Final Rule: Child Support Enforcement Program Audit
March 26, 1990
TO:STATE AGENCIES ADMINISTERING CHILD SUPPORT ENFORCEMENT PLANS UNDER TITLE IV-D OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED INDIVIDUALS
SUBJECT:Child Support Enforcement Program Audit
ATTACHMENT:Attached are final regulations which revises the Child Support Enforcement regulations governing the audit of State Support Enforcement (IV-D) programs and the imposition of financial penalties for failure to substantially comply with the requirements of title IV-D of the Social Security Act (the Act). In the Notice of proposed Rule Making (NPRM) published in the Federal Register on January 31, 1989 (54 FR 4841), regulations were proposed to improve and expedite the current process for auditing State and local IV-D programs by consolidating the criteria evaluated during the course of an audit and making other changes to the current requirements to allow flexibility in the audit approach. The final regulations only include changes regarding the period to be audited.
REGULATION REFERENCE:45 CFR Part 305.
SUPERSEDED MATERIAL:OCSE-AT-89-02, dated February 10, 1989.
INQUIRIES TO:OCSE Regional Representatives.
Allie Page Matthews
Federal Register / Vol. 55, No. 46 / Thursday, March 8, 1990 8465
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Child Support Enforcement
45 CFR Part 305
Child Support Enforcement Program; Revision of Child Support Enforcement Program Audit Regulations
AGENCY: Office of Child Support Enforcement (OCSE). HHS.
ACTION: Final Rule
SUMMARY: These final regulations revise the Child Support Enforcement program regulations governing the audit of State Child Support Enforcement (IV-D) programs and the imposition of financial penalties for failure to substantially comply with the requirements of title IV-D of the Social Security Act (the Act). In the Notice of Proposed Rule Making (NPRM) published in the Federal Register on January 31, 1989 (54 FR 4841), regulations were proposed to improve and expedite the current process for auditing State and local IV-D programs by consolidating the criteria evaluated during the course of an audit and making other changes to the current requirements to allow flexibility in the audit approach. The final regulations only include changes regarding the period to be audited. For a detailed discussion regarding why most of the proposed changes were not included in the final regulations, see "Supplementary Information."
EFFECTIVE DATE: March 8, 1990
FOR FURTHER INFORMATION CONTACT: Lourdes Henry (202) 252-5440.
Paperwork Reduction Act
This rule does not require any information collection activities and, therefore, no approvals are necessary under the Paperwork Reduction Act.
As a result of the enactment of P.L. 98-378, the "Child Support Enforcement Amendments of 1984," OCSE published final audit regulations on October 1, 1985, which affect the audits ofState IV-D programs for FY 1984 and beyond. Section 9 of P.L. 98-378, and the implementing regulations, require that OCSE conduct an audit of the effectiveness of State Child Support Enforcement programs at least once every three years; require that OCSE use a substantial compliance standard to determine whether each State has an effective IV-D program; provide that any State found not to have an effective IV-D program in substantial compliance with the requirements of title IV-D of the Act be given an opportunity to take the corrective action necessary to achieve substantial compliance with those requirements; provide for the use of a graduated penalty of not less than 1 nor more than 5 percent of a State's Aid to Families with Dependent Children (AFDC) program funds if a State is not in substantial compliance; and specify the period of time during which a penalty is effective.
Experience gained by OCSE auditors clearly indicates that a more effective and expeditious approach to audits of State IV-D programs is necessary. The NPRM contained major changes to the current audit process. The preamble to the NPRM indicated that the proposed regulations were an interim step in improving the audit process. However, OCSE has determined that most of the changes to the audit and penalty regulations proposed should not be finalized at this time, for several reasons. First, as a result of the passage of P.L. 100-485, the Family Support Act of 1988, we published final regulations on August 4, 1989 (54 FR 32284) regarding standards for program operations which contain timeframes for case processing and distribution. These regulations, as well as other regulations necessary to implement the child support provisions of P. L. 100-485, will have a major impact on the audit of State IV-D programs. Many commenters suggested that we delay issuance of major changes to the audit regulations proposed in this rule until we have published final regulations on program standards. They urged that all major changes to be made at one time.
We are issuing regulations regarding other child support provisions of P.L. 100-485, including mandatory use of guidelines to establish and modify support obligations, mandatory genetic testing in contested paternity establishment cases and clarifications with respect to the $50 pass-through payment in AFDC cases and paternity establishment until age 18. These regulations will not be issued in final form until early next year.
Second, the NPRM contained a proposed performance indicator to measure the establishment of paternity that differs from the establishment of paternity standard set forth in section 111 of the Family Support Act. Accordingly, we believe that it would be confusing and unreasonable to finalize the proposal.
Therefore, we believe that it is better to make major changes to the audit regulations in a consolidated document. We are committed to publish these major revisions in final form by the time that program standards requirements published August 4, 1989, are effective October 1, 1990. In preparing the comprehensive audit regulations, we will review any comments received in response to the January 31, 1989, NPRM related toproposed changes to the audit process. In addition, as indicated in the final program standards regulations published August 4, in revising the audit regulations, we will consider specific suggestions for assessing State compliance with the new program standards requirements which were received in response to the proposed program standards regulations. The new NPRM will include a 60-day comment period.
Although we are not making any major changes to the audit regulations in this document, we are finalizing one aspect of the proposed rule which revises õ305.11, Audit period, to provide for a more flexible audit period. This change, discussed below, will result in audits being conducted more timely because audit periods will not be tied to fiscal years. We believe this one aspect of the proposed regulation should be finalized at this time to allow more flexibility in scheduling audits immediately. The audit process and requirements will remain unchanged in all other aspects until the major audit revisions are published and finalized. OCSE will continue to use the scoring system in 45 CFR 305.98 until such time that a new scoring system is issued in final.
These final regulations are published under the authority of sections 1102, 402(a)(27), 452(a)(4) and 403(h) of the Act. Section 1102 authorizes the Secretary of HHS to publish regulations not inconsistent with the Act which may be necessary to efficiently administer the Secretary's functions under the Act. Section 402(a)(27) requires each State to operate a child support program in substantial compliance with the title IV-D State plan and section 452(a)(4) requires the audit of each State IV-D program to assure compliance with title IV-D requirements at least once every three years (or not less often than annually in the case of any State which is being penalized, or is operating under a corrective action plan). Finally, section 403(h) provides for the imposition of an audit penalty of not less than one nor more than five percent of a State's AFDC funding for any State which fails to substantially comply with title IV-D requirements, with an allowance for a corrective action period.
Regulatory Provisions and Response to Comments
We received 37 comments from States on the proposed regulations. We will consider the majority of the comments on aspects of the proposed regulations which are not being finalized in this document when we draft revised audit regulations to comport to changes made to program regulations as a result of the Family Support Act of 1988. We are, however, responding to comments on the proposed revision to the audit period. The regulatory requirement and response to comments follow.
This final rule revises the current regulations governingthe audit of State child support programs to provide flexibility in the timing of the audits. To provide greater flexibility in scheduling the audits and follow-up reviews, we are replacing the requirement that the audit cover the period of October 1 through September 30, of each fiscal year audited with a requirement that the audit cover a period comprised of any 12 consecutive months. In addition, we are replacing the requirement that the follow-up review conducted in States operating under corrective action plans with respect to State plan criteria cover the first full quarter after the corrective action period with a requirement that such audits cover the first three-month period beginning after the corrective action period. For States operating under corrective action plans with respect to the performance indicator, the follow-up review will continue to cover the first full Federal fiscal year following the date on which the penalty notice was issued.
We made a technical correction to the last sentence of õ305.11 by replacing the provision that the audit may cover a shorter period at State request when the State is being penalized under õ305.100 with the proviso that the audit may, at State request, be conducted prior to the end of the one-year period for the annual comprehensive audit prescribed under õ305.10(b).
1. Comment: States generally objected to the proposed audit period of between three and twelve months, arguing that it would provide too much flexibility and result in inequitable treatment of States. They indicated that State performance is impacted by the volume of requests for services which is subject to seasonal variations, for example, increased request for services as cold weather approaches and increased AFDC applications as seasonal employment opportunities are reduced. States also argued that three months is too short a timeframe in which to determine accurately a State's performance with respect to some of the performance criteria evaluation, including location of the absent parent and paternity establishment.
Response: In light of these comments, we revised proposed õ305.11 to provide for an audit period of any 12 consecutive months. This gives auditors the flexibility to begin an audit at the beginning of any month and alleviates the States' fears about inaccurate and inequitable audit results.
2. Comment: One State commented that the follow-up review with regard to performance indicators should cover the first twelve months following the expiration of the corrective action period rather than the first full fiscal year following the date on which a determination was made that performance was not in substantial compliance.
Response: As stated in the proposed regulations published in the Federal Register on October 1, 1985, pages 40136-7:
We believe that a one-year corrective action period is reasonable because the interim and final audit reports inform each State of its deficiencies before the State receives a notice from OCSE regarding the Secretary's finding that the State did not substantially complywith the requirements of title IV-D of the Act.
By allowing the follow-up review to cover the first 12 months following the expiration of the corrective action period, a State would actually have as long as 2 years in which to correct its deficiencies with regard to performance indicators. We continue to believe that one year is more than adequate to take corrective action. With few exceptions, States have been able to correct deficiencies within the corrective action period. Therefore, we have retained the requirement in õ305.11 that, when a State fails to meet audit criteria related to performance indicators, the review will cover the first full fiscal year following the date on which a determination was made that performance was not in substantial compliance.
Notice and Corrective Action Period
We made the following technical changes in õ305.99 to correspond to changes to õ305.11. We amended paragraph (d)(1) to make a correction by replacing the word "maintain" where it appears, with the word "maintained." For clarity, we added at the beginning of paragraph (d)(2), "during the corrective action period." Finally, in paragraph (d)(3), we replaced "quarter" with "three-month period," inserted "first full" before "fiscal" where it first appears; and deleted the word "fiscal" where it last appears.
Penalty for Failure to Have an Effective Program
We made a technical correction to õ305.100(d) by replacing the word "and" where it appears after the word "notice" and before the word "maintain" with the word "or."
Regulatory Impact Analysis
The Secretary has determined, in accordance with Executive Order 12291 that this rule does not constitute a "major" rule. A major rule is one that is likely to result in:
(1) An annual effect on the economy of $100 million or more;
(2) A major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or
(3) Significant adverse effects on competition, employment, investment, productivity, innovation or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic or export markets.
The Executive Order requires that, for major rules, we prepare a regulatory impact analysis which describes the potential benefits and costs of the rule, together with the potential benefits and costs of alternative approaches.
This final rule will have little or no net economic effect, because it will not change the requirement of State Child Support Enforcement programs or the penalties which may be levied againstprograms which fail to substantially comply with the requirements. The net effect here is not on actual State program practices but rather on the scheduling of audits to evaluate these practices. The number of States failing the audit is not expected to increase under this final rule.
Under the Regulatory Flexibility Act of 1980 (Pub. L. 96-354), we are required to prepare a regulatory flexibility analysis for those rules which will have a significant economic impact on a substantial number of small entities. This final rule will not have a significant economic impact on a substantial number of small entities. Therefore, a regulatory flexibility analysis is not required.
List of Subjects in 45 CFR Part 305
Accounting, Child Support, Grant programs/social programs(Catalog of Federal Domestic Assistance Program No. 13.783, Child Support Enforcement Program)
Dated: November 24, 1989.
Eunice S. Thomas
Office of Child Support Enforcement
Approved: February 9, 1990.
Louis W. Sullivan,
For the reasons set out in the preamble, 45 CFR Part 305 is has been amended as follows:
1. The authority citation for Part 305 continues to read as set forth below:
Authority: 42 U.S.C. 603(h), 604(d), 651(a)(1) and (4), and 1302.
2. Section 305.11 is revised to read as follows:
õ305.11 Audit period.
The audit will cover a period comprised of any 12 consecutive months. When the State is operating under a corrective action plan, the review will cover the first three-month period beginning after the corrective action period. When the State fails to meet audit criteria related to the performance indicator under õ305.98 of this part, the review will cover the first full fiscal year following the date on which a determination was made that performance was not in substantial compliance. The audit may, at State request, be conducted prior to the end of the one-year period prescribed under õ305.10(b) of this part when the State is being penalized under õ305.100 of this part.
3. Section 305.99 is amended by revising paragraphs (d)(1), (2) and (3) to read as follows:
õ 305.99 Notice and corrective action period
* * * * *
(d) * * *
(1) The State has achieve substantial compliance with the unmet criteria cited in the notice and maintained substantial compliance with any marginally-met criteria cited in the notice;
(2) During the corrective action period, the State is not implementing its corrective action plan; or
(3) The State has implemented its corrective action plan but has failed to achieve substantial compliance with the unmet criteria cited in the notice and maintain substantial compliance with any marginally-met criteria cited in the notice. For State plan-related criteria, this determination will be made as of the first full three-month period after the corrective action period. For performance indicator-related criteria, this determination will be made as of the first full fiscal year following the year in which a determination was made that performance was not in substantial compliance.
* * * * *
4. Section 305.100 is amended by replacing the word "and" with the word "or" in paragraph (d).
[FR Doc. 90-5432 Filed 3-7-90; 8:45 am]
BILLING CODE 4150-04-M