Legislature(1993 - 1994)
04/14/1994 08:00 AM House STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 482 - EMPLOYMENT INFORMATION PROVIDED TO THE STATE CHAIRMAN VEZEY opened HB 482 for discussion. Number 295 MARY GAY, DIRECTOR, CHILD SUPPORT ENFORCEMENT DIVISION, DEPARTMENT OF REVENUE, addressed HB 482. She stated HB 482 requires employers with 20 or more employees, to report new hires to the Child Support Enforcement Division (CSED). The original legislation enacted three years ago, contained a sunset clause. The original legislation had been proposed because CSED obtained a federal improvement demonstration grant to determine whether employer recording of new hires would increase the effectiveness of collections in child support. She said the first year the program was limited to only the largest employers of the largest number of obligors. The first year resulted in $753,000 in collections, of which $200,000 was directly associated to the additional information from the employers. MS. GAY noted prior to the legislation, the only method CSED had to obtain information as to whether an obligor was employed was whether the person gave them the information or through Department of Labor (DOL) records. The quarterly reports required by the DOL are only done at the end of ninety days. The employer does not have to submit them until thirty days later; therefore, by the time the information is accessible to CSED it is already four months old. Quite often the employee has moved on to another job and the CSED misses the opportunity to collect the child support. MS. GAY commented the second year CSED collected from seasonal employers. Seasonal employers are easily missed by the CSED. In the second year, including the first year target group, CSED collected in excess of $3 million, of which $625,000 was directly attributed to the legislation. MS. GAY commented in the third year, the target group will be analyzed according to the occupation. CSED will try to determine which occupations obligors are most commonly employed in, then target those occupations. Number 348 CHAIRMAN VEZEY asked if the employer reporting requirements were also applicable to labor unions and hiring halls. MS. GAY replied she thought the labor unions might have been included in immediate wage withholding. HB 482 regards employers. CHAIRMAN VEZEY inquired if hiring halls were required to notify CSED monthly of dispatches. Number 359 MS. GAY said she was not sure, but she did not think so. Hiring halls do not pay the wages. Number 367 CHAIRMAN VEZEY said he had thought they were also required to make the support. He commented the additional information makes collections much easier. The reporting is at the employer's expense and inconvenience. He felt employers should be given recognition for doing a tremendous service at no cost to the state. He suggested employers be compensated for their efforts. Number 379 MS. GAY responded current law states a dollar can be removed from the wages of the employee for the employer report. She said she did not know if there was federal match participation, whereby payment by the CSED would be an allowable expenditure for the federal match. Number 386 CHAIRMAN VEZEY mentioned the cost to the employer to account for the $1 deduction would be considerably more than $1. Number 388 LARAINE DERR, DEPUTY COMMISSIONER, TREASURY, DEPARTMENT OF REVENUE, answered questions on HB 482. She stated from her research, the sunset clause was put into the legislation three years ago because of a compromise. The dollar deduction and the sunset were part of the compromise so that if the program was not working in three years it could be repealed, or if there was significant cost impact to the employers it could be fixed at this time. From her knowledge, the $1 has not been under criticism. Number 404 CHAIRMAN VEZEY said he had not heard from anyone doing the $1 deduction. The $1 deduction was not worth it to the employers. He pointed out they are claiming the legislation is saving the state a lot of money on welfare payments; however, it is actually taxing the resources of the employers. The accounting process in the payroll is expensive. HB 482 would expand the project and go down the scale of employers. He felt employers would get more angry because they would have to work harder for the state. Number 424 MS. GAY reiterated the stages the program has gone through because it is a study. CSED does not want to put an undue burden on the employers. They do not intend to continue to request an employer with little turnover in employees to turn in the information. She emphasized the federal government feels the program is very worthwhile and there is legislation currently before Congress to require all states to enact laws, whereby employers would report the new hires. HB 482 would prevent confusion among the employers and the cost involved with starting and stopping the process. Number 449 CHAIRMAN VEZEY questioned the clause in statute that penalizes employers a 100 percent civil penalty for not witholding moneys if they have been notified of an employee with an obligation to the CSED. He stated the employee, once terminated, could come back to work in the future and the witholding order is still enforced until released by a court order. He could not recall any court order releasing any witholding order he has. He felt the 100 percent penalty did not foster a good relationship between the state and the employer. He found it offensive and believed it could be corrected easily. CHAIRMAN VEZEY stated he had written a letter to Laraine Derr with suggestive wording. Number 469 MS. GAY replied CHAIRMAN VEZEY has the opportunity. Number 478 MS. DERR did not recall receiving the letter. Number 490 REPRESENTATIVE G. DAVIS referred to the 1-3 ratio. He asked if the CSED was looking to extend the demonstration project or put the inclusions of the project into statute. Number 496 MS. GAY replied CSED would like to extend the project, even though the federal grant was only for three years. They want to keep the money coming in on a steady basis so the custodial parents can plan for their financial obligations. This would reduce the claims for public assistance. Number 504 REPRESENTATIVE G. DAVIS referred to the target ratio, 1-3 collected for each dollar spent on the program. He asked if the 1-3 target was met. Number 509 MS. GAY answered she had lost the report of those figures on the airplane to Juneau. She said $250,000, of the total $750,000, was directly attributed to the program the first year. This is approximately 1-3. Number 515 REPRESENTATIVE G. DAVIS inquired as to the anticipated cost of the program. Number 517 MS. GAY responded CSED did not attach a fiscal note to HB 482. The federal government granted approximately $250,000 a year for the project. She noted CSED had extra steps to go through to meet the reporting requirements, etc.,.... required by the federal grant. She said there was a specific cost involved to determine what the gains were attributed to. Number 526 REPRESENTATIVE G. DAVIS clarified the demonstration received $250,000 in federal grants and realized $200,000. Number 528 MS. GAY said, in the first year. Number 530 REPRESENTATIVE G. DAVIS inquired if this number was total or state share. Number 532 MS. GAY answered total. She said 50 percent would be attributed to AFDC, of which 50 percent would be state and 50 percent would be federal. Therefore, $50,000 directly attributed to general fund moneys to the state. Number 534 REPRESENTATIVE G. DAVIS stated from a cost benefit standpoint the program might break even. The grant required CSED to do extra controls that might cost extra if the program was a state program. Employees would still be needed. Number 545 MS. DERR pointed out in the second year, CSED gained $621,000. She stated the $250,000 from the first year grant was basically for set up charges. As the study progressed, the pay collections increased. Number 550 MS. GAY commented in the first year report extrapolated from the existing data, estimated potential collections could reach $7.5 million by expanding the program to the universe of employers. (REPRESENTATIVE OLBERG rejoined the meeting at 9:30 a.m.) Number 555 CHAIRMAN VEZEY stated he would forward the letter to MS. DERR again. He said the committee would try to bring HB 482 up again on Saturday. ADJOURNMENT CHAIRMAN VEZEY, having no more business before the committee, adjourned the meeting at 9:33 a.m.