Unemployment Insurance Bolsters Child Support Payments, But Future Remains Uncertain
For parents receiving child support, the best news they probably haven’t heard is called federal unemployment insurance. Those $600-a-week payments — which ended July 31 — have reached the pockets of people who lost jobs during the pandemic and kept child support checks flowing.
If federal unemployment checks don’t continue – and that seems to be the case for the moment, despite President Trump’s executive order on Saturday offering a $400-a-week extension – the drop could be swift, said Larry Desbien, director of the Colorado Division of Child Support Services “I think it could hit across the board — families at all income levels,” he said.
Child support is a lifeline for families across the United States. More than 15 million children, or one in five kids in the country — are supported at least in part by these payments, which totaled $28.8 billion in 2019. They raise many children out of poverty.
But some policies punish the families most in need. That’s because:
- Child support payments to the lowest-income families are diverted straight back to the government to repay public assistance they’ve received. Families in more than half the states receive none of the payment, and others get only about $50 to $100 of it. In 2019, more than $1 billion went back to government agencies.
- Harsh collection policies can send noncustodial parents into a vicious spiral of debt, with penalties like drivers’ license suspension making it harder for them get or keep a job.
Jessica Bartholow, a policy advocate for the California-based Western Center on Law & Poverty, thinks a lack of awareness about public assistance repayments led to what she sees as an oversight in the federal CARES Act. It allowed federal stimulus payments to be intercepted for child support debt, thus letting the money flow away from families who have received public assistance and back to the government.
“Congress incorrectly made the assumption that all the money goes to a custodial parent,” she said. “We believe Congress just didn’t understand that.”
“We had a whole bunch of households with children and elderly people and they did not get the stimulus,” she said.
The pandemic is highlighting the workings of the system — and revealing its snarls.
In Colorado, thanks to unemployment insurance, total child support payments actually rose since the pandemic began, Desbian said.
Like many states, it collects nearly two-thirds of child support payments straight out of the paychecks of parents who owe it. In April, as the pandemic created a wave of layoffs, those collections dropped from about $20 million a month to $18 million, Desbien said.
His colleagues in other state child support agencies reported similar drops in paycheck collections, he said.
But as more people began getting unemployment, “we’ve seen a substantial increase in intercepted unemployment benefits,” Desbien said. Colorado gained roughly $3 million in April.
“If Congress does not renew or come up with new legislation, I’m sure we’re going to see a decrease,” he said.
Others have concerns about child support in the pandemic.
“We’re actually quite worried about it,” said Anne Stuhldreher, director of the Financial Justice Project, an office of the city and county of San Francisco.
“In California, our child support policies are very punitive.” she said. “If a mother and child receive Medicaid or CalWORKs [the state’s welfare program] … they only receive the first $50 of child support. The rest goes to pay the government for public assistance. If the noncustodial parent or father cannot pay this, it spirals [out of control],” Stuhldreher said.
Fathers are penalized 10% interest, their assets can be taken, their credit rating is impacted, and their drivers’ license can be suspended, she said.
The impact is severe. Without a drivers’ license it’s hard to have a job, and without a good credit rating it’s hard to even rent an apartment, she said.
“We’ve heard from so many families just how hard these policies are. They dig parents and families in a hole that’s hard to get out of,” she said.
Stacie Poythress, who lives in Dallas, Texas, married a man from California six years ago. He’s been paying child support of $800 to $1,000 a month since they married. When he was 19, he had a relationship and fathered a child. But he lost his job soon after. His early inability to pay child support led to a debt of $38,000, of which $35,000 is interest owed, Poythress said. In March, he was furloughed from his job as a data engineer for a large hotel chain.
Poythress knows the challenges of raising a child singlehandedly. Her first marriage broke up 18 years ago when her son was very young.
“We never got child support from his father,” she said. The state couldn’t find him, she said
“I had to set up my life on my own. I was very stressed. My child was always the last one at day care to get picked up,” she said.
In the 2008 recession she lost her job as a TV station account executive and founded the nonprofit organization Single Parent Advocate to provide resources to single parents raising children.
In April, the organization surveyed 55 single parents in its North Texas network and found that 35 had experienced job loss or income reduction. They were struggling to pay rent, find a new place to live or make car and utility payments.
Jessica, a single mother in Atlanta who preferred not to use her last name, was divorced a year ago. In March, she bought a house. That same month, as the pandemic hit, her ex-husband lost his job, including the health insurance that covered the children. For two months, he made partial payments, and then the child support and alimony dried up completely. To deal with the situation and make sure she can make her house payments, she has cashed out her retirement account.
“We know that many people are unable to work and pay their bills,” said Heather Hahn, senior fellow at the Urban Institute.
The system is set up for child support debt to trigger a cascade of consequences, she said.
“I’m certain that is happening,” she said. “Where this whole system breaks down is with low-income parents who are not able to pay child support consistently or in full … particularly for families receiving Temporary Assistance to Needy Families [TANF],” she said. TANF, often known as welfare, is the federal cash assistance program.
“When someone applies to receive TANF cash assistance they are required to sign over their right to child support,” Hahn said. “The challenge is that when you have a family receiving cash assistance very often the other parent paying child support has a low income,” she said. Often it’s volatile income, since many people are in jobs that have varying hours each week.
“It makes it very hard for people to consistently pay the full amount,” Hahn said. “We’re hearing from fathers that once the interest kicks in, there’s no turning back.”
Adjustment to child support orders can be difficult. Often a parent must prove a permanent change in income below a certain percentage, Hahn said.
And courts in many states are backlogged because of the pandemic closures.
“Child support orders are often unrealistically high,” Hahn said. States have a formula and there’s often a minimum amount that must be paid, even when fathers have low incomes or no income.
“This is a real challenge for the system — how to deal with volatile income,” she said.
To be sure, states have relaxed some policies in the pandemic. California has stopped suspending drivers’ licenses and levying bank accounts, Bartholow said. When a stimulus check is intercepted for back child support, it will at least go to the custodial parents who are no longer receiving public assistance before being applied to the state debt.
But Colorado is the model for change: In 2017 it stopped withholding child support from recipients of public assistance. To date, only Minnesota and Vermont have followed suit, Hahn said.
“It’s a financial cost to the state,” Desbien said. They depend on the revenue. He would like to see the federal government stop requiring its cut of past due amounts. And federal funding should allow for employment services to parents, he said.
Colorado has reframed the message around child support to focus not just on enforcement but on parents’ ability to pay, Desbien said.
All the enforcement actions in the world are not going to turn on a switch and make money flow from parents who don’t have it, he said. The important thing is to connect parents with resources. “That’s a key piece,” he said.