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Final Rule: Incentive Payments to States and Political Subdivisions

AT-82-10

Published: September 15, 1982
Information About:
State/Local Child Support Agencies
Topics:
Funding, Incentive
Types:
Policy, Action Transmittals (AT), Regulations

REGULATION

ACTION TRANSMITTAL

OCSE-AT-82-10

September 15, 1982

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

SUBJECT: Final Regulation - Incentive Payments to States and Political Subdivisions

This is a final rule which implements section 307 of Public Law 96-272, the Adoption Assistance and Child Welfare Act of 1980, and makes several other changes to OCSE regulations.

The final rule:

1) extends the availability of incentive payments to States which collect child support on their own behalf;

2) amends the requirements regarding the payment of interstate incentives to give the IV-D agency or authorized political subdivision which receives a collection from another State or political subdivision more realistic time frames within which to calculate and pay incentives;

3) allows the collecting State or political subdivision to transmit a collection made on behalf of another State or political subdivision to the location specified by the State or political subdivision where the case originated;

4) authorizes political subdivisions to make incentive payments directly to another political subdivision within the State, to another State, or to a political subdivision of another State;

5) transfers the procedures regarding incentive payments from 45 CFR Part 302 (State Plan Requirements) to 45 CFR Part 303 (Standards for Program Operations);

6) deletes the audit regulation on incentive payments at 45 CFR 305.30; and

7) makes technical changes to several OCSE regulations to conform with other changes made in the final rule.

REGULATION

REFERENCES: 45 CFR 302.51, 303.52 (formerly 45 CFR 302.52), 304.26, 305.20 and 305.30.

EFFECTIVE DATE: August 27, 1982

RELATED REFERENCES: OCSE issued an Action Transmittal on the provisions of section 307: OCSE-AT-80-13, dated August 28, 1980. The AT is superseded by this final regulation.

INQUIRIES TO: OCSE Regional Representatives

Deputy Director

Office of Child Support

Enforcement

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Child Support Enforcement

45 CFR Parts 302, 303, 304 and 305

Child Support Enforcement Program; Incentive Payments to States and Political Subdivisions

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

ACTION: Final Rule

Summary: This regulation implements Section 307 of Pub. L. 96-272, the Adoption Assistance and Child Welfare Act of 1980. Section 307 provides for the payment of incentives to States which collect and enforce child support obligations on their own behalf. We published a Notice of Proposed Rulemaking (NPRM) on these provisions on May 8, 1981 (40 FR 25060). The comments received on that notice and our responses to the comments are discussed below. In addition, we have made several technical changes to two other regulations in order to make their references conform to this regulation. Finally, the procedures regarding incentive payments have been transferred from the State plan section of our regulations to the section dealing with standards for program operations. As a result of this a corresponding audit regulation has been deleted.

EFFECTIVE DATE: August 27, 1982.

FOR FURTHER INFORMATION CONTACT: Michael P. Fitzgerald (301)433-5350

SUPPLEMENTARY INFORMATION:

Background

Previously, section 458 of the Social Security Act provided for incentive payments equal to 15 percent of amounts received as payment of child support obligations which were enforced and collected under a State's Child Support Enforcement program and retained by the State to reimburse assistance payments under the Aid to Families with Dependent Children (AFDC) program. Under this provision States were entitled to receive incentive payments on collections they made on behalf of another State and political subdivisions were entitled to receive incentives on collections made for their own State or another State, but States were not authorized to receive an incentive payment for collections they made on their behalf. As a result, several States were not eligible to receive incentives on collections made for their own cases because collection and enforcement of the support obligation were the responsibility of the State Child Support Enforcement (IV-D) agency rather than delegated to a political subdivision.

Statutory Requirement

Section 307 of Pub. L. 90-272, signed by the President on June 17, 1980, amends section 458 of the Act to permit incentives to be paid to States which are collecting and enforcing on their own behalf. OCSE implemented this provision on an interim basis by issuing an Action Transmittal (AT) on August 28, 1980 (OCSE-AT-80-13). The AT is superseded by the final regulation published today. Under the amendment to section 458, States in which the collection and enforcement functions are performed by the State are now eligible to receive incentive payments on collections made on their own "intrastate" cases.

Regulatory Requirements

This regulation provides for incentives to be paid on amounts collected and retained by the State to reimburse assistance payments. States and political subdivisions must still meet the requirements that they enforce and collect child support obligations which have been assigned to the State under 45 CFR 232.11, pursuant to a title IV-D State plan, in order for incentives to be paid on collections made.

Where the Child Support Enforcement program is administered in a fashion such that the State IV-D agency is responsible for both enforcement and collection activities, the State will receive an incentive that it was not previously eligible to receive. This will result in increased amounts of incentive payments for many States. Where the program is State supervised, but administered by political subdivisions, the political subdivision that is collecting and enforcing support obligations continues to be entitled to receive incentive. Where various program activities are carried out by both the State and the Political subdivision, the entity to receive the incentive could be controlled by a cooperative agreement, purchase of service agreement or possibly State law. However, the payment of incentives to a State or political subdivision in any one of these situations must be consistent with instructions issued by OCSE. (See the discussion below under the heading "OCSE Instructions" for a listing of Ats which cover the payment of incentives.) In addition, for any one collection of assigned support, only one 15 percent incentive payment may be made.

Time Frames

The proposed regulations at 45 CFR 302.52(d)(2) and (3) (redesignated here as 45 CFR 303.52(d)(2) and (3)) specified time frames within which a collection must be transmitted and the incentive paid in interstate situations. The 10-day time frame in the proposed 45 CFR 302.52(d)(2) which prescribes the amount of time a collecting State or political subdivision has to transmit a collection made on an interstate case is unchanged in this final rule. However, for the reasons discussed below under the heading "Discussion of Comments," we have revised the 60-day time frame in the proposed 45 CFR 302.52(d)(3) which prescribes the amount of time a IV-D agency has to calculate and pay the incentive subsequent to the receipt of an interstate collection. This final regulation gives the IV-D agency 90-days after the end of the month in which the interstate collection was received from the collecting State or political subdivision to calculate and pay the incentive. As proposed in the NPRM, 45 CFR 302.52(d)(4) (redesignated here as 45 CFR 303.52(d)(4) specifies that the IV-D agency must implement procedures to ensure prompt transmittal of collections and payment of incentives as necessary in intrastate cases.

Payment of Incentives

Up to this point, 45 CFR 302.52 required all incentive payments to be paid by the State IV-D agency. This requirement was not changed in the NPRM. However, based on a recent review of information received from State and local IV-D agencies, we have determined that in many instances incentives have not been paid in a timely manner. This is especially true with respect to the payment of incentives on interstate IV-D collections. Therefore, we have decided to make the provision for paying incentives more flexible by permitting political subdivisions to pay incentives. Thus, the final regulation at both 45 CFR 303.52(a)(1) and 303.52(d)(3) permit the State IV-D agency or, at the option of the State, a political subdivision within the State to pay an incentive to a collectioning State or political subdivision when the incentive eligibility requirements are met. Under this requirement, if the State chooses to delegate the paying of incentives to its political subdivisions, it must so indicate in Attachment 1.2A of its IV-D State plan. The State may continue to pay all incentives by the State IV-D agency if it so chooses.

As noted above, these changes were not contained in the NPRM. The Administrative Procedure Act, 5 U.S.C. 553(b)(B), provides that if the Department for good cause finds that an NPRM is unnecessary, impractical or contrary to the public interest, it may dispense with the NPRM if it incorporates a brief statement in the local regulations of the reasons for doing so.

The Department finds that there is good cause to dispense with proposed rulemaking with respect to these changes. We find that publication of these changes in proposed form is unnecessary because they are optional with the State, do not affect the delivery of services and provide more administrative flexibility. Accordingly, we believe there is good cause to include them in this final regulation.

Transfer of 45 CFR 302.52 and Deletion of Corresponding Audit Regulation

In addition to the above modifications to the regulations, we are transferring the procedures regarding the payment of incentives from the State plan section of our regulations (45 CFR Part 302) to the section dealing with standards for program operations (45 CFR Part 303). We are doing this as part of an overall strategy to remove plan provisions from the regulations that are not statutory IV-D State plan requirements. Thus, the State plan preprint at Section 2.5, Incentive payments, will be deleted. States will be instructed via AT to officially request removal of this section of the plan from the appropriate OCSE Regional Office. However, the requirement to pay incentives remains a State plan requirement because the State plan section of our regulations at 45 CFR 302.51 continues to require the States under paragraphs (b)(2), (b)(4) and (f)(2) to make incentive payments. The corresponding audit regulation at §305.28. Distribution of child support payments does not require change to accommodate this fact. In §302.51, the references to §302.52 are being changed to §303.52 via this document to reflect the transfer of the incentive payment procedures.

Since the regulation which contains the procedures for paying incentives is being removed from the State plan section, we are deleting the corresponding audit provision at 45 CFR 305.30, Incentive payments. This change enables us to eliminate a separate compliance review of the procedures for paying incentives while continuing the review of the actual payment of incentives under distribution procedures (§305.28). This would relieve States of having to meet an additional separate State plan compliance test which is unnecessary.

The changes discussed in the preceding two paragraphs are being published in final form, although they were not included in the NPRM. The Administrative Procedure Act, 5 U.S.C. 553(b)(B), provides that if the Department for good cause finds that an NPRM is unnecessary, impractical or contrary to the public interest, it may dispense with the NPRM 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 with respect to these changes. We find that publication of these changes in proposed form is unnecessary for the following reasons. The State plan requirement containing procedures for making incentive payments (45 CFR 302.52) is not a statutory IV-D State plan requirement. On the contrary, it was established by OCSE at the inception of the IV-D program to insure that States would implement the requirement to pay incentives in the fashion prescribed by the statute at section 458 of the Act, it was felt that, especially because of the interstate feature inherent in the incentive payment process, States needed to be acutely aware of the prescribed procedures and would more readily adhere to them if they were a part of the State plan. OCSE feels that this need no longer exists since IV-D programs have been in operation for a number of years and States are now familiar enough with the rules to allow us to delete them from the State plan requirements. States should note, however, that the removal of these procedures from the State plan does not alter the requirement to pay incentives since the deleted regulation only contains provisions regarding the process of making incentive payments. These procedures are being transferred to a new 45 CFR 303.52 under the Part containing standards for program operations.

The State plan requirement in 45 CFR 302.51(b)(2), (b)(4)and (f)(2) that the IV-D agency deduct and pay incentives is unchanged. The regulations at 45 CFR 305.28 require OCSE to audit the actual payment of incentives as part of its review of the State's procedures for distributing child support payments. OCSE will continue to audit the actual payment of incentives under the distribution procedures at 45 CFR 305.28. The removal of 45 CFR 305.30, Incentive payments, merely eliminates a duplication in the regulation which govern the annual compliance audit conducted by OCSE. The removal of 45 CFR 305.30 is also consistent with the movement of the procedures for making incentive payments to the Part of our regulations which contain the standards for program operations. The removal of the State plan requirement and corresponding audit regulation pertaining to incentive payment procedures does not place any additional requirements on States or affect the delivery of IV-D services to recipients. It serves simply to clarify what is required of the States in making incentive payments and responsibility of OCSE in auditing this process.

Discussion of Comments

Comments on the NPRM were received from six States and one individual. The commentors supported the proposed changes to the regulation. However, several comments were received regarding provisions of the regulation that have been in existence since the inception of title IV-D. A summary of the substantive comments and our response follows.

1. Comment. One individual commented that incentive payments should not be taken out of child support collections because such practice penalizes children. Rather, the absent parent should be required to pay the incentive payment.

Response. Incentive payments are not taken out of child support collections that are paid to a family. They are only payable with respect to assigned child support (support paid directly to the State) which is paid on behalf of a child receiving AFDC and retained by the State as reimbursement of its costs of providing AFDC for the child. Furthermore, while the incentive payment is calculated on the amount the State retains to reimburse itself, it is paid from what would otherwise be the Federal share of the amount so retained. The financing of an incentive payment, therefore, is totally the responsibility of the Federal government.

2. Comment. One State commented that, because the transmittal requirement in the proposed 45 CFR 302.52(d)(2) (redesignated here as 45 CFR 303.52(d)(2) is contrary to the Uniform Reciprocal Enforcement of Support Act (URESA) laws in many States, the final regulation should permit the responding State or political subdivision of another State to transmit child support collections in accordance with instructions issued by the initiating jurisdiction.

Response. We agree that the requirement in the proposed regulation, that a State or political subdivision must transmit the collection in an interstate case to the IV-D agency where the case originated, may be contrary to the laws and practices inmany States. Since this requirement is not mandated by statute, we have decided to specify in this final regulation at 45 CFR 303.52(d)(2) that a State or political subdivision that makes a collection on behalf of another State or political subdivision of another State shall transmit the collection to the location specified by the State or political subdivision where the case originated. This change will permit the State or political subdivision where the case originated to determine where the collecting State or political subdivision must send the collection and allow the collecting State or political subdivision to transmit the collection accordingly.

3. Comment. One State commented that the final regulation should give the State where the case originated 60 days from the date it receives a collection on an interstate case to pay the incentive. This would give the States sufficient time to redetermine eligibility for AFDC, authorize distribution and pay the incentive.

Response. We agree that the requirement in the proposed regulation that the IV-D agency calculate and pay the incentive within 60 days of the end of the month in which the collection was made should be changed since the receiving State cannot control the forwarding of a collection by the collecting State. In addition, we further believe that in many instances the IV-D agency that receives the collection cannot redetermine eligibility for AFDC, authorize distribution and compute and pay the incentive within 60 days of the end of the month in which it receives the collection. Since the statute does not mandate a time frame, we have decided to specify in this final regulation at 45 CFR 303.52(d)(3) that the IV-D agency or political subdivision has 90 days from the end of the month in which the collection is received from another State or political subdivision of another State to calculate and pay the incentive.

Editorial and Technical Changes to 45 CFR Parts 302 and 304

We have made several editorial changes to the regulation on incentive payments in order to improve its clarity. In addition, we have make several technical changes to 45 CFR 302.51 and 304.26 to conform the references contained in those regulations to this final regulation on incentive payments (45 CFR 303.52).

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1980 (Pub. L. 90-511), the changes to the IV-D State plan preprint resulting from this final rule have been approved by the Office of Management and Budget (OMB) and assigned OMB control number 0960-0253.

List of Subjects

45 CFR Parts 302 Through 304

Child welfare, Grant programs/social programs.

45 CFR Part 305

Child welfare, Grant programs/social programs, Accounting.

PARTS 302, 303, 304 AND 305 [AMENDED]

Accordingly, 45 CFR Parts 302, 303, 304 and 305 are amended as described below:

1. 45 CFR 302.52 is revised and redesignated as a new 45 CFR 303.52 which reads as follows:

§303.52 Incentives payments to States and political subdivisions.

(a) General provisions. (1) The State IV-D agency or, at its option, the political subdivisions of the State pursuant to the title IV-D State plan shall make incentive payments to:

(i) Political subdivisions of the State that, under the approved title IV-D State plan, enforce and collect an assigned support obligation on behalf of the State; and

(ii) Other States or political subdivisions of other States that, under an approved title IV-D State plan, enforce and collect and assigned support obligation on behalf of the State.

(2) The State IV-D agency shall make incentive payments to itself when, under the approved title IV-D State plan, the State enforces and collects an assigned support obligation on its own behalf.

(b) Definitions. For the purposes of this section:

"Assigned support obligation" means a support obligation assigned to any State under § 232.11 of this title.

"Political subdivision" means a legal entity of the State as defined by the State, including a legal entity of the political subdivision so defined, such as a Prosecuting or District Attorney or a Friend of the Court.

(c) Amount of incentives. A State or political subdivision that meets the requirements and conditions in this section is eligible to receive an incentive payment equal to 15 percent of any amount collected and required to be retained to reimburse assistance payments under § 302.51. For any one collection of assigned support, only one 15 percent incentive payment may be made.

(d) Payment of incentives. (1) Incentive payments must be paid from amounts which would otherwise be paid to the Federal Government to reimburse its share of assistance payments under § 302.51 of this chapter.

(2) A State or political subdivision that makes a collection on behalf of another State or political subdivision of another State shall transmit the entire amount of the collection to the location specified by the State or political subdivision where the case originated, no later than 10 days after the end of the month in which the collection was made.

(3) Upon receipt of a collection from another State or political subdivision of another State, the State or political subdivision pursuant to the title IV-D State plan shall calculate and pay the incentive, if any, within 90 days of the end of the month in which the collection was received from the collecting State or political subdivision.

(4) The State IV-D agency shall implement procedures to ensure prompt transmittal of collections and incentive payments when a political subdivision makes a collection on behalf of the State or another political subdivision within the same State.

(e) Use of codes. (1) The collecting State or political subdivision forwarding a support collections to another State or political subdivision must include, as appropriate, the code identifying the collecting State or political subdivision as:

(i) Defined in the Federal Information Processing Standards Publication (FIPS) issued by the National Bureau of Standards; or (ii) Defined in the Worldwide Geographical Location Codes issued by the General Services Administration.

(2) The State or political subdivision where the case originated shall use the codes to track the collection and pay incentives.

(f) Assisting jurisdictions. The incentive payment described in paragraph (c) of this section must be allocated in accordance with instructions issued by the Office when more than one State or more than one political subdivision participates in activities to enforce and collect support.

2. The table of contents to 45 CFR Parts 302 and 303 are amended as follows:

a. The table of contents to 45 CFR Part 302 is amended by removing the phrase "302.52 Incentive payments to States and political subdivisions."

b. The table of contents to 45 CFR Part 303 is amended by adding after the phrase "303.20 Minimum organizational and staffing requirements.", the phrase "303.52 Incentive payments to States and political subdivisions."

3. 45 CFR 302.51 and 304.26 are amended as follows:

§ 302.51 [AMENDED]

a. 45 CFR 302.51 is amended by removing the citation "302.52" where it appears in paragraph (a) and inserting in its place the citation "303.52".

b. 45 CFR 302.51 is amended by removing the phrase "the IV-D agency shall deduct and pay the incentive payment, if any, prescribed in § 302.52." where it appears in paragraphs (b)(2), (b)(4), and (f)(2) and inserting in its place the phrase "the State IV-D agency or political subdivision of the State pursuant to the Title IV-D State plan shall deduct and pay the incentive payment, if any, prescribed in § 303.52."

§ 304.26 [Amended]

45 CFR 304.26 is amended by removing the citation "302.52" where it appears in paragraph (b) and inserting in its place the citation "303.52."

4. 45 CFR Part 305 is amended as follows:

The table of contents to 45 CFR Part 305 is amended by removing the phrase "305.30 Incentive payments."

§ 305.20 [Amended]

45 CFR 305.20 is amended by removing the phrase "Incentive Payments. (45 CFR 302.52)" where it appears in paragraph (a).

§ 305.30 [Removed and Reserved]

45 CFR 305.30 is removed and reserved.

Note -- 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. The Secretary certifies that because these regulations apply to States and will not have significant economic impact on a substantial number of small entities, they do not require a regulatory flexibility analysis as provided in Pub. L. 96-354, the Regulatory Flexibility Act of 1980.

(Sec. 1102 of the Social Security Act (42 U.S.C. 1302))

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

Dated June 1, 1982.

John A. Svahn,

Director, Office of Child Support Enforcement.

Approved: July 30, 1982.

Richard S. Schweiker,

Secretary.