Everyone seems to be interested in UDC right now.

The GAO is doing a review. They have already visited a few states, and have plans to visit a few more over the next two months. They plan to do a survey of all the states/territories. They are looking at how much the amount of udc has changed over the last few years, the causes for udc, how states are managing their UDC, and what guidance OCSE has given the states.

The OIG has proposed a review of UDC for FY 2004. they propose to examine UDC to determine

Whether the federal government received its share of program income earned in interest-bearing accounts or for undistributed balances written off by the State. OMB has expressed interest in having this area reviewed.

Advocate groups and the media have also been looking at udc. Over the past six months I have seen numerous local newspaper articles about individual states and udc.

Line 9b, OCSE 34A trend 99 - 02

As of the 4th quarter of FY 2002 the net UDC UDC figure was 657 million.

I included a preliminary figure for the first quarter of fy 2003, it is 581 million. Steady upward trend since 99

It peaked the 3rd quarter of FY 2001 at $773 million. About double the figure in first quarter of 1999. Remained flat for next year. 3rd quarter of fy 2002 was almost the same amount.

Has been dropping the last 2 quarters, but dropped the same two quarters last year. There is a lot of variation/seasonality between quarters. That is why generally only report the end of the year numbers.

But the real problem is that states define UDC in different ways. So the OCSE - 34A reports do not provide an accurate picture of the amount of UDC nationwide.

Together with NCCSD we conducted a voluntary survey of states. 20 states participated.

We provided the categories and asked states if they included that category in UDC. I could not fit all the categories on the slide, but wanted to give you some idea of the variation in what states include or not include as udc. The numbers represent the percent of the 20 states that include that reason as udc.

Survey- december 2002

This is the 4th quarter net udc(line 9b) divided by total collections received during the year(line 2) for fy 2002.

We often talk about how udc is a small percentage of the total monies we work with. The nationwide average is:

Nationwide average

FY 2002     2.8%     median 2.0%
FY 2001     3.3%
FY 2000     3.1%

But you see there is a lot of variation among the states, and that might be affected by how they define udc and what each state includes, or some states may have a problem that need to work on.

On this next slide I looked at the percent change in udc from the 4th qtr of fy 2001 to the 4th qtr of fy 2002.

As you can see again there is a lot of variation among the states, most of the states had a change of less than 20 percent, plus or minus. But there is a significant number of states outside this range. Earlier this year we had the regions contact states that a percent change of more than 20 % or less than -20% to ask them to explain the reasons for the significant change. Some of the reasons were due to things that the states were doing to distribute the money quicker, and sometimes we uncovered errors in reporting. We plan to do more of this, and have asked the regions to watch the amounts reported for udc on the quarterly reports and to ask the states for an explanation if there is a significant change.

Nationwide decrease 11%

So what are doing to get some consistency/better understanding in the reporting of udc?

We are adding two lines to the report, 9c and 9d, line 9b remains unchanged. They will provide a breakdown of the amount reported on line 9b into two categories, pending distribution includes collections reported on line 9b that have been identified and allocated to a particular account and which the state reasonably expects to distribute and disburse through normal processing at a date certain in the near future. These would include such things as collections offset from federal joint tax returns of non-tanf families or collections held for future support.

Line 9d are the portion of net udc reported on line 9b that either have not been fully identified or allocated and do not have a definite disbursement date due to insufficient information. These would include such things as collections where we do not know the address of the cp or ncp, or collections received with no open or active account.

The proposed changes to the form have been approved by OMB and we plan to implement the new form effective october 2003, which you won’t actually submit the first report until january 04 for the quarter oct-dec 03.

The national council of child support directors(NCSSD) commented on the form and provided recommendations for the categorization of UDC in the instructions. We plan to incorporate the udc categories recommended by nccsd.

The next step is to design a supplemental schedule to capture detail data on udc by reason and by age of udc. Again we will be working with nccsd to develop this form. Not sure when this will be ready.

Analysis - this is a study completed by the center for support of families. We will be publishing the results shortly. Their findings stressed the importance of all states defining udc the same, categorizing udc, and focus management attention on the problem and devote resources/staff to reducing and preventing udc.

Technical - this is the work discussed by elizabeth earlier. It is a contract to provide technical assistance to states on udc. The contractor will identify problem areas and recommend solutions.

Big 10 - this was a contract with policy studies inc to provide technical assistance on managing and reducing udc to the 11 states with the largest child support caseloads. This report has been published. Some of their findings: strong focus by program management, develop reporting capacity to track ud-by category, by age

SIP - we awarded a Special Improvement Project grant to the third judicial circuit court of michigan. A component of the court serves as the local IV-D agency for the city of detroit and surrounding communities that comprise wayne county. This is a completed project. Again, they reached similar conclusions, the importance of having well defined udc categories, the use of automation to resolve udc problems, and the importance of having staff dedicated solely to researching and working on udc.

1115 - there are currently research projects underway in three states to evaluate potential stategies to reduce udc.

Project period 9/30/02 - 2/29/04. indiana, texas, and dc.

Conf call - OCSE will hold a series of monthly telephone conference calls with the states to share information on what states are doing to reduce udc. The solutions discussed will probably be published in a 'best practices compendium’.

The first call was july 31, and ... The next call will be.