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State-Collected Child Support Not Reaching Beneficiaries

Lawmakers on Capitol Hill want to know why nearly $660 million in child support payments collected by states in 2002 never reached the people for whom it was intended.

“This is a problem,” said Sen. Chuck Grassley (search), R-Iowa, chair of the Senate Finance Committee.

Grassley is backing a provision in the pending Senate version of the Welfare Reform Act (search) reauthorization bill that would hold states accountable for their undistributed child support funds.

He has also asked the General Accounting Office (search) to conduct an audit of the state enforcement program in an attempt to discover why kids aren't receiving the money collected on their behalf. 

“Studies have shown that single parents who leave welfare are three times more likely to return to welfare if they don’t get the child support they are owed,” Grassley told Foxnews.com.

Several states have recognized the problem and are taking steps to reduce the sums of money they are holding.

But those familiar with the state systems say clogged and largely unfeeling bureaucracies have not only rendered the systems ineffective in many states, but have forced custodial parents to play detective to get the payments owed to their children.

“It’s just outrageous,” said Geraldine Jensen, president of the Association for Children for Enforcement of Support (search). “If a bank behaved this way it would go out of business.”

The floating funds have also resulted in a lot of ill will. While the $660 million accounts for less than 5 percent of the total collected on average each year by the states, parents say the sum doesn’t matter when it means they are forced to pester the state for every nickel and dime.

“It’s a big hardship on the parents, but more importantly the children, they are the ones who ultimately pay,” said Maryland resident Kimberly Dawkins, who got involved with ACES after her son was born and she was forced to pursue his father for child support.

Dawkins blames inefficiency and a lack of urgency on behalf of the Maryland Department of Human Resources (search), which handles child support enforcement.

“It’s the mentality of the agency – it’s just not a priority,” she said. “But it can literally mean the difference between paying the mortgage and giving your child a decent meal at night."

According to Brian Shey, executive director of child support enforcement services for Maryland, which collected  $438 million in payments last year, the state is holding about $3 million in undistributed funds.

“We don’t want to hold this money at all,” said Norris West, a spokesman for the Maryland agency.

Officials say the reasons are complex — much of the money is sitting there legitimately, mostly due to the relocation of parents and failure to provide a forwarding address.

“On balance, almost all child support collected is distributed to the families within 48 hours —that’s the big picture here,” Shey said, noting that Maryland reduced its undistributed funds by $1 million from the previous year after intensifying searches for families who had moved and encouraging parents to get direct deposit for support checks.

States report that money may also be withheld for legal reasons, like when paternity or other disputes are being litigated. States also have an obligation to hold money temporarily when it comes from federal withholding taxes so that new spouses can lay claim to any of the return. Sometimes, checks or money orders come in that cannot be readily matched to existing cases.

“Sometimes there is a good reason, and sometimes there’s no good reason,” said Nick Young, a spokesman for the Virginia Child Enforcement Services (search), which was credited by ACES for bringing its own undistributed funds down from $15 million to $2 million over the last few years.

“The bottom line is we all put our minds to it,” he said. 

About $18,000 of the $5.4 million that moves through VCES on any given day is considered “bad, undistributed funds” because officials truly cannot figure out where the money belongs.

“If anything, we’ll send it back. I don’t want to keep it,” Young said.

Janece Keetch, spokeswoman for the Texas attorney general’s office, which handles enforcement in that state, said that in 1999 the state held $21 million. Finding that sum “unacceptable,” Texas embarked on streamlining the system and being more aggressive in tracking down custodial parents.

In doing so, she said, they brought that figure down to about $2 million – 0.7 percent of the total child payments that Texas collects.

“We’re aggressively working these cases because we do not want to hold the money,” Keetch said. “The battle cry is to get the money to the children where it belongs.”

But not everyone is convinced that every state is doing its best to ensure the money reaches its destination. The House, too, has included in its Welfare Reform Act reauthorization bill a provision that will require states to report their annual undistributed funds along with an explanation why the funds are being held and what is being done to get the payments moving in the right direction.

“Until we step up and try to get the states more concerned and focused on this issue, I don’t think there is a high level of confidence that it will be any different than it is today,” said Nick Gwyn, spokesman for Rep. Ben Cardin, D-Md.

“We need to start by figuring out how big the problem is, and what steps need to be taken to remedy it,” Gwyn said.

Richard Paige, a child support enforcement director with the Tennessee Department of Human Services, which had $14 million in undistributed funds out of $414 million in collected payments in the fiscal year ending in June, said his agency welcomes the government’s inquiries as the department tries to improve its system.

“There’s a lot of pressure at the national level to reduce the level of undistributed funds," Paige said. "We were going down that road already.”