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Witnesses urge Congress to end TANF cost‑recovery and require pass‑through of child support to families
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Summary
Witnesses and members argued that many states retain child support paid on behalf of TANF families and that Congress should eliminate cost‑recovery, require pass‑throughs, and consider federal backfill for states to offset lost retained collections.
Ranking Member Davis and witnesses described retained collections (sometimes called cost recovery) as an issue that reduces payments to children. Connie Chesnick and Nick Gwynn urged Congress to move away from the original cost‑recovery model and increase the share of child support that reaches families. Chesnick presented a legislative package recommending an end to retained collections for TANF cases and modest federal increases to the incentive pool to offset administrative impacts.
Gwynn, of the Center on Budget and Policy Priorities, said that in 2023 state and federal governments retained $896,000,000 in child support payments and argued that retained collections reduce recipients’ incentives to participate with the program and harm low‑income families. “Pass through policies put the needs of children first,” Gwynn said, and suggested incremental and structural steps Congress could take — from eliminating the federal cap on pass‑through amounts to requiring all states to adopt family‑first distribution rules for arrears collected via tax refunds.
Members also discussed real‑world constraints. Witnesses told the committee states face system and timing challenges in changing distribution rules; Texas and Wisconsin officials warned that altering financial flows across many legacy systems would require substantial testing and investment. Chesnick and others proposed a combined approach: legislative changes to distribution rules along with adjusted federal performance incentives and modest federal funding to state administrative budgets during a transition.
The hearing included an exchange about recent federal action to freeze funding for certain states. Representative Davis called that step unlawful; Nick Gwynn said the letters to states did not follow typical procedures and that the funding freeze was under a temporary restraining order. No court outcome was announced at the hearing.
The panel did not vote on legislation at the hearing. Members asked witnesses to provide model statutory language and additional data for drafting potential bills.
