Legislature(2003 - 2004)
04/20/2004 02:15 PM House HES
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HB 176-NONCASH CHILD SUPPORT Number 1733 CHAIR WILSON announced that the next order of business would be HOUSE BILL NO. 176, "An Act providing that certain obligors can receive credit against their child support obligation for certain types of noncash child support; and providing for an effective date." Number 1757 RYNNIEVA MOSS, Staff to Representative John Coghill, Alaska State Legislature, presented HB 176 for Representative Coghill, sponsor of HB 176, and answered questions from the members. She explained that this bill has come a long way. In October of 2001 while attending a child in need of aid (CINA) workshop she met an incredible woman by the name of Faith Peters from Tanana. During that meeting Faith told her of the problems associated with CINA, and problems associated with villages and alcoholism. Faith told her of fathers in the villages that would cut an entire winter's worth of firewood, and fill the freezer with moose meat, but would not get any credit for contributing to the support of their children. Ms. Moss shared that Faith believes there is a self-esteem problem that could be addressed if the legislature were to change the law to enable noncash contributions to be used with respect to child support obligations. Representative Coghill, the Department of Revenue, and the Attorney General's Office have worked collectively to provide language which would allow the noncash contributions to be considered, she said. MS. MOSS told the members she has a committee substitute that she would like to present which is version H. This morning the Attorney General's Office agreed to two amendments which she will also present for the committee's consideration, she added. Ms. Moss said she believes if a father or mother has a noncash way of contributing to his/her children's support then credit should be accepted for it. Number 1821 MS. MOSS read the sectional analysis into the record as follows: Section 1. This section amends AS 25.27.020(b), "Duties and responsibilities of the agency", to allow the Child Support Division to apply noncash contributions of the noncustodial parent to his or her child support obligation if the following conditions exist: 1. the custodial parent has agreed to the arrangement 2. the noncash contributions can be for basic food, housing, and heat. 3. the agency may by regulation give credit for other types of noncash contributions because something may come up that has not been thought of. 4. with the adoption of the amendment the obligor would be required to show clear convincing evidence of the noncash contribution. 5. the custodial parent or guardian cannot be receiving assistance under the Alaska Temporary Assistance Program (ATAP) or the American Indian Welfare Reform Act. Number 1886 REPRESENTATIVE SEATON asked Ms. Moss to elaborate the rationale on the final condition. MS. MOSS explained that if a recipient of these programs were to receive cash, that amount would be applied to the individual's income; however, it is impossible to put a value on noncash contributions related to income in determining qualifications for ATAP. She added that it would add quite a fiscal note. Number 1916 REPRESENTATIVE CISSNA commented that there would be a problem placing a value on particular items. For instance, a fish would be worth a different amount depending on the time of year, the part of the state, or the market systems. She suggested that the parents agree on the value of the items, rather than the division doing so. MS. MOSS said that the department wants the parents to agree on the value of the item. Number 1961 REPRESENTATIVE COGHILL asked for Ms. Moss to clarify that these items would be credited for child support enforcement purposes, but not for income qualification for welfare purposes. MS. MOSS replied that is correct. Number 1981 DIANE WENDLANDT, Chief Assistant Attorney General, Statewide Section Supervisor, Civil Division, Department of Law, testified on HB 176 and answered questions from the members. She told the members there was concern about having state agencies setting value on noncash contributions. REPRESENTATIVE COGHILL directed attention to page 2, lines 14 and 15, and asked Ms. Wendlandt to speak to the reason this bill would not apply to those receiving public assistance or welfare. MS.WENDLANDT responded that there are two problems. First, in order to qualify for public assistance an individual must identify all sources of income. A noncash contribution must be included as income, she emphasized. The second problem is that when a parent applies for public assistance he/she assigns his/her right to child support to the state. This is done so that the state can recover money it pays to support the children. This system would not work under these assistance programs, she pointed out. REPRESENTATIVE SEATON referred to page 1, lines 12 and 13, which reads as follows: Notwithstanding the definition of "support order" in AS 25.27.900, the agency shall reduce the amount of money an obligor must pay ... REPRESENTATIVE SEATON posed a hypothetical question of a father who was making [child support] payments, while [the mother and children] are on public assistance. He said he surmises that the father's contributions would not count as a noncash payment. He asked for clarification in this case. MS. WENDLANDT replied that he is correct. The noncash contributions are treated the same as a direct payment. In the hypothetical example Representative Seaton posed, once the mother and children go on public assistance, the mother has assigned her right to support to the state. She does not have the right to agree to an alternative payment or accept child support since that now belongs to the state, Ms. Wendlandt explained. In Representative Seaton's scenario if the father brought moose meat to the mother at a time when she is on public assistance, there would be no credit given by Child Support Enforcement Division (CSED) against the obligor child support. Number 2144 CHAIR WILSON clarified that even if a father goes to the trouble of getting a moose, cutting it up, packaging it, and then brings it to the home, he will still not get any credit toward his CSED obligation. MS. WENDLANDT agreed that is correct. She pointed out that once a family goes on public assistance a warning letter is sent to the obligor that all child support payments must be made through CSED. She emphasized that this should not come as a surprise. CHAIR WILSON commented that she does not see the value in the bill. MS. MOSS clarified that this bill applies to individuals who are not on public assistance. Once an individual goes on public assistance the individual gives up his/her right to negotiate because the state is supporting the family, she explained. In most of these cases it is a minimum support order of $50 per month, she added. CHAIR WILSON said in other words, this bill is for the woman not on welfare who is receiving payments directly from the father. If they agree that a cord of wood is worth $50, then he could pay her $50 less for child support. MS. MOSS replied that is correct. She continued to read from the sectional analysis as follows: Section 2 amends AS 25.27.060, "Order of support", to add a provision defining support order and to allow the agency or the court to reduce the cash payment of court or administrative support to reflect the payment of a noncash contribution. Section 3 adjusts the uncodified law language that only noncash contributions made on or after the effective date of HB 176 being adopted. MS. MOSS told the members that Section 3 is being added to ensure that parents do not come to CSED and say "last week he gave me a cord of wood." Noncash contributions would not apply until the effective date of the bill. She explained that an uncodified law is used for legislative intent, and also for a transitional provision for legislation with a short existence. Most legislation that is for five years or less is usually put in uncodified law, she added. Number 2287 REPRESENTATIVE CISSNA asked if interest is accruing on child support payments that are not paid. MS. MOSS replied that is correct. She directed any further questions to John Mallonee, Acting Director of the Child Support Enforcement Division, Department of Revenue. TAPE 04-B, SIDE *33 REPRESENTATIVE CISSNA asked if there is an incentive to noncustodial parents to continue being part of the family and encourage contributions to its support. She said there should be some accommodation for noncash payments. MS. MOSS said that she and Representative Coghill agree with Representative Cissna, but have not been able to work out a way to accomplish it yet. Number 2273 JOHN MALLONEE, Acting Director, Child Support Enforcement Division, Department of Revenue, testified on HB 176 and answered questions from the members. He responded that he understands what is being said, but unfortunately when dealing with any type of assistance; the state has already paid out a given amount of money for those children for that month. He pointed out that whatever funds are paid back to the state goes into the general fund. Number 2252 REPRESENTATIVE COGHILL shared that many years ago when his father was in business with the Union Oil Company his dad received payments in furs from the village people. One time the company was very insistent [about payment] so his dad sent the company a mounted lynx. The company did not know what to do with it, he said, and he's pretty sure CSED would not know what to do with a hindquarter of a moose. REPRESENTATIVE SEATON noted that what is really being discussed is the valuation of items such as firewood. He suggested that perhaps the state could reduce support for the following month in lieu of noncash payments. REPRESENTATIVE COGHILL clarified that what Mr. Mallonee is saying is that the state is already paying for the support of the children. To try to credit anything for child support would mean it would have to go back to the state to reduce what has already been spent for welfare. He questioned whether it is wise to enter into that kind of accounting policy. Representative Coghill commented that if a man or woman does something to benefit his/her children whether the person gets credit or not will likely not stop him/her from doing it. He said there are times when receiving that credit is appropriate and he is looking for the best way to do that. Number 2186 REPRESENTATIVE CISSNA said she believes incentives matter on economic and public policy. She asked how much impact there would be on the fiscal note if the noncash payment slowed down or stopped the interest. Representative Cissna told the members that even families that are split apart need strengthening. REPRESENTATIVE COGHILL said he sees a couple of problems with respect to this. One is that there are arrearages that have accumulated over time. The other problem is that the department would be in the position of determining the value of the noncash contribution instead of the obligee and obligor. He said he is trying to keep the state out of the valuation process because it will likely be valued for less. There are people outside the welfare system who have been able to significantly add to the benefit of their children. Representative Coghill suggested that the committee continue to work on this point and find a better mechanism to improve the system. Number 2125 REPRESENTATIVE COGHILL moved to adopt CSHB 176, 23-LS0704\H, Mischel, 4/13/04, as the working document. There being no objection, version H was before the House Health, Education and Social Services Standing Committee as the working document. REPRESENTATIVE COGHILL moved Amendment 1 as follows [original punctuation provided]: Page 2, line 1: Delete: "the agency and" Page 2, line 3-4: Delete: "from information developed by other state agencies and by an agreement with" Page 2, line 3, before "the obligor" Insert and Page 2, line 13: Delete "and its use by the obligee or the obligee custodian" MS. MOSS explained that Amendment 1 removes language that would require the state's involvement in the agreement and leaves the decision between the two parents. Number 2054 MS. WENDLANDT told the members that CSED does not want to be in the business of valuing [noncash payments]. The simplest way to accomplish that is to leave it between the parents to agree. This amendment would do that. Number 2049 REPRESENTATIVE SEATON objected for purposes of discussion. He said he believes the second portion of the amendment that refers to page 2, lines 3 and 4, should read page 2, lines 2 and 3. REPRESENTATIVE COGHILL agreed. MS. MOSS referred to the fourth portion of the amendment, on page 2, line 13, and told the members that this language was removed because the Department of Law pointed out that it is a little hard to prove that someone ate the moose after its been eaten. CHAIR WILSON asked what would happen if the wife takes the meat and then later denies that she received it. MS. MOSS replied that a written agreement would have to be in place prior to the meat being in her possession. Number 1984 REPRESENTATIVE SEATON removed his objection. There being no further objection, Amendment 1 was adopted by the House Health, Education and Social Services Standing Committee. Number 1947 REPRESENTATIVE CISSNA asked if the agreement between the parents protect them if things turn badly. MS. MOSS responded that she does not see any protection, but suggested Ms. Wendlandt might have something to add. MS. WENDLANDT told the members that as a general rule under Alaska law agreements with respect to child support can be terminated by either parent unilaterally. If things go bad and one parent no longer wants to receive noncash contributions then CSED would honor that request and terminate the agreement. Number 1870 REPRESENTATIVE COGHILL moved Amendment 2, which reads as follows [original punctuation provided]: Page 2, line 21: Delete "agency and in" Replace: "by" Page 2, line 22, after the word "agreement": Delete: "with" Replace "between" Page 2, lines 22-23 Delete: "from the information developed by other state agencies," Replace: and the obligor MS. MOSS told the members that this amendment removes the state from the agreement and leaves it between the two parents. Number 1839 REPRESENTATIVE GATTO objected. He commented that he needs additional time to review the changes. REPRESENTATIVE GATTO removed his objection. There being no further objection, Amendment 2 was adopted by the House Health, Education and Social Services Standing Committee. Number 1801 REPRESENTATIVE COGHILL moved to report CSHB 176, version H, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 176(HES) was reported out of the House Health, Education and Social Services Standing Committee. The committee took an at-ease from 3:15 p.m. to 4:30 p.m. TAPE 04-34, SIDE A
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