BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 610 (Jones-Sawyer) - Child support: suspension of support order ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: July 16, 2015 |Policy Vote: JUD. 7 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: Yes |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 17, 2015 |Consultant: Jolie Onodera | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 610, an urgency measure, would until January 1, 2020, specify that the suspension of a child support order occurs by operation of law for any period exceeding 90 consecutive days in which an obligor is incarcerated or involuntarily institutionalized, subject to specified exceptions. This bill would require the Department of Child Support Services (DCSS) and the Judicial Council to evaluate the effectiveness of the administrative adjustment process and report to the Legislature by January 1, 2019. Fiscal Impact: Retroactive modification provisions : The DCSS has indicated the provisions of this measure could potentially be in violation of federal law with regard to the prohibition on AB 610 (Jones-Sawyer) Page 1 of ? retroactive modification of child support orders, as specified. According to the DCSS, violations of federal law could potentially put federal child support funding of $680 million at risk. Forms and legislative report : Minor and absorbable one-time costs to the Judicial Council and the DCSS to develop the required forms, evaluate the process and report to the Legislature, as specified, on or before January 1, 2019. LCSA administration : Potential minor to moderate increase in local child support agency (LCSA) administrative costs (Federal Funds/General Fund) to comply with the bill's provisions. CalWORKs impact : Minor, if any, loss of child support payment revenue to offset CalWORKs program costs, as only those obligors who do not have the means to pay support will have their child support orders automatically suspended. Background: Prior law required, until July 1, 2015, that the obligation to pay child support pursuant to an order being enforced by a LCSA was to be suspended for the period of time exceeding 90 consecutive days in which an obligor is incarcerated or involuntarily institutionalized, unless the obligor has the means to pay, the obligor was incarcerated for an offense constituting domestic violence, or the obligor was incarcerated for failure to pay child support. Prior law provided that upon release from incarceration or involuntary institutionalization, an obligor could petition the court for an adjustment of the arrears pursuant to the suspension of the support obligation authorized, subject to proof of the dates of incarceration or involuntary institutionalization, as well as proof that during that time, the obligor did not have the means to pay the support. An obligor's arrears were not to be adjusted until the court approved the petition. This bill seeks to provide for the suspension of child support by operation of law during a period of incarceration or involuntary institutionalization, and authorizes an LCSA to administratively adjust the order, as specified. This bill would also expand the population of applicable obligors beyond those individuals whose support orders are being enforced by LSCAs to all child support obligors. AB 610 (Jones-Sawyer) Page 2 of ? Proposed Law: This bill would provide, until January 1, 2020, that the obligation to pay child support is suspended by operation of law for any period exceeding 90 consecutive days that an obligor is incarcerated or involuntarily institutionalized, as specified, unless the obligor meets any of the following criteria: Has the means to pay support while incarcerated or institutionalized. Incarcerated for any domestic violence offence. Incarcerated for failure to pay child support. This bill would provide that the suspension only applies during the period of incarceration or institutionalization and automatically resumes to the amount of the pre-suspension order on the first day of the first full month after release. Additionally, this bill: Allows a LCSA to administratively adjust a child support order upon written notification of the obligee and obligor and provision to him or her of a form to object to any adjustment, if all of the following occurs: o The arrears and interest were accrued in violation of the provisions of this bill. o The agency verifies that the obligor 1) did, or did not have the ability to pay support, or 2) was, or was not incarcerated for domestic violence, as specified, or failure to pay child support. o Neither the obligee or obligor object, as specified. Provides that if either party objects to an adjustment of child support arrears by the LCSA, the LCSA must instead file a motion to adjust arrears with the court and serve copies of the motion on the parties. Defines "suspend" to mean that the payment due on the current child support order and any arrears payment, or interest resulting from these amounts, is, by operation of law, set to zero dollars for the period in which the person owing support is incarcerated or involuntarily institutionalized. Provides that if a local child support agency is enforcing a child support order, as specified, the provisions of the bill apply to an order or modification AB 610 (Jones-Sawyer) Page 3 of ? issued on or after July 1, 2011. Requires DCSS, by January 1, 2016, in consultation with Judicial Council, to develop forms to implement the administrative adjustment process. Requires DCSS and the Judicial Council to conduct an evaluation of the effectiveness of the administrative adjustment process, as specified, and report the results and any recommended changes to the Assembly Judiciary Committee and the Senate Judiciary Committee by January 1, 2019. Sunsets the bill's provisions on January 1, 2020. Prior Legislation: SB 1355 (Wright) Chapter 495/2010 created a pilot program to suspend child support payments when an obligor is incarcerated, as specified. This pilot program expired on July 1, 2015. Staff Comments: By authorizing LCSAs to administratively adjust child support orders pursuant to specified standards and procedures, this bill could result in additional workload for LCSAs. The magnitude of workload to provide written notification of proposed adjustments to child support obligors/obligees is dependent on the volume of cases statewide requesting retroactive adjustments, which at this time is unknown. Any increase in administration costs of the child support program would be funded from federal funds (66 percent) and state General Fund (34 percent). Child support administration expenditures are comprised of local staff salaries, local staff benefits, and operating expenses and equipment. The DCSS has indicated that the provisions of this bill could potentially be in violation of federal law. Pursuant to 42 USC § 666(a)(9), also known as the "Bradley Amendment," the retroactive modification of child support orders is prohibited, with the exception of pending modifications, but only from the date that notice has been given to the obligee or obligor. This bill provides that if a local child support agency is enforcing a child support order, as specified, the provisions of the bill apply to an order or modification issued on or after AB 610 (Jones-Sawyer) Page 4 of ? July 1, 2011. The prior provisions of Family Code § 4007.5 have expired, and any modifications to orders prior to the enactment date of this measure could potentially be found to be in violation of federal law. Additionally, state law (Code of Civil Procedure §§ 685.010, 685.030, 695.211) mandates that interest be charged on all money judgments at the legal rate, as specified, with no exceptions that apply to incarcerated debtors. Therefore, suspension of interest on arrears balances should only be applied to those amounts accrued during the period of incarceration. As a result, broad application to interest being accrued on any arrears balance existing prior to the date of incarceration is also potentially a violation of state and federal law. To the extent the issues identified above can be addressed, staff notes the overall intent of this measure appears consistent with the provisions of a federal notice of proposed rulemaking by the Centers for Medicare and Medicaid Services (CMS) and the Children and Families Administration (November 17, 2014), which stated: "Also, we propose to add a new paragraph (b)(2) that would allow the child support agency to elect in its State plan the option to initiate the review of a child support order and seek to adjust the order, if appropriate, after being notified that a noncustodial parent will be incarcerated for more than 90 days. This review would not need a specific request, provided both parents had received notice. In electing this State plan option, the State may also need to consider whether further changes to State laws are required to implement this procedure. In most States, incarcerated parents must take affirmative steps to have their orders modified. We have found that very few incarcerated parents petition for a modification, even though their order could be suspended during incarceration. As a result, by the time that noncustodial parents are released from prisons, their child support arrearages have grown to very high levels, and may help drive the noncustodial parents into the underground economy to avoid paying support and may create an additional barrier to parent-child contact." Under existing law, as a condition of receiving CalWORKs benefits, the custodial party automatically assigns all rights AB 610 (Jones-Sawyer) Page 5 of ? to child support to the county up to the amount of aid paid. When a child support payment is collected, the party receiving support receives the first $50 of the child support payment (called the disregard) and the county retains what is remaining to repay the cost of the CalWORKs benefit. This includes all current and past-due support and continues as long as a family is receiving aid. Because this bill will automatically suspend child support orders only for persons who do not have the ability to pay support while incarcerated or institutionalized, it is estimated that the impact to the level of child support payment revenue offsetting CalWORKs program costs will be minor, if any, as it is anticipated that the cases that do have their child support orders automatically suspended would likely not have the ability to pay and would have otherwise been accruing arrearage balances and interest. Recommended Amendments: To clarify that the LCSA may adjust orders specifically for those cases in which suspension is required by operation of law, staff recommends the following amendment: On page 3, line 29, after the word "for" insert: a money judgment or order for support of a child suspended pursuant to subdivision (a) To clarify that only the payments towards interest on any arrears balance that existed prior to incarceration is suspended and that interest on said arrears balance will continue to accrue as required by law, staff recommends the following amendment: On page 4, in line 29, delete lines 21-25, and insert: (2) "Suspend" means that the payment due on the current child support order, any arrears payment on preexisting arrears balance, and interest on any arrears created during qualifying periods of incarceration under this section, is, by operation of law, set to zero dollars ($0) for the period in which the person owing support is incarcerated or involuntarily institutionalized. To ensure orders are modified prospectively, staff recommends the following amendments: AB 610 (Jones-Sawyer) Page 6 of ? On page 4, in line 26, delete "as follows:" On page 4, in line 27, delete "(1) To" and insert "to" On page 4, delete lines 29-32. -- END --