State and local child support agencies receive funding to operate their programs. This funding comes from state and local governments and the federal government. The child support program is a federal matching grant program under which state and local governments must spend money in order to receive federal funding. For every dollar a state or local government spends on the child support program, it receives 66 cents from the federal government (also known as Federal Financial Participation, or FFP). The federal government also provides incentive payments, which are designed to encourage states to operate strong performance-based child support programs. These three sources of funding – state and local funding, the FFP, and federal incentive payments – represent nearly all of the funding for the child support program and are the focus of this blog. State child support programs also collect fees from families who use child support services, but this funding source represents less than 3 percent of the total funding for the child support program.
The federal government provides most of its funding for the child support program through its 66 percent match on state and local expenditures. Nonetheless, the federal government also provides incentive payments to states to encourage them to operate a strong performance-based child support program. The amount of incentive funding for the child support program was dramatically reduced by the Deficit Reduction Act of 2005 (DRA). Prior to the DRA, incentive payments were treated as state expenditures and the federal government matched these funds, greatly increasing their value. The DRA eliminated the federal match on incentive payments starting in FY 2008. As a result of the recession, Congress temporarily reinstated the federal match on incentives in FY 2009 and FY 2010 as part of the American Recovery and Reinvestment Act of 2009, but the DRA provision went back into effect in FY 2011.
As a result of the DRA, federal funding for the child support program has declined overall. During the recession when the DRA provision was temporarily reinstated, federal funding increased, but once the DRA provision went back into effect, federal funding declined. As the graph shows, federal funding for the program fell 10 percent between FY 2010 and FY 2013. Since FY 2013, federal funding has generally increased, but it is still about 4 percent below its FY 2008 level.
State and local funding for the child support program fell in FY 2009 during the recession and remained basically unchanged in FY 2010. Since FY 2010, state and local funding have generally increased, but not enough to offset the decline in federal funding resulting from the DRA.
Child Support Program Funding: FY 2008 to FY 2016
Note: Dollars are expressed in nominal terms. They have not been adjusted for inflation.
Source: Total Funding is from OCSE Form 396 line 7 (A+C). Federal Funding (including Incentives) is from OCSE Form 396 line 7 (B+D) plus line 1a. State and Local Funding is the difference between Total and Federal Funding.
Total funding for the child support program decreased nearly 3 percent from FY 2008 to FY 2016. During the recession and its aftermath, child support funding fell 5 percent, falling from $5.9 billion to $5.6 billion between FY 2008 and FY 2013. Since then, funding rebounded somewhat for two years and then fell slightly in FY 2016. In FY 2016, funding stood at $5.7 million, $144 million below its peak in FY 2008.