I know you have 
heard this advice before, but I offer it again. It is too early 
to reach the conclusion that additional access to child support 
services is necessary because we have yet to realize the 
promise of PRWORA. At best these changes are premature. At 
worst, they will divert state agencies from accomplishing our 
mission as set out in PRWORA. Further, if private access does 
go forward, conditions must be regulated, not ``recommended'' 
as in the current bill. Consumers and other states need 
safeguards and protection against misuse of data, usurious 
fees, and policies that subvert the child support program. 
Regulations would need to be developed and in place for a 
period of time before states would be allowed to contract with 
other entities. The bill now under consideration does not 
regulate and does not allow enough time between the date 
``recommendations'' are due and the date states are allowed to 
begin contracting with private vendors.
    I will close by commenting briefly on a few smaller 
provisions of the bill. Minnesota will not be impacted by the 
change to review and adjust because we have an automated COLA 
in our state. We have been using a COLA since the early 1980s 
and find it to be both efficient to operate and beneficial for 
families. We support the proposal to require a review when 
families leave TANF assistance. This is a way of targeting 
resources to some of our most fragile families. Implementing 
this provision will require a strong interactive partnership 
and careful coordination between child support and TANF 
agencies. It will take time to develop the kind of relationship 
and tools that will make ensure the success of this provision.
    We also support the change in section 403 regarding use of 
the tax offset program to collect past-due child support on 
behalf of children who are not minors. This is a very welcome 
change that will result in a meaningful change in child support 
collections.
    Again, Madame Chair and members of the Subcommittee, I 
thank you for the opportunity to testify today--and I commend 
you for the work and thought you have put into this bill and 
others before the committee. One of the most challenging 
aspects of our complex child support program is its financing. 
This bill takes a significant step toward serving families 
while preserving financing options for states.
    Thank you.
      

                                


    Chairman Johnson of Connecticut. Mr. Smith?

      STATEMENT OF VICTOR SMITH, PRESIDENT, DADS AGAINST 
                DISCRIMINATION, PORTLAND, OREGON

    Mr. Smith. Thank you, Madam Chair and Mr. Cardin, for 
having me here to speak to the Committee.
    I represent Dads Against Discrimination, a nonprofit, tax-
exempt charity for fathers who have domestic relations issues 
and wish to take charge of their families.
    I won't go into the history of DADS necessarily. It is not 
important. However, on this particular bill, and especially the 
part that has come to the attention of the room and the 
Committee who have gathered, the section that deals with 
privacy, I know of no one that wants to support that section of 
the bill that deals with private agencies collecting child 
support.
    I would agree with the testimony that has been given at 
this table that it is not necessary. There might be a suggested 
adding of a performance bill being required by such private 
agencies, a contract dispute resolution process provided to the 
clients, that there might be an agreement or a requirement that 
any employees will pass a criminal background check for such 
activity. I think if we could line these particular issues up--
performance, bond being provided, and so on--then maybe private 
agencies might be allowed to enter into the system.
    That section of the current bill that interests me, 
however, I would like to spend a little time on, under title 
seven, section 702, deals with an accounting process for moneys 
collected but not delivered.
    I have often wondered what happens to that money collected 
and not delivered. And if we could possibly have moneys 
collected and not delivered because perhaps the obligee moved 
away, that money should be returned to the obligors, tax free, 
because he has paid taxes on it, and with interest.
    So if an agency sits on money for more than a year and it 
cannot be delivered to the obligee, why not return it the 
obligor. The money hasn't reached its intended purpose, which 
is for child support. So if it doesn't get to the intended 
purpose of child support, then the money should be returned to 
the obligor.
    The section of the bill that interests me is the fatherhood 
section, of course. And we haven't had much discussion about 
that, but, of course, any fathers' group would support the 
fatherhood section of the bill. We want to promote that section 
of the bill. That is very important to fathers.
    The other sections that came to my attention were those 
sections of the bill that dealt with the veterans' money and 
the taking of veterans' money. That is thought to be a bad 
idea. Those guys who have veterans' benefit need to be left 
alone for that particular purpose.
    We have some States--Oregon being one of them--that makes a 
provision for disabled veterans and anyone who is on 
disability, where their child support on the current basis has 
been suspended, so people who are on disability forms don't 
have to pay child support on a current basis.
    The other sections that are of interest would be the 
passport obligation. If this bill is going to reduce the 
arrearage amount where you take the passport from $5,000 to 
$2,500, we say that is overkill. The reason that is overkill is 
that there is already a criminal law on the books, under U.S. 
Code 18, section 228, that if an obligor leaves the State he 
can be put in jail. So it would seem to me that, if you are 
going to take his passport--that means he is leaving the 
state--you don't need to do that. You don't need to take his 
passport. If he leaves the State, you put him in jail. So that 
particular section of the bill, under 401 that deals with 
passports, should be deleted.
    Now, I would like to get back to DADS for just a moment and 
say that we have been in business for some 23 years as a 
nonprofit, tax-exempt charity. I have talked with fathers from 
coast to coast for years. I can even tell you that fathers out 
of the State of Texas don't particularly care about private 
agencies going into the child support collection business. 
There is a group in Dallas that is very much opposed to that. 
We have had a conversation, coincidentally, about that.
    Those are some of the things that I have learned. If there 
are any questions about DADS or anything else that fathers want 
to do--they do want to participate--I am here to answer those 
questions.
    Thank you.
    Chairman Johnson of Connecticut. Thank you.
    [The prepared statement follows:]

Statement of Victor Smith, Dads Against Discrimination, Portland, 
Oregon

    Madam Chair and members of the Subcommittee, thank you for 
the opportunity to testify on behalf of DADS AGAINST 
DISCRIMINATION, divorced fathers and those fathers who were 
never married.
    DADS AGAINST DISCRIMINATION, DADS, is a non-profit tax 
exempt charity set up to help Fathers who have domestic 
relations issues and wish to take charge of their families. 
Fathers' problems such as child custody, child support, child 
visitation and parenting time were being ignored by the Federal 
and State Governments as reflected in the lack of funding 
services in the past for Fathers and their families. Fathers 
noticed that women had government funded services while Fathers 
had none. For example women had government funded telephone 
crisis lines programs and shelter homes while Fathers had none. 
Women received free information and services about child 
support from State agencies while Fathers were threatened with 
collection notices , wage garnishments and jail for failure to 
pay child support. No one seem to listen as to whether the 
fathers were employed or employable, or whether the father was 
in the hospital or in jail or part of a labor union strike for 
which he no control over but experienced a reduced his income 
just the same.
    Because it was believed that there should be an organized 
effort to assists fathers during the stressful period of 
divorce and/or family breakup, DADS was created in 1977 to 
address these social imbalances in services for fathers. Now, 
after some 23 years of serving fathers by DADS offering a 
telephone crisis line to listen to father's concerns and trying 
to resolve their issues, providing an attorney referral 
service, and paralegal services for those who can not afford an 
attorney and has chosen to do it themselves. DADS also offer a 
network of ``Fathers Rights'' contacts across the US who 
believe that fathers should be involved in their children's 
lives with respect to Father Custody or parenting time. DADS 
also has a call-in talk television program that focuses on 
fathers and their family issues as they see them. DADS also has 
a web site that has had more than 60,000 hits in the past year 
alone on the front page. DADS receives e-mail questions from 
around the world at 10 different sites. We believe that we have 
created an opportunity for open minded people to begin to 
question many of the false assumptions of the past about 
Fathers abilities to raise his own children and other domestic 
relations issues.
    As a further result of DADS services over the past 23 years 
to fathers, DADS has become a focus of some media attention, 
and some of which has become a matter of record within DADS web 
site, (www.dadsusa.com/ news1.htm). Where DADS has been sought 
out and interviewed by the Associated Press wire service, the 
Christian Science Monitor, Washington Times, News Week 
Magazine, Red Book Magazine, The Wall Street Journal and 
Bloomberg wire service. DADS has also been sought out by every 
network news broadcast service in the country at one time or 
another, including the CBS evening News 20 second interview 
during the O. J. Simpson trial dealing with the Marsha Clark's 
personal domestic relations issues.
    DADS is proud to announce that currently fathers are asking 
some real impact questions concerning domestic relations 
issues. For example in Portland, Oregon, Dennis Crocker is 
asking the State Supreme Court why he should be required to pay 
child support to the age of 21, when married parents are not 
being so required. Dennis Caron, of Columbus Ohio is asking 
both State and Federal Courts why he should be made to pay 
child support after divorce when his ex-wife had another man's 
child, Ira Teller, in Fort Lauderdale wants to know why the 
school teacher does not include him as ``Father'' of his child, 
in a ``Parent-Teacher'' conference. and all fathers across the 
country want to know (how?) and (why?) a woman can go to the 
Courthouse a lie about ``domestic violence'' that did not 
happen, and get the man kicked out of his own home, and then 
later using this as a tactic to secure child custody and 
divorce.
    It is with this background, and offices where telephones 
are constantly ringing, and fathers stopping by the office some 
with appoints and some without appoints, and all of whom are 
looking for help and answers to their domestic relations 
problems that I come here today from the front lines of the 
fight that American Fathers have in becoming fully respected as 
a parent able to raise his own children after divorce or family 
breakup.

                                Title I

Sec. 101. Distribution of child support collected by States on 
behalf of children receiving certain welfare benefits.

    Any and all child support distribution should include 
accounting elements that provide for moneys collected by the 
agency, and did not get used for it intended purposes, such as 
money that was returned by the post office as undeliverable 
because the party moved away without leaving a forwarding 
address. Such money should be returned to the obligor tax free 
and with interest on a yearly basis.
    If the obligee is no longer on State assistance, then that 
fact should constitute a change of circumstances, and require 
that both parties share the repayment of State debt.
    As a suggestion new laws should not be proposed by using 
language from the old law taken out of context and without 
reference as to the purpose and meaning within the old law as 
it is very confusing, and there can be no agreement on the 
exact out come of the new law.
                                Title II

Sec. 201. Mandatory review and modification of child support 
orders for TANF recipients.

    At any time there is a review of child support Orders, then 
there should also be a review of the total order including 
child custody, in the best interest of the child. The proposed 
language in this bill uses excerpted language taken out of 
context and causes confusion as to the true meaning and results 
of this section of the bill.

                                Title II

Sec. 301. Establishment and enforcement of child support 
obligations by public non-IV-D child support enforcement 
agencies.
    Since child support is already a regularly occurring event, 
it is not dear in this proposed section of the bill what the 
real changes might be, because this sections of the bill 
continues to use language from the current law excerpted and 
taken out of context to apply to a proposed new law.

Sec. 302. Use of certain enforcement mechanisms.

    Since current law already provides for the use of the 
``certain enforcement mechanisms'' as listed in this section of 
the bill, and this section of the bill continues to excerpt 
language from the current law, and use it out of context in a 
proposed new law, the value of any change is questionable.

                          Title III Subtitle B

Sec. 311. Establishment and enforcement of child support 
obligations by private enforcement agencies.
    Private child supper enforcement agencies should be kept 
out of the business of collecting and distributing child 
support money, and further kept out of the personal and private 
financial records of dozens. This is a point that those in the 
field of domestic relations can agree upon. The National 
Women's Law Cent's Joan Emtmacher gave testimony on this 
subject as recent as Oct. 5th, 1999. In addition, because the 
DAIS office in Portland, Oregon holds public meetings with the 
State office of Child Support Enforcement, we have teamed that 
there are some employees of the State agencies that question 
the wisdom of allowing private corporations into the area of 
child support collections. However, if there exists some law 
that suggests that private agencies should be allowed and 
inducted in the collection of child support then these private 
FOR PROFIT CORPORATIONS should be required to address the 
following: (I) Post a performance bond in all States that 
business is conducted. (2) By contract be disallowed to trade 
and profit from selling personal financial history airy citizen 
with a ``non-commercial'' douse. (3) Provide all their clients 
with a ``Dispute Resolution Process': and make a provision for 
judicial Review by the State in which collection is done. (4) 
Sign a State guarantee that all employees have past a criminal 
background deck.

Sec. 312. Use of certain enforcement mechanism.

    No private child support agency should be allowed to issue 
as IRS tax intercept.

                                Title IV

Sec. 401. Pass Port

    Reducing the amount of arrearages from $5000 to $2,500 is 
``over kill'' and pointless, because under US Code IS section 
228, if an obligor leaves his State and owes $5,000 or more in 
back child support, he can go to jail already. It appears that 
if he were to use his pass port he weld be committing a crime.
    The problem with this section of the bill is that their is 
a continued failure of attempting some degree of continuity in 
the language of the old law and the objectives in the new 
proposed laws that comes abet by excerpting the old laws, and 
taking the language out of context far a new proposed law.

Sec. 402. Garnishment of compensation paid to Vets.

    Is a very bad idea reflecting hostility towards men in the 
military, or were in the military and will have an adverse 
affect on getting men to enlist to serve this country's future 
needs.
                                Title IV

Sec. 402. Garnishment of compensation paid to Vet. (continued)

    This very bad idea is flawed for many reasons such as: Many 
States already allow credit for certain payments paid for child 
support paid from the Federal Government. In Oregon there is a 
State supplied ``Child Support Calculation'' work sheet where 
such money is figured as part of the child support paid. 
Furthermore in Oregon Law under ORS 25245, those who are 
considered disabled and getting paid by a federal government 
program are exempt form paying child support.
    A DAD in North Carolina e-mail his concern and complaint 
about this section of the bill saying that it would allowed 
obligees and the State to ``double dip'' a Veteran who has 
already paid his dues to society, and generally' impoverishing 
him. He point out the State of Texas as a good example of how 
this issue should work.
    This section of the bill is an example of an issue with 
diminishing returns. It is further an example of agency 
thinking in terms of ``the end justifies the means ; and that 
kind of thinking is foreign to this country. The agency here 
shows that it need a 'brighter staff or ``better concept'' to 
follow.

                                Title V

Sec. 501. Fatherhood Grants
    Any and all Fatherhood programs are welcomed and 
encouraged, and this should that ``brighter Star'' or ``better 
concept'' to follow as referred to in my response to section 
402 of this bill above. Our Society should be trying to bring 
fathers into the social main stream and not exclude them with 
DRACONIAN CHILD SUPPORT COLLECTION EFFORTS.
    Four example, if Fathers are behind in child support, there 
should be an office to check to see if the Father needs a job 
first, rather than first running the father down with a Court 
Order to Appear an SHOW CAUSE why he should not be held in 
contempt of Court for failure to pay child support. Recognizing 
Fathers as part of society and remembering that Fathers play an 
important roll in society would be the best attitude for child 
support workers to have. An attitude of economic search and 
destroy does not make good fathers available in the future, and 
same women trying to make a go as a seed wife will lose out, 
along with their children in the long run.
    Pasted experience with ``Fatherhood'' funding programs is 
that States will not forward Federal Grant money to Fathers' 
Support Groups. Generally States are staffed so heavily with 
men and women so closely related to the child support 
collection programs, it becomes impossible for the same staff 
to relate to Fathers and their interest for an opportunity of 
sots custody of our children after divorce or family breakup. 
DADS has found that there are those who will suggest that 
Fathers become ``involved.'' but will not say that ``Fathers 
should have ``sole Custody'' of their children To marry of us 
Fathers using the euphemism of ``involved or involvement'' is 
so that we can pay the bills of child support, is misguided. 
These are the same people that need to understand that Fathers 
are capable of love, not just money, and that Father have the 
ability to raise their own children with little to no use of 
welfare money from tax payers.
    Additionally it should be brought to the subcommittee's 
attention that the ``Fatherhood Grant'' section of the bill 
should not inducts HIV and AIDS education money because those 
issues are ``health'' issues with plenty of funds from existing 
sources, of which is generally not shared with Fathers arid 
their ``Parenting'' issues.

                           Title V Subtitle B

Sec. 511. Fatherhood Projects of National Significance

    Most Fathers as does DADS would welcome all Fatherhood 
Projects without question. It is very important to finally have 
the Federal Government focus some attention on Fathers and 
their children, so bring on the programs.

                                Title VI

Sec. 601. Elimination of set-aside of welfare to work hands far 
successful bonus.

    This is another section of the bill that the proposed 
language is excerpted and taken out of context to make a new 
law. Because of the style of the author of it is not clear what 
the value of any change would be. This section needs to be 
clarified.
                               Title VII

Sec. 701. Change dates for abstinence evaluation.

    This is another section of the bill that is proposed by 
excerpting language from laws already in effect, taking those 
word out of context, and proposing another law, and it is not 
possible to make a response from suds information.

                               Title VII

Sec. 702. Report on undistributed child support payments.

    Hurrah ! Finally something that makes sense, however, there 
should be language added to this section of the bill to the 
effect that such moneys received by the agency, but not 
delivered for its intended use of child support within on year 
and after all state debt has been paid, then such undelivered 
money should be returned tax free with interest to the to the 
obligor, and if he is not found then such money will be 
``credited'' to his tax account with the IRS for a 1040 credit.

Sec. 703. Use of new hire information to assist administration 
of unemployment compensation programs

    This is another over kill section of the child support 
staff, however, language news to be added in this section that 
whenever it is found that the income of the obligor on 
unemployment is at or below the US Government's ``Poverty 
Level'' then the child support is suspended.
    There should be a general rule for the obligor'so allow for 
``Family Formation and Stabilization'' and perhaps we have the 
makings of a new call an ``Act', herein.

Sec. 704. Immigration provisions.

    State agencies should make it clear that is the United 
States of America, and lives else where the will terminate.

Sec. 705. Correction of errors in the conforming amendments 
welfare to work programs and child support of 1999

    No comments.

                               Title VIII

Sec. 801. Effective date.

    No comments.
      

                                


    Chairman Johnson of Connecticut. Ms. Diaz?

STATEMENT OF VANESSA DIAZ, EXECUTIVE, SUPPORTKIDS.COM, AUSTIN, 
                             TEXAS

    Ms. Diaz. Madam Chair, Congressman Cardin, thank you for 
the opportunity to testify today on the important role of 
private child support enforcement agencies.
    I am a mom. My name is Vanessa Diaz. I am an employee of 
Supportkids, the largest private child support enforcement 
agency in the country, and I am very proud to be part of a 
company that has made such a difference in the lives of many 
families.
    I come before you today to tell you my own personal story 
about my effort to collect child support. I was divorced in 
June, 1986, and my husband was ordered to pay $300 a month for 
the support of our two sons.
    After several months without support, I decided to seek 
help through the government IV-D agency. Initially, I was very 
naive about the process. I thought I would at least have money 
to spend on my children for Christmas that same year.
    Although my ex-husband lived 10 minutes away from me, he 
was working, and he saw my children all the time, my support 
went unpaid for five Christmases thereafter. My ex-husband 
thought there was no need to provide child support, since I was 
working. And, although visitation was never an issue, he had no 
idea that during those 6 years without support we lived in what 
I can only call a ``survival mode.'' I worked two jobs. I was 
tired all the time. And I wasted so much energy for waiting and 
hoping for a check to come, instead of expending that precious 
energy on my children.
    I have a 4-year-old daughter now and I find myself feeling 
guilty at times. Every time she asks me to read a book or she 
wants a new toy, I can't help but think about the times I was 
not able to give those things to my boys. It was a constant 
battle, and it is very real.
    Raising my boys without child support and having to deal 
with an overwhelmed government agency, it was a time-consuming 
task that left me emotionally drained week after week.
    After many years, I finally decided to seek outside help. I 
turned to a private attorney. He wanted his retainer fee up 
front before he would even listen to me. I could not afford to 
give up several weeks of my grocery money, and there went 
another door slammed in my face.
    At the time I applied for services from Supportkids in 
1992, I was in despair, but I really felt I had nothing to lose 
and everything to gain. Within 6 weeks, Supportkids recovered 
all of my past-due child support and I was finally able to get 
closure on my case.
    Since then, I have been helping parents in their own effort 
to secure child support. I now understand why I was not able to 
get my court order enforced more effectively from the IV-D 
agency. I see it now as a harsh reality about the way things 
are. Instead of feeling personally violated about how my case 
was handled, I have a better understanding as to the 
constraints in the IV-D agency all over the country.
    I have worked with clients for over 8 years who are going 
through the same situation as I just described. By listening 
and effectively communicating to these parents, I do believe I 
am able to help them put some degree of closure on their daily 
struggle.
    The number one point I want to make today is that every 
woman should have the right to choose which agency they want to 
collect the child support that is owed them. I find it 
disturbing that someone should decide for me which enforcement 
option is best for my kids. I believe the same tools and 
information should be available to me to get what my children 
deserve, whichever enforcement option I may choose.
    It would be a monumental step in the right direction if all 
private entities could provide effective services using the 
same tools and information as are available to the government 
agencies.
    All too often in my work, I am confronted with turf issues, 
and it is troubling to see how easily one can lose sight of the 
real issue--taking care of the children. I do believe that 
Supportkids, combined with a collaborative effort from the IV-D 
agencies, can help change the quality of life for many 
children.
    Thank you.
    Chairman Johnson of Connecticut. Thank you, Ms. Diaz.
    [The prepared statement follows:]

Statement of Vanessa Diaz, Executive, Supportkids.com, Austin, Texas

    Madame Chairwoman, Congressman Cardin, and other 
distinguished members of the Subcommittee: thank you for the 
opportunity to testify today on the important role of private 
child support enforcement agencies in attacking the problem of 
nonsupport in our nation and the need of those agencies for 
access to enforcement tools already authorized by Congress, but 
now restricted in use to the government Title IV-D child 
support program.
    My name is Vanessa Diaz. Currently, I am an executive 
responsible for improving legal processes at Supportkids.com, 
the nation's largest private child support enforcement 
organization helping custodial parents collect unpaid child 
support. In 1986, however, I was a divorced mother of two 
children, holding down two jobs in a struggle to make ends meet 
without the benefit of the child support ordered in a divorce 
decree. I had wrongly assumed that my former spouse would 
respect the court's order that he pay $300 a month in support 
of his children and that within 30 days of the decree I would 
begin receiving support payments. That did not happen. In spite 
of my efforts to ensure that my children would continue to have 
a close and loving relationship with their father, he decided 
that he owed them nothing by way of material support and that I 
could look to my mother and any other willing relatives to help 
me provide additional resources for our children.
    When my former husband ignored the court's order for child 
support, I turned to the government child support enforcement 
program by applying for ``free'' services with the state IV-D 
agency. What I quickly learned is that ``free'' services mean 
little or nothing if, in fact, no services are provided. In 
spite of the fact that my former husband lived only 10 minutes 
away from my residence and that I was able to provide the IV-D 
agency with all the information they could possibly need to 
bring enforcement actions against him, the order went 
unenforced--and my children went without. But even back then I 
was aware that the services the government agency was supposed 
to be providing me weren't really ``free'' at all--that, in 
fact, I, as a taxpayer, was paying for these services. Indeed, 
according to the most recent (FY 1997), available data on the 
program, these services are costing over $3.4 billion in 
federal and state funds. There is nothing ``free'' about them.
    For six years I aggressively pursued the matter with the 
IV-D agency, repeatedly visiting the local office and 
repeatedly pleading for effective action. Repeatedly my 
children's father successfully walked away from contempt orders 
and other enforcement efforts of the IV-D agency. What I did 
not appreciate at the time--but do now--is because the workload 
of IV-D agencies is so great and their resources so limited, 
they cannot pursue effective enforcement of child support 
obligations in every case, no matter how much information they 
have about the delinquent parent. I naively assumed, however, 
that my case really mattered to the agency simply because my 
children were my number one concern. I did not know, as I do 
now, that the thousands of dollars in past-due support owed us 
was not even the proverbial drop in the bucket of the tens of 
billions of dollars in past-due support that go uncollected, 
year after year, in the government program.
    For years my children and I lived in what I can only call a 
``survival mode.'' Working two jobs, I had no time to 
``invest'' in my children's individual lives, and they had to 
be manage their own lives, as best they could, as ``latch key 
kids.'' My mother did try to help us out with the occasional 
bag of groceries, but her means were limited, being a divorced 
woman herself who had to raise six children on her own, two of 
them physically disabled.
    Some friends suggested that I turn to public assistance, 
but welfare simply was not an option for me: I could not 
imagine relinquishing even the small margin of self-reliance 
and financial independence I possessed. Others suggested that I 
turn to a private attorney for help in securing the current and 
past-due child support owed me. That, too, however, was not an 
option because of the retainer fee which the attorney wanted 
``up-front' and which I simply could not afford--unless I was 
prepared to give up several weeks of family grocery money. 
Then, by chance, in 1992 I saw a billboard advertising child 
support enforcement services through a private agency--the 
company for which I now work--and, although I was skeptical at 
first about a private agency's achieving success where the 
government agency had failed, I decided to apply for services 
from Supportkids.com.
    Within 6 weeks, Supportkids.com accomplished what the IV-D 
agency could not do within the prior 6 years: namely, recover 
nearly $14,000 in past child support. Because of the efforts of 
Supportkids.com, I not only received support arrearages due me, 
but I now also receive on a regular basis current support 
payments. The years of frustration and emotional exhaustion in 
the struggle to receive court-ordered child support ended, and 
I suddenly found that I was able to put aside funds for my 
children's education and that I was able to give my children 
the time and emotional energy I had always wanted to give them.
    I relate my personal story not because my experience is 
unique; it is not. There are hundreds of thousands of custodial 
parents who continue to wait for results from the government 
child support enforcement program, just as there are tens of 
thousands of custodial parents who have received results from 
private firms. I tell you my story because I know that the 
government agency cannot serve all families equally well and 
because I believe that custodial parents ought to have the 
choice of turning to private enforcement agencies and, through 
them, to have access to all the enforcement resources and 
remedies authorized by Congress.
    It seems to me inherently unfair that I--or any other 
custodial parent--would be denied the use of valuable 
enforcement tools provided under federal law and paid for by 
taxpayer dollars unless I agreed to have my case worked by an 
overburdened government program currently capable of making 
collections (usually only partial collections) in only about 1 
of every 5 cases in its staggering caseload. It seems to me 
that there is an issue of fundamental fairness here with 
respect to parents who seek help outside the IV-D program--
particularly when that program has failed them. What possible 
justification is there to deny parents useful information 
available to the IV-D agency if these parents choose to collect 
the support owed their children through public or private non-
IV-D enforcement agencies? After all, non-IV-D custodial 
parents are taxpayers who also paid for the development and 
operation of databases to which some interest groups would deny 
them access for use in helping them obtain their rightful child 
support.
    I do not understand how anyone with a genuine concern about 
the plight of families who suffer from nonsupport would say 
that these families should not have viable choices of sources 
of enforcement and that they must accept government services if 
they want access to all the enforcement tools authorized by 
Congress. Unless one is prepared to say that private attorneys, 
private agencies, and local government agencies should be 
banned from providing child support enforcement services--even 
though they provided these services before the IV-D program 
existed--then it makes no sense to say that these non-IV-D 
providers should not have access to the same resources and 
remedies available to the IV-D program. What public policy is 
served by creating an incentive for custodial parents to seek 
IV-D services at taxpayer expense through the denial of 
enforcement tools to these same parents when they freely choose 
an alternative enforcement route as a first preference and at 
their own expense?
    I am aware that there are those who believe that the 
government's IV-D program can and should do it all--that it is 
only a matter of time before all the new, required automated 
systems will kick in and all cases in the burgeoning caseload 
will be processed expeditiously and effectively. To these 
individuals I can only say that it is, indeed, a matter of 
time--a matter of years of waiting, suffering deprivations, 
struggling with frustration and emotional exhaustion.
    The fact is that child support enforcement--no matter how 
sophisticated our automated procedures and enforcement tools 
may be or may become--is still fundamentally a human enterprise 
when it comes to the employment of those procedures and tools. 
The heart of enforcement remains the work of child support 
personnel who deal with custodial parents, negotiate 
settlements, or perform the work for judicial or administrative 
hearings. It is here where the IV-D program is faced with the 
greatest probability of inadequate resources to meet the 
demands of its overwhelming caseload. Given the shortage of 
these human resources in the IV-D program, the need for 
effective use of non-IV-D resources is clearly indicated. But 
non-IV-D resources can be most effective only if they are 
provided with the same tools and information that are provided 
the IV-D community.
    If, in time, the IV-D program is efficiently able to 
provide effective enforcement services to all families needing 
those services, the services of non-IV-D providers will not be 
the alternative used very much by custodial parents. Today, 
however, families like mine seek the assistance of non-IV-D 
providers simply because the government program cannot provide 
efficient, effective enforcement services to all families 
needing them--let alone to all cases currently in its caseload.
    If we are to have the kind of competition between the 
public and private sector that elected officials and government 
and public policy experts have encouraged over the past decade, 
then we need a level playing field. The private sector needs to 
have access to the same tools the government IV-D possesses. 
This legislative proposal would support a degree of fair 
competition through the sharing of information and other 
resources that are currently available only to the public 
agency, although provided through the tax dollars paid by our 
clients, as well as by other citizens.
    Moreover, just as I was naive in thinking that a support 
order and excellent locate information ensured that the 
government agency would secure support payments, so these 
individuals are, I believe, naive in thinking that there will 
ever be enough resources for the government enforcement program 
to ``do it all.'' The need is so vast that it exceeds the 
ability of the government program to provide effective services 
in every case. All available resources--public and private--are 
required in the battle against nonsupport, and both the public 
and private agencies engaged in this critical battle need all 
the tools that Congress can provide--and, indeed, has already 
provided.The legislative proposal now before you for your 
consideration contains provisions that, as an option--and only 
as an option--would enable state IV-D agencies to enter into 
partnership with private child support enforcement agencies to 
share certain enforcement tools and, thereby, more effectively 
to share the work of providing families with enforcement 
services. Believe me, there is more than enough work to go 
around, and state IV-D agencies would never suffer for lack of 
customers were these options provided to them. The only ones 
who would be adversely affected by the collaborative efforts of 
public and private child support enforcement agencies under 
this legislative proposal are the tens of millions of 
noncustodial parents who every year successfully escape paying 
the support which they owe and which their children urgently 
need.
    Specifically, the proposed legislation provides that state 
IV-D agencies have the option of accepting requests from 
private enforcement agencies for information available to a 
state IV-D agency that may be useful to a private agency in its 
efforts to establish and/or enforce child support obligations. 
A private provider making such a request would, however, have 
to satisfy the state agency that it is capable of ensuring the 
same data security, privacy protections, and due process 
requirements applicable to the state agency, in accordance with 
procedures approved by the agency's director. No state agency 
would allow the wholesale downloading of data to any private 
attorney or private agency. The state IV-D agency would have to 
be satisfied that there is a genuine need for the information 
requested on any particular case. Because this is only an 
option, a state IV-D agency would set the procedures and 
standards appropriate to its own operations in providing 
enforcement information to private providers, as well as to 
non-IV-D public agencies.
    The proposal would also allow state IV-D agencies to 
provide private agencies access to certain enforcement remedies 
now restricted in use to IV-D agencies. These remedies include 
interception of federal income tax refunds for child support 
arrearages, the reporting of arrearages to credit bureaus, 
imposition of passport sanctions for past-due support, 
financial institution data matches to locate assets of 
delinquent obligors, and the garnishment of unemployment 
benefits for child support. The use of these remedies would, 
again, be controlled by the state IV-D agency, subject to 
procedures set by the agency and subject to safeguards 
established under federal and state laws.
    Not only would the collaboration of a state IV-D agency and 
a private provider of support services (including private 
attorneys) be at the option of a state IV-D agency, but the 
costs of such collaboration would be borne by the private 
provider. Quite simply, the intent is that neither the state 
nor the federal government would bear additional expenses. 
Whatever mode or extent of interaction a state IV-D agency 
might choose to have with a private provider would be on a fee-
for-services basis. Moreover, a state IV-D agency would be able 
to determine--if not all services--which services to make 
available to a private provider. The point here is that a state 
IV-D agency would itself judge, in light of its workload, the 
extent to which it is able to interact with private enforcement 
providers.
    I am aware of the objections posed by some members of the 
IV-D community--as well as by some special interest groups--to 
the sharing of IV-D enforcement resources with private 
attorneys and child support enforcement agencies. The notion 
seems to be that private providers of enforcement services 
would, for some reason, not use these resources responsibly. I 
find this bewildering and deeply troubling. It is as ill 
founded a notion as the idea--advanced by some special interest 
groups--that state IV-D agencies do not take their 
responsibilities seriously and for that reason do not serve all 
their customers well.
    I am proud of the work that I have done over the past 8 
years in Supportkids.com. I am proud, as well, of my co-workers 
and their dedication to the interests of the clients we serve. 
I am proud that Supportkids.com has collected over a quarter of 
a million dollars in child support for its employees alone. I 
am proud of the fact that people in our company have been able 
to leave the welfare rolls to assist other families in their 
struggle for financial self-sufficiency. We at Supportkids.com 
work hard on all our cases. We most certainly do not get the 
``easy'' cases. On the contrary, we get the cases in which the 
government program did not provide effective services and made 
no collections. If these were the ``easy'' cases, they would 
not have come to us; the government agency would have taken 
care of them.
    My experience, both as a custodial parent and as an 
employee of a private agency, is that private child support 
enforcement providers are no less responsible in their dealings 
with their customers or less caring about achieving effective 
results, within the boundaries of the law, than their IV-D 
counterparts. Together we share a commitment to the families we 
respectively--and often jointly--serve, a respect for the use 
of appropriate legal procedures, and a concern about the 
welfare of the children for whom we seek support. For those 
reasons, we should also be able to share the valuable 
enforcement resources and remedies which Congress has 
authorized for ensuring that parents fulfill their financial 
obligations to their children.
    Another, related issue that I have heard expressed about 
this legislative proposal is that it would compromise the 
privacy rights of individuals about whom information would be 
released to private and public non-IV-D enforcement entities. 
Quite simply, there is no privacy issue here. Not only would 
the state IV-D agency control what information is released, but 
also the only information released would be related to the 
legitimate purposes of child support enforcement and no other 
purposes. In this regard, the proposal is not different from 
current federal law that authorizes the disclosure to a 
custodial parent of certain otherwise confidential information 
concerning a parent available through the Federal Parent 
Locator Service for the purposes of establishing and enforcing 
child support obligations.
    Underlying most of the objections to any proposal for 
allowing non-IV-D providers of enforcement services to share 
IV-D enforcement resources is, I believe, the concern that 
there is something intrinsically wrong about charging fees or 
receiving payment for performing child support enforcement 
services. This concern seems rooted in the misperception that 
the government provides ``free'' services and that charging for 
child support services is like taking bread out of the mouths 
of children. (Of course, some state IV-D agencies do charge 
fees for services, and in 1992 the General Accounting Office 
recommended that all IV-D agencies charge fees in their non-
welfare cases to cover administrative costs. How, then, is it 
``wrong'' for the non-IV-D enforcement community to charge for 
its services, but not ``wrong'' for the IV-D community to do 
so?)
    I understand the visceral pull of this concern--and I agree 
that it is wrong and a cruel injustice for a family to receive 
less than the full and timely paid amount of child support owed 
it. I agree because I have experienced that injustice and 
injury. For 6 long and difficult years I received not a penny 
of the support the court had ordered for my children.
    Ideally, we taxpayers should not have to bear the costs of 
collecting child support from ``deadbeat'' parents, but we do 
because we believe that it is imperative that children have the 
financial support due them. Ideally, I should not have had to 
seek assistance from a private provider to secure the child 
support the government agency couldn't secure, but I did 
because my children needed the support due them. I suppose one 
could say that it is ``wrong'' for a tenant to incur legal 
expenses to recover a deposit from a landlord or for a consumer 
to recover damages for a defective product. But it is important 
not to overlook the simple and obvious fact that the ``wrong'' 
has been committed by the party who withheld the amount due in 
the first place. In the case of child support, the wrong lies 
with the parent who fails to provide the support, not with the 
enforcement provider who finally secures the support.
    No one could reasonably expect the IV-D program to operate 
without taxpayer dollars. Similarly, no one could reasonably 
expect a private enforcement provider to operate without 
compensation or a local government to bear the entire expense 
of a child support enforcement program. Therefore, to say that 
non-IV-D public and private enforcement providers should not be 
compensated for their services is tantamount to saying the non-
IV-D enforcement should not exist. I suspect, however, that 
there are special interest groups that do believe just that. 
Curiously, these are the same groups which believe that there 
should be no restrictions on how a custodial parent chooses to 
spend child support payment--presumably of the benefit of the 
child for whom the support is paid. Yet these very groups also 
oppose the right of a custodial parent to expend their child 
support for the purpose of recovering it in the first place, if 
the custodial parent enlists the assistance of a private 
enforcement agency.
    Payment of contingency fees to a private provider of 
enforcement services is the most important tool a custodial 
parent has to obtain justice when the IV-D agency is unable to 
provide effective services. Would anyone risk losing household 
money on a 2 in 10 chance of success with the government 
agency? Would anyone risk food on the table for such a 2 in 10 
chance? An informed custodial parent is a responsible parent 
who should be allowed to make an informed, responsible choice 
with respect to taking the best course of action to ensure his 
or her family's financial well being. The clients we serve are 
informed, responsible adults who know the difficulty of the 
work that we are prepared to undertake on their behalf to 
secure the support they are owed. They know they need the 
expertise we can--and do--provide. They know they need an 
advocate who has the time and resources to invest in their 
case. For them, the payment of contingency fees is the key to 
justice being done.
    Yes, it is wrong for a child not to receive the benefit of 
all the support due. But given the fact that each year millions 
of children are so wronged, should custodial parents and their 
children not have the right to more alternatives for 
enforcement rather than fewer? Is the mother who has failed to 
obtain her children's child support through the IV-D program to 
be effectively denied the opportunity of recovery through 
other, non-IV-D options? And should that mother be denied 
access to the enforcement resources available only through the 
IV-D agency? I believe that the time has come to move beyond 
parochial perspectives to a broader view of the child support 
enforcement problem in this country and to engage a new vision 
for dealing with that critical problem.
    Over the past 25 years, this subcommittee and its parent 
committee of the Congress have so often taken the lead in 
strengthening child support enforcement in this country through 
innovative and visionary legislation. The legislative proposal 
now before you offers yet another opportunity to advance the 
purposes of child support enforcement. It would provide a much-
needed bridge between the IV-D community and public and private 
enforcement agencies. It would open the door to productive 
collaboration among all of us and to a working partnership 
that, in the last analysis, can only benefit the families who 
seek--and need--our help.
    Madame Chairwoman, you and your distinguished colleagues on 
this subcommittee are, I know, well aware of the desperate 
circumstances in which millions of custodial parents in our 
country find themselves today because of the unlawful and 
immoral failure of noncustodial parents to pay child support. 
As someone who has personally and painfully known the plight of 
such custodial parents, I do not see how we, as a nation, 
cannot but choose to enlist all available resources, public and 
private, in fighting nonsupport.
    The establishment of the government child support 
enforcement under Title IV-D of the Social Security Act 25 
years ago was a major achievement for the welfare of our 
children. But there is a wealth of resources outside the IV-D 
program--locally funded public agencies and private providers--
that need to be brought more fully into the national child 
support enforcement effort. Under the provisions of the 
legislative proposal now before you, these resources can be 
made a more integral component of that effort without 
significant--if any--additional federal taxpayer dollars and 
without compromising in any manner the safeguards Congress has 
wisely provided for the protection of privacy and due process 
rights. With respect to private providers, the proposal offers 
custodial parents the option of choosing services from these 
providers without, however, having to forfeit the enforcement 
tools Congress has authorized and their taxpayer dollars are 
paying for. It also provides state IV-D agencies with the 
option of entering into partnerships with private providers to 
bring more resources to bear upon the intractable challenge--
and national scandal--of parental irresponsibility.
    I respectfully urge the subcommittee and the Congress to 
use this legislative proposal as an opportunity to strengthen 
the cause of child support enforcement and, I believe, thereby 
to bring us more quickly to a day when a story such as mine 
need never be told.
    Thank you.
      

                                


    Chairman Johnson of Connecticut. Mr. Bacarisse?

 STATEMENT OF CHARLES BACARISSE, HARRIS COUNTY DISTRICT CLERK, 
                         HOUSTON, TEXAS

    Mr. Bacarisse. Thank you.
    Madam Chair, Congressman Cardin, thank you for your time 
today. I am pleased to be here.
    I come before you today to lend my total and unequivocal 
support to legislation that would give non-title-IV-D 
enforcement agencies additional tools so they will be even more 
effective in enforcing support.
    My name is Charles Bacarisse, and, as district clerk of 
Harris County, Houston, Texas, one who oversees a support 
registry that moved more than $261 million in payments last 
year, I have seen child support enforcement on the national 
level fall behind at such a rate that empowering local 
assistance outside the title IV-D program is desperately 
needed.
    By passage of this legislation, the Congress will ensure 
that deserving recipients receive their monthly checks. Kids' 
lives and futures are at stake.
    In Houston, my staff processes more than 5,000 transactions 
totaling more than a million dollars each working day. The 
average payment is about $150, so we have a registry that 
serves all types of socioeconomic classes. In fact, based on 
the most recently available Federal data, if Harris County were 
a State, it would rank about 33d in the Nation in total 
collections--that is IV-D and non-IV-D together. So I appear 
before you as someone with firsthand knowledge necessary to 
demonstrate how highly critical this situation is.
    How serious is the problem being faced by the title IV-D 
program nationwide? You are well aware of the numbers. 
Basically, what I could add to that is that there is roughly 
$50 billion that remains uncollected from prior years in cases 
enforced under title IV-D.
    Let us just think about that a minute--$50 billion. Jesse 
Jones, perhaps one of the best-known Houstonians in history, 
ran the Reconstruction Finance Corp. for Franklin Roosevelt in 
the thirties and forties. Through the RFC, Mr. Jones spent $50 
billion rebuilding the U.S. economy. Think how far $50 billion 
in child support would go today toward rebuilding families and 
allowing custodial parents to work fewer hours potentially and 
spend more time with their children. Yet, the amount of 
uncollected child support grows every year.
    The reason is simple: The government title IV-D program has 
more to do than it can reasonably handle. A successful, full-
scale attack on this problem requires enlisting all available 
resources. Those include locally funded, non-title-IV-D 
government enforcement entities, members of the private bar 
that offer child support services, and responsible private 
firms specializing in support collection.
    This attack makes sense from a taxpayers' standpoint. Title 
IV-D enforcement services cost the taxpayers more than $3 
billion annually. Locally funded child support enforcement 
agencies such as ours offer services at zero cost to the 
Federal taxpayer.
    Harris County operates its own child support enforcement 
agency. It is the Harris County Domestic Relations Office, and 
about a dozen domestic relation offices exist in Texas' largest 
counties, and other organizations like these county-funded 
operations exist in other States, as well.
    The Harris County DRO is funded by fees that are paid by 
those who use its child support and visitation enforcement 
services and county tax dollars. The user fees are based on the 
client's income and ability to pay. Unfortunately, Texas' 
domestic relations offices and similar non-IV-D public support 
agencies in other States are unable to use some of the 
enforcement tools that are currently available to the IV-D 
agency, such as locate, for example. That simply adds to the 
burden on the IV-D agencies.
    A lot of discussion has been brought up this afternoon 
about privacy issues. I might mention that currently these non-
IV-D agencies and the private interests have access to data in 
the new hire database, but it is through quarterly reports 
through the State employment security agencies. So what the 
bill asks for is nothing new, but what it will do is automate 
that access so that we won't have to wait 3 months to track 
down someone that we are looking for.
    In order to get help for our challenges, we can get it with 
the tools that are outlined in H.R. 4469. Of course, all these 
measures would come with the appropriate safeguards on access 
to and use of confidential information. Any non-IV-D entity or 
private attorney seeking use of specified tools and information 
would be required to register with their IV-D agency. That is 
important.
    I think I would also like to mention, just for a moment, as 
I sum up, that a lot has been made of the use of confidential 
information. As an officer of the court--and there are 
thousands like me across the Nation--I handle confidential 
information every day. I handle all the county's juvenile 
records. Our State, for example, has passed parental consent 
for abortion. All of that data is confidential. We handle that. 
We currently also handle all criminal databases that connect 
directly into the FBI's NCIC criminal database. So we are used 
to, capable of, and certainly understand the importance of 
handling confidential information.
    I appreciate the opportunity to appear before you today.
    Thank you.
    Chairman Johnson of Connecticut. Thank you very much.
    [The prepared statement follows:]

Statement of Charles Bacarisse, Harris County District Clerk, Houston, 
Texas

    Madam Chairman and distinguished members of the committee, 
I come before you today to lend my total and unequivocal 
support to legislation that would give non-Title IV-D 
enforcement agencies additional tools so they will be even more 
effective in enforcing child support.
    My name is Charles Bacarisse. As the District Clerk of 
Harris County, Texas, and one who oversees a child support 
registry that moved more than $261 million in payments last 
year, I have seen child support enforcement on the national 
level fall behind at such a rate that empowering local 
assistance outside the Title IV-D program is desperately 
needed. By passage of this legislation, the Congress will 
ensure that deserving recipients receive their monthly checks. 
That is a moral obligation: Kids' lives and futures are at 
stake.
    In Houston, my staff processes more than 5,000 transactions 
totaling more than one million dollars each and every working 
day. In fact, based on the most recently available federal 
data, if Harris County were a state, it would rank about 33rd 
in the nation in TOTAL collections (that is, IV-D collections 
in both public assistance and non-public assistance cases). My 
county would rank 37th among the states in terms of collections 
in non-public assistance cases.
    So, I appear before you as someone with the first-hand 
knowledge necessary to demonstrate how highly critical this 
situation is.
    How serious is the problem being faced by the Title IV-D 
program nationwide? Consider that in FY 1997, $9.5 billion in 
child support was collected. However, this $9.5 billion 
represented, at best, only 54 percent of current support due 
that year. Only about 7 percent of past due support was 
collected in FY 1997.
    That left $8.1 billion in current child support uncollected 
and $41.4 billion in past due support uncollected. Going into 
FY 1998, $49.5 billion remained uncollected from prior years in 
cases enforced under IV-D.
    Nearly $50 billion. That's a huge number. That's a really 
significant number to a history buff from Houston like me. 
Jesse Jones, perhaps the best-known Houstonian in history, ran 
the Reconstruction Finance Corporation for Franklin Roosevelt 
in the 1930s and 1940s. Through the RFC, Jesse Jones spent $50 
billion rebuilding the U.S. economy.
    Think how far $50 billion in child support would go today 
in rebuilding families, in allowing custodial parents to work 
fewer hours and spend more time with their children. Yet the 
amount of uncollected child support grows every year.
    The reason for this unconscionable dilemma is simple. The 
government Title IV-D program has more to do than it can 
reasonably handle in serving both welfare and non-welfare 
populations.
    You may not be aware that of the more than 19 million cases 
currently in the nationwide IV-D caseload, more than 40 percent 
lack support orders. In those cases having orders, full or even 
just partial collections could be made in fewer than two of 
five cases because of the difficulties inherent in enforcement.
    While state IV-D agencies struggle to increase 
establishments and collections, their caseloads continue to 
grow by the hundreds of thousands--and backlogs in 
establishments and enforcement actions continue to mount.
    While the problem is monstrous by any standard, the 
solution is not. A successful, full-scale attack on this 
problem requires enlisting all available resources, including 
locally funded, non-Title IV-D government enforcement entities, 
members of the private bar that offer child support services 
and responsible private firms specializing in support 
collection.
    This attack makes sense from the taxpayers' standpoint. 
Title IV-D support enforcement services cost the taxpayers more 
than $3 billion annually, at a cost-effectiveness ratio of less 
than $4 in collected support for every $1 of administrative 
expenditures. By contrast, locally funded child support 
enforcement agencies and private attorneys can offer services 
at zero--zero--cost to the federal government.
    In this crisis, Harris County custodial parents needing 
assistance in enforcing child support are more fortunate than 
those in some other areas. This is because Harris County 
operates its own child support enforcement agency--the Harris 
County Domestic Relations Office.
    About a dozen DROs exist in Texas' largest counties. The 
Harris County DRO is funded by fees paid by those who use its 
child support and visitation enforcement services. The user 
fees are based on income and ability to pay.
    Unfortunately, Texas' domestic relations offices, and 
similar non-IV-D public child support enforcement agencies in 
other states, are unable to use some enforcement tools 
available to the IV-D agencies. The result is that custodial 
parents may be forced to go to the IV-D agency for certain 
types of service, such as income tax intercept. This simply 
adds to the burden on the IV-D agency.
    One way to decrease the dependency of custodial parents on 
IV-D agencies would be to allow non-IV-D agencies to run their 
cases through national databases, such as the federal new hire 
database. This enhanced data matching would allow a faster 
response to a custodial parent's request, while ensuring the 
privacy of those involved has been respected.
    As one who deals with this matter daily, my suggestion for 
involving capable non-Title IV-D enforcement entities must come 
with federal legislation to allow the following five 
enforcement tools:

The Equal Use of Income Withholding from Unemployment Benefits:

    Current law--42 U.S.C. 503(e)--permits the withholding of 
child support from UEB only in cases enforced by a state Title 
IV-D agency. Because this law restricts the enforcement of 
support in cases being handled by a local government agency or 
private attorney, it forces the custodial parent to use the 
Title IV-D agency.

Equal Use of Federal and State Tax Refund Intercepts:

    Again, current law--42 U.S.C. 664: 666(a)(3)--allows only 
the state Title IV-D agency to intercept state and federal 
income tax refunds to collect past due child support. This 
ability should be given to non-IV-D entities.

Extension of Data Matches with Non-Title IV-D Entities:

    Any new law should enable an approved private attorney or 
approved local government enforcement agency--upon payment of a 
service fee--to request that state IV-D agencies include a non-
IV-D case in the data matches and to require financial 
institutions to provide information and respond to notice of 
lien or levy in non-IV-D cases as they would in a Title IV-D 
situation.
The Ability to Report Child Support Delinquencies to Credit 
Bureaus:

    Currently, the federal Fair Credit Reporting Act restricts 
such reporting to state or local enforcement agencies, or to 
amounts that can be verified by local, state or federal 
government agencies. Any new legislation should amend the law 
to allow a registered private attorney, on behalf of a 
custodial parent, to request a state IV-D agency to report to a 
credit bureau the name of a non-custodial parent owing past due 
support and the amount of the past due support.

The Ability to Revoke Passports:

    Any new law should enable an approved local government 
enforcement agency to request that the U.S. State Department 
revoke a non-custodial parent's passport due to failure to pay 
child support. This enforcement tool would only be used when 
certain legally established requirements have been met.
    Of course, all of these measures would come with 
appropriate safeguards on access to, and the use of, 
confidential information maintained in government databases. 
The legislation should require any non-IV-D entity or private 
attorney seeking to use specified tools and information to 
register with the Secretary of Health and Human Services. The 
use of the specified tools and resources would be solely for 
child support enforcement purposes.
    My office, which processes both IV-D and non-IV-D child 
support payment has worked with both public and private child 
support organizations on many occasions. My view is that the 
more resources that can be applied to improving the collection 
of child support, the better for the children owed the support.
    Federal legislation and policies should encourage 
participation in child support enforcement by responsible 
public and private agencies and attorneys. This subcommittee 
can begin that process today by considering the recommendations 
I have presented, as well as those of my co-panelists here 
today.
    Madam Chairman and members of the committee, I hope I have 
clearly defined the gravity of this situation and left you with 
at least part of the solution. The need for legislation is 
great. New laws should be enacted as soon as possible to combat 
and curtail this growing problem. Millions of children across 
America are depending on you.
    Thank you for allowing me to testify before your committee.
      

                                


    Chairman Johnson of Connecticut. Mr. Bacarisse, to your 
knowledge, are all the other non-IV-D public agencies 
associated with the court?
    Mr. Bacarisse. To my knowledge and experience, we are 
either clerks of the court or we are associated with the court 
through enforcing of the orders, such as my colleague from 
Broward County. She is not a clerk, but she operates the 
Broward County child support division and she enforces the 
orders of the court that way.
    Chairman Johnson of Connecticut. And are you aware of any 
other non-IV-D public agencies in the country that aren't 
associated with the judicial system?
    Mr. Bacarisse. That are not in some way?
    Chairman Johnson of Connecticut. Yes. I really don't know 
this, and you may not know this.
    Mr. Bacarisse. No, ma'am. I am not aware of any.
    Chairman Johnson of Connecticut. Well, those of you who are 
listening, we will look into this, because that certainly makes 
a tremendous difference, the fact that you are accustomed to 
handling information that is of a private nature, and certainly 
getting people like you into the system ought to be a no-
brainer.
    Mr. Bacarisse. Thank you.
    Chairman Johnson of Connecticut. I want you all to think 
about that. There is a difference in these categories out 
there. Given the number of people not getting help, we do need 
to--it may be methodically opening up to people who are 
officers--you know, collection agencies that are associated 
with the court, or whatever. But I think we need to think about 
this definition.
    Ms. Diaz, why, when you could give the IV-D agency your 
husband's name and address and where he was working, why 
couldn't they get the support order enforced?
    Ms. Diaz. Well, that was a question I had many years ago.
    Chairman Johnson of Connecticut. As you said in your 
testimony, now you see why they couldn't help.
    Ms. Diaz. Right.
    Chairman Johnson of Connecticut. What is it that you see 
now?
    Ms. Diaz. The overwhelm. When I was going through it, my 
own, personal battle, it was a very personal case. It was 
individual. I thought my caseworker, as naive as I was, I 
thought my caseworker was helping me, and I thought she had my 
interest on her plate. I had no clue that there were thousands 
in front of me. I was not on welfare. It wasn't important. 
Maybe it was important, but I didn't know it. If they were 
working my case, I wasn't being communicated to.
    Keep in mind, during this time I wasn't sitting back 
waiting for something to happen. I was aggressively pursuing my 
own case.
    Chairman Johnson of Connecticut. With the agency or with 
your former husband?
    Ms. Diaz. No. With the agency. My former husband did visit 
my children quite often, and that was very--I didn't want to--I 
wanted to keep the child support issue between my ex-husband 
and myself, and I didn't want to bring the boys into it, so I 
didn't use them as leverage, like I hear some parents do.
    But I think it was just a matter of being naive then and 
not knowing that there were thousands of other clients just 
like me in the same boat. I thought it is just a matter of time 
and I was in a line.
    Chairman Johnson of Connecticut. And what did it cost you 
when you decided to go through Supportkids?
    Ms. Diaz. One-third, 33 percent.
    Chairman Johnson of Connecticut. And since they got it all 
apparently in kind of one payment, they took a third of that? 
Do they continue to take a third of every support payment that 
follows?
    Ms. Diaz. No. Actually, my contract was very clear. The 
child support arrears at the time was approximately $17,000 or 
$18,000, and that is what I understood was going to be worked 
to get $18,000. Once that amount is recovered, then, if the 
payments continue, I get 100 percent after that, and they 
continue to come in.
    The 33 percent was taken off of the lump payment that I 
received. My ex-husband decided again not to pay me. The 
contract ended with Supportkids, and I had the option of--
actually, the way the court order read is that he was going to 
be given a free year, and I wanted him to get--what I had 
asked, if he could--one of the provisions, I would be willing 
to give him a free year to get on his feet to do what he can to 
get a good job, and if, in fact, the $300 a month would 
continue on the 13th month. That money did not get paid, and 
therefore the entire year became back owing to him.
    So I did stay with the--in fact, I stayed with the IV-D 
agency until 1996, and I had already been a client with 
Supportkids since 1992. The only reason I stayed with them was 
I thought maybe there was a chance I could get maybe an IRS 
intercept or maybe there were some tools there that the IV-D 
agency had. I was trying to get the best of both. I wanted any 
possible way to get my support, and I would have gladly paid 
more than 30, believe me.
    Chairman Johnson of Connecticut. So, actually, if 
Supportkids had had the authority, they could have collected 
for you, charged you a third of that, but put in place a wage 
withholding system. Then you would have never had to worry 
again?
    Ms. Diaz. That is correct.
    Chairman Johnson of Connecticut. That is interesting. So, 
because they didn't have the authority to do that or the access 
to do that, you ended up having to go back in. Did you have to 
pay the second time when you went back?
    Ms. Diaz. No. In fact, the fee--you know, I hear these 
things about the cost and about the fees. I want you to know, I 
am a parent and I am the voice of millions of mothers out 
there. My case is not unique. It is very typical. I really do 
think--you know, when I read some of these testimonies and I 
see in here about how the IV-D agency offers free service, why 
would any parent in their right mind want to go to an agency 
that charges a third? Free service is only, in my opinion, when 
you get something out of it. When you get no service, it is not 
free.
    Mr. Cardin. Would the gentlelady yield for just one moment?
    Chairman Johnson of Connecticut. Go ahead.
    Mr. Cardin. I am going to have to excuse myself because I 
have some appointments I cannot miss.
    I just wanted the witnesses to know how much I appreciated 
your testimony. It is extremely helpful to us. This is an issue 
in which there is disagreement, but, as I said in my opening 
statement, I really do hope that we will be able to work out 
some legislation, particularly as it relates to the 
distribution rules, because that is clearly one which we know 
that the current setup just cries out for change.
    Let me thank you all and apologize for our delays. It was 
not our fault. We can never tell when a vote is going to take 
place.
    Chairman Johnson of Connecticut. Thank you, Ben. Thank you 
for being here through all the testimony, in spite of all the 
delays.
    Ms. Diaz. Excuse me. I was just going to add that the 6 
years was a hefty price that I paid.
    Chairman Johnson of Connecticut. Right.
    Now, as an employee now of Suportkids, is the general 
policy of Supportkids to charge a percent of arrearages and a 
percent of payments? Now, in your case they didn't charge a 
percent of payments ongoing. Would you talk a little bit more 
about what the policy--
    Ms. Diaz. Well, the contract is very clear. It is a money 
contract. It is not current support, arrears--
    Chairman Johnson of Connecticut. Is it the same for 
everyone?
    Ms. Diaz. Yes. In fact, it just depends. We have several 
different services that we offer that are different fee 
structures. The third, the 33 percent that you hear about, it 
is one-third of the amount, when the parent comes in, of the 
arrearages at that time. It is a money contract. When that 
amount is paid in full, we go away, the contract is ended, and 
the parent continues to get 100 percent of payments thereafter. 
It is simply a money contract. It is not separated into current 
and arrears and so forth. It is a money contract for the 
arrears that are owed at the time.
    Chairman Johnson of Connecticut. And does that entitle you 
to help any time your support payments stop or you have 
problems?
    Ms. Diaz. Right. If we are contracted to help a parent--
$10,000 is a good example. Of the noncustodial parents that we 
pursue, most of them aren't going to have $10,000 hanging 
around in some bank account to go seize, so we do have to go 
after their source of income or monthly payments. And yes, 
there is sometimes, quite often, a break in those payments, and 
we are right on them within--our systems require that within 20 
days of a missed payment, we immediately are on it again 
looking for that employment and searching for the next payment.
    But when that amount is paid, again, be it in a lump sum or 
over a course of monthly payments, that is when the contract 
ends.
    Chairman Johnson of Connecticut. So after the contract 
ends, then, if there are problems with the flow of support 
payments, the person cannot come back to Supportkids?
    Ms. Diaz. Absolutely. Certainly, the ideal situation would 
be for the child support to continue. What we have established, 
it does continue. The parent gets 100 percent. If at some time 
after they have gone through Supportkids their child support 
should stop, then, again, their options are there again. If 
they are with a IV-D agency, they can continue that route. They 
can continue to go through DRO office and county-based child 
support services. Or they can go through a private attorney. 
Their options are there again.
    Chairman Johnson of Connecticut. But if they came back to 
Supportkids and only 2 months support had been missed, then 
your 33 percent of, say, $600--
    Ms. Diaz. No, ma'am. It would go down to 20 percent. We 
have different services. If they are owed less than $5,000 and 
they know where the employment is, it is a 20 percent service.
    Chairman Johnson of Connecticut. And that is 20 percent of 
the arrearages?
    Ms. Diaz. Yes.
    Chairman Johnson of Connecticut. And would you take them if 
the arrearages are only 2 months?
    Ms. Diaz. Yes, ma'am. We have payment monitoring. If, after 
the contract is over, they wish to continue with our services, 
it is only 15 percent. It just varies as to what services they 
might be looking for.
    Chairman Johnson of Connecticut. But they could come back 
into the system after 2 months payment missing and get, for 20 
percent of those 2 months, help in reinstating the payments?
    Ms. Diaz. Right.
    Chairman Johnson of Connecticut. So that would cost them 
$200 then? That is cheaper than a lawyer and faster than a 
State agency.
    Ms. Diaz. And cheaper than waiting around in line. Right.
    Chairman Johnson of Connecticut. OK.
    Ms. Diaz. And keep in mind, we don't deviate from a court 
order. These court orders that come in, the parents--in my 
case, I was provided with a document, which was a divorce 
decree. It was a tool. It wasn't doing me any good because it 
wasn't being enforced.
    What we do, we take this tool, we find ways to enforce it, 
and we get it paid. I really do--in not all cases we were able 
to collect, but I really do think that there should be options 
more so than what is out there today. I mean, these parents 
should not have to be forced to stay in a government agency, in 
my opinion.
    Many times I am having to encourage parents to keep their 
case open just so that they can get the resources that the IV-D 
agencies have. It would be really nice to be able to give them 
a complete package, regardless of where they go.
    Chairman Johnson of Connecticut. Thank you.
    Ms. Kadwell, I appreciate your giving us statistics to show 
how very costly--and some of the others of you did--this 
distribution rule is in terms of administrative expenses. If we 
can fix that, you will have more resources to serve more people 
in a timely fashion.
    I do hope, though, that you, as well as others, will think 
about how we might enlarge our tools, because it simply is--I 
mean, we only have Ms. Diaz here, but I have heard this story. 
One of the reasons I took the lead on the child support bill 
when we were in the minority, and then again when we were in 
the majority, in spite of the fact that, as you know, it is 
very complicated legislation that takes an enormous amount of 
staff time and prevents you from doing other things, but I was 
just hearing too many situations like Ms. Diaz.
    The system isn't serving all the people it should, and 
simplification will definitely help, but most of the concerns 
you raise are just abusive collection practices. Why can't you 
write a contract that prohibits the use of those collection 
contracts? We are not throwing the door open to private 
agencies. We are just saying to States, ``If you want to 
contract with one private agency, write a contract and govern 
that agency's actions. If it works, spread it to five, spread 
it to ten.''
    I really don't, in good conscience, want to write a bill 
just about distribution rules, even though I have been fighting 
that battle since 1995 and personally was responsible for 
getting the changes that were included in the original bill, 
but it is not enough. It is not enough. And, as you know, we 
can't pass and you don't want us to pass child support 
legislation every year, because it is problematic. We get all 
kinds of neat ideas that sound good in hearings and we have put 
in there. We don't want to do this and churn the system.
    So I think not to take this opportunity to set in motion a 
process between the Federal and State governments and the 
private sector would be, frankly, irresponsible and a neglect 
of my duty.
    So I am very open to your help, because I like to do my 
duty in a way that I feel proud of, and I don't feel 
particularly happy when the whole community opposes me, but I 
will tell you, the evidence, the basic, gut evidence is so 
great that there are too many Ms. Diazes out there. I really 
can't go forward with a bill that doesn't begin to reach them.
    I think the IV-D agencies--I mean, we tried in the 
fatherhood bill. I am glad you mentioned it, Ms. Kadwell. We 
want the fatherhood programs to grow within this framework, but 
the IV-D agencies don't have the agencies to get in, in a 
sense, the social support system, but they have got to be a 
part of it.
    So if we want more holistic system, why is it we can't do 
business with the private sector? Because every week we don't 
they are still out there. They are still doing it. So if we end 
up in 2 years or 3 years, we have got to stay with contracts 
with 10 private agencies. I will tell you, every other private 
agency in that State is going to be in a different position 
than those that are contracting, and those that are contracting 
are going to set best practice standards and it is going to 
have ramifications and it will definitely have ramifications in 
the State legislature.
    So I just am not satisfied that we can do what my friend 
Wendell Primus wants us to do--that is, tell the States to do 
this. And I am one of them writing them letters and telling 
them what I thought they ought to do anyway and have gotten 
some good effect from that bully pulpit, but I know how 
worrisome this is.
    I think you have raised some very good points. There were 
some information points you raised, Ms. Entmacher, that I know 
you and Ms. Smith from Massachusetts will be able to help us 
understand better, that there may not be information in the 
system in certain cases.
    Also, I am not hung up on direct access. What would be the 
fee that you would want to provide information?
    So, you know, my message to you is I am still going to be 
up here plugging, and I would appreciate your working with me, 
and I would hope that we could find some solutions that will 
give us all a feeling that we are responsibly looking at the 
future.
    Thank you very much.
    Did you want to comment?
    Ms. Entmacher. If I may?
    Chairman Johnson of Connecticut. Yes. You have waited all 
this time. I can wait a little longer.
    Ms. Entmacher. Thank you.
    I just want to say that I have been involved in child 
support advocacy for 10 years and the National Women's Law 
Center has been doing it for 20 years, and we have heard and 
met and talked with many mothers in the situation of Ms. Diaz, 
which is why we have kept on doing this work.
    The problem is that, while it is possible that in some 
States you would get the type controls that you are talking 
about, it is also possible that some States would have very lax 
regulations, and through the Internet companies can advertise 
for custodial parents nationwide to contract with them, and it 
is precisely because I see the potential for great abuse here 
that I think we have to proceed with very great caution.
    Chairman Johnson of Connecticut. So ask me to put in the 
legislation that HHS has to sign off on the State regulations 
or in the State contract that the State agency develops to 
govern their relationships with private entities.
    All of these are solvable problems. I appreciate what your 
concerns are, but honestly, even if we don't make all the tools 
available--we don't have to make all the tools available--but 
why is it we can't help private agencies much more rapidly find 
out who the father is and where he is working and just some 
basic things?
    You know, I think we have to think about this. I am not 
throwing this open.
    I had one person at the hearing yesterday on China trade 
say, ``Why should we throw America's markets open?'' America's 
markets were open. Wait a minute. What are you paying attention 
to here?
    So I don't want to carry on this debate in the newspapers 
about the wrong issue. I am not going to throw the private 
sector--give them total access to all the collection tools 
without any governance by the government and without any 
control. In fact, if we are going to give so much control it 
may not work. That is my fear, is that the HHS regulations will 
be so cumbersome--this is what happened with Medicare choice 
plans. They didn't work. They were supposed to be the private 
sector equivalent and the agency came up with 780 pages of 
regulations. Well, this is not private sector insurance.
    I am offering a lot of protection, in my estimation--so 
much so that it may not work, but I am willing to do it because 
I want to see what do the people in the real world who work in 
this all the time, what kind of contract will they work out.
    We have got to collaborate. How do you govern 
collaboration? We have no choice but to collaborate. We can't 
do it all. We aren't doing it all and we aren't going to be 
able to do it all.
    The challenge is collaboration, so let us begin. That is 
all I am asking.
    Mr. Bacarisse.
    Mr. Bacarisse. Madam Chair, if I could just add one point 
on the collaboration issue--and I think Victor and I were 
talking about this before our panel--one thing that the Harris 
County Domestic Relations Office focuses on with their 
clientele is the visitation issue. This goes to your fatherhood 
initiative.
    Again, we are talking about money and payments and things 
like that, but what we really want to foster is responsibility 
and family.
    Victor and I were sharing a story. I said, ``Victor, you 
know what the biggest point of payments in our child support 
registry every year is?'' A lot of people think it is 
Christmas. No. It is August, because what has happened is the 
kids have been together with the dad for the summer and they 
have developed a bond and now dad believes he should start 
paying, and it is back to school time.
    It is amazing. You can just look down year after year after 
year. Our biggest volume of payments come in the month of 
August, and it is because we have got the energy at the local 
level and the initiatives to push these fatherhood initiatives 
and these visitation initiatives that the IV-D program doesn't 
have time to do.
    Chairman Johnson of Connecticut. That is really a wonderful 
issue, because if there is anything I get a lot of complaints 
about from fathers, it is, you know, ``I am supposed to pay 
this money and I am not allowed to see my child.''
    Mr. Bacarisse. Sure.
    Chairman Johnson of Connecticut. ``It is not my former 
wife. It is her mother that won't let me in the door, even 
though I have a court order.''
    That is very, very interesting. It reminds you so often 
that when you are dealing with human issues you have to get 
down to where people can talk to each other.
    Let me conclude this hearing by an absolutely fabulous 
quote. It happens to be from Dianna Durham-McLoud in the 
newspaper. I love it. It sums it all up. ``These are tough 
issues. That is because it is all about sex, power, and 
money.'' That is true.
    Thank you.
    [Whereupon, at 2:12 p.m., the hearing was adjourned.]
    [Submissions for the record follow:]

Statement of Geraldine Jensen, President, Association for Children for 
Enforcement of Support, Inc., Toledo, OH

    ACES members are families entitled to child support. ACES 
has 45,000 members, and 390 chapters located in 48 states. We 
are representative of the families whose 30 million children 
are owed $50 billion in unpaid child support. We have banded 
together to work for effective and fair child support 
enforcement. ACES has surveyed our membership to gather 
information from families as they make the transition from 
welfare to self-sufficiency. We have asked welfare recipients 
about the actions taken or not taken by child support 
enforcement agencies that have assisted them to become self 
sufficient. Collection of child support when joined with 
available earned income allows 88% of our membership to get off 
public assistance. Collection of child support enables our low 
income working poor members to stay in the job force long 
enough to gain promotions and better pay. The collection of 
child support means our members can pay the rent and utilities, 
buy food, pay for health care, and provide for their children's 
educational opportunities. Lack of child support most often 
means poverty and welfare dependency.

    Private Collection Agencies are not the Answer to Child Support 
                                Problems

    Private collection agencies for child support do not work 
any better than the government child support agencies. These 
agencies do not and should not have access to confidential IRS 
information, Federal Parent Locator Service which includes 
Social Security Numbers, Credit Bureau Reporting, New Hire 
Directories or Financial Institution Data Matches. They should 
not have access to state information such as tax records, 
employment records, worker's compensation records, or any other 
protected government records. The private agencies collecting 
child support are currently not regulated. In fact, the U.S. 
Supreme Court ruled that these agencies do not fall under the 
regulations of the Fair Debt Collection Act. Private collectors 
are a bad solution to a hard problem. It is a better investment 
to fix the child support enforcement system.
    Opening the door to confidential financial, IRS, and Social 
Security information to private collectors is a bad idea. This 
would make private data readily available to a multitude of 
sources. Controlling the appropriate use of this data when it 
becomes available to any agency or individual who calls itself 
a private collector violates the public trust in the 
government. It will create a situation where identity theft, 
false reporting, and the holding hostage of financial records 
and other private information can become an everyday 
occurrence.
    Giving private collectors access to report people to the 
credit bureau could also be dangerous. There are no adequate 
safeguards that can be put in place to ensure that those 
reported as ``deadbeats'' owe child support. Those reported by 
private collectors may not have an open IV-D case and there 
would be no way to verify if they owe child support. Nor would 
it be good use of our tax dollars to pay state workers to 
verify what private collectors submit for credit bureau 
reporting, bank matches, new hire registry matches etc. State 
child support workers are already overburdened.
    Under the proposed legislation state IV-D agencies can be 
forced to report anyone who is identified by a private 
collector or public non IV-D agency to the IRS for a tax 
intercept. One of the worst scenarios that could occur if this 
legislation is passed would be that a private collector could 
use this tax intercept process to steal tax refund money from 
someone who is due to receive a large tax refund. The private 
collector could identify the victim to the IRS as owing an 
arrearage. The IRS would then attach the refund and forward it 
to the private collector. The private collector could then keep 
the money. The people identified by the private collector to 
the state IV-D agency might be innocent, and not even owe 
support. Since there is liability protection, if the private 
collector makes a ``mistake'' nothing can be done to them. With 
the information a private collector could obtain just by asking 
the IV-D agency to obtain it for them, a crooked private 
collector could easily perpetrate an identity theft by 
gathering copies of tax returns, bank account information, 
passport information or any other information.
    There are no standards in the bill requiring the type of 
state system that must be used to verify that a private 
collector is legitimate. This means that some states could 
adopt a non interference system and do little or no 
verification on the legitimacy of the private collector. Some 
existing private collectors have already used schemes with 
``dummy'' corporations to rip off innocent families.
    If a private collector had access to data from the New Hire 
Directory, they could literally go through the phone book to 
gather names and submit them to the state. The state would send 
back all the information necessary to identify where the 
victims work, their social security numbers, etc. Passports, 
credit reports, taxes and banking information could all be held 
hostage by the threat of false reporting. Worse, people could 
be ruined financially by false reporting. Even if the private 
collector is not a true criminal and they are just incompetent, 
can you imagine what life would be like if you woke up one day 
to discover that your credit was ruined, your taxes 
intercepted, and your passport canceled because some private 
collector made a false report about you? In the proposed 
legislation, collectors get liability immunity, so there is no 
recourse for the injured party.
    Custodial parents who have used private collection agencies 
have encountered many problems. Some of the problems 
encountered include:
     Private collectors take huge fees on money they 
had no part in collecting Private collectors literally get 30-
40% of the children's money for merely mailing a piece of paper 
to the state IV-D agency. They have taken no action to collect 
the money, they are not involved in selecting the cases to be 
submitted--states are required under federal law to submit all 
cases with a $500 or more arrearage to the IV-D agency. The 
private collectors are not involved in preparing the case for 
submission, they are not involved in verifying arrearage, 
handing arrearage disputes etc., yet they still get 30% of the 
children's money. For example, private collectors get paid by 
taking their 30% fee from an IRS refund that the state 
government child support agency attached. This type of action 
is currently occurring in states like Texas, where the private 
collector merely notifies the state IV-D agency that the family 
has given them permission to collect the support owed and 
requests that all child support collected by the IV-D agency be 
sent to the private collector rather than to the family. Then, 
after the State IV-D agency prepares the case for submission 
for IRS and State offset by verifying the arrearage, name, and 
social security numbers, preparing the documents to be sent to 
the Federal government, handing any issues that arise from the 
non-custodial parent after they receive notice of the 
attachment such as a dispute as to the amount of arrears, new 
spouse claim,--the state IV-D agency receives the check from 
the IRS, processes it, and sends it onto the private collector. 
The private collector then takes their fee, usually 30% of the 
amount of the check, and sends the remainder to the family.
    Here are some examples of problems families have had with 
private collectors:
     Yvonne Best is the mother of two children, owed 
thousands of dollars in back support. She and her children live 
in San Francisco. She had an open case with the District 
Attorney. To support her children Yvonne was working two jobs. 
The childrens' father also worked two jobs. The District 
Attorney attached his earnings from his second job but not his 
primary job. She was only receiving $30-50 per month from this 
wage assignment.
    Out of frustration she opened a case with CSE, now known as 
Supportkids.com. She paid her application fee, but they did 
nothing for months. After seven months, CSE sent her a notice 
that they put a wage assignment in place. Yvonne thought she 
was getting somewhere. But all that CSE had done was change the 
payee to themselves on the wage assignment for $30.00-50.00 per 
month. They took their 30% and sent her the rest. After months 
of talking to ``case workers'' and supervisors and getting 
nowhere, she finally was let out of her contract with CSE.
     Burnelle White of Dallas, TX saw an article in the 
Dallas Woman's Magazine about Blue Moon Child Support 
Enforcement and Collection Agency and what a great job they do. 
Burnelle is the grandmother of a 12-year-old girl. Burnelle is 
trying to collect from her son-in-law, who lives in Royce, TX. 
He owes are about $7,000 in back support. Burnelle received 
custody of her granddaughter in 1991 when her daughter died of 
breast cancer. Child support payments are set at $180, plus 
$210 payment on in arrears. The child's father is paying 
support now but never paid regularly except for in 1994 when he 
was on probation. He is a self-employed landscaper. In January 
of 1994, Burnelle saw the article about Blue Moon and signed 
the contract because she hasn't received any help from the 
Texas Attorney General's Office. Blue Moon started collecting 
the money, but she did not receive the correct amount. When she 
contacted Blue Moon Child Support Enforcement and Collection 
Agency, they yelled at her and told her that she had to wait, 
and that Blue Moon had three weeks to get the money to her. 
Burnelle received a letter from Blue Moon (see attached).
    She never received all of the child support collected by 
Blue Moon collection agency from her son-in-law for support of 
his daughter. In June of 1999, Burnelle contacted the Texas 
Attorney General's Office, Consumer Division, to file a 
complaint and was told that she was one of several 
complainants. The Better Business Bureau said told her that 
because she had signed a contract and because the private child 
support collectors are not regulated there was nothing that 
they could do. The Better Business Bureau also told her that 
all the collection agency had to do was change names and move 
down the street, and even if some action had been taken against 
them before, they could be back in business. Blue Moon kept 25% 
of the child support collected, plus additional fees that she 
wasn't told about. The Texas Attorney General was able to get 
the contract canceled with Blue Moon. Burnelle still can't 
account for approximately four checks that she never received 
from Blue Moon. In July 1999 Blue Moon went out of business and 
their phone number was disconnected. Recently Burnelle went 
back to court and was able to successfully enforce her court 
order.
     Vicky Gorman has two children, ages 15(boy), and 
12(girl), the childrens' father lives in Kansas. He owes 
$48,877.26 which has gone unpaid in the past seven years since 
the divorce. She hired a private collection agency, Child 
Support Advocates, and signed a contract on May 22, 1996. Child 
Support Advocates collected some child support payments. 
Vicky's support order was for $550.00 per month. The first 
check Vicky received from Child Support Advocates was for 
$63.00, even though they had collected $250.00. Child Support 
Advocates charged a $250.00 application fee, even though they 
told her there were no fees. She had to hire a private attorney 
to have the contract terminated in March of 1999. Vicky says 
this of her experience with private collectors, ``Private 
collectors are not regulated, they only care about what they 
should receive, and if you call they tell you that you can't 
call and bug them. The contract states that if they collect any 
amount of money in the first year that the contract stays in 
effect until all is collected, and that part is hidden in the 
small print.''
    If federal law requires State Disbursement Units to send 
child support money collected from wage withholdings 
(interstate or local), attachment of unemployment compensation, 
attachment of bank account, etc., to private collectors. The 
private collectors will profit from the work of the state at 
the expense of the children.
    If someone has a IV-D case open, federal law requires 
automatic submission via the new computers for attachment of 
most type of assets upon a 30 day default. The proposal to 
require State Disbursement Units to send the child support 
checks to private collectors is merely a way for private 
collectors to make a windfall profit while doing no or little 
work.
    If there is a non IV-D case and a family signs up with a 
private collector and the private collector does the work of 
finding the employer, preparing an income withholding order and 
claims, the private collector has a right to be paid for this 
service. If private collectors provide a service not part of 
the IV-D system, they should be paid but not at the expense of 
the child. Instead they should be paid by the non-custodial 
parent who failed to meet their obligations and caused the 
custodial parent to need to seek services to collect the 
support. The non-custodial parent should be required to pay the 
fee, usually 30% in addition to the child support. The fee 
should only be allowed to be collected after child support due 
to the child has been paid.
     Some private collection agencies collected 
payments from the non-custodial parent but never sent the 
payments to the family. This is literally stealing money from 
the children. Since private collection agencies are not 
required to follow the Fair Debt Collection Act, families have 
no recourse in dealing with agencies who act inappropriately. 
We have had reports that private collectors laughed at one 
custodial parent when she told them that the child's father 
said he had paid the money to the collector and she has not 
received it. The private collector told her, ``sue us for it!'' 
Most of the families who turn to private collectors out of 
desperation for support payments are in serious financial 
distress. They do not have money to hire a private attorney, 
they have not received efficient services from the state IV-D 
agency, and then they get ripped off by a private collector. 
Many give up and eventually end up on welfare, or working two 
or three jobs to support their children. The children suffer 
financially and emotionally because now they have lost both 
parents, the one who has abandoned them financially and 
emotionally and the other who cannot be home to nurture them 
because they are working all the time!
     Roxanne Roderick of Dallas, TX had an experience 
with a collection agency that collected the child support but 
never gave her the payments. Roxane is divorced and has an 
eleven-year-old daughter. The father rarely paid support unless 
he was taken to court and moved from Texas to Atlanta and back 
to Texas. Roxanne was attracted to DSS collections from 
advertizing. When Roxane went to the office, she thought it was 
strange that the office was behind locked doors, and talk you 
had to talk through an intercom system. When Roxanne questioned 
how the office was set up she was assured that it was because 
that they sometimes have non-custodial parents get mad when 
they go after them for money. There was also an angry woman, in 
the office that was pulled aside so no one could find out what 
was going on. When Roxanne filled out the collection paperwork 
and signed the Power of Attorney paperwork she had no idea she 
was signing an agreement giving up her legal rights. At the 
same time as Roxanne was starting her paperwork with DSS 
collections, her daughter's father got married and moved out of 
state. DSS collections told her they could not collect from 
anyone out of state.
    Roxanne was still in contact with her ex-mother-in-law, who 
told Roxanne that she had been making payments to DSS 
collections for her son. Roxanne never received these payments. 
Roxanne called DSS collections to question them as to where the 
money was, and they got angry and told her to look at the 
source of her information. DSS sent her several nasty letters. 
DSS also refused to give payment information to the Texas 
Attorney General, so they had no idea that payments had been 
made.
    Most states have large amounts of undistributed child 
support payments on hand. Thirty-four states responded to our 
request for information about undistributed/unidentified funds. 
They reported that they are holding almost $200 million. This 
is very similar to the problems of private collectors not 
sending money onto the family. However, the difference is that 
citizens can call for a state auditor to check records of the 
state child support agency, and state IV-D agencies can be 
required to follow federal regulations about payment 
distribution. Neither of these remedies is available for 
resolving problems with private collectors. ACES recommends 
that language be added to the Fatherhood Initiative legislation 
which requires States IV-D agencies to use the Federal Parent 
Locator System and New Hire reporting system to find the 
addresses of families for whom payments are being held.
     Contracts used by some private collectors have 
hidden clauses which define all support as back support so that 
fees can be collected from current support payments (E.g., 
Supportkids.com) others require families owed support to pay 
additional court costs and attorney fees on top of the 30% fee 
taken from the child support collected. (E.g., Child Support 
Collectors Inc.) Some private collectors require contracts or 
power of attorney agreements that are binding for the entire 
childhood or are renewable for a full year if even one payment 
is received, such as an annual collection through the IRS 
Offset program by the State IV-D agency.
     Some private agencies have closed down and totally 
disappeared after custodial parents have paid application fees 
of hundreds of dollars Since there are no state or federal laws 
or regulations which govern the practices of private collectors 
on child support cases, these problems continue to occur 
unanswered.
     Some private collectors have violated contracts. 
Agreements were made for taking percentage out of arrears; 
instead they took a percentage of current support.
    Here are some examples of what happened to families using 
private collectors:
     A mother in Texas has one child that is owed over 
$50,000 in unpaid child support. She signed a contract with 
Child Support Enforcement (CSE now know as Supportkids.com) in 
Texas more than one year ago. Since signing the contract, 
Phyllis had to go on Public Assistance. CSE/Supportkids.com did 
not close her case when she went on welfare and turn it back 
over to the state as they are supposed to do. When she asked 
CSE/Supportkid.com if the case should be turned back to the 
state, CSE/Supportkids.com told her it did not matter because 
this was an interstate case. CSE/Supportkids.com has taken 32% 
of the current support but has not collected any money on the 
arrearage of $50,000.
     A mother in California had a $60,000 arrearage. 
She went to a private collection agency. Nothing was done on 
her case so she canceled her contract in writing. She came to 
ACES and learned how to collect the back support. When she was 
due to get the $60,000, the private collector notified her that 
she owed them 30% of the arrearage, even though the contract 
had been canceled. The private agency even tried to foreclose 
on her house to get their portion of the $60,000.

             Non IV-D Agencies Having Access to IRS Offset

    Many states have several different government child support 
agencies. In some communities these are local Clerk of the 
Courts offices or court trustees. Before statewide 
distribution, many of these offices had a cooperative agreement 
with State IV-D agencies for payment processing, income 
withholdings, and other services. These agencies were quick to 
refer families to State IV-D agencies in the past for services 
such as Parent Locator and IRS Offset because the family still 
had a case open at their agency and the agency received federal 
funding via the cooperative agreement. Now they do not like to 
refer cases to IV-D because families chose full IV-D services 
rather than using both agencies. Because of the history of 
cooperative agreements, local offices hired staff and often 
used child support positions as part of the local political 
patronage system.
    When states moved to using the State Disbursement Units, 
these offices began looking for a way to continue to keep their 
staff and continue the local patronage system. The newest 
method to further this intent is to get access to the IRS 
Offset system so that families will keep their case on file 
with their office rather than change over to the State IV-D 
system. This is good for some families who have had success 
with collection by these non IV-D government agencies, such as 
those where the mother, father, and child all live in the 
community and the non-custodial parent has been making regular 
payment on their own through this agency. Since employers now 
send all income withholding payments to the State Distribution 
Unit so that they have only one government agency to deal with, 
since almost 40% of the cases are interstate, and since 
contempt and criminal non-support actions are done by attorney 
under contract by IV-D at no charge to families in most states, 
it no longer makes sense for most cases to be handled by these 
local offices.
    For the few families continuing to have open cases at local 
agencies it does not make sense to create a system where the 
local agencies can access enforcement to the IRS Offset. It 
does make sense to set up a system where state IV-D agencies 
must accept cases referred from these offices and ensure that 
the cases are forwarded to the IRS. They can require these 
offices to provide the same information that they do of 
custodial parents opening cases for IRS Offset. This process 
includes forwarding a copy of an arrearage statement certified 
by the court or, in affidavit form, the name of the non-
custodial parent, their last known address, and social security 
number.
    ACES recommends that federal law require State IV-D 
agencies to accept and process these cases to ensure services 
to these families. This would enable these offices to provide 
services to the families who have cases on file where other 
collection services are working. If the case on file at the 
Clerk of Courts or Trustees' Office is not receiving regular 
payments, these offices should be required to notify the 
custodial parents in writing that full collection services for 
locating absent parents, income withholding, attachment of bank 
accounts, unemployment, etc. are available at the state IV-D 
agency.

    Distributing Child Support Payments and Review for Modifications

    ACES would like to see these sections of the bill expanded 
to ensure that families receive more child support rather than 
having the child support collected being used to pay off 
welfare debt.
    ACES supports the sections that:
     Determine that assignment of child support is only 
the amount that accruals under an order while a family receive 
TANF
     Determine that when the family is off TANF the 
amount of support due to the state to pay off a welfare debt is 
the amount of support that should have been paid while on TANF 
or the amount of TANF given to the family, whichever is less.
     Allows States to use TANF funding to make up any 
difference that occurs due to implementing this new 
distribution system or using the difference to meet the 
Maintenance of Effort requirement
    ACES encourages states to take advantage of the new 
distribution regulations rather than waiting until 2005 to 
implement them.
    ACES supports IV-A notifying IV-D when families leave TANF 
to facilitate establishing and enforcing child support orders 
and to obtain modification of orders for reasonable amounts of 
support payments.
    ACES opposes the section of the bill which requires review 
and modification for TANF families. ACES believes parents 
should have the right to make the choice of seeking a 
modification. Our members state they do no want to jeopardize 
often fragile emotional relationships between parents due to 
untimely and unwanted modifications.

Fatherhood Programs

    ACES support programs which assist fathers to become 
employed so that they can meet legal child support obligation. 
ACES supports programs which educate fathers about the 
importance of regular and adequate child support and emotional 
support to their children, foster communication and cooperative 
efforts between mothers and fathers, and protect women and 
children from domestic violence. We are concerned about the 
many groups which present themselves to be advocates for this 
but in truth are groups which are merely seeking to lower the 
amount of child support non-custodial parents' pay under state 
guidelines, or are working to change custody laws so custody is 
awarded to the parent with the highest income rather custody 
decision being based on best interest of the child.
    Current federally funded Access/Visitation Projects fail to 
reach families most in need of help in solving visitation 
problems. States that have set up mediation/counseling programs 
to help families resolve visitation problems set up programs 
that are often voluntary and therefore don't reach families 
with ongoing disputes. Voluntary projects have successfully 
helped families establish visitation orders and custody 
agreements at the time child support orders were entered. 
Programs such as the Fatherhood Initiative have had minimal 
impact. For example, the Los Angeles Fatherhood Initiative told 
ACES in July 1999 that they had only 39 fathers enrolled in the 
program.
    There are 650,000 open child support cases in Los Angeles. 
Manpower of New York reviewed the fatherhood program by 
establishing a control group of non-custodial parents to 
determine the effectiveness of the program. The review showed 
that 30% of the fathers participating in the fatherhood 
programs paid child support and 30% of the fathers not enrolled 
in the program paid child support. The program did successfully 
``smoke'' out those who were really working because, after the 
court ordered them to attend job training, they began paying 
child support to avoid losing their jobs!
    ACES recommends that programs be expanded to include more 
fathers so that more children benefit. In the past, programs 
have spent millions of dollars to serve a few fathers, of whom 
only 30% paid child support. Establishment of paternity, if 
needed, should be a prerequisite to participation in the 
program since the goal is to provide fathers' job and parenting 
training needed to successfully financially and emotionally 
support their children. Any organization receiving federal 
funding for Fatherhood programs should be required to include 
services to non-custodial mothers and should have anti-domestic 
violence curriculums.
    When parents see that the support paid actually benefits 
their children, it encourages them to meet legal child support 
obligations. Passing child support collected to families on 
welfare rather then keeping it to pay off welfare debts helps 
children and encourages non-custodial parents to meet child 
support obligations. Child support payments passed on to 
families should be counted toward TANF eligibility in the same 
manner as earned income.
    Federal law should encourage states to establish amnesty 
programs for parents who owe the states welfare child support 
debts. Parents should be allowed to make arrangements to pay 
current support obligations based on the state child support 
guidelines. These guidelines use actual parental income and 
cost of raising children information to determine the amount to 
be paid. The non-custodial parent should be allowed to enter 
into a legal agreement with the state that sets up a process 
which states that if the non-custodial parent meets current 
child support obligations and past obligations owed to the 
child, the state waives the arrears owed to them. If the parent 
violates their agreement, they become liable for the debt owed 
to the state.

Reform the Child Support Enforcement System Make Children as Important 
                                as Taxes

    In 1995, the U.S. Census study of children growing up in single 
parent households showed that 2.7 million children received full 
payments, 2 million received partial payments, and 2.2 million who had 
support orders received no payments. About 6.8 million children 
received no payments because they needed paternity or an order 
established. About 32% of the families who do not receive child support 
live in poverty. In single parent households, 28% of Caucasian 
children, 40% of Black children and 48% of Hispanic children are 
impoverished.
    There are now 30 million children owed $50 billion in unpaid child 
support according to the Federal Office of Child Support Enforcement's 
1998 Preliminary Annual Report to Congress. If we are truly serious 
about strengthening families and promoting self-sufficiency rather than 
welfare dependency by making parents responsible for supporting their 
children, it is time to get serious about setting up an effective 
national child support enforcement system. Taking care of the children 
one brings into the world is a basic personal responsibility and a true 
family value.
    Preliminary statistical reports from the U.S. Department of Health 
and Human Services, Administration of Children and Families, Office of 
Child Support Enforcement show that the average state collection rate 
for 1998 is 23%.
    ACES recommends that congress should enact, H.R. 1488, sponsored by 
Representative Henry Hyde (R) IL and Lynn Woosley (D) CA. It sets up a 
federal and state partnership to collect child support throughout the 
nation even when parents move across state lines. These interstate 
cases now make up almost 40% of the caseload and are the most difficult 
to enforce. State courts or government agencies, through administrative 
hearings, would establish orders within the divorce process or through 
establishment of paternity and would determine the amount to be paid 
based on parental income, modifying orders as needed. Enforcement would 
be done at the federal level by building on the current system where 
employers' payroll-deduct child support payments. Instead of the state 
government agencies in each state having their own systems to do this, 
the new law would have child support payments paid just like federal 
income taxes. Withholding would be triggered by completion of a W-4 
form, and a verification process. Self-employed parents would pay child 
support quarterly just like Social Security taxes. At years' end, if 
all child support due was not paid, the obligated parent would be 
required to pay it just like unpaid federal taxes, or collection would 
be initiated by the IRS.
    For low income and unemployed fathers, states could continue to 
operate fatherhood programs. Such programs offer fathers, many of whom 
are young, an opportunity to develop parenting skills and job skills 
that will allow them to financially support their children. About 40% 
of the children who live in fatherless households haven't seen their 
fathers in at least a year. Census Bureau data shows that fathers who 
have visitation and custody arrangements are three times as likely to 
meet their child support obligations as those who do not. If collection 
of child support were accomplished through the tax collection system, 
local Domestic Relations Courts would have more time and resources to 
focus on visitation and custody issues.

      

                                


Statement of Deborah Weinstein, Director, Family Income Division, 
Children's Defense Fund

    Improvements in the Distribution of Child Support 
Collections and Services to Enable Non-Custodial Parents to 
Contribute More to their Children
    The Children's Defense Fund commends the Subcommittee on 
Human Resources for holding this hearing on ways to improve our 
nation's system of collecting and distributing child support 
and to help fathers to contribute more to their children's 
support. We believe that provisions in two bills before the 
Subcommittee, H.R. 4699 and H.R. 3824, would make real progress 
in increasing the amount of child support actually received by 
the custodial family. Making such progress is vital to 
improving the well-being of children.
    Almost half (46.1 percent) of children in single-mother 
families are poor. In 1998, less than one-quarter (23.1 
percent) of government child support cases received any 
collections. For children receiving TANF or in foster care, the 
track record was worse: only 13.9 percent of cases have child 
support collections. The average payment for all government 
cases with collections was $3,180 in 1998; for TANF or foster 
care cases receiving child support, the average payment was 
$1,840. When added to earnings and other sources of income, 
child support can better enable the family to afford rent and 
other necessities, providing some measure of the security and 
stability that all children need. These bills will increase the 
likelihood that child support is collected and will provide 
help to absent parents (usually fathers) so that they can pay 
more support and also whenever possible play a greater role in 
their children's lives.
    We evaluate proposals to improve the child support 
collection system by several criteria: (1) collections to the 
greatest extent possible should result in a net gain to the 
custodial family and should help families in their transition 
from welfare to work; (2) simpler administration will lead to 
more collections; (3) the system will be strengthened to the 
extent that custodial and non-custodial parents respect its 
basic fairness, and to the extent that it incorporates basic 
protections from violence or unwarranted invasion of privacy; 
and (4) low-income parents, custodial and non-custodial, can 
increase their contributions to their children's support with 
job training and placement help. Many of these principles are 
embodied in the two pieces of legislation before the 
Subcommittee, but improvements are necessary in order to ensure 
that basic protections and fairness are achieved.
    Collections to the greatest extent possible should result 
in a net gain to the custodial family and should help families 
in their transition from welfare to work. Families should 
receive support collected on their children's behalf. H.R. 
3824, sponsored by Mr.Cardin (with Mr. Jefferson, Mr. Stark, 
and Mr. Matsui), is strong in requiring states to pass 
collections along to families receiving TANF, and encourages 
states to allow families to keep at least some of those dollars 
in addition to their TANF benefits, by reducing the amount owed 
to the federal government by the state. We strongly favor H.R. 
3824's forgiveness of reimbursements due to the federal 
government to the extent that child support payments are 
disregarded in calculating TANF benefits. H.R. 4469, sponsored 
by Mrs. Johnson, allows states the option of distributing all 
collections to families, but provides no similar encouragement 
to states to provide at least some of the child support in 
addition to TANF benefits. There are provisions in H.R. 4469 
that allow states to use federal TANF or state maintenance of 
effort funds to cover the costs of distributing child support 
collections to families. We are hesitant about such use of 
funds, since in effect this would allow states to use federal 
funds to draw down federal IV-D matching funds. If states are 
to be given this very favorable treatment, it should be in 
return for disregarding the child support provided to families 
in calculating TANF benefits and should not be indefinite, but 
should only extend for a limited number of years.
    Both bills are helpful in limiting states' claim to the 
child support dollars collected to the period during which 
families are receiving TANF assistance. It is extremely 
important that custodial families receive child support 
directly so that children's needs may be better met, and so the 
absent parent sees the value of paying support. Further, when 
payments are made directly to the family, they continue without 
interruption when the family leaves welfare for work. Under 
current practice in most states, most or all of child support 
is retained by the state for families receiving TANF. When they 
leave, current child support is supposed to be paid directly to 
them, but frequently there is a three-to six-month lag before 
collections are properly directed to the family. If child 
support were paid to the family even when they are receiving 
TANF, this loss of support during the critically important 
transitional period would be avoided.
    Seeking recovery for Medicaid childbirth costs from non-
custodial parents is prohibitively burdensome and works against 
other helpful provisions in H.R. 3824 and H.R. 4469 that would 
result in payments being made to custodial families, not to the 
state. At the time when fathers are deciding whether to 
acknowledge paternity, it would be far better for their support 
payments to result in help for their children. We support the 
provisions in Section 7 of H.R. 3824 and Title I of H.R. 4469 
to end recovery of childbirth costs.
    H.R. 3824 offers an important protection for custodial 
families when child support is distributed to the family, 
especially when states do not disregard child support income, 
and therefore replace TANF with child support dollars. Section 
5 requires the state to certify that procedures will be 
implemented to ensure that assistance payments will be timely 
in the event of delayed child support payments.
    Simpler administration will lead to more collections. Many 
analysts have concluded that our current child support 
distribution rules are so complex that they are almost 
impossible to administer. Providing child support directly to 
families whether they are receiving TANF or not has the virtue 
of simplicity, in addition to its other advantages to families. 
We strongly favor simplifying the rules so that child support 
owed during the periods before or after a family receives TANF 
goes to the custodial family, and not to state and federal 
governments. We support the provision in both bills that when 
families have left welfare they receive all arrearage payments 
owed to them, eliminating the current exception for support 
collected through federal tax intercepts (which under current 
law remains with the state). When fathers see that their 
children benefit from the support they send, it is a natural 
incentive to pay.
    Strengthening child support through basic fairness and 
protections. We oppose giving more information and enforcement 
mechanisms to private child support collection agencies, as 
provided in Title III of H.R. 4469. These agencies are 
unregulated. Courts have ruled that the federal Fair Debt 
Collection Practices Act does not extend to private child 
support collection agencies, so consumer protections available 
under that statute do not apply to these entities. Private 
collection entities now have access to ``locate only'' data 
through the Parent Locator Service, and there are questions as 
to whether this access has resulted in unwarranted invasions of 
privacy. Examples of abusive private agency practices are 
compellingly related in the testimony of Joan Entmacher of the 
National Women's Law Center and in the May 18 Washington Post 
story, ``Problems at Child Support Inc.'' They include 
instances in which mothers were unable to terminate a contract 
with a private collection agency, despite the fact that the 
agency was simply taking its cut from current child support 
payments generated through the state's IV-D agency.
    We are concerned that in the absence of regulation more 
abuses would inevitably occur, affecting both custodial and 
non-custodial parents. These abuses would undermine support for 
child support enforcement generally and might result in the 
loss of some of the enforcement tools which are only now 
beginning to show positive results in the IV-D system. Until 
some form of regulation of these entities is in place, they 
should not be given access to such highly sensitive 
information.
    We are also concerned that custodial parents and children 
be protected from domestic violence. We favor proposals that 
would require fathers' programs to collaborate with domestic 
violence experts or at least to show preference in funding 
programs that demonstrate such collaboration under Title V of 
H.R. 4469. We also support adding domestic violence expertise 
to the qualifications for potential appointees to the panels 
that award grants under this title.
    Helping low-income parents to work and contribute to their 
children's support. We continue to favor providing grants for 
fatherhood programs that offer help in assuming the role of 
responsible parent, in part through job training and placement 
assistance, and also through counseling and mentoring. As noted 
above, we believe that some fathers need help to avoid domestic 
violence, and that conflict resolution and other relevant 
counseling provided by domestic violence experts should be 
incorporated in programs receiving these grants. We continue 
also to believe that both custodial and non-custodial parents 
need access to effective job training and placement services, 
since both parents are needed to support their children. We 
urge the Subcommittee to include these grants in the proposed 
legislation, but also to adjust TANF requirements so that 
custodial parents may participate in education and training in 
order to enhance their earning capacity.
    The costs of H.R. 4469 are not fully offset within the 
legislation. We would oppose funding the bill by cuts in other 
programs serving low-income people. We have heard that cuts in 
TANF supplemental grants or in the Earned Income Tax Credit for 
childless workers are being contemplated as offsets, actions we 
strongly oppose. With budget surpluses continuing to grow, 
there is no possible justification for cutting other programs 
that benefit low-income people.
    Thank you very much for your attention to this testimony. 
The Children's Defense Fund (CDF) is a private, nonprofit 
advocacy organization whose mission is to Leave No Child 
Behind(TM). We receive no government funds. CDF provides a 
strong, effective voice for all the children of America who 
cannot vote, lobby, or speak for themselves.
      

                                


Statement of David L. Levy, President, Children's Rights Council

                  Hearing on Child Support Enforcement

    We are writing to clarify incorrect information submitted 
to you regarding Fatherhood Grants. This information was 
included in the legislative proposal to changes in rules for 
the distribution of child support collections under H.R. 4469.
    We agree that fathers and mothers should be included and 
supported in the law regarding family issues. We therefore 
support the basic goals of the Fatherhood Program. However, our 
concern lies with unsupported and incorrect information 
presented to you regarding shared parenting. We would like to 
set the record straight.
    Mr. Victor Smith, from Dads Against Discrimination, asks 
``you [to] regard a request of sole custody opportunities as a 
fundamental right.'' in his testimony on H.R. 4469. Although 
this bill does not affect custody determinations, it is 
important that you understand family issues, such as this, when 
creating any type of legislation affecting families. Sole 
custody, in many cases, damages children. Prior to the 1920's 
fathers were almost always granted sole custody of their 
children.\1\ After the 1920's, the preference switched to 
mothers as the usual recipients of sole custody. Currently 
however, shared parenting is preferred by both psychologist and 
courts, for children and families. Children need both parents 
involved in their lives, in more than just a minimal or 
monetary sense. A longitudinal study conducted by noted 
researcher Sanford Braver, Ph.D., found that when parents have 
no input into how their children are raised and their usual 
parenting rights are taken away, they withdraw from the 
obligations of parenthood financially and emotionally.\2\ 
Policies, such as joint custody, that support noncustodial 
parents by giving them more control in their children's lives, 
increase financial child support compliance and prevent the 
occurrence of the problem.\3\
---------------------------------------------------------------------------
    \1\ Alexander Hillery II, The Case for Joint Custody, The Best 
Parent is Both Parents, David L. Levy, ed. at 29 (1993).
    \2\ Sanford L. Braver, Sharlene A. Wolchik, Irwin N. Snadler, 
Virgil L. Sheets, Bruce Fogas, and R. Curtis Bay, A Longitudinal Study 
of Noncustodial Parents: Parents Without Children, J. of Fam. Psych, 9, 
20, v.7, no.1, (1993).
    \3\ Id. At 21.
---------------------------------------------------------------------------
    In addition, shared parenting was described by Mr. Smith as 
``a political concept which is rejected by those who know of 
the failure rate.'' However, joint custody is neither a 
political concept nor has a high failure rate. In fact, 
psychologists have been increasingly successful in educating 
the courts on why joint custody is beneficial to the child. 
Once implemented, shared parenting has been found to be 
extremely successful as a positive alternative for continuing 
custody disputes. Some examples of this include:
     By 1993, forty-eight states and the District of 
Columbia had accepted some form of joint custody
     Currently, twenty-six states plus D.C. have a 
presumption for shared parenting in their laws.
     90.2% of parents with joint custody paid their 
child support, 79.1% of parents with access paid their child 
support, and only 44.5% of parents with neither joint custody 
nor access paid their child support, as reported by the Census 
Bureau in 1992.
     Joint custody is an extension of the drive for 
equality that is so important to America today.\4\
---------------------------------------------------------------------------
    \4\ Hillery II, supra, note 1 at 51.
---------------------------------------------------------------------------
     Sole custody sends a message that only one parent 
should have responsibility. Joint custody sends the message 
that both do, legally and financially.\5\
---------------------------------------------------------------------------
    \5\ Id.
---------------------------------------------------------------------------
     Children raised by two parents are more likely 
than children raised by only one parent to have higher self-
esteem, higher school achievement, and less involvement in 
crime and drugs. Statistically, children with two parents are 
at less risk than children with only one parent.\6\
---------------------------------------------------------------------------
    \6\ Id. at 52.
---------------------------------------------------------------------------
     Section 16 (School Psychology) of the American 
Psychological Association similarly found ``favorable 
outcomes'' on a variety of measures relating to children when 
shared parenting was practiced, including: father involvement, 
best interest of the child standard, financial child support, 
relitigation and costs to the family, and parental conflict.\7\
---------------------------------------------------------------------------
    \7\ See Parenting Our Children: In the Best Interest of the Nation, 
Report of the U.S. Commission on Child and Family Welfare, 96 (Sept. 
1996).
---------------------------------------------------------------------------
    The involvement by both parents in the life of their 
child(ren) is not only important but also necessary. Studies 
have shown not only do the children fare better, but the 
government does not to bear as much of a responsibility for the 
support of children.
    Thank you for taking the time to create legislation in 
support of children and families.
      

                                


                 Cooperative Parenting for Divided Families
                                       Pittsburgh, PA 15221
                                                       June 1, 2000

A.L. Singleton, Chief of Staff
Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, D.C., 20515

    RE: CHILD SUPPORT ENFORCEMENT

    Thank you for giving our organizations a chance to present 
information on child support.
    Cooperative Parenting for Divided Families has, in some ways, been 
involved in the concerns of child support since 1984. We are all part 
of a larger collaboration of organizations. Some of these are national 
and statewide with thousands of members throughout the country. We have 
an excellent reputation, dedicated staff, a high quality of helping, 
reliability, and offering of free services.
    I personally have been a child-first advocate for over 17 years. My 
organization believes that every child is entitled to child support and 
quality time-sharing from both parents, regardless what that parent 
might be like. This is why we provide supervised visitation in order to 
prevent harm to any child or parent.
    We have many concerns with both child support issues and the access 
and visitation problems in our county. We have tried to bring these 
concerns to our Pennsylvania Commonwealth Court of Common Pleas of 
Allegheny County Family Division. Our efforts have been unsuccessful 
because certain individuals in the court say that we are only an 
interest group and have chosen not to involve us in helping to improve 
the child support and visitation system. I have included our offer to 
the court and their response to us.
    Our members and those we help are the indigent, the common parents 
from low to middle class families, the handicapped, the disabled, those 
who cannot get or do not have fair representation in the courts, and 
those who feel that they have been given the run-around by the court 
system.
    What we see here in PA is that the courts do not use every resource 
to which they have access regarding local, state, and federal laws. The 
agencies do not cooperate with one another, and there is a lot of red 
tape and incompetence within family division. The agencies do not 
inform one another of the laws and their duty to uphold them. When 
people become educated and aware of their legal rights and remedies, 
and then go to the court to ask that those rights be enforced, the 
court does not follow laws and rules handed down by the government to 
better child support and visitation enforcement. The court either 
ignores them or does not have a clue to the laws and their 
responsibility to follow up on all leads, information, or laws 
available to them. One of the things we have learned is that attorneys 
get to go in the front door of the court. Organizations like ours, 
being non-attorneys, have learned to go in through the back door. Thus 
we have more insight into the actual whole picture.
    Cases can sit for months on a desk without ever being looked at. 
Even when cases meet certain criteria as required by law for action, 
they can sit on a desk for months before they are moved to another 
department where nothing is done on them for more months. When the 
federal government with all its resources goes to family division and 
gets no help or respect, it's not surprising when the courts cannot 
find a parent not in hiding, let alone a parent who IS hiding. Most 
actual deadbeats do not hide at all; they do not worry that the courts 
might be looking for them. This is a really big problem in our court 
system. Family division does not have an answer to how to fix the 
problem, so they say there is no problem at all! Some judges have 
stated that they are giving the best services available. Some of the 
records and statistics look good, but if you can compare the number of 
cases where support is collected against the cases closed (so those 
numbers won't interfere with their collection of bonus incentive 
monies) you would find a large discrepancy.
    Child support enforcement should be removed from the court system 
but not put into the hands of profiteers who could also benefit from 
the suffering and misery of families in distress. Family court is a 
billion-dollar business for everyone but the families who need their 
support. It should be separate from family division. CSE has to wait 
until family division does its job, then forwards the case; if it's 
inefficiently help up in someone's office for weeks and months, CSE 
cannot act until they receive it. Harrisburg's answer to the caller is 
that they are only here to assist you in getting child support. This 
office would do better if removed from the control of the court, or at 
least given their own division within family division where the people 
can go and talk to a CSE officer themselves instead of relying on FD to 
take their case to the enforcement office. In Allegheny Co., the court 
is set up so that the people can have no contact whit CSE officers. A 
person should be able to leave the court and go to the enforcement 
office, or just visit the enforcement office when they have a need, or 
when they have new information on a non-custodial, non-compliant 
parent.
    A case should be followed all the way through, just like the ``by 
one judge, one case'' or ``by one case, one counselor"(DRO meaning 
Domestic Relations Officer here.) A case should be able to move through 
the court the same day and decisions should be made on that case 
immediately instead of having clients sit in court while the person 
holding the case has no power to make decisions--they make 
``suggestions.'' A case should be able to follow the proper channels 
straight to a judge or the motion (floating) judge on the same day for 
immediate action to be taken. Now the case should go to the correct 
department which can take action and make action happen instead of 
having that case sit idle for months or (no exaggeration) years. 
Because the location of a parent is unknown, there is no justification 
for letting a case sit idle. Departments within the government are not 
working together. I know an agent at the federal level, locally, that 
has five cases, which sat dormant for over a year before being given to 
him. On subject was paying, two were dead, and one is incarcerated. 
Staff people are pulled from other departments and put into CSE who do 
not have a clue as to what to do and where to turn. FD provides no 
assistance to them, or no assistance to the public. Our organizations 
are able to help and to educate those trying to work their way through 
the maze of the court system.
    These same courts should make use of legitimate 501 c (3) non-
profit organizations who actually help to improve child support 
collection and child access by advocating and working to improve the 
community. The 1996 Welfare Reform Law (P.L. 104-193) is only as good 
as the enforcement that the courts are willing to provide. Compare the 
numbers of cases of child support collected and uncollected with the 
number of licenses suspended. PA has the power to revoke licenses but 
chooses not to actually enforce this existing law. In the statistics 
there is no reflection of an actual increase due to the suspension of 
professional licenses. The courts have to use and enforce all the 
options they have under the law, do an automatic increase for non-
payment, and attach assets, fines, liens, and jail. There are no 
penalties now, and they are too lenient with habitual repeat offenders. 
The court allows too many individuals to be in contempt of court and 
perjure themselves out. How many times can one person be in contempt 
before the court acts? When it does act, it lets them perjure 
themselves repeatedly. Why would any parent worry about the 
consequences of not supporting their child when the courts themselves 
don't take this matter seriously? Some of these people can have four 
contempts and show up at court as they choose. Most appear due to a 
warrant, then they are released without paying, and they go until the 
next warrant is issued. There are no penalties for willfully refusing 
to pay your child support, or denying the other parent access to the 
child.
    Non-custodial parents have learned that they can perjure themselves 
out of contempt by paying a little money--just enough to satisfy the 
court at that time. The non-custodial parent should not be given such 
long times to report to enforcement officers when found in violation of 
compliance. They should go before a judge for strict penalties. No 
child support, judge, jail! Fines and less support should be imposed 
upon custodial parents who with hold visitation from the other parent. 
When filing for child support if the 40/60 formula is enforced for 
support, then the parent in violation of providing visitation should be 
penalized for interfering with parenting time.
    Most non-custodial parents that can pay do pay. Those who cannot 
should be made to enter programs for job training, education and 
parenting classes. It is up to the court to tell the difference between 
those who try to pay and the ones who just do not want to pay. The ones 
who simply cannot pay still try to spend time with their kids and to 
make an effort to pay something. They do not go months and years 
without paying or seeing their child--this is a parent trying. With 
some help they might try to meet their legal obligations.
    A $50 pass through is not much of an incentive for a family to move 
from welfare to work. There is no benefit to losing food stamps, 
childcare, and medical help if they go to work. Non-custodial parents 
do not like paying child support when welfare is getting the bigger 
chunk of money while their child receives only $50. Welfare should get 
$50 and the custodial parents the rest without penalties such as a cut 
in food stamps. Even when the order is written by the judge and it says 
that the family gets $200/mo. And welfare $50, anything over the $200 
goes to welfare and not the family even when the family is owed 
arrears. Harrisburg says PACES can only release the checks after a 
certain day and that any money that comes in before or after the 
release date goes to welfare. If the order reads child support to be 
$200 and $50 to welfare, and $300 comes in that month, welfare gets the 
extra $50 and the family gets nothing of the arrears owed to them when 
welfare is also due arrears. This is how PACES explained it to me when 
money comes in and it is not the family's release date for child 
support. It sits there until that release date and any money that comes 
in before or after that date is sent to welfare. What ends up happening 
is that all the money that was sent in that month went to welfare and 
not the family because of some unknown release date. By the time it's 
due for the family to receive its support, there is no more money 
because it all went to welfare.
    They do not hold up money due to welfare just to the needy 
families. Families leaving welfare should be entitled to all the money 
they are owed.
    Personally our organizations have found non-custodial parents 
faster than our court system has found them. There are some in hiding 
for years who have changed their social security numbers and have 
crossed state lines, including custodial parents that are collecting 
child support and are hiding the child from the non-custodial parent. 
Sometimes the money is going to welfare being paid through PACES and 
the court cannot tell the non-custodial parent seeking parenting time 
that they know where the child is. We have so many members with horror 
stories that have been victimized by the court system. Anything that 
you can do to improve this failing system, that is failing our 
children, would be greatly appreciated by our entire state!
    I have enclosed information on our organization. Please feel free 
to contact me for any additional explanation of information/assistance. 
I would like to be of further service to you. And, thank you for 
providing this opportunity to us, and for your interest in what the 
grassroots organizations have to say.

                                             Denise Simpson
                                                  President of CPDF
                                 Director/Group Coordinator of CPGI

    DDS/dds
    CC to all staff

    [Attachments are being retained in the Committee files.]
      

                                


Statement of John Haeger, Treasurer, Fathers are Parents, Too, Lilburn, 
GA

           H.R. 1488, The ``Hyde-Woolsey'' Child Support Bill

    I thank the Honorable Henry Hyde and the Honorable Lynn 
Woolsey for this opportunity to contribute written testimony to 
this Committee. I am a non-custodial parent of two daughters, 
17 and 18 years old. My child support obligation will end in 
less than two months, so this Committee, in modifying Federal 
child support policy, can offer no help for me or for my 
children. I am writing for the benefit of parents and children 
still affected by this Federally-encouraged system of child 
support awards and enforcement.

Summary:

    I urge this Committee to demand compliance with 
Congressional intent by HHS' grantees of federal financial 
participation in programs of state child support enforcement 
administration. When this Subcommittee recommends legislation 
to the full Committee, and to the House, and when citizens see 
those bills enacted into law, they, and especially those 
affected by the legislation, have a reasonable expectation that 
Federal funds ostensibly disbursed for a Congressionally-
established purpose will be spent in a manner that reflects 
Congressional intent. This is not the case in Georgia since 
1989. And, based on HHS claims of lax enforcement standards, it 
is likely not to be the case with far too many grantee-states.
    This is a request for Congressional inquiry into the 
effects of excessive child support guidelines decoupled from 
family economic statistics which, in conjunction with lack of 
payer self-support reserves can result in awards of support in 
excess of certain parents ability to pay and distortion of 
collection statistics. This is the case in Georgia. At the 
individual level, this combination can have the effect of 
increasing reported collection shortfalls. At the national 
level, it can contribute to bad national policy. This blood-
from-turnip approach serves only to harass and impoverish low-
income payers while contributing nothing to child support; it 
may have the effect of denying child support to recipients from 
some marginal payers who could pay an economically-justified 
amount. And, more importantly, it may have the effect of 
inflating reports of uncollected child support.
    This is a request to refrain from changes to Federal child-
support policy based on what is very likely flawed data 
resulting from HHS' grantee non-compliance with Congressional 
intent as permitted by HHS' exceptionally accommodative 25% 
non-compliance standard (and apparent HHS' acceptance of 
violations of even that lax standard). If Federal policy is to 
be changed, the affected citizens deserve that this 
Subcommittee demand accurate data on which to base its 
decisions. Georgia's systematic non-compliance, specifically in 
the areas of excessive awards and lack of self-support reserve 
contribute to inflated Georgia reports of uncollected child 
support.
    This is a request for Congressional inquiry into selective 
use by Federal grantee-states of interstate collection 
facilities to emphasize recoupment of state welfare outlays as 
compared with collections which flow solely to recipients.
    This is a request for inquiry into the ``basis and 
purpose'' for HHS' 25% grantee non-compliance standard (in the 
Administrative Procedure Act sense) and comparison with 
comparable standards of compliance required by other Federal 
social-service grantors.
    This is a request for Congressional inquiry into the 
veracity of claims of compliance with child-support-relevant 
Federal Statutes and Regulations by individual grantee States 
in their quarterly applications for awards of grants of federal 
financial participation in state child support enforcement 
administration.
    This is a request that this Subcommittee urge the Secretary 
of HHS in the strongest possible terms to take qui tam action 
to recoup federal funds disbursed to states pursuant to false 
claims of compliance with relevant Federal statutes and 
regulations in their quarterly grant applications or elsewhere. 
Such action would, at the same time, give both grantee-states 
and affected citizens an indication that Congress means for 
grantees to comply with Congressional intent in expenditure of 
Federal funds. It would impress upon grantees the importance of 
compliance with the plain text of Congressional and HHS intent 
even in the face of excessively accommodative oversight by HHS 
program officers.
    HHS must be able to rely on the veracity of grant 
applications and other submissions by state officers. Absent 
greatly increased funding, HHS cannot afford to devote 
resources to monitoring state program compliance at the detail 
level in every state. Like the IRS, HHS must be able to rely 
(in general) on a system of honest self-assessment by state-
grantees. And when that level of honesty (or even mere 
reporting accuracy) is lacking, grants can be awarded to non-
compliant grantees, undermining Congressional intent.

Discussion:

    HHS' 75% Compliance Standard: In 1998, a letter request was 
made to the Secretary of HHS to investigate Georgia's apparent 
deviations from Congressional intent. No action was taken. In 
response to a Congressional follow-up, a belated HHS response 
reported that HHS applies a standard of compliance that permits 
grantees a 25% error rate and that Georgia is in compliance 
under that standard. Apparently, a violation of Federal 
standards in the Federally-mandated quadrennial child support 
guideline review that could affect 100% of all Georgia child 
support awards only counts as one violation in HHS' compliance-
review methodology. Unless HHS has a special lower compliance 
standard for Georgia, Georgia may not be alone in its 
systematic failure to comply with Congressional intent.
    HHS Compliance Standard May Be Too Permissive: Earlier this 
year when a Federally-chartered corporation which grants 
Federal funds to a different set of social-service grantees 
reviewed grantee compliance, their grantee-compliance standard 
was 5%, not 25%.
    Request for Basis and Purpose-Compliance Policies and 
Procedures: This is a request that this Committee request that 
the Secretary of HHS provide the Committee with an existing 
statement of basis and purpose for her child-support-
administration-grantee compliance evaluation policies, 
procedures, and methodology. Special scrutiny is requested for 
the question of how the impact of systematic violations of 
Congressional intent within a state program (or, as in Georgia, 
without it, since Georgia has never imposed its State Plan for 
Child Support Enforcement state-wide) shall be evaluated.
    Child-Support Data Not Reflective of Compliance with 
Federal Policy: Statutory changes to Federal policy concerning 
child support guidelines are being proposed to this 
Subcommittee. And HHS' has admitted to an exceptionally 
accommodative 25% non-compliance standard in its program of 
awards of grants of federal financial participation. As a 
result of that lax standard, and Georgia's zeal to take 
advantage of HHS' lax oversight, data collected by Georgia (and 
quite possibly many other states) may not be not representative 
of the results of past (or current) compliance with Federal 
child-support policy as enunciated in Federal statutes 
(recommended by this Committee) and Federal regulations 
promulgated by HHS in implementation of those statutes.
    Request to Refrain from Changes Based on Questionable Data: 
This is a request to this Committee to refrain from making 
Federal policy decisions pending a review of HHS grantee 
compliance and an evaluation of the distortions embedded in HHS 
data which result from lax HHS compliance standards. 
Investigation of compliance by Federal grantees with existing 
Federal statutes and regulations and the effects of non-
compliance on data reported by Federal grantees may lead to the 
conclusion that non-compliance by participating states has so 
distorted child support enforcement reports submitted to HHS as 
to make them useless for Federal policy-making purposes.
    Closed Avenues-Plea for Enforcement of Congressional 
Intent: HHS apparently assumes it is not subject to any form of 
oversight in light of the ``absolute discretion'' granted it in 
a Supreme Court ruling, Freestone v. Blessing, 117 S.Ct. 1353 
(1997), which establishes the principle that child-support 
recipients (and, most likely payors, too) are granted no rights 
under Federal statutes (recommended by this Committee) to force 
the states to comply with Congressional intent as expressed by 
those same Federal statutes and as implemented by Federal 
regulations implementing those statutes. Recently, the U. S. 
Supreme Court closed yet another door to citizen enforcement of 
Congressional intent expressed in these Federal statutes in a 
qui tam case, Vermont Agency of Natural Resources v. United 
States ex rel. Stevens which bars citizen qui tam suits against 
states which fail to comply with the terms of their federal 
grants. In 1998, a D.C. District Court suit seeking to enjoin 
the Secretary of HHS from awarding or disbursing grant funds to 
Georgia while she fails to comply with Federal statutes and 
regulations was dismissed without consideration of the merits. 
Congressional oversight seems to be the last remaining avenue 
open to victims of HHS' lax oversight and systematic 
overreaching by HHS grantee-states.
    Request for Oversight of HHS and Grantee Compliance with 
Congressional Intent: This is a request for investigation of 
and, in light of HHS's admission of lax oversight practices, 
continuing oversight of, HHS' management of its State Child 
Support Enforcement Administration grant program. This 
Committee would be well within its rights to request of the HHS 
Secretary an existing a written statement of basis and purpose 
for HHS' lax grantee compliance standards as required by the 
Administrative Procedures Act.
    Georgia's Failure to Comply with Federal Statutes and 
Regulations: Based on the 1993 and 1998 reports of the Georgia 
Child Support Commission to the Governor, it appears that 
Georgia has intentionally (and both times under the leadership 
of a Georgia Supreme Court Justice) failed to comply with 
minimal requirements of the Federal statutes and regulations in 
its Federally-mandated quadrennial review Georgia's child 
support guidelines. In both instances, the Supreme Court 
Justice/Chairwoman failed to report that non-compliance to the 
Governor within the published report. One would think that a 
member of the Georgia Bar who sits on Georgia's Supreme Court 
would have an ethical duty to report such a lapse in her 
Committee's report to the Governor.
    Bloated Georgia Guidelines and Distorted Reports: As 
discussed in Mark Rogers' article in the Spring 1999 issue of 
the ABA Family Law Journal, Georgia guidelines lead to bloated 
awards; in part by both Commissions' failure to ``consider the 
cost of raising children;'' in part by Georgia's refusal to 
incorporate a self-support reserve (both Federal requirements), 
by Georgia's refusal to apply commonly-accepted principles of 
family economics to its guidelines, and in other ways.
    Grantee Non-Compliance and Distorted Reports: In so doing, 
Georgia has so distorted any results of award amounts or 
compliance rates that may emanate from this state as to make 
Georgia data useless (or worse, misleading) in Federal policy 
decisions. As a result of lax HHS oversight policies and 
methodologies, this effect may not be limited to Georgia. 
Reported child support award and enforcement results may not 
reflect the results of grantee compliance with existing Federal 
policy in any state.
    Importance of Accurate Data to Federal Policy-making: 
Federal decisions to modify policy should be based on accurate 
data reflective of the results of compliance with existing 
Federal policy. Excessive awards (as in Georgia, see Rogers 
above) which exceed the ability of low-income (and sometimes 
middle-income) payers to pay can distort state reports of 
compliance and of the distribution of award amounts. Until this 
Committee can be assured of compliance with Congressional 
intent by HHS and by HHS grantees, changes to Federal policy 
based on flawed data is premature. It would be far better to 
investigate grantee compliance and to assure that reported 
results are reflective of compliance with Congressional intent 
and with Federal policies established in Federal statute and 
regulations.
    Request for Investigation of Georgia's Grant Award 
Application Claims: Georgia has obtained grants since the 
inception of this program in 1989 based on claims of compliance 
with the Federal statutes and regulations which establish grant 
qualifications. HHS has awarded grants to the State of Georgia 
obtained based on what appear to be false claims (explicit or 
implied) by the State of Georgia in its quarterly applications 
for award of grants of Federal financial participation. Many, 
if not all, of these quarterly claims of compliance may be 
untrue, in some cases on a state-wide basis, in some cases on a 
local basis, with most violations extending for periods of 
years. I request that this Committee exercise its privilege to 
investigate HHS' quarterly awards of Federal financial 
participation in Georgia child support enforcement 
administration.
    Request for Investigation of Other States' Grant Award 
Application Claims: HHS grants of federal financial 
participation in state child support administration are 
ostensibly awarded to states which comply with Federal statutes 
(written by this Subcommittee) and Federal regulations 
promulgated by HHS pursuant to those statutes. I further 
request investigation into the basis and purpose for HHS' pre-
award inquiry procedures upon which basis quarterly awards of 
grants of federal financial participation in state child 
support enforcement administration are made. In light of HHS' 
lax grantee compliance requirements, this is a request that 
this Committee inquire into compliance by all states which have 
been awarded grants by HHS under this program. An independent 
government audit may be in order.
    Deprivation of Due Process of Law: Federal Regulations call 
for child-support-administration grantees to accord due process 
of law in implementing these federally-assisted programs. 
Details of systematic deprivations of due process in Georgia 
child support enforcement are legion. Only a few salient 
violations of Federal statutes and regulations have been 
recited here. Georgia's methods arguably include systematic 
deprivation of Constitutional rights to equal protection of the 
laws as well. These forms of overreaching can be described in 
detail to Committee investigators or during this Committee's 
inquiry into grantee compliance.
    Request for Qui Tam Recoupment of Funds Disbursed to Non-
compliant Grantees: This is a request that this Committee urge 
the Secretary of HHS in the strongest possible terms to take 
qui tam action to recoup federal funds disbursed to states 
pursuant to false claims of compliance with relevant Federal 
statutes and regulations in their quarterly grant applications 
or elsewhere. Such action would, at the same time, give both 
grantee-states and affected citizens an indication that 
Congress seriously intends that Federal funds be awarded and 
disbursed ONLY to grantees whose state programs comply with 
Congressional intent. It would impress upon grantees the 
importance of compliance with the plain text of Congressional 
and HHS intent even in the face of excessively accommodative 
oversight by HHS program officers.
      

                                


                                           Racine, WI 53402
                                                        May 1, 2000

    Dear Legislator:

    For those legislators who have asked themselves, ``How does a 
deadbeat parent accumulate more than $100,000.00 of child support 
arrears and what does Wisconsin do about it?'' I can give you an 
answer. Child support awards on average far exceed the actual cost of 
raising a child. Senate Bill 520 addresses this issue. The current 
child support standards in Wisconsin were written in the mid 80's by a 
group of women who worked for the Dept of Health and Human Services. 
Not one father was involved even though fathers are more than 10 times 
likely to pay child support than mothers. The standards were written 
with an obvious bias against the non-custodial parent, again, more than 
90% of the time, dad. Wis Statute 767.25(1c) states that the child of 
divorce has the right to the same standard of living as if the marriage 
had remained intact. This is impossible because lifestyles can not be 
duplicated on the same income. For this reason, instead of merely 
paying for his half of the incremental cost of raising a child, dads 
are frequently expected to pay for entire houses, cars, vacations, etc. 
This means mommy's lifestyle is subsidized by dad. She is also able to 
avoid her financial obligation to the children entirely. Child support 
is not based on actual earned income. Wis Statute 767.25(1hs) also 
states that support is based on ``earning capacity.'' Judges are 
allowed to ``assign'' an income to a father based on evidence produced 
to him by mommy for dad's level of training and experience. In 
addition, judges can and do ``impute'' income from assets dads own 
including but not limited to his home, auto, pension, business, IRA, 
etc. There is no cap on child support awards in Wisconsin.
    Meantime, mom is under no obligation to allow dad or the child's 
paternal relatives to use the items he has provided for. In addition, 
she can and does move the children away. Judges typically allow her to 
move if dad objects. If dad chooses to move to be with his children, 
his ``earning capacity'' and therefore child support is unchanged even 
if by necessity he must take a lower paying job. If dad's income drops 
for any reason whatsoever, disability, layoffs, injury, etc, child 
support arrears accrue at 11% interest (lowered just this year from 
18%). Only when dad hires a lawyer and asks for forgiveness can he hope 
a judge sides with him. If not, he cannot appeal as child support 
awards are at the discretion of the judge. This process takes at least 
6 months.
    Mom is also free to use the money in whatever fashion she wants 
including but not limited to paying experts and attorneys for the 
purpose of removing dad from the kids lives entirely. Dads must then 
pay an attorney and expert or risk not seeing his kids. There are no 
laws whatsoever that require mom to spend the money on the kids. When 
dad is allowed to see his kids, all of his expenses and incremental 
costs are above and beyond his child support obligation. When the child 
says, ``mom buys me anything I want, why don't you buy me anything?'' 
You quickly learn that to answer honestly will cost you time with your 
child. When dads do see their kids, his appearance is used as a 
convenient time to have him served with papers or have him incarcerated 
in front of the kids so they can see firsthand what a horrible person 
he is. This is frequently done by bitter, vengeful moms, and is totally 
legal.
    Why would Family Court allow this to happen? Three reasons, first 
because mommy wants it and asks for it through her attorney. Second 
because the county receives one dollar of federal matching funds for 
every dollar assessed. This money can be used to pay for police, 
firefighters, snow plows, etc. In other words, this money allows 
politicians to decrease property taxes. (One segment of society is 
victimized for the good of all). Third because there is no such thing 
as a domestic abuse shelter where dads are given free counselors, 
attorneys, and most importantly, lobbyists. All of this is done, ``in 
the best interest of the children".
    I believe that both parents are responsible for both the emotional 
and financial needs of a child. I am proud to support my child. I thank 
God for giving me not only a child, but also an income to support that 
child. The question is how much is enough? According to recently 
released data from the Dept of Agriculture, (http://www.newsday.com/ap/
washington/ap919.htm) the average cost of raising one child is 
$160,140. If you do the math, (160,140 divided by 18 years and 12 month 
per year divided by 2) dad's half share comes to $370 per month ($270 
and $540 for low and high income parents respectively). Why am I paying 
$5123.00 per month for one child? This would assume a father with no 
role in the child's life. Obviously, as dad spends more time with the 
child, this amount should decrease since dad is assuming these 
incremental costs as well. Current support standards force dads to pay 
3, 4, 5, even up to 10 times this amount depending on the judge. 
Remember, child support is tax free to mom. Dad pays the tax. The 
discrepancy increases as income increases.
    Irresponsible people are going to be irresponsible no matter how 
many laws you pass. As you pass more strict support guidelines, the 
more you victimize responsible dads. The solution is to pass equal and 
fair laws and then enforce them. I would love to enjoy the privileges, 
responsibilities, and joys of raising my own daughter 50% of the time. 
The current child support guidelines reward moms for removing dads from 
their children's lives. They punish those of us responsible dads who 
are ready, willing, and able to be involved in the lives of our 
children, yet are forced out, ``in the best interest of the child,'' 
without due process, representation, or equal protection. The current 
child support guidelines should be rewritten with input from 
responsible dads. Senate Bill 520 attempts to do this.

            Sincerely,
                                       Malcolm Hatfield, MD

      

                                


Wisconsin Cares about Kids

                   WI Support Collections Trust Fund

    Wisconsin cares for kids by removing them from the only 
father they will ever have. Wisconsin law gives moms and 
counties tremendous financial incentive for removing children 
from their father's lives. To date, my daughter Mary's mother, 
Elizabeth Hatfield, MD, has received over $400,000.00 in child 
support. This is not spousal or family support. This is child 
support for one child. Racine County has received over 
$400,000.00 in federal matching funds. This is how politicians 
keep property taxes low. Victimizing one segment of society for 
the good of all.
    I saw my daughter Mary (now 11 years old) a total of 6 
hours in the month of March, 2000. How many hours did you spend 
with your child? To date, Mary has gone 25 months with no 
contact not only from her father, but also from her father's 
extended family (cousins, aunts, uncles, grandma, stepmother, 
stepsister, etc.) Since 1993, when she was 4 years old, she has 
averaged 9 hours of contact per month with not only dad, but 
his extended family. This is child abuse at its worst. 
Perpetrated by child advocates who act, ``in the best interest 
of the child.''
    Wisconsin and Judge Richard Kreul have single-handedly 
removed Mary from her father. She now lives in Hinsdale, 
Illinois. Please stop this child abuse. Please give kids the 
father they deserve. Mary's court appointed attorney(GAL), 
Michael Phegley, has pocketed over $55,000 to date solely by 
keeping Mary from her father and his extended family.
    All children deserve a father. Stop removing dads from 
their children's lives. Stop giving moms and counties strong 
financial incentives to remove a child from her daddy's life. 
Please stop all forms of child abuse.
    For more information visit my website at http://
www.mydoctor.com/hatfield

                                       Malcolm Hatfield, MD
      

                                


[GRAPHIC] [TIFF OMITTED] T6898.001

      

                                


Statement of Hon. Michael K. Jeanes, Clerk of the Superior Court, 
Maricopa County, AZ

    I am an elected official in Arizona, Clerk of the Superior 
Court, serving a constituency of 2.9 million in Maricopa 
County, which is the 5th largest county, and the 8th largest 
court system in the nation. On behalf of those families not 
served by the Title IV-D program, I urge your support of 
legislative bill, H.R. 4469.
    In addition to my responsibilities as official record 
keeper and financial officer for Superior Court, I have 
oversight of the Family Support Center, which devotes 100% of 
its time and budget to child support related issues, such as 
the establishment, modification and enforcement of child 
support orders, and enforcement of court-ordered parent-child 
access (visitation).
    Up to half of the Arizona child support cases have private 
or (non Title IV-D) status, with circumstances that merit 
gaining access to information and enforcement tools currently 
available only to the State IV-D agencies. It is crucial to 
those families that these enforcement tools be made available 
to public government agencies such as offices of the Clerks of 
Superior Court, whose objective is to serve the Non-IV-D child 
support population.
    In 1994, the Arizona legislature authorized the 
establishment of the Child Support Coordinating Council 
Subcommittee, co-chaired by members of the State Senate and 
House. Council membership includes child support-related 
entities such as Family Court judicial officers, 
representatives from the Attorney General's office, the Clerks 
of the Superior Court, custodial and non-custodial parents, the 
employer community, and the State IV-D agency, (Division of 
Child Support Enforcement). The Clerks have worked diligently 
to support the objectives of the Council and its members, 
specifically the State IV-D agency, through collaborative 
endeavors, and have addressed any child support issues 
requiring legislation or compliance with mandates.
    Prior to the recent Federal legislation, PRWORA, which 
mandated a statewide centralized child support payment 
processing clearinghouse, my office performed child support 
payment processing functions for 60% of the state of Arizona 
cases, both IV-D and Non-IV-D. Yet, this office was fully 
cooperative in assisting the State IV-D agency with its 
conversion agenda, and will continue to work in a collaborative 
spirit. It is now time to address the crucial needs of the Non-
IV-D population.
    The Clerks of Superior Court in Arizona's fifteen counties 
recommended to the Child Support Coordinating Council 
Subcommittee that ALL cases, both IV-D and Non-IV-D, be placed 
on the IV-D agency's Arizona Tracking and Locate Automated 
System including those cases prior to January 1994. This 
recommendation eliminated the need to create 15 separate and 
costly automated systems for receipting and disbursement of 
child support payments, in addition to the state-wide system. 
It eliminated the need for Arizona employers to continue to 
send payments to different locations, depending on the date of 
the court order, as well.
    Unequivocally, our membership has contributed notable time 
and energies to the needs of the IV-D agency in Arizona and we 
now ask for its support in obtaining the tools that will help 
us serve the Non-IV-D families in Arizona.
    In 1988, this office established the Family Support Center, 
which includes Expedited Services for the enforcement of court-
ordered child support, spousal maintenance, and parent-child 
access, (visitation). Providing a non-adversarial forum for 
parties who petition the Court for enforcement of child 
support, a mediation-trained para-judicial conference officer, 
works with the parties to reach resolution. The process allows 
for a 25-day objection period in the event that a party wishes 
to request a formal hearing with a judicial officer, 
(objections and requests for hearings result in less than 10% 
of the cases.) Removing parents from the adversarial nature of 
the court room can lead to greater cooperation between the 
parents, and ultimately minimize harmful effects that parental 
conflict has on the children.
    Due to this service, at least 90% of these cases are 
resolved, without requiring a substantially encumbered Family 
Court to address these matters. However, expanded access to 
enforcement tools as outlined in H. R. 4669, would add 
immeasurably to our ability to help other families. Enforcement 
services are partially supported via a portion of the $61 post-
decree filing fee, and through the County General Fund.
    The critical issue of privacy is an ongoing concern 
addressed by this office on a daily basis, since the Clerk of 
the Superior Court works closely with the Court, holding an 
inherent obligation to protect the confidentiality of 
information. Additionally, for many years, my office has had 
contractual accountability to the State IV-D agency for 
provision of a variety of services, requiring strict compliance 
with both State and Federal regulations, including 
confidentiality.
    Legislation should require that Non-IV-D or private 
agencies register with the Secretary of Health and Human 
Services to ensure that information and enforcement tools are 
used within the parameters of legal intent.
    Although the State IV-D agencies may struggle admirably to 
meet the overwhelming demands of their customers, a significant 
number of families remains under-served. As a proponent of 
partnership and collaboration, it is my conviction that a 
public Non-IV-D agency, such as my office, can bolster the 
state agency's ability to serve families.
    I have met with John Clayton, Director of the Arizona 
Department of Economic Security and his Deputy, Nancy Mendoza, 
who heads the IV-D agency, and have attached a letter stating 
the provisions of their support for expanding access to public 
Non-IV-D entities.
    I urge that Federal legislation support the efforts of 
responsible public and private agencies to enforce child 
support, and that ALL families be given the same opportunities 
to benefit from information and tools needed by the vehicle of 
enforcement of their choice.
      

                                


                    Arizona Department of Economic Security
                                          Phoenix, AZ 85005
                                                       May 16, 2000

The Honorable Michael K. Jeanes, Clerk
Superior Court of Arizona
Maricopa County
201 West Jefferson
Phoenix, AZ 85003

Dear Michael:
    I want to thank you and Kat Cooper for coming to meet with me last 
month to discuss your interest in federal legislation which would 
enable public non-IV-D agencies access to IV-D information and 
enforcement remedies. It was clear to me that we share a common goal of 
ensuring that families receive the financial support they need and to 
which they are entitled. It was also apparent from our discussion that 
you in no way want to jeopardize the State's IV-D program.
    We have several concerns with the proposal for allowing public non-
IV-D entities to participate in IV-D remedies. It is possible that 
many, if not all, of our concerns could be addressed through amendments 
to the proposed legislation. I understand that Nancy Mendoza, my 
Deputy, has spoken with you briefly about our concerns and the need for 
amendments. The following is a more detailed discussion of those items.

Loss of Incentive and Exposure to Penalties

    First, as you know, States compete for federal incentive funding 
which constitutes a significant funding stream for the program as it 
can be used to match federal dollars at 66% per cent. Arizona is 
already at a competitive disadvantage for receiving these funds due to 
demographic factors in our state. In fact, Congressman Hayworth was 
successful in obtaining an amendment to the federal legislation 
governing incentives to ensure that Arizona's lower than average per 
capita income, higher than average mobility patterns and higher than 
average out-of-wedlock birth rate could be considered as unique 
demographic variables in calculating incentives. In accordance with 
Congressman Hayworth's amendment, the federal Office of Child Support 
Enforcement must issue a study of these factors later this year and 
will hopefully make adjustments accordingly. If the Maricopa and other 
Clerks of the Superior Court were to begin offering IV-D type services 
in Arizona, the State program could see a further reduction in its 
incentives as the cases likely to remain in the State's caseload would 
be primarily the harder-to-work public assistance cases. Furthermore, 
in addition to a loss of incentives, the State could lose from 1-5% of 
its Temporary Assistance to Needy Families (TANF) funding should our 
performance on incentives fall below certain thresholds prescribed by 
the Department of Health and Human Services.
    In order to remedy this shortcoming of the bill, we would suggest 
that if the State enters into an agreement with the Clerks of Court to 
provide access to IV-D information and remedies, the Clerk of Court 
cases should be counted as part of the IV-D caseload for purposes of 
incentives.

Impact on Automated Systems and Interface Compatibility

    We have come a long way in working together on automation issues. 
In fact, because of our joint efforts, DES and the Clerks of the 
Superior Court received the Governor's Spirit of Excellence Award last 
fall. I am aware that we continue to work on improvements to Central 
Payment Processing and the State Case Registry.
    It was clear that in order to achieve positive results on these 
joint automation projects, significant effort and time had to be 
invested. Even with this level of commitment, I am sure that you will 
agree that there were ``bumps in the road.''
    The legislation proposes access to data bases and enforcement 
remedies that are entirely dependent on automated systems. In order to 
accommodate Clerk of the Court use of those systems, a significant 
investment of time and resources will be required. DES does not have 
staff or funding to make an ``up front'' investment of this nature with 
the hope of recouping costs through fees as contemplated by the bill. 
In order for us to be able to design, test, implement and maintain the 
interfaces required in the legislation, it would be essential that the 
legislation prescribe that the initial and on-going automation costs be 
borne by the public non-IV-D entity and that the interface standards be 
set by the State.

Due Process for Obligors and State Liability

    Currently, the State IV-D program is required to send notices to 
obligors of enforcement remedies. Each remedy has specific notice 
requirements, timelines for the obligor to respond and a time frame in 
which the agency must resolve the matter. The proposed legislation must 
contain a provision to clarify that the duties of affording notice and 
processing appeals on public non-IV-D cases are the sole responsibility 
of the public non-IV-D entity. Further, while errors in enforcement can 
made by either a IV-D or a non-IV-D entity due to incorrect arrearage 
balances or other mistakes of fact, the State must be held harmless 
from errors in enforcement by the non-IV-D entity.

Oversight of Non-IV-D Public Entities' Adherence to Federal Law

    The State IV-D entity is monitored by several agencies to ensure 
compliance with federal law.
    The monitoring entities include the Internal Revenue Service, the 
Regional Office of the Department of Health and Human Services (DHHS), 
the Audit Division of the Office of Child Support Enforcement, and the 
Office of the Inspector General. The proposed legislation must make it 
clear that the State IV-D agency has no responsibility for monitoring 
the compliance of the non-IV-D entity with Federal laws and 
regulations.

Duplication of Enforcement and Dually Open Cases

    The use of IV-D remedies by the non-IV-D entity has the potential 
of creating confusion and subjecting obligors to multiple enforcement 
actions when parties may be participants in both the IV-D and non-IV-D 
systems. For example, an obligor may owe support to more than one 
family, with one of the custodial parents using the IV-D system and the 
other using the non-IV-D system. If both the IV-D and non-IV-D systems 
are attempting to use the same remedies, such as federal tax offset, a 
conflict in allocation of collections among the families could result. 
Additionally, even an obligor with only one family may be subjected to 
multiple enforcement remedies if both the IV-D and non-IV-D public 
entity are attempting to enforce at the same time. We have had many 
documented examples of ``doubling up'' on an obligor with the private 
collection agencies.
    A similar problem can occur when a family previously received 
public assistance, has assigned arrears owed to the State, but is now 
using the non-IV-D system. When a collection is made it will be 
necessary to sort out the payment hierarchy.
    The proposed legislation must include a mechanism for resolving 
these conflicts in enforcement and distribution of collections.
    I appreciate your giving me an opportunity to consider these issues 
and provide you with our analysis. I recall that you indicated that 
Congressman Hayworth's office would be interested in our position in 
this matter, so I will be forwarding him a copy of this letter. Please 
feel free to contact Nancy to discuss these thoughts in greater detail.

            Sincerely,

                                            John L. Clayton

    c: Congressman J. D. Hayworth
      

                                


Statement of Richard F. Doyle, Men's Defense Association,** Forest 
Lake, MN

                            Alimony/Support*

    Responsibility for alimony/support payments falls almost 
exclusively on one sex, regardless of fault, of who obtains custody, of 
ability to pay, or of the other parent's ability to share in lining 
costs. A Texas Bar Association study found that ``child support'' is 
awarded to 97 percent of custodial mothers, but to only 19 percent of 
custodial fathers. The average monthly award to mothers was $170 per 
child; to fathers, $11 (This was many years ago, hence the low 
figures).
---------------------------------------------------------------------------
    * Given only short notice, the Men's Defense Association has not 
had time to compile the statistics behind the statements herein, but 
most are common knowledge.
    ** A 15,000 member nationwide organization based in Minnesota.
---------------------------------------------------------------------------
    In order to justify increased awards, the Agriculture Dept. 
artificially bumped up the costs of raising children by an accounting 
trick called proportional accounting. This scheme divides the total 
cost of a household by the number of individuals therein. This is 
illogical because the adult(s) therein incur most of these costs with 
or without the children, who add only marginally to the cost.
    Child support aside, former husbands often have a financial 
obligation, called alimony, to further subsidize ex-wives, with no 
reciprocal obligation. If alimony is reasonable, isn't it as reasonable 
to expect ex-wives to cook, clean, and sew for ex-husbands? Alimony is 
out now, you say? No, it isn't. It is merely concealed in increased 
child support or renamed ``maintenance.'' That is why child support 
awards are much larger than the cost of raising children. Divorce court 
judges often set support levels 100 to 1,000 percent higher than the 
actual costs of raising children, according to welfare department cost 
estimates. Some fathers have been ordered to pay 70 to 110 percent of 
their net pay in child support. That is also why the Men's Defense 
Association refers to ``child support'' as ``alimony/support.''
    The worst part of this is that de facto alimony continues-even 
after the divorcee remarries-until the children are emancipated. Thus, 
the divorced husband is often obligated to support his ex-wife and her 
lovers.
    Incredibly enough, husbands are ordered to support all children 
born to their wives during marriage and separation, even if the husband 
is demonstrably not the father and the mother admits as much. One 
hapless fellow in Haupage, New York became a ``father'' of four 
children in this way while serving a nine-and-a-half year sentence for 
robbery.
    Child support is regarded as a father's responsibility and a 
mother's right. Visitation, in contrast, is regarded as a mother's 
responsibility and a father's right. In actual practice, only women's 
rights and men's responsibilities are considered. While mothers can 
thumb their noses at court-ordered visitation, the full resources of 
government, state and federal, come down on non-supporting fathers, 
many of whom are using the only means they have left to enforce 
visitation. Often they are jailed, regardless of their ability to pay. 
We criticized the Soviet Union for the Gulag Archipelago when we have 
our own invisible gulag right here.
    In effect we have communized the family, and required men to 
finance their own family's destruction.
    Lenore Weitzman's vastly overrated book, The Divorce Revolution, 
alleged that women are much worse off financially than men after 
divorce. (Weitzman has subsequently recanted much of her position.) 
These assertions have often been disproved. (See, for instance, Jed H. 
Abraham, The Divorce Revolution Revisited: A Counterrevolutionary 
Critique, Northern Illinois University Law Review, 9:2(1989), 251-298.) 
Many other statistics belie the notion that most men make out well from 
divorce. For example, divorced husbands commit suicide six times more 
often than their ex-wives. The reality of the situation is that very 
few people can afford divorce, other than the very rich and the very 
poor. If one income cannot be stretched to cover two roofs, perhaps 
there should be no divorce or the children should be placed with the 
parent most able to support them.
    While men are most often cleaned out by divorce, the popular 
buzzterm ``feminization of poverty'' elicits considerable sympathy for 
unemployed divorcees. Even if a divorcee is poor, we find it difficult 
to sympathize with someone who elected not to pursue a career, threw 
her husband out, and then pleads poverty. In the modern mentality 
regarding divorce, the concept of individual responsibility is applied 
to men only.
    Torn loose from any pretense of equity, divorce practice is the 
single most egregious and overlooked form of government redistribution 
in America today. And its scope is rapidly increasing. Like mules need 
hay, fathers must have enough left of their paycheck to eat, pay rent, 
keep warm, get to work and back, and (Heaven forbid) maybe raise 
another family. You say he shouldn't enter another marriage? On what 
grounds can you justify one sex being able to remarry, but not the 
other?
    ``Non-support,'' and ``Deadbeat Dad'' have become the ubiquitous 
battle-cry of the sanctimonious. Certainly fathers have a 
responsibility to support their children; but does this continue to 
apply when a father's children have been forcibly taken away and, in 
many cases, effectively brainwashed against him? When Big Brother so 
completely runs a man's family, shouldn't Big Brother also assume the 
man's other obligations?
    Draconian alimony and child support collection measures are like 
the Maginot line, a mighty fortress with guns pointed in the wrong 
direction. The solution is not to persecute men further but to begin 
treating them fairly. This would have two desirable results. First, 
around half of fathers would have custody. Second, those who didn't, 
being treated fairly, would be much more inclined to pay their just 
obligations.
    Fairness to men is the ONLY measure that hasn't been tried 
extensively. Where it has been tried, even in a limited manner as in 
shared parenting, support collections have increased dramatically. All 
other measures have failed--and will continue to fail. Respectfully 
submitted Richard F. Doyle On behalf of the Men's Defense Assoc.
      

                                


Statement of Martha Davis, Esq., Vice President and Legal Director, NOW 
Legal Defense and Education Fund, New York, NY

    NOW Legal Defense and Education Fund (``NOW LDEF'') is 
pleased to submit this testimony on the Child Support 
Distribution Act of 2000. NOW LDEF is a leading national not-
for-profit civil rights organization with a 30 year history of 
advocating for women's rights. Among NOW LDEF's major goals are 
securing economic justice for all women. Throughout our 
history, we have advocated for the rights of poor women, 
focusing on issues of child care, violence, employment and 
reproductive rights.
    Although NOW LDEF believes that child support reform is 
needed to help move parents and their children out of poverty, 
there are a number of glaring problems with the proposed bill. 
If not addressed, these will result in great harm to women and 
their families throughout the country.
    We focus our comments on Title V of the bill, which deals 
with grants to Fatherhood Programs. We believe that this 
section of the bill does not deal adequately with the problem 
of domestic violence. Indeed as currently written it is likely 
to result in federal money supporting programs that will keep 
women in dangerous, violent situations and thwart their ability 
to leave. As discussed more fully below, we are concerned with 
both the failure of the bill to adequately address domestic 
violence and the requirement that grantees promote marriage 
without recognition that marriage is not the best solution for 
all couples. We have proposed specific language at the end of 
our testimony to help address these serious concerns.
    The need to address domestic violence. Women and their 
children make up 90% of the people on welfare and approximately 
85% of all low income individuals. Violence against women is 
one of the main causes of women's poverty. Domestic violence 
makes women poor and keeps them poor. Study after study 
demonstrates that a large proportion of the welfare caseload 
(consistently between 15% and 25%) consists of current victims 
of serious domestic violence. Between half to two thirds of the 
welfare caseload has suffered violence or abuse at some time in 
their lives. Many battered women are economically dependent on 
their abusers. In one study, one third of battered women 
reported that they were prohibited from working outside the 
home. Those who are permitted to work fare little better. 96% 
reported that they had experience problems at work due to 
domestic violence, with over 70% having been harassed at work, 
50% having lost at least three days of work a month as a result 
of the abuse, and 25% having lost at least one job due to the 
domestic violence. Thus, battered women are overwhelmingly 
either totally economically dependent on the abuser or are 
economically unstable due to the abuse. Between 50-90% of 
battered women attempt to flee their abusers.
    For these women and their children, marriage is not the 
solution to poverty. Reunification could instead be a death 
sentence and will almost undoubtedly make them economically 
dependent on the abuser and unable to escape the abuse. Even 
interactions between the batterer and his child could be 
dangerous--both for the child and for the mother if she is 
forced to have contact with him. Five percent of abusive 
fathers threaten to kill their children's mother during 
visitation with their children and 25% of abusive fathers 
threaten to harm their children during visitation. Moreover, 
perpetrators of domestic violence are more than two times as 
likely as other fathers to fight for custody of their children 
as a means of punishing and maintaining control over the 
mother. To protect against this possibility, funding under this 
proposed bill should not be used for custody disputes, 
litigation, or legislative advocacy.
    While we urge you to recognize the danger involved for 
these women and the need to include safeguards in this bill, we 
also appreciate that not all men nor all non-custodial fathers 
are batterers. It is in our collective interest to promote the 
end to all poverty (including men's) and to promote men's 
ability and willingness to pay child support for their 
children, and to have that child support passed through to the 
children. Furthermore, we embrace the promotion of men's 
increased responsibility for contraception, child care, and 
their positive, healthy relationships with their children, as 
well as cooperative co-parenting between custodial and non-
custodial parents.
    To accomplish these goals without endangering survivors of 
domestic violence and their children, we suggest the following:
    Strike the promotion of marriage as a goal in and of itself 
and add domestic violence language where appropriate. As 
explained above, the blind promotion of marriage is extremely 
dangerous for victims of domestic violence.\1\ The goal of this 
bill should not be to force marriage where it is unwise and 
unsafe nor to assume that a two-parent family is automatically 
the best thing for children. Rather, the goal should be to 
promote loving, healthy relationships between parents and their 
children, to encourage cooperative parenting, and to support 
couples who want counseling or other services to improve their 
relationship.
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    \1\ It also sends a message of intolerance and disrespect for gay 
and lesbian partners and families who are not able to marry under our 
laws. In addition, it sends negative messages to the millions of 
single, divorced, re-married and widowed parents and their children 
whose families should be accepted and valued and who should be 
encouraged to provide loving homes for their children and to cooperate 
with the co-parent to raise the child in a loving, healthy environment.
---------------------------------------------------------------------------
    We urge the Committee to strike all language in the bill 
that mandates promotion of marriage and replacement of it with 
language with language that reflects support for healthy, 
cooperative, equal relationships between parents, which may 
include marriage services to couples who desire them. We also 
urge you to insert language to ensure that funds are used in a 
manner that demonstrates an understanding of domestic violence 
and that promotes a non-violent philosophy. This is especially 
important given the inclusion of the charitable choice 
provision, as many religious organizations favor reconciliation 
even where violence is present.
    This Congress has consistently recognized that domestic 
violence is a serious national problem and has made efforts to 
minimize the severe risk to women and children from that 
violence. We urge you not to adopt a bill that ignores those 
very real risks and devotes precious federal dollars to 
programs that may in fact contribute to the problem of violence 
against women that this Congress has valiantly tried to 
ameliorate.
    Specific changes proposed. We suggest the following 
specific changes in the bill to help insure that domestic 
violence concerns are addressed and that federal money will not 
go to promote marriages which will result in harm to women and 
children:

                              I. Marriage

Subtitle A--Fatherhood Grant Program

     Eliminate Section 403A(a) (1) (i.e. the promotion 
of marriage) in its entirety.
     Alternatively, eliminate the requirement in 
403A(b)(1)(B) that applications for Fatherhood Grants must 
demonstrate how all three purposes listed in Section 403A(a)(1) 
will be addressed; and eliminate the restriction in 
403A(b)(2)(A)(iii)(I)(3) that the panel ``shall not recommend 
that a project be awarded such a grant if the application 
describing the project does not attempt to meet the requirement 
of paragraph (1)(B).''
     In the alternative, we propose that 403A(a)(1) be 
modified to state: ``encourage healthy cooperative 
relationships between parents, including marriage where 
appropriate, through counseling, mentoring, enhancing 
relationship skills, teaching how to control aggressive 
behavior, teaching mutual respect and other methods. Marriage 
will not always be the best way to promote responsible and 
positive involvement of both parents in the lives of their 
children and should never be promoted where there is danger of 
physical or emotional harm.''
     If marriage continues to be included as a goal of 
this legislation and continues to be included as one of the 
goals addressed by applications for grants, Mrs. Johnson must 
amend both 403A(a)(1) to include ``where appropriate'' after 
``promote marriage,'' and the penalty provision at Section 
403A(b)(4)(E) to provide specifically that penalties will not 
be applied if a grantee fails to promote marriage in situations 
where marriage would not be in the best interests of the 
individuals served. (For example where one or both of the 
parents has remarried, or where there is a domestic violence 
problem).
     Amend 403A(b)(6), which governs evaluation, by 
eliminating ``effects of the projects on marriage,.''

Subtitle B--Fatherhood Projects of National Significance

     Eliminate all references in (c)(1) to the 
promotion of marriage and married fatherhood as the ideal. 
Replace with language regarding the advantages conferred on 
children by the establishment of healthy, respectful 
cooperative parenting relationships.
     Eliminate (c)(2)(C)

                         II. Domestic Violence

     Insert after 403A(b)(1)(E): 403A(b)(1)(F) A 
written commitment by the entity that the entity will have a 
meaningful collaborative and cooperative relationship with a 
national or state domestic violence coalition or a local 
domestic violence shelter or program with recognized expertise 
in the dynamics of domestic violence and with considerable 
experience working with domestic abuse survivors; and that the 
entity will make available to each individual participating in 
the project education about and referral to services that 
safely provide domestic violence intervention, victim and child 
witness counseling, and classes on violence prevention.
     Amend 403A(b)(2)(A)(ii)(II) and 
403(A)(b)(2)(B)(ii)(II) by inserting ``programs for domestic 
violence prevention'' after ``programs for children.''
     Insert after 403A(b)(3)(B)(iv): 403A(b)(3)(B)(v) 
To the extent that the application includes written agreements 
of cooperation with national or state domestic violence 
coalitions or a local domestic violence shelters or programs 
with recognized expertise in the dynamics of domestic violence 
and with considerable experience working with domestic abuse 
survivors, which should include a description of the services 
each such organization will provide to participants in the 
project, such as education and services for domestic violence 
intervention, victim and child witness counseling, and classes 
on violence prevention.
     Insert after 403A(b)(3)(B)(v) (as drafted above): 
403A(b)(3)(B)(vi) To the extent that the application describes 
a project that will enroll both parents to promote a healthy, 
respectful, cooperative-parenting relationship between the 
parents.

                         III. Charitable Choice

     Delete 403A(c) Applicability of Charitable Choice 
Provisions of Welfare Reform
    Thank you for the opportunity to submit testimony on this 
bill.
      

                                


Statement of Robert G. Williams, President, Policy Studies Inc., 
Denver, CO

    Chairman Johnson and members of the Human Resources 
Subcommittee, thank you for the opportunity to provide written 
testimony concerning child support guidelines, particularly the 
Income Shares Model, which is now used by 33 States. Under a 
grant from the Federal Office of Child Support Enforcement 
(OCSE), I served as staff person to the 1984-86 Advisory Panel 
on Child Support Guidelines. Charged with making 
recommendations to Congress and the States concerning child 
support guidelines, the Advisory Panel was appointed by OCSE at 
the request of the House Ways and Means Committee in 1984. The 
Advisory Panel recommended that States use either the Income 
Shares or Delaware Melson formula as the basis for their child 
support guidelines.
    My testimony explains the Income Shares Model and how its 
use is an equitable and effective means for determining child 
support orders.

                         Background Information

    Prior to the Child Support Enforcement Amendments of 1984, 
which required states to adopt numeric child support 
guidelines, child support order amounts were predominately 
determined on a case-by-case basis. This method was widely 
perceived as being inequitable because order amounts in cases 
with similar circumstances resulted in different order amounts. 
An additional concern was that orders were set too low. At this 
time, child support obligations were estimated to average 80% 
of poverty level.\1\
---------------------------------------------------------------------------
    \1\ Robert G. Williams, Development of Guidelines for Child Support 
Orders, Part II, Final Report. Report to U.S. Office of Child Support 
Enforcement, Policy Studies Inc. (March 1987) page II-i.
---------------------------------------------------------------------------
    The Family Support Act of 1988 (FSA) enacted many of the 
recommendations of the Advisory Panel including a federal 
requirement that states adopt rebuttably presumptive 
guidelines. Deviation criteria are at state discretion but must 
take into consideration the best interests of the child.\2\ The 
FSA also requires States to review their child support 
guidelines at least every four years ``to ensure that their 
application results in the determination of appropriate child 
support amounts.'' As part of the review, States are required 
to assess the most recent economic data on child-rearing costs 
and conduct a case file review to ensure that deviations from 
guidelines are limited.\3\
---------------------------------------------------------------------------
    \2\ 45 C.F.R. Sec. 302.56 (g)
    \3\ 45 C.F.R. Sec. 302.56
---------------------------------------------------------------------------
    Federal regulations do not specify which guidelines model 
States must use. Thirteen states base their guidelines on a 
percentage of obligor income; 33 states based their guidelines 
on the Income Shares model; three states based their guidelines 
on the Melson formula; and two states used a hybrid of the 
Income Shares Model.

                  Principle of the Income Shares Model

    The principle underlying the Income Shares Model is that 
the child is entitled to the same proportion of parental income 
estimated to have been spent if the parents were living 
together. For example, if the parents spent an estimated 20% of 
their net income on the child when the parents lived together, 
the child is still entitled to 20% of the parents' combined net 
income when the parents reside in separate households. In turn, 
each parent's share of the child-rearing expenditures is 
determined by prorating it based on parental income. To 
illustrate this, say the noncustodial and custodial parents' 
incomes are $3,000 and $1,500 per month, respectively. The 
noncustodial parent would be responsible for two-thirds ($3,000 
divided by the sum of $3,000 and $1,500) of the child-rearing 
expenditures (0.667 X $900 = $600 per month). This is the 
amount of the child support order under the Income Shares 
Model. The remainder of the child-rearing expenditures is the 
responsibility of the custodial parent. It is assumed that the 
custodial parent makes these expenditures directly on the 
child.

            Economic Data Underlying the Income Shares Model

    Income Shares States are more likely to base their Child 
Support Schedules on economic evidence of child-rearing 
expenditures than States relying on other child support 
guidelines models. Specifically, most Income Shares States rely 
on economic estimates developed by Dr. Thomas Espenshade (1984) 
or Dr. David Betson (1990).\4\ Both economists developed their 
estimates from national Consumer Expenditure Survey data, but 
used data from different years. Early Income Shares Schedules 
are based on Espenshade's estimates, Betson's estimates are 
generally used in updated Schedules. Betson's study fulfilled a 
federal requirement mandating that the U.S. Department of 
Health and Human Services (DHHS) conduct a study of patterns of 
expenditures on children in 2-parent families and other family 
structures.\5\ Betson estimated child-rearing costs using five 
different methods. DHHS also funded another study to examine 
Betson's results and how they related to child support 
guidelines.\6\ Betson is updating his study this summer through 
a grant from the Institute of Research on Poverty at the 
University of Wisconsin at Madison. Currently, 17 States use 
Betson's estimates.
---------------------------------------------------------------------------
    \4\ Thomas J. Espenshade,T3Investing in Children: New Estimates of 
Parental Expenditures (Washington, D.C.: Urban Institute Press, 1984. 
David M. Betson, Alternative Estimates of the Cost of Children from the 
1980-86 Consumer Expenditure Survey, Report to U.S. Department of 
Health and Human Services (Office of the Assistant Secretary for 
Planning and Evaluation), University of Wisconsin Institute for 
Research on Poverty (September 1990).
    \5\ P.L. 100-485, Sec. 128
    \6\ Lewin/ICF, Estimates of Expenditures on Children and Child 
Support Guidelines, Report to U.S. Department of Health and Human 
Services (Office of the Assistant Secretary for Planning and 
Evaluation), Lewin/ICF (October 1990).
---------------------------------------------------------------------------

  Adjustments for Shared Parenting-Time, Low Income and Other Factors

    The Income Shares Model can formulaically adjust for 
numerous factors that vary significantly between cases (e.g., 
shared-parenting time, actual work-related child care expenses, 
out-of-pocket medical expenses for the child, additional 
dependents, low income and other factors). Most (about 80 
percent) of the State Child Support Guidelines that adjust for 
these factors are based on the Income Shares Model. Similarly, 
most (83%) of the States that allow low-income parents a self 
support reserve rely on the Income Shares Model. In these 
situations, the support order is set such that payment of 
support does not reduce the noncustodial parent's remaining 
income below a subsistence standard of living.

                     Deviations from the Guidelines

    A national study reviewing about 4,000 child support orders 
found that the proportion of cases that deviated from the child 
support guidelines averaged 17 percent.\7\ The most common 
reason for deviation was agreement between the parties. Other 
frequently given reasons included shared-parenting time and 
additional dependents. Last year, Arizona, an Income Shares 
State with a shared-parenting time adjustment, conducted a case 
file review.\8\ Arizona found a deviation rate of 16 percent. 
It also found an interesting relationship between shared-
parenting time adjustments and mandatory parenting education. 
Compliance with the child support order (91% compliance) was 
the highest in cases where the noncustodial parent attended 
parenting education class and the order included an adjustment 
for time sharing. The group with the second highest compliance 
(69%) comprised noncustodial parents who attended parenting 
education class but did not receive a time-sharing adjustment. 
The group with the third highest compliance (57%) comprised 
noncustodial parents who did not attend parenting education 
class but received a time-sharing adjustment.
---------------------------------------------------------------------------
    \7\ CSR, Incorporated with the American Bar Association, Evaluation 
of Child Support Guidelines: Volume 1: Findings and Conclusions, Report 
to the Federal Office of Child Support Enforcement, Washington, D.C. 
(March 1996).
    \8\ Jane Venohr, Arizona Child Support Guidelines: Findings from a 
Case File Review: Report to the Supreme Court of Arizona, 
Administrative Office of the Courts, Policy Studies Inc. Denver, 
Colorado (1999).
---------------------------------------------------------------------------

                              Conclusions

    Most states have completed at least two rounds of 
quadrennial guidelines reviews since 1988 when it became a 
federal requirement. State-appointed committees comprising 
stakeholders (e.g., noncustodial parents, custodial parents, 
children's advocates, family law attorneys, representatives 
from the Family Courts and State Public Assistance Program, 
taxpayers and others) typically conduct the reviews. These 
review committees have carefully scrutinized child support 
guidelines. Despite these intensive reviews, only one State 
changed its guidelines model in the past five years and that 
was from the Melson Formula to the Income Shares Model. Most of 
the review committees' recommendations focus on updating the 
schedule to consider current levels such as changes in price 
levels and adopting or refining adjustments for special 
factors. Some states are cautious in adopting shared-parenting 
time adjustments because they do not want to encourage 
bargaining time for money. Partly to alleviate this problem, 
states are adopting mandatory attendance in parenting education 
classes and/or parenting plans and mediation programs for 
parents with access and visitation disputes in tandem with 
guidelines adjustments for shared-parenting time. (Arizona and 
New Jersey are examples.)
    In summary, the fact that most States have used and 
continue to use the Income Shares Model for over a decade when 
they have had several opportunities to discuss and adopt other 
guidelines models suggests that the Income Shares Model yields 
fair and economically appropriate results. Furthermore, as more 
States adopt mandatory parenting education, parenting plans and 
access and visitation programs, parents will better understand 
child support and its role in providing for the best interests 
of the child.
      

                                


Statement of Becky Kiely, Executive Director, Women For Fatherhood, 
Honeoye, NY

                  Regarding Child Support Enforcement:

    First of all, please allow me to introduce myself. I am 
Becky Kiely of Honeoye, NY. I'm the Executive Director of Women 
For Fatherhood, a group advocating equality for Non-Custodial 
parents and working to improve the image of fatherhood in 
general. Further, I am a mother, wife, step mother, tax payer 
and voter.
    I would ask that the current CSE system be looked at long 
and hard. First of all, it is expensive. The latest figures 
show that it costs $22 for every dollar of CS collected. Based 
on 1998's figures of collections, it cost the US 316.8 billion 
dollars to collect 14.4 billion dollars. Does this make sense? 
It would be cheaper by over 300 billion dollars for the 
Government to pay all CS orders. I am not suggesting that the 
government shift parental responsibility, I am only making a 
point about how fiscally irresponsible the current system is.
    Further, I would ask that you consider the 
constitutionality of our current CSE system.
    It is my opinion that the current Child Support (CS) 
collection laws are unconstitutional. In this regard, in cases 
where there is an intact family, with parents married and 
residing together, there is no statute for how much these 
parents must spend per month on their children. The only 
statutes come from Child Abuse laws, in that parents must 
provide safe haven, shelter, appropriate clothing for the 
weather conditions and food. A non-custodial parent (NCP) is 
forced to pay a certain percentage of his or her income to the 
custodial parent (CP) each month. For example, in NY, the 
percentage is 17% for one child and increases for each other 
child. A minimum of $25 must be awarded to the CP, according to 
state law. This is a case of one class of citizens being 
burdened with circumstances that are not imposed on another. I 
am not for a moment saying that there should be no financial 
obligation to one's children, but there needs to be equality. 
BOTH parents need to be equally responsible for the well being 
of their children. Also, CS should not be used to subsidize the 
CP's standard of living for their own gain. Child Support is 
just that, support of a child, not a child and his/her parent. 
And, it must be noted that CS is NOT merely financial support. 
All too often, the burden of the support obligation prevents 
the NCP from having contact with their children. The laws do a 
great injustice to the children by forcing the NCP to be no 
more than a wallet. Is it really in their best interests to pad 
the CP's checkbook while denying them the love, support and 
teaching of the NCP? Is it not in the best interest of the 
children to define support as ``financial, emotional, loving 
and equally important from both parents''? The current laws 
also create a privilege for one class of citizen--the children 
of divorced parents--that is not granted to another--the 
children of intact families. No child of intact families has 
the entire government looking out for their financial welfare 
by stating guidelines of how much money a parent must pay for 
their support.
    Our Constitution presumes all of us innocent until proven 
guilty, but the CS laws presume NCP's to be guilty with no 
chance to prove their innocence. Is not this presumption 
contrary to our Constitution? CS awards are automatically 
garnisheed, rather than giving the parent the opportunity to 
fulfill his or her obligation with responsibility and dignity. 
Instead, their wages are immediately attached and they are 
threatened with losses of driver's licenses, professional 
licenses, recreational licenses and tax returns for non-
compliance, regardless of the reason for the non-compliance. 
Involuntary unemployment and disability are NOT valid reasons 
for an adjustment in CS. If a CP loses their job or is on 
disability, CS awards can be raised or the CP can apply for 
public assistance to help with the children's expenses. Why is 
this same benefit not extended to NCP's? Again, a case of a 
legal benefit (or burden) that applies to one class of citizen, 
yet not to another. And, why is the CP's wage not attached and 
an amount deposited into an account solely for the welfare of 
the children? Why are they not made to share in the financial 
burden of their children?
    It is in the best interests of the children to protect the 
Constitutional rights of their parents. BOTH their parents. 
Equality is in the best interests of the children, not gender 
bias, not making the NCP a blank check and nothing more.
    The current Child Support laws are in direct conflict with 
our Constitution's equal protection clauses and this MUST be 
rectified. We cannot go on allowing the Constitutional rights 
of any citizen, much less millions of them, to be violated by 
our own government!!!!
    How does revoking a drivers or professional license 
increase child support collections? If a non-custodial parent 
is behind in their obligation, how does making it impossible 
for them to work help the situation? How does jailing an 
obligor pay the debt? Instead of assuming that all non-
custodial parents are Dead Beat Dads, I would suggest the 
following:
     Take gender out of this. CS obligations are 
assessed on men and women of every race, religion and socio-
economic class.
     Spend less money on attacking those owing support, 
instead spending money on education. Instead of making millions 
of parents feel like criminals before they even commit a crime, 
fund grants to help them get a better education, so they can 
meet their obligation.
     Train the CSEU workers to deal with obligors who 
contact them. My husband had an error occur in his account and 
it was a nightmare trying to get it corrected. He was 
consistently treated as someone who was trying to get out of an 
obligation, when all he wanted to do was correct an error of 
their making.
     Actually look at the trend in CS orders. I'm 
confident that you will find that the majority of deadbeats are 
NOT trying to avoid their obligation, instead, CAN'T fulfill 
it. Many awards are based on incorrect paperwork, the possible 
future earnings of the obligor and/or the custodial parent's 
income. But, instead of the custodial parent's income being 
considered so that they would be equally financially 
responsible, it is considered as a means to increase the CS 
award with imbedded alimony. My husband pays $9000/year in CS 
to a woman who refuses to participate fully in the financial 
needs of her children, working only when she chooses, to the 
tune of her only making $8000 last year. This is fair? A man 
pays more than his ex wife, yet is consistently denied any 
access to his children. Can you honestly show me that my 
husband is not paying imbedded alimony?
     Equalize enforcement of Visitation orders. Love is 
support, too! CS should not be only financial. Currently, CS 
orders are vigorously enforced, as you are well aware. 
Enforcing Visitation orders as vigorously will benefit the 
children, possibly more than the financial enforcement. Studies 
show that fathers who are actively participating in their 
children's lives are more willing to comply with CS orders. 
States with the enforced presumption of Shared Parenting 
collect more support than states that don't. A loving parent 
denied access to their children find that supporting them 
financially becomes a bitter pill to swallow. Children with 
fathers actively participating in their lives are proven to 
fare better in adulthood.
     Change the current structure of CS awards. The 
percentage system is blatantly unconstitutional! I'm sure that 
the government has done studies on the cost of raising a child. 
Implementing a figure-based structure, as opposed to a 
percentage-based stucture, will equalize the playing field, 
making both parents responsible for the welfare of their 
child(ren). The cost of raising a child should be divided 50/
50, with both parents considered obligors. I assure you, there 
are plenty of custodial parents that could be termed dead beat 
as far as the financial support of their children is concerned. 
The custodial parent's living expenses should NOT be included 
in a CS award. With or without children, an adult needs a home, 
groceries, utilities, etc. Why should the non custodial parent 
be responsible for these expenses?
    The combination of restructuring CS awards and of enforcing 
visitation orders is what is truly in the best interests of the 
children, a phrase that has been used (and abused) to justify 
that which is far from being in their best interests. It's time 
for this country to stop worrying so much about money and more 
about the total support of a child. Each state is given 
financial incentives for each dollar of support collected. Does 
this enhance the ``best interests'' of the children? No, it 
enhances the best interests of the state. Does including 
imbedded alimony enhance the ``best interests'' of the 
children? No, it enhances the best interest of the custodial 
parent.
    Regarding states keeping overdue collections finally 
recovered: I ask this-why are the states more deserving of this 
money than the children it was intended for? If a parent was 
collecting welfare in lieu of CS and the support is then 
collected, I can see the state recovering their ``loan'' to the 
parent. Beyond that, any dollar they keep should be considered 
theft.
    Private entities should not be a part of CSE. This is NOT a 
for-profit endeavor! This is an endeavor for parents to be 
responsible. No one should profit except the children.
    Our Courts, our government and our media need to get off 
the money bandwagon and get on a wagon that is full of the TRUE 
best interests of a child, a wagon that includes emotional 
support with financial support. To those of you with children, 
I pose this question. What do you think your child wants and 
needs more-your money or your love and your time?

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