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Center Director Carolyn Heinrich explores how to reduce growing child support debt and its unintended consequences for noncustodial parents' labor market participation through a new policy intervention Many poor children live with a single parent and rely heavily on financial support from a noncustodial parent. On average, child support paid by a noncustodial parent contributes to about one-third of income among families receiving current support, and considerably more among families living below the poverty level. In this context, substantial declines in disadvantaged adult males' employment and earnings in the last decade, exacerbated by the recent recession, have had direct and distressing consequences for poor families.
By fiscal year 2009, child support debt nationwide had grown to more than $107 billion. Unpaid child support debt not only reduces resources available to custodial families, but it also requires public Child Support Enforcement (CSE) agencies to expend more resources and increase enforcement actions for noncustodial parents. More public funds are spent today on CSE administrative expenditures than on federal government appropriations for workforce development programs.
In two distinct but related research efforts, Professor Carolyn Heinrich, director of the Center for Health and Social Policy, (with colleagues) investigates the causal linkages between growing child support debt and noncustodial parents' participation in the labor market and the effectiveness of policy interventions designed to reduce child support debt and mitigate its consequences. Research on this topic is essential because debt may be both a consequence of nonpayment of child support as well as a cause of nonpayment. If debt discourages cooperation with CSE efforts, or undercuts incentives to work in the formal labor market, increased enforcement may be counterproductive in reducing child support debt.
Heinrich and colleagues find that child support debt has a substantial negative effect on noncustodial parents' child support payments and formal earnings. In addition, working parents appear to reduce work effort (and child support payments) more than parents with weaker connections to the labor market, suggesting a serious unintended consequence of policies designed to help support poor families.
These research findings raise the question: Are there policy alternatives for making progress on both reducing child support debt and increasing current support payments? Many policy interventions have been tried nationwide to reduce debt levels, but few have been rigorously evaluated. The Office of Inspector General issued a report describing child support debt reduction programs in at least 20 states, but little evidence on outcomes is available.
In a collaborative effort between the State of Wisconsin Bureau of Child Support and the Institute for Research on Poverty at the University of Wisconsin, Heinrich worked with policymakers and child support agency staff to design and evaluate a pilot program that would draw noncustodial parents with large debts back into the CSE system by offering them new incentives to pay child support. For each dollar paid in current child support, noncustodial parents could earn up to a dollar "credit" toward their child support debt, allowing for a gradual reduction in arrears balances. The results of the rigorous experimental and nonexperimental evaluation showed that noncustodial parents paid significantly more child support (more than a hundred dollars more per month) than nonparticipants, were more likely to pay in a given month, and had significantly larger reductions in debt balances owed to custodial parents and the state (with debt reduced by more than $2,500 over the course of participation) than nonparticipants. These results were disseminated in national public policy and child support policy conferences and brought to the attention of the national Office of Child Support Enforcement.
Professor Heinrich is currently meeting with the Texas Office of Attorney General's staff to explore the possibilities of implementing a version of this pilot program in the state of Texas.