BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 578|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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THIRD READING
Bill No: SB 578
Author: Wright (D)
Amended: 4/21/09
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 4/28/09
AYES: Corbett, Harman, Florez, Leno, Walters
SENATE APPROPRIATIONS COMMITTEE : 13-0, 5/26/09
AYES: Kehoe, Cox, Corbett, Denham, DeSaulnier, Hancock,
Leno, Oropeza, Runner, Walters, Wolk, Wyland, Yee
SUBJECT : Child support interest
SOURCE : Department of Child Support Services
DIGEST : This bill provides that interest accrual for
child support arrears that have been assigned to the state
by recipients of welfare cash assistance shall be suspended
during those months in which the obligor has paid the
current month's court-ordered payments of current support
and arrears.
ANALYSIS : Existing law provides that in any action to
enforce child support obligations, interest does not accrue
on an obligation for current child, spousal, family, or
medical support due in a given month until the first day of
the following month. (Family Code Section 17433.5.)
Existing law provides that interest accrues at the rate of
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10 percent per annum on the principal amount of a money
judgment remaining unsatisfied. (Code of Civil Procedure
Section 685.010.)
Existing law provides that the Legislature reserves the
right to change the rate of interest for the principle
amount of a money judgment at any time to a rate of less
than 10 percent per annum, regardless of the date of entry
of the judgment or the date any obligation upon which the
judgment is based was incurred. A change in the rate of
interest may be made applicable only to the interest that
accrues after the operative date of the statute that
changes the rate. (Code of Civil Procedure Section
685.010.)
Existing law generally governs the California Work
Opportunity and Responsibility to Kids (Cal-WORKS) program,
which provides temporary financial assistance and
employment focused services to families with minor children
who have income and property below State maximum limits for
their family size. (Welfare and Institutions Code Section
11200 et seq.)
Existing law provides that, for applications received
before October 1, 2009, as a condition of eligibility for
Cal-WORKS aid, each applicant shall assign to the county
any rights to child and spousal support. The assignment
shall not exceed the total amount of cash assistance
provided to the family. An assignment of support rights to
the county shall also constitute an assignment to the
state. (Welfare and Institutions Code Section 11477.)
Existing law provides that, for applications received on or
after October 1, 2009, as a condition of eligibility for
Cal-WORKS aid, each applicant or recipient shall assign to
the county any rights to child and spousal support. The
assignment applies only to support that accrues during the
period of time that the applicant is receiving Cal-WORKS
assistance, and shall not exceed the total amount of cash
assistance provided to the family. An assignment of
support rights to the county also constitutes an assignment
to the state. (Welfare and Institutions Code Section
11477.)
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This bill provides that interest accrual for child support
arrears that have been assigned to the State pursuant to
Welfare and Institutions Code Section 11477 shall be
suspended during those months in which the obligor has paid
the current month's court-ordered payments of current
support and arrears.
This bill provides that interest accrual will be suspended
on the first day of the month following the current
payment.
This bill provides that interest accrual will resume on the
first day of the month following the month in which a
court-ordered payment of support and arrears is not
received.
This bill requires the Department of Child Support Services
to implement that provision by letters or similar
instructions.
This bill becomes operative on January 1, 2011.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11
2011-12 Fund
Increased payments Unknown potential for increased
General
revenue
Loss of interest Possible lone term revenue
loss General
accrual
The accrual of interest only results in additional money to
the state when it can be collected. Because the state can
automatically garnish wages and collect against personal
income tax returns, the accounts likely to be affected by
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this bill are the ones already most difficult to collect.
DCSS believes this bill will generate the revenue estimated
below.
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|Cases w/ Current & Arrears Due | FFY 2008 |
| | |
|-------------------------------------------+---------------|
|Cases w/ current & arrears due | |
| |208,974 |
| | |
|-------------------------------------------+---------------|
| Cases not paying toward current support | |
| (31.95%) |66,762 |
| | |
|-------------------------------------------+---------------|
| Assume 24.61% are assistance (current | |
|or former) |16,430 |
| | |
|-------------------------------------------+---------------|
| Assume 10% would begin paying monthly | |
|support due | 1,643 |
| | |
|-------------------------------------------+---------------|
| Avg. annual current collection per | $2,676|
|case | |
| | |
|-------------------------------------------+---------------|
|Increased Current Collections per Year | $4,396,047|
| | |
|-------------------------------------------+---------------|
| GF Share (of Assistance Only)| $1,963,988|
| | |
|-------------------------------------------+---------------|
| | |
| | |
|-------------------------------------------+---------------|
|Cases to begin paying on current & arrears | |
| | 1,643 |
| | |
|-------------------------------------------+---------------|
| Assume 10% will pay add'l. toward | |
|arrears | 164 |
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| | |
|-------------------------------------------+---------------|
| Assume 20% increase on avg. annual | |
|current pmt. (for | 535 |
| | |
| arrears) | |
| | |
|-------------------------------------------+---------------|
|Increased Arrears Collections per Year | $87,921|
| | |
|-------------------------------------------+---------------|
| GF Share (of Assistance Only)| $39,280|
| | |
|-------------------------------------------+---------------|
| | |
| | |
|-------------------------------------------+---------------|
|$50 Disregard for Current Assistance Cases | |
| | |
|-------------------------------------------+---------------|
| Cases to begin paying on current & | |
|arrears | 1,643 |
| | |
|-------------------------------------------+---------------|
| Assume 34.06 % are currently assisted | |
| | 560 |
| | |
|-------------------------------------------+---------------|
| $50 Disregard | -$50|
| | |
|-------------------------------------------+---------------|
|Increased Cost for $50 Disregard (Asst. | ($27,980)|
|Share) | |
| | |
|-------------------------------------------+---------------|
| GF Share (50% for Disregard)| ($13,990)|
| | |
|-------------------------------------------+---------------|
| | |
| | |
|-------------------------------------------+---------------|
|Net Increase for Cases w/ Current & | $4,455,988 |
|Arrears due | |
| | |
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|-------------------------------------------+---------------|
| GF Share (of Assistance Only)|$1,989,277 |
| | |
| | |
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SUPPORT : (Verified 5/27/09)
Department of Child Support Services (source)
California Alliance of Families and Children
ARGUMENTS IN SUPPORT : The author's office states, "To
encourage consistent and timely support payments as well as
improve arrears management and reduction, this legislative
proposal will suspend the accrual and assessment of
interest on both government-owned and non-government owned
arrears for noncustodial parents who meet their full
monthly obligation towards current child, medical, and
spousal support. The suspension of interest would apply
until a payment is missed and/or the full monthly
obligation is not met. Interest would accrue and be
assessed prospectively from the point a payment is missed
but would not be charged retroactively as a result of
non-compliance."
RJG:cm 5/27/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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