Reinvesting Child Support Incentive Payments


Publication Date: January 31, 2020



DATE: January 31, 2020

TO: State IV-D Agencies

SUBJECT: Reinvesting Child Support Incentive Payments

This document provides updated information on the following topics regarding the reinvestment of child support incentive payments:

  • Exemption authority
  • Political subdivisions
  • Base amount determinations
  • Incentive reinvestment exemption requests
  • Time limit for claiming payment of expenditures
  • Submission time frames
  • Duration
  • Consequences of non-compliance
  • Examples

Exemption authority

In accordance with section 458(f) Visit disclaimer page of the Social Security Act:

“A State to which a payment is made under this section shall expend the full amount of the payment to supplement, and not supplant, other funds used by the State (1) to carry out the State plan approved under this part; or (2) for any activity (including cost-effective contracts with local agencies) approved by the Secretary, whether or not the expenditures for the activity are eligible for reimbursement under this part, which may contribute to improving the effectiveness or efficiency of the State program operated under this part.”

In other words, a state must reinvest earned incentives in the state's child support enforcement (CSE) program, or may use the funds for other activities approved by the Secretary of Health and Human Services that will improve the state's CSE program. However, state CSE expenditures may not be reduced as a result of the receipt and reinvestment of incentive payments.

Political subdivisions

State officials should be aware that in states where incentive payments are passed through to political subdivisions or localities, those payments must be used in accordance with this guidance. States are responsible for ensuring that all components of their CSE programs comply with these requirements, including local or county programs and vendors or other entities that perform child support services under contract or cooperative agreement.

Base amount determinations

To determine whether incentive payments are used to supplement rather than supplant other amounts used by the state to fund the CSE program, a base-year level of program expenditures is necessary. See 45 CFR Section 305.35(d) Visit disclaimer page.

Every state has identified the method to calculate and determine their base amount. Subsequently, OCSE has calculated the base spending for each state using 1998 expenditure data unless the state selected the base amount using an average of the 1996, 1997, and 1998 expenditures.

Incentive reinvestment exemption requests

The IV-D statute allows a state to use incentive payments for other activities not eligible for federal financial participation, if these activities will contribute to improving the effectiveness or efficiency of the state's CSE program and are approved by the Secretary of Health and Human Services. States must submit an incentive reinvestment exemption request using the following procedures:

  1. Send a letter requesting approval to use incentive payments for activities not eligible for reimbursement under title IV-D of the Act to OCSE Division of Policy and Training at:
  2. The letter must include this information:
    1. Specific, detailed information on the activity the incentive payment will fund
    2. The amount of incentive funds to be spent on the activity
    3. How the activity will improve the effectiveness or efficiency of the state's CSE program
    4. Show a clear connection to and collaboration with the state CSE program
    5. The time period for this activity (maximum of five years)
    6. The name, telephone number, and email address of a contact person who can provide additional information on the request
  3. OCSE will review the letter and notify the state of its decision.

Time limit for claiming payment of expenditures

States must adhere to the eight-quarter time limit for claiming payment of expenditures per 45 CFR Section 95.7 Visit disclaimer page and only use available incentive funds awarded to them. Additionally, states must report expenditures and estimates using incentive funds based on an approved waiver in accordance with the Form OCSE-396 Instructions (PDF).

Submission time frames

  • States may submit an incentive reinvestment exemption request to OCSE at any time before the funds are actually used for the activity; however, states may not use incentive funds on the non-IV-D activity until the state’s request is approved.
  • States renewing their exemption request should submit them at least 90 days before they expire.


States may request an exemption to reinvest incentive in the non-IV-D activity for a period up to 5 years. For multi-year requests, after the initial approval the state must submit a request for continued approval annually to with the following information:

  • Amount spent in previous year(s)
  • Intent to continue activity in upcoming years
  • Outcomes from the approved activity
  • Changes or updates to activity initially requested and approved
  • If activity has been completed or will discontinue, a close out report that includes a summary of completed activity, total amount expended, total impact on collections, and total number of customers served.

Consequences of non-compliance

Federal auditors and central and regional office staff will have a role in monitoring state compliance with the reinvestment requirement. Non-compliance may result in disallowances of incentive amounts equal to the amount of funds supplanted.

The approval to use incentive funds for non-IV-D activities, as with other exemptions, is subject to review at any time. If circumstances change, or the activity funded by the state under the exemption proves in practice to be less effective or efficient than claimed, the approval for the alternative use of incentive funds may be revoked by the Commissioner of OCSE. If the approval is revoked, the state must begin using the incentive funds in support of IV-D activities.


The types of non-IV-D activities that may qualify for funding with incentive payments include, but are not limited to:

  • Fatherhood programs
  • Education and job programs for noncustodial parents
  • Programs targeting incarcerated or putative fathers
  • Mediation or couples counseling

The requested activity must show a clear connection to and collaboration with the state CSE program.

REFERENCES: AT-01-01, AT-17-12



INQUIRIES: ACF/OCSE Regional Program Managers

Scott M. Lekan
Office of Child Support Enforcement

Current as of: