[Congressional Record Volume 145, Number 69 (Thursday, May 13, 1999)]
[Senate]
[Page S5274]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. FEINSTEIN:
  S. 1033. A bill to amend title IV of the Social Security Act to 
coordinate the penalty for the failure of a State to operate a State 
child support disbursement unit with the alternative penalty procedure 
for failures to meet data processing requirements; to the Committee on 
Finance.


                   child support penalty fairness act

  Mrs. FEINSTEIN. Mr. President, today I am introducing the Child 
Support Penalty Fairness Act. This important legislation will remedy a 
flaw in federal child support laws that could cost California $4 
billion annually.
  On April 30, the Department of Health and Human Services announced 
its intent to reject the State of California's plan for child and 
spousal support because California does not have a centralized ``State 
Disbursement Unit'' that distributes child support collections to 
families. The mandatory penalty for this failure is loss of all federal 
child support administrative funding, which amounts to $300 million a 
year.
  In addition, because the 1996 welfare reform law requires states to 
have an approved child support plan in order to receive the Temporary 
Assistance to Needy Families block grant, California could lose its 
entire TANF block grant of $3.7 billion a year.
  In other words, California faces a $4 billion annual penalty for its 
failure to operate a State Disbursement Unit.
  This so-called ``nuclear penalty'' is completely unjust and out of 
proportion. It will devastate the State of California's ability to 
serve low-income children and families--both families on welfare, and 
families who need child support so that they can stay off welfare. The 
penalty also will cripple the State's budget, seriously harming the 
largest economy in this nation.
  I am not questioning the value of a State Disbursement Unit, or 
California's need to develop one. On the contrary, I am urging Governor 
Davis and the State legislature to come up with a plan to develop a 
State Disbursement Unit as quickly as possible. But I do not believe 
that poor families should be severely punished because the State has 
not gotten its act together.
  Moreover, California's failure to develop a State Disbursement Unit 
is a direct result of its failure to develop a statewide computer 
system that tracks child support cases--and California is already 
paying a penalty for the computer failure.
  The computer system penalty, which Congress established just last 
year, is fair and proportionate. More importantly, it rises over time, 
giving California a powerful incentive to get a computer system up and 
running. If California does not have a computer system in place by 
2002, it will lose over $109 million annually in federal funds.
  It is simply unfair to levy a $4 billion penalty against California 
for not having a State Disbursement Unit, when the State's failure to 
establish the unit is a direct result of a computer failure for which 
the State is already being penalized.
  The Child Support Penalty Fairness Act would provide that States 
could not be penalized for failure to develop centralized disbursement 
units, if they are already paying a penalty for computer-related 
problems.
  Under this bill, California would still have to pay a significant 
penalty for its computer-related troubles. Moreover, if California gets 
a statewide computer system in place, but still fails to operate a 
centralized disbursement unit, the State would be subject to additional 
severe penalties. This provides powerful incentive for the State to 
develop both a computer system, and a central disbursement unit, 
quickly.
  I believe that this bill is proportionate and fair. It will prompt 
the State of California to develop a State Disbursement Unit in a 
timely fashion, without placing aid to low income children and families 
at risk. It is simply the right thing to do. I hope that my colleagues 
will take up and pass the Child Support Penalty Fairness Act as quickly 
as possible.
  Mr. President, I ask unanimous consent that the full text of the bill 
be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1033

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Child Support Penalty 
     Fairness Act''.

     SEC. 2. ALTERNATIVE PENALTY PROCEDURE FOR FAILURE TO OPERATE 
                   STATE DISBURSEMENT UNIT.

       (a) In General.--Section 455(a)(4) of the Social Security 
     Act (42 U.S.C. 655(a)(4)) is amended by adding at the end the 
     following:
       ``(E) The Secretary may not disapprove a State plan under 
     section 454 against a State with respect to a failure to 
     comply with section 454(27) for a fiscal year as long as the 
     State is receiving a penalty under this paragraph with 
     respect to a failure to comply with either section 454(24)(A) 
     or 454(24)(B) for the fiscal year.''
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the amendments made by 
     section 101 of the Child Support Performance and Incentive 
     Act of 1998.
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