Brief ⁽¹⁾

HB 2508 requires the Department of Social and Rehabilitation Services (SRS), the state's Title IV-D agency, to establish a central unit for collection and disbursement of support payments, i.e., the Kansas Payment Center. SRS is required to collaborate with the Kansas Supreme Court in establishing the center.

The central unit shall commence operations with respect to support orders entered in each county as provided in a schedule adopted by the Kansas Supreme Court. Child support order includes any order for maintenance in conjunction with a child support order.

The bill provides that any provision in any child support order which requires remittance of support payments to the clerk of the district court or district court trustee shall be deemed to require remittance of support payments to the central unit regardless of the date the child support or income withholding order was entered.

Conforming amendments are made to the Income Withholding Act, the Kansas Parentage Act, the Kansas Divorce Code, and the Kansas Code of Civil Procedure.

The bill also amends the Divorce Code to permit for good cause shown orders of support to be paid other than to the central unit. A written agreement between the parties to make direct child support payments shall constitute good cause. The obligor is required to file a copy of the written agreement with the court, to keep written evidence of payments made, and to provide the written evidence to the court at least annually.

The bill also includes some technical amendments to the Kansas Income Withholding Act. One updates the definition of Title IV-D to include amendments enacted in recent years by the Congress. The other change clarifies that a copy of the income withholding order, rather than the original document, is served on the payor and triggers the payor's obligations under the withholding law.

Background

The Senate Committee of the Whole struck provisions of HB 2508 and inserted provisions of SB 329 with some added language regarding direct child support payments under the Kansas Divorce Code.

SB 329 was supported by SRS and the Office of Judicial Administration. A spokesperson for SRS said this legislation codifies the authority of the Kansas Supreme Court to require that child support payments be sent to the Kansas Payment Center. In addition, the conferee pointed out the 2000 omnibus budget bill which authorized by proviso the Kansas Supreme Court to issue an administrative order directing child support payments to be made to the central unit instead of to the district courts.

The federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) required centralized processing of support payments as a key element for improving child support laws and procedures. PRWORA requires the state to establish a centralized unit for collection and disbursement of support payments in all IV-D cases and income withholding payments established after October 1997 in Non-IV-D (non-SRS) cases.

A spokesperson for the Office of Judicial Administration supported the bill but requested the three amendments authorized by the Senate Committee on Ways and Means to clarify intent and to remove unnecessary language as the payment center is in operation.

The Senate Committee amended SB 329 by deleting the language about commencing operations; clarifies that maintenance payments will be handled in the same manner as support payments; and deletes the court's obligation to hold in trust undeliverable support payments as these payments are held by the central unit.

The fiscal note for SB 329 states that funding for operation of the Kansas Payment Center is included in the Governor's FY 2002 budget.

As noted earlier, provisions of HB 2508 were stricken by the Senate Committee of the Whole.

HB 2508 would establish the Kansas Payment Center as a central unit for the collection and dissemination of child support payments. In general, the bill follows the requirements of the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Specifically, HB 2508 contains the following provisions.

Time Limits

• HB 2508 amends the Income Withholding Law to require a response, to written or electronic requests for information, by a payor, usually an employer, within 5 days. Current law is 10 days.
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• HB 2508 also adds a requirement of a certified copy of an income withholding order to be served to the payor. The time limit, currently 14 days, for the payor to begin deductions is changed to 5 days. The time frame for paying the amount withheld is changed from the current 7 days to 5 days.
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• Penalty. HB 2508 adds a penalty provision for payors who, without good cause, fail to pay over the amount withheld and identify each payment in the same business day. The penalty will be a judgment against the payor and in favor of the obligee or recipient of the payment for twice the amount of the cost recovery fee.
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Contract Modifications

Certain contract modifications between the Department of Social and Rehabilitation Services (SRS) and the private vendor (collector) will be allowed as follows.

• Any contract shall provide that the Kansas Supreme Court, by court rule, establish the procedure for the creation, maintenance, and collection of official child support and maintenance records for use as official court records.
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• No contract shall include provisions allowing the private vendor who operates the payment center to be paid, in whole or in part, on the basis of an amount per phone call received by the center nor allowing the vendor to be paid an amount per check issued for checks that were issued in error by the center.
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• Any contract with a private vendor shall include penalty provisions for noncompliance with federal regulations relating to the timeliness of collections and disbursements and shall include minimum monetary penalties for each erroneous transaction, whether related to collection or disbursement. Penalties shall be collected as and when assessed and shall be placed in the SRS Central Unit Penalty Fund.
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• Any contract with a private vendor shall provide for full access to all data by the Secretary of SRS designee in the Central Receivables Unit, the designee of the Office of Judicial Administration, and the chairperson of the Central Payment Center Oversight Commission. Further, the contract shall provide that all district court clerks and court trustees have access to records of the vendors sufficient to allow them to assist in the process of matching support payments to the obligees and be provided dedicated telephone line access to the vendor for the purpose of assisting the vendor in making accurate and timely disbursements.
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• Any contract with a private vendor, in addition to sufficient customer service staff during regular business hours, shall require 24-hour access by obligors and obligees to payment files which show status of receipts and disbursements, including, but not limited to, date of receipt by the vendor, date of processing by the vendor, and date of mailing to the obligee.
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• Any contract with a private vendor shall provide that if the vendor is unable to match a payment with the obligee within five business days of receipt of the funds, such unmatched funds shall be transferred to the Central Receivables Unit of SRS for determination of proper disbursement.
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• Any contract with a private vendor shall provide that the central unit be known as the Kansas Payment Center. The name "Kansas Payment Center" shall be reserved for use by the State of Kansas for the functions of the central unit and shall not be used by any private entity for the collection of support funds.
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• Any contract with a private vendor shall provide that the vendor create a standardized form that shall accompany all payments made to the central unit. Such form shall contain the information necessary to assist in the disbursement of such payments.
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• Any unmatched funds transferred to the Central Receivables Unit of SRS which remain unmatched one year after the transfer and after a good faith effort has been made to find the obligee shall be deposited with the State Treasurer in accordance with the Unclaimed Property Act.
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• SRS Central Unit Penalty Fund. There is created in the State Treasury the SRS Central Unit Penalty Fund. Money credited to the Fund shall be used solely for the purpose of assisting obligees who have incurred expenses due to the fault of the vendor in handling the support payments.
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• All expenditures from the SRS Central Unit Penalty Fund shall be made in accordance with appropriations acts upon warrants of the Director of Accounts and Reports issued pursuant to vouchers approved by the Secretary or the Secretary's designee.
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• Upon receipt of any such penalty, the Secretary shall remit the entire amount at least monthly to the State Treasurer, who shall deposit it in the state treasury and credit it to the SRS Central Unit Penalty Fund.
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• On or before the 10th of each month, the Director of Accounts and Reports shall transfer from the State General Fund to the SRS Central Unit Penalty Fund interest earnings based on: the average daily balance of moneys in the SRS Central Unit Penalty Fund for the preceding month; and the net earnings rate of the pooled money investment portfolio for the preceding month.
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Central Payment Center Oversight Commission. The bill creates the Central Payment Center Oversight Commission to monitor the various aspects of the Kansas Payment Center, especially customer service.

Major portions of this provision include the following:

• Commission members will include:
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• • a district court judge whose jurisdiction includes domestic relations;
  • a court trustee who works in child support enforcement;
  • a district court clerk;
  • a Child Support Enforcement Specialist I who is employed by SRS;
  • an employer, with more than 75 employees, who provides income withholding;
  • an employer, with less than 25 employees, who provides income withholding;
  • a custodial parent who has a court order to receive child support;
  • a noncustodial parent who is under a support order to pay child support;
  • a representative appointed by the Governor;
  • a representative of the Office of Judicial Administration;
  • the State Treasurer or the Treasurer's designee;
  • the Central Receivables Unit manager of SRS or the manager's designee;
  • four members of the Legislature as ex officio members. Of the four members, one Representative shall be appointed by the Speaker of the House of Representatives, one Representative shall be appointed by the Minority Leader of the House of Representatives, one Senator shall be appointed by the President of the Senate, and one Senator shall be appointed by the Minority Leader of the Senate;
  • the vendor operating the central unit for the collection and disbursement of support payments, pursuant to KSA 23-4,118 and amendments thereto, or the vendor's designee as an ex officio member; and
  • the Director of the Title IV-D division or the Director's designee as an ex officio member.
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• The Legislative Coordinating Council shall appoint the first eight listed members of the Commission.
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• The initial members of the Commission shall be appointed no later than July 1, 2001. Members shall serve terms of two years, except that the initial terms of members shall be one year to provide for staggered terms for Commission members. Vacancies shall be filled in the same manner as the original appointments and for the remainder of the unexpired term. Members whose terms have expired shall continue to serve until their successors have been appointed. Members shall be eligible for reappointment. The Commission shall select a chairperson, annually, from its membership. A chairperson may serve more than one year.
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• The Commission shall meet on call of the chairperson as authorized by the Legislative Coordinating Council.
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• The staff of the Legislative Research Department, the office of the Revisor of Statutes, and the Division of Legislative Administrative Services shall provide such assistance as may be requested by the Commission and to the extent authorized by the Legislative Coordinating Council.
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• Members of the Commission attending meetings of the committee or attending a subcommittee meeting thereof authorized by the Legislative Coordinating Council shall be paid compensation, travel expenses, and subsistence expenses or allowances.
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• The duties of the Central Payment Oversight Commission shall include the following:
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  • recommend to SRS, if appropriate, ways to improve or enhance the effectiveness of the central unit for the collection and disbursement of support payments;
  • recommend performance indicators for the central unit;
  • recommend legislation which would clarify and improve state law regarding support for children as it relates to the central unit;
  • present an annual report of its activities and recommendations to the Legislative Coordinating Council by February 1;
  • review the terms of any contract with a private vendor who is operating the central unit and provide suggestions and recommendations;
  • consider whether the issue of a private vendor operating the central unit should be submitted to the Kansas Performance Review Board;
  • monitor federal regulations relating to the central unit mandate and evaluate any and all opportunities for appropriate waivers and options out of the mandate;
  • monitor all funds in suspense status and make recommendations regarding the handling of payments in suspense, whether by the state or a private vendor;
  • monitor the penalty provisions in any private vendor contract and monitor the status of violations and collection of penalties; and
  • conduct public hearings in order to fulfill the oversight function, as authorized by the Legislative Coordinating Council.

Sunset

The provisions regarding the contract modifications and the Oversight Commission will expire on July 1, 2003.

Court Trustees

A provision of the bill prohibits court trustees from charging or collecting a fee for support payments not paid through the central unit and disbursed according to KSA 23-4,118.

Bypass Procedure

Upon written agreement by the parties and permission by the court, income withholding payments can be avoided and direct payments to the obligee can be made. Such a written agreement will constitute good cause.

House Committee of the Whole

The House Committee of the Whole added a new section to HB 2508 to make the Secretary of SRS responsible for the payment of late fees, bank fees, and other such fees due to late payment of child support. An administrative procedure is established for hearing these claims by an administrative law judge. The Secretary has no right to appeal decisions by the judge.

Senate Committee on Judiciary

The Senate Committee on Judiciary amended HB 2508 by deleting a provision which provides that a written agreement between the parties to make direct child support payments shall constitute good cause for not using the central payment center. Another amendment was technical.

Senate Committee of the Whole

The Senate Committee of the Whole deleted provisions of HB 2508 and inserted provisions of SB 329.

Those appearing in support of HB 2508 included representatives from SRS, the Office of Judicial Administration, as well as several citizens who spoke on a related bill about the negative conditions of the current child support payment system.

The Chairman of the House Judiciary Committee also spoke in favor of HB 2508.

The fiscal note on HB 2508 indicates that, without a central payment center, the state could suffer federal penalties and a loss of $36.8 million in federal funds in FY 2002.

The provisions regarding the Oversight Commission were taken from HB 2361. The fiscal note on HB 2361 indicated an increase in state expenditures of $23,580 in FY 2002.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext.cgi