Revised January 9, 1998

Developing Innovative Child Support
Demonstrations for Non-Custodial Parents

A critical concern among policymakers is the development and enactment of policies that lessen the extent and depth of poverty, especially among children. Many poor children in single-parent families will be able to escape from poverty — or avoid being pushed still deeper into poverty — only if they can benefit from a combination of wages earned by their mother, earnings from their father paid in the form of child support, and government assistance in the form of earned income tax credits, child care subsidies, and food and health insurance. The Center on Budget and Policy Priorities is undertaking the development of demonstration projects that concentrates on the second of these three income sources — increased contributions from the earnings of non-custodial fathers.

Building on the work states and localities have already undertaken in developing programs for non-custodial parents, the Center is working to initiate projects designed to achieve two primary goals: first, to boost the employment and earnings of non-custodial parents and second, to pass some of those increased earnings on to children in the form of child support. As described below, this is an opportune time for states and localities to undertake new projects for non-custodial parents because new federal funding for these efforts was provided as part of the Balanced Budget Act of 1997.

 

Background

Currently, only a modest fraction of poor children in single-parent families receive child support income from their non-custodial parent. The proportion of never-married mothers who receive child support payments is especially low. Research indicates that more than $34 billion in potential child support income goes unpaid each year and that almost two-thirds of single mothers receive no assistance.

The new welfare law makes important strides in the child support enforcement arena, strengthening the tools for collecting child support from non-custodial parents who have income. However, it does little to help jobless non-custodial parents enter the labor force, and consequently, little to increase child support collections from non-custodial parents who lack earnings from which to make these payments. This is very problematic given that the economic circumstances of young men, particularly those with limited skills and education credentials, are decaying at an alarming rate. The inflation-adjusted average annual earnings of 25- to 29-year-old men without a high school diploma fell by 35 percent between 1973 and 1991. This suggests that the payoff from tighter enforcement may be constrained by the inability of some non-custodial parents to pay.

Currently, the child support system does not have the enforcement mechanisms to handle instances where the non-custodial father claims to be unemployed. Judges and child support officials usually have limited means at their disposable to determine the accuracy of a noncustodial parent's claim that he has no earnings. Moreover, jailing unemployed fathers is counterproductive. Judges may order noncustodial parents to seek work and report back to the court on these efforts, but courts and state child support enforcement agencies have large caseloads, are often overwhelmed, and typically lack the resources to monitor activities of this nature.

A final issue that affects the ability of the child support system to collect payments is the low level of cooperation by non-custodial parents. For AFDC or TANF cases, the father's incentive to make payments may be greatly diminished because the state can retain, as reimbursement for welfare costs, all child support payments. Under TANF, states can retain child support payments for the reimbursement for both cash and non-cash assistance (i.e. services) provided to the family. This can lead to a preference (on the part of both parents) for informal, direct payments that bypass the system.

Many non-custodial parents also are convinced that the child support system is fundamentally unfair, particularly to low-income non-custodial parents who, in their view, are frequently presented with support obligations that far exceed their ability to pay. This can be particularly true for non-custodial parents who do not make the required child support payments and accumulate a debt in the amount of owed child support. The existence of this child support debt — which can be substantial — can be daunting to non-custodial parents in low-wage jobs. Because the non-custodial parent may feel they will never be able to pay off their child support fully even if they are working, these arrearages may actually deter them from seeking stable employment or making child support payments or cause them to completely sever ties from the family.

 

The Parent's Fair Share Demonstration

In the Family Support Act of 1988, Congress mandated that various demonstration projects be conducted, including projects testing the provision of JOBS services to non-custodial parents. For the past several years, a major demonstration project know as Parents' Fair Share (PFS) has been carried out at nine sites. Supported by the federal government and several foundations, PFS is a response both to this legislative mandate and to the need to develop new, more effective approaches to dealing with non-custodial parents.

The Parent's Fair Share demonstration requires non-custodial parents of children on welfare to participate in employment-related and other services when they are unemployed and unable to meet their child support obligations. As summarized in the text box below, PFS has offered a variety of services to non-custodial parents, including four core components: a menu of employment and training services with a special emphasis on on-the-job-training (OJT) as a means to mix training with income-producing work; peer support groups built around a curriculum stressing responsible fatherhood; opportunities for non-custodial parents to mediate conflicts with custodial parents; and assistance with problems related to child support obligations. Through these services, PFS seeks to increase the earnings and living standards of non-custodial fathers, to translate these earnings into increased child support payments, and ultimately, to both improve the well-being of children and reduce public welfare spending.

Although the final results of the demonstration are not currently available, some of the initial results are promising. It appears that child support collections have increased in some sites. In addition, the "smokeout effect" is high — a significant number of those who claimed to have no earnings were found, as a result of the project, actually to have earnings. Finally, the peer support component has emerged as the core of the program, and judging by levels of participation and enthusiasm, as the most successful component.

Despite these promising developments, however, there is potential to build on the Parents' Fair Share demonstration. The program offers limited alternatives if the father is out of work and employment can not be found. In addition, it has not experimented with policies to ascertain whether passing through to AFDC children more of the child support paid on their behalf will result in increased child support payments. Increased earnings that lead to increased child support payments under PFS generally result in little if any additional income for children on AFDC.

 

Developing a Model for a Further Round of Demonstrations

To address these matters, the Center staff is working with states and localities to develop a new demonstration model for non-custodial parents. Its core elements would consist of enhancing the employment component of Parents' Fair Share demonstration and enacting mechanisms to assure that a larger portion of a non-custodial parent's earnings actually reach the parent's children.

 

The Employment Component

Several pieces of recent academic research show that the number of low-skilled job seekers in many cities substantially exceeds the number of low-skilled jobs, making it difficult for the less-skilled among this disadvantaged group to secure sustained employment. By swelling the number of low-skilled individuals in the labor force, welfare reform is virtually certain to aggravate this problem.

GUIDELINES FOR PARENTS' FAIR SHARE PILOT PROGRAMS: Four Core Components 1. EMPLOYMENT AND TRAINING The Parents' Fair Share pilot programs have included a group of activities intended to help participants secure long-term, stable employment at a wage level that would allow them to support themselves and their children. Since noncustodial parents vary in their employability levels, pilot programs were strongly encouraged to offer a variety of services, including job search assistance and opportunities for education and skills training. In addition, since it was important to engage participants in income-producing activities quickly and to establish the practice of paying child support, pilot programs were required to offer opportunities for on-the-job training (OJT), which combines skill-building and immediate income. 2. ENHANCED CHILD SUPPORT ENFORCEMENT A primary objective of Parents' Fair Share is to increase support payments made on behalf of children living in single-parent welfare families. This goal will not be met unless increases in participants' earnings are translated into regular child support payments. Although a legal and administrative structure already exists to establish and enforce child support obligations, pilot programs were encouraged to develop new procedures, services, and incentives in this area. These included: 1) steps to expedite the establishment of paternity and of child support awards and wage withholding arrangements; 2) quick follow-up when noncustodial parents failed to participate in the program as ordered; and 3) flexible rules that allow child support orders to be reduced temporarily while noncustodial parents participate in Parents' Fair Share and build the capacity to meet their child support obligations more adequately in the future. 3. PEER SUPPORT MDRC's preliminary research on the Parents' Fair Share demonstration suggested that employment and training services, by themselves, might not lead to changed attitudes and regular child support payments from all participants. Thus, pilot programs were developed in which support groups for participants were established to inform participants about their rights and obligations as noncustodial parents, to encourage positive parental behavior and sexual responsibility, to strengthen participants' commitment to work, and to enhance participants' life skills. The component was built around a curriculum called Responsible Fatherhood, supplied by MDRC. Some of the pilot programs also included guest speakers, recreational activities, mentoring programs, and/or planned parent-child activities. 4. MEDIATION Often disagreements between noncustodial parents about visitation, household expenditures, lifestyles, child care, school arrangements, and the roles and actions of other adults in their children's lives influence child support payment patterns. Thus, the pilot programs were required to provide opportunities for parents to mediate their differences, using services modeled on those provided through many family courts in divorce cases. _________________ Source: Dan Bloom and Kay Sherwood, "Matching Opportunities to Obligations: Lessons for Child Support Reform from the Parents' Fair Share Pilot Phase," Manpower Demonstration Research Corporation, April 1994.

This suggests that different types of employment strategies will be needed both to increase the overall number of low-skilled jobs and to give individuals with few skills and limited work history an opportunity to gain experience and skills that may make them sufficiently attractive to employers to secure private-sector positions. Toward this end, we are working to develop several components of an employment model to help non-custodial fathers attain the necessary job skills to find and retain a job. While each community needs to determine which services are most appropriate, there are four basic activities that should be considered: job readiness activities, on-the-job training, publicly funded jobs of last resort, and job retention services. Not all services are appropriate for all fathers, thus it is also important to develop mechanisms to ensure the most hard-to-serve fathers receive the most intensive services.

• Job readiness activities. Job readiness activities include assessment, job clubs, short training sessions to acquire "soft skills," peer support, mediation, parenting, and other services to respond to each client's needs. It would be appropriate for most unemployed non-custodial fathers to receive this set of services, with many job-ready clients being placed directly into jobs as a result of the activity. Clients receive no pay or stipend for this activity except for reimbursement for transportation expenses. During the time spent in these activities, child support orders would be suspended and arrearage credit might accrue with successful completion of this component.

• On-the-job training and trial employment. Individuals unable to find employment immediately could be placed either in on-the-job training or trial employment with a private employer. Under the trial employment component, a employment service provider would act as an intermediary and help develop entry level positions among a variety of local employers. Recognizing that private companies are reluctant to bring individuals onto their payrolls unless they have assurances the individuals will work out, the intermediary would essentially guarantee that a given employee is job-ready. Before being placed in a position, clients would receive a mixture of classroom training and soft skills enhancement and demonstrate they are job-ready. During the time a client is in this component, the client could be paid an hourly wage. After an initial period of training, the client would be placed with a private firm and receive further training on the job. The intermediary would continue to pay the client until the company the client has been placed is ready to hire the client and bring him or her onto the payroll. In addition to trial employment, it would also be beneficial to develop opportunities for participants to mix training with work, either through on-the-job training or through combinations of classroom training or education and subsidized or unsubsidized work.

• Publicly-funded jobs. For those fathers who cannot locate unsubsidized employment and are not ready for the component described above (i.e., are unable to be placed with a private employer), publicly-funded jobs could be needed. It is envisioned that most of these opportunities for paid employment would be in nonprofit and community-based organizations. Access to such jobs can help non-custodial parents subsequently move into unsubsidized employment. These positions are needed both to increase the overall number of low-skilled jobs in areas of high unemployment and to give hard-to-employ individuals an opportunity to gain work experience and job-related skills. In the absence of community jobs, it is unlikely that many of non-custodial parents will be able to enter the labor market (or to meet their child support obligations).

• Job retention services. The final component of the program would provide job retention services. This component would help individuals remain in their jobs and would handle employer/employee relationships or other employment barriers as they present themselves.

To the extent possible, participation in the employment component of the program would be required for fathers who were not paying child support — that is, the father would face consequences (with a possible ultimate step of incarceration) if they did not participate in the program or pay child support. Significant efforts would be made, however, to secure cooperation by the father on a voluntary basis by stressing the positive aspects of the program — peer support, assistance in finding employment, arrearage reduced if current support is paid, and the support order suspended while the father is in the program on an unpaid basis.

 

The Child Support Component

The second area where the new demonstration model would extend beyond Parents' Fair Share involves testing several ways to ensure that when a non-custodial parent finds employment and pays child support, a larger share of the child support payments reach the child on whose behalf they are made.

Changes in federal and state policies have altered AFDC to emphasize work and efforts to surmount barriers to employment among custodial parents, rather than simply focusing on whether the AFDC check was appropriately calculated. Similarly, our vision is that the child-support system should not simply demand payment but also see overcoming obstacles to employment among non-custodial parents as part of its mission. As part of the program model for non-custodial fathers, we have identified several potential enhancements to move the system in this employment-oriented direction. If this is accomplished, it may act as a positive force in assisting fathers to secure and maintain jobs.

• Pass-through of child support payments. Currently, in most states, child support payments made on behalf of children receiving welfare will be retained by the state welfare department and will not increase the well-being of the father's children. This may discourage the payment of child support by the non-custodial father and weaken the incentive for the non-custodial father to go to work. In this project, we would like to test an approach where a portion or the entire child support payment made on behalf of children receiving TANF assistance is passed through to the family. Because we anticipate greater employment and earnings among non-custodial fathers in the project, the additional costs of the pass-through could be covered by the increased child support payments made by program participants.

• Flexibility in adjusting child support orders. Non-custodial fathers in low-wage jobs often experience fluctuations in income, primarily because they change jobs or become unemployed. Policies that allow child support awards to be adjusted quickly as employment circumstances change may encourage fathers to make child support payments and prevent accumulation of arrearage in situations beyond the father's control. It also would be useful to develop policies that do not allow arrearages to accrue when the father is participating in employment-enhancing services.

• Arrearage Policies. Another component that could be incorporated into the program model is the development of alternative methods for handling child support arrearages accumulated by the non-custodial fathers. The existence of child support debt — which can be substantial — can be daunting to non-custodial fathers in low-wage jobs. Because these fathers may feel they will never be able to pay off their child support fully even if they are working, some argue these arrearages may deter them from seeking stable employment or making child support payments, or may cause them to sever completely their ties to the family. To examine whether changes in arrearage policies would increase employment and child support payments, we hope to interest states in testing two types of changes in policies related to arrearages. First, we would like to see a test of changes in two policies that can cause large arrearages to exist in the first place: the practice of making child support orders retroactive to the date the child first received AFDC or TANF, which can be several years in the past; and the practice of assuming that the non-custodial parent has earnings in circumstances where that may not be the case. Second, we would like to test new policies under which past arrearages are partially forgiven in circumstances where the father has been making child support payments or participating in employment activities for a set period of time. (Depending on the situation of the mother, some arrearages may be owed to the state for past welfare payments, while some may be owed directly to the family. States have the ability to forgive arrearages owed to them. Arrearages owed to the family cannot be forgiven.)

• In-kind payments. In circumstances where the father cannot make child support payments because he is not working, he could be given the option of providing in-kind services to the family. This could include providing child care or some other service to the family.

By changing the specific policies described above, the child support system would provide more incentives for non-custodial fathers to become employed and pay child support from their earnings. In addition, the child support system could be used to mandate participation by non-custodial parents in job-readiness, public service employment and other employment enhancement activities.

 

Resources Available for the Demonstrations: Welfare-to-Work Grants

This is an opportune time for states and localities to develop innovative programs for non-custodial parents. The new welfare-to-work grants contained in the recently-enacted federal balanced budget legislation give states and communities important opportunities to strengthen and expand their welfare reform programs, including efforts to serve non-custodial parents. In every state, these grants will increase the overall resources available to support welfare-to-work initiatives. The focus on local control and decision-making in this new program also will enable communities to make investments that respond specifically to unique local needs, supplementing welfare-to-work activities already implemented at the state or county level under the Temporary Assistance to Needy Families (TANF) program. Finally, the federal welfare-to-work grants will allow states and communities to design and test new strategies for helping hard-to-employ individuals, thereby laying the groundwork for future reforms of the welfare system.

Local governments and private industry councils (PICs) will play pivotal roles in the implementation of the new federal welfare-to-work grants. Formula grants will channel the bulk of new federal funds through states to cities and other areas with high concentrations of poverty. Local officials and community leaders must work with state policymakers to ensure that their full allotment of formula grant funds is secured by identifying the state, local, or private matching funds required under the federal law. In addition, more than $700 million in competitive grants to local communities, PICs, and nonprofit agencies will be awarded over the next two years, a total far larger than typically distributed under federally-administered grant programs. These competitive grants give cities important new opportunities to promote innovation and test new strategies for moving hard-to-employ individuals from welfare to work.

The Center on Budget and Policy Priorities is working intensively to encourage the use of formula grants and to stimulate innovative proposals for competitive grants for the development of programs serving non-custodial parents of children in TANF households. Of course, states also should consider how new federal welfare-to-work grants could strengthen other aspects of current welfare reform efforts such as job retention, placement, and support services.

The appendix of this paper provides details on the welfare-to-work grants. The U.S. Department of Labor (DOL) is also making a variety of materials related to the federal welfare-to-work grants available on the Internet. Planning guidance for states, facts sheets describing the program, regional DOL contacts, and final state-by-state allocations of formula grant funds can be found on the DOL welfare-to-work website at http://wtw.doleta.gov. Interim final regulations for the program were published on November 18, 1997 and are available at the DOL website. A Solicitation of Grant Applications (SGA) for competitive grants, which describes the process for submitting applications for such grants, was published on December 30, 1997 and can also be accessed through the DOL website. Grant applications for the first round of competitive awards (with approximately one-quarter of the grant money being awarded) are due on March 10, 1998. There will also be subsequent SGAs for competitive grants although the schedule has not yet been announced.

 

Research Issues

In developing a model for a new round of demonstration projects, the Center is seeking to interest a number of states in testing the resulting model in various localities. (Note: the Center will not be responsible for evaluating these demonstrations — this task is better-suited to MDRC, Mathematic, Abt, the Urban Institute, or others.) The research questions to be investigated include: the degree to which the employment and earnings of non-custodial parents are increased; the extent to which such parents become more likely to secure and retain private sector employment, particularly as a result of the publicly-funded jobs of last resort intervention; the extent to which changes in child support policies increase the amount of support paid by non-custodial parents and raise the incomes of children; and the extent to which this collection of policies increases the involvement of fathers in the lives of their children in a positive way.

The welfare-to-work legislation sets aside resources for evaluation of projects funded by welfare-to-work grants. The SGA described above contains more information on how states and localities can apply for these resources to evaluate their welfare-to-work projects.

 

Appendix: Major Provisions of the Welfare-to-Work Legislation

• The $3 billion in new federal welfare-to-work funds will be distributed to states and communities over the next two years. Half of the total — $1.5 billion — will be available in federal fiscal year 1998 and the remaining $1.5 billion will be distributed in fiscal year 1999. States and communities will be given up to three years after they receive grants to spend these funds. All funds must be spent by September 30, 2001.

• Funds provided under this legislation will be distributed through two kinds of grants: 75 percent of the funds are allocated to states on a formula basis, while the remaining 25 percent are awarded by the U.S. Department of Labor (DOL) through competitive grants.

• Most of the funds allocated to states through formula grants must be passed through to local Private Industry Councils (PICs), the entities that currently administer job training programs funded under the federal Job Training Partnership Act (JTPA). Only 15 percent of all formula funds can be retained by the state for state-administered programs and activities. States are required to submit plans to DOL that focus largely on procedural rather than substantive issues, including assurances of coordination between welfare-to-work grants and TANF work activities. The deadline for submission of state plans to DOL is December 12, 1997.

• Funds received by states on a formula basis are subject to a matching requirement. States must spend $1 of their own funds for allowable activities under the new law in order to receive $2 through federal formula grants. State expenditures beyond the TANF maintenance-of-effort (MOE) requirements, and perhaps local expenditures for allowable activities, will be counted toward this match. Funds that are not claimed by states in fiscal year 1998 will be added to the formula funds available in fiscal year 1999 and reallocated across all states in that year.

• Competitive grants can be awarded by DOL to PICs, local governments (i.e., cities and counties), or nonprofit organizations that submit proposals in conjunction with either PICs or local governments. No matching funds are required under these competitive grants. DOL's deadline for submission of proposals for a first round of competitive grants is likely to be in February 1998.

• The legislation authorizes a range of work-focused activities for which funds may be used, including:

• publicly-funded jobs and other wage subsidies;
• on-the-job training;
• job readiness, job placement, and post-employment services (which DOL may define to include education and training services provided to individuals after, but not before, they have been placed in jobs);
• job vouchers for similar services;
• unpaid community service or work experience programs; and
• job retention and supportive services (including transportation, child care, and substance abuse treatment if such services are not otherwise available).

• At least 70 percent of funds under both formula and competitive grants must be used to serve a highly disadvantaged group of TANF recipients or noncustodial parents of children in TANF households. These required beneficiaries must have either received assistance under TANF for at least 30 months or be within 12 months of a time limit on such assistance, and they also must face at least two of the three following barriers to employment:

1. lacking a high school diploma or GED and has low reading or math skills;
2. requiring substance abuse treatment for employment; and
3. having a poor work history.

• The remaining 30 percent of funds can be used to assist other TANF recipients or noncustodial parents who have characteristics associated with long-term welfare receipt.

• $100 million will be reserved from the total funds available in fiscal year 1999 for performance bonuses to states that will be awarded by the Secretary of Labor in fiscal year 2000.

 

More Detailed Summaries of the Legislation

The Center for Law and Social Policy (CLASP) and the Center for Community Change (CCC) both have prepared more detailed summaries of the welfare-to-work portion of the balanced budget legislation. These summaries can be obtained directly from CLASP (202-328-5140) and CCC (202-342-0567) in Washington, D.C.