Base Year Level of Spending - Reminder


Publication Date: November 7, 2017



DATE: November 7, 2017

TO: State IV-D Agencies

SUBJECT: Base Year Level of Spending — Reminder

The purpose of this Action Transmittal is to remind states how the base level of spending is determined in accordance with 45 CFR 305.35(d) and to give states the option to change the method that is used to determine their base amount for incentive purposes.

Section 458(f) of the Social Security Act requires that states use their incentive funds to supplement and not supplant their expenditures under title IV-D. The regulation at 45 CFR 305.35(d) sets forth the methodology for calculating the base amount of spending. States are provided with two options:

  • A base amount of IV-D expenditures is determined for each state by subtracting the amount of incentive funds received and reinvested in the state IV-D program for fiscal year 1998 from the total amount expended by the state in the IV-D program during the same period.
  • Alternatively, states have the option of using the average amount of the three fiscal years (1996, 1997, and 1998) as a base amount.

Regardless of the computation method chosen, a state’s reinvestment base equals the state share of expenditures for fiscal year 1998 (or alternatively, fiscal years 1996-1998), unless the state reinvested its incentive payments for those years into its child support program. If the state reinvested the incentives received in those years, then the 1998 incentive amount (or alternatively the average of fiscal years 1996-1998) is subtracted from the expenditure base. If the state did not reinvest the incentives received, then nothing is deducted from the expenditure base.

This base amount of state spending must be maintained in future years. Incentive payments earned by states must be used in addition to, and not in lieu of, the base amount.

Noncompliance will result in disallowances of incentive amounts equal to the amount of funds supplanted. For fiscal year 2019, states will be penalized for not meeting the baseline based on fiscal year 2018 data submitted on form OCSE-396.

ACTION REQUIRED: Previous communications did not provide a time limit for a state to notify OCSE in writing as to the option they prefer to use to have the base amount determined.

OCSE will notify each state in a separate correspondence of their current baseline and the options available to them as well as the deadline for notifying OCSE of the base amount the state will use.

REFERENCES: OCSE-AT-01-01, OCSE-AT-01-04, AT-16-06, DCL-01-50


INQUIRIES: ACF/OCSE Regional Program Managers or OCSE Division of Performance and Statistical Analysis at

Scott M. Lekan
Office of Child Support Enforcement

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