U.S. DEPARTMENT OF LABOR
Employment and Training Administration
Washington, D. C. 20210
April 8, 1982
March 31, 1983
UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 15-82
ALL STATE EMPLOYMENT SECURITY AGENCIES
T. JAMES WALKER
Child Support Intercept (Withholding from Unemployment Compensation)
Purpose. To inform State Employment Security Agencies (SESAs) of steps to implement the child support intercept
program enacted in P.L. 97-35 and generally described in UIPL 1-82.
References. Section 2335 of P.L. 97-35; Section 303 (a) (1), 303 (e) (1) , 303(e)(2) and 454(20) of the Social
Security Act; Section 3(a) of the Wagner-Peyser Act; P.L. 96-265; P.L. 94-566; and UIPL 1-82.
Background. Congress in the past (in Section 508, P.L. 94-566) has required each SESA to exchange information about workers and claimants with the child support agency in its State. These agencies are commonly referred to as IV-D agencies, from the Title of the Social Security Act which authorizes them.
The 1981 Omnibus Budget Reconciliation Act extended that action to require SESAs to withhold funds from UI benefits in cases where a child support enforcement agency is enforcing either a voluntary support agreement, a court order or an administrative order pursuant to a court order or law to pay.money for child support.
The requirement includes all unemployment insurance payments under a State law including extended benefits (EB), and unemployment compensation for Federal Employees (UCFE), Unemployment Compensation for Ex-servicemembers (UCX), Trade Readjustment Allowances (TRA), Disaster Unemployment Assistance (DUA), and payments under the Redwood National Park Expansion Act.
Please note that Section 2335 of P.L. 97-35 requires only that States make deductions from unemployment compensation for child support obligations being enforced through IV-D agencies and does not require deductions for spousal support. However, spousal support intercept is at the option of the State if permitted under State Law. (See page 2 of Attachment 4; Action Transmittal from the Department of Health and Human Services, Office of Child Support Enforcement). SESA's are required to furnish information to IV-D agencies in regard to spousal support because of a change in regard to spousal support because of a change in title IV-D by, Section 2332 of P.L. 97-35. That section amended title IV-D to include spousal support (under AFDC) with child support wherever it appeared in title IV-D. The effect is to make the information requirements of Section 3(a) of the Wagner-Peyser Act apply with respect to spousal as well as child support. The reimbursement of costs requirement of Section 508(b) of P.L. 94-566 also applies.
No reliable figures exist as to how many claimants will have benefits withheld under this new requirement. However, some clue may be inferred from a brief study in two mid-west States. The States compared IV-D agency tapes with UI claimant records for a one-year period. Between 1.5 and 2 percent of the claimants were on the IV-D tapes. Even though this may not be typical of all States, it suggests a basis to approach development of needed systems.
State Child Support Enforcement Agencies. Under the Social Security Act there is a State child support enforcement agency (known as the IV-D agency) in every State, D.C., Puerto Rico, the Virgin Islands and Guam. These agencies enforce collection of child support in all welfare cases (AFDC), for non-AFDC cases where the parent formerly was on welfare, for non-AFDC where the parent asked the IV-D agency to assist in enforcement and, in a few States, all child support payments. The agencies also locate missing parents, establish paternity and perform several other related functions.
IV-D Administrative Funds. The IV-D agency is financed by a mixture of State or local money, fees, and grants from
the Department of Health and Human Services under the Social Security Act. Federal grants generally cover 75 percent of costs. Each State has a plan for child support enforcement. The plan must be approved by the Secretary of Health and
Human Services (HHS) to qualify for Federal administrative funds. These plans vary, notably in how they organize
activities of the enforcement agency (State agency vs. local) and how they get their State administrative funds.
Information Exchange Services. Under Section 303(e)(1) of the Social Security Act and Section 508 of P.L. 94-566 (amending the Wagner-Peyser Act), these IV-D agencies have been exchanging information which may include lists or computer tapes, with SESAs in an attempt to locate absent parents. This activity probably will increase in the future, since Section 454(20) requires IV-D agencies to obtain information "on a periodic basis." SESAs provide information from both wage record searches and comparison with active claimant records in such exchanges. Administrative costs are not reimbursed in UIS budget allocation to SESAs, but are negotiated in agreements between the SESA and the IV-D agency. This is also the method of financing used for the child support intercept. The applicable statutes require the IV-D agencies to bear the SESA costs.
Collection by IV-D agencies. There are two general patterns of collection, although there are variations within
(1) State Office Collection.
In several States, the central State child support agency is the place where most actions occur. It assesses the absent parent's ability to pay and the custodial parent's needs: It prescribes the amount to be paid. It collects the child support money and disburses it to the proper places. The welfare agency which pays AFDC may also repay the Federal Government for its welfare costs using the child support money disbursed to it. In some cases, child support payments are made directly to the custodial parent. However, a court may issue an order in some legal action-in such a.State (e.g., a garnishment) which requires money to be paid to the court.
Under Section 303 (e) (2) all child support money the SESA withholds from benefits will be paid to the central agency.
(2) Local Collections.
In most States, the central State child support agency performs various supporting functions, butcollections normally are made by a local (usually county) agency. In most cases, this is part of the local court function. Amounts are established by the court with the help of the office of the district attorney or a similar agency, and the clerk of the court or other local officer receives the money and distributes it to the proper places.
If your State is organized this way, a method is needed to transmit child support money from the SESA to the local agency. Cost effectiveness should govern the choice between two methods;
a) pay all the money to the central IV-D office, for distribution to the proper local agency (including agencies in other States).
b) pay the money directly to the appropriate local agency, (except those inother States, which your central IV-D agency should handle). No payments shall be made directly to custodial parents. If the case is being enforced by a State or local IV-D agency (the only cases in which the SESA is required to withhold), the IV-D agency or appropriate local authority must get the money.
State IV-D agencies may vary in the amount of information they request, and in what cases they will request withholding. They may limit their concerns primarily to cases where the absent parent is delinquent in his/her payments or the custodial parent receives AFDC.
State Child Support Enforcement
Withholding Unemployment Compensation The new law amendsSection 3 (e) of the Social Security Act to require every SESA to take these actions:
(1) New unemployment compensation claim
Ask every new claimant if he/she "owes" child support which is being enforced by a State or local Child Support Enforcement Agency. It goes on to say the SESA must tell the IV-D agency if the claimant who answers "yes" is eligible for benefits. The SESA is not required to re-question claimants, nor to question current claimants at the start of the program (to start when the State law permits and fiscal arrangements are made, but no later than October 1, 1982). The above term "owes" is interpreted to mean "is required to pay child support that is enforced by a State or local child support enforcement agency." That definition should be used as a guide in determining exact wording on the State initial claim form. The SESA should establish jointly with the State central child support agency questions for a revised initial claim form. The form must include whether the person "owes" child support which is enforced by a child support agency and include the place (city and State) where the person is required to pay child support. The question should be included in the next order for initial claim forms, even if implementation of the exchange of information must await legislative and fiscal actions. (If needed, a separate questionnaire maybe used, pending use of revised forms).
The question will be standard for interstate claimants as follows:
"Are you required to make or do you owe child support payments? If "yes", where? (City), (County), (State). Revision of the interstate initial claim form IB-1 is in process and will be issued separately. Some State IV-D agencies may decide that it is not cost-effective to have you perform this function at all. If you agree periodically to compare listings of IV-D cases with your claimant records,
as indicated below in item 4, the cost of reporting on new claimants may be more than the value the IV-D agency sees in
the service. If this service is not requested and paid for, the SESA should not do it. But interstate Form IB-1 must ask the questions in every State.
From State to State, the IV-D agencies will differ as to whether or not they want the SESA to report only claimants who are determined to be eligible. Because eligibility determinations will cause some delay, and because some IV-D agencies are strongly oriented to preventing delinquency, such an agency may ask the SESA to notify them at once of every "yes" answer even though some percent will not be eligible. At least, the IV-D agency will check their records and start negotiations with the claimant much earlier, and they are willing to act on some cases which will not result in recovery. If it is less costly for some SESAs to give the notice without the need to report after eligibility is determined, that may impel some IV-D agencies to choose this route.
Other IV-D agencies will prefer to wait and get a list of only eligible claimants, - perhaps to reduce the volume of paperwork or for cost considerations. However; the legal basis for such disclosures should be clear. Under Section 303 (e) (2) the SESA is required to disclose information only on claimants determined to be eligible for unemployment compensation. Under Section 303 (a) (1), a SESA may, but is not required to, disclose any UI information to a public official in the performance of such official's public duties. Section 303 (a) (1) thus authorizes the disclosure to IV-D agencies of any UI information beyond that information that is required to be disclosed by Section 303 (e) (2) or, 303 (e) (1). Every disclosure to a IV-D agency is subject to payment by the receiving IV- D agency of the full costs of the supplying SESA's services in collecting, processing and forwarding the information.
"Eligible" means an individual has sufficient wage credits to establish a claim and its monetarily entitled to unemployment compensation. The IV-D agency may choose merely to ask if a monetary determination is issued, if it is concerned chiefly with the weekly benefit amount. But the IV-D agency, may choose also to ask for assurance that there is no non-monetary issue if the cost is such as to make it worthwhile.
Each SESA should try to accommodate its IV-D agency, at least to the extent required by Section 303 (e) (1) , and (2) and Section 3(a) of the Wagner-Peyser Act. Although the Section 303 (e) (2) does not require any specific form of notice, a variety of patterns should be considered.
(a) In some States, notice to the central IV-D agency is adequate for all cases. A daily or weekly listing, or photo or carbon copies of claim forms in a non-mechanized State, should suffice. Costs will dictate the choice.
(b) In many States, the notice must go to the local agency. The same kind of listings (or individual slips, if preferred) might be prepared at less frequent intervals than weekly, depending on the terms of the agreement.
(c) If the supporting parent's agency is outside the State, the SESA should send the notices to its own State IV-D agency, for interstate clearance by that agency. That agency is likely to become involved in the collection of any amount withheld, and may set up some records as well as be in the best position to know just where the notice should go.
(d) The content of each notice is negotiated with the IV-D agency and included in the agreement. We suggest the SESA include claimant name, social security account number and address and the place to which the claimant says support payments are payable. In States which wait until the claimant is found eligible, the WBA and duration would also help the IV-D agency to determine how much deduction should be made.
(2) Benefit assignments. An agreement or benefit assignment may specify an amount to be withheld from every week's benefits and remitted to the appropriate IV-D agency at agreed upon intervals.
(a) The amount maybe specified in several ways.
(1) The claimant may specify a deduction to be made by the SESA because he has been accustomed to that while he was working. Many employers make such deductions now based on either "voluntary" wage assignments agreed to by the claimant and the IV-D agency or based on court orders such as garnishments.
Such action presents problems.
i. It may not be a IV-D case in which case the SESA may not withhold and the IV-D agency is not the appropriate recipient of the amount withheld.
ii. The amount specified may be incorrect; the IV-D agency may want more, or might settle for less.
iii. The IV-D agency may be in pursuit of other collection methods such as garnishment, and too large an amount may be deducted or may conflict with action taken.
Accordingly, we urge a clearance system with the IV-D agency for voluntary benefit assignments. A simple method is to refer the claimant to the appropriate child support agency in person or by phone if he makes such an offer. (If it happens in the agent State in an IB case, the local IV-D agency can handle it: or the claimant can make the offer on an IB-11 and let the liable State clear it with its IV-D agency).
(2) The claimant and IV-D agency may jointly agree on an amount (in accordance with 2(A)(iii)II) and the IV-D agency delivers that agreement to the SESA.
The deduction from UI benefits is only one of a number of "intercepts" available to IV-D agencies, such as deductions from income tax refunds due, either State or Federal. The IV-D agency is responsible for coordinating its collection efforts to avoid over-collection.
(3) If all else fails, the IV-D agency, may take action through "legal process" (as defined in Section 462(e)) to order the SESA to withhold a specified amount. Section 462(e) states in part the term "legal process" means any writ, order, summons or other similar process in the nature of garnishment, which is issued by (A) a court of competent jurisdiction within any State..., (B) a court of competent jurisdiction in any foreign country... or (C) an authorized official pursuant to an order of such a court ...or pursuant to State or local law.
(b) The method of remitting amounts withheld to the IV-D agency will depend on SESA automation capacity. SESAs may store the needed data in the computer and issue one check to the IV-D agency, along with a list of the persons and amounts represented. A SESA with more limited automation may arrange for a separate check for each claimant. The IV-D agency should find either to be acceptable.
(c) Where to remit will vary, and is negotiable. Payment must go to a State or local child support enforcement agency. Many States can handle the payment through the central IV-D agency. In other States, payments will be made to the proper IV-D agencies. Child Support obligations which are being enforced by a State IV-D, agency other than the IV-D agency of the liable State will be processed through the system for interstate co-operation between IV-D agencies by the liable State.
(d) Unless the accumulated sums become large, in a very big State, monthly payments seem reasonable, but this also must be negotiated with the IV-D agency.
However, if payment data cannot be stored in the computer, much more frequent payments are advised.
SESA NOTICES 'TO CLAIMANTS
(4) State Employment Security Agencies must give each claimant an initial, written notice which explains the beginning date and amount of deduction from his/her weekly benefit amount in satisfaction of child support obligations to a child support enforcement agency. This notice may be issued at the time of or with the first benefit check from which a deduction is made. The notice must explain the authority for the deductions (State law, Court order, or administrative order by a IV-D agency) and include the claimant's right to appeal the SESA's action in deducting amounts for child support through the UI appeal process. However, this appeal is limited to the validity of the agency's authority to make deductions and/or accuracy of the amount deducted. Claimants should be advised to seek remedy through the court or IV-D agency enforcing the child support obligation when the claimants question the "reasonableness or "fairness" of the amount deducted in terms of their ability to pay.
Issuing notices and processing appeals are administrative costs in connection with child support intercept which require reimbursement by the State IV-D agency. The notice is not a nonmonetary determination nor is the appeal chargeable as appeals workload.
(5) SESA operating costs. It should be possible for the SESA to arrive at a reasonably accurate estimate of what each element of services will cost, to help the-IV-D agency decide what services it can afford. Cost Model techniques should be applied, both to set the figure for negotiations and to assure the IV-D agency that costs are truly represented. Cost will include all expenses involved in collecting, finding, processing, and forwarding information and money withheld such as labor, machine rental and any increase in costs of supplies (forms, envelopes, etc.) attributable to these services. Prorated charges for some overhead items should be based on the overhead rate used for ETA State grants.
Costs should be reexamined periodically, both as to wage rates and amount of time needed for the services.
SESAs must establish separate accountability to capture all costs related to child support intercept. Costs for child support intercept must not be charged to the State grants for administration. IV-D agencies shall pay SESAs for all child support intercept costs.
To make cost effective decisions, IV-D agencies will need estimates from SESAs regarding the costs of providing notices regarding new claims as well as cost estimates for providing notices containing various levels of information. Therefore, SESA should be prepared to advise the IV-D agencies of the cost of giving notices which contain various levels of information. Note well that SESAs must provide notices about eligible claimants who indicate child support obligations to the IV-D agencies as required by Section 2335. However, SESAs have flexibility in making agreements with IV-D agencies to provide notices containing information beyond what is required by Section 2335.
Startup Costs. System design and programming costs will be needed before delivery of any services; some materials (a special form, or the added cost of an extra copy of an existing form, or envelopes, for example) will also be needed. The attached sample agreement provides for advance payment. If computer preparation extends over a long period, periodic advances as work proceeds should be considered.
Many manual systems may have smaller initial costs than automated ones (and may therefore be preferred, at least at the start).
Postage. Procedures for covering postage costs are being developed and further instructions will be issued.
Agreements. A written agreement should be prepared. It should cover the information and services you are to supply, the prices, billing and payment arrangements, handling of errors, adjustment of prices and termination.
A sample agreement (Attachment 2) is attached, designed to permit flexibility in making minor changes in how things are done, but clearly setting out the basic services and rates. Details of the flexible areas are covered in the attached "Specification." (Attachment C). It is not a required format. It is intended merely to suggest areas to be considered, and a possible way to handle them.
Billing is a matter left to SESA's needs and capabilities. While advances may be provided, on the grounds that Title III funds will not be made available, if SESAs are able to devise a way to meet expenses pending reimbursement they may simplify some accounting actions by changes in the suggested language. However, a centralized billing and reimbursement arrangement (as contrasted with separate billing to each local childsupport agency) is recommended. The agreement must assure that the SESA recovers from the child support enforcement agency all direct and indirect costs of this activity.
Reporting. ETA does not plan on any reporting requirements. HHS will obtain needed reports from the IV-D agencies. However, SESA separate accounting and billing records for child support intercept should support any needed audit by State or Federal agencies as well as administrative cost charges.
Required Compliance. As was pointed out in UIPL No. 1-82, P.L.97-35 made this for certification of State laws starting October 1, 1982. Clearly, State laws must provide for such withholding by that date. However, until administrative funds for compliance are provided by a child support agency, a SESA cannot be expected to take action.
The requirement in the Federal law has been effective since August 13, 1981, so any action covered by this UIPL may be started at any time it is permitted by the State law and arrangements have been made for reimbursement of SESA costs.
States are urged to move promptly with any needed change in the State law and the negotiations with the State IV-D agency.
Actions Required. SESAs are requested to take the necessary actions to implement the requirements of P.L. 97-35 as follows:
Develop startup and ongoing costs for notification and intercept activities.
Meet with State IV-D agencies to work out agreements for child support intercept as soon as possible.
Forward copies of the agreements with the IV-D agencies to regional offices by July 1, 1982.
Advise regional offices of the status of negotiations and where SESA and IV-D agencies are unable to come to agreement by July 1, 1982.
Inquiries. Questions regarding this letter should be directed to the appropriate regional office.
Attachments. (1) Questions and Answers; (2) model agreement and specifications; (3) list of State IV-D agencies; (4) Action Transmittal to State IV-D agencies from the Department of Health and Human Services.