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The Changing Landscape of Child Support Distribution and Pass-Through Payments

It is no secret that the assignment, distribution, and disbursement of child support is always evolving. Industry expert Elizabeth Morgan in her article Pass-Through Payments to Families: Options Available to States, breaks down the relationship of child support assignments, distribution, and pass-through payments within the context of state and federal requirements and policy options. Elizabeth’s article provides insight into the shifting focus of the child support program from a cost-recovery orientation to a trend to more family-first policies.

Family-First Options Under the Deficit Reduction Act of 1984

The Deficit Reduction Act of 1984 (DRA) ushered in a more family-first treatment of child support distribution. Since then, more collections go to the family, now that less support goes to the government for families receiving public assistance. States have more options to pass through assigned support collections to families. Meaning, not only to families currently receiving public assistance but also to families who are no longer receiving assistance. States also have the authority to discontinue some existing assignments of arrearages so that these arrearages belong to the family, not to the state.  

Under the DRA, states also have the option to distribute federal tax refund offset collections in the same way as all other types of collections, that is, first to current support, then to the family’s arrearages, then to the state’s arrearages. Currently, only five states have implemented “DRA Distribution” though many states are considering a shift to this type of distribution with the trend towards family-first policies.

Child support distribution and the option to pass through assigned support collections to families may change and expand through future legislation. Congress introduced the Strengthening Families for Success Act in October of 2020. While the legislation is not currently under consideration, it is expected to be re-introduced during the current Congress. For more detailed information regarding this topic, read Elizabeth’s article linked below.

The Future of Pass-Through Payments

Pass-through payments will continue to change through ongoing legislation. The Strengthening Families for Success Act was introduced in the House and the Senate in October of 2020. It would allow States to pass through any amount of assigned support with full federal financial participation. To qualify, the State must disregard the current amount of support passed through. This is necessary for determining eligibility and the amount of assistance the family needs.

Originally published in the Child Support CommuniQue – April 2021 issue (page 36)

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