Virginia

Direct Deposit of Child Support Payments

Goal

Direct deposit of child support payments electronically into the recipients' checking or savings accounts.

Description

In the fall of 1997, the Virginia Department of Social Services' Division of Finance responded to the cumulative requests of 40 custodial parents to participate in a pilot of a direct deposit program in Virginia. After collaborative planning with several major banking institutions in Virginia, on October 29, 1997, letters were mailed to this group of custodial parents announcing the new direct deposit program of child support payments. Funds were first electronically deposited into the customers’ bank accounts on November 26, 1997.

Next, two district offices within Virginia (the cities of Portsmouth and Danville) were identified to serve as pilot sites whose experience with the program would be the basis of a statewide program. The new Direct Deposit Program was marketed by the mass mailing of brochures touting the slogan, "Direct Deposit: Receiving Child Support is Now Faster and Easier," to a targeted customer base with the Portsmouth and Danville districts. The selection criteria for the targeted mass mailing included the following:

1. NONTANF or TANF case within one of these districts
2. Payment received in the last six months
3. Checks currently being mailed directly to the custodial parent from DCSE

The marketing brochure contained a basic description of the Direct Deposit Program, citing the advantages of using this method of payment (get payment faster, check cannot be lost/stolen, no trips to/waits at bank). Attached was a tear-off application/authorization agreement for automatic deposit of child support payments.

Results

As of July, 2000 there were 26,990 direct deposit accounts (checking and savings) to which 59,671 payments were made via direct deposit for Division of Child Support Enforcement clients, representing 27.1% of all child support payments in Virginia. This represents a tremendous savings in staff time over any manual methodology, expedites the payments to where they are needed, eliminates the possibility of lost or stolen checks, and lowers the state's "undistributed receipts." Virginia also has direct deposit agreements with 19 other states.

The Direct Deposit Program in Virginia is highly successful, continues to grow daily in enrollment, and is now marketed by Virginia's banking institutions, who stock the enrollment forms and mail completed forms to the Division of Child Support Enforcement. Additionally, the direct deposit forms are located in all district offices around Virginia as well as on the Virginia Department of Social Services' website.

Funding

The Direct Deposit Program is funded through the operating budget of the Virginia Department of Social Services' Division of Child Support Enforcement.

Replication Advice

It is imperative that detailed implementation and marketing planning take place between Child Support Enforcement and the banking institutions within a state considering a direct deposit program. Aside from arranging the electronic transfer of funds from DCSE's bank to the customer's bank, a separate DCSE account should be set up to accommodate rejections. When DCSE's bank sends funds to a customer's account and there is a problem (i.e., the account is closed, etc), these funds are rejected and routed into this new account. The bank faxes a list of the "rejects" to DCSE's central office daily. These payments are re-posted to the child support system, and an actual check is then written and mailed to the custodial parent.