Exploring a Child Support Pass-Through Option for Colorado

Colorado has an opportunity to increase the monthly incomes of Colorado Works families as well as improve their paths to self-sufficiency by changing the State’s child support pass-through and disregard policies. Families eligible for Colorado Works, which is Colorado’s Temporary Assistance for Needy Families (TANF) program, have below-poverty incomes. When a family applies for Colorado Works, any payment toward the monthly child support obligation is counted as income for determining eligibility. Federal regulations also require that a TANF family cooperate with child support services and legally turnover their child support right to the government while the family receives TANF cash assistance. In Colorado, half of retained collections must be sent to the federal government and the remainder is retained by the State and counties.

In 1975, the Child Support Program was created as a national/state/local government partnership and it initiated the policy of retaining child support collections to recover welfare costs. In 1996, federal requirements began to grant states more flexibility in their passthrough/disregard policies. In 2008, federal regulations began offering a greater incentive to use that flexibility. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 gave states the options to pass-through child support collections for TANF families while receiving cash assistance, disregard the child support income when calculating the assistance level, or both. The Deficit Reduction Act of 2005 (DRA) made it more financially feasible for states to pass through and disregard child support payments. In 2008, the federal government began waiving part of its share of retained collections if the state adopted a child support pass-through and disregard policy. The disregard is just as important as the pass through if the goal is to increase family income. Without the disregard, a dollar of child support passed through to the family would reduce the TANF benefit by a dollar. In all, child support is an integral source of income for low-income families.