BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 1355 (Wright) Hearing Date: 05/24/2010 Amended: 05/12/2010 Consultant: Jacqueline Wong-HernandezPolicy Vote: Judiciary 4-0 _________________________________________________________________ ____ BILL SUMMARY: SB 1355 provides that the obligation of a person to pay child support pursuant to an order that is being enforced by a local child support agency under Title IV-D of the Social Security Act is suspended for the period of time in which the obligor is incarcerated or involuntarily institutionalized, with specified exceptions. This bill would require the court to provide notice to the parties of the support obligation suspension at the time the order is issued. This bill would authorize an obligor, upon release from incarceration or involuntary institutionalization, to petition the court for an adjustment of the arrears pursuant to the suspension of the support obligation. These provisions would apply to all child support orders issued and all modifications of child support orders requested on or after January 1, 2011. This bill would also require the Judicial Council to proscribe forms necessary for the implementation of the above-described provisions, including forms for a petition to adjust arrears. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund Suspension of arrears Potentially significant decrease in revenue General New court petition process Unlikely to create new costs General* New forms Minor and absorbable General* *Trial Courts Trust Fund _________________________________________________________________ ____ STAFF COMMENTS: This bill may meet the criteria for referral to the Suspense File. This bill prescribes changes to court processes that are unlikely to present any significant up front costs, and may create workload efficiencies. The potential loss of revenue noted above is as a result of the effects of the new procedure on any child support payments that reimburse the state for aid to recipient families. Under existing federal law, a child support obligor can request a modification to a court order requiring him or her to pay child support, based on a change of circumstances lasting more than 90 days. A change of circumstance could be the loss of a job, the birth of another child (or establishment of paternity), or virtually any circumstance in which the obligor's financial situation may affect the amount of child support expected from him or her. Child support orders are largely based on the obligor's income, ability to pay, and custody arrangement. If a child support order were issued at a time when the obligor was employed full time, and he or she were to subsequently become Page 2 SB 1355 (Wright) unemployed, the obligor could seek a support modification of the child support order after 90 days of unemployment (a financial circumstance change). Until the 91st day, the court order for full support would still stand. This bill would suspend arrears for an obligor incarcerated for more than 30 consecutive days. Currently, if an obligor were incarcerated in a county jail for fewer than 90 days (and then released), he or she would be responsible for paying the full amount of court-ordered child support for the time he or she was incarcerated because the circumstance change lasted fewer than 90 days. Because this bill specifically provides that incarceration for more than 30 days would trigger an automatic suspension of the child support order, the 60 day difference between existing federal law and this bill allows for a revenue loss to the custodial parent, and to the state if the state is involved in the support of the child and non-custodial parent. Existing law allows the state to collect and child support on behalf of a custodial parent enrolled in CalWORKs to offset the aid given to the family. A CalWORKs child support case is opened when a custodial parent applies for and receives CalWORKs benefits. The Department of Social Services (DSS) informs the Department of Child Support Services (DCSS) when CalWORKs benefits are granted, and a child support case is opened by the DCSS. As a condition of receiving CalWORKs benefits, the custodial party automatically assigns all rights to child, spousal, and medical support to the county up to the amount of aid paid. This includes all current and past-due support and continues as long as a family is receiving aid. Any current child support payments which exceed the amount of aid paid will be sent to the custodial party. To the extent that this bill results in decreased support payments to CalWORKs aided families, it creates General Fund costs by not backfilling the aid with child support money collected. Many obligors who are eligible for modifications to their child support orders do not know they are eligible, and never seek modifications even though their circumstances have changed. For these individuals, arrears continue to accumulate; they frequently never fully pay their arrears. To the extent that any obligors who were incarcerated or involuntarily institutionalized with no means to pay child support, would have eventually paid arrears which the state had some portion of claim over, this bill could result in a loss of state revenue. These arrears, however, would have been the result of what is functionally an overpayment. Had the individual petitioned the court for a modification of the child support order, allowable under existing law, it would have likely been granted and arrears suspended. .