Here’s what happened when one state let welfare recipients keep their child support payments.
By Dwyer Gunn
In 1997, the state of Wisconsin decided to experiment with the way it handled child support payments made to welfare recipients. In previous years, under the Aid to Families With Dependent Children (AFDC) program, recipients who also received child support payments from a non-custodial parent were required to relinquish the bulk of what they received in child support to the state — states only “passed through” the first $50 of child support in a given month.
The federal welfare-reform bill (formally known as the Personal Responsibility and Work Opportunity Reconciliation Act) of the previous year gave states room to experiment with and set their own policies. The majority of states decided to eliminate the pass-through entirely and simply retain all child support payments to welfare recipients, but Wisconsin instead implemented and rigorously evaluated a temporary, experimental full pass-through and full disregard program, in which recipients retained all of the child support paid to them and their full welfare benefits.
“Given the time-limited nature of cash assistance, the benefits to the government of retaining child support as a reimbursement for cash payments is also limited.”
The AFDC-era child support pass-through policy reflects the historic purpose of child support enforcement: to allow the government to recover the costs of supporting children whose non-custodial parents had abandoned them. The policy, however, created a host of undesirable incentives for both custodial and non-custodial parents alike, according to researchers.
“The dad says, ‘If my kids are no better off if I pay or if I don’t, why should I pay more money?’” explains Daniel Meyer of the University of Wisconsin’s Institute for Research on Poverty. Custodial parents also had little incentive to cooperate with the child support enforcement system since their income remained unchanged if they established paternity or filed for support. The sociologist Kathryn Edin found that parents were cooperatively cheating the system — the mother would refuse to establish paternity and, in exchange, the father would provide financial assistance under the table, allowing the custodial parent to keep both the welfare benefits and the unofficial child support payments.
Beginning in 1997, Wisconsin randomly assigned welfare recipients who received child support into treatment and control groups. Those in the treatment group received the full pass-through and full disregard treatment, while those in the control group received only some of the child support paid on their behalf (a “partial pass-through” condition). The IRP evaluated the program.
A version of this story first appeared in the July/August 2016 issue of Pacific Standard.
A paper published in 2008 in the Journal of Policy Analysis and Management summarized the results of the experiment: Fathers in the treatment group were both more likely to pay child support and paid more child support — 19 percent more by the third year of the experiment, in fact. Even more interesting, the full pass-through and full disregard policy didn’t end up costing the government very much money — approximately $2 million, according to a cost-benefit analysis the IRP performed — thanks to both the relatively short amount of time that most families receive welfare benefits and to reductions in assistance spending elsewhere.
“Given the time-limited nature of cash assistance, the benefits to the government of retaining child support as a reimbursement for cash payments is also limited,” Meyer and his co-authors wrote in the 2008 paper. “In contrast, the benefits to children of establishing paternity and setting a pattern of child support payments are potentially much more enduring.”
The 2006 re-authorization of the Personal Responsibility and Work Opportunity Reconciliation Act decreased many of the costs associated with pass-through and disregard policies, and, in recent years, a number of states have implemented such policies. Today, 25 states pass-through and disregard a portion of child support to welfare recipients. Last year, Colorado became the first state to pass a full pass-through and full disregard policy (Minnesota has a full pass-through, but not a full disregard policy), which will be implemented by 2017.