Stateline Story

Child-Support Enforcement Takes Hit

Deep slashes in the federal child-support enforcement program-included in Congress' most recent budget cuts - have left states searching for ways to avoid scaling back what has been hailed as the government's most successful social-services program.

The changes, effective October 2007, reduce the federal government's share of costs in states' increasingly successful efforts to collect overdue child-support payments from deadbeat parents.

Since the federal child-support enforcement program was created in 1975, states have used federal matching funds to employ thousands of caseworkers plus legal, administrative and law enforcement staff to track down parents and collect overdue child-support payments.

Using innovative tactics-such as wanted posters, highway billboards, subpoenas of cell phone records and offers of reduced payments for parents who volunteer to come forward-states now are collecting $4.38 in child-support payments for every dollar spent on enforcement operations.

There's no question that the program has been successful, but congressional budget-cutters argued that the federal share of the $5.3 billion program is much too high. Congress wrote new rules to trim the federal government's share-which on average covered 88 percent of program costs-and included them in the Deficit Reduction Act of 2005, signed by President Bush this month.

The cuts were made by eliminating a so-called double-dipping provision added in 1998 that matched incentive payments states receive for improving their programs with additional federal dollars.

Now that federal funding has been pulled back, states are faced with either reducing their staffs or coming up with more money to keep their programs running at current levels.

In California, the cuts will put a $90 million hole in its child-support enforcement program. According to state Rep. Dave Jones (D), the cutback will "result in about $160 million in lost child-support collections each year, forcing poor families to rely more on welfare and other governmental assistance, further underscoring the folly of these cuts."

"Given our $6 billion budget deficit, there is no guarantee that the state can backfill even a part of these federal cuts," Jones said. As a result, innovative projects-such as the state's experiment with offering reduced rates to parents who volunteer to make overdue payments--could fall by the wayside, he said.

But the director of Virginia's child-support program, Nick Young, said he's confident the Legislature will appropriate the additional money needed to keep the program operating at existing levels. With federal incentive payments, matching funds and offsets to the state's welfare program, Virginia has not had to appropriate revenues for its enforcement program in the last five years.

Virginia's program, which employs about 1,000 people and costs $84 million, collected $560 million in support payments last year. Young says he expects lawmakers will consider the $6 million needed to maintain the program "a pretty reasonable request."

Serving some 17 million families, child-support enforcement efforts in many cases make it possible for single-parent families to remain self-sufficient, rather than seek support from other government-funded programs, such as Medicaid, food stamps and welfare.

Over the years, states have steadily collected an ever-bigger share of the more than $96 billion in court-ordered child support that goes unpaid each year. In 2004, states collected nearly $22 billion in overdue child-support payments, compared to $15 billion in 1998. During the same period, states increased their success rate-the number of cases collected compared to the total caseload-from 23 percent to 51 percent.

Payments collected by states are turned over to the children's custodial parents or guardians, unless the family is on welfare or has collected welfare payments in the past. For those families, states use the support payments to repay federal and state welfare funds for the money the families received.

Most states keep all of the child-support money they collect for welfare parents, and according to current rules, refund an average of 6 percent of total collections to the feds and 5 percent to state welfare accounts. In a sense, child support payments owed to current and former welfare parents are used to repay their government welfare debt.

The new provision offers states the option of giving welfare parents up to $100 per month from child-support payments collected on their behalf. Instead of repaying government coffers, states can give their share of the funds to welfare families and the federal government will forgo its share as well.

"Everyone agrees that it's better for parents to know that their payments will directly benefit their families. It encourages parent-child bonds and results in a higher rate of payment," says Sheri Steisel of the National Conference of State Legislatures.

In the past, states primarily collected child support for families on welfare, but the number of non-welfare clients has increased in the last few years, because of greater awareness of the program. Now, about 50 percent of enforcement clients are low- and middle-income parents who are not on welfare.

"It's almost as if the states' success is being used against them," said NCSL's Steisel. "What I fear is we're taking a successful program and making it impossible for states to maintain the same level of excellence," she said.

The Congressional Budget Office (CBO) calculates that eliminating double-dipping provisions will save the federal government $4.9 billion over the next 10 years, provided states fill in at least half of the funding reductions.

If states don't come up with the missing money, enforcement programs will shrink and federal matching funds paid at a set rate of 66 percent of costs will drop by as much as $8.55 billion over the same period, says a social welfare advocacy group, the Center for Law and Social Policy.

CBO also estimates the cuts will cost families $8.4 billion or more in uncollected child support.