Opinion
Opinion By: Chris Gorman, Attorney General; Ross T. Carter, Assistant Attorney General
You have requested an opinion regarding the collection and disbursement of payments on child support obligations. Specifically, you ask whether the Cabinet for Human Resources may establish a system for the collection and disbursement of child support payments through the offices of CHR's contracting officials without violating Kentucky law (specifically KRS 41.070(1) and KRS 41.160) or federal regulation. For the reasons stated below, it is our opinion that CHR may establish such a system without violating KRS 41.070(1) and KRS 41.160. This opinion is limited to interpreting the Kentucky statutes discussed in the opinion. Questions regarding compliance with federal regulations should be addressed to the appropriate federal officials.
Your request concerns the child support recovery program created in KRS 205.710 et seq. KRS 205.712 establishes the Division of Child Support Enforcement within CHR and assigns certain duties to it, including: (1) serving as the collector of all court orders or administrative orders for child support payments paid pursuant to Part D of Title IV of the Social Security Act; and (2) enforcing all other child support laws, including the collection of court ordered child support arrearages. Pursuant to KRS 205.712(4), CHR may enter into cooperative arrangements with appropriate courts and law enforcement officials to assist CHR in administering the child support recovery program. Specifically, "the local county attorney shall be considered the designee of [CHR] for purposes of administering the program of child support recovery within a county, subject to the option of the county attorney to decline such designation."
As we understand your question, you are concerned with establishing a system for collecting and disbursing the child support payments that are recovered by the county attorneys on behalf of individuals who are not receiving AFDC. The county attorneys recover this money from individuals who owe child support payments; the money is then paid, in its entirety, to the individuals to whom the child support payments are due. You want to know if the county attorneys may collect and disburse these child support payments through their local offices, or whether the payments that are collected by the county attorneys must be deposited in the state treasury and then disbursed by the state treasurer to the individuals to whom the child support payments are due. You appear to be particularly concerned with making sure that any system that is used complies with the requirements of KRS 41.070(1) and KRS 41.160.
The first part of your question concerns the issue of where the child support payments that are collected by the county attorneys should be deposited before the payments are disbursed. You wonder whether KRS 41.070(1) requires the collected money to be deposited in the state treasury.
KRS 41.070(1) provides in part:
Unless otherwise expressly provided by law, no receipts from any source of state money or money for which the state is responsible shall be held, used or deposited in any personal or special bank account, temporarily or otherwise, by any agent or employe of any budget unit, to meet expenditures or for any other purpose. All receipts of any character of any budget unit, all revenue collected for the state, and all public money and dues to the state shall be deposited in state depositories in the most prompt and cost-efficient manner available, except that in the case of state departments or agencies located outside Frankfort, and all state institutions, the finance and administration cabinet may permit temporary deposits to be made to the accounts maintained by the agency, department, or institution in a bank which has been designated as a depository for state funds for a period not to exceed thirty (30) days, and may require that the money be forwarded to the state treasury at the time and in the manner and form prescribed by the department.
While this statute is obviously broad in scope and is intended to provide a comprehensive rule regarding the handling of funds by public officials, the statute's reach is not as sweeping as it might first appear. We discussed the statute in OAG 83-370 in the context of an inquiry concerning the Kentucky Reinsurance Association. The KRA was created by 1982 legislation for the purpose of providing a means of assuming the liabilities of the Special Fund. It is a statutorily created nonprofit corporation that is attached to the Finance and Administration Cabinet for administrative purposes. KRS 342.123. We concluded that the KRA funds are subject to KRS 41.070 because the money collected by KRA is to be used by the Special Fund in furtherance of the workers' compensation program.
In subsequent litigation, the Kentucky Supreme Court held that KRA funds were not subject to KRS 41.070. In
Thompson v. Kentucky Reinsurance Association, Ky., 710 S.W.2d 854 (1986), the court held that KRA funds "are clearly private funds, as opposed to public, and are therefore not subject to control by the General Assembly." Id. at 857. The court cited as precedent
Ross v. Gross, 300 Ky. 337, 188 S.W.2d 475 (1945), in which the court held that if a statute allots a portion of fees collected by a public officer as his compensation, then the legislature cannot mandate that the compensatory portion be transmitted to the state treasury.
Based on these cases, we believe that a distinction must be drawn between the character of funds addressed in the statute and the funds temporarily held by a county attorney collecting child support. The child support funds are in no manner capable of being determined to be public funds. They are funds paid by one individual to another individual in satisfaction of a court judgment. While the county attorney may serve as the conduit from payor to payee, neither the county attorney nor the state acquires any claim of title against the child support funds. The status of the funds is perhaps analogous to money paid into court during litigation. The clerk of the court as a fiduciary is responsible for the safekeeping of the funds, but no one would argue that the clerk must promptly remit such funds in every case directly to the state treasury. Indeed, CR 67.03 provides explicitly that the clerk may deposit the money in a local account.
We are aware that KRS 41.070 refers to "money for which the state is responsible," and one might maintain that the state is responsible in a fiduciary sense for the child support funds collected by county attorneys. We believe that such a position is definitively rejected by Thompson v. Kentucky Reinsurance Association, where the court emphatically stated that the statute applies only to state funds and not private funds, even though the state might in some situations be "responsible" for private funds.
Therefore, because the requirements in KRS 41.070 regarding the deposit of receipts do not apply to this situation of collecting and disbursing private funds, the monies collected by county attorneys are not required to be deposited in the state treasury before they are disbursed.
The second part of your question concerns the disbursal of the child support payments that are collected by the county attorneys. You want to make sure that any system that is used complies with KRS 41.160, which states, in part:
No money shall be paid out of the treasury except by the check of the treasurer upon a state depository. Because of our conclusion that county attorneys are not required to deposit the child support payments that they collect in the state treasury, KRS 41.160 will not apply to the collected child support payments, assuming that they are not deposited in the state treasury.
In conclusion, it is our opinion that the monies collected by the county attorneys for child support payments need not be deposited in the state treasury and disbursed by the state treasurer. The county attorneys may collect and disburse these child support payments through their local offices without violating KRS 41.070(1) and KRS 41.160.