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F I S C A L I M P A C T R E P O R T

SPONSOR Rawson

DATE TYPED 02/05/05 HB

SHORT TITLE Deduct Child Support from Workers’ Comp

SB 366

ANALYST Weber

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Human Services Department (HSD)

Attorney General Office (AGO)

Workers’Compensation

SUMMARY

Synopsis of Bill

SB 366 amends the Workers' Compensation Act to direct the Workers’ Compensation Admini-

stration to notify the human services department of the names of all persons determined to be

eligible for workers’ compensation benefits so that child support can be deducted or withheld

from the Workers' Compensation payments.

Significant Issues

The Human Services Department comments.

SB 366 amends the Workers' Compensation Act to direct the Workers’ Compensation Admini-

stration to notify the human services department of the names of persons determined to be eligi-

ble for workers’ compensation benefits. The Administration will then deduct and withhold child

support from Workers' Compensation payments. New Section I. requires the Human Services

Department (HSD) to reimburse the Administration for administrative costs incurred in perform-

ing the child support enforcement. Significant issues by section are:

Senate Bill 366 -- Page 2

1. Section D(1) would permit the deduction of child support from workers’ compensation

amounts “specified in an agreement between the person the and child support enforcement divi-

sion.” The Child Support Enforcement Division (CSED) is only authorized to enforce child sup-

port pursuant to judgments (as specified in section D(2) of this amendment). CSED does not en-

force “agreements” between parties, unless such agreements are included in a court-ordered

judgment or order for support. The sentence should rather state, “specified in a judgment or or-

der for support entered against an obligor by a court in a case enforced by the department pursu-

ant to Title IV-D of the Social Security Act.” Any “agreement” (or “stipulation”) would have to

be filed in District Court in order for CSED to enforce, and this situation would probably be in-

cluded in Section D(2). In addition, the correct citation is U.S. Social Security Act, 42 U.S.C.

Section 651 et seq., and should be cited throughout the amendment in all references to the U.S.

Social Security Act.

2. Section I states that the Human Services Department shall reimburse the Workers Compensa-

tion Administration for administrative costs associated with child support enforcement deduc-

tions. The amendment implies that there would be an automated data match between agencies,

and that there would need to be a joint powers agreement to memorialize an agreement on costs

of reimbursement. There is no appropriation contained in the amendment and yet the Child Sup-

port Enforcement Division would incur costs both to set-up the match on its side and to pay

Workers’ Compensation for its administrative costs.

3. Section H should be deleted, as redundant.

PERFORMANCE IMPLICATIONS

The following performance measures for Human Services could be affected.

•

Amount of child support collected, in millions of dollars.

•

Percent of current support owed that is collected.

Workers’ Compensation income withholding to pay child support is currently done manually.

An automated match would likely increase child support collections by an unknown amount.

FISCAL IMPLICATIONS

Human Services anticipates CSED would incur costs to set up a data match with Workers’ Com-

pensation and to reimburse Workers’ Compensation for their administrative costs (as described

above in detail).

The CSED computer system (Child Support Enforcement System or CSES) would need some

programming changes in order to have the existing interface capability function automatically.

The cost to do this is estimated at a one-time appropriation of $400,000.00. The other adminis-

trative costs of sending notices out to non-custodial parents can be absorbed in the existing

budget and with existing staff.

Senate Bill 366 -- Page 3

TECHNICAL ISSUES

The Attorney General adds.

Section E is unclear. It appears that the intent of Section E is that the amount withheld is consid-

ered payment of workers' compensation to the claimant and may intend that the amount paid to

HSD is to satisfy claimant's child support obligations. However, SB 366 does not expressly pro-

vide that HSD will pay the amount withheld to the person to whom the child support is owed

Also, Human Services indicates the federal citation is incorrect.

New Section (D)(1) contains a citation of the U. S. Social Security Act (“454(20)(B)(i)”) that

does not exist. The citation should be U.S. Social Security Act (42 U.S.C. Section 651 et seq.).

MW/sb