To provide more child support money to families leaving welfare, to simplify the rules governing the assignment and distribution of child support collected by States on behalf of children, to improve the collection of child support, and for other purposes.

February 8, 2005

Ms. SNOWE (for herself, Mr. KOHL, Mr. ROCKEFELLER, and Ms. LANDRIEU) introduced the following bill; which was read twice and referred to the Committee on Finance

To provide more child support money to families leaving welfare, to simplify the rules governing the assignment and distribution of child support collected by States on behalf of children, to improve the collection of child support, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Child Support Distribution Act of 2005'.

SEC. 2. TABLE OF CONTENTS.

The table of contents for this Act is as follows:

Sec. 1. Short title.

Sec. 2. Table of contents.

TITLE I--DISTRIBUTION OF CHILD SUPPORT

Sec. 101. Distribution of child support collected by States on behalf of children receiving certain welfare benefits.

TITLE II--EXPANDED ENFORCEMENT

Sec. 201. Decrease in amount of child support arrearage triggering passport denial.

Sec. 202. Use of tax refund intercept program to collect past-due child support on behalf of children who are not minors.

Sec. 203. Garnishment of compensation paid to veterans for service-connected disabilities in order to enforce child support obligations.

Sec. 204. Mandatory review and adjustment of child support orders for families receiving TANF.

TITLE III--MISCELLANEOUS

Sec. 301. Report on undistributed child support payments.

Sec. 302. Use of new hire information to assist in administration of unemployment compensation programs.

Sec. 303. Increase in payment rate to States for expenditures for short-term training of staff of certain child welfare agencies.

TITLE IV--EFFECTIVE DATE

Sec. 401. Effective date.

TITLE I--DISTRIBUTION OF CHILD SUPPORT

SEC. 101. DISTRIBUTION OF CHILD SUPPORT COLLECTED BY STATES ON BEHALF OF CHILDREN RECEIVING CERTAIN WELFARE BENEFITS.

(a) Modification of Rule Requiring Assignment of Support Rights as a Condition of Receiving TANF- Section 408(a)(3) of the Social Security Act (42 U.S.C. 608(a)(3)) is amended to read as follows:

`(3) NO ASSISTANCE FOR FAMILIES NOT ASSIGNING CERTAIN SUPPORT RIGHTS TO THE STATE- A State to which a grant is made under section 403 shall require, as a condition of paying assistance to a family under the State program funded under this part, that a member of the family assign to the State any right the family member may have (on behalf of the family member or of any other person for whom the family member has applied for or is receiving such assistance) to support from any other person, not exceeding the total amount of assistance so paid to the family, which accrues during the period that the family receives assistance under the program.'.

(b) Increasing Child Support Payments to Families and Simplifying Child Support Distribution Rules-

(1) DISTRIBUTION RULES-

(A) IN GENERAL- Section 457(a) of such Act (42 U.S.C. 657(a)) is amended to read as follows:

`(a) In General- Subject to subsections (d) and (e), the amounts collected on behalf of a family as support by a State pursuant to a plan approved under this part shall be distributed as follows:

`(1) FAMILIES RECEIVING ASSISTANCE- In the case of a family receiving assistance from the State, the State shall--

`(A) pay to the Federal Government the Federal share of the amount collected, subject to paragraph (3)(A);

`(B) retain, or pay to the family, the State share of the amount collected, subject to paragraph (3)(B); and

`(C) pay to the family any remaining amount.

`(2) FAMILIES THAT FORMERLY RECEIVED ASSISTANCE- In the case of a family that formerly received assistance from the State:

`(A) CURRENT SUPPORT- To the extent that the amount collected does not exceed the current support amount, the State shall pay the amount to the family.

`(B) ARREARAGES- Except as otherwise provided in an election made under 434(34), to the extent that the amount collected exceeds the current support amount, the State--

`(i) shall first pay to the family the excess amount, to the extent necessary to satisfy support arrearages not assigned pursuant to section 408(a)(3);

`(ii) if the amount collected exceeds the amount required to be paid to the family under clause (i), shall--

`(I) pay to the Federal Government, the Federal share of the excess amount described in this clause, subject to paragraph (3)(A); and

`(II) retain, or pay to the family, the State share of the excess amount described in this clause, subject to paragraph (3)(B); and

`(iii) shall pay to the family any remaining amount.

`(3) LIMITATIONS-

`(A) FEDERAL REIMBURSEMENTS- The total of the amounts paid by the State to the Federal Government under paragraphs (1) and (2) of this subsection with respect to a family shall not exceed the Federal share of the amount assigned with respect to the family pursuant to section 408(a)(3).

`(B) STATE REIMBURSEMENTS- The total of the amounts retained by the State under paragraphs (1) and (2) of this subsection with respect to a family shall not exceed the

State share of the amount assigned with respect to the family pursuant to section 408(a)(3).

`(4) FAMILIES THAT NEVER RECEIVED ASSISTANCE- In the case of any other family, the State shall pay the amount collected to the family.

`(5) FAMILIES UNDER CERTAIN AGREEMENTS- Notwithstanding paragraphs (1) through (3), in the case of an amount collected for a family in accordance with a cooperative agreement under section 454(33), the State shall distribute the amount collected pursuant to the terms of the agreement.

`(6) STATE FINANCING OPTIONS- To the extent that the State's share of the amount payable to a family pursuant to paragraph (2)(B) of this subsection exceeds the amount that the State estimates (under procedures approved by the Secretary) would have been payable to the family pursuant to former section 457(a)(2)(B) (as in effect for the State immediately before the date this subsection first applies to the State) if such former section had remained in effect, the State may elect to use the grant made to the State under section 403(a) to pay the amount, or to have the payment considered a qualified State expenditure for purposes of section 409(a)(7), but not both.

`(7) STATE OPTION TO PASS-THROUGH ADDITIONAL SUPPORT WITH FEDERAL FINANCIAL PARTICIPATION-

`(A) FAMILIES THAT FORMERLY RECEIVED ASSISTANCE- Notwithstanding paragraph (2)(B)(ii), a State shall not be required to pay to the Federal Government the Federal share of an amount collected on behalf of a family that formerly received assistance under the State program funded under part A, to the extent that the State pays the amount to the family.

`(B) RECIPIENTS OF TANF FOR LESS THAN 5 YEARS-

`(i) IN GENERAL- Notwithstanding paragraph (1), in the case of a family that includes an adult that has received assistance from the State for not more than 5 years after the date of enactment of this paragraph, a State shall not be required to pay to the Federal Government the Federal share of the excepted portion (as defined in clause (ii)) of any amount collected on behalf of such family during a month to the extent that--

`(I) the State pays the excepted portion to the family; and

`(II) the excepted portion is disregarded in determining the amount and type of assistance provided to the family under such program.

`(ii) EXCEPTED PORTION DEFINED- For purposes of this subparagraph, the term `excepted portion' means that portion of the amount collected on behalf of a family during a month that does not exceed $400 per month, or in the case of a family that includes 2 or more children, that does not exceed an amount established by the State that is not more than $600 per month.

`(8) STATES WITH DEMONSTRATION WAIVERS- Notwithstanding the preceding paragraphs, in the case of a State that, on the date of enactment of this paragraph, has had in effect since October 1, 1997, a waiver under section 1115 permitting pass-through payments of child support collections--

`(A) the State may continue to distribute such payments to families without regard to the expiration date of such waiver; and

`(B) the requirement under paragraph (1) to pay to the Federal Government the Federal share of the amount collected on behalf of a family shall not apply to the extent that--

`(i) the State distributes such amount to the family; and

`(ii) such amount is disregarded in determining the amount and type of assistance paid to the family.'.

(B) STATE PLAN TO INCLUDE ELECTION AS TO WHICH RULES TO APPLY IN DISTRIBUTING CHILD SUPPORT ARREARAGES COLLECTED ON BEHALF OF FAMILIES FORMERLY RECEIVING ASSISTANCE- Section 454 of such Act (42 U.S.C. 654) is amended--

(i) by striking `and' at the end of paragraph (32);

(ii) by striking the period at the end of paragraph (33) and inserting `; and'; and

(iii) by inserting after paragraph (33) the following:

`(34) include an election by the State to apply section 457(a)(2)(B) of this Act or former section 457(a)(2)(B) of this Act (as in effect for the State immediately before the date this paragraph first applies to the State) to the distribution of the amounts which are the subject of such sections, and for so long as the State elects to so apply such former section, the amendments made by paragraphs (1) and (2) of subsection (e) of section 101 of the Child Support Distribution Act of 2005 shall not apply with respect to the State, notwithstanding subsection (f)(1) of such section 101.'.

(C) APPROVAL OF ESTIMATION PROCEDURES- Not later than the date that is 6 months after the date of enactment of this Act, the Secretary of Health and Human Services, in consultation with the States (as defined for purposes of part D of title IV of the Social Security Act), shall establish the procedures to be used to make the estimate described in section 457(a)(6) of such Act.

(2) CURRENT SUPPORT AMOUNT DEFINED- Section 457(c) of such Act (42 U.S.C. 657(c)) is amended by adding at the end the following:

`(5) CURRENT SUPPORT AMOUNT- The term `current support amount' means, with respect to amounts collected as support on behalf of a family, the amount designated as the monthly support obligation of the noncustodial parent in the order requiring the support.'.

(c) Ban on Recovery of Medicaid Costs for Certain Births- Section 454 of such Act (42 U.S.C. 654), as amended by subsection (b)(1)(B), is amended--

(1) by striking `and' at the end of paragraph (33);

(2) by striking the period at the end of paragraph (34) and inserting `; and'; and

(3) by inserting after paragraph (34) the following:

`(35) provide that the State shall not use the State program operated under this part to collect any amount owed to the State by reason of costs incurred under the State plan approved under title XIX for the birth of a child for whom support rights have been assigned pursuant to section 408(a)(3), 471(a)(17), or 1912.'.

(d) STATE OPTION TO DISCONTINUE OLDER SUPPORT ASSIGNMENTS- Section 457(b) (42 U.S.C. 657(b)) is amended to read as follows:

`(b) CONTINUATION OF ASSIGNMENTS-

`(1) STATE OPTION TO DISCONTINUE PRE-1997 SUPPORT ASSIGNMENTS-

`(A) IN GENERAL- Any rights to support obligations assigned to a State as a condition of receiving assistance from the State under part A and in effect on September 30, 1997 (or such earlier date on or after August 22, 1996, as the State may choose), may remain assigned after such date.

`(B) DISTRIBUTION OF AMOUNTS AFTER ASSIGNMENT DISCONTINUATION- If a State chooses to discontinue the assignment of a support obligation described in subparagraph (A), the State may treat amounts collected pursuant to such assignment as if such amounts had never been assigned and may distribute such amounts to the family in accordance with subsection (a)(4).

`(2) STATE OPTION TO DISCONTINUE POST-1997 ASSIGNMENTS-

`(A) IN GENERAL- Any rights to support obligations accruing before the date on which a family first receives assistance under part A that are assigned to a State under that part and in effect before the implementation date of this section may remain assigned after such date.

`(B) DISTRIBUTION OF AMOUNTS AFTER ASSIGNMENT DISCONTINUATION- If a State chooses to discontinue the assignment of a support obligation described in subparagraph (A), the State may treat amounts collected pursuant to such assignment as if such amounts had never been assigned and may distribute such amounts to the family in accordance with subsection (a)(4).'.

(e) Conforming Amendments-

(1) Section 404(a) of such Act (42 U.S.C. 604(a)) is amended--

(A) by striking `or' at the end of paragraph (1);

(B) by striking the period at the end of paragraph (2) and inserting `; or'; and

(C) by adding at the end the following:

`(3) to fund payment of an amount pursuant to section 457(a)(2)(B), but only to the extent that the State properly elects under section 457(a)(6) to use the grant to fund the payment.'.

(2) Section 409(a)(7)(B)(i) of such Act (42 U.S.C. 609(a)(7)(B)(i)) is amended--

(A) in subclause (I)(aa), by striking `457(a)(1)(B)' and inserting `457(a)(1)'; and

(B) by adding at the end the following:

`(V) PORTIONS OF CERTAIN CHILD SUPPORT PAYMENTS COLLECTED ON BEHALF OF AND DISTRIBUTED TO FAMILIES NO LONGER RECEIVING ASSISTANCE- Any amount paid by a State pursuant to section 457(a)(2)(B), but only to the extent that the State properly elects under section 457(a)(6) to have the payment considered a qualified State expenditure.'.

(3) Section 6402(c) of the Internal Revenue Code of 1986 (relating to offset of past-due support against overpayments) is amended--

(A) in the first sentence, by striking `the Social Security Act.' and inserting `of such Act.'; and

(B) by striking the third sentence and inserting the following: `The Secretary shall apply a reduction under this subsection first to an amount certified by the State as past due support under section 464 of the Social Security Act before any other reductions allowed by law.'.

(f) Effective Date-

(1) IN GENERAL- The amendments made by this section shall take effect on October 1, 2008, and shall apply to payments under parts A and D of title IV of the Social Security Act for calendar quarters beginning on or after such date, and without regard to whether regulations to implement such amendments (in the case of State programs operated under such part D) are promulgated by such date.

(2) STATE OPTION TO ACCELERATE EFFECTIVE DATE- In addition, a State may elect to have the amendments made by this section apply to the State and to amounts collected by the State, on and after such date as the State may select that is after the date of enactment of this Act and before October 1, 2008.

TITLE II--EXPANDED ENFORCEMENT

SEC. 201. DECREASE IN AMOUNT OF CHILD SUPPORT ARREARAGE TRIGGERING PASSPORT DENIAL.

(a) In General- Section 452(k)(1) of the Social Security Act (42 U.S.C. 652(k)(1)) is amended by striking `$5,000' and inserting `$2,500'.

(b) Conforming Amendment- Section 454(31) of the Social Security Act (42 U.S.C. 654(31)) is amended by striking `$5,000' and inserting `$2,500'.

SEC. 202. USE OF TAX REFUND INTERCEPT PROGRAM TO COLLECT PAST-DUE CHILD SUPPORT ON BEHALF OF CHILDREN WHO ARE NOT MINORS.

Section 464 of the Social Security Act (42 U.S.C. 664) is amended--

(1) in subsection (a)(2)(A), by striking `(as that term is defined for purposes of this paragraph under subsection (c))'; and

(2) in subsection (c)--

(A) in paragraph (1)--

(i) by striking `(1) Except as provided in paragraph (2), as used in' and inserting `In'; and

(ii) by inserting `(whether or not a minor)' after `a child' each place it appears; and

(B) by striking paragraphs (2) and (3).

SEC. 203. GARNISHMENT OF COMPENSATION PAID TO VETERANS FOR SERVICE-CONNECTED DISABILITIES IN ORDER TO ENFORCE CHILD SUPPORT OBLIGATIONS.

Section 459(h) of the Social Security Act (42 U.S.C. 659(h)) is amended--

(1) in paragraph (1)(A)(ii)--

(A) in subclause (IV), by striking `or' after the semicolon;

(B) in subclause (V), by inserting `or' after the semicolon; and

(C) by adding at the end the following:

`(VI) subject to paragraph (3), other than periodic benefits or payments described in subclause (V), by the Secretary of Veterans Affairs as compensation for a service-connected disability paid by the Secretary to a former member of the Armed Forces;'; and

(2) by adding at the end the following:

`(3) LIMITATIONS WITH RESPECT TO COMPENSATION PAID TO VETERANS FOR SERVICE-CONNECTED DISABILITIES-

`(A) ALIMONY AND CHILD SUPPORT- Subject to subparagraph (B), compensation described in paragraph (1)(A)(ii)(VI) shall not be subject to withholding pursuant to this section--

`(i) for payment of alimony; or

`(ii) for payment of child support if the individual is fewer than 60 days in arrears in payment of the support.

`(B) LIMITATION- Not more than 50 percent of any payment of compensation described in subparagraph (A) may be withheld pursuant to this section.'.

SEC. 204. MANDATORY REVIEW AND ADJUSTMENT OF CHILD SUPPORT ORDERS FOR FAMILIES RECEIVING TANF.

(a) In General- Section 466(a)(10)(A)(i) of the Social Security Act (42 U.S.C. 666(a)(10)(A)(i)) is amended in the matter preceding subclause (I)--

(1) by striking `parent, or,' and inserting `parent or'; and

(2) by striking `upon the request of the State agency under the State plan or of either parent,'.

(b) Effective Date- The amendments made by subsection (a) shall take effect on October 1, 2007.

TITLE III--MISCELLANEOUS

SEC. 301. REPORT ON UNDISTRIBUTED CHILD SUPPORT PAYMENTS.

Not later than 6 months after the date of enactment of this Act, the Secretary of Health and Human Services shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report on the procedures that the States use generally to locate custodial parents for whom child support has been collected but not yet distributed. The report shall include an estimate of the total amount of such undistributed child support and the average length of time it takes for such child support to be distributed. The Secretary shall include in the report recommendations as to whether additional procedures should be established at the Federal or State level to expedite the payment of undistributed child support.

SEC. 302. USE OF NEW HIRE INFORMATION TO ASSIST IN ADMINISTRATION OF UNEMPLOYMENT COMPENSATION PROGRAMS.

Section 453(j) of the Social Security Act (42 U.S.C. 653(j)) is amended by adding at the end the following:

`(7) INFORMATION COMPARISONS AND DISCLOSURE TO ASSIST IN ADMINISTRATION OF UNEMPLOYMENT COMPENSATION PROGRAMS-

`(A) IN GENERAL- If a State agency responsible for the administration of an unemployment compensation program under Federal or State law transmits to the Secretary the name and social security account number of an individual, the Secretary shall, if the information in the National Directory of New Hires indicates that the individual may be employed, disclose to the State agency the name, address, and employer identification number of any putative employer of the individual, subject to this paragraph.

`(B) CONDITION ON DISCLOSURE- The Secretary shall make a disclosure under subparagraph (A) only to the extent that the Secretary determines that the disclosure would not interfere with the effective operation of the program under this part.

`(C) USE OF INFORMATION- A State agency may use information provided under this paragraph only for purposes of administering a program referred to in subparagraph (A).'.

SEC. 303. INCREASE IN PAYMENT RATE TO STATES FOR EXPENDITURES FOR SHORT-TERM TRAINING OF STAFF OF CERTAIN CHILD WELFARE AGENCIES.

Section 474(a)(3)(B) of the Social Security Act (42 U.S.C. 674(a)(3)(B)) is amended by inserting `, or State-licensed or State-approved child welfare agencies providing services,' after `child care institutions'.

TITLE IV--EFFECTIVE DATE

SEC. 401. EFFECTIVE DATE.

(a) In General- Except as otherwise provided in this Act, and subject to subsection (b), this Act and the amendments made by this Act shall take effect on October 1, 2005, and shall apply to payments under part D of title IV of the Social Security Act for calendar quarters beginning on or after such date, and without regard to whether regulations to implement such amendments are promulgated by such date.

(b) Delay Permitted If State Legislation Required- In the case of a State plan approved under section 454 of the Social Security Act which requires State legislation (other than legislation appropriating funds) in order for the plan to meet the additional requirements imposed by the amendments made by this Act, the State plan shall not be regarded as failing to comply with the additional requirements solely on the basis of the failure of the plan to meet the additional requirements before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2-year legislative session, each year of such session shall be deemed to be a separate regular session of the State legislature.

END