Child Support and Related Social Policies
IRP Reports
Unlike most immigrant groups, refugees are eligible for a number of public assistance programs which trigger mandatory participation in the child support system under Title IV-D. This report divides refugees living in Wisconsin into geographical and ethnic groups and analyzes their economic status, location, and family characteristics. It examines interactions with the child support system for refugees as a whole, and by group. The analysis was completed using the Multi-Sample Person File (MSPF) 2010 database which merges CARES and KIDS (the Wisconsin child support enforcement data system) with data from the state Unemployment Insurance program.
Most refugees in Wisconsin are concentrated in urban areas of the state, particularly in Milwaukee County. The analysis finds that over 76 percent of minor children of refugees living in Wisconsin live with both of their parents and that an additional 5 percent have a deceased parent. These findings suggest that overall child support enforcement needs among the refugee population are comparatively low. However, outcomes could be improved with targeted efforts to establish paternity and set orders among urban refugee populations.
The Wisconsin Shares child care subsidy program provides assistance to low-income families who need help with child care in order to work. Families must meet both financial and nonfinancial eligibility criteria to participate and are expected to pay part of the cost of the child care in the form of copayments that are calculated according to a sliding scale. Currently, child and family support payments are not counted as income when determining financial eligibility or expected copayment amounts. A previous report considered the effects on program caseloads if child and family support income were considered as income for the purposes of eligibility determinations. The report also estimated the effects of these changes in caseloads on program costs. This report estimates a fuller fiscal effect of considering child and family support as income for purposes of calculating Wisconsin Shares copayment amounts, including the effect of families who would retain eligibility but experience higher copayments.
This analysis estimates the state and federal costs of a full pass-through policy (where both federal and state shares of child support are paid to families) compared to a partial pass-through policy (where only the state share of child support is paid to families) for the population of W-2 cases subject to child support pass-through policy in Wisconsin. The majority of the net cost to the federal government is attributable simply to the loss of the federal share of child support that is passed through. To the state, the full pass-through policy results in a net savings, largely because of lower child care subsidies for those in the full pass-through group.
This report is divided into two parts. Part 1, "A Comparison of Outcomes across Cohorts," corroborates the results from earlier reports showing positive effects of the full pass-through and disregard policy on paternity establishment among later entrants which persisted throughout the observation period, higher likelihood of child support payment in the early years of the program, and lower levels of W-2 use in the first year of the evaluation.
Part 2 of the report, "Outcomes among Caretaker Supplement Cases," examines outcomes for participants in Wisconsin’s Caretaker Supplement program (CTS), which provides assistance for parents receiving Supplemental Security Income benefits, and compares those outcomes to those for W-2 participants. We do find some differences between the two groups; CTS participants continue to receive CTS payments much longer than W-2 participants receive W-2 payments. In line with the requirements of the CTS program, the employment, earnings, and child care subsidy participation among this clientele is substantially lower than for those who participated in W-2. In both programs early entrants (many of whom transitioned from AFDC) remained in the programs (and on other assistance programs) longer than those coming in later. W-2 cases having a higher likelihood of child support payment and higher amounts paid, which is likely attributable to the higher earnings of the noncustodial fathers of W-2 children.
The Wisconsin Shares child care subsidy program provides assistance to low-income families who need help with child care in order to work. Families must meet both financial and nonfinancial eligibility criteria to participate. Currently, child and family support payments are not counted as income when determining financial eligibility. In this report, we assess the extent to which families participating in the child care subsidy program would be disqualified were support income considered in calculating eligibility and benefit levels.
To examine the effect of counting child support as income in child care subsidy calculations, data were drawn from CARES, Wisconsin’s public assistance information system, and from KIDS, the child support information system. All cases that participated in Wisconsin Shares between March 2000 and the end of 2005 were selected from CARES. A total of 130,110 cases had an eligibility determination during this time period. Wisconsin Shares applicants have an eligibility determination at initial entry and then again every six months. Participants are also required to update their income information any time it changes, so the interval between eligibility determinations could be less than six months.
This report examines the experiences of the American Indian population served by Wisconsin's W-2 program. While participation in W-2 among American Indians in the state is a small percentage of the total, the study examines this subgroup of the population within its unique context of demographics, socioeconomic status, and different regulatory jurisdictions (e.g., tribal courts). The report describes study findings concerning American Indians' participation in public-assistance programs, child support payments, paternity establishment, and earnings in the years after entry into the W-2 program using administrative data to examine the effects of child support pass-through and disregard policies of the CSDE on the American Indian population on W-2.
This difference-in-difference evaluation makes use of the opportunity provided by the end of the child support pass-through experiment to assess the changes in outcomes for custodial and noncustodial parents associated with the full pass-through and disregard policy. The analysis compared the differences in outcome means between the group consistently receiving the full pass-through and the group that formerly received a partial pass-through, but began to receive the full pass-through as of July 2002, for the year prior to the policy change (July 2001-June 2002) and the two years after the policy change. The report posted here examines differences between the year prior and the year from July 2003 – June 2004. The authors found that the difference in difference was consistently larger for those in the group formerly receiving the partial pass-through but that only the difference arising from the mechanical effect of the change to full pass-through on child support received was statistically significant.
Wisconsin’s policy providing a full child support pass-through and disregard of child support payments in calculating eligibility offers a new source of income for W-2 families. It also requires that both custodial and noncustodial parents comply with new rules. This report investigates the effects of both changes, as well as how participants perceive the trade-offs. The researchers reviewed child support policy documents, and in three counties conducted short interviews with local child support administrators and longer ethnographic interviews with a stratified sample of 42 women. The interviews covered family transitions, work history, and changing sources of formal and informal income in an effort to determine how child support income and child support enforcement policies affect economic well-being and family structure.
The authors consider a variety of policy approaches to the question of what to do with child support payments paid by a noncustodial parent on behalf of a family receiving public benefits. The report includes an analysis of the variation in pass-through/disregard policy over different periods in different states to evaluate the relationship between the disregard and pass-through level and such outcomes as paternity establishment and child support collections. The results show that higher child support disregards are associated with increased paternity establishment, while a pass-through without a disregard is less likely to yield the same benefits as a pass-through with a disregard.
The notion that arrears have a deterrent effect on child support payments has been raised repeatedly in the qualitative literature, but there have only been limited efforts to examine this quantitatively. This report examines the relationship between child support arrearages owed to the state and subsequent compliance with ongoing support obligations. The author uses a framework that recognizes that the determinants of compliance differ for employed and nonemployed fathers and attempts to disentangle the effects of overall arrearages from the effects of having an obligation to pay birth-related costs (known as lying-in costs).
The Caretaker Supplement (CTS) of the CSDE, which began in 1997, provides a cash benefit to parents who are receiving SSI payments and raising minor children in the State of Wisconsin. In January 2004, almost 6,000 SSI parents were receiving benefits for 12,300 children. With data drawn from state administrative records, the Survey of Wisconsin Works Families, and focus groups, this report employs quantitative and qualitative methodologies to gain a deeper understanding of CTS and its role in the economic well-being of families headed by parents with disabilities.
We found that, overall, participants were appreciative of the CTS program, especially in comparison to W-2. However, participants described in detail the use of many community resources (e.g., food pantries and used clothing stores) to make ends meet and stated that CTS payments were not enough. Some participants described problems with CTS such as confusion about the workings of the program and complaints about interaction with caseworkers. Only a minority of the participants received child support and those who did reported receiving insubstantial amounts.
The federal government has strongly promoted increased use and enforcement of medical support orders. This report seeks to answer the question: What proportion of low-income noncustodial parents has access to affordable health insurance from which their children might benefit? The researchers find that some children covered by the Wisconsin Medicaid program have noncustodial parents not known to that program who have health insurance, and that savings would be possible if those carriers could be identified and billed. In addition, it is likely that some children not on Medicaid and with no insurance coverage could receive coverage as a result of this kind of data match.
Recent reforms have aimed to "make work pay." The Earned Income Tax Credit (EITC) has been dramatically expanded in the last decade. The AFDC program, which included an entitlement to cash assistance, has been replaced by TANF, which provides time-limited payments and which generally requires work. Wisconsin’s TANF program, W-2, has been associated with declines in the receipt of public assistance (see Chapter 3) and increases in mother’s earnings (see Chapter 4). In this chapter we consider whether the program has led to improvements in overall economic well-being for its participants.
Virtually all observers believe the existing welfare system needs to be changed. Conservatives believe that AFDC destroys initiative and discourages work and marriage. Liberals argue that it offers inadequate benefits while robbing individuals of their dignity and self-esteem. Recipients feel degraded and trapped by a system that offers no reward for their efforts to be self-sufficient and that gives them little control over their lives. Taxpayers criticize spending what appears to be an increasing amount on a program from which they see few positive results.
Specific proposals to change welfare, however, inevitably arouse passion and rhetoric. Arriving at a consensus regarding solutions has proven extraordinarily difficult. These briefings will not provide such solutions. Rather, IRP and FIS are endeavoring to introduce a more reflective discussion into an all-too-often passionate and partisan debate. They do so by drawing upon the better research in given areas and upon the experiences of practitioners struggling with the challenges of doing reform on a daily basis.
IRP Discussion Papers
The Earned Income Tax Credit (EITC) is the largest cash or near-cash U.S. antipoverty program, but a large fraction of its payments appear to go to taxpayers who are not eligible for the credit. The most recent study of EITC noncompliance (for tax year 1999) found that of the $31.3 billion claimed in EITC, between $8.5 and $9.9 billion, or 27.0 to 31.7 percent of the total, exceeded the amount to which taxpayers were eligible. Of these errors, the most common problem was that EITC-qualifying children failed to live for at least six months with the taxpayer claiming the child. Tax returns do not collect information on the location of children during the year. Consequently, absent additional information, the Internal Revenue Service (IRS) has little ability to scrutinize EITC qualifying-child claims before the EITC is paid out. In this paper we use a unique dataset containing federal individual income tax returns, Unemployment Insurance data, state child support data, and data collected by hand from Wisconsin courthouses to examine EITC compliance and participation. We find, as expected, that the recipients of child support awards make most EITC claims. Nevertheless, a substantial number of claims are made by adults listed as the court-ordered payor, or are made by adults not identified in the state case registry.
Households with children in the United States are more likely to experience food insecurity than households with no children. However, households with children are less likely to experience hunger. This finding suggests that food insecure households with children may be drawing on personal and/or public resources to help them avoid hunger. In this paper, we use data from the April Food Security Supplements of the Current Population Survey to evaluate whether federal food assistance programs play a role in helping households with children avoid hunger. This paper studies whether one personal resource, household employment circumstances, helps households with children avoid hunger. We find that by using better income data from the March Demographic Survey and by using a 10-item adult-referenced food security scale that excludes child-referenced items, we are able to control for the observed differences between households with and without children under 5 years old. For households with school-age children, only participation in the National School Lunch Program appears able to explain why they are able to avoid hunger.
Although teen childbearing connotes negative outcomes for the mothers, we know little about the effects on the children of being born to a teen mother. We explore some of the possible health and medical care consequences associated with having a teenage mother. The 1987 National Medical Expenditure Survey (NMES), a nationally representative data set, is the data source we use to examine the consequences teen parenting might have on additional health and medical care costs for the children. We find that the children of teenage mothers tend to be in poorer health than the children of older mothers, and that a greater proportion of their medical expenses are borne by other members of society.
The central elements in President Clinton's proposal to reform the welfare system are: increasing the earned income tax credit, improving the child support system, educating and training the poor, and limiting the amount of time people can receive assistance. The authors commend the first two components of the president's plan but question the likely effectiveness of the last two: even with the education, training, and child care programs that the president has proposed, few welfare recipients will be able to command wages that would lift them out of poverty, and successful education and training programs would cost more than the government appears willing to spend. The authors recommend that the president consider giving tax credits to, and subsidizing the wages paid by, employers who hire low-wage workers and assist young people and poor families to save for future opportunities. In their view, poverty will not be alleviated by only getting tough on welfare recipients; instead, labor market interventions should be adopted so as to expand opportunities for low-wage, low-skilled workers.
The child support system has been increasing its efforts to make health insurance a part of child support awards. Data from the 1990 Current Population Survey Child Support Supplement show that 40 percent of child support awards require that the noncustodial parent provide health insurance to his children. However, in a third of the cases, the noncustodial parents are not providing coverage. This matters because 16 percent of the children whose noncustodial fathers are not providing the coverage they were ordered to provide are not insured through other sources (e.g., Medicaid). But expecting noncustodial parents to be the sole providers of health insurance for their children may be unwise. Data from Wisconsin suggest that fewer than half (and probably less than 10 percent) of uninsured children in custodial-parent families have a noncustodial parent who can afford to provide health insurance for them. Health care reform is needed so that all children will have coverage, whether it is provided by their parents or the government.
This paper examines the participation rate of the earned income tax credit (EITC). After examining a variety of data sources on EITC recipiency, my preferred estimates indicate that 80 to 86 percent of eligible taxpayers received the credit in 1990, which implies fewer than 2.1 million taxpayers entitled to the credit failed to receive it. I then examine factors correlated with nonparticipation and find that many are consistent with rational or voluntary explanations for nonparticipation. The paper concludes with a discussion of the labor market incentives and antipoverty effectiveness of the credit before and after the August 1993 expansion of the EITC.
This study tests whether female-headed households' child care choices differ because the mechanisms leading to female-headship status are distinct, thereby differentially conditioning the set of child care choices and mothers' abilities to pay. Differences are found among divorced, separated, and never-married mothers' child care arrangements. Differences in child care demand are generated by variations in each type of female-headed household's economic constraints, kin networks, and by each type of unmarried mother's work history. It is concluded that the stated policy aim of economic self-sufficiency for female-headed families will remain elusive unless public policies for these families assess potential transfers of income from noncustodial fathers and coresident kin.
In recent years, child care has become an important public policy issue, owing primarily to the significant increase in the labor force participation of women with young children. Consequently, a number of bills containing provisions to subsidize child care have been introduced into Congress. As a first step in considering possible behavioral responses to proposed child care subsidies, this paper presents estimates of a structural model in which a mother simultaneously chooses her labor status, whether or not to purchase market child care, and the quality of care purchased. The authors find that among mothers who work and purchase child care, an increase in wages does not result in a proportional increase in child care expenditures, and that a mother will not change the number of hours she works at her job, regardless of any child care subsidies or an increase in wages. Estimation results are also used to simulate the effects of two proposed changes in the federal child care tax credit. The simulation results indicate that the primary effect of a more generous credit is to allow working mothers who use free care to purchase higher quality market care.
In this paper I use data from the Current Population Survey and Survey of Income and Program Participation to calculate the number of taxpayers eligible for the earned income tax credit (EITC) in 1979 and 1984. Comparing this population to the number of taxpayers receiving the EITC indicates that participation rates appear to be very high and may exceed 100 percent. Several explanations for this result are examined, and evidence is presented suggesting widespread noncompliance with the EJTC. Incorporating this evidence changes the participation rate calculation to about 70 percent. The effects of the 1986 tax reform are examined by calculating participation rates for 1988. The rate was about 75 percent, which implies that roughly 2.1 million EITC-eligible taxpayers failed to receive the credit. The paper concludes with simulations of the effect current law and proposed changes in the EITC have on the poverty gap.
Members of minority groups in the United States are more likely to be poor than are white non-Hispanic citizens. This is the case both before and after they have received transfers from federal, state, and local governments. They are eligible for the same social insurance programs and transfer programs as the rest of the population. This paper reviews the research that has been carried out on the circumstances of minority groups, examines the extent to which minority groups make use of social insurance and welfare programs, and assesses the effectiveness of these programs in enabling members of minority groups to escape poverty. The paper closes with a list of major research questions that have not yet been addressed and suggests new research approaches.
The goal of recent federal welfare legislation has been to reduce the poverty of welfare families by requiring the mothers of children dependent on public assistance to work and the fathers of these children to pay child support. The authors address the potential of such legislation by examining the earnings capacity of single AFDC mothers and the child-support-paying capacity of the fathers of their children. The authors find that under the optimistic assumptions of (1) full-time, full-year employment of the mother, (2) complete compliance with child support orders by the father, and (3) limited need to pay for child care, five-sixths of these mothers would have income in excess of their AFDC grants plus food stamps. When these assumptions are relaxed, however, we find that work and child support alone are insufficient to raise the incomes of nearly two in three families above the level of AFDC benefits plus food stamps.