Office of Child Support Enforcement
FY 2002 and FY 2003 Annual Report to Congress

Annual Report to Congress
Department of Health and Human Services
Administration for Children and Families
Office of Child Support Enforcement

Table of Contents

Foreword by Secretary Leavitt
Background
Introduction
Automation
Training and Technical Assistance
Program Improvements
Focusing on Results
Referrals to Workforce Agencies
Project Save Our Children (PSOC)
Tribal Program
International Program
List of Charts
Program Charts and Graphs
State and Nationwide Box Scores
List of Tables
Glossary of Financial and Statistical Terms

Foreword

I am pleased to offer this Annual Report to Congress on the Child Support Enforcement (CSE) Program. The report highlights the operation and accomplishments of the program for Fiscal Years 2002 and 2003.

The Child Support Enforcement Program has been serving children and their families since 1975. Over these years, the program has changed from one that recoups welfare costs to one which serves a mostly non-welfare clientele. Congress created the Child Support Enforcement Program out of intense concern over the costs to the Federal and state governments of supporting children when their parents did not.

Provisions in the 1996 bipartisan welfare reform legislation strengthened and improved state child support collection activities by establishing a national new hire and wage reporting system, streamlining paternity establishment, creating uniform interstate child support forms, computerizing statewide collections, and authorizing tough new penalties for nonpayment.

The Child Support Enforcement Program ensures families’ self-sufficiency by making child support a more reliable source of income that will help families become and remain financially secure. Over $20 billion in child support payments was collected and distributed in FY 2002. In FY 2003, over $21 billion was collected and distributed. This increase in collections is particularly notable since the child support caseload decreased by almost one percent over the same time. For both years, the combined state/Federal cost of collecting and distributing payments was about $5.2 billion, with the Federal government providing about $3.4 billion and the states $1.8 billion.

We look forward to our continued partnership with the states and all those who work to improve the lives of children. We believe that both parents are responsible for providing financial and emotional security and support for the children they bring into this world and will continue working toward this goal for all children.

Michael O. Leavitt

Background

The Office of Child Support Enforcement (OCSE) is part of the Administration for Children and Families (ACF) within the Department of Health and Human Services (DHHS). It sets program standards and policy, evaluates states’ performance in conducting their programs, and offers technical assistance and training to states. It also helps states develop, manage, and operate their programs effectively and according to Federal law. The Federal government provides the major share of state program operating costs and provides location and collection services, policy guidance and technical help to enforcement agencies, conducts audits and educational programs, supports research, and shares ideas for program improvement.

The mission of ACF is to promote the economic and social well-being of families, children, individuals, and communities. The purpose of OCSE is to ensure that assistance in obtaining support, including financial and medical, is available to children by:

• locating noncustodial parents;
• establishing paternity and support obligations;
• monitoring and enforcing obligations; and
• collecting and distributing child support.

All states and some tribes run a child support enforcement program, usually out of the state or tribe’s human services department or department of revenue, and often with the help of prosecuting attorneys, district attorneys, other law enforcement agencies, and officials of family or domestic relations courts.

Services are available to any parent or other person with custody of a child who has a parent living outside of the home. Services are available automatically for families receiving assistance under the Temporary Assistance for Needy Families (TANF) program, the Medicaid program, and Foster Care program. Other families seeking government child support services can apply through their state/local agency or one of the tribes running the program. For these families, there is an application fee.

Current child support collected on behalf of families receiving TANF is returned to reimburse the state and Federal governments for TANF payments made to the families. Child support payments that are collected on behalf of never-TANF families are sent to the families. Child support payments over the amount needed to repay the government for public assistance payments are sent to TANF families. The program also provides services to noncustodial parents to establish paternity, locate a custodial parent and child if necessary, and/or bring the case into the child support program. States offer access and visitation services through Federal grants.

Evolution of the Program: Making Child Support a More Reliable Source of Income

Since the inception of the child support enforcement program, the mission has remained the same—locate noncustodial parents, establish paternities, and establish and enforce support obligations by obtaining support from the noncustodial parent. However, the program has evolved from its beginnings as a means to reimburse the government for welfare payments to one that provides a more reliable source of income for families. Welfare recipients now make up just 17 percent of the total child support caseload. The largest group of clients, 47 percent, is comprised of families who formerly received public assistance. The remaining 36 percent is comprised of families who never received public assistance.

More than ever, the money the program collects on behalf of children actually goes to children. In fiscal year 2002, 89 percent of child support collections was distributed to families. In FY 2003, 90 percent of the child support collections was distributed to families.

Introduction

In FY 2003, the Office of Child Support Enforcement (OCSE) received a Program Assessment Rating Tool (PART) score of 90 percent. This is the highest rating ever given by the White House Office of Management and Budget for any block grant, formula grant, or service program in the entire government. There are several factors which helped the program attain this high rating and accomplish the many successes described in this report in fiscal years 2002 and 2003.

Child support payments collected and distributed in FY 2002 totaled over $20 billion. In FY 2003, support payments collected and distributed were over $21 billion. This increase in collections is notable since the child support caseload decreased by almost one percent over the same time. The combined state/Federal cost for collecting and distributing was about $5.2 billion.

Automation

Automation is critical to the operation and success of the child support enforcement program. Without a comprehensive, reliable, flexible, and secure system, caseworkers in the states would not have the means to locate noncustodial parents who are delinquent in child support payments or to increase collections. At the Federal level, OCSE was charged with the responsibility of developing the initial Federal Parent Locator Service (FPLS) and expanding it to include new systems used by the states to address welfare reform requirements. Today, the expanded FPLS includes several mission-critical systems supporting OCSE business processes and one state-to-state communications network.

The FPLS supports the goals of OCSE and, ultimately, ACF by:

• locating child support case participants and their assets, including employment;
• facilitating income withholding and collections from employers, including both private and government agencies;
• providing access to interstate case and processing information;
• offsetting Federal payments, including tax refunds, to delinquent obligors; and
• denying passport issuance to delinquent obligors.

The specific FPLS systems that support OCSE in achieving its goals are the following:

National Directory of New Hires (NDNH) contains employment and unemployment claimant information from 54 states and territories and all Federal agencies for the purpose of locating child support case participants, and identifying employment to facilitate collection of support through income withholding and medical support enforcement through enrollment in health care coverage.

Federal Case Registry (FCR) contains child support case and participant information from 54 states and territories. Matching between the NDNH and FCR provides states with interstate location capabilities, unavailable from any other source, through which parentage, financial and medical support orders can be established and enforced.

Multistate Financial Institution Data Match (MSFIDM) provides a centralized system and process through which delinquent obligors can be matched with their financial accounts in over 4,500 multistate financial institutions to locate financial assets and enable states to freeze and seize them.

Interstate Referral Guide (IRG) provides child support case processing information from each of the 54 state and territorial jurisdictions to increase the efficiency of interstate case processing.

Office of Child Support Enforcement Network (OCSENet) is a private, closed network that facilitates transfer of data over private lines; the network supports the processing of interstate case requests and the submission of electronic income withholding orders (IWOs) by states directly to the Department of Defense (DOD), the largest single employer in the U.S.

Child Support Enforcement Network (CSENet) is the system that supports the interstate transactions transmitted over OCSENet.

Federal Offset System transmits information about delinquent obligors certified by states to the Department of Treasury's Financial Management Service (FMS), which offsets tax refunds and other Federal payments by the amount of certified child support debt. The Federal Offset System also interfaces with the Department of State (DOS) to deny passport issuance to delinquent obligors.

These systems enable the child support program to operate more efficiently by providing centralized interfaces and standardized data exchange methods rather than duplicating the functions in each individual state. The Social Security Administration (SSA) provides the operating environment for Federal Case Registry, National Directory of New Hires, Federal Agency External Locate System, Federal Offset System and Multistate Financial Institution Data Match in accordance with an interagency agreement. SSA also provides a Federal-to-state and Federal-to-Federal agency communications network (SSANet). Additional information on these applications is accessible at http://www.acf.hhs.gov/programs/cse/newhire/.

How Automation Worked to Improve the Program

Beginning in 1981, ACF has supported the development of automated information systems for Child Support Enforcement Programs by enhanced funding at 90% federal financial participation (FFP) to encourage development of a single statewide child support system. FFP match at regular match (66%) was available for systems for county and local programs. Despite the availability of FFP, state development and implementation of compliant child support enforcement systems was initially slow. To stimulate development, Congress passed the Family Support Act of 1988 mandating the implementation of automated Child Support Enforcement systems in every state, requiring that such systems be fully operational no later than October 1, 1995; and rescinding enhanced funding for systems development and equipment cost effective September 30, 1995. Congress later extended this deadline to October 1, 1997. The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 restored enhanced funding at 90% Federal match, with limits, retroactive to October 1, 1995 through September 30, 1997 to enable states to complete their FSA-compliant systems. PRWORA also provided FFP at an enhanced rate of 80% (with a nationwide total Federal share ceiling of $400 million), for systems development and implementation costs related to PRWORA automation requirements and established a deadline for PRWORA automation of October 1, 2000. This enhanced funding authority expired on September 30, 2001. States not compliant by the statutory deadline faced either state plan disapproval or an alternative systems penalty that increased every year they were out of compliance.

This enhanced financial support has provided states and territories with the financial resources to develop and acquire cost effective automated systems. Documentation provided by the states annual cost benefit analysis, have indicated that in the majority of states, the benefits of automation have far exceeded the initial costs of the system development. States and territories now have statewide child support systems with the functionality to both exchange interstate child support information via CSENet and to disburse funds electronically utilizing the National Automated Clearing House Association (NACHA), which has endorsed the child support conversion for Electronic Funds Transfer (EFT)/Electronic Data Interchange (EDI). States have enhanced their electronic interfaces with other state, local and private entities to improve the location of individuals and their employment and assets.

Fiscal Year 2003 marked the year when the majority of states, an additional fifteen, implemented enhancements to statewide child support systems to take advantage of the provisions of PRWORA. OCSE efforts resulted in the certification of eight states in FY 2002 and seven states in FY 2003 as being compliant with PRWORA automation requirements. In FY 2003, the Alternative Systems penalties totaling $211,688,311 were imposed against four states who were not yet complaint with the automation requirements of PRWORA.

In addition to the systems enhancements mandated by PRWORA, many states and territories are increasing their level of automation and implementing system enhancements to better serve their client base. Many states are encouraging the electronic disbursement of child support payments to families, either through direct deposit or use of shared-value cards. A best practice that OCSE encouraged state child support agencies to implement in FY 2003 involved the development and implementation of interactive customer service websites for child support clients. OCSE developed a training curriculum for Customer Service Web Development in FY 2003 and trained over 83 state, local, and tribal child support staffs in four two-day training sessions. Resource materials collected from several states were disseminated to other states, including a programming code that enables individuals and small businesses to utilize a state website to authorize a debit from a bank account.

In FY 2003, OCSE continued to encourage the collection and dissemination of best practices in automation through Section 1115 and Special Improvement Project (SIP) grants. Among the automation initiatives were:

• pilot projects with the Defense Finance Administration to facilitate electronic wage withholding;
• working with tribal child support grantee agencies on the planning and requirements for potential tribal child support systems;
• a feasibility study to examine data and document exchange capability between child support enforcement agencies and courts;
• development of data elements and transaction standards for accessing child support payment data across states;
• developing guidance on automating the closure of child support cases to ensure timely and correct notification to clients;
• research on how to improve the data exchange between Temporary Assistance for Needy Families (TANF) and child support local and state agencies; and
• development of cost allocation for systems development materials, a user guide, and a software toolkit.

Automation Outcomes

The automation supplied by OCSE makes a substantial contribution to the child support enforcement program by providing locate and asset information to states to enforce their cases and increase collections. Unless noted otherwise, all statistics quoted below are for FY 2003:

• A total of 6.7 million child support cases, with arrearages of $72 billion, were certified for Federal tax refund and administrative payment offset. If Federal tax refunds or administrative payments were payable on these certified cases, they were offset by the amount of child support arrearage due. In calendar year 2003, over 1.6 million of these cases had Federal tax refunds and administrative payments offset, resulting in child support collections of $1.6 billion. Of this total, approximately 49 percent was targeted for reimbursement of TANF payments; the remaining 51 percent was collected for non-public assistance child support debt.
• In FY 2003, the Passport Denial program netted $11.3 million in child support collections, and the average number of passports denied as a result of this program continued to exceed sixty per day. Since the inception of the program in 1998, cumulative collections exceed $28.5 million. Significantly, these figures are based on voluntary reporting, so the actual figures, in all probability, are much higher. As an example of the effectiveness of this program, in FY 2003 a noncustodial parent made a lump sum payment of $186,000 in order to have his passport renewed. The entire payment went directly to the family as the case was non-TANF.
• During FY 2003, Multistate Financial Institution Data Match (MSFIDM) has returned to the states an average of more than 1.8 million account matches each quarter. These financial accounts were associated with approximately 1.1 million delinquent obligors. The MSFIDM program netted approximately $63 million in FY 2003. Cumulative collections since the program began in 1999 now total approximately $168.4 million. Significantly, these figures are based on voluntary reporting by only some of the states that are using the program, and may include some in-state collections.
• The National Directory of New Hires (NDNH) provided matches of noncustodial parent information with that of new hire, quarterly wage and unemployment insurance records from state workforce agencies. More than 658 million employment records were posted to the NDNH. The records were matched against noncustodial parents and putative fathers on the FCR. In total, employment data on 4.6 million individuals were sent to states. As a result of these matches, states are able to put income withholding in place in an expedited fashion and determine whether health care coverage is available for children.
• Over 6 million transactions occurred between states through the Child Support Enforcement Network (CSENet).

In addition, the FPLS has greatly facilitated OCSE’s support of - and contributions to - the President’s Management Agenda, with a specific concentration on the Improved Financial Performance Initiative, by reducing erroneous payments and overall program costs in public assistance and benefits programs. FPLS data have been used in intragovernmental and intergovernmental data-sharing initiatives, resulting in savings totaling over $1.4 billion, as follows:

• Social Security Administration (SSA): FPLS data is matched to verify eligibility and payment amounts under the Supplemental Security Income (SSI) program. The FPLS data match has resulted in annual savings of approximately $371 million in estimated recovery of overpayments and the prevention of future overpayments.
• Internal Revenue Service (IRS): FPLS data is matched to verify taxpayer claims relative to the Earned Income Tax Credit (EITC). The FPLS data match has resulted in identification of approximately 3 million taxpayers, with roughly $9 billion in related refunds, whom are potentially filing fraudulent EITC claims. Of those identified, IRS has examined 170,000 taxpayers and has frozen over $550 million in refunds in the FY 2003 tax-filing season.
• Department of Education (ED): FPLS data is used to locate student loan defaulters, and has resulted in over $269 million in direct ED collections, with an additional $457 million in collections from their Guaranty Agencies, for a total of over $726 million, in FY 2002.
• Temporary Assistance for Needy Families (TANF): Comparisons of TANF data and data maintained in the FPLS NDNH resulted in the identification of approximately 2,758 TANF recipients in the District of Columbia who were employed but failed to report their earnings as a condition of TANF eligibility. After independent verification of NDNH data, the six-month pilot conducted with the District of Columbia’s Income Maintenance Administration and overseen by OCSE and ACF resulted in case actions generating annual savings of nearly $3 million. This amount represents approximately three percent of the District’s TANF block grant.

Federal Parent Locator Service (FPLS): Changing Roles of States and Federal Agencies

Until recently, the roles of state and Federal agencies in the administration of the child support enforcement program have been relatively well-defined. OCSE used the FPLS to provide a wealth of information to the states, which then took specific, often worker-initiated action, on cases. Today, those roles are changing - OCSE is harnessing technology to provide states with automated enforcement action on entire state caseloads, thereby freeing states to focus their efforts on debt prevention, customer service, and other beneficial areas.

The FPLS eliminates traditional barriers between government agencies and promotes data sharing to improve program efficiencies and customer service. As states modernize their existing systems, one goal will be to integrate their enterprise architectures with the national FPLS system to leverage the Federal locate, data exchange, and child support collection processing. The states will continue to rely on OCSE to provide standardized and centralized communication and data exchanges with employers, multistate financial institutions, and other Federal agencies-critical suppliers to the child support enforcement process. Better integration of the state and Federal processes in performing activities related to child support will also improve the overall cost-effectiveness and efficiency of interstate and intrastate case processing.

State Chief Information Officers (CIO) recognize the value enterprise architecture provides as a means of integrating health and human services delivery processes and goals with information technology (IT) initiatives. State CIOs are also advocating the migration of legacy based systems to technologically modern platforms. In addition, the FPLS data are used for cross-Federal agency purposes to reduce erroneous payments and overall program costs. These data-sharing initiatives reduce redundant investments in Federal IT resources, and provide a single source of data for multiple purposes. This also significantly reduces the burden on private and public data providers by eliminating the cost and resources involved in the requirement for multiple submissions.

One of the strategic planning deficiencies that OCSE has identified is that the states have been unprepared for resource constraints. To assist the states in meeting the strategic plan objectives in light of state budgetary constraints, OCSE is focusing on how increasing the level of automation in the child support enforcement program can help states do more with less. Examples of OCSE's increased emphasis in this area include:

• identification of best practices in child support automation and data usage;
• establishment of Federal technical assistance teams to review states’ automation efforts and suggest improvements;
• development and delivery of a technical assistance guide for states that includes specific guidance on increasing automation levels for state child support programs;
• development and delivery of training curricula on web-based customer service sites that facilitate client access to case status and payment information;
• inclusion of innovative automation efforts in OCSE reports; and
• designation of “better use of automation” as a priority area for both Section 1115 and SIP grants.

Wage Attachment Since New Hire Reporting

The legal and technological tools that were created in PRWORA have contributed to the continuing increase in child support collections through FY 2002 and FY 2003. PRWORA authorized direct wage withholding, through which state child support enforcement agencies can issue Income Withholding Orders (IWOs) to employers in other states without requesting help from the other states’ child support agency.

In addition, PRWORA expanded the FPLS to include two new databases: the NDNH and the FCR. Data in the NDNH is automatically compared on a daily basis to data in the FCR to locate putative fathers and noncustodial parents involved in child support cases. Successful matches are returned to the states so they can establish paternity and child support obligations, and issue IWOs.

These tools are powerful in the collection of child support. The percentage of child support collections obtained through wage attachment was 56 percent in FYs 1996-1999. Once the NDNH was created and fully functional, the percentage of child support collections obtained through wage attachment increased to 62 percent in FY 2000, 65.0 percent in FYs 2002-2003 and 66.3 percent in FY 2003, demonstrating the efficiency and effectiveness of this application.

Training and Technical Assistance

Overview

To provide leadership on discretionary grants and special initiatives, and establish technical assistance and training strategies to address program needs, the Division of State, Tribal and Local Assistance works in partnership with: the Federal/State Training and Technical Assistance Work Groups; ACF regional offices; other OCSE components; national organizations such as the National Child Support Enforcement Association, the Eastern Regional Interstate Child Support Association, and the Western Interstate Child Support Enforcement Council; State and Tribal Child Support Enforcement agencies; and private partners.

In fiscal years 2002 and 2003, technical assistance and training were provided in a variety of key operational areas.

Managing Arrears

Several regional offices worked comprehensively with their states to identify ways to manage and prevent build-up of arrears. Several meetings were held during which issues were described and successful practices discussed. OCSE conducted annual national training conferences, which were attended by about 450 state and local agency child support employees. In these forums, OCSE presented information on state practices that successfully dealt with issues such as arrears, undistributed collections, and access and visitation, among many other areas. For the first time, in FY 2003, OCSE introduced webcasting of several conference sessions to broaden audience participation.

Working With Judiciary and Courts

In FY 2003, OCSE sponsored a National Judicial Symposium in coordination with the National Center for State Courts, the Conference of Chief Justices, and the Conference of State Court Administrators. Approximately 300 representatives attended including State Chief Justices, court administrators, state IV-D Directors, state CSE system managers, state Medicaid or SCHIP Directors, tribal judges, and other child support staff and stakeholders. The symposium covered interstate case processing issues as well as systems and medical support enforcement. OCSE is continuing this important collaboration effort with a series of follow-up meetings on specific areas of mutual interest with the judiciary.

New Training Curricula

Other initiatives included the development of several training packages targeted to helping improve child support services. A customer service training curriculum was developed and delivered to managers and caseworkers in a number of states to improve child support staff effectiveness with their customers. A training curriculum and other materials related to military child support enforcement were developed for use by state and local child support staff to help improve their ability to collect child support from noncustodial parents in the U.S. military. In addition, a training package was developed on ways to improve coordination between TANF, child support enforcement, and workforce investment agencies in the state offices and local agencies. Improved coordination among these three agencies should help families by increasing the rates of paternity establishment, order establishment, employment, and the collection of child support.

Urban and Rural Jurisdictions

An urban project was organized by the Administration for Children and Families (ACF) staff in Federal regional offices and meetings were held in FY 2002 and 2003. The focus was on exchanging information on performance - related issues and practices common to child support enforcement agencies in large jurisdictions.

In FY 2003, OCSE had two Urban Academies (in Chicago and Washington, DC) attended by 16 local jurisdictions in 16 States. The Academies brought together local managers from large urban areas to discuss issues and effective practices that will lead to increased child support collections. Topics discussed included: Review and Adjustment; Incarcerated Parents; Call Centers and Employment Programs and Employer Outreach.

The participants identified key challenges for large urban jurisdictions and developed strategies for overcoming barriers. “Reunion” calls with Academy participants and subject matter experts were held in FY 2003 on topics that the local managers identified for follow-up. More reunion calls are planned for FY 2004.

In FY 2001, Secretary Thompson announced the “HHS Initiative on Rural Communities” for enhancing human services and health care for families and individuals in rural America. In July 2003, OCSE and regional staff began to hold audio conferences with representatives from rural counties. The intent was to give agency leaders a way to share information about challenges and effective practices in rural areas.[1]

Best Practices

The 2002 Compendium of State Best Practices and Good Ideas in OCSE contains practical ideas for improving the performance of states' child support enforcement programs. Each program write up describes a statewide or local agency practice and provides information on results and funding, advice on replication, and contact information for follow-up comments and questions.

Released at the beginning of FY 2003, the compendium includes 22 practices covering a spectrum of child support issues from a fatherhood program in Georgia, to a customer service unit in South Dakota, to electronic deposit of child support payments in Virginia. The compendium also gives recommendations on web-based customer service in Texas; a voice response information system in West Virginia; collaboration with the Head Start program in Maryland; and management improvement in North Carolina, including an automated customer service center for parents to verify payments received and processed, and hearing date schedules.

Program Improvements

Undistributed Collections

Undistributed Collections (UDC) are child support payments collected on behalf of individual recipients that cannot be disbursed immediately due to a lack of identifying information, unknown whereabouts of the intended recipient, determination of welfare status, dispute resolution, or other reasons. As of the end of FY 2003, states report that total monies collected and not distributed were $532 million. This is a decrease of 19 percent from the FY 2002 amount. Although a lot of progress has been made in attacking this problem in the past year, reducing UDC remains a priority for OCSE and the states.

Through OCSE’s partnership with the states and the National Council of Child Support Directors (NCCSD), OCSE revised the Quarterly Report of Collections to separate the UDC reported into two categories: UDC held pending timing or legal issues [2] and UDC requiring further research before it can be distributed. Sorting UDC into these two categories will help states target which cases require additional work before they can be distributed. A supplemental schedule that provides a more detailed breakdown of UDC is planned for implementation in October 2004. This will further aid states in scheduling case work. It will also provide information about why a collection has not been distributed, and how long it has remained undistributed.

Auditors in the Government Accountability Office (GAO) concluded a review of UDC in March of 2004. In addition to surveying all states, they visited several states to see how they are managing UDC. GAO’s resulting draft report, Better Data and More Information on Undistributed Collections are Needed, offered two recommendations: 1) that OCSE periodically review the accuracy of UDC; and 2) that OCSE and the Department of Treasury make improvements that will allow collections held from tax refunds to be distributed sooner. OCSE is working with regional offices to ensure that states’ UDC data are reviewed and that balances are monitored. OCSE is also working with Department of Treasury to get additional information on the processing status of injured spouse claims in order to share it with the states so that they can immediately release these collections to families rather than hold the money for 180 days.

Electronic Funds Transfer (EFT)/Electronic Data Interchange (EDI) is the primary method of sending payments electronically through the banking system. EFT is one tool that can reduce UDC. To facilitate income withholding and collections from private and Federal government agency employers, OCSE began an initiative at the end of FY 2000 to help the states increase the number of employers sending child support payments electronically to the state disbursement units (SDUs). The EFT portion of the transmission contains the payment information. The EDI portion of the transmission includes identifying information so that the payment can be properly credited to the payor's case. EFT/EDI is the appropriate payment method for larger employers, including the Federal government. At the end of FY 2000, electronic payments (e-payments) to SDUs accounted for about 5 percent of total payments. As a result of an outreach initiative by OCSE, and in partnership with national employer organizations and state child support enforcement agencies, e-payments for child support have increased to about 23 percent of total payments. Almost all states now accept child support payments electronically.

OCSE’s outreach included presentations, information dissemination, training, and technical assistance to large employers, major payroll service providers, payroll systems software developers, and Federal agencies. Some additional results of these promotional activities include:

• All major payroll service providers are sending child support payments electronically and the four major Federal payroll processors are remitting child support payments electronically.
• OCSE’s partnership with the National Automated Clearinghouse Association (NACHA), the non-profit trade group that promotes electronic payments, as well as their automated clearinghouse (ACH), led to the establishment of a Task Force for Child Support Electronic Payments. With OCSE’s assistance, the task force produced a User Guide to Electronic Child Support Payments, which is now the standard e-payments guide for all SDUs.
• Eleven states/counties have implemented web-based payment services for employers and/or non-custodial parents as an alternate payment option to EFT/EDI.
• More states are moving toward electronic disbursement of child support to custodial parents (CPs) through the use of direct deposit, debit cards, or smart cards for those parents without bank accounts.

Arrears Management

One of the top priorities for the child support program has been to gain a greater understanding of the increasing national child support debt. As of the end of FY 2003, states reported that the total cumulative unpaid child support since the inception of the child support enforcement program in 1975 is $96 billion. Almost $6.5 billion of support was distributed as arrears in FY 2003. With more knowledge about the composition of unpaid child support debt, OCSE should be able to design and implement more effective strategies to collect arrears from those who have the ability to pay and develop more appropriate policies for low-income parents who are unable to pay.

In an effort to increase the understanding of this problem, OCSE and the Assistant Secretary for Planning and Evaluation (ASPE) have contracted with the Urban Institute to conduct a “Child Support Debt Analysis Study” for nine states with the largest caseloads. The purpose of this study is to identify the composition of child support debt, the causes for dramatic growth, and what steps may be taken to curb future arrears growth.

OCSE is already learning a number of interesting things about child support debt. Our national data indicate, for example, that:

• Approximately one-half of the debt is owed to the government.
• Most debtors owe small amounts, but most of the debt is held by persons who owe large amounts. Only 20 percent of debtors owe more than $20,000, but they hold 65 percent of the national child support debt.
• According to state workforce agencies’ quarterly wage data, it appears that most debtors have little or no income. However, many of these people have other sources of income such as government benefits and bank accounts.

Some individual states have begun studying child support debt in order to better manage arrears and have initiated efforts such as adopting new procedures, setting more appropriate orders for low-income parents, and/or expanding resources to enhance collection capabilities.

States are approaching arrears management from a variety of perspectives. There are a number of studies going on that will help further define the arrears and the customers who owe back child support. Knowing the demographics will help focus limited resources in the right areas. Best practices are being developed and being shared across the states to leverage the good ideas.

In April and November of 2001, some regional offices held meetings with Federal and state partners to develop strategies and explore what states could do to avoid the build-up of arrears and to manage existing arrears. A follow-up meeting was held in September 2002 to discuss good ideas and best practices to avoid the build-up of arrears and reduce existing arrears by taking action related to enhancing prevention, order establishment, early intervention, and accrued arrears management. Minutes of these meetings, and a report that followed, "Establishing a Discussion Framework & Developing Guiding Principle," have been the bases for conference presentations, workshops and new practices. The FY 2001 reports can be found at: http://www.acf.hhs.gov/programs/cse/pubs/2002/reports/arrears/. The FY 2002 report is located at: http://www.acf.hhs.gov/programs/cse/pubs/2003/reports/arrears/.

Through discretionary grant authority, OCSE is assisting states in their efforts to develop successful strategies to address buildup of arrearages. Minnesota and Virginia have projects that offer low-income or high risk NCPs an opportunity to eliminate arrears owed to the state in return for ongoing payments. Maryland has a project analyzing arrears to develop strategies designed to target NCPs with varying degrees of ability to pay. Colorado and Texas have projects designed to work with low-income noncustodial parents. Colorado is using automation to minimize use of default orders through access to automated databases to obtain information to establish and modify orders. The Texas project will improve the child support review process by focusing on the entry of new order information and the initiation of income withholding.

Medical Support

The Child Support Performance and Incentive Act of 1998 (CSPIA) mandated the establishment of a Medical Child Support Working Group (MCSWG) to identify impediments to the effective enforcement of medical support. The MCSWG report (June, 2000) contained recommendations for improving medical support enforcement and access to health care coverage for children receiving IV-D services.

CSPIA also mandated establishment of the Medical Support Incentive Workgroup (MSIW) to develop a performance measure of the effectiveness of states in establishing and enforcing medical support obligations. In response to the recommendations of the MCSWG and the MSIW, OCSE has continued to work with state partners and stakeholders in the Center for Medicare and Medicaid Services and the Department of Labor in developing legislative proposals. OCSE has also continued its consultation with state partners in developing regulatory revisions to improve the establishment and enforcement of medical support, including the issues of availability and affordability of employer-sponsored coverage.

Additionally, CSPIA mandated the development of the National Medical Support Notice (NMSN) to improve the administration of medical support obligations. The NMSN regulation was promulgated December 27, 2000. As of October 1, 2003, almost all states had enacted laws to have in effect the provisions required for use of the NMSN in cases where the obligated parent has medical support provisions in the child support order and may be able to provide health care coverage through employer-provided insurance. The remaining states are seeking legislation to automate, or are in the process of automating, the NMSN.

The Employer Outreach team continues to provide extensive technical assistance to employers on the NMSN through articles in publications, presentations at conferences and teleconferences, and explanatory material on its website. For example, the NMSN matrix informs employers of each state’s implementation date for the NMSN, the state’s priority between child support and medical support, and the state’s contact person for additional information. In addition, the OCSE website has a downloadable version of the NMSN for use by state workers. The Employer Outreach team continues to assist states with individual requests.

In response to MCSWG recommendations, OCSE and other Department of Health and Human Services (DHHS) components are sponsoring research projects to improve establishment and enforcement of appropriate medical support obligations: the Assistant Secretary for Planning and Evaluation (ASPE), in consultation with OCSE, has sponsored research addressing health care coverage among child support-eligible children; ASPE also has sponsored research addressing state practices in medical child support cross-program coordination; OCSE has sponsored special improvement grants to assist a state in the initiation of enforcement of the custodial parent’s health insurance coverage in order to decrease public funds spent on children’s medical coverage and increase the number of cases where premium costs are shared in a balanced manner between parents; and OCSE has also included medical support as one of the five priority areas for research demonstration activities to add to the knowledge and to promote the objectives of the child support enforcement program.

Grants to States and Other Organizations

Section 1115 Demonstration Grants

Section 1115(a) of the Social Security Act provides OCSE with authority to fund demonstration grants. Only state title IV-D agencies or the state umbrella agencies of which they are a part can receive the grants. The agencies can contract with other agencies, universities, or private consultants to join in these efforts. States must apply for these funds in response to a grant announcement of the availability of funds. Congress appropriated $1.8 million annually for demonstrations, experiments or pilot projects to assist in promoting the objectives of title IV-D.

In FY 2002, OCSE awarded the following 12 new Section 1115 grants:

Massachusetts was awarded $100,000 to analyze arrears and reduce them through new arrears management programs targeted to NCPs with varying abilities to pay. Identification of low-income NCPs will enable the state to target classes of cases for different collection methods and identify cases where collection is likely and those appropriate for settlement. This should increase the capacity of low-income NCPs to make current payments and better manage their arrears.

Minnesota was awarded $43,500 to offer low-income NCPs an opportunity to eliminate arrears owed to the state in return for the payment of ongoing child support in all of their child support cases, per a signed agreement. This project allows for the continuation of recruitment and broadens the participation to voluntary cases. The grant provides longitudinal data on the above demonstrations. It also seeks to increase the amount of child support collected on behalf of children.

Arizona, with a grant of $99,596, seeks to increase the rate of cases with collections from low-income noncustodial parents by expanding the IV-D agency’s collaboration with fatherhood programs, other workforce training programs and the TANF agency. Among its key activities are an enhanced fatherhood curriculum that includes relationship building and the benefits of marriage (developed and delivered by the First Institutional Baptist Church of Phoenix), life skills development, workforce development, money management, and career development.

Kansas, with a grant of $59,558, is partnering with Legal Services, the court, and the Shawnee County (Topeka) noncustodial parent project to build on the current program by coordinating selected legal and mediation services to the NCPs. Where appropriate, the attorneys seek modification of orders to increase NCP satisfaction through revised visitation, custody or support orders, or a more accurate reflection of the NCP’s ability to pay.

Texas proposes to provide a variety of training to paroled and released NCPs through state and local-level demonstration efforts with its $100,000 award. These local-level efforts will include parenting assistance and reunification services, employment services, order reviews and possible suspension of enforcement activity, and placement of state arrears in abeyance. State-level efforts include collaborations with criminal justice, IV-D court masters and workforce development boards. A child support video and a parents’ guidebook will be developed. Family services will be provided by Family Services of Greater Houston and the Child Crisis Center (El Paso). When appropriate, Community-Based Organizations will assist paroled and released offenders with family reunification and reintegration.

In a two-year grant of $150,000 per year, Virginia seeks to improve the state’s ability to locate and serve NCPs. It focuses on implementing and staffing a Child Support Unit in the Chesapeake County Sheriff’s Office to work the law-enforcement side of instate and interstate child support cases in collaboration with the juvenile courts and the local and state child support offices.

Indiana will use a $100,000 grant to investigate the use of debit cards to reduce UDC. This will be the first rigorous evaluation of state-issued child support debit cards that moves from a distribution function comprised largely of check writing services to an electronic system. The proposal is to eliminate the handling and mailing of money orders by the NCP and by county clerks using paper transactions. The information will be transmitted electronically by the seller to the state IV-D agency at the close of every business day. The project will decrease UDC, reduce returned warrants from invalid addresses, lower administrative costs, and move the state to a geographically centralized disbursement unit.

With another grant for $100,000, Indiana proposes to make all old and current distribution information available to government staff throughout the state on a secure Internet basis. Currently, requests for research of pre-1997 information is processed through a paper system and is conducted by staff at only the state capital location. This creates delays (the average is 39 days) and a backlog. If successful, the project would reduce UDC, reduce the time for families to receive their child support, decrease error rate in disbursements, lower administrative costs, and increase collections.

Texas proposes to make support easier for noncustodial parents to pay by contracting with a grocery chain to accept payment. Funds will be transferred electronically. If successful, this project would reduce UDC, increase the amount of child support paid, and expedite the processing of payments. Initially, payments would be accepted only in cash. The grant is for $71,630.

The District of Columbia seeks to use its grant of $52,525 to analyze the composition of the UDC balance and to identify, implement, and evaluate potential strategies to reduce that balance. The primary objective of the project is to reduce the accumulated UDC by 50 percent.

Colorado proposes to use its grant of $100,000 to develop an innovative coordinated approach in order to increase the number of children in IV-D cases with health care coverage. The project will use a medical support facilitator and new automated processes.

In FY 2003, OCSE awarded the following 12 new Section 1115 grants:

Virginia was awarded $81,000 to improve the court process. The project’s goals are: 1) to improve materials and support for self-represented litigants in child support and other cases, 2) to improve case management procedures in Juvenile & Domestic Relations courts for child support and other cases, and 3) to improve the accuracy of judicial paternity orders and other decisions related to child support orders.

California, Tennessee, and Texas were awarded $60,000 each and Iowa was awarded $58,000 to demonstrate improved partnerships between child support enforcement and work programs.

Oklahoma and Washington were awarded $79,750 and $80,000, respectively, to demonstrate innovative methods of providing health coverage to children for whom child support was ordered.

Texas was awarded $80,040 to develop a program using teenage parents to speak to and educate other teen parents and teen non-parents about paternity establishment, child support, and related parenting issues.

Four states - Colorado, Michigan, Texas, and Virginia - were awarded three year grants to reduce arrearages of low-income noncustodial parents. The awards were for $55,023, $145,000, $196,555, and $200,000, respectively.

In addition, four states - Vermont, Washington, Wisconsin, and Wyoming - were granted continuations of their data warehousing and data mining projects, for $199,941, $200,000, $172,724, and $71,967, respectively.

Special Improvement Project Grants

The purpose of the Special Improvement Project (SIP) grant program is to provide funding for projects which further the national child support mission and goals and to help improve program performance. SIP’s legislative authority is Section 452(j) of the Social Security Act, and provides Federal funds for research and demonstration programs and special projects of regional or national significance relating to the operation of state child support enforcement programs. No applicant match is required. Program announcements are published at least annually in the Federal Register. Eligible applicants include state and local public agencies, non-profit agencies (including faith-based organizations), and tribal organizations.

Over the past five years, OCSE has awarded an average of 9 grants per year, totaling approximately $1.3 million per year. OCSE did not award funds in FY 2002 but provided $2.2 million in funding for FY 2003 to eleven states, non-profit and tribal organizations, as described below:

• In Muskegon, Michigan, Family Court Services of the 14th Judicial Circuit received $199,772 - in collaboration with the County Departments of Employment and Training, Corrections, and Child Support, as well as various faith-based and community organizations - to help unemployed fathers by combining employment programs with family counseling and management of their child support debt.
• The Imperial Valley Regional Occupational Program’s Project Dads, in El Centro, California, received $141,858 in collaboration with other agencies, to help fathers obtain employment, assist them with child support order modifications, and help them access parental skills training.

Three grants were awarded to non-profit organizations and a state agency to emphasize the importance of a healthy marriage to a child’s well being.

• The Marriage Coalition, a non-profit organization in Cleveland Heights, Ohio, received $199,994 to test a curriculum to provide poor, unmarried parents with knowledge on the importance of establishing paternity and paying child support or the advantages of a healthy marriage.
• In Allentown, Pennsylvania, Community Services for Children, Inc. received $177,374 to provide - in collaboration with local faith-based organizations - marriage education, employment, and other services to unwed couples involved with Early Head Start or Head Start.
• The Alabama Child Abuse and Neglect Prevention Board received $200,000 to provide services to help low-income, ethnically diverse, unmarried parents learn practical skills to promote healthy marriage, improve employment, and increase paternity establishment rates and child support payments.

Four grant awards focused on expanding use of automation and state best practices to enhance enforcement tools, improve customer service, and increase child support collections.

• South Carolina received $414,574, on behalf of the Electronic Parent Locator Network/Financial Institution Data Match Consortium of 14 states, to develop an on-line program to initiate and respond to state requests for automated enforcement of interstate cases. This project aims to expedite and successfully collect past-due child support through seizure, as necessary, of funds in non custodial parents’ accounts in financial institutions located in states other than those where the child support is owed.
• Colorado was awarded $100,000 to utilize web site technology to increase customer services by providing parents, employers and caseworkers the ability to access case data and input data on-line.
• Iowa received $99,090 to enhance its current web site to provide self-access services for its customers to improve the process of qualifying and applying for child support order modifications.
• North Carolina received $200,000 to develop an automatic “call-back” telephone system to remind customers of scheduled appointments and hearings and also to remind those who have missed payments that they are delinquent - a proven technique used by private debt collectors.

Two grant awards were made focusing on assistance to tribal child support enforcement programs and enforcement of medical support orders. They are:

• The National American Indian Court Judges Association, Inc. received $199,887 to conduct a needs assessment and provide technical assistance and models of child support services to help tribal courts and agencies implement successful and effective child support programs.
• Montana was awarded $149,464 to initiate enforcement of the custodial parent’s health insurance coverage, as appropriate; to decrease public funds spent on children’s medical coverage; and to increase the number of cases where premium costs are shared in a balanced manner between parents.

Access and Visitation Grants

The “Grants to States for Access and Visitation” Program was authorized by Congress through passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA).[3] The overall goals of the program are to:

• enable states to establish and administer programs; and
• support and facilitate non custodial parents’ access to and visitation of their children.

States are directed to accomplish these goals through the provision of services including, but not limited to:

• mediation (mandatory and voluntary);
• counseling;
• education (e.g., parent education);
• development of parenting plans;
• visitation enforcement (monitored or supervised visitation);
• neutral drop-off/pick-up; and
• development of guidelines for visitation and alternative custody arrangements.

Federal Funds

Since FY 1996, $10 million has been appropriated each year for OCSE’s “Grants to States for Access and Visitation” Program. The funding formula, as stipulated via congressional statute, determined that “…the allotment of a state for a fiscal year is the amount that bears the same ratio to $10,000,000 for grants under this section for the fiscal year as the number of children in the state living with only one biological parent bears to the total number of such children in all states.” The minimum annual grant award for a state is $100,000. This is to ensure that states with small populations (i.e., fewer single parent households) are guaranteed a base grant amount; those states with larger populations will be awarded an increased grant amount according to the prescribed funding formula.

Required State Match

States are required, by law, to provide a minimum of 10 percent match vis-à-vis the Federal grant amount. This match requirement can be met via cash and in-kind by the state and/or local grantees.

State Program Reporting Requirements

As a condition of receiving a grant, the Federal law (42 U.S.C. 6696) requires states to monitor, evaluate, and report on services funded through this program. This statutory requirement is satisfied through the annual submission - by states to OCSE—of the “State Child Access Program Survey” which includes:

• state agency contact information;
• services funded;
• provider agency contact information;
• number of parents served;
• socio-economic and demographic information on families served; and
• outcome data (i.e., actual increase in NCP parenting time with children).

FY 2003 Program Achievements

As delineated in Chart A, states provided access and visitation services to a record number of parents (70,000) as compared to previous years. This is particularly noteworthy since nearly half of the states received the minimum annual grant award of $100,000.

State trends appear to remain constant over the years in terms of slightly higher numbers of never-married parents (22,744) participating in access and visitation services as compared to divorced (18,188) or separated (8,644) parents. Nearly 2,000 grandparents and legal guardians - who had primary custodial responsibility of children - were beneficiaries of these services as well.

A nearly equal number of mothers (34,629) and fathers (32,936) were served, resulting in an estimated 50,415 children being positively affected through their parents’ participation in services provided by state-administered access and visitation programs.

The number of NCPs whose parenting time with their children increased as a result of participating in access and visitation programs. As indicated on the previous page, states are now required to report the actual increase in NCP parenting time with children. Despite the fact that this data element was introduced half-way through the service period, 40 states which collected this information reported that nearly 26,000 NCPs increased their parenting time with their children.

Overall, the majority of parents served through this program have annual incomes less than $20,000. On average, states continue to fund a range of access and visitation services although parent education, mediation, and supervised visitation ranked among the most popular programs.

For additional information on this grant program, OCSE has prepared a report entitled Preliminary Data: Child Access and Visitation Grants - State Profiles (FY 2003). This report can be accessed on OCSE’s website: http://www.acf.hhs.gov/programs/cse.

*This chart is based on data reported by 53 states and territories for FY 2003 and does not reflect numbers reported for “grandparents/legal guardians.” FY 2002 data are based on reports received from 48 states.

** Fiscal Years 2002 and 2003 data are preliminary.

Healthy Marriages Initiative Waivers

A major initiative of OCSE has been to fund and monitor Section 1115 waiver projects for states which integrate marriage education and child support objectives. These waivers are designed to:

• promote the objectives of title IV-D of the Social Security Act;
• enforce support obligations owed by noncustodial parents to their children by locating the noncustodial parents;
• establish paternity and obtain child support;
• assure that support will be available for all children for whom assistance is requested;
• improve the financial well-being of children; and
• improve the operation of the child support enforcement program.

Project applications were received from Michigan, Idaho, Virginia, Illinois, Louisiana, Massachusetts and Minnesota. These applications were approved in FY 2003. Applications from other states (Kentucky, Washington , Florida, Georgia, Wisconsin, Ohio, Colorado and Texas) were under review at the end of FY 2003.

In general, the projects: provide healthy marriage education, integrate child support information and motivation into this healthy marriage education, use in-hospital maternity wards as recruitment places, provide community-wide media campaigns which present the advantages of marriage, and promote responsible fatherhood and other social support.

Waivers allow the state to: operate the project on less than a statewide basis, use Federal Financial Participation (FFP) for related activities not normally funded under Title IV-D (e.g., marriage education, coalition building, media campaigns, responsible fatherhood and other social support), and match Federal funds with private funds. Federal funds are limited to $1 million and project periods are from two to five years.

Extensive technical assistance is being provided to projects under the direction of the Lewin Group of Falls Church, Virginia. This effort is monitored by the Office of Planning, Research and Evaluation (OPRE) and funded by OPRE and OCSE. An evaluation of the waiver is underway.

In addition, as described above under “Grants to States and Other Organizations,” in FY 2003, OCSE awarded three SIP grants to emphasize the importance of healthy marriage to a child’s well being.

Focusing on Results

The Office of Child Support Enforcement (OCSE) program is results-oriented. The program’s effectiveness is measured through the use of specific performance indicators. Performance indicators were selected that further the goals of the child support program to see that:

• all children have parentage established,
• all children in IV-D cases have financial and medical orders,
• all children in IV-D cases received financial and medical support from parents, as ordered, and
• the IV-D program will be efficient and responsive in its operations.

Performance-Based Incentives and Penalties

Since 1975, the Federal government has paid incentives to state child support enforcement programs to encourage improved child support collections through efficient establishment and enforcement techniques. These incentive payments are a key source of funding for state programs. The method for calculating payments changed with the adoption of the Child Support Performance and Incentive Act (CSPIA) in 1998. This system was developed from recommendations made to the Secretary by an Incentive Funding Workgroup composed of state and Federal partners. Key elements of the performance-based incentive system include:

• linking incentive payments to performance in the five measured areas: paternity establishment, order establishment, collections on current support due, cases paying toward arrears, and cost-effectiveness;
• data must be reliable and complete, as determined by annual data reliability audits;
• incentives are based on state collections and performance;
• states are paid from a capped incentive pool; and
• incentives must be reinvested into state child support programs.

The goal of the new incentive system, as implemented in Federal regulations (45 CFR Part 305), is to provide a financial reward to states that find innovative, cost-effective means to improve child support performance in the five measured areas. This new system has generated a more balanced program that produces better outcomes for children and families.

Fiscal year 2000 was the first year states received incentives based on the new incentive system. The performance-based incentive formula was phased-in over the FY 2000-2002 period and became the sole determinant for incentive payments in FY 2002.

In FY 2003, forty-three states received an incentive for all five measures, eight states received an incentive for four measures, and the remaining three states received an incentive for three measures. This is a marked improvement over FY 2002 results that show thirty-seven states received an incentive for all five measures, eleven states for four measures, and six states for three measures.

Incentives for FY 2003 totaled $461 million, a 2.4 percent increase over the FY 2002 total of $450 million. FY 2003 final adjustments are overwhelmingly positive - forty states received more than their initial estimates and only fourteen states received less.

The child support enforcement performance based penalty system provides that a financial penalty be assessed when data submitted for calculating state performance is found to be incomplete and/or unreliable, when the calculated level of performance for any of the three penalty measures (paternity establishment, support order establishment, or current collections) fails to achieve a specified level or when states are not in compliance with certain child support requirements. There is an automatic corrective action year following the discovery of the deficiency or deficiencies. The corrective action year is the immediately succeeding fiscal year following the year of the deficiency.

The penalty is held in abeyance pending the results of the state’s data reliability audit and performance results submitted for the corrective action period. If the state’s data are determined complete and reliable and related performance is adequate for the corrective action year, the penalty is not imposed.

The financial penalty is a reduction to the state’s Temporary Assistance for Needy Families (TANF) block grant. If corrective action was unsuccessful, the penalty amount is calculated as one to two percent of the adjusted State Family Assistance Grant (SFAG) for the TANF program for the first year of the deficiency and increases each year, up to five percent, for each consecutive year the state’s data are found to be incomplete or unreliable or the state’s performance on a penalty measure fails to attain the specified level of performance necessary to avoid a penalty. Fourteen states received a penalty in 2003, after the FY 2002 corrective action year for the FY 2001 performance period. Thirteen states appealed to the Department.

Audits and Data Reliability

Passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) in 1996 changed the direction and emphasis of audits of state OCSE programs conducted by the OCSE’s Office of Audit. Legislative requirements now emphasize performance and outcomes rather than the pre-PRWORA requirements of processing and taking actions on child support cases. Beginning in FY 2000, as part of PRWORA and CSPIA, states began receiving financial incentives based on meeting or exceeding standards for each of the five performance measures related to paternity and order establishment, collecting child support, and cost effectiveness.

The incentives are paid based on performance data that states report to OCSE. The Office of Audit performs Data Reliability Audits (DRAs) to evaluate the completeness, accuracy, security, and reliability of this data reported and produced by state reporting systems. DRAs help to ensure that incentives are earned and paid only on the basis of verifiable data and that the incentive payment system is fair and equitable.

Fiscal Year 2003 was the fourth year that OCSE calculated and paid incentives to states for performance based on the five performance measures. The major improvement noted in FY 2002 data reliability was again observed in the FY 2003 results as six more states, or a total of forty-eight, passed all data reliability requirements. In FY 2002, forty-one states passed all requirements compared to only twenty-eight states in FY 2001. Only thirteen states in FY 2002, versus twenty-six states in the prior year, did not get a payment for one or more incentive measures due to the inability to meet data reliability audit standards.

OCSE also is required by PRWORA to evaluate the adequacy of the financial management of a state’s program. Specifically, OCSE’s Office of Audit is mandated to perform reviews of expenditures claimed by states for Federal reimbursement. The primary objectives of a cost audit is to determine whether costs claimed by the state for Federal reimbursement is allowable, allocable, and reasonable to the child support enforcement program, and to ensure that states bear their fair share of child support costs. Financial audits are performed after the DRAs are complete to the extent that time and resources are available before beginning the next fiscal year DRAs. Audit findings from cost audits performed or reported in FY 2003 included, among other things, findings of incorrect methods for allocating costs to the IV-D program; unallowable and non-IV-D costs claimed for reimbursement; and the receipt of program income not offset to reduce expenditures as required.

Self-Assessment

The self-assessment process was designed to be used as a management tool by states. Self-assessment helps the states evaluate their programs and performance, and gives them an opportunity to ensure they are meeting Federal requirements for providing child support services. The Federal role in all of this is to analyze the reports, make recommendations, assist with corrective action, and identify best practices which could be shared among the states.

Prior to the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), states were audited every three years to ensure they were in compliance with Federal requirements. If a state was found not to be in compliance, it would receive a penalty and be given a chance to correct the problem by submitting a corrective action plan. Once the corrective action period was completed, another audit would be done. If the problem was corrected, the penalty would be rescinded.

With the enactment of PRWORA, states were charged with an annual review of their child support enforcement programs to determine if Federal requirements are being met. States must submit an annual report of their findings to OCSE within the Department of Health and Human Services. The Federal requirements consist of seven compliance criteria used by the states to evaluate their child support programs.

States’ average self-assessment rates for FY 2002 and FY 2003 for each criteria were as follows:

Criteria	Average Rate 2002	Average Rate 2003	Target/Efficiency Rate
case closure	85%	89%	90%
establish paternity & support	76%	78%	75%
enforce support orders	86%	86%	75%
collect & distribute support	94%	95%	75%
secure & enforce medical support	79%	79%	75%
review & adjust support orders	81%	85%	75%
interstate services	81%	81%	75%
expedited process six months	90%	90%	75%
expedited process twelve months	97%	94%	90%

Overall national totals indicate that states have been performing at or above the required efficiency rates.

State Plans

As a condition of receiving Federal Financial Participation (FFP), the State IV-D agency must submit an approvable State Plan describing the nature and scope of its child support enforcement program. The State Plan consists of preprinted pages and related attachments, and contains all the information necessary for OCSE to determine whether it can be approved. The authority to approve State Plans is delegated to the Regional Offices, but the Commissioner of OCSE retains the authority for determining that a State IV-D Plan is not approvable.

In FY 2003, several states were sent notices of intent to disapprove their IV-D State Plans for failure to submit an approvable State Plan. During the year, all those states enacted the required state legislation, implemented the required procedures, and submitted approvable State Plans, which upon approval, generated letters to those states withdrawing the notice of intent.

Program Assessment Rating Tool

The Program Assessment Rating Tool (PART) was developed to assess and improve program performance so that the Federal government can achieve better results. A PART review helps identify a program’s strengths and weaknesses to inform funding and management decisions aimed at making the program more effective. The PART, therefore, looks at all factors that affect and reflect program performance including:

• program purpose and design;
• performance measurement;
• evaluations and strategic planning;
• program management; and
• program results.

Because PART includes a consistent series of analytical questions, it allows programs to show improvements over time and allows comparisons between similar programs.

As part of the budget process reforms under the President’s Management Agenda, reviews were implemented to measure the effectiveness of Federal programs in FY 2003. Programs were evaluated using the PART. OCSE volunteered to participate in the PART process in FY 2003 to support the President’s Management Agenda. The OCSE program received a PART score of 90 percent, making it the highest rated social services program and the highest rated block/formula grant program amongst all programs reviewed government wide in FY 2003. According to the Office of Management and Budget (OMB), OCSE’s high rating was due to its:

• clear purpose and unambiguous mission linked to salient and meaningful program measures;
• strong management practices with financial incentives awarded and penalties assessed to states based on meeting the specific performance measures;
• demonstration of measurable progress toward meeting its long-term and annual performance goals; and
• independent evaluations indicating the program’s effectiveness in achieving results.

Over the past few years, OCSE has been the recipient of several awards that acknowledge the quality and effectiveness of its collaboration and coordination efforts. These awards were the result of evaluations that considered the program’s impact, effectiveness, and other measures of performance.

Referrals to Workforce Agencies

A goal of the Office of Child Support Enforcement (OCSE) is to encourage child support agencies and courts to refer unemployed or underemployed non-custodial parents (NCPs) to One-Stop Centers and other workforce investment operations to improve their ability to support themselves and their families.

OCSE has worked with the Department of Labor’s (DOL) Employment Training Administration for the past several years to develop awareness and encourage collaboration between child support enforcement and workforce investment agencies at the national, state, and local levels.

A Memorandum of Understanding (MOU) to work together on improving collaboration was signed with the DOL in FY 2003. The purpose of the agreement is to increase the number of noncustodial parents who secure and retain unsubsidized jobs through the workforce investment system so that they can better meet their child support obligations.

These two Federal organizations have had little contact in the past and had virtually no understanding of the other’s work or goals. OCSE and DOL started meeting to shape the goals, needs and issues of this collaboration. Slowly, through joint issuances and conference workshops, OCSE encouraged its components to cross-refer clients to - and collaborate to improve services with - the DOL, with the long range goals of improving the economic self-sufficiency of NCPs and their children.

Through the MOU and in other ways, OCSE has also sought to encourage judges and hearing officers to refer delinquent, unemployed NCPs to workforce investment as a positive alternative to a ‘seek work’ order or incarceration.

OCSE seeks out and publishes ‘promising practices’ on effective collaborations between child support enforcement, the judiciary, and workforce investment.

OCSE also began the development of a seminar curriculum on improving program outcomes through interagency collaboration. The seminar, designed for state and local office and/or regional managers from child support, TANF, and workforce investment, demonstrates the advantages of working together to achieve program goals to help client families. One of the goals of this initiative is to increase the referral of NCPs to workforce offices by both child support and TANF.

As a result of these efforts, more and more local child support enforcement agencies and courts are referring unemployed NCPs to DOL operations for employment and training, and workforce development agencies are enrolling and serving NCPs. Federal leadership in this collaboration has paid off at both the state and local levels. Although some local and state staff started working together before OCSE did, the vast majority had not.

Project Save Our Children

Project Save Our Children (PSOC) is a criminal child support enforcement initiative targeted at pursing chronically delinquent parents who willfully fail to take responsibility for their children and owe large sums of child support ($20,000 and over). PSOC’s goal is to increase child support collections through the identification, investigation, and - when warranted - prosecution of flagrant, delinquent child support offenders. By prosecuting parents who will not provide support, a pointed message of responsibility is sent which may help to give their children a better chance in life.

The PSOC Task Force is based on a model project launched in 1998 in Columbus, Ohio. The Midwest Law Enforcement Task Force, formed by the Office of Child Support Enforcement (OCSE) and the Department of Health and Human Services’ (DHHS) Inspector General’s office, joined with Justice Department prosecutors and investigators, state child support agencies, and local law enforcement officials to coordinate efforts in a new investigative initiative. Since that time, PSOC has grown to operate through 12 sites nationwide, covering all states and territories.

Since the project’s creation in 1998, PSOC has investigated more than 8,000 cases and is responsible for over 800 arrests and over 700 convictions and adjudications. As a result of these investigations, $38 million in restitution has been ordered in which $21 million has been collected. PSOC’s activities have facilitated OCSE’s ability to collect arrearages.

Tribal Program

The Personal Responsibility and Work Opportunity Act (PRWORA) of 1996 first allowed the Office of Child Support Enforcement (OCSE) to directly fund tribal child support enforcement programs. States have historically been charged with providing child support services to tribal recipients, as they comprise part of the state caseload. Under an Interim Final Rule published in August 2000, the Department of Health and Human Services (DHHS) provided funding to nine Tribes (listed below) to operate a comprehensive child support enforcement program.

• Chickasaw Nation
• Navajo Nation
• Puyallup Tribe
• Sisseton-Wahpeton Sioux Tribe
• Lac du Flambeau Tribe
• Menominee Tribe
• Port Gamble S’Klallam
• Lummi Nation
• Forest County Potawatomi

In FY 2003, these Tribes participated in national child support meetings and conferences which included the following: The Tribal Automation System Workgroup; The Tribal/State Cooperation Workgroup; The National Indian Child Welfare Association Directors Training Conference; and The Central Office/ACF Regional Office Conference. The Tribes also provided on-site Technical Assistance to the Navajo Nation and Sisseton-Wahpeton and co-hosted a conference with the National Council of State Legislatures.

Once the final regulations are published, DHHS will make direct payments for administrative expenses to Tribes, tribal organizations and Alaskan Native villages that demonstrate the capacity to operate a child support enforcement program. To receive funding, Tribes must meet the following objectives:

• establishment of paternity;
• modification and enforcement of support orders;
• collection and distribution of support; and
• location of noncustodial parents.

OCSE anticipates that the Federal government will pay 90 percent of reasonable and necessary costs of the programs initially, with Tribes and tribal organizations required to contribute the remaining 10 percent.

International Program

During FY 2002, the United States (U.S.) declared several additional jurisdictions to be foreign reciprocating countries (FRCs) for purposes of child support enforcement - the Netherlands, Norway, and the Canadian provinces of Alberta, Newfoundland/Labrador, and Ontario. During FY 2003, reciprocity agreements also became effective between the U.S. and the Canadian provinces/territories of New Brunswick, Northwest Territories, and Nunavut.

In May 2003, the Office of Child Support Enforcement, Department of State (DOS), and state child support agency officials attended the Hague Conference on Private International Law and participated in meetings of the Special Commission on Family Maintenance which is working to develop a new multilateral convention for child support enforcement. While the U.S. has not been a signatory to previous conventions, U.S. participation in the current Special Commission offers the possibility that a new multilateral instrument might provide U.S. families with the benefits of an expanded international system of cooperation.

As part of OCSE’s efforts in support of the Hague Special Commission, the U.S. has taken a leadership role as Governor of the Administrative Cooperation Working Group, which held its first meeting by teleconference in November 2003. The Administrative Cooperation Working Group’s stated goals are to improve administrative cooperation among participating countries (e.g., by working toward standard forms, procedures, and timeframes for case processing) and to develop possible recommendations on administrative cooperation for upcoming Hague Special Commission meetings.

OCSE, in partnership with the DOS, has also worked to improve cooperation with nations in Latin America and the Caribbean. In FY 2002, negotiations began on bilateral agreements with Costa Rica, El Salvador, and Honduras. In August 2003, the U.S. hosted the “Meeting of the Americas” in Orlando, which was attended by seventeen foreign countries from the Western Hemisphere. The Meeting of the Americas explored, with U.S. leadership, a regional approach towards cooperation on enforcement of child support across borders.

In support of state caseworkers, OCSE issued the first installment of “A Caseworker’s Guide to Processing Cases with Foreign Reciprocating Countries (FCR)” which explains how to process child support cases internationally with our English-speaking FRCs. OCSE also issued the first in a series of International Dear Colleague Letters on international service of process, as well as policy guidance on issues such as foreign currency child support payments and changes to Canadian reciprocal child support legislation which will significantly improve procedures for cooperation with the U.S.

List of Charts

Cases

Figure 1 Total Caseload for Five Fiscal Years

Figure 2 IV-D Cases With and Without Orders Established for Five Fiscal Years

Figure 3 Number of IV-D Cases for Which a Collection Was Made for Five Fiscal Years

Paternities Acknowledged and Orders Established

Figure 4 IV-D and Statewide Paternities Acknowledged for Five Fiscal Years

Figure 5 Support Orders Established for Five Fiscal Years

Collections

Figure 6 Total Distributed Collections by Current, Former, and Never Assistance, FY 2003

Figure 7 Total Distributed Collections by TANF/Foster Care and Non-TANF Collections for Five Fiscal Years

Figure 8 Distribution of Total Collections, FY 2003

Figure 9 Total Collections by Method of Collections, FY 2003

Figure 10 Current Collections Due and Distributed, FY 2003

Figure 11 Cases Paying Toward an Arrears, FY 2003

Interstate

Figure 12 Interstate Collections for Five Fiscal Years

Figure 13 Interstate Cases - Cases Sent to and Received from Another State for Five Fiscal Years

Expenditures

Figure 14 Total Expenditures for Five Fiscal Years

Figure 15 Total ADP Expenditures for Five Fiscal Years

Number of Children

Figure 16 Number of Children in the IV-D Program for Five Fiscal Years

Federal Parent Locator Services

Figure 17 Number of Unique Persons in the Federal Case Registry (FCR) for Five Fiscal Years

Figure 18 Federal Offset Collections for Five Processing Years (PY)

Figure 19 IV-D Tribal Program, FY 2003

Program Charts and Graphs

State and Nationwide Box Scores

State and Nationwide Box Scores for Fiscal Year 2003

List of Tables

Program Overview

Table 1 - Financial Overview, FY 2002 and FY 2003

Table 2 - Statistical Overview, FY 2002 and FY 2003

Program Collections

Table 3 - Total Distributed Collections for Five Fiscal Years

Table 4 - Distributed Current Assistance Collections for Five Fiscal Years

Table 5 - Distributed Former Assistance Collections for Five Fiscal Years

Table 6 - Distributed Never Assistance Collections for Five Fiscal Years

Table 7 - Distributed TANF/Foster Care Collections for Five Fiscal Years

Table 8 - Distributed TANF Collections for Five Fiscal Years

Table 9 - Distributed Foster Care Collections for Five Fiscal Years

Table 10 - Distributed Non-TANF Collections for Five Fiscal Years

Federal and State Share of Collections

Table 11 - Federal Share of TANF/Foster Care Collections for Five Fiscal Years

Table 12 - State Share of TANF/Foster Care Collections for Five Fiscal Years

Undistributed Collections

Table 13 - Gross Undistributed Collections for Five Fiscal Years

Table 14 - Net Undistributed Collections for Five Fiscal Years

Table 15 - Percent of Undistributed Collections, FY 2003

Other Collections

Table 16 - Collections Forwarded to Non-IV-D Cases for Five Fiscal Years

Table 17 - Total Wage Withholding for Five Fiscal Years

Table 18 - Total Collections Made by Method of Collection, FY 2003

Payments to Families

Table 19 - Payments to Families for Five Fiscal Years

Table 20 - TANF/Foster Care Payments to Families for Five Fiscal Years

Interstate Activity

Table 21 - Interstate - Collections Forwarded to Other States for Five Fiscal Years

Table 22 - Interstate Caseload for Two Fiscal Years

Cost-Effectiveness

Table 23 - CSPIA Cost-Effectiveness Ratio for Five Fiscal Years

Incentives

Table 24 - Incentive Payment Estimates for Five Fiscal Years

Table 25 - Incentive Payment Actuals for Five Fiscal Years

Medical Support

Table 26 - Medical Support Payments to Families for Five Fiscal Years

Table 27 - Percent of Health Insurance Provided as Ordered for Two Fiscal Years

Table 28 - Percent of Cases in Which Medical Support is Ordered for Two Fiscal Years

Program Expenditures

Table 29 - Administrative Expenditures for Five Fiscal Years

Table 30 - Federal Share of Administrative Expenditures for Five Fiscal Years

Table 31 - State Share of Administrative Expenditures for Five Fiscal Years

Table 32 - Non-IV-D Costs for Five Fiscal Years

Functional Costs

Table 33 - ADP Expenditures for Five Fiscal Years

Table 34 - ADP Expenditures at Enhanced Rate for Five Fiscal Years

Table 35 - Expenditures for Laboratory Tests for Paternity Establishment for Five Fiscal Years

Fees

Table 36 - Fees and Costs Recovered for Two Fiscal Years

Table 37 - Fees Retained by Other States for Five Fiscal Years

Program Savings/Costs

Table 38 - Total Program Costs for Five Fiscal Years

Table 39 - State Share Program Savings or Costs for Five Fiscal Years

Table 40 - Federal Share of Program Costs for Five Fiscal Years

Cases and Caseloads

Table 41 - Cases with No Jurisdiction for Five Fiscal Years

Table 42 - Cases Open by Current, Former, and Never Assistance, FY 2003

Table 43 - Cases Open at the End of the Fiscal Year for Five Fiscal Years

Table 44 - Total Caseload for Five Fiscal Years

Table 45 - Total Caseload by Current Assistance for Five Fiscal Years

Table 46 - Total Caseload by Former Assistance for Five Fiscal Years

Table 47 - Total Caseload by Never Assistance for Five Fiscal Years

Orders Established

Table 48 - Total Cases with Orders Established for Five Fiscal Years

Table 49 - Cases with Orders Established by Current, Former, and Never Assistance, FY 2003

Paternities

Table 50 - Total Number of Paternities Established or Acknowledged for Five Fiscal Years

Table 51 - Paternity Establishment for Two Fiscal Years

Services Provided

Table 52 - IV-A Cases Closed Where a Child Support Payment Was Received for Five Fiscal Years

Table 53 - Number of Support Orders Established During the Fiscal Year for Five Fiscal Years

Table 54 - Number of CSE Cases in Which a Collection Was Made on an Obligation for Five Fiscal Years

Table 55 - Cases Sent to Another State for Five Fiscal Years

Table 56 - Cases Received from Another State for Five Fiscal Years

Services Required

Table 57 - Cases Requiring Services to Establish an Order for Five Fiscal Years

Table 58 - Children Requiring Paternity Determination Services for Five Fiscal Years

Staff

Table 59 - Full-Time Equivalent Staff by State and Local, Cooperation-Agreements, and Privatized Offices, FY 2002 and FY 2003

Table 60 - Total Full Time Equivalent Staff for Five Fiscal Years

Table 61 - Costs and Staff Associated with the Central Office of Child Support Enforcement for Five Fiscal Years

Current Support

Table 62 - Amount of Current Support Due for Five Fiscal Years

Table 63 - Amount of Support Distributed as Current Support for Five Fiscal Years

Arrears

Table 64 - Total Amount of Arrearages Due for Five Fiscal Years

Table 65 - Amount of Arrearages Due by Current Assistance, Former Assistance, and Never Assistance, FY 2003

Table 66 - Total Amount of Support Distributed as Arrears for Five Fiscal Years

Table 67 - Certified Federal Offset Caseload and Arrearage Totals, FY 2003

Table 68 Cases with Arrears Due and Paying Towards Arrears, FY 2002 and FY 2003

Non-Cooperation and Good Cause

Table 69 - Cases with Determination of Non-Cooperation for Five Fiscal Years

Table 70 - Cases with Good Cause Determinations for Five Fiscal Years

Children

Table 71 - Children with Paternity Resolved for Five Fiscal Years

Table 72 - Total Number of Children for Five Fiscal Years

Federal Parent Locator Service

Table 73 - Tax Offset and Administrative Offset Programs (TANF and Non-TANF Combined), PY 2002 and PY 2003

Table 74 - Federal Parent Locator Service (FPLS) for Fiscal Years 2002 and 2003

Table 75 - Federal Parent Locator Service (FPLS) Processing Years 2002 - 2003 Reports

Table 76 - Federal Parent Locator Service (FPLS) National Directory of New Hires (NDNH), FY 2002 and FY 2003

Table 77 - Federal Parent Locator Service (FPLS) Number of Cases in the Federal Case Registry (FCR), FY 2002 and FY 2003

Table 78 - Federal Parent Locator Service (FPLS) Number of Unique Persons in the Federal Case Registry (FCR) by Participant Type, FY 2003

Table 79 - Federal Parent Locator Service (FPLS) Number of Unique Persons in the Federal Case Registry (FCR) Matched by Data Type, FY 2002 and FY 2003

Table 80 - Federal Parent Locator Service (FPLS) Net Collections - Federal Offset Program, PY 2003

Table 81 - Federal Parent Locator Service (FPLS) Number of Offsets - Federal Offset Program, PY 2003

Glossary
Financial and Statistical Terms

Program Collections

Table 3 - Total Distributed Collections (Form OCSE-34A, line 8E)

Total amount of collections distributed during the year on behalf of both TANF (Temporary Assistance for Needy Families) and non-TANF families. Total collections are calculated as the sums of Current IV-A Assistance, Current IV-E Assistance, Former Assistance and Never Assistance.

Table 7 - Distributed TANF/Foster Care Collections (Form OCSE-34A, line 8(A+B) + line 7aC)

The portion of total collections received on behalf of families receiving assistance under the TANF program plus children placed in foster care facilities. These collections are divided between the state and Federal governments to reimburse their respective shares of either Title IV-A assistance payments or Title IV-E Foster Care maintenance payments.

Table 10 - Distributed Non-TANF Collections (Form OCSE-34A, lines 7bC + 7cC + 8D)

The portion of total collections received on behalf of families not receiving assistance under the TANF/Foster Care programs and distributed to those families during the year.

Federal and State Share of Collections

Table 11 - Federal Share of TANF/Foster Care Collections (Form OCSE-34A, line 12a + line 10B; in FY 2002, line 10)

The portion of child support collections used to reimburse the Federal government for its share of past assistance payments under Title IV-E of the Social Security Act or foster care maintenance payments, before the payment of incentive payments.

Table 12 - State Share of TANF/Foster Care Collections (Form OCSE-34A, line 7aE minus lines (10B + 11E + 12aE))

Collections that will be divided between the state and Federal governments to reimburse their respective shares of either Title IV-A assistance payments or Title IV-E Foster Care maintenance payments.

Undistributed Collections

Table 14 - Net Undistributed Collections (Form OCSE-34A, line 9bE 4^th quarter)

The amount of collections that remains available for distribution in a future quarter.

Table 16 - Collections Forwarded to Non-IV-D Cases (Form OCSE-34A, line 4E)

Those collections received through income withholding and processed through the State Disbursement Unit on behalf of Non-IV-D cases that were forwarded to the custodial parent during the quarter.

Payments to Families

Table 19 - Payments to Families (Form OCSE-34A, line 7cE)

The collections that are distributed either to the family or to the foster care agency to be used on the child’s behalf.

Table 20 - TANF/Foster Care Payments to Families (Form OCSE-34A, line 7c(A+B))

The total amount of collections that are distributed either to the family or to the foster care agency to be used on the child’s behalf.

Interstate Activity

Table 21 - Interstate - Collections Forwarded to Other States (Form OCSE-34A, line 5E)

Amounts received in response to a request for assistance from another state and forwarded during the quarter to that state for distribution, including