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HomeNewsArchivesFINANCE BLAMED FOR PAYROLL DEDUCTION DELAYS

FINANCE BLAMED FOR PAYROLL DEDUCTION DELAYS

Jan. 28, 2002 – The main problem with child support payments is delay from the Finance Department in disbursing the funds, Regina de Chabert, Justice Department paternity and child support director, told the Senate Government Operations Committee Monday.
It was a charge that went unanswered, as Finance Commissioner Bernice Turnbull wasn't at the hearing, although she had been invited to testify. The meeting was called to address reports of delays in her department's disbursement of collected fees, loan payments, garnishments and other revenues to government agencies, lending institutions and credit unions.
Sen. Emmett Hansen II, the committee chair, commented: "Both the Finance commissioner and Ira Mills, director of the Office of Management and Budget, were invited to this hearing. We haven't heard from either of them." He vowed to subpoena them for a future hearing.
Attorney General Iver Stridiron, who was waiting to give testimony along with de Chabert and Mary Beth Arceneaux, V.I. Bankers Association legal counsel, said, "I was puzzled. Bernice Turnbull never turns down a request to testify. I just called her, and she said she told the Legislature staff she couldn't attend today because she is in the thick of budget meetings and preparing testimony for a Finance Committee meeting tomorrow."
Hansen maintained the Government Operations meeting was equally important. Stridiron suggested that rather than issuing subpoenas, Hansen schedule another meeting and invite them again.
De Chabert said the problem with child-support payments is that the Finance Department sends her division two payments together at the end of the month, whereas most income withholding orders are on a biweekly basis. "Consequently, child support will always be a month behind," she said, resulting in "a scenario where a custodial parent receives a check for support this month that was due for the prior month."
As things now stand, de Chabert said, non-custodial parents whose payments are being deducted from their paychecks but are not reaching the intended beneficiaries until the following month could face "credit bureau reporting, tax offset and, should their balances meet mandated thresholds, … license revocation, passport denial and asset seizure."
And then, committee members noted, there are the hardships imposed on those who depend on the payments.
Sen. Norma Pickard-Samuel said, "These parents are calling the talk shows, crying and desperate. We should assess fines for those people responsible getting the money from point A to point B." She added, "The governor should get involved. I'll come and bring my staff to help do the work manually."
The majority leader, Sen. Celestino A. White Sr., said the payment delays create problems for people in low-income housing, as the applicant lists child support payments as part of his or her income and is assessed accordingly. De Chabert, however, said that wasn't the case, as the delay is factored into the application formula.
According to de Chabert, things will change in February, when the Paternity and Child Support Division should begin using a new automated system to track payments. She said the division is adopting the new system "to achieve federal compliance and in order to be removed from the alternative penalty system that has resulted in a multimillion-dollar penalty assessed against the child support program."
The system has not been activated yet, she said, but federal certification is scheduled for next week, and the "enforcement mechanisms" will be operational at that time. She said the division is working with the Finance Department to get things to a point where delays occur only in cases of "truly eligible delinquency."
Stridiron said the system is the same as on the mainland. "We deal with limited resources, and they tell us how it should be run," he said. Both Stridiron and de Chabert said they are awaiting the hiring of more child support collectors. The job pays very little, and should be upgraded, both said. The division now flies personnel from St. Croix to St. Thomas to help.
Belated bank-loan payments
There are ongoing delays in the Finance Department's disbursements of payroll deductions for bank-loan payments as well, Arceneaux testified. In fact, she said, they have gotten worse.
"Chase Bank reports that as of Jan. 25, it had not received any payments from pay periods in 2002," she said. "The payment from the pay period ending Dec. 20, 2001 — before Christmas last year — was not received until Jan. 18, 2002."
Arceneaux said the way the system is supposed to work is that an employee opts to have loan payments deducted automatically from his or her pay to ensure that the lending institution gets them on time, with no need to write checks and depend on the mail for delivery.
For example, she cited Chase Bank as an institution that accepts payroll deduction payments for government employees. It receives one check for each district — two weeks after the pay period has passed. She said it's the same story for all other banks in the territory.
"In effect, the government is making loans to itself from its own employees — without their consent, without paying them interest, and to their personal and financial detriment," Arceneaux said. These delays are unfair to the borrowers, she stressed. "They produce real hardship and negative consequences, such as negative credit standing, late fees and increased interest costs."
Hansen said he knew of one case where a borrower had a late charge of $178 assessed on a loan of less than $500.
Other jurisdictions have faced similar problems when state agencies drag their feet in making payments, Arceneaux said, and at least four states have passed legislation addressing the problem, making the government responsible for the interest and late charges. But even that "doesn't solve the problem for the borrower whose good credit is on the line," she added.
The V. I. Bankers Association considers the situation "unfair and detrimental to all concerned,"she testified.
Without testimony from Turnbull or Mills, the senators were left with little to question. Stridiron said, "It's like preaching to the choir."
Committee members attending the hearing were Sens. Adelbert Bryan, Donald "Ducks" Cole, Roosevelt David, Carlton Dowe, Hansen and Pickard-Samuel. Sen. David Jones was absent.

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