AUTHOR: ELAINE SORENSEN
The amount of child support arrears certified by states and submitted to OCSE reached $117 billion in February 2020 before falling to $113 billion in October 2020. The $4 billion decline is the largest that OCSE has recorded in 20 years.
The arrears amount represents child support that remains unpaid. State child support agencies maintain and certify noncustodial parents’ arrears and submit that information to the federal office for inclusion in the Federal Collection and Enforcement Programs. In turn, OCSE forwards this information to certain federal and private entities, when appropriate, for actions under federal law. This includes submitting cases with eligible arrears to the Treasury Offset Program, which is operated by the U.S. Department of Treasury, Bureau of the Fiscal Service (BFS). Monies that BFS offsets through the program, including from federal tax refunds, are sent to OCSE to be forwarded to the submitting states.
Figure 1 shows that arrears have been increasing over time and, historically, follow a certain pattern during the year. They tend to peak in February, then decline usually through October. Arrears increase again between October and February, ending each year at a higher level.
Based on recent trends in arrears, we expected a slight decline between February and October of 2020, but not as much as $4 billion. We capture this trend by calculating the monthly change in arrears from the past four years and applying the average change to each month between March 2020 and October 2020. Using this predictive approach, we expected arrears to drop by less than $1 billion between February and October, as shown by the blue line in Figure 1. However, as the orange line shows, they actually dropped by $4 billion.
Figure 1. Average Monthly Certified Child Support Arrears (in billions)
Source: Federal Office of Child Support Enforcement (OCSE), Management Information Central Repository System (MICRS).
This significant drop in arrears was driven in large part by the Economic Impact Payments of $1,200 per adult and $500 per child issued to most Americans as part of the 2020 CARES Act. The CARES Act did not exempt these payments from the Treasury Offset Program, and thus they were handled the same as a tax refund offset. Noncustodial parents who were eligible for a tax refund offset had their payments intercepted. While other factors may have also played a role in the decline of child support arrears in 2020, the offsets from Economic Impact Payments were probably the largest contributing factor.