Statement of Illinois Department of Healthcare and Family Services

I am pleased to present this testimony in support of H.R. 1386 on behalf of the State of Illinois’ Department of Healthcare and Family Services.

Recent Congressional legislation has resulted in a dramatic impact on the functioning of the child support program, with some key changes adversely affecting low-income families.  The State of Illinois supports House Bill 1386, The Child Support Protection Act of 2007, restoring lost funding for a universally-acclaimed, cost-effective program that indisputably keeps thousands of families from slipping into greater poverty.  We believe it is crucial for Congress to repeal the three child-support funding provisions of the Deficit Reduction Act of 2005 (DRA) in order to maintain the program’s unparalleled success as a key poverty-fighting program.

Congress’ 2006 passage of the DRA provided important new tools to assist state and local government agencies improve their collection rate, such as lowering the passport denial threshold, adding tax offsets for older children, simplifying distribution of support, and expanding medical support options. However, three funding provisions in DRA unmistakably undercut the IV-D program, offsetting much of the recent gains made by the child support agencies in the country: 

•  Disallowing the match of state-earned incentive dollars with Federal Financial Participation (FFP) undercut a covenant between the federal government and states to promote efficiency and success.
•  Imposing a $25 fee for never-TANF cases in which annual collections are $500 or greater created added difficulty for many parents living on the cusp of poverty and is requiring costly systems changes and added bureaucracy. 
•  Reducing the genetic testing FFP for parentage testing from 90% to 66% sent the wrong message to families and states that parentage determination was not a top priority, and further financially burdened states reeling from the incentive-match loss.

Loss of Incentive Match

The Congressional Budget Office (CBO) estimated that the DRA incentive match loss alone would reduce families’ income dependent on child support by $8.4 billion over 10 years.  The CBO estimate assumes state legislatures and county governments will make up half of the lost federal funds, which was overly optimistic for Illinois, as for other states.   With few states currently reporting legislative initiatives to replace all or most of the $937 million in lost FFY08 funding, the actual loss to families over ten years may be much more than the $8.4 billion that CBO forecast if one forecasts $4.58 collected for each dollar spent on the child support program, based on the average cost-effectiveness ratio found in FY05 preliminary data from the Federal Office of Child Support Enforcement. 

When Congress passed the Child Support Performance and Incentive Act of 1998 (CSPIA), Congress replaced an incentive program that emphasized TANF recovery by capping non-TANF collection incentives with a program that rewards efficient, results-oriented IV-D program efforts.  Between the incentive and its match, about one in four dollars from all funding sources originate in the incentive performance. The match alone constitutes about one of six program dollars.   CSPIA has led to remarkable improvements in performance as states compete for their fair share of the incentive pie.

In Illinois alone, the CSPIA has contributed to dramatically increased performance.  With comparative data available on outcome measures and matchable incentive funding based on performance, Illinois’ collections for IV-D families has grown from $393 million in federal fiscal year 2000 to $702 million in federal fiscal year 2006.  During the same time period, cost effectiveness improved from $2.28 to $3.84.  For Illinois’ 601,908 families served by the child support program, these performance improvements directly contribute to economic security and self-sufficiency. 

By imposing such drastic and draconian cuts on the child support program, IV-D programs will not provide the level of child support services poor and near-poor parents and children deserve. The cuts mean a rollback in everyday services, and fewer dollars available for initiatives involving automation improvements, hard-to-collect cases and cases with large arrearages, customer service and employer outreach.  The negative impact could possibly extend to the millions of employers who interact with the child support program and 17.2 million children who live apart from their non-custodial parent.

Today, over 60,000 child support professionals assist families.  The DRA cut in federal support by disallowing the incentive match will very likely lead to a dramatic down-sizing of the workforce, which will result in much higher caseloads per worker and fewer tough cases being worked successfully.  Illinois is not contemplating a workforce reduction, but will be affected by workforce reductions in other states.  States must work together to establish and enforce support across state borders.  The DRA cut not only diminishes the potential for collections for each state, but diminishes potential collections across state lines for interstate cases. 

Imposing the $25 Fee

The imposition of the $25 fee on families who have never received TANF benefits and who receive $5 00 or more in collections in a year may result in hardship for many of the persons the program is currently designed to help, the near-poor who need the program’s support to maintain independence from means-tested programs.  As custodial parents will likely bear the cost of the fee in most states, many borderline-poor parents trying to stay afloat will have to manage without some necessities to pay a fee minimal in fiscal impact to the federal government but much larger in impact to the affected parent.

State IV-D programs will have to spend considerable sums developing plans to impose the fee, explaining the fee to parents and making adjustments to their systems, as the impact of the fee ripples through the distribution algorithms that support the disbursement technology.  The cost of this change and its associated questionable policy implications make the $25 fee a poor mandate on states.

Reducing the Genetic Testing FFP

By reducing the genetic testing FFP from 90% to 66%, Congress is downgrading the priority status of efforts to provide legally-recognized fathers for children born out-of-wedlock.   About 1.5 million children or 37% of live births in 2005 were born to parents not married to one another.  Genetic testing is the key evidence to provide legal fatherhood status for an alleged or putative father, introducing a formal relationship between parent and child that will last a lifetime , including rights and responsibilities.  To promote family stability, permanent two-parent contributions to the life of a child, and certainty regarding relationships and duties, Congress should repeal the reduction in FFP for genetic testing.

Unprecedented Unanimity in the Child Support Community

The DRA’s IV-D changes and subsequent legislative efforts to repeal the DRA’s provisions that hurt families have united the child support community as never before.  The State of Illinois is united with representatives of national, regional, state and tribal child support associations in support of  H.R. 1386’s repeal of the incentive-match disallowance, and the repeal of the $25 fee and genetic testing FFP reduction as well.  We strongly believe that to prevent major disruption in collection efforts and to keep families out of poverty, Congress needs to make these changes.