Legislature(1993 - 1994)

04/14/1994 08:00 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  CHAIRMAN VEZEY opened HB 482 for discussion.                                 
  Number 295                                                                   
  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                     
  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                      
  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                                                                   
  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                       
  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.                                                        
  CHAIRMAN VEZEY, having no more business before the                           
  committee, adjourned the meeting at 9:33 a.m.                                

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