SF4245

Purpose

To modify how fees are charged for IV-D child support enforcement services, clarify how fee revenue is used and distributed, and make technical corrections to the law.

Key Provisions

• Notification when IVD services continue or change
  • If a recipient is no longer receiving assistance (such as foster care, medical assistance, or other Title IV-A programs), the public authority must notify them within five working days about whether IVD services will continue and explain fees, services, and distribution policies.
• Fees for people who never received assistance
  • For individuals who never received assistance and for whom at least $550 in support has been collected, the public authority must impose an annual federal collections fee of $35 per case in which IVD services are furnished. This fee comes from the support collected, but not from the first $550.
• Cost recovery fee for full IVD services
  • When an obligee receives full IVD services after written notice, the public authority must charge a cost recovery fee of 2% of the amount collected. This 2% is deducted from the amount of child support and maintenance before it is disbursed to the obligee. It does not apply to an obligee currently receiving Title IVA IVE foster care or medical assistance or to those who previously received such assistance until they have gone 24 consecutive months without it.
• Cost recovery fee for applying for IVD services (obligor or obligee)
  • For an obligor or obligee who has applied for IVD services and receives written notice, in addition to the monthly court-ordered child support, the public authority may charge a 2% cost recovery fee on the monthly obligation. This fee can be collected through income withholding and other enforcement methods.
• Fees tied to tax intercepts and other collection actions
  • Fees charged by state and federal tax agencies for overdue support must be paid by the person receiving the services. For each successful federal tax interception, the public authority must assess a $25 fee to the non-assisted person, with the fee withheld before funds are released and deposited in the general fund.
• How fee revenue is treated
  • Federal collections fees (and cost recovery fees) are to be treated as “child support program income” under federal rules and deposited into a dedicated special revenue fund account.
• How the nonfederal share is used
  • The nonfederal share of the cost recovery fee revenue must be retained and distributed: half to the child support system special revenue account to support administration and the automated system, plus additional amounts for administering the fees, with the remainder to counties to aid county enforcement programs.
  • The nonfederal share of federal collections fees must also be distributed to the counties to support their child support enforcement programs.
• County distribution and reinvestment
  • Counties receive quarterly distributions using the specified methodology. The funds must be reinvested in the child support enforcement program, and counties may not reduce their own funding by the amount distributed.
• Special revenue fund
  • The commissioner of human services is authorized to establish a special revenue fund to receive the federal collections fees and cost recovery fees.
• Federal law alignment
  • The bill’s fee limits do not apply if they conflict with federal law governing funds for Title IVA and Title IVD programs.

Financial and Administrative Changes

• Creation of dedicated accounts and funds
  • Establishment of a special revenue fund to hold federal collections fees and cost recovery fees.
• New revenue streams and allocation
  • Federal collections fees (for cases with full IVD services) and cost recovery fees (2% on monthly obligations or amounts collected) become new revenue sources.
• Distribution to counties
  • Both the nonfederal share of cost recovery fees and the nonfederal share of federal collections fees are distributed to counties to support and fund their child support enforcement programs, following a specified methodology. Counties must reinvest these funds in their programs and cannot use them to replace existing funding.
• Administrative oversight
  • The commissioner of human services will determine whether costs are recovered based on actual or standardized costs and will oversee quarterly distribution and fund management.

Impact on Parties

• Recipients (obliges and nonassistance recipients)
  • Some recipients may face new or higher fees (e.g., 2% cost recovery on amounts collected or monthly obligations, and a $25 federal tax intercept fee for non-assisted individuals).
  • Those currently receiving Title IVA/IVE foster care or medical assistance are generally exempt from certain fees for up to 24 months after leaving assistance.
• Obligor and obligee duties
  • Obligor and obligee may see a 2% fee added to monthly support obligations and may see deductions occur before funds are disbursed.
• Counties
  • Counties receive additional funding to support their enforcement programs and are tasked with reinvesting this funding into the child support system without reducing their own program funding.
• Public authorities
  • Public authorities gain new authority to impose and collect these fees and to manage the resulting revenues through dedicated funds.

Implementation and Oversight

• Timing and notices
  • Required five-working-day notification if IVD services continue or change, with clear explanation of implications and available services and fees.
• Federal and state alignment
  • Fees and distributions must adhere to federal law (Title IV-A, Title IV-D) and related CFR provisions; adjustments may be made to stay compliant.
• Reporting and accounting
  • Revenues from fees are to be accounted for as child support program income and deposited into the special revenue fund; quarterly distributions to counties must follow the specified methodology and accounting rules.

Relevant Terms - IVD services - IV-D - Title IVA, IVE - foster care - medical assistance - public authority - obligee - obligor - cost recovery fee - federal collections fee - nonfederal share - special revenue fund - child support enforcement program - income withholding - federal tax interception - 518A.81, 518A.84 subdivision 11 - CFR 45 304.50