5

Cost Recovery

Poverty Industry Taking Child Support from Children and Families

As the preceding chapters illustrate, the poverty industry’s scope and effect are immense. Abused and neglected children, the sick, and the elderly are used in revenue strategies almost as if they are resources on industry conveyor belts to tap into as much federal aid as can be extracted. And the reach and impact of the poverty industry does not end with the diversion of federal aid. This chapter explains how even child support has not escaped. Rather than supporting children, much of what we call child support is often converted into a government revenue strategy that is harming children and families.

Children in low-income single-parent households desperately need child support payments. However, reports from the Federal Office of Child Support Enforcement indicate that $28.5 billion—over a quarter of the national child support debt—is owed to the government. The targets of strategies to convert child support into government funding are poor families and children involved in the welfare and foster care systems.1

As with the practices described in previous chapters, private companies are again intricately involved with child support revenue strategies. In addition to helping states obtain children’s Social Security benefits and maximizing federal Medicaid funds, MAXIMUS also runs entire child support offices. The military contractor Lockheed Martin has also contracted to run state child support offices and even has a contract with the Federal Office of Child Support Enforcement. The national Federal Parent Locator Service Child Support Services Portal, and its access and use of confidential government information regarding millions of people across the country, is housed at the following: “System Location: Lockheed Martin, Building 101, 9500 Godwin Drive, Room F12, Manassas, Virginia 20110-4157.”2

The first way that states convert child support into a government revenue stream is through our nation’s welfare assistance program, called Temporary Aid to Needy Families (TANF). When low-income custodial parents need welfare assistance, states force those parents to transfer their children’s rights to child support to the government. States’ rationale for taking child support from poor children is to pay themselves back for the costs of welfare assistance, in a forced tradeoff and resulting government debt: mothers and children owing their child support rights and the impoverished fathers owing the payments.3 For most poor families, the ability to pay back the cost of welfare is not a reality and the resulting debt and harm never cease.

The poverty industry’s conversion of child support to replenish government revenue is largely unknown to the public. Most people view child support as purely beneficial and only intended for children and custodial parents. But for the millions of children whose child support rights have been taken by the government, the child support enforcement efforts are anything but beneficial. Although initially it may seem to be a fair policy that absent parents should be pursued for government-owed child support to repay welfare costs, the reality of the practice results solely in harm—harm to mothers, fathers, children, and society.

States require poor mothers to identify absent fathers and then to sue them, over and over again. When mothers are poor, the fathers are almost always poor too. Thus, most of the resulting government-owed child support cannot be paid, and huge back payments (arrearages) quickly accumulate. Poor fathers who try to catch up almost always fail, as the poverty industry lines up against them and the relentless enforcement mechanisms never slow: a poor father finally obtains a new job but then is fired after he is jailed for unpaid child support; a truck driver trying to catch up on child support arrearages has his license suspended due to the back payments of child support, so he can’t work; a construction worker has 65 percent of his wages garnished for child support and as a result he can’t afford his rent or insurance on his old work truck.

As a result of the forced welfare cost recovery mechanisms, the poverty industry is further harming the already fragile relationships between poor mothers and fathers, and poor children often lose contact with their fathers as the insurmountable child support mechanisms drive the fathers away. Moreover, society is also harmed by the welfare cost recovery focus. Poor fathers who are unable to pay child support retreat from their families and are driven into the underground economy, reducing legitimate work and resulting tax payments—and increasing crime.

Worse still, states do not even benefit financially from the fiscal strategy of taking child support from children to recoup welfare costs. With the large administrative costs of the enforcement efforts against poor fathers—including paying private contractors—states may be spending more money seeking to collect child support to repay welfare costs than they are actually collecting. And when government-owed child support is actually collected, taking the money from low-income families increases the economic struggles of the families and increases their likelihood of needing additional welfare assistance, thus increasing state costs.

Mothers, fathers, children, the social fabric, and even the state finances all lose. The only winners, perhaps, are the private contractors of the poverty industry who are profiting from state contracts.

The story of Derek Harvey and his children, discussed in more detail later in this chapter, illustrates the harm. Mr. Harvey took custody of his four children after the mother of his oldest daughter died and the mother of his other children abandoned the children due to substance abuse. He also took custody of a fifth child who was not his own, the half sister to one of Mr. Harvey’s daughters. He tried his best to raise all five children as a single father, making only $10.96 per hour working for the city of Baltimore as a landscaper.4

Already struggling financially, Mr. Harvey’s efforts to raise his children were undermined when the Baltimore City Office of Child Support Enforcement—operated by MAXIMUS—started pursuing him for government-owed child support. According to the company, Mr. Harvey owed about $10,000 in back payments that accrued prior to the change in custody, all of which were owed to the state because both mothers had received welfare assistance (and at which time Mr. Harvey was struggling with unemployment).5

A poor father stepped up and took custody of his four children and even another child not his own. He found a low-wage job to try to support them, but then the Maryland Child Support Agency operated by MAXIMUS harmed his efforts to support his children—in the name of child support.

In the second method of converting child support into government revenue, the poverty industry is taking child support from abused and neglected children—and again, the only winners in the practice are private contractors. Similar to welfare cost recovery, states pursue the child support payments when children are in foster care to recoup the state costs of care. So, in addition to the practice of foster care agencies taking children’s Social Security benefits discussed in chapter 3, states also take the foster children’s rights to child support.

The poverty industry pursues child support in foster care cases against parents who have the least ability to pay. The collection effort is only required when children are removed from poor families: when foster children are removed from prosperous families, the requirement to pursue child support to pay back the cost of care does not exist.6

As with welfare cost recovery, it may initially seem appropriate for states to pursue the impoverished parents of foster children for government-owed child support payments to pay back the costs of care. But again, the states’ cost recovery effort has only caused harm.

When children enter foster care, the parents struggle to overcome poverty and other barriers with the hope of reuniting with their children. However, the additional debt obligation from government-owed child support can often derail the parents’ struggle for economic stability and family reunification. Many states include the child support payments as a requirement in plans before reunification can be considered. States convert foster children into collateral, with the parents only able to seek reunification if they can pay off the government debt first.

When the parents are unable to make the support payments, some states use the government debt as the sole reason to terminate parental rights. For example, as discussed in more detail later in this chapter, an incarcerated father in North Carolina was scheduled for early release due to good behavior and he had an approved reunification plan to regain custody of his daughter. But the state foster care agency terminated his parental rights for not paying child support to reimburse foster care costs. The father only made forty cents a day working in the prison kitchen, thus making only $72.80 during the relevant statutory period, and was not even under a court order or otherwise made aware that he needed to pay support. However, the court found he nonetheless should have been paying over his money toward the cost of foster care and terminated his parental rights for that reason alone. The father lost his daughter for $72.80 owed to the government.7

Unfortunately, the case is not unique. As foster care agencies face dwindling state funding, they have increasingly turned to other revenue strategies even when the strategies harm the children in their care—and taking child support is no exception.

Both the welfare and foster care cost recovery strategies using child support enforcement result in the diversion of agency and program purposes. The core purposes of the foster care, welfare, and child support agencies are to serve the best interests of children and families. However, as the agencies focus more on revenue and cost recovery, often aided by private contractors, the self-interested government financial interests undermine the agencies’ primary goals.

This chapter explores the practices and concerns regarding revenue strategies of the poverty industry using child support. The policy issues are set out, illegalities exposed, the impact on vulnerable children and families explained—and how we all are harmed by the diversion of purpose when agencies created to serve others instead seek to serve themselves.

Welfare Cost Recovery: Modern-Day Bastardy Acts

The poverty industry’s pursuit of child support as a government cost recovery strategy harkens back to the time when children born out of wedlock were considered bastards and their mothers treated as criminals. Over 400 years ago, the old “Poor Laws” of England authorized local parishes to protect society from the risk and burden of supporting children born outside of marriage. Single mothers were forced before public tribunals to name the fathers of their “illegitimate” children and pay bonds to protect the towns from the possible financial burden of their children. State laws in early America mimicked the Elizabethan Poor Laws, including the American “bastardy acts.” For example, in 1781, Maryland’s “Bastardy and Fornication” law put unwed mothers in jail until they paid security to indemnify the county against the potential cost of their children or until they named the absent father:

[A]ny justice of the peace . . . informed of any female person having an illegitimate child . . . shall call on her for security to indemnify the county from any charge that may accrue by means of such child, and, upon neglect or refusal, to commit her . . . to be . . . safely kept until she shall give such security; but in case she shall on oath discover the father, then the said justice is hereby required to discharge her . . . and directed to call such father . . . before him, and shall cause him to give security . . . to indemnify the county from all charges that may arise for the maintenance of such child.8

Still today, although children born to unmarried parents luckily are no longer referred to as bastards in current laws, modern paternity and child support policies are not far removed from the old bastardy acts. States still force unwed mothers applying for public assistance to provide the names of possible fathers of their children in order to indemnify society for the cost of their children. States require the mothers to make their children and themselves available for DNA testing to determine paternity, and then force the mothers to sue the fathers for child support—requiring the mothers to divulge intimate details in courtrooms that are often crowded, dingy, chaotic, and open to the public. Then, the government generally takes any resulting child support payments. States impose these paternity and child support requirements on low-income mothers applying for welfare cash assistance, Medicaid, food stamps, or even childcare assistance necessary for the mothers to work.

States take choices that are available to middle-class and wealthy women away from poor mothers, and strip dignity from the fathers. The long outdated notions of bastardy acts still exist, but there is a key difference today: Governments also collaborate with companies of the poverty industry, seeking to profit by helping to enforce the outdated and harmful welfare cost recovery requirements.

History of Conflicting Purpose

From its beginnings, child support has not been just about supporting children. The origins of child support include English common law, state poor laws, divorce codes, bastardy laws, and criminal nonsupport laws. The purposes of the support obligation were also varied, and a tension emerged between society’s interest in providing support to children and the countervailing interest in protecting society from the burden of supporting children. The conflict began more than 200 years ago, and continues today.

Early History: Supporting Children or Protecting Society

In England during the 1800s, the duty of parents to support their children was considered a principle of natural law, but there was no legal remedy to enforce the obligation.9 However, a different and enforceable support obligation also existed at the time, but for the benefit of local governments. The Elizabethan Poor Laws sought to indemnify towns from the potential burden of supporting poor children, giving local parishes the power to pursue fathers for support obligations to protect against the cost of providing public aid to single mothers. Thus, two competing purposes for child support existed from the obligation’s English beginnings.

As the child support obligation emerged in America, courts initially recognized support obligations through divorce proceedings and most states began formalizing such support obligations through divorce laws in the 1930s. However, while a child support obligation owed for the benefit of children developed through the divorce laws, other conflicting support obligations were already entrenched in early American law—again for the benefit of local governments rather than for the children. Many states enacted laws modeled on the old Elizabethan Poor Laws so that towns could sue absent fathers to reimburse public aid provided to the mothers and children. States also enacted “bastardy” statutes aimed at protecting society from the burden of “illegitimate” children.

As the child support obligation continued to develop in America, the conflicting interests between state and child became even more entrenched. Courts increasingly described the best interests of children as the overriding concern in child support proceedings. But simultaneously, states and local governments—armed with new federal laws—continued to ramp up their efforts to seek child support as a means of reimbursing welfare costs rather than providing support to children.

Federal Child Support Laws Contributing to the Conflict

When the U.S. Congress first enacted legislation regarding child support, it initially focused on the government’s fiscal interests. Early federal legislation provided requirements to help states pursue support obligations to pay back the costs of public assistance, rather than to benefit children. Then, Congress enacted Title IV-D of the Social Security Act in 1975 as a partnership between the federal and state governments to collect child support. Title IV-D formalized the structure of welfare cost recovery that still exists today: poor mothers applying for public aid must establish paternity, sue the fathers for child support, and simultaneously assign the rights to receive the child support over to the government to repay the costs of the public assistance. Thus, like the Elizabethan Poor Laws of England and the American bastardy acts, the primary goal of the Title IV-D child support program at its creation was not to help poor children but to take child support from poor families to repay public aid.

Almost as an afterthought, Congress also added authority to provide child support enforcement services for parents not receiving welfare and thus not required to sign over their child support to the government. The child support program in America was born in conflict, pitting the government fiscal interests against the interests of the children.

The Bastardy Acts Continue

After creation of the IV-D child support system, the outdated policies from the old bastardy acts were brought forward—and strengthened. With sweeping changes to the welfare assistance program in 1996, called Temporary Aid to Needy Families (TANF), Congress continued the forced child support program with increased sanctions. Under the prior AFDC welfare program, a mother’s failure to sufficiently cooperate with child support enforcement resulted in a reduction but not a complete loss of welfare assistance for the family. Under TANF, a mother and her family can lose all benefits.

State laws only allow narrow exceptions to the child support cooperation requirements, and they are rarely provided—although a low-income mother may have several concerns with helping in the child support process. For example, she may fear retaliation from the father, either in the form of abuse toward her and the children or through threats of custody litigation, where the absent parent seeks custody not for the benefit of the children but to avoid child support. The mother may prefer not to name the father, following rape, incest, or other circumstances whereby leaving the father out of the child’s life is preferred. She may also hope to either preserve or build a positive relationship with the father, whereas being forced to sue the father for child support owed to the government will often harm the fragile relationship.

Legal Confusion from Conflicting Agency Purposes: Agency Fiscal Interests versus Best Interests of Children

When child support agencies value their own fiscal self-interests above the interests of supporting children, legal confusion results. The conflict goes to the core of child support agency purpose, but has largely been ignored. The analysis provided here illustrates the nonsensicalness that results from child support’s conflicting goals, and how something called child support can actually cause harm to children and families.

In all matters regarding child support, the controlling legal standard is the best interests of the children. However, in welfare cost recovery cases, states force custodial parents to assign the child support to the government with the goal of serving the fiscal interests of the state child support agency. Thus, a clear legal question emerges: When the agency’s fiscal interests conflict with the best interests of the children, whose interests prevail?

Few courts or state legislatures have addressed or even acknowledged the conflict, despite the fact that such a significant percentage of child support arrearages are owed to the government rather than to children. The following are examples of three states that at least acknowledged the competing goals, but failed to resolve the conflict. The failure is no surprise, because—as the examples illustrate—it’s impossible to resolve the conflicting goals when child support agencies are working to take funds from children.

Irresolvable Conflict: Vermont and Alaska

Vermont is one of the few states, if not the only one, to recognize the conflict between the agency self-interests and the best interests of children in state legislation. A Vermont statute seemingly addresses the conflict: explaining that even when child support has been assigned to the state to pay back the costs of welfare, the best interests of the child standard still controls and no support actions should occur that are not in the child’s best interests:

When an assignment is in effect, the state shall be guided by the best interests of the child for whose benefit the action is taken.

* * * *

(2) If, after reasonable inquiry into the circumstances of the family, it is determined by the office of child support that an action would not be in the best interests of the affected child, a support action should not be undertaken.10

The statutory language is clear. However, the irresolvable conflict remains. Any dollar of child support the agency takes as assigned support rather than providing the payment to the child is contrary to the child’s best interests. Thus, under the language of the statute, no support action taken “when an assignment is in effect” could ever be in the child’s best interests.

A decision by the Vermont Supreme Court also leaves doubt as to whether the statute will ever be truly applied. In Powers v. Office of Child Support, the court addressed whether the child support agency could be sued for not doing its job well.11 In ruling that the child support agency did not waive sovereign immunity, the court recognized the legislative requirement to protect the best interests of children but nonetheless concluded that “Vermont’s statutory scheme was not intended to benefit individual children and custodial parents, but was intended to benefit Vermont society as a whole.” The court noted the statutory requirement that the child support agency must always be guided by the best interests of the child, and that the agency purpose does not change when child support has been assigned to the state. However, the court concluded that the state agency’s fiscal interests were at least equal to the interests of children: “In neither case does the service provided by [the child support agency] flow to an individual, but instead it flows to the welfare of the state, its children, and its fisc.”12 Thus, when the state’s fiscal interests come head-to-head with the interests of children in Vermont, it is doubtful after Powers whether the courts will honor or enforce the statutory priority of the best interests of children.

In Alaska, a hopeful decision by the state’s Supreme Court acknowledged the conflict between agency fiscal interests and the best interests of children in Department of Revenue, Child Support Enforcement Division v. Pealatree. The court even suggested there are some circumstances when the agency’s fiscal interests should give way to the best interests of children.13

In the Pealatree case, the parents divorced and the father received custody of their minor son. As part of the divorce agreement, the parents agreed the mother would not owe child support in exchange for her relinquishment of possible claims to the father’s tools that he needed in his job as a laborer. The tools were worth about $5,000. The trial court judge in the divorce ruled that the agreement was a proper offset against child support the mother would otherwise owe of $50 per month, because the agreement allowed the custodial father to keep his tools and better support his son.

Three years later, the father needed welfare assistance and the state child support office began pursuing the mother for child support that was assigned to the state. The agency thus challenged the $5,000 offset against the child support obligation. On appeal, the Alaska Supreme Court ruled that the mother’s $5,000 offset against her child support obligation was still valid. The court explained that “situations may exist in which [the child support agency’s] direct and derivative rights to recoupment of public assistance payments should yield to equitable considerations,” and that “one such circumstance would be a child support offset agreement that a court approved as serving a child’s best interest.”

However, while recognizing that the best interests of children might be considered in some instances, the Pealatree ruling did not fully resolve the conflict between the agency and children. As with the Vermont legislation described above, the core question still remains: If the best interests of children are the guiding standard for child support decisions, when could it ever be in the best interests of children for the child support agency to pursue and take the child support from the children?

Then in Maryland, opportunity was presented to resolve the conflict—but again without success. Child support enforcement actions were contrary to the children’s interests, and were driven in large part by a poverty industry contractor, MAXIMUS, Inc. The next section describes the case.

Harvey v. Marshall: The Best Interests of Children versus the State and MAXIMUS, Inc.

Mr. Harvey is the father of four children born to two different mothers. Both mothers applied for welfare assistance when they initially had custody of the children, which resulted in Mr. Harvey owing child support payments that were assigned to the state.14 Mr. Harvey was unemployed for much of the time, and the government-owed child support continued to mount.

Then, after finding employment as a landscaper for the city of Baltimore, Mr. Harvey was able to step up for his children. He took full custody of his children when one of the mothers died and the other mother abandoned the children. He also began taking care of a fifth child (not his own), the half sister to one of Mr. Harvey’s daughters. He struggled to raise all five children making only $10.96 per hour working for the city.15

Mr. Harvey received very little communications from the child support agency, but the arrearages quietly and quickly increased. Then, after all the children came to live with him, the child support agency began its effort to collect the back payments. A private contractor, MAXIMUS, was hired to operate the Baltimore City Office of Child Support Enforcement and asserted that Mr. Harvey owed $32,000 in child support to the government—including for alleged child support obligations that accrued even while he had custody of all the children.16

Mr. Harvey obtained a clarified custody order that affirmed he had custody of the children, and the child support obligations that MAXIMUS claimed accrued while the children lived with Mr. Harvey were accordingly dismissed. However, MAXIMUS continued to pursue about $10,000 in back payments that the company said accrued prior to the change in custody, all of which were owed to the state. MAXIMUS pursued child support orders, in the name of Mr. Harvey’s children, in order to take money from the household where the children lived.17

Mr. Harvey pleaded that the child support was reducing his ability to support the children, harming his credit rating and hopes to finance and purchase a family home, and undermining his effort to save money for the children to attend college. When MAXIMUS refused to stop its collection efforts,18 Mr. Harvey asked the state child support agency (which oversees the local child support offices) to use its statutory discretion to waive the state-owed arrearages.

The Maryland state agency initially agreed, recognizing the harm to the children. The head of the state child support agency issued a written request to MAXIMUS, indicating that it was in the children’s best interests to halt all enforcement efforts against Mr. Harvey other than collecting $1.00 per year as a nominal amount. But MAXIMUS—although under contract with the child support agency—refused the agency’s request. MAXIMUS expressed concern that stopping the collection effort would harm its collection rates and thus harm the company’s financial interests. At trial, an employee testified that MAXIMUS did not like the proposal because it “would potentially harm the numbers that show the local enforcement office’s collection rate.”19

Despite harm to the children, the state agency acquiesced to the company’s refusal. The state gave priority to the fiscal interests of MAXIMUS over the best interests of the children, and the trial court unfortunately agreed.20

Mr. Harvey appealed the decision, arguing that the child support agency illegally failed to adhere to the best interests of the child standard but rather submitted to the private interests of MAXIMUS. But the Maryland Court of Special Appeals ruled in favor of the financial interests of MAXIMUS and the state agency. Even though MAXIMUS had contracted to run the Baltimore child support office whose primary purpose is to help children, the court concluded that the purpose of the MAXIMUS contract was not to help children but rather was “expected to increase revenues for the State.”21 The court even concluded that it was appropriate to put the purely private financial interests of MAXIMUS over the interests of children:

In enacting the pilot program to privatize the Administration’s “child support enforcement functions,” the legislature evidently sought to take advantage of efficiencies achievable in private enterprise as compared to government operations. In delegating such responsibility, it was obviously necessary to give the private company financial incentives to perform the work. The record in this case suggests that one of BCOCSE’s financial incentives was measured by its “collection rate” with respect to child support arrears.22

The court reasoned that the financial incentives to MAXIMUS were more important than the children served by the child support office that MAXIMUS was hired to run:

We are persuaded that this motivation is a legitimate one in this context, because financial incentives for performance and achievement are an integral part of private enterprise. The legislature, in enacting [the privatization pilot project], undoubtedly understood that when a private company undertakes to collect monies owed to the State, its success in doing so may benefit both the company and the State. Although this financial incentive may work to the detriment of a debtor like Harvey, as well as his children, it also may work to the benefit of the State’s citizens as a whole.23

Maryland’s top appellate court, the Court of Appeals, agreed and ruled in favor of the state’s fiscal interests, and found it appropriate to favor the private interests of MAXIMUS over the interests of the children.

As Mr. Harvey’s case moved up through the courts, the conflict between the fiscal interests of the state and its contractor with the best interests of the children was brought to a head. The child support agency looked to the past, even citing the old Maryland Bastardy Act, and argued that the main purpose of Maryland’s child support and paternity statutes is to protect the public from the burden of supporting illegitimate children and to increase state revenues through welfare cost recovery. Mr. Harvey argued for the children, pointing out that the Maryland Bastardy Act was repealed long ago and that the primary purpose of child support is now to promote the best interests of children.24

The arguments become circular. The pursuit of government-owed child support is established by statute, so the practice seems to be an appropriate statutory goal. However, the best interests of the child standard has not been un-linked from assigned child support, and courts and statutes refer to the primacy of the best interests of children as the standard in all matters regarding child support. The arguments highlight the irresolvable conflict when an agency created to serve children turns against the children. There is never a time when the state’s fiscal interests in taking child support payments are not in direct conflict with the best interests of children. And adding the private interests of a company’s profit goals into the mix, the conflict deepens—as evident in the Harvey case.

The Harvey case illustrates that as long as child support agencies are turning their efforts against the best interests of children, conflict will result. As discussed below, the conflicts and resulting legal confusion have an enormous impact on children, families, and society.

Impact from the Conflict: Harm Caused by Child Support Agencies and Private Contractors Turning against the Best Interests of Children

When custodial parents can choose whether to initiate child support proceedings, and any payments are provided to the children and their families, the benefit can be great. Although the government IV-D child support program was initially created to collect child support assigned to the government, the services are also available to families not receiving welfare assistance. The side of child support that provides payments to children and families has been effective. Child support collections in the non-welfare cases have grown much faster than collections of the government-owed child support, in significant part because when custodial parents are poor and in need of welfare assistance, the noncustodial parents are also often poor. Total non-welfare child support collections now account for more than 90 percent of all child support collections.

Thus, while not the initial goal of the child support program, the increase in child support collections for non-welfare families provides a significant benefit to families and to society. But the other side of child support, that which forces the child support process on poor families and takes the payments from children, is a different story.

In addition to the poverty industry goal of turning child support into revenue, some proponents contend the welfare cost recovery policies help society by increasing paternal responsibility and improving family relationships. According to the reasoning, if a state forces a poor father to pay government-owed support, he will view himself with greater value and self-respect and will increase contact with his children. However, the theory is not supported by research and the argument fails within the reality of how the child support system impacts poor fathers, mothers, and children.

First, when states take child support from the families, the fathers are less likely to pay or feel any pride and increased family attachment when they are able to pay. Second, when the mothers are poor the fathers are often poor too. The child support orders are often set at unrealistic levels for poor fathers, and large arrearages result. Almost two-thirds of the parents responsible for unpaid child support arrearages had incomes of less than $10,000.25 Even child support agency officials recognize that because of the economic situation of fathers in the families receiving welfare, the child support arrearages are often uncollectible.

Despite the recognition of poor fathers’ inability to keep up with support payments, the fathers are hauled into packed courtrooms and berated by frustrated family court judges, often with the mothers and children present. Many feelings are present during such child support dockets, but self-respect and pride are usually not among them.

Moreover, the poverty industry treats poor custodial mothers the same as the noncustodial fathers, if not worse. Child support can be a tool to enforce the financial rights of women and children. However, in the side of child support where the payments are taken to repay welfare costs, paternalistic and harmful treatment of poor mothers reigns. Rather than enforcing the mother’s rights, state welfare cost recovery policies diminish the ability of a mother to choose the best course for her family—whether or not to pursue the absent father for child support—and take any resulting support payments from the mother. The outdated ideas of the bastardy acts, when single mothers were treated as criminals and forced into court to protect society from the burden of their illegitimate children, are still very much alive in the world of welfare cost recovery. The states’ treatment of poor fathers and mothers has not resulted in societal benefits, and as the next sections explain, only harm has resulted.

Culture of Conflict: State vs. State vs. Mom vs. Dad vs. Child

The child support requirements pit the states’ competing interests against themselves and lead to greater turmoil between family members. For a young low-income single mother in need of public assistance, the forced trip to the child support office has become almost a rite of passage—and not a good one.

The conflict begins within the state child support agency. The agency’s competing interests are aligned squarely against each other: serving the best interests of children, while taking money from the children—and further weakening the bonds in the children’s already fragile families through the forced child support system.

The child support agency’s competing interests fall into two categories, looking forward and outward, and looking back and inward. The outward- and forward-looking interest hopes to support the future best interests of children and to help the families’ struggle for economic stability, so that future public assistance is not needed. Looking inward and back, child support agencies have short-term fiscal self-interests of forcing the child support system on families receiving public assistance and taking the resulting payments. The agencies have a shortsighted goal of using child support as government revenue, at the expense of the long-term hopes for the children and families.

When a family is receiving public assistance, allowing the custodial parent to decide whether to pursue child support and giving any payments to the family will serve the state interests in encouraging family economic stability and reducing the family’s need for public assistance in the future. However, if the agency provides child support to the families, the money is then not available for the agency’s goal of bolstering government revenue. In fact, the competing state interests often collide within a single case. When a custodial parent has left public assistance, back-owed child support is owed to the state to repay welfare costs while current support is owed to the parent. The child support agency will thus strive to take child support from the family while simultaneously trying to get child support to the family. Consider the following example:

Maryland Child Support Agency Argues Against Supporting Children

In child support cases where support payments are owed both to the government and to the families (because the custodial parents stopped receiving welfare assistance), the traditional rule is that families should be paid first before the government. However, an exception to the “families first” rule has been applied to child support payments received by intercepting tax refunds—which is often the most successful method of collecting support in cases where the parents are poor. Thus, legislation was introduced in Maryland in 2014 to clarify that when child support is collected through tax refund intercepts, the families should be paid first before the government.

The head of the Maryland child support agency argued against prioritizing payments to families and children. The bill did not eliminate any money owed the government, but simply indicated the families should be paid first. However, the agency director incorrectly testified that the bill “requires that taxpayers are not reimbursed for these [welfare] costs even when child support is collected.”26

Further, similar to the agency’s argument regarding foster children’s Social Security benefits discussed in chapter 3, the child support agency argued that by taking child support payments from low-income children, the agency could help more children: that these “reimbursements allow the Department to provide services for many more vulnerable children.”27

In addition to the states’ internal competing interests, the forced child support system pits the interests of poor families against each other. Studies of fragile families show that young, poor families have potential for healthy relationships between the parents, and the possibility to become two-parent families. Most mothers want the fathers to be significantly involved in their children’s lives, and most of the fathers want to be involved. However, rather than supporting the families with services targeted to encourage healthy relationships, states force the mothers to sue the fathers—with any payments routed away from the families. The result is not positive for the relationships.

Further, the child support cooperation and assignment requirements also add conflict between the children and the parents. The poverty industry alienates low-income fathers from their children as the fathers are not able to keep up with support payments owed to the government, and the fathers may reduce contact with the children because of embarrassment or the desire to avoid enforcement efforts. Most children want their fathers involved in their lives, and the children likely cannot understand the forced child support system. As the children see their mothers suing the fathers, the children may blame both parents as the fathers retreat from family involvement.

Thus, the diversion of child support into state revenue and private profit comes at a high cost of conflict. The competing agency interests collide and the poverty industry’s revenue goals cause a weakening of the already fragile relationships in struggling families. Our welfare program has a stated legislative goal of encouraging and supporting two-parent families. Why then is a policy continued whose conflicting interests tear fragile families apart?

Societal Costs

In addition to the conflict described above, society is harmed by the poverty industry’s diverted use of child support. When child support is provided to families, the payments have a significant impact on reducing the number of children living in poverty. When states and their contractors use support payments as revenue, fewer children can escape poverty. The impact is felt by all of us. A study found that the costs to the U.S. economy resulting from child poverty amount to about $500 billion annually, or almost 4 percent of the GDP.28

Also, societal harm results as the child support requirements cause low-income noncustodial parents to retreat from the workforce. The impact is felt disproportionately by young African American men. As the poverty industry initiates pursuit, the fathers face unrealistically high support orders, license suspensions, and having their wages garnished as much as 65 percent. As a result, many poor fathers will retreat from the “above-ground” economy. A recent economic study found that stricter child support enforcement causes an increase in criminal activities among low-income fathers, as the fathers seek to avoid the regular labor force.29

The ripple effect of low-income noncustodial fathers leaving the formal economy is immediate. The obligors are more likely to engage in criminal activities, less likely to seek medical care without employer-sponsored health insurance, less likely to pay taxes, less likely to pay child support, and less likely to have a positive relationship with the custodial parents or their children.

Impact on Family Economics

They don’t want to cooperate, because it will only hurt their family. They don’t want to have the State collect their children’s support, because it will hurt their children.

—Child support caseworker30

States require single parents applying for welfare assistance to establish and pursue child support and simultaneously trade away their children’s rights to the child support payments. Proponents have contended the tradeoff is a good bargain. In exchange, the families receive regular welfare assistance payments (although with time limits and work requirements). However, considering the economic realities of families receiving welfare, the harm of the forced tradeoff becomes apparent.

Children and families are forced to give their child support rights to the government when the families have the greatest need for additional financial support. Families on welfare are the most economically fragile at the time when they try to leave welfare for work. If the families were also able to receive child support payments, the payments could enhance their ability to build up greater economic stability in preparation for leaving welfare.

A policy experiment in Wisconsin uncovered what should be obvious—that allowing child support to benefit children is better for the children and their families, and better for the state as a result. The state received a waiver from the welfare cost recovery rules in 1997 so it could pass any child support payments directly to families receiving welfare. Studies examining the waiver program indicated significant success, including “increased paternity establishment, increased child support collections, and little additional government cost.”31 In fact, allowing child support to benefit children can reduce the cost of welfare:

Child support may also reduce the costs of public assistance. If child support provides sufficient income to help a single parent become self-sufficient—perhaps by packaging child support with own earnings and other work-related supports—child support may (indirectly) reduce reliance on, and the costs of, welfare.32

Further, the child support cooperation and assignment requirements cause additional negative family economic impact by reducing informal and “in-kind” support from noncustodial parents. When states require poor mothers to sue poor fathers for payments that are then taken from the children, the fathers are less likely to provide informal financial help, buy food and clothing, or help with transportation needs and so on. The Department of Health and Human Services Office of Inspector General (OIG) investigated problems with the child support requirements and warned of the harm: that “child support enforcement may actually make some TANF families worse off. ”33 The OIG explained that noncustodial parents may stop providing informal or in-kind support to custodial parents who cooperate in establishing and enforcing child support obligations owed to the government. To counter the possible harm, the OIG recommended that states should take advantage of flexibility available within federal child support rules and reconsider their current child support policies to ensure they are not “counter-productive to long-term goals of helping clients attain independence and self-sufficiency.”34

Impact on Public Economics

Finally, even the fiscal motive of the poverty industry in converting child support to revenue is not successful. At first glance, the cost-effectiveness of the child support program seems excellent and improving every year. For the side of child support providing payments to children, that conclusion is true. But for the other side of child support, the program is a fiscal failure.

In 2011, the total administrative costs for child support collections reached $5.7 billion, resulting in $25.1 billion in support payments provided to the families and children. The social value of such payments to families is enormous. As a comparison, the total amount of child support provided to families was more than $8 billion greater than the approximately $17 billion in total federal spending on the nation’s welfare program. The additional financial support greatly increases the families’ economic stability, and the support payments also create an additional “cost avoidance” benefit: When child support payments are provided to families, the families are less likely to need public assistance and savings to public finances result. For example, a study found that the increased family economic stability from child support paid to families in 1999 resulted in $2.6 billion in avoided public assistance costs.

However, whereas the $5.7 billion in total administrative costs resulted in $25.1 billion in child support collections that were owed to families, the administrative costs resulted in only $1.6 billion in welfare cost recovery payments.

Even dividing out the administrative costs to only consider the welfare cost recovery caseload, the cost effectiveness is minimal and likely even negative. The total administrative costs are not broken down by type of case, but the costs of enforcement in child support cases where the parents received welfare are often significantly higher—because the obligors are poor and collections more difficult. To put it simply, we may likely be spending more on child support enforcement in cost recovery cases than the resulting collections. Further, this fact does not even take into account the lost cost avoidance benefits when support payments are not provided to families, as described above.

Thus, the poverty industry’s practice of converting child support into government revenue and private profit causes conflict and harm—and creates no benefit to children, families, the government, or society. Perhaps the only beneficiaries of the revenue strategy using poor children and families are the private contractors who profit from helping states pursue the payments. Further, the harm does not stop with families receiving welfare. The next section explains how child support is also converted into government revenue in the foster care system.

Using Foster Children as Collateral for Poverty Industry Revenue

Similar to welfare cost recovery, child support is also used in a revenue strategy involving foster children. The poverty industry targets abused and neglected children removed from poor families, pursues child support against the parents, and takes any resulting support payments away from the children. This policy does not apply to children removed into foster care from well-off families—only poor children. The practice again harms the children, families, and society. And again, the only winners are the private contractors.

Some of the same private contractors that help foster care agencies obtain foster children’s Social Security benefits also help states with this foster care revenue strategy using child support. For example, foster children may encounter MAXIMUS when the company contracts with the state to help obtain children’s disability payments, and then also when the company contracts to help enforce child support obligations.

This revenue strategy targets parents who have the least ability to make support payments. When their children are removed, often due to neglect caused by the circumstances of poverty, the parents struggle to improve their economic stability in order to reunify with their children. However, the government-owed child support obligation can undermine the reunification efforts by saddling the low-income parents with debt obligations they cannot afford to pay—and that do not help their children.

States use the foster children as collateral, mortgaged to secure the debt for their own care. Rather than only using federally required case plans to help parents overcome barriers in order to reunify with their children, states often illegally convert the case plans into debt collection tools. The parents can only get their children back if they can pay off the poverty industry. Almost like repossession of a car, the poverty industry may permanently terminate parental rights if the parents are not able to pay the government-owed debt.

Losing a Daughter for $72.80

A North Carolina foster care agency terminated a father’s rights while he was incarcerated for the sole reason of not paying child support to the government.35 The child had done well in her father’s care prior to his temporary incarceration. Because his parents were deceased and he had no siblings or other family able to care for his daughter, she was taken into foster care.

He called the social worker as often as he could to check on his daughter. He sent letters. He arranged to have a Christmas gift sent to his daughter through the Angel Tree organization. And he had opportunity for good work after release: “During his service in the U.S. Army from 1978–1983, from which he received two honorable discharges, T.D.P.’s father earned his GED . . . Prior to his incarceration, he worked as a restaurant cook and the restaurant manager told him she would rehire him upon his release . . .”

While the girl “was in her father’s care, DSS concluded the minor child was happy, healthy, clothed and well-fed . . . ,” and “[d]ue to his good behavior, his release date had been changed to an earlier date . . .” The social worker thus approved a plan for reunification with the father after his pending early release date from prison. But the agency simultaneously initiated proceedings to terminate parental rights.

Although the father made only pennies a day working in the prison kitchen, and he did not even know he owed support because there was no child support order in place, the court found he should have paid to reimburse the costs of foster care. The court found he could have paid “an amount greater than zero.” At 40 cents a day, the father earned $2.80 per week. Thus, considering his total earnings and the maximum amount of support he could have paid during the statutory period, the father’s parental rights were terminated for a government debt of $72.80.36

The case illustrates the result when the poverty industry subordinates the child welfare system’s primary goals to a focus on cost recovery, and unfortunately the case is not alone in its Dickensian approach. As underfunded state agencies desperately seek revenue, combined with federal laws and funding rewarding fast termination of parental rights, such examples will likely continue.

The revenue tactic of taking child support from foster children results in diverted agency missions. The core purposes of child welfare agencies are to protect the welfare of children and to strengthen and preserve families. The purpose of the child support program is to serve the best interests of children. However, through the forced intersection of the two programs in order to obtain foster children’s child support, the poverty industry causes a shift that subverts the agencies’ intended missions to a fiscal pursuit.

Caseworkers often oppose the revenue strategy, expressing concern that parents of foster children “are ‘too poor to pay,’” that “enforcing child support will be detrimental to the parent/child relationship.” Further, “[t]hey do not believe that child support serves to stabilize the family unit and help insure its future integrity.”37 States imposing government-owed child support on already poor families creates a barrier to parents’ efforts to obtain economic stability and reunify with their children. Foster children face longer stays in foster care and weakened parent-child relationships. Also, like with welfare cost recovery, there is little if any revenue gain to the government. The impoverished parents of foster children cannot meet the child support obligations, and the government administrative costs in pursing the support likely outweigh the resulting collections.

Illegality also results. States take plans required to help parents reunify with their children and often turn them into debt collection tools, requiring the parents to pay the government debts before reunification is allowed. The practice conflicts with statutorily required reunification efforts as impoverished parents are even further impoverished. And if the parents cannot make the payments, an unconstitutional practice can occur as in the case described above—terminating parental rights for a government-owed debt.

The stated goal of turning foster children’s child support into revenue is simple: paying back the government costs of foster care. Our initial emotional response to the cost recovery effort may be equally simple: parents who abuse and neglect their children should be held legally responsible to pay child support to the government for the resulting foster care costs. However, the simple goal and emotional desire to punish the parents and hold them accountable come to a halt when confronted by reality.

Targeting Impoverished and Broken Families

Foster children don’t come from rich families. When states remove children into foster care, their parents have often endured years of hardship: homeless and unemployed parents unable to find work; parents who grew up in the foster care system repeating the cycle; disabled parents unable to obtain adequate services; mothers who have been subjected to domestic violence; parents trying to overcome addictions; and single mothers who received welfare struggling to make it on their own.

A national study found that children in poor families were twenty-two times more likely to experience some form of maltreatment than children in better-off families.38 This poverty correlation doubles when considering only child neglect (children in poor families are 44 times more likely to experience neglect), and neglect is the most common type of maltreatment. Foster care agencies often treat such circumstances of poverty as grounds for child removal.

The poverty correlation in foster care is heightened by the lack of services to help poor families stay intact. Federal law requires state foster care agencies to make “reasonable efforts” to prevent the need for child removal. The requirement could trigger needed assistance to poor families prior to child removal, but unfortunately state agencies often overlook the “reasonable efforts” requirement, and services are therefore not adequate. A survey of foster care caseworkers found that parents of foster children were in need of services at the time of removal. Needed services included child care so the parents could work; domestic violence services; treatment for addictions; assistance with housing; services for mental health problems; and access to medical care, but the needs were often unmet.39

Further, the disproportionate impact on the poor is exacerbated by the funding structure of the child welfare system. Although some federal funds are available under Title IV-B to help struggling families stay together, the funds are capped. But the funds available under Title IV-E to pay foster care costs after children are removed are not capped and are only limited by the number of eligible children. About ten times the amount of funding has been made available for foster care services after child removal, as opposed to funds available to help poor families stay together.

In addition to the funding discrepancy, the federal funds for foster care services are targeted so that foster care agencies are incentivized to remove children from poor families. States agencies can only receive the IV-E funds on behalf of children removed from poor families that would have been eligible for welfare assistance. States often hire poverty industry contractors to develop strategies to increase the “penetration rate,” the percentage of foster children who come from poor families and are eligible for the IV-E funds. Children growing up in poor families face greatly increased risk of being assessed for abuse and neglect, and then states further target the children because they come with federal funds attached.

The Law Behind the Revenue Strategy: Discretion to Serve the Best Interests of Foster Children Ignored

States pursue child support obligations against the parents of foster children and divert the resulting payments to replenish government revenue, under the laws governing the Title IV-E foster care program. The requirements only apply when a child is removed from a poor family, and then the child welfare and child support agencies work together to pursue child support payments from the parents. States take any resulting payments in order to repay the costs of foster care.

The revenue strategy formally began in 1984, when Congress inserted language into Title IV-E that formed the basis of foster care cost recovery through child support enforcement that continues today. The following requirement was imposed upon state child welfare agencies:

[W]here appropriate, all steps will be taken, including cooperative efforts with the State agencies administering the program funded under part A of this subchapter and plan approved under part D of this subchapter, to secure an assignment to the State of any rights to support on behalf of each child receiving foster care maintenance payments under this part.40

Even with the cost recovery law in place, foster care agencies still have wide discretion to serve the best interests of foster children and only initiate child support cases when no harm is done. But the discretion is usually ignored.

The “where appropriate” clause in the statutory language gives states flexibility to consider the children’s interests and family circumstances before referring a foster care case for child support enforcement. Federal guidance explains that states have discretion to determine “which cases are appropriate for referral.” And “[t]o determine if a case is ‘appropriate’ to refer to the title IV-D agency,” the guidance continues, “the State should evaluate it on an individual basis, considering the best interests of the child and the circumstances of the family.”41 Suggested factors include whether reunification is a goal and whether the state-owed child support obligation would be a barrier to reunification.

A few states, like Ohio, California, and Rhode Island, implemented policies to take advantage of the discretion by considering the children’s best interests and reunification concerns. However, many states only provide exceptions to the child support requirement in instances of domestic violence. Other states, like Maryland, Nebraska, and Texas, provide no exceptions at all regardless of any harm that may result.42

As explained in earlier sections of the book, taking foster children’s child support is just one of many poverty industry revenue strategies—and the strategies often overlap. For example, just considering the various forms of cost recovery strategies, a foster child’s mother may likely have received cash welfare assistance prior to her child’s placement in foster care. Because of the welfare receipt, the state would force her to sue the noncustodial father for child support to repay the costs of the welfare assistance, as described in the first part of this chapter. If the mother then encounters difficulties and the state places her child in foster care, the state may initiate simultaneous child support collection efforts against both parents to repay the costs of foster care services. Further, if the child suffers from a learning disorder or other disability, the child may be eligible to receive Social Security benefits—which the child welfare agency will also take to reimburse foster care costs. The result is a bureaucratic cost recovery focus that diverts the agency missions, harms the children and families, and creates significant social costs.

Child Welfare Agencies’ Missions Diverted by the Poverty Industry

Child welfare agencies exist to serve dual goals—protecting the interests of children and strengthening and preserving families. The agencies are supposed to help families with services to prevent the need for child removal. And if a child is removed, the agencies will provide care and services for the child while also assisting the parents with reunification efforts.

Thus, protecting the best interests of the children is at the forefront of the agencies’ goals, with a simultaneous mission of preserving the families. But the poverty industry is undermining the missions. The industry ignores the best interests of children and harms family preservation and reunification, diverting the agency goals of protecting children to revenue maximization.

Serving Children and Families versus Race for the Money

A child removed from her family into foster care will encounter a swirling world that will determine the fate of the parent-child relationship. The child and her parents will be surrounded by a blur of meetings with caseworkers, reports, court hearings, discussions with lawyers, counseling and therapy, classes to improve parenting skills, and visits to doctors and mental health professionals. Ideally the interests of the child and parents are not lost in the confusing mix. However, states will also initiate the cost recovery focus, as well a powerful force: legal requirements and financial incentives that will encourage a race toward terminating parental rights.

The child welfare system’s policies were significantly altered through the Adoption and Safe Families Act (ASFA) in 1997. The goal of assisting family reunification in foster care cases was not eliminated, but ASFA also shifted focus toward promoting adoptions due to concern about children languishing in foster care. Parental rights must be terminated before an adoption can occur, so ASFA set short time limits for states to begin the termination process. Along those lines, “concurrent planning” is encouraged, where child welfare agencies actively pursue adoption while simultaneously providing required reunification services.

ASFA provides some discretion to allow more time for reunification when doing so is in the best interests of the children, but money trumps all. States often ignore the discretion because the financial incentives are all geared toward quickly terminating parental rights. For example, agencies are worried they may not maximize federal funds if they do not terminate parental rights quickly. Also, financial awards are provided to foster care agencies for each finalized adoption but no similar financial incentive is provided to work toward family reunification.

Even with states’ race to terminate parental rights encouraged by financial incentives, child welfare agencies have a core mission of providing reunification services to strengthen and preserve families. The agencies are supposed to “prevent or eliminate the need for removing the child from the child’s home . . . ,” and if child removal occurs the agencies must provide reunification services “to make it possible for a child to safely return to the child’s home.”43 Thus, despite ASFA encouraging states to terminate parental rights as quickly as possible, family reunification continues as a key component of required case planning goals. However, the reunification requirements are often weakened as a result of the government’s cost recovery focus. Again, private contractors are often present. In addition to contracting with states to pursue government-owed child support, the poverty industry companies also help states maximize revenue through strategic compliance with the ASFA and other Title IV-E requirements.

Poverty Industry Revenue versus Family Reunification

Although the child welfare system is structured against the poor, hope remains for some parents. A good caseworker may work through the bureaucratic barriers, develop a relationship of trust with the parents, and develop a case plan with reunification assistance. For example, if a child is taken into foster care because the parents are facing homelessness, unemployment, and substance abuse, the caseworker might help locate housing assistance, a drug treatment program, and help with job training.

Overcoming poverty is not easy, but the parents can make good progress with effective caseworker assistance. However, when the parents face the greatest vulnerability and need for services, the foster care agency shifts its role as social services provider to the goal of revenue maximization. And while the agencies and their private contractors initiate government-owed child support, the financial pursuit will increase the parents’ economic difficulty and harm their struggles to reunify with their children.

A report by the OIG found that most foster care caseworkers don’t approve of the child support cost recovery requirements. The caseworkers often “expressed opinions that families of IV-E Foster Care children are ‘too poor to pay,’” that the child support requirements could hamper family reunification, and “that enforcing child support will be detrimental to the parent/child relationship.” The caseworkers explained they “do not believe that child support serves to stabilize the family unit and help insure its future integrity.”44 The report recognized that foster care caseworkers were reluctant to refer cases to child support enforcement because they cared about helping their clients:

Foster care staff are oriented to talk in terms of an individual child. They form interpersonal relationships with the families they serve. On the other hand, most IV-D Child Support Staff view themselves as adversaries of “absent parents.” The child support staff tend to be “bottom line oriented.”45

Despite the concerns and harm, the OIG expressed a belief that foster children might benefit from the child support cost recovery requirements. Although any child support payments are taken from the children, the OIG asserted foster children might benefit indirectly through paternity establishment that could trigger possible inheritance and insurance rights and also information regarding genetically linked medical problems. Further, the report explained that the paternity establishment could help a child potentially form social relationships with the father that otherwise might not occur.

However, the U.S. Department of Health and Human Service’s Assistant Secretary for Planning and Evaluation (ASPE) disagreed with the OIG’s positive view that child support cost recovery can be helpful in some foster care cases—expressing concern about the conflicting missions:

I believe your draft does not address several important issues, and therefore oversimplifies the extent to which Child Support collections for foster care children can or should be pursued. . . . The report does not adequately address the real and perceived conflicts between the activities and goals of the IV-D [child support] program (maximizing collections) and those of the IV-E [foster care] program (maximizing family reunification).46

Unfortunately the focus on government revenue apparently won out in the OIG report, which called for improved collaboration with child support staff in order to increase child support enforcement in foster care cases. The OIG acknowledged but quickly disregarded the concerns of HHS leadership: “We agree that child support should only be pursued in ‘appropriate’ cases. However, we continue to believe that the majority of children in foster care can benefit from IV-D Child Support services, such as paternity establishment and locating absent parents.”47

The OIG’s conclusion that child support cost recovery in foster care cases can actually help the children does not withstand scrutiny. Most children enter foster care due to family poverty. Pursing government-owed child support against impoverished parents does not help the children, undermines parents’ reunification efforts, and harms the parents’ relationships with their caseworkers. Further, while the child welfare program has expressed desire to increase the involvement of noncustodial fathers in their children’s lives, increased cost recovery efforts have the reverse effect. The government-owed child support obligations can further alienate parents from each other, and cause the noncustodial fathers to further retreat from the agency in pursuit. If the primary agency interaction with fathers takes the form of child support obligations the fathers cannot afford to pay, threatening the fathers with incarceration due to contempt, suspending their driver’s licenses, and garnishing 65 percent of their paychecks for support payments that are taken from the children, the fathers will seek to avoid rather than embrace agency involvement.

Moreover, the OIG’s claim that foster children can receive benefit from child support enforcement because of the parent identification and location services is based on a misunderstanding of the law. Foster care agencies can request parental location assistance from child support offices, and paternity can be established, without referring a child’s case for child support enforcement.

With all harm and no benefit to families or children, the only potential beneficiary of child support cost recovery in foster care cases is the poverty industry: the state agencies looking to replenish government revenue and the private contractors seeking to maximize profit. And in fact, states also do not win because government agencies receive little or no financial benefit—and likely incur a loss. As explained regarding child support cost recovery used in welfare cases, payments from child support enforcement in foster care cases are overshadowed by the cost of enforcement. The parents of foster children are almost always poor, and collecting support payments from impoverished parents is not a successful undertaking. The administrative costs of collections are likely close to if not greater than the resulting collections Also, states taking child support payments from families and children results in the loss of “cost-avoidance” benefits, the cost savings when parents and children are less likely to need public assistance in the future when child support is paid to families rather than routed to government coffers.

Children are harmed. Families are harmed. Social costs are increased. Any revenue gain to the government is questionable at best. Only the poverty industry contractors stand to benefit. The conclusion is simple. When child support benefits children, the collection effort can be worth the cost. When states divert child support toward cost recovery, the questionable fiscal benefit to the government is simply not worth the harm that results.

Illegality of Using Foster Children as Collateral

The poverty industry’s effort to use foster children’s child support as revenue is a fiscal failure and includes negative policy implications. Further, illegality can result.

Illegal Diversion of Agency Mission

Agencies enforcing government-owed child support obligations against the parents of foster children conflicts with the required goal of family reunification. The diverted agency mission conflicts with federal law.

Foster care agencies must make reasonable efforts “to preserve and reunify families.” A case plan is required, and the plan must include services to help the parents overcome difficulties so that a safe reunification may be possible.

Agencies are supposed to provide services and plans to help make reunification more likely, not more difficult, and not add burdens irrelevant to the children’s interests or that do not address the causes for child removal. However, the agency enforcement of government-owed child support in foster care cases has nothing to do with the causes for child removal, is harmful to the children, and the additional obligation will make reunification less likely.

Many state foster care agencies even insert the government-owed child support as an element in the required reunification plans. The agencies use foster care children as collateral: If the parents do not meet the case-planning requirement of paying child support to the government, the children are not returned.

When states pursue government-owed child support obligations that harm family reunification goals, or when the government debt is inserted into required reunification plans, the federal statutes that require a focus on family reunification are violated. The conflict has a significant negative effect on case planning goals, and as the next section explains, the conflict can lead to the termination of parental rights.

Unconstitutional Practice: Terminating Parental Rights for a Government-Owed Debt

We have not rid ourselves of debtors’ prisons only to substitute for that Dickensian horror, the termination of the debtor’s parental rights.48

Several states include the failure to pay government-owed child support as a statutory factor for terminating parental rights. Some states even allow the unpaid debt alone to serve as grounds for termination. Such statutory grounds for terminating parental rights are unconstitutional, subordinating the constitutionally protected parent-child relationship to the fiscal interests of the poverty industry.

The government interest in termination of parental rights proceedings is supposed to be protecting the welfare of children, not pursing government-owed debts. For example, if a parent owes money to repay government loans for a child’s education, should the parent lose her child if she falls behind on the loan payments? A child placed in foster care is obviously different, because the child is removed due to abuse or neglect. However, the reasons for ultimately terminating the parent-child relationship must always be based on the best interests and welfare of children, and support payments owed to the government are not related to those interests.

Agencies terminating parental rights due to government-owed child support divert the child welfare mission toward agency cost recovery, with the children used as collateral. The parents can try to reunite with their children if they can keep up with payments owed to the government, but they can lose the child-collateral if they fall behind.

In fact, several state court decisions have upheld the termination of parental rights due to the government-owed debts. For example, in the case discussed earlier, the appeals court in North Carolina allowed a termination of an incarcerated father’s parental rights for the sole reason that the father failed to make government-owed support payments. Although the agency caseworker developed a plan for the father to reunite with his daughter after prison release, the agency also initiated the process to terminate his parental rights—and the only reason provided was the government debt. The agency relied on the following North Carolina statute:

(a) The court may terminate the parental rights upon a finding of one or more of the following:

. . . (3) The juvenile has been placed in the custody of a county department of social services. . . . and the parent, for a continuous period of six months next preceding the filing of the petition or motion, has willfully failed for such period to pay a reasonable portion of the cost of care for the juvenile although physically and financially able to do so.49

The father was actually not even under a court order to pay child support, and he only made 40 cents a day working as a cook in the prison. However, the court found he should have paid some “amount greater than zero” and used his failure to do so as the grounds to permanently remove his daughter.

Similar examples exist in other states. In Georgia, a teenage girl gave birth to a daughter while she was in foster care. The seventeen-year-old mother was separated from her daughter because the foster care agency did not find a placement that would let them stay together. Once separated, the agency required the young mother (who was still in foster care herself) to make support payments to repay the costs of her daughter’s foster care. The agency made the government debt part of her reunification plan.50 The mother then had to leave foster care when she turned eighteen, but the agency kept her daughter and filed a petition to terminate parental rights six months after the mother aged out of care. The juvenile court explained: “[T]here is no doubt that this mother loves this child. However, her own circumstances have placed her in the position of not being able to provide the basic necessities for the child since the child’s birth one and one-half years ago.”51

The Georgia appellate court noted several difficulties the young mother faced as reasons for terminating her parental rights. The mother could not maintain stable housing, she had not finished high school, she struggled with mental health difficulties including post-traumatic stress disorder, and she did not have health insurance. Further, in addition to such difficulties faced by many foster children trying to transition to independence, the court emphasized another factor as reason to take away her daughter: The struggling mother was $220 behind on the government-owed child support payments.52

Unfortunately, such examples are not uncommon. In South Carolina, courts have ruled that unpaid child support owed to the government can be the sole reason for terminating incarcerated parents’ parental rights.53 Other Georgia cases have allowed termination of parental rights of an incarcerated mother and disabled father, explaining that the state’s “law requires a parent to financially support his or her child while the child is in foster care, even in the absence of a court order”54 and “even if personally disabled”55 or “unable to earn income.”56 And in other North Carolina cases, a parent’s rights were terminated because the parent was only able to pay $136 of $300 owed toward the cost of foster care,57 and a court found it appropriate to terminate parental rights for unpaid support where a young struggling mother was not even told she was supposed to pay support to the government.58

The parent-child relationship is constitutionally protected, and the grounds for termination of parental rights can only occur when in the best interests of the children. Thus, the agency focus on debt collection as a reason to terminate parental rights is an unconstitutional infringement on the parent-child relationship, in violation of substantive due process.

Supreme Court Justice Ruth Bader Ginsburg explained that the U.S. Supreme Court has been “unanimously of the view that ‘the interest of parents in their relationship with their children is sufficiently fundamental to come within the finite class of liberty interests protected by the Fourteenth Amendment’” and “that ‘[f]ew consequences of judicial action are so grave as the severance of natural family ties.’”59 The Court recognized a fundamental liberty interest in the parent-child relationship that requires meaningful inquiry into the substantive content of state statutes providing for terminating the relationship.

Substantive due process is about more than process. The Supreme Court explained in Troxel v. Granville how the doctrine requires a focus on fair content—not just fair procedures:

We have long recognized that the Amendment’s Due Process Clause, like its Fifth Amendment counterpart, “guarantees more than fair process.” . . . The Clause also includes a substantive component that “provides heightened protection against government interference with certain fundamental rights and liberty interests.”60

As Supreme Court Justice Antonin Scalia explains, the heightened scrutiny is a “a substantive component, which forbids the government to infringe certain ‘fundamental’ liberty interests at all, no matter what process is provided, unless the infringement is narrowly tailored to serve a compelling state interest.”61

That test is not met when a state statute allows the termination of the parent-child relationship due to a government-owed debt. When a state seeks to terminate parental rights, a clear and compelling state interest exists to protect the welfare of children. But a state agency ending the parent-child relationship because of money owed to the government is not related to that state interest.

Refocusing Child Support Toward Helping Children

The conclusions to be drawn from this chapter are simple. When multiple agencies that exist to serve vulnerable children and fragile families are engaged in collaboration, the result should help the children and families—not cause harm.

Child support enforcement actions should not work against the interests of children and their families. The agency pursuit of government-owed child support when families receive public assistance or when children are in foster care causes harm and results in no benefit: The agency cost recovery effort harms the best interests of children; further divides fragile families as the parents are pitted against each other; weakens the economic stability of impoverished families; undermines the efforts of families to reunite with children in foster care; alienates poor fathers from their families and from the above-ground economy; and there is little if any positive revenue effect for the state agencies, and more likely a fiscal loss.

As long as states continue their cost recovery efforts using child support, the interests of children and families will conflict with the states’ fiscal pursuits and the only winners will be the private contractors. The harm can be remedied by ensuring child support is only pursued and used to help children. More detailed recommendations to realign the agencies’ missions are included in the conclusion to this text.