[House Hearing, 107 Congress]
[From the U.S. Government Printing Office]




                               before the

                        FINANCIAL MANAGEMENT AND

                                 of the

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION


                                H.R. 866



                              JUNE 6, 2001


                           Serial No. 107-72


       Printed for the use of the Committee on Government Reform

  Available via the World Wide Web: http://www.gpo.gov/congress/house

                            WASHINGTON : 2002

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                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             PAUL E. KANJORSKI, Pennsylvania
STEPHEN HORN, California             PATSY T. MINK, Hawaii
JOHN L. MICA, Florida                CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia            ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             ELIJAH E. CUMMINGS, Maryland
BOB BARR, Georgia                    ROD R. BLAGOJEVICH, Illinois
DAN MILLER, Florida                  DANNY K. DAVIS, Illinois
DOUG OSE, California                 JOHN F. TIERNEY, Massachusetts
RON LEWIS, Kentucky                  JIM TURNER, Texas
JO ANN DAVIS, Virginia               THOMAS H. ALLEN, Maine
DAVE WELDON, Florida                 WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   ------ ------
ADAM H. PUTNAM, Florida              ------ ------
C.L. ``BUTCH'' OTTER, Idaho                      ------
EDWARD L. SCHROCK, Virginia          BERNARD SANDERS, Vermont 
------ ------                            (Independent)

                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
                     James C. Wilson, Chief Counsel
                     Robert A. Briggs, Chief Clerk
                 Phil Schiliro, Minority Staff Director

    Subcommittee on Government Efficiency, Financial Management and 
                      Intergovernmental Relations

                   STEPHEN HORN, California, Chairman
RON LEWIS, Kentucky                  JANICE D. SCHAKOWSKY, Illinois
DAN MILLER, Florida                  MAJOR R. OWENS, New York
DOUG OSE, California                 PAUL E. KANJORSKI, Pennsylvania
ADAM H. PUTNAM, Florida              CAROLYN B. MALONEY, New York

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
          J. Russell George, Staff Director and Chief Counsel
 Bonnie Heald, Professional Staff Member and Director of Communications
                    Scott R. Fagan, Staff Assistant
                     Michelle Ash, Minority Counsel

                            C O N T E N T S

Hearing held on June 6, 2001.....................................     1
Text of H.R. 866.................................................     5
Statement of:
    Bilirakis, Hon. Michael, a Representative in Congress from 
      the State of Florida.......................................     8
    Fuentes, Frank, Acting Commissioner, Office of Child Support 
      Enforcement, Department of Health and Human Services; Hon. 
      J.B. Penn, Under Secretary for Farm and Foreign 
      Agricultural Services, Department of Agriculture; Daniel L. 
      Hatcher, senior staff attorney, Children's Defense Fund; 
      Wendell Primus, director of income security, Center on 
      Budget Policy Priorities; and Geraldine Jensen, president, 
      Association for Children for Enforcement of Support, Inc...    19
Letters, statements, etc., submitted for the record by:
    Bilirakis, Hon. Michael, a Representative in Congress from 
      the State of Florida, prepared statement of................    11
    Fuentes, Frank, Acting Commissioner, Office of Child Support 
      Enforcement, Department of Health and Human Services, 
      prepared statement of......................................    23
    Hatcher, Daniel L., senior staff attorney, Children's Defense 
      Fund, prepared statement of................................    42
    Horn, Hon. Stephen, a Representative in Congress from the 
      State of California, prepared statement of.................     3
    Jensen, Geraldine, president, Association for Children for 
      Enforcement of Support, Inc., prepared statement of........    65
    Penn, Hon. J.B., Under Secretary for Farm and Foreign 
      Agricultural Services, Department of Agriculture, prepared 
      statement of...............................................    32
    Primus, Wendell, director of income security, Center on 
      Budget Policy Priorities, prepared statement of............    55
    Schakowsky, Hon. Janice D., a Representative in Congress from 
      the State of Illinois, prepared statement of...............    16



                        WEDNESDAY, JUNE 6, 2001

                  House of Representatives,
  Subcommittee on Government Efficiency, Financial 
        Management and Intergovernmental Relations,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:05 a.m., in 
room 2154 Rayburn House Office Building, Hon. Stephen Horn 
(chairman of the subcommittee) presiding.
    Present: Representatives Horn and Schakowsky.
    Staff present: J. Russell George, staff director and chief 
counsel; Bonnie Heald, professional staff member and director 
of communications; Scott Fagan and Chris Barkley, staff 
assistants; Alex Hurowitz and Ryan Sullivan, interns; Michelle 
Ash, minority counsel, David McMillen, minority professional 
staff member; Jean Gosa, minority assistant clerk.
    Mr. Horn. The Subcommittee on Government Efficiency, 
Financial Management and Intergovernmental Relations will come 
to order.
    Today's hearing will examine the merits and challenges of 
H.R. 866, sponsored by the gentleman from Florida, 
Representative Michael Bilirakis. This proposed legislation is 
designed to send a loud and clear message to all parents that 
regardless of means and despite other responsibilities, they 
must support the children they bring into this world.
    In essence, this is a hearing about the family, the soul of 
society and the cornerstone of our Nation. As we are all aware, 
however, the nature and structure of today's family is vastly 
different from that of a century ago or even 50 years ago.
    Today, 20 percent of all children live with only one 
parent, a mother or a father; more likely a mother. According 
to the 2000 census figures, 11 million American families are 
owed support and 7 million of them never receive any payment 
toward the cost of raising their children.
    There are State and Federal laws to track down deadbeat 
parents and make them pay their delinquent child support.
    The problem transcends economic status. Consider just three 
examples of several hundred deadbeat parents who were 
prosecuted by the Department of Justice and convicted of 
failing to support their children last year.
    A plastic surgeon pled guilty to willfully failing to pay 
his child support, despite his yearly net income of more than 
$200,000. The physician still owes $50,000 for his two 
    A Florida chiropractor pled guilty to a felony for his 
failure to pay approximately $87,000 in delinquent child 
support. His income averaged about $100,000 a year.
    A former NBA basketball player waited until he was arrested 
in an unrelated charge before paying the $173,000 he owed in 
five separate child support enforcement orders in five separate 
    As a father and grandfather, I cannot understand those who 
walk away from the fundamental responsibilities and true joy of 
    As legislators, we cannot force these irresponsible parents 
to love and nurture their children. We can, and we must, 
however, do everything in our power to ensure that at a minimum 
they provide the financial support those children need and 
    Our witnesses today will present a variety of perspectives 
on H.R. 866 to help us in our examination of this bill. I 
welcome all of you and look forward to your testimony.
    [The prepared statement of Hon. Stephen Horn and the text 
of H.R. 866 follow:]






    Mr. Horn. I am especially pleased to welcome as our first 
witness my colleague from Florida, Mr. Michael Bilirakis, who 
will speak on behalf of his legislation.
    Without objection, I would like to have Mr. Bilirakis join 
us on the dais after his testimony so we can have a useful 
dialog. Without objection, that will be done.
    I am delighted to have you here. Thank you very much. 
Please proceed in any way you would like.


    Mr. Bilirakis. Thank you very much, Mr. Chairman, for your 
interest in this legislation, as much as your interest in doing 
what is really best for the children out there who have been 
the innocent of wayward fathers.
    I do want to apologize for coming in a little late. I don't 
really know what transpired, but we were advised that 2247 was 
going to be the hearing room. That is where we went. I 
appreciate you waiting for me.
    Mr. Chairman, you have basically said it. Child support is 
certainly a very critical problem in this great country. Our 
system for enforcing child support orders has failed miserably. 
We all have to realize that. By current estimates, at least 30 
million children are now owed $50 billion in unpaid child 
    Payment is received, we know, in less than a quarter of all 
cases. Even though the government spends nearly $4 billion per 
year, and employs more than 50,000 people, to collect child 
support, billions and billions remain uncollected. I would like 
to think that we all would agree, that this certainly cannot be 
    Individuals who neglect their parental obligations simply 
transfer the costs to the rest of society. They should not be 
rewarded for such action. That is the point behind the 
legislation. It is designed to deny a broad range of Federal 
benefits to individuals who willfully refuse to pay child 
    It requires applicants to sign an affidavit to certify, 
applicants for Federal financial assistance, to certify that 
they are not more than 60 days delinquent in the payment of any 
child support obligation or if so delinquent, that they are in 
compliance with an approved repayment plan. It is really quite 
simple, maybe a little too simple.
    It is intended to encourage payment of child support and to 
preclude the use of Federal taxpayers dollars to assist 
individuals who neglect their children.
    Mr. Chairman, back in the 103d Congress I introduced a 
piece of legislation which was enacted into law to amend the 
Small Business Reorganization Act to deny small business loans 
and loan guarantees to individuals who refuse to pay child 
support. My prepared remarks say that the Small Business 
Administration has implemented these provisions. We should have 
said that the Small Business Administration should have 
implemented these provisions because it is our understanding 
that they have not done so. We can talk about that later, if 
you would like.
    Mr. Chairman, failure to pay child support is not merely 
being late or forgetful of one's obligation. It is a violation 
of a lawful court order. It is considered contempt of court. It 
is not unreasonable, I submit, to require applicants for 
Federal assistance to comply with their legal duties. There is 
precedent for that.
    I would like to clarify a few points on this legislation. 
The Federal agency involved is not required to research the 
applicant's status. Rather, an applicant for assistance must 
make a simple, affirmative statement of compliance. This 
requirement will be enforced through existing provisions of 
Federal law, which establish penalties for fraud in obtaining 
Federal financial assistance.
    We are talking about a line on a form, an affidavit line on 
a form when they apply for some sort of Federal assistance. The 
agency is not required to research the applicant's status. But 
if it turns out downstream somewhere that there is a 
determination that the applicants have lied under oath, then 
the fraud provisions come into play and the applicant could be 
hit over the head.
    I think just the fact that they would have to certify, by 
an affidavit, that they are in compliance would if nothing 
else, play a terrific role psychologically.
    The bill does include a good cause exception to avoid 
penalizing parents who are unable to satisfy their child 
support obligations due to factors beyond their control. It is 
necessary, I think, to avoid penalizing parents in situations 
where, despite a good faith effort, they are unable to modify 
the terms of their child support obligation or obtain a 
repayment agreement.
    This is designed to emphasize that the payment is a 
fundamental civic responsibility. I think it is going to help 
to ensure that individuals who fail to satisfy their most basic 
parental obligation are not rewarded for such action.
    Sir, I know that in your mind and certainly in our minds, 
we don't want to do something where the consequences would turn 
out to be worse than the intent of the legislation. We don't 
intend to prevent parents from obtaining Federal benefits that 
directly aid children or that provide a subsistence level 
support to parents.
    Family programs, such as Medicaid and the Temporary Aid to 
Needy Families program provide assistance that may be necessary 
for the well being of other children currently living in the 
household or of the parent's own survival.
    I have not included a list of all Federal programs. There 
are hundreds of Federal programs, although we have not included 
a list of programs to be exempted in the bill text. We really 
believe that each Federal agency can best determine which types 
of assistance should be excluded.
    However, direction from Congress in report language, can 
guide the rulemaking process regarding necessary exemptions to 
the act. We are very much aware of that particular concern. We 
have been working with the Office of Legislative Counsel to 
discuss possible modifications. We want to work with the 
various organizations, such as the Children's Defense Fund, to 
try to work out language if it is felt by this committee that 
it is necessary.
    There is no pride in authorship. I wish to make clear, Mr. 
Chairman, that I am not concerned about having my name on 
anything at all. I am concerned about the fact that bad 
parents, mostly fathers, are out there taking advantage of the 
system and being rewarded by the Federal Government in spite of 
the fact that they are not doing what they should do for the 
benefit of their children.
    That is really all I am concerned with. If we could only do 
something that would be consistent with trying to reach that 
goal, then we can call it whatever we want to call it. It can 
be part of the basic legislation or whatever the case may be.
    [The prepared statement of Hon. Michael Bilirakis follows:]

    [GRAPHIC] [TIFF OMITTED] T0138.006
    [GRAPHIC] [TIFF OMITTED] T0138.007
    Mr. Horn. I agree with the gentleman. I think all of us who 
try to legislate feel exactly as you do, let us get the job 
done and we don't care who takes credit for it.
    You mentioned yourself, before I yield to the ranking 
member, that the Small Business Administration delegates the 
task of the SBA loan applicant's child support certifications 
to the financial institutions handling the loan and that these 
certifications are not being checked against a Federal registry 
such as the Federal Parental Locator Service, unless someone 
makes a request to do so.
    According to the Small Business Administration's Inspector 
General, that simply has not occurred. What is your feeling and 
the intention you have on the self-certifications?
    Mr. Bilirakis. Well, Mr. Chairman, I think the intent of 
the legislation back in the 103d Congress was clear about what 
should have been done. We went into this. When we have our 
oversight hearings, we sometimes find that agencies just don't 
follow through with what we mandated them to do.
    I am very disappointed to see that the SBA apparently, and 
I say this only because I have not really seen their forms, 
does not even include the line on the form to the effect that 
certification that we insist be in there. This means there are 
an awful lot of bad parents out there who are taking advantage 
of taxpayers' dollars and still not complying.
    Do you think it is the best thing to leave it open to the 
Secretary or the Administrator, or would you want to make it 
very clear in this current bill what should be done?
    I have found that legislative intent doesn't mean a thing 
around here when they all go to court. If we are going to do 
it, we ought to stick it in the law and follow up on it.
    I believe that we have to mandate that the certification 
and affidavit language has to be on the Federal form. Now 
insofar as the exceptions are concerned, that is the will of 
this committee.
    I should think that because it is so complex with so many 
government programs out there we probably ought to leave it to 
the discretion of the particular agency whether exceptions 
should apply in certain cases.
    There is language that exempts programs that directly aid 
children in the household, ``or to provide subsistence level 
assistance for the parent.'' In other words, if the agency 
determines that programs fall within those types of categories, 
they could make that decision or we could leave it up to them 
    We are all human beings, and we know when we put up our 
hand swear to or certify something, it is very meaningful. I 
think that psychologically, certification could really play a 
    Mr. Horn. Well, I thank you.
    I now yield to the ranking member. I am delighted to have 
you here.
    Ms. Schakowsky. Thank you so much, Mr. Chairman. Mr. 
Chairman, I want to thank you for holding this hearing. It is 
vitally important that Congress continually review 
opportunities to strengthen our child support system. I support 
using a strong hand to ensure that deadbeat parents pay the 
child support they owe their children.
    This hearing can demonstrate how seriously all of us regard 
a parent's responsibility to support his or her children. In 
1997, there was an estimated 11.8 million single-parent 
families, 9.8 million maintained by the mother. Of that 11.8 
million, about 40 percent of those families had incomes below 
the poverty threshold.
    When a poor family receives child support, the child 
support amounts to about 26 percent of the family's budget. 
There is evidence that fathers who pay support are more 
involved with their children, providing them with emotional 
support as well as financial support.
    Of the total $29.1 billion owed for child support in 1997, 
$12 billion was not paid. Among those due support, 40.9 percent 
received the full amount, 26.5 received partial payment, and 
32.6 percent received nothing.
    In 1997, the Urban Institute, using the assumption that all 
custodial parents had child support orders and that all orders 
were paid in full, estimated that $51 billion should be 
collected in child support each year, compared to the $18 
billion that was collected in 2000, we have a long way to go.
    Although these numbers are startling, I do not think we can 
understate how far we have come. State agencies have been given 
a number of tools to enforce child support orders. For example, 
agencies can garnish IRS refund checks, strip a parent of his 
or her professional licenses, report delinquency to credit 
reporting bureaus, take away drivers licenses and deny passport 
    Progress has been made. Identification of the non-custodial 
parents has increased dramatically. In the year 1994, 676,000 
paternities were established and acknowledged. In the year 
2000, 1,600,000 paternities were established and acknowledged.
    In addition, collections have increased. In 1995, 34 
percent of custodial parents received some child support when 
an order was in place. In 2000, 68 percent of custodial parents 
received some child support when an order was in place.
    Today, we are here to discuss whether a parent should be 
denied Federal financial assistance if he or she is delinquent 
in child support payments.
    I want to commend the author of this legislation for 
highlighting the need for strong child support enforcement. I 
have been talking with some of the child advocacy groups who 
have some concerns about this particular proposal, but I would 
really like to work with the sponsor, because I think we 
absolutely share the same goal here.
    So, I am eager to hear from our witnesses. I want to thank 
them for being here today. Perhaps our witnesses can help us 
understand whether Congress should be increasing the number of 
punitive tools available and also to see if there are other 
alternatives such as working with parents, giving them the 
support systems they need to find and keep jobs.
    In Illinois, we have had a persistent problem. There have 
been a number of different proposals that have been made, but 
yet we still continue to be, in my State, one of the worst in 
terms of our record in child support collection.
    So, I really appreciate this effort. There is a growing 
public awareness of the problem of nonpayment of child support. 
I am very hopeful that this hearing will shed more light on the 
    Thank you.
    [The prepared statement of Hon. Janice D. Schakowsky 



    Mr. Horn. We thank you. Would you have some questions of 
Mr. Bilirakis now? He is going to join us up here, as we do 
with all authors. So, without objection, you can come up to the 
dais, if you were like.
    Mr. Bilirakis. May I, Mr. Chairman, respond very briefly? 
First of all, you are right. There are an awful lot of 
loopholes, and a lot of questions, and changes that need to be 
made. We are not really talking only about our legislation, 
although we are very grateful that it is the subject of this 
hearing. It is a subject we have to address.
    You have talked about the improvements in collections. But 
we are told, and Ms. Jensen will testify to this later on and 
do a much better job than I could, that a lot of the money is 
collected, is not being distributed to the kids.
    That is another point that the committee may want to 
    Ms. Schakowsky. Let me just ask you, are you talking about 
the percent of those that are receiving any kind of assistance? 
It goes to the States rather than to the families?
    Mr. Bilirakis. I am talking about child support 
    Ms. Schakowsky. Yes. I fully agree with you.
    Mr. Bilirakis. Thank you, Mr. Chairman.
    Mr. Horn. Thank you.
    We will now have the second panel join us. That is Mr. 
Fuentes, Mr. Penn, Mr. Hatcher, Mr. Primus and Ms. Jensen.
    Let me go through the ground rules on this. This is an 
investigating unit under the Government Reform Committee. We do 
swear in all witnesses except Members of Congress. I realize 
that some of you have not had a chance to really be in your own 
position in these agencies and we appreciate your coming here 
to give us some views on this--realizing this is all that you 
are going to do.
    So, now, if you will stand and raise your right hands, and 
if there are any assistants who are going to assist, please get 
up. The clerk will take your names. So, the people back of you, 
let us do it once and not have to swear everybody in 
    [Witnesses sworn.]
    Mr. Horn. The clerk will note that all five witnesses and 
five assistants have affirmed the oath.
    We will go down in the agenda that is before us. We are 
delighted to have Mr. Frank Fuentes, the Acting Commissioner, 
Office of Child Support Enforcement, Department of Health and 
Human Services. I assume, Mr. Fuentes, you are new to this 
role, with another administration.
    Dr. J.B. Penn, Under Secretary for Farm and Foreign 
Agricultural Services, Department of Agriculture. Have both of 
you been confirmed by the appropriate people in the Senate or 
is that currently underway?
    Mr. Penn. I have.
    Mr. Horn. Mr. Fuentes, has the Senate confirmed you or is 
that a secretarial appointment?
    Mr. Fuentes. I am the senior civil servant in the Office of 
Child Support Enforcement. My regular position is that of 
Deputy Commissioner. Until someone is appointed, I am the 
Acting Commissioner.
    Mr. Horn. Well, maybe in the year 2002 we will have these 
confirmations. Be of good cheer until then.
    Then we have Mr. Primus, director of Income Security Center 
on Budget Policy Priorities. That is a nonprofit, I believe, is 
that correct?
    Mr. Primus. That is correct.
    Mr. Horn. Is that funded by HHS, essentially?
    Mr. Primus. No. We receive no government moneys.
    Mr. Horn. I see. OK. President Jensen, Association for 
Children for Enforcement of Support, Inc. Is that a nonprofit 
    Ms. Jensen. Yes, it is.
    Mr. Horn. Who funds that?
    Ms. Jensen. We are mainly privately funded but we do 
receive $15,000 through the city of Toledo block grant program, 
which is a Federal program.
    Mr. Horn. That is interesting. So, one city has decided you 
are a good place to get some things done. That is fascinating.
    Ms. Jensen. ACES was founded in Toledo, OH, and we have an 
office there.
    Mr. Horn. That is interesting.
    So, let us go now with Frank Fuentes, the Acting 
Commissioner, Office of Child Support Enforcement, Department 
of Health and Human Services.
    May I say, don't read it to us. I have stayed up most of 
the night reading it all. I have read every sentence. But what 
we would like you to do in the 5 to 10 minutes you have is to 
talk from the heart as to what the key things are and the rest 
we can bring out in the questions by the Members here and also 
some of your colleagues here. So, go ahead.


    Mr. Fuentes. Thank you, Mr. Chairman. Good morning. 
Distinguished members of the subcommittee, it really is a 
wonderful opportunity to share with you what we have been doing 
in the Office of Child Support Enforcement. So, we very much 
appreciate the opportunity to come before you.
    As I stated before, my name is Frank Fuentes. I am the 
Acting Commissioner for the Office of Child Support 
    The program has been truly successful in its Federal-State 
partnership effort fostering family responsibility and 
promoting the well-being and self-sufficiency of children and 
their parents, especially by providing the financial and 
emotional support children need in order to thrive.
    The goals of the program are to identify and locate 
custodial parents, establish paternity, establish child support 
obligations and then to enforce those support orders so that 
children receive what they need.
    The welfare reform legislation, the Personal Responsibility 
and Work Opportunity Reconciliation Act of 1996, gave us some 
very effective tools that we have been using to produce 
significant improvements and achievements.
    My purpose in being here is to share that information with 
you, but then, as requested, to also share some initial 
thoughts on Mr. Bilirakis' proposal to further strengthen our 
child support enforcement efforts. This, of course, is a goal 
that we all share.
    But to give a little background on what we have been doing 
with the tools that Congress provided, in fiscal year 2000, we 
collected a record $17.9 billion in support of children. In 
addition, this number of child support cases with collections 
rose to 7.2 million. I think you would agree that those are 
impressive results.
    To add to the magnitude of the improvement, if you look 
over the history of the Child Support Enforcement Program, $100 
billion has been collected in that 25-year period. 
Approximately 20 percent of that was collected just last year. 
So, we are seeing progress your tools have allowed us to use.
    In addition to collections, we have had similar success in 
the establishment of paternity. The numbers there have also 
increased in the voluntary acknowledgement of paternities. We 
have now reached in fiscal year 2000, 1.6 million voluntary 
paternity establishments. Of these, over 688,000 were done 
through in-hospital acknowledgement programs and another 
867,000 were done through the establishment by State Child 
Support Enforcement Programs.
    The interesting part of this, of course, and the most 
exciting, is that in addition to being the first step in 
collecting child support, it is also through the establishment 
of paternity the first opportunity to engage dads in the lives 
of their children, create the kinds of emotional bonds, and the 
security, that are really crucial to the continued emotional 
and financial support of their children.
    Some of the tools we have utilized have been the National 
Directory of New Hires, Automatic Wage Withholding, the 
streamlining of paternity establishment, creating uniform 
interstate child support forms, computerizing statewide 
collections, and authorizing tough new penalties for nonpayment 
of support; such as the revocation of drivers' licenses.
    We are excited about the dramatic results we have seen and 
the changes that have been generated by the use of these tools. 
OCSE and the States are convinced that as we mature in the use 
of these tools that future child support enforcement will 
continue down a successful path.
    At this point, I would like to turn to a brief discussion 
of H.R. 866. First, I would like to acknowledge the importance, 
again, of the bill's goal which is the improvement of child 
support and to strengthen our abilities to enforce it.
    While we are proud of the inroads we have made there is no 
question there is still room for improvement. We certainly 
realize there are areas that by working with the Congress we 
can continue to improve and build on the record we have already 
    The administration has not taken a formal position on H.R. 
866 at this time; however, I would like to share some serious 
technical concerns of this bill. As we understand it, the 
intent of H.R. 866 is to help improve the collection of 
    The bill would provide some limited exceptions requiring 
applicants for any form of Federal financial assistance to 
certify they are not more than 60 days delinquent in their 
child support obligations. If the applicant is delinquent, they 
would be required to comply with a repayment plan or an 
agreement as conditioned by the Federal agency administering 
that benefit.
    The bill provides exceptions if assistance is subject to 
garnishment for payment of overdue support or if the assistance 
agency determines that the applicant has good cause, for 
failing to pay the support or entered into or complying with a 
repayment plan.
    Our comments focus on two concerns. The first is what we 
believe are structural difficulties that would impede the 
effectiveness of the bill. Second is questions on the efficacy 
of potentially targeting the low-income population for 
nonpayment of child support.
    With respect to the first issue, the sole enforcement tool 
envisioned is self-certification of compliance. That is, there 
would be no mechanism to verify an applicant's certification of 
payment of child support. While this might serve as an 
incentive for some to become current in their support, or enter 
into a payment agreement, the value of this approach without 
subsequent verification seems unclear. Further, if verification 
were required, its effectiveness would be hampered by the fact 
that many cases remain outside of the Title IV-D Child Support 
    On the other hand, modification of a child support order 
following a change in a particular non-custodial parent's 
circumstances, such as the loss of a job, can take 
significantly longer than 60 days. Arrearages often buildup 
during that time period.
    Withholding of Federal financial assistance at this point 
may only worsen the impact of the change that necessitated the 
modification request. Now, we note that the bill provides for 
good cause exemptions, presumably to address situations like 
these and others. However, these provisions are currently 
undefined and therefore ambiguous. Also undefined is the broad 
reference to Federal financial assistance programs. There is a 
wide range of such programs and the implementation and impact 
of the bill would vary greatly depending on the breadth of that 
    With respect to the second broad issue, the lack of clarity 
in the bill raises the potential of focusing on applicants for 
basic Federal assistance. In potentially targeting those 
parents who themselves are impoverished and least able to pay 
child support, rather than those who can provide the support 
but refuse to, the result could be denying assistance to 
destitute individuals without increasing the payment to the 
children who are owed the support.
    The administration is committed to supporting efforts to 
improve the Child Support Program; however, we are concerned 
about whether the approach taken in H.R. 866 will accomplish 
its intended goal.
    In closing, I would like to reiterate the positive impact 
that the existing enforcement tools are having in helping to 
improve the lives of the Nation's children. We look forward to 
building on these successes with the Congress and with the 
State to ensure that the program is most effective in 
addressing the needs of children and families.
    Thank you, Mr. Chairman. I would be pleased to answer any 
questions that you may have.
    [The prepared statement of Mr. Fuentes follows:]

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    Mr. Horn. We are going down the line first and then we will 
come back to ask questions generally.
    Dr. J.V. Penn is the Under Secretary for Farm and Foreign 
Agricultural Services of the Department of Agriculture. Like 
Mr. Fuentes, you are both new on the job, but you have now been 
confirmed by the Senate. So, you can say what you want now.
    Proceed and just give us the overview of it for 5 to 10 
    Mr. Penn. Thank you very much, Mr. Chairman. I, too, am 
very pleased to be here today to share the Department of 
Agriculture's views on H.R. 866. Also, like the previous 
witness, we also very much support the goals of this 
legislation, but we, too, have some serious concerns about the 
impact that it might have on the programs we operate at the 
Department of Agriculture.
    Now, in terms of the applicability of this legislation to 
USDA programs, I want to note at the outset that 43 percent of 
the total budget of the Department of Agriculture is for food 
assistance programs that are primarily administered through the 
    Second, another 36 percent of the Department's budget 
provides a host of program benefits to farmers and rural 
communities all across the country. Some of our programs are 
for emergencies in response to natural and other disasters such 
as hurricanes, floods and droughts. Thus, we are a bit 
concerned at the outset that H.R. 866 doesn't define the term, 
``financial assistance.''
    That is important to us, as you will note, when I describe 
some of our programs. First, addressing our food assistance 
programs, strictly speaking, these programs provide nutrition 
assistance rather than financial assistance. We do this through 
the use, as everyone knows, of Food Stamps, coupons or vouchers 
or through actual service of meals in school daycare homes, or 
through the distribution of commodities themselves.
    So, if H.R. 866 is intended to apply to these programs, 
then we would have the following observations: The first is 
that these programs need to be implemented by the States or by 
local governments acting in their role as partners with Federal 
agencies. That is certainly the case for the Food Stamp 
    We already have an enormous amount of complaints and 
criticism from the States in that these programs are terribly 
complex and that they are not being reimbursed properly for 
their administration.
    Our fear would be that enactment of this legislation might 
further complicate the administration of the program and make 
it even more costly and more difficult, and provide an even 
greater burden on the States.
    Second, I would like to note that the Food Stamp Act of 
1977 already allows the States the option to disqualify 
individuals from receiving Food Stamp benefits if they are 
delinquent in court-ordered child support payments or they fail 
to cooperate with child support enforcement programs in 
establishing paternity and obtaining child support.
    So, we are not certain of our further ability to promote 
personal responsibility that would be needed for the Food Stamp 
    I would like to note it is unclear from this legislation 
whether the disqualification would apply just to the individual 
who is delinquent in payments or to other members of the 
household living with that individual.
    Our department in the past has not supported penalizing 
entire households where only one member of the family failed to 
comply with some program rule.
    So, any legislation that would potentially deny food 
assistance to low-income households needs to be very carefully 
considered because, I want to note, 50 percent of the Food 
Stamp recipients are children and the Food Stamp Program, we 
think, already has existing authority that encourages personal 
    So, we think any modifications to this authority might be 
more appropriately considered when the Food Stamp Act comes up 
for reauthorization in fiscal year 2003.
    Now, turning to the Child Nutrition Programs, H.R. 866, as 
introduced, we think presumes that the benefits denied are 
those to which the applicant alone is entitled. But in almost 
all cases, the benefits under the Child Nutrition Program are 
intended for someone other than the applicant and so, as with 
the Food Stamp Program, we think it would be counterproductive 
to deny benefits to others who may be associated with the 
individual who is not in compliance.
    So, benefits under both the Child Nutrition Program and the 
Special Supplemental Nutrition Program for Women and Children, 
the WIC Program, and our commodity distribution programs are 
provided by local schools, childcare centers, health clinics 
and similar entities under arrangements with the States.
    We think any additional responsibilities for collecting, 
monitoring and carrying out the administration of this process 
could prove to be extremely burdensome and costly and would 
have a negative impact on the overall administration of the 
    One other point, Mr. Chairman, we think is important is the 
exemptions already made for means-tested programs. The Debt 
Collection Improvement Act of 1966 has uniformly included 
language that exempts benefit payments made in means tested 
programs or it allows the delegation of authority to make such 
    We would suggest that just to be in conformance with the 
existing legislation H.R. 866 might include similar language.
    I just talked about the food assistance programs and now 
want to note the impact on the farm programs.
    We are troubled by the lack of a clear definition of the 
term ``financial assistance,'' because without it we don't know 
how broadly H.R. 866 might apply to these programs.
    We operate a host of programs that provide assistance to 
farmers and rural communities, as well as farm loan and debt 
restructuring programs. We certainly think that H.R. 866 would 
apply to the farm loan and debt restructuring programs and we 
are not certain how that would affect co-obligors if there is 
more than one borrower and only one borrower was in default. 
How would that affect the other parties?
    Also, we are concerned that the certification process might 
add to delays in making these loans to farmers. As we know, 
there is a seasonal element involved here and loans have to be 
timely or otherwise the season moves along.
    We are also concerned about the direct payments made to 
farmers. The payments made under the marketing loan programs 
and a whole variety of other programs as well as the loan and 
loan restructuring programs--how all of those might be affected 
without a clear definition of the term ``financial 
    Finally, Mr. Chairman, let me end by saying again, USDA 
strongly supports the intent of the legislation, but we would 
like to see further analysis to ensure that administrative 
costs and processes don't inadvertently reduce benefits to 
children and others in need.
    I would note that the bill touches on some very complex 
issues such as cause and effect, State versus Federal roles, 
and we have some serious concerns about those issues. 
Additional concerns include the denial of financial assistance 
benefits to children and diminishing the applicant's subsequent 
earnings and thus the means to pay the child support payments.
    With that, I will stop. Thank you.
    [The prepared statement of Mr. Penn follows:]

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    Mr. Horn. Thank you.
    We now have Daniel L. Hatcher, the senior staff attorney 
for the Children's Defense Fund. Mr. Hatcher, we are glad to 
have you here. We know of a lot of the work of the Children's 
Defense Fund. That, too, is an NGO, or a nonprofit.
    Mr. Hatcher. It is. We receive no government funds as well.
    Mr. Horn. We would like you to summarize your statement and 
then get to the key things.
    Mr. Hatcher. Thank you, Mr. Chairman, and good morning. We 
also commend the subcommittee for holding this hearing on H.R. 
866 and the very important issue of child support enforcement. 
We appreciate the opportunity to testify.
    Children need support from both parents, both financial 
support, and when possible, emotional support. The Children's 
Defense Fund applauds Representative Bilirakis for introducing 
H.R. 866 and making an important statement about parent's 
responsibility to support their children.
    However, we do have a number of reservations about this 
legislation. Everyone agrees that the continued improvement of 
child support enforcement is vital. The question really begins 
to come down to the focus. With State programs facing limited 
resources, how should those resources be best used to best help 
children, especially low-income children?
    Rather than implementing a new set of penalties at this 
time, we believe that the limited resources of the State child 
support programs can be better used to continue improvements to 
existing enforcement tools, including the tools already 
mentioned that came out of the 1996 Welfare Reform Law, to 
reform child support distribution rules to get more child 
support that is already being collected to the families with 
children, especially those families that are now leaving 
welfare for work, and to provide supportive services to both 
low-income custodial and non-custodial parents to be better 
equipped to better support their children.
    First, turning to the issue of child support distribution, 
I would like to spend just a couple of minutes discussing what 
we believe to be the most important issue. Reform to the Child 
Support Distribution rules is needed to help low-income 
    The reform that is included in the Johnson-Cardin Child 
Support Distribution Act of 2001 and also incorporated into the 
act, to leave no child behind, an omnibus bill for children, is 
crucial for several reasons. Families that receive welfare 
under current law have to assign their child support benefits 
to the government.
    When families leave welfare, they often end up in a 
situation where some of the child support is owed to the 
government and some is owed to the children, which then creates 
a very complex set of distribution rules to decide when the 
money comes in how much goes to the government, to the State, 
the Federal Government and when and how much goes to the 
    Child support that is owed to the government rather than 
children can work against families, where non-custodial fathers 
can become more alienated from their families when they 
struggle to pay child support that they know is being taken 
from the children and kept by the government. Poor mothers and 
fathers that reunify are often still forced to pay child 
support arrearages that are owed to the State government even 
though the children are now with them.
    Now, the States do have the option to give some of this 
assigned child support back, but only after they pay the 
Federal Government its share. So, they don't have the option to 
give it all back at this point.
    The Child Support Distribution Act would change this to 
give States the option to pass through all assigned child 
support to children with Federal participation in the pass-
    Also, another troubling aspect of the current child support 
distribution rules is that the most effective means of 
collecting child support arrears for low-income families, those 
families who have received or are receiving TANF tax 
intercepts, is often not available to low-income families.
    Now, changing the child support distribution rules, the 
reason I am spending time on this is that it is so important. 
It would take some funding from State child support programs 
that are already facing limited resources, which adds to our 
concern of adding a new set of administrative burdens on the 
Child Support Program.
    It is clear, it is very clear that H.R. 866 has the obvious 
intent to serve the best interests of children. But in addition 
to some of these concerns we have with the limited resources, 
there are concerns that have already been mentioned with some 
of the language in H.R. 866.
    I won't spend a lot of time, since some of these items have 
already been discussed. We do have concerns with the fact that 
financial assistance is not defined and that the failure to 
adequately define ``financial assistance'' could lead to the 
unintended result of denying benefits when in some 
circumstances they could actually help children. They could 
help low-income non-custodial parents work toward self-
sufficiency and then be better able to help their children.
    Some good examples could be legislation which is introduced 
in the Senate and House now for Federal funding for fatherhood 
programs, to provide assistance to low-income, non-custodial 
parents in the form of responsible fatherhood programs, job 
training, parental counseling, domestic violence counseling and 
the like; all geared toward the goal of helping these low-
income, non-custodial parents be more involved with their 
families when appropriate and provide better support to their 
    Also, we take concern with the good cause exception, 
although it is clear the good causes exception is there with 
the intent to take into account these situations where it might 
be better for the non-custodial parent to get the benefits to 
help the children. As has already been said, the exception is 
not defined.
    We also have concerns about who would make the decision on 
good cause, what would be the procedure? There are no 
provisions for protecting against due process concerns, for 
providing the right to contest and appeal the good cause 
    It seems most likely that the place where the decision 
would fall for determining good cause would end up on the child 
support programs, otherwise there would be great difficulty if 
each agency was making the decision about what is good cause in 
those circumstances without really having a lot of information 
about the personal facts of these families and children.
    Possible modifications to H.R. 866 could definitely be made 
to improve upon some of these concerns. For example, changes 
could be made to clarify which specific types of financial 
assistance would be targeted. Rather than adding a growing list 
of exemptions of programs that would not be denied, it would 
likely be a better approach to only add those programs that 
would be specifically targeted and only after very careful 
consideration is given to those specific programs to ensure 
that their denial would actually encourage more child support 
payments rather than in some circumstances hurting the 
situation further, as has already been discussed.
    Also, changes to the good cause exception could be made to 
better indicate what factors are going to be considered on good 
cause. Is it the best interest of the children that is the 
over-riding standard? Specific examples could be listed as 
examples of what meets good cause such as when a family 
reunifies and the non-custodial parent now lives with the 
children for whom child support is owed.
    It would also be important to add in the right to contest 
and appeal good cause decisions, both to protect against due 
process concerns and to better ensure that when a good cause 
determination is made that it is not made in error. Again, as I 
have already said, it would be important to decide where that 
decision is made and come up with the structure for that 
    That leads me to some of the concerns on the additional 
administrative burdens that this could have on the child 
support programs. Even with these potential changes to the 
legislation, the Children's Defense Fund fears that H.R. 866 
could place an undue administrative burden on State Child 
Support Enforcement Offices.
    Now, I am aware that the idea is that this would be through 
self-certification, but it does seem difficult that the self-
certification would, when carried out, not include significant 
involvement from the child support enforcement agency, either 
in tracking a situation where reports are made where there may 
have been false certification filed and looking at situations 
where the parent was at first not in compliance but then came 
into compliance.
    The self-certification does allow for working out an 
agreement even if the parent is behind on child support but 
questions can come up about who would they work out the 
agreement with. It seems like it would have to be with the 
child support enforcement offices.
    Initial conversations with some child support IV-D 
Directors confirm these concerns, that the serious funding 
difficulties that the State child support enforcement programs 
are facing, at the same time that they are trying to step up 
enforcement activities and really get up to speed on all the 
existing child support tools that are now available, including 
those new tools that were made available through welfare 
    They are providing new services to both custodial and non-
custodial parents to really look at the holistic approach to 
serving low-income families and to helping both custodial and 
non-custodial parents better serve their children and have more 
involvement with their children when appropriate.
    In developing and implementing State-wide computer systems, 
there is concern that implementing this new set of penalties 
could require some very complicated interaction between the 
child support enforcement agencies and several different 
Federal and State agencies in determining when parents are or 
are not in compliance.
    So, again, rather than adding the burden on State programs 
at this time to implement this new set of penalties, we believe 
that a better use of the limited funds available to child 
support programs at this time is to continue improvements to 
the existing tools, to continue reform of child support 
distribution to get that child support that is already being 
collected to these families with children, and to provide 
additional supportive services both to custodial and non-
custodial parents so they can better provide for their 
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Hatcher follows:]

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    Mr. Horn. Thank you very much. We now go to Wendell Primus, 
the director of income security, Center on Budget Policy 
    Mr. Primus. Mr. Chairman and members of the subcommittee, 
thank you for the opportunity to testify today on H.R. 866. I 
will summarize my testimony and try not to repeat what has been 
raised by the three witnesses to my right.
    We basically agree with the three previous statements and 
believe that H.R. 866 is flawed and could have a number of 
harmful and counterproductive effects.
    We strongly agree with Representative Bilirakis that the 
payment of child support is a fundamental civic responsibility 
and parents who do not live with their children have an 
obligation to provide both financial and emotional support to 
them. Research also shows that strong child support enforcement 
programs reduce entrances into and hastens exits out of welfare 
and reduces divorce and out-of-wedlock childbearing.
    I think the real issue is: Does the child support 
enforcement program need another tool or should we use the 
existing tools we have better? I think having watched this 
program over the last 25 years, we have given the program many 
more tools and the key ones were added in the Welfare Reform 
Act of 1966.
    That was through the New Hire Directory. Every time a 
person is hired today in the United States, the employer must 
forward a form which is matched against a registry of all the 
child support orders. If there is a match, you can immediately 
order automatic wage withholding.
    I think we are on the threshold of seeing enormous 
increases in performance and just in the last 5 years, the 
probability of collecting from someone with an order in the IV-
D system hearings doubled from 34 percent to 68 percent. So, I 
think we have made enormous strides.
    So, I think rather than adding another penalty, I believe 
our focus should be on ensuring that States use the tools they 
already have as effectively as possible.
    Going through your two or three examples at the beginning 
of the hearing, Mr. Chairman, the question is, why didn't that 
NBA star get an automatic wage withholding so that his salary 
was reduced and sent to child support? I mean, why wasn't the 
State involved doing that?
    In terms of the other two examples, the question was, you 
know, why didn't we take away their professional licenses? 
Those tools are available. It is not that we really want to 
take it away, because then we have destroyed probably his 
ability to earn a livelihood, but my point is that the system 
already has sufficient tools.
    The question is: Should we be using those tools better and 
how can we help States utilize those tools better?
    But I am also concerned that this bill could make it more 
difficult for low-income non-custodial parents to become 
employed and meet their parental responsibilities.
    Many dads in the current IV-D system need support and 
probably need financial assistance such as job training and 
education programs. I think in the next round of welfare reform 
we have got to be more concerned about the non-custodial 
parents' involvement in the lives of their children and helping 
them move into the labor force, retain employment and make 
    As Dan has already indicated, I think the first step in 
that process is really passing H.R. 4678, a bill that passed 
last September by a margin of 405 to 18 in the House. The 
Senate, unfortunately, did not take it up. But this really was 
the first step. It would also have assured that more of the 
child support actually gets from the dads to the children.
    Today, we have a 100 percent tax rate in the case of low-
income dads where mothers are on welfare. The dad is ordered to 
pay. If he pays, all of the moneys accrue to the benefit of the 
State or Federal Government.
    I know that Illinois has considered passing through. The 
problem is that the Federal Government doesn't help them in 
that effort. I know the bills have actually passed the House. I 
think the last one was vetoed by the Governor. My understanding 
of the situation is if you passed H.R. 4678 and had the Federal 
Government participate partially in getting those payments to 
the mother, many States would take advantage of that.
    So, I share the concerns about the definition of good cause 
and what is financial assistance. I worry that might be applied 
to job training programs. Since my time is up, I do want to 
emphasize that this issue of arrearages is a big issue among 
low-income, non-custodial parents.
    In Baltimore City, I have looked carefully at Maryland and 
the State did runs for me. The average arrearage for a low-
income male in Baltimore City was $9,000. We are hearing lots 
of anecdotal evidence that is forcing them to go underground 
and is doing just the opposite of what we intended.
    So, I think our emphasis has got to be on getting those 
low-income, non-custodial parents to meet their parental 
responsibility. That is different from the three examples that 
you cited earlier. I don't think another punitive tool is the 
right way of going about that.
    Thank you.
    [The prepared statement of Mr. Primus follows:]

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    Mr. Horn. Thank you.
    Our last presenter is Geraldine Jensen, president of the 
Association for Children for Enforcement of Support, Inc.
    Ms. Jensen. Thank you, Mr. Chairman, members of the 
committee and thank you, Representative Bilirakis, for 
introducing the STOP Act.
    I am here today to represent ACES members who are typical 
of the over 20 million families who are now owed $71 billion in 
unpaid child support. The STOP Act will assist these children 
and it will send a strong message that child support is a 
fundamental responsibility.
    Examples of Federal programs where parents who fail to pay 
child support can and do receive Federal grants and loans 
includes venture capitalists for high-risk technologies from 
the National Institute of Standards and Technologies, doctors 
who are remodeling their offices and receive money from HUD, 
sponsors of festivals and exhibits who receive funding from the 
National Endowment of the Arts.
    We believe that the ``good cause'' provisions in the bill 
and the requirement to make arrangements for payments will 
improve child support collections and promote payment. 
Certification that one pays, done in the same way as one 
certifies that they have reported for the draft on a college 
loan is not burdensome.
    The bill does, however, need the clarification to ensure 
that programs such as Food Stamps and Medicaid and TANF are 
    The STOP Act will increase collections, but it will be 
important that these payments as well as all child support 
payments be quickly and efficiently distributed to families. 
ACES is very concerned about a recent report from HHS which 
shows that at the end of 2000, $644 million in child support 
was collected, but not distributed to families.
    States cite the lack of being able to locate the custodial 
parent and the complicated welfare distribution regulations as 
among the reasons that payments are not distributed.
    California has the largest amount of undistributed funds at 
$176 million. They are currently surveying counties to validate 
this total.
    In Illinois, the only State with the new State disbursement 
unit online, it was so plagued with problems and payments were 
so delayed that it shut the system down and returned payment 
distribution to the counties. They are currently rebidding the 
contract in Illinois to put a new system in place.
    Michigan reports $26 million in undistributed payments. 
Problems with locating custodial parents in Michigan resulted 
in $300,000 being credited to unclaimed funds departments in 
1999. After the State disbursement unit went online, 
undistributed payments more than doubled to $700,000 in 2 
months, between October to December, and another $2.7 million 
has gone unclaimed this year.
    Michigan received $327 million in Federal funding to 
computerize child support. At present, 13 counties, including 
Detroit, are still not on-line and the system does not meet 
Welfare Reform requirements.
    Ohio, knowingly and purposely put a computer system on-line 
which miscalculates the amount of child support due to families 
leaving welfare. This has literally stolen $10 million from the 
State's neediest families. Ohio tries to justify this behavior 
by stating that they were trying to avoid Federal penalties for 
missing deadlines.
    Ohio has received $250 million from the Federal Government 
for developing this broken system. The Ohio State Disbursement 
Unit is run by Bank One under a contract that pays them out of 
interest earned on collections and rewards them for slow 
distribution. Families report delays of weeks and months in 
receiving payments.
    ACES recommends that the Federal law that would require 
States to notify parents about unclaimed funds, require them to 
use the Federal locator to find the custodial parent, and 
prohibit vendors from being paid out of the interest. In fact, 
all interest earned should go to the children. It requires 
State auditors to annually certify that the State is meeting 
its fiduciary responsibility in processing these payments.
    It recommends that the States return unclaimed funds when 
they can't find the custodial parent after 3 years, to the non-
custodial parent, rather than to the State coffers, and setup a 
fair hearing process for parents so that if we have a dispute 
we can have a way to resolve the problems with payment 
distribution with the State.
    New studies show that child support enforcement reduces the 
divorce rate, reduces the number of births of never-married 
parents, and reduces teenage premarital child bearing. Children 
who receive support are more likely to have contact with their 
fathers, have better grade point averages and significantly 
better test scores. They have fewer behavioral problems and 
remain in school longer.
    Your support of the STOP Act will help children. We ask you 
to please act to ensure that the support paid reaches the 
children rather than enriching the State coffers.
    Thank you.
    [The prepared statement of Ms. Jensen follows:]

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    Mr. Horn. Thank you very much.
    Now, we are going to go on 5 minutes for the Members. We 
will start with the ranking member from Illinois, 5 minutes. 
Then Mr. Bilirakis will have 5 minutes and back and forth so we 
get the questions out of us and the information out of you.
    The gentlewoman from Illinois has 5 minutes.
    Ms. Schakowsky. In Illinois, you are right, Mr. Primus, the 
Governor vetoes a bill that would have allowed more than $50 to 
go to parents who receive TANF, but also then they don't 
receive it through child support payments. They just get the 
flat $50.
    That $50 goes to support the entire child support 
collection system of Illinois, which serves not only low-income 
children, but also all children who are receiving child 
support. So, you have poor kids really subsidizing this child 
support system. Also, 10 percent of the money then just goes to 
run activities of Illinois government.
    It seems to me that one of the rationales requiring--as 
does Wisconsin, by the way--my understanding is that there is a 
Federal waiver in Wisconsin so that all money collected for 
families on public aid goes to those families and that 
Wisconsin, which is experiencing a 90 percent drop in welfare 
caseloads, didn't penalize a person's cash grant due to child 
    So, it seems to me that if some States, Wisconsin, Vermont, 
and Connecticut could get that Federal waiver, that surely we 
ought to figure out some way for more of that money to be able 
to go to those children and it would be an incentive for the 
working parent to provide more child support, knowing that more 
than $50, in the case of Illinois, is going to go directly to 
the children and would encourage, also, the custodial parent to 
help find the other parent to contribute to their support. That 
is one question.
    The other was, I am trying to understand how that 
interfaces with the Cardin legislation and if that is what this 
addresses, that more money would go to the kids?
    Any one can answer that.
    Mr. Primus. Yes. The Nancy Johnson-Ben Cardin legislation 
of last year speaks directly to the issues you have raised. I 
agree with Geraldine. I think one of the chief problems in the 
system right now is the distribution rules.
    I defy anyone to explain those in cases where the 
arrearages have been accumulated before the mother went on 
welfare, what happens to arrearages accumulated while she was 
on welfare and then afterwards. So, the Johnson-Cardin 
legislation of last year would have done two primary things. It 
would have said, ``When we intercept the IRS refund check, if 
the mother is owed money or the State is owed money, you must 
give it to the mother first.''
    That was a mandatory provision and Nancy Johnson was the 
primary sponsor of that.
    Congressman Cardin added another provision which would have 
gone to your Illinois example and said, if the State 
disregards--right now if the mother is on welfare, half of the 
child support, in some cases more, goes to the Federal 
Government, regardless of what the State does in terms of 
disregarding the child support and calculating the TANF 
    What the Cardin amendment would have done is said if the 
State of Illinois wants to disregard $200, then it no longer 
has to send to the Federal Government $100. It participates in 
the cost of providing that assistance to the mother.
    I think all of us would agree that really is the 
legislation that you want to support. I think that would do a 
lot for the system. We need to simplify these distribution 
    Ms. Schakowsky. In a June 4, 2001 article in the Chicago 
Sun-Times, it mentions there is enormous dissatisfaction right 
now with the State disbursement unit. It seems that, though, is 
in compliance with fairly new Federal regulations that require 
disbursement to go on this way.
    Did we create a system that further exacerbates the 
problem? Is that what we have done, in your view?
    Ms. Jensen. Yes. The State disbursement unit has caused 
many more problems in States that have a State-supervised 
county-run system. In those States in the past, mainly the 
county clerk of courts disburses payments.
    Instead it said we will have one place that all the 
payments come into and go out of. The vendors that were hired 
in many States did a very poor job. Those payments went in and 
they couldn't identify which families to send them to. There 
have been many problems.
    We would like to see reform to that system that would allow 
States to let money come in locally and just send the records 
back and forth. Right now, in places like Michigan, money comes 
into the State disbursement unit. They then take the money and 
send it to the county friend of the court who then sends it to 
the family.
    It seems to us they should send the money to the family and 
send a record to the county so that they quit passing this 
money between agencies.
    We also would like to see it easier for people to pay, so 
that you could pay with your credit card or your ATM card at 
the bank.
    Mr. Horn. Thank you. We will get back to that.
    The gentleman from Florida, Mr. Bilirakis, 5 minutes.
    Mr. Bilirakis. Thank you very much, Mr. Chairman.
    I want to thank the panel, and I mean that sincerely. We 
get so darned frazzled sometimes, and often our intentions 
don't always make it into the legislation.
    I said at the outset, that there are a lot of loopholes and 
a lot of corrections and improvements that need to be made. I 
have no pride in authorship.
    If the only thing that comes out of this hearing and the 
introduction of our legislation is prudence, then I think it is 
    I guess one of the questions I would ask Ms. Jensen is what 
happens to the money that is collected that doesn't get down to 
the families, to the children?
    Ms. Jensen. The States have not been able to give us a good 
answer. Most of them can say that a portion of it is 
unidentified. They don't know which custodial family to send it 
to. We ask them to do the Federal parent locator to find the 
custodial parents because, you know, they are not hiding. They 
would want these payments.
    The other money, I just think they need to be better 
monitored and they need better fiscal controls because it is 
very hard to determine where the rest of those un-issuable 
payments are going.
    Mr. Bilirakis. I am sure we could try to help in that 
regard. I just want to point out, do we want grant money, 
Federal taxpayers' grant money, to go to Creators for Literary 
Publishing, cultural festivals and various types of artistic 
and cultural exhibits given by the National Endowment for the 
    When those people have been bad actors in terms of not 
caring enough about their children, do we want money to go to 
venture capitalists as Ms. Jensen mentioned for the creation of 
high-risk technologies given by the National Institute of 
Standards Technology? Do we want money to go to developers for 
modernizing or purchasing land, building or machinery given by 
every one of these departments and agencies when there have 
been bad actors?
    Do we want grant money to go to creators and inventors for 
projects that present to the public conservation of art 
exhibits, again the National Endowment of the Arts? Do we want 
money to go for the construction of doctors' offices?
    Ms. Jensen shared this with us. I find it hard to believe 
that we spent money for it. I have been here 19 years and I 
still get surprised.
    Money to doctors for constructing medical facilities, 
incorporating new construction concepts given by HUD? I mean, 
do we want Federal dollars to go to those types of people 
making applications for grants and getting them when in fact 
they have been bad actors as far as their children are 
    That is really the intent of our legislation. I want to 
apologize that we didn't make that clear. Obviously the way it 
is worded, as you and I have said, the intent is not there.
    We are not talking about the impoverished. We are not 
talking about people on Food Stamps. We are talking about 
people who clearly earn enough to support their children and 
are coming to the Federal Government as bad actors, getting 
these grants.
    I guess I would ask the question: Would you all support 
this legislation, more fully if it focused on Federal loans, 
loan guarantees and grants rather than Federal assistance in 
general? Of course, it would more clearly define good cause to 
include economic necessity. That is a little bit tough because 
it is ambiguous but that can all be worked out.
    Let me ask the question. Mr. Fuentes.
    Mr. Fuentes. Congressman Bilirakis, there is no question 
that we share the goal.
    Mr. Bilirakis. But would you support that type of 
    Mr. Fuentes. I would say that the administration would be 
happy to review any revisions and modifications to the proposal 
that you put forward and get back to you with a very thoughtful 
and constructive response.
    Mr. Horn. Without objection, it will be put at this point 
in the record.
    It seems to me it is very simple. You either say artists 
can go out and leave their kids in the gutter and you people 
getting HUD grants can go get them and they are left on the 
curbs. So, it is very simple, yes or no?
    Mr. Penn.
    Mr. Penn. We support the objective of the legislation. Our 
only concern is with the way you implement it. If we can find a 
way to implement it that doesn't overly burden the 
effectiveness of the programs, we would be happy to support it.
    Mr. Bilirakis. Just a little line or two on an application 
form. Mr. Hatcher.
    I am sorry, Mr. Chairman.
    Mr. Horn. No. I just wanted to get it going down there. You 
asked a question. Let's see if it is yes or no.
    Mr. Hatcher. Thank you, Mr. Chairman. I will start with 
``yes,'' but add clarification. We definitely support the 
intent that Mr. Bilirakis has described and would not like to 
see those types of services going to parents who can afford to 
pay child support and who aren't paying child support.
    We still do have concerns on the timing questions and the 
ability to implement additional penalties at this time.
    If I could use an example, I just bought an old house that 
I am trying to fix up. I get restless as I move from one room 
to the other room. I start tearing into something and then I 
get bored with that project and pretty soon my whole house is a 
shambles. Now, I have a new baby and it is a mad house. Nothing 
ever gets completely fixed.
    So, our concern here is that we really spend the limited 
resources of State child support programs to fix the current 
things that need to be fixed rather than trying to implement 
new programs.
    Mr. Horn. Mr. Primus.
    Mr. Primus. We also support the intent of the legislation. 
But I guess we really question the effectiveness. I mean, if it 
is a bad actor and you just have a line on the form, I am not 
so sure that does much. I worry that we will create more cost 
trying to route out the bad actors, as you put it.
    I would rather see those moneys and efforts spent making 
the existing tools more effective so we weed out the bad actors 
before they even get around to applying for any Federal grants.
    I also share some concerns, you know, if you have a farmer 
who is behind, but he is behind for other reasons. Then you 
have to sort out whether he should get assistance or not. I am 
not so sure we should put that burden on every program that 
supplies assistance.
    I would rather focus on getting the current tools working 
and working better and getting this system funded better.
    Mr. Horn. Ms. Jensen.
    Ms. Jensen. Yes, absolutely. We believe the certification 
process will help based on the experience of when the law was 
passed for revocation of drivers' licenses. For example, the 
State of Maine just sent a letter out to people telling them 
that they can lose their license and they collected millions of 
    So, just bringing this to people's attention and saying 
that the Federal Government is concerned about this issue will 
have a big impact for the children.
    Mr. Horn. OK. We will now move back to the ranking member, 
Ms. Schakowsky, for 5 minutes of questioning.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    Mr. Fuentes, does the Secretary of HHS support the Johnson-
Cardin legislation?
    Mr. Fuentes. My understanding, Congresswoman, is that 
Secretary Tommy Thompson has gone on record as supporting 
simplified distribution and that there are a number of 
proposals. The Department, I believe, is reviewing the bill and 
at the appropriate time will provide an answer to that.
    But there is no question that he is very supportive of 
simplifying and certainly helping welfare families become self-
sufficient and remain self-sufficient.
    Ms. Schakowsky. So, at this point do you have any 
legislation addressing this issue that is being promoted by the 
Department and the Secretary or are you in the process still of 
considering it?
    Mr. Fuentes. The administration is in the process of 
considering it.
    Ms. Schakowsky. We are reauthorizing TANF this Session, are 
we not? Might this be part of that?
    Mr. Fuentes. We will see exactly what the best approach 
might be. Certainly the consideration of TANF reauthorization 
will be an opportunity to touch on many of these areas.
    Ms. Schakowsky. Ms. Jensen, regarding the issue of the 
State disbursement unit, you suggested a number of corrections 
that could be made. Are these incorporated in any legislation 
right now? Is there any activity now in either body?
    Ms. Jensen. The only legislation I am familiar with is the 
thing that everyone has been talking about, the Johnson-Cardin 
bill. I think we have a need for some new laws to deal with 
some of the problems that have come out of the State 
disbursements units, with timeliness of payments and unclaimed 
funds and all those other issues.
    Ms. Schakowsky. In Illinois, a committee of the 
legislature, a task force of the House of Representatives, 
which I used to serve on, was created. They are going to hold 
hearings on whether to create a new State agency with child 
support its sole responsibility.
    One of the Republican members was quoted as saying that 
this program is broken. It doesn't need another band-aid. It 
needs either a private contractor or it needs a director to go 
to Washington and say, ``Look, the old system worked fairly 
well. This new system has been a disaster.''
    What would you say about that characterization around the 
country of this system?
    Ms. Jensen. We have been very involved in Illinois with the 
task force and with the need of moving child support out of the 
Illinois Department of Public Aid and into a different State 
agency where it is a priority. We think that would help a great 
    We do need to be computerized. It is amazing that in this 
century child support is not yet computerized in States 
    So, I don't think we need to go backward, but they do need 
to make sure that the computer systems for payments 
distribution, for tracking cases actually work and help 
families instead of hurting them.
    So, there needs to be a tooling of that system to get it up 
and running.
    Ms. Schakowsky. Are you talking about just Illinois or in 
    Ms. Jensen. I am talking throughout the whole country. The 
system they setup was that each State developed its own 
computer system. So, California and Michigan and, I forget the 
other State, Ohio is not certified but is in the process of 
getting certified, along with Nebraska.
    Those systems are all going to need to be updated at 
different times. They are all different from each other. So, 
the Federal Government, if it continues to fund this, is going 
to pour millions and millions of dollars into something that 
doesn't work and probably has no hope of really working.
    Plus, the systems don't talk to each other. It would make 
much more sense to revisit that whole issue and maybe adopt one 
system that all the States used, kind of like everyone using 
    Ms. Schakowsky. It seems so reasonable. The Department of 
Public Aid has said, ``Non-payment of child support is a 
primary reason almost half a million children in Illinois 
receive welfare.''
    The Federal role is so critical here. I would certainly 
like to work with everyone, Mr. Bilirakis and everyone, to see 
if there isn't something that we can do, particularly with 
perhaps this new opportunity with the TANF reauthorization, 
although it certainly extends beyond that, to come up with 
something that is really going to work.
    This is a persistent problem that doesn't defy solution. We 
just have to come up with a better one. Thank you.
    Mr. Horn. The gentleman from Florida, Mr. Bilirakis, 5 
    Mr. Bilirakis. Thank you, Mr. Chairman.
    You know, we have talked about improvements made over the 
last few years. God knows that has been the case and we are 
very grateful for that. Ms. Jensen shared with us about how 
collections have been improved. But an awful lot of that money, 
as much as half a billion dollars, is really not going down to 
the children.
    HHS has furnished us with State breakdowns. So I guess a 
question ought to be raised as to where that money went. Where 
is it? It was intended for a certain purpose.
    Mr. Chairman, not belittling any of these other areas, and 
the ranking member is quite correct, if we don't improve the 
collection and distribution process, getting it to where it is 
supposed to go, we are not really accomplishing very much.
    I still say that there are people out there who are 
receiving Federal dollars who are not impoverished, who are not 
on Food Stamps, who can well afford to pay child support for 
their children and who are not doing it.
    There seems to be a reluctance to supplement all of the 
good things that are now taking place by basically having a 
    Now I assure you, and I guess we all have different 
opinions in this, but we are talking about people who are, 
doctors, lawyers, engineers, scientists, painters. We can go on 
and on here.
    I don't think that they would be willing to sign a 
statement under oath to the effect that they have not followed 
the law in terms of their children and still go forward and try 
to get Federal dollars.
    In any case, the point of the matter is that I don't think 
we ought to get away from the purpose of the legislation and 
that is to prevent those kinds of people from getting Federal 
    The purpose is not to go after the impoverished and people 
on Food Stamps or welfare. As far as farmers are concerned, 
there are an awful lot of big farmers out there who get a lot 
of subsidies and Federal loans who may be bad actors. Is it 
intended to reach them? You are right it is. I think so.
    Thank you, Mr. Chairman. I appreciate very much your giving 
me this time.
    Mr. Horn. Well, I agree with you on those last remarks. I 
wouldn't give them an inch.
    Let me get down to the Federal Parental Locator Service. 
Under whose responsibility is that? Mr. Fuentes.
    Mr. Fuentes. Yes, that is an activity of the Office of 
Child Support Enforcement.
    Mr. Horn. How many employees are currently assigned to 
updating and checking the Federal Parental Locator Service and 
associated systems?
    Mr. Fuentes. Federal employees, we currently have 12. We 
have 123 contractor staff working specifically on that system.
    Mr. Horn. And that is spread out over all 50 States?
    Mr. Fuentes. The 12 Federal staff and the contractors are 
housed specifically in Washington and the surrounding area.
    Mr. Horn. OK, so all the work is done here.
    Mr. Fuentes. It is all done here, but it is communicated on 
a regular automated basis with all the States.
    Mr. Horn. How long does it take to verify whether a person 
is listed on the Federal Parental Locator Service? How long 
does it take; 5 seconds; 5 minutes?
    Mr. Fuentes. It is a very quick process. It is 
instantaneous. It really is tape-to-tape. All of these machines 
have their data bases. The work that is done is actually 
creating matches between numerous data bases and then providing 
the State the necessary information.
    Mr. Horn. Now, is there ever a breakdown on this or how 
does that work?
    Mr. Fuentes. From time to time there are systems failures 
in terms of the computers, but there are redundant and backup 
systems. We utilize the data system at SSA, which is state-of-
the-art. So, as soon as one system or one series of computers 
go down, there are those that back it up. So, the matches are 
continual. They go back to the States on a daily basis.
    Mr. Horn. Do we know what type of person is locating this? 
Is this a city or a county where the welfare department is 
delegated or where Federal agencies--what is the profile of 
people that you are serving?
    Mr. Fuentes. That we are serving?
    Mr. Horn. Yes.
    Mr. Fuentes. Our primary clients are the States. The States 
provide us on a regular basis information from their State case 
registry, their requests for the locator service. Within 20 
days of a person being hired, the employer must provide certain 
information to the State and then the State automatically 
provides that to our data base.
    Mr. Horn. Are there any lawsuits or anything where people 
have tried to interfere with that and say, ``What do you mean? 
I am entitled to that million dollars of Federal taxpayers' 
money and I can still not give a dime to my kid.''
    Mr. Fuentes. Not to my knowledge, sir.
    Mr. Horn. No lawsuits on that? Sometimes there are weird 
    Mr. Fuentes. In the last 15 months that I have been there, 
I have learned all manner of kinds of groups. But the fact of 
the matter is this has not happened.
    Mr. Horn. Now, with some of the States not having much of a 
system, should we just do it for them? What would we miss if it 
weren't the States that was doing it?
    Mr. Fuentes. Sir, we are working with all of the States in 
bringing their systems up. All but four States are certified 
for the FSI-88 requirements. We have just finished full 
certification of six States for the PRWORA requirements. We 
have a number of other States ready to be certified.
    We continue under the current arrangement to provide 
technical assistance, but also, where necessary, invoking the 
penalties if States are not moving on the timeline that they 
are required to.
    Mr. Horn. Where is California in all this? As I remember a 
couple of years ago, the Los Angeles District Attorney, which 
represents one-third of the State of California, which is 32 
million people, they have 10 million. The smaller counties 
didn't want to have the same computing ability that the Los 
Angeles District Attorney had.
    I am just curious about what happened on that. Have you 
been in the middle of that?
    Mr. Fuentes. Well, sir, the way that has been working out, 
Mr. Chairman, is that in working with the State of California, 
because of the circumstances that came about there and the 
desperate conditions, the State legislature created a separate 
agency for child support enforcement. It removed responsibility 
from the counties and provided it to a statewide agency. I 
believe by this October all of the personnel working in the 
District Attorney's Offices or other county offices across the 
State will now be part, officially part of the new child 
support agency.
    In addition, working with them on their automated systems, 
we have been supporting an interim system of six, taking all of 
the 58 counties. Am I correct?
    Mr. Horn. Yes, 58.
    Mr. Fuentes. Taking all of the 58 counties, the State 
probably had 50 different approaches. We have taken an interim 
step to get one system in place because it is a very laborious 
and time-consuming process.
    We have authorized six systems so any one of the counties 
can now come on to one of the six approved systems. They are 
approved because they meet the criteria laid out in PRWORA and 
    The State has indicated by 2006 that they will have a 
statewide system across the country. However, again, because we 
implement the law, California this year paid $113 million in 
penalties. Until their system is up and running or unless those 
requirements change, those penalties will continue to be 
    Mr. Horn. Where does that money go to, the U.S. Treasury?
    Mr. Fuentes. Currently, it reverts to the Treasury, sir.
    Mr. Horn. That is a good place for it to revert. Thank you. 
I am sorry my people in California don't seem to know what they 
are doing. But that is not the only issue they have out there. 
So, if you are going to go out there, take a candle with you.
    Mr. Fuentes. If I could just add something, because we have 
talked about the undistributed collection issue and I would 
just like to take the opportunity to share with you what the 
Office of Federal Child Support Enforcement has been doing 
about that issue.
    First, it was the No. 1 priority the last fiscal year and 
it remains this fiscal year one of our top three priorities.
    Second, just as recently as yesterday morning we were 
meeting with the IV-D Director Association in a panel 
discussion that was all morning long in identifying approaches 
to resolving those undistributed collections.
    We have also come to understand, because of the attention 
we have put on it, both with the States, but also nationally, 
that at any given time about half of that money is explainable. 
The Federal tax offset requirements includes a provision for 
the injured spouse. So, States routinely hold that money up to 
6 months. So, half of the undistributed amount is allowing time 
for an ``injured spouse claim'' to be processed and acted on.
    We are still working with the States through a task order 
that we have offered to identify best practices and to provide 
technical assistance to them on how to reduce that other half 
of the amount.
    Mr. Horn. That is very well said. My last question, because 
we have two votes on the floor. Ms. Jensen, I am curious, you 
suggested in your testimony that custodial parents should also 
be listed in the Federal system so they could be located for 
issuing child support payments.
    What would it take to accomplish that?
    Ms. Jensen. It would take a regulation from HHS. They 
already have all the names and Social Security numbers of the 
custodial parents when you apply for services. It would just be 
a regulation requiring the States to use that tool to track 
down parents that they need to find to get this money to.
    Mr. Horn. Well, we thank you all. You have all been great 
witnesses. We appreciate your answers to the questions. The 
majority staff and the minority staff might well have questions 
to send to you. If you would be as nice on those questions as 
you were on ours, they will put it in the record at this point.
    With that, we are in adjournment.
    [Whereupon, at 11:45 a.m. the subcommittee was adjourned, 
to reconvene at the call of the Chair.]