Title I Child Support Distribution

    Families on Assistance - Under current law, States must pay the Federal government between half to three-fourths of child support collected on behalf of families on welfare, even if the collection is sent to the family. (The Federal share is based on the State's Medicaid match rate.) HR 1471 eliminates the Federal share of these collections if they are sent to the family and disregarded for payment purposes under the Temporary Assistance for Needy Families (TANF) program. This provision does not apply to collections for families on TANF for more than five years, or to amounts disregarded above $400 a month, or $600 a month for two or more children.

    Families that have left assistance - Under current law, past-due child support must first cover amounts owed to former welfare families, except when it is collected through the Federal Tax Refund Offset (TRO), in which case the collection first goes to pay amounts owed to the State. (Generally, arrears that accrued when the family was not on TANF are owed to the family, while arrears that accrued when the family was on TANF are owed to the State). HR 1471 eliminates this exception for the TRO, meaning former welfare families would be first in line for all past-due child support payments, including those collected from tax refunds. This reform is optional for States over the next 5 years and then becomes mandatory in FY 2007. In addition, the bill gives States the permanent option to pass through all past-due payments (regardless of when they accrued) to families that have left welfare. (Note: All current child support must go directly to former welfare families both under current law and under the bill.)

The Congressional Budget Office (CBO) estimates all of these provisions will cost $1.1 billion over five years and $4.3 billion over 10 years. In addition, CBO estimates the bill will send an additional $6.3 billion in child support payments to low-income families over the next ten years ($4.3 billion in forgone Federal collections and $2 billion in foregone State collections).

    Medicaid birthing costs - The bill prevents States from using the child support system to collect from non-custodial parents the Medicaid costs associated with the birth of their child.

Title II Child Support Review and Modification

    The bill requires more frequent reviews and modifications of child support orders (when an individual leaves welfare and every 3 years thereafter).

Title III Demonstration Project for Local Child Support Agencies

    The measure establishes demonstration projects to allow certain local, public agencies involved in the collection of child support (agencies other than the State child support program, such as clerks of the court) greater access to the National Directory of New Hires, which contains employee wage records. In addition, the bill provides these agencies access to several enforcement tools that only State child support agencies now are permitted to utilize, including intercepting unemployment insurance benefits, revoking passports, accessing data from financial institutions, and seizing Federal tax refunds. Under the bill, the Secretary of HHS must approve at least 5 but not more than 10 such demonstrations. This title also includes a GAO study on the collection efforts and practices of private child support collection agencies.

Title IV Additional Child Support Enforcement Tools

    The bill lowers the amount of child support arrears needed to trigger a current-law provision on suspending an individual's passport (down from $5,000 to $2,500), permits the use of the federal tax refund offset to collect child support arrears after a child has turned 18 years of age, and allows up to 50% of VA disability benefits to be garnished to pay delinquent child support orders.

Title V Fatherhood Provisions

    The bill includes two competitive grant programs (administered by HHS with mandatory funding) to promote marriage, improve parenting and enhance the employment prospects of low-income, mainly non-custodial parents. The legislation includes $6 million to evaluate the impact of these grants and incorporates a series of references to preventing domestic violence in the context of the fatherhood programs. The Charitable Choice language from the 1996 welfare law applies to these grants.

• The first grant program, which is focused primarily on community-based organizations, is funded at $140 million over four years (starting in FY 2002).
• The second grant program, aimed at three national fatherhood projects, is funded at $15 million over four years (starting in FY 2002).

Title VI Miscellaneous Provisions

    The bill incorporates a series of miscellaneous provisions, including: (1) an HHS report on collected, but undistributed child support; (2) providing new hire information to State Unemployment Insurance programs; (3) barring non-immigrant aliens from entry into the US if they owe more than $2500 in past-due child support to US citizens; and (4) Federal reimbursement for State efforts to train staff in state-approved child welfare agencies.

Prepared by the Democratic Staff of the Committee on Ways and Means (6/27/01)