For Low-Income Parents, Most Child Support Goes to the State — Not the Kids

Thomas Lam Jr. says he has always tried to do right by his two daughters, but for a while, he found himself in an untenable situation: His child support payments were eating up most of his income, but most of the money wasn't even going to his kids.

Lam's case isn't isolated: Some 250,000 families in California only get $50 a month in child support payments because they're receiving government assistance, like welfare or Medi-Cal. The rest of the money — $950 per month in Lam's case at the time — goes to the government to repay the public for those safety net programs that his children's mother received.

"It felt like, what's the point of working?" Lam, 36, said recently as he waited for his daughters, ages 5 and 10, to arrive at his Vallejo home. "They're taking all the money. I still had to pay for my kids' food, clothes and all this other stuff, but it just seemed impossible to do all of that."

Making matters worse, Lam owed much more more than his monthly $1,000 child support payment. Because he’d fallen behind on payments, the state was charging him 10% interest. All told, he owed around $6,000; if he didn’t pay, he could lose his driver’s license, or even go to jail.

Studies show that 70% of child support debt in California is owed to the government, and much of it is owed by very low-income parents. The median annual income of parents paying child support in California is about $14,600.

In 2018, those parents paid nearly $370 million in child support to the government. A new study released Monday by the Urban Institute found that the debt isn't only hurting the parents: It's impacting their relationship with their kids.

"It's so absurd," said State Sen. Nancy Skinner, D-Oakland, who wants to change state child support laws. "It's like we're trying to get blood from a turnip, blood from a stone."

Skinner is pushing a bill this year that would increase the amount of child support that goes to families. Under SB337, families with one kid would get $100 a month instead of $50, and families with two ore more children would receive $200. Another bill would eliminate the interest charged on child support debt.

Skinner's bill was initially more ambitious, calling for 100% of child support payments to flow to families. But lawmakers in the Senate watered it down, concerned it would cost the state too much money.

Still, Skinner said, even the more modest amounts could make a huge difference. She noted that for a parent working for minimum wage, a few hundred dollars every month is a lot of money, and for families living in poverty, every extra cent can help.

If most of the child support payment goes to the government, "what's the motivation to pay?" she asked.

"The studies show that if we can assure the parent who has to pay that the money is actually going to his children, the more likely he is to be willing to pay," said Skinner.

As part of the Urban Institute study, a group of anti-poverty organizations helped to pay down the child care debt of 32 mothers and fathers. The study found that the debt relief made significant impacts on the lives of the parents who owed the money as well as their children, including:

• The parents consistently paid their monthly child support payments on time.
• The parents' credit scores, housing status and overall financial situations improved, and they were more likely to be able to get a job.
• The parents' relationships with their children and their co-parents improved.

That last benefit is as important as the financial gains, said Jamie Austin at Tipping Point Community, a non-profit that helped fund Urban Institute's study. Austin said the research showed that many parents, both the ones paying and the ones who are supposed to receive child support, were unaware of how the system works.

"This is really tearing families apart psychologically," Austin said. "We heard stories of mothers and fathers avoiding each other, always arguing about money ... because of these financial troubles that really had nothing to do with the family and everything to do with the government policy."

Lam was one of the participants in the debt relief study, and he said the change was dramatic. He was able to lower his monthly payments to a more affordable amount — $560 a month.

The lack of debt and lower payments freed Lam up to spend money on his daughters when they are with him, which he said is nearly half of the time.

"I love my kids. They changed my life. They made me a better man ... The hard earned money I do make, I want that to go toward my kids. I have no problem paying child support," he said. "But it should be fair."

Correction Aug. 20: The original version of this story said child support payments reimburse welfare and food stamp programs. In fact, parents' payments do not pay back food stamps, but they do pay back Medi-Cal.