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NPRM: Standards for Program Operations - Processing Cases and Distributing Collections

AT-89-05

Published: April 19, 1989
Information About:
State/Local Child Support Agencies
Topics:
Case Management, Case Closure, Collections/Distribution/State Disbursement Unit (SDU), Enforcement, Locate, Medical Support, Order Establishment, Paternity Establishment, Funding, Incentive, Intergovernmental/Interstate
Types:
Policy, Action Transmittals (AT), Regulations

PROPOSED REGULATION

ACTION TRANSMITTAL

OCSE-AT-89-05

APRIL 19, 1989

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

SUBJECT:  Standards for Program Operations

ATTACHMENT:  The attached proposed regulation implements the requirements of sections 121 and 122 of the Family Support Act of 1988 (P.L. 100-485) by revising current regulations to specify standards for processing child support enforcement cases and timeframes for distributing child support collections under title IV-D of the Social Security Act.

REGULATION REFERENCE: 45 CFR Parts 301 through 304, 306 and 307

COMMENT PERIOD:  Consideration will be given to written comments and suggestions received no later than June 19, 1989. Because the final rule must, by statute, be published on August 1, 1989, we cannot consider comments received after June 19. Address comments to: Office of Child Support Enforcement, Department of Health and Human Services, 370 L'Enfant Promenade, S.W., Washington, D.C. 20447, Attention: Director, Policy and Planning Division.

INQUIRIES TO: OCSE Regional Representatives

Robert C. Harris

Associate Deputy Director

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Child Support Enforcement

45 CFR Parts 301, 302, 303, 304, 306,

and 307

RIN 0970-AA16

Standards for Program Operations

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

ACTION: Notice of proposed rulemaking.

SUMMARY: This proposed regulation implements the requirements of sections 121 and 122 of the Family Support Act of 1988 (Pub. L. 100-485) by revising current regulations to specify standards for processing child support enforcement cases and timeframes for distributing child support collections under title IV-D of the Social Security Act (the Act). By imposing requirements and timeframes for taking appropriate actions and clarifying or updating existing or vague timeframes and requirements, the proposed regulation would ensure that child support services are effectively and expeditiously provided and that children receive the services they need and the support to which they are entitled. States would be required to meet these standards by October 1, 1990.

This regulation also responds to section 121(b) of Pub. L. 100-485 which requires consultation with an advisory committee prior to publication of the Notice of Proposed Rulemaking. Information concerning the consultation is provided in the Background section of this proposed rule.

In addition, this proposed rule implements sections 103(e)(3) and 127 of the Family Support Act of 1988 by revising regulations to exclude certain costs from administrative costs when computing incentive payments.

DATE: Consideration will be given to written comments and suggestions received by June 19, 1989.

ADDRESS: Address comments to: Office of Child Support Enforcement, Department of Health and Human Services, 370 L'Enfant Promenade SW., Washington, DC 20447. Comments will be available for public inspection Monday through Friday, 8:30 a.m. to 5:00 p.m. in the Department's Office at the above address.

FOR FURTHER INFORMATION CONTACT: Joyce Allred, Policy and Planning Division, OCSE (202)252-5369.

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

Public reporting burden for the collection of information requirements at 45 CFR 303.2(a), 303.2(b)(2), 303.2(b)(4), 303.2(b)(5), 303.3(d) through (g), 303.4(d)(2), 303.6(c)(3), 303.10(b)(6), 303.11(a), 303.11(c), 303.11(d) and 302.32(b) is estimated to average 5, 10, 5, 5, 5, 5, 5, 5, 5, 5, 5, 5, 5, 5 and 5 minutes respectively, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Office of Child Support Enforcement, Family Support Administration, 370 L'Enfant Promenade SW., Washington, DC 20447; and to the Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503.

Background

Since the inception of the Child Support Enforcement (IV-D) program in 1975, States have been required to locate absent parents, establish paternity, obtain support orders and collect support payments. However, in response to public concern that States were not providing adequate or expeditious services under the IV-D program, the Child Support Enforcement Amendments of 1984 (1984 Amendments) were enacted into law. The purpose of the 1984 Amendments is to strengthen State IV-D programs and improve performance.

Among other things, the 1984 Amendments require States to have in effect and use administrative or expedited judicial processes to establish and enforce support orders. Paternity may be established using expedited processes at State option. To implement the new law, OCSE published regulations governing expedited processes which include timeframes within which actions to establish or enforce support orders must be completed by the court or administrative authority. These timeframes require, from the time of filing to the time of final disposition, 90 percent of actions to be completed in 3 months, 98 percent in 6 months and 100 percent in 12 months.

The expedited processes timeframes in Federal regulations, however, only refer to the time a case is actually under judicial or administrative review. There are no corresponding overall requirements in Federal regulations for expeditious processing of cases from the time of referral from the Aid to Families with Dependent Children (AFDC) agency, the foster care agency, the State Medicaid agency or application for non-AFDC services under the IV-D program until the IV-D agency takes an appropriate action. There are also few specific requirements regarding what actions are adequate at each step of case processing, what results are expected, and under what conditions a case may be closed.

In April 1987, the U.S. General Accounting Office (GAO) published a report to the Secretary of Health and Human Services titled Child Support Need to Improve Efforts to Identify Fathers and Obtain Support Orders (GAO/HRD-87-37) (hereafter referred to as the GAO report) in which it examined State IV-D agency efforts to determine paternity and obtain support orders for AFDC children and the potential impact of the 1984 Amendments on the IV-D program. The GAO report stated that State efforts to determine paternity or obtain support orders were inadequate because: (1) AFDC agencies did not refer all cases to IV-D agencies; or (2)

IV-D agencies did not open cases for some referrals, closed some cases prematurely, or did not work open cases for at least six months. Accordingly, GAO recommended that OCSE: (1) Require that AFDC agencies refer appropriate cases to the IV-D agencies; (2) require that IV-D agencies open cases and pursue paternity and support orders as required by Federal law and regulations; (3) set performance standards for establishing paternity and obtaining support orders; (4) review States' operations to determine whether standards are followed; and (5) provide guidance in developing case tracking and monitoring systems. We agree that stronger Federal leadership is needed to address the serious problems cited by GAO and identified as well by OCSE audits and reviews. The need to eliminate these problems is particularly pressing because, as the number of divorces and out-of-wedlock births increase, the number of families needing IV-D services will increase as well.

Despite Federal and State efforts in the 13 years since the inception of the IV-D program, the child support problem continues to grow. In FY 1987, OCSE conducted IV-D program reviews in most States; since then, activity has been continuing on a more targeted basis. The purposes of the reviews are: (1) To focus States' attention on the Federal government's clear objective to achieve full implementation of Federal child support legislation and especially the 1984 Amendments; and (2) to alert States to problems in the operation of IV-D programs. Results from the program reviews completed to date indicate widespread problems in many aspects of case processing including: inadequate cooperation between the AFDC and IV-D agencies with regard to the referral of AFDC cases and information exchange; incomplete or no action taken on cases needing paternity establishment; ineffective and incomplete locate procedures; inadequate support obligations established; and ineffective use of enforcement techniques.

These findings, coupled with the findings from the FY 1984, 1985 and 1986 program results audits (33 of 54 States audited for FY 1984 or 1985 were found not to be in substantial compliance with IV-D requirements) indicate a compelling need for IV-D programs to improve their performance.

To aid in identifying actual case processing steps and the time required for completion of each action required under 45 CFR Part 303, OCSE first requested input from State IV-D agencies in the fall of 1987. Various States submitted case processing flow charts and descriptions of case processing steps from referral of a case by the AFDC agency (referred to generally as IV-D intake) to establishment and/or enforcement of a child support obligation. Many case processing schemes submitted were complicated or vague with regard to actual steps taken and the majority of States did not submit actual timeframes within which actions are taken. However, analysis of this information, and the findings of the program results audits and program reviews, underscores the need for more stringent and precise timeframes and program standards.

On October 13, 1988, the Family Support Act of 1988 (Pub. L. 100-485) was signed into law. This new law addresses the injustice of parents failing to assume responsibility for their children's support. Section 121 of Pub. L. 100-485 requires the Secretary of Health and Human Services (HHS) to establish time limits within which States must accept and respond to requests for assistance in establishing and enforcing support orders, including requests to locate absent parents, establish paternity and initiate proceedings to establish and collect support awards.

Section 121(b) further required the establishment, no later than December 13, 1988, of an advisory committee composed of representatives of organizations representing Governors, State welfare Administrators and State child support enforcement Directors. The Secretary is required to consult with the committee prior to issuing any regulations establishing standards regarding what constitutes an adequate response on the part of a State to the request of an individual, State, or jurisdiction for services.

Section 122 of Pub. L 100-485 requires the Secretary of HHS to establish time limits governing the period within which a State must distribute amounts collected as child support. While not required by statute, OCSE also consulted with the advisory committee on these timeframes and made adjustments based on the advice of the Committee members. We have incorporated the standards required by sections 121 and 122 of P.L 100-485 into this proposed rule and plan to issue final regulations no later than August 1, 1989, as specified in the law. We believe that the standards which implement sections 121 and 122 will significantly improve the performance of IV-D programs.

The 19-member advisory committee was appointed in December 1988, and convened in Washington, DC on January 4, 1989, adjourning the following day. In addition to the representation mandated by statute, representatives of child advocacy groups, State legislators, judges, prosecuting attorneys and other child support practitioners were included on the advisory committee, enabling us to benefit from the broadest possible range of child support expertise in developing these proposed rules.

OCSE opened the meeting by providing background information on current performance of State IV-D programs and presenting proposed case processing time standards. The suggested timeframes covered each case processing function, from intake through enforcement. A 2-day discussion of prompt response and distribution issues followed. Committee members presented their views on the appropriateness of each of the timeframes and processing steps developed by OCSE and recommended alternatives where they considered the initial proposal to be overly extensive or unduly restrictive. The committee also suggested additional processing steps that based on their experience warranted inclusion under the timeframes. As a result, many of the timeframes and case processing steps provided herein have been revised from those originally contemplated by OCSE.

The committee generally agreed that current child support case processing is in need of major improvement and that proposed timeframes should reflect realistic expectations of improved services rather than limited standards which can be readily met with minimal effort. In particular, the committee was concerned that the time standards initially considered by OCSE in the areas of distribution, case opening, support order establishment and service of process were not stringent enough. In addition, the committee identified and prodded a number of recommendations for closing potential loopholes in the case processing scheme under consideration. As a result, many of the case processing timeframes, as well as a number of the case processing steps proposed herein are a direct result of the advisory committee's recommendations.

A distinct minority of committee members argued that time standards should not be phased in until, in accordance with Pub. L. 100-485, automated child support information management systems are mandatory in 1995. However, we disagree that the timeframes proposed herein cannot be met much sooner. In fact, a number of committee members indicated their IV-D programs could currently meet many of the proposed timeframes. Many spoke of the thirteen years that have already elapsed since the basic framework and requirements of the IV-D program were enacted into law. Further, in mandating that we publish final rules setting timeframes for case processing within 10 months of enactment of Pub. L. 100-485, Congress surely did not intend for us to allow States six or seven more years to meet those timeframes. We believe that these proposed timeframes are well-reasoned, having been developed based on the experience of many child support experts representing different points of view and that meeting the timeframes should be within the grasp of any well-managed IV-D agency by October of 1990.

Further, over time, we intend to reconsider the time standards to determine if they are stringent enough to ensure services are being provided promptly given operational experience and steadily expanding automation of program activities since their adoption. We solicit comment on what steps we should take to reflect improvements in case processing over time. One option is to wait to decide whether and how to change time frames in the program standards. Another option is to write into the final regulation a date by which theme regulations must be reviewed and updated. A third option would be to write into the regulation shorter time frames for years after 1990. We would appreciate comments on these options, and other suggestions that commenters may wish to offer.

With the exception of a minority viewpoint over when time standards should be phased in, the committee generally reached consensus on each of the specific timeframes and case processing steps contained in this rule. The proposals in this rule were greatly influenced and often suggested by those on the advisory committee. The committee's valuable contribution to this effort and support for the contents of this proposal and what these standards are intended to accomplish are greatly appreciated.

Therefore, we propose to strengthen the current requirements and define standards for program operations, in accordance with Pub.L. 100-485, as follows. Current regulations governing case processing contain requirements to process cases "promptly", "as soon as possible", etc. Vague regulatory requirements invite differing interpretations and inhibit accountability. In addition, existing specific timeframes intended to be the maximum time necessary or allowable to take an action often become the minimum amount of time within which any action is initiated.

Based on the analysis of program audit and program review results, input from State IV-D agencies, early discussions with experts in child support enforcement case processing and program operations and recommendations of the advisory committee, we developed standards set forth in this proposed regulation which should ensure appropriate and expeditious processing of IV-D cases. States would have to meet the standards for case processing contained in this proposed rule as one facet of the determination of whether they are in substantial compliance with the requirements of title IV-D of the Act. We believe the proposed standards are realistic and focused in areas where increased effectiveness and efficiency are necessary for an enhanced IV-D program.

We intend to revise the regulations governing audits of State child support enforcement programs to address substantial compliance with the proposed case processing timeframes and program standards. We will issue a proposed audit regulation soon after publication of these program standards regulations as final rules. As a general rule, States would be required to meet the case processing timeframes and standards in 75 percent of the cases reviewed for an audit as one facet of the determination of whether they are in substantial compliance with the requirements of title IV-D of the Act beginning October 1, 1990.

We recognize that there may be a small percentage of cases which will not be processed in accordance with required timeframes because of the specific circumstances of the case. However, we believe that the number of such cases is so minute as to have little impact, even in a marginally effective program, on the substantial compliance standard, which requires that only 75 percent of cases meet the required timeframes to successfully pass the audit. The advisory committee supported this position.

Requirements for timely IV-D program operations are only one part of the IV-D amendments contained in Pub.L. 100-485. However, because of stringent statutory deadlines, this proposed rule addresses time limits for accepting and responding to requests for establishment and enforcement of support orders and the distribution of support collections. This proposed rule would also revise regulations to exclude from State administrative costs in computing incentive payments, the costs of: (1) State demonstration projects for evaluating model procedures for reviewing child support awards, as authorized by section 103(e)(3) of Pub.L. 100-485; and (2) effective January 1,1990, the costs of interstate enforcement demonstrations in accordance with section 458(d) of the Act, as amended by section 127 of Pub.L. 100-485.

The remaining child support provisions of Pub.L. 100-485 which require regulations by OCSE will be implemented in separate regulations. These separate regulations will address requirements for immediate income withholding (section 101); disregard applicable to timely child support payments (section 102); State guidelines for child support award amounts, including review and modification of orders (section 103, with the exception of section 103(e), regulated in this document); timing of notice of support payment collections (section 104); performance standards for State paternity establishment programs, including mandatory genetic testing in contested paternity cases (section 111): increased Federal assistance for paternity establishment (section 112); and mandatory automated tracking and monitoring systems (section 123).

The following charts summarize many of the time standards in this proposed regulation. They also incorporate interactions with other regulations, such as those for wage withholding and expedited processes. These charts should make it easier for the public to review this notice of proposed rulemaking.

BILLING CODE 4150-04-M

* * * SEE OCSE REFERENCE CENTER FOR CHARTS * * *

Statutory Authority

This regulation is proposed under the authority of sections 452 (a)(1) and (a)(2), (h) and (i), 454(13), 458(d) and 1102 of the Act.

Sections 452(a) (1) and (2) require the Secretary to establish such standards for State programs for locating absent parents, establishing paternity, and obtaining child support as he determines to be necessary to assure that such programs will be effective, and to establish minimal organizational and staffing requirements for State units engaged in carrying out such programs. Section 452(h) of the Act, added by section 121 of Pub. L. 100-485, requires the Secretary to establish time limits governing the period or periods within which a State must accept and respond to requests for assistance in establishing and enforcing support orders, including requests to locate absent parents, establish paternity, and initiate proceedings to establish and collect child support awards. Section 452(i) of the Act, added by section 122 of Pub. L. 100-485, requires the Secretary to establish time limits governing the period or periods within which a State must distribute amounts collected as child support. Section 454(13) of the Act requires States to comply with such requirements and standards as the Secretary of HHS determines to be necessary for the establishment of an effective IV-D program. Section 458(d) of the Act, as amended by section 127 of Pub. L. 100-485, requires States to exclude for purposes of computing incentives, the amounts expended by the State in carrying out a special project assisted under section 455(e) of the Act. Section 1102 of the Act requires the Secretary to publish regulations that may be necessary for the efficient administration of the functions for which he is responsible under the Act.

Regulatory Provisions

This proposed regulation would prescribe standards for program operations which the IV-D agency must meet, including minimal organizational and staffing requirements, and requirements governing maintenance of case records; location of absent parents; establishment of support obligations; establishment of paternity; service of process; enforcement of support obligations; conditions under which cases may be closed; distribution of support payments; and incentive payments. In addition, this regulation would make technical changes and add new sections for clarity and consistency with the above-mentioned changes to Parts 302 and 303. States would be required to meet these standards by October 1, 1990.

Changes with respect to excluding costs of interstate grants when computing incentives would be effective January 1, 1990, and changes with respect to excluding costs of demonstration projects on model procedures for reviewing child support awards would be effective when the costs are incurred.

Support Payments to the IV-D Agency - Section 302.32

Under current regulations, the lack of, or outdated, timeframes for taking action cause excessive delays in accounting for and distributing support collections. These delays penalize the obligor and the children. Because the intent of the IV-D program is to help families attain self-sufficiency by ensuring that children receive the financial support to which they are entitled, timeframes for the distribution of support payments are necessary. The timeframes in this proposed rule would ensure the timely distribution of collections after receipt by the IV-D agency to families in need of them. We propose to revise §302.32, Support payments to the IV-D agency, to reduce the time within which IV-D agencies must report collections to IV-A agencies and to add specific timeframes for distribution of collections in both AFDC and non-AFDC cases as a first step in ensuring that child support collections reach the intended recipients as expeditiously as possible. We will continue to review and, as necessary, tighten distribution timeframes to parallel improvements in areas affecting distribution of collections received. For example, the requirements of the Expedited Funds Availability Act, Title IV-D of Pub.L. 100-86, enacted August 10, 1987 and initially effective September 1, 1988, seeks to ensure prompt availability of funds and to expedite clearance of most checks. Beyond directly facilitating State distribution of child support collections, the statutory timeframes required of financial institutions can also serve as a guidepost against which to measure performance and set goals for the distribution aspect of the IV-D program.

Section 302.32(b) - Informing the IV-A Agency of Collections

Expeditious redetermination of eligibility is an important step in achieving the IV-D goal of helping families attain self-sufficiency. The IV-A agency must be informed of the amount of a collection so that eligibility can be redetermined and the support collection can be distributed properly and in a timely manner. Current regulations at §302.32(b) require the IV-D agency to inform the IV-A agency of the amount of collections which represents payment on the required support obligation for that month as soon as possible but no later than 30 days after the end of a month. This means that a collection on January 2 need not be reported until February 28- 57 days later. We believe that this timeframe is excessive and that States should have the capability to report collections in a more timely manner. Accordingly, we propose to amend paragraph (b) to require that the IV-D agency inform the State's IV-A agency of the amount of the collection which represents payment on the required support obligation for that month within 10 working days from the date of receipt by the

IV-D agency responsible for final distribution of the collection.

Section 302.32(f)- Timeframes for Distribution of Amounts Collected

We propose to add a new paragraph §302.32(f) to mandate timeframes for distribution of support payments.

Each distribution timeframe proposed under this paragraph requires that collections must be distributed within a certain number of days from the date of initial receipt within the State. This means that States must distribute collections within, for example, 15 working days from the date the collection is first received in the State. If the collection must pass through more than one entity in the State before reaching the final distribution point, the State must still ensure that the collection is distributed within 15 working days of the date of first receipt in the State. In wage withholding cases, the timeframe would start when the withheld amount is received in the State, not when it is withheld by the employer.

Proposed distribution timeframes were discussed a great deal in the advisory committee meeting. The initial proposal presented to the group recommended allowing each entity in a State through which a collection passed (e.g., court, local IV-D agency, State IV-D agency) 10 working days to forward the collection. Almost universally, the committee members felt that the initial OCSE proposal was an unduly protracted timeframe. Committee members were negative to an approach which would allow each entity within a State to hold a collection for a period of time to the disadvantage of the children. The clear consensus was that an all-encompassing timeframe from initial receipt within the State until payment to the custodial parent and children should be set. It then would be up to the designated single State agency to monitor performance and limit delays at each step of the process. Committee members generally agreed that as short a time as feasible should be set, making allowance for interstate case situations. Virginia has been under court order for over a year to distribute child support collections within 15 days, and has almost always met that condition without difficulty through management commitment and an appropriate allocation of resources to the task. Therefore, we have responded to the committee's concern that distribution be as timely as possible for the benefit of the children who, all too frequently, are in desperate financial circumstances, while allowing adequate time for more difficult situations such as interstate cases, as the basis for the timeframes discussed below.

1. Section 3O2.32(f)(1) - Timeframes for Distribution of Amounts Collected in Interstate IV-D Cases

Current regulations under §303.7(c)(7)(iv) require in interstate IV-D cases, the responding State to collect and monitor any support payments from the absent parent and forward payments to the location specified by the initiating IV-D agency no later than 10 days alter the collection is received, except with respect to certain Federal tax offset collections. We propose to add a new paragraph §302.32(f)(1) to require in interstate IV-D cases, amounts collected by the responding State on behalf of the initiating State to be forwarded to the initiating State within 10 working days of the initial point of receipt in the responding State in accordance with §303.7(c)(7)(iv). This does not reflect a chance in policy but simply conforms this proposed requirement to the current requirement under the interstate regulation.

2. Section 302.32(f)(2) - Timeframes for Distribution of Amounts Collected on Behalf of Current Recipients or AFDC and Title IV-E Foster Care Assistance.

We propose to add a new §302.32(f)(2) to require States to meet specific timeframes in distributing collections on behalf of current recipients of AFDC and title IV-E foster care assistance.

Current regulations at §302.51(b)(1) require that, of any amount that is collected as support by the IV-D agency on behalf of current recipients of aid under the State's IV-A plan and for whom an assignment under §232.11 is effective, the first $50 of any amount collected in a month which represents payment of the required support obligation for that month shall be paid to the family. Because the $50 pass-through must be disregarded in redetermining eligibility, there is no reason to delay sending that amount to the family. Accordingly, we propose to amend §302.32 by adding a new paragraph (f)(2)(i) to require that payments to the family in cases under §302.51(b)(1) must be made within 15 working days of the date of initial receipt in the State. Therefore, the 15-day timeframe would start when the collection is received by the first point of receipt within the State. This required timeframe would apply regardless of whether the IV-A agency distributes the $50 disregard or the IV-D agency makes the disregard payment under agreement with the IV-A agency.

We propose to amend §302.32 further to address the distribution of collections in AFDC cases under §302.51(b)(2) through (5). Because the amounts collected in excess of the $50 payment to the family are, for the most part, used to reimburse the State and Federal government for AFDC payments to the family, we propose to require in paragraph (f)(2)(ii) that, except as specified under proposed paragraph (f)(2)(iv), collections under §302.51(b)(2) through (5) must be distributed within 15 working days of notice of eligibility redetermination by the IV-A agency. However, we would allow States to distribute such collections prior to eligibility redetermination at the IV-D agency's discretion. We are proposing to allow States to distribute collections under

§302.51(b)(2) through (5) without waiting for eligibility redetermination because, while redetermination of eligibility can take up to four months, a collection which causes ineligibility is used to reimburse the State and Federal government for AFDC paid to the family in the month of collection. Although some subsequent adjustment may be necessary, the benefits of timely distribution warrant allowing States this flexibility.

We propose to require in paragraph (f)(2)(iii) that, except as specified in paragraph (f)(2)(iv), collections in title IV-E foster care cases must be distributed within 15 working days of the date of initial receipt in the State.

Finally, proposed paragraph (f)(2)(iv) requires collections as a result of Federal or State tax refund offset to be distributed in AFDC cases under §302.51(b)(4) and (5) and in title IV-E foster care cases under §302.52(b)(3) and (4) within 15 working days of the date of initial receipt in the State. Even though tax offset collections are batched in a discrete timeframe, for the most part, unlike regularly recurring collections, we believe that distribution can be handled expeditiously, albeit perhaps with some shifting of IV-D agency resources. Therefore, we are proposing the same 15 working day timeframe with respect to these collections as well.

3. Section 302.32(f)(3) - Timeframes for Distribution of Amounts Collected on Behalf of Non-AFDC Individuals

To ensure timely distribution of amounts collected on behalf of individuals receiving services under §302.33, we propose to require in §302.32(f)(3) timeframes within which States must distribute collections on behalf of non-AFDC families. Current delays in some States in transmitting support payments to the family are excessive and unwarranted. We believe that these timeframes are necessary to ensure that children receive the support to which they are entitled in a timely manner.

Under §302.32(f)(3)(i), we propose that amounts collected which represent payment on the current support obligation shall be paid to the family within 15 working days of the date of initial receipt in the State.

New paragraph (f)(3)(ii) would reflect current policy by requiring that, except as specified in paragraph (f)(3)(iii), if the amount collected is more than the amount required to be distributed in paragraph (f)(3)(i) discussed above, the State may, at its discretion either pay such amounts to the family to satisfy non-AFDC past-due support or retain such amounts as have been assigned to satisfy past assistance paid to the family which has not been reimbursed. In States where the IV-D agency opts to apply such amounts to non-AFDC arrearages the amounts must be paid to the family within 15 working days of the date of initial receipt in the State.

New paragraph (f)(3)(iii) would address timeframes for distribution of Federal income tax refund offset collections in non-AFDC cases. Amounts collected as a result of tax refund offset to satisfy past-due support would be distributed under §302.51(b)(4) and (5) within 15 working days of the date of initial receipt in the State, with one exception. Section 303.72(h)(5) allows States, in cases where the Secretary of the Treasury, through OCSE notifies the State that an offset is being made to satisfy non-AFDC past due support from a Federal refund based on a joint return, to delay distribution until notified that the unobligated spouse's proper share of the refund has been paid or for a period not to exceed six months from notification of offset, whichever is earlier.

Since timeframes for distribution of all IV-D collections, regardless of the collection mechanism (e.g., Federal or State income tax refund offset, wage withholding), would be governed by proposed §302.32(f), reference to timeliness of distribution in other regulations is unnecessary. Accordingly, we propose to amend §302.51 by deleting in paragraph (a) the last sentence that reads "In any case in which collections are received by an entity other than the agency responsible for final distribution under this section, the entity must transmit the collections within 10 days of receipt." and by deleting in paragraphs (b) (3) and (5) the sentence that reads "This payment shall be made in the month following the month in which the amount of the collection was used to redetermine eligibility for an assistance payment under the State's title IV-A plan". Similarly, we propose to amend

§303.100(e)(2) to delete reference to distributing "promptly" amounts collected through wage or income withholding. Finally, we would delete from regulations governing distribution of State tax refund offset collections the words "Within a reasonable time period in accordance with State law" in §303.102(g)(1).

Maintenance of Case Records- Section 303.2

Current §303.2 requires the IV-D agency, for all cases referred to the IV-D agency or upon application for IV-D services under §302.33, to immediately establish a case record. The case record must contain all information collected pertaining to the case. Furthermore, current regulations list information which should be included, when applicable, at §303.2(a) through (l).

Despite these current requirements, GAO reported that seven of the eight IV-D agencies visited in the study cited earlier did not open cases and establish records for 110 of the 760 children who needed orders and did not get them. GAO stressed that failure to open cases results in some children being denied paternity determinations and support orders and distorts statistics needed by program managers and the Congress to accurately measure performance and identify problems that may require corrective legislative actions. Similar findings are evident in IV-D program audit results. Of 33 States found not to comply substantially with title IV-D requirements as a result of an audit for FY 1984 and 1985, nine States have been assessed a penalty for failure to meet the requirement for maintenance of case record because case records could not be located or because case documentation was inadequate. This indicates that cases had never been opened or case records had been lost.

Case opening problems are compounded by the fact that there are no formal requirements governing the IV-D application process. As a result, there are reportedly long delays in even accepting an application in some States. Members of the advisory committee discussed the overwhelming need for specific requirements setting timeframes within which States must accept and respond to applications for IV-D services. The initial proposal we presented to the group required that States open a case within 2 working days of receipt of referral or application. The members of the group expressed concern about problems individuals have in obtaining and filing IV-D applications. The consensus of the group was to retain our proposed 2-day timeframe for case opening and to add formal requirements governing the accessibility, availability and filing of applications for services. The group believes that this is necessary to ensure that the case opening requirements are triggered promptly.

The intent of the Child Support Enforcement program is to ensure that IV-D services are provided to those cases which require them. Unless applications are provided and accepted and cases are opened, this purpose cannot be achieved. In response to advisory committee input, the problems reported by GAO and OCSE's program reviews and program audits, we believe it is necessary to clearly state what actions IV-D agencies must take to provide and accept applications for IV-D services and to open a case upon referral or application for IV-D services.

Accordingly, this proposed regulation would revise §303.2 in several ways. First, the section title, Maintenance of case records, would be changed to Establishment of cases and maintenance of case records. Because this proposed regulation would expand and clarify the requirements for case establishment, to be discussed below, it should be reflected in the title. Second, current §303.2(a) through (1) are examples of the type of information to be included in case records. The list, while not all-inclusive, is lengthy. We do not believe it is necessary to attempt to spell out all the information that should be included in a case record. Rather, we are proposing to address IV-D agency responsibilities with regard to the application process in §303.2(a) and to address case records in proposed §303.2(b).

1. Application Process

The requirements for provision of non-AFDC services do not apply until the IV-D agency receives an application for IV-D services. However, because there are no current requirements governing when the IV-D agency must provide and accept the applications, there are indefensible delays in the establishment of case records and provision of services. In accordance with Pub.L. 100-485, we are proposing to set forth explicit requirements and timeframes for responding to requests from individuals for child support assistance. This will ensure that individuals receive applications for IV-D services and that once applications are received, cases are opened and services provided in a timely manner.

Current regulations at §302.30 require that IV-D agencies must publicize the availability of support enforcement services and must include a telephone number or address where further information may be obtained. However, further information is often not readily available to individuals. Often, individuals cannot receive applications for services or information about IV-D services until an intake appointment is scheduled. Members of the advisory committee reported that current state practices regarding applications frustrate individuals who are trying to obtain IV-D services. For instance, they indicated that at least seven States require an intake appointment to receive or fill out an application and often appointments are not available for at least 6 to 8 weeks. In addition, when individuals call to request services, an application may never be mailed to them. These delays are discouraging to the individual and antithetical to the purpose of the IV-D program. To ensure that IV-D services are provided to those persons who require them, it is crucial that individuals have access to IV-D applications without having to wait unreasonable periods of time. Accordingly, proposed paragraph (a)(1) would require that the IV-D agency must make applications for child support services readily accessible to the public.

To ensure that applications are provided as soon as possible after an individual inquires about IV-D services, we propose to require in §303.2(a)(2) that the IV-D agency must provide applications on the day an individual requests an application or services. In addition, information describing available services, the individual's rights and responsibilities and the State's fees, cost recovery and distribution policies must accompany all applications for services.

While the above requirements should ensure that IV-D information is provided to individuals in a timely manner, cases cannot be opened and services cannot be provided until the application is received and a case record is established. Case record establishment, to be discussed in more detail below, is the essential first step in gathering the information needed to process cases effectively. Because in non-AFDC cases this information is initially gathered on the application. States must log in and assess the application in a timely manner. However, because only minimal information is needed to establish a case record, we propose to require in paragraph (a)(3) that the IV-D agency must accept an application as filed on the day it is received. An application is a written document provided by the State which indicates that the individual is seeking assistance with a child support problem and is signed by the individual applying for IV-D services.

2. Opening Cases

We are proposing in §303.2(b) that, for all cases referred to the IV-D agency or applying for IV-D services under §302.33 the IV-D agency must open a case within two working days of receipt of referral or application for services by establishing a case record. The case record (which may be automated, on paper or a combination thereof) must be supplemented with all information and documents pertaining to the case and will include all relevant facts, dates, actions taken, contacts made and results in a case.

Initially, a case file will contain only that information which is available upon application or referral. The additional information and documents pertaining to the case described above would be included in the case file as they become available or as they are gathered. Therefore, because the initial requirements for case opening are minimal, we believe two working days for opening cases is adequate and reasonable.

3. Actions Required Within 15 Working Days of Referral or Application for IV-D Services

With regard to cases referred to the IV-D agency, the AFDC agency is required under 45 CFR 235.70 to provide all relevant information prescribed by the IV-D agency. Often, however, the interview to determine AFDC eligibility is inadequate to gather the information.

Because of the need for increased cooperation and coordination between the AFDC (IV-A) and IV-D programs, the Family Support Administration (FSA) launched the IV-A/IV-D Interface Initiative in FY 1986 to improve the interaction between IV-A and IV-D programs. As mentioned previously, IV-D program reviews highlighted serious problems which prevent effective IV-A/IV-D agency interaction including: Lack of timeliness in reporting; inadequate information referred; and poor understanding of the roles of each agency. As part of the Initiative, OCSE is working with the Office of Family Assistance (OFA) to correct these problems. To date, the following goals have been accomplished:

1. FSA has funded four demonstration projects under which States will test the following techniques: a separate AFDC applicant interview by a child support enforcement worker and initiation of IV-D services within the AFDC application period; the invoking of sanctions by the IV-D agency for failure to cooperate in establishing paternity and obtaining a support order; and enhanced data exchange between the two programs.

2. Each FSA Regional Office initially conducted an interface program review of at least one locality and issued a report including recommendations for improvement. Regional Offices have carried out subsequent activities in this same vein.

3. Several States have initiated or are developing pilot projects to test the feasibility of innovative provisions to address problems such as late case referrals from IV-A to IV-D agencies and insufficient, or poor quality, information referred; poor exchange of case status information; lack of communication between IV-A and IV-D agencies; and inadequate staff training.

4. OCSE developed training packages to improve understanding of each agencies roles and programs and to strengthen the training and orientation of workers within and between programs. The National Institute of Child Support Enforcement (NICSE), under contract to OCSE, developed and field tested the Participants' Handbook and Trainers' Guide Handbook with local jurisdictions and conducted the first two sessions for training certified trainers in February, 1988.

5. OCSE is identifying State and local practices that are innovative and will improve the interface process. Three "best practices" have already been publicized on failure to cooperate, direct referrals and automated data exchange.

The problems discussed above must be solved because the information obtained from the AFDC client is critical to the establishment and processing of a IV-D case. While State AFDC agencies should gather all pertinent and necessary information at the AFDC interview, the IV-D agency may need to gather additional information. Some States conduct IV-D interviews before AFDC eligibility is determined. This practice, which is accomplished within the permissible time period for AFDC eligibility determination often produces quality child support-related information quickly. We would like to point out that Federal funding is available for this IV-D activity regardless of whether the applicant is determined to be eligible for AFDC. If the custodial parent is determined to be ineligible for AFDC States should encourage the applicant to apply for non-AFDC IV-D services in order to obtain support for the child.

Federal AFDC regulations have requirements for prompt referral of cases to child support agencies, but this NPRM does not include any corresponding requirements for child support agencies to make sure they receive the referrals. We specifically request comment on the possibility of requiring State IV-D agencies to have agreements in place to ensure that all cases are referred within a specified number of working days of an application or determination of eligibility for AFDC, Foster Care or Medicaid benefits.

Proposed §303.2(c) would require the IV-D agency to take specific actions on a case within 15 working days of receipt of referral of a case by the AFDC, IV-E (foster care) or Medicaid agency or of an application under §302.33. GAO specifically recommended in their report that OCSE take steps to improve State efforts to determine paternity and establish support orders. We agree that it is necessary to take steps to ensure that IV-D agencies immediately open cases and pursue paternity and support orders because we believe the initial steps taken in child support enforcement are crucial. Often it is at the first point of contact with the custodial parent that information is most likely to be available and accurate, particularly with regard to location leads, paternity issues, etc. We believe that a timeframe of 15 working days is both reasonable and necessary to ensure that cases are forwarded for necessary action expeditiously. We want to stress, however, that the 15-day requirement is intended as an outer limit. If at any point prior to the end of the required time limit there is sufficient information to proceed, the State must initiate the next appropriate action on a case within 2 working days of determination of that action, as required in proposed paragraph (c)(3).

Child support cases enter the IV-D system at different stages of readiness and success in each case is contingent upon timely determination of what appropriate action is necessary. Furthermore, regardless of what or how much information is initially received on a case, the information is only as useful as it is accurate and complete. As stated previously, although the AFDC agency is required to gather all relevant information on a case, additional information may be necessary. The GAO report identified cases in the study which were closed due to what the State termed "inadequate information" about the alleged father. Although the particular State identified had written procedures requiring interviews to attempt to obtain information about the absent parent, records were not adequate to determine whether any information gathering had taken place.

The initial proposal we presented to the advisory committee required that within 15 working days of receipt of referral or application, the IV-D agency must conduct an interview if necessary. The group urged us to delete this requirement because an interview may not be needed in each instance at this point in case processing. Furthermore, they did not agree with setting a standard based on an "if necessary" judgment call. Although we have not required an interview, States must obtain as much information as possible from the custodial parent. This information is the most valuable in preparing a case for necessary service. To ensure all efforts to gather accurate information are made, we propose to require in paragraph (c)(1) that, within 15 working days of receipt of a case or of an application for services, based on an assessment of the case to determine necessary action, the IV-D agency must solicit necessary information from the custodial parent and other relevant sources and initiate verification of information.

Many cases enter the IV-D system with inaccurate, incomplete, outdated or no location information. Every attempt must be made to locate the absent parent because, without this information, establishment of paternity or establishment and enforcement of child support obligations is impossible. Therefore, we propose, in paragraph (c)(2), that the IV-D agency must, as necessary, access all appropriate State and local automated location sources within the 15-day timeframe. State and local automated location sources would include any of those location sources listed in §303.3 which are automated. The State parent locator service (PLS) should have access to all these records. This requirement would ensure that every effort is made to gather information necessary to proceed with a case.

Within the 15-day timeframe, under paragraph (c)(3), if there is adequate location information available to proceed with a case, the IV-D agency must initiate necessary action on the case within 2 working days of determination of the next appropriate action or service. Such actions could include referral to another State for necessary services if the absent parent has been located in another State. Alternatively, in situations where there is inadequate location information to proceed with a case, paragraph (c)(4) would require the IV-D agency to refer the case for further location attempts as specified in §303.3.

As stated previously, the proposed 15-day timeframe is intended as an outer limit. If at any point prior to the end of the 15 working days there is sufficient information to proceed with the case, the State must determine the next appropriate action or service immediately.

The requirements governing case opening and maintenance of case records will ensure that all appropriate cases enter the IV-D system and receive prompt attention. While the proposed rule requires the IV-D agency to perform the above-mentioned actions within the prescribed timeframes, we would like to stress that, in cases referred to IV-D agencies, the extent to which certain of these actions are necessary or appropriate depends for the most part on the amount and accuracy of information gathered on a case by the referring agency and the steps taken on a case by that agency prior to referral. By requiring the IV-D agency to perform these functions to the extent that they have not been performed by others, we do not intend to remove the burden and responsibility on the referring agency of forwarding as complete and accurate case information as possible. Often the most recent and accurate information can be obtained from the custodial parent during the interview for AFDC eligibility. The interview and the AFDC eligibility worker's initial efforts to ascertain as much information as possible are essential steps toward the goal of providing necessary services successfully.

Finally, we would like to point out that in situations where the custodial parent fails to cooperate, the IV-D agency should notify the AFDC or foster care agency of noncooperation but should not suspend activities to establish paternity or secure support in any case unless, as provided under §302.31(b), the IV-D agency receives notice from the AFDC or IV-E agency that there has been a claim of good cause for failing to cooperate. In accordance with §302.31(c), the IV-D agency will not undertake to establish paternity or secure support in any case for which it has received notice from the IV-A or IV-E agency that there has been a finding of good cause pursuant to, §§232.40 through 232.49 of this title unless there has been a determination by the State or local IV-A or IV-E agency that support enforcement may proceed without the participation of the caretaker or other relative. If there has been such a determination, the IV-D agency will undertake to establish paternity or secure support but may not involve the caretaker or other relative in such undertaking.

Location of Absent Parents - Section 303.3

Current regulations at 45 CFR 303.3 set forth requirements for all cases referred to the IV-D agency or applying for services under §302.33 under which State IV-D agencies must attempt to locate all absent parents when their location is unknown.

Because current and accurate location information is a prerequisite to any action to establish or enforce a child support obligation, we believe improvements in the requirements regarding location are necessary. The members of the advisory committee agreed with our proposed improvements to this section but discussed at great length the need to formally define "location" and to close loopholes in the location process. The proposed requirements and timeframes herein, and the new section governing service of process, are a direct result of the advisory committee's discussions about the importance of improved location services.

1. Definition

The advisory committee stressed that the location function can only be considered complete or successful when the address received is accurate. Accordingly, we propose to define in §303.3(a) "location" as the confirmed physical whereabouts of the absent parent or his or her employer(s), other sources of income, and/or assets. We want to point out that the need for confirmation of the location information would depend on whether the information received is current (e.g., confirmation may not be necessary if address information received through accessing the Department of Motor Vehicles shows that the absent parent provided the address recently).

2. Location Sources

Current §303.3(c) requires the IV-D agency to use appropriate State agencies and departments, which at a minimum must include those departments which maintain records of public assistance, unemployment insurance, income taxation, driver's licenses, vehicle registration and criminal records. We propose to redesignate paragraph (c) as (b)(3) and add departments which maintain records of employment and wage records to the list. Employment files are a particularly valuable location source because they are updated quarterly and often contain the most recent address information. This proposed change, together with the current requirements at §303.3(a) and (b) (redesignated in this proposed rule as (b)(1) and (2)) for use of local location sources, should ensure that all available and appropriate sources are used to locate an absent parent.

This NPRM does not include any requirements on the use of private automated data sources. We specifically request comment on the possibility of including requirements or encouragement on the use of credit reporting agencies and the Postal Service contractor's recent mover data base.

3. Actions Required Within 30 Working Days

Current regulations at §303.3(d) require the IV-D agency to utilize all appropriate State and local location sources within 60 days of referral of the case from the AFDC agency or application under §302.33. Despite this 60-day timeframe for accessing State and local sources, the GAO report identified cases in there study which were closed due to what the State termed "inadequate information" about the alleged father. In addition, 20 of 43 States assessed penalties as a result of FY 1984, 1985 and 1986 program audits failed to comply substantially with program requirements for providing location services. Currently, the States and localities decide what location attempts are adequate and when a case can be closed. As the audit results and the GAO report indicate, IV-D agency efforts to locate absent parents are often inadequate.

We propose to redesignate current §303.3(d) as (b)(4) and revise it to require that the IV-D agency, within 30 working days of referral of the case, application under §302.33, or determination that location of the absent parent is unknown, access all appropriate location sources.

Inadequate location efforts are difficult to understand given the great strides States have made developing automated child support systems. Use of automated systems significantly reduces the time it takes to access location sources. Given today's automated access to many location sources, and the fact that the 60-day timeframe was set in 1978, prior to this automated access, we propose to reduce the time within which the IV-D agency must access all appropriate location sources to 30 working days in paragraph (b)(4).

We want to stress that child support case processing is a dynamic process. There may be many points in case processing where the IV-D agency cannot proceed because the absent parent moves or changes jobs or where the case otherwise necessitates further location efforts. The advisory committee was particularly concerned with the fact that current regulations put the emphasis on front-end location efforts but do not explicitly take into consideration situations where location services are necessary at a later point in case processing because, for example, the absent parent's location, although it may have been previously known, becomes unknown. To close this loophole, we propose to require in paragraph (b)(4) that these location requirements would again apply at any point where the State determines that location services are warranted (i.e., at any point in case processing where location is needed, the required location sources must be accessed within 30 working days of request for location as a result of determining that the location of the absent parent, employer other source of income and/or assets is unknown). We believe 30 working days is reasonable given many States' capabilities for immediate or very rapid access to motor vehicle, employment security and other records. Nevertheless, we encourage comments on this timeframe.

We are proposing a parallel change to §303.7(c)(4) which currently requires responding IV-D agencies, in interstate cases, to provide location services in accordance with §303.3 within 60 days of receipt of an Interstate Child Support Transmittal Form, a URESA Action Request Forms package or other alternative State form and documentation from its interstate central registry. We propose to change the 60-day timeframe to 30 working days to be consistent with the 30 working day timeframe proposed in §303.3(b)(4).

Paragraph (b)(5) would require that the IV-D agency transmit appropriate cases to the Federal PLS including cases which qualify for submittal to the FPLS and for which State and local location efforts have been unsuccessful. While the Federal PLS is a valuable source, we want to avoid situations where cases are "shot-gunned" to the FPLS when State and local sources could provide accurate location information. We urge States to examine each case to decide which location sources would be the most appropriate. The 1984 Amendments amended section 453(f) of the Act to permit States to access the Federal PLS without first exhausting State PLS resources and States may now submit appropriate cases to the Federal and State PLS simultaneously without waiting to access local location sources. Except when States have reason to believe an absent parent/putative father lives or has assets out of State, we encourage States to use automated data sources before requesting Federal PLS services. We want to point out, however, that in interstate cases, the Federal PLS is accessed by the initiating State. The responding State is not required to access the Federal PLS again upon receipt of the case.

We also propose in paragraph (b)(6) that within 2 working days of location, the IV-D agent must initiate necessary action or service (i.e., establishment of paternity or a support order or enforcement of a support order). This requirement again is indicative of the advisory committee's concern that cases move forward as soon as one action is completed and the next appropriate and necessary action is determined. Necessary action includes referring a case to another State because the absent parent has been, or is presumed to be, located there, as specified in proposed paragraph (b)(7). Once a case has been referred by the central registry in the responding State to the appropriate State or local IV-D agency for processing, that case, although an interstate case, must be worked like any intrastate case, in accordance with the timeframes and standards in Part 303.

4. Continued Location Attempts

We believe it is critical for States to attempt periodically to locate absent parents or sources of income in cases in which previous attempts have been unsuccessful to determine whether location information has become available. Accordingly, we propose to require in paragraph (b)(8) that the IV-D agency must repeat location attempts quarterly in appropriate cases in which previous attempts have failed but adequate information exists to meet the requirements for submittal for location. This 3-month cycle must coincide with quarterly updates to State employment security files.

This requirement to repeat location attempts in cases in which prior location attempts have failed is proposed because, as stated previously, often cases are closed or left unattended when insufficient effort has been made to pursue the case, or to reevaluate it after initial attempts to proceed were unsuccessful. We do not intend that States resubmit cases for location attempts if there is inadequate identification information on the absent parent. However, if adequate information exists but previous attempts have failed, States would be required to resubmit such cases because the subsequent attempts to locate may prove successful, e.g., the absent parent may have gotten a driver's license or a job. We specifically request comment on whether annual checks against Federal automated data sources should be required.

As previously discussed, the advisory committee urged us to revise the location section to ensure that location services are provided expeditiously at any such point in case processing when the location of the absent parent, source(s) of income, etc, is unknown. Accordingly, we propose to require in paragraph (9) that the IV-D agency must refer a case for location services within 5 working days of determining that location is necessary. This could occur at any time, for example, when the IV-D agency is in the process of establishing or modifying an order or enforcing an existing order. Once the case is referred for location services, the requirement and timeframes in §303.3(b) would again apply.

Establishment of Support Obligations- Section 303.4

Current regulations at §303.4 set forth requirements for IV-D agencies with regard to the establishment of support obligations in all cases referred to the IV-D agency or for which there are applications for IV-D services. We propose to amend §303.4 by adding a new paragraph (d) which would require the IV-D agency, within 30 working days of locating the absent parent or establishing paternity, to establish a support order or file a petition with the court or administrative authority to establish a support obligation.

As stated previously, Congress attempted to alleviate public concerns regarding the lack of adequate and expeditious IV-D services by requiring in the 1984 Amendments that States have and use expedited processes to establish and enforce support obligations. Those expedited processes, and the timeframes in implementing regulations at §303.101, only apply to cases once they are under administrative or judicial review. No corresponding timeframes exist within which IV-D agencies must file cases with the administrative or expedited judicial authority for support order establishment or enforcement. The result is large backlogs of cases in IV-D offices. Section 121 of Pub.L. 100-85 adds a new section 452(h) to the Act which requires the Secretary of HHS to impose timeframes within which States must respond to requests for assistance in establishing and enforcing support orders.

The initial proposal we presented to the advisory committee required that within 60 calendar days of locating the absent parent, the IV-D agency must establish a support order or file a petition with the court or administrative authority to establish a support obligation. We have subsequently revised this due to the group's concerns. First, while we urge States to establish paternity and a support order simultaneously except where prohibited by State law, the advisory committee believes that paternity and support orders are often established in separate proceedings. For this reason, the committee argued that the proposed timeframes should begin with locating the absent parent or establishing paternity. Because it is our intent that child support case processing flow quickly from one needed service to the next, we incorporated the advisory committee's suggestions in our proposal.

Secondly, the advisory committee convinced us that 30 working days (rather than the 60 calendar days in our proposal) is adequate to either establish an order by consent or to petition the court or administrative authority for support. Again the committee convinced us that if a IV-D agency is unable to establish an order administratively by consent in less than six weeks, a petition for support should be filed. We request comments, including any alternatives based on experience, on this timeframe.

Unless IV-D agencies process cases to the point of establishing an order by consent or petitioning the court or administrative authority to establish an order and serving process, the expedited process system in place in most States is useless. Timeframes for processing cases from application or referral of the case by the IV-D agency to establishment or enforcement of an order are necessary if we are to conform to Congressional intent in requiring expedited processes as part of the 1984 Amendments as well as in requiring timeframes for providing services in Pub.L. 100-485--that IV-D services be provided expeditiously.

The proposed case processing timeframes contained in this regulation are intended to encompass all necessary actions up to the point where the expedited processes timeframes requirements begin (i.e., a case is "filed"). Therefore, there should not be a gap between the timeframe requirements contained in this proposed rule and the timeframe requirements for expedited processes.

There is one further concern we would like to address. Currently, there are no requirements governing situations where a petition for a support order is dismissed without prejudice. Because this may occur for various legitimate reasons (e.g., the absent parent is currently unemployed, etc.), we believe it is necessary to ensure that every effort is made to establish a support order if circumstances upon which the dismissal is based change. Accordingly, we propose in §303.4(e) that the IV-D agency must examine the reasons for dismissal, determine when it would be appropriate to seek an order in the future, and seek asupport order at that time.

Establishment of Paternity - Section 303.5

This proposed rule would revise current requirements for paternity establishment at §303.5.

1. Paternity Establishment Within One Year

As discussed previously, we propose to add timeframes for processing cases from the time of referral or application until the date the IV-D agency files a petition or serves process to establish or enforce a child support obligation with the court or administrative agency. Once a petition is filed or service of process is completed (depending on which date triggers expedited processes in the State), the required timeframes for expedited processes apply and ensure that 100 percent of those cases are processed within one year of the date of filing or service. The exception to this scenario are complex issue cases or cases requiring paternity establishment.

The Child Support Enforcement Amendments of 1984 allow States to exclude paternity cases from their expedited processes. However, paternity establishment is a crucial step in the child support enforcement process in the past States have been lax in the establishment of paternity, as reflected in IV-D program audit results (32 of 43 States penalized as a result of 1984, 1985 and 1986 audits were cited in paternity-related cases, either because of the State's failure to locate putative fathers or to establish paternity.) Often, States do not bother to attempt location in cases needing paternity establishment. Because of these audit results and the fact that paternity establishment cases are not subject to expedited process requirements unless the State opts to include them, we believe it is essential to set a time standard for establishing paternity.

We believe that strengthened paternity establishment standards and time limits are essential to improve State IV-D program performance. Therefore, we propose to amend §303.5(a) to require that the IV-D agency must, within one year of locating the alleged father, establish paternity by court order or other legal process established under State law, establish paternity by voluntary acknowledgment if under current law such acknowledgment has the same effect as court-ordered paternity, or exclude the alleged father as a result of genetic tests. We want to stress, however, that the one-year time limit is intended as an outer limit. We urge States to attempt to establish paternity by voluntary acknowledgment or legal process immediately upon location of the alleged father, simultaneously with the establishment of an order if not prohibited by State law. The advisory committee was concerned that we include reference to cases in which paternity cannot be established because the putative father is excluded. Therefore, we have added this reference but limited it to exclusion as a result of genetic tests. We specifically request comment on whether there should be separate time requirements for uncontested paternity cases.

While this one-year timeframe may seem on its face to ignore cases in which paternity establishment may be difficult if not impossible, it is imperative to underscore the need to strengthen paternity establishment requirements because of the current exclusion of paternity establishment cases from the expedited processes requirements and the low priority States have given this essential function of child support enforcement. We consulted with the advisory committee with regard to the limited number of paternity cases which are impossible to resolve within one year despite the State's every effort. The committee believes that these very limited number of cases would easily be accounted for within the 25 percent margin allowed as part of the 75 percent substantial compliance audit standard. At such time as audit regulations are revised for consistency with case processing timeframes and program standards, a State would be cited in an audit if it failed to establish paternity or exclude the alleged father (discussed below) within one year in 75 percent of the cases reviewed for the audit.

2. Exclusion of the Alleged Fathers

Proposed §303.5 would require that the IV-D agency must establish paternity or exclude the alleged father as a result of genetic tests within one year of locating the alleged father. In our discussions with the committee, questions were raised about whether or not IV-D agencies must pursue all alleged fathers or only one. To encompass situations where more than one alleged father has been identified, we propose to require in §303.5(a)(2) that the IV-D agency must meet the requirements set forth in paragraph (a)(1) of this section for each alleged father identified, until paternity is established or each alleged father is excluded.

3. Use of Laboratories Which Perform Genetic Testing at Competitive Rates

Furthermore, this proposed regulation would revise current paragraph (c) to require IV-D agencies to identify and use laboratories which perform genetic testing at reasonable cost through competitive procurement. In the interest of competition and associated cost benefits, we deleted the reference limiting identification of laboratories to those within the State. State IV-D statistical and expenditure reports show vast differences in what States pay for genetic tests. The range, based on voluntary reporting of laboratory costs, is between $300 and $1500 per test. Effective October 1, 1988, as a result of Pub.L. 100-485 the Federal government pays 90 percent of the costs of genetic tests. To avoid situations where States use laboratories at exorbitant cost when there may be a laboratory available which performs comparable testing at more reasonable cost, OCSE will investigate what laboratories throughout the country charge for comparable genetic tests and report that data to States.

This proposed rule also would add the word "genetic" before "tests" in proposed paragraph (c) to more accurately reflect the advancements in, and increased refinement of, testing methods to determine paternity. Current paragraph (b) would not be changed.

To correspond with these proposed changes, §304.20(b)(2) would be revised by changing the reference to blood tests to genetic tests and the reference to §3O3.5(b) to §303.5(c).

Enforcement of Support Obligations- Section 303.6

This proposed regulation would revise current requirements at §303.6 by deleting the enforcement techniques listed in paragraphs (a) through (f) and adding monitoring and enforcement requirements in new paragraphs (a) through (c).

1. Monitoring Compliance With Orders and Identifying Delinquencies

Current regulations at §303.6 require that the IV-D agency, for all cases under the State plan in which the obligation to support and the amount of the obligation have been established, must maintain an effective system for identifying, within 30 days, those cases in which there is a failure to comply with the support obligation and to contact such delinquent individuals as soon as possible in order to enforce the obligations and obtain the current support obligation and any arrearages.

Despite the above requirement that States must monitor cases, some IV-D agencies still rely on custodial parents informing them of a delinquency before they investigate compliance with the obligation and take action to enforce it. Effective and timely monitoring, of compliance is essential in order to trigger income withholding in accordance with statutory requirements and to ensure timely use of other enforcement techniques as appropriate.

In addition, the statutory provision for States to have and use procedures for withholding wages or income requires that the absent parent become subject to withholding and that advance notice of the withholding be sent to the absent parents at the latest, on the date on which the parent fails to make payments in an amount equal to the support payable for one month. Therefore, it is imperative that States identify delinquencies immediately in all cases when the debt equals the amount payable for one month. States may not wait 30 days after there is a delinquency to identify the delinquency.

We specifically request comment on whether the requirement for sending notice to a delinquent absent parent should be amended from "the State must take steps * * * to send the advance notice" on the day the delinquency reaches one month's support to "the State must send the advance notice" on that day. We also specifically request comment on whether States should be required to process uncontested wage withholding cases more quickly than contested cases.

We propose to delete the current 30-day timeframe and address the above-mentioned issues in several ways. First, proposed §303.6(a) would require that the IV-D agency maintain and use an effective system for monitoring compliance with the support obligation. Advisory members encouraged us to clarify that monitoring includes monitoring of medical as well as cash support provisions of support orders. Under current requirements, the IV-D agency must communicate periodically with the Medicaid agency to determine if there have been lapses in health insurance coverage for Medicaid applicants and recipients. The IV-D agency then must take appropriate action to enforce the order when the Medicaid agency informs the IV-D agency that the absent parent has failed to secure health insurance coverage as ordered, or that health insurance coverage has lapsed. We request comment on whether wage withholding notices to employers should: (a) inform the employer when enrollment in employment based medical insurance has also been required by the support order, (b) request the employer to alert the IV-D agency if the absent parent has not enrolled the child(ren) in required medical insurance and (c) request the employer to enroll the child(ren) if the absent parent has not, where permitted by State law.

Additionally, we propose to require in paragraph (b) that the IV-D agency maintain and use an effective system for identifying those cases in which there is a failure to comply with the support obligation on the date the parent fails to make payments in an amount equal to the support payable for one month or earlier in accordance with State law.

2. Enforcement Actions

We would require in paragraphs (c) (1) and (2) that the State must initiate wage withholding in accordance with the requirements of §303.100, and initiate any other appropriate enforcement technique, except Federal or State tax refund offset (which are available only once a year), within 30 working days of identifying a delinquency or other support-related non-compliance with the order. The committee supported this proposal.

This requirement would include taking appropriate enforcement action within 30 working days of notification of non-compliance with an order requiring health insurance coverage. In accordance with current medical support requirements, States must attempt to enforce a requirement in a support order that an absent parent obtain health insurance in cases of noncompliance with such an order. The enforcement action must be taken within 30 working days of being informed that the absent parent has failed to obtain health insurance or within 30 working days of being notified of a lapse in such coverage. In Medicaid-eligible cases, this would be within 30 working days of being informed by the State Medicaid agency of such non-compliance and in all other cases where the custodial parent has consented to such services, this would be within 30 working days of being notified by the custodial parent of noncompliance with the health insurance aspect of an order.

Section 302.70(b) specifies that a State need not apply procedures for State income tax refund offset, imposition of liens against real and personal property, giving security, posting a bond or giving some other guarantee to secure payment of support, or providing information on the amount of overdue support to consumer reporting agencies in a particular case "if the State determines that it is not appropriate using guidelines generally available to the public which take into account the payment record of the absent parent, the availability of other remedies, and other relevant considerations. The guidelines may not determine a majority of cases in which no other remedy is being used to be inappropriate." Therefore, if a State has developed guidelines specifying when use of these enforcement techniques would be inappropriate, the requirement in proposed §303.6(c)(2) to initiate any appropriate enforcement technique within 30 working days would not apply if use of the technique is inappropriate in a given case, in accordance with those guidelines.

When use of a specific enforcement action requires service of process, process must be served within 10 working days of request for service of process, in accordance with §303.9 of this proposed rule. This 10-day timeframe must be met within the 30 working day period proposed under §303.6(c)(2) for enforcement action. Service of process is often an essential step in taking enforcement actions and traditionally many of the delays in providing support enforcement services are delays caused by slow service of process. The advisory committee indicated it is important to place a time limit on serving process and we propose that the service of process be accomplished as part of the overall timeframe for taking the necessary enforcement action. Proposed §303.9 which addresses service of process requirements is discussed in more detail below.

With regard to Federal and State income tax refund offset, we propose to require in paragraph (c)(3) that States submit all cases which meet the certification requirements for State tax refund offset once a year, in accordance with §303.102 and State guidelines developed under §302.70(b), and for Federal tax refund offset in accordance with §303.72. Federal and State income tax refund offset are particularly effective and efficient mechanisms for enforcing support orders. However, States have not taken full advantage of Federal tax refund offset as evidenced by vastly different State submission practices. To ensure maximum use of these effective enforcement techniques, cases meeting the certification requirements for Federal and State income tax refund offset, as set forth in §303.72 and 303.102, must be submitted.

We propose to require in paragraph (c)(4) that in cases where previous enforcement attempts have been unsuccessful, the State must initiate appropriate enforcement techniques where it becomes aware of changes in the factors which determine the ability to use an enforcement technique. Because it is not acceptable to ignore cases when previous enforcement efforts have failed, States would be required to examine the factors quarterly. The State must keep abreast of case circumstances to determine when the potential for resumed enforcement efforts occurs and take all necessary actions in accordance with §303.6 (c)(1) through (c)(3).

Because of the proposed changes discussed above, we propose to delete the current list of enforcement techniques in current §303.6(a) through (f). There is no reason to list some enforcement actions or to try to list all techniques since States are required to take whatever enforcement action is warranted in a particular case.

Service of Process - Section 303.9

Service of process is a necessary element in child support establishment and enforcement cases and many delays in providing services are directly caused by slow and ineffective attempts to serve process.

As specified in OCSE-AT-88-19, expedited processes timeframes apply beginning with the date a case is filed. A State may interpret "case filing" to mean the date the absent parent is served or the date a case is filed. If a State's trigger for the expedited processes timeframes is the date of successful service of process, service must be completed within the proposed case processing timeframes contained in this regulation. Alternatively, if a State's trigger for the expedited processes timeframe is the date a case is filed, service of process must occur within those expedited processes timeframes.

The committee discussed at length that it is crucial to place a time limit on requesting and serving process within the overall timeframes for taking certain actions. They were concerned that a case's forward movement not be halted because service of process is slow or not given adequate attention. Accordingly, we propose to add a new section §303.9 to require that when service of process is necessary at any point in case processing, service of process must be requested within 2 working days of determination that service of process is necessary and must be completed, in accordance with paragraph (b), within, not in addition to, the overall timeframes for location, establishment of paternity and support orders, and enforcement. Paragraph (b) would require process to be served within 10 working days of the request for service of process.

In order to meet these timeframes, States will need to remedy deficiencies in service of process procedures. Committee members urged us to state clearly in this discussion the fact that, if IV-D agencies encounter difficulty in obtaining adequate and timely responses to requests for service of process, Federal funding at the applicable matching rate is available for the costs of hiring process servers or otherwise purchasing such services as necessary expenditures under the IV-D program. In addition, we urge States to examine alternatives to personal service and redefine what constitutes service of process. We believe that alternatives such as mail service and use of public or private process services on a performance-related contact basis can meet due process concerns and improve attempts to serve process. Simple and effective practices are described in an OCSE Service of Process monograph published in May of 1987 and other OCSE materials.

We recognize that there may be cases in which service of process takes an extended period of time or is impossible because an absent parent successfully avoids service. However, we discussed these concerns with the advisory committee and the committee was comfortable with the belief that this percentage of cases is small enough to be encompassed in the 25 percent margin allowed under the contemplated 75 percent audit standard. We encourage comments in this area.

Procedures for Case Assessment and Prioritization- Section 303.10

Because States may prioritize there IV-D caseload in accordance with the requirements for case assessment and prioritization at §303.10, we are clarifying the State's responsibility for meeting the proposed requirements contained in this regulation if the State has a prioritization system. As stated in the preamble to the final rule, Procedures for Case Assessment and Prioritization (49 FR 36773, published September 19, 1984), the purpose of case prioritization is to improve case management, not to limit IV-D services. States are required to undertake to secure support and establish paternity in all cases. However, a State may use various case characteristics to determine the order in which cases will be worked.

In previous sections of this proposed rule, we have stressed the overwhelming need for more stringent requirements and standards for paternity establishment and the establishment and enforcement of support obligations. Because we have never intended that case prioritization schemes limit IV-D services, we believe it is necessary to clarify in the regulations governing case prioritization that the requirements in Part 303 must be met if a State implements a case prioritization system. Therefore, we propose to add to §303.10(a) that, if a State adopts a case assessment and prioritization system, the IV-D agency must continue to meet the timeframes and case processing standards contained in Part 303. We believe this addition is necessary to clarify that prioritizing cases may not result in impeding case processing.

Current §303.10(b)(5) requires a State, in implementing a case assessment and prioritization system, to 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. We propose to cross reference proposed §303.2 in §303.10(b)(5) to ensure that cases are prioritized only after the requirements for establishment of cases and maintenance of case records in proposed §303.2 are met. Although we are proposing to reference all of Part 303 in §303.10(a), as mentioned above, we believe that adding a reference to §303.2 in paragraph (b)(5) is necessary because the initial actions required in proposed §303.2 are essential to ensure adequate information is available on a case before a State determines the priority of working that case.

Finally, we propose to tie the case processing requirements in Part 303 to the requirement for periodic review of low priority cases contained in current §303.10(b)(6). We propose to add to paragraph (b)(6) that periodic review of low priority cases must be in accordance with the standards set forth in Part 303, such as quarterly location attempts.

Case Closure Criteria- Section 303.11

Proposed §303.11 would establish criteria States must use to determine whether child support cases may be closed. Current regulations are silent regarding any criteria which States must apply in evaluating caseloads for the purpose of case closure. This proposal would require State IV-D agencies to establish standards for closing cases which would limit cases the State may close to those in which there is no reasonable expectation of establishing paternity, obtaining a support order, or collecting child or spacial support, either now or in the foreseeable future. These criteria will ensure that dependent children and their custodial parents have the benefit of all the support enforcement services available where the potential for paternity establishment or establishment and enforcement of support exists. Any case not meeting at least one of the standards for closure must remain open and be worked by the State IV-D agency.

The establishment of a system of case closure will allow States to more effectively pursue cases in which circumstances pose reasonable expectations that support enforcement services will result in paternity or support order establishment and the enforcement of orders. State IV-D agencies will be able to close cases with little or no potential for success, currently and in the foreseeable future, and focus their resources on cases with establishment or enforcement potential.

The GAO report mentioned previously noted that the prioritization regulations did not specifically address case closure and applied only to those States which opted to use case prioritization procedures. The GAO found that five of the eight sample IV-D offices reviewed for the report did not have written prioritization procedures, and that a significant number of cases were closed by the offices prematurely without adequately pursuing the establishment of paternity and support orders. The report recommended that OCSE develop case closure criteria for IV-D agencies to ensure that efforts to determine paternity and obtain support orders and provide other assistance are adequate.

It is in the best interests of both children and their custodial parents, as well as State IV-D agencies that clearly defined regulatory standards be established for case closure. At the present time each State may establish case closure criteria, subject only to the requirements mentioned above. Where the State has no standards for case closure and does not periodically evaluate unworkable cases, the IV-D agency is forced to spread available resources inefficiently, resulting in less than effective service given to cases with demonstrated potential for success. In other circumstances, the lack of standards for case closure, or the establishment of standards which are too broad, can result in the arbitrary closing of cases which should have remained open, and the failure to establish paternity and support orders or to collect needed support.

Some States have shown that a careful delineation of case closure criteria can result in program performance improvement; refocusing resources formerly spent unproductively can increase support order establishment and enforcement. In the summer of 1987, OCSE collected and evaluated available information regarding existing State practices and case closure criteria and used this information in developing these proposed criteria.

The advisory committee reviewed and discussed the proposed criteria. Members of the committee agreed with the need for case closure criteria and support the proposed criteria discussed below as reasonable.

If a case does not meet at least one of the following proposed criteria it must be kept open and worked. However, because current regulations at §303.10 allow States to establish procedures for case prioritization, States must distinguish between those cases with current success potential and those which do not now, but may in the future, have potential for success. This latter group could include the cases which do not meet the criteria for closure but in which the next required case processing step cannot be taken. Requirements for periodic review in §303.10 governing case prioritization systems, and elsewhere in Part 303, would apply in these cases.

The proposed §303.11 would be entitled "Case closure criteria." A new paragraph (a) would require States to establish a system for case closure. Paragraph (b) would establish the criteria for case closure eligibility.

Paragraph (b)(1) would allow closure of a case where the child has reached the age of majority, there is no longer a current support order and either no arrearages are owed or arrearages are under $150. We believe that this will allow States to reduce caseloads where there is no longer a minor child and arrearages are relatively small. This provision would also ensure that an obligor could not avoid support obligations by evading their support responsibilities until the child reached the age of majority if the amount of past-due support owed was substantial (i.e., over $150).

Proposed §303.11(b)(2) would allow case closure where the child has not reached the age of majority, arrearages are less than $150, and there is no longer a current support order. Circumstances in which a child has not reached the age of majority but there is no longer a current support order might include termination of parental rights or reconciliation of the child's parents. Termination of parental rights might occur in cases where the child has been legally adopted or has become legally emancipated through marriage. In cases where the parents have reconciled, there would no longer be an absent parent.

Proposed §303.11(b)(3) would allow a State to close a case upon the death of the absent parent, or putative father, if there are no resources available in the estate from which to recover support. A delinquent absent parent may have assets which he or she has protected from collection procedures, and the parent's death may release these assets for collection by the IV-D agency. States should establish routine procedures for ascertaining the extent of any assets which may be available, including availability of assets upon the death of an absent parent. In the case of the death of a putative father, the IV-D agency should also continue to pursue a paternity action to conclusion if there are assets which can be identified, including social security or other retirement survivors' benefits.

Under proposed paragraph (b)(4), the IV-D agency may close cases in which either the child is at least 18 years old and the action is barred by a statute of limitations which meets the requirements of §302.70(a)(5), or the putative father is excluded and no other putative father can be identified. Requiring the IV-D agency to keep cases open beyond this point will serve no useful purpose. In addition, paragraph (b)(4) would specify that, in accordance with §303.5(b), the IV-D agency need not attempt to establish paternity in any case involving incest or forcible rape, or in any case where legal proceedings for adoption are pending, if, in the opinion of the IV-D agency, it would not be in the best interests of the child to establish paternity.

Although proposed paragraph (b)(4) would allow closure of cases needing paternity establishment under specific, limited conditions, we urge States to make every effort, using all resources available, to establish paternity in every case which requires such action.

Proposed paragraph (b)(5) would allow case closure where the IV-D agency has been unable to locate an absent parent despite having made repeated location efforts using multiple sources, including those listed under §303.3, over a three-year period. We believe that, if a State has made such efforts, the likelihood of success beyond the three-year period is extremely low. However, we are particularly interested in receiving comments on the three-year, or any other timeframe in this proposal. Comments on individual or State experience which may support or discredit these proposed timeframes are encouraged.

Paragraph (b)(6) would allow case closure if the absent parent is unable to pay support during the duration of the child's minority because he or she has been institutionalized for at least five years or is incarcerated with a sentence of at least 12 years remaining to be served with no chance for parole. In such cases, the State must also determine that no income or assets are available to the absent parent whim could be levied or attached. Income would include earnings while incarcerated. In the case of institutionalized or incarcerated parent where the timeframes established above have not been met, a IV-D agency which prioritizes cases in accordance with §303.1O may wish to place the case in a low priority file and review the case periodically for available assets and to determine any change in status.

Paragraph (b)(7) would allow a case to be closed when the absent parent is a citizen of, and lives in, a foreign country, does not work for the United States government or a company which has its headquarters or offices in the United States, and has no reachable domestic income or assets; and the State has been unable to establish reciprocity with the country. If the absent parent resides abroad and the case does not qualify for closure under the above criteria (i.e., reciprocity has been established, or the parent works for a U.S. agency or a company with headquarters or offices in the United States), the State should have a good chance of establishing paternity or establishing and enforcing support. In addition, if an absent parent residing abroad meets all the other criteria for closure in this subparagraph, but is a U.S. citizen, the case should not be closed, since a return to the United States is a possibility. Such cases may qualify for inclusion in a suspense file established under §303.10.

Paragraph (b)(8) would allow a case to be closed if the resident parent, legal guardian, attorney, or agent of a child requested the State parent locator service (PLS) to submit a request to the Federal PLS under the provisions of §302.35(c)(3) and the location services have been completed. The advisory committee asked that we clarify that this is a special category of cases in which Federal PLS access only, not full IV-D services, is requested.

Paragraph (b)(9) would allow case closure in a non-AFDC case or in a former AFDC, Medicaid or foster care (title IV-E) case when the custodial parent requests that the case be closed and there are no arrearages assigned to the State. No such option is available to the custodial parent in an open AFDC, Medicaid or foster care case where support has been assigned to the State in accordance with section 402(a)(26) or 1912 of the Act.

Paragraph (b)(10) would allow the IV-D agency to close a case when it has been notified by the IV-A or IV-E agency, in accordance with §302.31(c), that there has been a finding of good cause for the recipient's failure to cooperate in obtaining support and the IV-A or IV-E agency has determined that paternity establishment or support establishment and enforcement may not proceed without risk or harm to the child or caretaker relative.

Paragraph (c) would require the State, 60 calendar days prior to any case closure because of criteria in paragraphs (b) (1) through (7), to notify the custodial parent in writing of the State's intent to close the case. If a case is closed, the custodial parent may request at a later date that the case be reopened if there is a change in circumstances which could lead to the establishment of paternity or a support order, or enforcement of an order.

Paragraph (d) would require the IV-D agency to retain all records for cases closed pursuant to this section for a minimum of three years, in accordance with 45 CFR Part 74, Subpart D.

However, because some families tend to remain on AFDC for long periods of time or leave and then return to the AFDC rolls, States should consider keeping at least minimal information on closed AFDC IV-D cases (e.g., the date and the reason for closure) to avoid duplication of effort should the case be referred again for IV-D services at some, much later, date.

Minimal Organizational and Staffing Requirements- Section 303.20

We believe that the goal of efficient and effective IV-D programs cannot be achieved unless States and localities have an organizational structure and sufficient resources to meet the performance and time standards proposed in this rule. Therefore, we propose to amend current §303.20(c), minimal organizational and staffing requirements, by requiring that there must be an organizational structure and sufficient resources at the State or local level to meet the performance standards contained in Part 303.

To further ensure effective child support programs, we propose to amend current §303.20 by adding a new paragraph (g) which would state that, if it is determined as a result of an audit under Part 305 that a State is not in substantial compliance with title IV-D of the Act, the Secretary will evaluate whether insufficient program resources were a contributing factor and, if necessary, may prescribe specific standards for the State.

We discussed the subject of adequate staffing and sufficient resources with the committee. They agreed that inadequate resources, e.g., insufficient staff and inadequate computer capabilities, often result in poor child support services. Perceived resource deficiencies may also stem from or be exacerbated by fragmented and inefficient organizational arrangements, poor work flow, inadequate policies and procedures, and lack of staff training, among other factors. The committee could offer no clear solution to the problem other than States need to focus attention on child support efforts and realign priorities and/or increase available resources to realize the potential of the program's goals. The fact is that, although there is a general requirement that States adequately staff and manage IV-D programs to ensure compliance with Federal requirements, this requirement has never been quantified and thus many have not done so. Each State should examine the overall management and operation of it's IV-D program and, as necessary, consider transferring existing resources or reordering priorities for the benefit of the program which has a high potential for generating revenues for the State as well as for ensuring support for those in need.

Finally, for consistency with the previously mentioned proposal to delete the list of enforcement techniques in §303.6, we propose to amend §303.20(c)(7) by replacing the list of available enforcement techniques with a requirement that the activities to enforce collection of support must include wage withholding and other available enforcement techniques.

Incentive Payments to States and Political Subdivisions- Section 303.52 and Proposed Section 304.12

Current §303.52 sets forth requirements governing incentive payments to both States and political subdivisions. Because regulations for incentive payments for the most part, govern a financial aspect of the program and do not therefore properly belong in Part 303, which establishes program standards, OCSE is proposing to transfer §303.52 (a), (b) and (c) to 45 CFR Part 304, Federal Financial participation. We are proposing this technical change because we believe that this section would be more appropriately located in Part 304 since it is not directly related to program operations. Accordingly, current 45 CFR 303.52(d) would be redesignated as §303.52. Furthermore, we propose to change the section title, Incentive payments to States and political subdivisions, to Pass-through of incentives to political subdivisions, since this is the only requirement remaining in this section.

To implement the provisions of sections 103(e) and 127 of Pub. L. 100-485, we propose to amend regulations governing incentive payments (proposed §304.12) in two ways. First, we propose to implement section 127, which amends section 458(d) of the Act to exclude the costs of interstate grants when computing incentive payments, by revising paragraph (b)(4)(v) to state that, effective January 1, 1990, in calculating the amount of incentive payments, amounts expended by the State in carrying out a special project under section 455(e) of the Act shall not be included in the State's total IV-D administrative costs. In addition, we propose to implement section 103(e) of Pub.L. 100-485 by adding a new paragraph (vi) which would state that the costs of demonstration projects for evaluating model procedures for reviewing child support awards under section 103(e) of Pub.L. 100-485 shall not be included in a State's total IV-D administrative costs for purposes of computing incentives.

For consistency with the redesignation of most of §303.52 as §304.12, all references to §302.52(a) through (c) in other regulations would be changed to refer to §304.12.

Medical Support Enforcement - Part 306

Currently, Part 306 is divided into two subparts. Current Subpart A contains requirements governing optional cooperative agreements and Subpart B contains required IV-D medical support activities. Because Subpart B contains medical support enforcement requirements which should more appropriate]y appear in Part 303, we propose to move the requirements under current Subpart B (§306.50, Securing medical support information and §306.51, Securing medical support obligations) to Part 303 as new §§303.3O and 303.31, respectively. The regulations under current Subpart A would remain as Part 306 without the heading of Subpart A.

For consistency with the changes and redesignations within Part 306, all references in program regulations to regulations in current Part 306 would be changed to reflect the transfer of the contents of Subpart B to Part 303 and the redesignation of subpart A of part 306 as Part 306.

Economic Impact

The Child Support Enforcement program was established under title IV-D of the Act by the Social Security Amendments of 1974, for the purposes of enforcing the support obligations owed by absent parents to their children, locating absent parents, establishing paternity and obtaining child support. The IV-D program collected some $4.7 billion in FY 1988 - over $1.5 billion behalf of children receiving AFDC and the remainder on behalf of children not receiving AFDC. State and local expenditures amounted to $1.2 billion. Collections for AFDC families after a $50 disregard, are used to offset the costs of assistance payments made to such families. The intent of this proposed regulation is to improve the efficiency and effectiveness of IV-D programs. Because this proposed rule strengthens and clarifies existing program operations regulations, it is expected that State performance will improve and cases will be worked more effectively. Any increase in administrative costs will be minimized if States transfer existing resources to concentrate on child support enforcement efforts and will be more than offset by an increase in collections. State expenditures may increase initially; however, we believe that the increase will be more than offset by the increase in collections, and therefore, a net savings to State government will result.

Executive Order 12291

The Secretary has determined in accordance with Executive Order 12291 that this rule does not constitute a "major" rule. A major rule is one that is likely to result in:

(1) An annual effect on the economy of $100 million or more;

(2) A major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographical regions; or

(3) Significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises in domestic or export markets.

This rule clarifies and strengthens current regulations governing IV-D program operations and any increase in administrative costs to the States will be more than offset by increased collections under the program. If States reallocate existing resources to concentrate efforts on child support enforcement, the return on that investment of resources will far exceed any initial increase in cost to the state.

The proposed case closure criteria contained in §303.9 should result in improved performance of State IV-D agencies because it will ensure that available resources are focused on IV-D cases in which there is potential for paternity establishment and support over establishment and enforcement. It will allow States to close unworkable cases and improve the management of their caseloads. Increased efforts focused on workable cases should result in increased collections, and AFDC cases, increased savings to the State and Federal government.

Regulatory Flexibility Analysis

The Secretary certifies, under 5 U.S.C. 605(b), as enacted by the Regulatory Flexibility Act (Pub. L. 96-354), that this regulation will not result in a significant impact on a substantial number of small entities. The primary impact is on State governments and individuals who are not considered small entities under the Act.

List of Subjects

45 CFR Parts 301, 303 and 304

Child support, Grant programs- social programs, Reporting and recordkeeping requirements.

45 CFR Part 302

Child support, Grant programs- social programs, Penalties, Reporting and recordkeeping requirements, Unemployment compensation.

45 CFR Part 306

Child support, Grant programs- social programs, Medicaid, Reporting and recordkeeping requirements.

45 CFR Part 307

Child support, Grant programs- social programs. Computer technology, Reporting and recordkeeping requirements.

(Catalog of Federal Domestic Assistance Program No. l3.783, Child Support Enforcement Program.)

Dated: April 6, 1989.

Catherine Bertini,

Acting Director, Office of Child Support Enforcement.

Approved: April 6, 1989.

Louis W. Sullivan,

Secretary

For the reasons set forth in the preamble, 45 CFR Parts 301 through 304, 306 and 307 are proposed to be amended as set

forth below.

PART 301 [AMENDED]

1.The authority citation far Part 301 continues to read as follows:

Authority: 42 U.S.C. 651 through 658, 660, 664, 666, 667, 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p) and l396(k).

§§301.1, 306.1, and 303.52 [Amended]

2. Section 301.1 is amended by moving the definitions of "Medicaid agency" and "Medicaid" which are currently in §306.1 (b) and (c) and removing the paragraph designations, and inserting the definitions after the definition of "IV-D agency" and by moving the definition of "Political subdivision which is currently in §303.52(a) and inserting it after the definition of "Past-due support".

PART 302 - [AMENDED]

1. The authority citation for Part 302 continues to read as follows:

Authority: 42 U.S.C. 651 through 658, 660, 664, 666, 667, 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p) and l396(k).

2. Section 302.32 is amended by revising the first sentence of paragraph (b) and adding paragraph (f) to read as follows:

§302.32 Support payments to the IV-D agency.

* * * * *

(b) The IV-D agency must inform the State's IV-A agency of the amount of the collection which represents payment on the required support obligation for the month as determined in §302.51(a) within 10working days from the date of receipt by the IV-D agency responsible for final distribution of the collection.

* * *

* * * * *

(f) Timeframes for distribution of support payments. (1) In interstate IV-D cases, amounts collected by the responding State on behalf of the initiating State must be forwarded to the initiating State within 10 working days of the initial point of receipt in the responding State, in accordance with § 303.7(c)(7)(iv).

(2) Amounts collected by the IV-D agency on behalf of current recipients of aid under the State's title IV-A or IV-E plan for whom an assignment under §232.11 of this title or section 471(a)(17) of the Act is effective shall be distributed as follows:

(i) Payments to the family in AFDC cases under §302.51(b)(1) of this part must be made within 15 working days of the date of initial receipt in the State.

(ii) Except as specified under paragraph (f)(1)(iv) of this section, collections distributed under §302.51(b) (2) through (5) of this part must be distributed within 15 working days of notice of eligibility redetermination by the IV-A agency, but may be distributed prior to eligibility redetermination at the IV-D agency's discretion.

(iii) Except as specified in paragraph (f)(1)(iv) of this section, collections in title IV-E foster care cases must be distributed within 15 working days of the date of initial receipt in the State.

(iv) Collections as a result of Federal or State tax refund offset must be distributed in AFDC cases under §302.51(b) (4) and (5) and in title IV-E foster care cases under §302.52(b) (3) and (4) within 15 working days of the date of initial receipt in the State.

(3) Amounts collected on behalf of individuals receiving services under §302.33 of this part shall be distributed as follows:

(i) Amounts collected which represent payment on the current support obligation shall be paid to the family within 15 working days of the date of initial receipt in the State.

(ii) Except as specified in paragraph (f)(2)(iii), if the amount collected is more than the amount required to be distributed in paragraph (f)(2)(i) of this section, the State may at its discretion either pay such amounts to the family to satisfy past-due support within 15 working days of the date of initial receipt in the State or retain such amounts as have been assigned to satisfy assistance paid to the family which has not been reimbursed.

(iii) Amounts collected as a result of Federal income tax refund offset to satisfy past-due support in non-AFDC cases shall be distributed under §302.51(b) (4) and (5) within 15 working days of the date of initial receipt in the State, except as provided in

303.72(h)(5) of this chapter.

§3O2.51 [Amended]

3. Section 302.51 is amended by changing all references to "§303.52" to "304.12," by removing the sentence "In any case in which collections are received by an entity other than the agency responsible for final distribution under this section, the entity must transmit the collection within 10 days of receipt." in paragraph (a), and by removing the sentence "This payment shall be made in the month following the month in which the amount of the collection was used to redetermine eligibility for an assistance payment under the State's title IV-A plan." in paragraphs (b)(3) and (5).

§302.55 [Amended]

4. Section 302.55 is amended by changing reference to "§303.52" to "§304.12" and the reference to "§303.52(d)" to

"303.52".

§302.80 [Amended]

5. Section 302.80 is amended by removing the words "Subpart A of" in paragraph (a) and replacing the words "Subpart B of Part 306" in paragraph (b) with the words "§§303.30 and 303.31".

PART 303-[AMENDED]

1. The authority citation for Part 303 continues to read as follows:

Authority: 42 U.S.C. 651 through 658, 660, 663, 664. 666, 667, 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p) and 1396(k).

2. Part 303 is amended as follows:

§303.0 [Amended]

a. Section 303.0 is amended by removing the words "effective July 1, 1975;" in paragraph (a).

b. Section 303.2 is revised to read as follows:

§303.2 Establishment of cases and maintenance of case records.

(a) The IV-D agency must:

(1) Make applications for child support services readily accessible to the public;

(2) Provide applications on the day an individual requests and application or services. Information describing available services, the individual's rights and responsibilities, and the State's fees, cost recovery and distribution policies must accompany all applications for services; and

(3) Accept an application as filed on the day it is received. An application is a written document provided by the State which indicates that the individual is seeking assistance with a child support problem and is signed by the individual applying for

IV-D services.

(b) For all cases referred to the IV-D agency or applying for services under §302.33 of this chapter, the IV-D agency must open a case within two working days of receipt of referral or application for services by establishing a case record. The case record must be supplemented with all information and documents pertaining to the case, as well as all relevant facts, dates, actions taken, contacts made and results in a case.

(c) Within 15 working days of receipt of referral of a case or of an application for services under §302.33, based on an assessment of the case to determine necessary action:

(1) Solicit necessary and relevant information from the custodial parent and other relevant sources and initiate verification of information;

(2) Access all appropriate State and local automated sources to determine the absent parent's address, employer, income and assets, if necessary;

(3) If there is adequate location information to proceed with the case, initiate appropriate service within 2 working days of determination of next appropriate action or service; and

(4) If there is inadequate location information to proceed with the case, request additional information or refer the case for further location attempts, as specified in §303.3.

c. Section 303.3 is revised to read as follows:

§303.3 Location of absent parents.

(a) Definition. "Location" means the confirmed physical whereabouts of the absent parent, his or her employer(s), other sources of income and/or assets.

(b) For all cases referred to the IV-D agency or applying for services under §302.33 of this chapter, the IV-D agency must attempt to locate all absent parents or sources of income and/or assets when their location is unknown. Under this standard, the IV-D agency must:

(1) Use appropriate local locate sources such as officials and employees administering public assistance, general assistance, medical assistance, food stamps and social services (whether such individuals are employed by the State or a political subdivision), relatives and friends of the absent parent, current or past employers, the local telephone company, the U.S. Postal Service, financial references, unions, fraternal organizations, and police, parole, and probation records if appropriate;

(2) Establish working relationships with all appropriate local agencies in over to utilize local locate resources effectively;

(3) Use appropriate State agencies and departments, which at a minimum must include those departments which maintain records of public assistance wages and employment, unemployment insurance, income taxation, driver's licenses, vehicle registration and criminal records;

(4) Within 30 working days of referral of the case, application under §302.33 or request for location in accordance with paragraph (b)(8) of this section, access all appropriate location sources:

(5) Transmit appropriate cases to the Federal PLS, including cases which qualify for submittal to the FPLS and for which State and local location efforts have been unsuccessful;

(6) Within 2 working days of location, initiate necessary action or service;

(7) Refer appropriate cases to the IV-D agency of any other State, in accordance with the requirements of §303.7 of this part. The IV-D agency of such other State shall follow the procedures in paragraphs (b)(1) through (8) of this section for such case as necessary except that the responding State is not required to access the Federal PLS under section (b)(4) of this section;

(8) Repeat location attempts quarterly in appropriate cases in which previous attempts to locate absent parents or sources of income and/or assets have failed but adequate information exists to meet requirements for submittal for location, in conjunction with quarterly updates of State employment security files: and

(9) If at any point in case processing the absent parent's location or location of sources of income and/or assets becomes unknown, refer for location services within 5 working days of determining that location is unknown.

d. The introductory text of §303.4 is republished and the section is amended by adding new paragraphs (d) and (e)to read as follows:

§303.4 Establishment of support obligations.

For all cases referred to the IV-D agency or applying for services under §302.33 of this chapter, the IV-D agency must:

* * * * *

(d) Within 30 working days of locating an absent parent or establishing paternity, establish a support order or file a petition for establishment of a support order with the court or administrative authority responsible for establishment of obligations;

(e) If the court or administrative authority dismisses a petition for a support order without prejudice, the IV-D agency must examine the reasons for dismissal, determine when it would be appropriate to seek an order in the future, and seek a support order at that time.

e. Section 303.5 is amended by revising paragraphs (a) and (c) to read as follows:

§303.5 Establishment of paternity.

(a) For all cases referred to the IV-D agency or applying for services under §302.33 of this chapter in which paternity has not yet been established, the IV-D agency must:

(1) Within one year of locating the alleged father;

(i) Establish paternity by court order or other legal process established under State law;

(ii) Establish paternity by acknowledgment if under State law such acknowledgment has the same legal effect as court-ordered paternity, including the right to benefits other than child support; or

(iii) Exclude the alleged father as a result of genetic tests.

(2) In any case where an alleged father is excluded but more than one alleged father has been identified, the IV-D agency must meet the requirements set forth in paragraph (a)(1) of this section for each alleged father identified.

* * * * *

(c) The IV-D agency must identify and use through competitive procurement laboratories which perform, at reasonable cost, legally and medically acceptable genetic tests, including blood tests, which tend to identify the father or exclude the alleged father. The IV-D agency must make available a list of such laboratories to appropriate courts and law enforcement officials, and to the public upon request.

f. Section 303.6 is revised to read as follows;

§303.6 Enforcement of support obligations.

For all cases referred to the IV-D agency or applying for services under §302.33 in which the obligation to support and the amount of the obligation have been established, the IV-D agency must maintain and use an effective system for:

(a) Monitoring compliance with the support obligation;

(b) Identifying on the date the parent fails to make payment in an amount equal to the support payable for one month, or on an earlier date in accordance with State law, those cases in which there is a failure to comply with the support obligation; and

(c) Enforcing the obligation by:

(1) Initiating income withholding, in accordance with §303.100;

(2) Initiating any other available enforcement technique, except Federal and State income tax refund offset, as appropriate in accordance with §302.70(b) of this Chapter, within 30 working days of identifying a delinquency or other support-related noncompliance with the order:

(3) Submitting once a year, all cases which meet the certification requirements for State income tax refund offset, in accordance with §303.102 and State guidelines developed under §302.70(b), and for Federal income tax refund offset, in accordance with the requirements of §303.72 of this part; and

(4) In cases where previous enforcement attempts have been unsuccessful, examine the factors which determine the ability to use an enforcement technique quarterly and initiate appropriate enforcement techniques as appropriate in accordance with the requirements of this section.

§303.7 [Amended]

g. Section 303.7(c) is amended by amending paragraph (c)(4) to replace the words "60 days" with the words "30 working days" and by adding the words "with the exception of the requirement to access the Federal PLS in §303.3(b)(4)." after "§303.3 of this part" in paragraph (c)(4)(i).

b. A new §303.9 entitled "Service of process" is added to read as follows:

§303.9 Service of process.

(a) When service of process is necessary at any point in case processing, service of process must be requested within 2 working days of a determination that service of process is necessary and must be completed in accordance with paragraph (b) of this section within the overall timeframes for location, establishment of paternity and support orders and enforcement set forth in this Part; and

(b) Process must be served within 10 working days of the request for service of process.

i. The Introductory text of §303.10(b) is republished and §303.10 is amended by revising paragraphs (a), (b)(5) and (b)(8) 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. If a IV-D agency implements a case assessment and prioritization system, the IV-D agency must continue to meet the timeframes and case processing standards contained in this Part.

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

* * * * *

(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 in accordance with §303.2.

(6) Establish a mechanism for the periodic review of low priority cases in accordance with the standards set forth in Part 303, and for notifying the custodial parent in these cases that new information may result in a higher priority for the case.

i. A new §303.11 entitled "Case closure criteria" is added to read as follows:

§303.11 Case closure criteria.

(a) The IV-D agency shall establish a system for case closure.

(b) In order to be eligible for closure, the case must meet at least one of the following criteria:

(1) In the case of a child who has reached the age of majority, there is no longer a current support order and arrearages are under $150;

(2) In the case of a child who has not reached the age of majority, there is no longer a current support order and arrearages are under $150:

(3) The absent parent or putative father is deceased and no further action, including a levy against the estate, can be taken;

(4) Paternity cannot be established because:

(i) the child is at least 18 years old and action to establish paternity is barred by a statute of limitations which meets the requirements of §302.70(a)(5) of this chapter;

(ii) a court or administrative process has excluded the putative father and no other putative father can be identified; or

(iii) in accordance with §303.5(b) of this part, the IV-D agency has determined that it would not be in the best interests of the child to establish paternity in a case involving incest or forcible rape, or in any case where legal proceedings for adoption are pending;

(5) The absent parent's location is unknown, and the State has made regular attempts using multiple sources to locate the absent parent over a three-year period, all of which have been unsuccessful;

(6) The absent parent cannot pay support for the duration of the child's minority because the parent has been institutionalized in a psychiatric facility for at least five years or is incarcerated with a sentence of at least 12 years remaining to be served and there is no chance for parole. The State must also determine that no income or assets are available to the absent parent which could be levied or attached for support;

(7) The absent parent is a citizen of, and lives in, a foreign country, does not work for the Federal government or a company with headquarters or offices in the United States, and has no reachable domestic income or assets; and the State has been unable to establish reciprocity with the country:

(8) The IV-D agency has provided location-only services as requested under §302.35(c)(3) of this chapter:

(9) The non-AFDC custodial parent requests closure of a case and there is no assignment to the State of arrearages which accrued under a support order; or

(10) There has been a finding of good cause as set forth at §§302.31(c) and 232.40 through 232.49 of this chapter and the State or local IV-A or IV-E agency has determined that support enforcement may not proceed without risk or harm to the child or caretaker relative.

(c) In cases meeting the criteria in paragraphs (b) (1) through (7) of this section, the State must notify the custodial parent in writing 60 calendar days prior to closure of the case of the State's intent to close the case. If the case is closed, the custodial parent may request at a later date that the case be reopened if there is a change in circumstances which could lead to the establishment of paternity or a support order or enforcement of an order.

(d) The IV-D agency must retain all records for cases closed pursuant to this section for a minimum of three years, in accordance with 45 CFR Part 74, subpart D.

k. Section 303.20 is amended by revising the introductory language in paragraph (c) and paragraph (c)(7) and adding new paragraph (g) to read as follows:

§303.20 Minimum organizational and staffing requirements.

(c) There is an organizational structure and sufficient resources at the State and local level to meet the performance and time standards contained in this part and to provide for the administration or supervision of the following support enforcement functions:

* * * * *

(7) Enforcement. Activities to enforce collection of support, including income withholding and other available enforcement techniques.

* * * * *

(g) If it is determined as a result of an audit conducted under Part 305 of this chapter that a State is not in substantial compliance with the requirements of title IV-D of the Act, the Secretary will evaluate whether inadequate resources was a major contributing factor and, if necessary, may set resource standards forthe State.

§§ 303.30 and 303.31 [Redesignated From 306.50 and 306.51 Respectively]

l. Section 306.50 is redesignated as a new §303.30 and 306.51 is redesignated as a new 303.31.

§§303.52 and 301.1 [Amended]

m. In §303.52, the definition of "Political subdivision" is moved from paragraph (a) to §301.1 and §303.52 is revised to read as follows:

§303.52 Pass-through of incentives to political subdivisions.

The State must calculate and promptly pay incentives to political subdivisions as follows:

(a) The State IV-D agency must develop a standard methodology for passing through an appropriate share of its incentive payment to those political subdivisions of the State that participate in the costs of the program, taking into account the efficiency and effectiveness of the activities carried out under the State plan by those political subdivisions. In order to reward efficiency and effectiveness, the methodology also may provide for payment of incentives to other political subdivisions of the State that administer the program.

(b) To ensure that the standard methodology developed by the State reflects local participation, the State IV-D agency must submit a draft methodology to participating political subdivisions for review and comment or use the rulemaking process available under State law to receive local input.

§303.72 [Amended]

n. Section 303.72(g)(8) is amended by changing the reference to "§303.52" to "§304.12."

§303.73 [Amended]

o. Section 303.73(a)(1) is amended by changing the reference to "§303.7(a)(3)" to "§303.7."

§303.100 [Amended]

p. Section 303.100(e)(2) is amended by removing the word "promptly" after the word "distributed."

§303.102 [Amended]

q. Section 303.102(g)(1) is amended by removing the words "Within a reasonable time period in accordance with State law," and capitalizing the word "a" before the word "State."

PART 304 - [AMENDED]

1. The authority citation in Part 304, continues to read as follows:

Authority: 42 U.S.C.651 through 655, 657, 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p), and 1396(k).

2. Part 304 is amended by adding a new §304.12, entitled "Incentive payments" and by amending §§304.20(b)(2), 304.23 and 304.26 as follows:

§304.12 Incentive payments

(a) Definitions. For the purposes of this section: "AFDC collections" means support collections satisfying an assigned support obligation under §232.11 of this title or section 471(a)(17) of the Act, including collections treated in accordance with paragraph (b)(4)(ii) of this section.

"Non-AFDC Collections" means support collections, on behalf of individuals receiving services under §232.11 of this title or section 471(a)(17) of the Act, including collections treated in accordance with paragraph (b)(4)(ii) of this section and collections made under §302.51(e) of this chapter.

"Total IV-D administrative costs" means total IV-D administrative expenditures claimed by a State in a specified fiscal year adjusted in accordance with paragraphs (b)(4)(iii), (b)(4)(iv) and (b)(4)(v) of this section.

(b) Incentive payments to States. Effective October 1, 1985, the Office shall compute incentive payments for States for a fiscal year in recognition of AFDC collections and of non-AFDC collections.

(1) A portion of a State's incentive payment shall be computed as a percentage of the State's AFDC collections, and a portion of the incentive payment shall be computed as a percentage of its non-AFDC collections. The percentages are determined separately for AFDC and non-AFDC portions of the incentive. The percentages are based on the ratio of the State's total administrative costs and the State's non-AFDC collections to the State's total administrative costs in accordance with the following schedule:

Percent of collection

paid as an incentive

Less than 1.4..........................6.0

At least 1.4...........................6.5

At least 1.6...........................7.0

At least 1.8...........................7.5

At least 2.0...........................8.0

At least 2.2...........................8.5

At least 2.4...........................9.0

At least 2.6...........................9.5

At least 2.8..........................10.0

(2) The ratios of the State's AFDC and non-AFDC collections to total IV-D administrative costs will be truncated at one decimal place.

(3) The portion of the incentive payment paid to a State for a fiscal year in recognition of its non-AFDC collections is limited to the percentage of the portion of the incentive payment paid for that fiscal year in recognition of its AFDC collections, as follows:

(i) 100 percent in fiscal years 1986 and 1987;

(ii) 105 percent in fiscal year 1988;

(iii) 110 percent in fiscal year 1989; and

(iv) 115 percent in fiscal year 1990 and thereafter.

(4) In calculating the amount of incentive payments, the following conditions apply:

(i) Only those AFDC and non-AFDC collections distributed and expenditures claimed by the State in the fiscal year shall be used to determine the incentive payment payable for that fiscal year;

(ii) Support collected by one State on behalf of individuals receiving IV-D services in another State shall be treated as having been collected in full by each State;

(iii) Fees paid by individuals, recovered costs, and program income such as interest earned on collections shall be deducted from total IV-D administrative costs;

(iv) At the option of the State, laboratory costs incurred in determining paternity may be excluded from total IV-D administrative costs; and

(v) Effective January 1, 1990, amounts expended by the State in carrying out a special project under section 455(e) of the Act shall not be included in the State's total IV-D administrative costs.

(vi) Costs of demonstration projects for evaluating model procedures for reviewing child support awards under section 103(e) of Pub.L. 100-485 shall not be included in the State's total

IV-D administrative costs.

(c) Payment of incentives. (1) The Office will estimate the total incentive payment that each State will receive for the upcoming fiscal year.

(2) Each State will include one-quarter of the estimated total payment in its quarterly collection report which will reduce the amount that would otherwise be paid to the Federal government to reimburse its share of assistance payments under §§302.51 and 302.52 of this chapter.

(3) Following the end of a fiscal year, the Office will calculate the actual incentive payment the State should have received based on the reports submitted for that fiscal year. If adjustments to the estimate made under paragraph (c)(1) of this section are necessary, the State's IV-A grant award will be reduced or increased because of over- or under- estimates for prior quarters and for other adjustments.

(4) For FY 1985, the Office will calculate a State's incentive payment based on AFDC collections retained by the State and paid to the family under §302.51(b)(1) of this chapter.

(5) For FY 1986 and 1987, a State will receive the higher of the amount due it under the incentive system and Federal matching rate in effect as of FY 1986 or 80 percent of what it would havereceived under the incentive system and Federal matching rate in effect during FY 1985.

§304.20 [Amended]

b. Section 304.20(b)(2) is amended by substituting the word "genetic" for the word "blood" wherever it appears and changing the reference to "§303.5(b)" to "§305.5(c)".

§304.23 [Amended]

c. Section 304.23(g) is amended by removing the words ",Subpart A," after the words "Part 306".

§304.26 [Amended]

d. Section 304.26(b) is amended by changing the reference to "§303.52" to "§304.12".

PART 306-[AMENDED]

§§306.1 and 301.1 [Amended]

§§306.50 and 306.51 [Redesignated as §§303.30 and 303.31]

Part 306 is amended by transferring the definitions of "Medicaid agency" and "Medicaid" from §306.1 to §301.1 transferring the contents of Subpart Required IV-D Activities, which consists of §§306.50 and 306.51, to Part 303 and redesignating them as new §§303.30 and 303.31, respectively, and the part is revised to read as follows:

PART 306-OPTIONAL COOPERATIVE AGREEMENTS FOR MEDICAL SUPPORT ENFORCEMENT

Sec.

306.0 Scope of this part.

306.2 Cooperative agreement.

306.10 Functions to be performed under a cooperative agreement.

306.11 Administrative requirements of cooperative agreements.

306.20 Prior approval of cooperative agreements.

306.21 Subsidiary cooperative agreements with courts and law enforcement officials.

306.22 Purchase of service agreements.

306.30 Source of funds.

Authority: 42 U.S.C. 652, 1302, 1396a(a)(25) 1396b(d)(2), 1396b(o), 1396b(p), and 1396(k).

§306.0 Scope of this part.

This part defines the requirements for an optional cooperative agreement between the IV-D agency and the Medicaid agency for the purpose of enforcing medical support obligations under section 1912of the Act.

§306.2 Cooperative agreement.

The cooperative agreement between the IV-D agency and the Medicaid agency shall be a written agreement for the IV-D agency to assist the Medicaid agency by securing and enforcing the medical support obligation of an absent parent to a child for whom an assignment of medical support rights has been executed under 42 CFR 433.146. The functions that the IV-D agency may perform under the cooperative agreement are set forth in §306.10. The administrative requirements are set forth at §306.11.

§306.10 Functions to be performed under a cooperative agreement.

The functions that the IV-D agency may perform under a cooperative agreement with the Medicaid agency are limited to one or any combination of the following activities. The agency may:

(a) Receive referrals from the Medicaid agency.

(b) Locate the absent parent, using the State Parent Locator Service and the Federal Parent Locator Service, as needed.

(c) Establish paternity if necessary.

(d) Determine whether the parent has a health insurance policy or plan that covers the child.

(e) Obtain sufficient information about the health insurance policy or plan to permit the filing of a claim with the insurer.

(f) File a claim with the insurer; or transmit the necessary information to the Medicaid agency, or to the appropriate State agency or fiscal agent for the filing of the claim; or require the absent parent to file a claim.

(g) Secure health insurance coverage through court or administrative order.

(h) Take direct action against the absent parent to recover amounts necessary to reimburse medical assistance payments when the absent parent does not have health insurance and the amounts collected will not reduce the absent parent's ability to pay child support.

(i) Receive medical support collections.

(j) Distribute the collections as required by 42 CFR 433.154 including calculation and payment of the incentives provided for by 42 CFR 433.153.

(k) Perform other functions as may be specified by instructions issued by the Office of Child Support Enforcement.

§306.11 Administrative requirements of cooperative agreements.

(a) Organizational structure. The cooperative agreement must:

(1) Describe the organizational structure of the unit or units within the IV-D agency that are responsible for medical support enforcement activities.

(2) List the medical support enforcement functions that are to be performed outside of the IV-D agency with the name of the organization responsible for performance.

(3) Provide that the IV-D agency shall have responsibility forsecuring compliance with the requirements of the cooperative agreement by individuals or agencies outside the IV-D agency performing medical support enforcement functions.

(b) Maintenance of records. The cooperative agreement must specify that the IV-D agency will establish and maintain case records of medical support enforcement activities in accordance with the provisions of §302.15 of this chapter.

(c) Safeguarding information. The cooperative agreement must provide that the use or disclosure of information concerning applicants for, or recipients of, medical support enforcement services is subject to the limitations in §303.21 of this chapter.

(d) Fiscal policies and accountability. (1) The cooperative agreement must provide that the IV-D agency will maintain an accounting system and supporting fiscal records adequate to assure that claims for reimbursement from the Medicaid agency are in accordance with applicable Federal requirements in 45 CFR Part 74.

(2) The cooperative agreements must provide for the establishment of a method for properly allocating those costs that cannot be directly charged to the medical support enforcement effort.

§ 306.20 Prior approval of cooperative agreements.

(a) Prior to implementation, the IV-D agency must submit two copies of any cooperative agreement entered into under this part to the Regional Representative for approval.

(b) The Regional Representative will review the cooperative agreement for conformity with the requirements of this part and 42 CFR 433.152.

(c) The Regional Representative will promptly notify the State of approval or disapproval. The State may consider the agreement approved if notification is not received within 60 days after the agreement is received by the Regional Representative.

§306.21 Subsidiary cooperative agreements with courts and law enforcement officials.

The IV-D agency will enter into subsidiary written cooperative agreements with appropriate courts and law enforcement officials to the extent necessary to perform those functions specified in the cooperative agreement between the IV-D agency and the Medicaid agency. These agreements must be made in accordance with the requirements of §302.34 (Cooperative agreements).

§306.22 Purchase of service agreements.

The IV-D agency will enter into written purchase of service agreements to the extent necessary to fulfill the requirements of its cooperative agreement with the Medicaid agency.

§306.30 Source of funds.

The cooperative agreement must specify that the IV-D agency will receive full reimbursement from the Medicaid agency for all medical support enforcement activities performed under the agreement.(See 306.11(d) for requirements on fiscal policies and accountability.)

PART 307- [AMENDED]

1. The authority citation for Part 307 continues to read as follows:

Authority: US.C 652 through 658, 664, 666, 667 and 1302.

§307.10 [Amended]

2. Section 307.10 is amended by changing the reference in paragraph (a)(2)(xiii) to "45 CFR Part 306" to" §§303.30 and 3O3.31".

[FR Doc. 89-9354 Filed 4-18-89; 8:45 am]

BILLING CODE 4150-04-M