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Final Rule: Case assessment; Costs for services for non-AFDC families; Reduction of Program Costs

AT-84-10

Published: September 19, 1984
Information About:
State/Local Child Support Agencies
Topics:
Case Management, Federal Reporting, Funding, Cost Recovery
Types:
Policy, Action Transmittals (AT), Regulations
Tags:
User Fees

Final Regulations: 1-Procedures for case assessment and prioritization; and 2-Costs of services for non-AFDC families; reduction of program expenditures by fees and other income

REGULATIONS

ACTION TRANSMITTAL

OCSE-AT-84-10

September 19, 1984

TO:STATE AGENCIES ADMINISTERING CHILD SUPPORT ENFORCEMENT PLANS UNDER TITLE ND OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED INDIVIDUALS

SUBJECT: Final Regulations: (1) Procedures for Case Assessment and Prioritization; and (2) Costs of Services for Non-AFDC Families; Reduction of Program Expenditures by Fees and Other Income

REGULATION

REFERENCES: 45 CFR Parts 302 through 304.

ATTACHMENT: Attached are final regulations which add 45 CFR 303.10 to permit State IV-D agencies to implement case assessment and prioritization procedures that provide for the review and management of cases and which establish basic requirements that States' prioritization systems must meet.

Also attached are final regulations that amend 45 CFR Parts 302 and 304 to implement section 171(a)(3) of P.L. 97-248, the Tax Equity and Fiscal Responsibility Act of 1982; section 2333(c) of P. L. 97 -35, the Omnibus Budget Reconciliation Act of 1981; and section 3(c) of P.L. 98-378, the Child Support Enforcement Amendments of 1984. These regulations: require States to charge an application fee for furnishing non-AFDC IV-D services; permit States to allow the jurisdiction that collects support for the State to retain any application fee collected; permit States to recover actual or standardized costs of providing services under the title IV-D State plan; and require States to reduce the total expenditures they report for a quarter by the total amount of any fees collected and any other income.

EFFECTIVE DATE: September 19, 1984, except for 45 CFR 302.33(c)(2) (the required application fee for non-AFDC services) which is effective on October 1, 1985.

COMMENT

PERIOD: Consideration will be given to written comments or suggestions on 45 CFR 302.33(c)(2) only, received by the Acting Director, Office of Child Support Enforcement, Room 1010, 6110 Executive Boulevard, Rockville, Maryland 20852, on or before November 19, 1984.

SUPERSEDED

MATERIAL: OCSE-AT-80-5, dated March 6, 1980; OCSE-AT-83-9, dated May 9, 1983; and OCSE-AT-83-19, dated September 23, 1983.

INQUIRIES TO: OCSE Regional Representative

Deputy Director

Office of Child Support Enforcement

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Child Support Enforcement

45 CFR Parts 302 and 304

Child Support Enforcement Program: Cost of Services for Non-AFDC Families; Reduction of Program Expenditures by Fees and Other Income

AGENCY: Office of Child Support Enforcement (OCSE), HHS.

ACTION: Final rules.

SUMMARY: These regulations amend OCSE regulations at 45 CFR Parts 302 and 304 to implement section 171(a)(3) of Pub. L. 97-248, the Tax Equity and Fiscal Responsibility Act of 1982, section 2333(c) of Pub. L. 97-35, the Omnibus Budget Reconciliation Act of 1981 and section 3(c) of Pub. L. 98-378, the Child Support Enforcement Amendments of 1984. They revise 45 CFR 302.33 to require States to charge an application fee for furnishing non-AFDC child support enforcement (IV-D) services and to permit States to allow the jurisdiction that collects support for the State to retain any application fee collected. Application fees must be paid by the individual applying for services or paid by the State out of its own funds and may be recovered from the absent parent. These regulations permit States to recover actual or standardized costs and any fees collected to cover administrative costs under the IV-D State plan either from the individual who owes a support obligation to a non-AFDC family receiving IV-D services, or from the non-AFDC individual receiving the services. In the latter case, costs may be recovered directly from the individual or by deducting costs from the support collected. If costs are recovered from the non-AFDC individual receiving IV-D services, the IV-D agency must have in effect a procedure for informing other States and all persons authorized within the State to establish an obligation for support that costs will be recovered from the non-AFDC individual. In addition, the State must notify the individual (either the non-AFDC individual or the absent parent) from whom costs will be recovered. If an applicant for non-AFDC services assigns support rights to the State, the IV-D agency must inform the applicant that the assignment is not a condition of eligibility for IV-D services and may have the effect of making the support debt dischargeable in bankruptcy.

These regulations also require States to reduce the total expenditures they report for a quarter by the total amount of any fees collected and any other income (e.g., interest earned on collections prior to distribution) AFDC and non-AFDC cases under the generated by service provided both in title IV-D State plan.

We published a Notice of Proposed Rulemaking in the Federal Register on September 15, 1983 (48 FR 41450.) The comments received on that notice, our responses to the comments, and several changes made to the regulations as a result of those comments are discussed below.

We believe the changes made to these regulations to implement the application fee provisions of sections 3(c) and (f) of Pub. L. 98-378, effective October 1, 1985, are expressly required by the statute and are non-discretionary in nature. However, anyone who wishes to comment on this portion of the regulation may do so during the next 60 days. If necessary, we will revise the regulation in response to comments received.

EFFECTIVE DATE: September 19, 1984 except for 45 CFR 302.33(c)(2) which is effective on October 1,1985.

FOR FURTHER INFORMATION CONTACT: Michael P. Fitzgerald, Policy Branch, OCSE (301) 443-5350.

SUPPLEMENTARY INFORMATION:

Statutory Requirements

Pub. L. 97-35, the Omnibus Budget Reconciliation Act of 1981 Section 2333 of Pub. L. 97-35 amended title IV-D of the Social Security Act (the Act) regarding the cost of services for non-AFDC families and the reduction of expenditures by fees and other income generated under the IV-D program. All of the amendments of section 2333 were repealed or amended by Pub. L. 97-248, discussed below, except for the amendment of section 455(a) of the Act.

Section 455(a) of the Act was amended to require the Secretary, in determining the total amount expended by a State during a quarter, to exclude the total amount of any fees collected or other income resulting from services provided both in AFDC and non-AFDC cases under the title IV-D State plan.

Section 2336(a) of Pub. L. 97-35 provided that the amendments contained in section 2333 had an effective date of October 1, 1981, unless the Secretary of Health and Human Services (HHS) authorized a State to postpone the effective date because State law prohibited it from implementing the amendments on October 1,1981.

Pub. L. 97-248 the Tax Equity and Fiscal Responsibility Act of 1982

Section 171 of Pub. L. 97-248 also amended title IV-D of the Act regarding the cost of services for non-AFDC families. Section 171(a)(2) of Pub. L. 97-248 repealed the provision in section 454(6)(B) of the Act, added by section 2333 of Pub. L. 97-35, which prohibited States from charging an application fee when the non-AFDC family requests that the IV-D agency only collect support on its behalf. Section 171(b)(1) of Pub. L. 97-248 repealed section 454(19) of the Act, added by section 2333 of Pub. L. 97-35, which had required States to impose a ten percent fee on absent parents to cover costs in excess of the application fee for providing services to non-AFDC families. Section171(a)(3) amended section 454(6)(C) of the Act to permit States providing IV-D services to non-AFDC individuals who request them to recover costs incurred in excess of the application fee either from the absent parent who owes a support obligation or from the non-AFDC individual who is receiving the IV-D services. If costs are recovered from the non-AFDC individual receiving IV-D services, the IV-D agency must have in effect a procedure for informing all persons authorized within the State to establish support obligations that it will recover costs from the non-AFDC individual. Before enactment of Pub. L. 97-248, section 454(6)(C), as revised by Pub. L. 97-35, had permitted only the State that made a collection in a non-AFDC case to retain the fee imposed against the parent owing the support.

The amendments made by section 171 of Pub. L. 97-248 were effective August 13, 1981, unless, in accordance with section 176 of Pub. L. 97-248, the Secretary of HHS determined that State legislation was required before a State could comply with the changes made by section 171. If the Secretary so determined, the amendments would be effective in the State at the end of the first session of the State legislature which began after October 1, 1982, or which began prior to October 1,1982 and remained in session for at least 25 calendar days after that date.

Pub. L. 98-378, the Child Support Enforcement Amendments of 1984.

Section 3(c) of Pub. L. 98-378 amends section 454(6)(B) of the Act regarding the imposition of the application fee. First, the amendment requires the State to charge an application fee for IV-D services under title IV-D of the Act which must be paid by the individual applying for IV-D services, recovered from the absent parent, or paid by the State out of State funds. Second, the amendment specifies that State funds used to pay the application fee are not program expenditures under the IV-D State plan but are program income. Third, the amendment requires the application fee to be a flat dollar amount not to exceed $25 or the State may vary the amount of the application fee not to exceed $25 based on the non-AFDC individual's ability to pay. The Secretary may raise or lower the upper limit of the fee to reflect future increases or decreases in administrative costs.

Section 21(d) of Pub. L. 98-378 amends section 454(6) of the Act by redesignating clause (C) as clause (D). Section 3(f) of Pub. L. 93-378 amends section 454 of the Act to allow States to permit the jurisdiction that collects support for the State to retain any application fee collected under section 454(6)(B) of the Act.

These amendments are effective on October 1, 1985 (except the amendment made by section 21(d), which is applicable after December 31, 1985), unless the Secretary of HHS determines that State legislation is required before a State can comply with the requirements. If the Secretary so determines, the amendments would be effective in the State no later than the beginning of the fourth month that begins after the end of the first session of the State legislature which ends on or after October 1,1985.The term "session" means a regular, special, budget or other session of a State legislature.

Section 7 of Pub. L. 98-378 amends section 457(c) of the Act to require the State to continue to collect current support payments from the absent parent for the first five months following the family's ineligibility for AFDC. This amendment is effective October 1,1984 and it will be implemented in regulations about to be published by the Department.

New Regulatory Provisions at 45 CFR 302.33

OCSE has revised 45 CFR 302.33 to implement the statutory amendments and to make other clarifying changes to the regulation. In the first clarification, we revised § 302.33(a) to clearly indicate the services available under that section and the individuals who are eligible to receive such services. Other changes to § 302.33 are discussed below.

Definitions

In § 302.33(b) we define the term "applicant's income" as the disposable income available for the applicant's use under State law. The State must consider the applicant's income when determining the non-AFDC application fee according to the fee schedule that States may use under § 302.33(c)(1)(ii) and (c)(2)(iv)(B). The fee schedule was formerly at § 302.33(b)(2).

Application Fee for Non-AFDC Families

Currently 45 CFR 302.33(b) (redesignated here as § 302.33(c)(1)) permits States to charge an application fee for any IV-D services provided to non-AFDC individuals. To be consistent with the amendment made by section 3 of Pub. L. 98-378, we have amended this provision to indicate that it remains in effect until October 1, 1985.

Prior to its current revision, section 454(6)(B) of the Act permitted the IV-D agency to charge an application fee to each non-AFDC individual who applies for IV-D services. To charge a fee, a State had to elect to do so in its IV-D plan and indicate in its plan whether it would charge a flat fee not to exceed $20 or a fee based on a fee schedule that took into account the income of each applicant for IV-D services.

To implement the new section 454(6)(B) of the Act, the regulations at § 302.33(c)(2) require the State IV-D agency to charge an application fee in all case for IV-D services under § 302.33. Under § 302.33(c)(2)(i) the State IV-D agency may collect the application fee from the individual who is applying for IV-D services or pay the application fee out of State funds. The State may recover the application fee from the absent parent who owes a support obligation to a non-AFDC family on whose behalf the IV-D agency is providing support enforcement services and pay the recovered amount to the applicant or to itself if it paid the fee. If a State elects to pay the application fee, the regulations at § 302.33(c)(2)(iii) specify that State funds used to pay the application fee are not program expenditures under the IV-D State plan but are program income under § 304.50. (See the discussion below under the heading "New Regulatory provisions at 45 CFR 304.50" for details regarding the treatment of program income.)

The regulations at § 302.33(c)(2)(iv) specify that the application fee charged under § 302.33(c)(2) must be, on a statewide basis, either a flat dollar amount not to exceed $25 (or a higher or lower amount the Secretary determines to be appropriate for any fiscal year to reflect increases or decreases in administrative costs) or an amount based on a fee schedule not to exceed the flat dollar amount. The fee schedule must be based on the applicant's income. We will issue a notice of proposed rule making to elicit comments on a proposed method of determining the maximum allowable application fee.

To implement section 3(f) of Pub. L. 98-378, which amends section 454 of the Act, the regulations at § 302.33(c)(2)(v) permit the State IV-D agency to allow the jurisdiction that collects support for the State to retain any application fee collected under this section. The application fee retained under § 302.33(c)(2)(v) must be treated as program income in accordance with § 304.50.

Recovery of Costs in Non-AFDC Cases

To implement the revised section 454(6)(C) of the Act (redesignated and hereafter referred to as section 454(6)(D)), the regulations at § 302.33(d)(1) permit the IV-D agency to elect in its State plan, on a statewide basis, to recover costs incurred in excess of any fees collected to cover administrative costs under the IV-D State plan either: (1) From the individual who owes a support obligation to a non-AFDC family on whose behalf the IV-D agency is providing services; or (2) from the non-AFDC individual on whose behalf the IV-D agency is providing services, either directly or by reducing the amount of the support collection made on the family's behalf.

Section 302.33 previously provided for recovery of costs in excess of the application fee. In determining the costs subject to cost recovery in non-AFDC cases, OCSE policy requires the States to deduct the amount of any fees collected to cover administrative costs under the IV-D State plan from costs incurred in providing IV-D services. To clarify the relationship between fees and costs that may be recovered in non-AFDC cases, § 302.33(d)(1) specifies that a State may only recover costs which exceed the amount of any fees collected to cover administrative costs under the IV-D State plan. The fees include the application fee collected under § 302.33(c), the fee for Federal Parent Locator Service locate only request prescribed in § 303.70(e)(2), any other fees authorized under title IV-D of the Act, and any fees collected from the custodial parent under State law. The late payment fee prescribed in the new section 454(21) of the Act is not included because the fee is in the nature of a penalty and is collected for purposes other than to cover administrative costs in an individual case. These fees are, however, subject to the amended section 455(a) implemented by

§ 304.50, and must be deducted from administrative costs.

The State may recover costs from non-AFDC individuals who are receiving IV-D services only if the State has in effect a procedure for informing other States and all persons authorized within the State to establish a support obligation that costs will be recovered from those individuals. State procedures should include notification to all persons authorized to make such orders whenever a State elects to recover costs or ceases the practice of cost recovery. States may establish their own procedures for informing persons authorized to make such orders.

In recovering costs from the non-AFDC individual on whose IV-D services are being provided, States may deduct costs incurred in excess of any fees collected to cover administrative costs under the IV-D State plan from the support collected on behalf of the individual or directly from the individual. This allows a State to recover costs from the support collected for as long as collections are made by the State, and then to attempt to recover any remaining unreimbursed costs directly from the individual.

To respond to States' concerns that the calculation of actual costs on a case by case basis is time consuming and costly and to encourage States to recover costs and improve the cost-effectiveness of the program, we revised § 302.33(d)(1) to permit the IV-D agency on a case by case basis to recover either actual or standardized costs. If a State recovers standardized costs, it must comply with the requirements in § 302.33(d)(2) and develop a written methodology to determine standardized costs which are as close to actual costs as is possible and make the methodology available to anyone upon request. In either case, we encourage States to strive to minimize costs so as not to discourage the application for services by those most in need of them.

Section 302.33(d)(3) prohibits the IV-D agency from treating any amount collected from an absent parent as recovered costs except amounts which exceed the total amount of current support owed by the absent parent. OCSE policy requires child support collections received for non-AFDC cases established under 45 CFR 302.33 to be considered first as payment on the current support obligation. Support collected up to the amount of the current obligation must be passed on to the family.

If, under § 302.33(d)(1)(ii), the State elects to recover costs from the individual receiving IV-D services, § 302.33(d)(4) then permits the IV-D agency to attempt to obtain reimbursement from the absent parent for the individual who is receiving IV-D services. This allows States that elect to recover costs from the individual receiving IV-D services to reduce the impact of cost recovery on that individual. Reimbursement from the absent parent to the custodial parent in this situation may not be considered child support payments.

Section 302.33(d)(5) requires the IV-D agency that elects to recover costs to notify, as appropriate, either the non-AFDC individual who has applied for IV-D services or the individual who owes a support obligation to the non-AFDC family that costs will be recovered. In interstate cases, the IV-D agency where the case originated must notify applicants of the States that recover costs. Section 302.33(d)(5) requires the IV-D agency to notify the IV-D agencies in other States if it recovers costs from the individual receiving IV-D services.

The changes discussed under the heading "Application Fee for Non-AFDC Families" and above regarding cost recovery in excess of fees were not included in the Notice of Proposed Rulemaking. The Administrative Procedures Act, 5 U.S.C. 553(b)(B), provides that, if the Department for good cause finds that a notice of proposed rulemaking is unnecessary, impracticable or contrary to the public interest, it may dispense with the notice if it incorporates a brief statement in the final regulations of the reasons for doing so.

The Department finds that there is good cause to dispense with proposed rulemaking procedures with respect to these changes. We find that publication of these changes in proposed form would be unnecessary for the following reasons, A new

§ 302.33(c)(2) implements the new State plan requirements at section 454(6)(B) of the Act and the sentence following section 454(21) of the Act. These new statutory provisions are non-discretionary in nature and the regulation merely follows the statute. Section 302.33(d)(1) is revised to specify that the State may only recover costs incurred in excess of any fees collected to cover administrative costs incurred in providing IV-D services. This change incorporates the requirements of section 455(a) of the Act.

Assignment of Support Rights in Non-AFDC Cases

Section 302.33(e)(1) (formerly § 302.33(d)) allows the IV-D agency to take an assignment of support rights from a non-AFDC individual who applies for IV-D services. Such an assignment does not constitute an assignment under 45 CFR 232.11 and may not be a condition of eligibility for receiving IV-D services. Since § 302.33(e)(1) indicates that an individual applying for IV-D services is not required to make an assignment of support rights as a condition of eligibility for IV-D services, the regulations at § 302.33(e)(2) require the IV-D agency to so inform such individual prior to the taking of an assignment. This change was made in response to comments received on the proposed rule. (See Discussion of Comments.) Section 302.33(e)(2) further requires the IV-D agency to inform any individual making an assignment in a non-AFDC case that the assignment may have the effect of making the support debt dischargeable in bankruptcy.

New Regulatory Provisions at 45 CFR 304.50

The amended section 455(a) of the Act requires the Secretary, in determining the total amount expended by a State during a quarter, to exclude any fees collected or other income resulting from services provided in AFDC and non-AFDC cases under the title IV-D State plan. Therefore, States must reduce their expenditures by: (1) The total non-AFDC application fees collected under 45 CFR 302.33(c); (2) the total fees collected for non-AFDC Federal Parent Locator Service locate-only requests under 45 CFR 303.70(e)(2) ; (3) any fees collected under State law; (4) any costs recovered from collection such as those recovered under 45 CFR 302.33(d) and 302.51(e)(2); (5) late payment fees collected in accordance with the new section 454(21) of the Act; and (6) other income resulting from services provided in AFDC and non-AFDC cases under the title IV-D State plan, in accordance with section 455(a) of the Act. OCSE issued an Action Transmittal (OCSE-AT-82-8) on September 3, 1982 on the reduction of expenditures by fees and other income.

To implement in regulations the amendment made to section 455(a) of the Act by section 2333(c) of Pub. L. 97-35 and section 171(b)(2) of Pub. L. 97-248, we added a new § 304.50, Treatment of Program Income, which requires States to exclude from their IV-D expenditure claims any fees which are collected under the title IV-D State plan and any income (e.g., interest earned on collections prior to distribution ) generated as a result of IV-D activities. This applies to fees or income in both AFDC and non-AFDC cases.

Discussion of Comments

We received nineteen comments in response to the Notice of Proposed Rulemaking. Ten State agencies, one county executive, one domestic relations agency, one family court, one governor, one private individual, one judge and three legal advocacy groups submitted comments.

General Comments (45 CFR 302.33)

1. Comment: One State objected to the application fee and recovery of costs provisions of the regulations because these options apply to all non-AFDC cases and could place a financial burden on individuals in need of IV-D services.

Response: Neither section 454 (6) of the Act nor 45 CFR 302.33 require a State to collect an application fee or recover costs of providing services to non-AFDC individuals. However, section 454(6)(B) and the implementing regulations at

§ 302.33(c)(2) require the State to charge an application fee for IV-D services beginning October 1, 1985. Under this requirement, the fee must be paid by the individual applying for IV-D services or by the State itself. If a State elects to impose the application fee on the individual who applies for IV-D services, the fee should be paid at the time of application. A State could avoid the financial burden referred to by the commenter of paying the application fee at the time of application by electing to pay the fee itself.

Under section 454(6)(D) of the Act and 45 CFR 302.33(d), a State that elects in its State plan to recover costs in excess of any fees collected to cover administrative costs under the IV-D

State plan may recover costs either from the absent parent or from the individual who has filed an application for IV-D services. By recovering costs from the absent parent, a State would avoid imposing an additional financial burden on the custodial parent. In any event, a State that elects to recover costs must pursue cost recovery in all non-AFDC cases.

2. Comment: One State suggested that the costs of providing services to non-AFDC individuals could be controlled better by limiting the availability of IV-D services to families who cannot afford to hire private attorneys than by the application fee and recovery of costs provisions of the regulations.

Response: Section 454(6)(A) of the Act and 45 CFR 302.33(a) require the State to make IV-D services available to any individual not receiving assistance under the AFDC program who files an application for IV-D services with the IV-D agency. Thus, IV-D services must be made available to any non-AFDC Individual who files an application regardless of the applicant's ability to hire a private attorney. Congress enacted the mandatory application fee and optional recovery of costs provisions in section 454(6) of the Act to allow States to offset some of the costs incurred in providing IV-D services to non-AFDC individuals.

3. Comment: One family court asked if the regulations only provide for the imposition of an application fee and recovery of costs if the State collects support. One legal advocacy group suggested that the regulations prohibit the State from collecting the application fee or recovering costs unless the amount of support collected exceeds the application fee and any additional costs incurred.

Response: Under § 302.33(c)(2), a State must charge an application fee for each non-AFDC case. If the State elects to collect the application fee from the individuals applying for services, the fee should be collected at the time of application to ensure that the fee is paid in accordance with section 454(6)(B) of the Act.

The regulations at 45 CFR 302.33(d)(1) permit the State to elect in its State plan to recover any costs in excess of any fees collected to cover administrative costs under the IV-D State plan from the absent parent or from the individual who has filed an application for IV-D services. Under this provision, a State that recovers costs from the non-AFDC individual may recover costs from any support collected on behalf of the individual or directly from the individual. Although a State may recover all costs directly from the individual, we expect many States to recover costs from any support collected as long as collections are made by the State and then attempt to recover any remaining unreimbursed costs directly from the individual. A State that elects under 45 CFR 302.33(d)(1) to recover costs from the absent parent is prohibited under § 302.33(d)(3) from treating any amount collected from the absent parent as recovered costs except amounts that exceed the current support owed by the absent parent.

Definitions (45 CFR 302.33(b))

4. Comment: One legal advocacy group recommended that the proposed definition of the term "applicant's income" be changed to "the disposable income actually available to the applicant" because the proposed definition may allow the State to include income that is not available to the applicant.

Response: We believe that the definition of the term "applicant's income" at 45 CFR 302.33(b) adequately ensures that any State which charges the individual applying for services the application fee in accordance with § 302.33(c) only consider disposable income actually available to the applicant under State law.

Application Fee (45 CFR 302.33(c))

5. Comment: One legal advocacy group suggested that the regulations be revised to require the States to waive the application fee for former AFDC recipients and other individuals who would be discouraged from applying for IV-D services by a fee. A second legal advocacy group suggested that the regulations be revised to require States to give non-AFDC applicants the option of paying the application fee at the time of application for IV-D services or having the fee deducted from collected support. A third legal advocacy group suggested that the regulations be revised to require the States to suspend the application fee for individuals who show, at the time of application for IV-D services, that they cannot afford to pay the fee and collect the suspended application fee by retaining a portion of each child support arrearage payment.

Response: As indicated under the response to comment number 1, beginning October 1, 1985, the State must charge an application fee for IV-D services. However the regulations at

§ 302.33(e)(2)(i) specify that the State may collect the application fee from the individual who is applying for IV-D services or pay the fee itself. Thus, the State can pay the fee for individuals who would he discouraged from applying for IV-D services by a fee. In addition, the regulations at

§ 302.33(c)(2)(iv)(B) permit a State that elects to impose an application fee on the individual who applies for IV-D services to collect a fee based on the applicant's income.

The revised section 457(c)(1) of the Act requires the State to continue to collect current support payments from the absent parent after the family ceases to receive AFDC for a period not to exceed the first five months following the family's ineligibility for AFDC. In this situation, the family is not required to file an application for IV-D services under § 302.33. In addition, the revised section 457(c)(2) of the Act permits States to continue to provide this service after the five-month period upon authorization from the family. States are also prohibited from requiring any formal application or imposing any application fee in cases where the State IV-D agency is authorized to continue to collect and distribute support.

States that elect to collect the application fee from the non-AFDC applicant can permit the applicants to decide whether to pay the application fee at the time of application for IV-D services or have the fee deducted from collected support. The fee must be collected, however, and we recommend that the State collect the application fee from the AFDC individual at the time of application for IV-D services to ensure that the fee is paid in accordance with section 454(6)(B) of the Act. Permitting the States that elect to collect the application fee from the non-AFDC individual to determine whether or not to suspend a non-AFDC individual's application fee based on ability to pay and to collect the fee by retaining a portion of each child support payment does not relieve the State from its liability to treat such fees as program income whether collected or not.

6. Comment: One legal advocacy group suggested that States be encouraged to charge the application fee to the obligor.

Response: There is no basis in the statute for imposing a fee upon the obligor. We believe that charging a reasonable application fee to an individual applying for IV-D services is not overly burdensome. Thus, the regulations at § 302.33(e)(2)(1) do not permit the States to charge the application fee to the obligor.

Section 454(6)(B) of the Act and the regulations at

§ 302.33(c)(2) require the States to charge an application fee for IV-D services beginning October 1,1985. Under this requirement, the application fee must be "paid" by the individual applying for IV-D services or "paid" by the State itself. However, the statute and the regulations at § 302.33(c)(2)(ii) also permit the States to "recover" the application fee from the obligor and pay any recovered amount to the applicant or itself if it paid the fee. There is no provision in the Act for the fee to be "paid" by the absent parent directly. Section 454(6)(B) clearly requires that the fee must be imposed. Under certain circumstances it would be impossible to charge the absent parent the fee, e.g., paternity not established (i.e., no "parent" to charge) or absent parent out-of-state (i.e., beyond the State's jurisdiction to charge).

7. Comment: Two legal advocacy groups recommended that the regulations be revised to raise the maximum flat application fee to $30 instead of $40 because many non-AFDC individuals cannot afford to pay a $40 application fee. One legal advocacy group suggested that because the preamble to the proposed regulations does not provide any information on whether the cost of providing IV-D services has doubled, the $20 maximum flat application fee should be raised to $30 instead of $40.

Response: We agree that the $40 application fee may be too high for some individuals to afford to pay. Therefore, we have revised the maximum flat application fee to $25. This is consistent with the new statute which is not effective until October 1, 1985, and it will permit States that wish to charge fees immediately to develop forms and procedures which will be in accordance with § 302.33(c)(2) when it becomes effective.

Beginning October 1, 1985, the revised section 454(6)(B) of the Act and § 302.33(c)(iv)(A) permit the States to charge a flat application fee not to exceed $25 or any higher or lower amount set by the Secretary. The Secretary may, in accordance with section 454(6)(B) of the Act, adjust the maximum allowable fee prescribed in § 302.33(c)(2)(A) upward or downward to reflect increases or decreases in administrative costs.

The regulations at § 302.33(c)(2)(i) permit the State to collect the mandatory application fee from the individual who is applying for IV-D services or pay the application fee out of State funds in accordance with statewide standards. The State may pay the fee for non-AFDC individuals who cannot afford to pay it.

8. Comment: One legal advocacy group recommended that the regulations be revised to specify that application fees based on fee schedules cannot exceed the maximum flat application fee.

Response: Section 302.33(c) specifies that the fee schedule must be based on each applicant's income as defined in 302.33(b) and cannot exceed $25 or any other amount set by the Secretary to reflect changes in program costs, Under these provisions, the fee schedule cannot place a substantial burden on non-AFDC applicants at the lower end of the economic scale.

Recovery of Costs (45 CFR 302.33(d))

9. Comment: One State commented that the proposed regulations at 45 CFR 302.33(d) preclude cost-effective cost recovery and do not properly implement section 454(6)(C) (redesignated as 454(6)(D)) of the Act.

Response: We believe that the regulations at 45 CFR 302.33(d) permit the States to recover costs in a cost-effective manner and properly implement the new section 454(6)(D) of the Act. Section 454(6)(D) of the Act permits a State to elect in its State plan to recover any costs incurred in excess of any fees collected to cover administrative costs under the IV-D State plan either from the absent parent or from the individual who has filed an application for IV-D services. To implement the new section 454(6)(D) of the Act, the regulations at 45 CFR 302.33(d) permit the same. Under this provision, the IV-D agency may recover on a case by case basis either actual or standardized costs incurred in excess of the application fee. We believe that section 454(6)(D) of the Act permits us to allow States to recover standardized costs in accordance with 45 CFR 302.33(d) (1) and (2). We also believe that the recovery of standardized costs is the most cost-effective means of recovering costs in accordance with section 454(6)(D) of the Act.

10. Comment: One State commented that the types of cost recovery prescribed in the regulations may not be considered by the State's Supreme Court as consistent with the State Constitution.

Response: As indicated in the response to comment number 9, we believe that the recovery of costs provisions at 45 CFR 302.33(d) properly implement the new section 454(6)(D) of the Act as amended by section 171(a)(3) of Pub. L. 97-248 and the new statute.

Since the regulations at 45 CFR 302.33(d) implement an optional State plan provision, the State is not required to recover costs. Thus, a State that is prohibited by State law or a court ruling from recovering costs may elect in its State plan not to recover costs. A State that wishes to recover costs would have to revise any State law that prohibits cost recovery.

11. Comment: One State asked whether the proposed regulations permit a State to recover costs if an application fee is not charged.

Response: Section 454(6)(D) of the Act and the implementing regulations at 45 CFR 302.33(d) permit a State to elect in its State plan to recover any costs in excess of any fees imposed to cover administrative costs under the IV-D State plan incurred in providing IV-D services to non-AFDC applicants. If a State elects in its State plan not to charge an application fee prior to October 1, 1985, but to recover costs, the State may recover any-costs incurred in providing IV-D services to non-AFDC applicants:

12. Comment: One family court, one legal advocacy group and one State recommended that we restrict the recovery of costs in interstate cases. Suggestions included allowing either the initiating or responding State to recover costs, amending the regulations to permit only the initiating State to recover costs in interstate cases when the State elects to do so in its State plan, and prohibiting the recovery of costs in interstate cases.

Response: A State that elects to recover costs must attempt to recover costs in all cases filed in the State or referred from another State either each absent parent obligated to pay support or from each individual receiving IV-D services. In addition, if two States incur costs in an interstate non-AFDC case, both States are entitled to recover costs from a resident or non-resident if recoveries are provided for under their respective State plans and the proper notification has been given to the non-AFDC applicant as required under § 302.33(d)(5). In response to these comments, we have decided to make explicit in regulations that this notification requirement is applicable in interstate cases as well as intrastate cases. We believe this policy is consistent with Congressional intent as long as any State involved in providing IV-D services only seeks to recover costs associated with any service actually provided. In so doing, no individual would be charged more than is necessary to recover the cost of providing services in his or her case.

13. Comment: One State asked whether the phrase "*** informing all persons authorized within the State to establish a support obligation that the State will recover costs from that individual" in the preamble of the proposed regulations means informing all authorized persons that the State intends to recover costs from all individuals who contract with the State for IV-D services, or informing all authorized persons regarding each individual non-AFDC applicant by name.

Response: The statement in the preamble means that the State must have implemented a procedure for informing all persons authorized to establish a support obligation that the State will recover costs from all individuals who have filed an application for IV-D services.

14. Comment: One legal advocacy group suggested that the regulations at 45 CFR 302.33(d)(1)(ii) be revised to specify the procedures States must use to ensure that all individuals authorized within the State to establish an obligation for support are notified that the State recovers costs from the individual receiving IV-D services.

Response: We believe that the flexibility and discretion the regulations give the States to establish their own procedures for informing persons authorized to establish support orders is consistent with the corresponding statutory provision at section 454(6)(D)(ii) of the Act. States may contact the appropriate OCSE Regional Office for assistance in establishing a procedure that meets the notification requirement. Since 302.33(d)(1)(ii) is a IV-D State plan requirement, the OCSE Audit Division will, as part of its compliance audits, determine whether each State that elects to recover costs from the individual receiving IV-D services meets the requirements in the regulation. If the audit findings indicate that a State is not meeting the notice requirements in § 302.33(d)(1)(ii), the appropriate OCSE Regional Office will work with the State to take corrective action soon as possible.

15. Comment: One legal advocacy group recommended that the regulations prohibit the State from recovering costs from any non-AFDC individual recovering support collection services until the case returns to the court or other decision-maker for enforcement or modification.

Response: Section 454(6)(D) of the Act, which permits States to recover costs incurred in providing IV-D services to non-AFDC individuals, does not prohibit the recovery of costs on cases that require only collection of support. Therefore, States may recover actual or standardized costs associated with any service provided. If the only service being provided is collection of support, costs associated with the service should be minimal. We believe that a reasonable cost recovery program is not likely to place an undue burden on non-AFDC individuals who apply for IV-D services because they will receive services from the IV-D agency which may not be available to them from any other source at a comparable cost.

16. Comment: Two legal advocacy groups recommended that the regulations specify the maximum amount a State can deduct from support collections as recovered costs. Suggestions included permitting States to retain up to five percent of each support collection as recovered costs and specifying that a State cannot retain more than 50 percent of support payments applied to arrearages.

Responses: Section 454(6)(D) of the Act allows States to recover any costs in excess of any fees imposed to cover administrative costs under the IV-D State plan and does not limit the amount that may be withheld from support collected on behalf of non-AFDC individuals receiving IV-D services. Although

§ 302.33 does not set a maximum amount a State may deduct from support collections, the State may only recover on a case by case basis either actual or standardized costs in accordance with 302.33(d)(2). A State that recovers costs may retain a flat percentage of support collected as long as the recovery of costs does not exceed the actual or standardized costs incurred in a given case and does not place an undue burden on the individual receiving IV-D services. A State that elects to retain a flat percentage of each non-AFDC collection must periodically reconcile the amount retained with costs as determined by the standardized or actual method. Therefore, the withholding of a flat percentage would cease when the amounts withheld equaled the standardized or actual amounts charged by the State. The flat percentage of support retained is a matter to be determined by the State in accordance with these requirements.

17. Comment: One family court commented that the regulations permit the recovery of costs from support payments, but do not ensure that the total current support amount is paid to the payee.

Response: If a State elects to recover costs from the absent parent, the regulations at § 302.33(d)(3) prohibit the IV-D agency from treating any amount collected from the absent parent as recovered costs except amounts that exceed the amount of current support owed. Under this option, the State must give priority to the current support obligation. Support collected up to the amount of the current support obligation must be paid to the family. Otherwise, we believe, the State would in effect be recovering costs from the family receiving non-AFDC services.

If a State elects to recover costs from the individual who files an application for IV-D services, the State may under

§ 302.33(d)(1)(ii) recover costs directly from the individual or from the support collected on behalf of the individual. This is consistent with section 454(6)(D)(ii) of the Act. There is no requirement that the total current support amount be paid to the payee if this statutory option is selected.

18. Comment: Two legal advocacy groups recommended that, because it is often the obligor's malfeasance that necessitates IV-D services, the regulations should indicate a preference for recovering costs from the obligor.

Response: Under section 454(6)(D) of the Act and 45 CFR 302.33(d)(1), any State that opts to recover costs may recover them from the absent parent or from the individual who applies for IV-D services. The statute does not indicate that there is any preference which should be given to recovering costs from the obligor. However, the State that elects to recover costs from the individual receiving IV-D services in accordance with 45 CFR 302.33(d)(1)(ii) may attempt to obtain reimbursement from the absent parent for the individual receiving IV-D services in accordance with § 302.33(d)(4). We believe that this provision will reduce the burden of cost recovery on the non-AFDC individual receiving IV-D services.

19. Comment: One family court and two legal advocacy groups recommended that the regulations address the recovery of costs on a cost per service basis. Suggestions included specifying the services for which State can recover costs, establishing the maximum amount that a State can charge for each service, prohibiting the State from charging the costs of enforcement and collection services against the applicant more than once, and specifying how often a State can charge for enforcement or collection activity.

Response: 45 CFR 302.33(d)(1) permits a State to collect on a case by case basis either excess actual or standardized costs from the absent parent or from the individual receiving IV-D services. A State that chooses to recover standardized costs must develop a written methodology to determine standardized costs which are as close to actual costs as possible. The State could develop a written methodology for determining the average cost per service as illustrated in the preamble to the proposed regulation.

The costs of providing IV-D services vary from State to State. Costs such as salaries, benefits and other administrative expenses incurred in providing a IV-D services such as enforcement must be considered in determining actual costs or establishing standardized costs which are as close to the actual costs incurred as possible. Therefore, we believe it is impossible to establish a standard cost per service in Federal regulations because of the various situations that exist.

A State that develops average costs per service as part of a written methodology to recover standardized costs may recover costs each time the service is provided. For example, suppose the average cost of taking enforcement action is $50. If the State takes enforcement action twice in a case, the State may recover $100. Alternatively, a State that determines standardized costs under § 302.33(d)(2) may develop an average cost of providing a service per case. For example, if the average cost of providing collection services on a IV-D case is $60 and the State provides collection services to a case, the State will only recover $60 regardless of how often or how long it provides collection services.

20. Comment: One State objected to the methodology for determining standardized costs presented in the proposed regulations because it requires the calculation of costs on a case by case basis which is a very labor intensive process.

Response: We believe that the calculation of standardized costs on a case by case basis is less costly and time consuming than calculating actual costs on a case by case basis. We expect many States to adopt this option because it will result in the recovery of standardized costs in a given case that closely reflect the costs of services provided in that case.

21. Comment: Two legal advocacy groups recommended that the regulations be revised to require States that elect to recover standardized costs to do so based on the income of either the non-AFDC individual receiving IV-D services or the absent parent responsible for the costs of providing IV-D services.

Response: The State has discretion in determining the rate at which it will recover costs as long as the criteria developed are used throughout the State and do not discourage the application for services by those most in need of them. Thus, the State could use the average income of those non-AFDC individuals receiving IV-D services from whom it will recover costs as a criterion for determining the rate of recovery. There is no provision in the statute for basing costs on the income of the absent parent.

22. Comment: One State suggested that the proposed regulations be revised to permit States to impose a flat percentage fee for non-AFDC service that does not exceed the average costs of such services.

Response: The regulations at 45 CFR 302.33(d)(2) require a State that elects to recover standardized (or average) costs to develop a written methodology to determine standardized costs which are as close to actual costs as is possible. In addition, the State must reconcile the amount recovered to the standardized (or average) costs of providing IV-D services at some point on a case by case basis.

Once a State has determined standardized costs in accordance with § 302.33(d)(2), the State may collect these costs on a case by case basis by the retention of a flat percentage of support collected as long as the amount recovered does not exceed the costs incurred in a given case. A State that recovers costs by the flat percentage method must closely monitor its cost recovery activities to ensure that it does not recover amounts in excess of incurred costs in any individual case.

23. Comment: One legal advocacy group recommended that the regulations require States that develop a written methodology under the proposed 45 CFR 302.33(d)(2) to make the methodology available to individuals upon request.

Response: We agree that the regulations should require the State that elects to recover standardized costs to make the written methodology available to individuals upon request. The individual receiving IV-D services, the individual who owes support and any other party interested in the welfare of the child have a legitimate interest in reviewing the method used to establish standardized costs. Therefore, we have revised 45 CFR 302.33(d)(2) to specify that a State which develops a written methodology for determining standardized costs must make the methodology available to any individual upon request.

24. Comment: One State suggested that, because the procedure described in the proposed regulations at 45 CFR 302.33(d)(4) involves recovery of costs from the custodial parent while attempting to recover costs from the absent parent, the provision should be revised to provide that the State will first attempt to recover costs from the absent parent before it recovers costs from the custodial parent. One family court indicated that the proposed § 302.33(d)(4) is impractical.

Response: The regulations at § 302.33(d)(4) provide that a State that recovers costs under § 302.33(d)(1)(ii) may attempt to obtain reimbursement from the individual who owes a support obligation for any costs paid by the individual receiving IV-D services and pay all amounts so obtained to the latter individual. As indicated in the preamble to the proposed regulations, this would allow States that elect under

§ 302.33(d)(1)(ii) to recover costs from the individual receiving IV-D services to reduce the impact of cost recovery on that individual. Costs recovered from the absent parent in this situation may not be considered child support payments. Although this option involves some additional costs, we believe that it will be selected by some States.

A State that wants to recover costs without placing a burden on the non-AFDC family, as suggested by the first commenter, should opt to recover costs from the absent parent under

§ 302.33(d)(1)(i).

25. Comment: One legal advocacy group and one State recommended that the proposed regulations at § 302.33(d)(5) be revised to require a IV-D agency that elects to recover costs to notify both the custodial parent and absent parent.

Response: Previous regulations at § 302.33(c) required a IV-D agency that elected to recover costs from support collections to notify each non-AFDC individual for whom IV-D services are being provided of that fact. Under this provision, the IV-D agency only sent notices to individuals affected by cost recovery. We continue to believe that only the individual affected by a State's decision to recover costs should be notified. Therefore, the regulations at 45 CFR 302.33(d)(5) require a State that elects to recover costs to notify, as appropriate, either the individual who has filed an application for IV-D services or the individual who owes a support obligation to a non-AFDC family receiving IV-D services that costs will be recovered.

Assignment (45 CFR 302.33(e))

26. Comment: One State commented that the provision in the regulations that requires the State to inform any individual about to make an assignment of support rights that the assignment may have the effect of making a support debt dischargeable in bankruptcy will burden the State and discourage individuals from applying for IV-D services.

Response: Even though the assignment is for collection purposes only and transfers no property right to the State, we are aware of bankruptcy proceedings in which substantial amounts of past due support assigned to the State by non-AFDC individuals under § 302.33(e) were discharged. Since the non-AFDC individual and family may be adversely affected by an assignment of support rights, the regulations at 45 CFR 302.33(e)(2) require the IV-D agency to inform all non-AFDC individuals applying for IV-D services that any assignment of support rights to the State may result in a support debt being discharged if the debtor declares bankruptcy.

27. Comment: One legal advocacy group suggested that the proposed 45 CFR 302.33(e)(1) be revised to specify that the IV-D agency must inform each individual who applies for IV-D services that failure to make an assignment of support rights will not effect that individual's eligibility for IV-D services.

Response: We agree that the individual who applies for IV-D services needs to know that his or her failure to make an assignment of support rights will not affect his or her eligibility for IV-D services. We revised 45 CFR 302.33(e)(2) to specify that, before the applicant for IV-D services makes an assignment of support rights, the IV-D agency must inform the individual that the assignment is not a condition of eligibility for IV-D services.

Treatment of Program Income (45 CFR 304.50)

28. Comment: One State commented that, because the Federal government reduces the quarterly IV-A grant award advanced to the State by the anticipated Federal share of IV-D AFDC collections

for the upcoming quarter, it would be inequitable for the Federal government to demand a share of any interest earned on IV-D AFDC collections. One State, one county executive, one domestic relations agency and one judge also expressed concern about this provision.

Response: Quarterly IV-A grant awards to the State are reduced by the Federal government by the estimated net Federal share of IV-D AFDC collections exclusive of any interest earned by the State on such collections. Section 455(a) of the Act requires the States to reduce their quarterly expenditure claims for Federal funding by the total amount of any fees collected or other income resulting from Services provided under the IV-D State plan. The term "income" includes any interest income earned by a State on collections made under the IV-D State plan. Thus under regulations at 45 CFR 304.50(b), any interest earned on IV-D AFDC collections before those collections are distributed in accordance with section 457 of the Act and the implementing regulation at 45 CFR 302.51 must be excluded from the State's quarterly expenditure claims for Federal IV-D funding.

29. Comment: One individual suggested that, because interest income may be construed as exempt from the requirement to exclude earned income from quarterly expenditure claims for Federal funding, the proposed regulations at 45 CFR 304.50(b) should be revised to specify interest income.

Response: We agree that interest income could possibly be construed as exempt from the proposed § 304.50(b). Therefore, we revised the final 45 CFR 304.50(b) to require the IV-D agency to exclude from its quarterly expenditure claims an amount equal to all interest and other income earned during the quarter resulting from services provided under the IV-D State plan.

30. Comment: One State suggested that the proposed 45 CFR 304.50(b) be revised to delete the word "earned" to conform the provision to section 455(a) of the Act.

Response: Section 455(a) of the Act requires the States to exclude from their quarterly expenditure claims for Federal funding any fees collected or other income resulting from services provided under the IV-D State plan. We believe that the term "income," as used in section 455(a) of the Act, includes earned income such as interest earned by a State on IV-D collections because interest earned on such collections is a direct result of State collection and distribution services. Once the State makes a IV-D collection, any interest earned prior to the completion of the distribution process (that is, from the date of collection until the date the Federal government receives from the State a IV-A expenditure report that reduces State IV-A expenditures by the net Federal share of IV-D AFDC collections) must be excluded from the State's quarterly claims for Federal funding. Thus, the regulations at 45 CFR 304.50(b) require the State to exclude from its quarterly expenditure claims all interest and other income earned during the quarter resulting from services provided under the IV-D State plan.

Paperwork Reduction Act

These regulations at 45 CFR 302.33 information collection requirements which are subject to Office of Management and Budget review under the Paperwork Reduction Act of 1980. These requirements have not yet been approved by OMB and are therefore not effective. The Department will publish a notice in the Federal Register regarding the effective date of these requirements once OMB approval has been obtained.

List of Subjects in 45 CFR Parts 302 and 304

Child welfare, Grant programs/Social programs.

Regulatory Impact Analysis

In developing Pub. L. 97-248, the Congress used figures developed by the Congressional Budget Office which indicate that the revised application fee and recovery of costs provisions will provide savings in the range of $11 to $16 million annually during fiscal years 1984 and 1985. The Department estimates that the mandatory application fee provisions of section 3 of Pub. L. 98-378 will provide savings of $10 million annually during fiscal years 1986 and 1987. These estimated savings represent 9 to 15 percent of total non-AFDC expenditures. These figures do not represent changed costs as such, but a change in payor from the general taxpayer to the users of these services. These changes may have some beneficial effect on private sector providers of similar services, but we do not believe it will be substantial. In addition to these changes in structure and magnitude of fees and cost recovery. States may realize some actual administrative cost savings by moving from a case-by case to standardized procedure for calculating costs. However, we expect that these savings will not exceed several million dollars annually.

For the reasons stated above, the Secretary has determined that this document is not a major rule as described by Executive Order 12291 because it does not meet any of the criteria set forth in Section 1 of the Executive Order. Further the Secretary certifies that these regulations will not have significant economic impact on a substantial number of small entities, and do not require a regulatory flexibility analysis as provided in Pub. L. 96-345, the Regulatory Flexibility Act of 1980.

PART 302--[AMENDED]

1. 45 CFR 302.33 is revised to read as follows:

§ 302.33 Individuals not otherwise eligible for paternity and support services.

(a) Availability of services. The State plan must provide that the support collection or paternity determination services established under the plan shall be made available to any individual not receiving assistance under the Aid to Families with Dependent Children (AFDC) program who files an application for the services with the IV-D agency.

(b) Definitions. For purposes of this section:

"Applicant's income" means the disposable income available for the applicant's use under State law.

(c) Application fee. (1) Until October 1, 1985, the State plan may provide for an application fee to be charged each individual who applies for services under this section. If the State elects to charge a fee, the State plan shall specify either

(i) A flat dollar amount not to exceed $25 to be charged each applicant; or

(ii) A fee schedule to be used to determine the fee to be charged each applicant. Such fee schedule will be based on each applicant's income and, will be designed so as not to discourage the application for such services by those most in need of them.

(2) Beginning October 1, 1985, the State plan must provide that an application fee will be charged for IV-D services under this section. Under this paragraph:

(i) The State shall collect the application fee from the individual applying for IV-D services or pay the application fee out of State funds.

(ii) The State may recover the application fee from the absent parent who owes a support obligation to a non-AFDC family on whose behalf the IV-D agency is providing services and repay it to the applicant or itself;

(iii) State funds used to pay an application fee are not program expenditures under the State plan but are program income under 304.50 of this chapter.

(iv) Any application fee charged must be uniformly applied on a statewide basis and must be;

(A) A flat dollar amount not to exceed $25 (or such higher or lower amount as the Secretary may determine to be appropriate for any fiscal year to reflect increases or decreases in administrative costs); or

(B) An amount based on a fee schedule not to exceed the flat dollar amount specified in paragraph (c)(2)(iv)(A) of this section. The fee schedule must be based on the applicant's income.

(v) The State may allow the jurisdiction that collects support for the State under this part to retain any application fee collected under this section.

(d) Recovery of costs. (1) The State may elect in its State plan to recover any costs incurred in excess of any fees collected to cover administrative costs under the IV-D State plan. A State which elects to recover costs shall collect on a case by case basis either excess actual or standardized costs:

(i) From the individual who owes a support obligation to a non-AFDC family on whose behalf the IV-D agency is providing services under this section; or

(ii) From the individual who has filed an application for IV-D services under this section, either directly or from the support collected on behalf of the individual, but only if the State has in effect a procedure for informing all individuals authorized within the State to establish an obligation for support that the State will recover costs from the individual receiving IV-D services under this section.

(2) A State that recovers standardized costs under paragraph (d)(1) of the section shall develop a written methodology to determine standardized costs which are as close to actual costs as is possible. This methodology must be made available to any individual upon request.

(3) The IV-D agency shall not treat any amount collected from the individual as a recovery of costs under paragraph (d)(1)(i) of this section except amounts which exceed the current support owed by the individual under the obligation.

(4) If a State elects to recover costs under paragraph (d)(1)(ii) of this section, the IV-D agency may attempt to seek reimbursement from the individual who owes a support obligation for any costs paid by the individual who is receiving IV-D services and pay all amounts reimbursed to the individual who is receiving IV-D services.

(5) If a State elects to recover costs under this section, the IV-D agency must notify, consistent with the option selected, either the individual who has filed an application for IV-D services or the individual who owes a support obligation that such recovery will be made. In an interstate case, the IV-D agency where the case originated must notify the applicant of the States that recover costs.

(6) The IV-D agency must notify the IV-D agencies in all other States if it recovers costs from the individual receiving IV-D services.

(e) Assignment. (1) The IV-D agency may take an assignment of support rights from an individual who applies for services under this section. However, as assignment by an individual under this section does not constitute an assignment under § 232.11 of this title and may not be a condition of eligibility for services under this section.

(2) Before the applicant for IV-D services under this section makes an assignment of support rights, the IV-D agency shall inform the individual that the assignment is not a condition of eligibility for services under this section and may have the effect of making the support debt dischargeable in bankruptcy.

2. 45 CFR Part 304 is amended by adding a new § 304.50 to read as follows:

§ 304.50 Treatment of program income.

The IV-D agency must exclude from its quarterly expenditure claims an amount equal to:

(a) All fees which are collected during the quarter under the title IV-D State plan; and

(b) All interest and other income earned during the quarter resulting from services provided under the IV-D State plan.

(Sec. 1102 of the Social Security Act (42 U.S.C 1302) and secs. 454(6) and 455(a) of the Social Security Act (42 U.S.C. 654(6) and 655(a))

(Catalog of Federal Domestic Assistance Program No. 13.679 Child Support Enforcement Program.)

Dated: May 21, 1984.

Martha A. McSteen,

Acting Director, Office of Child Support Enforcement.

Approved: August 24, 1984.

Margaret M. Heckler,

Secretary.

[FR Doc. 84-24745 Filed 9-18-84; 8:45 am]

BILLING CODE 4190-11-M

45 CFR Part 303

Procedures for Case Assessment and Prioritization

AGENCY: Office of Child Support Enforcement (OCSE), HHS.

ACTION: Final rule.

SUMMARY: This document establishes in regulation the authority for States to prioritize their Child Support Enforcement program caseloads. The purpose of this regulation is to permit States to implement case prioritization procedures that provide for the review and management of cases and to establish basic requirements that States' prioritization systems must meet. We published a Notice of Proposed Rulemaking on Procedures for Case Assessment and Prioritization in the Federal Register on April 29,1983(48 FR 19424). We received many substantive comments in response to the proposed rule resulting in a number of revisions. This document responds to the comments received and discusses the revisions made as a result of the comments.

EFFECTIVE DATE: September 19, 1984; except for § 303.10(b)(6) which contains information collection requirements under review by the Office of Management and Budget.

FOR FURTHER INFORMATION CONTACT: Marianne Rufty, (301) 443-5350, Office of Child Support Enforcement, Department of Health and Human Services, Room 1010, 6110 Executive Boulevard, Rockville, Maryland 20852.

SUPPLEMENTARY INFORMATION:

Statutory Provisions

This final rule is implemented under the authority of section 1102 of the Social Security Act (the Act) which requires the Secretary to publish regulations that may be necessary for the efficient administration of the functions for which she is responsible under the Act. We believe this rule is necessary for the efficient operation of the Child Support Enforcement program under title IV-D of the Act.

Section 454(4) of the Act requires each State plan for child support to provide that the State "will undertake *** (A) in the case of a child born out of wedlock *** to establish the paternity of such child ***and (B) in the case of any child *** to secure support for such child ***" (emphasis added). However, there is no provision in title IV-D of the Act or its legislative history that specifies in what order a State must process cases in order to carry out this responsibility. In addition, section 452(a)(1) of the Act requires OCSE to establish standards for program operations. We believe, therefore, that ample statutory authority exists to promulgate regulations that would allow States to implement case prioritization systems to manage their caseloads while continuing to achieve the program goals of locating parents, establishing paternity and securing support. Since we believe that all cases should receive some level of effort to achieve the desired program goal, we want to ensure that these regulations are not construed to imply that it would be permissible for States to neglect or exclude certain cases or classes of cases.

Relationship to the Child Support Enforcement Amendments of 1984

The Child Support Enforcement Amendments of 1984 (Pub. L. 98-378) requires States to develop and implement a variety of measures to increase program performance while allowing States considerable flexibility in the way they operate their programs. This regulation complements the new legislation because it offers States an additional means of enhancing the effectiveness and efficiency of their operations by improving the management of cases.

Provisions of the Final Rule

This part of the preamble contains the section-by-section provisions of the final rule. Under each final provision, we discuss the related proposed provision, the comments received on that provision, and our responses to those comments. A large number of substantive comments were received on the proposed rule-20 letters from State IV-D agencies, four from various other State offices, two from advocacy groups, and two from a concerned citizen. Many of the comments were related and resulted in elements of several of the proposed requirements being discussed under one final requirement.

Section 303.10(a): "The IV-D agency may implement a case assessment and prioritization system statewide or in a particular political subdivision of the State to manage its caseload."

The proposed 303.10(a) gave States the option to implement case prioritization procedures to manage their cases, including AFDC non-AFDC and interstate cases. We wanted to provide States with a management tool that could be used to improve the effectiveness of establishing paternity and securing support for children. In addition, because of caseload and geographic variations within a State, we felt that States should have the flexibility to implement one statewide system or separate systems within political subdivisions, provided that all cases within the State or political subdivision are included in that system.

Several commenters, including one advocacy group, recommended that this regulation be made a State plan requirement under 45 CFR Part 302. Two commenters recommended that we develop a corresponding audit regulation under 45 CFR Part 305 so that OCSE auditors would have a basis for evaluating a State's prioritization system. The advocacy group also felt that, by allowing States to develop multiple local prioritization systems, States could avoid the statewideness requirements and make a "geographic crazyquilt" of eligibility.

The State plan requirement at 45 CFR 302.39 specifies that the IV-D agency must comply with the standards for program operations prescribed in 45 CFR Part 303. We believe this is sufficient to ensure State compliance with the requirements of case prioritization in § 303.10. This arrangement is consistent with OCSE policies published in a final rule in the Federal Register on June 8, 1982, in which we specified our intent to remove all nonstatutory State plan requirements from 45 CFR Part 302 and place them in 45 CFR Part 303, Standards for Program Operations.

More importantly, OCSE auditors evaluate States' programs to ensure State plan requirements in 45 CFR Part 302 are being met. If a State adopts a case prioritization system, the State must continue to meet the requirements in Part 302 which include performing all of the functions of the program, that is, locating the absent parent, establishing paternity and establishing and enforcing support obligations for AFDC and non-AFDC cases. If an audit reveals that a State did not work certain classes of cases, such as paternity or non-AFDC cases, using case prioritization to justify its action, the State would be subject to the penalty under 45 CFR 305.50 for failure to have an effective program.

With respect to the comment on statewideness as it affects eligibility, caseloads differ significantly between regions of the country and even within the boundaries of a particular State. Urban areas may have a proportionately higher percentage of paternity cases than rural areas. A particular community may have proportionately fewer non-AFDC cases than another or a disproportionate number of incoming interstate support cases. The characteristics of the cases themselves also differ significantly. There may be proportionately more single women with children than married women with children applying for services in one area versus another. One area may have proportionately more cases requiring support orders to be established than cases with existing orders.

We believe that a State that opts to implement one prioritization system or multiple systems will do so for the purpose of managing its caseload, not for limiting IV-D services to certain applicants. States are required to undertake to secure support and establish paternity in all cases. However, they may use various case characteristics, depending upon caseload demographics, to determine the order in which cases will be worked. In our view, this does not in any way affect eligibility for IV-D services.

Thus, we made no substantive changes to the proposed 303.10(a) as a result of the above mentioned comments. To improve readability, several clauses referencing those cases that must be included in the State's system were moved from this paragraph to the new § 303.10(b)(2). In addition, we added the phrase "statewide or in a particular political subdivision of the State" to the proposed paragraph (a) so that States are aware of the flexibility they may have in designing a system or various systems (provided that all cases within the State or political subdivision are included in that system) to manage their cases.

General comments received on the proposed regulations and our responses follow:

Comment: Although many States generally supported the concept of prioritization, seven State IV-D agencies said that the proposed regulations interfere with the State's current practice in whole or in part.

Response: States primarily objected to the restrictions in the proposed §§ 303.10(b)(2) through 303.10(b)(6) either because the State's internal organizational structure or its current operating prioritization system could not be adjusted to meet these requirements. We replaced the requirement that States must prioritize cases within each of the basic service categories with the requirement that States must ensure that no program service is systematically excluded and deleted the requirement that States establish priority I, II, and closed status categories. As a result, a State that opts to prioritize will need to make few, if any, adjustments to its operation or current prioritization scheme. The specific provisions that were revised or deleted are discussed in more detail below.

Comment: Two State agencies and one public interest law firm expressed support for the rule as written.

Response: Our intent in writing the proposed rule was to allow States the flexibility to implement case prioritization systems to manage their caseloads while continuing to achieve the program goals of locating parents, establishing paternity and securing support for children.

Other States objected strongly to the specificity of the rule. In effect, States felt that these requirements were too restrictive and would impose additional staff and paperwork burdens on an already overburdened system.

Therefore, we decided to replace the requirement for prioritization within service categories with the requirement that States ensure that no program service is systematically excluded and delete the requirement to establish status categories so that States would have the flexibility to operate various types of prioritization systems.

Comments: Seven State IV-D agencies requested that we withdraw the regulations.

Response: Our initial reasons for promulgation regulations in this area are still valid. Some States would like to implement prioritization systems but are reluctant to do so without regulatory authority. Many others are currently operating systems to rank their caseloads without guidelines. Therefore, we continue to believe that it is in the best interest of the program to publish regulations on case prioritization. However, we chose to make prioritization optional so that States may adopt procedures only when they believe such procedures will improve the operation of their programs.

This document establishes in regulation, the authority for States to prioritize their caseloads while preserving the statutory requirement that States will undertake to establish paternity and secure support for children with respect to whom an assignment is effective and for children in non-AFDC cases.

We received many comments on the proposed regulations. The majority of the comments concerned specific requirements that States viewed as too restrictive, burdensome and costly. Were placed the requirement of prioritization within each of the basic service categories with the requirement that States ensure that no program service is systematically excluded and deleted the requirement to establish case status categories of priority I, II, and closed. Therefore, we believe that the regulations contained in this document will be much more acceptable to those States that suggested the regulations be withdrawn.

Comment: An advocacy group was concerned that the preamble to the proposed rule used "age of the child" as an example of a success indicator in the paternity service category and failed to mention cases that are approaching the statute of limitations (as ones that should be processed before others in this category).

Response: We did not wish to infer that there is only one success indicator per service category or to give the impression that "age of the child" is an especially reliable indicator for success in the paternity service category. We agree with the commenter that the "key evidentiary element in a paternity case is a simple scientific (blood) test, of very high probative value, that does not deteriorate over time." Therefore, we urge States to give special priority under their criteria to cases that are approaching the statute of limitations.

Section 303.10(b)(1): "Develop written procedures for the evaluating and prioritization of cases upon receipt and upon becoming aware of changes in case circumstances."

The proposed § 303.10(b)(1) required States to develop written procedures and success indicators for the evaluation and prioritization of all cases upon receipt. The purpose of requiring States to write procedures was to ensure that the ranking and processing of cases would be uniform and equitable according to prescribed State or local standards. In addition, OCSE would have a basis for reviewing a State's prioritization system to verify that States do not neglect or exclude any class of services required by the Act.

No comments were received on the proposed § 303.10(b)(1). Comments received on the proposed § 303.10(b)(7), however, affected our decision to revise the proposed § 303.10(b)(1).

Section 303.10(b)(7) required States to reevaluate cases if their potential for successful resolution changed because of new or updated absent parent information. Our intention in proposing this requirement was to protect cases from never being worked because they were initially given low priority at intake.

Two State agencies felt that the proposed § 303.10(b)(7) would ensure that cases are reviewed but that it is burdensome in conjunction with the proposed § 303.10(b)(6), the periodic review of cases requirement.

We continue to believe that it is important to provide protection for those cases that experience a change in case circumstances. Therefore, we retained the substance of the proposed § 303.10(b)(7) and, in effect, strengthened this requirement by combining it with the new § 303.10(b)(1).

Thus, in addition to requiring States to have written procedures for prioritization of cases at intake, the new § 303.10(b)(1) requires States to write procedures for reviewing the priority given to cases for which new case information is obtained. A case might be moved up or down in its ranking based on this review. We strongly urge States to develop and implement information exchange systems that will be used to update case information on a routine basis and include reference to these systems in their written procedures. For instance, if there is an exchange of absent parent information between the State's unemployment office and the IV-D agency, the State's written procedures should explain the mechanism used and the type of information received. We recommend that all States include in their procedures a description of the information exchange system in use between the State's IV-A and IV-D agencies:

Section 303.10(b)(2): "Include all of its cases in the system, including cases referred from the IV-A agency under

§ 235.70 of this title, cases in which applications for services are received under § 302.33 of this chapter, and cases referred from other States for assistance under § 302.86 of this chapter."

The proposed § 303.10(b)(2) required States to include both AFDC and non-AFDC cases in implementing procedures. Our purpose in proposing that States include both caseloads in the same system was to ensure that non-AFDC cases would not be excluded or neglected as a result of the implementation of these procedures.

Eight State IV-D agencies commented on the proposed 303.10(b)(2). Two felt that non-AFDC cases should not be prioritized when a State charges non-AFDC individuals an application fee and/or recovers the costs of services provided. One of these two stated that, if non-AFDC applicants pay for service, they have a right to expect service. The other six commenters opposed using the same prioritization system and criteria for both caseloads because their current practice is to maintain distinct program areas and procedures for each caseload. We will respond to the States' concerns separately.

First, can a State prioritize a non-AFDC case if it charges a non-AFDC individual an application fee and/or recovers the costs of services provided? Yes. If a State opts to prioritize its caseload, non-AFDC cases must be included in the system. Upon review of all intake information, the IV-D agency may determine that a case has poor potential for successful resolution and may decide to process other cases with higher potential for success before that one. Even if States do not prioritize cases, a similar situation may occur when no immediate action can be taken after an application has been filed. In either instance, no further costs will be charged to the applicant until services

moved up or down in its ranking based have been provided,

Secondly, must a State use the same prioritization system and criteria for AFDC and non-AFDC cases? In order to protect cases from being excluded or receiving a lower priority as a class, we require the State to include all cases in its prioritization system. To ensure equal treatment of both caseloads, States must use the same evaluative criteria for both. The State's written procedures must ensure that neither the non-AFDC caseload nor the AFDC caseload will be given a lesser priority than the other one.

We have not substantially changed the proposed

§ 303.10(b)(2) as a result of the above mentioned comments. As noted above, to clarify what cases a State must include in its system, we added language that was deleted from the proposed

§ 303.10(a). We also replaced the word "procedures" with the word "system" for editorial reasons. Therefore, the new

§ 303.10(b)(2) continues to require that a State, opting to adopt a case prioritization system, must include all cases in that system.

Section 303.10(b)(3). "Ensure that no service required to be provided under the IV-D State plan will be systematically excluded by the prioritization system, including locating the absent parent, establishing paternity and establishing and enforcing support obligations."

The proposed § 303.10(b)(3) required States to examine and prioritize cases within each of the program service categories, based on the success indicators that States developed for each service. Our purpose in proposing that States prioritize cases within each of the service categories was to ensure that no program service or class of cases would be overlooked or excluded, particularly the more involved cases such as paternity.

We will first address comments to the proposed

§ 303.10(b)(3) and, as a result of those comments, our revisions to this requirement. Secondly, we will respond to those States that recommend prioritization based on collection potential instead of prioritization based on success indicators developed for each service category.

With respect to the proposed § 303.10(b)(3), five State IV-D agencies felt that prioritization within categories would be both costly and duplicative. As cases progressed through the services, case assessment and prioritization would occur each time the case entered and exited the necessary program service category. States argued that this process would result in unnecessary administrative costs. In addition, States describe the process as burdensome and unresponsive to their current situation of limited resources.

We agree that objections concerning prioritization within service categories have merit and have therefore revised the proposed § 303.10(b)(3) by replacing the requirement that States must prioritize within service categories based on success indicators with a requirement that States that adopt prioritization systems must ensure that no program service is systematically excluded as a result of these systems. The new

§ 303.10(b)(3) allows States to implement systems that are more responsive to their needs while continuing to support our intent of ensuring that no program service or class of cases is overlooked or excluded in a State as a result of case prioritization. We believe that the statutory requirement that States must undertake to establish paternity and to secure support for children will further ensure that these important program goals are not neglected.

Three State IV-D agencies recommended that cases be prioritized based on collection potential. States may include collection potential among their overall prioritization criteria. However, States may not orient their programs entirely toward financial output by focusing solely on the amount of support or dollar amount that may be obtained in each case. A sole focus on collections would be discriminatory, particularly if immediate collection potential was the only consideration. This could result in the State IV-D agency failing to comply with the requirements of its IV-D State plan in the sense that certain functions of the program, such as paternity establishment, might be ignored. If all factors are the same, (for example, the absent parent can be located and the evidence of support liability is strong), cases should be given equal priority for establishment and enforcement of a support order regardless of the absent parent's income or financial resources.

We want States to consider a variety of factors when developing their prioritization criteria. If obtaining a support obligation, however small the amount, enables a family to become self-sufficient, that case could be processed before others. If a voluntary wage assignment is obtainable, that case could receive immediate attention.

It is not our intention to allow states to neglect or exclude any class of cases from receiving IV-D services as a result of implementing prioritization systems. We promulgate these regulations to allow States the flexibility to implement systems to manage their caseloads. To accomplish this, we believe it is important for States to focus on those factors or case characteristics that have proven reliable with respect to securing support and establishing paternity.

Section 303.10(b)(4): "Notify all applicants for services that the information they provide, either initially or subsequently, may affect the relative priority given to their cases.

We added this requirement as a result of several comments received from an advocacy group that is concerned about protections for IV-D applicants under State and local case prioritization systems. In effect, the advocacy group felt that the IV-D agency should notify all applicants about the priority that has been assigned to their cases. In addition, they believed that the regulation should allow applicants the opportunity to request a hearing to dispute the priority.

We do not recommend notifying applicants individually about their rank in the State's prioritization process because we believe that requirements now contained in this document provide sufficient protection and because individual notifications of the rank assigned to a case would be impractical given the dynamics of any effective case prioritization system. We envision case priorities to be continually fluctuating and responsive to case changes. If individual notifications of rank assigned and hearings were required for each change in priority, the system would rapidly become inoperable. However, under § 303.10(b)(6), we are requiring that notice be given to low priority cases to encourage them to timely provide any information that may result in reclassification of the case. We discuss paragraph (b)(6) in more detail below.

Since we believe that obtaining quality information is a major factor in determining the priority order of a case, we added the new § 303.10(b)(4). This will ensure that all applicants know the importance of giving quality information to the IV-D agency because cases will be assessed based upon that information and processed in accordance with the State's written prioritization procedures. These procedures should be made available to any concerned individual upon request. Informing applicants that quality information may effect the priority order of their cases could be accomplished by revising AFDC and non-AFDC application forms to inform applicants about quality information or by notifying each applicant individually.

Section 303.10(b)(5) "Prioritize cases after reviewing all intake information for accuracy and completeness and, if review indicates that additional information is needed, prioritize only after attempting to verify or secure the information."

The proposed § 303.10(b)(4) required States to ensure that each case would receive a minimum level of effort. We wanted Stats to make an affirmative effort to obtain the best information possible before placing the case within its prioritization scheme. For example, States should verify the information forwarded by the IV-A agency, especially when that information appears on its face to be incomplete, inaccurate or incorrect.

We received comments from eleven State IV-D agencies on this requirement. Some States objected strenuously to the proposed

§ 303.10(b)(4) on the basis that it would be totally impractical and inefficient and would impose additional staffing burdens on an already overburdened system. Another State felt that this requirement was not cost beneficial nor would it allow efficient use of staff time especially if a separate IV-D interview has to be conducted before prioritizing. Still another believed that to do something in every case would negate the benefits of prioritization which should be to select one case for processing before another because that case has a higher potential for successful resolution.

We do not see the proposed § 303.10(b)(4) as burdensome to States because we believe that securing the best information possible before working the case as a matter of State practice is an effective program technique. Although the proposed rule mentioned interviewing the custodial parent as a method for obtaining the best available information, we did not mean for States to interview applicants in every case. We want States to pay particular attention to IV-A referral information and when that information is inadequate, contact the custodial parent or other sources (such as State motor vehicle offices or U.S. Post Offices) by phone, mail or interview to verify the accuracy of the referral data and/or to obtain better, more up-to-date information. We believe that efforts to secure the best information possible before prioritizing the case will enhance the benefits of the State's prioritization system. Even though staff time and resource may initially be expended in an effort to obtain the best information, both the state and the case benefit in the long term when he case is given a proper priority for processing from the beginning. To eliminate ambiguity in the interpretation of the term "minimum level of effort," however, we revised the proposed § 303.10(b)(4) to explicitly refer to reviewing all intake information for accuracy and completeness and, when additional information is needed, States must attempt to secure that information. In addition, we have changed this regulation to be more explicit about what is meant by a "minimum level of effort" so that cases will be prioritized in an equitable and efficient manner. We believe that obtaining the best information possible before prioritizing the case is also consistent with the statutory requirement to undertake to secure support and to establish paternity for children in AFDC and non-AFDC cases.

Section 303.10(b)(6): Establish a mechanism for the periodic review of low priority cases and for notifying the custodial parent in these cases that new information may result in a higher priority for the case.

The proposed paragraph (b)(5) required States to establish status categories of priority I, II and closed. We prescribed certain status categories because we believed that States needed guidelines with respect to the development of the categories and the types of cases that should be assigned to each category. Based on the comments received on the proposed § 303.10(b)(5), which we discuss later in this section, we deleted that requirement.

The proposed § 303.10(b)(6) required States to establish mechanisms to periodically review priority II cases. Priority II cases were defined in the preamble to the proposed regulations as those "cases in which the probability of successfully providing the necessary service is low at the time of referral but in which case circumstances have potential for change." Our intention in proposing this requirement was to protect cases from never being worked because they were initially given low priority at intake.

Five State IV-D agencies felt that the periodic review of priority II cases was in conflict with the intent of the proposed regulation which was to permit States to concentrate resources on cases with the greatest potential for success. One State questioned how IV-D agencies with their current staffing shortages could be expected to perform periodic reviews of priority II cases without removing the emphasis from priority I cases.

We continue to believe that periodic review of cases that are initially given low priority is an essential element in any effective prioritization system. It assures applicants for services that, although their case may have poor potential for case resolution at intake, the case will be looked at again, at a later date, to reevaluate its potential based on any change in case circumstances. Upon reevaluation, a case's processing order might change resulting in securing a paternity determination and/or support establishment and collection.

To further assure that low priority cases will be re-evaluated where appropriate, we have specified that States notify those custodial parents whose case is given low priority within the State's system. The notice should ask the custodial parent to keep the IV-D agency informed of any new absent parent information that may change the priority order of the case. We believe this notice requirement supports both the periodic review requirement under this paragraph and the case review requirement which was moved to paragraph (b)(1). In effect, the notice provides a mechanism for assuring that custodial parents who want their cases to have the highest priority possible will be encouraged to come forward with new information such as the return of the absent parent to the jurisdiction because the custodial parent is frequently in the best position to obtain this information.

The new § 303.10(b)(6) deletes reference to the priority II status category and instead uses the term periodic review of low priority cases. As discussed below, we deleted the status category requirement in the proposed paragraph (b)(5)).

Six State IV-D agencies objected to the proposed

§ 303.10(b)(5) which required States to establish status categories of priority I, II, and closed. One State felt that the formation of subsystems of cases was not sound management practice especially when inadequate funding exists to increase staff to handle these subsystems. Other States objected to our definition of the "closed" status category because they felt it was too limiting and would result in an overly large priority II status category.

Another IV-D agency felt that the status categories interfered with the State's current system, which they described as much more sensitive to caseload realities than those proposed.

Upon consideration of the comments, we believe that a variety of different schemes of status categories is possible and that it is not necessary to regulate in this area. States that implement a case management system will automatically establish certain categories to distinguish higher potential cases from lower potential cases. Therefore, to give States the flexibility to develop status categories that meet thee needs, we are deleting the proposed § 303.10(b)(5).

OMB Review

These regulations at 45 CFR 303.10(b)(6) contain information collection requirements which are subject to Office of Management and Budget (OMB) review under the Paperwork Reduction Act of 1980. These requirements have not yet been approved by OMB and are therefore not effective. The Department will publish a notice in the Federal Register regarding the effective date of these requirements once OMB approval has been obtained.

Regulatory Impact Analysis

No significant costs will result from this final rule. Also, States prioritization systems are expected to increase collections to the extent that such collections will more than offset any implementation costs. The Secretary has determined that this document, which responds to the comments received on the proposed rule, is not a major rule as described by Executive Order 12291. In addition, the Secretary certifies that for the reason stated above, these regulations will not have a significant economic impact on a substantial number of small entities and, therefore, will not require a regulatory flexibility analysis as provided in Pub. L. 96-354, the Regulatory Flexibility Act of 1980.

List of Subjects in 45 CFR Part 303

Child welfare, Grant programs - social programs.

PART 303--[AMENDED]

45 CFR Part 303 is amended by adding a new § 303.10 to read as follows:

§ 303.10 Procedures for case assessment and prioritization.

(a) The IV-D agency may implement a case assessment and prioritization system statewide or in a particular political subdivision of the State to manage its caseload.

(b) In implementing a case assessment and prioritization system, the IV-D agency must:

(1) Develop written procedures for the evaluation and prioritization of cases upon receipt and upon becoming aware of changes in case circumstances;

(2) Include all of its cases in the system, including cases referred from the title the IV-A agency under § 235.70 of this title, cases in which applications for services are received under § 302.33 of this chapter, and cases referred from other States for assistance under § 302.36 of this chapter.

(3) Ensure that no service required to be provided under the IV-D State plan will be systematically excluded by the prioritization system, including locating the absent parent, establishing paternity, and establishing and enforcing support obligations.

(4) Notify all applicants for services that the information they provide, either initially or subsequently, may affect the relative priority given their cases.

(5) Prioritize cases after reviewing all intake information for accuracy and completeness and, if review indicates that additional information is needed, prioritize only after attempting to verify or secure the information.

(6) Establish a mechanism for the periodic review of low priority cases and for notifying the custodial parent in these cases that new information may result in a higher priority for the case.

(Section 1102 of the Social Security Act (42 U.S.C. 1302), section 452(a) of the Social Security Act (42 U.S.C. 652(a)), and section 454(4) of the Social Security Act (42 U.S.C. 654(4))

(Catalog of Federal Domestic Assistance Program No. 13.679, Child Support Enforcement Program)

Dated: June 20, 1984.

Martha A. McSteen,

Acting Director, Office of Child Support Enforcement.

Approved: August 24, 1984

Margaret M. Heckler,

Secretary.

[FR Doc. 84-24744 Filed 9-18-84; 8:45 am]

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