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Testimony on The Debt Collection Improvement Act of 1996 by Anne F. Donovan
Acting Deputy Director, Office of Child Support Enforcement
Administration for Children and Families
U.S. Department of Health and Human Services

Before the House Committee on Government Reform and Oversight, Subcommittee on Government Management, Information and Technology
April 18, 1997

Chairman and members of the Subcommittee, I am pleased to appear before you today to testify on implementation of the Debt Collection improvement Act of 1996. My testimony will focus on the use of the Act to collect child support owed on behalf of millions of our Nation's children. We consider this to be an extremely promising enforcement mechanism, and I want to thank you for giving me the opportunity to testify on our early progress in implementing the law.

The goal of the child support enforcement program is to ensure that children are financially supported by both their parents. The program was established in 1975 as a joint undertaking involving Federal, State and local cooperative efforts. At the Federal level, the Department provides technical assistance and funding to States through the Office of Child Support Enforcement. Today, when high divorce rates translate into a host of social problems, it is more important than ever to reaffirm that both parents have a responsibility to support their children.

President Clinton has made improving child support enforcement and increasing child support collections a top priority and the results are telling. In fiscal year 1996, the program was responsible for the collection of $11.8 billion from non-custodial parents, an increase of $4 billion, or nearly 50 percent, since 1992. Despite this progress, much more needs to be done. Currently, only about one-half of custodial parents due child support receive full payment. About twenty -five percent receive partial payment and twenty-five percent receive nothing.

The Debt Collection Improvement Act contains provisions that will significantly assist States' efforts to collect past-due child support obligations and will complement the enforcement tools included in the new welfare reform law. Specifically, the Act allows for administrative offset, by the Department of Treasury, of a variety of federal payments. The implications of this legislation are enormous. We have worked closely with Treasury's Internal Revenue Service on collecting delinquent child support through the interception of Federal Tax Refund payments and we welcome the opportunity for this new collaboration to greatly expand the offset program. The Act will facilitate moving from a once-a-year, single revenue offset process to a continuous process involving offset of Federal payments.

Executive Order 13019

To ensure that the full force and effect of the Debt Collection Improvement Act are brought to bear on parents that refuse to support their children, the President issued Executive Order 13019 on September 28, 1996, mandating executive agencies to take specific actions to implement the law. The President has pointed out that, "if all parents in this country paid the child support they owe, we could move 800,000 women and children off the welfare rolls tomorrow.... If you owe child support, you shouldn't get the support of the national government."

First, the Order requires all federal Departments and agencies to take necessary and legal steps to deny government loans - such as small business loans, farm loans, home loans to non-supporting parents. Second, and the specific focus of my testimony today, the Order calls for the collection of past due support through an administrative offset program which can identify people who receive federal payments and who owe child support. This would allow support debts to be deducted, for example, from fees paid to government consultants and vendors - funds that could otherwise be paid to families.

President Clinton directed the Secretary of the Treasury, in consultation with the Secretary of Health and Human Services, to develop and implement procedures necessary to collect delinquent child support debts by administrative offset. HHS was in turn directed to provide the Secretary of Treasury with information on past-due child support claims which have been referred by States.

In response, the Office of Child Support Enforcement has been working closely with the Department of Treasury and has convened a joint work group, which also includes State child support enforcement officials, to-identify and resolve potential problems and to develop an implementation plan.

Since tax refunds and Federal salary payments have been available for attachment to pay child support debts for many years, we anticipate that the category of "Vendor/Miscellaneous Payments" where an individual payee can be identified will result in the bulk of child support offsets under this program. An estimated 16,152,000 annual vendor/miscellaneous payments are scheduled to be in the system and Treasury estimates a significant amount of these payments have potential for administrative offset for child support enforcement purposes.

We have taken the initiative to ensure that all State CSE agencies are fully apprised of the potential for administrative offset, and we have worked hard to promote the new program for all States which have the current systems capacity to utilize it. We contacted all 50 States and four jurisdictions that operate child support enforcement programs. During these initial contacts, discussion centered on implementation capability, a critical issue given States focus on new responsibilities under welfare reform. States fell into two categories: those which could begin implementation immediately or within a few months, and those which required significant systems' modifications or needed enabling legislation.

We anticipate that all States will be able to participate in the Treasury Offset Program by January 1998 when the Tax Refund Offset Program will be merged with the Treasury Offset Program at Treasury's Financial Management Service. Federal Tax Refunds will then become one of the many federal payments offset in the Treasury Offset Program.

On February 25 and 26, 1997, the Office of Child Support Enforcement hosted a Task Force meeting, which included the HHS/Treasury Work Group, Administration for Children and Families' Regional staff specialists and State Child Support Enforcement 4 officials to identify and discuss common State implementation issues. This meeting was extremely useful in helping us to focus on specific problems which could be resolved, and in alleviating States' concerns about the new program.

The HHS/Treasury Work Group then hosted a conference call on March 11, 1997, to discuss a specific implementation plan with those States that had tentatively committed to begin certifying cases immediately. We followed that call with another series of contacts with the remaining "flow-in" States, i.e. those jurisdictions which would submit cases as soon as systems' problems or legal impediments were resolved. A phased-in approach is necessary at this time to accommodate various States' limitations based upon systems' processing capabilities and legal constraints under their existing statutory authority. In particular, some States have to modify their automated processing and distribution systems in order to handle collections of delinquent child support obligations through the Treasury Offset Program.

As a result of these activities, we have already begun to identify cases which are eligible for administrative offset. During the week of April 7, 1997, we issued pre-offset notices for three States: Arizona, Kansas and South Dakota. These States represent 1 12,500 cases and offsets are scheduled to begin on May 12.

Within a week, we expect pre-offset notices for Connecticut and the District of Columbia, totaling 66,500 cases to be mailed. Offsets on behalf of these cases should begin mid-May. Other States that will join the administrative offset this year include: Alaska (April), Massachusetts (April/May), Oklahoma (May), Hawaii (June), Rhode Island (June/July), Vermont (July), Idaho (July) and New York (August).

We will continue to work closely with the States to resolve the issues impeding their participation. For example, OCSE will conduct workshops on the Debt Collection Improvement Act of 1996 and Executive Order 13019 in at least 3 major Child Support Enforcement conferences this year.

The Office of Child Support Enforcement was the first agency to participate in the Tax Refund Offset Program and has collected over $7.4 billion since its inception. Last year, States submitted over 5.3 million cases through the Office of Child Support Enforcement to the internal Revenue Service for offset, resulting in record-breaking collections totaling over $1.02 billion. Given this experience, we are very excited about participating with Treasury in this new program, and want to ensure that it is carefully planned and implemented with maximum participation by the State CSE agencies. We believe that this collaborative partnership is essential to guarantee that the Program succeeds.


In conclusion, Mr. Chairman, this Administration is fully committed to utilizing the resources provided by the Debt Collection Improvement Act for the enforcement of child 6 support. The Office of Child Support Enforcement will continue to work closely with the Department of Treasury and our State partners to ensure full implementation of Executive Order 13019, which will certainly result in enhancing the collection of desperately needed child support for the children of America.

I want to again thank the Subcommittee for this opportunity to testify. I would be happy to answer your questions.

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