Child Support Payment Corporation :::

CHILD SUPPORT BOND LEGISLATION

A BILL

To provide for the issuance of child support bonds to assure payment of child support.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.
This Act may be cited as the `Family Support Bond Act of 2007'.

SECTION 2. FINDINGS AND PURPOSE.
(a) FINDINGS- The Congress finds that-

there is more than $84 Billion dollars in accumulated unpaid child support that is due to more than 17 million children in the United States;
families being limited by benefits are most in need of adequate and regular child support payments to become and remain self-sufficient;
a majority of children that grow up in single family, who do not receive child support payments, live at or below the poverty level;
children who receive child support are more likely to have contact with both parents, have fewer behavior problems and attain higher levels of education;
there is more than $ 29 Billion dollars in accumulated payments due to the Federal Treasury and there is more than $ 29 Billion dollars in accumulated payments due to the individual State Treasuries;
there is more than $ 26 Billion dollars in accumulated payments due to needy families to help them become and remain self sufficient;
payment of these amounts would add an immediate and significant stimulus to the economy.

(b) PURPOSE- It is the purpose of this Act to enable participating States, organizations, and institutions to establish child support payment corporations in order to provide funding for the child support payments of non-custodial parents of such children. The child support bond approach is structured on the issuance of bonds that are collateralized and securitized by the past, present and future child support payments. The principal amount of the bonds would be guaranteed by the Federal Government for periods of up to thirty years.

SEC. 3. ESTABLISHMENT OF CHILD SUPPORT BOND PROGRAMS

(a) IN GENERAL- In order to encourage participating States, organizations and institutions to establish and form child support payment corporations, the Secretary of the Treasury ( hereafter in this section referred to as the ‘Secretary’) shall authorize the issuance of a United States Government Guarantee of principal repayment on principal amounts for up to $84 Billion dollars for periods of up to thirty years. The proceeds of the bond offering will be used to purchase outstanding arrearages, make current and future child support payments. The Secretary shall authorize the assignment of the arrearages due to the Federal Government, including accrued statutory interest, to the bondholders upon receipt of funds. The arrearages due to the States and individuals will be voluntarily assigned upon the receipt of funds in accordance with this section.

(b) CONTENTS OF APPLICATION- An application for guarantees under this section shall be submitted by the Governor of a State or principal(s) of the institution and shall-

contain a description of the proposed child support bond program to be established, implemented, or improved using amounts provided under this section, including the specific activities to be undertaken and the agencies that will be involved;
specify whether the program will be carried out throughout the State or in limited areas of the State;
estimate the number of children who will be eligible for child support payments under the project, and the amounts to which they will be entitled on average as individuals and in the aggregate;
describe the child support guidelines and review procedures which are in use in the State and any expected modifications;
contain a commitment by the State to carry out the program during a period of not less than 3 and not more than 30 consecutive fiscal years beginning with fiscal year 2001;
contain assurances that the State--

is currently at or above the national median paternity establishment rate(as defined in section 452(g)(2) of the Social Security Act),
will improve the performance of the agency designated by the State to carry out the requirements under part D of title IV of the Social Security Act by at least 4 percent each year in which the State operates a child support bond program under this section in -

the number of cases in which paternity is established when required;
the number of cases in which child support orders are obtained; and
the number of cases with child support orders in which collections are made; and

to the maximum extent possible under current law, will use Federal, State, and local job training assistance to assist individuals who have been determined to be unable to meet such individuals' child support obligations;

describe the extent to which multiple agencies, including those responsible for administering the Temporary Assistance to Needy Families under part A of title IV of the Social Security Act and child support
collection, enforcement, and payment under part D of such title, will be involved in the design and operation of the child support bond programs; and
contain such other information as the Secretary or the Secretary of Health and Human Services may require by regulation.

USE OF FUNDS- A State, organization or institution shall use the guarantees provided under this section to carry out a child support bond program designed to fund past, present and future child support payments for each eligible child in the State.
REQUIREMENTS- (1) A child support bond program funded under this section shall provide that--

any child with a living non-custodial parent for whom a child support order has been granted is eligible for the child support bond program;
the court ordered child support payment shall be paid promptly to the custodial parent at least once a month by the living non-custodial parent and shall be-

in statutory default in the event of non-payment and shall accrue interest at a rate of the 30 year Treasury Bond Rate plus 7% but not less than 12% p.a.;
offset and reduced to the extent that the custodial parent receives child support payment in a month from the non-custodial parent;
indexed and adjusted for inflation; and
in the case of a family of children with multiple non-custodial parents, calculated in the same manner as if all such children were full siblings, but any child support payment from a particular non-custodial parent shall only be applied against the child support payment due for the child or children of that particular non-custodial parent;
interest payments made on the bonds shall be exempt from federal income taxes.

for purposes of determining the need of a child or relative and the level of assistance, one-half of the amount received as a child support payment shall be disregarded from income until the total amount of child support and Temporary Assistance to Needy Families benefit received under part A of title IV of the Social Security Act equals the Federal poverty level for a family of comparable size;
in the event that the family as a whole becomes ineligible for Temporary Assistance to Needy Families under part A of the Social Security Act due to consideration of guaranteed child support benefits, the continuing eligibility of the caretaker for Temporary Assistance to Needy Families under such title shall be calculated without consideration of the guaranteed child support program; and
in order to participate in the child support bond program, the child's caretaker shall apply for services of the State's child support enforcement program under part D of title IV of the Social Security Act.

For purposes of this section, the term `child' means an individual who is of such an age, disability, or educational status as to be eligible for child support as provided for by the law of the State in which such individual resides.
For purposes of this section, a child support order shall be deemed to have been granted when a court has ordered an individual to make child support payments in specific amounts for a specified time period for the support of a particular child or children.
CONSIDERATION AND PRIORITY OF APPLICATIONS- (1) The Secretary shall consider all applications received from States, organizations and institutions desiring to implement child support bond programs under this section and shall approve not more than 70 programs (50 state programs and 20 territories and private programs) which appear likely to contribute significantly to the achievement of the purpose of this section. In selecting States, institutions or organizations to implement the program under this section, the Secretary shall-
consider the geographic dispersion and variation in population of the applicants;
give priority to applications which demonstrate-
significant experience in dealing with child support payment issues; and
that efforts will be made to link child support payment systems with other service delivery systems; and
ensure that, if feasible, the appalicant selected use a variety of approaches for child support guidelines.
Of the applicants selected to participate in the child support bond programs conducted under this section, the Secretary shall require, if feasible-
that at least 2 or more of such applicants provide intensive integrated social services for low-income participants in the child support assurance project, for the purpose of assisting such participants in improving their employment, housing, health, and educational status; and
that at least 2 or more such applicants plan to cooperate and to integrate interstate establishment and enforcement of child support awards.
EVALUATION AND REPORTS- (1) Each applicant that implements a bond program under this section shall, as a part of such program, conduct an annual evaluation of the effectiveness of the bond program and shall submit the annual report to the Secretary concerning the results of the evaluation and any improvements in child support bond program.
The report submitted by an applicant to the Secretary shall analyze and describe (in such a manner as prescribed by the Secretary)-
the impact of the child support bond program on the economic and non-economic well-being of children and adults in both custodial and non-custodial households;
the work force participation rates of both custodial and non-custodial parents as a result of participation in the child support bond programs;
the impact of the child support bond program on Temporary Assistance to Needy Families participation rates, grants, and funding levels;
a comparison of enforcement effectiveness in intrastate and interstate cases;
the impact on custodial and non-custodial families of access to intensive integrated services for custodial families and to job training services for non-custodial parents;
the impact of child support guidelines on the effectiveness of the child support bond program and the economic well-being of children and adults in both custodial and non-custodial families;
administrative policies and laws of the Federal Government and the State or a political subdivision of the State, identified by the State as impediments to the collection of adequate child support payments from non-custodial parents;
the measures that the State has taken or intends to take to eliminate or reduce impediments described in subparagraph (G) that are attributable to administrative policies and laws of the State or a political subdivision ofthe State; and
any other relevant items as the Secretary may require.
DURATION- A program conducted under this section shall be commenced not later than fiscal year 2002 and shall be conducted for not less than 3 and not more than 30 consecutive fiscal years, except that the Secretary may terminate a program before the end of such period if the Secretary determines that the applicant conducting the program is not in substantial compliance with the terms of the application approved by the Secretary under this section.
COST SAVINGS RECOVERY- The Secretary shall develop a methodology to identify any State cost savings realized in connection with the implementation of a child support bond program conducted under this Act. Any such savings realized as a result of the implementation of a child support bond program shall be utilized for child support enforcement improvements or expansions and improvements in the Temporary Assistance to Needy Families Program conducted under part A of title IV of the Social Security Act within the participating State, and Federal expenditures for such project within the State shall be reduced in proportion to any such savings.
EVALUATION AND REPORT TO CONGRESS- Three and 5 years after commencement of the first child support bond program, the Secretary shall conduct an evaluation of each such project and submit a report to the Committee on Finance and the Committee on Labor and Human Resources of the Senate, and the Committee on Ways and Means and the Committee on Education and Labor of the House of Representatives concerning the effectiveness of the child support bond program funded under this section. Such report shall analyze the reports received by the Secretary under subsection (f) from each participating State and shall compare the effects of different types of child support guidelines.
RESTRICTIONS ON MATCHING AND USE OF FUNDS- (1) An applicant implementing a bond program under this section shall be required
except as provided in paragraph (2), to provide not less than 20 percent of the total amounts expended in each calendar year of the project to pay the costs associated with the project funded under this section; and
to maintain its level of expenditures for child support collection, enforcement, and payment at the same level, or at a higher level, than such expenditures were prior to such State's participation in a bond program provided by this section.
A State participating in a bond program under this section may provide no less than 10 percent of the total amounts expended to pay the costs associated with the program funded under this section in years after the first year such project is conducted in a State if the State meets the improvements specified in subsection (b)(6)(B).
COORDINATION WITH CERTAIN MEANS-TESTED PROGRAMS- For purposes of-
the United States Housing Act of 1937;
title V of the Housing Act of 1949;
section 101 of the Housing and Urban Development Act of 1965;
sections 221(d)(3), 235, and 236 of the National Housing Act;
the Food Stamp Act of 1977;
title XIX of the Social Security Act; and
child care assistance provided through part D of title IV of the Social Security Act, the Family Care and Development Block Grant, or title XX of the Social Security Act, any payment made to an individual for child support up to the amount which a guaranteed child support payment would provide shall not be treated as income and shall not be taken into account in determining resources for the month of its receipt and the following month.
TREATMENT OF CHILD SUPPORT BENEFIT- Any guaranteed child support benefit received by an individual under this Act shall be considered child support for purposes of the Internal Revenue Code of 1986.
AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated such sums as may be necessary in each of the fiscal years 2007, 2008, 2009,2010, and 2011, to carry out the purposes of this Act.