DCL-02-30, Urgent Need for States to Correct and Resubmit FY 2001 Data Found to be Incomplete or Unreliable for Determination of FY 2002 Performance-Based Incentives and Penalties

DCL 02-30

DATE: October 23, 2002

TO: ALL STATE IV-D DIRECTORS

RE: URGENT NEED FOR STATES TO CORRECT AND RESUBMIT FY 2001 DATA FOUND TO BE INCOMPLETE OR UNRELIABLE FOR DETERMINATION OF FY 2002 PERFORMANCE-BASED INCENTIVES AND PENALTIES

Dear Colleague:

This letter is to remind you of the importance of correcting and resubmitting any child support data reported for FY 2001 that the Office of Child Support Enforcement (OCSE) determined to be incomplete or unreliable. For many states, corrected FY 2001 data are necessary to compute the FY 2002 paternity establishment percentage (PEP) and to enable a state to show improvement in performance between FY 2001 and FY 2002, when the FY 2002 level of performance is below the standard for earning an incentive or preventing a penalty.

In OCSE Action Transmittal 01-01, we provided you with a copy of the "Final Rule on Incentives, Penalties and Audit," which was published in the Federal Register on December 27, 2000 (65 FR 82177). This rule added and/or revised regulations governing the performance-based incentive system and performance penalties required by the Child Support Performance and Incentive Act of 1998. Throughout the final rule and its preamble, we echoed Congress’s requirement that states submit complete and reliable data to demonstrate their performance each fiscal year. A state whose data are found to be incomplete or unreliable may be assessed a penalty and will not be eligible for an incentive payment for the particular performance measure involved in that fiscal year. Incomplete or unreliable data may also affect the state’s eligibility to earn incentives for that measure the following year.

OCSE guidance regarding the need for states to resubmit data found to be incomplete or unreliable for incentive and penalty purposes appears in the preamble section of the final rule. On page 82184, we explained that section 305.32 contains the requirements for the submission of data, which should include "any necessary data from the previous fiscal year needed to calculate the paternity establishment percentage or any improvements over that fiscal year’s performance necessary to earn incentives or avoid penalties for the current fiscal year."

On page 82190, we provided an example to illustrate the need to resubmit corrected data to avoid the financial penalty or to qualify for incentives in the following fiscal year by showing an improvement in performance. In the example, a state is determined to have unreliable data for current collections for FY 2001 and the state corrects the unreliable data for FY 2001 during FY 2002. We clarified that, "the state must still have reliable FY 2002 data and meet the current collections performance standard for FY 2002 or incur a penalty in FY 2003" and "that the State may need to correct and resubmit its FY 2001 data in order to demonstrate improvement which would qualify for incentives or to meet the penalty performance measure during FY 2002." And on page 82206, in response to a comment asking for clarification as to how a state may demonstrate an increase in performance when data for the previous year were found to be incomplete or unreliable, we explained that:

If [the] State is able to correct the problem and substitutes corrected data by the time data are required to be submitted for next year’s incentive payment determination, it will be able to earn incentives for the next year on improvement measures based on the corrected data. If the data problem is not corrected, a state will not be able to earn incentives based on improved performance.

With respect to incentives, for example, four performance measures - the PEP, support order establishment, current collections, and arrearage collections - enable a state to earn an incentive in FY 2002, despite failing to reach the performance standard, if the state’s performance on that measure has improved by a certain percentage over its performance in FY 2001. A state can demonstrate such an improvement if the relevant performance data for both FY 2001 and FY 2002 are complete and reliable. Therefore, states that would qualify for an incentive payment under these circumstances should correct and resubmit their data for FY 2001 on or before December 31, 2002, the date by which the states’ FY 2002 data are due to OCSE.

Similarly, incomplete or unreliable FY 2001 data may lead to the assessment of financial penalties for FY 2002 on three performance measures – the PEP, support order establishments, and current collections. As with earning incentives for levels below the performance standard, the financial penalty may be avoided for poor FY 2002 performance by demonstrating sufficient improvement in performance over FY 2001 levels. (See 45 CFR 305.40.) Again, however, the relevant data for the two consecutive fiscal years must be complete and reliable.

Finally, correction and resubmission of FY 2001 data are important because they affect a state’s PEP calculation for FY 2002. The denominator of a state’s PEP is a function of the number of children born out of wedlock during or as of the end of the preceding fiscal year (line 5 or line 8 of Form OCSE-157). Thus, a state will not earn an incentive for the PEP in FY 2002 if line 5 or line 8 was found to be unreliable for FY 2001.

I urge each state to correct and resubmit by December 31, 2002 any performance-related FY 2001 data that were found to be incomplete or unreliable. Corrected data should be submitted to OCSE, with audit trails as described in DCL-02-23 (August 27, 2002). Data submitted after this date will not be considered. If you have any questions regarding this matter, please contact your regional program manager or Joyce Pitts, OCSE, Division of Planning, Research, and Evaluation, at (202) 401-5374.

Sincerely,

Sherri Z. Heller, Ed.D.
Commissioner
Office of Child Support Enforcement

cc: Regional Program Managers
ACF Regional Administrators