dcl9013.htm

Electronic transfer of funds and data

May 24, 1990

DC-9013

TO STATE IV-D DIRECTORS

Dear Colleague:

We are writing to advise you of an innovative and exciting national initiative involving income withholding and electronic transfer of funds an data. When fully implemented, it will boost both States' and employers' efficiency in implementing immediate income withholding and should alleviate much of the anticipated workload. Use of electronic transfer of funds and data can provide a seamless flow of collections and information from employer to the IV-D agency and to the child support recipient.

Electronic funds transfer (EFT) and electronic data interchange (EDI) technologies are combined in this initiative to electronically transmit both payments and payment related data. Over the past decade, EFT has thrived in the financial world. EDI also has gained acceptance in virtually all industries as a means to transmit purchase orders, shipping information, invoices, and other business documents. Yet, while several State and local child support enforcement programs have experimented with forms of EFT, these tests have not resulted in widespread use of the technology. While the tests demonstrated that EFT is effective, efficiencies were not experienced since payment transfers were separate and apart from the payment related data. That is, the EDI technology, was not used to electronically provide the payment related data simultaneously. Separating the EFT and EDI technologies resulted in redundant processing of collection information.

Clearly, a successful EFT/EDI project will involve employers and financial institutions as well as child support enforcement agencies. In addition, EFT/EDI will affect all States' automated and accounting systems. A work group was formed representing these various actors to develop a standard format for transferring both income withholding payments and the related data. This standardization is essential to avoid incompatible payment and data formats which could result form negotiations among State and local IV-D agencies and employers.

We are pursuing this initiative in cooperation with the National Automated Clearing House Association (NACHA) which sets rules and administers the Automated Clearing House Network. In 1989, the Office of Child Support Enforcement began working closely with NACHA to develop a Child Support Convention, a set of procedures with a selected format to be used by employers to electronically transfer income withholding payments and standardized data elements which will contain case related information about the withholding.

Page 2 - IV-D Directors

The enclosed EFT/EDI Work Group Report provides you background on the work completed so far along with information on EFT/EDI as an emerging technology with many potential and beneficial applications in the child support enforcement arena. As you are reviewing the Report, you will note that the EFT/EDI Work Group has proposed data elements which will contain the data about the payment transactions. This is where we ask for your help.

The data elements must be used nationwide to identify the appropriate child support case records and to distribute payments accurately; regardless of the child support enforcement agency's organizational structure, case record numbering system, or level of automation. Therefore, we are asking you to review the data elements on page 6 and to provide us with your comments and suggestions.

The Report also raises unresolved issues on page 7. Please help us by studying those as well and providing us with comments and /or suggestions. The EFT/EDI Work Group will reconvene in mid-June to review your comments. Therefore, we would like to have them no later than June 15, 1990. Because of many courts' roles as collections points, we urge you to send a copy of this document to your State's court administrative office and include their comments with yours.

The contact person is Yvette Hilderson Riddick at (202) 252-5427 or Program Support Branch, Program Operations Division, OCSE, 370 L'Enfant Promenade, S.W., Washington, D.C. 20447. Thank you for your assistance in this very important initiative.

Sincerely,

Jo Anne B. Barnhart

Director

Office of Child Support

Enforcement

Enclosure

cc: Regional Representatives