Final Rule: Revision to the Timeframes for Distributing $50.00 Pass-Through Payments

AT-92-11

Publication Date: November 20, 1992
Current as of:

ACTION TRANSMITTAL

OCSE-AT-92-11

November 20, 1992

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

SUBJECT: Final Rule - Revision to the Timeframes for Distributing $50.00 Pass-Through Payments.

ATTACHMENT: Attached is a final rule which revises the timeframes for distribution of the $50.00 pass-through payments made by either the State IV-A or IV-D agencies, other child support collections to families receiving Aid to Families with Dependent Children (AFDC), and certain collections in title IV-E foster care cases, revising existing regulations in 45 CFR 232.20(d) and 45 CFR 302.32(f). The changes will enable States to operate their programs in a more efficient and effective manner.

REGULATION REFERENCE: 45 CFR Parts 232 and 302

SUPERSEDED MATERIAL: OCSE AT-91-08, dated September 5, 1991

EFFECTIVE DATE: November 19, 1992

INQUIRIES TO: ACF Regional Administrators

__________________________

Allie Page Matthews

Deputy Director

Office of Child Support Enforcement

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

RIN 0970-AA87

45 CFR Parts 232 and 302

Special Provisions Applicable to Title IV-A of the Social

Security Act; Standards for Program Operations

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

ACTION: Final rule

SUMMARY: This final rule revises the timeframes for distributing the $50 pass-through payments made by either the State IV-A or IV-D agencies and other child support collections to families receiving Aid to Families with Dependent Children (AFDC), and certain collections to former AFDC recipients and title IV-E foster care cases. These changes will enable the States to operate their programs in a more efficient and effective manner.

EFFECTIVE DATE: November 19, 1992.

FOR FURTHER INFORMATION CONTACT: Ms. Lourdes Henry, Fourth Floor, Aerospace Building, 370 L'Enfant Promenade, S.W., Washington, D.C. 20447, (202) 401-5440.

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

This final rule does not require information collection activities and, therefore, no approvals are necessary under the Paperwork Reduction Act.

Statutory Authority

This final rule is published under the authority of sections 452(a)(1) and (2), and (i), 454(13), and 1102 of the Social Security Act (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 and spousal 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(i) of the Act, added by section 122 of Public Law 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 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.

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, despite Federal and State efforts in the 17 years since the inception of the IV-D program, the child support problem continues to grow. On October 13, 1988, the Family Support Act of 1988 (Pub. L. 100-485) was signed into law. This law addresses the injustice of parents failing to assume responsibility for their children's support. Section 121 of Public Law 100-485 required 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 122 of Public Law 100-485 required the Secretary of HHS to establish time limits governing the period within which a State must distribute amounts collected as child support. Final regulations to implement these provisions were published in the Federal Register on August 4, 1989 (54 FR 32284).

Effective October 1, 1990, §302.32(f) established timeframes within which States must send child support collections to families. Since publication of those regulations, States have expressed their strong belief that the requirement to distribute the first $50 of support within 15 calendar days of the date of the initial receipt in the State would place an unreasonable administrative burden on State agencies with no compelling benefit to families to warrant varying the longstanding practice which ties assistance payments, accounting, and distribution of collections in AFDC cases to a monthly cycle. They presented data gathered through a national survey conducted by the American Public Welfare Association substantiating their contention.

In response to this overwhelming reaction to the requirement in the program standards final rule, buttressed by the survey information, we have reexamined our position. From all indications, sending $50 pass-through payments to the family within a set number of days after the end of the month of collection is the most practical approach when sending the payment to the family. Therefore, we proposed, on August 28, 1991 at 56 FR 42581, to amend §§232.20(d) and 302.32(f) to tie sending payments to AFDC families and certain payments to title IV-E foster care agencies to the end of the month in which the support was initially received in the State.

Regulatory Provisions

Former §232.20(d) stated that when the IV-A agency, on behalf of the IV-D agency, sends the $50 pass-through payment to the family under §302.51(b)(1), the payment will be sent within 20 calendar days of the date of initial receipt in the State of the first $50 of support collected in a month, or if less than $50 is collected in a month, within 20 calendar days of the end of the month in which the support was collected. In the proposed rule, we proposed changing §232.20(d) to require that when the IV-A agency, on behalf of the IV-D agency, sends to the family the $50 pass-through payment under §302.51(b)(1), the payment will be sent within 25 calendar days of the end of the month in which the support was initially received in the State.

Federal regulations at §302.32(f)(2)(i) previously required that when the IV-D agency sends payments to the family under §302.51(b)(1), payments to the family must be sent to the family within 15 calendar days of the date of initial receipt in the State of the first $50 of support collected in a month, or, if less than $50 is collected in a month, within 15 calendar days of the end of the month in which the support was collected. When the IV-A agency sends payments to the family under §302.51(b)(1), the IV-D agency must forward any amount due the family under §302.51(b)(1) to the IV-A agency within 15 calendar days of the date of initial receipt in the State of the first $50 of support collected in a month, or, if less than $50 is collected in a month, within 15 calendar days of the end of the month in which the support was collected. In the proposed rule, we proposed to change §302.32(f)(2)(i) to require that when the IV-A agency sends payments to the family under §302.51(b)(1), the IV-D agency must forward any amount due the family under §302.51(b)(1) to the IV-A agency within 15 calendar days of the end of the month in which the support was initially received in the State.

In response to comments received on these proposals, this final rule amends §§232.20(d) and 302.32(f)(2)(i) to specify identical timeframes when either the IV-A or IV-D agency sends the pass-through payment to the family under §302.51(b)(1). Under both §§232.20(d) and 302.32(f)(2)(i), pass-through payments must be sent to the family within 15 calendar days of the end of the month in which the support was initially received in the State.

Former regulations at §302.32(f)(2)(ii) stated that, except as specified under paragraph (f)(2)(iv), collections for the month after the month the family receives its last assistance payment and collections distributed under §302.51(b)(3) and (5) must be sent to the family within 15 calendar days of the date of initial receipt in the State of a collection for the first month of ineligibility. In the proposed rule, we proposed to change §302.32(f)(2)(ii) to require that, except as specified under paragraph (f)(2)(iv) of this section: (A) Collections distributed under §302.51(b)(3) and (5) must be sent to the family within 15 calendar days of the end of the month in which the amount of collection which represents payment on the required support obligation was used to redetermine the family's eligibility for an assistance payment under the State's title IVA plan; and (B) Collections for the month after the month the family receives its last assistance payment must be sent to the family within 15 calendar days of the date of initial receipt in the State. This final rule amends §302.32(f)(2)(ii) to require, except as specified under paragraph (f)(2)(iv), that: (A) When the IV-D agency sends collections to the family under §302.51(b)(3) and (5), the IV-D agency must send collections to the family within 15 calendar days of the end of the month in which the support was initially received in the State; and (B) when the IV-D agency sends collections to the family for the month after the month the family becomes ineligible for AFDC, the IV-D agency must send collections to the family within 15 calendar days of the date of initial receipt in the State. In addition, former regulations at §302.32(f)(2)(iii) stated that, except as specified in paragraph (f)(2)(iv), collections in IV-E foster care cases under §302.52(b)(2) and (4) must be distributed within 15 calendar days of the date of initial receipt in the State. As proposed, §302.32(f)(2)(iii) would require that, except as specified under paragraph (f)(2)(iv), collections in IV-E foster care cases under §302.52(b)(2) and (4) must be distributed within 15 calendar days of the end of the month in which the support was initially received in the State. Consistent with the proposed change, the final rule at §302.32(f)(2)(iii) requires that, except as specified under paragraph (f)(2)(iv), when the IV-D agency sends collections to the IV-E foster care agency under §302.52(b)(2) and (4), the IV-D agency must send collections to the IV-E agency within 15 calendar days of the end of the month in which the support was initially received in the State.

Response to Comments

We received over 50 comments on the notice of proposed rulemaking published in the Federal Register on August 28, 1991 (56 FR 42581) including comments from State and local IV-D agencies, child advocacy groups, and interested individuals. Comments and our responses are as follows:

$50 Pass-Through Payments in AFDC Cases

1. Comment: Many commenters, who generally supported the proposed timeframes, suggested various timeframes for sending the $50 pass-through payment to the family, for example, 10 working days, 15 or 25 calendar days from the end of the month of collection. They argued that the current regulation makes it difficult for clients to budget their household income since they cannot determine when to expect the $50 pass-through payment. They also argued that providing a timeframe from the end of the month allows sufficient time for necessary transfer of funds or data to the IV-A agency, issuance of pass-through payments with the AFDC grant, and is consistent with other timeframes for distribution. Another commenter recommended that the regulations should provide for a 15-day timeframe from the end of the month. This commenter contended that the current regulations have resulted in increased operating costs, minimal benefit to families who continue to receive the same net amount of money, and requests for information from consumers who do not understand the erratic receipt of their pass-through payments. Other commenters supported the proposed change regarding the $50 pass through because they felt it was more realistic and should result in more efficient and accurate distribution. Other commenters indicated that a timeframe based on a monthly cycle of accounting and distribution of collections in AFDC cases is simpler and less costly to administer than the existing requirement and would be consistent with the issuance of AFDC benefits. They also indicated that, since the AFDC recipient receives an AFDC payment on or about the same date each month, the family could more easily determine when the pass-through payment is due.

Response: We are persuaded by commenters who suggested that the timeframes for issuing the pass-through payment should be consistent with the AFDC payment cycle because the pass-through payment could be issued with the AFDC grant. This approach would result in the AFDC family being able to readily determine when the pass-through payment could be expected every month. Under the previous rules, AFDC recipients who did not know if or when they will receive a pass-through payment frequently contacted the IV-D agency to request such information. This has resulted in many hours of staff time spent responding to inquiries. Additionally, meeting the requirement to distribute pass-through payments within 15 calendar days of receipt of the first $50 of child support has necessitated issuances of pass-through payments to families on a daily basis. The cost and administrative burden involved in complying with this requirement far outweigh the benefits. Time and money spent administering the pass-through process diverts limited resources away from providing IV-D services.

Therefore, in response to comments, we are revising the regulations governing the IV-A program at §232.20(d) to require that when the IV-A agency, on behalf of the IV-D agency, sends the family the sum disregarded under §302.51(b)(1), it must do so within 15 calendar days of the end of the month in which the support was initially received in the State. Under §302.32(f)(2)(i), when the IV-D agency sends payments to the family, such payments must be sent within 15 calendar days of the end of the month in which the support was initially received in the State.

2. Comment: Some commenters objected to the proposed rule because a family would have to wait as long as 45 to 55 days to receive its pass-through payment. They expressed concern that, as proposed, the rule would require a shorter timeframe for the distribution of title IV-E foster care collections than other collections. They argued that, if the proposal is adopted, the detriment to low income families would far outweigh any administrative benefits to the States. Several commenters urged that OCSE leave the present timeframe rules in place because they treat families in all States the same way. Several commenters endorsed the current regulations because under them an absent parent can see an immediate benefit to his children, the family promptly knows when the absent parent has paid support, and the family receives the pass-through payment in a timely manner.

Response: Under the former regulations at §232.20(d) and §302.32(f)(2)(i), the State was required to issue the $50 pass-through payments on a daily basis. This proved to be a costly and administratively burdensome process. The family did not receive the pass-through payment at the same time each month which often resulted in confusion and made it difficult to include the pass-through in the family budget. Also, the AFDC check received by the family at the same time each month could not include the pass-through payment. We do not believe that the benefit to the family of receiving pass-through payments under the prior timeframes outweighs the confusion of not knowing when such payments will be received, the cost and burden of daily distribution, or the inability to use the AFDC grant cycle. As indicated previously, the final regulations at §§232.20(d) and 302.32(f)(2)(i) require that when either the IV-A or IV-D agency sends the pass-through payment to the family, the payment must be sent to the family within 15 calendar days of the end of the month in which the support was initially received in the State.

3. Comment: Many commenters suggested that the IV-A and the IV-D agencies be held to the same timeframe regardless of whether the IV-A agency or the IV-D agency distributes the pass-through payment. They argued that two different timeframes (the proposed 25-calendar-day timeframe at §232.20(d) for the payment of pass-through payments by the IV-A agency and the proposed 15-calendarday timeframe under §302.32(f)(2)(i)) would cause administrative inconvenience and general frustration with child support enforcement policies because different timeframes could apply in different States. Some commenters suggested that a more equitable approach would be to make the timeframe requirements consistent.

Response: We agree with the commenters that the same timeframes for issuance of pass-through payments should apply regardless of whether the IV-A or IV-D agency sends the payments to the family. Some State IV-A agencies enter into agreements under which the IV-D agency sends the $50 payment to AFDC families. Consistent with our policy of not establishing interim timeframes for different entities in the State, the IV-A and IV-D agencies must arrange to ensure that, when the IV-A agency sends the $50 payment to AFDC families, the IV-A agency receives the pass-through payment in sufficient time to meet the timeframes for distribution of the $50 pass-through. Therefore, we are eliminating from §302.32(f)(2)(i) the separate timeframe for the IV-D agency to forward the payment to the IV-A agency when the IV-A agency sends the payment to the family. When the IV-A agency makes the payment, it must be sent to the family within

15 calendar days of the end of the month of initial receipt in the State in accordance with §232.20(d) and the IV-D agency must ensure it transfers the collection in time for the IV-A agency to meet the requirement.

4. Comment: Some commenters suggested that the pass-through payment be made by the IV-D agency because only one agency would be involved in the payment process and the State would save on administrative costs.

Response: States have discretion to determine which agency makes the payment and may adopt this approach.

5. Comment: One commenter recommended that, when the IV-A and IV-D programs have automated systems, the $50 pass-through payments should be distributed within 10 days from the date of receipt of the first $50 of support. A few commenters suggested that the effective date of the change to the pass-through timeframe be delayed until 1995 when all States are required to have Statewide automated systems in place.

Response: We believe that any State, whether fully automated or not, should be able to meet the $50 pass-through payment timeframes contained in these final rules. In response to the suggestion for a shorter timeframe once all States are automated, we may revisit this issue at that time to determine if these timeframes should be shortened.

6. Comment: A few commenters recommended that the regulations at §302.32(f)(2)(ii)(B) be revised to specify "the month in which the family becomes ineligible for AFDC" rather than "the month the family receives its last assistance payment" because the family may be eligible for AFDC but receive no payment due to the minimum grant standard or receive its last assistance payment at the end of one month which covers a portion of the next month and the IV-D agency is not notified of ineligibility until the 12th day of the next month.

Response: We agree that the regulations at §302.32(f)(2)(ii)(B) should specify "the month in which the family becomes ineligible for AFDC" rather than "the month the family receives its last assistance payment" because the family may be eligible for AFDC but receive no payment due to the minimum grant standard or receive its last assistance payment at the end of one month which covers a portion of the next month. Therefore, we have revised the regulation to reflect the suggested change.

7. Comment: One commenter recommended that the timeframe for use of child support payments in redetermining eligibility should be 20 days following the end of the month of receipt.

Response: The regulations at §302.32(b) require the IV-D agency to notify the IV-A agency of the current support payment within 10 working days of the end of the month in which the support was received by the IV-D agency responsible for distribution. Under §232.20(b)(1), the IV-A agency must use such amount to redetermine the family's eligibility for AFDC no later than the second month after the month in which the IV-A agency is notified of the current support payment by the IV-D agency. It is beyond the scope of these regulations to address the time necessary to redetermine eligibility under the IV-A program.

8. Comment: Several commenters requested that the regulation substitute "no later than" for "within" 15 calendar days of initial receipt because this would provide IV-D agencies with a definitive outside limit for distributing support to families who become ineligible for AFDC and permit them to make those payments sooner.

Response: We disagree with the commenters' proposal to substitute "no later than" for "within" 15 calendar days of initial receipt because these terms have the same meaning. In addition, the term "within" is used consistently throughout the regulation in describing distribution timeframes. The term provides the IV-D agency with a definitive outside time limit and permits it to make payments earlier.

Other Payments to Families in AFDC Cases

1. Comment: One commenter indicated that the proposed rule would, for the first time, set a sensible time standard applicable to payment of excess child support that exceeds the AFDC grant plus the pass-through to families who continue to be eligible for AFDC. Another commenter supported the current language of §302.32(f)(2)(ii) which requires that the support under §302.51(b)(3) and (5) be distributed within 15 calendar days of the date of initial receipt by the State because these payments to the family are budgeted for the month of receipt and result in timely receipt of child support by the family. Another commenter suggested that §302.32(f)(2)(ii) provide that payments under §302.51(b)(3) and (5) be paid to the family only after they cease to receive AFDC because these payments must be used to redetermine eligibility and the amount of AFDC and could cause a reduction in the family's AFDC grant for a subsequent month.

Response: We believe that these payments must be sent to the family within a reasonable period of time which enables the States to issue them with the AFDC grant and/or pass-through payment. As proposed, changes to §302.32(f)(2)(ii) would specify a timeframe for issuing these payments to the family which could result in the family not receiving such payments for several months. Therefore, we have revised §302.32(f)(2)(ii) to specify that when the IV-D agency sends collections to the family under §302.51(b)(3) and (5) of this part, the IV-D agency must send collections to the family within 15 calendar days of the end of the month in which the support was initially received in the State. This change is consistent with other timeframes in this regulation and will enable States to send payments to the family in conjunction with the AFDC payment cycle.

2. Comment: Some commenters suggested giving every AFDC client a $50 increase in benefits and discontinuing the pass-through program because it is extremely costly and time consuming.

Response: As we indicated in the preamble to a previous final rule, in response to a similar comment regarding the $50 pass through payments (53 FR 21642, dated June 9, 1988), these regulations merely implement the requirements in the amended statute. The commenters' recommendation cannot be implemented under current law.

3. Comment: One commenter requested clarification regarding the timeframe allowed for disbursement of a pass-through payment when a prior month's payment is received (e.g., August and September payments received in October) and either the IV-A or the IV-D agency is disbursing the payment.

Response: The timeframes regarding payment of the $50 pass through are the same regardless of whether the collection is received in the month in which it was paid or the payment was made on time but did not reach the agency until a subsequent month. Therefore, if a State receives a wage withholding collection in October which represents amounts withheld from the absent parent's wages in August and September, the months when due, the State must send a pass-through payment to the family for each month in which $50 or more was withheld no later than November 15 in accordance with §302.32(f)(2)(i) regardless of whether the IV-A or the IV-D agency disburses the payment. If the payment was not made in the month when due, the family is not entitled to receive a $50 pass-through payment.

4. Comment: One commenter noted that a May 1990 letter from the Deputy Director of OCSE indicated that audit compliance would not be required until after this regulation was revised. The commenter suggested that we indicate when these regulatory changes are effective and when the State will be subject to an audit.

Response: States are required to comply with Federal regulations regarding timeframes for distribution of child support collections. These revisions are effective upon publication. State compliance with the provisions of the Family Support Act will be determined in accordance with audit regulations which incorporate those requirements.

Payments in Title IV-E Foster Care Cases

Comment: One commenter suggested that the proposed§302.32(f)(2)(iii) is unclear because it does not specify which agency is responsible for distributing the collections, nor does it specify the type of collection being distributed.

Response: Under §302.32(f)(2)(iii), the IV-D agency must distribute amounts collected on behalf of recipients of the State's title IV-E plan for whom an assignment of support rights is in effect. In addition, §302.32(f)(2)(iii) refers to collections in title IV-E foster care cases under §302.52(b)(2) and (4). These collections are identified in §302.52(b) as support collections made by the IV-D agency on behalf of children receiving title IV-E foster care maintenance payments.

Executive Order 12291

In accordance with Executive Order 12291, we are required to prepare a Regulatory Impact Analysis for any "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 geographic 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 meets none of these criteria. In addition, this rule would likely result in administrative cost savings to the Federal and State governments because the $50 pass-through payment and most collections made in title IV-E foster care cases would be distributed on a monthly basis rather than incrementally throughout the month.

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, which are not considered small entities under the Act.

List of Subjects in 45 CFR Part 232

Aid to Families with dependent children, Child Support, Grant programs--social programs.

List of Subjects in 45 CFR Part 302

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

(Catalog of Federal Domestic Assistance Program No. 93.023, Child Support Enforcement Program)

Dated:

Jo Anne B. Barnhart

Assistant Secretary

for Children and Families

Approved:

Louis W. Sullivan, M.D.

Secretary

For the reasons set forth in the preamble, 45 CFR Parts 232 and 302 are amended as follows:

PART 232 -- SPECIAL PROVISIONS APPLICABLE TO TITLE IV-A OF THE SOCIAL SECURITY ACT

1. The authority citation for Part 232 continues to read as follows:

Authority: 42 U.S.C. 1302.

2. Section 232.20(d) is revised to read as follows:

§232.20 Treatment of child support collections made in the Child Support Enforcement Program as income and resources in the Title IV-A Program.

* * * * *

(d) The State plan must provide that the IV-A agency, on behalf of the IV-D agency, will send to the family the sum disregarded under §302.51(b)(1) within 15 calendar days of the end of the month in which the support was initially received in the State.

PART 302 -- STATE PLAN REQUIREMENTS

3. 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 1396(k).

4. Section 302.32 is amended by revising paragraphs (f)(2)(i), (ii) and (iii) to read as follows:

§302.32 Collection and distribution of support payments by the

IV-D agency.

* * * * *

(f) * * *

(2) * * *

(i) When the IV-D agency sends payments to the family under §302.51(b)(1) of this part, the IV-D agency must send payments to the family within 15 calendar days of the end of the month in which the support was initially received in the State.

(ii) Except as specified under paragraph (f)(2)(iv) of this section:

(A) When the IV-D agency sends collections to the family under §302.51(b)(3) and (5) of this part, the IV-D agency must

send collections to the family within 15 calendar days of the end of the month in which the support was initially received in the State.

(B) When the IV-D agency sends collections to the family for the month after the month the family becomes ineligible for AFDC, the IV-D agency must send collections to the family within 15 calendar days of the date in which the support was initially received in the State.

(iii) Except as specified under paragraph (f)(2)(iv) of this section, when the IV-D agency sends collections to the IV-E foster care agency under §302.52(b)(2) and (4) of this part, the IV-D agency must send collections to the IV-E agency within 15 calendar days of the end of the month in which the support was initially received in the State.

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