S.F. _____ H.F. _____ Section 1. Section 8A.504, subsection 1, paragraph a, Code 1 2013, is amended to read as follows: 2 a. “Collection entity” means the department of 3 administrative services and any other state agency that 4 maintains a separate accounting system and elects to establish 5 a debt collection setoff procedure for collection of debts owed 6 to the state or its agencies an agency . 7 Sec. 2. Section 8A.504, subsection 1, Code 2013, is amended 8 by adding the following new paragraph: 9 NEW PARAGRAPH . 0b. “Debtor” means a person who is liable 10 on a claim to an agency. 11 Sec. 3. Section 8A.504, subsection 1, paragraph b, Code 12 2013, is amended to read as follows: 13 b. “Person” does not include a state an agency. 14 Sec. 4. Section 8A.504, subsection 1, paragraph d, Code 15 2013, is amended to read as follows: 16 d. “State agency” “Agency” means a board, commission, 17 department, including the department of administrative 18 services, or other administrative office or unit of the 19 state of Iowa or any other state entity reported in the 20 Iowa comprehensive annual financial report, or a political 21 subdivision of the state, or an office or unit of a political 22 subdivision. “State agency” “Agency” does include the clerk 23 of the district court as it relates to the collection of a 24 qualifying debt. “State agency” “Agency” does not include the 25 general assembly or the governor. 26 Sec. 5. Section 8A.504, subsections 2, 3, and 5, Code 2013, 27 are amended to read as follows: 28 2. Setoff procedure. The collection entity shall establish 29 and maintain a procedure to set off against any claim owed to a 30 person debtor by a state an agency any liability of that person 31 debtor owed to a state an agency, a support debt being enforced 32 by the child support recovery unit pursuant to chapter 252B , 33 or such other qualifying debt. The procedure shall only apply 34 when at the discretion of the director it is feasible. The 35 -1- LSB 1254XD (6) 85 ec/rj 1/ 7

S.F. _____ H.F. _____ procedure shall meet the following conditions: 1 a. Before setoff, a person’s debtor’s liability to a state 2 an agency and the person’s debtor’s claim on a state an agency 3 shall be in the form of a liquidated sum due, owing, and 4 payable. 5 b. Before setoff, the state agency shall obtain and forward 6 to the collection entity the full name and social security 7 number of the person debtor liable to it the agency or to whom 8 a claim is owing who is a natural person. If the person debtor 9 is not a natural person, before setoff, the state agency shall 10 forward to the collection entity the information concerning the 11 person debtor as the collection entity shall, by rule, require. 12 The collection entity shall cooperate with other state agencies 13 in the exchange of information relevant to the identification 14 of persons debtors liable to or claimants of state agencies. 15 However, the collection entity shall provide only relevant 16 information required by a state an agency. The information 17 shall be held in confidence and used for the purpose of setoff 18 only. Section 422.72, subsection 1 , does not apply to this 19 paragraph. 20 c. Before setoff, a state an agency shall, at least 21 annually, submit to the collection entity the information 22 required by paragraph “b” along with the amount of each person’s 23 debtor’s liability to and the amount of each claim on the state 24 agency. The collection entity may, by rule, require more 25 frequent submissions. 26 d. Before setoff, the amount of a person’s debtor’s claim 27 on a state an agency and the amount of a person’s debtor’s 28 liability to a state an agency shall constitute a minimum 29 amount set by rule of the collection entity. 30 e. Upon submission of an allegation of liability by a 31 state an agency, the collection entity shall notify the state 32 agency whether the person debtor allegedly liable is entitled 33 to payment from a state an agency, and, if so entitled, shall 34 notify the state agency of the amount of the person’s debtor’s 35 -2- LSB 1254XD (6) 85 ec/rj 2/ 7

S.F. _____ H.F. _____ entitlement and of the person’s debtor’s last address known to 1 the collection entity. Section 422.72, subsection 1 , does not 2 apply to this paragraph. 3 f. (1) Upon notice of entitlement to a payment, the state 4 agency shall send written notification to that person debtor 5 of the state agency’s assertion of its rights to all or a 6 portion of the payment and of the state agency’s entitlement 7 to recover the liability through the setoff procedure, the 8 basis of the assertion, the opportunity to request that a 9 jointly or commonly owned right to payment be divided among 10 owners, and the person’s debtor’s opportunity to give written 11 notice of intent to contest the amount of the allegation. The 12 state agency shall send a copy of the notice to the collection 13 entity. A state An agency subject to chapter 17A shall give 14 notice, conduct hearings, and allow appeals in conformity with 15 chapter 17A . 16 (2) However, upon submission of an allegation of the 17 liability of a person debtor which is owing and payable to the 18 clerk of the district court and upon the determination by the 19 collection entity that the person debtor allegedly liable is 20 entitled to payment from a state an agency, the collection 21 entity shall send written notification to the person debtor 22 which states the assertion by the clerk of the district court 23 of rights to all or a portion of the payment, the clerk’s 24 entitlement to recover the liability through the setoff 25 procedure, the basis of the assertions, the person’s debtor’s 26 opportunity to request within fifteen days of the mailing of 27 the notice that the collection entity divide a jointly or 28 commonly owned right to payment between owners, the opportunity 29 to contest the liability to the clerk by written application 30 to the clerk within fifteen days of the mailing of the notice, 31 and the person’s debtor’s opportunity to contest the collection 32 entity’s setoff procedure. 33 g. Upon the timely request of a person debtor liable to 34 a state an agency or of the spouse of that person debtor and 35 -3- LSB 1254XD (6) 85 ec/rj 3/ 7

S.F. _____ H.F. _____ upon receipt of the full name and social security number of 1 the person’s debtor’s spouse, a state an agency shall notify 2 the collection entity of the request to divide a jointly or 3 commonly owned right to payment. Any jointly or commonly owned 4 right to payment is rebuttably presumed to be owned in equal 5 portions by its joint or common owners. 6 h. The collection entity shall , after the state agency has 7 sent notice to the person debtor liable or, if the liability 8 is owing and payable to the clerk of the district court, after 9 the collection entity has sent notice to the person debtor 10 liable, shall set off the amount owed to the agency against any 11 amount which a state an agency owes that person debtor . The 12 collection entity shall refund any balance of the amount to 13 the person debtor . The collection entity shall periodically 14 transfer amounts set off to the state agencies entitled to 15 them. If a person debtor liable to a state an agency gives 16 written notice of intent to contest an allegation, a state an 17 agency shall hold a refund or rebate until final disposition 18 of the allegation. Upon completion of the setoff, a state an 19 agency shall notify in writing the person debtor who was liable 20 or, if the liability is owing and payable to the clerk of the 21 district court, shall comply with the procedures as provided 22 in paragraph “j” . 23 i. The department of revenue’s existing right to credit 24 against tax due or to become due under section 422.73 is not to 25 be impaired by a right granted to or a duty imposed upon the 26 collection entity or other state agency by this section . This 27 section is not intended to impose upon the collection entity or 28 the department of revenue any additional requirement of notice, 29 hearing, or appeal concerning the right to credit against tax 30 due under section 422.73 . 31 j. If the alleged liability is owing and payable to the 32 clerk of the district court and setoff as provided in this 33 section is sought, all of the following shall apply: 34 (1) The judicial branch shall prescribe procedures to 35 -4- LSB 1254XD (6) 85 ec/rj 4/ 7

S.F. _____ H.F. _____ permit a person debtor to contest the amount of the person’s 1 debtor’s liability to the clerk of the district court. 2 (2) The collection entity shall, except for the procedures 3 described in subparagraph (1), prescribe any other applicable 4 procedures concerning setoff as provided in this subsection . 5 (3) Upon completion of the setoff, the collection entity 6 shall file, at least monthly, with the clerk of the district 7 court a notice of satisfaction of each obligation to the 8 full extent of all moneys collected in satisfaction of the 9 obligation. The clerk shall record the notice and enter a 10 satisfaction for the amounts collected and a separate written 11 notice is not required. 12 k. If the alleged liability is owing and payable to a 13 community college political subdivision and setoff pursuant to 14 this section is sought, both of the following shall apply: 15 (1) In addition to satisfying other applicable setoff 16 procedures established under this subsection , the community 17 college political subdivision shall prescribe establish and 18 implement procedures to permit a person debtor to contest the 19 validity or the amount of the person’s debtor’s liability to 20 the community college political subdivision . Such procedures 21 shall be consistent with and ensure the protection of the 22 person’s debtor’s right of due process under Iowa law. 23 (2) The collection entity shall, except for the procedures 24 prescribed pursuant to subparagraph (1), prescribe any other 25 applicable procedures concerning setoff as provided in this 26 subsection . 27 3. In the case of multiple claims to payments filed under 28 this section , priority shall be given to claims filed by the 29 child support recovery unit or the foster care recovery unit, 30 next priority shall be given to claims filed by the clerk of 31 the district court, next priority shall be given to claims 32 filed by the college student aid commission, next priority 33 shall be given to claims filed by the investigations division 34 of the department of inspections and appeals, and last priority 35 -5- LSB 1254XD (6) 85 ec/rj 5/ 7

S.F. _____ H.F. _____ shall be given to claims filed by other state agencies. In the 1 case of multiple claims in which the priority is not otherwise 2 provided by this subsection , priority shall be determined in 3 accordance with rules to be established by the director. 4 5. Under substantive rules established by the director, the 5 department shall seek reimbursement from other state agencies 6 to recover its costs for setting off liabilities. 7 Sec. 6. Section 99D.2, subsection 3, Code 2013, is amended 8 to read as follows: 9 3. “Claimant agency” means a state an agency as defined in 10 section 8A.504, subsection 1 , or the state court administrator 11 as defined in section 602.1101 . 12 Sec. 7. Section 99F.1, subsection 4, Code 2013, is amended 13 to read as follows: 14 4. “Claimant agency” means a state an agency as defined in 15 section 8A.504, subsection 1 , or the state court administrator 16 as defined in section 602.1101 . 17 Sec. 8. Section 234.8, Code 2013, is amended to read as 18 follows: 19 234.8 Fees for child welfare services. 20 The department of human services may charge a fee for 21 child welfare services to a person liable for the cost of the 22 services. The fee shall not exceed the reasonable cost of the 23 services. The fee shall be based upon the person’s ability 24 to pay and consideration of the fee’s impact upon the liable 25 person’s family and the goals identified in the case permanency 26 plan. The department may assess the liable person for the 27 fee and the means of recovery shall include a setoff against 28 an amount owed by a state an agency to the person assessed 29 pursuant to section 8A.504 . In addition the department may 30 establish an administrative process to recover the assessment 31 through automatic income withholding. The department shall 32 adopt rules pursuant to chapter 17A to implement the provisions 33 of this section . This section does not apply to court-ordered 34 services provided to juveniles which are a charge upon the 35 -6- LSB 1254XD (6) 85 ec/rj 6/ 7

S.F. _____ H.F. _____ state pursuant to section 232.141 and services for which the 1 department has established a support obligation pursuant to 2 section 234.39 . 3 EXPLANATION 4 This bill concerns setoff procedures established in Code 5 section 8A.504 and used to collect debts owed the state or a 6 political subdivision of the state. 7 The bill redesignates the term “agency” rather than as the 8 defined term “state agency” while keeping the definition the 9 same. The bill also defines “debtor” as a person who is liable 10 on a claim to an agency. Corresponding changes to terms in 11 Code section 8A.504 are made to reflect these changes. 12 Code section 8A.504(2)(k), relating to additional setoff 13 requirements for debts owing and payable to a community 14 college, is amended. The bill provides that the additional 15 requirements apply to political subdivisions, that political 16 subdivisions shall establish and implement these enhanced 17 procedures, and that the procedures shall permit a debtor to 18 contest the validity or the amount of the debtor’s claimed 19 liability. 20 -7- LSB 1254XD (6) 85 ec/rj 7/ 7