Legislature(1993 - 1994)
04/05/1994 03:00 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CHAIRMAN HUDSON brought CS for HB 458 to the attention of the committee and noted that Rep. John Davies was no longer able to be on-line. HB 458 - CHILD SUPPORT NONPAYMENT/LICENSING BAN Number 151 FAWN HELMS, Legislative Aide to Rep. John Davies, Prime Sponsor of HB 458, stated that child care enforcement can attach to wages to collect back child support, but unfortunately this has not taken care of the back child support owed to both custodial parents and to the state in lieu of Aid To Families With Dependent Children (AFDC). She explained that before issuing a licence, the licensor must check the applicant's name against a list compiled by the Child Support Enforcement Division (CSED) that lists people who are substantially not in compliance. In the CS, "being not in substantial compliance" means not having made a payment in the last year or being $2500 in arrears. She said once this mechanism is triggered, as long as the person otherwise qualifies for the license or certificate, a 150- day temporary license would be issued. During that time there would be an opportunity to work with the CSED to either show that the CSED's records were in error, or to make arrangements to be in compliance. Following this, the regular license or certificate would be issued. She referred to an informal survey, "State Responses On Licensing Restrictions And Revocations" in the packets, conducted by the federal office of Child Support Enforcement. She said they checked with other states that had implemented similar programs and indications show that this has helped in collecting back child support. She said there have actually been very few instances where they have had to resort to denying a license or certificate. She added that this was basically a way to get people's attention to the fact that they need to tend to their payment responsibility. Number 190 CHAIRMAN HUDSON asked for the specifics to be reiterated. MS. HELMS confirmed that $2500 in arrears was on the bottom end, and she read the definition located on page 7, line 17. Number 202 CHAIRMAN HUDSON asked, for the record, if there were a lot of people in major noncompliance. MS. HELMS responded that the division would be better able to speak to this issue, but it was her understanding that there was at least $300 million in arrears in Alaska. Number 215 MARY GAY, Director, Child Support Enforcement Division (CSED), Department of Revenue, said there are $330 million in unpaid child support, a large portion of which is owed to the state for AFDC money because the money was given to families because the absent parent was not providing support. She said this legislation would substantially increase CSED collections because it would make the nontraditional wage earner, the self-employed person, address the situation of either paying child support or losing a license. She said last year the CSED collected $50 million in child support from only 46 percent of the cases, leaving 54 percent of the cases as having paid nothing. She said somebody was taking care of those families and she thought it was the state. MS. GAY explained that a portion of the 54 percent would be self-employed and she referred to a national statistic which states that 46 percent of the population is employed in nontraditional wage earning jobs. She said if they estimated that 25 percent of all the cases were in that category, they would be able to increase their collection by $16 million. Of that amount, one and one half million dollars would be returned to the general fund because that would be the portion of AFDC collected. She said that about three million dollars in AFDC is collected and 50 percent of that would go to the general fund and 50 percent would go back to the federal government. MS. GAY said that child support's funding comes from the federal government at a 66 percent match. She mentioned that the licensing entities involved in helping the agency would be able to submit their expenditures to the division and there would be a 66 percent match on the efforts put forth in helping the CSED. Number 256 REP. GREEN noted that this was an astonishing amount of money and asked, "How much do you have a feel for approximately how many of these deadbeats are outside of Alaska that would not be pressured by this loss of licenses?" MS. GAY responded that it would probably be less than ten percent. REP. GREEN commented that most of them are in Alaska. He then asked, "Can you give us an overview of what kind of a person this is, that is in arrears in child support?" MS. GAY responded that the person is usually a male, in the age range of 25-45, and that there are quite a few that have multiple cases. She explained that some conceal their assets, and some work in a cash economy. REP. GREEN explained that the reason he was asking was because he wondered if that kind of person was likely to be thwarted by the loss of a license. MS. GAY gave the example of a trucker who would be affected if he did not have his commercial driver's license. She said a truck driver can be considered as a subcontractor and is not necessarily employed; he is paid a check and taxes are not taken out. She said he might send in his tax return, but he might not send in child support checks. Number 296 REP. GREEN asked if it would enforce the intent of the legislation if this were expanded to include other types of licenses, such as limited entry permits, fishing licenses, etc. MS. GAY said she was happy to see this legislation because it would be helpful, but as she did not write it, this question would better be directed to Rep. Davies. Number 306 REP. GREEN reiterated that he was wondering if the threat of not having a driver's license would influence somebody to pay what they obviously owe, and furthermore, he questioned if expanding this to other mechanisms would amplify the pressure to respond. MS. GAY said yes, if the categories were expanded, then the collections would also be increased. Number 313 REP. GREEN asked what portion of the collection on the $330 million in arrears would then go to the state. Number 317 MS. GAY explained that of the $330 million in unpaid child support, there is a portion that is uncollectible, and they guesstimate that 30 percent is collectable. She said they have not touched it very well as yet because they only collect one and one half percent of that unpaid amount, and it is growing because there is interest accruing on it. She said if they could collect 25 or 30 percent of it, that would be very helpful to the state. Of that portion, she figured 74 percent would go to the custodial parents and 24 percent would go to the state. She added that 50 percent of the state's portion is federal. Number 329 CHAIRMAN HUDSON figured that the state would get 12.5 percent. Number 331 REP. PORTER asked if someone could beat the system by paying one dollar a year. MS. GAY replied, "and not owing more than $2,500." She added that in a lot of these cases the amount was much more than that. REP. PORTER said that if more than $2500 was owed, this law could still be beat by paying one dollar a year. MS. GAY pointed out that the wording is "and". REP. PORTER pointed out that a person is in compliance if they have made one payment or a partial payment during the past twelve months. MS. GAY said if a person owes $2,499 and has submitted a one dollar payment, that person could slip under the wire. She said they do not want to be chasing people unless the back payments are large because it causes more work for the division. Number 361 REP. PORTER said when someone owes that much money, it is wise to try to get it, and if that person was using the help of an attorney, "that attorney reading this would see that hole quicker than I did." Number 365 MS. GAY said she did not know what the average child support amount is. She guessed that maybe it was about $300 or $400 and therefore it does not take very long for the amount to reach $2,500. She added that payment due is figured as a percentage of one's income and also on the number of children involved. She said it is 20 percent for one child and 27 percent for two children. Number 377 REP. PORTER said he could circumvent the entire bill by paying one dollar a year. MS. GAY repeated that this pertains only to the situation of the back payments ALSO being under $2,500. She said she thought the CSED would keep busy focusing on those who had accumulated more than $2,500. MS. GAY said something she found interesting was the inclusion that the CSED would report back to the legislature in the following year. She suggested that time might possibly be used to try something different. REP. GREEN asked exactly what the $330 million represented. MS. GAY said that $330 million was in arrears, and 50 million was paid. REP. GREEN reiterated that if $330 million had accumulated as unpaid, he wondered what was the percentage of deadbeats and he asked, "Was it five percent or ten percent? How many people legitimately paid?" MS. GAY replied that of the 50 million that was paid, those payments came from 46 percent of the obligers, so 54 percent did not pay anything. Number 416 REP. GREEN brought up the point that the CSED would not have a record of a person who had been paying all along. Number 427 MS. GAY clarified that they do not have records of all the child support cases. She said when someone goes on AFDC, they have to have a case with the CSED or sometimes the court says a person has to go the CSED. She agreed that there are a portion of the cases that the division never sees. She said the CSED does not see the people who pay their child support and have arrangements that are working out. Number 440 REP.GREEN posed a question about the process of divorce and asked if it was more likely that payments were made through the courts or through the CSED. MS. GAY said, more likely than not, payments are made through the CSED. Number 445 REP. GREEN asked, "And you said that any number of these people have two or three sets that they are responsible for?" MS. GAY said in many of these instances there was never a marriage, and when the child is born, there may not be a father listed on the birth certificate because there was not a marriage. She said blood testing is involved and they determine who the father is. Number 460 REP. GREEN asked about the current collection efforts, not including the proposed legislation. Number 462 MS. GAY said the division currently has a staff of 170 people and approximately 24 people work in the enforcement section and they are just beginning a new section called the investigator unit intended to pursue people who are concealing their assets. She said there is also a locate section and an employer reporting program that has been under statute for the past three years. Number 483 REP. PORTER asked if the payments collected were generally monthly collections. MS. GAY said they are very effective with the traditional wage earners because wages are with-held with every paycheck. She said they have a problem with nontraditional wage earners. Number 497 REP. GREEN presented the theoretical situation of a mother and her children, with the mother having a settlement that is due her on a monthly basis from her ex-husband, but that goes in arrears. Meanwhile, if the state provides AFDC as a means of support, then when the collection process begins, who has the rights to that money? Who has the first draw? Number 500 MS. GAY responded that as long as the mother is on AFDC, the money goes to the state except for a 50 dollar pass-through amount that goes directly to her. Number 501 MS. GAY presented a scenario where a mother had been on AFDC for five months, receiving $800 a month. Because the man does not make very much money, it is figured that he can pay $200 a month, so over a period of five months he owes $1,000 of the $2,000 total that is owed to the state. The amount is calculated on how much he earns, not on how much the state gave to the family. She said if he won a $10,000 jackpot, $1,000 would go to the state, she would get the other $9,000, and she would be able to go off of AFDC. REP. GREEN asked if her past due would be diminished. MS. GAY said the state's portion would be paid and she would receive the rest of the money. If she were not receiving AFDC and he suddenly had access to $10,000 and he owed her money, then she would be paid first and the state would be paid later. Number 511 CHAIRMAN HUDSON said he would hold this bill over; that he would like to have the prime sponsor present before moving on this bill, and added that it needs to be tightened up. Chairman Hudson asked Ms. Helms to relay to Rep. Davies that "there is at least one section in here that we believe a good, or not even a good, but maybe even a bad attorney could probably get all the way through." Number 515 REP. PORTER suggested eliminating the phrase "or partial payment" on page 7, line 20, and then adding some other verbiage so that it would read, "and has made at least one payment in the past 12 months that represents at least one twelfth of the required annual payment." Number 523 MS. GAY said they would prepare a fiscal note for the committee and mentioned that the costs from the licensing entities would impact the CSED's costs. CHAIRMAN HUDSON announced they would address the teleconference calls. Number 527 ROBERT ARMSTRONG testified from Wrangell and said he has been involved in child support since 1976 when he got his first divorce. He began by saying that they did not have the current bill in Wrangell. TAPE 94-33, SIDE A Number 000 MR. ARMSTRONG continued by asking if he would be in compliance (indiscernible). MS. HELMS responded to Mr. Armstrong's question and said that he would be in compliance because he would be making regular payments and he would have been making at least one payment a year. MR. ARMSTRONG asked if this meant that anyone with a wage garnishment would be in compliance. MS. HELMS said, yes, as long as they were employed and the CSED was receiving payments through the employer. MR. ARMSTRONG asked if this would also apply if he were a seasonal worker and went on unemployment during the winter months. MS. HELMS replied this was correct because unemployment was also attached by the CSED, so he would still be in substantial compliance. Number 012 MR. ARMSTRONG said his biggest concern was judicial in nature. He referred to the 14th amendment in the constitution and read, "No state shall make or force any law which shall abridge the privileges or..." and then stated that taking away the privilege of a driver's license is, in effect, violating the 14th amendment. He added that this bill would be obstructing his "pursuit of happiness" which is mentioned in the Declaration of Independence. He said this bill does the opposite of what is needed because what is needed are business and productive incentives for the person who has to make child support payments. He pointed out that if someone was in noncompliance and their license was taken away, they could not even drive to work. He restated that he had major problems with this legislation and it seems to have some strongly negative connotations. He questioned the efficiency of the agency and its ability to use the tools it already possesses and he voiced his opinion that the legislature should think twice before giving the agency more tools to work with. He said, "Don't blame everything on the obligor out there. Look at the agency and see what they are doing." He concluded by pointing out that the "pass through" payment remains $50 even if a person's monthly payment changes significantly. Number 057 REP. PORTER commented that it was unfortunate that the CS for the bill was not available to Mr. Armstrong. He said his understanding was that this legislation supplied the agency with the additional tool of reaching the self- employed person who is otherwise unavailable for garnishment. He mentioned that the 14th amendment does not guarantee such things as life, liberty, and the pursuit of happiness, but rather that a person will not be deprived without due process. He said most of these orders are the result of a court process, and that is due process. Number 067 CHAIRMAN HUDSON thanked Mr. Armstrong and said if he had information to submit to the committee, they would be happy to receive it and to pass this on to the prime sponsor so they would have a better answer in the future. Number 071 PAT NEAL testified from Wrangell and said she is married to a noncustodial parent who has been in compliance with child support payments. She said she has kept a log of her dealings with child support enforcement during the past one and one half years and it does not paint a very good picture of the CSED. She said both she and her husband have been treated rather badly by the CSED and the division's unprofessional and ineffective treatment is frightening to her in light of the current legislation. She said the CSED does not need another tool because much of what is covered in this bill is already covered under present law. She said if the CSED would do their job, this bill would be unnecessary. She pointed out that the CSED has 50 percent garnishment, places liens on personal property and vessels, intercepts IRS and permanent fund dividend payments, and has access to lists of directors from organizations and companies that incorporate. She stated she did not feel there was a need for this bill and that it would generate a bureaucratically created deadbeat problem that would be worse than it is now. Number 092 DOUGLAS O'BRIEN testified from Fairbanks and stated that child support is composed of physical and financial support and also emotional support or visitation. He said Alaska, unlike successful states that have high compliance rates, does not enforce visitation. He noted that in Michigan, which he understands has the highest compliance rate, there is enforced visitation. He said this bill is built on the myth of the deadbeat dad and this is a misnomer. He suggested that they not go forward with this bill until they achieve a better understanding of how the system works. He explained that the CSED is almost impossible to deal with and the legislature has empowered the agency to go back ten years to investigate compliance history. He mentioned that people have problems with the IRS and the IRS only goes back seven years unless fraud is proven. He said the CSED's requirement for producing ten year's worth of records was a mistake on the legislature's part, and with the attached penalties and interest, it becomes totally prohibitive. He asked if there was time to continue with his testimony. CHAIRMAN HUDSON responded that Mr. O'Brien was offering some meaningful information, but he wanted to be sure that he had access to the current bill copy and he wanted the prime sponsor to be available to respond to Mr. O'brien's comments. MR. O'BRIEN interjected that Rep. Davies had been sitting right next to him and they had talked at length for about 30 minutes. He added that people are not aware of what the CSED is all about and they assume that this is about deadbeat dads and the collection of real and viable past payments. Number 142 CHAIRMAN HUDSON agreed that this was the viewpoint of some of the legislators and indicated that they are open to being educated. He suggested that Mr. O'brien submit any written information that he cared to, and said they would try to give Mr. O'brien more time when this legislation is brought up again. He thanked Mr. O'Brien for testifying. CHAIRMAN HUDSON said HB 458 would be carried over. CHAIRMAN HUDSON adjourned the meeting at 5:00 p.m.
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