See these bookmarks for important state comparisons on many issues in child support.

#STATE IVD POLICIES ON RETROACTIVE SUPPORT

#POTENTIAL NON-GUIDELINE FACTORS IN IVD SUPPORT ORDERS

#SAMPLE MATRIX ON ARREARS FORGIVENESS

#STATE COLLECTION POLICIES

#STATE POLICIES ON IMPUTATION OF INCOME

#STATE POLICY ON MINIMUM SUPPORT ORDERS

#THRESHOLDS FOR PERIODIC MODIFICATION

Executive Summary

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Nearly 12 million mothers are raising children in single parent families. The overwhelming majority of these mothers are in the paid labor force, yet a third of their families live below the poverty line and many of the rest subsist barely above poverty. Regular, timely child support payments could be of great help to these families. Unfortunately, too few low and moderate income custodial mothers receive such payments.

 

Every state has public programs to assist parents in establishing paternity, obtaining support orders, and enforcing those orders. These programs have existed since the late 1970’s, and serve a substantial proportion of custodial parents and their children. Despite these efforts, nearly $72 billion dollars in child support arrears are reported to be owed in cases using the public system. As discussed below, some of this debt is real and some is not. Some is collectable and some is not. Nonetheless, each year this figure goes up when new arrears accumulate because current support is not fully paid.

 

There are many reasons why such a huge amount of arrears has accumulated. One is that some non-custodial parents who are able to pay go to great lengths to avoid their obligations. Recently, tools (e.g., administrative  income withholding, financial institution data matches, license revocation) have become available to state child support agencies to pursue these deadbeat parents. States need to aggressively use these tools.

 

Another reason for the accumulation of arrears is states’ inability to quickly capture changes in case status. For example, a non-custodial parent may die, ending his support obligation under state law. If this change is not recorded, arrears will continue to accumulate on the books although they are not actually owed. Similarly, the parents may informally change custody, making the former non-custodial parent the custodial parent of  the children. If the order is not terminated, arrears will accumulate even though the parent who now has custody is fully supporting the children. Periodic review, followed by  case closure where appropriate, would help address this problem.

 

Another issue is the problem of poor records. Even when formal records exist, they may not be accurate. For example, the obligated parent may have made direct payments to the custodial parent that are not reflected in the records. This is a significant problem in states that do not serve income withholding orders on employers as soon as a support order is entered. During the interim between issuance of the order and imposition of income withholding, the non-custodial parent may make direct payments to the custodial parent and these will not be captured in the state’s records. Early and aggressive issuance of income withholding orders should reduce the number of cases in which this is a problem. In addition, in interstate cases, payments may have been made in one state but credit for those payments may not be reflected in the records of another state. The Uniform Interstate Family Support Act’s (UIFSA) one-order scheme should ultimately reduce the number of cases with multiple orders and payments going to  different states. However, in the near term, states will have to develop ways to deal with problems related to inaccurate records in interstate cases.

 

Finally, some non-custodial parents are facing child support obligations that are beyond their ability to pay. The extent of this problem varies a good deal from state-to-state, depending on state policy and practice in a number of critical areas. (See Appendices 1-6 for specific state policies) These  include:

·        Whether or not the state establishes retroactive support obligations when setting new orders. Some states establish only prospective orders. The vast majority, however, will go back several years (or to the child’s date of birth) and establish a retroactive obligation. This obligation  may include payment for the child’s health care coverage (including Medicaid- covered birthing costs) in addition to a lump sum representing retroactive cash support. Moreover, in some older cases , the retroactive support amount represents the amount of public assistance benefits the custodial parent received, not the amount that the non-custodial parent would have paid under the state’s child support guidelines. Thus, before the non-custodial parent has left the tribunal, he is in arrears. If the order is not established close to the time of the child’s birth and/or when birthing costs and welfare debt are included, these arrears can be substantial.

 

·        The state’s policy on interest. Some states charge no interest on delinquent support payments. Others charge double-digit interest  on payments missed after the date the order is established. If the obligated parent stays current, interest does not accrue. If he falls behind, he will owe a significant amount of interest. Still other states charge interest on the retroactive arrears established along with the original order (see above). This can add substantially to the amount owed from the outset.

 

·        How support payments are allocated. In states that  charge interest, how collections are allocated also affects the size of accumulated arrears. Collections can be attributed first to principal or to interest. If they are attributed to interest, the amount of principal goes down more slowly (if at all) and thus more interest accumulates. This can greatly prolong the time it takes to pay down the arrearage as well as the amount that has to be paid.

·        Whether the state includes significant fees or costs in the initial support order. Some states do not charge non-custodial parents fees or costs. Others seek the cost of genetic testing when such tests have been requested. Still others pursue a variety of fees and costs (e.g., attorneys fees, court filing fees), which can add thousands of dollars in arrears onto the initial order.

·        How the state sets initial orders for current support. All non-custodial parents physically able to do so should work and contribute to the cost of raising their children. The question is how much can they contribute. States now use income-based child support guidelines to set support orders. Some state’s guidelines take into account the non-custodial parent’s need to have at least a minimal amount of money (a “self-support reserve”) to live on. Others have guidelines that set a minimal obligation even if the non-custodial parent has no ability to pay. This can be a particular problem if the non-custodial parent is in jail or prison and has no ability to earn wages that allow him to pay support.  In states with these mandatory minimum orders, the accumulation of arrears is almost inevitable.

·        The extent to which the state relies on default orders. Some states make significant attempts to obtain financial information about  non-custodial parents before setting support orders. Even if those parents fail to appear and  default orders are entered, those orders are based on reasonably accurate information. Other states set orders based on the information provided by  non-custodial parents. In those states, if the parents do not appear and provide information, default orders are set based on imputed income. In imputing income, most states assume that the non-custodial parent is working full time. The amount of earnings imputed may be based on the minimum wage, the average state wage or the average wage in the industry where the non-custodial parent has a recent work history. If the amount imputed is substantially more than the father’s actual income, the order will be well beyond his ability to pay. Again, the inevitable result is the accumulation of substantial arrears.

·        The ease with which orders can be modified when a parent suffers a precipitous drop in income. Even when the initial order accurately reflects the non-custodial parent’s ability to pay, circumstances may change. The father might lose his job altogether or face a reduction in hours or salary. A few states have policies that encourage obligors to quickly modify their orders if they experience a substantial decline in income. Others make it very difficult for obligors to seek or obtain a change even when the original order is clearly beyond the payment capacity of the non-custodial parent. When it is difficult to modify an order, modification is not sought and arrears accumulate under the unmodified order.

Fathers should be expected to support their children and it is quite appropriate for states to adopt policies that maximize the amount of support going to children. However, states are also beginning to recognize that the cumulative effect of some of these policies, leaves low-income fathers with overwhelming child support arrears. In some instances, the amount will never be paid and the state will carry large amounts of uncollectable arrears on its books. This contributes to a negative public perception of the child support program.

 

Moreover, attempts to pursue such arrears can have unintended, negative consequences. Up to 65% of the non-custodial parent’s earnings may be taken to satisfy child support debt. If this amount is withheld, a low-income parent may be left with too little to live on. This may cause him to quit his job and  move to another jurisdiction or join the underground economy. Then, the child will receive no current support, arrears will continue to mount, and the state records will reflect even more child support debt.

 

This situation is tragic for custodial parents and their children who need the support to meet their basic needs. It has public consequences as well. If child support is not paid, some mothers will need public assistance. In particular, they may seek Temporary Assistance to Needy Families (TANF) or Medicaid. This creates public costs. Other mothers may already be receiving such assistance and –in the case of TANF—may be facing an end to their time-limited benefits. When families reach their TANF time limit, the state will have to either  leave them destitute or provide assistance from state funds.

 

Recognizing the desirability of getting current support to such families, some states have begun to examine the relationship between arrearage payments and current support. If the collection of arrears stands in the way of collecting current support, perhaps something should be done to lower the amount of arrears that have to be paid. In this regard, some states have developed an ad hoc approach, allowing individual workers discretion to compromise arrears in “appropriate cases”, especially where the non-custodial parent will be in a better position to pay current support if arrears are forgiven. Federal guidance clearly allows this approach. More recently—and with encouragement from the federal government—some states have attempted to develop a more systematic framework within which to compromise or forgive arrears. (See Appendix 7) However, identifying appropriate approaches poses some fundamental public policy questions. These include:

·        What message do arrearage forgiveness programs send? The goal of the child support program is the efficient and effective collection of support. To meet this goal, the program must convince parents  that it is in their best interest to pay regularly and on time. It must also convince parents that there are serious consequences for non-payment.  Writing off arrears owed by those who have not met their obligations  undercuts this basic message  and could lead some obligors to avoid payment in the hopes that the arrears will be forgiven in the future. This will damage  the program’s ability to meet its goal and hurt children.

 

·        How does the state distinguish between a deadbeat parent (who can pay but hasn’t done so) and a dead broke parent (who truly can’t pay)? Many non-payors allege an inability to pay, even when they have substantial income. It is not easy for a state to determine where the line is between those who can and those who cannot pay or to make consistent, reasonable judgments about who fits in which category. Moreover, recent research suggests that ability to pay varies greatly over time. Someone who cannot pay today may well be able to pay in the future. This needs to be taken into account when setting policy.

 

·        Is an arrearage forgiveness policy fair to those non-custodial parents who have struggled to meet their obligations? No state wants to denigrate good behavior. Yet, writing off arrears for parents who have not met their support obligations while doing nothing for similarly situated parents who have done the right thing could be seen as doing just that.

 

·        How much say should custodial parents have in whether or not arrearages are forgiven? If the arrears are owed to the custodial parent, there is near universal agreement that she should be the one who decides whether the arrears should be partially or wholly forgiven. If the arrears are owed to the state under a public assistance assignment, however, there is some disagreement about whether or not the custodial parent should be consulted on the compromise of state-owed arrears or whether the decision is wholly up to the state.

 

·        Should the source of the accumulated arrears matter? As noted above, some arrears exist because the non-custodial parent has failed to meet his obligation under a legitimate order. Others exist because the state has adopted policies (e.g., imposition of retroactive support back to the date of birth, plus interest and birthing costs) that clearly contributed to the fact that large arrears exist irrespective of ability to pay. . Some states are beginning to think about this distinction in developing a policy about what kinds of arrears should and should not be forgiven.

 

·        Should forgiveness of arrears be a one-time event or should it be tied to on-going behavior? If the goal is simply reducing the amount of uncollectable arrears being carried on a state’s books, a one-time forgiveness program is a simple and direct way to accomplish this objective. However, if the goal is to collect as much of the arrears as possible and/or encourage the payment of current support (and thus reduce the likelihood that arrears will  accumulate in the future), a different approach should be taken. For example, arrearage forgiveness might be tied to the non-custodial parent’s participation in a fatherhood program. It might also involve writing down the arrears over time based on the parent’s track record in meeting his current support obligations.

In grappling with these public policy issues, states can benefit from a four step process.

Step 1. Assess the caseload. Conduct an analysis of 1) who owes arrears; 2) to whom the arrears are owed ( the family or the state); 3) how much is owed; 4) the source of the arrears ( support, interest, fees, costs);  5) the age of the debt; 6) any differences between in-state and interstate cases; and 6) the debtors current economic situation. This will assist the state in determining how much of what is owed is potentially collectable and what the best methods for collection might be.

Step 2. Examine state policies and practices that might be contributing to the problem. Undertake an honest assessment of  current policies and practices in setting and enforcing support orders to identify the reason that substantial arrears have accumulated. Is a large part of the problem a time lag between establishment of the order and issuance of an income withholding order to the employer? Is the lack of protocols for handling interstate cases making those cases a particular source of difficulty? Alternatively, is a substantial part of what is owed attributable to the interest on  retroactive support established along with the initial order, or the way the state allocates collections between interest and principal?

Step 3.Develop a strategy for preventing problems in the future. As a result of the analysis undertaken  in Step 2, the state might want to change some of its policies so that less arrears will accumulate in the future. In this regard, a state might look at policies and procedures used to 1)establish initial orders; 2) quickly modify orders when circumstances substantially change; and 3) monitor orders to be sure that substantial arrears do not accrue without some action being taken.  For example, if the caseload analysis reveals that most of the arrears are owed by low-income obligors whose orders were set using  imputed income, thought might be given to using a variety of data bases (e.g., state employment, jail, and prison records) to gather the best available income information before setting default orders in the future. If it appears that inability to quickly modify orders when the obligated parent suffers a precipitous drop in income is a source of difficulty, the state might revise its policies and procedures in this area.

Step 4. Develop a system for assessing whether or not to consider forgiving arrears in existing cases. In addition to a  preventative strategy, states will have to decide whether they wish to develop a forgiveness policy for arrears that have already accumulated. In making this determination, it may be useful to categorize the arrears into one of five possible sources.

Category 1. Arrears that were established at the time the order was initially set. This would include retroactive arrears, interest on retroactive arrears, fees and/or costs related to the litigation itself, and costs related to birthing expenses.

Category 2. Arrears that arose be cause the order did not take into account the obligated parent’s ability to meet the obligation. This would include arrears that accumulated pursuant to orders set under mandatory minimum guideline rules when the minimum was clearly beyond the  non-custodial parent’s ability to pay given his income at the time. It would also include orders set by imputing income that was significantly higher than the obligated parent’s actual income.

Category 3. Arrears that resulted from failure to modify an order downward when the non-custodial parent suffered a significant loss of income.

Category 4. Arrears that exist  because a case that should have been closed was not. This would include situations where the non-custodial parent has died, been institutionalized or incarcerated  for a lengthy period , or is totally and permanently disabled and has no earnings potential. It would also include other cases eligible for closure under federal regulations and cases where the statute of limitations on collection has expired so that the debt is no longer collectable.

Category 5.  Arrears  that accumulated after the order was established and were payable during a period of time in which the obligated parent had the ability to pay but failed to do so.

When arrears are categorized in this way, the state can develop a matrix for deciding how much (if any) arrears might be forgiven. (See sample matrix in Appendix 8). As part of this process, it should also determine at what point the custodial parent should be involved in the process. For example, the state might decide that in Category 4 cases, the files should be closed and the arrears written off because they are no longer legally collectable. In category 5 cases, the state might decide that the arrears should never be written off unless and until the statute of limitations has  expired. If the arrears are attributable to Categories 1, 2 or 3, the state might develop a policy of  forgiveness as to any amount owed to the state under a public assistance assignment. Category 1, 2 or 3 arrears owed to the custodial parent might also be forgiven with her consent.

If a state chose the latter approach in Category 1, 2 or 3 cases (and cases where the arrears represent a combination of the factors) further refinements could be made. For example, a state might adopt a policy of partial—rather than complete—forgiveness. This would somewhat lessen the perception that the obligated parent is being rewarded for being irresponsible. In determining the amount to forgive, the state might consider 1) the size of the arrears relative to the obligated parent’s current ability to pay; 2) the length of time it would take to pay off the accumulated arrears if the full amount were to be collected; 3) what part of the sum owed is principal, interest, fees or costs. With this type of analysis, a state might decide that it  would consider forgiveness of interest, fees and costs but not the monthly support obligation itself. Alternatively—or additionally--, it might decide to might decide to consider writing down the excess support arrears that accumulated under an order that could have been modified downward but was not. In this scenario, the state would calculate the amount that would have been owed under a modified order based on the non-custodial parent’s actual income at the time. This would be subtract this from the amount due under the unmodified order and the difference forgiven.  The parent would still owe the guideline amount for the period in question based on his actual income at the time.

Forgiveness of some or all of the debt might also be tied to current financial status. For example, a state might forgive only those arrears owed by non-custodial parents with incomes below 200 percent of poverty. These are the parents that will have the greatest difficulty meeting their own subsistence needs, paying current support, and paying off arrears. As noted above, the state has an interest in keeping these parents in the above ground economy and making payments of current support. Writing off some or all of their arrears could be justified as supporting those public policy goals.

Forgiveness might also be tied to behavior. One approach would be to provide forgiveness to a non-custodial parent’s successful completion of a fatherhood program. This would limit the number of parents who would be able to take advantage of a forgiveness policy since there are still very few fatherhood programs available. However, in a state that wishes to proceed cautiously, this might be a good initial step. In a state that wishes to take a more ambitious approach, the forgiveness might be tied to payment of current support. A certain percentage of the arrears could be forgiven for every year that the non-custodial parent meets his current support obligation, for example.

In short, there is ample room for states to balance the different public policy considerations discussed above and come up with a policy that fits the needs of the state and the parents. Some states will be comfortable with a limited forgiveness plan while others will favor a broader and more far-reaching approach. The more sophisticated a state can be in breaking down the various issues and concerns, the more likely it is to develop an approach that works well and garners public support.

At the same time, states should be aware that more research is needed. Some studies have been done and several are in process. Hopefully, the federal Office of Child Support Enforcement will fund additional studies of innovative state practices  and the lessons learned from them. This would provide better information on which states can base their public policy.

In addition, information available from the New Hire Reporting system as well as the Financial Institution Data Match (FIDM) program suggests that some parents of children who receive public assistance who owe arrears could be making at least a partial payment on their obligations. Thus, it would be wrong to assume that just because the custodial parent and children have received public assistance the non-custodial parent is unable to pay   any of the accumulated arrears. It would also be wrong to assume that because the family did not receive public assistance, the non-custodial parent is quite capable of paying all arrears owed on a case.

Nuanced approaches can be developed and states should see this as an evolving process in which the rights and responsibilities of parents and states are weighed in the light of new knowledge and emerging public policy.

This piece summarizes the information contained in a longer piece entitled AN OUNCE OF PREVENTION AND A POUND OF CURE which will be available on the CLASP web site soon and from CLASP Publications, 1616 P Street, NW, Washington, DC 20036, (202) 328-5142.    Those interested in a detailed description of state policies, research studies and guidance from the federal government on arrears forgiveness should consult the longer piece.

APPENDIX 1

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STATE IVD POLICIES ON RETROACTIVE SUPPORT

Note: None means the decision maker can go back to the date of the child’s birth.

Sources:

DEPARTMENT OF HEALTH AND HUMAN SERVICES, OFFICE OF INSPECTOR GENERAL, STATE POLICIES USED TO ESTABLISH CHILD SUPPORT ORDERS FOR LOW INCOME NON-CUSTODIAL PARENTS, OEI-05-99-00391 (JULY 2000)

NATIONAL CHILD SUPPORT ENFORCEMENT ASSOCIATION, INTERSTATE ROSTER AND REFERAL GUIDE (1999)

APPENDIX 2

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STATE POLICY ON MINIMUM SUPPORT ORDERS

Source:

DEPARTMENT OF HEALTH AND HUMAN SERVICES, OFFICE OF INSPECTOR GENERAL, STATE POLICIES USED TO ESTABLISH CHILD SUPPORT ORDERS FOR LOW INCOME NON-CUSTODIAL PARENTS, OEI-05-99-00391 (JULY 2000)

APPENDIX 3

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POTENTIAL NON-GUIDELINE FACTORS IN IVD SUPPORT ORDERS

Source:

 NCSEA, 1999 Interstate Roster and Referral Guide updated by the OCSE Online State Roster

 and Referral  Guide

* Every state but Vermont pursues reimbursement for genetic testing costs when paternity is established. A “yes” in this box indicates that some costs in addition to genetic tests are authorized.

** State policy in this area is somewhat confusing. In many states there is authority to pursue such costs but this authority is not exercised by the IVD agency or is exercised differently in different parts of the state.

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APPENDIX  4

STATE POLICIES ON IMPUTATION OF INCOME

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Sources:

DEPARTMENT OF HEALTH AND HUMAN SERVICES, OFFICE OF INSPECTOR GENERAL, STATE POLICIES USED TO ESTABLISH CHILD SUPPORT ORDERS FOR LOW INCOME NON-CUSTODIAL PARENTS, OEI-05-99-00391 (JULY 2000)

NCSEA, 1999 INTERSTATE ROSTER AND REFERRAL GUIDE

APPENDIX 5

THRESHOLDS FOR PERIODIC MODIFICATION

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Sources:

NCSEA 1999 State Roster and Referral Guide

HHS Office of Inspector General, Review and Adjustment of Support Orders (1999), Table 2.

APPENDIX 6

STATE COLLECTION POLICIES

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Source:

NCSEA 1999 Interstate Roster and Referral Guide Updated by OCSE Online Roster and Referral Guide.

APPENDIX 8

SAMPLE MATRIX ON ARREARS FORGIVENESS

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