SOUTH DAKOTA

PAYMENT VIA AUTOMATIC WITHDRAWAL/DEBIT AUTHORIZATION

Goal:To offer obligors and employers an alternative to the income withholding process.

Strategic Plan: Supports Strategy 3 of the National Child Support Strategic Plan.

Description:State-determined criteria now give obligors an alternative to the usual income withholding process. When state-determined criteria are met, the obligor signs an authorization form which allows the child support agency to withdraw an amount equal to the current monthly child support obligation, plus an appropriate amount for arrears (if any exists), from his or her checking or savings account. In instances when the obligor is not self-employed, the child support agency continues to track the obligor's employment and in the event there are insufficient funds in the bank account, an income withholding order is generated immediately.

The Federal Office of Child Support Enforcement was consulted before the state legislation was introduced and a Policy Interpretation Question was issued (PIQ-03-10), which cleared the way for the bill's passage. The withdrawal/debit authorization in lieu of income withholding is considered to be a "pro-obligor/pro-business" measure, which both employers and State legislators supported. They believed the South Dakota child support agency's efforts to "think outside the box" could potentially relieve employers of some of their administrative burdens related to child support.

The debit authorization in lieu of the income withholding process was designed to reduce some of the lapses in payments that occur when obligors change employers; reduce the number of payments that would have to be processed and mailed to custodial parents (CP) due to multiple monthly payroll periods; facilitate making the full monthly child support payment on a "date certain" and, in turn, reduce CP customer service calls checking on the status of payments; improve payment processing efficiencies by increasing the number of electronic payments received and processed; and make some efficient alternative payment methods available to self-employed obligors. All of these outcomes lessen administrative burdens and costs for the State and Federal Government.

While the actual income withholding order and the garnishment of wages are no longer required when an obligor qualifies for this process, it should be noted that the National Medical Support Notice must still be generated and sent to the employer.

Results:A little over 200 obligors, representing about $80,000 per month in payments, have signed up for this program. This is significant for a state with a small caseload. Initial outreach about this option was targeted to obligors who paid cash, check or money order. Currently, when new cases are set up, all obligors are offered this option. Enrollment is not as high as anticipated. One reason may be that under standard income withholding procedures, the monthly child support payment is split among or between pay periods. Obligors may find it financially difficult to pay the full amount with a single debit that occurs on a set date in the month.

Location:This practice is available to obligors statewide.

Funding:Regular IV-D funds are used.

Replication Advice:When an obligor with an income withholding order changes to the debit authorization, care must be taken with the first automatic withdrawal and the timing of terminating the income withholding order to ensure the obligor will have sufficient funds in his or her account when the new process is implemented. In the event of insufficient funds, steps have to be taken to recoup the funds that were distributed as well as make certain an income withholding is issued on appropriate cases.

Contact:

Rocco Konop

Program Specialist

Phone: (605) 773-3641

Email: Rocco.Konop@state.sd.us