Child Support in TANF Program

Current law requires TANF recipients who receive child support payments to assign the payments to the state government as an implicit reimbursement for welfare expenditures. States are required to give the federal government a share of its child support collections that is proportionate to the share of the state’s TANF program that is federally funded.

Under the former program of Aid to Families with Dependent Children (AFDC), states were required to pass through to the family the first $50 of child support received each month and exclude that amount in determining eligibility and benefits. The amount passed on to the family was disregarded when determining the federal share of a state’s collection. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 eliminated the pass-through requirement in the new TANF program. States may pass some or all child support payments to families receiving TANF, but any support paid to families must be paid out of the state’s share of collections. As of 2003, 28 states had eliminated the pass-through and exclusion for child support collections.2 The majority of states continuing to pass through child support have maintained the $50 pass-through and the excluded amount, but a few states allow families on TANF to keep higher amounts of child support (Roberts and Jordan 2004).

Eliminating the child support pass-through is seen as a disincentive for noncustodial parents of children on welfare to participate in the formal child support system. Since support paid through that system yields little or no additional income for their children, many of those parents prefer to make informal contributions (Sorensen and Lerman 1998). Research suggests that many noncustodial fathers make noncash contributions, because those contributions allow them to meet their children’s needs more directly. Evidence also indicates that child support enforcement discourages some fathers from working in the formal sector and increases informal work activity (Waller and Plotnick 2001). Informal agreements, however, put the custodial parent at risk of noncompliance with TANF requirements. Informal payments are likely to be smaller and are made at the discretion of the noncustodial parent, leaving the custodial parent little means to pursue nonpayment (Turetsky 2000).

The treatment of child support payments for TANF recipients may change with the reauthorization of the 1996 legislation. H.R. 4, the Personal Responsibility, Work, and Family Promotion Act of 2003, was passed by the House on February 13, 2003. The bill would encourage states to give the custodial parent a larger portion of the child support payment ($100 or $50 plus the pass-through allowed by the state as of December 31, 2001, whichever is greater) by waiving the federal government’s share of any child support collections that are passed on to the family. On October 3, 2003, the Senate Committee on Finance reported a version of the bill that would waive the federal share of child support passed on to TANF families—up to $400 per month in the case of a family with one child, and up to $600 per month in the case of a family with two or more children.

Proponents of these proposals believe that it would provide an incentive for more absent parents to make payments, because less of their payment would be counted against the TANF benefit. Proponents also believe that more custodial parents would seek CSE services if the custodial parent kept an increased portion of the child support payment. There is some evidence to support this position. Sorenson and Halpern (1999) found that the $50 pass-through program increased the likelihood of receiving child support. For example, of the never-married mothers on TANF, the likelihood of receiving child support increased by 4.5 percent under a pass-through program. In addition, Wisconsin received a federal waiver that allowed a full pass-through of child support collections to TANF recipients on an experimental basis. Reports of the experiment show that the full pass-through encourages recipients to cooperate with establishing paternity and results in collecting higher amounts of child support (Meyer and Cancian 2002).

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