Multistate Provisions of the Financial Institution Data Match
ACTION TRANSMITTAL AT-98-29
October 13, 1998
TO: STATE AGENCIES ADMINISTERING CHILD SUPPORT ENFORCEMENT PLANS UNDER TITLE IV-D OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED INDIVIDUALS
SUBJECT: Policy Questions and Answers regarding the Multistate Provisions of the Financial Institution Data Match under Title IV-D of the Social Security Act
BACKGROUND: The recent passage of Public Law 105-200 added provisions to Title IV-D of the Social Security Act allowing OCSE, through the Federal Parent Locator Service, to assist States in conducting data matches with multistate financial institutions.
ATTACHMENTS: Statutory provisions pertaining to financial institution data match and answers to questions regarding multistate provisions of the financial institution data match
RELATED REFERENCES: OCSE-AT-98-07, dated March 2, 1998.
INQUIRIES: Regional Administrators
David Gray Ross
Office of Child Support Enforcement
Section 452(l) of the Social Security Act (the Act) allows the Secretary of Health and Human Services to aid State IV-D agencies and multistate financial institutions in reaching agreements regarding the receipt from the financial institutions and the transfer to the State agencies of financial institution data match information. It further allows any State operating financial institution data matches as of July 20, 1998 to wait until January 1, 2000 to allow the Secretary access to information from the multistate financial institutions operating in that State.
Section 466(a)(17) of the Act requires that States have in effect laws requiring the use of procedures for conducting financial institution data matches. It requires States to enter into agreements with financial institutions doing business in their States, to coordinate with the financial institutions (and with the Federal Parent Locator Service (FPLS) in the case of multistate financial institutions) in the development and operation of a data match system under which the financial institutions will provide information to the States regarding the assets held by the institutions on behalf of delinquent noncustodial parents. The State agency may pay a reasonable fee to the financial institution for conducting the match. In addition, the financial institutions are protected from liability for disclosures, seizures, and any other action taken in good faith to comply with this section.
Section 469A provides further protection from liability for financial institutions providing records to State child support enforcement agencies in child support cases.
QUESTIONS AND ANSWERS
Q1: Does the authority given to the Secretary of the Department of Health and Human Services in Section 452 of the Social Security Act (the Act) to "aid State agencies...and [multistate] financial institutions....in reaching agreements" allow OCSE to negotiate and enter into agreements with financial institutions on behalf of States?
A1: The Act itself does not give OCSE the authority to negotiate and enter into agreements with financial institutions on behalf of States; it merely allows OCSE to assist the States. However, a State can give the OCSE the authority to act as its agent to negotiate and enter into agreements with the multistate financial institutions.
Q2: Can OCSE enter into an agreement with a multistate financial institution which would bind all States where that financial institution does business?
A2: OCSE’s authority derives from the State as its representative. OCSE can not bind a State through an agreement unless authorized to do so by the State. If given authority by a State to enter into agreements on its behalf with the financial institutions, OCSE can enter into such an agreement.
Q3: Does the law allow OCSE, acting as the agent of the State, to negotiate an operational agreement that the financial institution will provide all matched information to OCSE for distribution to States?
A3: Yes. In assisting States with the multistate financial institution data match (FIDM), this could be included in the agreement.
Q4: Must each State enter into an agreement with each multistate financial institution doing business in the State?
A4: No. As discussed above, the State can give OCSE authority to enter into an agreement on its behalf.
Q5: Could States give OCSE the authority to act on their behalf by the IV-D director signing up for FIDM as part of the tax offset certification?
A5: Yes, if not prohibited by State law. This is one potential method which will be explored.
Q6: Could there be a master agreement - one agreement for all multistate financial institution and States?
A6: Yes, there could be one such agreement. However, each State and each financial institution must sign it, either directly or through an authorized agent, in order to be included.
Q7: Is a multistate financial institution shielded from liability for release of information resulting from a data match with a nationwide file to a State in which the financial institution does not do business and with which it does not have an agreement?
A7: Yes, if the agreement between the multistate financial institution and OCSE on behalf of the State provides for such a release. Section 469A(a) of the Act provides a shield from liability for a financial institution disclosing information to State child support agencies or the FPLS under section 466(a)(17) agreements.
Q8: If a service provider is acting as an agent of the multistate financial institution, does it have a separate duty to OCSE?
A8: No. Service providers participating in the multistate FIDM do so only as agents of their clients which are multistate financial institutions. Their duties are strictly to their clients.
Q9: Are States required to coordinate with the FPLS in the multistate data match process?
A9: Yes. Section 466(a)(17)(A)(i) of the Act requires coordination with the FPLS for data matches with multistate financial institutions. There is a grace period, until January 1, 2000, for States already conducting data matches as of July 20, 1998.
Q10: Is participation in the multistate data match process mandatory for multistate financial institutions?
A10: No. Section 466(a)(17)(A) requires the State to have in effect laws requiring the use of procedures for the financial institution data match. The Act does not specifically require the multistate financial institutions to participate.
Q11: Are service providers who operate in many States but serve only single-State financial institutions (i.e., credit unions, small banks) eligible to participate in the multistate match process?
A11: No. The Act states that financial institutions doing business in two or more States are eligible. As agents for the financial institutions, the service providers are bound by the circumstances of their clients.
Q12: Is a service provider participating in the multistate FIDM an independent participant, or just an agent for the multistate financial institution?
A12: A service provider participating in the multistate FIDM on behalf of its client is just an agent. There is no authority in the Act for service providers to participate independently of financial institutions.
Q13: Who will be responsible for ensuring that the financial institutions comply with the law - OCSE or the States?
A13: The States will be responsible for ensuring compliance. Although OCSE can assist the States in the multistate FIDM, the States remain ultimately responsible for compliance with the statutory requirements and for assuring that financial institutions comply with the matching agreements.
Q14: Does OCSE have the authority to set or assess fees?
A14: No, there is no authority for OCSE to set or assess fees. Fees are a matter of State law.
Federal Financial Participation (FFP)
Q15: Is Federal Financial Participation (FFP) available for operational costs? If so, at what rate?
A15: Yes, FFP at a rate of 66% of administrative expenditures is available. The financial institution data match is a required State procedure under the State plan. Therefore, pursuant to 45 C.F.R. §304.20, necessary expenditures related to its operation are eligible for FFP. The Federal reimbursement is payable to the State. If a State has a contract with a multistate financial institution, the State can request FFP for reimbursement of reasonable and necessary fees charged by the financial institution.
Q16: Is FFP available for development costs? If so, at what rate?
A16: Yes, FFP is available for State IV-D program development costs at the 66% rate, in accordance with 45 C.F.R. §304.20. FFP is not available for development costs of financial institutions because there is no authority under the Act to pay for such expenditures.