Wisconsin Department of Workforce Development

Tuesday, April 17, 2001 Governor Scott McCallum Secretary Jennifer Reinert

News Media Contact Rachel Biittner 608/266-8710 e-mail: news@dwd.state.wi.us fax: 608/266-1784

MOTHERS RECEIVE MORE CHILD SUPPORT UNDER
PASS THROUGH METHOD
Wisconsin is the first state to explore alternative child support distribution method

MADISON – Department of Workforce Development Secretary Jennifer Reinert announced today the success of an alternative method of distributing child support. A study conducted by the Institute for Research on Poverty shows that passing through all child support to mothers on W-2 cash assistance has resulted in higher collections, more fathers paying the child support they owe, and higher paternity establishment rates.

The Child Support Demonstration Evaluation began with the implementation of the W-2 program in October of 1997. One group, referred to as the experimental group, received the full amount of child support paid each month. The other group, referred to as the control group, collected $50 or 41% (whichever is greater) of the child support paid each month.

The partial payment method for the control group is similar to the policy that was in place under the AFDC program. The rationale for the AFDC child support distribution method was mothers receiving cash welfare payments, in essence, were to pay back the government with their child support. The federal government required the control group comparison in order to measure the impact of the experimental method and whether it made a difference for mothers on cash assistance.

"It’s very encouraging to see the positive results of the child support pass-through demonstration. While it’s logical to assume when you pass through the entire amount of child support paid that mothers would receive more money, it is even more encouraging that fathers in turn pay more than they had previously paid and are more likely to establish paternity," said Secretary Jennifer Reinert.

The IRP study evaluated the effects of the pass-through demonstration during 1998 and 1999 on the experimental and control group mothers on W-2 cash assistance. The highlights include:

• Fathers in the experimental group who were new to the welfare system and not aware of the old method paid an average annual amount of $305 more in child support than the control group in 1998 and $232 more in 1999. (The results were lower when fathers who had been a part of the system before and aware of the ‘pay back government’ method were included, with fathers paying $28 and $35 more in 1998 and 1999).

• Fathers in the experimental group who were new to the welfare system and not aware of the old method had a higher incidence of paying some or all of their child support owed. In 1998, 58% of fathers in the experimental group paid some or all of their child support, compared to 48% of fathers in the control group. In 1999, the number had increased to 61% for the experimental group compared to 56% for the control group. (The results were again lower when fathers aware of the old method were included with 52% of the fathers in the experimental group paying child support in 1998 compared to 50% of fathers in the control group, and 56% of the fathers in the experimental group paying in 1999, compared to 53% in the control group).

• Children in the experimental group whose fathers were new to the welfare system and not aware of the old method had a higher paternity establishment rate (20%) compared to those in the control group (15%). (The results were again lower when fathers who were aware of the old method were included. Paternity establishment rates for children in the experimental group were 14% compared to 13% for the control group).

"The reason we differentiated between fathers aware of the old system and those that weren’t is because it takes time for people to understand the changes in policy and as a result modify their behavior. The behavioral changes may not be immediate. But for those who never knew of the old system, the positive effects can be seen very clearly. The idea has always been, if the child support payment is going directly to the child the father will be more likely to pay. The results confirm that theory," said Eric Baker, Administrator of the Division of Workforce Solutions.

Some additional findings from the study include:

• Fathers in the experimental group appear less likely than fathers in the control group to have informal employment or earnings. In 1999, 14% of fathers in the experimental group reported informal work compared to 21% of fathers in the control group. (Informal employment or earnings make it more difficult to collect child support).
• The change in child support distribution has come at little or no extra cost to government, despite the elimination of the ‘pay back’.

"The rationale behind this new method of distributing child support payments is really quite simple. If we pass through the entire amount of child support being paid to the custodial parent, even if they are receiving cash welfare assistance, they are much more likely to be able to reach self-sufficiency with the added income. Study after study has shown that when all child support that is owed is received, families have a much higher likelihood of succeeding independently," said Secretary Reinert.

The study also evaluated the general well-being of W-2 families in 1998 and 1999 and found:

• Higher levels of employment for all mothers studied compared to other states and substantial growth in earnings – from 1998 to 1999 median wages grew from $7.00 an hour to $7.75 an hour, and average earnings for those who worked grew by more than $2,000.
• At the beginning of W-2, 81% of mothers received cash assistance. After two years, only 20% received cash assistance.
• Children were more likely to be covered by health insurance than children in low-income families nationally.
• Mothers were increasingly likely to receive child support, increasing from 24% from the first quarter of enrollment in W-2 to 37% in the seventh quarter.

-30-

News Release Index Page