T-9 Legal to Financial

Karen Young, Financial Manager, Monterey

Mary K. Clesi, Departmental Fiscal Officer, Santa Clara

Rebecca Durney, Chief Attorney, Siskiyou/Modoc

A Roundtable Discussion!

Non-Standard Orders

■Impact to Customers

■Impact in CSE

■Interpreting Orders

■Enforcing Orders

■Tracking/Monitoring

Non-Standard Orders

■Net/Split Custody Orders

■Offset Orders

■Retroactive Downward Modifications & Overpayments

■Unallocated / Non-Severable Orders

■SSA Derivative Benefits

Non-Standard Orders

■Tax Exemption in Alternating Tax Years

■Employed vs Unemployed

■Smith-Ostler Orders

■Qualified Domestic Relations Orders (QDRO)

■Tribal: Standard and/or In-Kind Orders

■DOR Receivables and Determination of Arrears

Net/Split Custody Orders

Legal Description

Two parent case Each parent has a child in their column for

calculations Each parent owes support for the child not

in their custody Guideline child support results in an overall

NET order for one parent to pay the other.

Net/Split Custody Orders

Legal Description (continued)

Practice Point: Even if you only have one parent with one child in your case, you must include all biological siblings on the case for the calculation, even if your order will be enforced for just one child. There is no other way to give parents credit for the children in their custody. They are NOT hardship children. FC Sec. 4071(a)(2)

Net/Split Custody Orders

■Difficulties/Complications

If it’s a Non-Welfare (NW) case, court may order an offset of the net amount against NW arrears owed by one parent to the other, so no money exchanges hands.

If custody changes during the life of the order, it must be modified quickly to capture the change of custody (i.e. if both children go to one parent).

If a child emancipates or charges stop for some reason, charge the remainder of the order for the remaining child in the full amount calculated or modify the order.

Net/Split Custody Orders

■CSE Financials & Monitoring

Add Current Support Charging Instructions (CI) based on order (for the net amount).

May need to end date Current Support CI if there is a case with Current Support CI for the parent not required to pay.

Add CI to increase Current Support in the future when older dependent(s) emancipate.

Offset Orders

Legal Description

Father owes mother Non-Welfare (NW) child support arrears

Now, mother owes NW father current support

Rather than have NW money change hands, the court in its discretion or by parents agreement, offsets NW current owed by mother against the NW arrears owed by father. It reduces the arrears balance owed by father and there is no out of pocket for mother.

Offset Orders

■Difficulties/Complications

What happens when there are no arrears owed to offset? Charge current support for mother?

If cases are in two separate counties, the parents may ask for venue in one county so they can obtain order that is in the best interest of the family.

Depending on amount of arrears owed, may need to suppress Income Withholding Order (IWO) if Offset will pay off arrears.

Offset Orders

■CSE Financials & Monitoring

Create Excel Worksheet to maintain list of cases requiring an offset each month or use CSE task.

Post a Non-SDU payment for the offset amount each month.

Notify caseworker or attorney, depending on LCSA policy, when offset stops (i.e. arrears paid in full).

Note: Many LCSAs do not use the automated process in CSE to perform the offset but choose to post manually.

Retroactive Downward Modifications & Overpayments

Legal Description

Obligor has low or no arrears while a downward mod is pending. By the time of the hearing, the effective date based on filing, is months ago. If obligor continued to pay, it’s likely there will be an overpayment which the obligee may not want or be able to repay, and there are no arrears to apply to the overpayment. FC 3653 (d)

Retroactive Downward Modifications & Overpayments

■Difficulties/Complications

Cannot adjust accounts to reflect credit balance if order does not include a repayment plan.

May require going back to court although repayments are not guaranteed.

Some LCSAs may choose to negotiate the repayment of the overpayment with the parties instead of going back to court.

Retroactive Downward Modifications & Overpayments

■Difficulties/Complications (continued)

May require placing an Allocation Hold to suspend collections until after the court hearing.

Have the court direct how to handle the funds on hold.

Option to consider--If there is an overpayment, have the parents handle outside of CSE. Stay out of it. Add wording to order that overpayment will be addressed by parties without DCSS involvement.

Retroactive Downward Modifications & Overpayments

■CSE Financials & Monitoring

If order does not result in an overpayment and there are mixed accounts, carefully review the case to determine if collections should be adjusted.

If the order results in an overpayment and there is no repayment agreement addressing the repayment, do not adjust charging instruction to create a credit balance.

Retroactive Downward Modifications & Overpayments

■CSE Financials & Monitoring (continued)

If going back to court to modify order to address overpayment, add charging instructions to zero the arrears until the order can be modified or a repayment plan (if negotiating with the parties directly) can be negotiated.

Continue to send the CP current support until the matter is resolved.

Unallocated / Non-Severable

Legal Description

A current support order for more than one child containing a per child breakdown. However, language in the order establishes that the total child support amount will remain unchanged until the youngest child emancipates or child support is modified or terminated by operation of law. CSS Letter 08-11.

Unallocated / Non-Severable

■Difficulties/Complications

If there is more than one child in the case and one child goes to another payee or Foster Care, some LCSAs split current support evenly between the dependents (i.e. 50/50) until order is modified to get an allocated order.

■CSE Financials & Monitoring

Charging instructions should be associated to the youngest child until the order is modified.

SSA Derivative Benefits

Legal Description

Per FC 4504 (b), any retirement or disability benefit paid towards child support as a derivative of the claim of the obligor parent shall be credited towards current and past due child support. A best practice is to calculate guideline child support and subtract the monthly derivative benefit to

arrive at a net child support order.

SSA Derivative Benefits

■Difficulties/Complications

Manual process to post Non-SDU payment each month for amount of the Derivative Benefit (DB) that exceeds current support (when DB exceeds current support and current support has been set to $0).

Cost of Living Adjustments may change the DB amount; may need to stipulate or go back to court if current support not $0.

Include language in order that allows administrative adjustment of accounts if derivative benefits change due to other children or COLA changes. Refer to CSS Letter 11-12 and 11-12 Errata.

SSA Derivative Benefits

■CSE Financials & Monitoring

Current Support charging instructions end dated if DB exceeds Current Support until order is obtained setting support to $0.

Excel worksheet to maintain list of cases requiring a Non-SDU payment each month for the DB - or use CSE task.

Post a Non-SDU payment for the DB amount each month (to post to arrears balance owing).

Tax Exemption in Alternating Years

Legal Description

Both parents work. Parents agree or court orders, that dad gets

odd year exemption, mom gets even year exemption. This will change alternate year calculation.

Practice Point: Prepare two calculations alternating the exemptions and annualize the child support by averaging the support and make that the static order. Include both calculations in your motion and order.

Tax Exemption in Alternating Years

■Difficulties/Complications

If support is not “averaged”, the Charging Instruction List page will have multiple entries.

Employer will receive modified Income Withholding Order (IWO) each time Charging Instruction changes.

Not averaging alternating calculations results in inconsistency for both obligor and obligee year to year.

Tax Exemption in Alternating Years

■CSE Financials & Monitoring

If support is not averaged, a Current Support Charging Instruction is added to reflect the varied amounts the NCP is obligated to pay each year, through emancipation of the dependent.

Averaged support sets one amount instead of varying amounts each year. Allows for consistency.

Employed vs Unemployed

Legal Description

The parents do not want, or the court will not issue, an order using “annualized” income for seasonal employment. Therefore, there is one amount for employed periods and a separate amount for periods of unemployment.

Best practice is to take periods of employment and unemployment and average the income for a static order.

Employed vs Unemployed

■Difficulties/Complications

If not an annualized order:

Relies on NCP to communicate to DCSS when not employed.

Labor intensive to monitor case and continually modify Current Support Charging Instructions.

Charging Instructions List page will have multiple entries.

Employed vs Unemployed

■Difficulties/Complications (continued)

Employer will receive modified IWO every time current support changes.

If not a DCSS order (the parties enter their own order), consider modification to annualize the monthly support to avoid the tracking issues.

Employed vs Unemployed

■CSE Financials & Monitoring

If not annualized, requires Current Support CI to be reduced for periods of unemployment and modified upward for periods of employment.

If annualized, support Current Support CI set for one amount instead of varying amounts each year.

Smith-Ostler Orders

Legal Description

Based on the case In re the Marriage of Ostler and Smith  (1990) 223 Cal.App.3d 33, 272 Cal.Rptr. 560, the trial court set guideline child support and spousal support, but then allocated a percentage interest of obligor’s future bonuses as additional support: 10% for additional child support and 15% for additional spousal support.  The Court of Appeal held that an order for additional support, based on future bonuses, was within the trial court’s discretion.

Smith-Ostler Orders

■Difficulties/Complications

Excel worksheet for Monthly Calculations for Overtime or Commission S-O amount (legal staff).

Dependent on NCP providing paycheck stub or further contact with the employer.

Initial calculation of arrears balance (old order-prior S-O amounts due); audit case.

Current Support CI List page may have many entries.

Manual process for applying collections.

Smith-Ostler Orders

■CSE Financials & Monitoring

Once S-O amount calculated, modify Current Support CI to increase CI by the amount of the S-O amount due. Some LCSAs do not modify the Current Support CI until the payment is received.

Modify Current Support CI back to court ordered monthly amount for the next month.

Set Allocation Hold to manually release S-O collection.

Qualified Domestic Relations Orders (QDRO)

Legal Description

When the obligor has assets in a retirement plan and we want those funds for support purposes, submit pleadings to the court to obtain a QDR order and serve the QDR order on the retirement plan administrator.

Many plans require an alternate payee and some plans require the LCSA to name the child as alternate payee. Plan administrators can be challenging.

Qualified Domestic Relations Orders (QDRO)

■Difficulties/Complications

The different plans require different legal wording

■CSE Financials & Monitoring

Set Allocation Hold if NCP has multiple cases and other county/counties not participating in QDRO action.

SDU frequently suspends collections even though three identifiers are provided on the remittance.

Tribal: Standard and/or In-Kind Orders

Legal Description

A tribal court may issue a child support order that is not for dollars but for “in kind” payment, such as wood, meat, work or other form of valued exchange.

Practice Point: These are fairly rare but you may want to have a dollar value placed so you can track compliance and enforcement in CSE.

Tribal: Standard and/or In-Kind Orders

■Difficulties/Complications

Manual process to issue monthly list of disbursements to the CP.

If order for In-Kind, refer to Attorney for instructions for how to charge in CSE.

Tribal: Standard and/or In-Kind Orders

■CSE Financials & Monitoring

If CP receiving Tribal TANF, CP is required to open a case with DCSS.

Child support is issued directly to CP even though she is receiving Tribal TANF.

Once per month CP is required to obtain a list of disbursements issued for the month and give to the Tribe.

DOR Receivables and Determination of Arrears

Description

State of California changed the legal date of collection to the date of receipt when the LCSAs transitioned to the SDU.

A “loan” payment was posted to the NCP’s case(s) for the month in which their LCSA transitioned to the SDU. The “Date of Receipt” (DOR) payment reduced arrears that may have been created, removed interest accrued and removed enforcement actions that would have been triggered without a payment. A DOR obligation was added to the case and a CP receivable was created (no receivable if collection applied to welfare).

The NCPs were notified in 2/2007 by letter that the loan would have to be repaid by the NCP after all other support obligations have been satisfied.

DOR Receivables and Determination of Arrears

■Difficulties/Complications

If there is no DOR receivable in CSE (occurs when original DOR collection applied to welfare accounts in the legacy system), some LCSAs may not collect DOR if there is no Account Receivable (A/R) to offset and collection will cause an Excess if no Unreimbursed Assistance Pool (UAP).

DOR Receivables and Determination of Arrears

■CSE Financials & Monitoring

When auditing a case, the DOR should be added to the last month of the audit as an adjustment so correct amount of arrears is reported.

For LCSAs that had CASES as a legacy system, pre-CSE receivables also should be added to the last month of the audit as an adjustment.

Legal to Financial

Legal Tips

Consider how other counties might interpret your order.

Be specific with specialized orders or language so it can be enforced and not raise more questions than answered.

Provide an adequate summary in the CSE Activity Log so enforcement can look back and determine how to proceed in the future.

Legal should work closely with Financial on complicated matters BEFORE court. Don’t obtain orders that make sense legally but that cannot be enforced in CSE.

Legal to Financial

Financial Tips

Reach out to other LCSA financial staff; How do they handle similar orders?

Financial should work closely with Legal; Help Legal understand CSE financial limitations but be open to manually processing non-standard orders if possible.

Legal to Financial

Roundtable DiscussionQ&A

Speaker Contact Information

Karen Young: youngk@co.monterey.ca.us

Mary K. Clesi: mclesi@dcss.sccgov.org

Rebecca Durney: rdurney@co.siskiyou.ca.us