Modifications, Review and Adjustment in Tough Economic Times May 25, 2011

1. Modifications, Review and Adjustment in Tough Economic TimesMay 25, 2011 Nancy Thoma Groetken, Regional Program Manager Office of Child Support Enforcement Region VII nancy.thomagroetken@acf.hhs.gov Michaelene M. Machowiak, Deputy Prosecuting Attorney St. Joseph Co. Prosecutor’s Office, South Bend, IN 574-235-9786, mmachowiak@stjoepros.org Maria R. Mancuso, ESQ., Child Support Hearing Officer Administrative Office of the Courts, Hughes Justice Complex, Trenton, NJ P: 609-984-0486 E: Maria.Mancuso@judiciary.state.nj.us Moderator: Scott Cade, Regional Vice President, ACS Inc. 1

2. The Demand for Modification has Never Been Greater Prolonged economic downturn with sustained unemployment near 10%. Constricting State budgets impacting staffing levels and State priorities. Extended tours of duty for military service members, specifically Reservists. Shifts in attitude towards incarcerated non-custodial parents. 2

3. Timely Review and Adjustment is Critical • Change in employment and the loss or reduction of income for NCPs can lead to: • increased arrears, • a reduction in the rate of collection of current support collected – some payors who lose their jobs are quick to find another, almost always lower paying.  They become partial-payors of current support but, with review and adjustment, could return to meeting their current obligation 100%.  • use of stronger remedies to enforce order compliance, • migration to the underground economy to avoid the child support system. 3

4. Timely Review and Adjustment is Critical The poor get hit first, worst and longest. Economic recovery will come more quickly to a NCP who is offered some relief from a CS payment he/she cannot afford while unemployed. Timely adjustment of child support aids the entire family in process of recovering from bad times to better times. Debt is bad for the debtor and the one owed the debt. Piled up debt makes recovery harder for families – leads to bad relationships, homelessness, and other complex issues. 4

5. Timely Review and Adjustment is Critical If treated fairly when modification is requested and support is set at an appropriate amount, research shows an NCP is more likely to pay. When reducing child support amounts, we also need to be there when it is time to raise it back up. Building trust with an NCP and the CP is critical - when the time comes to modify upward an NCP may be much more likely to cooperate if they believe they will again be treated fairly. 5

6. Obstacles and Pitfalls Complicated forms – Hard to navigate pro se, especially for those who may not be English-proficient or are illiterate. There is some movement toward simplification by Courts. Some resistance in standardizing forms or rewriting in plain English Complicated process – Modification is often a long and drawn out process. Two step process of review and then adjustment adds time and complexity. 6

7. Obstacles and Pitfalls • Complicated Child Support Guidelines – • Approaches to simplify/streamline review and adjustment can be foiled by detailed guideline needs • Need lots of financial data and expense information from both parents. Can we use less detail and still get to a similar/equitable bottom line? • Complicated to get into the door – • Complex rules defining how to qualify for a review can be misunderstood by workers and parents • Need to encourage application and do outreach • Expensive to access the courts for a traditional modification 7

8. Obstacles and Pitfalls • Resources are stretched • Availability of court docket time • Lack of/use restrictions of federal funds for legal services (federal legislation issues - LSC prohibited from using federal funds for certain activities -1996 laws) • Public legal services workload dramatically increased due to housing cases (foreclosures), bankruptcy, and immigration - Legal Services usually refer requests for review and modification to CSE • Impact on Clerk of Courts in “helping” the NCP through the pro se process; many courts are doing furloughs 8

9. Obstacles and Pitfalls • Whose best interests? • Downward modifications not in best interest of child • Need to balance the needs of the CP for support during difficult financial times • Many NCPs are unaware they can apply for IV-D review and adjustment services or are hesitant to apply; once the case is open, States can’t close a case if this is the only service an NCP desires. • Bradley Amendment restricts retroactive modification – need to “race to the court to file” as soon as you receive a request for review or learn a modification may be needed to avoid unnecessary debt accumulation. 9

10. Administrative Solutions • Two Models • Iowa – Shortened Timeframes and Abbreviated Reviews • Oregon – Recession Response Team 10

11. Administrative Solutions - Iowa Iowa has done administrative review and adjustment for over 20 years State law dictated a process rich in due process – including two federally mandated 30-day waiting periods -- to assure parents have ample time to respond and/or seek counsel With increased demand and need for more timely adjustment, a team of CSE field and central office staff considered various ways to complete reviews more quickly. 11

12. Administrative Solutions – Iowa Iowa CSE sought legislative changes to the two 30-day waiting periods which were no longer required after passage of PRWORA Sought to expand access to a relatively new “abbreviated” review and adjustment for cases in which a party is requesting a review. It had formerly been used only for mandatory TANF reviews SF2158 passed effective July 1, 2010 12

13. Shortened Timeframes – Iowa • Effective July 1, 2010, the pre- or post- review timeframes were shortened from 30 days to 15 days in the regular administrative review process. • Changing the timeframe from 30 to 15 days allows a worker to do the guidelines calculation and send the NOD 15 days after serving the party, and enter the order 15 days after generating the Notice of Decision (NOD) 13

14. Abbreviated Review For customers who request reviews, Iowa CSE now has authority to use the “abbreviated review process”. Upon written request from a customer, staff determination is now made to do a ‘regular’ review or ‘abbreviated’ review. “Abbreviated” doesn’t mean the process necessarily takes less time, but the law allows CSE to cut out part of the process and take advantage of available financial information 14

15. Abbreviated Review ‘Abbreviated’ means instead of starting with the Notice of Intent (NOI) and waiting for the customer to return financial information, the worker starts the process by gathering financial information from available sources, including information provided at time of request by the requestor, from online sources, or from other written information from the income provider or other sources. The worker then does the guidelines calculation, and serves the NOD and the guidelines worksheet on each party. 15

16. Abbreviated Review • If a party disagrees with the calculation • Either party may challenge by asking for a second review. • The worker will send the Notice of Second Review and include a financial statement in the packet for each parent. • After receiving and verifying the information from the financial statements, the worker will send a new guidelines worksheet with the Second Notice of Decision to the parties. • If neither party requests a court hearing, the process is completed by generating the order, securing the district court judge’s approval, and filing it with the clerk of court. 16

17. Abbreviated Review - Iowa • During the 9-month period July 2010 to March 2011.  • 181 reviews were deemed appropriate for abbreviated review.  • 20 reviews were ended because an adjustment wasn’t appropriate and 5 were ended due to ‘other’ reasons.  • CSE filed 129 orders (115 administrative and 14 judicial). • In the first 9 months, the average days to complete abbreviated reviews is 124 days. For comparison, in the same period, average days to complete regular reviews is 215 days. 17

18. Administrative Solutions – Iowa For more information contact: Mary O'Reilly Loven, PhD Policy Supervisor Iowa Bureau of Collections 400 SW 8th, Suite H Des Moines, IA 50309 515-281-8377 mloven@dhs.state.ia.us 18

19. Administrative Solutions - Oregon • Oregon recognized the rapidly growing problem: • Parents need a faster, fair, legally-recognized, and more cost-effective process to obtain a temporary modification to court ordered child support obligations when faced with employment-related income changes caused by the current economic recession. 19

20. Administrative Solutions - Oregon • In just three months the Division of Child Support : • developed a legislative concept, • saw it enacted, • adopted temporary administrative rules , • selected and trained staff for a specialized team, and • implemented an entirely new, expedited process in May 2009 20

21. Administrative Solutions - Oregon House Bill 2275 passed, became law effective May 7, 2009, and added a new section 13 to Oregon Revised Statutes (ORS) 416.425. Gives the Attorney General the authority to declare a “period of significant unemployment” in Oregon, which starts the Recession Response Process. Attorney General John Kroger made such a declaration May 6, 2009. 21

22. Administrative Solutions - Oregon • Numerous Administrative Rule changes were made • to assure due process • establish clear parameters and procedures. • Employment-Related Modifications (ERM) can only be initiated by Division of CS or DA staff, not courts or private attorneys. 22

23. Recession Response Project • The new Recession Response Project • Provides an alternative administrative mechanism • Temporarily modifies the child support obligation within a court entered order • Order is effective for up to six months from the date an Employment Related Modification (ERM) filed • When income has changed due to unemployment or a reduction in work hours 23

24. Recession Response Project • The new Recession Response Project • Previous underlying order reinstated early if requesting party returns to work earning wages similar to amount used to calculate underlying order • Use of actual income vs. presumed income (for both parties) • Minimum $100 orders • Parties can consent to an amount greater or less than the child support guideline amount 24

25. Recession Response Project • DCS Centralized Recession Response Team -- Team members use special streamlined rules, forms and procedures to process requests more quickly • When a party inquires, in person, by phone, fax or e-mail, a project team member immediately interviews the requestor to determine if the case qualifies for Employment-Related Modification (ERM) and conducts a verbal discovery to obtain financial information. • Encourages the parties to accept service and consent to a temporary modification amount • Schedules administrative hearings within two weeks of a request 25

26. Recession Response Project • Service of Documents • Electronic service options (fax, email) • Priority mail with Delivery Confirmation • Effectively secures service, cheaper ,and reduces wait time for delivery confirmation - confirmed by USPS website tracking method • Self addressed, stamped envelope included with documents mailed to expedite return 26

27. Recession Response Project • Consent Orders • Parties agree to proposed temporary order amount and return documents within 14 days • Temporary orders with underlying administrative orders are entered and enforceable immediately • Temporary orders with underlying judicial orders must be filed in court before being entered and enforceable (additional 30-45 days – considerably less time than traditional modification) 27

28. Recession Response Project • Expedited Administrative Hearing Process • Default option (requesting party returns documents and non-requesting party doesn’t, case referred for administrative hearing) • Hearing process - Recession Response “Rocket Docket” • Co-housed with Office of Administrative Hearings • Hearing scheduled within days of request for hearing (compared to 4-6 weeks for traditional hearing) • Child support worker appears and testifies in telephone hearings • Administrative hearing order written and sent to all parties by end of the week in which hearing is held 28

29. Recession Response Project • Renewal or Reinstatement Process • Five month reinstatement notice sent • Option for renewal if circumstances haven’t changed • Administrative review conducted by case manager • Renewal granted – new money award filed in court and valid again for 6 months from date of circuit court filing • No request for renewal made - reinstate underlying child support order 29

30. Recession Response Project • Advertising the Availability of Temporary Orders • Oregon Child Support Program began marketing the new services to local communities and clients • Media releases and direct customer outreach • Billing stuffers, brochures, automated voice responses system, DCS and employer EFT website notices • Information shared at DCS employer seminars 30

31. Recession Response Project • Many Positive Outcomes • Timely responses and relief to parents within weeks - the entire process can take from 7 to 45 days to produce an enforceable child support order; compared to a traditional court order modification that can take 3 to 6 months or longer to complete. • Decrease in arrears, greater long-term payment compliance • Secondary outcomes experienced throughout the project include many improved work processes and significantly enhanced collaboration with parents and partner agencies. 31

32. Recession Response Project • During the period from May 2009 through December 2010, the Team fielded 10,392 inquiries for temporary ERMs. • Of those, 384 resulted in the entry of new or temporary child support consent orders. • In addition, there were 374 administrative hearings requested by the parties, which led to 298 new or temporary child support order modifications. 32

33. Administrative Solutions - Oregon For more information contact: Sue Armintrout, Manager Recession Response Team Oregon Division of Child Support (503) 986-6218 sue.armintrout@doj.state.or.us 33

34. St. Joseph County Demographics • Location B. Population C. Median Income

35. St. Joseph County IV-D Caseload Statistics • Total Number of Cases • Total Number of Assistance Cases • Total Number of Former Assistance Cases • Total Number of Never Assistance Cases • Total Collections • Total Number of Staff

36. Initial Intake Appointments • Appointment Letter to CP • Subpoena Duces Tecum • Employment Verifications

37. Determining Gross Income • Indiana Child Support Guidelines • Memorandum on Guideline Revision • Default Judgments

38. Modifications • Stipulations • In Gross Orders • Administrative Hearings • Establishment of New Orders for Same NCP

39. SSD/SSI Cases • Legal History • Memorandum on Credit for Lump Sum Back Award • Modifications

40. Indiana Support Enforcement Tracking System (ISETS) • Reports 1. NCP not paying full amount of support 2. NCP is incarcerated 3. CP & NCP have same address 4. NCP has applied for SSA benefits 5. NCP is receiving unemployment

41. Other Considerations • IV-D Court • Jail Outreach Project • Communication with the Felony Division • Stipulations • Child Support Improvement Program (CSIP)

42. Overview of Child Support Hearing Officer Program New Jersey uses a judicial process to establish and enforce child support orders. Rule 5:25-3 authorizes the Child Support Hearing Officer to hear support cases and make recommendations to judges. Unless a party objects, the recommendation of the CSHO becomes an order of the court. Currently, 24 CSHOs and 1 Supervising CSHO hear approximately 100,000 cases per year with a negligible appeal rate. 42

43. “There is, of course, no brightline rule by which to measure when a changed circumstance has endured long enough to warrant a modification of a support obligation.” Larbig v. Larbig, 384 NJ Super 17, 23 (App. Div. 2006) 43

44. Hypothetical #1 Mom and Dad have two children, Amy and Brad. Amy is 14, a freshman in high school, plays in the school band and has braces. Brad is 8, is a math whiz and has asthma. In 2005, Dad was court ordered to pay $200 per week for the support of both children, per the NJ Child Support Guidelines, and is required to reimburse Mom 65% of any unreimbursed expenses above $250 per year, per child. The support was based on Mom’s gross income of $400 per week ($20,800 annually) and Dad’s gross income of $800 per week ($41,600 annually)

45. Dad files a motion for a reduction of his support. He says that he broke his leg on the job and was out on disability in 2009 for 10 weeks. When he got back, he was laid off as his job was being outsourced. He received a 6 month severance package. Once the severance package was exhausted, he began collecting unemployment benefits of $580 per week. He is still receiving unemployment but it will be exhausted in a month. He states that he is attempting to start his own business operating a food cart.

46. Mom files a motion for an increase. She says that the children are now involved in more extracurricular activities and the braces and asthma force her to spend more on medical. When Dad lost his job, the children lost their medical coverage. She now has NJ Family Care at no cost to her, but she has out of pocket expenses for office visits and medication. She lost her job and was collecting unemployment. Because of this, she lost her apartment and the family was forced to move in with her parents. She has recently returned to work earning $9 per hour but after 90 days it will increase to $10.50 per hour. She states that Dad has always had the food cart business on the side and always has extra cash. Dad responds that Mom doesn’t pay rent at her parent’s house and spends his child support on vacations, clothes for herself and drives a brand new car.

47. QUESTIONS: 1. DOES DAD HAVE A BASIS FOR MODIFICATION? 2. DOES MOM HAVE A BASIS FOR MODIFICATION?

48. Hypothetical #2 Using the same fact pattern as Hypothetical #1, with the following additional information: Dad did not pay for the 10 weeks that he was on disability. He paid sporadically while he was receiving his severance package. It took 6 weeks before income withholding began on his unemployment benefits. Dad owes arrears of $7993. Probation has added an additional payment of $50 per week towards the payment of those arrears. Mom wants the order enforced. Dad says he is unable to pay.

49. QUESTIONS: 1. HOW DO YOU ENFORCE THIS ORDER? 2. WHAT FACTORS SHOULD BE CONSIDERED IF YOU FIND THAT ENFORCEMENT IS APPROPRIATE?

50. Modifications, Review and Adjustment in Tough Economic Times QUESTIONS? 50