Existing law requires each county to provide cash assistance and other social services to needy families through the California Work Opportunity and Responsibility to Kids (CalWORKs) program using federal Temporary Assistance for Needy Families block grant program, state, and county funds.

Under existing law, a recipient of CalWORKs aid is required to assign to the county any rights to support from any other person that the recipient may have, on their behalf, or on behalf of any other family member for whom the recipient is receiving aid, not exceeding the total amount of CalWORKs cash assistance provided to the family. Existing law also requires the first $50 of any amount of child support collected in a month in payment of the required support obligation for that month to be paid to a recipient of CalWORKs aid, and prohibits this amount from being considered income or resources of the recipient family or being deducted from the amount of aid to which the family would otherwise be eligible.

This bill would, commencing January 1, 2022, or when the Department of Child Support Services provides the Legislature with a specified notification, whichever date is later, increase that amount to $100 for a family with one child and $200 for a family with 2 or more children.

Existing law provides that the Department of Child Support Services and local child support agencies have the responsibility for promptly and effectively collecting and enforcing child support obligations. Existing law requires a local child support agency to submit child support delinquencies to the department for purposes of supplementing the collection efforts of the local child support agencies and defines a child support delinquency for the purposes of these provisions.

This bill would, commencing January 1, 2022, and to the extent permitted under federal law, exclude from the definition of child support delinquency an arrearage or otherwise past due amount owed to the state that the local child support agency or department has determined to be uncollectible, as specified, and would require the agency or department to deem an arrearage or otherwise past due amount uncollectible under certain circumstances. The bill would authorize the department to implement and administer these provisions through a child support services letter or similar instruction until regulations are adopted by July 1, 2022.

Existing law continuously appropriates moneys from the General Fund to defray a portion of county costs under the CalWORKs program.

This bill would provide that the continuous appropriation would not be made for the purposes of implementing the bill.

This bill would incorporate additional changes to Section 17500 of the Family Code proposed by AB 1092 to be operative only if this bill and AB 1092 are enacted and this bill is enacted last.

 VETO  

Bill No: SB 337

Author: Skinner (D)

Amended: 9/6/19

Vote: 27

SENATE HUMAN SERVICES COMMITTEE: 6-0, 4/8/19

AYES: Hurtado, Stone, Beall, Jackson, Pan, Wiener

SENATE JUDICIARY COMMITTEE: 9-0, 4/23/19

AYES: Jackson, Borgeas, Allen, Caballero, Jones, Monning, Stern, Umberg, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/16/19

AYES: Portantino, Bates, Bradford, Hill, Jones, Wieckowski

SENATE FLOOR: 38-0, 5/21/19

AYES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Glazer, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

SENATE FLOOR: 40-0, 9/11/19

AYES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dahle, Dodd, Durazo, Galgiani, Glazer, Lena Gonzalez, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

ASSEMBLY FLOOR: 78-0, 9/10/19 - See last page for vote

SUBJECT: Child support

SOURCE: Anti-Recidivism Coalition

Good Foundation

Insight Center for Community Development

PolicyLink

Tipping Point Community
Western Center on Law & Poverty

DIGEST:

This bill increases the amount of child support to be paid to a recipient of CalWORKs aid, and prohibits this amount from being considered income or resources or from being deducted from the amount of aid to which the family would otherwise be eligible from $50 for all families to $100 for a family with one child and $200 for a family with 2 or more children, as specified. This bill excludes from the definition of “child support delinquency” an arrearage or otherwise past due amount owed that has been determined to be uncollectible, as specified, and requires an arrearage or otherwise past due amount to be deemed uncollectible under certain circumstances.

ANALYSIS:

Existing federal law:

1. Establishes the Temporary Assistance for Needy Families (TANF) program to provide cash aid and welfare-to-work services to eligible families and permits states to implement the program under a state plan. (42 USC 601 et seq.)
2. Provides an option for states to pass through to custodial parents receiving TANF benefits up to the first $100 in child support collected for one child and up to $200 for two or more children and to disregard those amounts when calculating TANF eligibility and grant amounts. (42 USC 657)

Existing state law:

1. Establishes in state law the CalWORKs program to provide cash assistance and other social services for low-income families through the federal TANF program. Under CalWORKs, each county provides assistance through a combination of state, county and federal TANF funds. (WIC 10530, 11200)
2. Requires a county department, in cases in which the paternity of a child has not been established to the satisfaction of that department, to refer the applicant to local child support agency at the time the application is signed, as specified. (WIC 11479)
3. Requires money from noncustodial parents for child or spousal support shall be paid directly to the local child support agency and shall not be paid directly to the family, as specified. (WIC 11457 (a))
4. Requires a CalWORKs applicant or recipient, as a condition of eligibility for aid, to assign to the local child support agency all rights to child support payments received on behalf of a child in the CalWORKs assistance unit and requires the applicant or recipient to cooperate in establishing the paternity of that child and in establishing, modifying, or enforcing a support order with respect that child, as specified. (WIC 11477)
5. Requires support that has been assigned pursuant to CalWORKs rules and that accrues while the family is receiving CalWORKs aid to be permanently assigned until the entire amount of aid paid has been reimbursed. (WIC 11477 (a)(2))
6. Entitles the state to the amount of CalWORKs aid repaid to the state by means of child support collections, except to the extent that county and federal funds were expended, during which instances the federal government and/or county shall be entitled to a share of the amount received or recovered, as specified. (WIC 11487)
7. Provides that CDSS and the local child support agency shall have the responsibility for promptly and effectively collecting and enforcing child support obligations, as specified. (FAM 17500 (a))
8. Requires the local child support agency to submit child support delinquencies to the DCSS for purposes of supplementing the collection efforts of the local child support agencies, as specified. Defines “child support delinquency” as an arrearage or otherwise past due amount that accrues when an obligor fails to make any court-ordered support payment when due, which is more than 60 days past due, and the aggregate amount of which exceeds $100. (FAM 17500 (c))
9. Requires the local child support agency to pass through the first $50 of any amount of child support collected on behalf of a child included in a CalWORKs assistance unit to the recipient family and disregards that amount when calculating income or resources for purposes of determining eligibility and establishing the family's grant amount. (FAM 17504)

This bill:

1. States Legislative intent to increase the amount of child support payments received and to strengthen family unity between children and their noncustodial parent, thereby improving the health and well-being of low-income children.
2. Redefines “child support delinquency,” commencing January 1, 2022, and to the extent permitted under federal law, to not include an arrearage or otherwise past due amount owed to the state that the local child support agency or DCSS has determined to be uncollectible.
3. Requires the DCSS or local child support agency to, in determining the meaning of “uncollectible” for purposes of arrearages and otherwise past due amounts owed to the state, consider specified factors, including income and assets available to pay the arrearage or otherwise past due amount; the number of support orders; source of income; age of the arrearage or otherwise past due amount, employment, payment and incarceration history; whether the order was based on imputed income, and other readily ascertainable debts.
4. Requires DCSS and a local child support agency to deem an arrearage or otherwise past due amount owed to the state as “uncollectible” if the noncustodial parent’s sole income is from Supplemental Security Income/State Supplementary Program (SSI/SSP) for the Aged, Blind, and Disabled benefits; a combination of SSI/SSP benefits and Social Security Disability Insurance benefits; Cash Assistance Program for Aged, Blind, and Disabled Legal Immigrants benefits; or Veterans Administration Disability Compensation benefits.
5. Permits CDSS to implement and administer provisions of the bill through a child support services letter or similar instruction until regulations are adopted. Thereafter, CDSS shall adopt regulations by July 1, 2022.
6. Prohibits CDSS or local child support agency from collecting interest that accrues on or after January 1, 2022, on the principal amount of child support that has been assigned, as specified.
7. Increases the amount of child support that a local child support agency must pass through to a CalWORKs recipient family and disregards that amount for purposes of determining CalWORKs eligibility and calculating the family's grant amount from $50 for all families to $100 for a family with one child and to $200 for a family with two or more children, as specified.
8. Requires that the increase shall become operative on January 1, 2022, or when the CDSS notifies the Legislature that the Statewide Automated Welfare System can perform the necessary automation to implement this section, whichever date is later.
9. Makes technical and conforming amendments, including language that avoids chaptering issues with AB 1092.

Background

This bill seeks to ensure that low-income families on CalWORKs receive more of their child support payments. SB 337 aligns California law with Federal law and allow CalWORKs families to receive $100 in child support for one child and $200 for two or more children (instead of the current amount of $50). According to the author, “Last year, more than 1.2 million California children living in or near poverty did not receive the full child support payments made by their parents. California must stop taking the lion’s share of support payments that rightfully belong to families and kids.”

CalWORKs. The CalWORKs program was created after the passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996. PRWORA transformed public assistance in the United States with a new emphasis on moving public assistance recipients from welfare to work. The reform instituted requirements and restrictions on eligibility (including time limits, work requirements, and participation rates) and gave states discretion to structure programs, as long as the program meets basic requirements.

Today, the CalWORKs program provides time-limited monthly income assistance and employment-related services aimed at moving children out of poverty and helping families meet basic needs. CalWORKs cash assistance is conditioned on participating on program activities.

Child Support Program. Noncustodial parents are often responsible for paying child support payments to custodial parents and their children. In California, the child support program is administered by DCSS, and 49 local child support agencies carry out child support enforcement duties at the county level. The state’s Child Support Program collects child support from noncustodial parents for the purpose of establishing child support orders; collecting child support payments from noncustodial parents; and distributing collected child support to custodial parents and their children.

The Child Support Program serves approximately one in ten Californians. According to DCSS, 26 percent of custodial families live in poverty and 77 percent of the DCSS caseload are current or former recipients of public assistance. In 2018, the average monthly child support distributed was about $300.

Under federal law, families receiving public assistance via TANF (which is the block grant that funds CalWORKs) must cooperate with efforts to establish and enforce child support payments. In addition, recipients must assign their rights to child support payments to the state and the state will collect the child support payments on behalf of the custodial parent.

For the purpose of CalWORKs grant calculations, federal law permits states to “pass through” and “disregard” all child support dollars to children who currently receive TANF-funded assistance. However, the federal government will only share in the cost of the disregard, up to the first $100 a month paid to TANF families with one child and $200 for families with two or more children. This law took effect October 1, 2008, however, California has not modified its laws pertaining to the pass through and disregard since it was established via AB 196 (Kuehl, Chapter 478, Statutes of 1999).

Therefore, under current state law, children receiving aid through CalWORKs, Medi-Cal, or foster care, who are also receiving child support are permitted to keep only the first $50 of a child support payment. This is referred to as the $50 “pass through.” The state keeps the remaining balance of the child support payment as reimbursement to the state and federal government for costs associated with TANF assistance provided to custodial family.

Additionally, California has adopted a $50 “disregard” for child support payments, which permits the $50 of the child support payment that is “passed through” to the CalWORKs recipient to be disregarded when determining CalWORKs eligibility and grant amounts.

This bill increases the disregard and pass through from $50 to $100 for a family with one child and to $200 for a family with two or more children. There is evidence that when more of parents’ child support payments go to their children, parents are more likely to pay, and to pay more. Colorado enacted a law requiring 100 percent of child support payments go to children about a year ago. Colorado reports that child support payments increased by 63 percent. Early indicators suggest that increasing the amount of child support given to families is expected to increase compliance, increase payment amounts, reduce reliance on other forms of public benefits, and reduce tension between parents.

Child Support Debt Forgiveness. When a family leaves CalWORKs, the family regains its rights to currently owed child support, and may receive the entire child support payment. However, if the non-custodial parent has been in arrears with child support payments, the state continues collecting and retaining payments as reimbursement for costs associated with welfare benefits paid to the family. Once the arrears are paid, the full amount of child support collected is paid to the custodial family.

According to the sponsors, the overwhelming majority of outstanding public assistance debt is owed by extremely poor people with tens of thousands of dollars in debt originating from orders that often were too onerous for them to meet, given their financial circumstances. A 2003 study prepared by DCSS entitled Examining Child Support Arrears in California: The Collectability Study found that 95 percent of delinquent debt was likely uncollectible. Noncustodial parents making less than $10,000 owed and average of $20,000 due in part to a 10 percent interest rate on late payments. Collectively, these parents’ debt comprised 70 percent of the outstanding child support debt owed to the state.

Seventy-seven percent of the child support cases maintained by the state’s child support program in federal fiscal year 2017-18 were CalWORKs cases. Nineteen percent of those were current CalWORKs cases and 58 percent were former CalWORKs cases. A March 2019 report by the Legislative Analyst’s Office found that, “In 2017-18, the state collected $410 million in child support on behalf of former and current CalWORKs families. Of this amount, $368 million was collected as CalWORKs recoupment that was used to reimburse the state ($168 million), counties ($23 million), and federal ($176 million) governments…Of the remaining amount, $12 million was passed through to CalWORKs families.”

The bill seeks to provide a process through which county and state entities assigned to collect child support may expunge child support delinquencies owed by very low-income non-custodial parents who, due to their financial circumstances, are not likely to pay that obligation.

Related/Prior Legislation

AB 1092 (Jones-Sawyer, 2019) limits the interest that may be charged on child support assigned to the county and provides that if child support is assigned to the county, DCSS or the local child support agency may not charge interest on the principal amount owed. This bill was vetoed.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Assembly Appropriations Committee:

• DCSS estimates, beginning no sooner than January 1, 2022, annual revenue reductions of $34 million ($17 million General Fund (GF)) in assigned child support that will be passed through to families instead of recouped by the state and federal governments. Additional costs of $900,000 (GF) if the state is required to backfill the counties' share of the lost revenue.
• Personnel cost savings to DCSS, of an unknown amount, but likely in the high hundreds of thousands of dollars (GF), from discontinuing enforcement of "uncollectable" child support debt cases.
• Unknown, but likely significant automation costs (GF) to DCSS to make the necessary code changes to the Child Support Enforcement system.
• Unknown future automation costs to DSS to make programming changes to CalSAWS once the migration is complete
  

SUPPORT: (Verified 9/10/19)

Anti-Recidivism Coalition (co-source)

Good Foundation (co-source)

Insight Center for Community Development (co-source)

PolicyLink (co-source)

Tipping Point Community (co-source)
Western Center on Law & Poverty (co-source)

A New Way of Life Re-Entry Project

Bay Area Legal Aid

Community Coalition for Substance Abuse Prevention and Treatment

Lawyers' Committee for Civil Rights

Legal Services for Prisoners with Children

Legal Services of Northern California

MILPA (Motivating Individual Leadership for Public Advancement)
National Association Of Social Workers, California Chapter

Public Interest Law Project

OPPOSITION: (Verified 9/10/19)

None received

GOVERNOR'S VETO MESSAGE:

I am returning Senate Bill 337 without my signature:

Senate Bill 337 would increase the amount of child support passed through to families receiving California Work Opportunity and Responsibility to Kids (CalWORKs) assistance.

Reducing child poverty across our state is a key priority for me. To this end, in 2019 we have increased CalWORKs grants by almost 25 percent, increased the amount of earnings families on CalWORKs can retain every month from $225 to $600, and increased the level of savings and the value of the car families can have and qualify for CalWORKs. We also increased and expanded California's Earned Income Tax Credit to $1 billion annually, including an increase of $1,000 in the credit for families with children under the age of 6.

While I am supportive of increasing the amount of child support passed through to families on CalWORKs, such an increase would have a General Fund impact of tens of millions of dollars annually, thus it should be considered as part of the budget process.

ASSEMBLY FLOOR: 78-0, 9/10/19

AYES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bigelow, Bloom, Boerner Horvath, Bonta, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Daly, Diep, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Voepel, Waldron, Weber, Wicks, Rendon

NO VOTE RECORDED: Wood

Prepared by: Taryn Smith / HUMAN S. /

10/22/19 14:46:44

**** END ****

 UNFINISHED BUSINESS  

Bill No: SB 337

Author: Skinner (D), et al.

Amended: 9/6/19

Vote: 21

SENATE HUMAN SERVICES COMMITTEE: 6-0, 4/8/19

AYES: Hurtado, Stone, Beall, Jackson, Pan, Wiener

SENATE JUDICIARY COMMITTEE: 9-0, 4/23/19

AYES: Jackson, Borgeas, Allen, Caballero, Jones, Monning, Stern, Umberg, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/16/19

AYES: Portantino, Bates, Bradford, Hill, Jones, Wieckowski

SENATE FLOOR: 38-0, 5/21/19

AYES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Glazer, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

ASSEMBLY FLOOR: 78-0, 9/10/19 - See last page for vote

SUBJECT: Child support

SOURCE: Anti-Recidivism Coalition

Good Foundation; Insight Center for Community Development

PolicyLink; Tipping Point Community

Western Center on Law & Poverty

DIGEST:

This bill increases the amount of child support to be paid to a recipient of CalWORKs aid, and prohibits this amount from being considered income or resources or from being deducted from the amount of aid to which the family would otherwise be eligible from $50 for all families to $100 for a family with one child and $200 for a family with 2 or more children, as specified. This bill excludes from the definition of “child support delinquency” an arrearage or otherwise past due amount owed that has been determined to be uncollectible, as specified, and requires an arrearage or otherwise past due amount to be deemed uncollectible under certain circumstances.

Assembly Amendments delay implementation of provisions of the bill; require the Department of Child Support Services (DCSS) and local child support agencies to deem an arrearage or past due amount owed to the state as “uncollectible” if the noncustodial parent’s sole income is from specified public assistance programs; and avoid chaptering issues with AB 1092 (Jones-Sawyer).

ANALYSIS:

Existing federal law:

1. Establishes the Temporary Assistance for Needy Families (TANF) program to provide cash aid and welfare-to-work services to eligible families and permits states to implement the program under a state plan. (42 USC 601 et seq.)
2. Provides an option for states to pass through to custodial parents receiving TANF benefits up to the first $100 in child support collected for one child and up to $200 for two or more children and to disregard those amounts when calculating TANF eligibility and grant amounts. (42 USC 657)

Existing state law:

1. Establishes in state law the CalWORKs program to provide cash assistance and other social services for low-income families through the federal TANF program. Under CalWORKs, each county provides assistance through a combination of state, county and federal TANF funds. (WIC 10530, 11200)
2. Requires a county department, in cases in which the paternity of a child has not been established to the satisfaction of that department, to refer the applicant to local child support agency at the time the application is signed, as specified. (WIC 11479).
3. Requires money from noncustodial parents for child or spousal support shall be paid directly to the local child support agency and shall not be paid directly to the family, as specified. (WIC 11457 (a))
4. Requires a CalWORKs applicant or recipient, as a condition of eligibility for aid, to assign to the local child support agency all rights to child support payments received on behalf of a child in the CalWORKs assistance unit and requires the applicant or recipient to cooperate in establishing the paternity of that child and in establishing, modifying, or enforcing a support order with respect that child, as specified. (WIC 11477)
5. Requires support that has been assigned pursuant to CalWORKs rules and that accrues while the family is receiving CalWORKs aid to be permanently assigned until the entire amount of aid paid has been reimbursed. (WIC 11477 (a)(2))
6. Entitles the state to the amount of CalWORKs aid repaid to the state by means of child support collections, except to the extent that county and federal funds were expended, during which instances the federal government and/or county shall be entitled to a share of the amount received or recovered, as specified. (WIC 11487)
7. Provides that CDSS and the local child support agency shall have the responsibility for promptly and effectively collecting and enforcing child support obligations, as specified. (FAM 17500 (a))
8. Requires the local child support agency to submit child support delinquencies to the DCSS for purposes of supplementing the collection efforts of the local child support agencies, as specified. Defines “child support delinquency” as an arrearage or otherwise past due amount that accrues when an obligor fails to make any court-ordered support payment when due, which is more than 60 days past due, and the aggregate amount of which exceeds $100. (FAM 17500 (c))
9. Requires the local child support agency to pass through the first $50 of any amount of child support collected on behalf of a child included in a CalWORKs assistance unit to the recipient family and disregards that amount when calculating income or resources for purposes of determining eligibility and establishing the family's grant amount. (FAM 17504)

This bill:

1. States Legislative intent to increase the amount of child support payments received and to strengthen family unity between children and their noncustodial parent, thereby improving the health and well-being of low-income children.
2. Redefines “child support delinquency,” commencing January 1, 2022, and to the extent permitted under federal law, to not include an arrearage or otherwise past due amount owed to the state that the local child support agency or DCSS has determined to be uncollectible.
3. Requires the DCSS or local child support agency to, in determining the meaning of “uncollectible” for purposes of arrearages and otherwise past due amounts owed to the state, consider all of the following factors:
4. Income and assets available to pay the arrearage or otherwise past due amount,
5. Source of income,
6. Age of the arrearage or otherwise past due amount,
7. The number of support orders,
8. Employment history,
9. Payment history,
10. Incarceration history,
11. Whether the order was based on imputed income, and
12. Other readily ascertainable debts.
13. Requires DCSS and a local child support agency to deem an arrearage or otherwise past due amount owed to the state as “uncollectible” if the noncustodial parent’s sole income is from Supplemental Security Income/State Supplementary Program (SSI/SSP) for the Aged, Blind, and Disabled benefits; a combination of SSI/SSP benefits and Social Security Disability Insurance benefits; Cash Assistance Program for Aged, Blind, and Disabled Legal Immigrants benefits; or Veterans Administration Disability Compensation benefits.
14. Permits CDSS to implement and administer provisions of the bill through a child support services letter or similar instruction until regulations are adopted. Thereafter, CDSS shall adopt regulations by July 1, 2022.
15. Prohibits CDSS or local child support agency from collecting interest that accrues on or after January 1, 2022, on the principal amount of child support that has been assigned, as specified.
16. Increases the amount of child support that a local child support agency must pass through to a CalWORKs recipient family and disregards that amount for purposes of determining CalWORKs eligibility and calculating the family's grant amount from $50 for all families to $100 for a family with one child and to $200 for a family with two or more children, as specified.
17. Requires that the increase shall become operative on January 1, 2022, or when the CDSS notifies the Legislature that the Statewide Automated Welfare System can perform the necessary automation to implement this section, whichever date is later.
18. Makes technical and conforming amendments, including language that avoids chaptering issues with AB 1092.

Background

This bill seeks to ensure that low-income families on CalWORKs receive more of their child support payments. SB 337 aligns California law with Federal law and allow CalWORKs families to receive $100 in child support for one child and $200 for two or more children (instead of the current amount of $50). According to the author, “Last year, more than 1.2 million California children living in or near poverty did not receive the full child support payments made by their parents. California must stop taking the lion’s share of support payments that rightfully belong to families and kids.”

CalWORKs. The CalWORKs program was created after the passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996. PRWORA transformed public assistance in the United States with a new emphasis on moving public assistance recipients from welfare to work. The reform instituted requirements and restrictions on eligibility (including time limits, work requirements, and participation rates) and gave states discretion to structure programs, as long as the program meets basic requirements.

Today, the CalWORKs program provides time-limited monthly income assistance and employment-related services aimed at moving children out of poverty and helping families meet basic needs. CalWORKs cash assistance is conditioned on participating on program activities.

Child Support Program. Noncustodial parents are often responsible for paying child support payments to custodial parents and their children. In California, the child support program is administered by DCSS, and 49 local child support agencies carry out child support enforcement duties at the county level. The state’s Child Support Program collects child support from noncustodial parents for the purpose of establishing child support orders; collecting child support payments from noncustodial parents; and distributing collected child support to custodial parents and their children.

The Child Support Program serves approximately one in ten Californians. According to DCSS, 26 percent of custodial families live in poverty and 77 percent of the DCSS caseload are current or former recipients of public assistance. In 2018, the average monthly child support distributed was about $300.

Under federal law, families receiving public assistance via TANF (which is the block grant that funds CalWORKs) must cooperate with efforts to establish and enforce child support payments. In addition, recipients must assign their rights to child support payments to the state and the state will collect the child support payments on behalf of the custodial parent.

For the purpose of CalWORKs grant calculations, federal law permits states to “pass through” and “disregard” all child support dollars to children who currently receive TANF-funded assistance. However, the federal government will only share in the cost of the disregard, up to the first $100 a month paid to TANF families with one child and $200 for families with two or more children. This law took effect October 1, 2008, however, California has not modified its laws pertaining to the pass through and disregard since it was established via AB 196 (Kuehl, Chapter 478, Statutes of 1999).

Therefore, under current state law, children receiving aid through CalWORKs, Medi-Cal, or foster care, who are also receiving child support are permitted to keep only the first $50 of a child support payment. This is referred to as the $50 “pass through.” The state keeps the remaining balance of the child support payment as reimbursement to the state and federal government for costs associated with TANF assistance provided to custodial family.

Additionally, California has adopted a $50 “disregard” for child support payments, which permits the $50 of the child support payment that is “passed through” to the CalWORKs recipient to be disregarded when determining CalWORKs eligibility and grant amounts.

This bill increases the disregard and pass through from $50 to $100 for a family with one child and to $200 for a family with two or more children. There is evidence that when more of parents’ child support payments go to their children, parents are more likely to pay, and to pay more. Colorado enacted a law requiring 100 percent of child support payments go to children about a year ago. Colorado reports that child support payments increased by 63 percent. Early indicators suggest that increasing the amount of child support given to families is expected to increase compliance, increase payment amounts, reduce reliance on other forms of public benefits, and reduce tension between parents.

Child Support Debt Forgiveness. When a family leaves CalWORKs, the family regains its rights to currently owed child support, and may receive the entire child support payment. However, if the non-custodial parent has been in arrears with child support payments, the state continues collecting and retaining payments as reimbursement for costs associated with welfare benefits paid to the family. Once the arrears are paid, the full amount of child support collected is paid to the custodial family.

According to the sponsors, the overwhelming majority of outstanding public assistance debt is owed by extremely poor people with tens of thousands of dollars in debt originating from orders that often were too onerous for them to meet, given their financial circumstances. A 2003 study prepared by DCSS entitled Examining Child Support Arrears in California: The Collectability Study found that 95 percent of delinquent debt was likely uncollectible. Noncustodial parents making less than $10,000 owed and average of $20,000 due in part to a 10 percent interest rate on late payments. Collectively, these parents’ debt comprised 70 percent of the outstanding child support debt owed to the state.

Seventy-seven percent of the child support cases maintained by the state’s child support program in federal fiscal year 2017-18 were CalWORKs cases. Nineteen percent of those were current CalWORKs cases and 58 percent were former CalWORKs cases. A March 2019 report by the Legislative Analyst’s Office found that, “In 2017-18, the state collected $410 million in child support on behalf of former and current CalWORKs families. Of this amount, $368 million was collected as CalWORKs recoupment that was used to reimburse the state ($168 million), counties ($23 million), and federal ($176 million) governments…Of the remaining amount, $12 million was passed through to CalWORKs families.”

The bill seeks to provide a process through which county and state entities assigned to collect child support may expunge child support delinquencies owed by very low-income non-custodial parents who, due to their financial circumstances, are not likely to pay that obligation.

Related/Prior Legislation

AB 1092 (Jones-Sawyer, 2019) limits the interest that may be charged on child support assigned to the county and provides that if child support is assigned to the county, DCSS or the local child support agency may not charge interest on the principal amount owed.

SB 380 (Bradford, Chapter 729, Statutes of 2017) allowed, in certain instances, a CalWORKs assistance unit to receive the full child support payments for a stepsibling or half-sibling in that unit, and prohibited those child support payments from impacting CalWORKs eligibility or benefit level determination.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Assembly Appropriations Committee:

• DCSS estimates, beginning no sooner than January 1, 2022, annual revenue reductions of $34 million ($17 million General Fund (GF)) in assigned child support that will be passed through to families instead of recouped by the state and federal governments. Additional costs of $900,000 (GF) if the state is required to backfill the counties' share of the lost revenue.
• Personnel cost savings to DCSS, of an unknown amount, but likely in the high hundreds of thousands of dollars (GF), from discontinuing enforcement of "uncollectable" child support debt cases.
• Unknown, but likely significant automation costs (GF) to DCSS to make the necessary code changes to the Child Support Enforcement system.
• Unknown future automation costs to DSS to make programming changes to CalSAWS once the migration is complete
  

SUPPORT: (Verified 9/10/19)

Anti-Recidivism Coalition (co-source)

Good Foundation (co-source)

Insight Center for Community Development (co-source)

PolicyLink (co-source)

Tipping Point Community (co-source)
Western Center on Law & Poverty (co-source)

A New Way of Life Re-Entry Project

Bay Area Legal Aid

Community Coalition for Substance Abuse Prevention and Treatment

Lawyers' Committee for Civil Rights

Legal Services for Prisoners with Children

Legal Services of Northern California

MILPA (Motivating Individual Leadership for Public Advancement)
National Association Of Social Workers, California Chapter

Public Interest Law Project

OPPOSITION: (Verified 9/10/19)

None received

ASSEMBLY FLOOR: 78-0, 9/10/19 AYES: Aguiar-Curry, Arambula, Bauer-Kahan, Berman, Bigelow, Bloom, Boerner Horvath, Bonta, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Daly, Diep, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Petrie-Norris, Quirk, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Ting, Voepel, Waldron, Weber, Wicks, Wood, Rendon

Prepared by: Taryn Smith / HUMAN S. /

9/10/19 23:01:46

**** END ****

SENATE THIRD READING

STR Bill Id:SB 337

Author:(Skinner)

As Amended Ver:September 6, 2019

Majority vote

SUMMARY:

Raises the California Work Opportunity and Responsibility to Kids (CalWORKs) child support disregard from the first $50 per month to the first $100 per month for a family with one child, or the first $200 per month for a family with two or more children; places certain limitations, for CalWORKs applications received before October 1, 2009, on the assignment of rights to child support to the county for CalWORKs applicants or recipients; and, to the extent permitted by federal law, beginning January 1, 2022, would exclude an arrearage or otherwise past-due amount that is determined to have been established in error or to be uncollectible from the definition of "child support delinquency."

Major Provisions

1. States Legislative intent to increase the amount of child support payments received and to strengthen family unity between children and their noncustodial parent, thereby improving the health and well-being of low-income children.
2. Effective beginning January 1, 2022, this bill exempts from inclusion in the definition of "child support delinquency," to the extent permitted by federal law, an arrearage or otherwise past-due amount that a local child support agency or the Department of Child Support Services (DCSS) determines was established in error or has determined to be uncollectible.
3. Requires DCSS, in determining the meaning of "uncollectible" for purposes of arrearages and otherwise past due amounts owed to the state, to consider a number of factors including, among others and as specified: income and assets available to pay the arrearage or otherwise past due amount, source of income including veterans benefits, age of arrearage or otherwise past due amount, and incarceration history.
4. Effective January 1, 2022, this bill increases, when child support is collected on behalf of a CalWORKs recipient in payment of the required support obligation, the amount that must be passed through to the recipient from the first $50 per month to the first $100 per month for a family with one child, or the first $200 per month for a family with two or more children, as specified. Makes this provision effective January 1, 2022, or when the State Department of Social Services notifies the Legislature that the California Statewide Automated Welfare System (CalSAWS) can perform the necessary automation to implement this section, whichever date is later.
5. Add provisions form AB 1089 (Jones-Sawyer) of the current legislative session to avoid chaptering out conflicts.

COMMENTS:

CalWORKs: CalWORKs is the state's TANF program, providing eligible low-income families with cash grants and supportive services aimed at helping them to secure education, training, and employment. For Fiscal Year (FY) 2018-19, the average monthly CalWORKs cash grant is estimated to be $568 per household.

Child support: Noncustodial parents are responsible for paying child support payments to custodial parents and their children. In California, child support orders can be established in one of two ways: privately, using an attorney or during divorce proceedings; or using the state child support system to help establish an order. The state child support program, administered by DCSS and run locally through 49 local child support agencies (LCSAs), establishes child support orders and collects payments from noncustodial parents to distribute to custodial parents and their children. The state government pays one-third of the costs of child support services, and the federal government pays two-thirds.

CalWORKs and child support: Federal TANF law requires states to collect child support on behalf of custodial parents who receive CalWORKs. When families apply for CalWORKs, they are required to assign any rights to support over to the county. The child support payments subsequently received are distributed to the state and federal governments to reimburse the costs of CalWORKs benefits. However, the first $50 of support collected is passed through to the family. Federal law permits states to disregard up to the first $100 per month for families with one child and up to the first $200 per month for families with two or more children. In 2017-18, 77% of child support cases were CalWORKs cases – with 19% current CalWORKs cases and 58% being former CalWORKs cases. A March 2019 report by the Legislative Analyst's Office found that, "In 2017-18, the state collected $410 million in child support on behalf of former and current CalWORKs families: $368 million reimbursed the state ($168 million), counties ($23 million), and federal ($176 million) governments…" Only $12 million supported CalWORKs families.

Need for this bill: This bill would ensure more resources for families. It seeks to raise the CalWORKs child support disregard from the first $50 per month to the first $100 per month for a family with one child, or the first $200 per month for a family with two or more children, thereby allowing for the maximum pass-through permitted by federal law.

According to the Author:

"The 'Child Support Reform Act,' seeks to ensure that low-income families receive the first $100 of child support for one child, and the first $200 for two or more children to which they are entitled. This payment structure is to align with Federal law in regards to income-disregard, thus not effecting their eligibility for social services."

Arguments in Support:

Homeboy Industries writes that this bill "will ensure more of parents' child support payments go to their families instead of requiring low-income families to pay back the cost of public benefits."

Arguments in Opposition:

None on file

FISCAL COMMENTS:

According to the Assembly Appropriations Committee:

1. DCSS estimates, beginning no sooner than January 1, 2022, annual revenue reductions of $34 million ($17 million General Fund (GF)) in assigned child support that will be passed through to families instead of recouped by the state and federal governments. Additional costs of $900,000 (GF) if the state is required to backfill the counties' share of the lost revenue.
2. Personnel cost savings to DCSS, of an unknown amount, but likely in the high hundreds of thousands of dollars (GF), from discontinuing enforcement of "uncollectable" child support debt cases.
3. Unknown, but likely significant automation costs (GF) to DCSS to make the necessary code changes to the Child Support Enforcement system.
4. Unknown future automation costs to DSS to make programming changes to CalSAWS once the migration is complete.

VOTES:

SENATE FLOOR: 38-0-0

YES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Glazer, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

ASM HUMAN SERVICES: 8-0-0

YES: Reyes, Mathis, Arambula, Choi, Friedman, Gipson, Maienschein, Mark Stone

ASM JUDICIARY: 12-0-0

YES: Mark Stone, Gallagher, Chau, Chiu, Gonzalez, Holden, Kalra, Kiley, Maienschein, Obernolte, Petrie-Norris, Reyes

ASM APPROPRIATIONS: 18-0-0

YES: Gonzalez, Bigelow, Bloom, Bonta, Brough, Calderon, Carrillo, Chau, Diep, Eggman, Fong, Gabriel, Eduardo Garcia, Maienschein, Obernolte, Petrie-Norris, Quirk, Robert Rivas

UPDATED:

VERSION: September 6, 2019

CONSULTANT: Daphne Hunt & Gail Gronert / HUM. S. / (916) 319-2089 FN: 0002015

SENATE THIRD READING

STR Bill Id:SB 337

Author:(Skinner)

As Amended Ver:September 3, 2019

Majority vote

SUMMARY:

Raises the California Work Opportunity and Responsibility to Kids (CalWORKs) child support disregard from the first $50 per month to the first $100 per month for a family with one child, or the first $200 per month for a family with two or more children; places certain limitations, for CalWORKs applications received before October 1, 2009, on the assignment of rights to child support to the county for CalWORKs applicants or recipients; and, to the extent permitted by federal law, beginning January 1, 2022, would exclude an arrearage or otherwise past-due amount that is determined to have been established in error or to be uncollectible from the definition of "child support delinquency."

Major Provisions

1. States Legislative intent to increase the amount of child support payments received and to strengthen family unity between children and their noncustodial parent, thereby improving the health and well-being of low-income children.
2. Effective beginning January 1, 2022, this bill exempts from inclusion in the definition of "child support delinquency," to the extent permitted by federal law, an arrearage or otherwise past-due amount that a local child support agency or the Department of Child Support Services (DCSS) determines was established in error or has determined to be uncollectible.
3. Requires DCSS, in determining the meaning of "uncollectible" for purposes of arrearages and otherwise past due amounts owed to the state, to consider a number of factors including, among others and as specified: income and assets available to pay the arrearage or otherwise past due amount, source of income including veterans benefits, age of arrearage or otherwise past due amount, and incarceration history.
4. Effective January 1, 2022, this bill increases, when child support is collected on behalf of a CalWORKs recipient in payment of the required support obligation, the amount that must be passed through to the recipient from the first $50 per month to the first $100 per month for a family with one child, or the first $200 per month for a family with two or more children, as specified. Makes this provision effective January 1, 2022, or when the State Department of Social Services notifies the Legislature that the California Statewide Automated Welfare System (CalSAWS) can perform the necessary automation to implement this section, whichever date is later.

COMMENTS:

CalWORKs: CalWORKs is the state's TANF program, providing eligible low-income families with cash grants and supportive services aimed at helping them to secure education, training, and employment. For Fiscal Year (FY) 2018-19, the average monthly CalWORKs cash grant is estimated to be $568 per household.

Child support: Noncustodial parents are responsible for paying child support payments to custodial parents and their children. In California, child support orders can be established in one of two ways: privately, using an attorney or during divorce proceedings; or using the state child support system to help establish an order. The state child support program, administered by DCSS and run locally through 49 local child support agencies (LCSAs), establishes child support orders and collects payments from noncustodial parents to distribute to custodial parents and their children. The state government pays one-third of the costs of child support services, and the federal government pays two-thirds.

CalWORKs and child support: Federal TANF law requires states to collect child support on behalf of custodial parents who receive CalWORKs. When families apply for CalWORKs, they are required to assign any rights to support over to the county. The child support payments subsequently received are distributed to the state and federal governments to reimburse the costs of CalWORKs benefits. However, the first $50 of support collected is passed through to the family. Federal law permits states to disregard up to the first $100 per month for families with one child and up to the first $200 per month for families with two or more children. In 2017-18, 77% of child support cases were CalWORKs cases – with 19% current CalWORKs cases and 58% being former CalWORKs cases. A March 2019 report by the Legislative Analyst's Office found that, "In 2017-18, the state collected $410 million in child support on behalf of former and current CalWORKs families: $368 million reimbursed the state ($168 million), counties ($23 million), and federal ($176 million) governments…" Only $12 million supported CalWORKs families.

Need for this bill: This bill would ensure more resources for families. It seeks to raise the CalWORKs child support disregard from the first $50 per month to the first $100 per month for a family with one child, or the first $200 per month for a family with two or more children, thereby allowing for the maximum pass-through permitted by federal law.

According to the Author:

"The 'Child Support Reform Act,' seeks to ensure that low-income families receive the first $100 of child support for one child, and the first $200 for two or more children to which they are entitled. This payment structure is to align with Federal law in regards to income-disregard, thus not effecting their eligibility for social services."

Arguments in Support:

Homeboy Industries writes that this bill "will ensure more of parents' child support payments go to their families instead of requiring low-income families to pay back the cost of public benefits."

Arguments in Opposition:

None on file

FISCAL COMMENTS:

According to the Assembly Appropriations Committee on August 30, 2019:

1. DCSS estimates, beginning no sooner than January 1, 2022, annual revenue reductions of $34 million ($17 million General Fund (GF)) in assigned child support that will be passed through to families instead of recouped by the state and federal governments. Additional costs of $900,000 (GF) if the state is required to backfill the counties' share of the lost revenue.
2. Personnel cost savings to DCSS, of an unknown amount, but likely in the high hundreds of thousands of dollars (GF), from discontinuing enforcement of "uncollectable" child support debt cases.
3. Unknown, but likely significant automation costs (GF) to DCSS to make the necessary code changes to the Child Support Enforcement system.
4. Unknown future automation costs to DSS to make programming changes to CalSAWS once the migration is complete.

VOTES:

SENATE FLOOR: 38-0-0

YES: Allen, Archuleta, Atkins, Bates, Beall, Borgeas, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Glazer, Grove, Hertzberg, Hill, Hueso, Hurtado, Jackson, Jones, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Nielsen, Pan, Portantino, Roth, Rubio, Skinner, Stern, Stone, Umberg, Wieckowski, Wiener, Wilk

ASM HUMAN SERVICES: 8-0-0

YES: Reyes, Mathis, Arambula, Choi, Friedman, Gipson, Maienschein, Mark Stone

ASM JUDICIARY: 12-0-0

YES: Mark Stone, Gallagher, Chau, Chiu, Gonzalez, Holden, Kalra, Kiley, Maienschein, Obernolte, Petrie-Norris, Reyes

ASM APPROPRIATIONS: 18-0-0

YES: Gonzalez, Bigelow, Bloom, Bonta, Brough, Calderon, Carrillo, Chau, Diep, Eggman, Fong, Gabriel, Eduardo Garcia, Maienschein, Obernolte, Petrie-Norris, Quirk, Robert Rivas

UPDATED:

VERSION: September 3, 2019

CONSULTANT: Daphne Hunt / HUM. S. / (916) 319-2089 FN: 0001774

Date of Hearing: August 14, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 337

Author:(Skinner) – As Amended Ver:June 27, 2019

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill increases the amount of child support passed through to California Work Opportunity and Responsibility to Kids (CalWORKs) families and disregards that amount when calculating the families’ CalWORKs eligibility and grant. This bill also allows the Department of Child Support Services (DCSS) or the local child support agency (LCSA) to expunge child support debt owed to the state in certain situations where repayment is effectively impossible. Among the bill’s provisions:

1. Requires the amount of monthly child support, collected by the state on behalf of a CalWORKs recipient, passed through to that CalWORKs recipient be increased from the first $50 to the first $100 for families with one child and $200 for families with two or more children. Continues the requirement that child support passed through to recipients is disregarded as income and resources in determining eligibility and amount of aid paid.
2. Limits the assignment to the state of any rights to child support to include only support that accrues while the applicant is receiving CalWORKs assistance, and discontinues any assigned rights to support, with respect to applications received before October 1, 2009, accrued before the applicant received aid.
3. Refines the definition of “child support delinquency” to exclude a past due amount owed to the state that the LCSA or DCSS determines is “uncollectible.” Requires DCSS or the LCSA, to determine the meaning of “uncollectible” consistent with federal case closure regulations and other specified factors.
4. Requires DCSS and the LCSAs to deem a past due amount owed to the state as “uncollectible,” consistent with federal regulations, if either of the following exists:
   1. The noncustodial parent is living with the minor child (as the primary caregiver or in an intact two-parent household), and the LCSA has determined that services are not appropriate or are no longer appropriate.
   2. The noncustodial parent’s sole income is from Supplemental Security Income (SSI) payments, both SSI payments and Social Security Disability Insurance (SSDI) benefits, or Cash Assistance Program for Immigrants (CAPI).
5. Requires a determination made under (4) above is permanent and no longer enforceable as of the date of the determination.

FISCAL EFFECT:

1. DCSS estimates lost revenue of $34 million ($17 million GF) in assigned child support that will be passed through to families instead of recouped by the state and federal governments. Additional costs of $900,000 (GF) if the state is required to backfill the counties’ share of the lost revenue.
2. Personnel cost savings to DCSS, of an unknown amount, but likely in the low millions of dollars (GF), from discontinuing enforcement of “uncollectable” child support debt cases. Actual costs would depend on the definition of “uncollectable.” For example, if DCSS defines uncollectable as cases that have never made a payment and have no reportable income, DCSS would close approximately 18,000 cases and eliminate $276 million in child support arrears balance.  This would result in a potential reduction of approximately 98 positions and an annual cost saving of approximately $11 million ($3.7 million GF). 
3. Unknown, but likely significant automation costs (GF) to DCSS to make the necessary code changes to the Child Support Enforcement (CSE) system. DCSS indicates these changes will need to be prioritized within the department’s existing workload and estimates it may take approximately two years to implement.
4. Administrative costs, likely in the tens of millions of dollars (GF) annually for two years, for the Department of Social Services (DSS) to manually override the increased child support pass-through until the statewide Automated Welfare System (CalSAWS) migration is complete in early 2023.
5. Future automation costs of approximately $1 million (GF) to DSS to make the necessary programming changes to CalSAWS once the migration is complete.

COMMENTS:

1. Purpose. This bill seeks to increase the amount of child support payments received by CalWORKs recipients. According to the author:

[This bill] seeks to ensure that low-income families receive the first $100 of child support for one child, and the first $200 for two or more children to which they are entitled. This payment structure is to align with Federal law in regards to income-disregard, thus not effecting their eligibility for social services. [This bill] would overturn a decades-old law under which child-support payments meant for families who receive CalWORKs benefits go to the state rather than to the families and children who need it most.

1. CalWORKs. CalWORKs is the state’s Temporary Assistance for Needy Families (TANF) program, providing eligible low-income families with cash grants and supportive services. CalWORKs is administered at the county level and funded largely through the federal TANF block grant and state maintenance-of-effort contributions. CalWORKs participants have access to a range of services, including child care. Unless deemed exempt, parents are required to develop and participate in a welfare-to-work plan. For fiscal year (FY) 2018-19, the average monthly CalWORKs cash grant is estimated to be $568 per household. In FY 2017-18, the average monthly CalWORKs caseload was 423,121 households.
2. Child support. Noncustodial parents are often responsible for paying child support payments to custodial parents and their children. A “child support order” is the amount of child support that a noncustodial parent is required to pay. In California, these orders can be established either privately, using an attorney or during divorce proceedings, or using the state child support system to help establish an order. The state child support program, administered by DCSS and run locally through 49 LCSAs, establishes child support orders and collects payments from noncustodial parents to distribute to custodial parents and their children. The state government pays one-third of the costs of child support services, and the federal government pays two-thirds.
3. Child Support Collected Through CalWORKs. The state must, per federal TANF law, collect child support on behalf of custodial parents who receive CalWORKs. When families apply for CalWORKs they are required to assign to the county their right to receive any child support owed during the assistance period and to cooperate with the child support program in enforcement efforts. The child support payments subsequently received are distributed to the state and federal governments to reimburse the costs of CalWORKs benefits. However, there is a monthly $50 disregard, whereby the first $50 of support collected is passed through to the family on whose behalf the support was collected. Per federal law, states can disregard up to the first $100 per month of collected child support for families with one child, and up to the first $200 per month for families with two or more children. (States can pass through a higher amount, but would be required to pay the federal government a share of that amount.) Once a custodial parent exits CalWORKs, DCSS is required to continue enforcement of the support order, although the custodial parent can choose to not use the services of DCSS.

Of the child support cases maintained by the state’s child support program in federal fiscal year 2017-18, 77% were CalWORKs cases –19% current CalWORKs cases and 58% former CalWORKs cases. A March 2019 report by the Legislative Analyst’s Office found:

In 2017-18, the state collected $410 million in child support on behalf of former and current CalWORKs families. Of this amount, $368 million was collected as CalWORKs recoupment that was used to reimburse the state ($168 million), counties ($23 million), and federal ($176 million) governments…Of the remaining amount, $12 million was passed through to CalWORKs families.

DCSS reports that nearly $18 billion in unpaid child support and interest has accumulated in California, of which approximately $7 billion ($3 billion GF) is assigned and owed to the government.

1. Related Legislation. AB 1092 (Jones-Sawyer), of this legislative session, provides if child support is assigned to the county, DCSS or LCSA may not charge interest on the principal amount owed. That bill is pending on the Senate Appropriations Committee’s Suspense File.
2. Prior Legislation.

SB 380 (Bradford), Chapter 729, Statutes of 2017, allowed, in certain instances, a CalWORKs assistance unit to receive the full child support payments for a stepsibling or half-sibling in that unit, and prohibited those payments from impacting CalWORKs eligibility or benefit level determination.

AB 1654 (Bonilla), of the 2013-14 Legislative Session, would have increased the amount of monthly child support passed through to CalWORKs recipients, from $50 per family to $100 for a family with one child or $200 for a family with two or more children. That bill was held on the Senate Appropriations Committee’s Suspense File.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: June 25, 2019

ASSEMBLY COMMITTEE ON JUDICIARY

Mark Stone, Chair

SBPCA Bill Id:SB 337

Author:(Skinner) – As Amended Ver:May 17, 2019

PROPOSED CONSENT (As Proposed to be Amended)

SENATE VOTE: 38-0

SUBJECT: Child support: INCREASING PASS-THROUGH TO NEEDY FAMILIES AND REDUCING UNCOLLECTIBLE DEBT OWED TO THE STATE

KEY ISSUES:

1. IN ORDER TO HELP LOW-INCOME FAMILIES AND ENCOURAGE NONCUSTODIAL PARENTS TO SUPPORT THEIR CHILDREN, SHOULD THE AMOUNT OF CHILD SUPPORT PASSED THROUGH TO FAMILIES RECEIVING CALWORKS BE INCREASED FROM $50 PER MONTH TO $100 PER MONTH FOR FAMILIES WITH ONE CHILD AND $200 PER MONTH FOR FAMILIES WITH TWO OR MORE CHILDREN?
2. IN ORDER TO REDUCE TRULY UNCOLLECTIBLE DEBT OWED TO THE STATE FOR PUBLIC ASSISTANCE RECOUPMENT AND REDUCE HARM TO FRAGILE FAMILIES, SHOULD THE STATE CHILD SUPPORT PROGRAM BE ABLE TO DEEM CERTAIN DEBT UNCOLLECTIBLE, INCLUDING DEBT FOR PARENTS WHOSE SOLE INCOME IS FROM SSI OR WHO ARE REUNITED WITH THEIR CHILDREN--CASES THAT CAN BE CLOSED UNDER FEDERAL RULES—GIVEN THAT THE DEBT CANNOT BE REPAID, BUT CAN RUIN THE LIVES OF LOW-INCOME OBLIGOR PARENTS AND KEEP THEM FROM THEIR CHILDREN?

SYNOPSIS

For low-income, single-parent families, child support is very often a critical part of the income they need to survive and thrive. However, when families receive cash assistance under California’s Temporary Assistance for Needy Families (TANF) program, known in California as the California Work Opportunity and Responsibility to Kids (CalWORKs) program, almost all the child support that the noncustodial parent pays goes to reimburse the state for the assistance that the family receives. In addition, current support that is not paid while the family is on assistance becomes debt that the noncustodial parent owes to the state, accruing interest at 10% per year, which can leave low-income noncustodial parents impoverished and keep them from their children. On the flip side, while child support payments are critical for low-income families, low-income obligors, especially those whose orders were set by default using imputed income, are often unable to pay the child support debt, particularly the debt owed to the state for public assistance reimbursement that does not benefit the family, and are further impoverished by the state’s child support collection efforts.

This bill seeks to help low-income families in two ways to, as stated in the bill’s legislative intent portion, “increase the amount of child support payments received and to strengthen family unity between children and their noncustodial parent, thereby improving the health and well-being of low-income children.” First, the bill increases the amount of child support paid by the noncustodial parent that the family receives when on CalWORKs from $50 a month to $100 a month for one child and $200 for two or more children. This money is also appropriately disregarded when determining the families’ CalWORKs grant amount. The bill also deems, and provides a mechanism to deem, certain past-due child support owed to the state for public assistance recoupment as uncollectible, similar to some federal case closure rules meant to assist low-income obligors and allow local child support agencies to focus collection efforts on cases with some chance of success that will actually benefit families.

The bill is sponsored by the Western Center for Law and Poverty and a broad collation of anti-poverty groups, and is supported by, among others, the Financial Justice Project of the City and County of San Francisco’s Treasurer's Office, Lawyers' Committee for Civil Rights, Legal Services of Northern California, and Rubicon Programs. It has no opposition. It passed out of the Human Services Committee last week on consent.

SUMMARY: Increases the amount of child support passed through to families receiving support from the California Work Opportunity and Responsibility to Kids (CalWORKs) program and disregards that amount when calculating their CalWORKs grant, and allows the child support program to extinguish child support debt owed to the state in certain situations where repayment is effectively impossible. Specifically, this bill:

1. States the intent of the Legislature to increase the amount of child support payments received and to strengthen family unity between children and their noncustodial parent, thereby improving the health and well-being of low-income children.
2. Increases the amount of child support collected each month that CalWORKs recipients receive from the first $50 to the first $100 for families with one child and $200 for families with two or more children. Continues the requirement that child support passed through to families is disregarded as income and resources in determining eligibility for aid and the amount of aid paid.
3. Requires that the assignment to the county of any rights to support applies only to support that accrues during the period of time that the applicant is receiving CalWORKs assistance, and does not exceed the total amount of cash assistance provided to the family. 
4. Discontinues any assigned rights to support, with respect to applications received before October 1, 2009, that accrued before the applicant received aid.
5. Refines the definition of “child support delinquency,” to the extent permitted under federal law, to exclude an arrearage or otherwise past due amount owed to the state that the local child support agency (LCSA) or the Department of Child Support Services (DCSS) determines is “uncollectible.” Requires DCSS or the LCSA, in determining the meaning of “uncollectible” for purposes of arrearages and otherwise past due amounts owed to the state, to consider, consistent with federal case closure regulations, all of the following factors:
   1. Income and assets available to pay the arrearage or otherwise past due amount;
   2. Source of income;
   3. Age of arrearage or otherwise past due amount;
   4. The number of support orders;
   5. Employment history;
   6. Payment history;
   7. Incarceration history;
   8. Whether the order was based on imputed income; and
   9. Other readily ascertainable debts.
6. Requires DCSS and the LCSAs to deem a past due amount owed to the state as “uncollectible,” consistent with federal regulations, if either of the following exists:
   1. The noncustodial parent is living with the minor child (as the primary caregiver or in an intact two-parent household), and the LCSA has determined that services are not appropriate or are no longer appropriate; or
   2. The noncustodial parent’s sole income is from:
      1. Supplemental Security Income (SSI) payments made in accordance with federal law;
      2. Both SSI payments and Social Security Disability Insurance (SSDI) benefits, as provided; or
      3. Cash Assistance Program for Immigrants (CAPI).
7. Requires that a determination made under 6), above, that a child support delinquency owed to the state is uncollectible is permanent such that the child support delinquency determined to be uncollectible will no longer be enforceable as of the date of the determination. Requires that DCSS or the LCSA to notify the court of any child support delinquency deemed uncollectible, as appropriate.
8. Authorizes DCSS to implement and administer the provisions in 6)-7), above, through a child support services letter or similar instruction until regulations are adopted by DCSS by July 1, 2022.

EXISTING LAW:

1. Establishes the federal Temporary Assistance for Needy Families (TANF) program to provide aid and welfare-to-work services to eligible families and, in California, provides that TANF funds for welfare-to-work services are administered through the California Work Opportunity and Responsibility to Kids (CalWORKs) program. (42 U.S.C. 601 et seq.; Welfare & Institutions Code Section 11200 et seq.)
2. Establishes income, asset and real property limits used to determine eligibility for the CalWORKs program. (Welfare & Institutions Code Section 11250 et seq.)
3. Provides that, as a condition of eligibility for cash assistance, an applicant or recipient must assign to the state their rights to any child support owed during the receipt of benefits, as provided, in an amount not to exceed the total cash assistance provided to the family. Requires support that has been assigned pursuant to CalWORKs rules and that accrues while the family is receiving CalWORKs aid to be permanently assigned until the entire amount of aid paid has been reimbursed. (Welfare & Institutions Code Section 11477.)
4. Stipulates that any month in which the cost of CalWORKs cash aid provided to a recipient for the month is fully reimbursed by child support shall not be counted as a month of receipt of aid for purposes of CalWORKs time limits, as specified. (Welfare & Institutions Code Section 11454.5 (a).)
5. Provides that the DCSS is the mandated single state child support (IV-D) agency. Requires each county to maintain a LCSA, which is responsible for promptly and effectively establishing, modifying and enforcing child support obligations. (Family Code Sections 17200-02, 17400.)
6. Requires LCSAs to pay families receiving cash assistance the first $50 of any child support collected in a month in which the child support is due, and that payment cannot be deducted from the amount of assistance to which the family would otherwise be eligible. (Family Code Section 17504; Welfare & Institutions Code Section 11475.3.)
7. Requires that DCSS and the LCSA have the responsibility for promptly and effectively collecting and enforcing child support obligations, as specified. (Family Code Section 17500 (a).)
8. Requires the LCSA to submit child support delinquencies to the DCSS for purposes of supplementing the collection efforts of the LCSAs, as specified. Defines “child support delinquency” as an arrearage or otherwise past due amount that accrues when an obligor fails to make any court-ordered support payment when due, which is more than 60 days past due, and the aggregate amount of which exceeds $100. (Family Code Section 17500 (c).)
9. Requires DCSS to establish a program for the compromise of child support arrears and interest owed to the state. The amount of the compromise shall take into account the obligor's ability to pay and must be in the best interest of the state. (Family Code Section 17560.)
10. Establishes CAPI, a state-funded program that provides monthly cash benefits to aged, blind, and disabled non-citizens who are ineligible for SSI/SSP solely due to their immigrant status. (Welfare & Institutions Code Section 18937 et seq.)
11. Establishes, under federal law, criteria under which child support cases may be closed. (45 CFR Section 303.11.)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: For low-income, single-parent families, child support is very often a critical part of the income they need to survive and thrive. However, when families receive cash assistance under California’s TANF program, known in California as CalWORKs, almost all of the child support that the noncustodial parent pays goes to reimburse the state for the assistance that the family receives. In addition, current support that is not paid while the family is on assistance becomes debt that the noncustodial parent owes to the state, accruing interest at 10% per year, which can leave low-income noncustodial parents impoverished and keep them from their children. On the flip side, while child support payments are critical for low-income families, low-income obligors, especially those whose orders were set by default using imputed income, are often unable to pay their child support debt, particularly the debt owed to the state for public assistance reimbursement that does not benefit the family, and are further impoverished and alienated from their families by the state’s child support collection efforts.

This bill seeks to help low-income families in two ways to, as stated in the bill’s legislative intent portion, “increase the amount of child support payments received and to strengthen family unity between children and their noncustodial parent, thereby improving the health and well-being of low-income children.” First, the bill increases the amount of child support paid by the noncustodial parent that the family receives when on CalWORKs from $50 a month to $100 a month for one child and $200 for two or more children. This money is also disregarded when determining the families’ CalWORKs grant amount. The bill also, appropriately, deems, and provides a mechanism to deem, certain past-due child support that is owed to the state for public assistance recoupment to be uncollectible, similar to some federal case closure rules meant to assist low-income obligors and allow local child support agencies to focus collection efforts on cases with some chance of success and actual benefit to families.

In support of the bill, the author writes:

The “Child Support Reform Act,” [] seeks to ensure that low-income families receive all the child support payments to which they are entitled. The act, Senate Bill 337, would overturn a decades-old law under which child-support payments meant for families who receive CalWORKs benefits go to the state rather than to the families and children who need it most.

The Child Support Reform Act will right a historic wrong. Last year, more than 1.2 million California children living in or near poverty did not receive the full child support payments made by their parents. California must stop taking the lion’s share of support payments that rightfully belong to families and kids.

The origins of the child support program. In 1975 Congress established the national child support program to provide funds to states to establish paternity and child support orders, and to collect and distribute child support. Under the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), a state’s TANF plan must contain an assurance that the state will operate a child support enforcement program pursuant to an approved plan. Basic responsibility for administering the child support program is left to the states, but the federal government plays a significant role in dictating the major design features, funding, and evaluating state programs. The federal government provides a 66% match for any funds a state expends for reimbursable child support enforcement activities. Collections made on behalf of families receiving TANF assistance are shared equally with the federal government.

The child support program was originally designed by Congress in 1975 as a cost-recovery program to reimburse state and federal governments for public assistance paid to children. However, since 1996 welfare reform, the program has focused on family self-sufficiency and getting more child support dollars directly to families. As stated in federal policy established by The Office of Child Support Enforcement: “Child support is no longer primarily a welfare reimbursement, revenue-producing device for the Federal and State governments; it is a family-first program, intended to ensure families’ self-sufficiency by making child support a more reliable source of income.” (Office of Child Support Enforcement, U.S. Department of Health and Human Services, National Child Support Enforcement Strategic Plan FY 2005-2009, 1.) Unfortunately, that is not always how the program operates and state rules for operating the program in California fail to maximize support for low-income custodial families and children and can be punitive, alienating, and impoverishing for low-income obligor parents.

Treatment of child support collected on behalf of CalWORKs recipients. When families apply for CalWORKs – California’s TANF program – they are required to assign to the state their rights to any child support owed during the assistance period and to cooperate with the child support program in enforcement efforts. There are complex federal distribution rules for determining how child support collections are allocated between families and the government. As a general rule, child support paid while a family receives assistance is retained by the state and shared with the federal government.

Under federal law, states have the option to "retain, or distribute to the family, the State share" of the amount collected for current recipients. Prior to PRWORA, states were required to pass through and disregard as countable income for grant calculations the first $50 of current child support payments to the family. This provision was repealed as a requirement of PRWORA, but California retained in the CalWORKs program, under state authority, a pass-through and disregard of the first $50 of any current child support paid on behalf of the family. However, the state still was required to pay to the federal government its 50 percent share of all collections, including the $50 pass-through.

The federal Deficit Reduction Act of 2005 (DRA), among other things, provided states with increased flexibility to pass through more child support dollars to children who currently receive TANF-funded assistance. In particular, the DRA provides that the federal government will share in the cost of the disregard, up to the first $100 a month paid to TANF families with one child and $200 for families with two or more children.

Significant uncollectible child support in California. In almost all cases, child support orders should be based on the actual income of a party to ensure they best represent the parties’ ability to pay and are collectible. In actuality, orders are often set by default, and where no income information is known about the obligor parent, support can be set based on minimum wage income, which still may be an uncollectible amount, depending on the income and assets of the child support obligor. Unpaid child support, like all unpaid money judgements, accrues interest at the rate of 10% per year. (Code of Civil Procedure Section 685.010.) The Urban Institute’s Collectibility Study, although approximately 15 years old, still sheds light on the Collectibility of child support arrears owed for families receiving public assistance. ( Elaine Sorensen, Examining Child Support Arrears in California: The Collectibility Study, Urban Institute (March 2003).) That report found that, as of March 2000, $14.4 billion was owed in past-due child support and that 28% of the child support debtors held 72% of the debt. Sixty percent of the debtors had either no income or annual income below $10,000. Moreover, 70% of the debt was owed for past-due public assistance assigned to the county. In other words, 70 percent of the money owed would not be going to families, but instead would go to the government to recoup the assistance paid to the family. Much of that child support debt was clearly never going to be paid, although it would still accrue interest at 10% a year.

Children and families benefit from child support they can count on every month, not large, uncollectible arrears, especially when owed to the government for recoupment of aid. Families, particularly low-income families who have left the CalWORKs program, rely on timely child support payments to survive. Unfortunately, large uncollectible arrears can actually make it more difficult to collect ongoing child support and cause harm to families both financially and emotionally. The following, while taken from a report on incarcerated child support obligors, applies also to obligors with large child support debt, particularly debt owed to the state for public assistance recoupment and not to the family:

Most people agree that parents should support their children to the best of their ability. However, children receive the most benefit from reliable long-term support from their parents, even if those payments are modest. The key to regular child support payments is steady employment. . . . Those who cannot maintain steady employment and keep up with their child support obligations fall deeply into debt, and their children lose out. . . .

When researchers from the Urban Institute asked recently released men what kept them from returning to prison, the largest percentage singled out support from their families and seeing their children as the most important factors: ties with family and children mattered even more than housing or employment. Strong family relationships are positively correlated with maintaining employment, staying away from drugs, and rebuilding a social network after incarceration—practices that also make society safer and save taxpayers money. Yet, when parents walk away from jobs, they often pull away from their children. Parents who see no end in sight to their child support debts are less likely to remain in low- wage jobs, to comply with child support obligations in the future, or to reunite with their children and reintegrate into society.

(Kristen D. Levingston and Vicki Turetsky, Debtor’s Prison – Prisoners’ Accumulation of Debt as a Barrier to Reentry, 41 Clearinghouse Review 187, 194-95 (July-Aug. 2007) (footnotes omitted)).

These same concerns were raised in a very recent study of child support policies from Maryland. That study found:

Unrealistic child support policies and practices entangle poor African American men and their families in poverty and have become a destabilizing force in the Baltimore community. Child support orders set beyond the ability of noncustodial parents to comply push them out of low-wage jobs, drown them in debt, hound them into the underground economy, and chase them out of their children’s lives. . . .

There is broad consensus that both parents should contribute to their children’s support when living apart, and custodial parents should not have to bear the sole burden of support. Most noncustodial parents want to provide for their children, and most do pay child support. Consistent, on-time payments can help low- income families increase their economic stability and improve family relationships. However, families do not benefit when parents cannot afford to pay their orders. Falling behind on child support payments can exacerbate family hardship and tensions, driving a wedge between the parents and pushing noncustodial parents away from their children—the exact opposite of what the child support program is set up to do.

(Vicky Turetsky, Reforming Child Support to Improve Outcomes for Children and Families, Abel Foundation (June 2019), Executive Summary.) That report developed three evidence-based strategies that underlie all the report’s recommendations to improve outcomes for children and families:

• Set child support orders that reflect parents’ actual ability to pay;
• Reduce uncollectible child support debt; and
• Ensure that children, not the state, receive the money when their parents pay child support.

This bill focuses on the latter two strategies to help custodial and noncustodial parents and their children.

This bill increases child support passed through and disregarded to needy families. This bill, seeking to benefit low-income families, increases the pass-through and disregard for families receiving CalWORKs to the maximum amount in which the federal government will share, up to $100 a month for families with one child and $200 for families with two or more children. This bill takes advantage of the federal option under the federal Deficit Reduction Act to redirect more child support funds towards children on CalWORKs.

The Center for Law and Social Policy (CLASP) and Policy Studies Inc. suggest several advantages for implementing the pass-through and disregard options in the DRA. They assert that the changes improve child support compliance by encouraging noncustodial parents to work and pay child support. They cite studies from Wisconsin that suggests that when child support is passed through and disregarded to families receiving TANF cash assistance, more noncustodial parents pay support and they pay more support. Additionally, they cite the same research for demonstrating that an enhanced pass-through reduces noncustodial parents’ participation in the underground economy and provides an incentive for them to pay through the formal child support system. (CLASP and Policy Studies, Inc., More Child Support Dollars to Kids: Using New State Flexibility in Child Support Pass-Through and Distribution Rules to Benefit Government and Families (July 2006).) Thus, increasing the pass-through and disregard encourages essential bonds – both financial and emotional – between noncustodial parents and their children.

CLASP also states that an increased pass-through and disregard compliments broader work and poverty reduction strategies by assisting families in making the transition from welfare to work and increasing the financial security for families while they receive TANF benefits. Finally, they state that the pass-through and disregard changes will improve child support program performance and increase federal incentive payments for states while simplifying the program. Additionally, a study by the Urban Institute found that expanded pass-through and distribution policies reduce costs in other programs. (Urban Institute, Benefits and Costs of Increased Child Support Distribution to Current and Former Welfare Recipients (2005).)

Several states, including Illinois, Montana, New Jersey, New York, and Pennsylvania, have increased the amount of money they pass through to families to take advantage of the increased federal pass through and disregard options. In addition, one state, Colorado, has opted to send 100 percent of child support to families and to pay back the federal government’s portion directly. According to the sponsors, although this program was implemented just a year ago, initial results are promising: the total amount of child support payments have increased by 63%.

This part of the bill is nearly identical to AB 1654 (Bonilla), 2014, which passed this Committee and this House, but was held on the suspense file in the Senate Appropriations Committee.

This bill also ends the requirement that families assign their pre-assistance child support payments to the state in order to receive CalWORKs benefits. When families apply for CalWORKs today they are required to assign to the state their rights to any child support owed before and during the assistance period and to cooperate with local child support agencies in enforcement efforts. Prior to PRWORA, welfare recipients were required to assign to the state, as a condition of receiving aid, both their pre- and post- assistance child support obligation, from which the state could refund itself the welfare it paid to the family. Since PRWORA, states have been able to discontinue those assignments and treat any child support collected for the family as if the support obligation had never been assigned to the state. (42 U.S.C. Section 657 (b).)

This bill takes advantage of the federal option and ensures that more child support can reach children by limiting the assignment to the state of any rights to child support only to support that accrues during the period of time that the applicant is receiving CalWORKs assistance.  The bill also discontinues any assigned rights to support, with respect to applications received before October 1, 2009, that accrued before the applicant received aid. All of this is done in compliance with federal law and to ensure that child support payments benefit children and families.

However, as currently drafted, DCSS has raised the possibility that this provision actually eliminates the state’s ability, discussed below, to forgive and erase uncollectible arrears that today are owed to the state. The author and the sponsors are continuing to work with DCSS on this issue and if concerns about otherwise uncollectible debt being impossible to eliminate cannot be adequately addressed, this Committee suggests that this provision of the bill be deleted from the bill as the bill moves forward.

This bill allows DCSS and LCSAs to deem some debt owed to the state for public assistance recoupment to be uncollectible. As discussed above, the overwhelming majority of outstanding public assistance payback debt is owed by extremely poor people with tens of thousands of dollars in debt originating from orders that often were too onerous for them to meet, given their financial circumstances. Most of this debt will never be collected, and stopping collection efforts on uncollectible debt would allow DCSS and the LCSAs to focus their efforts on collecting current payments for families in which the obligors have the means to pay their outstanding debt.

There is an existing program to compromise uncollectible debt owed to the state for public assistance reimbursement under Family Code Section 17560. The amount of the compromise takes into account the obligor's ability to pay and must be in the best interest of the state. However, that program has not been used often and has done little to reduce the child support program’s uncollectible debt owed to the state.

This bill creates what hopefully will be a more successful alternative to the existing compromise of arrears program by first refining the definition of “child support delinquency” to exclude past due child support owed to the state that the LCSA or DCSS determines is uncollectible. In determining what “uncollectible” means, the bill requires that DCSS or the LCSA consider all of the following factors:

• • Income and assets available to pay the arrearage or otherwise past due amount;
  • Source of income;
  • Age of arrearage or otherwise past due amount;
  • The number of support orders;
  • Employment history;
  • Payment history;
  • Incarceration history;
  • Whether the order was based on imputed income; and
  • Other readily ascertainable debts.

To help the LCSAs implement these determinations uniformly across the state, the bill authorizes DCSS to implement and administer these uncollectible determinations through a child support services letter or similar instruction until DCSS adopts required regulations by July 1, 2022.

In addition, the bill provides for two situations where debt owed to the state must be deemed uncollectible, consistent with federal regulations. They are:

• 1. The noncustodial parent is living with the minor child as the primary caregiver or in an intact two parent household, and the LCSA has determined that services are not appropriate or are no longer appropriate; or
  2. The noncustodial parent’s sole income is from SSI, Social Security Disability Insurance (SSDI), or Cash Assistance Program for Immigrants.

In these two instances where debt must be deemed uncollectible, the child support agency is allowed under federal law to stop all enforcement efforts and close the case. (45 CFR Section 303.11 (b)(5), (9).) In the first instance, any money taken from the obligor parent – now the custodial parent – will limit support for the very child who is subject to the order and will likely harm the child. But this is not an automatic determination of uncollectibility. The LCSA must determine that enforcement services are not appropriate. Thus, if the obligor, now custodial, parent is wealthy and can easily both support their child and repay the families’ public assistance debt, the LCSA would not determine that services are not appropriate and would continue to collect the past-due support. However, in most of these cases, the now custodial parent will not be able to both support their minor child and repay the public assistance without impoverishing the child. In the second automatic uncollectibility determination, the obligor parent is receiving SSI, or equivalent, which, by definition, means that the obligor is aged, blind, or disabled, and has little or no income or assets. These are safety-net programs and recipients simply do not have the ability to repay the back support – and SSI rules prohibit its garnishment for child support purposes.

The non-automatic determination of “uncollectibility” will require DCSS to develop implementing guidelines so that the program can operate uniformly across the state and low-income obligors will not have their lives ruined in an attempt to pay back public assistance owed to the state that the obligor has little or no ability to repay. This should allow for low-income obligors to go on with their lives, survive, and hopefully remain close to their children. It will also get uncollectible child support off the state’s books and allow the child support program to focus its efforts on collecting reasonable support that benefits families.

Arguments in support: A coalition of organizations that serve children and low-income family’s write in support (footnotes omitted):

California has one of the highest rates of poverty in the Country. Rates of poverty are even higher for California’s children of color. Child support payments not only help families make ends meet, but research shows that child support allows families to stop receiving public benefits, remain off public benefits, and exit poverty. But California’s current child support policies undermine the anti-poverty effects of child support payments. Research has shown that fathers who have child support payments they can afford are more likely to pay them.

Research has also shown that when more of a parents’ child support payments go to their children, parents are more likely to pay, and to pay more. In just over a year since enacting a law requiring that 100% of child support payments go to children (Colorado SB 337), Colorado is reporting that the total amount of parents’ child support payments increased by 63 percent. Both more consistent and higher payments have driven this incredible growth. A detailed evaluation of this policy is forthcoming, but results from increasing the amount of child support going to families are expected to include the following improvements: increased compliance, increased payment amounts, greater willingness for mothers to cooperate with child support, reduced reliance on other forms of public benefits, and reduced tension between parents.

Simply put, by redirecting low-income parents’ child support payments to repay public assistance instead of passing them through to their children, and by loading non-custodial parents with debt and unreasonable, government-owed child support orders, California is undermining its efforts to reduce child poverty.

REGISTERED SUPPORT / OPPOSITION:

Support

All of Us or None (co-sponsor)

Anti-Recidivism Coalition (co-sponsor)

Good+ Foundation - Fatherhood Initiative (co-sponsor)

Insight Center for Community Economic Development (co-sponsor)

Legal Services for Prisoners with Children (co-sponsor)

PolicyLink (co-sponsor)

San Francisco Financial Justice Project (co-sponsor)

Tipping Point Community (co-sponsor)

Western Center on Law and Poverty (co-sponsor)

A New Way of Life Re-Entry Project
Bay Area Legal Aid
Center for Employment Opportunities
City and County of San Francisco - Treasurer's Office, Financial Justice Project

Coalition of California Welfare Rights Organizations
Community Coalition
Lawyers' Committee for Civil Rights
Legal Services of Northern California
Milpa (Motivating Individual Leadership For Public Advancement)
National Association of Social Workers, California Chapter
Parent Voices
Public Interest Law Project
Root & Rebound
Rubicon Programs

San Bernardino Fatherhood

Opposition

None on file

Analysis Prepared by: Leora Gershenzon / JUD. / (916) 319-2334

Date of Hearing: June 18, 2019

ASSEMBLY COMMITTEE ON HUMAN SERVICES

Eloise Gómez Reyes, Chair

SBPCA Bill Id:SB 337

Author:(Skinner) – As Amended Ver:May 17, 2019

SENATE VOTE: 38-0

SUBJECT: Child support

SUMMARY: Raises the California Work Opportunity and Responsibility to Kids (CalWORKs) child support disregard from the first $50 per month to the first $100 per month for a family with one child, or the first $200 per month for a family with two or more children; places certain limitations, for CalWORKs applications received before October 1, 2009, on the assignment of rights to child support to the county for CalWORKs applicants or recipients; and, to the extent permitted by federal law, excludes an arrearage or otherwise past-due amount that is determined to have been established in error or to be uncollectible from the definition of “child support delinquency.” Specifically, this bill:

1. States Legislative intent to increase the amount of child support payments received and to strengthen family unity between children and their noncustodial parent, thereby improving the health and well-being of low-income children.
2. Exempts from inclusion in the definition of “child support delinquency,” to the extent permitted by federal law, an arrearage or otherwise past-due amount that a local child support agency or the Department of Child Support Services (DCSS) determines was established in error or has determined to be uncollectible.
3. Requires DCSS, in determining the meaning of “uncollectible” for purposes of arrearages and otherwise past due amounts owed to the state, to consider a number of factors including, among others and as specified: income and assets available to pay the arrearage or otherwise past due amount, source of income, age of arrearage or otherwise past due amount, and incarceration history.
4. Requires DCSS to adopt regulations to implement the provisions of this bill and current law related to child support delinquencies by July 1, 2020, and authorizes DCSS to implement and administer those provisions through a child support services letter or similar instruction until such regulations are adopted, as specified.
5. Increases, when child support is collected on behalf of a CalWORKs recipient in payment of the required support obligation, the amount that must be passed through to the recipient from the first $50 per month to the first $100 per month for a family with one child, or the first $200 per month for a family with two or more children, as specified.
6. Requires, for CalWORKs applications received prior to October 1, 2009, an applicant’s or recipient’s assignment of rights to child support to the county to apply only to support that accrues during the period of time that the applicant is receiving CalWORKs assistance and, further, requires any assigned rights to support that accrued prior to receiving aid to be discontinued, as specified.
7. Prohibits a continuous appropriation, as specified, from being made for purposes of implementing the provisions of this bill.
8. Makes technical changes, including deleting outdated language.

EXISTING LAW:

1. Establishes in federal law the Temporary Assistance for Needy Families (TANF) program, which provides block grants to states to develop and implement their own state welfare-to-work programs designed to provide cash assistance and other supports and services to low-income families. (42 United States Code Section [U.S.C.] 601 et seq.)
2. Establishes the state’s TANF program, the CalWORKs program. CalWORKs provides cash assistance and other supports and services to low-income families and is administered by the counties. (Welfare and Institutions Code [WIC] Section 11200 et seq.)
3. Establishes income, asset, and real property limits used to determine eligibility for the CalWORKs program, and CalWORKs grant amounts, based on family size and county of residence. (WIC 11150 to 11160, 11450 et seq.)
4. Requires any CalWORKs recipient who is required to participate in welfare-to-work activities to enter into a written welfare-to-work plan with the county welfare department, requires the welfare-to-work plan to include the activities and services which will move the recipient into employment, establishes additional requirements related to the plan, and delineates allowable welfare-to-work activities, as specified. (WIC 11325.21, 11322.6)
5. Requires a county to, at the time an individual applies for CalWORKs, or a recipient’s eligibility is determined, provide program information, including a description of the responsibility of the participant to cooperate in establishing paternity and enforcing child support obligations, and to assist individuals in establishing paternity and obtaining child support as a condition of eligibility. (WIC 11324.8)
6. Requires, as a condition of eligibility for CalWORKs aid, each applicant or recipient to assign to the county any rights to support from any other person the applicant or recipient may have on their own behalf or on behalf of any other family member for whom the applicant or recipient is applying for or receiving aid, not exceeding the total amount of CalWORKs cash assistance provided to the family, as specified. Further, stipulates that, for applications received on or after October 1, 2009, the assignment shall apply only to support that accrues during the period of time that the applicant is receiving CalWORKs assistance. (WIC 11477 (a)(1))
7. Requires support that has been assigned pursuant to CalWORKs rules and that accrues while the family is receiving CalWORKs aid to be permanently assigned until the entire amount of aid paid has been reimbursed. (WIC 11477 (a)(2))
8. Requires, as a condition of eligibility for CalWORKs aid, each applicant or recipient to cooperate with the county welfare department and local child support agency in establishing the paternity of a child of the applicant or recipient born out of wedlock with respect to whom aid is claimed, and in establishing, modifying, or enforcing a support order with respect to a child of the individual for whom aid is requested or obtained, unless the applicant or recipient qualifies for a good cause exception, as specified. (WIC 11477 (b)(1))
9. Requires the county welfare department to determine if an applicant or recipient has good cause for noncooperation with CalWORKs child support rules prior to referral of the applicant or recipient to the local child support agency for child support services, as specified. (WIC 11477.02)
10. Requires a county department, in cases in which the paternity of a child has not been established to the satisfaction of that department, to refer the applicant to local child support agency at the time the application is signed, as specified. (WIC 11479).
11. Requires money from noncustodial parents paid for child or spousal support with respect to whom an assignment has been made per CalWORKs rules to be paid directly to the local child support agency and not directly to the family, as specified. (WIC 11457)
12. Requires the first $50 of any amount of child support collected in a month in payment of the required CalWORKs support obligation to be paid to the CalWORKs recipient, as specified. (Family Code [FAM] Section 17504)
13. Defines, in federal law, “excepted portion,” for purposes of the TANF program, to mean that portion of the amount of support collected on behalf of a family during a month that does not exceed $100 per month, or in the case of family that includes two or more children, that does not exceed $200 per month. (42 U.S.C. 657 (a)(6)(B)(ii))
14. Exempts states from being required, in cases where a family receives TANF assistance from the state, to pay the federal government the federal share of the excepted portion of any amount collected on behalf of the family during any month in which the state pays the excepted portion to the family and the excepted portion is disregarded in determining the amount and type of assistance provided to the family, as specified. (42 U.S.C. 657 (a)(6)(B)(i))
15. Stipulates that any month in which the cost of CalWORKs cash aid provided to a recipient for the month is fully reimbursed by child support shall not be counted as a month of receipt of aid for purposes of CalWORKs time limits, as specified. (WIC 11454.5 (a)(3))
16. Defines “child support delinquency” to mean an arrearage or otherwise past due amount that accrues when an obligor fails to make any court-ordered support payment when due, which is more than 60 days past due, and the aggregate amount of which exceeds $100. (FAM 17500 (c))
17. Requires the local child support agency to submit child support delinquencies to DCSS for purposes of supplementing the collection efforts of the local child support agencies, as specified. (FAM 17500)

FISCAL EFFECT: According to the Senate Appropriations Committee on May 16, 2019, this bill may result in revenue loss for the state in the tens of millions of dollars annually, as well as automation costs for DCSS, and administrative costs for the California Department of Social Services. This bill may also result in potential cost savings, in the low millions of dollars, from a reduction in workload associated with excluding arrearage.

COMMENTS:

CalWORKs: CalWORKs is the state’s TANF program, providing eligible low-income families with cash grants and supportive services aimed at helping them to secure education, training, and employment. CalWORKs is administered at the county level; it is funded largely through the federal TANF block grant and state maintenance-of-effort contributions. Families participating in CalWORKs have access to a range of services that can include child care and services aimed at addressing mental health needs, substance use disorders, experiences of domestic violence, and learning disabilities, among other issues. Unless deemed exempt or otherwise not required to participate per CalWORKs rules, parents are required to develop and participate in a welfare-to-work plan. CalWORKs-approved welfare-to-work activities can include public or private sector subsidized or unsubsidized employment; on-the-job training; community service; secondary school, adult basic education and vocational education and training when the education is needed for the recipient to become employed; specific mental health, substance abuse, or domestic violence services if they are necessary to obtain or retain employment; and a number of other activities necessary to assist a recipient in obtaining unsubsidized employment.

A number of changes to the CalWORKs program were adopted with the passage of SB 1041 (Senate Committee on Budget and Fiscal Review), Chapter 47, Statutes of 2012. These changes included the establishment of the 24-month time clock. Unless exempted per CalWORKs rules, an adult recipient is expected to participate in welfare-to-work activities during the up to 48 months for which they may receive assistance. For 24 of those 48 months, welfare-to-work participation requirements can include a broad range of activities, such as employment, training, education, and mental health, domestic violence, and substance use disorder services. Once this 24-month time clock “runs out,” CalWORKs welfare-to-work participants must meet the more stringent federal TANF requirements in order to maintain their eligibility for aid. If a CalWORKs recipient does not meet the requirements of their welfare-to-work plan and does not have a permissible exemption or exception to those requirements, they are subject to sanction; sanction results in an individual’s portion of the family’s grant being subtracted from the total grant amount provided to the family to meet basic needs.

The current maximum CalWORKs grant for a family of three living in a high-cost county, if the family has no other income, is $785 per month. However, many families earn some income and do not qualify for the maximum grant amount. For Fiscal Year (FY) 2018-19, the average monthly CalWORKs cash grant is estimated to be $568 per household. In FY 2017-18, the average monthly CalWORKs caseload was 423,121 households.

Child support: Noncustodial parents are often responsible for paying child support payments to custodial parents and their children. A “child support order” is the amount of child support that a noncustodial parent is required to pay. In California, these orders can be established in one of two ways: privately, using an attorney or during divorce proceedings; or using the state child support system to help establish an order. The state child support program, administered by DCSS and run locally through 49 local child support agencies (LCSAs), establishes child support orders and collects payments from noncustodial parents to distribute to custodial parents and their children. The state government pays one-third of the costs of child support services, and the federal government pays two-thirds.

CalWORKs and child support: The state must, per federal TANF law, collect child support on behalf of custodial parents who receive CalWORKs; therefore, when families apply for CalWORKs, they are required to assign any rights to support over to the county. The child support payments subsequently received are distributed to the state and federal governments to reimburse the costs of CalWORKs benefits. However, there is a monthly $50 disregard, whereby the first $50 of support collected is passed through to the family on whose behalf the support was collected. Per federal law, states can disregard up to the first $100 per month of collected child support for families with one child, and up to the first $200 per month for families with two or more children. (States can pass through a higher amount, but would be required to pay the federal government a share of that amount.) Once a custodial parent exits CalWORKs, DCSS is required to continue enforcement of the support order, although the custodial parent can choose to not use the continued services of DCSS.

Of the child support cases maintained by the state’s child support program in federal fiscal year 2017-18, 77% were CalWORKs cases – with 19% of the total being current CalWORKs cases and 58% being former CalWORKs cases. A March 2019 report by the Legislative Analyst’s Office found that, “In 2017-18, the state collected $410 million in child support on behalf of former and current CalWORKs families. Of this amount, $368 million was collected as CalWORKs recoupment that was used to reimburse the state ($168 million), counties ($23 million), and federal ($176 million) governments…Of the remaining amount, $12 million was passed through to CalWORKs families.”

Prior to October 1, 2009, families receiving CalWORKs were required to assign their pre-assistance child support arrears (money owed) to the county as a condition of eligibility. However, the Federal Deficit Reduction Act of 2005, limited, as of October 1, 2009, the assignment of support rights to the amount of support accruing during the period a family receives assistance; therefore, on and after October 1, 2009, CalWORKs applicants who are owed child support arrearages that accumulated when they were not receiving CalWORKs cash aid do not have to assign those arrears in order to be eligible for CalWORKs.

Need for this bill: This bill seeks to raise the CalWORKs child support disregard from the first $50 per month to the first $100 per month for a family with one child, or the first $200 per month for a family with two or more children, thereby allowing for the maximum pass-through permitted by federal law. This bill would also limit, for CalWORKs applications received before October 1, 2009, the assignment of rights to the county to support that accrues during the time an applicant is receiving CalWORKs – this would parallel the current restrictions placed on the assignment of rights for CalWORKs applications received on or after October 1, 2009, as a result of implementation of the Federal Deficit Reduction Act of 2005. Additionally, this bill would, to the extent permitted by federal law, exclude for all child support cases (and not just CalWORKs cases) an arrearage or otherwise past-due amount that is determined to have been established in error or to be uncollectible from the definition of “child support delinquency.”

According to the author, “The ‘Child Support Reform Act,’ seeks to ensure that low-income families receive the first $100 of child support for one child, and the first $200 for two or more children to which they are entitled. This payment structure is to align with Federal law in regards to income-disregard, thus not effecting their eligibility for social services. The act, [this bill], would overturn a decades-old law under which child-support payments meant for families who receive CalWORKs benefits go to the state rather than to the families and children who need it most.

“The Child Support Reform Act will right a historic wrong. Last year, more than 1.2 million California children living in or near poverty did not receive the full child support payments made by their parents. California must stop taking the lion’s share of support payments that rightfully belong to families and kids.”

Double referral: This bill will be referred to the Assembly Judiciary Committee should it pass out of this committee.

RELATED AND PRIOR LEGISLATION:

AB 1092 (Jones-Sawyer) of 2019 provides that if child support is assigned to the county, the DCSS or the LCSA may not charge interest on the principal amount owed. AB 1092 is awaiting hearing in the Senate Judiciary Committee.

SB 380 (Bradford), Chapter 729, Statutes of 2017, allowed, in certain instances, a CalWORKs assistance unit to receive the full child support payments for a stepsibling or half-sibling in that unit, and prohibited those child support payments from impacting CalWORKs eligibility or benefit level determination.

AB 1654 (Bonilla) of 2014 would have increased the amount of monthly child support passed through to CalWORKs recipients from $50 per family to $100 for a family with one child or $200 for a family with two or more children. AB 1654 was held on the Senate Appropriations Suspense File.

REGISTERED SUPPORT / OPPOSITION:

Support

All of Us or None (Sponsor)
Anti-Recidivism Coalition (Sponsor)
Good+ Foundation - Fatherhood Initiative (Sponsor)
Insight Center for Community Economic Development (Sponsor)
Legal Services for Prisoners with Children (Sponsor)
PolicyLink (Sponsor)
San Francisco Financial Justice Project (Sponsor)
Tipping Point Community (Sponsor)
Western Center on Law & Poverty, Inc. (Sponsor)
Bay Area Legal Aid
Center for Employment Opportunities
Community Coalition
Legal Services of Northern California
National Association of Social Workers, California Chapter
Parent Voices
Root & Rebound

Opposition

None on file

Analysis Prepared by: Daphne Hunt / HUM. S. / (916) 319-2089

 THIRD READING  

Bill No: SB 337

Author: Skinner (D)

Amended: 5/17/19

Vote: 21

SENATE HUMAN SERVICES COMMITTEE: 6-0, 4/8/19

AYES: Hurtado, Stone, Beall, Jackson, Pan, Wiener

SENATE JUDICIARY COMMITTEE: 9-0, 4/23/19

AYES: Jackson, Borgeas, Allen, Caballero, Jones, Monning, Stern, Umberg, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/16/19

AYES: Portantino, Bates, Bradford, Hill, Jones, Wieckowski

SUBJECT: Child support

SOURCE: Anti-Recidivism Coalition

Good Foundation

Insight Center for Community Development

PolicyLink

Tipping Point Community

Western Center on Law & Poverty

DIGEST:

This bill increases the amount of child support passed through to custodial parents and disregarded as income for California Work Opportunities and Responsibility to Kids (CalWORKs) recipients and provides for the expungement of child support debt that was established in error or is unlikely to be collected. The bill also discontinues any assigned rights to support for CalWORKs applications received before October 1, 2009, as specified.

ANALYSIS:

Existing federal law:

1. Establishes the Temporary Assistance for Needy Families (TANF) program to provide cash aid and welfare-to-work services to eligible families and permits states to implement the program under a state plan. (42 USC 601 et seq.)
2. Provides an option for states to pass through to custodial parents receiving TANF benefits up to the first $100 in child support collected for one child and up to $200 for two or more children and to disregard those amounts when calculating TANF eligibility and grant amounts. (42 USC 657)
3. Permits a state to discontinue the assignment of a support obligation and treat amounts collected pursuant to the assignment as if the amounts had never been assigned and distribute the amounts to the family, as specified. (42 USC 657 (b))

Existing state law:

1. Establishes in state law the CalWORKs program to provide cash assistance and other social services for low-income families through the federal TANF program. Under CalWORKs, each county provides assistance through a combination of state, county and federal TANF funds. (WIC 10530, 11200)
2. Requires that any month in which a number of conditions exist, including in which the cost of the CalWORKs cash aid provided to the recipient for the month is fully reimbursed by child support, whether collected in that month or any subsequent month, shall not be counted as a month of receipt of aid for the purposes of the CalWORKs 48-month time limit. (WIC 11454.5 (a)(3))
3. Requires money from noncustodial parents for child or spousal support shall be paid directly to the local child support agency and shall not be paid directly to the family, as specified. (WIC 11457 (a))
4. Requires a CalWORKs applicant or recipient, as a condition of eligibility for aid, to assign to the local child support agency all rights to child support payments received on behalf of a child in the CalWORKs assistance unit and requires the applicant or recipient to cooperate in establishing the paternity of that child and in establishing, modifying, or enforcing a support order with respect that child, as specified. (WIC 11477)
5. Requires CalWORKs applicants that applied before October 1, 2009 to assign to the county any rights to support from any other person the applicant or recipient may have on his or her own behalf or on behalf of any other family member for whom the applicant or recipient is applying for or receiving aid, not exceeding the total amount of cash assistance provided to the family under this chapter as specified. (WIC 11477 (a)(1)(A))
6. Requires that if income of child only case is reasonably anticipated income derived from child support, the first $50 of child support received each month shall not be considered income or resources and shall not be deducted from the amount of aid to which the assistance unit otherwise would be eligible. (WIC 11477(c)(3))
7. Entitles the state to the amount of CalWORKs aid repaid to the state by means of child support collections, except to the extent that county and federal funds were expended, during which instances the federal government and/or county shall be entitled to a share of the amount received or recovered, as specified. (WIC 11487)
8. Provides that CDSS and the local child support agency shall have the responsibility for promptly and effectively collecting and enforcing child support obligations, as specified. (FAM 17500 (a))
9. Requires the local child support agency to submit child support delinquencies to the Department of Child Support Services (DCSS) for purposes of supplementing the collection efforts of the local child support agencies, as specified. Defines “child support delinquency” as an arrearage or otherwise past due amount that accrues when an obligor fails to make any court-ordered support payment when due, which is more than 60 days past due, and the aggregate amount of which exceeds $100. (FAM 17500 (c))
10. Requires the local child support agency to pass through the first $50 of any amount of child support collected on behalf of a child included in a CalWORKs assistance unit to the recipient family and disregards that amount when calculating income or resources for purposes of determining eligibility and establishing the family's grant amount. (FAM 17504)

This bill:

1. States Legislative intent to increase the amount of child support payments received and to strengthen family unity between children and their noncustodial parent, thereby improving the health and well-being of low-income children.
2. Refines the definition of “child support delinquency,” to the extent permitted under federal law, to not include an arrearage or otherwise past due amount that the local child support agency or department determines was established in error or has determined to be uncollectible.
3. Requires DCSS to consider specified factors in determining the meaning of “uncollectible” for purposes of arrearages and otherwise past due amounts owed to the state, consistent with specified federal regulation.
4. Authorizes DCSS to implement and administer these provisions through a child support services letter or similar instruction until regulations are adopted by July 1, 2020.
5. Increases the amount of child support that a local child support agency must pass through to a CalWORKs recipient family and disregards that amount for purposes of determining CalWORKs eligibility and calculating the family's grant amount from $50 for all families to $100 for a family with one child and to $200 for a family with two or more children, as specified.
6. Requires that the assignment to the county of any rights to support shall apply only to support that accrues during the period of time that the applicant is receiving CalWORKs assistance, and shall not exceed the total amount of cash assistance provided to the family.  Further requires that any assigned rights to support that accrued prior to receiving aid shall be discontinued, as specified.
7. Discontinues any assigned rights to support, with respect to applications received before October 1, 2009, that accrued before the applicant received aid.
8. Makes technical and conforming amendments.

Background

This bill seeks to ensure that low-income families on CalWORKs receive more of their child support payments. SB 337 would align California law with Federal law and allow CalWORKs families to receive $100 in child support for one child and $200 for two or more children (instead of the current amount of $50). According to the author, “Last year, more than 1.2 million California children living in or near poverty did not receive the full child support payments made by their parents. California must stop taking the lion’s share of support payments that rightfully belong to families and kids.”

CalWORKs. The CalWORKs program was created after the passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996. PRWORA transformed public assistance in the United States with a new emphasis on moving public assistance recipients from welfare to work. The reform instituted requirements and restrictions on eligibility (including time limits, work requirements, and participation rates) and gave states discretion to structure programs, as long as the program meets basic requirements.

Today, the CalWORKs program provides time-limited monthly income assistance and employment-related services aimed at moving children out of poverty and helping families meet basic needs. CalWORKs cash assistance is conditioned on participating on program activities.

Child Support Program. In California, the child support program is administered by DCSS, and 49 local child support agencies carry out child support enforcement duties at the county level. The state’s Child Support Program collects child support from noncustodial parents for the purpose of establishing child support orders; collecting child support payments from noncustodial parents; and distributing collected child support to custodial parents and their children.

The Child Support Program serves approximately one in ten Californians. According to DCSS, 26 percent of custodial families live in poverty and 77 percent of the DCSS caseload are current or former recipients of public assistance. In 2018, the average monthly child support distributed was about $300.

Under federal law, families receiving public assistance via TANF (which is the block grant that funds CalWORKs) must cooperate with efforts to establish and enforce child support payments. In addition, recipients must assign their rights to child support payments to the state and the state will collect the child support payments on behalf of the custodial parent.

There are complex federal rules for determining how child support collections are allocated between CalWORKs families and the government. As a general rule, child support paid while a family receives assistance may be retained by the state (47.5 percent) and shared with the county (2.5 percent) and federal (50 percent) government.

For the purpose of CalWORKs grant calculations, federal law permits states to “pass through” and “disregard” all child support dollars to children who currently receive TANF-funded assistance. However, the federal government will only share in the cost of the disregard, up to the first $100 a month paid to TANF families with one child and $200 for families with two or more children. This law took effect October 1, 2008, however, California has not modified its laws pertaining to the pass through and disregard since it was established via AB 196 (Kuehl, Chapter 478, Statutes of 1999).

Therefore, under current state law, children receiving aid through CalWORKs, Medi-Cal, or foster care, who are also receiving child support are permitted to keep only the first $50 of a child support payment. This is referred to as the $50 “pass through.” The state keeps the remaining balance of the child support payment as reimbursement to the state and federal government for costs associated with TANF assistance provided to custodial family.

Additionally, California has adopted a $50 “disregard” for child support payments, which permits the $50 of the child support payment that is “passed through” to the CalWORKs recipient to be disregarded when determining CalWORKs eligibility and grant amounts.

This bill increases the disregard and pass through from $50 to $100 for a family with one child and to $200 for a family with two or more children. There is evidence that when more of parents’ child support payments go to their children, parents are more likely to pay, and to pay more. Colorado enacted a law requiring 100 percent of child support payments go to children (Colorado SB 337) about a year ago. Colorado reports that child support payments increased by 63 percent. Early indicators suggest that increasing the amount of child support given to families is expected to increase compliance, increase payment amounts, reduce reliance on other forms of public benefits, and reduce tension between parents.

Child Support Debt Forgiveness. When a family leaves CalWORKs, the family regains its rights to currently owed child support, and may receive the entire child support payment. However, if the non-custodial parent has been in arrears with child support payments, the state continues collecting and retaining payments as reimbursement for costs associated with welfare benefits paid to the family. Once the arrears are paid, child support collected is paid to custodial family.

According to the sponsors, the overwhelming majority of outstanding public assistance debt is owed by extremely poor people with tens of thousands of dollars in debt originating from orders that often were too onerous for them to meet, given their financial circumstances. A 2003 study prepared by DCSS entitled Examining Child Support Arrears in California: The Collectability Study found that 95 percent of delinquent debt was likely uncollectible. Noncustodial parents making less than $10,000 owed and average of $20,000 due in part to a 10 percent interest rate on late payments. Collectively, these parents’ debt comprised 70 percent of the outstanding child support debt owed to the state.

The bill discontinues any assigned rights to support, with respect to applications received before October 1, 2009, that accrued prior to the applicant receiving aid. Additionally, the bill would, to the extent permitted under federal law, exclude from the definition of “child support delinquency” an arrearage or otherwise past due amount that the local child support agency or department determines was established in error or has determined to be uncollectible. This would give those entities discretion to expunge arrearages deemed erroneously established or uncollectible.

Related/Prior Legislation

AB 1092 (Jones-Sawyer, 2019) limits the interest that may be charged on child support assigned to the county and provides that if child support is assigned to the county, DCSS or the local child support agency may not charge interest on the principal amount owed. This bill is awaiting a floor vote of the full Assembly.

SB 380 (Bradford, Chapter 729, Statutes of 2017) allowed, in certain instances, a CalWORKs assistance unit to receive the full child support payments for a stepsibling or half-sibling in that unit, and prohibited those child support payments from impacting CalWORKs eligibility or benefit level determination.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee, this bill results in revenue loss for the state in the tens of millions of dollars annually, as well as automation costs for DCSS, and administrative costs for CDSS. This bill also results in potential cost savings, in the low millions of dollars, from a reduction in workload associated with excluding arrearage.

SUPPORT: (Verified 5/16/19)

Anti-Recidivism Coalition (co-source)

Good Foundation (co-source)

Insight Center for Community Development (co-source)

PolicyLink (co-source)

Tipping Point Community (co-source)
Western Center on Law & Poverty (co-source)

A New Way of Life Re-Entry Project

Bay Area Legal Aid

Community Coalition For Substance Abuse Prevention And Treatment
MILPA (Motivating Individual Leadership For Public Advancement)
National Association Of Social Workers, California Chapter

Lawyers' Committee for Civil Rights

Legal Services for Prisoners with Children

Legal Services of Northern California

Public Interest Law Project

OPPOSITION: (Verified 5/16/19)

None received

Prepared by: Taryn Smith / HUMAN S. /

5/20/19 11:26:21

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 337 (Skinner) - Child support

Bill Summary:

SB 337 would end the requirement that families assign their child support payments to the state to receive California Work Opportunities and Responsibility to Kids (CalWORKs) benefits, and would provide for the expungement of certain child support debt that is unlikely to be collected.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on May 16, 2019

Fiscal Impact:

This bill would result in revenue loss for the state in the tens of millions of dollars annually, as well as automation costs for the Department of Child Support Services (DCSS), and administrative costs for the California Department of Social Services (CDSS). This bill would also result in potential cost savings, in the low millions of dollars, from a reduction in workload associated with excluding arrearage.

Author Amendments:

Reduce the pass through amount from all child support collected to the first $100 for a family with one child or the first $200 for a family with two or more children.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 337 (Skinner) - Child support

Bill Summary:

SB 337 would end the requirement that families assign their child support payments to the state to receive California Work Opportunities and Responsibility to Kids (CalWORKs) benefits, and would provide for the expungement of certain child support debt that is unlikely to be collected.

Fiscal Impact:

This bill would result in revenue loss for the state in the tens of millions of dollars annually, as well as automation costs for the Department of Child Support Services (DCSS), and administrative costs for the California Department of Social Services (CDSS). This bill would also result in potential cost savings, in the low millions of dollars, from a reduction in workload associated with excluding arrearage. (See Staff Comments for assumptions)

Background:

In California, the child support program is administered by DCSS, and local child support agencies carry out child support enforcement duties at the county level. The state’s Child Support Program collects child support from noncustodial parents for the purpose of establishing child support orders; collecting child support payments from noncustodial parents, and distributing collected child support to custodial parents and their children. According to DCSS, 26 percent of custodial families live in poverty and 77 percent of the DCSS caseload are current or former recipients of public assistance. In 2018, the average monthly child support distributed was about $300.

Under federal law, families receiving public assistance via TANF (which is the block grant that funds CalWORKs) must cooperate with efforts to establish and enforce child support payments. In addition, recipients must assign their rights to child support payments to the state and the state will collect the child support payments on behalf of the custodial parent.

Existing state law requires the local child support agency to pass-through the first $50 of any amount of child support collected on behalf of a child included in a CalWORKs assistance unit to the recipient family and disregards that amount when calculating income or resources for purposes of determining eligibility and establishing the family's grant amount. Existing federal law provides an option for states to pass-through to a custodial parent receiving TANF benefits up to the first $100 in child support collected for one child and up to $200 for two or more children and disregards those amounts when calculating TANF eligibility and grant amounts.

When a family leaves CalWORKs, the family regains its rights to currently owed child support, and they may be receiving the entire child support payment. However, if the non-custodial parent has been in arrears with child support payments, the state continues collecting the payments and continues to retain the payment as reimbursement for costs associated with welfare benefits paid to the family. Once the arrears are paid, any support collected is paid to the family.

Proposed Law:

This bill would:

• State that it is the intent of the Legislature to increase the amount of child support payments received and to strengthen family unity between children and their noncustodial parent, thereby improving the health and well-being of low-income children;
• Exclude, to the extent permitted under federal law, from the definition of “child support delinquency” an arrearage or otherwise past due amount that the local child support agency or department determines was established in error or has determined to be uncollectible, as defined. This bill would authorize DCSS to implement and administer this provision through a child support services letter or similar instruction until regulations are adopted and would be required to adopt regulations to implement these provisions by July 1, 2020;
• Require all the child support collected in a month to be paid to the recipient and prohibit the child support received from being considered income or resources of the recipient family or being deducted from the amount of aid to which the family would otherwise be eligible;
• Discontinue any assigned rights to support, with respect to applications received before October 1, 2009, that accrued before the applicant received aid.

Related Legislation:

AB 1092 (Jones-Sawyer, 2019) would require the parties to a proceeding in which child support is at issue to disclose whether a party is currently receiving or applying for CalWORKs and requires the Department of Child Support Services and local child support agencies, with respect to delinquencies in child support that have been assigned to the county, to charge interest on the principal amount owed at a rate no higher than the rate required by federal law

SB 380 (Bradford, Chapter 729, Statutes of 2017) allows, in certain instances, a CalWORKs assistance unit to receive the full child support payments for a stepsibling or half-sibling in that unit, and prohibits those child support payments from impacting CalWORKs eligibility or benefit level determination.

AB 1502 (Mullin, Statutes of 2014) proposed to streamline CalWORKs eligibility standards for two-parent families. It included removal of the deprivation standard, in addition to changes to work requirements for relative caregivers within the CalWORKs program. The bill did not pass out of Senate Appropriations Committee.

AB 196 (Kuehl, Chapter 478, Statutes of 1999) restructured the state child support enforcement program to make child support enforcement to, among other things, significantly increase accountability and responsibility for the program at all levels of government and maximize collection and delivery of child support to the children and families to whom it is owed. Among the provision of this bill was the $50 pass through and disregard of child support payments for CalWORKs applicants and recipients.

Staff Comments:

Loss of recouped child support: California law requires that the first $50 of any amount of child support collected in a month must pass through to the family and the remaining balance be distributed to Federal, State, and County governments to recover costs for public assistance. In FY 2017-18, an estimated $103 million ($50 million Federal, $50 million State, and $3 million County) in current support was recouped by government agencies from child support cases currently receiving CalWORKs assistance.S If this bill is enacted, all current support collected would instead be distributed to families resulting in an annual general fund revenue decrease.

The federal government shares the cost of pass through with the state up to the first $100 a month paid to families with one child and $200 for families with two or more children. The federal government will share in the cost of pass through up to approximately $17 million federal funds annually based on these thresholds. If this bill is enacted, the state would be required to reimburse the federal share on any amount of child support passed through to families above this amount, which is estimated to be $33 million based upon existing collection volumes. Additionally, the state would need to backfill the counties’ share of lost revenue ($3 million) as this money is used within county budgets.

Expunging arrearage: Discontinuing the enforcement of the caseload in arrearage or closing the cases, would reduce the number of full time equivalent (FTE) staff needed at the Local Child Support Agencies. Defining “uncollectible” as arrears owed on cases that have never made a payment and have no reportable income – approximately 18,000 cases – would result in a reduction of 98 positions for DCSS and an annual cost saving of approximately $11 million ($3.7 million GF). If “uncollectible” is defined as cases that have not paid in the last three years and also have no reportable income – approximately 54,000 cases – DCSS would be able to reduce FTEs by 287, and save an estimated $31 million ($10.5 million GF) in personnel costs.

This bill would allow DCSS to cease the enforcement of “uncollectible” child support arrears, thereby reducing arrears balances by a yet to be determined amount. Although this is not expected to impact existing child support collection volumes as these are cases that are not currently paying support, it would represent a potential loss of foregone revenue in the hundreds of millions to low billions of dollars.

Automation changes: Significant functionality changes in the Child Support Enforcement (CSE) system would need to be made to update how the current child support distribution amounts are calculated and distributed for each custodial parent. These changes would need to be prioritized amongst DCSS’s existing maintenance and operations workload in order to sustain service level objectives and is estimated to take approximately 2 years to implement. This would result in increased workload for DCSS to complete the update.

Administrative workload: This bill would create additional administrative time to explain child support pass-through options to CalWORKs applicants and participants. CDSS would incur costs of $800,000 per year for the increased workload.

-- END --

SENATE JUDICIARY COMMITTEE

Senator Hannah-Beth Jackson, Chair

2019-2020 Regular Session

Bill No: SB 337 (Author:Skinner)

Version: April 11, 2019

Hearing Date: April 23, 2019

Fiscal: Yes

Urgency: No

Consultant: JDT

SUBJECT

Child support

DIGEST

This bill would end the requirement that families assign their child support payments to the state to receive California Work Opportunities and Responsibility to Kids (CalWORKs) benefits, and would provide for the expungement of certain child support debt that is unlikely to be collected.

EXECUTIVE SUMMARY

Existing law requires low-income families who receive assistance from the CalWORKs program to assign to the state their rights to child support. That support, with the exception of $50 which “passes through” to the recipient, is held by the state to reimburse the state and federal governments for the CalWORKs assistance costs. Requiring low-income families to forfeit child support to pay back public assistance harms families in numerous ways, including: lowering payment rates among people who do not want to see their money go to the government instead of their children; driving noncustodial parents to exit the formal economy to avoid wage garnishment; and increasing conflict in already fraught relationships, further disconnecting children and noncustodial parents. Marginally employed, low-income parents who struggle to consistently make payments are forced to pay punitively high interest rates for missed payments, adding to their mounting financial distress and increasing their likelihood of missing payments, exacerbating the problem. These policies make it harder to escape poverty, drive fractured families further apart, and ultimately harm child wellbeing.

This bill would end the state’s policy of recouping costs of the CalWORKs program from child support and would allow these payments to directly benefit children. The bill would also provide for the expungement of certain child support debt that is unlikely to be collected. The bill is sponsored by a coalition of organizations, and has no known opposition. It passed the Senate Human Services Committee by a vote of 6-0.

PROPOSED CHANGES TO THE LAW

Existing federal law:

1. Establishes the federal Temporary Assistance for Needy Families (TANF) program to provide aid to eligible families. (42 U.S.C. § 601 et seq.)
2. Provides an option in federal law for states to pass through to custodial parents receiving TANF benefits up to the first $100 in child support collected for one child and up to $200 for two or more children and to disregard those amounts when calculating TANF eligibility and grant amounts. (42 U.S.C. § 657)

Existing state law:

1. Provides that, as a condition of eligibility for cash assistance, an applicant or recipient must assign to the state their rights to any child support owed at the time of the application and during the receipt of benefits in an amount not to exceed the total cash assistance provided to the family. (Welf. & Inst. Code § 11477.)
2. Establishes the California Work Opportunities and Responsibility to Kids program (CalWORKS) which administers TANF funds to eligible families for welfare-to-work services. (Welf. & Inst. Code § 11200 et seq.)
3. Requires each county to maintain a local child support agency, which is responsible for promptly and effectively establishing, modifying, and enforcing child support obligations. (Fam. Code § 17400.)
4. Requires local child support agencies to pay families receiving cash assistance the first $50 of any child support collected in a month in which child support is due, and that payment cannot be deducted from the amount of assistance to which the family would otherwise be eligible. (Fam. Code § 17504; Welf. & Inst. Code § 11475.3.)

This bill:

1. States that it is the intent of the Legislature to increase the amount of child support payments received and to strengthen family unity between children and their noncustodial parent, thereby improving the health and well-being of low-income children.
2. To the extent permitted under federal law, excludes from the definition of “child support delinquency” an arrearage or otherwise past due amount that the local child support agency or department determines was established in error or has determined to be uncollectible.
3. Requires all the child support collected in a month to be paid to the recipient and prohibits the child support received from being considered income or resources of the recipient family or being deducted from the amount of aid to which the family would otherwise be eligible.
4. Discontinues any assigned rights to support, with respect to applications received before October 1, 2009, that accrued before the applicant received aid.
5. Makes other conforming changes.

COMMENTS

1. Background

In 1975, Congress established the national child support program as Part D of Title IV of the Social Security Act (IV-D Program) to provide funds to states to establish paternity and child support orders and collect and distribute child support obligations. Under the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), a state’s TANF plan must contain an assurance that the state will operate a child support enforcement program pursuant to an approved IV-D plan. Basic responsibility for administering the program is left to the state, but the federal government plays a major role in dictating the major design features, funding, and evaluating state programs. The federal government provides a 66 percent match for any funds a state expends for reimbursable child support enforcement activities. Collections made on behalf of families receiving TANF assistance (and some other cash assistance programs) are shared 50:50 with the federal government.

The Child Support Program was originally designed by Congress as a cost-recovery program to reimburse state and federal governments for public assistance paid to children. However, since the implementation of welfare reform in 1996, the program has focused on family self-sufficiency and getting more child support dollars directly to families.

On February 8, 2006, President Bush signed the Deficit Reduction Act of 2005 (DRA). The DRA made substantial cuts in federal funding for child support enforcement, mandated some additional enforcement activities, and provided new state flexibility to “pass-through” more child support dollars to children who currently receive or formerly received TANF-funded assistance.

Effective October 1, 2008, the federal government waived its 50 percent share of any child support collected on behalf of any TANF-funded family up to $100 per month for families with one child and up to $200 for families with two or more children, regardless of whether the child support is for current support or arrearages.

For current CalWORKs recipients, the first $50 of current support received from the noncustodial parent in the month due is passed through to the CalWORKs family and “disregarded” as income or resources in determining eligibility and grant amount.

The child support program is administered by the Department of Child Support Services (DCSS), and local child support agencies carry out child support enforcement duties at the county level. The state’s child support program collects child support from noncustodial parents for the purpose of establishing child support orders, collecting child support payments from noncustodial parents, and distributing collected child support to custodial parents and their children. Forty-nine local child support agencies work to locate absent parents; certify paternity; establish, enforce, and modify child support orders; and collect and distribute payments. The child support program serves approximately one in every 10 Californians. According to DCSS, 26 percent of custodial families live in poverty, and 77 percent of the DCSS caseload are current or former recipients of public assistance. In 2018, the average monthly child support distributed was about $300.

This bill would increase the current pass-through amount for CalWORKs recipients to the full amount of child support. This bill would also require that the pass-through child support be disregarded as income and resources in determining eligibility and amount of aid.

2. Forfeiting child support to reimburse public assistance programs harms families

The sponsors of this bill recently produced a study on the harms and inefficiencies of the policy of requiring low-income families to sign over their child support rights to the government.^[1] In fiscal year 2017-18, California collected $368 million in child support payments from such families to pay back the government for the cost of public benefits. $176 million of these payments went to the federal government, $168 million went to the state, and $23 million went to California counties. Much of these payback payments come from parents whose families no longer receive public benefits, as noncustodial parents often continue to pay back debt and penalties even after their family stopped receiving assistance. The study made the following key findings:

• requiring parents to pay back public assistance deprives low-income children of valuable resources;
• public assistance payback debt levels are unrealistic for low-income parents to repay;
• charging high interest rates for outstanding child support debt (in California, 10 percent compound interest) grows the debt to levels that low-income parents cannot repay;
• requiring parents to pay back public assistance disproportionately impacts families of color;
• requiring parents to pay back public assistance pushes parents to exit the formal economy to avoid wage garnishments;
• penalties for nonpayment can trap low-income parents in a cycle of joblessness and incarceration;
• requiring parents to pay back public assistance drives families apart; and
• requiring parents to pay back public assistance is not cost-effective, as most of the debt is uncollectible.

Additionally, the Center for Law and Social Policy (CLASP) and Policy Studies Inc. suggest several advantages for implementing the pass-through and disregard options in the DRA. They assert that the changes improve child support compliance by encouraging noncustodial parents to work and pay child support. They cite studies in Wisconsin that suggest when child support is passed through and disregarded to families receiving TANF cash assistance, more noncustodial parents pay support and pay higher amounts. Presumably, the supporting party is paying more because they know that the money is going to the child and not the government. Additionally, CLASP cite the same research for demonstrating that an enhanced “pass-through” reduces noncustodial parents’ participation in the underground economy and provides an incentive for them to pay through the formal child support system.^[2]

CLASP also states that an increased pass-through and disregard complements broader work and poverty reduction strategies by assisting families in making the transition from welfare to work and increasing the financial security for families while they receive TANF benefits. Finally, CLASP states that the “pass-through” and “disregard” changes will improve child support program performance and increase federal incentive payments for states while simplifying the program.

3. Ends the requirement that families assign their child support payments to the state to receive CalWORKs benefits

When families apply for CalWORKs they are required to assign to the state their rights to any child support owed before and during the assistance period and to cooperate with local child support agencies in enforcement efforts. Under federal and state law, states withhold any collected child support payments for these families to reimburse the state and federal governments for the assistance costs.

Prior to the PRWORA, states were required to pass-through and disregard the first $50 of current child support payments to the family as countable income for federal grant amount calculations. This provision was repealed as a requirement of PRWORA, but California retained in the CalWORKs program a pass-through and disregard of the first $50 of any current child support payment. Thus, for current CalWORKs recipients the first $50 of current support received from the noncustodial parent in the month due is passed through to the CalWORKs family and disregarded as income or resources in determining eligibility and grant amount. No pass-through payment is made to the family for a month in which there is no support collected or if the payment is not made timely.

Prior to 2008, a state was free to pass-through and disregard any amount of child support collections. However, the state was still required to pay to the federal government its 50 percent share of the collections. Effective October 1, 2008, the federal government waived its 50 percent share of any child support collected on behalf of any TANF-funded family up to $100 per month for families with one child and up to $200 for families with two or more children, regardless of whether the child support is for current support or arrearages. Beyond those waived amounts, a state that authorizes a higher pass-through would be required to backfill the unreimbursed costs through a separate funding mechanism. Thus, budgetary constraints may present the biggest obstacle to achieving this bill’s policy goals.

Several states, including Illinois, Montana, New Jersey, New York, and Pennsylvania, have increased the amount of money they pass through to families to take advantage of these waived amounts. However, only one state, Colorado, has opted to send 100 percent of child support to families and to pay back the federal government’s portion directly. According to the sponsors, although this program was implemented just a year ago, initial results are promising: the total amount of child support payments have increased by 63 percent. If this bill is signed into law, California would follow Colorado’s example and pass through 100 percent of child support to the families. This bill, like Colorado’s, will need to be accompanied by significant appropriations. Although it is not clear precisely how much this would be, for a point of reference, in fiscal year 2017-18, California directed $176 million in child support payments to the federal government.

4. Expunges certain outstanding public assistance payback debt

According to the sponsors, the overwhelming majority of outstanding public assistance payback debt is owed by extremely poor people with tens of thousands of dollars in debt originating from orders that often were too onerous for them to meet, given their financial circumstances. Most of this debt will never be collected, and expunging the debt would allow DCSS to focus its efforts on collecting current payments for families.

The U.S. Partnership on Mobility from Poverty argues:

Cost recoupment plays an outsized role in the lives of some fathers—particularly low-income fathers, who are most likely to owe arrears to the state. Roughly one-quarter of the more than $100 billion in past-due child support payments and interest on the child support debt is owed to the government, not to families. Most of that past-due support is owed by a relatively small number of fathers who have disproportionately low incomes. A study of nine states found that 11 percent of noncustodial parents owed 54 percent of the total past-due amount; each of these fathers owed over $30,000. Three-quarters of these fathers had no reported income or annual incomes below $10,000, but only one in five noncustodial fathers with no child support debt had incomes this low. Within just three zip codes in Baltimore, 4,000 noncustodial parents (mostly fathers) collectively owe $26 million to the state in child support arrears and interest. Qualitative research has shown that cost recoupment delegitimizes the formal child support system in the eyes of fathers, who resent that the state continues to “take its cut” even when the mothers of their children are no longer receiving welfare.^[3]

This bill would provide for the forgiveness of a considerable amount of public debt that is unlikely to be collected. The bill would discontinue any assigned rights to support, with respect to applications received before October 1, 2009, that accrued prior to the applicant receiving aid. Additionally, the bill would, to the extent permitted under federal law, exclude from the definition of “child support delinquency” an arrearage or otherwise past due amount that the local child support agency or department determines was established in error or has determined to be uncollectible. This would give those entities ample discretion to expunge arrearages that they deem erroneously established or uncollectible. However, the bill does not provide any guidance for implementing these provisions.

A 2003 study prepared by DCSS entitled Examining Child Support Arrears in California: The Collectability Study found that 95 percent of delinquent debt was likely uncollectible. Noncustodial parents making less than $10,000 owed and average of $20,000 due in part to the 10 percent interest rate on late payments. Collectively, these parents’ debt comprised 70 percent of the outstanding child support debt owed to the state. The study identified the following characteristics to analyze the collectability of child support debt:

• the extent to which there are income and assets available to pay the debt;
• whether the individual lives in another state; and
• the age of the debt.

Additional relevant factors could include the debtor’s payment history, whether the support order was based on actual income, other readily ascertainable debts, incarceration history, and employment history.

To add criteria for determining when a debt is uncollectible for purpose of this bill, as well as guidance for the DCSS in implementing this provision, the author has agreed to amend the bill as follows:

Amendment 1

On page 3, line 22, insert the following:

1. In determining the meaning of “uncollectible,” for purposes of arrearages owed to the state, the Department of Child Support Services shall, consistent with Section 303.11 of Title 45 of the Code of Federal Regulations, consider the following factors: income and assets available to pay the debt, source of income, the age of the debt, the number of support orders, employment history, payment history, incarceration history, whether the order was based on imputed income, and other readily ascertainable debts.
2. Notwithstanding the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), the Department of Child Support Services may implement and administer this subdivision through an all-county letter or similar instruction until regulations are adopted. Thereafter, the department shall adopt regulations to implement this section by July 1, 2020.

Additionally, to clarify that the DCSS may still collect child support delinquencies not owed to the state, the author has agreed to the following amendment:

Amendment 2

On page 3, lines 13-14, strike “assigned to the state.”

5. Arguments in support

According to the author:

The “Child Support Reform Act,” which seeks to ensure that low-income families receive all the child support payments to which they are entitled. The act, Senate Bill 337, would overturn a decades-old law under which child-support payments meant for families who receive CalWORKs benefits go to the state rather than to the families and children who need it most.

The Child Support Reform Act will right a historic wrong. Last year, more than 1.2 million California children living in or near poverty did not receive the full child support payments made by their parents. California must stop taking the lion’s share of support payments that rightfully belong to families and kids.

Writing in support, a coalition of organizations that serve children and low-income families state:

California has one of the highest child poverty rates in the country. Research indicates that providing families with their full child support payment could reduce child poverty. It also shows that if non-custodial parents are not undermined by public benefits pay back debt, they are more likely to make regular payments and to maintain or strengthen relationships with their children. For these reasons, we urge you to support SB 337.

SUPPORT

Anti-Recidivism Coalition (co-sponsor)

Good Foundation (co-sponsor)

Insight Center for Community Development (co-sponsor)

PolicyLink (co-sponsor)

Tipping Point Community (co-sponsor)

Western Center on Law & Poverty, Inc. (co-sponsor)

Center for Employment Opportunities

Community Coalition

Lawyers’ Committee for Civil Rights

Legal Services for Prisoners with Children

Legal Services of Northern California

National Association of Social Workers—California Chapter

Parent Voices California

Public Interest Law Project

OPPOSITION

None known

RELATED LEGISLATION

Pending Legislation: AB 1092 (Jones-Sawyer, 2019) would eliminate the 10 percent interest imposed on child support debt assigned to counties.

Prior Legislation:

SB 380 (Bradford, Ch. 729, Stats. 2017) allows a CalWORKs assistance unit to receive the full child support payments for a stepsibling or half-sibling in that unit, and prohibits those child support payments from impacting CalWORKs eligibility or benefit level determination, as specified.

AB 1654 (Bonilla, 2014) would have required that up to $100 is passed through to families with one child, and up to $200 for families with two or more children, or a greater amount if authorized by federal law. That bill was held in the Senate Appropriations Committee.

AB 196 (Kuehl, Ch. 478, Stats. 1999) restructured the state child support enforcement program to make child support enforcement to, among other things, significantly increase accountability and responsibility for the program at all levels of government and maximize collection and delivery of child support to the children and families to whom it is owed. Among the provision of this bill was the $50 pass-through and disregard of child support payments for CalWORKs applicants and recipients.

PRIOR VOTES:

Senate Human Services Committee (Ayes 6, Noes 0)

**************

1. The Payback Problem: How Taking Parents’ Child Support Payments to Pay Back the Cost of Public Assistance Harms California Low-Income Children & Families—A Call for Reform to Put Families First (April 2019). ↑

2. Center for Law and Social Policy and Policy Studies, Inc., More Child Support Dollars to Kids: Using New State Flexibility in Child Support Pass-Through and Distribution Rules to Benefit Government and Families (July 2006). ↑

3. Transforming Child Support into a Family-Building System (March 2018). ↑

SENATE COMMITTEE ON HUMAN SERVICES

Senator Hurtado, Chair

2019 - 2020 Regular

Bill No: SB 337

Subject: Child support

SUMMARY

This bill requires all child support collected in a month to be paid to recipients of California Work and Responsibility to Kids (CalWORKs) benefits and would prohibit any of that child support from being considered family income or resources or from being deducted from the amount of aid to which the family would otherwise be eligible. This bill also, to the extent permitted under federal law, excludes from the definition of “child support delinquency” an arrearage or otherwise past due amount that was established in error or has been determined to be uncollectible, as specified.

ABSTRACT

Existing Law:

1. Establishes under federal law the Temporary Assistance for Needy Families (TANF) program to provide cash aid and welfare-to-work services to eligible families and permits states to implement the program under a state plan. (42 USC 601 et seq.)
2. Provides an option in federal law for states to pass through to custodial parents receiving TANF benefits up to the first $100 in child support collected for one child and up to $200 for two or more children and to disregard those amounts when calculating TANF eligibility and grant amounts. (42 USC 657)
3. Establishes in state law the CalWORKs program to provide cash assistance and other social services for low-income families through the federal TANF program. Under CalWORKs, each county provides assistance through a combination of state, county and federal TANF funds. (WIC 10530, 11200)
4. Requires that any month in which a number of conditions exist, including in which the cost of the cash aid provided to the recipient for the month is fully reimbursed by child support, whether collected in that month or any subsequent month, shall not be counted as a month of receipt of aid for the purposes of the 48-month time limit. (WIC 11454.5 (a)(3))
5. Requires money from noncustodial parents for child or spousal support has been made shall be paid directly to the local child support agency and shall not be paid directly to the family, as specified. (WIC 11457 (a))
6. Requires a CalWORKs applicant or recipient, as a condition of eligibility for aid, to assign to the local child support agency all rights to child support payments received on behalf of a child in the CalWORKs assistance unit and requires the applicant or recipient to cooperate with the county welfare department and local child support agency in establishing the paternity of that child and in establishing, modifying, or enforcing a support order with respect that child, provided that the applicant or recipient does not qualify for a good cause exception from this requirement, as specified. (WIC 11477)
7. Requires that income of child only case is reasonably anticipated income derived from child support, the first $50 of child support received each month shall not be considered income or resources and shall not be deducted from the amount of aid to which the assistance unit otherwise would be eligible. (WIC 11477(c)(3))
8. Entitles the state to the amount of CalWORKs aid repaid to the state by means of child support collections, except to the extent that county and federal funds were expended, during which instances the federal government and/or county shall be entitled to a share of the amount received or recovered, as specified. (WIC 11487)
9. Provides that CDSS and the local child support agency shall have the responsibility for promptly and effectively collecting and enforcing child support obligations. (FAM 17500 (a))
10. Provides that DCSS and the local child support agency are the public agencies responsible for administering wage withholding, as specified. (FAM 17500 (b))
11. Requires the local child support agency to submit child support delinquencies to DCSS for purposes of supplementing the collection efforts of the local child support agencies, as specified. Defines “child support delinquency” to mean an arrearage or otherwise past due amount that accrues when an obligor fails to make any court-ordered support payment when due, which is more than 60 days past due, and the aggregate amount of which exceeds one hundred dollars ($100). (FAM 17500 (c))
12. Defines “Public assistance” to mean any amount paid under the CalWORKs program or any Medi-Cal benefit, for the benefit of any dependent child or the caretaker of a child. (FAM 17000 (j))
13. Requires the local child support agency to pass through the first $50 of any amount of child support collected on behalf of a child included in a CalWORKs assistance unit to the recipient family and disregards that amount when calculating income or resources for purposes of determining eligibility and establishing the family's grant amount. (FC 17504)

This Bill:

1. States Legislative intent to increase the amount of child support payments received and to strengthen family unity between children and their noncustodial parent, thereby improving the health and well-being of low-income children.
2. Refines the definition of “child support delinquency,” to the extent permitted under federal law, to not include an arrearage or otherwise past due amount that the local child support agency or department determines was established in error or has determined to be uncollectible.
3. Deletes the requirement that the first fifty dollars ($50) of required support obligation for that month to be paid to a CalWORKs recipient and instead requires that all of the support collected to be paid to the recipient.
4. Deletes the requirement that the first fifty dollars ($50) of child support received each month shall not be considered income or resources of the CalWORKs recipient family and shall not be deducted from the amount of CalWORKs aid to which the family would otherwise be eligible and instead prohibits any of the child support received from being considered income or resources of the recipient family or being deducted from the amount of aid to which the family would otherwise be eligible.
5. Requires that if the income of a child only assistance unit includes reasonably anticipated income derived from child support, the full amount of the support received each month shall not be considered income or resources and shall not be deducted from the amount of aid to which the assistance unit otherwise would be eligible.
6. Makes technical amendments.

FISCAL IMPACT

This bill has not been analyzed by a fiscal committee.

BACKGROUND AND DISCUSSION

Purpose of the Bill:

According to the author, this bill “seeks to ensure that low-income families receive all the child support payments to which they are entitled.” Senate Bill 337 would overturn a “decades-old law under which child-support payments meant for families who receive CalWORKs benefits go to the state rather than to the families and children who need it most,” per the author.

The author says, this bill “will right a historic wrong.” Last year, more than 1.2 million California children living in or near poverty did not receive the full child support payments made by their parents. “California must stop taking the lion’s share of support payments that rightfully belong to families and kids,” the author states.

Child Support

In California, the child support program is administered by the Department of Child Support Services (DCSS), and local child support agencies carry out child support enforcement duties at the county level. The state’s Child Support Program collects child support from noncustodial parents for the purpose of establishing child support orders; collecting child support payments from noncustodial parents, and distributing collected child support to custodial parents and their children. In California 49 local child support agencies work to locate absent parents; certify paternity; establish, enforce, and modify child support orders; and collect and distribute payments.

The child support program serves approximately one in every ten Californians. According to DCSS, 26 percent of custodial families live in poverty and 77 percent of the DCSS caseload are current or former recipients of public assistance. In 2018, the average monthly child support distributed was about $300.

Under federal law, families receiving public assistance via TANF (which is the block grant that funds CalWORKs) must cooperate with efforts to establish and enforce child support payments. In addition, recipients must assign their rights to child support payments to the state and the state will collect the child support payments on behalf of the custodial parent.

Currently, by state law, children receiving aid through CalWORKs, Medi-Cal, or foster care, who are also receiving child support are permitted to keep only the first $50 of a child support payment. This is referred to as the $50 “pass through.” The state keeps the remaining balance of the child support payment as reimbursement to the state and federal government for costs associated with TANF assistance provided to custodial parents.

Additionally, California has adopted a $50 “disregard” for child support payments, which permits the $50 of the child support payment that is “passed through” to the CalWORKs recipient to be disregarded when determining CalWORKs eligibility and grant amounts.

CalWORKs

The CalWORKs program was created after the passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWOA) of 1996, which created TANF block grants. PRWORA transformed public assistance in the United States with a new emphasis on moving public assistance recipients from welfare to work. The reform instituted requirements and restrictions on eligibility (including time limits, work requirements, and participation rates) and gave states discretion to structure programs, as long as the program meets basic requirements. Federal TANF rules allow adult recipients to receive cash aid for up to 60 months. However, under CalWORKs, adult cash benefits are time limited to 48 months, up to 24 months of which may entail designated WTW activities such as job finding, job training, educational pursuits, subsidized employment or unsubsidized employment, as defined and within specific parameters.

The CalWORKs program provides monthly income assistance and employment-related services aimed at moving children out of poverty and helping families meet basic needs. CalWORKs is funded with a mix of federal TANF money, state, and county funds. CDSS is the designated state agency responsible for program supervision at the state level. The counties are responsible for administering the caseloads at the local level.

In order to be eligible for CalWORKs, families must meet income and asset tests, both of which require specified calculations that take into account many factors, including earned income, disability-based unearned income, and other unearned income. Eligibility standards require that a family’s countable income must be less than the “Minimum Basic Standard of Adequate Care,” which varies based on family size and where the family resides (some areas in California are designated high cost of living areas). For example, a family of three living in a high cost of living area must earn less than $1,342 in countable monthly income in order to be eligible for CalWORKs benefits. Child support payments are not counted toward the families’ countable income.

The average monthly cash grant for a family of three on CalWORKs in Fiscal Year 2019-20 is estimated at $682. As of April 2019, the maximum monthly grant amount for a family of three, if the family has no other income and lives in a high-cost county, is $785. According to recent data from CDSS, approximately 423,000 families relied on CalWORKs in FY 2017-18. About 55 percent of cases include children under six years old.

Changes in Federal Law

There are complex federal rules for determining how child support collections are allocated between families and the government. As a general rule, child support paid while a family receives assistance may be retained by the state (47.5 percent) and shared with the county (2.5 percent) and federal (50 percent) government.

Prior to 1996, for the purpose of CalWORKs grant calculations, states were required to pass through and disregard as countable income the first $50 of current child support payments made by non-custodial parent to a CalWORKs family. With passage of the federal PRWORA of 1996, the mandatory $50 pass through and disregard was repealed, however, states were still required to pay to the federal government its 50 percent share of all collections.

The federal Deficit Reduction Act of 2005 (DRA), among other things, provided states with increased flexibility to pass through more or all child support dollars to children who currently receive TANF-funded assistance. Also, the DRA provides that the federal government will share in the cost of the disregard, up to the first $100 a month paid to TANF families with one child and $200 for families with two or more children. This change took effect October 1, 2008.

Despite changes in federal law, California has not modified its laws pertaining to the $50 child support pass through and disregard since it was established via AB 196 (Kuehl, Chapter 478, Statutes of 1999).

According to CDSS, over 900,000 (78 percent) of California families in Federal Fiscal Year 2018 who have child support cases receive or previously received public benefits and, therefore, received only $50 in child support payments, regardless of the amount of the child support paid by the non-custodial parent. In Federal Fiscal Year 2017, CDSS distributed $2.1 billion in child support payments to families. Of the child support collections received by CDSS in FFY 2017, $377 million was recouped by government agencies as follows:

• $183.3 million to the federal government,
• $169.6 million to the state government, and
• $23.6 million to the counties.

When a family leaves CalWORKs, the family regains its rights to currently owed child support, and they may be receiving the entire child support payment. However, if the non-custodial parent has been in arrears with child support payments, the state continues collecting the payments and continues to retain the payment as reimbursement for costs associated with welfare benefits paid to the family. Once the arrears are paid, any support collected is paid to the family.

Should this bill become law, child support payments would no longer be diverted to the government entities, and instead be available to CalWORKs families. It is unclear how arrears child support payments will be addressed.

Child Support Program Cost Avoidance Report

In a March 2019 report mandated by AB 1811 (Committee on Budget, Chapter 35, Statutes of 2018) DCSS indicates that the Child Support Program generates cost avoidance because the program decreases expenditures for governmental assistance programs for families that otherwise would have been on public assistance.

The CDSS report refers to a study and report issued by The Urban Institute titled “Child Support Cost Avoidance in 1999, Final Report^[1],” which discussed cost avoidance as it relates to child support as follows:

“[T]he goal of promoting self-sufficiency suggests some financial benefits for the government, since increased levels of financial stability and independence mean that families require less assistance from the government in other areas, such as food, housing, and medical assistance. These financial benefits – referred to here as “cost avoidance” – accrue not just from former welfare recipients, but also from families whose child support (when combined with other income) has enabled them to avoid welfare entirely and to reduce or eliminate their need for assistance from other government programs. Cost avoidance occurs when child support income reduces the benefit a family receives under a government means-tested transfer program, or is sufficient to render a family ineligible for assistance or to cause an eligible family to decide not to participate in the program. Any government program that counts a family’s income when determining eligibility or benefits, and that includes child support as part of that income, is a potential candidate for child support cost avoidance.”

According to The Urban Institute report, “This nationwide report asserts that cost avoidance cannot be calculated, it can only be estimated because it cannot be directly measured. It must be inferred.”

Subsequent to the nationwide report, the Child Support Directors Association of California issued a report that focused on cost avoidance within California. According to this report, titled “Cost Avoidance and Cost Recovery in California’s Child Support Program: SFY 2000-01,” while there are many government programs that likely have cost avoidance due to the California Child Support Program, the primary governmental programs with cost avoidance generated due to the Child Support Program are CalWORKs; CalFresh; Medi-Cal; Supplemental Security Income; and public/subsidized housing. This California-focused report states cost avoidance for Fiscal Year 2000-01 to be around $233 million.

DCSS used the data from that report to further estimate cost avoidance in Fiscal Year 2017-18 at around $439 million. However, DCSS acknowledges that these estimates are based on outdated data. Therefore, DCSS is exploring options to create a new study on cost avoidance that may be released as early as 2020.

Potential Impacts

There is evidence that when more of a parents’ child support payments go to their children, parents are more likely to pay, and to pay more. Colorado enacted a law requiring 100 percent of child support payments go to children (Colorado SB 337) about a year ago. Colorado reports that child support payments increased by 63 percent. Early indicators suggest that increasing the amount of child support given to families is expected increase compliance, increase payment amounts, reduce reliance on other forms of public benefits, and reduce tension between parents.

According to a policy brief titled “More Child Support Dollars to Kids: Using New State Flexibility in Child Support Pass-Through and Distribution Rules to Benefit Government and Families” published by the Center for Law and Social Policy, “When more child support is passed through and disregarded, the impact on non-custodial parents’ willingness to establish paternity, work in the formal economy, and pay child support will be greater. More generous policies also will have a greater impact on a state’s work participation rate. With higher disregards, more working families will retain eligibility, and thus count toward the state’s work participation rate.”

CalWORKs and the Child Support Program are complicated on their own. When a proposed policy change impacts both programs, it is important to explore potential unintended consequences. While the following is not a comprehensive discussion of the potential impact the bill might have on existing program rules and participants, it is presented to document some of the discussions at hand.

48-month time clock: Currently, the CalWORKs 48-month clock does not “tick” if the noncustodial parent makes a child support payment that meets or exceeds the full amount of the CalWORKs grant. This bill would not change that policy. In all other cases, the family will continue to have their time “ticked” but they will also have more money in the household, as they will be in receipt of the CalWORKs grant as well as the full amount of the child support payment. CalWORKs recipients whose 48-month time clock has expired may no longer receive cash aid or WTW services, but they are permitted to receive certain support services, including childcare.

Impact on CalFresh: Preliminary discussion indicates that this bill, in its current form, would likely not impact CalFresh eligibility. Current policy appears to permit child support payments that are passed through to the family to be exempted as income for purpose of determining CalFresh eligibility.

Fiscal impact on federal, state and local government: Currently, the state collects and keeps all but the first $50 of court ordered child support payments for families who are receiving CalWORKs (or other TANF funded benefits). The remaining balance is disbursed to the state (47.5 percent) and shared with the county (2.5 percent) and federal (50 percent) government. In Federal Fiscal Year 2017, $337 million was distributed in this manner. The impact this bill may have on the state’s general fund and local funds will require exploration. The DRA provides that if a state adopts a pass-through and disregard policy, the federal government will waive its share of support, up to $100 per month passed through for one child and $200 for two or more children. Additionally, it is unclear how this bill would impact current discussion regarding a proposed new budgeting methodology for the LCSAs.

SB 380 (Bradford, Chapter 729, Statutes of 2017): Under SB 380, CalWORKs families are allowed to receive the full child support payment for a stepsibling or half-sibling in that unit. The bill prohibits those child support payments from impacting CalWORKs eligibility or benefit level determination. This is an option for the families. There may be a need to address potential conflict with SB 380 provisions in order to maintain the option currently provided to these families.

Related/Prior Legislation

AB 1092 (Jones-Sawyer, 2019) requires the parties to a proceeding in which child support is at issue to disclose whether a party is currently receiving or applying for CalWORKs and requires the Department of Child Support Services and local child support agencies, with respect to delinquencies in child support that have been assigned to the county, to charge interest on the principal amount owed at a rate no higher than the rate required by federal law

SB 380 (Bradford, Chapter 729, Statutes of 2017) allows, in certain instances, a CalWORKs assistance unit to receive the full child support payments for a stepsibling or half-sibling in that unit, and prohibits those child support payments from impacting CalWORKs eligibility or benefit level determination.

AB 371 (Mullin, 2015) proposed to streamline CalWORKs eligibility standards for two-parent families. Among other things, it included removal of the deprivation standard. The bill was vetoed by the Governor.

AB 1502 (Mullin, Statutes of 2014) proposed to streamline CalWORKs eligibility standards for two-parent families. It included removal of the deprivation standard, in addition to changes to work requirements for relative caregivers within the CalWORKs program. The bill did not pass out of Senate Appropriations Committee.

AB 196 (Kuehl, Chapter 478, Statutes of 1999) restructured the state child support enforcement program to make child support enforcement to, among other things, significantly increase accountability and responsibility for the program at all levels of government and maximize collection and delivery of child support to the children and families to whom it is owed. Among the provision of this bill was the $50 pass through and disregard of child support payments for CalWORKs applicants and recipients.

COMMENTS

This bill has also been referred to the Senate Judiciary Committee. Should the bill move out of this Committee, some issues that may warrant further inquiry include “uncollectable” debt and debt that was “established in error” in the context of child support. These are policy topics that fall within that Committee’s jurisdiction.

POSITIONS

Support:

Western Center on Law & Poverty, INC.; PolicyLink;

Good Foundation; Tipping Point Community; Insight Center for Community Development; Anti-Recidivism Coalition (Sponsors)

A New Way of Life Re-Entry Project

Bay Area Legal Aid

Lawyers' Committee for Civil Rights

Legal Services for Prisoners with Children

Legal Services of Northern California

Public Interest Law Project

Oppose:

None received

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1. https://www.urban.org/sites/default/files/publication/57941/410957-Cost-Avoidance-and-Cost-Recovery-in-California-s-Child-Support-Program.PDF ↑