Recoupment of the Federal Share of Collections and Payment of Child Support Incentives under PRWORA
TO:State Agencies Administering the Following Programs under the Social Security Act: The Child Support Enforcement Program under Title IV-D, The Aid to Families with Dependent Children Program under Former Title IV-A, and The Temporary Assistance to Needy Families Program under Title IV-A, as amended, and other Interested Individuals and Organizations.
SUBJECT:The Calculation and Recoupment of the Federal Share of Child Support Collections and the Payment of Child Support Incentives Under The Provisions of Public Law 104-193, the "Personal Responsibility and Work Opportunity Reconciliation Act of 1996" (PRWORA)
BACKGROUND:Under former Section 457 of the Social Security Act (Act), as in effect prior to the enactment of PRWORA, the Federal government received "appropriate reimbursement" of its share of child support collections made under the Child Support Enforcement (CSE) Program on behalf of custodial parents receiving Aid to Families with Dependent Children (AFDC). Under former Section 403(b)(2) of the Act, this Federal share was recouped through a reduction in the amount of the quarterly grant award sent to a State for maintenance assistance payments made under its AFDC program.
Former Section 457 of the Act also provided that the Federal government would recoup its share of child support collections in the same proportion as "the extent of its participation" in the AFDC maintenance assistance payments made to custodial parents. In accordance with Section 1118 of the Act, the Federal "participation" is calculated using the Federal medical assistance percentage (FMAP) rate.
Under Section 458 of the Act, States receive estimated quarterly incentive payments to recognize and encourage successful child support programs. These amounts are paid to the States through a decrease in the net Federal share of child support collections and the resulting increase in the amount of the quarterly grant award sent to a State for maintenance assistance payments made under its AFDC program.
Under PRWORA, amended Sections 457(a)(1) and (a)(2) of the Act continue to require that a State must "pay to the Federal Government the Federal share of" child support collections made on behalf of families receiving assistance under its Temporary Assistance to Needy Families (TANF) Program and mandates the use of the FMAP rate for this purpose. In addition, amended Section 458 of the Act continues to require the payment of incentive payments to States.
POLICY:With the repeal of Title IV-A and, specifically, Section 403(b)(2) of the Act, the mechanisms by which the Federal government will receive its share of child support collections and make incentive payments were left ambiguous.
ACF has determined that to promptly and efficiently continue the recoupment of the Federal share of child support collections and to continue the payment of child support incentive payments with minimal disruptions, the required financial adjustments, formerly included on the quarterly AFDC grant awards under Title IV-A, will now be included on the quarterly CSE grant awards under Title IV-D.
DATES:Under PRWORA, States are required to implement a TANF program no earlier than August 22, 1996 (the date of enactment of the statute) and no later than July 1, 1997. Until an individual State implements a TANF program, it will continue to administer an AFDC program under former Title IV-A and the provisions of Section 403(b)(2) will remain in effect for that State.
Computation of the Federal Share of Collections: Prior to the enactment of PRWORA, States had the option of calculating the Federal share of collections using either the FMAP rate for the fiscal year in which the collection was made or the FMAP rate for the fiscal year the collection was due, whichever was most beneficial. Under PRWORA, this option is eliminated and the use of the FMAP in effect during the fiscal year in which the collection is made is mandatory.
For any State that implemented a TANF Program prior to October 1, 1996, the mandatory use of theFMAP rate is effective for all collections made on or after the date of program implementation. For all other States, the mandatory use of the FMAP rate is effective for all collections made on or after October 1, 1996, even where a State continues to administer an AFDC Program under the former Title IV-A.
Recoupment of Federal Share of Collections; Incentive Payments: The Federal Share of child support collections will be recouped as an adjustment decreasing the quarterly grant award to the State under Title IV-D. Likewise, quarterly incentive payments will be made through an adjustment increasing the quarterly grant award to the State under Title IV-D.
For any State that implements its TANF Program on the first day of a fiscal quarter, these processes will be effective as of the date of implementation; for any State that implements its TANF Program on any day other than the first day of a fiscal quarter, these processes will be effective as of the first day of the fiscal quarter following TANF implementation.
The annual incentive payment reconciliation will be in the form of an adjusting grant award issued for the CSE Program following the end of the fiscal year. (For fiscal year 1996 incentive payments only, an adjusting grant award for the annual incentive payment reconciliation will continue to be issued for the AFDC Program for any State that has not implemented a TANF program by the time the reconciliation is calculated, approximately April 1, 1997).
REQUIRED:ACF is currently in the process of revising existing financial reporting forms for the CSE Program to accommodate new reporting requirements implemented by PRWORA.
All States will continue to report child support collections using Form OCSE-34, "Child Support Enforcement Program, Quarterly Report of Collections." The Federal share of child support collections will continue to be reported on Line 18 of that quarterly report.
Through the quarter in which a TANF Program is implemented (see "Effective Dates," above), any State that continues to administer an AFDC Program will continue to report the Federal share of childsupport collections, as calculated on Form OCSE-34, on Line 11 of Section A, Part 1 of Form ACF-231, "Aid To Families With Dependent Children Program Financial Report."
Form OCSE-131, "Child Support Enforcement Program, Quarterly Report of Expenditures and Estimates" is being revised to include an additional line for reporting the Federal share of child support collections, as calculated on Form OCSE-34. In the interim, beginning with the first quarter following the implementation of a TANF Program (see "Effective Dates," above), the "N
et Federal Share of Expenditures" reported on Line 12 of Form OCSE-131, should be shown as being reduced by the "Net Federal Share of Collections" as reported on Form OCSE-34. The State should annotate this entry with a footnote, detailing this computation.
INQUIRIES:Direct all inquiries to the ACF Regional Administrator.
David Gray Ross Norman L. Thompson
Deputy Director Director
Office of Child Support
Enforcement Office of Program Support