Reduction in Federal Financial Participation Rates for the Child Support Enforcement Program
AT-95-03
ACTION TRANSMITTAL
OCSE-AT-95-03
February 17, 1995
TO: STATE AGENCIES ADMINISTERING THE CHILD SUPPORT
ENFORCEMENT PROGRAM UNDER TITLE IV-D OF THE SOCIAL
SECURITY ACT AND OTHER INTERESTED PARTIES.
SUBJECT: Reduction in Federal Financial Participation (FFP)
Rates for the Child Support Enforcement Program
Under Title IV-D of the Social Security Act (Act)
BACKGROUND: Under Section 455(a)(1)(B) of the Act, States are
currently entitled to Federal funding at the
"enhanced" 90 percent FFP rate for expenditures
for the planning, design, development,
implementation and operation of an approved Child
Support Enforcement System (CSES).
Under Section 123(c) of Public Law 100-485, the
"Family Support Act of 1988," dated October 13,
1988, this provision of the Act is repealed to
eliminate the enhanced FFP rate for these
expenditures and substitute the "regular" 66
percent FFP rate.
(Federal funding will continue to be available at
the 90 percent FFP rate for laboratory costs
associated with the process of paternity
determination.)
EFFECTIVE
DATE: The 90 percent FFP rate for CSES expenditures is
repealed as of September 30, 1995. For all CSES
expenditures made on or after October 1, 1995
(other than holdback payments discussed as
"Special Circumstances," below), Federal funding
is only available at the 66 percent FFP rate.
SPECIAL
CIRCUMSTANCES: System Certification and Holdback Payments. In
accordance with the provisions of 45 CFR 307.5(a),
"By October 1, 1995, each State must have in
effect an operational computerized support
enforcement system, which is certified." To be
fully certified, a system must be in compliance
with all the requirements of 45 CFR 307.10 and
must have successfully passed a certification
review conducted by the Office of Child Support
Enforcement (OCSE) under the provisions of 45 CFR
307.25.
Since we anticipate that many States will not
request certification reviews until just before
the deadline, OCSE will be unable to conduct these
reviews in all States that have a "certifiable"
operational system in effect by the October 1,
1995 deadline. When, under the terms of its
contract with systems developers and others, a
State "holds back" a portion of the contracted
price pending completion and formal certification
of the entire project, any delay in the
certification process will necessarily delay the
final payment of these "holdback" amounts.
Cash Accounting. Under the provisions of 45
CFR 304.25(a), States are required to maintain a
cash accounting system for the maintenance of
financial records under the Child Support
Enforcement Program. As stated in this
regulation, this provides that "(e)xpenditures are
considered to be made on the date which the cash
disbursements occur...."
Given the delays that may occur in the
certification process, many "holdback payments"
will ultimately be paid to the respective
contractors after September 30, 1995, the last day
that Federal funding will be available at the 90
percent FFP rate. In accordance with the cash
accounting requirements outlined above, payments
made after that date would no longer be eligible
for Federal funding at the 90 percent FFP rate.
Deviations. Under Federal regulations at 45
CFR 304.25, "(d)ifferent rules may be applied...
for particular classes of expenditures only upon
justification by the State to (OCSE) and approval
(by OCSE)."
In accordance with these regulations, any State
that has in effect an operational statewide
comprehensive computerized support enforcement
system and has requested a "Federal Level 2
Certification" prior to October 1, 1995, may
submit a request that it be permitted to deviate
from the standard treatment of expenditures to
preserve its claim to Federal funding at the 90
percent FFP rate. To permit these requests to be
processed, they must be received by this agency no
later than August 31, 1995. Each request must
include the State's rationale for the request and
the full amount for which the request is being
submitted. The use of certified mail with a
return receipt is recommended to establish the
mailing and receipt dates.
The request must be signed by the individual
responsible for submitting the State's quarterly
expenditure reports and should be sent to:
Administration for Children and Families
c/o Director, Office of
Information Systems Management
370 L'Enfant Promenade, S.W.
Washington, D.C. 20447
A copy should also be sent to the appropriate
Regional Administrator.
Escrow Accounts. To preserve its claim for
Federal funding at the 90 percent FFP rate, the
State must establish an escrow account with a
third party at the time the request for deviation
is submitted. The amount deposited to this
account should equal the 10 percent State share of
the payments being held back pending system
certification, as specified in the State's
contract. If the State's deviation request is
approved, the holdback payments, when made to the
vendor, will remain eligible for Federal funding
at the 90 percent FFP rate, using the amount in
the escrow account as the State share of these
payments. Any non-holdback payments anticipated
to be made to the vendor later than September 30,
1995 under the terms of the contract should not be
deposited in this account and will not be
considered for the enhanced FFP rate.
Financial Reporting. Deposits made to an
escrow account will not be considered expenditures
for Federal reporting purposes. Upon
notification that a State's Child Support
Enforcement System is certified, the entire
holdback payment should be claimed as "prior
quarter increasing adjustments" at that time.
These claims will remain eligible for Federal
funding at the 90 percent FFP rate. Additional
Federal funding at the 90 percent FFP rate will
not be available to correct system deficiencies
identified by the State or by a Federal
certification review, including deficiencies
concerning contract deliverables, if such
corrections are made after September 30, 1995.
OTHER
PROVISIONS: Prior Quarter Adjustments. For the purposes of
determining the applicable FFP rate for those
expenditures affected by this change, the date the
expenditure is made (or the quarter to which the
expenditure is allocated) is the controlling
factor. Any expenditure made prior to October 1,
1995, but claimed later than that date will remain
eligible for Federal funding at the 90 percent FFP
rate.
Timely Filing. The reduction in FFP rates does
not alter the requirement under Section 1132 of
the Social Security Act (45 CFR Part 95, Subpart
A) that claims be filed within two years of the
last day of the quarter in which the expenditure
was made. The determination of the appropriate
FFP rate for these claims is governed by the
guidelines discussed above. Any claim found to
meet the criteria for an exception to the two-year
deadline, will remain eligible for Federal funding
at the 90 percent FFP rate regardless of when that
claim is filed.
Depreciation Claims. Claims filed in
accordance with a multi-quarter depreciation
schedule are eligible for FFP at the rate
applicable to the quarter to which the
depreciation is allocated. Depreciation claims
applicable to quarters beginning prior to October
1, 1995 will continue to be eligible for FFP at
the higher rate; depreciation claims applicable to
quarters beginning on or after October 1, 1995,
will be eligible for FFP only at the 66 percent
rate.
(Example: ADP equipment purchased in accordance
with an approved plan in July 1992 is to be
depreciated over a five-year period, from July
1992 through June 1997. The portion of the
depreciation allocated to and claimed for quarters
beginning July 1992 and ending September 1995 will
be eligible for Federal funding at the 90 percent
FFP rate; the portion of the depreciation
allocated to and claimed for quarters beginning
October 1995 and ending June 1997 will be eligible
for Federal funding at the 66 percent FFP rate.)
ACTION
REQUIRED: For expenditure reports submitted for fiscal
quarters beginning on or after October 1, 1995,
the "Federal Share of Expenditures" reported on
Part 1 of Form OCSE-131, the "Child Support
Enforcement Program Financial Report" must be
calculated using the new FFP rate:
Line 10 ("Total Federal Share of Expenditures").
Equal to: Line 8 x the Enhanced FFP Rate plus (Sum
of Lines 5 + 6 + 7 + 9) x the Regular FFP Rate.
INQUIRIES: Direct inquiries to the appropriate ACF Regional
Administrator.
/s/ /s/
David Gray Ross Norman L. Thompson
Deputy Director Director
Office of Child Support Office of
Enforcement Financial Management