Examining Child Support Arrears in California: The Collectibility Study

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Abstract

This report was prepared in response to a mandate from the California State Legislature to analyze how much of the $14.4 billion in child support arrears owed statewide in March 2000 was realistically collectible. Child support arrears had grown dramatically in California during the prior decade and state legislators were concerned about their collectibility. The Urban Institute estimated that $3.8 billion, or 26% of the $14.4 billion, would be collected over 10 years. The reason that so little arrears are likely to be collected is that most of the arrears are owed by individuals who owe more than $20,000 in arrears and have relatively low incomes.

Introduction

Child support arrears (past due support) have grown dramatically in California during the past 10 years. In March 2000, when the Collectibility Study began, California had $14.4 billion in child support arrears. In federal fiscal year (FFY) 2001, the arrears had grown to $17 billion, representing 20 percent of the nation’s child support arrears. That same year, California had only 12 percent of the nation’s caseload. Ten years earlier, in FFY 1992, California’ s arrears stood at $2.5 billion, or 10 percent of the nation’s arrears, and it had 10 percent of the nation’s caseload. Hence, California’ s arrears have grown much faster than the rest of the country. Figure 1 shows the growth in child support arrears nationwide and in California. The gap between the top two lines represents California’s growing share of the nation’ s child support arrears.

Figure 2 contrasts California’ s child support arrears with child support arrears in New York. We selected New York for comparative purposes because it too has a large population and a large metropolitan area. New York differs, however, from California in at least one important respect – it does not charge interest on its child support arrears. New York is not alone in this respect. Eighteen states do not charge interest on child support arrears. California counties were instructed to charge interest on nearly all of their arrears in 1992.

Figure 2 shows that New York’s child support arrears were only slightly smaller than that of California’s between FFY 1986 and FFY 1992, but starting in FFY 1993 the difference grows astronomically. In FFY 1992, New York’s child support arrears were $1.8 billion; California’s were $2.5 billion. Nine years later, New York’s child support arrears had increased to only $3.2 billion, while California’s grew to $17 billion.

In 1999, Governor Gray Davis signed legislation enacting massive reforms of the child support system (Assembly Bill 196 and Senate Bill 542). These reforms created a new state agency responsible for overseeing California’s child support program, called the Department of Child Support Services (DCSS). It also mandated that the newly created department analyze the current amount of child support arrears statewide and determine the amount that is realistically collectible. DCSS contracted with the Urban Institute to conduct the study and established an Advisory Group of national, state and local child support experts and stakeholders to advise the study. This report presents the Urban Institute’s findings, including recommendations based on our research.

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