Legislature(1997 - 1998)
04/23/1997 09:01 AM HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE HEALTH, EDUCATION & SOCIAL SERVICES COMMITTEE April 23, 1997 9:01 a.m. MEMBERS PRESENT Senator Gary Wilken, Chairman Senator Loren Leman, Vice Chairman Senator Lyda Green Senator Jerry Ward Senator Johnny Ellis MEMBERS ABSENT All members present. COMMITTEE CALENDAR Confirmation: Board of Dispensing Opticians, Barbara Landi SENATE BILL NO. 154 "An Act relating to paternity determination and child support; relating to reporting of and access to financial or other information for child support purposes; making changes to laws relating to occupational, recreational, or other licenses, permits, certificates, or other authorizations issued by the state to facilitate administration of child support laws; relating to the interest rate on judgments or decrees for child support; relating to immunity from civil liability for good faith compliance with reporting or other requirements for child support purposes; relating to voiding fraudulent transfers and to penalties for noncompliance with orders for child support purposes; amending Rules 4, 5, 35, 52, 58, 60(b), 78, 90.1, and 90.3, Alaska Rules of Civil Procedure; amending Rule 901, Alaska Rules of Evidence; amending Rules 3 and 5, Alaska Bar Association Rules; repealing the effective date of sec. 45, ch. 107, SLA 1996; and providing for an effective date." - HEARD AND HELD SENATE BILL NO. 116 "An Act relating to welfare to work tax credits under the Alaska Net Income Tax Act; and providing for an effective date." - SCHEDULED BUT NOT HEARD PREVIOUS SENATE COMMITTEE ACTION SB 154 - No previous Senate action to record. SB 116 - See Senate State Affairs Committee minutes dated 3/25/97, 3/27/97. WITNESS REGISTER Myrna Maynard, Staff Senator Pearce State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Discussed SB 154. Glenda Straube, Director Child Support Enforcement Division Department of Revenue 550 W. 7th Avenue Anchorage, Alaska 99501 POSITION STATEMENT: Explained SB 154. Marilyn May Assistant Attorney General Collections & Support Department of Law 1031 W. 4th Avenue, Suite 200 Anchorage, Alaska 99501-1994 POSITION STATEMENT: Answered questions. Dan Branch Assistant Attorney General Human Services Section PO Box 110300 Juneau, Alaska 99811-0300 POSITION STATEMENT: Answered questions. Susan Haymes, Law Specialist Limited Entry Fisheries 8800 Glacier Highway, Suite 109 Juneau, Alaska 99801-8079 POSITION STATEMENT: Answered questions. Gary Roth Alaska Bankers Association 119 N. Cushman Fairbanks, Alaska 99701 POSITION STATEMENT: Suggested clarification of the definition of a "financial institution". Jodie Olmstead Fairbanks, Alaska POSITION STATEMENT: Discussed her child support case. ACTION NARRATIVE TAPE 97-42, SIDE A Confirmation: Board of Dispensing Opticians Number 001 CHAIRMAN WILKEN called the Senate Health, Education & Social Services Committee (HES) to order at 9:01 a.m. and announced that the Confirmation for the Board of Dispensing Opticians nominee would be the first order of business. The committee took a brief at ease. BARBARA LANDI , nominee for the Board of Dispensing Opticians, informed the committee that she was educated as a teacher and attended college in New York. Ms. Landi worked many years in the Mat-Su Valley, but more recently she and her husband operate a small business in Anchorage. Ms. Landi has worked for the Alaska State Fair and for a farm and garden supply company. Ms. Landi is also a free-lance writer. Ms. Landi enjoyed her experience as a member of the Board of Veterinary Examiners for the last four years and therefore she applied to be on another board. CHAIRMAN WILKEN noted that Ms. Landi's resume states that she has taught every grade from K-12. Chairman Wilken said that was testimony to Ms. Landi's patience. SENATOR GREEN commented that she and Ms. Landi had crossed paths in substitute teaching and work at the Alaska State Fair. Senator Green wished Ms. Landi luck. CHAIRMAN WILKEN stated that the hearing results would be passed to the Senate President. Chairman Wilken congratulated Ms. Landi. SB 154 CHILD SUPPORT & PATERNITY Number 076 CHAIRMAN WILKEN announced that SB 154 was the next order of business before the committee. SENATOR WARD moved that CSSB 154(HES) be adopted for consideration. Without objection, it was adopted. MYRNA MAYNARD , staff to Senator Pearce, informed the committee that Senator Pearce sponsored SB 154 on behalf of the Child Support Enforcement Division (CSED). Ms. Maynard directed the committee to the preamble of the bill which relates the intent of the bill. Ms. Maynard deferred to Ms. Straube for further comments. GLENDA STRAUBE , Director of CSED in the Department of Revenue, noted that in the Fall of last year, Congress passed the Personal Responsibility, Work Opportunity Reconciliation Act. Along with the effort to put people to work was an emphasis on child support efforts. This bipartisan effort to strengthen child support laws recognizes the responsibility of all parents to support their children. The federal act makes substantial changes to the child support mandates for all states. Ms. Straube reviewed the changes created by the federal act. The federal act requires all employers to report new hires/rehires within 20 business days. Currently, that is only required when there are 20 or more employees and the time limit is 30 days. Within seven days of receiving that information, CSED must send that data to the federal government. Number 147 SENATOR LEMAN asked if all businesses, even those who employee only one, would be required to report. GLENDA STRAUBE replied yes. GLENDA STRAUBE noted that currently an employer has 10 days to send the employee's withheld money to the federal government. Under the federal act, no prior notice is necessary to the obligor when the withholding order is sent. Currently, prior notice is given. Under the federal act, financial institutions and like entities must match data with CSED quarterly. CSED already has access to bank information and the ability to lien. The matching of data quarterly would reduce the need for the use of subpoenas to acquire that information. Ms. Straube noted that this has been done in Massachusetts for some time. Both the child support agency and banks have become comfortable with the system. Ms. Straube explained that under the federal act an occupational license can be revoked for noncompliance of a child support order as well as for noncompliance of a subpoena or warrant. SENATOR GREEN said that currently CSED does not revoke a license when a person does not comply with a subpoena or warrant, but would under the federal act. GLENDA STRAUBE agreed. SENATOR GREEN aske if the revocation would be automatic. GLENDA STRAUBE replied no, license revocation is a last resort. SENATOR ELLIS inquired as to which license revocations were included under Senator Green's bill last year and those under the federal mandates. GLENDA STRAUBE specified that the federal mandate included the occupational, drivers license, and recreational license. The recreational license was not included under Senator Green's bill last year because it is difficult to administer. Also last year's bill did not include commercial fishing crewman's licenses. In response to Chairman Wilken, GLENDA STRAUBE pointed out that the list in the committee packet with the bullet beginning with "Ensures child support judgements" and those bullets underneath were requested and are not mandatory; those bullets are Alaskan provisions. The bullet beginning with "Drops time limitation" and up are federal requirements. Number 221 SENATOR WARD asked if the license revocation provision included a commercial crewman's license. GLENDA STRAUBE said that was exempted per the request of the limited entry commission. The division agreed to that because of the enforcement difficulties. The crew license can be purchased in some very remote locations. The division was trying to move away from those licenses that would be difficult to enforce and not cost effective. Under the federal act, the hunting for non-personal and the fishing for non- subsistence use licenses as well as the commercial crew members fishing license can be revoked. SENATOR LEMAN asked if this revocation of licenses provision actually was partially an Alaskan provision not federally mandated. GLENDA STRAUBE clarified that the federal mandate allows the revocation of all occupational, drivers, and recreational licenses. Ms. Straube said that if hunting and fishing licenses fell off the list, then a request for an exemption for commercial crew members fishing licenses could be requested. Ms. Straube did note that exemptions for child support do not occur very often. With regards to hunting for non personal use, Ms. Straube was not sure how that would be determined because there are no subsistence hunting provisions or license whereas fishing does have subsistence and non subsistence licenses. Ms. Straube pointed out that there will be a change in how the money is dispersed once collected. Past AFDC recipients must receive all child support payments before the state can reimburse itself. Ms. May and Mr. Branch noted that this did not require a statutory change and could be done by regulation. Ms. Straube stated that there are many things mandated by federal law that are not in this legislation because the department already has the ability to do that mandate per existing statute and can merely do a regulation. Ms. Straube continued with the next federal mandate which requires social security numbers on state licenses, permits and other documents. Number 297 SENATOR LEMAN said that requirement caught his attention. A person's social security number is not for identification purposes. GLENDA STRAUBE noted that the federal law dealt with some controversial issues and believed that Congress felt that if people were to be taken off welfare, then the other side must pay their part as well. SENATOR GREEN asked if the mandate meant that the social security number would now be on a person's drivers license. A discussion ensued regarding whether that already occurs. CHAIRMAN WILKEN stated that this would probably receive further discussion at a later time and he encouraged such discussion. GLENDA STRAUBE continued the review of the federal mandates encompassed in SB 154. SB 154 attempts to address the interstate problem by requiring that various state agencies provide information to all child support agencies. However, such information can only be used for child support purposes. The federal mandate that grants immunity from prosecution to entities who in good faith provide information or honor CSED actions protects private entities. Ms. Straube pointed out that the federal mandate expands the paternity establishment requirements. One of the more important expansions deals with the acknowledgment of paternity. Parents must be informed of rights and consequences of singing an acknowledgement of paternity, in particular child support. After 60 days of a signed acknowledgement of paternity, that can only be rescinded in court and based on fraud, duress, or material mistake of fact. SENATOR GREEN inquired as to the current standard of rescinding paternity. GLENDA STRAUBE pointed out that the administrative paternity establishment bill passed, Senator Halford included disestablishment which relates to this requirement. The disestablishment could occur up to three years after the birth or the time the person could have known that one was not the father. SENATOR GREEN clarified that she was referring to the acknowledgement of paternity of unwed parents. DAN BRANCH explained that the current statute provides that if a putative father acknowledges in writing that he is the parent of the child, that legitimates the child. If SB 154 is adopted, that finding of paternity could not be set aside by a court unless the court found that there was fraud in obtaining the acknowledgement form. SB 154 limits what can be argued in court. GLENDA STRAUBE informed the committee that there are cases in which a person signing an acknowledgement of paternity knew that he was not the biological father. Then after a break up, that father does not want to pay child support and with this there would be grounds to go to court to say that he was not the biological father. In response to Chairman Wilken, DAN BRANCH explained that "putative" means thought or assumed to be the father. Number 390 GLENDA STRAUBE explained that under current statutes a putative father does not have the right to request blood tests and establishment of paternity, but under SB 154 he will. Under SB 154, Ms. Straube believed that Public Assistance would reserve the right to decide "good cause" exceptions to genetic testing. The bill will also require that employer information must be provided when establishing paternity in order to decrease the time between the paternity and order establishment. Under current interstate laws, the location of a custodial parent or children is not released if there is risk to the health, safety or liberty of the children. That has been added to the domestic law per the federal mandate. There have been changes to comply with the Uniform Interstate Family Support Act. SB 154 provides the department the authority to contract out child support disbursement functions. SB 154 provides the state with the authority to require delinquent obligors, in AFDC cases, to participate in appropriate work activities. Ms. Straube pointed out that states that did welfare reform a few years ago find that once notices go out, people, who were once working under the table, suddenly report work activities. SB 154 would void fraudulent transfers when used to evade child support collections which Ms. Straube said occurs frequently. In response to Senator Green, GLENDA STRAUBE informed the committe of a case of fraudulent transfer in which an obligor owned a trucking company, but suddenly his girlfriend owned a trucking company not the obligor. SB 154 requires that entities in Alaska recognize liens from other states. If the delivery of legal documents in person has been unsuccessful, legal service can be considered by first class mail. Number 438 SENATOR LEMAN pointed out that Section 91 says that "An administrative subpoena shall be delivered by first class mail." Why would delivery in person of that subpoena be disallowed? MARILYN MAY believed that the language was used in order to convey that it is unnecessary to provide personal service of a subpoena. GLENDA STRAUBE interjected that her comments to first class mail of legal documents is not limited to subpoenas. Section 91 is the subpoena section. Ms. Straube indicated that the use of first class mail is in another section that could be specified. GLENDA STRAUBE continued with the federal mandates included in SB 154. Under SB 154, there is no "statute of limitations" on reporting arrears to credit bureaus. Even if the arrears are paid, that remains on the credit report. In response to Senator Green, MARILYN MAY stated that Section 144 refers to this issue. Ms. May clarified that Section 144 does not relate to the notification that an arrearage has been paid. There is no statutory obligation on that matter. GLENDA STRAUBE explained that currently, if an obligor pays all the arrears that is removed from the credit report. Ms. Straube is uncomfortable with that practice because all other debts, even if paid, remain on the credit report. SB 154 would bring the department into conformance with the reporting of most delinquent credits. Ms. Straube noted that concluded the federal mandates included in SB 154. Ms. Straube moved to the areas in SB 154 which are recommended changes from CSED or the AG's office. The division deals with two and sometimes three different interest rates with child support. The recommendation is to use one rate of interest on child support related debts and judgements. Ms. Straube emphasized that this change is merely an administrative issue. SENATOR LEMAN asked if the change to one interest rate would be an incentive or disincentive for an obligor to pay. GLENDA STRAUBE said that, personally, she regretted this request because it is lower than other interest rates. Ms. Straube indicated that the six percent interest rate could place the debt at the bottom of the list which could be a disincentive. SENATOR LEMAN understood the intent, but wanted to review that issue. Number 510 GLENDA STRAUBE stated the next recommendation which would allow the correction of a child support order if based on fraudulent information. Currently, nothing can be done retroactively if a person hid income in the past; no retroactive modification can be done nor can there be a change in the child support. CSED wants to be able to do what was passed in welfare reform last year which allows the division to vacate and reestablish an order when someone lied to avoid child support payments. SENATOR GREEN asked if a child support order is determined to be based on erroneous information and the payment should have been less; would the division repay that individual for overpayments? GLENDA STRAUBE replied yes. Ms. Straube explained that CSED cannot retroactively modify an order. An order is established on factual information provided to CSED by the obligor or the Department of Labor data. Ms. Straube said that the concern last year was that CSED could not help those with a large arrearage who were actually not making enough to cover the debt. That can be done, but that would require going to court and many resources. SENATOR GREEN asked if an ex-spouse makes claims that the spouse is making more than the spouse actually does, would that information be used to determine a child support order. GLENDA STRAUBE said that CSED does not base the order on that information. However on a default order when the obligor will not provide information, the division would review the best data for the industry with which the obligor is employed to determine the order. SENATOR GREEN asked if Ms. Straube has observed any difference since last year with regard to people working with CSED on default orders. GLENDA STRAUBE said that the division has just begun to deal with the defaults. The division has not dealt with the default orders enough to provide any observations. Ms. Straube hoped that once an obligor's debt is based on the obligor's actual earnings, that obligor would be more likely to pay ongoing child support and arrears. SENATOR WARD inquired as to the meaning of the federal mandate that allows CSED to contract out child support disbursement functions. What is the current practice? GLENDA STRAUBE explained that under federal welfare reform, each state is required to have a central location for collection and disbursement of child support. If a state does not have the capacity to do so, the federal mandate provides the authority to contract out those functions. Ms. Straube said that Alaska already has a centralized location, but the issue is being reviewed to contract out. CHAIRMAN WILKEN pointed out that the next committee of referral for SB 154 is Senate Finance. Chairman Wilken suggested that any concerns be mentioned for Ms. Straube to address. Those concerns should be addressed in SHES. TAPE 97-42, SIDE B SENATOR GREEN asked what would happen if SB 154 did not pass this year or next year. GLENDA STRAUBE said that SB 154 has to pass this year. The Congressional legislation passed late in the Congressional session which has left states and the federal government scrambling. The federal government can impose penalties such as all of the CSED budget. In further response, Ms. Straube said that there is no waiver process. Ms. Straube believed that there is no way to get this through, but the legislation must pass next year or there would not be any excuse. Without passage, public assistance would lose $3.2 million from its budget. GLENDA STRAUBE continued with the CSED and AGO's recommended changes. The current employer penalty of $1,000 is changed to $10,000 when an employee is fired due to an income withholding order. Ms. Straube noted that some employers refuse to collect the money while others collect the money and use it themselves. SENATOR WARD inquired as to how many times employers have been fined $1,000. GLENDA STRAUBE said that the division has not fined anyone because the requirements for proof are so strict. MARILYN MAY was not aware of such a case. Ms. May indicated that the small penalty, the difficulties of making a case, and the cost of such a case have not been worth pursing such a case. The current penalty is not much of a disincentive to employers. Number 547 GLENDA STRAUBE informed the committee that employers have indicated their dislike of the withholding orders. The next recommended change is a clarification that parents owe a duty of support whether or not a support order has been entered. The courts do that now. Currently, the Supreme Court makes changes to the Child Support Guidelines which necessitates CSED to promulgate regulations conforming to the Supreme Court changes. This recommendation would make the Supreme Court changes automatically become CSED regulations. CHAIRMAN WILKEN asked if Senator Ward's question regarding the revocation of commercial fishing crewmen's licenses had been answered. SENATOR WARD asked who determined that there was a similarity between a recreational license and crew license. Do crew licenses fall under this and how many crew licenses are there? SUSAN HAYMES , Commercial Fisheries Entry Commission, said that crew licenses are covered under the federal mandates. Ms. Haymes was unsure as to the number of crew licenses issued by the Department of Fish & Game, but offered to get that information for the committee. Ms. Haymes believed that the number of crew licenses would be in the tens of thousands. GLENDA STRAUBE clarified that the commercial crewmen's fishing license falls under the occupational licenses not the recreational license. The single licenses for fishing and hunting are under the recreational license. SENATOR LEMAN noted that in several places there is a change from "court" to "tribunal"; what is the significance of that change? MARILYN MAY explained that the Welfare Reform Act requires that any action that can be taken by a court can be taken by any appropriate tribunal. Alaska already has an agency with administrative authority to do many things being done by the courts in other states. The agency's authority over child support enforcement is almost coextensive to that of a court. When "tribunal" is used, it is meant to cover the administrative powers of the agency. Number 487 SENATOR LEMAN posed the scenario in which the State of Alaska is unsuccessful in getting the U.S. Supreme Court to take the Venetie case which would logically result in more Indian country in Alaska. Would the federal law apply to the tribes? Senator Leman assumed that the tribes would take on some of the responsibility instead of child support enforcement; would that require further action or would that fall under the sovereign to sovereign relationship? MARILYN MAY pointed out that the Federal Welfare Reform Act does include a section which deals with child support enforcement for Indian tribes and those states that have Indian country. The federal act allows for the child support agency to have cooperative agreements with the tribe or tribal organizations under certain circumstances such as established courts. SENATOR LEMAN asked if the child support enforcement activities are required to happen by either the tribe or via these cooperative agreements. GLENDA STRAUBE explained that the state has the ultimate responsibility regardless of whether a tribe takes responsibility for the local child support enforcement. Other states have tribes in Indian country that already run programs. The tribe can have child support guidelines that are different than the state guidelines as well as determining a different due amount. Currently, Metlakatla has the authority to make such decisions. Ms. Straube believed that most of the nonprofits will not want to take over child support. In explanation to the situation in Metlakatla, Ms. Straube said that Metlakatla is determining how child support will be established and how much will be withheld. DAN BRANCH specified that Metlakatla is not directly enforcing child support, but is raising sovereign immunity in regards to the child support enforcement agency garnishing wages of anyone working for the tribal entity. Metlakatla, a recognized federal Indian reservation, is different than other tribal entities in Alaska. There is no child support officer in Metlakatla. Number 438 GARY ROTH , President of Denali State Bank, informed the committee that he was representing the Alaska Bankers Association. Mr. Roth directed the committee to Section 76 (D) of the CS, page 30 line 22. Mr. Roth believed that the definition of "financial institution" is limited to banks, foreign banks, mutual savings banks, small loans, trust companies, and credit unions. Mr. Roth suggested that 50 percent of the deposit accounts are held by brokerage houses and insurance companies. The state would be missing an opportunity to further recapture these funds without an amendment. Mr. Roth recommended that on page 30, line 22 after " financial institutions " insert ", brokerage houses, insurance companies, and companies doing individual investments, transactions or deposit accounts in the state". Mr. Roth informed the committee that his small bank is being asked to cross reference 486 names which will take about two days to complete. The proposed automated system will be efficient and shorten the process. SENATOR LEMAN believed that everything listed by Mr. Roth would be included in the definition of "financial institution". DAN BRANCH informed the committee that the definition of "financial institution" is provided in the federal statute. These procedures will be developed through regulation. Section 76 clearly provides CSED with the regulator authority to establish these procedures. Mr. Branch believed that the definition of "financial institution" is defined rather broadly and would include those entities specified by Mr. Roth. GARY ROTH asked if information was being routinely requested from brokerage houses. GLENDA STRAUBE replied yes. Ms. Straube recalled that at least one brokerage house claimed that it did not have to comply. Ms. Straube did not disagree with Mr. Roth's comments. CHAIRMAN WILKEN announced that Mr. Roth's suggestion be included in the forthcoming CS in order to further discuss that issue. Chairman Wilken requested that Mr. Roth submit any industry numbers regarding the percentage of money included in those other entities. Chairman Wilken asked Ms. Straube if she had enough information to return with a CS. GLENDA STRAUBE believed that it would be best if there are any major issues, that those be sent in writing to her. Ms. Straube said that she only heard one suggested change regarding the definition of "financial institution". SENATOR WARD requested that concerns and such be left to the individual staff. SENATOR LEMAN expressed the need to revisit the interest rate issue. CHAIRMAN WILKEN announced that SB 116 would not be heard today, but would be scheduled for Friday. Number 334 JODIE OLMSTEAD , testifying from Fairbanks, informed the committee that she has an unresolved child support enforcement case. Ms. Olmstead suggested the following to CSED in order to improve the agency. First, parents should be informed in a timely manner. Ms. Olmstead noted that her own court action started in October, but she was not informed until March. Ms. Olmstead informed the committee that in her case her ex-husband is in California and she is in Alaska; both are cooperating with CSED. The problem for Ms. Olmstead is CSED in both states. Second, one enforcement officer should be assigned to a case. Third, an effective grievance process should be provided. Fourth, check challenged facts and respond appropriately. Ms. Olmstead noted that her ex-spouse worked for Fred Meyers. CSED sent a withholding order to store A which did not act on the order. The order should have gone to the corporate headquarters per her suggestion. Ms. Olmstead called Fred Meyer and CSED each month for six months to let them know of the situation. No child support was ever collected and Ms. Olmstead and her children went hungry. Fifth, Ms. Olmstead suggested that the Ombudsman's recommendations be acted upon or respond as to why. The Ombudsman said that the state and the store made a mistake and Ms. Olmstead and her children should have received a minimum of $42,000, but she received nothing. Sixth, the parent should be advised that the Attorney Generals Office is present to protect CSED. Ms. Olmstead informed the committee that the Attorney General made a deal with the store on behalf of CSED. Ms. Olmstead heard about the deal later through the Attorney General and her children received $1,400. The deal protected the agency and avoided setting a precedent. Seventh, Ms. Olmstead stressed the need to be dedicated to obtaining support money for children. Ms. Olmstead commented on the over zealousness of DFYS. Eighth, act when parents point out the need to wait. Ms. Olmstead noted the frivolous court proceeding in which attempts to obtain child support from a father who has no money. Ninth, Ms. Olmstead suggested that the agency should listen when a parent points out that the agency's actions are unnecessarily driving a wedge between the parents and hurting the children. Ms. Olmstead noted that she was a member of Concerned Parents for Reform. One of the biggest problems in Ms. Olmstead's case was the communication between California and Alaska. Ms. Olmstead said that through her group she has heard of numerous situations such as hers between California and Alaska. Ms. Olmstead discussed her unresolved situation further. Ms. Olmstead said that many people are on welfare because of the non-receipt of child support. CHAIRMAN WILKEN encouraged Ms. Olmstead to fax her suggestions to the committee and to follow SB 154 which may address some of her concerns. Chairman Wilken noted that he had a packet of information on welfare reform and would be happy to provide it to anyone interested. There being no further business before the committee, the meeting was adjourned at 10:25 a.m.