[Congressional Record Volume 144, Number 31 (Thursday, March 19, 1998)]
[Senate]
[Pages S2298-S2300]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. FEINSTEIN:
  S. 1798. A bill to provide for an alternative penalty procedure for 
States that fail to meet Federal child support data processing 
requirements; to the Committee on Finance.


             THE CHILD SUPPORT PENALTY FAIRNESS ACT OF 1998

  Mrs. FEINSTEIN. Mr. President, I am introducing today, the Child 
Support Penalty Fairness Act of 1998. Similar to the House passed Child 
Support Performance and Incentive Act, this legislation decreases 
penalties for states who didn't make the October 1997 child support 
enforcement system deadline but this legislation provides exemptions 
for those counties, such as Los Angeles county, that made the deadline 
even if the state didn't.

  This legislation decreases the overall penalties to 4% of the child 
support administrative funds in the first year, and doubles the 
percentage of penalties each year, capping it at 20% by the fourth 
year. Additionally, if the state becomes certified during the year, 75% 
of the penalties would be forgiven for that fiscal year. The penalty 
structure in this legislation is the same as Clay Shaw's bill, HR3130, 
which passed the House of Representatives two weeks ago and awaits 
consideration in the Senate Finance Committee.
  The current penalties for not having the child support enforcement 
system up and running are enormous. States would be penalized all their 
TANF (AFDC) funding and their child support administration funds for 
the year.
  The total loss in TANF funds and child support administrative funds 
from the 14 states amount to over $8 billion annually and for 
California, the penalty would be $3.7 billion in TANF funds and $300 
million in child support administrative funds annually.
  What is unique about this legislation is that in addition to lowering 
penalties, it exempts from the penalties those counties who had their 
own certifiable systems prior to October 31, 1997.
  All of us agree that for states who did not make the deadline, they 
should be held accountable. But for those

[[Page S2299]]

states who have county based child support systems where individual 
counties could have been certified by HHS independently, it is unfair 
to penalize the counties with the state.
  For California, 25% or $75 million of the penalty will be borne by LA 
County, the largest county in the nation serving 550,000 families and 
whose program is larger than 42 other states. Despite the fact that LA 
County completed its system by the October 1997 deadline and could be 
certified as recognized by HHS in its March 2, 1998 proposed rules, LA 
County will be penalized along with the rest of California.
  This is unfair and wrong. As I propose in my legislation, when 
counties have met the system requirement by building their own system 
with separate HHS funding, their portion should be exempted from the 
total penalties imposed on a state.
  Mr. President, I know there is bi-partisan support for my proposal 
which is similar to Clay Shaw's bill which passed the House. My 
proposal differs from Shaw's bill in that it exempts penalties for 
those counties who met all the requirements and completed their child 
support enforcement system before the October 1997 deadline. This 
provision is critical for many states whose counties have done their 
job but will suffer enormous penalties because the state as a whole 
have failed.
  I urge all my colleagues to support this legislation, and I ask 
unanimous consent that the text of the bill, the memorandum of 
understanding, and excerpts from 42 CFR Part 307 be printed into the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1798

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION. 1. ALTERNATIVE PENALTY PROCEDURE FOR CHILD SUPPORT 
                   DATA PROCESSING REQUIREMENTS.

       (a) In General.--Section 455(a) of the Social Security Act 
     (42 U.S.C. 655(a)) is amended by adding at the end the 
     following:
       ``(4)(A) If--
       ``(i) the Secretary determines that a State plan under 
     section 454 would (in the absence of this paragraph) be 
     disapproved for the failure of the State to comply with 
     section 454(24)(A), and that the State has made and is 
     continuing to make a good faith effort to so comply; and
       ``(ii) the State has submitted to the Secretary a 
     corrective compliance plan that describes how, by when, and 
     at what cost the State will achieve such compliance, which 
     has been approved by the Secretary,

     then the Secretary shall not disapprove the State plan under 
     section 454, and the Secretary shall reduce the amount 
     otherwise payable to the State under paragraph (1)(A) of this 
     subsection for the fiscal year by the penalty amount.
       ``(B) In this paragraph:
       ``(i) The term `penalty amount' means, with respect to a 
     failure of a State to comply with section 454(24)--
       ``(I) 4 percent of the penalty base, in the case of the 1st 
     fiscal year in which such a failure by the State occurs;
       ``(II) 8 percent of the penalty base, in the case of the 
     2nd such fiscal year;
       ``(III) 16 percent of the penalty base, in the case of the 
     3rd such fiscal year; or
       ``(IV) 20 percent of the penalty base, in the case of the 
     4th or any subsequent such fiscal year.
       ``(ii) The term `penalty base' means, with respect to a 
     failure of a State to comply with section 454(24) during a 
     fiscal year, the amount otherwise payable to the State under 
     paragraph (1)(A) of this subsection for the preceding fiscal 
     year, minus the applicable share of such amount which would 
     otherwise be payable to any county to which the Secretary 
     granted a waiver under the Family Support Act of 1988 (Public 
     Law 100-485; 102 Stat. 2343) for 90 percent enhanced Federal 
     funding to develop an automated data processing and 
     information retrieval system provided that such system was 
     implemented prior to October 1, 1997.
       ``(C)(i) The Secretary shall waive a penalty under this 
     paragraph for any failure of a State to comply with section 
     454(24)(A) during fiscal year 1998 if--
       ``(I) by December 31, 1997, the State has submitted to the 
     Secretary a request that the Secretary certify the State as 
     having met the requirements of such section;
       ``(II) the Secretary has provided the certification as a 
     result of a review conducted pursuant to the request; and
       ``(III) the State has not failed such a review.
       ``(ii) If a State with respect to which a reduction is made 
     under this paragraph for a fiscal year achieves compliance 
     with section 454(24)(A) by the beginning of the succeeding 
     fiscal year, the Secretary shall increase the amount 
     otherwise payable to the State under paragraph (1)(A) of this 
     subsection for the succeeding fiscal year by an amount equal 
     to 75 percent of the reduction for the fiscal year.
       ``(D) The preceding provisions of this paragraph (except 
     for subparagraph (C)(i)) shall apply, separately and 
     independently, to a failure to comply with section 454(24)(B) 
     in the same manner in which the preceding provisions apply to 
     a failure to comply with section 454(24)(A).''.
       (b) Inapplicability of Penalty Under TANF Program.--Section 
     409(a)(8)(A)(i)(III) of such Act (42 U.S.C. 
     609(a)(8)(A)(i)(III)) is amended by inserting ``(other than 
     section 454(24))'' before the semicolon.

     SEC. 2. AUTHORITY TO WAIVE SINGLE STATEWIDE AUTOMATED DATA 
                   PROCESSING AND INFORMATION RETRIEVAL SYSTEM 
                   REQUIREMENT.

       (a) In General.--Section 452(d)(3) of the Social Security 
     Act (42 U.S.C. 652(d)(3)) is amended to read as follows:
       ``(3) The Secretary may waive any requirement of paragraph 
     (1) or any condition specified under section 454(16), and 
     shall waive the single statewide system requirement under 
     sections 454(16) and 454A, with respect to a State if--
       ``(A) the State demonstrates to the satisfaction of the 
     Secretary that the State has or can develop an alternative 
     system or systems that enable the State--
       ``(i) for purposes of section 409(a)(8), to achieve the 
     paternity establishment percentages (as defined in section 
     452(g)(2)) and other performance measures that may be 
     established by the Secretary;
       ``(ii) to submit data under section 454(15)(B) that is 
     complete and reliable;
       ``(iii) to substantially comply with the requirements of 
     this part; and
       ``(iv) in the case of a request to waive the single 
     statewide system requirement, to--
       ``(I) meet all functional requirements of sections 454(16) 
     and 454A;
       ``(II) ensure that the calculation of distribution of 
     collected support is according to the requirements of section 
     457;
       ``(III) ensure that there is only 1 point of contact in the 
     State for all interstate case processing and coordinated 
     intrastate case management;
       ``(IV) ensure that standardized data elements, forms, and 
     definitions are used throughout the State; and
       ``(V) complete the alternative system in no more time than 
     it would take to complete a single statewide system that 
     meets such requirement;
       ``(B)(i) the waiver meets the criteria of paragraphs (1), 
     (2), and (3) of section 1115(c); or
       ``(ii) the State provides assurances to the Secretary that 
     steps will be taken to otherwise improve the State's child 
     support enforcement program; and
       ``(C) in the case of a request to waive the single 
     statewide system requirement, the State has submitted to the 
     Secretary separate estimates of the total cost of a single 
     statewide system that meets such requirement, and of any such 
     alternative system or systems, which shall include estimates 
     of the cost of developing and completing the system and of 
     operating the system for 5 years, and the Secretary has 
     agreed with the estimates.''.
       (b) Payments to States.--Section 455(a)(1) of such Act (42 
     U.S.C. 655(a)(1)) is amended--
       (1) by striking ``and'' at the end of subparagraph (B);
       (2) by striking the semicolon at the end of subparagraph 
     (C) and inserting ``, and''; and
       (3) by inserting after subparagraph (C) the following:
       ``(D) equal to 66 percent of the sums expended by the State 
     during the quarter for an alternative statewide system for 
     which a waiver has been granted under section 452(d)(3), but 
     only to the extent that the total of the sums so expended by 
     the State on or after the date of the enactment of this 
     subparagraph does not exceed the least total cost estimate 
     submitted by the State pursuant to section 452(d)(3)(C) in 
     the request for the waiver.''.
                                                                    ____


                      Memorandum of Understanding

       This agreement is entered into by Wayne A. Stanton, 
     Administrator, Family Support Administration (FSA), 
     Department of Health and Human Services, Ira Reiner, Los 
     Angeles County District Attorney, Richard B. Dixon, Los 
     Angeles County Chief Administrative Officer, and Dennis 
     Boyle, Deputy Director, State Department of Social Services, 
     to resolve certain issues relating to needed improvement in 
     the Los Angeles County child support enforcement program.
       It is understood and agreed that there is a top level 
     management commitment to accomplish management standards to 
     performance and to develop an automated system that can 
     adequately support the program operations and to employ 
     sufficient staff to carry out the duties of the Child Support 
     Program.
       It is further understood and agreed that the lack of an 
     automation system that can adequately support the program 
     operations and the present number of employees assigned to 
     carry out the duties of the family support program have 
     significantly contributed to the current level of child 
     support collections.
       All concerned parties will work together to quickly 
     complete Requests For Proposals for the following areas 
     consistent with applicable County charter and ordinance 
     provisions which require findings of cost effectiveness or 
     feasibility:
       1. To replace, enlarge, or modify Los Angeles County's 
     existing Automated Child Support Enforcement System;

[[Page S2300]]

       2. Supplemental locate and collection services for hard-to-
     find absent parents;
       3. An automated billing system;
       4. Process serving;
       5. Banking/Court Trustee operations;
       6. Blood testing;
       7. Data preparation of case backlog in anticipation of 
     automation.
       The District Attorney's Office will immediately begin 
     hiring within current budgetary authorizations the necessary 
     additional qualified employees to provide required child 
     support enforcement program services.
       All concerned parties will work together to:
       1. Develop and approve a six to ten page planning Advance 
     Planning Document (as detailed on the Attachment).
       2. Revise Request For Proposals and Advance Planning 
     Document so as to require the use of existing hardware.
       The FSA will advise the State that Los Angeles County, in 
     recognition of the size of its caseload, is eligible to 
     establish its own automated system which may be separate from 
     any other system(s) which may be required of other countries.
       The State will request and FSA will consider in a timely 
     manner an 1115 waiver so as to provide Los Angeles County 90% 
     funding to replace, enlarge or modify Los Angeles County's 
     existing Automated Child Support Enforcement System and not 
     jeopardize 90% funding for other systems within the State.
       This document expresses the will and commitment of the 
     Federal, State, and County Governments to expedite the 
     approval processes necessary to accomplish the goals set 
     forth herein.
     Wayne A. Stanton,
       Administator, Family Support Administration.
     Gregory Thompson,
       Chief, Deputy District Attorney, District Attorney's 
     Office.
     Richard B. Dixon,
       Chief Administrative Officer, Chief, Administrative Office.
     Dennis Boyle,
       Deputy Director, State Department of Social Services.
                                                                    ____


                     Excerpts From 45 CFR Part 307


    Automated Data Processing Funding Limitation for Child Support 
                          Enforcement Systems

       Summary: The Federal share of funding available at an 80 
     percent matching rate for child support enforcement automated 
     systems changes resulting from the Personal Responsibility 
     and Work Opportunity Reconciliation Act is limited to a total 
     of $400,000,000 for fiscal years 1996 through 2001. This 
     proposed rule responds to the requirement that the Secretary 
     of Health and Human Services issue regulations which specify 
     a formula for allocating this sum among the States, 
     Territories and eligible systems.
       PRWORA requires the Secretary of Health and Human Services 
     to issue regulations which specify a formula for allocating 
     the $400,000,000 available at 80 percent FFP among the States 
     and Territories. The Balanced Budget Act Amendments add 
     specified systems to the entities included in the formula. 
     The allocation formula must take into account the relative 
     size of State and systems IV-D (child support enforcement) 
     caseloads and the level of automation needed to meet title 
     IV-D automated data processing requirements. Accordingly, we 
     propose to revise 45 CFR Part 307 to include conforming 
     changes and to add Sec. 307.31.

     Conditions That Must Be Met for 80 Percent Federal Financial 
                             Participation

       Pub. L. 104-193 provides enhanced funds to complete 
     development of child support enforcement systems which meet 
     the requirements of both the Family Support Act and PRWORA. 
     From this we conclude that no change in the conditions for 
     receipt of funds was anticipated by Congress. Thus, we 
     propose to retain in 45 CFR Part 307.31 the same conditions 
     for receipt funds at 80 percent FFP which appear at 
     Sec. 307.30 (a), (b), (c), and (d) and apply to claims for 
     FFP at the 90 percent rate.
       Throughout this notice of proposed rulemaking we use 
     ``State'' as the inclusive term for States, Territories and 
     approved systems as described in 42 U.S.C. 655(a)(3)(B)(iii) 
     (section 455(a)(3)(B)(iii) of the Act) as added to the Act by 
     section 5555 of the Balanced Budget Act of 1997 (Pub. L. 105-
     33). The technical amendments to section 455(a)(3)(B) of the 
     Act changed the entities included in the allocation formula 
     by adding ``system'' to States and Territories. For purposes 
     of this proposed rule, a system eligible for enhanced funding 
     is a system approved by the Secretary to receive funding at 
     the 90 percent rate for the purpose of developing a system 
     that meets the requirements of section 454(16) of the Act (42 
     U.S.C. 654(16)) (as in effect on and after September 30, 
     1995) and section 454A of the Act (42 U.S.C. 654A), including 
     a system that received funding for this purpose pursuant to a 
     waiver under section 1115(a) of the Act (42 U.S.C. 1315(a)).

                           Allocation Formula

       Section 344(b)(3)(C) of PRWORA requires the Secretary to 
     allocate by formula the $400,000,000 available at the 80 
     percent FFP rate. This section specifies that the formula 
     take into account the relative size of State IV-D caseloads 
     and the level of automation needed to meet applicable 
     automatic data processing requirements. The legislative 
     history does not elaborate on the meaning of these factors.
       The allocation formula proposed in this section is the 
     product of consultation with a wide range of stakeholders. We 
     sought information from child support enforcement systems 
     experts, financial experts, economists, State IV-D directors, 
     and national associations. Before drafting regulations we 
     asked States to suggest approaches for allocating the 
     available Federal share of the funds. In a number of open 
     forums we sought suggestions for the allocation formula. An 
     internal working group considered the information from 
     States, reviewed the suggestions, then developed the proposed 
     allocation formula.
       Simply stated, the proposed formula first allots a base 
     amount of $2,000,000 to each State to take into account the 
     level of automation needed to meet the automated data 
     processing requirements of title IV-D. The formula, then, 
     allots an additional amount to States based on both their 
     reported IV-D caseload and their potential caseload based on 
     Census data on children living with one parent.
       As indicated earlier, we use ``State'' as the inclusive 
     term for States, Territories and systems described in 42 
     U.S.C. 655(a)(3)(B)(iii) (455(a)(3)(B)(iii) of the Act) as 
     amended by section 5555 of the Balanced Budget Act of 1997. 
     The technical amendments to section 455(a)(3)(B) of the Act 
     changed the entities included in the allocation formula by 
     adding ``system'' to States.
       At this time caseload and census data are not available for 
     Los Angeles County. Therefore, the tables in appendix A show 
     a base amount allocated to Los Angeles County and blank cells 
     for the caseload factor and the census factor. With a base 
     amount assigned for Los Angeles County, we can calculate the 
     total remaining funds available for allocation among the 
     other States. California's caseload factor and census factor 
     represent the total for the State, including Los Angeles 
     County. The California IV-D agency and the Los Angeles County 
     IV-D agency have been asked to provide us with caseload and 
     census data, as described below, showing Los Angeles County's 
     share of the California total.
                                 ______