Other Related Spending Plan Posts
The spending plan includes $344 million General Fund for the Department of Child Support Services (DCSS) in 2021‑22, an increase of $28 million (9 percent) relative to revised estimates for 2020‑21. In this section, we discuss the budget actions resulting in the overall funding increase and other budget changes.
Largely Reverses 2020‑21 Funding Reductions. At the start of the coronavirus disease 2019 public health emergency in the spring of 2020, the state anticipated significant decline in state revenue and an ensuing budget deficit. As a result, the 2020‑21 budget implemented a number of funding reductions across multiple state programs, including the child support program. However, given the better-than-expected revenue estimates in 2021‑22, the spending plan partially or fully restores funding levels for local child support agencies (LCSAs), local child support courts, and DCSS state operations, which we describe in detail below.
LCSAs. The spending plan provides an additional $19.1 million General Fund ($57.3 million total funds) for LCSA administration costs, which reflect a full reversal of LCSA funding reductions implemented in 2020‑21. The additional funding will be allocated to 29 LCSAs with the highest case-to-staffing ratios as of September 2020.
Local Child Support Courts. The spending plan increases funding for child support-related local court operations by $4.1 million General Fund ($12 million total funds), which is greater than the local court reduction implemented in 2020‑21 ($2.4 million General Fund [$7 million total funds] reduction). We understand that the additional funds primarily will be allocated across the Child Support Commissioner ($3.1 million General Fund) and Family Law Facilitator ($1 million General Fund) programs.
DCSS State Operations. The spending plan increases DCSS state operation funding levels by $4 million General Fund ($12 million total funds) on an ongoing basis relative to 2020‑21 funding levels. This amount is less than the DCSS funding reduction implemented in 2020‑21 ($5.9 million General Fund [$18 million total funds] reduction, not including local court funding reduction). The additional funds largely will be spent on information technology positions and system modifications.
Prioritize Distribution of Child Support Payments to Families Above Government. In March 2020, the Governor issued an executive order that prioritized the distribution of intercepted federal tax refunds to pay family owed child support debt first rather than government-owed welfare recoupment debt. While the executive order was set to expire on July 30, 2021, the spending plan includes language that permanently maintains the prioritization of directing federal tax offsets to families above the government. The administration estimates that this permanent change will result in an additional $16 million of federal tax offsets going to families per year and the state revenues decreasing by $8 million per year (with the federal government experiencing the remaining $8 million in foregone annual welfare recoupment dollars).
Cease Enforcement Activities for Uncollectible State-Owed Welfare Recoupment Debt. Under federal law, families receiving California Work Opportunity and Responsibility to Kids (CalWORKs) cash assistance or involved in the foster care system are required to open a child support case and sign over their rights to the majority of their child support payments to the state for reimbursement for the cost of providing CalWORKs or foster care. Specifically, the federal government requires states to intercept child support payments for CalWORKs and foster care families to reimburse the state, county, and federal government for the costs associated with providing CalWORKs cash assistance and foster care maintenance payments. (The state currently allows CalWORKs families to retain the first $50 of child support received each month, with the remaining amount of the child support payment going towards welfare recoupment.) To the extent that parents fall behind on making child support payments, they are still responsible for paying the full amount of past-due welfare recoupment obligation, which also accrues 10 percent per year interest. As of 2019‑20, the balance of past-due government-owed welfare recoupment debt totaled $6.8 billion.
In 2019‑20, the Legislature passed legislation to cease enforcement activities for government-owed welfare recoupment debt that is deemed uncollectible, to the extent allowable under federal law. (The enforcement of child support debt owed to families would remain the same under this legislation.) However, this legislation was vetoed with direction from the Governor to address the issue in the budget process. Ultimately, the spending plan includes this legislation and requires DCSS to adopt regulations defining what type of cases may be deemed uncollectible and thus unenforceable by LCSAs by July 1, 2024.
Other Budget Actions. The spending plan also includes the following program changes:
Conduct a Child Support Uncollectability Study. The spending plan provides $255,000 General Fund to conduct a study on what factors impact the collectability of past-due child support. This study will help the state determine what share of the total amount of government-owed welfare recoupment debt is uncollectible and for which uncollectible cases to cease enforcement activities. (While the Legislature approved resources for DCSS to conduct an uncollectability study, it did not approve DCSS’ January request to conduct a study on the appropriateness of the K-Factor in the child support guideline. The K-Factor refers to the cost of raising children or share of income families spend on their children, which is one of many variables used to determine the amount of a parent’s income that should be allocated for child support.)
Expand Allowance of Electronic Signature. The spending plan includes language that expands the use of electronic signature statewide by allowing all LCSAs to utilize electronic signature regardless of whether the local court electronically files documents.
Continue Suspension of Performance Incentive Funding Model. Since 2002‑03, the state has suspended the LCSA performance incentive model outlined in statute. As a part of the 2019‑20 LCSA funding methodology, the administration created a new performance incentive model. However, statute was not updated to reflect the new incentive model. The spending plan includes language that continues the suspension of the LCSA performance incentive model through the end of 2022‑23 while it reevaluates the funding and incentive model.
No Action on Proposal to Increase Low-Income Adjustment Threshold. The federal government requires the state’s formula for setting and modifying child support orders to take into consideration the basic subsistence level of need of the parent paying support. The low-income adjuster (LIA) in the state’s child support guideline is meant to provide the federally required adjustment to child support order for low-income parents. As a part of the 2021‑22 May Revision, the administration proposed to increase the LIA threshold in order to reflect recent state minimum wage increases, which has increased at a faster rate than inflation and the current annual adjustment to the LIA threshold. However, the Legislature did not act on the LIA threshold proposal. We understand that the upcoming review of the state’s child support guideline (expected to be released in January 2022) will include an assessment of the LIA threshold, which will further help the Legislature identify the necessary changes to the LIA threshold, if any.