Connie Erickson, Research Analyst David Niss, Attorney JoAnn K. Jones, Secretary Published by: Montana Legislative Council Representative Larry Hal Grinde, Presiding Officer Montana Legislative Services Division Robert B. Person, Executive Director David D. Bohyer, Director, Office of Research and Policy Analysis Gregory J. Petesch, Director, Legal Services
In July of 1997, the Legislative Council authorized the establishment ofan interim subcommittee to explore options for operating welfare and childsupport enforcement programs from state-only revenue sources and withoutfederal funding. This action was in response to the difficult passage ofSenate Bill No. 374 (Chapter 552, Laws of 1997) during the 1997 legislativesession and the possibility that those provisions of SB 374 that sunseton July 1, 1999, will not be reenacted. Absent the reenactment of thoseprovisions, Montana will be in jeopardy of losing its federal TemporaryAssistance to Needy Families block grant as well as the federal fundingfor its child support enforcement program.
SUBCOMMITTEE ACTIVITIESThe Subcommittee on Welfare and Child Support Enforcement Programs wasappointed in the fall of 1997. From December 1997 through April 1998, theSubcommittee held four meetings and two public hearings, including a METNETvideo conference. The dates of the meetings and hearings were as follows: December 9, 1997 Subcommittee Meeting January 27, 1998 Subcommittee Meeting March 11, 1998 Subcommittee Meeting April 21, 1998 Public Hearing April 21, 1998 Public Hearing (METNET) April 22, 1998 Subcommittee Meeting
At its first meeting, the Subcommittee chose to focus its efforts onexploring the options for operating a welfare program and a child supportenforcement program with state funding only. While there was an intereston the part of some members of the Subcommittee in reviewing the progressof welfare reform in Montana and evaluating the effectiveness of the FamiliesAchieving Independence in Montana program, the Subcommittee as a wholefelt that such a review was beyond the purview of the Subcommittee. Therefore,the Subcommittee chose to concentrate its efforts on proposing optionsfor the 1999 Legislature to consider should the Legislature not renew thecontested provisions of Senate Bill No. 374.
SUBCOMMITTEE RECOMMENDATIONSAs a result of its deliberations, the Subcommittee voted to support liftingthe termination date on the contested provisions of Senate Bill No. 374from which the state had not received an exemption. Those contested provisionsare: . the establishment of a Directory of New Hires; . the automated access to financial records; . the requirement to provide Social Security numbers on applications fora professional or occupational license, a marriage license, and a commercialdriver's license; and . the requirement to provide Social Security numbers on a decree of dissolution,a child support order, and a paternity determination.
The Subcommittee also decided to present to the 1999 Legislature theoptions for state-funded welfare and child support enforcement programsbut without a recommendation.
SUBCOMMITTEECHARGEWELFAREREFORMDuring the 1992 presidential campaign, then-presidential candidate BillClinton promised to “end welfare as we know it”. His goal was to completelyrestructure the federal welfare system that President Franklin D. Roosevelthad established during the early days of the New Deal. Over the years,federal public assistance programs underwent changes and alterations, butthe basic premise remained the same: to guarantee a level of financialsupport for all eligible low-income mothers and children. However, thisfederal guarantee spawned expensive governmental welfare programs thatworked at cross-purposes to the traditional values of self- sufficiency,personal responsibility, family stability, and caring for people in need.All across the nation, state governments became increasingly frustratedwith the federal welfare system and began to overhaul their own state programsto better reflect their vision of what a welfare system can and shoulddo. Montana was one of those states.
On July 23, 1993, Governor Marc Racicot issued Executive Order No. 12-93,directing a welfare advisory council to “develop a comprehensive welfarereform proposal that will meet the basic needs of recipients and providethe resources necessary to maximize each recipient's opportunity to achieveindependence of the welfare system”. Over the next 8 months, this 23-memberadvisory council, representing a bipartisan cross-section of Montanansinterested in welfare reform, met, heard testimony, received recommendations,analyzed data, reviewed similar initiatives in other states, synthesizedall of the information received, and produced a final report for gubernatorialapproval in February 1994. The final report recommended a comprehensivewelfare reform initiative to replace the Aid to Families with DependentChildren program (AFDC). This initiative was called Families AchievingIndependence in Montana or FAIM.
Because the FAIM program was changing the focus of the AFDC programfrom check-receiving to achieving self-sufficiency, Montana had to requestwaivers from the federal government before implementation could occur.The formal request was made in April 1994. In addition, implementationrequired statutory changes that had to be made by the Legislature in 1995.On April 15, 1995, Governor Racicot signed the Montana Welfare Reform Actinto law. A few days later, the necessary federal approvals were receivedfrom the Department of Health and Human Services. FAIM implementation beganon February 1, 1996, in nine Montana counties. By March 1997, all 56 countieswere participating.
At the federal level, both President Clinton and the U.S. Congress werealso wrestling with welfare reform. Two efforts put forth by the Republican-controlledCongress, House Resolution No. 2491 and House Resolution No. 4, were vetoedby the President in late 1995. Efforts to reform welfare appeared lostat the beginning of 1996, but through the efforts of the National Governors'Association, prospects for reform were revitalized. After extensive maneuveringby both Republicans and Democrats with respect to changes in Medicaid,a compromise was finally reached. On August 22, 1996, President Clintonsigned the Personal Responsibility and Work Opportunity ReconciliationAct (PRWORA). This new law ends the 61-year-old guarantee of providingwelfare checks to all eligible low- income mothers and children. Federalfunding will be sent to the states in the form of block grants called TemporaryAssistance to Needy Families (TANF). States, in turn, will have almostcomplete control over eligibility and benefits, although some federal restrictionswill apply: a work requirement for welfare recipients and a time limitfor receiving benefits.
However, while giving states greater flexibility in designing publicassistance programs, PRWORA also imposed significant requirements on statechild support enforcement programs. Receipt of the federal block grantfunds for state welfare and state child support enforcement programs wascontingent upon states enacting these federal child support enforcementrequirements. Failure to enact the requirements would result in the forfeitureof the federal funds. SENATEBILL NO. 374 In order to comply with the federal requirements and to access the federalwelfare and child support enforcement funds, Senator Don Hargrove introducedSenate Bill No. 374 during the 1997 legislative session. SB 374 was metwith a maelstrom of controversy. Many legislators expressed incredulitythat the U.S. Congress supported these provisions. They accused Congressof extortion in forcing states to enact these provisions in order to receivefederal funds. They decried the intrusiveness into people's personal livesand the utter disregard for state sovereignty. The requirements that somelegislators found particularly onerous were: . a centralized registry of new hire information, including requiring employersto report new hires to the state within 20 days of the date of hire, thatwill upload the information to a federal data base; . collection of Social Security numbers on applications for professionaland occupational licenses and commercial driver's licenses; on death certificates;and on records pertaining to divorce decrees, child custody, and paternitydeterminations; . elimination of a jury trial for paternity cases, even if state constitutionalchange is required; and . matching databases of delinquent parents against customer records of financialinstitutions.
The bill was heavily amended as it made its tortuous route throughthe Montana Legislature. After three free conference committee reports,four failed second reading votes in the House of Representatives, and muchdebate and acrimony, SB 374 was the final bill passed by the Legislaturein the last hours of the last day of the 55th legislative session. However,the final bill contained several new provisions. The legislators wantedto ensure that if Congress or the courts were to amend, repeal, or invalidateany or all of the most controversial requirements, then the correspondingsections of SB 374 would almost immediately terminate. In the meantime,the Department of Public Health and Human Services (DPHHS) was directedto seek exemptions from the requirements. As a spur to the DPHHS, a terminationdate of July 1, 1999, was added to the bill.
Immediately following the conclusion of the legislative session, GovernorMarc Racicot wrote to the members of the Montana congressional delegationinforming them of the controversial enactment of SB 374 and asking theirsupport in repealing or softening the specific areas of controversy, easingthe exemption criteria, and uncoupling compliance from federal funding.The Governor also expressed concern over two additional requirements thatwere then being debated by Congress: to include Social Security numberson applications for personal driver's licenses and for all recreationallicenses. (These additional requirements were ultimately included in theBalanced Budget Act of 1997 and will have to be enacted by Montana in 1999.)
Senators Max Baucus and Conrad Burns agreed in the spring of 1998 tointroduce legislation that would delete information from the database maintainedby the National Directory of New Hires 24 months after the date of entryfor people found to be delinquent in their child support payments and 12months after the date of entry for everyone else. In addition, the newlegislation will impose penalties for any misuse of the information containedin the National Directory of New Hires.1
In 1999, the Montana Legislature will again face most of the controversialprovisions of SB 374. Moreover, there will be the addition of the new requirements.SUBCOMMITTEEON WELFARE ANDCHILD SUPPORT ENFORCEMENT PROGRAMS
At the May 19, 1997, meeting of the Legislative Council, Speaker ofthe House John Mercer proposed an interim study to examine child supportand welfare issues. His concern centered on the possibility that the provisionsin SB 374 would terminate in 1999 and not be renewed by the 1999 Legislature.If that were to happen, Montana's welfare system and child support enforcementprogram would have to be completely revamped to accommodate the loss offederal funds. Speaker Mercer suggested that a welfare reform study should: (1) examine the waiver systemthat allows states to design welfare systems that differ from the federalrequirements; (2) evaluate the FAIM programto determine its effectiveness; (3) review the compliance requirementsof the federal government, especially in the area of child support enforcement; (4) monitor congressional changesto welfare reform and child support enforcement; and (5) prepare for the possibilitythat the provisions of SB 374 will not be reenacted by the 56th Legislature.
On July 19, 1997, the Legislative Council authorized the establishmentof a subcommittee to prepare proposals for implementing a state publicassistance program and for maintaining and increasing the effectivenessof the state child support enforcement system in the absence of federalfunding.ISSUESAND OPTIONS
ISSUES
During its deliberations, the Subcommittee on Welfare and Child SupportEnforcement Programs identified certain issues that it felt were importantfor the Subcommittee to pursue in the furtherance of its objectives. TheSubcommittee believed that it was important for the 1999 Legislature toknow exactly how much federal funding would be lost to the state if theLegislature chose not to renew the provisions of SB 374. In addition, theSubcommittee was adamant that the Department of Public Health and HumanServices (DPHHS) vigorously pursue the request for exemptions as directedby the 1997 Legislature. The Subcommittee was also concerned about theimpacts of its deliberations on Montana's Indian population. In Montana,roughly 20% of the welfare caseload is American Indian. Indian reservationsare economically depressed, and employment opportunities are scarce. Indianwelfare recipients would be particularly hard-hit by the loss of federalTANF funds to the state.
Funding One of the most cogent arguments used by the proponents in securingthe passage of SB 374 was the potential loss of federal funding, not onlyfor child support enforcement but for welfare reform as well. TANF fundingforms the backbone of the FAIM program. This potential loss of fundingwas the incentive for the creation of the Subcommittee. For this reason,one of the first tasks of the Subcommittee was to request a report fromthe Legislative Fiscal Division, summarizing the state and federal resourcesappropriated by the 1997 Legislature to the DPHHS for the state welfareand child support enforcement programs.
The Child Support Enforcement Division (CSED) of the DPHHS is operatingwith a budget of about $20 million for the 1999 biennium. Of that amount,roughly 66% is funded from federal special revenues, 33.5% from state specialrevenues, and .04% from the state general fund (one-time only appropriationfor a special project with the Missoula District Court). Of the state specialrevenue amount, approximately 43% is federal incentive payments receivedby the state based on the amount of child support collected by CSED. Therefore,of the total $20 million, about $16 million comes from the federal government.These federal funds not only support the activities of the CSED, they arealso used to support the SEARCHS computer system in the Operations andTechnology Division (OTD) and to provide indirect support to OTD and theDirector's Office. Should the loss of federal funding occur because ofthe Legislature's failure to enact the required child support enforcementprovisions in 1999, the CSED will see its budget decrease by about 80%.
Montana's welfare program, FAIM, is funded from both state and federalfunds. The federal funds come from the TANF block grant while the statefunds come from the general fund and reimbursement from nonassumed counties.2The PRWORA requires that states annually maintain fiscal effort ata minimum of 80% of the level expended by the state for welfare in fiscalyear 1994. The Montana Legislature appropriated funds at approximately83% of the required maintenance of effort. The TANF block grant and thestate funds pay for cash assistance; client support and other services;and administration, operations, and case management services. For the 1999biennium, total funding for the welfare program amounts to $121.4 million,excluding child-care funding. Of this amount, $89.3 million, or 73.5%,comes from the federal TANF block grant. Loss of federal funding for theFAIM program would result in a welfare program funded at about 26.5% ofthe current budget.
Exemptions Even though the federal government imposed numerous regulations onthe states regarding child support enforcement, the government also allowedstates to seek exemptions from the regulations if the state could demonstratethat the regulations would not increase the effectiveness and efficiencyof the state child support enforcement program or if the state alreadyhas a procedure that may not fully comply with the regulation, but thestate can show that implementation of the regulation would not increasethe effectiveness or efficiency of the program. The DPHHS was directedby the Legislature to seek exemptions from the federal government for fourof the child support enforcement provisions imposed by the federal welfarereform law. The four provisions were: . a centralized registry of new hire information, including requiring employersto report new hires to the state within 20 days of the date of hire, thatwill upload the information to a federal database;
. collection of Social Security numbers on applications for professionaland occupational licenses and commercial driver's licenses; on death certificates;and on records pertaining to divorce decrees, child custody, and paternityacknowledgments; . elimination of a jury trial for paternity cases, even if state constitutionalchange is required; and . matching databases of delinquent parents against customer records of financialinstitutions.
In September of 1997, the DPHHS submitted its first request for anexemption. It was for the requirement that a state enact a law that excludesthe right to a jury trial in actions to establish paternity. Montana basedits request on the fact that in Montana, paternity proceedings are consideredequity actions, and there is no general right to a jury trial in equityactions. Montana already excluded jury trials in paternity proceedingsand, therefore, there was no need for Montana to enact a specific law expresslyexcluding paternity jury trials. The federal Department of Health and HumanServices agreed, and the exemption was granted.
In January and February of 1998, the DPHHS submitted its next two requests.These requests pertained to the requirement for Social Security numbers(SSN) on death certificates; for SSNs on applications for professionaland occupational licenses, driver's licenses, recreational licenses, andmarriage licenses; and for SSNs on records relating to divorce decrees,support orders, and paternity determinations. The federal Department ofHealth and Human Services accepted the state's argument that the recordingof the SSN on a death certificate would not enhance the effectiveness andefficiency of the child support enforcement program and so granted theexemption. The DPHHS based its request for the other exemptions relatingto the use of SSNs mainly on the issue of conflicting federal laws. TheDPHHS argued that another provision of the Social Security Act that wasnot amended by PRWORA specifically states the instances in which it ispermissible to ask for SSNs and protects their confidentiality. However,the federal Department of Health and Human Services denied the requestfor exemption, stating that the congressional directives to require SSNson certain license applications and records were clear and unambiguousand the Department of Health and Human Services had no authority to ignorethose directives.
The final provisions that the Legislature directed the DPHHS to seekexemptions from are the new hire registry and the financial institutiondata match. The DPHHS has requested the exemptions, but expects to receivedenials on both requests because the new hire registry and the financialinstitution data match have proven to be extremely effective tools in childsupport enforcement.
WelfareReform and Indian Tribes When Montana implemented its FAIM program in February of 1996, theIndian tribes, with the exception of the Fort Belknap Tribe, were giventhe option of participating in the state program or continuing to operatepublic assistance grant programs under the then existent guidelines. TheFort Belknap Tribe was not given the option because it did not operateits own tribal Job Opportunities and Basic Skills (JOBS) program. The remainingsix tribes chose to continue to operate under the old rules. However, withthe passage of PRWORA in August of 1996, all Indian tribes were requiredto actively participate in some type of welfare reform by operating theirown TANF program or by participating in the state TANF program. In Montana,the six remaining tribes chose to participate in the state program. However,because FAIM/TANF had been crafted with minimal tribal input due to federalrequirements and short federal time limits, the program was not well understood,and many Indian public assistance recipients were ill- prepared for thenew requirements. In order to mitigate these problems, the 1997 Legislatureappropriated money to the DPHHS to be used to assist Indian tribes to transitionto FAIM. Since that time, the DPHHS has made a concerted effort to workwith tribes in creating individualized tribal welfare reform plans.
Indian tribes are also eligible to apply for funding to administer andoperate their own TANF programs. Tribes must submit a 3-year tribal TANFplan to the Secretary of the federal Department of Health and Human Servicesfor review and approval. The Secretary establishes for each tribe thatsubmits a plan the minimum work participation requirements, appropriatetime limits for the receipt of welfare-related services, and the penaltiesagainst individuals that are consistent with the economic conditions andresources available to each tribe and with the purposes of the law. Oncean Indian tribe has an approved TANF plan, the tribe will receive fundingequal to the federal share of all expenditures (other than child care)by the state under the AFDC program and the JOBS program for fiscal year1994 for Indian families residing in the service area identified in thetribal TANF plan. The formula used to determine tribal TANF funding includesonly federal payments; the state match of those federal dollars would notbe guaranteed but would be determined legislatively. This means that atribe operating its own TANF program may have less money to help its membersthan if the tribe remained on the state TANF program. Once a tribe hasan approved TANF plan, the state's TANF grant will be reduced, and thestate is no longer obligated to expend state funds on behalf of eligiblefamilies served by the tribal TANF program. However, states can contributestate funds to a tribe with an approved TANF plan for certain allowableactivities and for families that meet the state's TANF income and resourcestandards. A state's contribution to an Indian tribe for use in the tribe'sTANF program should be spelled out in an negotiated agreement between thestate and the tribe if not determined statutorily.
In Montana, the Confederated Salish and Kootenai Tribes are currentlyworking on a tribal TANF plan with an implementation date of January 1999.Other Montana tribes have discussed the possibility of operating theirown TANF programs but have opted to stay with the state program becauseof the loss of funding that could occur. If the Confederated Salish andKootenai are successful in having their plan approved and in negotiatinga contribution from the state, other tribes may follow suit.
If Montana chooses to forego the federal TANF block grant and to fullyfund a welfare program with state money, it would probably be in a tribe'sbest interests to operate its own TANF program, contract with another tribeto operate its program, or form a consortium of tribes to operate a singleprogram.OPTIONS After reviewing the issues of funding, exemptions, and tribal welfare reform,the Subcommittee, on January 27, 1998, directed the Child Support EnforcementDivision (CSED) and the Child and Family Services Division of the DPHHSto report back to the Subcommittee on the possible impacts of the lossof federal funding and with recommendations as to how their respectivedivisions would operate without federal funding for child support enforcementand public assistance. On March 11, 1998, Hank Hudson and Mary Ann Wellbankof the DPHHS presented their findings to the Subcommittee.
Optionsfor Operating FAIM Without Federal TANF Funds (Appendix A)
The Child and Family Services Division (CFSD) began its presentationby identifying the variable factors to be considered in the design of theoptions. The variable factors were divided into three areas: program design,policy, and miscellaneous. Under “program design”, the factors addressedwere whether the program would be administered at the state level, thelocal level, a state/local mix, or by an entirely new approach that wouldprovide assistance through other avenues. Under “policy”, the factors includedtime limits, income and resource standards, full-family sanctions, a “familycap”, earned income disregards, one- time employment related-payments,monthly work participation requirements, and two-parent eligibility. Under“miscellaneous”, the factors considered were staffing levels, staffingreclassification, waiting lists, supplementary expenditures, and employmentand training contracts.
After considering all of the variable factors and weighing those againstthe amount of money that would be available for the public assistance program,the CFSD created two options. Option One called for a statewideprogram. Caseloads would be reduced immediately by using a 2-year timelimit applied retroactively. Tougher income and resource limits and broadersanctions would be imposed. FAIM and Protective Services staff would belaid off, child care would be reduced, and emergency services and employmentand training programs would be eliminated. The result would be a $289 amonth cash benefit, regardless of family size, for no longer than 2 years.There would be no funding available for caseload increases. OptionTwo presented by the CFSD resembled Option One except that it assumesthat tribes would leave the state program due to lack of funding and wouldinstead file separate tribal family assistance plans. All of the otherchanges in Option One remain in Option Two.The result would be an increase in the monthly cash benefit, from $289to $366. The consequences of implementing either Option Oneor Option Two are outlined in Table One on page 15.
The CFSD also looked at the impacts on other programs if either of theoptions were implemented by the state. For example, when cash benefitsare reduced, food stamp, subsidized housing, and other assistance benefitsnot directly tied to welfare reform increase. Some Medicaid recipientscould lose their coverage because medically needy eligibility is tied tothe cash assistance payment level.
The removal of millions of dollars in federal funds would have a significantimpact on the state's economy. The Department of Labor and Industry projectsthat for every federal dollar eliminated from the state, 75 cents to $1.00additional spending power is lost to local economies. The impact wouldbe even greater with the lay-off of state and county public assistanceemployees and employees of organizations that contracted to provide employmenttraining to public assistance recipients.
There would also be a significant impact on federally subsidized housingavailability. Currently, 31% of Montana's federally subsidized housingunits are occupied by FAIM participants. Tenants pay 30% of their incometowards rent. Tenant rent payments currently average between $115 and $160per month. If a tenant's income level is reduced to zero or below a minimumlevel based on family size, the tenant has to pay only the minimum housingexpense of $25 per month; the housing program must make up the difference.As more funds are spent per housing unit by the housing program, the numberof units decreases.
The CFSD was also concerned that by refusing the TANF block grant, thestate would be dismantling a successful welfare reform project that hasmade considerable strides towards helping families achieve long-term independencefrom the welfare system. The result would be the creation of a permanentclass of poor people with little or no hope for a brighter future.
TABLE ONE
Elements of Options One and Two and Their Consequences
ELEMENTS
CONSEQUENCES
Statewide public assistance program.
Statewide consistency.
Two-year time limit applied retroactively.
Many households would begin losing benefits immediately;state may face litigation over retroactive applicability; without retroactivity,necessary savings would not be achieved for several years.
Reduction of resource standards; counting ofcertain excluded assets.
Asset transfers and fraud could increase; communityresources could be overwhelmed by extremely poor families.
Full family sanction.
Child protective service and domestic violencereferrals might increase; noncompliant teens might be expelled from theirhomes.
Reduction of staff.
Termination costs (sick leave, vacation pay,etc.) would need to be paid; could reduce or eliminate first-year savings.
Elimination of supplementary expenditures.
Abuse and neglect tolerance levels would needto be raised, endangering children's health and safety; no money availablein case of economic recession that results in increased caseloads; lossof emergency assistance could result in more families in crisis.
Discontinuance of all employment and trainingactivities.
More difficult for families to leave welfarerolls quickly and permanently; greater recidivism.
Uniform benefit level.
Families could have less money for basic needs;larger families could experience increased levels of poverty.
Optionsfor Operating a Child Support Enforcement Program Without Federal Funds(Appendix B) The Child Support Enforcement Division (CSED) began its presentationwith a discussion of all of the different “tools” that CSED uses in locatingnoncustodial parents who owe child support and in collecting child support.These tools include such things as applications for Social Security benefits,federal employment records, military records, Federal Case Registry, FederalNew Hire Registry, Federal Parent Locate Service, Internal Revenue Servicerecords, and interfaces with other state child support enforcement programs.CSED reported that most if not all of these tools would not be availablefor use by CSED if federal funding for the program is rejected. CSED alsoprovided information showing the impacts of the loss of federal fundingon its work. (See charts on pages 19 and 20.) Without federal funding,CSED would have approximately $3.4 million with which to operate its services.CSED would have to lower its FAIM caseload by 53% and its non-FAIM caseloadby 93%. The loss of the federal funding would also mean the loss of muchof the ability of CSED to collect child support due to the loss of theabove-mentioned tools. As a result, CSED would be spending $3.4 milliondollars to collect $2.8 million.
CSED designed four options for operating a child support enforcementprogram without federal funds. Option One would focus onthe broad social goals of a child support enforcement program: establishingpaternities in out-of-wedlock births, recouping taxpayer investment inpublic assistance programs, and moving families off of the welfare system.CSED would be absorbed into the Child and Family Services Division, andits caseload would consist only of FAIM cases. The only service that wouldbe available to non-FAIM cases would be in-hospital paternity acknowledgment.Services to FAIM families would include establishment of paternity, establishmentof support and health insurance orders, and the enforcement of orders.Non-FAIM families would have to rely on the court system or on privatecollection agencies to enforce and collect child support.
Option Two would continue the current level of servicesto both FAIM and non- FAIM families. However, non-FAIM families would haveto pay the full cost of the services. This would mean up-front applicationfees, advance fees for paternity establishment, fees for establishmentof support orders, fees for enforcement actions, and a percentage of eachcollection when enforcement begins. Under this option, CSED would remaina division within the DPHHS.
Option Three is the most drastic because it would discontinuethe child support enforcement program entirely. Both FAIM and non-FAIMfamilies would be forced to rely on the court system or on private collectionagencies for enforcing and collecting child support.
Option Four would mix and match child support enforcementservices with the available funding. CSED would identify its top prioritiesas far its services are concerned. Once priorities were established, thesepriorities would be matched to the available funding, resulting in thedesign of the program. This option would take longer to implement and mayinvolve some up-front costs. However, it may be the best option in termsof serving the needs of all custodial parents seeking help with child support.
PUBLIC HEARINGS
In order to allow the public ample opportunity to comment on the optionsdesigned by the DPHHS, the Subcommittee took public testimony on threedifferent occasions. The first opportunity was at the Subcommittee's meetingon March 11 in Helena. The Subcommittee also held a public hearing on Tuesday,April 21 at the State Capitol in Helena and a METNET video conference lateron that same day. The METNET conference involved sites in 12 locations,including Helena. In addition to the public hearings, the Subcommitteemailed out over 200 copies of the options, posted the options on the LegislativeServices Division website, publicized the availability of the options andthe public hearings through the legislative INTERIM newsletter andpress releases, and accepted written testimony on the options. The Subcommitteewanted to ensure that people had the opportunity to know what the Subcommitteewas doing and to comment on the options before they were presented to the1999 Legislature.
The Subcommittee received more than 70 comments, oral and written frompeople all across Montana. The comments came from FAIM recipients; custodialparents; representatives of charitable organizations, churches, Indiantribes, and advocacy groups; labor unions; county commissioners and welfaredirectors; social workers; the Bureau of Indian Affairs; the League ofWomen Voters; legislators; day-care providers; Montana Legal Services;and private citizens. Their testimony was overwhelmingly in oppositionto the state refusing the federal dollars for welfare and for child supportenforcement. Many of those testifying stated that it was the responsibilityof society to care for those unable to care for themselves. To turn backfederal welfare funds would be to abdicate that responsibility. Othersexpressed concern that those who would suffer the most, if any of the proposedoptions were adopted, were children. County commissioners worried thatcounties would bear the brunt of the virtual shutdown of the FAIM program,and counties would not have enough resources to care for those people whowould need assistance. Women's advocates were concerned that a lack ofwelfare and child support enforcement resources would make it almost impossiblefor women and their children to leave abusive relationships. More peoplewould sink into poverty, and the resulting stress and tensions could resultin more cases of spousal and child abuse. Private citizens who testifiedstated that they were federal taxpayers and they wanted their tax dollarsto come back to Montana and not go to another state.
Only one witness testified in favor of refusing the federal money. Thiswitness believed that the child support enforcement provisions that wereimposed on the states by PRWORA were unconstitutional and would most likelynot survive a court challenge. This witness also felt that the Subcommitteehad strayed from its original charge to find a way to operate a state welfareprogram without federal assistance and was moving towards a recommendationthat the provisions of SB 374 should not be allowed to sunset. He urgedthe Subcommittee to adopt a plan for the funding of a welfare program anda child support enforcement program if federal funds are refused by theLegislature.
SUBCOMMITTEERECOMMENDATIONS
Following the public hearings and the METNET video conference, the Subcommitteemet on April 22 to review the public comments and to formulate its recommendationsfor the 1999 Legislature. Representatives of Senator Max Baucus and SenatorConrad Burns reported on the senators' efforts to address some of the concernsof the Legislature regarding the child support enforcement provisions ofPRWORA. Senators Baucus and Burns are proposing legislation that wouldcap the amount of time that information could be kept in the database ofthe federal New Hire Registry. The proposal is to keep the informationin the database for 2 years for people who are delinquent in paying childsupport and 1 year for everyone else. The proposal would also impose penaltieson anyone who would use or disclose the information from the Registry inany unauthorized manner.
Mary Ann Wellbank of the Child Support Enforcement Division (CSED) presentedthe Subcommittee with a draft of a bill that the CSED hopes to have introducedin the 1999 legislative session. The bill lifts the termination date onthe contested provisions of SB 374 and implements the new child supportenforcement provisions passed by Congress in 1997. The Subcommittee enteredinto a debate over the merits of combining both issues in one bill. SomeSubcommittee members believed that the issues should be presented in twobills so that legislators could distinguish between the old and the newprovisions. Other members supported a single bill because both the sunsettedand the new provisions needed to be passed, and the same arguments wouldbe made both for and against. Therefore, it would be easier to do it allat one time. The Subcommittee reached no conclusion as to whether thereshould be one bill or two bills. However, the Subcommittee wanted the finalreport to indicate that further revisions to the child support enforcementstatutes would be forthcoming and would have to be passed by the Legislaturein order for the state to continue receiving federal funding.
The Subcommittee then entered into a lengthy discussion about what recommendationsit would make to the 1999 Legislature. Senator Lynch offered the firstmotion: MOVED: That the Subcommittee support lifting thetermination date on the contested provisions of Senate Bill No. 374. Thosecontested provisions are: . the establishment of a Directory of New Hires; . the automated access to financial records; . the requirement to provide Social Security numbers on applications fora professional or occupational license, a marriage license, and a commercialdriver's license; and . the requirement to provide Social Security numbers on a decree of dissolutionor a child support order.
Senator Lynch was concerned that any of the options presented by theDPHHS would, if adopted, have devastating effects on families in Montana,and, therefore, Montana should not jeopardize the receipt of federal fundsfor welfare and child support enforcement. Representative Arnott offeredan amendment to Senator Lynch's motion that would require the Legislatureto appropriate enough money for TANF. She felt this had not been done inthe last legislative session, and it was imperative that the Legislatureaddress this funding shortfall. Rep. Arnott's amendment failed on a voteof seven to one. Senator Lynch's original motion was then approved on avote of six to two.
Senator Lynch then offered a second motion: MOVED: That the Subcommittee support the new childsupport enforcement requirements if failure to implement them would jeopardizefederal funding. The new requirements are for Social Security numbers onapplications for all driver's licenses and for all recreational licenses.
Senator Lynch believed that if the new requirements would pose the sameproblems as the SB 374 requirements, then the Subcommittee should supporttheir implementation as well. Some members of the Subcommittee argued thatthe original charge of the Subcommittee only addressed SB 374, and theSubcommittee should stick with that charge. Other members felt that thenew requirements had not been sufficiently studied to the extent necessaryto take a position. Senator Hargrove moved that Senator Lynch's motionbe tabled; Senator Hargrove's motion passed on a vote of seven to one.
Representative Arnott offered the following motion: MOVED: That the Subcommittee request an AttorneyGeneral (AG) opinion on whether or not the CSED's modification of court-orderedchild support payments is a violation of the separation of powers doctrineof the Montana Constitution.
Representative Arnott based her motion on a preliminary order issuedon March 2 by District Court Judge Marc Buyske. Judge Buyske's order preventsthe CSED from changing court-ordered child support payments. He believesthat the state law giving the CSED the authority to change the paymentswithout court approval is unconstitutional because it violates the MontanaConstitution's separation of government powers. There was Subcommitteediscussion as to who could request an AG opinion. After the Subcommitteedetermined that the request could only be made by the Speaker of the Houseor the President of the Senate, Representative Arnott withdrew her motion.(Judge Buyske has since ruled the state law unconstitutional but has stayedhis order to allow the current system to remain in operation while thecase is appealed to the Montana Supreme Court.)
Representative Arnott offered a second motion: MOVED: That the Subcommittee initiate action toimplement a program in Montana similar to the Mississippi “Faith and Families”program.
“Faith and Families” is a welfare reform partnership between state governmentand the Mississippi faith community. It does not replace the state TANFprogram, and state funding does not go to the churches for the program.It is strictly a voluntary program; churches are not required to participate.It was implemented through the Mississippi governor's office and did notrequire any legislation. A similar program has been implemented in Texas,and Representative Arnott believed Montana could benefit from such a program.Senator Swysgood ruled that the motion was out of order because it wasbeyond the scope of the Subcommittee's charge. He suggested that RepresentativeArnott present the proposal to the Oversight Committee on Children andFamilies as that was a more appropriate forum.
The Subcommittee then spent some time discussing the substance of thefinal report. It was decided that the final report should be a simple andstraightforward analysis of the Subcommittee's work, emphasizing the followingelements: . the Subcommittee's recommendation;
. the options identified by DPHHS; . the amount of time set aside for public testimony; and . the amount and nature of the public testimony received.
CONCLUSION
Senate Bill No. 374 generated intense and often acrimonious debate duringthe final days of the 1997 legislative session. When the dust had settledand the bill had finally passed, the contentious issues were settled, butonly for 2 years. The Legislature held out hope that Congress, the courts,or the federal Department of Health and Human Services would address itsconcerns either through legislation, legal decisions, or exemptions. However,the legislative leadership also recognized that the contentious issuesthat so divided the 1997 Legislature would most likely have to be revisitedby the 1999 Legislature and it would be in everyone's best interest toexplore the options available should the 1999 Legislature choose not toreenact the contested provisions of SB 374 and, as a result, forego federalfunding for welfare and child support enforcement.
When the Subcommittee on Welfare and Child Support Enforcement Programsmet, for the first time, on December 9, 1997, the members were acutelyaware of the task ahead of them. That task was made even more importantbecause Congress had imposed additional requirements that the Subcommitteeknew would not meet with the favor of many legislators, and the DPHHS hadbeen granted two exemptions but had been denied others.
The Subcommittee recognized that the loss of federal funding would havea major impact on Montana's welfare reform efforts as well as on the state'sability to assist custodial parents in collecting child support payments.The Subcommittee also understood that the opposition to SB 374 in 1997will in all likelihood be present in 1999 when DPHHS offers its legislationto lift the termination date on the remaining contested provisions andto enact the new provisions. Therefore, it was incumbent upon the Subcommitteeto make it known to the Legislature exactly what options were availableshould the Legislature reject the federal funding by its failure to enactthe child support enforcement provisions. In its recommendations to theLegislature, the Subcommittee chose not to endorse any of the options.Rather, the Subcommittee chose simply to present these options to the Legislatureso that individual legislators will have additional information to helpthem in their decisionmaking. At the same time, as a result of its reviewof the options and the overwhelming opposition to the options by thosewho testified, the Subcommittee recommends that the 1999 Montana Legislaturelift the termination date on the contested provisions of Senate Bill No.374.
MINORITY REPORT
Thefollowing minority report was submitted by Representative Peggy Arnott,a member of the Subcommittee on Welfare and Child Support Enforcement Programs.ISSUES
The following issues should be reviewed carefully before accepting therecommendation of the Subcommittee to lift the termination date on thecontested provisions of Senate Bill No. 374:
. The welfarecaseload has been reported to have been reduced by 40%, but there has notbeen a reduction of one staff person. Generally, people want a reductionin welfare, but as the welfare caseload declines, there should also bea proportionate reduction in the number of employees working with the welfarepopulation.
. A 1998report by the Legislative Audit Division found that the accounting systemof the Department of Public Health and Human Services (DPHHS) was plaguedwith inaccuracies and was unreliable, resulting in accounting mistakesinvolving $85 million. Accountability certainly ought to be a prioritybefore the Legislature appropriates millions of dollars to a system withthose sorts of identified problems.
. The Indiantribes are eligible to apply for funding to administer and operate theirown TANF programs. Although there has been a reported 40% decline in welfarecases, the tribal welfare roles have remained largely static. Providingthe opportunity for tribes to operate their own programs might be the bestalternative for state and tribal concerns.
. Mandatescome with the acceptance of federal money. The DPHHS admits that its federalfunding may already be in jeopardy if there is a shortfall because theLegislature did not appropriate the full amount for the maintenance ofeffort that is necessary for federal backfill in case of a shortfall.
. The ChildSupport Enforcement Division is admittedly in violation of federal mandatesbecause it is not collecting in three counties due to Judge Marc Buyske'sjudicial challenge to the DPHHS's authority to change court- ordered childsupport payments. This places the DPHHS in jeopardy of losing its federalfunding.
. By recommendingthat the Legislature lift the termination date in Senate Bill No. 374,the Subcommittee has abdicated its charge to evaluate the FAIM program'seffectiveness, to review the compliance requirements of the federal government,and to prepare for the possibility that the contested provisions of SB374 may not be reenacted by the 56th Legislature.
OPTIONS
The following options should be considered by the 56th Legislature priorto the reconsideration of Senate Bill No. 374:
. Limitfull welfare benefits to 1 year. For each year thereafter that a familyis on welfare, there will be a corresponding decrease in benefits.
. Allowlocal governments to operate their own welfare programs.
. Requirea 1-year waiting period before people moving into Montana from anotherstate are eligible for welfare.
. Encourageand assist tribal governments to operate their own welfare programs.
MATERIALS AVAILABLE
The following materials relevant to the Subcommittee on Welfare andChild Support Enforcement Programs are available from the Legislative ServicesDivision.
Minutesof Meetings and Public Hearings Minutes are available for the following Subcommittee meetings and publichearings: December 9, 1997 January 27, 1998 March 11, 1998 April 21-22, 1998
StaffReports and Memoranda Study Plan for the Subcommittee on Welfare andChild Support Enforcement Programs, December 1997, Connie Erickson,Legislative Services Division
State Legal Obligation to Provide Child Supportand Public Assistance Programs, January 6, 1998, David S. Niss, LegislativeServices Division
Fiscal Summary for the Child Support EnforcementDivision and the Public Assistance Program of the Montana Department ofPublic Health and Human Services, 1999 Biennium, January 20, 1998,Pam Joehler and Joanne Chance, Legislative Fiscal Division
TANF Funding for Indian Tribes, March 4, 1998,Connie Erickson, Legislative Services Division
South Dakota TANF Program, March 11, 1998,Connie Erickson, Legislative Services Division
Other Reports and Memoranda A Chronology of Alberta Welfare Reform, AlbertaMinistry of Family and Social Services
Background and History of DPHHS-CSED ProposedFee Regulations, April 21, 1998, Mary Ann Wellbank, Department of PublicHealth and Human Services
Constitutionality of Durational Residency Requirementsfor Public Assistance and Other Welfare Benefits, October 1987, MaryK. McCue, Legislative Services Division
Faith & Families of Mississippi, March23, 1998, Office of the Governor, State of Mississippi
L55 8301cehc.
APPENDIX A
APPENDIX B
Footnote:11 Thelegislation was included in theChild Support Performance and Incentive Act (P.L. 105-200). The effectivedate is October 1, 2000. Footnote:22 Anonassumed county is a county that has not transferred its responsibilityfor providing public assistance and child protective services to the Departmentof Public Health and Human Services.
