Legislature(2001 - 2002)

02/20/2001 03:03 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 41-CHILD SUPPORT ENFORCEMENT/SOC SEC. #                                                                                    
                                                                                                                                
Number 1222                                                                                                                     
                                                                                                                                
CHAIR DYSON  announced that  the final item  of business  would be                                                              
HOUSE  BILL NO.  41, "An  Act repealing  the  termination date  of                                                              
changes made by  ch. 87, SLA 1997 and ch. 132,  SLA 1998 regarding                                                              
child  support enforcement  and  related  programs; repealing  the                                                              
nonseverability  provision   of  ch.  132,  SLA   1998;  repealing                                                              
certain  requirements   for  applicants  for  hunting   and  sport                                                              
fishing  licenses or  tags, and  for certain  hunting permits,  to                                                              
provide  social security  numbers  for child  support  enforcement                                                              
purposes; and providing for an effective date."                                                                                 
                                                                                                                                
[In  packets  but not  yet  adopted  was Version  F,  22-GH1002\F,                                                              
Lauterbach,  2/16/01.    As  a result  of  being  amended  at  the                                                              
previous hearing,  Version F rolled  CSSB 19(HES), except  for the                                                              
title, into HB 41.]                                                                                                             
                                                                                                                                
Number 1160                                                                                                                     
                                                                                                                                
BARBARA  MIKLOS,  Director,  Child  Support  Enforcement  Division                                                              
(CSED),  Department  of  Revenue,  testified  via  teleconference.                                                              
She stated  that the CS for HB  41, Version F, changes  the recent                                                              
legislation's  sunset   provision  relating  to   social  security                                                              
numbers  as  well  as provisions  that  deal  with  the  financial                                                              
institutional  data match  program, which  is a  program CSED  has                                                              
just begun  to implement.  She  said it also adds  some provisions                                                              
from  the  Senate  Health, Education  and  Social  Services  (HES)                                                              
Standing  Committee; if an  employer did  not provide  information                                                              
on new  hire reporting, there  would not  be a separate  cause for                                                              
civil action.   She remarked that  for the most part,  CSED has no                                                              
trouble with  the changes.  She  noted that the  current committee                                                              
is asking  for the  legislation to sunset  in two years;  although                                                              
CSED  supports  having  it  be  five  years,  there  would  be  no                                                              
objection to the two-year sunset.                                                                                               
                                                                                                                                
Number 1110                                                                                                                     
                                                                                                                                
CHAIR DYSON  stated that he  has a proposed  amendment of  his own                                                              
and asked  Randall Lorenz, staff,  to explain it.   That amendment                                                              
to Version F, 22-GH1002\F.1, Lauterbach, 2/16/01, read:                                                                         
                                                                                                                                
     Page 1, line 3, following "institutions":                                                                                
          Insert "; relating to child support payments"                                                                       
                                                                                                                                
     Page 5, following line 4:                                                                                                  
          Insert a new bill section to read:                                                                                    
      "* Sec. 12.  AS 25.27.103 is amended to read:                                                                         
               Sec. 25.27.103.  Payments to agency.  An                                                                       
     obligor       shall make child  support payments  to the                                                                   
     agency  if  the agency  is  enforcing  a duty  of  child                                                                   
     support  under AS 25.25  or  this chapter.   The  agency                                                                   
     shall disburse  that portion  of a payment that  exceeds                                                                   
     the amount of  money necessary to satisfy  the obligor's                                                                   
     immediate duty  of support in accordance with  state and                                                                   
     federal requirements.   Unless the obligor  indicates in                                                               
     writing  that  all or  part  of  the payment  should  be                                                               
     credited  toward  the  obligor's   arrears,  the  agency                                                               
     shall credit a  payment received in the last  10 days of                                                               
     a calendar month  against the immediate duty  of support                                                               
     that  is  due   in  the  next  calendar  month   if  the                                                               
     immediate  duty of  support  for the  current month  has                                                               
     been   satisfied.   The  agency   shall   credit   money                                                               
     disbursed   under  this   section  [SUBSECTION]   toward                                                               
     satisfaction of the obligor's duty of support."                                                                            
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 6, line 2:                                                                                                            
             Delete "11 and 14"                                                                                                 
             Insert "11, 12, and 15"                                                                                            
                                                                                                                                
RANDALL LORENZ,  Staff to Representative Fred Dyson,  Alaska State                                                              
Legislature,  stated  that presently,  if  an individual  makes  a                                                              
payment  through the  employer  - for  example,  during the  first                                                              
couple of  days in February -  and then, because of  automatic pay                                                              
cycles, his or her  March paycheck falls around the  25th, 26th or                                                              
27th of February,  then that's considered by CSED  an overpayment.                                                              
It would  then go  towards  any back pay  to either  the state  or                                                              
federal  government,  and would  not  be  forwarded to  the  March                                                              
payment,  which was  the  intent.   As  a result,  the  individual                                                              
learns, in March,  that he or she is in arrears  for not paying in                                                              
March.   The problem  is that  CSED's computers  are not  forward-                                                              
looking  to make  sure that  it has been  taken care  of prior  to                                                              
making  the state or  federal payments.   Mr.  Lorenz stated  that                                                              
this amendment,  therefore, requires  that any payment  that comes                                                              
in the  last ten  days of  the month  be placed  towards the  next                                                              
month's fiscal  requirement, if the  current month has  been taken                                                              
care of, unless  that individual signs a waiver allowing  it to go                                                              
to the federal or state arrearages.                                                                                             
                                                                                                                                
Number 0954                                                                                                                     
                                                                                                                                
REPRESENTATIVE  WILSON remarked  that she thinks  that this  is an                                                              
excellent idea and asked what Barbara Miklos thinks of it.                                                                      
                                                                                                                                
MS. MIKLOS stated  that she doesn't think CSED  disagrees with the                                                              
intent,  but she  thinks that  there are  a few  cases where  this                                                              
becomes  a  problem.     She  explained  that  if   there  are  no                                                              
arrearages  on the  case,  then  the money  is  applied to  future                                                              
payments.   She added that  arrearages on  a case are  monies owed                                                              
to the custodial  parent, not to the state or  federal government.                                                              
In  fact, CSED's  new  distribution  requirements  state that  the                                                              
custodial parent  must be  paid first.   The biggest  concern, she                                                              
said,  is that  this is  not consistent  with CSED's  requirements                                                              
with the  federal government  in terms of  how it distributes  the                                                              
money collected.  She deferred to Mr. Mallonee to speak to that.                                                                
                                                                                                                                
Number 0960                                                                                                                     
                                                                                                                                
JOHN MALLONEE,  Data Processor Manager, Child  Support Enforcement                                                              
Division   (CSED),   Department    of   Revenue,   testified   via                                                              
teleconference.    He  explained  that  Title  45,  CFR  (Code  of                                                              
Federal Regulations) 302.51(a)(1), states:                                                                                      
                                                                                                                                
     For  the  purpose  of  distribution   in  a  IV-D  case,                                                                   
     amounts  collected, except  as provided under  paragraph                                                                   
     (a)(3)  of this  section, shall  be treated  first as  a                                                                   
     payment  on  the required  support  obligation  for  the                                                                   
     month  in which  the support  was collected  and if  any                                                                   
     amounts  are  collected  which  are in  excess  of  such                                                                   
     amount,  these  excess  amounts   shall  be  treated  as                                                                   
     amounts   which  represent   payment  on  the   required                                                                   
     support obligation for previous months.                                                                                    
                                                                                                                                
MR. MALLONEE  said that there is  also a (b) to that  same section                                                              
that states:                                                                                                                    
                                                                                                                                
     If  an amount  collected as  support represents  payment                                                                   
     of the  required support  obligation for future  months,                                                                   
     the  amount  shall be  applied  to such  future  months.                                                                   
     However,  no such  amounts  shall be  applied to  future                                                                   
     months unless  amounts have  been collected which  fully                                                                   
     satisfy  the support obligation  assigned under  section                                                                   
     403(a)(8)  of the  Act  for the  current  month and  all                                                                   
     past months.                                                                                                               
                                                                                                                                
MR. MALLONEE  stated  that this  is in contradiction  to what  the                                                              
federal distribution requirement has CSED doing.                                                                                
                                                                                                                                
REPRESENTATIVE WILSON  asked:  Currently,  when funds come  in and                                                              
are first  applied to  the current month,  if the individual  were                                                              
two  months in  arrears, would  the money  go to  that [back  pay]                                                              
before it would go forward?                                                                                                     
                                                                                                                                
MR. MALLONEE replied that that is correct.                                                                                      
                                                                                                                                
REPRESENTATIVE  COGHILL  said the  obligor  is  asked  to write  a                                                              
statement saying  that that's  the case.   He asked if  there were                                                              
cases in which arrearages  would be in contest in  such a way that                                                              
this  be  effective in  getting  the  money  to the  next  forward                                                              
months.                                                                                                                         
                                                                                                                                
MR. MALLONEE answered  that a case where it might  arise is if the                                                              
noncustodial parent  were contesting  what the arrearages  were on                                                              
the case, and felt  that that money was really  being paid ongoing                                                              
and didn't agree with the arrears.                                                                                              
                                                                                                                                
REPRESENTATIVE  COGHILL asked  if having  the noncustodial  parent                                                              
sign an  affidavit,  or some kind  of letter  affirming that  that                                                              
could happen, is just bringing him or her into the loop.                                                                        
                                                                                                                                
MR.  MALLONEE answered  that that's  all it  would do.   He  added                                                              
that  he doesn't  think  that would  solve  the  problem with  the                                                              
federal requirement  because the  individual is just  telling what                                                              
his or  her intentions  happen to  be at  that moment,  but CSED's                                                              
distribution is  based on when it  collects the money and  how the                                                              
case appears at that particular time.                                                                                           
                                                                                                                                
REPRESENTATIVE  CISSNA stated  that  it's  her understanding  from                                                              
the  amendment  language  that  the  individual  would  always  be                                                              
paying forward, so the public money would never get recuperated.                                                                
                                                                                                                                
Number 0576                                                                                                                     
                                                                                                                                
CHAIR DYSON stated  that the intent is for the money  to go to the                                                              
support of the children.   Any money that is intended  to pay back                                                              
obligations  would be separate.   Chair  Dyson asked Mr.  Mallonee                                                              
when  checks would  be  coming from  the  employer  as opposed  to                                                              
directly from the obligor.                                                                                                      
                                                                                                                                
MR.  MALLONEE  replied  that  part  of the  problem  is  that  the                                                              
distribution  rules are  a little  more specific  for things  that                                                              
come  from an  employer  versus  those things  that  come from  an                                                              
individual.    Checks   that  come  from  the   employer  must  be                                                              
distributed by  the distribution  requirements within two  days of                                                              
CSED  receiving  them.   It  is  somewhat  longer  if it  is  paid                                                              
individually.     He  stated  that   there  are  times   when  the                                                              
employer's checks could be considered for the prior month.                                                                      
                                                                                                                                
Number 0460                                                                                                                     
                                                                                                                                
CHAIR DYSON  asked why  the employers are  sending checks  for the                                                              
support of children that aren't theirs.                                                                                         
                                                                                                                                
MS. MIKLOS  answered that in 1994  or 1996 Congress  required from                                                              
all  states  that  child  support  be  automatically  carried  out                                                              
through  wage withholding.   She  said  she thinks  the intent  in                                                              
having  the employer  withhold the  money, which  made a  dramatic                                                              
increase  in terms of  child support,  was that  it would  be more                                                              
consistent to withholding on federal income tax.                                                                                
                                                                                                                                
CHAIR DYSON  asked:  If the employer  mails the check  on the 22nd                                                              
or  23rd and  CSED  applies  that  to the  month  in which  it  is                                                              
received, takes  the difference  on any  overages, and  applies it                                                              
to back  debts, would the  obligor get  a penalty in  interest the                                                              
next month when the person isn't paid up to date?.                                                                              
                                                                                                                                
MS.  MIKLOS replied  that first  of all,  this is  referring to  a                                                              
person  who  is  already  behind  in  his  or  her  child  support                                                              
payments.   The  penalties  would not  increase  in future  months                                                              
when the person continues  to be behind.  If he  or she were never                                                              
behind, then there  would be absolutely no penalties  because that                                                              
money would be applied to the future.                                                                                           
                                                                                                                                
Number 0305                                                                                                                     
                                                                                                                                
CHAIR  DYSON asked  if  CSED is  using any  of  the arrearages  to                                                              
reimburse  the  state  for  welfare  and  ATAP  (Alaska  Temporary                                                              
Assistance Program)  funds that have  been given to  the custodial                                                              
parents.                                                                                                                        
                                                                                                                                
MS. MIKLOS  answered yes, some  of the money  may go to  the state                                                              
or federal  government and some  may go to the  custodial parents.                                                              
Under  CSED's  new  distribution   requirement  from  the  federal                                                              
government, it is  required to pay the custodial  parent first for                                                              
the  arrearages.     If   the  custodial   parent  is   on  public                                                              
assistance, the state would provide the child support payments.                                                                 
                                                                                                                                
CHAIR DYSON  asked if  there is any  way to craft  this so  if the                                                              
obligor  is behind  on child  support  payments, any  overpayments                                                              
would  go  to the  custodial  parent  and  the children,  and  not                                                              
reimburse  the  state  for  welfare  or  ATAP  until  the  obligor                                                              
authorized money  from his or her  paycheck deductions or  wrote a                                                              
check to make up those arrearages that are owed to the state.                                                                   
                                                                                                                                
MS. MIKLOS  answered that child  support payments that  people pay                                                              
now,  unless  there's  an  instance of  hardship,  do  include  SS                                                              
(social security)  money to pay  back on arrears.   Therefore, its                                                              
not that  CSED doesn't  collect the monthly  support ongoing.   If                                                              
the obligors  are continually  paying on  future months  and never                                                              
paying on the  arrears, they will then be gathering  more interest                                                              
as  the money  moves along.   She  added  that in  some ways  this                                                              
would work to their disadvantage.                                                                                               
                                                                                                                                
Number 0100                                                                                                                     
                                                                                                                                
SHARRON  O'DELL,  Staff  to  Representative  Vic  Kohring,  Alaska                                                              
State   Legislature,  came   forth   and  stated   that  in   1999                                                              
Representative  Kohring's  office  handled  two cases  like  this,                                                              
which were  garnishment cases with ATAP  debt.  In one  case, CSED                                                              
would  not reverse  the second  payment, stating  it couldn't  get                                                              
the money back from  the public assistance office.   In the second                                                              
case, CSED backed  out the posting, re-receipted  it, and reissued                                                              
a payment  to the  custodial parent.   Because  it was  a military                                                              
check, CSED said  it could do that.  When CSED  applies the second                                                              
payment received in  the calendar month, because the  first one is                                                              
received  in  the  beginning  of  the  month  and  the  second  is                                                              
received in the end  of the month, the state robs  the kids of the                                                              
very support that is says it gives them.                                                                                        
                                                                                                                                
TAPE 01-17, SIDE A                                                                                                              
                                                                                                                                
MS. O'DELL  stated that there  must be  some type of  mechanism in                                                              
place  that lets  CSED  distinguish money  that  is received  that                                                              
way.                                                                                                                            
                                                                                                                                
Number 0102                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CISSNA asked  Ms. Miklos  if there  is a way  that                                                              
this could be addressed.                                                                                                        
                                                                                                                                
Number 0200                                                                                                                     
                                                                                                                                
MS. MIKLOS  clarified that it doesn't  matter where CSED  gets the                                                              
money  from,  it  must  always be  paid  to  the  ongoing  monthly                                                              
support first.   Child Safety  Enforcement Division's  position on                                                              
whether there's  a way to fix the  problem has been that  the most                                                              
important thing  is to  collect money  for the children,  although                                                              
CSED  does believe  people  have  an obligation  to  pay back  the                                                              
state.  Child  Safety Enforcement Division would  be interested in                                                              
trying to  figure out a  way for payments  that happen to  come in                                                              
late to be used  for the next month.  This [amendment]  is not the                                                              
way, however,  because it does  not meet federal  requirements and                                                              
it does not consider  the money CSED gets from  the Permanent Fund                                                              
Dividend  Division or the  IRS (Internal  Revenue Service),  which                                                              
must be applied to arrears.                                                                                                     
                                                                                                                                
Number 0327                                                                                                                     
                                                                                                                                
CHAIR  DYSON  called an  at-ease  at  4:47  p.m. The  meeting  was                                                              
called back to order at 4:48 p.m.                                                                                               
                                                                                                                                
CHAIR DYSON referred  to the amendment, 22-GH1002\F.1.   Beginning                                                              
on line  11 of  the amendment, he  asked Ms.  Miklos how  it would                                                              
work  to delete  the language,  "Unless the  obligor indicates  in                                                              
writing  that  all or  part  of  the payment  should  be  credited                                                              
toward the  obligor's arrears",  and to have  it read  as follows,                                                              
beginning on line 9:                                                                                                            
                                                                                                                                
     The  agency shall  disburse  that portion  of a  payment                                                                   
     that exceeds  the amount of  money necessary  to satisfy                                                                   
     the obligor's  immediate duty  of support in  accordance                                                                   
     with  state  and federal  [requirements].    The  agency                                                                   
     shall credit a  payment received in the last  10 days of                                                                   
     a calendar month  against the immediate duty  of support                                                                   
     that  is  due   in  the  next  calendar  month   if  the                                                                   
     immediate  duty of  support  for the  current month  has                                                                   
     been  satisfied  and the  moneys  will  not be  used  to                                                                   
     satisfy past debts to the state.                                                                                           
                                                                                                                                
Number 0429                                                                                                                     
                                                                                                                                
MS. MIKLOS responded  that there would be some  real problems with                                                              
the expectation of  the federal government in terms  of being able                                                              
to satisfy  not just the  debt to the state  but also the  debt to                                                              
CSED.  She emphasized  the complexity of dealing with  the IRS and                                                              
the permanent fund, for example.                                                                                                
                                                                                                                                
CHAIR  DYSON stressed  the intent  of keeping  the money going  to                                                              
the kids, and not  having money arbitrarily siphoned  off to pay a                                                              
back  debt to  the state.   He  suggested  that there  could be  a                                                              
conceptual  amendment  sent to  the  drafters,  or this  could  be                                                              
postponed until the  beginning of the next meeting.   He asked Ms.                                                              
Miklos what she would prefer.                                                                                                   
                                                                                                                                
MS. MIKLOS  answered  that she would  rather  wait until the  next                                                              
meeting, to possibly come up with some language.                                                                                
                                                                                                                                
REPRESENTATIVE  CISSNA suggested  that  the  amendment state  that                                                              
the  amount required  for  the future  month  be satisfied  first,                                                              
before  back   payments.    In   that  way,  there  would   be  an                                                              
opportunity  for  money to  be  paid  backwards.   She  asked  Ms.                                                              
Miklos whether that would work.                                                                                                 
                                                                                                                                
CHAIR DYSON stated that he thinks this is on the right track.                                                                   
                                                                                                                                
Number 0609                                                                                                                     
                                                                                                                                
MS.  MIKLOS remarked  that  the reason  CSED  has introduced  this                                                              
legislation  is to  avoid a  federal  penalty.   Referring to  CFR                                                              
302.51,  she said  the federal  government has  been pretty  clear                                                              
regarding what CSED is expected to do with the money.                                                                           
                                                                                                                                
CHAIR DYSON suggested  the language should be crafted  to say that                                                              
the  money  is part  of  what  happens  every  month, so  that  it                                                              
purposely  excludes   permanent  fund  dividends   or  income  tax                                                              
refunds,  for example.    He said  he is  not  interested in  this                                                              
amendment  precluding  CSED's  collection  of back  debts  to  the                                                              
custodial parent;  rather, his concern  is with the back  debts to                                                              
the state that keep money from going to the kids.                                                                               
                                                                                                                                
REPRESENTATIVE KOHRING  noted that he  wouldn't be present  at the                                                              
next meeting.   He  commented that normally  he'd be  reluctant to                                                              
vote for extending  the sunset date of CSED, but  he believes that                                                              
Ms. Miklos and her  staff have done a good job.   He said he would                                                              
support this  legislation, at  least in its  current version.   He                                                              
added  that he thinks  the issue  on social  security numbers  was                                                              
handled  better  in  this  committee  than  in  the  Senate  House                                                              
Health, Education  and Social Services Standing Committee.  [HB 41                                                              
was held over.]                                                                                                                 

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