FY2011 Preliminary Report

FY 2011 Child Support Program Highlights

The Office of Child Support Preliminary Report highlights financial and statistical program achievements based on quarterly and annual data.  In fiscal year (FY) 2011 information was compiled from State and Tribal-submitted reports on program status sent to the federal government.

SMALL DECREASE IN TOTAL IV-D CASELOAD AFTER TWO YEARS OF INCREASING CASELOADS

Caseload: There were 15.8 million total cases in the IV-D program as of the end of FY 2011. This was a small decrease (0.2 percent) from FY 2010. However, the caseload remains higher than FY 2009 and prior years. This drop was driven primarily by a 7 percent decrease in the current assistance caseload. There were small increases in the former assistance (0.1 percent), and never assistance (1.8 percent) caseloads.

Chart 1: Total Caseload by Current, Former, and Never Assistance and Percentages, Fiscal Years 2007-2011

TOTAL CHILD SUPPORT COLLECTIONS ARE UP 3 PERCENT

Collections: In FY 2011, the Child Support Program began to see signs of improvement in the rate of increase in collections after two years of depressed collections. Total IV-D distributed collections increased by 3 percent to $27.3 billion in FY 2011, above the FY 2008 pre-recession high, compared to $26.6 billion in FY 2010, $26.4 in FY 2009, and $26.6 billion in FY 2008. During the three-year period between FY 2008 and FY 2011, total child support collections increased by 3 percent, compared to an increase of 16 percent during the prior three years between FY 2005 and FY 2008. The amount of collections distributed to families also increased by 3 percent; the proportion of collections going to families was 94 percent. In addition to the increase in IV-D collections, there was an increase in collections sent to non IV-D families. The non IV-D collections increased by 1 percent over FY 2010 to $3.9 billion. In total, IV-D and non IV-D collections increased to over 31 billion in FY 2011.

Chart 2: Total Distributed Child Support Collections (IV-D and Non IV-D), FY 2000-2011

INCREASE IN COLLECTIONS FROM INCOME WITHHOLDING DRIVES INCREASE IN TOTAL COLLECTIONS

Chart 3 indicates the largest proportion of collections (over two-thirds) was from income withholding, particularly payroll-based withholding. These collections were up 4 percent in FY 2011. This reverses the previous trend of decreases in these collections. In FY 2011, there was also a change in the trend of collections from the offset of unemployment compensation payments. During the recent recession, there was dramatic growth in these collections. These collections increased by more than 4 times over the period between FY 2007 and FY 2010. In FY 2011, these collections decreased by 24 percent. In addition to improved employment conditions, enhanced federal enforcement is playing a larger role in helping to maintain collections. Collections coming directly from the various federal programs including Federal Offset, SSA Garnishments, Multi-State Financial Institution Data Match, Passport Denial Program, National Directory of New Hires-FCR Match, and Insurance Match, have increased by 2 percent in FY 2010, and 10 percent in FY 2011. These collections represented 11 percent of total IV-D and non IV-D child support collections in FY 2009, 11.2 percent in FY 2010, and in FY 2011 these collections were $3.73 billion and accounted for 12 percent of the total IV-D and non IV-D support collections.

While the overall performance picture improved slightly in FY 2011, the data continue to show signs of weakness, particularly among the lowest-income families in the caseload. The percentage of “enforcement-ready” cases with support orders that had collections has declined across the board since FY 2008, with the sharpest declines in current and former assistance cases. The percentage of current assistance cases with orders that had collections declined from 59.5 percent in FY 2008 to 56.9 percent in FY 2011 and the percentage of former assistance cases with orders that had collections declined from 68.0 percent to 65.4 percent. The percentage of never assistance cases with orders that had collections declined more modestly, from 80.0 percent to 78.6 percent.

Chart 3: Total Child Support Collections Received by the Method of Collection, Fiscal Year 2011

TOTAL ADMINISTRATIVE EXPENDITURES CONTINUE TO DROP FOR THIRD YEAR IN A ROW

Figure 6: Total Automated Data Processing (ADP) Expenditures for Five Consecutive Fiscal Years

Automated Data Processing (ADP) expenditures increased 27.9 percent from FY 2010 to FY 2011.

Figure 7: Total Number of Children in the IV-D Program for Five Consecutive Fiscal Years

In FY 2011, the number of children in the child support program decreased by 1.0 percent over the previous year.

Figure 8: Number of Unique Persons Matched³ by the Federal Parent Locate Service for Five Consecutive Fiscal Years

The number of unique persons matched increased by 0.4 million between FY 2010 and 2011.

Figure 9: Federal Offset Collections for Five Consecutive Calendar Years

Federal Offset collections for FY 2011 were over $2.3 million, an 11 percent increase from the previous year.

The Deficit Reduction Act of 2005 allowed states to certify nearly 1 million additional non-TANF debts in 2008 that were previously not eligible for tax refund offset. It is estimated that this resulted in at least an additional $200 million collected.

The Economic Stimulus Act of 2008 provided economic stimulus payments of up to $600 ($1,200 if filing a joint return, plus additional amounts for each qualifying child) to be made to over 130 million American households. These payments were eligible for tax refund offset and resulted in an additional $863 million in 'special collections' in 2008.

The American Recovery and Reinvestment Act of 2009 provided one-time Economic Recovery Payments (ERP) of $250 to an estimated 60 million recipients of Social Security (SSA), Supplemental Security Income (SSI), Railroad Retirement Benefits (RRB) and Veterans’ Disability Compensation or Pension Benefits. These payments were eligible for administrative offset and resulted in additional 'special collections' of $111,689,930 in PY 2009 and $6,653,690 in 2010.

Appendix

Incentive Formulas

How an Incentive Payment is Determined

Because of the complexity of the incentives formula set forth in section 458 of the Social Security Act, we have included an example of how the system would work in a particular year for State A. Let’s make the following assumptions regarding State A (See Table A):

• State A’s paternity performance level is 93 percent, making its applicable percent 100 percent (see Table C)
• State A’s order establishment performance level is 74 percent, making its applicable percent 88 percent (see Table C)
• State A’s current support collections performance level is 59 percent, making its applicable percent 69 percent (see Table D)
• State A’s arrearage support collections performance level is 60 percent, making its applicable percent 70 percent (see Table D)
• State A’s cost-effectiveness ratio is $4.40, making its applicable percent 80 percent (see Table E)
• State A’s collections base is $50 million (determined by 2 times the collections for Current Assistance, Former Assistance, and Medicaid Never Assistance plus Never Assistance collections and fees retained by other states)

• The maximum incentive for State A is:

  • $50 million collections base for paternity ($50 mil. times 1.00), plus
  • $44 million collections base for orders ($50 mil. times 0.88), plus
  • $34.5 million collections base for current collections ($50 mil. times 0.69), plus
  • $26.25 million collections base for arrearage collections ($50 mil. times 0.75¹ times 0.70) plus
  • $30.0 million collections base for cost-effectiveness ($50 million times 0.75¹ times 0.80) equals
  • Resulting in a maximum incentive base amount of $184.75 million for State A.

We must now make some assumptions regarding the other States. Let’s assume that there are only two other States in our country--and the maximum incentive base amount is $84 million for State B and $50 million for State C, making the total maximum incentive base amount $318.75 million for all three States (See Table B).

• We must now determine what is State A’s share of the $318.75 million. It is 58 percent ($184.75 divided by $318.75).

• Let us assume it is FY 2003, so the incentive payment pool for the FY is $461 million (see table F).
• Since State A’s share is 0.58, this state has earned 58 percent of the $461 million incentive payment pool that Congress is allowing, or $267.2 million ($461 mil. x 0.58) incentive payment for this particular fiscal year.

If the Paternity Establishment or Support Order Performance Level Is:

If the Current Collections or Arrearage Collections Performance Level Is:

If the Cost-Effectiveness Performance Level Is:

The incentive payment pool after FY 2008 is the amount of the incentive payment pool for the preceding FY, multiplied by the percentage by which the CPI for that preceding FY exceeds the CPI for the second preceding FY.

The CPI for a FY is the average of the CPI for the 12 month period ending on Sept. 30 of the FY. The CPI means the last CPI for all-urban consumers published by the United States Department of Labor. The NOT seasonally adjusted CPI numbers are used.

The percentage increase between the preceding FY (FY 2008) and second preceding FY (FY 2007) is about 4.44%.   So, $483 million (the FY 2008 incentive pool amount) plus 4.44% equals about $504 million (the FY 2009 incentive pool amount).  The FY 2011 incentive pool amount ($513 million) was established by the budget submitted by the Office of Legislative Affairs and Budget (OLAB).

¹ Because the measure has less weight.

² Use this table to determine the maximum incentive levels for the paternity establishment and support order performance measures.

³ Use this table to determine the maximum incentive levels for the current and arrearage support collections performance measures.

⁴ Use this table to determine the maximum incentive level for the cost-effectiveness performance measure.

• OCSE-157 Report
• OCSE-34A Report
• OCSE-396A Report
• OCSE-75 Report