BILL ANALYSIS
AJR 17
Page 1
Date of Hearing: April 19, 2005
ASSEMBLY COMMITTEE ON JUDICIARY
Dave Jones, Chair
AJR 17 (Jones) - As Introduced: March 30, 2005
PROPOSED CONSENT
SUBJECT : CHILD SUPPORT AUTOMATION SYSTEM: WISE USE OF PENALTY
MONIES
KEY ISSUE : SHOULD THE LEGISLATURE MEMORIALIZE CONGRESS TO
ENACT LEGISLATION TO ALLOW STATES ASSESSED PENALTIES FOR FAILING
TO IMPLEMENT A CHILD SUPPORT AUTOMATION SYSTEM TO (1) ESTABLISH
A BASE YEAR OF THOSE PENALTIES AND (2) REINVEST THOSE PENALTIES
IN THE CHILD SUPPORT PROGRAM TO HELP GET SUPPORT TO KIDS RATHER
THAN BE USED FOR UNRELATED PURPOSES?
SYNOPSIS
This resolution urges Congress to enact legislation to allow
states assessed penalties for failing to implement a child
support automation system to (1) base the penalties on costs the
year before the state began receiving penalties, thus avoiding
penalizing the state for investing in the program and in
automation efforts, and (2) reinvest those penalties in child
support program improvements and automation system developments.
SUMMARY : Makes various findings regarding the child support
automation system and substantial penalties being assessed
against California for its tardiness in getting a statewide
child support automation system up and running. Specifically,
this bill :
1)Declares that:
a) California and other states have been subject to federal
penalties since 1998 due to their failure to fully
implement a certified statewide child support automation
system and these penalties, which have increased from 4
percent to 30 percent of the federal share of the
Department of Child Support Services (DCSS) program's
administrative costs, are levied against the state until
the state has a certified statewide automation system in
place;
AJR 17
Page 2
b) California reached the 30 percent penalty level in the
2002 federal fiscal year and has incurred a total penalty
of $754 million through the 2004 federal fiscal year;
c) California's child support automated system is expected
to be operational by the 2006 federal fiscal year, by which
time California's cumulative penalties will have reached
$1.2 billion;
d) California entered into a contract in July 2003 with a
team of vendors led by IBM for development of the child
support enforcement system component of the California
Child Support Automation System, California entered into a
services contract in December 2004 with Bank of America to
operate the State Disbursement Unit, the second component
of the California Child Support Automation System, and
California is well along the way toward securing a
statewide automation system that will comply with all the
federal certification requirements and improve program
performance;
e) The Legislature supports the policy directives of the
National Governors Association, the National Conference of
State Legislatures, the American Public Human Services
Association and other organizations that urge penalty
reinvestment to help states both complete automation and
improve child support performance; and
f) The Legislature supports changing the penalty structure
to ensure that states are not penalized for increased
investment in the program and for system development costs
by imposing penalties based on the year prior to the year
penalties were first imposed, rather than the prior year.
The federal penalties no longer serve their intended
purpose and in fact: (i) penalize the state for increasing
its spending on program improvements and automation
development; (ii) force system procurement and technology
decisions to focus on avoiding federal penalties, rather
than prudent technology goals and system objectives; and
(iii) reduce the ability of the program to continue to
collect child support payments for largely low-income
families who have left the welfare system or are able to
avoid relying on welfare.
2)Respectfully memorializes the Congress of the United States,
and each Senator and Representative from California in the
Congress of the United States to enact legislation to (a)
allow states that have been assessed federal penalties to
reinvest those child support automation penalties in child
AJR 17
Page 3
support program improvements and automation system
development, which would allow California and other states to
enhance and improve their child support automation systems;
and (b) impose the penalty based on the year prior to when
penalties were first imposed, as opposed to the prior year, to
avoid penalizing states for increased program investments and
system development costs.
EXISTING LAW :
1)Established DCSS as the single state agency responsible for
the oversight and management of the state's child support
enforcement program. (Family Code Section 17000 et seq .)
2)States findings that California does not have a statewide
child support automation system required by federal law
subjecting the state to significant federal penalties, and a
single statewide system promotes uniformity in the child
support program; and states intent to create a single
statewide child support automation system that complies with
all federal requirements and an intent to designate the
Franchise Tax Board (FTB) as the entity responsible for the
procurement, development, implementation and maintenance of
the single statewide system. (Welfare & Institutions Code
Section 10080.)
3)Requires the state department designated as the single
statewide agency responsible for operating the child support
enforcement program, through FTB as its agent, to develop,
implement, and maintain the California Child Support
Automation System (CCSAS). (Welfare & Institutions Code
Section 10082.)
4)Requires CCSAS to be operative in all California counties and
provide for the sharing of all data and case files and
standardized functions across all of the counties. (Welfare &
Institutions Code Section 10082.)
5)Requires all state agencies to cooperate with FTB to establish
and expedite the procurement, development, implementation and
operation of CCSAS and requires all state control agencies to
expedite all CCSAS review processes. (Welfare & Institutions
Code Section 10082.)
6)Requires FTB to develop a CCSAS procurement plan which employs
AJR 17
Page 4
techniques previously successfully used by FTB to procure
automation systems and to consider the findings and
recommendations made by the Bureau of State Audits in its
evaluation of the failure of the previous child support
automation system. (Welfare & Institutions Code Section
10083.)
7)Permits the state to pass on federal child support automation
penalties to the counties but holds those penalties in
abeyance as long as the counties comply with their automation
agreements and otherwise cooperate in establishing CCSAS.
(Welfare & Institutions Code Section 10088.)
8)Requires the department and FTB to develop and implement
timelines for the procurement and development of CCSAS and to
report progress against the established timelines during the
annual budget hearing process. (Welfare & Institutions Code
Section 10091.)
9)Provides that the state will have in effect an automated data
processing and information retrieval system. (42 U.S.C.
Section 654(24).) Establishes substantial and increasing
penalties for failure to establish such a system. (42 U.S.C.
Section 655(a)(4).)
FISCAL EFFECT : As currently in print, this bill is keyed
non-fiscal.
COMMENTS : This resolution addresses the growing and
increasingly substantial federal penalties being assessed
against California for its years-long failure to fully implement
a certified statewide child support automation system. These
penalties, which reached 30 percent of the federal share of the
child support services program's administrative costs in 2002,
are levied against the state until the certified system is
actually in place. To date, California has paid $754 million in
penalties to the federal government. However, California's
child support automated system is not expected to be operational
until the end of the 2006 federal fiscal year. This will result
in cumulative penalties reaching $1.2 billion - money, the
author notes, that would instead, and much more wisely, be used
to help children get the support they need.
California's efforts to address the failures of the current
child support system began in 1999 with AB 196 (Kuehl), Chapter
AJR 17
Page 5
478 of the Statutes of 1999, and SB 542 (Burton/Schiff), Chapter
480 of the Statutes of 1999. These bills restructured the state
child support program to make child support enforcement a top
priority of the state; to significantly increase accountability
and responsibility for the program at all levels of government;
and to create an effective child support program that maximizes
collection and delivery of child support to the children and
families to whom it is owed.
More specifically, following the procedure set forth in AB 150
(Aroner), Chapter 479 of the Statutes of 1999, California is
well on its way to developing a statewide automated system.
That legislation established a partnership between DCSS and FTB
to procure, develop, implement and maintain a statewide
automated child support system. Development of CCSAS began in
earnest in 2000. The system has two components: the Child
Support Enforcement (CSE) system and the State Disbursement Unit
(SDU). After competitive procurements, a team of vendors led by
IBM was awarded the CSE contract in July 2003, and Bank of
America was awarded the SDU services contract in December 2004.
The IBM contract is for $801 million, the Bank of America
seven-year contract is for $186 million, and the total ten-year
project costs are projected to be $1.3 billion.
In an attempt to minimize federal penalties, CCSAS has been
designed in two phases. The first phase, Version One, is an
alternative system configuration (linking two existing county
systems with a statewide database) allowing for early
certification and an end to penalties. The second phase,
Version Two, is designed to implement a state-of-the-art single
statewide system which should significantly improve program
performance. Version One was originally scheduled to be
completed by February 2006, but system competition has been
moved up to September 2005. Version Two is anticipated to be
completed by September 2008. The SDU is scheduled to begin
operations in September 2005, although the roll out to all the
local child support agencies is not expected to be completed
until the following year.
Despite all of California's efforts, federal penalties continue
to progressively accumulate -- with none of this lost money
targeted for the kids who need support. This resolution urges
Congress to instead consider limiting the penalty based on
spending a year before the state first entered into penalties
and allowing states to reinvest these penalties directly in
AJR 17
Page 6
child support program improvements and automation system
development in order to enhance and improve child support
enforcement programs.
In support of the resolution, the author notes the following
points:
Federal penalties served an important purpose of capturing the
attention of the state and resulted in the restructuring of the
program at both the state and local levels and establishing a
reliable approach to securing a statewide automated system using
performance based procurement methodologies.
Federal penalties no longer serve any constructive purpose and
now only serve to undercut California's reform efforts in
several ways:
1. They impose a double dip sanction on the state because
the state is spending more money on program improvements and
automation development. For every additional dollar California
spends on the program it must budget an additional $0.60 to
cover the penalties.
2. They force procurement and technology decisions to be
made around avoiding penalties and not around prudent technology
goals and system objectives.
3. They undercut public confidence in the child support
program because they threaten to reduce the ability of the
program to continue to collect support for largely low-income
custodial parents who have left or now receive public
assistance.
Prior Legislation : AJR 18 (Aroner), Resolution Chapter 117 of
the Statutes of 2001, a very similar resolution, was passed
unanimously by the Legislature when California had paid only
$163 million in penalties.
AB 150 (Aroner), Chapter 479 of the Statutes of 1999,
established the current procedure for development of the child
support automated system.
AJR 17
Page 7
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Leora Gershenzon / JUD. / (916)
319-2334