Revisions in OCSE Financial Reporting Instructions for FY 2007


Publication Date: November 16, 2006



DATE: November 16, 2006


SUBJECT: Revisions in OCSE financial reporting instructions for fiscal year 2007 to accommodate the Deficit Reduction Act of 2005.

BACKGROUND: Public Law 109-171, the Deficit Reduction Act of 2005 (DRA), was enacted into law on February 6, 2006. The statute contains four provisions that will impact the State’s completion and submission of the quarterly financial reporting forms for the Child Support Enforcement Program:

  • Effective October 1, 2006:

    • Implementation of an annual user fee;

    • Reduction of the Federal financial participation (FFP) rate for expenditures for laboratory genetic testing expenses.

  • Effective October 1, 2007:

  • Elimination of the availability of Federal funds associated with the States’ expenditures of child support incentive payments.

  • Implementation of State’s ability to “pass through” a portion of child support collections directly to the family.

  • Effective October 1, 2008:

PURPOSE: This Action Transmittal will address the revised reporting instructions applicable to the changes that became effective in fiscal year 2007 (October 1, 2006). Similar revised instructions applicable to the changes effective in October 2007 and 2008 will be addressed in a future Action Transmittal.

REVISED INSTRUCTIONS: Each State submits a“Quarterly Report of Expenditures and Estimates,” Form OCSE-396A, following each fiscal quarter. Both reporting changes that became effective October 1, 2006 will affect that quarterly report.

  1. Annual User Fee. In accordance with Sec 7310 of the DRA, each State “shall impose an annual fee of $25” for each “never assistance” case “for whom the State has collected at least $500 of support….”

    Although at the time of this Action Transmittal, Federal regulations governing these fees are pending, these fees are based on collections made by the State on or after October 1, 2006.

    Reporting: These fees are considered program income and are included with other fees reported on existing Line 2a of Form OCSE-396A, “Fees and Costs Recovered in Excess of Fees (Eligible for FFP at the 66% Rate).” The existing instructions for this line entry adequately address this new fee.

  2. Reduced FFP rate. In accordance with Sec 7308 of the DRA, the Federal financial participation (FFP) rate for“Laboratory Costs in Determining Paternity” is reduced from the enhanced rate of 90 percent to the regular rate of 66 percent.

    This reduction in the FFP rate is effective for any expenses of laboratory costs paid by the State on or after October 1, 2006, regardless when the service was performed. Prior quarter claims— those expenses paid prior to October 1, 2006, but claimed for Federal funding after that date — remain eligible for Federal funding at the 90 percent rate. All claims remain subject to the two year claiming deadline found at 45 CFR Part 95, Subpart A.

    Reporting: On Form OCSE-396A, Line 8, “Laboratory Paternity Determination Expenditures Eligible for FFP at the 90% Rate” is available to report both current quarter and prior quarter laboratory expenditures. Despite the existing line title, the Federal share of expenditures reported on this line applicable to October 1, 2006 and thereafter will be calculated at the 66% rate.

    Prior quarter expenditures applicable to fiscal quarters ending prior to October 1, 2006 will continue to be calculated at the 90% rate, when properly itemized and identified as “LAB” on Part 2 of Form OCSE-396A.

    Pending approval by the Office of Management and Budget and in an effort to simplify financial reporting, OCSE anticipates that Line 8 will be deleted from Form OCSE-396A beginning with expenditures reported for fiscal year 2008 (October 1, 2007). At that time, States will be instructed to report laboratory costs with all other routine title IV-D administrative costs on Line 1a of this form.

EFFECTIVE DATE: These instructions are effective for any expenditures or collections made on or after October 1, 2006. The submission of Form OCSE-396A for the 1st quarter of FY 2007 is due no later than January 30, 2007.

RELATED MATERIAL: Action Transmittal OCSE-AT-03-04, dated September 26, 2003, “Implementation of Revised Financial Reporting Forms: Form OCSE-396A and Form OCSE-34A.”

INQUIRIES: Inquiries should be made to the appropriate ACF Regional Administrator.

Margot Bean
Office of Child Support Enforcement


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