Implement Employer New-Hire Reporting for Child Support Enforcement

The Legislature should encourage employers to report newly hired employees directly to the Child Support Enforcement program to facilitate wage withholding for child support enforcement.


Background
Employer New Hire Reporting (ENHR), in which employers report new hires and rehires directly to the Child Support Enforcement (CSE) program, addresses the problem of locating and securing wage assignments on child support obligors with transient and seasonal occupations.

Automatic wage withholding provides a reliable and unobtrusive means of collecting support from obligors who are regularly employed. In Texas, the employer is required to comply with the wage withholding court order. The obligee s representative sends the obligor s employer a copy of the support order, and the employer complies by immediately beginning to withhold the support amount from the obligor s wages and forwarding the child support to the designated collection office. 1~

Although the wage assignment order is intended to follow the obligor from job to job, it only does so if the obligor or the obligee s representative makes the wage assignment order known to the new employer. The obligee s representative can do this only if the new employer is known. Many child support obligors work as transient or seasonal laborers, or in jobs with high turnover rates. Obligors, particularly in welfare-related cases, may also have sporadic employment. 2~

The CSE program receives information on newly hired employees from the Texas Employment Commission (TEC). The data are often as much as six months out of date because of employer reporting requirements and information processing time. 3~ An obligor may have changed jobs twice in this period of time. 4~ Thus, by the time the CSE field worker attempts to secure a wage assignment with the last employer listed, the obligor is already gone.

The solution is an ENHR program such as those already being used successfully in Washington and Alaska. In ENHR, employers report their new hires and rehires to the CSE program on a regular basis. The program matches the names with the database of child su pport obligors, names with no match are discarded and matching obligors are followed up for wage assignment. In Washington, employers in certain industries are required to report, and are fined for failure to do so. 5~

Washington has found the ENHR program to be highly successful and cost effective. The program resulted in increased collections of $22 for every dollar spent. During the program s first 18 months, over $8 million in collections were found to be directly at tributable to the program. It was credited with allowing the CSE agency to make collections in 43 percent of the cases in which the obligor had not met his child support obligation during the six months prior to being reported. The program improved Aid to Families with Dependent Children (AFDC) collections even more than non-AFDC collections. 6~

Washington involved employers in designing their program. The longitudinal study of the program emphasizes that employer cooperation is crucial to the success of ENHR, and reports little employer non-cooperation or dissatisfaction. 7~ In fact, Washington reports that many employers who were not required to report did so anyway because they believed so strongly in the program. 8~ Alaska has implemented ENHR, and several other states are considering this option. 9~

ENHR could be particularly successful in Texas, where there are a number of industries with high employee mobility. The new automated system for child support enforcement, TEXCSES, would provide the capacity for expansion. New revenue generated from increa sed collections would fund the new effort.


Success of ENHR depends on the enthusiasm and support of employers. Texas businesses have demonstrated their concern for the state s children; ENHR would provide an opportunity for businesses to make a large contribution to children s well-being with relatively little inconvenience.


Recommendations
A. Texas should implement employer new-hire and rehire reporting on a voluntary basis statewide.

Beginning January 1, 1994, employers should be encouraged to submit copies of the W-4 forms of all new and re-hired employees to the state CSE office within two weeks of hiring, with the option of mailing or faxing the forms. The Att orney General should install a toll-free fax number for employer use.

B. The Legislature should direct the Attorney General to develop a plan for phasing in and monitoring the Employee New Hire Reporting (ENHR) program. The Legislature should require that the plan contain provisions for including the Texas Employment Commiss ion and private sector representatives in the development of the program.

C. The Legislature should direct the Attorney General s office to develop methodologies for estimating cost savings to the state resulting from improved child support enforcement.


Implications
ENHR would provide a valuable opportunity for partnership between the state and the private sector in improving the lives of Texas children. By assisting the state in collecting child support due, businesses would be contributing to their own well-being an d the well-being of all state taxpayers by reducing the need for state AFDC and Medicaid expenditures.

In addition to allowing CSE to secure wage-withholding orders, ENHR would provide CSE with location information on other absent parents, one of the main bottlenecks in establishing orders and collecting support due.

Some individuals believe ENHR may constitute an invasion of privacy. In Washington, names of new hires with no match in the CSE database are deleted automatically. Furthermore, strict confidentiality laws protect CSE records, including location information , such as employment.

ENHR entails some minor administrative costs to employers, but most employers would probably find the inconvenience of reporting negligible when compared with the value of assisting in the state s CSE effort. One Washington employer reported that the process only takes two minutes per employee. 10~


Fiscal Impact
ENHR would increase the number of paying AFDC and non-AFDC cases in the state CSE caseload and would increase state and federal shares of retained AFDC collections, federal incentives, federal match and AFDC cost avoidance. ENHR would also result in Medica id cost avoidance and cost recovery. The Medicaid cost savings are not quantifiable with available data.

It is not possible to estimate the actual revenue increases generated by a voluntary program. However, if participation in the program were similar to that in Washington s mandatory program, ENHR could net $7.3 million in 1994 and $69.6 million over the next five years in additional revenue, providing the children of Texas an additional $352 million in child support.

It is likewise impossible to estimate the administrative costs of the voluntary program, but the projected revenues quoted above would require administrative expenses of $142,000 in 1994 and $169,000 in 1995.

Endnotes
1 Interviews with staff members of the Texas Office of the Attorney General, Child Support Enforcement Division, Austin, Texas, October 1992.
2 Interview with the Honorable Suzanne Covington, Travis County Domestic Relations Court, October 4, 1992.
3 Interviews with staff members of the Texas Office of the Attorney General, Child Support Enforcement Division, October 1992.
4 Washington State Office of Support Enforcement, Employer Reporting Program Longitudinal Report: July 1990-January 1992 (Washington State Department of Social and Health Services, July 1992).
5 Ibid.
6 Ibid.
7 Ibid.
8 Ibid.
9 Bee Moorhead, State Survey of Innovative Child Support Enforcement Practices (The University of Texas at Austin, September 1992). (Draft).
10 Washington State Office of Support Enforcement.