Dear Colleague DC-94-73
Child Support treated as deduction for Food Stamp eligibility
purposes.
DCL-9473
December 20, 1994
TO ALL STATE IV-D DIRECTORS
Dear Colleague:
This will inform you of the recent publication by the Food and
Consumer Service (FCS), Department of Agriculture, of a proposed
rule, with comment period, implementing the provisions of section
13921 of the Omnibus Reconciliation Act of 1993, Public Law No.
103-66 [(Mickey Leland Childhood Hunger Relief Act) (Leland Act)]
which allows a child support deduction for legally-binding child
support payments made to a different household.
Attached is a copy of the Notice of Proposed Rulemaking (NPRM)
published in the Federal Register on December 8, 1994
(59 FR 63265). The rule allows obligors who are Food Stamp
recipients to have the amount of child support they pay be treated as
a deduction from their income for Food Stamp eligibility purposes,
effective September 1, 1994. State Food and Consumer Service
agencies (State agencies) may implement the provision on that date.
They are required to implement the deduction no later than October 1,
1995.
The Leland Act amends the Food Stamp Act of 1977. The purpose of the
amendment is to encourage noncustodial parents to meet their child
support obligations. This provision will also more accurately
reflect a household's ability to buy food after it meets its legal
child support obligation. This will result in an increase in the
number of potentially eligible Food Stamp recipients and in the
benefit level of households entitled to this deduction.
The Food and Consumer Service held a public hearing on January 20,
1994, to offer State agencies, advocacy groups, and other interested
parties an opportunity for public dialogue on these provisions. The
hearing was designed as a preliminary step to obtain input for
drafting the NPRM and formal commentary was anticipated as part of
the public comment period. Therefore, we encourage State IV-D
Directors to review the attached proposed rule and to consult with
the State Food Stamp agencies regarding this proposed rule.
State and local child support agencies may be contacted by their
State and local food stamp agency counterparts to assist them in
implementing this provision by verifying the amount of the child
Page 2 - State IV-D Directors
support obligation and the monthly amounts actually paid. The NPRM
specifically solicits comments on how the process for obtaining
verification should occur when a food stamp recipient's child support
is ordered and paid in another State.
We encourage you to forward any comments on this and any other
aspects to the FCS at the address listed in the Federal Register, on
the proposed rule during the comment period, which ends February 6,
1995. We would appreciate receiving a copy of any comments you
submit to FCS. Please send the copy to Marilyn R. Cohen, OCSE
Division of Policy and Planning, 370 L'Enfant Promenade, S.W., 4th
floor, Washington, D.C. 20447.
If you have any questions, or need additional information please
contact Marilyn R. Cohen, (202) 401-5366.
Sincerely,
David Gray Ross
Deputy Director
Office of Child Support
Enforcement
Attachment
cc: ACF Regional Administrators
Child Support Program Managers, Regions I-X
Billing Code 3410-30-U
UNITED STATES DEPARTMENT OF AGRICULTURE
Food and Consumer Service
7 CFR Parts 271, 273, and 275
[Amendment No. 362]
RIN 0584-AB58
FOOD STAMP PROGRAM; Child Support Deduction
AGENCY: Food and Consumer Service, USDA.
ACTION: Proposed Rule.
SUMMARY: This rule is being proposed to implement a provision of
the 1993 Mickey Leland Childhood Hunger Relief Act establishing a
child support deduction. The deduction would increase the
benefits of food stamp households that pay legally obligated
child support to a nonhousehold member.
DATES: Comments must be received on or before (insert date 60
days after publication in the Federal Register) to be assured of
consideration.
ADDRESSES: Comments should be submitted to Judith M. Seymour,
Eligibility and Certification Regulation Section, Certification
Policy Branch, Program Development Division, Food and Consumer
Service, USDA, 3101 Park Center Drive, Alexandria, Virginia,
22302, (703) 305-2496. Comments may also be datafaxed to the
attention of Ms. Seymour at (703) 305-2454. All written comments
will be open for public inspection at the office of the Food and
Consumer Service during regular business hours (8:30 a.m. to 5
p.m., Monday through Friday) at 3101 Park Center Drive,
Alexandria, Virginia, Room 720.
FOR FURTHER INFORMATION CONTACT: Questions regarding the
proposed rulemaking should be addressed to Ms. Seymour at the
above address or by telephone at (703) 305-2496.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This proposed rule has been determined to be significant and was
reviewed by the Office of Management and Budget in conformance
with Executive Order 12866.
Executive Order 12372
The Food Stamp Program is listed in the Catalog of Federal
Domestic Assistance under No. 10.551. For the reasons set forth
in the final rule in 7 CFR 3015, Subpart V and related Notice (48
FR 29115), this Program is excluded from the scope of Executive
Order 12372 which requires intergovernmental consultation with
State and local officials.
Regulatory Flexibility Act
This rule has been reviewed with regard to the requirements of
the Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). Ellen
Haas, Under Secretary for Food, Nutrition, and Consumer Services,
has certified that this rule will not have a significant economic
impact on a substantial number of small entities. State and
local welfare agencies will be the most affected to the extent
that they administer the Program.
Paperwork Reduction Act
The reporting and recordkeeping burden associated with the
eligibility, certification, and continued eligibility of food
stamp recipients is approved under OMB No. 0584-0064. Current
burden estimates for OMB No. 0584-0064 include burden associated
with collecting and verifying information reported on the
application to determine initial household eligibility and also
on the change report and monthly report forms. The provision in
7 CFR 273.9 of this proposed rulemaking which allows an income
deduction for certain child support payments does not alter
burden estimates already approved under OMB No. 0584-0064. The
methodologies used to determine the burden estimates assume that
all households will report information on each income and
resource line of the application form and will be subject to the
same level of reporting and verification burden as current levels
require. The public reporting burden for the Food Stamp Program
application is estimated to average 13.74 minutes per
application. The proposed reporting requirements in 7 CFR 273.12
and 7 CFR 273.21 do not alter the burden estimate for reporting
already approved under OMB No. 0584-0064. Establishing a
quarterly reporting option for the child support deduction will
not increase the reporting burden because households are already
required to report certain changes when they occur. At State
agency option, quarterly reporting would replace change reporting
for the child support deduction and would reduce the number of
times a year a household would have to complete a food stamp
application form. Comments regarding this burden estimate or any
other aspect of this collection of information, including
suggestions to reduce this burden may be sent to: U.S.
Department of Agriculture, Clearance Officer, OIRM, Room 404-W,
Washington D.C. 20250 and to Wendy Taylor, OIRM, Office of
Management and Budget, Paperwork Reduction Project (OMB No. 0584-
0064) Washington, D.C. 20503.
Executive Order 12778
This rule has been reviewed under Executive Order 12778, Civil
Justice Reform. This rule is intended to have preemptive effect
with respect to any State or local laws, regulations or policies
which conflict with its provisions or which would otherwise
impede its full implementation. This rule is not intended to
have retroactive effect unless so specified in the "Effective
Date" paragraph of this preamble. Prior to any judicial
challenge to the provisions of this rule or the application of
its provisions, all applicable administrative procedures must be
exhausted. In the Food Stamp Program the administrative
procedures are as follows: (1) for Program benefit recipients --
State administrative procedures issued pursuant to 7 U.S.C.
2020(e)(1) and 7 CFR 273.15; (2) for State agencies --
administrative procedures issued pursuant to 7 U.S.C. 2023 set
out at 7 CFR 276.7 (for rules related to non-quality control (QC)
liabilities) or Part 284 (for rules related to QC liabilities);
(3) for Program retailers and wholesalers -- administrative
procedures issued pursuant to 7 U.S.C. 2023 set out at 7 CFR
278.8.
Background
Regulatory Impact Analysis
Need for Action
This action is required as a result of the Mickey Leland
Childhood Hunger Relief Act which amends the Food Stamp Act of
1977, as amended, to establish a child support deduction for
households that pay legally obligated child support to a
nonhousehold member.
Benefits
The child support deduction would increase the number of
potentially eligible food stamp recipients and would increase the
benefit level of households entitled to the deduction.
Costs
It is estimated that this action would increase the cost of the
Food Stamp Program by less than $1 million in Fiscal Year 1994;
$55 million in Fiscal Year 1995; $125 million in Fiscal Year
1996; $130 million in Fiscal Year 1997; and $145 million in
Fiscal Year 1998.
BACKGROUND
On January 4, 1994, the Food and Consumer Service (FCS) published
a notice in the Federal Register announcing a public hearing on
January 20, 1994. The public hearing was scheduled to provide an
opportunity for State agencies, advocacy groups, and other
interested parties to engage in public dialogue on issues
concerning the regulatory provisions to be published in
connection with the Food Stamp Act of 1977 (Act) amendments made
by the Mickey Leland Childhood Hunger Relief Act, Chapter 3,
Title XIII, Omnibus Budget Reconciliation Act of 1993, Pub. L.
103-66, enacted August 10, 1993 (Leland Act). All provisions of
the Leland Act pertinent to the Food Stamp Program (Program),
including the child support deduction, were included as topics of
dialogue during the public hearing.
CHILD SUPPORT DEDUCTION
A food stamp applicant's eligibility and coupon allotment are
determined, in part, by the amount of income the household has
available to spend on food after certain monthly expenses are
deducted from the household's total monthly income.
Household expenses that are deducted from income in determining
food stamp eligibility and coupon allotment include: (1) a
standard deduction (which is provided to all food stamp
households); (2) an earned income deduction equal to 20 percent
of the household's gross earned income; (3) a medical deduction
for expenses over $35 a month for elderly or disabled household
members; (4) up to a certain limit, a dependent care deduction
for the actual costs the household must pay for the care of
children or other dependents while household members are seeking
or maintaining employment or while they are participating in
education or training programs; and (5) the costs for shelter
which exceed 50 percent of income after other deductions. There
is a limit on the shelter deduction for households without an
elderly or disabled member.
Section 13921 of the Leland Act (Pub. L. 103-66, Title I, Chapter
3, August 10, 1993) amends section 5(e) of the Food Stamp Act to
add a deduction for household members who make legally obligated
child support payments to or for an individual living outside of
the household. The provision is intended to encourage
noncustodial parents to comply fully with their child support
obligations. At the same time, the deduction will result in a
more accurate reflection of the household's reduced ability to
buy food. The legislative history (House Conference Report No.
213, 103rd Congress, 1st Session (1993), p.925) indicates that
Congress did not want an undue administrative burden placed on
the State agency as a result of this provision.
The Department is addressing a number of issues related to the
child support deduction in this proposed rule. These issues are
discussed below and include: (1) definition of a legal obligation
to pay child support and allowable amount of child support
deduction; (2) verification; (3) budgeting and reporting
procedures; (4) length of certification period; and (5) quality
control requirements.
Legal Obligation and Amount of the Child Support Deduction
To be eligible for the child support deduction, the statute
requires that the household must be legally obligated to pay
child support. The Department is aware that various arrangements
may exist between unmarried, separated, or divorced parents with
respect to child support. However, the law is specific that the
deduction is allowed only for persons who have a legal
obligation, such as a court order that would be upheld by a judge
in a court of law, an order issued through an administrative
process, or a legally enforceable separation agreement.
Accordingly, the Department proposes to amend 7 CFR 273.9(d) to
specify that persons who are legally obligated to pay child
support to or for an individual living outside the household and
who make such payments are eligible to receive a child support
deduction.
The Department is proposing in this rule to amend 7 CFR 273.9(d)
to specify that the child support deduction must reflect the
child support the household pays or expects to pay during the
certification period, rather than the obligated amount. The
legislation states that "... households shall be entitled to a
deduction for child support payments made (emphasis added)...."
It is clear that the objective of the law is to allow a deduction
on the basis of payments actually made, not the amount the
household is legally obligated to pay. Current data show that 49
percent of parents who are legally obligated to pay child support
either do not pay any support (24 percent) or pay less than the
full amount of the support (25 percent). (Overview of
Entitlement Programs, 1993 Green Book, Background Material and
Data on Programs within the Jurisdiction of the Committee on Ways
and Means, Committee on Ways and Means, U.S. House of
Representatives, p. 748.) Strengthening the child support
system is an important goal of the Department. The Department
believes that Congress did not intend to provide a deduction for
child support payments that the household member did not actually
pay. Such a deduction would simply be a windfall to absent
parents who fail to meet their responsibilities to their
children. Furthermore, a child support deduction that reflects
actual payments would allow the household to include child
support payments that were previously unpaid (i.e., arrearages).
Most importantly, basing the deduction on amounts paid would most
accurately reflect the current food assistance needs of the
paying household.
The Department also is including a clarification discussed in the
legislative history of the Leland Act (114 Congressional Record,
S10726, August 6, 1993). The history indicates that legally
obligated payments paid on behalf of the nonhousehold member
(such as paying rent to a landlord) must be considered as part of
the child support deduction for the household making the
payments. This would include any additional payments the
noncustodial parent is legally obligated to make to obtain health
insurance coverage for a child or children. Accordingly, the
Department is proposing to specify in 7 CFR 273.9 that the child
support deduction shall include payments the household makes on
behalf of the nonhousehold member to the extent that the payments
represent the household's child support obligation and have been
ordered by a court or administrative authority. Alimony or
spousal support payments that are made to or on behalf of a
nonhousehold member or payments made in accordance with a
property settlement would not be allowable as part of the child
support deduction.
The Department is also proposing to add conforming language at 7
CFR 273.11(c)(1)(i) and (2)(iii) to provide procedures for
allowing the child support deduction for households with
ineligible members. As proposed, the child support deduction
would be handled the same way as the earned income, standard,
medical, dependent care, and excess shelter deductions. That is,
the entire deduction would be allowed to households with members
disqualified because of intentional Program violation or work
requirements because the entire income of these household members
is counted. In the case of ineligible aliens or members
disqualified for refusal to obtain or apply for a social security
number, the amount of child support paid or expected to be paid
would be divided evenly among the household members, including
the ineligible member, and all but the ineligible member's share
would be deducted from household income.
The Department is proposing to add the provision of section 13921
of the Leland Act authorizing a child support deduction to the
allowable deductions in 7 CFR 273.9(d) by redesignating
paragraphs (d)(7) and (d)(8) as paragraphs (d)(8) and (d)(9) and
by adding a new paragraph (d)(7) following the provisions for the
standard utility allowance. In accordance with section 13921 of
the Leland Act, the child support deduction must be determined in
the food stamp benefit calculation prior to determining the
household's excess shelter deduction and it would be preferable
to insert the child support deduction before the shelter
deduction at 7 CFR 273.9(d)(5). However, redesignating 7 CFR
273.9(d)(5) and subsequent paragraphs would require extensive
renumbering of existing policy guidance and regulations in
clearance. Therefore, the Department is proposing to place the
new deduction following the standard utility allowance
provisions. To ensure the correct calculation of allotments,
however, the Department is proposing to amend 7 CFR 273.10 by
redesignating paragraphs (e)(1)(i)(F) and(G) as (e)(1)(i)(G) and
(e)(1)(i)(H) and adding a new paragraph (e)(1)(i)(F) to place the
child support deduction before the shelter deduction in the order
of allotment calculation. The Department will amend the food
stamp application form and the food stamp worksheet to include a
space for households to identify child support payments.
Verification of Child Support Deduction
The Department is proposing that both the legal obligation to pay
child support and the actual amount paid be verified. The
household would be the primary source of verification of the
legal obligation to pay child support, the amount of the
obligation, and the amount paid. Any document that verifies the
obligation to pay child support, such as a court order,
administrative order, or legally enforceable separation agreement
would be sufficient verification of the obligation and obligated
amount. Acceptable verification of amounts paid would include
canceled checks, wage withholding statements, verification of
withholding from unemployment compensation, and statements from
the custodial parent regarding direct payments or third party
payments the noncustodial parent pays or expects to pay on behalf
of the custodial parent. However, documents used to verify the
household's legal obligation to pay child support would not be
acceptable verification of the household's actual payments. If
the household fails or refuses to submit required verification,
the State agency would determine the household's eligibility and
coupon allotment without consideration of the child support
deduction.
In addition, we are proposing that State agencies enter into
agreements with their State Child Support Enforcement (CSE)
agencies to obtain verification from CSE of child support
payments made to the agency by individuals in food stamp
households claiming the deduction. We are proposing that a match
with CSE records be conducted at least once prior to the
household's next recertification. For households certified for 3
months or fewer, the match would be required at alternate
recertifications. The State agency would also be required to
verify payments made to courts or CSE agencies in other States to
the extent that verification can be obtained electronically.
We are not proposing more specific requirements for scheduling
the matches at this time because we realize that CSE systems
enhancements are currently being developed. We encourage State
food stamp and CSE agencies to comment on the feasibility of
requiring more frequent matches with CSE information and the
potential effectiveness of match data as verification of child
support obligations and payments. Of particular concern is the
effectiveness of automated verification procedures when the food
stamp household and the custodial parent do not reside in the
same State.
State agencies would be required to notify applicants on the
application form that child support information will be checked
through computer matching with CSE. The information obtained
through the match would be used to enable the State agency to
make a more informed decision regarding the household's deduction
for the new certification period. If the deduction is allowed
prospectively based on an average of past payments and recent
data are available from CSE, the CSE data could be used as the
basis for anticipating future payments, taking into account any
changes in circumstances reported at recertification. However,
State agencies would not be required to conduct any month-by-
month reconciliation of amounts reported by the household and the
CSE data. Because the deduction will frequently be based on an
average of past payments, the amount of the deduction would not
coincide with the actual payment made. State agencies would not
be required to use the information retrospectively to establish
claims or provide restored benefits. Information from CSE
records is considered unverified upon receipt. Therefore, if
there is a discrepancy between information provided by the
household and that obtained from CSE records, the State agency
would be required to give the household an opportunity to resolve
the discrepancy in accordance with procedures at 7 CFR
273.2(f)(9) for handling unverified data obtained through the
Income and Eligibility Verification System.
Accordingly, the Department is proposing to amend 7 CFR
273.2(f)(1) to add requirements related to verification of child
support at initial certification. We are also proposing a
conforming amendment to 7 CFR 273.2(b)(2) requiring the State
agency to notify applicants that child support information is
subject to verification through computer matching. An amendment
to 7 CFR 273.2(f)(8)(i) is also proposed to require verification
of child support payments at recertification. Changes reported
during the certification period would be verified in accordance
with 7 CFR 273.2(f)(8)(ii). We are interested in obtaining
comments on these verification requirements and suggestions for
less burdensome ways of verifying child support payments.
Child Support Budgeting and Reporting Procedures
The Leland Act and legislative history indicate that the
Department may minimize requirements for budgeting and reporting
changes in child support payments. Section 13921 of the Leland
Act allows retrospective calculation of the support payments.
Another option discussed in the legislative history (House
Conference Report No. 213, 103rd Congress, 1st Session (1993), p.
925) would permit State agencies to develop an average based on
payments made during the last certification period (with
appropriate adjustments to account for any changes in the child
support order) rather than track the household's monthly
payments. The Department is cognizant of the need to minimize
the reporting and budgeting burden while also ensuring that
households receive a deduction only for payments that are
actually being made.
Accordingly, the Department is proposing several procedures in
this rule that strike a balance between the need to have accurate
information and the need to minimize burdens on food stamp
households and State agencies. State agencies will have the
option to select the procedure(s) which best suits their needs.
Option 1 -- Change Reporting and Prospective or Retrospective
Budgeting
Current rules at 7 CFR 273.12 identify the changes a household
must report during its certification period. Households must
report certain changes within 10 days of the date the change
becomes known. The Department proposes to amend the current
reporting requirements at 7 CFR 273.12 to establish reporting
requirements for child support payments. The intent is to
provide a means of obtaining information about payments being
made that is not overly burdensome on the household or the State
agency. Because the Department recognizes that some households
will have a history of making child support payments while others
will not, the proposal includes reporting and budgeting
requirements for households with and without a child support
payment record.
Under this proposal, any household that is subject to change
reporting (for the child support payment) under 7 CFR 273.12(a)
would be required to report changes in the legal obligation,
including but not limited to changes such as a child reaching an
age limit at which child support is no longer legally obligated
or a change in the legally obligated amount.
For change reporting households that have a record of 3 or
more months of paid child support, the State agency would average
at least 3 months of legally obligated child support and use
the average as the household's support deduction, taking into
account any anticipated changes in the legal obligation or other
changes that would affect the payment. The average would be used
to establish a household's child support payment for the
certification period. The average would be adjusted during the
certification period in accordance with any changes in the
payment reported by the household or which otherwise become known
to the State agency. At recertification, the State agency would
obtain updated information on which to base a new average for the
new certification period.
For households without a record of at least 3 months of paid,
legally obligated child support, the State agency would base the
child support deduction on anticipated payments, exclusive of
payments toward arrearages. The household would be required to
report changes greater than $50 in the amount of legally
obligated child support actually paid, excluding any amounts paid
toward arrearages. The base from which to measure the $50 change
would be the figure used at the most recent certification action
to determine the household's allotment.
Under current 7 CFR 273.12(a)(1)(i), households have to report a
change in gross monthly income when the amount changes by more
than $25. The Department considered proposing a $25 change
reporting requirement for child support payments, but decided
instead to increase the reporting threshold. Using a higher
amount would mean that fewer small changes would have to be
reported and processed, thereby saving time for both households
and the State agency and minimizing the administrative burden.
The Department believes the increased efficiency would offset any
confusion caused by the inconsistency in the reporting
thresholds. Included in the category of households without a
payment record would be households with a newly established legal
obligation and households that have failed to meet an obligation.
These households would be certified initially for a short period,
in accordance with 7 CFR 273.10(f)(4), to allow development of a
payment history prior to assignment of a longer period with a
deduction based on averaged payments.
With certain exceptions, households subject to change reporting
may have their income and deductions budgeted prospectively or
retrospectively. The Department is proposing that a State agency
may budget child support payments either prospectively or
retrospectively, depending on the reporting option selected.
Option 2 - Quarterly Reporting and Prospective or Retrospective
Budgeting
The Department is proposing to include a new reporting option
State agencies may use for households that are subject to change
reporting requirements under 7 CFR 273.12 and are eligible to
receive a child support deduction. Under this option, State
agencies may require households to submit a quarterly report to
report changes in the amount of child support paid and changes in
the legal obligation. The household would remain responsible for
reporting changes other than changes in child support payments as
required by 7 CFR 273.12(a)(1) within 10 days.
The Department is proposing quarterly reporting for two reasons:
(1) it enables State agencies to assign longer certification
periods while receiving periodic information on the actual amount
of child support paid, and (2) it allows States to adjust the
deduction on the basis of several months of data.
Under this proposal, a State agency electing to use the quarterly
reporting system would be required to provide the household with
a quarterly report by the end of the second month in each
quarter. The State agency's quarterly report must be written in
clear, simple language, meet the bilingual requirements of
s272.4(b), and contain the following:
a. A requirement to report the actual amount of child
support paid for the first 2 months of the quarter and the actual
amount paid or anticipated for the third month;
b. A requirement to report changes in the legal obligation
to pay child support anticipated for the upcoming quarter,
including but not limited to changes such as the completion of an
obligation or a change in the legally obligated amount.
c. A requirement to return the report to the State agency
by a specified date in the third month in the quarter;
d. Notification of the verification the household must
submit with the report;
e. The individual or agency unit available to assist the
household in completing the form and the toll-free number (or
number where collect calls will be accepted) which the household
may use to obtain further information;
f. A statement to be signed by the household member who is
responsible for paying child support indicating his or her
understanding that the information may result in a change in the
household's food stamp benefits, including reduction or
termination;
g. A statement that failure to return the report by the
required deadline may result in disallowance of the child support
deduction;
h. A reminder that other changes required to be reported
under 7 CFR 273.12(a)(1) must be reported within 10 days from the
date the household becomes aware of the change; and
i. A statement advising the household that the State agency
will act on a change reported before the quarterly report is
submitted;
j. A brief description of the Food Stamp Program civil and
criminal penalties for fraud.
The State agency would use this report to make any changes in the
household's child support deduction for the next 3 months.
State agencies would be required to average the previous
quarter's payments to determine the deduction for the following
quarter. The State agency would also need to take into account
any reported changes in the legal obligation to pay child
support.
Households must be given a reasonable time after the end of the
second month to submit the quarterly report. If the household
fails to file a quarterly report or files an incomplete report by
the date set by the State agency, the State agency would be
required to send the household a reminder notice advising the
household that it has 10 days from the date the State agency
mails the notice to file a complete quarterly report. If the
household does not file a complete report by the extended filing
date, the State agency would recalculate the household's
eligibility and benefit level without allowing a deduction for
child support. The State agency would not be allowed to
terminate the household for failing to submit a complete
quarterly report unless the household is otherwise ineligible.
The State agency would be required to send an adequate notice as
defined under current rules at 7 CFR 271.2 if the household fails
to submit a complete report or if the information contained on a
complete quarterly report results in a reduction or termination
of benefits. Adequate notice is currently defined, in part, as a
written notice that advises the household of an action the State
agency intends to take. The notice may be received by the
household prior to the date of the action, at the time the
household receives its reduced benefits, or at the time the
household would have received its benefits if the action the
State agency intends to take is a termination of benefits.
Households have 10 days from the mailing date of the notice to
contest the State agency's action. State agencies may combine
the reminder notice and adequate notice.
The Department is further proposing in this rule to prohibit
quarterly reporting for some food stamp households. Section
6(c)(3) of the Act prohibits dual reporting requirements. Thus,
if the State agency elects to require a household to report any
child support payments quarterly, the quarterly report would be
the sole reporting requirement for reporting child support.
Section 6(c)(1)(A) of the Act prohibits State agencies from
requiring certain households such as migrant or seasonal
farmworker households to submit periodic reports. We are
including these statutory prohibitions in this proposal at 7 CFR
273.12.
The Department does not intend that changes other than changes in
child support be included on the quarterly report. The
Department has recently approved several waivers allowing State
agencies to implement a quarterly reporting system for certain
portions of the food stamp caseload. We will be reviewing the
impact of these waivers to determine the feasibility of a more
expanded quarterly reporting system. The quarterly report
described in this rule pertains only to child support payments.
Option 3 - Monthly Reporting and Retrospective Budgeting
State agencies may require households (except certain
legislatively exempt households) to report changes on a monthly
report form under the current rules at 7 CFR 273.21 (i.e.,
monthly reporting households). All monthly reporting households
are required to be budgeted retrospectively. Section 6(c) of the
Act and corresponding regulations at 7 CFR 273.21(h)(3) allow the
State agency to determine the changes the household must report
monthly. Households that are required to report monthly under 7
CFR 273.21 would be required to report their monthly child
support payments on the monthly report if the State agency
includes the requirement on its monthly report. If a household
that is required to report its child support payment on a monthly
report fails to report or fails to submit required verification
related to its child support payment, the State agency would
determine the household's eligibility and allotment level without
consideration of the child support deduction. If the State
agency does not require the household to report its monthly child
support payments on the monthly report, the household would be
subject to change reporting for child support payments.
Summary of Child Support Deduction Reporting and Budgeting
Procedures
The intent of all the possible reporting and budgeting systems is
to most accurately reflect a household's actual payment of child
support while minimizing the burden on households and State
agencies. For that reason, the Department has provided several
options as discussed in detail above. In summary, the options
are:
(1) Change reporting: If a household has a record of at
least 3 months of paid child support, the State agency would
budget the child support deduction either prospectively or
retrospectively based on an average of the payments made in
at least 3 previous months, and the household would be
required to report within 10 days changes in the legal
obligation to pay child support.
If a household has no record of paying child support (or a
record of less than 3 months) the State agency would budget
the child support deduction prospectively or retrospectively
using an estimate based on available information in
accordance with 7 CFR 273.10(c), and households would be
required to report within 10 days changes in the legal
obligation and changes in the amount of the payment of $50
or more.
(2) Quarterly reporting: The State agency may budget child
support payments prospectively or retrospectively based on
actual monthly information reported by the household on a
quarterly report form.
(3) Monthly reporting: The State agency may budget child
support payments retrospectively based on actual amounts
reported by the household on a monthly report.
State agencies may choose one or more of these options. State
agencies may use a combination of the options, depending on the
budgeting and reporting systems already in place. That is, a
State agency which has monthly reporting for part of its caseload
and change reporting for other households, may opt to require the
monthly reporting households to report changes in child support
payments monthly while other households are required to report
the changes within 10 days. However, a State agency may not
impose a dual reporting requirement on a household. The
Department does not believe that a household should be subject to
all three reporting methods because the reporting requirements
would be too cumbersome. Thus, no household would be required
under this proposal to report child support on a change report, a
monthly report, and a quarterly report. Regardless of the system
used, the State agency must act on any reported change.
Accordingly, the Department is proposing to amend 7 CFR 273.10, 7
CFR 273.12(a) and (b), 7 CFR 273.21(h) and 7 CFR
273.21(j)(3)(iii) to specify the requirements for the options
State agencies may elect for child support reporting and
budgeting. The Department is also proposing to amend 7 CFR 271.2
to define "adequate notice" as it relates to monthly reporting
and quarterly reporting.
Child Support Deduction - Certification Periods
Under current rules at 7 CFR 273.10(f), the State agency must
establish a definite period of time (i.e., certification period)
within which the household is eligible to receive benefits.
Depending on household circumstances, the household may be
certified for as short a period as 1 month but for no more than
12 months.
The Department is not proposing special certification period
requirements for households eligible to receive a child support
deduction. Establishing special certification period
requirements was considered, but during the January 20 hearing it
was pointed out that current rules adequately address the
situation of households that pay child support. Under current
rules, households with no record of payments or which have
extreme monthly variations in payments would be certified for a
short period of time in accordance with 7 CFR 273.10(f)(4).
Households with a stable payment record and households that
report their child support payments quarterly or monthly would be
certified for longer periods from 6 to 12 months, in accordance
with 7 CFR 273.10(f)(5) and (8).
Child Support Deduction - Quality Control (QC)
As indicated in the above discussion, Congress recognized the
fluctuating nature of child support payments and intended that
determining the monthly amount of the allowable child support
deduction should not be a burden for State agencies.
Accordingly, the Department has proposed to give State agencies
flexibility in determining how to budget the payments, including
use of averaging. According to the legislative history of the
child support deduction provision (House Conference Report No.
213, 103rd Congress, 1st Session (1993), p. 925), State agencies
would be able to average the payments made during one
certification period and use that amount, taking into account any
changes in the obligation, for the next certification period.
The report indicates that "The managers do not intend for this
[averaging] procedure to deny a household a deduction for any
child support actually paid, but rather the intention is to give
States the option to use consistent budgeting procedures that
would minimize the number of changes they would be required to
make. State agencies correctly following such procedures would
not be charged with quality control errors if the amount of child
support that a household paid increased or decreased as long as
the State agency adjusted the household's allotment prospectively
at its next recertification."
To implement this provision, the Department proposes that the QC
system would review the accuracy of the deduction at the most
recent certification action prior to the sample month. Any
unreported change in actual child support payments or obligation
subsequent to the certification action would not be the basis for
citing a household reporting error or a State agency error. A
variance would exist if the QC reviewer determines that the State
agency did not apply the proper deduction at the most recent
certification action or that the household reported a change
after the most recent certification action and the State agency
failed to act or acted improperly on the reported change.
Therefore, the Department proposes to add a paragraph to 7 CFR
275.12(d)(2) to specify that any variances in the child support
deduction resulting from unreported changes in actual child
support payments or obligation shall be excluded from the QC
error determination.
Implementation
Section 13971 of the Leland Act provides that State agencies may
implement Section 13921, Child Support Payments to Non-Household
Members, on September 1, 1994, and shall implement the child
support deduction no later than October 1, 1995. Therefore, we
are proposing the amendments in this rule be effective on
September 1, 1994, and be implemented no later than October 1,
1995. The provision must be implemented for all households that
newly apply for Program benefits on or after October 1, 1995, or
the date the State agency implements the provision prior to the
required implementation date. State agencies would be required
to adjust the cases of participating households at the next
recertification, at household request, or when the case is next
reviewed, whichever comes first. The State agency must provide
restored benefits to such households back to October 1, 1995, or
the date the State agency implemented the provision prior to
October 1, 1995. State agencies which fail to implement by
October 1, 1995, shall provide benefits retroactive to October 1,
1995, or the date of application, whichever is later. Variances
resulting from implementation of the provisions of the final rule
would be excluded from error analysis for 120 days from the
required implementation date, in accordance with section 13951 of
Pub. L. 103-66, which amended section 16(c)(3)(A) of the Act, 7
U.S.C. 2025(c)(3)(A). State agencies which implement prior to
the required implementation date must notify the appropriate
regional office prior to implementation that they wish the
variance exclusion period to begin with actual implementation, as
provided in 7 CFR 275.12(d)(2)(vii)(A). Absent such
notification, the exclusionary period will begin with the
required implementation date.
List of Subjects
7 CFR 271
Administrative practice and procedure, Food stamps, Grant
programs-social programs.
7 CFR Part 273
Administrative practice and procedure, Aliens, Claims, Food
stamps, Fraud, Grant programs-social programs, Penalties,
Records, Reporting and recordkeeping requirements, Social
security, Students.
7 CFR 275
Administrative practice and procedures, Food stamps, Reporting
and recordkeeping requirements.
Accordingly, 7 CFR parts 271, 273, and 275 are proposed to be
amended as follows:
1. The authority citation of parts 271, 273, and 275 continues
to read as follows:
Authority: 7 U.S.C. 2011-2032.
PART 271 - GENERAL INFORMATION AND DEFINITIONS
s271.2 [Amended]
2. In 271.2, the definition of "Adequate notice" is amended by
removing the words "in a Monthly Reporting and Retrospective
Budgeting system" and adding in their place the words "in a
periodic reporting system such as monthly reporting or quarterly
reporting".
PART 273 - CERTIFICATION OF ELIGIBLE HOUSEHOLDS
3. In s273.2:
a. a new sentence is added at the end of paragraph (b)(2),
b. a new paragraph (f)(1)(xi) is added, and
c. a new sentence is added at the beginning of paragraph
(f)(8)(i)(A).
The additions read as follows:
s273.2 Application Processing.
* * * * *
(b) Food Stamp application form. * * *
(2) Income and eligibility verification system (IEVS). * * *
The State agency shall also notify all applicants on the
application form that information regarding child support
payments may be verified with Child Support Enforcement agencies
or courts.
* * * * *
(f) Verification. * * *
(1) Mandatory verification. * * *
(xi) Legal Obligation and Actual Child Support Payments.
The State agency shall verify the household's legal obligation to
pay child support, the amount of the obligation, and the monthly
amount of child support the household actually pays. The
household is responsible for providing verification of the legal
obligation, the obligated amount, and the amount paid. The State
agency shall accept any document that verifies the household's
legal obligation to pay child support, such as a court or
administrative order, or legally enforceable separation
agreement. The State agency shall accept documentation verifying
a household's actual payment of child support including, but not
limited to, canceled checks, wage withholding statements,
verification of withholding from unemployment compensation, and
statements from the custodial parent regarding direct payments or
third party payments the noncustodial parent pays or expects to
pay on behalf of the custodial parent. Documents that are
accepted as verification of the household's legal obligation to
pay child support shall not be accepted as verification of the
household's actual monthly child support payments. In addition
to requiring verification from the household, the State agency
shall be responsible for obtaining verification of the
household's child support payments if the payments are made to
the State's Title IV-D agency. State agencies shall enter into
agreements with Child Support Enforcement (CSE) agencies to
obtain data regarding the child support obligation and child
support payment record of members of food stamp households
receiving a child support deduction. The State agency shall
match the records of food stamp recipients receiving a child
support deduction against CSE automated data files. This match
shall be conducted, at a minimum, at least once prior to the next
recertification. For households certified for 3 months or fewer,
the State agency shall conduct a match prior to alternate
recertifications. The State agency shall use the information in
determining the household's entitlement to a deduction in the new
certification period. The State agency shall give the household
an opportunity to resolve any discrepancy between household
verification and CSE records in accordance with paragraph (f)(9)
of this section.
* * * * *
(8) Verification subsequent to initial certification. (i)
Recertification. (A) At recertification the State agency shall
require the household to verify the amount of legally obligated
child support a household member pays to a nonhousehold
member. * * *
* * * * *
4. In s273.9, paragraphs (d)(7) and (d)(8) are redesignated as
paragraphs (d)(8) through (d)(9) respectively and a new paragraph
(d)(7) is added to read as follows:
273.9 Income and Deductions.
* * * * *
(d) Income deductions. * * *
(7) Child Support Deduction. Child support payments paid
by a household member to or for a nonhousehold member, provided
that the household member has a legal obligation to pay child
support and the payments are verified in accordance with
s273.2(f). Households that fail or refuse to obtain necessary
verification of their legal obligation or of their child support
payments shall have their eligibility and benefit level
determined without consideration of a child support deduction.
If the noncustodial parent makes child support payments to a
third party (e.g., a landlord or utility company) on behalf of
the nonhousehold member in accordance with the support order,
such payments shall be included in the child support deduction.
Payments that are made by the household to obtain health
insurance for the child or children shall also be included as
part of the child support deduction. For households that have at
least a 3-month record of child support payments, the State
agency shall allow a deduction for amounts paid toward
arrearages. Alimony payments made to or for a nonhousehold
member shall not be included in the child support deduction.
Households that are eligible to receive a child support deduction
shall report changes in accordance with the reporting
requirements specified in s273.12 or s273.21.
* * * * *
5. In s273.10:
a. The introductory text of paragraph (d) is amended by
adding the words "child support" between the words "shelter," and
"and medical".
b. A new paragraph (d)(8) is added.
c. Paragraph (e)(1)(i)(E) is amended by removing the
reference "(e)(1)(i)(F)" and adding in its place a reference to
"(e)(1)(i)(G)".
d. Paragraphs (e)(1)(i)(F) and (e)(1)(i)(G) are
redesignated as paragraphs (e)(1)(i)(G) and (e)(1)(i)(H)
respectively and a new paragraph (e)(1)(i)(F) is added.
e. Newly redesignated paragraph (e)(1)(i)(G) is amended by
removing the reference to "(e)(1)(i)(G)" and adding in its place
a reference to "(e)(1)(i)(H)".
The additions and revisions read as follows:
s273.10 Determining household eligibility and benefit levels.
* * * * *
(d) Determining deductions. * * *
(8) Child Support Deduction. The State agency shall budget
child support payments either prospectively or retrospectively,
depending on the reporting system used. In addition, the
following budgeting procedures shall be used:
(i) For change reporting households with a history of 3 or
more months of paying child support, the State agency shall
average at least 3 months of child support, taking into account
any anticipated changes in the legal obligation, and use that
average as the household's support deduction.
(ii) For change reporting households with no child support
payment record or less than a 3-month record, the State agency
shall estimate the anticipated payments (excluding
payments toward arrearages) and use that estimate as the
household's support deduction.
(iii) For quarterly reporting households, the State agency
shall initially use either paragraphs (d)(8)(i) or (d)(8)(ii) of
this section as appropriate, then develop an average using the
information provided in the quarterly report for subsequent
quarters, making any necessary adjustments for anticipated
changes.
(iv) For monthly reporting households, the State agency
shall initially use either paragraphs (d)(8)(i) or (d)(8)(ii) of
this section as appropriate, then adjust the deduction as
appropriate based on the monthly reports.
(e) Calculating net income and benefit levels.
(1) Net monthly income.
(i) * * *
(F) Subtract allowable monthly child support payments in
accordance with s273.9(d)(5).
* * * * *
s271.11 [Amended]
6. In s273.11,
a. Paragraph (c)(1)(i) is amended by adding the words "child
support," after the words "dependent care,".
b. Paragraph (c)(2)(iii) is amended by adding the words
"child support payment," after the word "allowable" in the second
sentence and after the word "deductible" in the third sentence.
7. In s273.12,
a. A new paragraph (a)(1)(vi) is added.
b. A new sentence is added after the first sentence of
paragraph (a)(2).
c. Paragraph (a)(4) is redesignated as paragraph (a)(5) and
a new paragraph (a)(4) is added.
d. The heading of paragraph (b) is revised, new
introductory text is added to paragraph (b) and the introductory
text of paragraph (b)(1) is revised.
e. Paragraph (b)(2) is revised.
The revisions and additions read as follows:
s273.12 Reporting changes.
(a) Household responsibility to report.
(1) * * *
(vi) Changes in the legal obligation to pay child support,
including termination of the obligation when a child reaches an
age at which child support is no longer legally obligated. A
household with less than a 3-month record of child support
payments shall also be required to report changes greater than
$50 from the amount used in the most recent certification action.
Households required to report changes in child support on a
quarterly or monthly report shall report actual monthly amounts
paid in addition to changes in the legal obligation.
(2) * * * Households that are required to report a
change monthly as specified under s273.21 or that are required to
report monthly child support payments on a quarterly report as
specified under paragraph (a)(4) of this section shall not be
required to report changes within 10 days of the date they become
known to the household. * * *
* * * * *
(4) The State agency may require a household that is
eligible to receive a child support deduction in accordance with
s273.9(d)(7) to report its monthly child support payments on a
quarterly report.
(i) A State agency that elects to require a household to
report its monthly child support payments on a quarterly report
shall provide the household with the quarterly report no later
than the end of the second month in the quarter. The State
agency shall provide the household a reasonable period after the
end of the month in which to return the report. If the household
does not file the report by the due date or files an incomplete
report, the State agency shall provide the household with a
reminder notice advising the household that it has 10 days from
the date the State agency mails the notice to file a complete
quarterly report. If the household does not file a complete
report by the extended filing date as specified in the reminder
notice, the State agency shall determine the household's
eligibility and benefits without consideration of the child
support deduction. The State agency shall not terminate a
household for failure to submit a quarterly report unless the
household is otherwise ineligible. The State agency shall send
the household an adequate notice as defined in s271.2 of this
chapter if the household fails to submit a complete report or if
the information contained on a complete quarterly report results
in a reduction or termination of benefits. The quarterly report
shall meet the requirements as specified in paragraph (b) of this
section. The State agency may combine the content of the
reminder notice and the adequate notice as long as the notice
meets the requirements of the individual notices.
(ii) The quarterly report form shall be the sole reporting
requirement for reporting monthly child support payments. The
State agency shall not include other items for the household to
report on the quarterly report. The State agency shall not
require households excluded from monthly reporting as specified
in s273.21(b) to report monthly child support payments on a
quarterly report. The State agency is also prohibited from
requiring monthly reporting households to submit a quarterly
report.
* * * * *
(b) Report forms. The State agency shall provide the
household with a form for reporting the changes required in
paragraph (a) of this section and shall pay the postage for the
household to return the report.
(1) The report form for reporting changes within 10 days of
the date the change becomes known shall, at a minimum, include
the following:
* * * * *
(2) The quarterly report form for reporting child support
payments shall be written in clear, simple language and meet the
bilingual requirements described in s272.4(b) of this chapter.
The report shall include the following:
(i) A requirement to report the actual amount of child
support paid for the first 2 months of the quarter and the actual
amount paid or anticipated for the third month;
(ii) A requirement to report changes in the legal
obligation to pay child support anticipated for the upcoming
quarter, including but not limited to changes such as the
completion of an obligation or a change in the legally obligated
amount;
(iii) The date in the third month by which the State agency
must receive the form;
(iv) Notification of the verification the household must
submit with the report;
(v) The name of the individual or agency unit available to
assist the household in completing the form and the toll-free
number (or number where collect calls will be accepted) which the
household may use to obtain further information;
(vi) A statement to be signed by the household member who
is responsible for paying child support indicating his or her
understanding that the information may result in changes in the
level of benefits, including reduction or termination;
(vii) A statement that failure to return the report by the
required deadline may result in disallowance of the child support
deduction;
(viii) A reminder that other changes required to be
reported under paragraph (a)(1) of this section must be reported
within 10 days from the date the household becomes aware of the
change;
(ix) A statement advising the household that the State
agency will act on changes in its monthly child support deduction
if the household elects to report the change before submitting
the quarterly report; and
(x) A brief understandable description of the Food Stamp
Program civil and criminal penalties for fraud printed in
prominent and boldface lettering.
* * * * *
8. In s273.21:
a. A new paragraph (h)(2)(ix) is added.
b. Paragraph (j)(3)(iii)(E) is redesignated as paragraph
(j)(3)(iii)(F) and a new paragraph (j)(3)(iii)(E) is added.
The revision and additions read as follows:
s273.21 Monthly Reporting and Retrospective Budgeting (MRRB)
* * * * *
(h) The monthly report form. * * *
(2) Monthly report form. * * *
(ix) If the State agency elects to require reporting of
child support payments on the monthly report form, the State
agency shall require the household to report changes in the
actual monthly amount of child support paid and any changes in
the legal obligation to pay child support.
* * * * *
(j) State agency action on reports. * * *
(3) Incomplete filing. * * *
(iii) * * *
(E) If the household does not report or verify its monthly
child support payment or a change in its legal obligation, the
State agency shall not allow a child support deduction.
* * * * *
Part 275 - PERFORMANCE REPORTING SYSTEM
9. In s275.12, a new paragraph (d)(2)(ix) is added to read as
follows:
s275.12 Review of active cases.
* * * * *
(d) Variance identification. * * *
(2) Variances excluded from error analysis. * * *
(ix) Any variance in a child support deduction which was the
result of an unreported change subsequent to the most recent
certification action shall be excluded from the error
determination.
* * * * *
_______________________ ______________
Ellen Haas Date
Under Secretary for
Food, Nutrition, and Consumer Services
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