The Wisconsin Bureau of Child Support, the Racine County Child Support Department, and the Institute for Research on Poverty (IRP) implemented a child support debt reduction demonstration program, Families Forward, in Racine County. The program aimed to reduce child support debt (arrears owed by noncustodial parents) while increasing child support payments.
The nature of the problem
Nationwide, the arrears owed by noncustodial parents on their unpaid child support have grown dramatically, increasing by 300 percent and reaching $92 billion nationwide by FY 2002. Only a small fraction of this amount is currently collected.
A variety of factors contribute to the accumulation of child support debt. For instance, it is frequently difficult to obtain order adjustments when the noncustodial parent is incarcerated, so arrears accumulate and interest of 12 percent per year is charged on unpaid support. In other cases, arrears stem from noncustodial parents’ limited ability to pay because they are unemployed or under-employed or from parents’ limited willingness to pay support.
The accumulation of child support arrears implies both a lack of resources provided to custodial families (in the case of arrears owed to families) and a lack of reimbursement to the state for expenses that could, at least in principle, be recovered. At the same time, the persistence of arrears creates its own problems—including difficulty meeting state performance targets; effort expended on enforcement efforts; hardships for low-income fathers, many of whom have little realistic prospects for paying off their debts; hardships for the families that struggle to make ends meet without regular child support payments; and secondary impacts on payments, because arrears may drive some fathers into the underground economy to avoid enforcement.
Concern about the scope of arrears and the associated negative consequences has led to increasing interest in arrears-forgiveness policies. The issue was discussed in a 2003 IRP Special Report by Judi Bartfeld, Forgiveness of State-Owed Child Support Arrears (February 2003).
A Wisconsin experiment in arrears forgiveness
Arrears owed by noncustodial parents in Wisconsin are substantial. The Wisconsin Bureau of Child Support in 2000 reported a total child support debt of over $2.3 billion, of which 54.4 percent was owed to custodial families and 45.6 percent was owed to the state or counties.
Racine County has been selected as the site for implementing an arrears forgiveness demonstration program in Wisconsin. In Racine County, approximately 80 percent of all open child support cases under Section IV-D have arrears. On average, noncustodial parents owe over $4,000 to custodial parents and over $2,000 to the State. Racine County’s profile of noncustodial IV-D parents is very similar to that of other large urban areas whose low-income populations contribute disproportionately to high levels of child support debt and bear the brunt of child support enforcement actions. The findings of the demonstration program and evaluation should thus inform the larger national debate over how to address this problem, in addition to informing Wisconsin child support policy.
The Families Forward program: How does it work?
Families Forward is a 2-year study to see if giving extra credit to parents who pay child support leads to more child support for the family. Its key feature is an agreement that permits the forgiveness of child support debt owed by the noncustodial parent to the custodial parent and/or to the State of Wisconsin (arrears on former AFDC cases) if the noncustodial parent makes regular child support payments.
Noncustodial parents who owe child support and enroll in the Families Forward Program must make regular child support payments. Every dollar that participating noncustodial parents pay in support will reduce their unpaid debt by an extra $0.50 or $1.00. Nor will parents be charged interest on arrears while they are participating in the program. Unpaid interest will be reduced first, then other unpaid balances. If a noncustodial parent fails to make any payments during two consecutive calendar quarters, the case will be disqualified from the program, the interest charging will resume, and no additional arrears forgiveness will be granted for payments made.
Evaluating the program’s effectiveness
The Institute for Research on Poverty has overseen the collection of data during the demonstration and produced an analysis of the impact of the program. The current version of the paper that describes the Families Forward program impact using administrative data and information provided by the participants through surveys and focus groups is titled, “Reducing Child Support Debt and Its Consequences: Can Forgiveness Benefit All?“