BILL ANALYSIS
AJR 17
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AJR 17 (Jones)
As Amended June 1, 2005
Majority vote
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|ASSEMBLY: |71-0 |(April 21, |SENATE: |33-4 |(July 11, |
| | |2005) | | |2005) |
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Original Committee Reference: JUD.
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 resolution :
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% to
30% 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;
b) California reached the 30% penalty level in federal
fiscal year (FY) 2002 and has incurred a total penalty of
$754 million through federal FY 2004;
c) California's child support automated system is expected
to be operational by federal FY 2006, 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 (CCSAS), California entered
into a services contract in December 2004 with Bank of
America to operate the State Disbursement Unit (SDU), the
second component of CCSAS, and California is well along the
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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;
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; and,
g) Congresswoman Matsui has introduced the Child Support
Reinvestment Act of 2005 which would allow for penalty
reinvestment in the program and change the penalty
structure so states are not penalized for investing in the
program.
2)Respectfully memorializes the United States (U.S.) Congress,
and each Senator and Representative from California in the
U.S. Congress to enact the Child Support Reinvestment Act of
2005 which: a) allows states that have been assessed federal
penalties to reinvest those child support automation penalties
in child 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) imposes 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.
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The Senate amendments add in the reference to Congresswoman
Matsui's Child Support Reinvestment Act of 2005.
EXISTING LAW :
1)Requires DCSS, through the Franchise Tax Board (FTB) as its
agent, to develop, implement, and maintain CCSAS.
2)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.
3)Requires DCSS 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.
AS PASSED BY THE ASSEMBLY , this resolution was substantially
similar, except as set forth above.
FISCAL EFFECT : None
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% 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 federal FY 2006. 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 is on its way to developing a statewide automated
system. AB 150 (Aroner), Chapter 479 of the Statutes of 1999,
establishes 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
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(CSE) system and 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 10-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. 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. The state is scheduled to seek system
certification, and end penalties, in September 2006.
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
child support program improvements and automation system
development in order to enhance and improve child support
enforcement programs.
In support of this resolution, the author notes the following
points:
1)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.
2)Federal penalties no longer serve any constructive purpose and
now only serve to undercut California's reform efforts in
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several ways:
a) 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;
b) They force procurement and technology decisions to be
made around avoiding penalties and not around prudent
technology goals and system objectives; and,
c) 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.
Analysis Prepared by : Leora Gershenzon / JUD. / (916)
319-2334 FN: 0011211