0100: REVISED ANALYSIS AS PASSED BY THE SENATE (3-11-09)

SUPPORT ORDER VIOLATIONS S.B. 100 & 102: REVISED ANALYSIS AS PASSED BY THE SENATE
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Senate Bills 100 and 102 (as passed by the Senate)
Sponsor: Senator Mark C. Jansen (S.B. 100) Senator Valde Garcia (S.B. 102)
Committee: Families and Human Services

Date Completed: 3-11-09

RATIONALE

The Friend of the Court (FOC) was created in 1919 to assist the circuit court in protecting the interests of children in child custody, parenting time, and child support cases. The FOC is responsible for conducting investigations and making recommendations to the court regarding custody, parenting time, and the proper level of child support. In addition, the FOC has the responsibility to enforce custody, parenting time, and support orders. If a payer owes past due child support, enforcement options include income withholding, intercepting the payer's income tax refund, and placing a lien on the payer's real or personal property. The FOC also may recommend that the court suspend the payer's driver license or other licenses if the payer fails to comply with a court order.

For fiscal year (FY) 2006-07, the total arrearages owed in Michigan amounted to over $9.2 billion, according to the Federal Office of Child Support Enforcement. That amount consists of money owed to families as well as surcharges assessed for failure to pay the required support. Although the amount of arrearages collected has increased each year since 2005, the collected amount remains only a fraction of the total owed. In some cases, the amount may be difficult to collect, particularly if the payer has a limited ability to pay or no reported income. It has been suggested courts should have some flexibility in imposing surcharges, while the FOC should be given additional tools to collect arrearages and enforce court orders, so that families receive the payments that they are entitled to under court order. Also, some have recommended that that income withholding limits be revised to ensure that collection activities do not cause the payer hardship out of proportion with his or her ability to pay.

CONTENT Senate Bill 100 would amend the Support and Parenting Time Enforcement Act to do the following:

-- Revise requirements for a support payer or payee to provide information to the Friend of the Court, and allow the court to impose a fee for failure to comply with the requirements.
-- Permit the court to add a surcharge to past due amounts if a payer willfully failed to pay support, and delete provisions under which a surcharge must be added or may not be assessed.
-- Require the amount withheld from a payer's income to include any costs, fines, and sanctions.
-- Revise the limit on the maximum amount of income withholding.
-- Require the FOC to notify the Secretary of State (SOS) if a payer failed to request or attend a license suspension hearing, and require the SOS to suspend the payer's driver license; and otherwise revise provisions concerning license suspension.
-- Permit the court, in a civil contempt hearing for violation of a support order, to order the payer's vehicle rendered temporarily inoperable.
-- -- Permit the court, in a civil contempt hearing for violation of a support order or parenting time order, to require the payer or parent to participate in certain counseling programs or other activities under the supervision of the FOC, and to commit the person to jail (as currently provided) or an alternative to jail.
-- Require support to be assigned to the funding county if a child for whom support was payable were placed in county-funded foster care.

Senate Bill 102 would amend the Michigan Vehicle Code to do the following:

-- Require the Secretary of State to suspend a payer's license immediately upon notice from an FOC office that the payer had failed to appear for a hearing, comply with a repayment plan order, or respond to a license suspension notice.
-- Provide that a suspension order would remain in effect until the person obtained a certificate from the FOC showing that he or she was complying with the custody, parenting time, or support order, paid the circuit court clerk a $45 driver license clearance fee, and (as currently required) paid the license reinstatement fee.
-- Require the circuit court clerk to transmit, for each driver license clearance fee, $15 to the SOS, to defray the cost of processing license suspensions and reinstatements, and $30 to the county treasurer, to be deposited in the county FOC fund.

The bills are tie-barred to each other.

Senate Bill 100

Support Order

Under Section 3 of the Support and Parenting Time Enforcement Act, except as otherwise provided, every support order that is part of a judgment issued by a Michigan court or that is an order in a domestic relations matter must include a statement that the order is a judgment on and after the date each support payment is due, with the full force, effect, and attributes of a judgment of the State, and is not, on or after the date it is due, subject to retroactive modification. The bill also provides that no additional action would be necessary to reduce support to a final judgment.

The Act requires a support order to include substantially the statement described above, and a statement that a surcharge will be added to support amounts that are past due as provided under the Act. Under the bill, the statement would have to indicate that a surcharge may, rather than will, be added to past due support payments.

Under the bill, if a person failed to comply with the requirements of Section 3, the court could impose a fee set pursuant to a policy established by the SCAO under the supervision and direction of the Supreme Court. The fee would have to be deposited in the FOC fund.

Currently, each support order that is an order in an FOC case must include all of the following:

-- A requirement that within 21 days after the payer or payee changes his or her residential or mailing address, that individual report the new address and his or her telephone number in writing to the FOC. -- A requirement that both the payer and payee notify the FOC office if he or she holds an occupational license and if he or she holds a driver license.
-- The name, address, and telephone number of the payer's and payee's current source of income.
-- A requirement that both the payer and payee inform the FOC office of his or her Social Security number and driver license number.

Under the bill, instead, each support order that was an order in an FOC case would have to require each party to give the FOC all of the following information in writing:

-- A single mailing address for the party, to which all notices and papers in the case would be served.
-- The party's residential address.
-- The party's telephone number.
-- Whether the payer or payee held an occupational license, driver license, or recreational license.
-- The names, addresses, and telephone numbers of the payer's and payee's current sources of income.
-- The payer's and payee's Social Security numbers and driver license numbers.

The support order also would have to include a requirement that, if any of this information changed, each party notify the FOC of the new information within 21 days of the change. This notice would have to be written or given by any other method allowed under guidelines established by the State Court Administrative Office (SCAO) under the supervision and direction of the Michigan Supreme Court.

The Act also requires each support order that is an order in an FOC case to include notice that an order for dependent health care coverage takes effect immediately and will be sent to the parent's current and subsequent employers if appropriate. The notice must inform the parent that he or she may contest the action by requesting a review or hearing concerning availability of health care coverage at a reasonable cost.

Under the bill, this would apply to every support order that was a part of a judgment issued by a Michigan court or that was an order in a domestic relations matter. The notice would have to state that, in an FOC case, a national medical support notice (rather than an order for dependent health care coverage) would be sent to the parent's current and subsequent employers and insurers if appropriate.

Except as otherwise provided, the bill would require service of notices or other papers under the Act and under the FOC Act to be made by first class mail, postage prepaid. If mail were returned as undeliverable from that address, the FOC could change the address under guidelines established by the SCAO or the Supreme Court.

Unless Federal law or regulation required otherwise, if mail served in this manner were returned from an address and a new address had not been established within 21 days after the mail was returned, the party would waive his or her right to notice, and the FOC would not be obligated to serve any notice or other paper until the party submitted a written change of address to the FOC or until the FOC had changed the address as provided in the bill.
The bill would delete the Act's definition of "address", i.e., the primary address shown on the records of a financial institution used by the financial institution to contact the account holder.

The bill specifies that, in a support enforcement proceeding, a report, record, or information from the Michigan Child Support Enforcement System or the Support Disbursement Unit that related to paid or unpaid support would be prima facie authentic and could be admitted into evidence without extrinsic evidence of authenticity.

Surcharge

Currently, for an FOC case, as of January 1 and July 1 of each year, a surcharge must be added to support payments that are past due as of those dates. Under the bill, instead, the court could order a surcharge to be added on those days if the court determined that the payer had failed to pay support under a support order and the failure was willful. The surcharge would apply until abated by the court. A surcharge ordered in a court order that was entered before the bill's effective date, however, would be terminated on that date and another surcharge could not be ordered in the action except as provided in the bill.

The bill would delete a provision under which a surcharge may not be added to support ordered under the Paternity Act for the time period to the date of the support order.

These amendments would take effect on December 31, 2009.

Support for Child over 18

The Support and Parenting Time Enforcement Act permits a court to order support for a child after he or she reaches the age of 18, if the child is regularly attending high school full time with a reasonable expectation to graduate while residing on a full-time basis with the recipient of support or at an institution.

Under the bill, such a support order would have to provide that the support would terminate on the last day of a specified month, regardless of the actual graduation date.

Prorated Support

Under the Act, if a support order takes effect on other than the first day of the month, the monthly amount must be prorated based on the daily amount for that month. A monthly support order amount must be prorated for the last month in which the order is in effect. Under the bill, the last month's amount could not be prorated.

Refund of Support

Under the Act, if the Title IV-D agency receives a support payment that, at the time of its receipt, exceeds a payer's support amount payable plus an amount payable under an arrearage payment schedule, the agency must apply the excess against the payer's total arrearage accrued under all support orders under which the payer is obligated. If a balance remains, the agency must do one of the following:

-- If the payer designates the balance as additional support, immediately disburse that amount to the recipient of support.
-- If, at the time the payment is received, the payer is obligated for a future support payment and the balance is less than or equal to the monthly support payment amount, retain the balance and disburse it to the support recipient when the amount is payable.
-- If, at the time the payment is received, the payer is not obligated for a future support payment, or the payer is obligated under a support order for a future support payment but the balance is greater than the monthly support order amount, return the balance to the payer.

Under the bill, after one year following its date of enactment, if a payer had paid money that had not been disbursed to the payee, and the payer were entitled to a refund of all or part of the money because support had been abated in whole or in part, the refund would have to be applied first to any support past due in the case and then to any past due support the payer owed in another case. Any balance after the application to support arrearages would have to be refunded to the payer.

(Title IV-D of the Social Security Act deals with child support. In Michigan, the Title IV-D agency is the Office of Child Support in the Department of Human Services.)
Support for Foster Child

Under the Act, if a child for whom support is payable under a court order is under the State's jurisdiction and is placed in foster care, support payable under the order is assigned to the Department of Human Services. Under the bill, if the child were placed in county-funded foster care, the support payable would be assigned to the funding county. Each support order a court entered or modified would have to include a provision to this effect.

The bill also would revise the definition of "recipient of support" to include the county, if the minor child were in county-funded foster care.

Payment Plan

Under the Act, a payer who has an arrearage under a support order may file a motion with the circuit court for a payment plan to pay arrearages and to discharge and abate arrearages. The court must approve the plan if it finds that the plan is in the best interest of the parties and children and meets certain other criteria. If the arrearage is owed to the State or a political subdivision of the State, the court must approve the plan if it will pay a reasonable portion of the arrearage over a reasonable period of time in accordance with the payer's current ability to pay, and other requirements are met.

A payment plan that does not pay the entire arrearage must require payments for at least 24 months, for a payer who has an income at or below the poverty level. For a payer who has an income over the poverty level, a payment plan must require payments for at least 24 months plus one additional month for each $1,000 above the poverty level that the payer earns. The bill would delete these requirements.

Notice of Arrearage, Income Withholding

The Act requires the FOC office to send immediate notice to a payer by ordinary mail if income withholding is not effective immediately and the arrearage under a support order reaches an amount that requires the initiation of one or more support enforcement measures, or if the amount of income withholding is administratively adjusted for arrears. The notice must include the amount of the arrearage and either notice that the payer's income is subject to income withholding and the amount to be withheld, or notice that the payer's income withholding is being administratively adjusted and the amount of the adjustment, among other information.

The bill would delete a requirement that a copy of the notice be sent by ordinary mail to each recipient of support.

The Act requires a notice of income withholding to be served on the payer's sources of income. Under the bill, a labor organization that assigned a member to work would have to forward a copy of an income withholding notice served on the labor organization to the actual employer. The bill also would include a labor organization within the definition of "source of income" (an employer or successor employer or another individual or entity that owes or will owe income to the payer).

Under the Act, the notice must direct sources of income to withhold from income due the payer an amount sufficient to meet the payments ordered for support and service fees, and to defray arrearage payments and service fees due at the time the order of income withholding takes effect. Under the bill, the amount withheld also would have to be sufficient to cover any fines, costs, and sanctions.

The bill would require a person serving a notice of income withholding to send separate notices for support, fees, fines, costs, and sanctions ordered to be paid under Title IV-D and for support, fees, fines, costs, and sanctions not ordered to be paid under Title IV-D.

Maximum Amount of Withholding

Currently, a notice of income withholding must direct that the amount withheld for support, fees, and health care premiums not exceed the amount allowed under Section 303(b) of Title III of the Federal Consumer Credit Protection Act (15 USC 1673). Under the bill, beginning 90 days after its effective date, the amount withheld for support, fees, health care premiums, fines, costs, and sanctions ordered under the FOC Act or the Support and Parenting Time Enforcement Act could not exceed the amount allowed under Section 303(b) or 50% of the payer's disposable earnings as that term is defined in 15 USC 1672.

(Section 303(b) limits the amount of an individual's aggregate disposable earnings subject to garnishment. If earnings are garnished to enforce a support order, the maximum is 50% of the individual's disposable earnings for a work week if the individual is supporting his or her spouse or dependent child (other than a spouse or child for whom the support is used). If the individual is not supporting a spouse or dependent child, the maximum is 60% of disposable earnings for a work week. Those limits are 55% and 65%, respectively, however, if the earnings are subject to garnishment to enforce a support order for a period that is earlier than 12 weeks before the beginning of the work week.

Under 15 USC 1672, "disposable earnings" means that part of the earnings of any individual remaining after the deduction from those earnings of any amounts required by law to be withheld.)

Currently, if there is more than one order to withhold income for support, fees, or health care coverage premiums against a payer or parent, the source of income must comply with all of the income withholding notices to the extent that the total amount withheld does not exceed the limits imposed under Section 303(b) of the Federal Consumer Credit Protection Act. Under the bill, the source of income would have to comply to the extent the total amount withheld did not exceed 50% of the payer's disposable earnings as defined in 15 USC 1672.

The source of income would have to comply with the notices as follows:

-- If all income withholding orders were from this State and the total amount designated in the notices to withhold income for current and past due support exceeded 50% of the payer's disposable earnings, the source of income would have to withhold an amount equal to that limit.
-- If one or more of the orders were from another state, the source of income would have to give priority to amounts designated in each notice as current support, as currently provided.

The Support and Parenting Time Enforcement Act contains formulas for the source of income to allocate withholding among multiple orders, depending on whether the total amounts designated as current support exceed or do not exceed the amount available for income withholding. Under the bill, the applicable formula would depend on whether the total amount designated as current support exceeded 50% of the payer's disposable earnings.

Those amendments would take effect 90 days after the bill's effective date.

Tax Offset

For an FOC case, if a support arrearage has accrued, the Act allows the FOC office to request the Office of Child Support to initiate offset proceedings against the delinquent payer's State and Federal tax refunds.

Under the bill, the FOC could request the Office of Child Support to initiate offset proceedings if the case had not been designated for offset proceedings by that Office and the accrued arrearage met the requirements established by State or Federal law, regulation, or rule, as applicable.

Lien on Property

The amount of past due support that accrues under a judgment made under the Act or under the law of another state constitutes a lien in favor of the support recipient against the real and personal property of a payer.

Before a lien is perfected or levied, the Title IV-D agency must send a notice to the payer subject to the support order informing the payer of the imposition of liens by operation of law and that the payer's real and personal property can be encumbered or seized if an arrearage accrues in an amount that exceeds the amount of periodic support payments payable under the payer's support order for the specified time period. The bill would delete this provision.

Under the bill, a lien could not be perfected or levied unless the Title IV-D agency had notified the payer that liens exist by operation of law and that the payer's real and personal property could be encumbered or seized if an arrearage accrued in an amount that exceeded the periodic support payments payable under the payer's support order for the time specified in the Act. Notice would be provided if it were in the payer's support order or if it were mailed to the payer at any time.

Dependent Health Care Coverage

Under the Act, an order or notice of an order for dependent health care coverage served on an employer must direct the employer to withhold from the employee's income the employee's share, if any, of premiums for dependent health care coverage and pay that amount to the insurer or plan administrator. The order or notice also must direct that the amount withheld for support, fees, and health care premiums not exceed the amount allowed under Section 303(b) of Title III of the Federal Consumer Credit Protection Act.

Under the bill, the order or notice would have to direct that the amount withheld not exceed 50% of the employee's disposable earnings as that term is defined in 15 USC 1672 (described above).

License Suspension

Under the Support and Parenting Time Enforcement Act, for an FOC case, the FOC office may petition the court for an order to suspend a payer's occupational license, driver license, or recreational or sporting license, or any combination of the licenses if all of the following are true:

-- An arrearage has accrued in an amount greater than the amount of periodic support payments payable for two months under the payer's support order.
-- The payer holds an occupational license, driver license, or recreational or sporting license or the payer's occupation requires an occupational license.
-- An order of income withholding is not applicable or has been unsuccessful in assuring regular payments on the support obligation and regular payments on the arrearage.

The bill would remove the second criteria, as well as the reference to a petition by the FOC.

Under the Act, an FOC office may not file a petition unless the office sends the payer notice of the amount of the arrearage and that the payer's occupational license, driver license, or recreational or sporting license, or any combination of the licenses may be subject to suspension. Under the bill, an FOC office would have to send the payer that notice before seeking the suspension of a license.

Within 21 days after the date on which notice is mailed to a payer, he or she may request a hearing on the proposed suspension. If the payer requests a hearing within that time, entry of the suspension order must be delayed pending the outcome of the hearing. Under the bill, a suspension order could not be entered and a suspension notice could not be sent pending the outcome of the hearing.

If the court determines that the payer has accrued an arrearage on his or her support order and that the payer has or could have the capacity to pay all or some of the amount due, the court must order the payment of the arrearage in one or more scheduled installments of a certain sum. Under the bill, if the court made this determination after a hearing, the court would have to order the payment of the arrearage "as reasonable" in one or more scheduled installments.

Under the Act, after 21 days after the date on which a notice of a proposed license suspension is sent, the court may order the suspension of the payer's occupational license, driver license, or recreational or sporting license, or any combination of the licenses included in the notice, under either of the following circumstances:

-- The payer fails to pay the arrearage and fails either to request a hearing or to appear for a hearing after such a request.
-- The payer fails to comply with an arrearage payment schedule ordered under the Act.

Under the bill, after 21 days after the date on which a notice of a proposed license suspension was sent, the FOC would have to notify the Secretary of State if the payer had failed to request a hearing or failed to attend a hearing on the proposed suspension or pay the arrearage in full. Upon receiving the notice, the SOS would have to suspend the payer's driver license.

The court could order the suspension of the payer's occupational license and/or recreational or sporting license under the circumstances described above.

If the court determined that the payer had failed to comply with an arrearage payment, it could direct the FOC to notify the Secretary of State of the failure. Upon receiving that notice, the SOS would have to suspend the payer's driver license as provided in the Michigan Vehicle Code.

Currently, if the court orders a suspension of an occupational license, driver license, or recreational or sporting license, the order must indicate that the licensing agency is required to suspend the license within seven business days after receiving the order. Under the bill, the order would have to indicate that the agency would suspend the license within seven business days or sooner if required by the act authorizing the license suspension.

If a payer is the subject of a suspension order under these provisions and has failed to respond in any manner to the notice given, the FOC office may not send the suspension order to the licensing agency until at least 14 days after the date the office first attempts to serve a copy of the order on the payer by personal service or by registered or certified mail, return receipt requested, with delivery restricted to the payer. The bill would delete this provision.

Under the Act, after a suspension order is entered, a payer may agree to and the court may order a schedule for the payment of the arrearage. Under the bill, after a suspension order was entered or after a suspension, a payer could agree to and the court could order a reasonable schedule for the payment of the arrearage.

If the court orders a schedule for payment of the arrearage, the court must enter an order rescinding the suspension order. The bill also would require the FOC, on verification by the court clerk that the required driver license clearance fee had been paid, to provide a certificate to the payer stating that he or she was in compliance with the support order.

Contempt: Failure to Pay Support

Under the Act, if a person is ordered to pay support and fails or refuses to do so, and if an income withholding order is inapplicable or unsuccessful, a recipient of support or the FOC may commence a civil contempt proceeding in the circuit court, by filing a petition for an order to show cause why the delinquent payer should not be held in contempt. If the payer fails to appear in response to a show cause order, the court may take one or more of several actions, including applying an enforcement remedy authorized under the Act or the FOC Act for the nonpayment of support. Under the bill, such a remedy would include suspending the payer's occupational license, driver license, or recreational or sporting license.

In addition, the court could enter an order that a law enforcement agency render any vehicle owned by the payer temporarily inoperable, by booting or other similar method, subject to release on deposit of an appropriate bond. The court also could place the payer under the supervision of the FOC office for a term fixed by the court with reasonable conditions, including one or more of the following: participating in a parenting program, drug or alcohol counseling, or a work program; seeking employment; participating in other counseling; continuing compliance with a current support or parenting time order; or entering into and complying with an arrearage payment plan.

Under the Act, the court may find a payer in contempt if it finds that he or she is in arrears and is satisfied that the payer has the capacity to pay out of currently available resources all or part of the amount due under the support order. Upon finding a payer in contempt, the court, among other options, may enter an order that commits the payer to the county jail, or commits the payer to the county jail with the privilege of leaving during specified hours for employment purposes. Under the bill, the court also could commit the payer to an alternative to jail.

The bill also would give the court the option to enter an order that placed the payer under the supervision of the FOC office for a term fixed by the court with reasonable conditions, including one or more of the following: participating in a parenting program, drug or alcohol counseling, or a work program; seeking employment; participating in other counseling; continuing compliance with a current support or parenting time order; or entering into and complying with an arrearage payment plan.

In addition, under the Act, the court may find a payer in contempt if it finds that the payer is in arrears and one of the following applies:

-- The court is satisfied that by the exercise of due diligence, the payer could have the capacity to pay all or some of the amount due under the support order and that the payer fails or refuses to do so.
-- The payer has failed to obtain a source of income and has failed to participate in a work activity after referral by the FOC.

Upon finding a payer in contempt under that provision, the court must, absent good cause to the contrary, order the payer to participate in a work activity and also may take one or more other actions, including committing the payer to the county jail with the privilege of leaving the jail during specified hours for employment purposes. The bill also would permit the court to commit the payer to an alternative to jail, and would give the court the option to enter an order that placed the payer under the supervision of the FOC office for a term fixed by the court with reasonable conditions, including those described above.

Under the Act, if a payer is committed to jail with the privilege of leaving during specified hours for employment purposes and violates the conditions prescribed by the court, the court must commit the payer to the county jail without the privilege of leaving. If the payer fails to return to the place of confinement within the time prescribed, he or she is considered to have escaped from custody and is guilty of a misdemeanor, punishable by imprisonment for up to one year. Under the bill, those provisions also would apply to a payer who was committed to an alternative to jail.

Contempt: Parenting Time

Under the Act, if the FOC office determines that a procedure other than a civil contempt proceeding is unsuccessful in resolving a dispute concerning parenting time with a minor child, the FOC office must commence a civil contempt proceeding to resolve the dispute by filing with the circuit court a petition for an order to show cause why either parent who has violated a parenting time order should not be held in contempt.

If the court finds that either parent has violated a parenting time order without good cause, it must find that parent in contempt of court and may, among other options, enter an order that commits the parent to the county jail, or commits the parent to the county jail with the privilege of leaving during specified hours for employment purposes. The bill also would allow the court to commit the parent to an alternative to jail.

In addition, the bill would give the court the option to enter an order that placed the parent under the supervision of the FOC office for a term fixed by the court with reasonable conditions, including one or more of the following:

-- Participating in a parenting program.
-- Participating in drug or alcohol counseling.
-- Participating in a work program.
-- Seeking employment.
-- Participating in other counseling.
-- Continuing compliance with a current support or parenting time order.
-- Entering into and complying with an arrearage payment plan.
-- Facilitating makeup parenting time.

Under the Act, if a custodial parent is committed to jail with the privilege of leaving during specified hours for employment purposes and violates the conditions ordered by the court, the court must commit the parent to the county jail without the privilege of leaving. If the parent fails to return to the place of confinement within the time prescribed, he or she is considered to have escaped and is guilty of a misdemeanor, punishable by imprisonment for up to one year. Under the bill, those provisions also would apply to a custodial parent who was committed to an alternative to jail.

If a parent fails to appear in response to an order to show cause as described above, the court may order a bench warrant requiring the parent to be brought before the court to show cause why he or she should not be held in contempt. Unless good cause is shown, the court must order the parent to pay the costs of the hearing, the issuance of the warrant, the arrest, and further hearings.

Under the bill, if the hearing could not be held immediately after the parent was arrested, he or she could be released if a bond in the amount of the fines, costs, and sanctions imposed under the Act and any additional amount the court determined necessary to secure the parent's appearance were deposited with the court.

The Act provides that if the court finds that either parent has violated a parenting time order without good cause, and if the parent holds an occupational license, driver license, or recreational or sporting license, the court may condition the suspension of the license or any combination of the licenses upon noncompliance with an order for makeup and ongoing parenting time.

The court may order a makeup parenting time schedule if the parent demonstrates a good faith effort to comply with the parenting time order. If the court orders a makeup parenting time schedule, it must enter an order rescinding the suspension order.

Under the bill, on verification by the clerk of the court that the driver license clearance fee had been paid (as proposed by Senate Bill 102), the FOC would have to give the payer a certificate stating that he or she was in compliance with the support order.

Senate Bill 102

The Michigan Vehicle Code requires the Secretary of State to comply with a suspension order issued under the Support and Parenting Time Enforcement Act. The SOS must suspend the operator's or chauffeur's license of a licensee within seven business days after receiving the suspension order. The bill would replace these provisions.

Under the bill, if an FOC office notified the SOS that a licensee had failed to appear for a hearing, comply with a repayment plan order, or respond to a license suspension notice under the Support and Parenting Time Enforcement Act, the SOS would have to suspend the operator's or chauffeur's license of the licensee immediately and would have to notify the licensee of the suspension by first-class mail.

Currently, an order rescinding a suspension order is effective when the court enters it and the licensee pays the reinstatement fee required under Section 320e of the Vehicle Code. (That section requires a person whose operator's or chauffeur's license is suspended under these provisions to pay a fee of $85 to the SOS before a license is issued or returned to the person.)

The bill would delete that provision. Instead, a suspension order would remain in effect until all of the following occurred:

-- The person obtained a certificate from the FOC showing that the person was complying with the custody, parenting time, or support order, and provided that certificate to the SOS within 10 days after the date of issuance noted on the certificate.
-- The person paid to the circuit court clerk a $45 driver license clearance fee.
-- The person paid the reinstatement fee imposed under Section 320e.

As currently provided, unless a person's license otherwise were suspended, revoked, or invalid, it would be reinstated and valid immediately on satisfaction of the above requirements. The SOS would have to reissue the license within 30 days after receiving the certificate from the FOC showing compliance with the custody, parenting time, or support order, and evidence of payment of the driver license clearance fee and the reinstatement fee.

If a person showed a law enforcement officer a copy of a certificate from the FOC that was issued to the person within the previous 10 days, the officer could not arrest or issue a citation to the person for driving on a suspended or expired license or without a license on the basis of any matter resolved under the provisions described above, even if the SOS had not yet received or recorded the certificate.

For each driver license clearance fee received, the clerk would have to transmit the following amounts on a monthly basis:

-- $30 to the county treasurer, who would have to deposit the money in the county FOC fund.
-- $15 to the SOS, who would have to deposit the money in the State's General Fund.

The General Fund money would have to be spent to defray the expenses of the SOS in processing the suspension and reinstatement of driver licenses under these provisions.

MCL 552.602 et al. (S.B. 100) 257.321c (S.B. 102)

ARGUMENTS (Please note: The arguments contained in this analysis originate from sources outside the Senate Fiscal Agency. The Senate Fiscal Agency neither supports nor opposes legislation.)

Supporting Argument The FOC has limited resources at its disposal, and must balance the competing demands of collection activities and enforcement with its other responsibilities. The end goal of the FOC's activities is to ensure that families receive proper support, and the bills would help the FOC to direct more of its attention toward that purpose, while providing additional tools for enforcing court orders. Senate Bill 100 would give the court discretion in assessing surcharges for past due support payments. Currently, the Support and Parenting Time Enforcement Act identifies specific circumstances under which surcharges must be assessed, giving the court little latitude to account for the particulars of each case. The assessed surcharges increase the total amount owed, making repayment more difficult, leading to additional surcharges. That cycle reportedly has led some payers to accumulate extremely large arrearages, most of which consist of surcharges. Faced with such large debts and limited incomes, some payers may simply give up on ever being able to pay back the arrearage. A study by the Urban Institute, which examined child support arrears Michigan and eight other large states, found that a relatively small number of payers owed the bulk of the arrearages. Specifically, about 11% of cases accounted for 54% of the total amount owed, with each payer owing $30,000 or more. Of those with arrearages, 50% reported no income or annual income of $10,000 or less (Assessing Child Support Arrears in Nine Large States and the Nation, 2007).

The added flexibility in Senate Bill 100 would allow the court to consider factors such as whether the nonpayment had been willful, or whether mitigating circumstances accounted for the nonpayment. Those provisions could lead to more reasonable past due amounts, increasing the likelihood that they could be collected. Senate Bill 100 also would revise the limit on the maximum amount of income withholding, to ensure that the support payments do not leave the payer unable to provide for himself or herself.

In addition, Senate Bill 102 would streamline the process for suspending an individual's license if he or she failed to appear for a hearing or comply with a repayment plan. Because a driver license is essential for many Michigan residents to get to and from work and otherwise go about their daily lives, license suspension can be an effective tool for encouraging compliance with a parenting time, custody, or support order. The bill would require communication between the FOC and the Secretary of State to ensure that an individual's license was suspended when appropriate. The license could be reinstated only if the individual obtained a certificate from the FOC showing compliance with the order and paid certain fees. In addition to the currently required driver license reinstatement fee, Senate Bill 102 would add a license clearance fee to help cover the administrative costs. The SOS would retain $15 of the clearance fee, while the remaining $30 would go to the county FOC fund.

In addition, if a payer violated a support order, Senate Bill 100 would permit the court to render the payer's vehicle temporarily inoperable to induce compliance. Wayne County reportedly has been using vehicle boots, which lock the wheels so that the vehicle cannot be driven, as part of a successful effort to compel compliance with court orders. Other counties have expressed interest in adopting similar practices, but the Act as written does not specifically permit such an action. The Act does permit the court to order a vehicle to be towed in a civil contempt hearing for failure to comply with a court order. Booting a vehicle is less expensive than towing while achieving the same results, and should be permitted as an additional tool for dealing with those who fail to pay support.

In addition, Senate Bill 100 would allow the court, if an individual violated a court order, to commit him or her to either jail or an alternative to jail. Currently, the Act permits the court only to commit the individual to jail. Jail alternative programs could be more cost effective and could free up beds in the county jails for criminal offenders. Many jail alternatives already exist in counties where jail crowding has been a problem. Programs have been developed in coordination with county road commissions or local park services, which required individuals to clean up litter alongside roads or do park maintenance. Those programs could serve as a low-cost, effective means of inducing compliance with a court order, short of incarceration.

Senate Bill 100 also would allow a county to be compensated for a child who was placed in county-funded foster care, if support were payable for that child. That provision would help to cover the costs of the foster care and ensure that the parent was contributing to the support of the child.

Opposing Argument
Surcharges originally were designed to help preserve the value of child support arrearages, in lieu of interest, according to the Family Law Section of the State Bar of Michigan. If surcharges were imposed only in cases of willful failure to pay support, it would be to the payer's financial benefit to pay other interest-bearing debts before paying child support, and the payee would lose the present value of the support with no recompense.

Opposing Argument
Under Federal law, which Michigan currently follows, up to 60% of disposable earnings may be withheld if there are arrearages, and up to 65% may be withheld if there are arrearages and no other dependents. Senate Bill 100, however, would limit income withholding to 50% of a payer's disposable income. This would not even cover base child support in some cases, which would be forced into arrearage.

Legislative Analyst: Curtis Walker

FISCAL IMPACT Senate Bill 100
The bill would lead to an indeterminate reduction in local and State Child Care Fund expenditure by requiring that support payments for children in county-supervised foster care be assigned to the funding county.

The proposed fee for failure to comply with information requirements would result in additional revenue. Changes to the driver license suspension process would result in administrative savings.

Senate Bill 102
The bill would require a person who had his or her driver license suspended under the Support and Parenting Time Enforcement Act to pay a driver license clearance fee of $45. The proposed fee would be in addition to the current $85 license reinstatement fee, which the Secretary of State receives for costs associated with suspending a license and removing a suspension. Of the proposed additional $45 fee, the SOS would receive $15 to help with the costs associated with suspensions and removal of suspensions. In FY 2006-07, there were 2,115 transactions involving the reinstatement of driver licenses related to child support. Assuming that an estimated 2,100 cases are reinstated each year, the additional revenue to the SOS from the proposed driver license clearance fee would be an estimated $31,500 annually.

The bill would have no fiscal impact on local government.

Fiscal Analyst: Joe Carrasco
Stephanie Yu

Analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent. sb100&102/0910