Purpose

• Update provisions related to income withholding for state child support enforcement (IVD/IV-D) and fees. The bill aims to adjust who pays certain fees, introduce new fees, and make technical corrections to Minnesota law governing how these fees are assessed, collected, and distributed to support the child support program and counties.

Main Provisions

• Notification when IVD services continue without ongoing public assistance

  • If a recipient stops receiving assistance from state programs (IVA/IVE foster care or medical assistance), the public authority must notify the recipient within five working days that IVD services will continue unless told otherwise. The notice must explain the implications of continuing IVD services, the available services, fees, cost recovery fees, and how those fees are distributed.

• Annual federal collections fee for some cases

  • For individuals who never received assistance under a state program funded under title IVA and for whom the public authority has collected at least $550 of support, the authority must impose an annual federal collections fee of $35 per case in which services are provided. This fee is taken from the support collected on behalf of the individual but not from the first $550.

• Cost recovery fee when full IVD services are provided to an obligee

  • If the public authority fully provides IVD services to an obligee who has applied for those services (with written notice), a cost recovery fee of 2% of the amount collected must be charged. This 2% fee is taken from the collected support before it is disbursed to the obligee.
  • This fee does not apply to an obligee who is currently receiving assistance under IVA/IVE foster care or medical assistance, or who has received such assistance until they have not received it for 24 consecutive months.

• Cost recovery fee for obligor or obligee applying for services (monthly)

  • For both obligor or obligee who apply for IVD services, a 2% cost recovery fee of the monthly court-ordered child support and maintenance can be charged. It may be collected through income withholding and other enforcement tools.

• Fees for tax intercepts and overdue amounts

  • Fees from state and federal tax agencies for collecting overdue support must be charged to the person receiving the services.
  • The public authority must assess a $25 fee to the obligee not receiving public assistance for each successful federal tax interception, withheld before funds are released, and deposited in the general fund.

• Treatment and use of collected fees

  • Federal collections fees and cost recovery fees collected are considered child support program income under federal rules and deposited into a special revenue fund account.
  • The commissioner of human services may elect to recover costs using either actual costs or standardized costs.
  • The rules on fee amounts are designed to align with federal law requirements and do not override those requirements.

• Creation and use of funds

  • The commissioner can establish a special revenue fund to receive these fees.
  • The nonfederal share of cost recovery fee revenue is distributed as follows:
  • About half goes to the child support system special revenue account to support state administration and the automated system.
  • Additional portions are used to administer the fees.
  • Remaining funds go to counties to support their child support enforcement programs.
  • The nonfederal share of federal collections fees is distributed to counties to support their enforcement programs.
  • Counties receive quarterly distributions using a methodology specified in statute. Counties must reinvest these funds in the child support enforcement program and should not reduce their own funding because of these distributions.

Significant Changes to Existing Law

• Introduction of a 2% cost recovery fee for full IVD services provided to applicants (with exceptions as noted).
• Introduction of a 2% cost recovery fee on the monthly court-ordered support for obligor/obligee when applying for IVD services.
• New $35 annual federal collections fee for certain cases where no prior IVA assistance was received and $550 or more has been collected.
• Updated notification requirements about continuing IVD services after loss of public assistance.
• Creation and use of dedicated special revenue funds for these fees, with prescribed distribution formulas to the state child support program and counties.
• Clarification that fees are treated as child support program income under federal law and deposited in designated funds.
• Authority for the commissioner to choose between actual and standardized cost recovery methods.

Implementation and Oversight

• Administered by the public authority responsible for child support enforcement and the Minnesota Department of Human Services (Children, Youth and Families).
• The commissioner has discretion on cost recovery cost methods (actual vs standardized).
• Revenue distributions to counties follow a defined methodology and quarterly timelines.
• Counties are required to reinvest the funds into the child support enforcement program.

Impact on Individuals

• Some recipients may face new or higher fees (2% cost recovery, federal collections fee, and a $25 tax interception fee in certain cases).
• Recipients will receive advance notice about continuing IVD services and must be informed of associated costs and policies.
• Funds collected are increasingly directed to support the state child support system and local counties’ enforcement efforts.

Summary of Key Concepts

• IVD/IV-D services (income withholding for child support)
• Public authority for child support enforcement
• Obligee (recipient of support)
• Obligor (payer of support)
• Cost recovery fee (2%)
• Federal collections fee ($35/year for certain cases)
• Title IVA / Title IVE (foster care and related programs)
• Foster care and medical assistance
• Income withholding and other enforcement tools
• Federal tax interception
• Special revenue fund
• County funding for child support enforcement
• CFR 45 304.50 (federal rule reference)

Relevant Terms - IVD services, IV-D program - Title IVA, Title IVE - public authority, child support enforcement - obligee, obligor - cost recovery fee, federal collections fee - income withholding, enforcement remedies - foster care, medical assistance - federal tax interception - special revenue fund - child support system, counties - nonfederal share, federal collections fees - 518A.84 subdivision 11 (funding methodology) - actual costs, standardized costs - CFR 45 304.50