# Flexibility, Efficiency, and Modernization in Child Support Enforcement Programs

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2014-26822

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** November 17, 2014
- **Citation:** 79 FR 68548

## Text

DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 433
[CMS-2343-P]
RIN 0938-AR92
Administration for Children and Families
45 CFR Parts 301, 302, 303, 304, 305, 307, 308, and 309
RIN 0970-AC50
Flexibility, Efficiency, and Modernization in Child Support Enforcement Programs

AGENCY:

Office of Child Support Enforcement (OCSE), Administration for Children and Families (ACF) and the Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS).

ACTION:

Notice of proposed rulemaking (NPRM).

SUMMARY:

This NPRM is intended to carry out the President's directives in
Executive Order 13563: Improving Regulation and Regulatory Review
. The NPRM proposes revisions to make Child Support Enforcement program operations and enforcement procedures more flexible, more effective, and more efficient by recognizing the strength of existing state enforcement programs, advancements in technology that can enable improved collection rates, and the move toward electronic communication and document management. This NPRM proposes to improve and simplify program operations, and remove outmoded limitations to program innovations to better serve families. In addition, changes are proposed to clarify and correct technical provisions in existing regulations.

DATES:

Consideration will be given to comments received by January 16, 2015.

ADDRESSES:

You may transmit written comments electronically via the Internet at
http://www.regulations.gov
. This approach is our preferred method for receiving comments. To download an electronic version of the rule, you may access
http://www.regulations.gov
and follow the provided instructions.

Additionally, you may send comments via United States Postal Service to: Office of Child Support Enforcement, Administration for Children and Families, Department of Health and Human Services, Attention: Director, Division of Policy, Mail Stop: OCSE/DP, 370 L'Enfant Promenade SW., Washington, DC 20447.

You also may send comments via overnight service to: Office of Child Support Enforcement, Administration for Children and Families, Department of Health and Human Services, Attention: Director, Policy Division, Mail Stop: OCSE/DP, 901 D Street SW., Washington, DC 20447.

You also may submit comments by facsimile to (202) 260-5980. Comments will be available for public inspection. To schedule an appointment, please call (202) 401-9271.

FOR FURTHER INFORMATION CONTACT:

Anne Miller, Division of Policy, OCSE, telephone (202) 401-1467, email:
anne.miller@acf.hhs.gov
or Barbara Addison, Division of Policy, OCSE, telephone (202) 401-5742, email:
barbara.addison@acf.hhs.gov
. Deaf and hearing impaired individuals may call the Federal Dual Party Relay Service at 1-800-877-8339 between 8 a.m. and 7 p.m. Eastern Standard Time.

SUPPLEMENTARY INFORMATION:

Submission of Comments

Comments should be specific, address issues raised by the proposed rule, propose alternatives where appropriate, explain reasons for any objections or recommended changes, and reference the specific action of the proposed rule that is being addressed. Additionally, we will be interested in comments that indicate agreement with changed or new proposals. We will not acknowledge receipt of the comments we receive. However, we will review and consider all comments that are germane and are received during the comment period. We will respond to these comments in the preamble to the Final Rule.

Statutory Authority

This NPRM is published under the authority granted to the Secretary of the Department of Health and Human Services by section 1102 of the Social Security Act (Act), 42 U.S.C. 1302. Section 1102 of the Act authorizes the Secretary to publish regulations, not inconsistent with the Act, which may be necessary for the efficient administration of the functions for which the Secretary is responsible under the Act.

This proposed rule is published in accordance with the following sections of the Act: section 451 Appropriation, section 452 Duties of the Secretary, section 453 Federal Parent Locator Service, section 454 State Plan for Child and Spousal Support, section 454A Automated Data Processing, section 454B Collection and Disbursement of Support Payments, section 455 Payment to States, section 456 Support Obligations, section 457 Distribution of Collected Support, section 458 Incentive Payments to States, section 459 Consent by the United States to Income Withholding, Garnishment, and Similar Proceedings for Enforcement of Child Support and Alimony Obligations, section 460 Civil Actions to Enforce Support Obligations, section 464 Collection of Past-due Support From Federal Tax Refunds, section 466 Requirement of Statutorily Prescribed Procedures to Improve Effectiveness of Child Support Enforcement, and section 467 State Guidelines for Child Support Awards.

Background

The Child Support Enforcement program is intended to ensure that noncustodial parents provide financial support for their children. Child support payments play an important role in reducing child poverty, lifting approximately one million families out of poverty each year. In 2012, the Child Support Enforcement program collected $27.7 billion in support payments for the families in State and Tribal caseloads. During this same period, 82 percent of the cases had support orders, and nearly 72 percent of cases with orders had at least some payments during the year.

The proposed rule makes changes to strengthen the Child Support Enforcement program and update current practices in order to increase regular, on-time payments to families, increase the number of noncustodial parents working and supporting their children, and reduce the accumulation of unpaid child support arrears. These changes remove regulatory barriers to cost-effective approaches for improving enforcement consistent with the current knowledge and practices in the field, and informed by many successful state-led innovations. In addition, given that three-fourths of child support payments are collected by employers through income withholding, this proposed rule standardizes and streamlines payment processing so that employers are not unduly burdened by this otherwise highly effective support enforcement tool. The rule also removes outdated barriers to electronic communication and document management, updating existing child support regulations which frequently limit methods of storing or communicating information to a written or paper format. Finally, the proposed rule updates the program to reflect the recent Supreme Court decision in

Turner
v.
Rogers,
564 U.S. _, 131 S Ct. 2507 (2011).

Executive Order 13563
directs agencies to increase retrospective analysis of existing rules to determine whether they should be modified, streamlined, expanded, or repealed so as to make the agency's regulatory program more effective or less burdensome in achieving regulatory objectives.
1

In response to
Executive Order 13563,
OCSE conducted a comprehensive review of existing regulations to improve program flexibility, efficiency, and responsiveness; promote technological and programmatic innovation; and update outmoded ways of doing business. Some of these regulations have not been updated in a generation. Proposed regulatory improvements include: (1) Procedures to promote program flexibility, efficiency, and modernization; (2) updates to account for advances in technology; and (3) technical corrections.

1
Available at:
http://www.whitehouse.gov/the-press-office/2011/01/18/improving-regulation-and-regulatory-review-executive-order
. Also, the OMB Memorandum related to Executive Order 13563 is available at:
http://www.whitehouse.gov/sites/default/files/omb/memoranda/2011/m11-10.pdf
.

Before drafting the proposed rules, OCSE consulted with States, Tribes, employers, and other stakeholders. The National Council of Child Support Directors voluntarily established a subcommittee that would provide OCSE with cost saving proposals. We also sought Tribal input in a formal fashion as discussed in the Tribal Impact Statement.

These efforts helped OCSE to: Identify regulations where we could encourage noncustodial parents to assume more personal responsibility; increase State and employer flexibility to better serve families; improve program effectiveness, efficiency, and innovation; streamline intergovernmental case processing; improve customer service; and remove barriers identified by employers, States, and families that impede efficient and timely child support payments. We also identified obsolete and outmoded requirements and technical fixes that are needed. This proposed rule recognizes and incorporates policies and practices that reflect the progress and positive results that have resulted from successful program implementation by States and Tribes.

The section-by-section discussion below provides greater detail on the provisions of the proposed rule. All references to regulations are related to 45 CFR Part 300, except as specified in sections relating to the CMS regulations (42 CFR part 433).

Effective Date and Potential Impact on State Law

In this NPRM, some of the proposed regulatory provisions would require a State to submit revised State plan pages and/or enact new State laws. A State may meet these requirements through enactment of State law, regulations (including court rules), and/or procedures that ensure compliance with Federal law. In this NPRM, we specifically seek public comment on the actions a State will need to take to ensure compliance with the proposed provisions. We are especially interested in the steps necessary to implement proposed provisions in §§ 302.32, 302.38, 302.56, 303.6, 303.8, 303.11, and 303.100.

In addition, we seek public comment on the amount of time a State will need to take these actions and to implement the proposed provisions in this NPRM. We request comment on whether a general effective date of one year after publication of the final rule will be sufficient, for most changes, with the exception of § 302.56(a), where we have proposed that a State meet the guidelines requirements within one year after completion of the State's next quadrennial review of its guidelines.

When new State plan requirements were enacted in the past, and additional State legislation was required, in order for the State's Title IV-D plan to remain in compliance, Congress provided that the State must enact the needed legislation by the first day of the second calendar quarter beginning after the close of the first regular session of the State legislature that begins after the effective date of the regulation. If the State had a 2-year legislative session, each year of the session was considered a separate regular session of the State legislature. We are inviting comments concerning which of the proposed changes in this NPRM may require State legislation and may warrant a similar delay in the effective date.

Tribal Impact Statement

In this NPRM, OCSE proposes to update existing State case closure rules in order to deliver more efficient child support services to families. There were no Tribal IV-D programs when case closure regulations were initially written in 1989. Today there are over 50 fully operational Tribal IV-D programs. Because our proposed updates could have an impact on these programs, we invited Tribal leaders to engage in written consultation via a “Dear Tribal Leader Letter,” dated April 28, 2011. We specifically sought comments on how we could encourage efficient case transfer between a State and a Tribal IV-D program.
2

2
Available at:
http://www.acf.hhs.gov/programs/cse/pol/DCL/2011/dcl-11-07.htm
.

In addition to written consultation, we engaged in a face-to-face consultation with Tribal leaders at the ACF Tribal Consultation Session on August 18, 2011 and March 6, 2012. We also invited Tribal leaders to participate in an additional day of consultation and dialogue, on August 19, 2011, to address any issues specific to Tribal child support.
3

Finally, in 2011, OCSE met with Tribal IV-D directors, on January 12-13, 2011, February 23-24, 2011, and March 10-11, 2011, to discuss Medicaid reimbursement cases that involve enrolled Tribal members or those otherwise eligible for enrollment. Our efforts to engage Tribal leaders throughout this NPRM process proved to be beneficial. Tribal leaders provided valuable comments that helped us formulate proposed regulatory language.
4

3
Available at:
https://www.federalregister.gov/articles/2011/07/19/2011-18096/notice-of-meeting-administration-for-native-americans#p-8
.

4
For a detailed description of these proposed changes, please see the Case Closure section.

We would like to emphasize that case closure regulations proposed in this NPRM are only applicable to State IV-D agencies. However, during tribal consultation held previously, we consulted with tribes regarding a proposal to all State child support agencies to close a case when the case is opened due solely to a Medicaid referral for medical support enforcement of a case involving an IHS-eligible child. We encourage all interested parties, including Tribes, to provide comments regarding this portion of the regulations during the public comment period. We will review and consider all comments, before we issue a final rule.

In addition to updating case closure regulations, we propose several technical corrections to existing Tribal regulations. These proposed corrections should have little to no impact on Tribal IV-D programs.

Section-by-Section Discussion of the Provisions of This Proposed Rule

This NPRM proposes: (1) Procedures to promote program flexibility, efficiency, and modernization; (2) updates to account for advances in technology; and (3) technical corrections. The following is a discussion of all the regulatory provisions included in this NPRM. Please note the provisions are discussed in order by category. Because this is a lengthy NPRM, we present the proposed revisions in these three categories to

assist the reader in understanding the major concepts and rationale for the changes.

Topic 1: Procedures To Promote Program Flexibility, Efficiency and Modernization (§§ 302.32; 302.33; 302.38; 302.56; 302.70; 302.76; 303.3; 303.6; 303.8; 303.11; 303.31; 303.72; 303.100; 304.20; 304.23; and 307.11)

Section 302.32: Collection and Disbursement of Support Payments by the IV-D Agency

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) (Pub. L. 104-193) centralized payment processing through the creation of State Disbursement Units (SDUs) and standardized income withholding provisions by requiring use of a uniform income withholding form. In the 1990s and 2000s, OCSE and State child support agencies partnered closely with employer and payroll organizations to implement the 1996 reforms. These collaborative efforts have been instrumental in streamlining the process for employers and ensuring that children receive billions of dollars in child support annually. Currently, over two-thirds of child support payments ($23 billion dollars in FY 2012) are collected by employers through income withholding, an enforcement tool which is, by far, the most effective remedy for ensuring that noncustodial parents are held accountable. While the overall framework for the processing and disbursing of child support payments is sound, the proposed rule addresses four ongoing concerns raised by employers, families, and States that hinder efficient income withholding and payment disbursement procedures: (1) State processing of income withholding payments on non-IV-D orders through the SDU; (2) SDU disbursement of child support payments directly to the family; (3) use of the Income Withholding for Support form; and (4) transmission of income withholding payments directly to the appropriate SDU.

Section 302.32 describes requirements for State IV-D agencies regarding the collection and disbursement of support payments. In its current form, this section provides narrow guidance on specific disbursement timeframes for IV-D cases and clarifies that, with respect to a case where the family is receiving TANF and has assigned rights to child support, payments must go to the SDU and not directly to the family.

A challenge for employers processing income withholding payments for child support is the interaction with SDUs, specifically in regard to payments on non-IV-D cases. An SDU is a State payment processing unit that receives and disburses payments collected on child support orders in both IV-D and non-IV-D cases. Employers are required by law to send all income withholding payments to the SDU designated on the OMB-approved Income Withholding for Support form. The State must receive the payments, determine the distribution of funds using their statewide automated system, and disburse the funds through the SDU to the appropriate payee. While this payment process is largely automatic and seamless, particularly with payments on IV-D cases, some employers have encountered problems when sending payments to SDUs in a few States on non-IV-D cases.

Federal law requires SDUs to collect and disburse payments under orders in both IV-D cases and in non-IV-D cases in which the support order was initially issued on or after January 1, 1994, and the income of the noncustodial parent is subject to withholding pursuant to section 466(a)(8)(B) of the Act. In order to process these non-IV-D income withholding payments, SDUs must have access to basic information about the non-IV-D orders. To this end, section 454A(e) of the Act requires each State to maintain or have access to information about non-IV-D orders in its State Case Registry (SCR), which is a part of its statewide automated system. The SCR contains records on IV-D cases and on non-IV-D orders established or modified in the State on or after October 1, 1998. The State then uses the information on non-IV-D orders to identify any incoming non-IV-D payments and to handle their disbursement through the SDU. Data in the SCR, as part of the State's automated system, must be used to facilitate the collection and disbursement of child support payments through the SDU.
5

5
For further information, see AT-98-08,
Policy Questions and Responses Regarding the State Case Registry and the Federal Case Registry of Child Support Orders under sections 453(h) and 454A(e) of the Social Security Act,
available at:
http://www.acf.hhs.gov/programs/cse/pol/AT/1998/at-9808.htm
.

Despite these statutory requirements to process non-IV-D income withholding payments automatically, employers have complained that a small number of States are not in compliance with these requirements and that some SDUs do not maintain information about non-IV-D orders prior to the employer sending payment to the SDU. In such cases, upon receipt of non-IV-D income withholding payments from employers, these States are contacting employers and custodial parents asking for additional information, forms, or documents before they process a payment on non-IV-D orders, increasing the burden on employers and families. In some instances, a few States are refusing to process the non-IV-D income withholding payments and returning the funds to employers. These returned or delayed payments result in confusion, customer service complaints, and added expense and paperwork for the employer. This practice also adversely impacts noncustodial parents trying to meet their financial obligations and ultimately delays child support from reaching families.

Because States have some latitude in how they meet the requirements for managing their IV-D programs and structuring their statewide automated systems, the reasons States have trouble processing non-IV-D payments are likely to be diverse. In some situations, the problems may be traced to a State not fulfilling their responsibility for processing non-IV-D payments, while in others it may be associated with data processing procedures or certain characteristics of their statewide automated systems. For example, the problem may be related to: Challenges in the automated computer interface between State agencies and courts; delays in the original transfer of non-IV-D order information from the courts to the SCR; the sharing of non-IV-D order data between the SCR and the SDU; or the number and type of non-IV-D data elements in the SCR.

To address employer problems with States not processing payments on non-IV-D orders through their SDUs, we propose to set forth in § 302.32 the basic requirements for SDUs, as stated in section 454B of the Act. Specifically, we propose revising § 302.32(a) with language similar to section 454B(1) of the Act to describe the State's responsibility to establish and operate a SDU. Under proposed paragraph (a), a IV-D agency must establish and operate a SDU for the collection and disbursement of payments under support orders in all cases enforced under the title IV-D plan and in all cases not being enforced under the IV-D plan in which the support order is initially issued in the State on or after January 1, 1994, and in which the income of the noncustodial parent is subject to withholding pursuant to section 466(a)(8)(B) of the Act. We propose a conforming change by deleting the existing language in paragraph (a). The existing paragraph (a) is a holdover regulatory provision from the Aid to Families with Dependent Children Program and addresses child support payments which are collected for a recipient of assistance under the

State's title IV-A plan. This language is no longer needed because it is subsumed under the new proposed paragraph (a) which states that payments in all IV-D cases must be made to the SDU.

In the past, OCSE refrained from regulating SDU requirements because we considered the statute to be self-implementing. We noted that we would reconsider this position if a need arose.
6

Because of the problems with non-IV-D payment processing, we believe that rules are needed. The regulatory approach we are proposing is predicated on the belief that States are returning or delaying non-IV-D payments for diverse reasons. Therefore, we believe a regulatory approach that is more general and less prescriptive is appropriate. While our aim is to dispel any confusion over the requirements, this approach will allow States flexibility to identify and remove the barriers to non-IV-D payment processing as they might occur uniquely in each State. We note, however, that there is no Federal statutory authority for States to require custodial parents or employers to provide information and data on non-IV-D orders as a condition to process these payments. We especially are interested in hearing from States and the public whether the general approach in the regulations will effectively address the problems with SDU payment processing on non-IV-D orders, and if there are additional problematic issues regarding SDU payment processing this rulemaking can or should address.

6
For further information, see AT-97-13,
Collection and Disbursement of Support Payments,
available at:
http://www.acf.hhs.gov/programs/cse/pol/AT/1997/at-9713.htm
.

As a final note on this proposal, over the years States have raised the question of whether FFP is available for activities in non-IV-D cases. In 2010 OCSE issued PIQ-10-01, “Federal Financial Participation and non-IV-D activities,”
7

to expand on earlier SDU policy issued in Action Transmittal, AT-97-13, “Collection and Disbursement of Support Payments.” PIQ-10-01 states that FFP is available for the non-IV-D case data requirements and payment processing required by the Social Security Act. In general, FFP is available for the submission and maintenance of data in the SCR with respect to non-IV-D support orders established or modified on or after October 1, 1998; the receipt and disbursement of collections through income withholding for child support orders initially issued in the State on or after January 1, 1994; and the required reporting to OCSE of non-IV-D financial and statistical information. See OCSE-PIQ-10-01 for more information. We believe the clarification of FFP availability will mitigate States' cost concerns related to this proposed provision.

7
Available at:
http://www.acf.hhs.gov/programs/cse/pol/PIQ/2010/piq-10-01.htm
.

Section 302.33: Services to Individuals Not Receiving Title IV-A Assistance

Current § 302.33(a)(4) requires that whenever a family is no longer eligible for assistance under a State's TANF, foster care, and/or Medicaid programs, the IV-D agency must notify the family, within 5 working days of the notification of ineligibility, that child support services will continue, without application, unless the family notifies the agency to the contrary. In certain situations, we believe that automatic continuation of child support services can be inappropriate for the family, such as once a child has been reunified with the family or the child has aged out of foster care. Therefore, based on a request from a joint child support/child welfare workgroup, we propose an efficiency change in § 302.33(a)(4).

We propose to eliminate “title IV-E foster care” from the first sentence in § 302.33(a)(4) and to add to that provision stating that the requirement to notify the family within 5 working days that services will be continued, unless the family notifies the IV-D agency to the contrary, also applies when a child is no longer eligible for IV-E foster care, but only in those cases that the IV-D agency determines that such services and notice would be appropriate. This proposed revision provides State IV-D agencies with additional flexibility to determine whether notice to a family in which a child no longer receives foster care maintenance payments is appropriate and whether to close the case. We believe that these revisions will simplify the notification process in post-foster care cases, recognizing that continued child support enforcement may be inappropriate, for example, once foster care cases are closed due to family reunification or when children age out of foster care. However, existing arrearages in these IV-D referral cases would remain an obligation owed to the State and collectible under all applicable State laws and processes pursuant to section 456 of the Act and 45 CFR 302.50(c).

At the request of States, we propose to provide each State the option to elect in its State plan to allow an individual parent who files an application the flexibility to select child support services from a menu of service options to better meet the needs of the families. Currently, a parent who applies for services has to accept the full range of services.

We propose to add a new paragraph (a)(6) that indicates that the State would elect in its State plan whether or not it provides applicants under subparagraph (a)(1)(i) the option to request limited services. This rule provides the State with authority to allow either the custodial or the noncustodial parent to request specific child support services tailored to the family's circumstances. In addition, we believe that limited services will result in increased customer satisfaction; help fathers assume more personal responsibility; help to make enforcement services more successful and efficient; and respond to families' needs. We believe that this will give States increased flexibility to be responsive to the family.

Under this proposal, for example, a State could elect to allow an applicant for services to request paternity establishment services only. Based on the State's procedures, if an unwed mother lived with the biological father of a child, he could request paternity establishment services only. Having paternity legally established may provide the biological father a sense of personal responsibility for the child. This would benefit the unwed parents since genetic testing could be done at a reduced rate, and would benefit the child if paternity is established by clarifying birth records and establishing possible eligibility for dependents' benefits. Additionally, if the parents separate in the future, it would be easier for the State child support agency to establish and enforce a support obligation. In the Child Support Enforcement program, this menu of service options is called “limited services.” The child support community has discussed this approach for many years as a positive strategy to tailor services to serve families.

If the State chooses this option, it would be required to define how this process would be implemented and establish and use procedures that would specify what limited services are allowed and under what circumstances. Additionally, the State's procedures would require that a limited services applicant requesting enforcement services must receive all appropriate mandatory enforcement services, such as the Federal Tax Refund Offset, income withholding, and credit bureau reporting. This provision also states that an application would be considered full-service unless the parent specifically applies for limited services in accordance with the State's procedures, and if one parent specifically requests limited services

and the other parent requests full services, the case will automatically receive full services. Also, for all limited service applicants, the State would be required to charge the application and service fees required under paragraphs (c) and (e) of the section, and may recover costs in accordance with paragraph (d) of this section if the State has chosen this option in its State plan. Finally, the State must also include information in its application form on the range of available services, consequences of selecting a limited service, and an explanation that the case will be closed when the limited service is completed.

Before a State chooses to implement these new criteria, it would need to ensure that its automated system can be easily modified so that it can effectively manage its caseloads regarding what services are requested. Also, if a State provides this option, the State would have flexibility on how it implements these proposed changes. The State must ensure that these changes are made in a consistent manner in accordance with its State plan. The State could also choose to implement this option for one or two services, and expand this as it gains experience in implementing these changes.

We believe that as States modernize their statewide automated systems, this option will be easier for States to implement and to manage in their caseloads, and at the same time will provide them additional flexibility to provide child support services that meet the needs of families. We expect limited services can be a cost-effective way to provide efficient and targeted services while avoiding expenditures on unnecessary and unproductive services.

Also, the State must ensure that an application is received from the applicant documenting what limited services are being requested. Regarding the fees for a limited-services application, the State may choose to charge the same fees as a full-service application. However, the fees must be charged in accordance with paragraphs (c) and (e) of this section, and if the State chooses to recover costs, it must be done in accordance with paragraph (d) of this section.

Finally, we are cognizant of the risk of domestic violence in the general operation of the child support program, and in particular as related to this proposed limited services provision. The child support program has required domestic violence safeguards in § 303.21(e) and we will continue to work with States and advocates to ensure that best practices are in place to safeguard the affected parties. OCSE also has a major domestic violence initiative underway to identify and promote effective practices to support families. We invite comments on whether there are additional domestic violence safeguards that should be put in place with respect to the limited services options.

Section 302.38: Payments to the Family

This proposed rule addresses concerns raised by States and families about the difficulties that families encounter when child support payments are disbursed directly to private collection agencies, bypassing the custodial families to whom the money is owed. Unlike private firms that contract with State child support agencies, private collection agencies contract directly with custodial parents for the collection of child support and are not affiliated with the State IV-D program. While earlier OCSE policy guidance did not preclude State IV-D programs from disbursing child support collections to private collection agencies if requested by the custodial parent-payee, OCSE now believes that disbursement of child support collections from SDUs to private collection agencies instead of directly to families puts the government in the role of indirectly enforcing private contracts and is not in the best interests of families and children.

Numerous consumer complaints and litigation have highlighted the questionable practices of many private collection agencies. These practices include deceptive advertising; perpetual service contracts that require direct payment to the company and prohibit cancellation; falsely representing the business as a government office; using official-looking documents to pressure employers to redirect support withheld from employees' paychecks; demanding payments from grandparents; demanding payments that are not owed from noncustodial parents; and other allegedly deceptive and abusive tactics.
8

OCSE's intent is not to regulate private collection agencies, but rather to ensure that child support programs are not facilitating, and the taxpayer is not subsidizing, the sometimes inappropriate business practices of private collection agencies not under contract to States. In order to provide protections for families and fulfill the intent of the founding child support legislation and subsequent policy, we propose that child support payments owed and payable to families be disbursed directly, and only, to families.

8
These practices are described in various consumer complaints and letters to State consumer agencies, as well as in GAO report,
Child Support Enforcement—Clear Guidance Would Help Ensure Proper Access to Information and Use of Wage Withholding by Private Firms,
GAO-02-349 (2002), available at:
http://www.gao.gov/new.items/d02349.pdf
.

Such private collection agencies enter into contracts with custodial parents to collect child support, but are not subject to the same contractual or regulatory oversight as State IV-D agencies and other private firms that have contracts with States to carry out public child support functions. Many states contract with private firms to provide various child support services. These private firms act on behalf of the State IV-D agency and must comply with the same statutes and regulations as the State IV-D program. Moreover, the Federal Trade Commission has determined that child support private collection agencies are not subject to the Fair Debt Collection Practices Act, 15 U.S.C. 1692-1692p, administered by the Federal Trade Commission because child support debt is not considered consumer debt.
9

9

Mabe
v.
G.C. Services Limited Partnership,
32 F. 3d 86 (4th Cir. 1994), available at:
http://scholar.google.com/scholar_case?case=16399759672854246032&q=Mabe+v.+G.C.+Services+Ltd.+Partnership&hl=en&as_sdt=2,9&as_vis=1
.

Since the Child Support Enforcement program was created over 30 years ago, the statutory framework for payment processing imposed on States the requirement that collections owed to the family should be paid to the family. Section 457 of the Act, Distribution of Collected Support, requires the State to track and distribute payments, and clearly indicates that money owed to the family is paid to the family, unless the family received TANF assistance and has assigned its rights to support to the State as reimbursement. In accordance with section 457 of the Act, the portion of the support owed to the family must be distributed “to the family” and not to any other party.

Section 454(11)(B) of the Act reinforces the requirement that payments are made to families. According to this provision, States must provide in their State child support enforcement plans that any payments required to be made to a family pursuant to section 457 must be made to “
the resident parent, legal guardian, or caretaker relative having custody of or responsibility for the child or children
” (emphasis added). The law is clear that payments due to families are to be disbursed from SDUs to the individual with responsibility to protect and further the child's best interests.

On December 29, 2010, ACF published final regulations in the
Federal Register
(75 FR 81894) for

Safeguarding Child Support Information (Safeguarding rule) by distinguishing between individuals who have a legal and fiduciary obligation to protect a child's best interests and those who do not.
10

Specifically, the Safeguarding rule clarified that each of the categories of individuals authorized to receive child support information under section 453(c)(3) of the Act, has “a relationship with the child that imposes an intrinsic responsibility to assure protection of the child's welfare and interests.” The rule excludes those “with a pecuniary interest of their own that may be inconsistent with the child's best interests” from receiving confidential information contained in the Federal and State Parent Locator Service. According to the standard set in the Safeguarding rule, therefore, private collection agencies, with their financial self-interest and no fiduciary duty to serve the children's best interests, are not authorized to receive protected child support information.

10
The 2010 Safeguarding final rule is available at:
http://www.acf.hhs.gov/programs/cse/pol/AT/2010/at-10-12.htm
.

Because the categories of individuals authorized to receive information, as listed in section 453(c)(3) of the Act (“the resident parent, legal guardian, attorney, or agent of the child”), significantly overlap with the entities authorized to receive payment disbursement in section 454(11)(B) of the Act (“the resident parent, legal guardian, or caretaker relative having custody of or responsibility for the child or children”), the definitions used in the Safeguarding regulation are directly analogous to the discussion in this proposed rule.

The Safeguarding rule notes that a “resident parent” lives with the child and provides the child's day-to-day care. Further, an individual who has been appointed by court order as a child's “legal guardian” is legally responsible for the child's care and has a legal obligation to act in the child's best interest. The Safeguarding rule further notes that a “caretaker relative” is a longstanding term used in the TANF program and its predecessor program, Aid to Families with Dependent Children (AFDC), to refer to those relatives responsible for the day-to-day care of children and who are eligible to apply for cash assistance for needy families, regardless of the existence of a legal custody order or legal guardianship status.

Each of these individuals has a relationship with the child that imposes responsibility to assure protection of the child's welfare, while private collection agencies historically do not, even if those companies employ attorneys. Therefore, consistent with the specific statutory descriptions of authorized individuals, as well as the general standards set forth in the Safeguarding rule, this proposed rule would require that any payments made under §§ 302.32 and 302.51 would be made directly to the resident parent, legal guardian, or caretaker relative and not to a private collection agency with a contractual agreement with the family.

The primary goal of the Child Support Enforcement program is to ensure that families benefit directly from child support payments. This family-first perspective is intended to ensure families' self-sufficiency and strengthen parents' commitment to supporting their children. On the one hand, this approach is a shift from child support's earlier focus on welfare reimbursement and cost recovery for Federal and State governments; on the other hand, it is consistent with the original principle that payments due to families who never received welfare are disbursed to families directly. Congress affirmed these family-first principles when it passed the Deficit Reduction Act of 2005 (DRA). Known as “family first distribution,” the purpose of section 7301(b) of the DRA is, “Increasing child support payments to families and simplifying child support distribution rules”.
11

Section 7301 of the DRA modified the rules of distribution and assignment of section 457 of the Act, and provided a set of options for States which, if adopted, would result in 100 percent of payments to families who are receiving or have received welfare assistance. The DRA's family-first approach clearly discourages redirecting payments to any individuals or entities other than families. In 2012, more than 94 percent of child support collected by the IV-D program was paid to families.
12

11
For further information, see Public Law No. 109-171, Title VII, Subtitle C, Section 7301 (2006), available at:
http://www.gpo.gov/fdsys/pkg/PLAW-109publ171/pdf/PLAW-109publ171.pdf.

12
For further information, see OCSE's
FY 2012 Preliminary Report, Table P-1
available at:
http://www.acf.hhs.gov/programs/css/resource/fy2012-preliminary-report-table-p-1
. The figure was calculated by adding total payments to families, medical support, and the amount passed through to families for a total of $26.1 billion distributed to families. This figure represents 94.2 percent of total collections in the amount of $27.7 billion.

In sum, based on the intent of the original child support legislation and the more recent “family-first” policies, we propose to revise § 302.38, “Payments to the family,” by inserting the word “directly” before the phrase “to the resident parent, legal guardian, or caretaker relative.” This proposed change will address concerns regarding disbursement of payments directly to the family. The purpose is to require SDUs to disburse child support payments directly to the intended beneficiary and not to divert those payments to another entity such as a private collection agency or other creditor of the custodial parent. The proposed change does not preclude a custodial parent from entering into a contractual relationship with a private collection agency for the collection of child support. Also, the proposed change is not intended to affect or change a State's current practices regarding electronic disbursements of child support payments. Disbursement of a child support payment to a custodial parent's bank account is a direct payment to the family. In addition, please note that this provision applies to payments that are due to the family; this provision does not preclude a State from sending payments for distribution and disbursement to initiating agencies on intergovernmental actions. We ask specifically for comments on whether the proposed regulations will affect State laws that permit the child support payment to be sent to other individuals/entities, such as a conservator or private attorney representing the custodial parent and child, with a legal and fiduciary duty to act in the child's best interest.

Section 302.56: Guidelines for Setting Child Support Awards

We also propose to update Federal regulations in § 302.56 that address State guidelines for setting child support awards. A number of these proposed changes are intended to ensure that parents meet their child support obligations and to assist States in complying with the U.S. Supreme Court decision in
Turner
v.
Rogers,
564 U.S. ___, 131 S Ct. 2507 (2011). Consistent child support payments can help custodial families achieve economic stability, which is especially important to the millions of low- and moderate-income families served by the Child Support Enforcement program.
13

However, basic fairness requires that child support obligations reflect an obligor's actual ability to pay them.

13
For further information, see Carl Formoso,
Child Support Enforcement: Net Impacts on Work and Welfare Outcomes pre- & post-PRWORA,
Washington State Division of Child Support (2000), available at:
http://www.dshs.wa.gov/pdf/esa/dcs/reports/csepolicybrief.pdf.

A growing body of research finds that compliance with child support orders in some States, regardless of income level, declines when the support obligation is

set above 15-20 percent of the obligor's income, and that orders for excessive amounts result in lower, not higher, child support payments.
14

States like California and Washington have found that the direct result of establishing support obligations that exceed the ability of obligors to meet them is unpaid arrearages. Most arrearages are owed by noncustodial parents with earnings under $10,000 and are uncollectible.
15

Research finds that high arrearages substantially reduce the formal earnings of noncustodial parents and child support payments in economically disadvantaged families, while reducing unmanageable arrearages can increase payments.
16

Accumulation of high arrearage balances is often associated with incarceration, because parents have little to no ability to earn income while they are incarcerated, and little ability to pay off the arrearages when released due to lack of employment.
17

14
Mark Takayesu,
How Do Child Support Order Amounts Affect Payments and Compliance?
Orange County, CA Department of Child Support Services, (Oct. 2011), available at:
http://ncsea.omnibooksonline.com/2012policyforum/data/papers/PV_1.pdf#page=1;
and Carl Formoso,
Determining the Composition and Collectability of Child Support Arrearages, Volume 1: The Longitudinal Analysis
(2003), available at:
http://www.dshs.wa.gov/pdf/esa/dcs/reports/cvol1prn.pdf.
See also HHS Office of Inspector General report,
The Establishment of Child Support Orders for Low Income Non-custodial Parents,
OEI-05-99-00390, (2000), available at:
http://oig.hhs.gov/oei/reports/oei-05-99-00390.pdf.

15
For further information, see Elaine Sorensen, Liliana Sousa, and Simon Schaner's report,
Assessing Child Support Arrears in Nine Large States and the Nation
(2007), available at:
http://aspe.hhs.gov/hsp/07/assessing-CS-debt/.

16
For further information, see Carolyn J. Heinrich, Brett C. Burkhardt, and Hilary M. Shager,
Reducing Child Support Debt and Its Consequences: Can Forgiveness Benefit All?
(2010), available at:
http://www.irp.wisc.edu/research/childsup/cspolicy/pdfs/2007-09/FamiliesForward_3_19_10.pdf;
Maria Cancian, Carolyn Heinrich, and Yiyoon Chung,
Does Debt Discourage Employment and Payment of Child Support?
(2009), available at:
http://www.irp.wisc.edu/publications/dps/pdfs/dp136609.pdf;
and Harry Holzer, Paul Offner, and Elaine Sorensen,
Declining Employment Among Young Black Less-Educated Men: The Role Of Incarceration and Child Support
(2004), available at:
http://www.urban.org/uploadedpdf/411035_declining_employment.pdf.

17
For further information, see Carmen Solomon-Fears, Gene Falk, and Adrienne L. Fernandes-Alcantara,
Child Well-Being and Noncustodial Fathers
(2013), Congressional Research Service. See also Amanda Geller, Irwin Garfinkel, and Bruce Western.
The Effects of Incarceration on Employment and Wages: An Analysis of the Fragile Families Survey (
2006), Center for Research on Child Wellbeing. Working Paper # 2006-01-FF. available at:
http://www.saferfoundation.org/files/documents/Princeton-Effect%20of%20Incarceration%20on%20Employment%20and%20Wages.pdf.
Also, the Report of the Re-Entry Policy Council,
Charting the Safe and Successful Return of Prisoners to the Community,
Council of State Governments, Reentry Policy Council, January 2005, Policy Statement 13, available at:
http://reentrypolicy.org/Report/About.
For further background, see Jessica Pearson's article,
Building Debt While Doing Time: Child Support and Incarceration,
Judges' Journal, American Bar Association, no. 1, vol. 43 (Winter 2004), available at:
http://peerta.acf.hhs.gov/uploadedFiles/BuildingDebt.pdf.

As a condition of State IV-D plan approval, section 467 of the Act requires a State to establish guidelines for child support awards issued in the State. Existing regulations provide a State with discretion to design its child support guidelines within the parameters of § 302.56. Currently, under § 302.56(c)(1), guidelines must take into consideration all earnings and income of the noncustodial parent.

Research suggests that setting an accurate order based upon the ability to pay improves the chances that noncustodial parents will continue to pay over time. Compliance with support orders is strongly linked to ability to pay. Many low-income noncustodial parents do not meet their child support obligations because they do not earn enough to pay what is ordered.
18

The HHS Office of the Inspector General concluded that child support orders set for low income parents are ineffective in generating child support payments when set too high relative to ability to pay, finding that compliance is significantly lower when a monthly order is more than 20 percent of a parent's income than when it is 15 percent or less.
19

Similarly, studies conducted in Washington and California found that, regardless of income level, arrearages are unlikely to accumulate if the support obligation is no more than 20 percent of earnings, or lower.
20

18
Michelle Ganow Jones,
Options to Help Low-Income Noncustodial Parents Manage Their Child Support Debt
(2002), available at
http://76.12.61.196/publications/optionstohelplowincomeIN.htm.

19
For further information, see HHS OIG report,
The Establishment of Child Support Orders for Low Income Non-custodial Parents,
OEI-05-99-00390 (2000), available at:
http://oig.hhs.gov/oei/reports/oei-05-99-00390.pdf
.

20
Carl Formoso,
Determining the Composition and Collectability of Child Support Arrearages, Volume 1: The Longitudinal Analysis
(2003), available at:
http://www.dshs.wa.gov/pdf/esa/dcs/reports/cvol1prn.pdf.
Mark Takayesu,
How Do Child Support Orders Affect Payments and Compliance?
Orange County, CA Department of Child Support Services (Oct. 2011), available at:
http://ncsea.omnibooksonline.com/2012policyforum/data/papers/PV_1.pdf#page=1.

Setting child support orders that reflect an actual ability to pay is crucial to encouraging compliance, increasing accountability for making regular payments, and discouraging uncollectible arrearages. On January 30, 2013, the National Child Support Enforcement Association issued a policy statement indicating that: “As a general rule, child support guidelines and orders should reflect actual income of parents and be changed proactively to ensure current support orders reflect current circumstances of the parents and to encourage regular child support payments. Presumed or default orders should occur only in limited circumstances.”
21

Many States have programs to ensure that child support orders are based on the ability to pay. As of September 2011, at least 21 States and the District of Columbia were operating programs designed to ensure that child support orders reflect current earnings when orders are initially established and are modified when earnings change.
22

For example, Idaho operates a Default Reduction Project, Arizona conducts modification workshops, Kentucky developed on-line assistance for parents to modify their orders, and Texas offers enhanced Web site assistance for modifying orders to match reduced income. In addition, as of April 2011, 38 States and the District of Columbia did not treat incarceration as “voluntary unemployment,” a legal barrier to modifying orders to reflect actual income.
23

Evidence shows that engaging both parents in the order establishment process is likely to result in more accurate order setting, avoiding default orders, avoiding the unnecessary build-up of arrearages, and increasing parental commitment to regularly pay child support.
24

21
The National Child Support Enforcement Association policy statement,
Setting Current Support Based on Ability to Pay,
dated January 30, 2013, is available at:
http://www.ncsea.org/documents/Ability_to_Pay-final.pdf.

22
Department of Health and Human Services, Office of Child Support Enforcement,
State Child Support Agencies with Programs to Ensure that Child Support Orders Reflect Current Earnings
(2012), available at:
http://www.acf.hhs.gov/programs/css/resource/state-child-support-agencies-with-programs-to-ensure-that-child-support.

23
Thirty two States allow for an order modification when noncustodial parents are incarcerated and six other states do not have a legal bar against such modifications. See Department of Health and Human Services, Office of Child Support Enforcement, “
Voluntary Unemployment,” Imputed Income, and Modification Laws and Policies for Incarcerated Noncustodial Parents
(2012), Project of Avoid Increasing Delinquencies, Child Support Fact Sheet, available at:
http://www.acf.hhs.gov/sites/default/files/ocse/paid_no4_companion.pdf.

24
See Elaine Sorensen and Tess Tannehill,
Preventing Child Support Arrears in Texas by Improving Front-end Processes
(2006), available at:
http://www.urban.org/UploadedPDF/411829_child_support_arrears.pdf;
Center for Policy Research,
Reducing Child Support Default Orders in Colorado
(2007), Colorado Division of Child Support Enforcement, Final Report for Grant No. 90FD0080, available at:
https://childsupport.state.co.us/siteuser/do/vfs/Read?file=/cm:Publications/cm:Reports/cm:Colorado_x0020_Default_x0020_Project_x0020_Final_x0020_Report.pdf;
and Kelly Macatangay, Anton H. Westveld, Brian Kunkel,

Intervening for Success.
(2012) Final Report for Grant No. 90FD0136.

If States are unable to obtain data on the earnings and income of the noncustodial parent in a child support proceeding, many States impute the noncustodial parent's income. In some cases, imputation of income is based on an analysis of a parent's specific education, skills, and work experience,
25

while in other cases, imputation of income is standardized based on full-time, full-year work at minimum or median wage, particularly if a noncustodial parent is not working, or there is no available income information.

25
See PIQ-00-03,
State IV-D Program Flexibility with Respect to Low Income Obligors—Imputing Income; Setting Child Support Orders and Retroactive Support; Compromising Arrearages; Referral to Work-Related Programs and Other Non-traditional Approaches to Securing Support,
available at
http://www.acf.hhs.gov/programs/cse/pol/PIQ/2000/piq-00-03.htm.

However, research suggests that support orders based on imputed income often go unpaid because they are set beyond the ability of parents to pay them. The result is high uncollectible arrears balances that can provide a disincentive for obligors to maintain employment in the regular economy. Inaccurate support orders also can help fuel resentment toward the child support system and a sense of injustice that can decrease willingness to comply with the law.
26

The research supports the conclusion that accurate support orders that reflect a noncustodial parent's actual income are more likely to result in compliance with the order, make child support a more reliable source of income for children, and reduce uncollectible child support arrearages.
27

26
Christy Visher and Shannon Courtney,
Cleveland Prisoners' Experience Returning Home,
Urban Institute (2006), available at
http://www.urban.org/UploadedPDF/311359_cleveland_prisoners.pdf.
Also, Maureen R. Waller and Robert Plotnick,
Effective Child Support Policy for Low-Income Families: Evidence from Street Level Research,
Journal of Policy Analysis and Management (2001), available at:
http://www.jstor.org/stable/3325595.

27
For further information, see the report,
The Story Behind the Numbers: Understanding and Managing Child Support Debt,
OCSE Study (2008), available at:
www.acf.hhs.gov/programs/cse/pol/IM/2008/im-08-05a.pdf.

Before child support programs were computerized, imputation of income was used as the basis for establishing support obligations because limited information was available to decision-makers. Today, however, States have access to multiple interstate data systems, including the State and National Directories of New Hires as well as the Financial Institution Data Match (FIDM) and Multistate Financial Institution Data Match (MSFIDM), that can verify when a noncustodial parent has a new job, is claiming unemployment insurance benefits, or has quarterly wage information available. Data, not assumptions, are a more accurate method of determining the income and resources of noncustodial parents.

Accordingly, we propose to modernize standard practices for setting child support awards in order to set more accurate orders based on actual income. To address these changes, we propose a revision to § 302.56(a) to provide a State with sufficient time to address the revised requirements of § 302.56. Specifically, we propose that a State meet the requirements of § 302.56 within one year after completion of its next quadrennial review of its guidelines pursuant to § 302.56(e).

We propose to amend current § 302.56(c)(1) to require guidelines to take into consideration a noncustodial parent's “actual” earnings and income rather than “all” earnings and income. We believe this amendment will afford a State greater flexibility to set accurate orders that reflect a noncustodial parent's actual ability to pay support. The proposed revision will reflect common practice in some States and encourage operational updating in others. We specifically invite public comments on this proposed change.

Additionally, we propose a new criterion as § 302.56(c)(4). We propose that State guidelines take into consideration the noncustodial parent's subsistence needs (as defined by the State in its guidelines) and provide that amounts ordered for support be based upon available data related to the parent's actual earnings, income, assets, or other evidence of ability to pay, such as testimony that income or assets are not consistent with a noncustodial parent's current standard of living. “Subsistence” is defined in the Merriam-Webster dictionary as, “the minimum (as of food and shelter) necessary to support life.”
28

A number of States incorporate a self-support reserve into their guidelines to recognize the noncustodial parents' subsistence needs. See PIQ-00-03 (September 14, 2000).
29

For example, New Jersey defines a self-support reserve as the amount of income that the State determines is necessary to ensure that a noncustodial parent “has sufficient income to maintain a basic subsistence level and the incentive to work so that child support can be paid.”
30

This reserve amount is either disregarded or used to adjust the child support obligation so the noncustodial parent is able to meet his basic needs. The goal of this proposal is to establish an accurate child support order and obtain compliance with the order based upon the real circumstances of the parties and the best interests of the child. The IV-D agency must use the guidelines and take into consideration the obligated parent's ability to pay, or justify the deviation from the application of the guidelines. See PIQ-07-01 (February 6, 2007) (requiring similar considerations in the recoupment of medical expenses or birthing expenses owed to a State).
31

28
See
http://www.merriam-webster.com/.

29
PIQ-00-03,
State IV-D Program Flexibility with Respect to Low Income Obligors—Imputing Income; Setting Child Support Orders and Retroactive Support; Compromising Arrearages; Referral to Work-Related Programs and Other Non-traditional Approaches to Securing Support,
available at:
http://www.acf.hhs.gov/programs/css/resource/state-iv-d-program-flexibility-low-income-obligors.

30
Rules Governing the Courts of New Jersey, Appendix IX-A
Considerations in the Use of Child Support Guidelines,
Section 7.h., Self-Support Reserve, available at:
http://www.judiciary.state.nj.us/csguide/app9a.pdf.

31
PIQ-07-01,
Use of Federal Income Tax Refund Offset Program to recoup medical expenses or birthing expenses owed to a State,
available at:
http://www.acf.hhs.gov/programs/css/resource/tax-refund-to-recoup-medical-or-birthing-expenses-owed-to-state.

The proposed regulation in § 302.56(c)(4) allows a State to impute income where the noncustodial parent's lifestyle is inconsistent with earnings or income and where there is evidence of income or assets beyond those identified. We recognize, however, that some noncustodial parents may not make support payments because they are unwilling to do so. An example of this would be a noncustodial parent who, despite good educational credentials and marketable job skills, simply refuses to work. In this situation the court may deviate from the guidelines. We specifically invite comments on this provision.

We also propose a new criterion as § 302.56(c)(5) to prohibit the treatment of incarceration as “voluntary unemployment.” While the treatment of incarceration as voluntary unemployment used to be a common State guidelines policy, no more than a dozen States still maintain this policy. Treating incarceration as voluntary unemployment means that income is imputed and precludes modification of support orders. The research suggests that many incarcerated parents often leave prison with an average of $15,000-$30,000 or more in unpaid child support, with no means to pay

upon release.
32

The research also indicates that orders that are unrealistically high may undermine stable employment and family relationships, encourage participation in the underground economy, and increase recidivism.
33

We want to highlight and to specifically invite public comments on this provision.

32
See Esther Griswold and Jessica Pearson, “Twelve Reasons for Collaboration Between Departments of Correction and Child Support Enforcement Agencies,”
Corrections Today
(2003 which is available at:
http://www.thefreelibrary.com/Twelve+reasons+for+collaboration+between+departments+of+correction...-a0123688074;
Jessica Pearson, “Building Debt While Doing Time: Child Support and Incarceration,”
Judges' Journal
(2004), which is available at:
https://peerta.acf.hhs.gov/uploadedfiles/buildingdebt.pdf;
Nancy Thoennes,
Child Support Profile: Massachusetts Incarcerated and Paroled Parents
(2002), which is available at:
http://cntrpolres.qwestoffice.net/reports/profile%20of%20CS%20among%20incarcerated%20&%20paroled%20parents.pdf;
and Pamela Ovwigho, Correne Saunders, and Catherine Born.
The Intersection of Incarceration & Child support: A snapshot of Maryland's Caseload
(2005), which is available at:
http://www.familywelfare.umaryland.edu/reports1/incarceration.pdf.
See also Federal Interagency Reentry Council,
Reentry Myth Buster on Child Support
(2011), available at:
http://www.nationalreentryresourcecenter.org/documents/0000/1063/Reentry_Council_Mythbuster_Child_Support.pdf.

33
U.S. Department of Health and Human Services, Office of Child Support Enforcement,
Incarceration, reentry and Child Support Issues: National and State Research Overview
(2006), available at:
http://www.acf.hhs.gov/programs/cse/pubs/2006/reports/incarceration_report.pdf.

Additionally, we propose a new criterion as § 302.56(h) that will allow a State to recognize parenting time provisions when both parents have agreed to the parenting time provisions or pursuant to State guidelines. Parenting time is a legally distinct and separate right from the child support obligation. Nonetheless, in practical terms, parenting time is an important corollary to child support establishment because the child support agency, or finder of fact, needs information about the parenting time arrangements in order for the guideline amount to be effectively calculated. For the proposed parenting time provision, we want to emphasize that this is a minor change to existing regulations and merely allows a court or child support agency to include a parenting time agreement into the child support order when both parents have agreed to the parenting time provisions.

Including both the calculation of support and the amount of parenting time in the support order at the same time increases efficiency, and reduces the burdens on parents of being involved in multiple administrative or judicial processes at minimal cost to the child support program. When a State has adopted child support guidelines that incorporate parenting time, the parenting time is integral to the support order calculation. “State child support guidelines that incorporate parenting time” refers to those States that have guidelines which incorporate allowances (or credits) for the amount of time children spend with both parents in the calculation of the child support order amount.

This new parenting time provision is not intended to require State IV-D agencies to undertake new activities. IV-D program costs must be minimal and incidental to IV-D establishment activities and would not have any impact on the Federal budget. Our proposed regulation is intended simply to allow the inclusion of an uncontested and agreed upon parenting time provision incidental to the establishment of a child support order when convenient to the parties, IV-D agency and court to do so. We believe that this provision will reflect the current practice in some States and will encourage program flexibility in others. We specifically invite comments on this provision.

Finally, we propose to redesignate current § 302.56(h) as § 302.56(i) and to revise this section. Current § 302.56(h) addresses the data that a State must consider as part of the review of a State's guidelines pursuant to § 302.56(e) and requires that the analysis of the data must be used in the guidelines review to ensure that deviations from the guidelines are limited. We propose adding a new sentence at the end of this provision stating that deviations from the presumptive child support amount may be based on factors established by the State. Reasons for deviating from the guidelines in the best interest of children often include extraordinary medical expenses, and/or educational costs of additional dependents.

Section 302.70: Required State Laws

We propose changes to existing rules in section 302.70 to improve efficiency of state programs. OCSE has statutory authority to grant a State an exemption from implementing one or more of the laws and procedures required under section 466 of the Act if a State can demonstrate to the satisfaction of the Secretary that adoption of any one or all of the required laws and procedures will not increase the effectiveness and efficiency of the State's Child Support Enforcement program. Additionally, OCSE may grant an exemption if a State has and uses a similar procedure which does not fully comply with the mandate, law, or procedure and the State shows evidence that implementation of the mandatory procedure would not increase the efficiency and effectiveness of the State's existing procedure. In the past, OCSE has granted such State exemptions for a period up to 3 years. However, we believe that changing the time period to 5 years would reduce paperwork while ensuring sufficient accountability and oversight.

We also propose to amend the provision in § 302.70(d)(2) that allows a State to request extensions of its IV-D State plan exemptions every 3 years. OCSE believes that the requirement to request an extension every 3 years is unnecessary and that a 5-year review would be more appropriate. There are two reasons for this proposed change. First, OCSE reviews and analyzes initial exemption requests thoroughly to ensure that the statutory requirements pursuant to section 466(d) of the Act are met. Second, in over 20 years of reviewing extension requests for approved exemptions, OCSE has never denied an extension request. This proposed amendment to request extensions of IV-D State plan exemptions every 5 years will not change OCSE's authority to review and to revoke a State's exemption at any time, but it will promote efficiency by reducing the burden imposed on States submitting exemption extension requests.

Section 302.76: Job Services

The evidence from recent research studies, including rigorous analyses of Texas'
NCP Choices
and the New York's
Strengthening Families Through Stronger Fathers Initiative,
indicates that child support-coordinated work programs can be an effective method of increasing child support payments to families.
34

Although many State Child Support Enforcement programs have entered into local or statewide partnerships to provide noncustodial parent employment activities, the cost of work activities provided under an individual work plan has not been allowed as a IV-D reimbursable cost.
35

34
For further information, see Daniel Schroeder and Nicholas Doughty's report,
Texas Non-Custodial Parent Choices: Program Impact Analysis
(2009), available at
https://www.texasattorneygeneral.gov/cs/ofi/ncp_choices_program_impact.pdf.
Also, Kye Lippold, Austin Nichols, and Elaine Sorensen's report,
Strengthening Families Through Stronger Fathers: Final Impact Report for the Pilot Employment Programs
(2011), available at:
http://www.urban.org/uploadedpdf/412442-Strengthening-Families-Through-Stronger-Fathers.pdf.

35
See OCSE AT-97-10, Question and Answer 4, under Miscellaneous, available at:
http://www.acf.hhs.gov/programs/cse/pol/AT/1997/at-9710.htm;
OCSE PIQ-98-03, available at:

http://

www.dshs.wa.gov/pdf/esa/dcs/reports/OCSE_PIQ_90_99.pdf;

and OCSE AT 00-08, Question and Answer 17, available at:
http://www.acf.hhs.gov/programs/css/resource/collaborative-efforts-between-iv-d-agencies-and-welfare-to-work.

Section 454(13) of the Act requires that the state plan must “provide that the State will comply with such other requirements and standards as the Secretary determines to be necessary to the establishment of an effective program for locating noncustodial parents, establishing paternity, obtaining support orders, and collecting support payments.” Pursuant to section 454(13) of the Act, we propose to add a new optional State plan provision, § 302.76, Job Services. The proposal permits the State to provide certain specified job services to eligible noncustodial parents pursuant to § 303.6(c)(5). If the State chooses this option, the state plan must include a description of the job services and eligibility criteria.

Section 303.3: Location of Noncustodial Parents in IV-D Cases

Section 303.3 requires IV-D agencies to attempt to locate all noncustodial parents or sources of information or assets where that information is necessary. In addition to the Federal Parent Locator Service, the existing regulation lists appropriate locate sources, including “police, parole, and probation records.” The proposed change to § 303.3(b)(1) specifically adds “corrections institutions” to this list.

This proposed change will encourage child support agencies to use the available locate tools already at their disposal to identify incarcerated noncustodial parents and assure that their orders are appropriate.

Section 303.6: Enforcement of Support Obligations

In addition to the State guidelines changes, we propose to update Federal regulations in § 303.6 requiring States to have procedures in place ensuring that civil contempt proceedings take into consideration the subsistence needs of the noncustodial parent.

We believe our effort to modernize current practices in this program area will encourage noncustodial parents to comply with child support orders, maintain legitimate employment, and minimize the accumulation of unpaid child support arrearages. This will ultimately help noncustodial parents to better fulfill their financial responsibilities toward their children.

Existing § 303.6(c) requires that the IV-D agency must maintain and use an effective system for enforcing a child support obligation by complying with the provisions in existing § 303.6(c)(1) through (4). The IV-D agency must use this enforcement system for all cases referred to the IV-D agency or applying for services under § 302.33 in which a child support order has been established.

To ensure that the low-income noncustodial parent is able to comply with the court order, we propose to redesignate paragraph (c)(4) to (c)(5) and add new paragraph (c)(4) requiring States to have procedures in place ensuring that in civil contempt proceedings, such enforcement activities take into consideration the noncustodial parent's subsistence level and income. In addition, we encourage States to develop procedures to take into account the noncustodial parent's subsistence level in other child support enforcement procedures such as credit bureau reporting, license revocation, State tax refund offset, and liens. Some States have reported that they are already doing this based on discretionary needs-based analysis that the States have developed for implementing several of these enforcement tools. We invite comments on whether OCSE should regulate having procedures for considering the noncustodial parent's subsistence level for other enforcement activities in the future.

In addition, we propose in new paragraph (c)(4) that the IV-D agency must ensure, in a civil contempt proceeding, that a purge amount the noncustodial parent must pay in order to avoid incarceration takes into consideration actual earnings and income and the subsistence needs of the noncustodial parent. In addition, we propose that a purge amount must be based upon a written evidentiary finding that the noncustodial parent has the actual means to pay the amount from his or her current income or assets. This proposal will assure a fundamentally fair determination of whether a noncustodial parent is able to comply with the court order in a child support civil contempt proceeding that can lead to jail time. This proposed provision is intended to assist States seeking to add due process protections in accordance with the U.S. Supreme Court's recent decision in
Turner v. Rogers,
564 U.S. _, 131 S Ct. at 2507 (2011), which noted that civil contempt proceedings must assure a “fundamentally fair determination . . . whether the supporting parent is able to comply with the support order.” As noted in
Turner,
“A court may not impose punishment in a civil contempt proceeding when it is clearly established that the alleged contemnor is unable to comply with the terms of the order.”
Turner, 131 S. Ct. at 2516, quoting Hicks
v.
Feiock,
485 U.S. 624, 638, n. 9.

Under this provision, a court would not be allowed to set a standardized purge payment amount in a IV-D case, including a fixed dollar amount, a fixed percentage of the arrearage, or a fixed number of monthly payments, unless the provisions of proposed § 303.6(c)(4) are met. Under proposed § 303.6(c)(4), a IV-D agency, for example, could implement procedures to assist the court in its determination, for example, by pre-screening cases to determine whether the case is appropriate for a contempt proceeding. The issue is not the use of contempt procedures per se, but contempt orders that, if not satisfied, can lead to jail time. While some States routinely use show cause or contempt proceedings, jail is not a typical outcome. We believe the proposed provision will provide safeguards to reduce the risk of erroneous deprivation of liberty in a child support civil contempt case. We note that a contempt order may not be monetary, but instead may require certain actions by the obligor, such as obtaining employment or participation in job search or other work activities. So long as the obligor has the present ability to do what is ordered of him or her, HHS believes such an order would appear to comply with the
Turner
decision.

In an effort to make the program more effective and to increase regular child support payments, we propose program standards related to providing certain job services for eligible noncustodial parents responsible for paying child support. These services are designed to complement traditional enforcement tools and to help noncustodial parents find suitable employment opportunities so they can support their children.

Stable child support collections depend on the economic stability of the noncustodial parent. In fact, over 70 percent of child support collections are made through wage withholding by employers.
36

So while the child support program works well for those parents who have steady incomes through regular employment or other means, it has been less effective for the 20 to 30 percent of noncustodial parents who have a limited ability to pay child support because of their limited

earnings.
37

For example, 70 percent of unpaid child support debt is owed by parents with no or low reported earnings.
38

Many poor noncustodial parents, however, have little or no connection to the formal labor market and therefore cannot pay consistent support.
39

36
DCL-13-16, OCSE Preliminary FY 2012 Data Report, is available at:
http://www.acf.hhs.gov/programs/css/resource/fy-12-preliminary-data-report-announcement.

37
For further information, see Elaine Sorensen and Chava Zibman's report,
Poor Dads Who Don't Pay Child Support: Deadbeats or Disadvantaged?
(2001), available at:
http://www.urban.org/UploadedPDF/anf_b30.pdf.

38
For further information, see Elaine Sorensen, Liliana Sousa, and Simon Schaner's report,
Assessing Child Support Arrears in Nine Large States and the Nation
(2007), available at:
http://aspe.hhs.gov/hsp/07/assessing-CS-debt/.

39
For further information, see Elaine Sorensen and Helen Oliver's report,
Policy Reforms are Needed to Increase Child Support from Poor Fathers
(2002), available at:
http://www.urban.org/uploadedPDF/410477.pdf.

Traditional enforcement tools often prove ineffective in getting unemployed noncustodial parents to pay child support.
40

In most cases, offering job services is a more effective approach for increasing the ability of unemployed noncustodial parents to get and keep a job and to pay child support on a regular basis, while holding parents accountable for supporting their children. As of February 2014, 30 States and the District of Columbia are operating 77 work-oriented programs for noncustodial parents with active child support agency involvement. Three of these States are operating statewide programs—Georgia, Maryland, and North Dakota. Many other States are operating programs in multiple counties. We estimate that roughly 30,000 noncustodial parents were served by these programs in 2013. Many of these programs are associated with better child support and employment outcomes, and evaluations show they usually lead to increased support payments.
41

40
For further information, see Maria Cancian, Daniel R. Meyer, and Eunhee Han's article,
Child Support: Responsible Fatherhood and the Quid Pro Quo
(2011),
The ANNALS of the American Academy of Political and Social Science 635:140.

41
U.S. Department of Health and Human Services, Administration for Children and Families, Office of Child Support Enforcement,
Work-Oriented Programs for Noncustodial Parents with Active Child Support Agency Involvement
(2014), available at:
https://www.acf.hhs.gov/sites/default/files/programs/css/work_oriented_programs_for_non_custodial_parents_2014.pdf.

These programs build on a long history of national demonstrations providing employment services to noncustodial parents. The Parents' Fair Share (PFS) demonstration in the 1990s tested a comprehensive employment program designed to improve child support payments and other outcomes for unemployed noncustodial parents with children receiving public assistance. The evaluation of PFS found that this intervention increased reliable child support payments.
42

Subsequent demonstrations or initiatives included the OCSE Responsible Fatherhood Programs (1998-2000), Partners for Fragile Families (2000-2003), Welfare-to-Work funded programs (1998-2004), and the Fathers at Work Demonstration (2003-2007). All of these programs aimed at increasing low-income parents' earnings and their child support payments, as well as increasing their involvement in their children's lives.
43

These programs tended to generate appreciable gains in child support payments.

42
For further information, see Fred Doolittle, Virginia Knox, Cynthia Miller, and Sharon Rowser's report,
Building Opportunities, Enforcing Obligations: Implementation and Interim Impacts of Parents' Fair Share
(1998), available at:
http://www.mdrc.org/sites/default/files/full_38.pdf.

43
For further information, see Sarah Avellar, M. Robin Dion, Andrew Clarkwest, Heather Zaveri, Subuhi Asheer, Kelley Borradaile, Megan Hague Angus, Timothy Novak, Julie Redline, and Marykate Zukiewicz's report,
Catalog of Research: Programs for Low-Income Fathers
(2011), OPRE Report# 2011-20, available at:
http://www.acf.hhs.gov/programs/opre/resource/catalog-of-research-programs-for-low-income-fathers.

We propose to add § 303.6(c)(5) to provide program standards related to the proposed optional State plan provision for job services for noncustodial parents owing child support through the IV-D program that are reasonably expected to increase child support payments. Our proposed job services program standards emphasize rapid labor force attachment and job retention strategies rather than long-term career development. While there are other contexts in which services to promote access to better jobs and careers are important, we have determined that in the context of unemployed noncustodial parents with child support responsibilities, federal matching funds should be limited to those services best calculated to lead to rapid employment entry and employment retention. States may determine whether to provide job services and how to design an evidence-informed employment program that improves child support outcomes. State child support work-oriented programs have implemented a number of promising strategies such as tiered employment, sectoral strategies, and job-driven training—training with a focus on business and labor market needs. Allowable job services are limited to those services which will help noncustodial parents find and maintain work so they can pay consistent and ongoing child support payments.

To be eligible for job services, we propose that the noncustodial parent must have a IV-D case, have a current child support order, be unemployed or not making regular child support payments, not be receiving TANF assistance or assistance funded with State dollars counting toward TANF maintenance of effort, not be enrolled in a Supplemental Nutrition Assistance Program Employment and Training program under 7 CFR 273.7 and 273.24, not be receiving the same job services from Workforce Investment Act (WIA) under 20 CFR part 652 and parts 660-671, and not be receiving a Federal Pell Grant under 34 CFR part 690. The State child support agency may set additional eligibility criteria.

We propose that allowable job services (for which FFP will be available under § 304.20(b)(3)(ix)) include:

• Job search assistance;

• job readiness training;

• job development and job placement services;

• skills assessments to facilitate job placement;

• job retention services;

• certificate programs and other skills training directly related to employment, which may include activities to improve literacy and basic skills, such as programs to complete high school or a General Education Development (GED) certificate, as long as they are included in the same job services plan; and

• work supports such as transportation assistance, uniforms, or tools.

We have included a focused set of job services based on rigorous research that shows positive effects of these types of services on the employment of noncustodial parents and their child support payments.
44

This package includes certificate programs and other skills training directly related to employment. Previous successful programs have included a package of services including certificate programs and skills training, which only minimally increase the cost of this provision. We specifically invite comment on our proposed eligibility

criteria and the list of allowable job services.

44
For further information, see Daniel Schroeder and Nicholas Doughty's report,
Texas Non-Custodial Parent Choices: Program Impact Analysis
(2009), available at
https://www.texasattorneygeneral.gov/cs/ofi/ncp_choices_program_impact.pdf.
Also, Kye Lippold, Austin Nichols, and Elaine Sorensen's report,
Strengthening Families Through Stronger Fathers: Final Impact Report for the Pilot Employment Programs
(2011), available at:
http://www.urban.org/uploadedpdf/412442-Strengthening-Families-Through-Stronger-Fathers.pdf.

Subsidized employment is not included as an allowable job service above, but we ask for comment regarding its inclusion here. Subsidized employment programs provide jobs to people who cannot find employment in the regular labor market and use public funds to pay all or some of their wages. Evaluations of subsidized employment programs suggest that they are effective at providing jobs in the short term and can have valuable ancillary benefits, including reduced welfare receipt and recidivism among ex-offenders.
45

However, including subsidized employment in a jobs program can increase the cost of the program, and our principal focus here is on low-cost job services. We invite comments on the effectiveness of including subsidized employment as an allowable job service, including experience and evidence of the cost-effectiveness of using this strategy to improve regular child support payment from low-income parents, and if allowed, options we might consider for limiting the costs of subsidized jobs efforts, such as limits on the length or amount of the subsidy. Since payment of child support obligations is the goal of job services in child support, we also ask for comments on the potential implications of withholding child support from IV-D funded subsidized wages.

45
For further information, see Cindy Redcross, Megan Millenky, Timothy Rudd, and Valerie Levshin. “More than a Job: Final Results from the Evaluation of the Center for Employment Opportunities (CEO) Transitional Jobs Program,” OPRE Report 2011-18 (January 2012) available at:
http://www.acf.hhs.gov/sites/default/files/opre/more_than_job.pdf.
In addition, see Dan Bloom, Sarah Rich, Cindy Redcross, Erin Jacobs, Jennifer Yahner, and Nancy Pindus. “Alternative Welfare-to-Work Strategies for the Hard-to-Employ: Testing Transitional Jobs and Pre-Employment Services in Philadelphia,” MDRC, (October 2009), available at:
http://www.acf.hhs.gov/programs/opre/resource/alternative-welfare-to-work-strategies-for-the-hard-to-employ-testing.

Section 303.8: Review and Adjustment of Child Support Orders

Effective review and adjustment of child support orders is an important step in ensuring that noncustodial parents comply with their child support obligations. Without an effective system to change child support orders to reflect actual ability to pay, arrears will accumulate. The unnecessary accrual of arrears is harmful because it hinders payment of regular support payments, leads to uncollectible debt, limits work opportunities for noncustodial parents, and interferes with parent-child relationships.
46

To address the needs of families with a parent in prison, numerous States, including Missouri, Nevada, Oklahoma, Texas, and West Virginia, already communicate with incarcerated parents about review and adjustment policies and the importance of requesting modification of their child support orders.
47

46
For further information, see Carolyn J. Heinrich, Brett C. Burkhardt, and Hilary M. Shager,
Reducing Child Support Debt and Its Consequences: Can Forgiveness Benefit All?
(2010), available at:
http://www.irp.wisc.edu/research/childsup/cspolicy/pdfs/2007-09/FamiliesForward_3_19_10.pdf.

47
For further information, see Department of Health and Human Services, Office of Child Support Enforcement,
“Voluntary Unemployment,” Imputed Income, and Modification Laws and Policies for Incarcerated Noncustodial Parents
(2012), Project of Avoid Increasing Delinquencies—Child Support Fact Sheet, available at:
http://www.acf.hhs.gov/sites/default/files/ocse/paid_no4_companion.pdf.

Section 466(a)(10) of the Act requires a State to have in effect laws requiring the use of procedures for review and adjustment of child support orders. Existing regulations in § 303.8 specify the requirements that a State must meet with respect to seeking adjustments to child support orders in IV-D cases. The current regulation establishes both a required system for review and adjustment for cases with assignments under part A of the Act and a means of accessing the review and adjustment process for other cases based upon a request from either parent. We propose to redesignate § 303.8(b)(2) through (b)(5) as (b)(3) through (b)(6). 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.
48

A number of States, including Arizona, California, Michigan, Vermont, and the District of Columbia permit their child support agency to initiate review and adjustment upon notification that the noncustodial parent has been incarcerated.
49

During the first year of implementing this new procedure, one State was able to modify over 300 orders resulting in an average of $5,156 in arrearages being avoided per case.
50

We specifically invite comments on this provision, including any experiences commenters have had in trying to adjust orders for incarcerated noncustodial parents.

48
For further information, see the
Report of the Re-Entry Policy Council: Charting the Safe and Successful Return of Prisoners to the Community,
available at:
http://www.reentrypolicy.org/publications/1694;file.
See also Carmen Solomon-Fears, Gene Falk, and Adrienne L. Fernandes-Alcantara,
Child Well-Being and Noncustodial Fathers
(2013), Congressional Research Service.

49
In 2012, Vermont enacted Senate Bill 203 that allows the child support program to file a motion to modify child support if a party is incarcerated from more than 90 days. For information about the other jurisdictions, see Department of Health and Human Services, Office of Child Support Enforcement,
“Voluntary Unemployment,” Imputed Income, and Modification Laws and Policies for Incarcerated Noncustodial Parents
(2012), Project of Avoid Increasing Delinquencies—Child Support Fact Sheet, available at:
http://www.acf.hhs.gov/sites/default/files/ocse/paid_no4_companion.pdf.

50
For further information, see the final report on
Modifying Orders for DC Prisoners: An 1115 Demonstration Project
(2006), abstract available at:
http://archive.acf.hhs.gov/programs/cse/grants/abstracts/by_state.html.

In addition, we propose to redesignate existing § 303.8(b)(6) which requires notice “not less than once every three years,” to § 303.8(b)(7) and (b)(7)(i) and to add a new paragraph (b)(7)(ii) to add that a notice of the right to request a review and adjustment is also required when the IV-D agency has knowledge that a parent is incarcerated. Alabama and Texas provide inmates with information about the child support program and the steps needed to request a review of their child support order.
51

Providing notice is a necessary first step in informing both parents of the ability to request a modification of their order when a parent has been incarcerated.

51
For further information, see Department of Health and Human Services, Office of Child Support Enforcement,
“Voluntary Unemployment,” Imputed Income, and Modification Laws and Policies for Incarcerated Noncustodial Parents
(2012), Project of Avoid Increasing Delinquencies—Child Support Fact Sheet, available at:
http://www.acf.hhs.gov/sites/default/files/ocse/paid_no4_companion.pdf.

In addition, § 303.8 specifies requirements that a State must meet with respect to seeking adjustments to child support orders in IV-D cases. Existing paragraph (d) of this section specifies that if the review indicates the

need to provide for the health care needs of the children in the order, such a need must constitute adequate justification under State law to petition for adjustment of the order, regardless of whether an adjustment in the amount of child support is necessary. Existing paragraph (d) restricts consideration of Medicaid as medical support.

Since current OCSE policy does not consider the eligibility for or receipt of Medicaid to meet the health care needs of the child(ren), States are required to include private health insurance or establish a cash medical support order to address the child(ren)'s health care needs pursuant to § 303.31(b). Although this has been a longstanding policy,
52

we realize that our existing regulation restricts existing State flexibility available under the current statute and that it is no longer appropriate to restrict Medicaid, CHIP, and other coverage plans available in the State as part of medical support. In order to provide a State with flexibility to establish and enforce medical support obligations whenever a parent has access to health care coverage—private or public—at a reasonable cost, consistent with section 452(f) of the Act, OCSE proposes to delete the last sentence of paragraph (d) of § 303.8 which prohibits Medicaid from being considered medical support.

52
For further information, see AT-91-02,
http://www.acf.hhs.gov/programs/cse/pol/AT/1991/at-9102.htm,
AT-92-02,
http://www.acf.hhs.gov/programs/cse/pol/AT/1992/at-9202.htm,
AT-92-12,
http://www.acf.hhs.gov/programs/cse/pol/AT/1992/at-9212.htm,
and AT-08-08,
http://www.acf.hhs.gov/programs/cse/pol/AT/2008/at-08-08.htm.

Section 303.11: Case Closure Criteria

Case closure, § 303.11, is another area where changes in existing regulations will increase program flexibility, effectiveness, and efficiency. Case closure regulations were initially promulgated in 1989. Since then, advances in technology have greatly increased the likelihood that if State IV-D agencies have sufficient information about a noncustodial parent, they can generally locate the noncustodial parents and find legitimate income and assets.

The goal of the proposed case closure regulations is to direct resources for cases where collections are possible and to ensure that families have more control over whether to receive child support services. Under current case closure regulations, States are not permitted to close cases except under certain narrow and specific circumstances. This can mean that a State may be required to keep a case open for decades, well after the child has emancipated, and regardless of whether the family wants continued services. State case closure procedures are automated and subject to audits.

The National Council of Child Support Directors provided OCSE with recommendations for improving the effectiveness and efficiency of the case closure criteria, while at the same time, ensuring that resources are directed to working cases and that children receive services whenever there is any reasonable likelihood for collections in the future. Additionally, we sought Tribal input in a formal fashion as discussed in the Tribal Impact Statement.

The proposals in this regulation are intended to carry out good customer service and management practices in order to provide needed services where there is any reasonable chance to successfully work a case. The proposed regulation also ensures that safeguards are in place to keep recipients apprised of case closure actions. Cases are not closed without taking into consideration any new information provided by the affected parties.

Section 454(4)(A)(ii) of the Act requires a State to provide IV-D services to any individual who files an application for services. In addition, sections 408(a)(3) and 454(29) of the Act require TANF assistance recipients to assign their rights to child support and to cooperate with the child support program in obtaining support. Existing regulations allow a State to close IV-D cases only under certain restricted circumstances even when the State is no longer able to provide effective and productive child support services. In all cases where case closure is proposed, recipients of child support services are given notice of the intent to close the case and are provided an opportunity to respond with information and to request that the case be kept open or, after the case is closed, to reopen the case.

In an effort to modernize our regulations, we propose several new case closure criteria and revisions to existing criteria in § 303.11 that are intended to provide families with effective child support enforcement services, promote State flexibility, and ensure the efficient use of State and Federal resources. While the NPRM expands the number of case closure criteria, it also strengthens the case closure notice provisions to ensure that recipients are kept apprised of case closure actions and understand how to request additional services. The proposals in this regulation aim to balance good management and workable administrative decisions with providing needed services, always erring in favor of including any case in which there is a reasonable chance of success.

In § 303.11(b), we propose to clarify that a IV-D agency is not required to close a case that is otherwise eligible to be closed under that section. Case closure regulations are designed to give a State the option to close cases, if certain conditions are met, and to provide a State flexibility to manage its caseload. If a State elects to close a case under one of these provisions, we propose the State maintain supporting documentation for its decision in the case record. We emphasize that closing a case will not affect the legality of the underlying order. The child support order, including any payment or installment of support such as arrearages due under the order, remains in effect and legally binding.

We propose a new criterion as § 303.11(b)(2) that will allow a State to close cases where there is no current support order and all arrearages are owed to the State. This provision is intended to afford the State more resources to enforce those cases where debt is owed to families rather than to the State.

We propose a new criterion as § 303.11(b)(3) that will allow the IV-D agency to close arrearages-only cases against low-income senior citizens who are entering or have entered long-term care placement, and whose children have already reached majority age. In addition, these noncustodial parents must have no income or assets available above the subsistence level that could be levied or attached for support. The first generation of orders in the IV-D program was issued more than 35 years ago. We recognize that a portion of our noncustodial parent population is aging, many of whom may depend on fixed incomes. Old child support debt, carried well after the children have become adults and sometimes parents themselves, could pose a barrier for aging parents to obtain affordable housing, basic income, and health care. We believe enforcement efforts against these noncustodial parents are not only ineffective, but are also an inefficient way to expend child support resources. We would like to hear from States and other stakeholders about their experiences working with low-income, aging noncustodial parents, and receive recommendations for this rule.

OCSE has redesignated § 303.11(b)(2) as (b)(4) and proposes to add a new criterion as § 303.11(b)(5) which allows a State to close cases when the noncustodial parent is either living with the minor children as the primary caregiver or is a part of an intact two-parent household, and the IV-D agency

has determined that services either are not appropriate or are no longer appropriate. This provision is intended to address situations where parents reconcile so services are no longer needed, as well as intact two-parent families where one parent works or is seeking work out of State and child support services were never needed. We have also redesignated paragraph (b)(3) as (b)(6).

When States have made repeated efforts over time to locate noncustodial parents, and those efforts are unsuccessful because of inadequate identifying or location information, States should be allowed to close those cases and to focus efforts on productive cases. Current § 303.11(b)(4)(i) permits a State to close cases that have identifying information, like full names, dates of birth, and verified Social Security Numbers, after 3 years, in which locate efforts have been exhausted. For those cases with sufficient identifying information and with enhanced locate tools, such as the National Directory of New Hires (NDNH) that provides current data on new hires and quarterly wage data and the Federal Case Registry (FCR), as well as tax information from the Internal Revenue Service and financial information from financial institutions data match, State experience has been that if a State is able to locate parents and assets, it is generally within 2 years. Moreover, the NDNH data are only retained for 2 years. Given that, we propose to redesignate paragraph (b)(4) as paragraph (b)(7) and to revise the 3-year locate period in newly designated § 303.11(b)(7)(i) to a 2-year locate period. Given the low success rate for collections after 2 years, the extra time and resources that would have been used to locate may be better used to enforce other cases where appropriate.

Similarly, under current § 303.11(b)(4)(ii), a State is allowed to close cases after 1 year if it does not have sufficient identifying information, such as a date of birth or a verified Social Security Number, to initiate an automated locate effort. For the same reasons noted in the previous paragraph, we propose changing the locate period from a 1-year period to a 6-month period in proposed § 303.11(b)(7)(ii).

Also, proposed § 303.11(b)(7)(iii) adds a provision to allow a State to close cases after a 1-year period when there is sufficient information to initiate an automated locate effort, such as full names and dates of birth, but locate interfaces are unable to verify Social Security Numbers. OCSE implemented an interface between its Federal Parent Locator Service (FPLS) and the Social Security Administration's Enumeration Verification System (EVS) in 1996. FPLS is a computerized national location network that provides States with the most timely, accurate information available to locate noncustodial parents for the purpose of establishing or enforcing child support orders. The EVS system is an automated process to verify, correct, and identify Social Security Numbers. It supports the correct identification of individuals when incomplete or duplicate Social Security Numbers are found in child support enforcement records. States are required to use EVS and to obtain as much pertinent information as possible from custodial parents. However, if after 1 year neither EVS nor FPLS are able to verify Social Security Numbers, OCSE believes that case closure is warranted. Without sufficient information to use enhanced locate tools like EVS and the FPLS, locate efforts are futile and work time may be better allocated to other areas of enforcement.

Current § 303.11(b)(5) lists a limited number of circumstances under which a State may close cases if it determines a noncustodial parent cannot pay support for the duration of the child's minority. We propose to redesignate the existing provision as § 303.11(b)(8) and to add the phrase “the child has reached the age of majority” to the first subparagraph under the proposed provision. This will allow a State to close both current support and arrearages-only cases if the circumstances described in proposed (b)(8) are met. We have also revised the proposed language by moving the phrase, “and shows no evidence of support potential” earlier in the paragraph to clarify that this condition applies to all of the circumstances described in proposed (b)(8). The current provision also allows a State to close cases in which the noncustodial parent has been incarcerated “with no chance for parole” and has no income or assets above the subsistence level, which could be levied or attached for support. We believe the “no chance for parole” requirement unduly restricts a State's flexibility to determine that the child support case is unproductive and should be closed. Therefore, we propose to eliminate the phrase “with no chance for parole.” We also propose to add a new provision that will allow a State to close cases in which the noncustodial parent cannot pay support and shows no evidence of support potential despite multiple referrals for services over a 5-year period, which have not been successful. A State will have the discretion to determine what services are appropriate and available under State law. Finally, we have added that these cases can only be closed under proposed (b)(8) if the noncustodial parent's does not have income or assets “above the subsistence level.” We believe that the IV-D agency should only pursue enforcement on these cases if the noncustodial parent has income or assets above the subsistence level (as defined by the State).

We have also added a new criterion § 303.11(b)(9) to allow a State to close a case when a noncustodial parent's sole income is from Supplemental Security Income (SSI) payments made pursuant to sections 1601
et seq.,
of title XVI of the Act, 42 U.S.C. 1381,
et seq.,
from both SSI and benefits pursuant to title II of the Act, or from other needs-based benefits. We are including the concurrent SSI/title II beneficiary in this proposal, because the noncustodial parent's income level is low enough to be eligible for SSI. Therefore, we believe that these cases should be closed since they would be unproductive for the IV-D agency to pursue. Additionally, we seek comments on whether additional guidance is warranted to strengthen protection of SSI, e.g., requiring enhanced notice provisions recognizing these exceptions to garnishment. We have also redesignated existing paragraphs (b)(6)-(b)(8) as paragraphs (b)(10)-(b)(12).

As previously discussed, we proposed under § 302.33(a)(6) to allow a State to offer limited child support services. Currently, there is no corresponding provision that allows a State to close these cases opened under § 302.33(a)(6), without first waiting for the recipient of services to request case closure. Therefore, we propose a new criterion § 303.11(b)(13) that will allow the State to close a non-IV-A case after a limited service under § 302.33(a)(6) has been completed without providing the notice under § 303.11(d)(1). (Section 302.33(a)(6) requires that the individual be notified when applying for limited service(s) that the case will be closed after the limited service is completed.) However, after the case is closed, the IV-D agency must notify the recipient in accordance with § 303.11(d)(6). We have also redesignated current paragraph (b)(9) to (b)(14).

In non-IV-A cases, or cases where the custodial parent and/or child(ren) does not receive cash assistance from the State, the State is required to distribute child support payments to the recipient of child support services. Although many State child support programs distribute payments through debit cards, it remains extremely important for the

recipient of services to keep the State informed of his or her current mailing address to ensure that the case can be processed effectively. If a State is unable to contact a recipient of services, current § 303.11(b)(10) requires the State to make an attempt of at least one letter sent by first-class mail to the recipient's last known address within 60 calendar days before beginning the process of case closure. If the attempt fails and the State does not hear from the recipient of services within the 60 days, under current paragraph (c), the State must then send another letter to inform the recipient of services of its intent to close the case in 60 days. In situations where the letter sent in the first attempt is returned by the Postal Service as undeliverable with no forwarding address, the State must still wait the full 60 days from the date the letter was mailed before sending the 60-day case closure notice. We intend to streamline the case closure process by eliminating the 60-day wait requirement under proposed § 303.11(b)(15). We consider it to be more efficient to allow a State to attempt to contact the recipient of services through at least two different methods. With today's technology, there are many different options when it comes to notifying clients, such as first-class mail, electronic mail, text messaging, and telephone calls. A State will have discretion to determine what methods are most appropriate on a case-by-case basis. As emphasized in Action Transmittal 10-11, “Alternative Methods to Meet the Monthly Requirement,” however, the underlying policy goal is effective notice.

We redesignated existing paragraphs (b)(11)-(b)(14) as (b)(16)-(b)(19) and propose a new criterion at § 303.11(b)(20) to provide a State with flexibility to close cases referred inappropriately by the IV-A, IV-E, and Medicaid programs. We encourage State IV-D agencies and assistance programs, like IV-A, IV-E, and Medicaid, to work together to define referral criteria to ensure only appropriate cases are referred to the IV-D agency. The term
appropriate
is used in the regulation because section 454(4)(A) of the Act requires IV-D agencies to provide services “as appropriate.” Primarily due to automated interfaces between programs, a very small number of cases referred to the IV-D agency are plainly inappropriate for child support enforcement services, but existing regulations do not provide State IV-D agencies with a basis for closing such cases. We believe that these programs and child support agencies work hard to communicate regularly and effectively to assist each other in updating their respective case information to ensure that referrals are made appropriately.

However, there are rare instances when a State inadvertently opens cases inappropriately referred for child support services. Therefore, we recommend a new criterion that will allow a IV-D agency to close a case that has been opened to establish or enforce child support because of an inappropriate referral from another assistance program.

For example, in assistance cases which are referred for IV-D services, both parents may be living at home and functioning as an intact family although the parents are not married and paternity has not been established. Since both parents are living with their child, and there is no noncustodial parent, the IV-D agency may determine that pursuing the case is not appropriate for child support enforcement. Another example could be an intact family that is eligible for TANF. A married parent applied for TANF, while the other parent has left the area to find work. Since the family continues to function as an intact family, although one parent is away for economic reasons, the IV-D agency may determine that it is detrimental to the family to pursue child support. In these circumstances, we believe the IV-D agency should be in communication with the IV-A agency to ensure that the decision to close the IV-D case will not be viewed by the IV-A agency as noncooperation by the recipient of services.

Another example of an inappropriate referral would be for a family receiving a non-recurring, short-term TANF benefit that does not fall within the definition of TANF assistance under § 260.31 as required by existing law and policy
53

that was unnecessarily referred to the IV-D program in error. In cases where there is no legal authority to require an assignment and the case was inappropriately opened by the IV-D agency, we believe that the IV-D agency should be able to close the case.

53
For further information, see AT-98-24, August 19, 1998, available at:
http://www.acf.hhs.gov/programs/cse/pol/AT/1998/at-9824.htm.

Also, in IV-E cases which are referred to the IV-D agency, there may be cases where children are expected to be in foster care for only a short time before being reunited with their family or before adoption proceedings are finalized. The IV-D agency may determine that it is not appropriate to pursue child support. Finally, as discussed above in proposed § 302.33(a)(4), we provide State IV-D agencies with additional flexibility to determine whether notice to a family in which a child no longer receives foster care maintenance payments is appropriate.

While we believe that inappropriate referrals are limited in number, we believe a State should have the flexibility to close these cases on a case-by-case basis under proposed § 303.11(b)(20). We specifically seek public comment on whether the proposed provision in § 303.11(b)(20) effectively addresses the rare circumstance where an inappropriate referral may have been made or whether the language is too broad. We are interested in the pros and cons of this proposal and if you have any additional suggested criteria or revisions to ensure that a State is accorded the flexibility to close cases where inappropriate referrals have been made.

In addition, we plan to update case closure regulations to encourage efficient case transfer between State and Tribal IV-D programs. Originally, when case closure regulations were written in 1989, there were no Tribal IV-D programs. Presently, there are over 50 fully operational Tribal IV-D programs. We invited Tribal leaders to engage in both written and face-to-face consultations to discuss issues and proposed solutions related to intergovernmental coordination. We also met with Tribal IV-D directors in several sessions around the country to have a conversation regarding Tribal Medical Child Support. We specifically discussed case transfer and case closure issues that will require a State IV-D agency to close Medicaid reimbursement cases that involve children receiving services from the Indian Health Service (IHS) when appropriate. We also discussed case transfer and case closure issues with State child support directors. As a result of these efforts, we received comments that helped us develop this NPRM.
54

54
See Tribal Impact Statement in preamble.

In recent years, OCSE received a number of inquiries asking whether a State IV-D agency may close a case that has been transferred to a Tribal IV-D program and under what circumstances. OCSE responded to those inquiries in Policy Interpretation Question Tribal (PIQT) 05-01.
55

PIQT 05-01 clarified that a State may transfer a case to a Tribe if the custodial parent wishes to receive services from the Tribal IV-D agency rather than from the State IV-D agency, and requests that the case be transferred or consents to the transfer. The guidance stated that such transfers,

at the request of or with the consent of the custodial parent, may be appropriate if there are no assigned arrearages owed to the State. In other words, under existing policy, a State could close and transfer cases to Tribes only if there were no assigned arrearages owed to a State that required the State to maintain an open IV-D case. Similarly, if a Tribe had a current case but the parent requested that it be transferred to a State IV-D program and the Tribe no longer had an interest in the action, the Tribe could close and transfer the case to the State IV-D program. The current policy does not address cases where there is no current assignment. The State may transfer such cases to a Tribal IV-D agency for appropriate action.

55
Available at:
http://www.acf.hhs.gov/programs/cse/pol/PIQT/2005/piqt-05-01.htm.

Proposed § 303.11(b)(21) will permit a State the flexibility to close the case if it has been transferred to a Tribal IV-D agency, regardless of whether there is a State assignment. It will also allow a State to reduce data management demands by eliminating duplicate and outdated cases and to better allocate its limited resources to other enforcement activities. Before a case can be transferred to a Tribal IV-D agency, we propose that either the recipient of services must request the transfer or the State must notify the recipient that the case will be transferred to the Tribal IV-D agency and obtain the recipient's consent. We also propose that a State deems consent if the recipient does not respond to a notice to transfer within 60 calendar days from the date notice was provided. Although not a condition of eligibility, some Tribal IV-D applications for services contain a box that may be checked to affirm a Tribal applicant's consent to have the case transferred from a State IV-D agency to a Tribal IV-D agency. This may be regarded as sufficient proof of consent for transferring and closing the case. We specifically request comments from States, Tribes, and other stakeholders on this additional flexibility for States to transfer and close cases notwithstanding a State assignment, and will consider all comments and recommendations received before issuing the final rule. Finally, we propose the State notify the recipient that the case has been transferred to the Tribal IV-D agency.

A State has the authority to accept less than the full payment of state-assigned arrearages on the same grounds that exist for compromise and settlement of any other judgment owed to the State.
56

Therefore, a State may enter into an agreement with a Tribal IV-D agency to permit the Tribe to compromise any state-assigned arrearages.

56
For further information see PIQ-00-03, available at:
http://www.acf.hhs.gov/programs/cse/pol/PIQ/2000/piq-00-03.htm,
and PIQ-99-03, available at
http://www.acf.hhs.gov/programs/cse/pol/PIQ/1999/piq-9903.htm.

Any State debt owed under the pre-existing order remains in effect and legally binding. Once a case is closed and transferred to a Tribal IV-D program, the Tribal IV-D program will continue to adhere to Federal regulations and must extend the full range of services under its IV-D plan as required by § 309.120(a). We strongly urge the State and the Tribe to work together in these instances to reach agreement on steps to take that will result in effective intergovernmental cooperation, smooth case transfer, less confusion about case ownership, and ongoing support payments to families, including the possibility of compromising arrearages permanently assigned to the State an

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2014-26822. Public record. Not legal advice.