BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Joseph L. Dunn, Chair
2005-2006 Regular Session
AJR 17 A
Assembly Member Jones J
As Amended June 1, 2005 R
Hearing Date: June 7, 2005
GMO:cjt 1
7
SUBJECT
Child Support Penalties
DESCRIPTION
This resolution would request the U.S. Congress to enact
the Child Support Reinvestment Act of 2005, recently
introduced by Congresswoman Matsui, to allow states that
have been assessed federal penalties for failing to timely
implement an automated child support collection program, to
reinvest those penalties in child support program
improvements and automated system development and to use as
a base year for the calculation of those penalties the year
prior to when penalties were first imposed.
BACKGROUND
In 1999, the Legislature dramatically enacted structural
reforms in the state's child support enforcement program.
It transferred state responsibility for the program from
the Department of Social Services (DSS) to a newly created
Department of Child Support Services (DCSS), transferred
local responsibility for the program from district
attorneys to local child support agencies which, except for
hiring decisions, were also placed under the control of
DCSS, and created a complaint resolution and fair hearing
process for resolving child support complaints. [SB 542
(Burton/Schiff), Ch. 480, Stats. 1999; AB 196 (Kuehl), Ch.
478, Stats. 1999; AB 472 (Aroner), Ch. 803, Stats. 1999.]
The new DCSS was required to develop uniform forms,
(more)
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policies and programs, and performance standards. The
reformed program then was funded entirely through federal
and state funds. If local agencies failed to meet required
performance standards, DCSS was to assist in program
operations and management.
Title IV-D of the Social Security Act requires all states
with a welfare program to operate a child support program
which establishes and enforces child support obligations.
[P.L. 93-647 (H.R. 17045), 42 U.S.C. 651 et seq.] The
Act was later amended to require that states implement a
statewide automated child support system for Title IV-D
cases by October 1, 1995 (extended to October 1, 1997).
The federal Child Support Performance and Incentive Act
(CSPIA) of 1998 established new federal performance
measures and an incentive and penalty structure to fund and
motivate states to improve their child support system
performance. The CSPIA established federal incentives for
states based on five performance measures: (1) number of
paternities established; (2) number of support orders
established; (3) current support collected; (4) arrears
collected; and (5) cost-effectiveness of the program. In
order to obtain incentive payments and to avoid penalties,
the state's performance data must be deemed by the federal
government to be complete and reliable.
The money in the incentive pool, which the states must
share, is capped at $446 million for the federal fiscal
year 2005, $458 million in 2006, and $471 million in 2007.
In addition each $1 received from the pool is matched with
$2 of federal matching dollars.
Because many states were not able to complete their child
support automation systems by the deadline, CSPIA provided
an alternative penalty scheme: failure to complete the
automation system would result in a loss of federal
administrative funding of the child support program,
beginning at 4 percent the first year and rising to 30
percent by the fifth and subsequent years until the
automation system is certified as complete. The penalty is
reduced by 90% in any year that a state successfully
completes its automation system.
In March 2005 the Assembly Committee on Judiciary conducted
an informational hearing on the status of the state's
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implementation of the federally required certified
statewide child support automation system, and the
penalties imposed on the state by its failure to timely
implement such a program. According to the report prepared
by that committee, the results of California's child
support performance efforts since 2000 are positive: the
state has improved performance on three of the five federal
measures (paternities established, support orders
established and current support collections), held flat on
another (arrears collections), and lost ground on the last
(cost effectiveness).
To date, California has paid the federal government over
$750 million in penalties. This number is expected to
reach $1.2 billion by 2006, when California hopes to
complete the system. The state has entered into contracts
with IBM and Bank of America to develop and implement the
system. The first phase, which should end federal
penalties, is scheduled for completion on September 30,
2006.
CHANGES TO EXISTING LAW
This resolution states that California has been penalized
by the federal government since 1998 for failure to fully
implement a certified statewide child support automation
system and that these penalties have increased from 4
percent to 30 percent of the federal share of the
Department of Child Support Services program's
administrative costs and will continue at that high rate
until the state has a certified statewide automation system
in place.
This resolution states that the state has incurred a total
penalty of $754 million through the 2004 federal fiscal
year, and that by 2006 these penalties will reach $1.2
billion. The resolution states that California's child
support automated system is expected to be operational in
the 2006 federal fiscal year.
The resolution declares that the federal penalties no
longer serve their purpose and that in fact, they penalize
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the state for increasing its spending on program
improvements and automation development and reduce the
ability of the program to continue collecting child support
payments for low-income families.
This resolution further declares that the Legislature
favors changing the penalty structure to encourage
increased investment in the program and to impose penalties
based on the year prior to the year penalties were first
imposed rather than just the prior year.
This resolution then memorializes the U.S. Congress and
each representative and senator from California to enact
the Child Support Reinvestment Act of 2005, recently
introduced by Congresswoman Matsui, to allow states that
have been assessed federal penalties to reinvest them in
child support program improvements and automation system
development.
COMMENT
1. Proponents say flawed federal penalty structure calls
for congressional action
According to proponents of this resolution, since 1997
California has been saddled with significant federal
penalties while it has procured, designed and developed a
new statewide child support automation system. While the
penalties should end when the state completes its new
system and gets certification, the remaining unpaid
penalties represent a significant amount that can be used
to further improve the system that the state will have
put in place.
Proponents also state that the penalties accrued because
the state's focus on meeting the federal deadlines along
the way significantly and negatively influenced the
state's decisions. For example, they point to the first
version of the Statewide Automated Child Support System,
which was hastily installed even though it failed user
acceptance testing. "The rush to get the State out of
federal penalties as soon as possible poses the same risk
to the current project as the penalties mount." [Letter
from National Center for Youth Law, dated May 26, 2005.]
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Another flaw of the federal penalty structure relates to
the manner by which the penalties are calculated.
Currently, since the federal penalties are based on the
program administrative costs of the prior federal fiscal
year, the penalties escalate as program spending
increases. Thus the state pays more penalties as it
spends more money to complete and certify the project in
order to end the penalties. This catch 22 is an absurd
result of the penalty structure, proponents state.
This resolution would encourage Congress to enact the
Child Reinvestment Act of 2005 (H.R. 2409), to allow for
reinvestment of the penalty that would otherwise be
imposed on states into the child support collection
program and for restructuring the penalty calculation to
ensure increased investments in the program. Passage of
H.R. 2509 would relieve the state of $128 million in
federal penalties, which "do little to advance the
progress of child support automation system development
and take crucial resources that could be more
beneficially directed to programs and services for
disadvantaged and vulnerable children."
Support: National Center for Youth Law
Opposition: None Known
HISTORY
Source: Author
Related Pending Legislation: None Known
Prior Legislation: AJR 18 (Aroner, Res. Ch. 117, Stats.
2001) was a similar resolution, when the state
paid penalties only in the amount of $163
million.
Prior Vote: Asm. Jud. (Ayes 9, Noes 0)
Asm. Flr. (Ayes 71, Noes 0)
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