Reduction in Federal Financial Participation Rates for the Child Support Enforcement Program
DATE: May 18, 2001
TO: STATE AGENCIES ADMINISTERING THE CHILD SUPPORT ENFORCEMENT PROGRAM UNDER TITLE IV-D OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED ORGANIZATIONS AND INDIVIDUALS.
SUBJECT: Reduction in Federal Financial Participation (FFP) Rates for the Child Support Enforcement Program under Title IV-D of the Social Security Act (Act)
BACKGROUND: Under Section 455(a)(3)(B) of the Act, States are currently entitled to Federal funding at the "enhanced" 80 percent FFP rate for expenditures for the planning, design, development, implementation and operation of an approved Child Support Enforcement System (CSES) that is capable of performing the tasks and meeting the requirements found in Section 454A of the Act.
Also under Section 455(a)(3)(B) of the Act, funding at this enhanced rate is available only through Fiscal Year 2001.
EFFECTIVE DATE: The 80 percent FFP rate for CSES expenditures is eliminated after September 30, 2001. For all CSES expenditures made on or after October 1, 2001, Federal funding is only available at the 66 percent FFP rate.
OTHER PROVISIONS: System Certification and Holdback Payments. With the elimination of FFP at the 90 percent rate for CSES expenditures in 1997 (See OCSE-AT-97-08, May 14, 1997), we determined that it was necessary, at that time, to grant a deviation from the regular cash accounting requirements, in accordance with 45 CFR 304.25. This exception enabled States to receive funding at the 90 percent FFP rate for limited amounts of expenditures made under contractual holdback provisions after the elimination of the availability of FFP at that rate.
With the current elimination of the availability of FFP at the 80 percent rate, a similar deviation is not required and will not be granted. With the enactment of P.L.104-193, the "Personal Responsibility and Work Opportunity Reconciliation Act of 1996," Section 454(23)(B) of the Act was amended to require State to implement additional CSES requirements, mandated under Section 454A of the Act, no later than October 1, 2000. However, as discussed above, funding at the 80 percent FFP rate was available for these requirements for an additional year, through September 30, 2001. Any contractual holdback payments or other delayed payments for these additional requirements should have been made during this one-year period and no further extension of time is necessary.
Prior Quarter Adjustments. For the purposes of determining the applicable FFP rate for those expenditures affected by this change, the date the expenditure is made (or the quarter to which the expenditure is allocated) is the controlling factor. Any legitimate CSES expenditure made prior to October 1, 2001, but claimed later than that date will remain eligible for Federal funding at the 80 percent FFP rate.
Timely Filing. The reduction in FFP rates does not alter the requirement under Section 1132 of the Social Security Act (45 CFR Part 95, Subpart A) that claims be filed within two years of the last day of the quarter in which the expenditure was made. The determination of the appropriate FFP rate for these claims is governed by the guidelines discussed above. Any claim found to meet the criteria for an exception to the two-year deadline will remain eligible for Federal funding at the 80 percent FFP rate regardless of when that claim is filed.
Depreciation Claims. Claims filed in accordance with a multi-quarter depreciation schedule are eligible for FFP at the rate applicable to the quarter to which the depreciation is allocated. Depreciation claims applicable to quarters beginning prior to October 1, 2001 will continue to be eligible for FFP at the higher rate; depreciation claims applicable to quarters beginning on or after October 1, 2001, will be eligible for FFP only at the 66 percent rate. (Example: ADP equipment purchased in July 1997 to meet the requirements of Section 454A of the Act and in accordance with an approved plan is to be depreciated over a five-year period, from July 1997 through June 2002. The portion of the depreciation allocated to and claimed for quarters beginning July 1997 and ending September 2001 will be eligible for Federal funding at the 80 percent FFP rate; the portion of the depreciation allocated to and claimed for quarters beginning October 2001 and ending June 2002 will be eligible for Federal funding at the 66 percent FFP rate.)
ACTION REQUIRED: With the elimination of the availability of FFP at the 80 percent rate, effective for expenditures made on or after October 1, 2001 (fiscal quarters ended December 31, 2001 and thereafter), the following changes are required in the completion of Form OCSE-396A:
Part 1, Line 6, "Approved ADP Expenditures Eligible for FFP at the 80% Rate."
- No "Current Quarter Claim" entries are to be made in Columns A or B;
- No "Next Quarter Estimate" entry is to be made in Column E;
- If needed, "Prior Quarter Adjustment" entries may continue to be made in Columns C and D for a period of two years (submitted no later than September 30, 2003) in accordance with Section 1132 of the Act.
Part 3, Line 6, "Approved ADP Expenditures Eligible for FFP at the 80% Rate."
- No entries are to be made on this line for budget projections for Fiscal Year 2002 and thereafter.
INQUIRIES: Direct inquiries to the appropriate ACF Regional Administrator.
Office of Child Support Enforcement