Issue:
Should states have the option to expand their child support payment distribution units to include all child support payments made by income assignments that were entered prior to January 1, 1994?
Background:
Initially, federal law mandated universal withholding of child support from earnings by employers. Then, effective January 1, 1994, PRWORA required SDUs to process withheld payments in non-IVD cases in which the date of the support order is January 1, 1994, or later. For those states that would like to be consistent and universal for all income assignment orders, federal funding (FFP) is not currently provided for withholding prior to 1994. Therefore, states can choose to have their SDU's 1) not process payments in pre-1994 cases, or 2) to process pre-1994 payments and bear the entire cost with no FFP. Although a savings to the state and federal government, the first option effectively eliminates the benefit to employers envisioned by the SDU requirement of PRWORA. Under option one employers do not have the one location per state to which payments are sent. 1994 and subsequent payments go to the state SDU, and pre-1994 payments go to numerous addresses for various custodial parents. Under option two employers receive the benefit envisioned by PRWORA, but the state must pay all costs associated with the processing of payments for the pre-1994 orders.
NCCSD Statement in Support:
NCCSD supports processing all wage withholding payments through the State Distribution Unit. The change in current law would bring consistency to all payments, would benefit employers, and would allow states the option to have payments in pre-1994 non-IVD cases processed through their SDUs with costs shared between the state and federal government under the usual matching rate applied to IV-D expenditures.