Expanded Federal Matching for Court Costs
December 5, 1980
TO:STATE AGENCIES ADMINISTERING CHILD SUPPORT PROGRAMS UNDER TITLE IV-D OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED INDIVIDUALS
SUBJECT:Requirements for Receiving Expanded Federal Matching for Court Costs under the Provisions of Section 404 of P.L. 96-265; Revision to OCSE-AT-80-14, dated August 29, 1980.
PURPOSE:The purpose of this Action Transmittal is to revise the specific instructions contained in OCSE-AT-80-14 pertaining to amendments to cooperative agreements to cover court costs eligible for FFP under section 404 of P.L. 96-265, for the reasons outlined below. In addition, these revised instructions provide clarification of the requirements pertaining to 1978 base period expenditures for the newly eligible costs. All other instructions contained in OCSE-AT-80-14 remain in effect.
BACKGROUND: Court Cost Provisions of P.L. 96-265.
Section 404 of P.L. 96-265, effective July 1, 1980, amends Section 455 of the Social Security Act to permit expanded Federal financial participation (FFP) in the costs of courts under cooperative agreements with IV-D agencies. Specifically, this statute authorizes FFP in expenditures for the staffs of judges and of other officials making judicial decisions, as well as for other administrative costs of making judicial decisions. Under this statute, however, compensation for judges or other officials making judicial decisions continues to be ineligible for FFP. Costs of personal offices and travel for judges and other officials making judicial determinations are also ineligible for FFP. Under earlier policy, FFP in cooperative agreements with courts was limited to personnel and administrative costs which had no direct connection with the judicial determination process. A new and unique statutory requirement for FFP in the expanded court costs under Section 404 of P.L. 96-265 provides that Federal matching in any calendaryear is available only in that portion of a court's expenditures for newly eligible activities incurred on behalf of IV-D cases which exceeds its calendar year 1978 expenditures for the same activities. This "Maintenance of effort" provision insures that the Federal role with respect to these costs is one of encouraging increased court time for cases receiving IV-D services available through State and local courts under cooperative agreements, rather than matching expenses which have been financed solely by State and local governments before Federal assistance was available.
Previous Interim Instructions.
OCSE issued set of instructions, OCSE-AT-80-14, dated August 29, 1980, to establish interim policy for claiming FFP in the newly eligible court costs. That AT also provided interim instructions for using the Internal Revenue Service to collect child support on behalf of non-AFDC families, another provision of P.L. 96-265. Both of these provisions had a statutory effective date of July 1, 1980. The interim instructions contained in OCSE-AT-80-14 were necessary to provide guidelines to the States during the period in which regulations were to be developed to implement these two provisions of P.L. 96-265.
Instructions to Amend Cooperative Agreements.
Among the instructions contained in OCSE-AT-80-14 is a requirement that existing cooperative agreements with courts be amended to specify two things in order to become eligible for the expanded FFP: (1) the new expenditure items for which IV-D reimbursement will be claimed, and (2) the expenditures for these specific items incurred in calendar year 1978 attributable to cases receiving services under the IV-D program. In these earlier instructions, an extension of the latter requirement concerning the 1978 base, figure was permitted through December 31, 1980 with Regional Office approval.
There is a long-standing requirement in 45 CFR 304.21 that FFP is available in costs incurred under cooperative agreement only from the beginning of the quarter in which the agreement is executed by the parties involved. This same rule applies to amendments to agreements. Therefore, in order to receive FFP in the newly eligible costs under P.L. 96-265 during the July 1 throughSeptember 30, 1980 quarter, the instructions of OCSE-AT-80-14 required that courts execute legal amendments to their cooperative agreements to this effect on or before September 30, 1980.
OCSE received numerous comments from State and local IV-D agencies and from courts concerning the requirement that cooperative agreements be amended to include costs eligible for FFP under Section 404 of P.L. 96-265. It was pointed out that in many cases the language of existing cooperative agreements is sufficiently broad to cover changes in the availability of FFP, such as those made by P.L. 96-265, without formally amending the agreements. Because of the time involved in executing these amendments, many courts would effectively be precluded from receiving FFP for the newly eligible costs in the July-September quarter when such a delay is not in fact necessary under the terms of their agreements.
Under the statutory provision that FFP in the newly eligible court costs be limited to costs incurred in excess of calendar year 1978 expenditures, the majority of eligible claims for calendar year 1980 will likely occur during the fourth calendar quarter. Thus, many courts could amend their agreements to cover the new Section 404 costs by December 31, 1980 and still receive reimbursement for most of their eligible calendar year 1980 costs. Nevertheless, OCSE now believes that in this interim period before regulations are issued it is unreasonable to require amendments to those cooperative agreements that do not need to be amended to specify the new items of cost in which FFP is available.
CONTENT: Three Categories of Courts.
There are three categories into which courts fall with respect to the expansion of FFP in court costs under Section 404 of P.L. 96-265. First, there are those courts presently under agreement for which, as noted above, no amendment to the cooperative agreement is necessary in order to include the costs recently made eligible for FFP under P.L. 96-265. A second category of courts includes those presently under agreement for which, under State law, regulations, rules, standards or the terms of the agreement, an amendment to the cooperative agreement is necessary in order for the court to receive FFP inthese expanded activities, Finally, a third category of courts includes those which do not currently have cooperative agreements, and hence have not received Federal reimbursement under the IV-D program.
Requirements for Courts for Whom Amendments Are Not Necessary.
As noted above, there are cases in which the language of an existing cooperative agreement is sufficiently broad to cover the new eligible expenditures. Under these revised interim instructions, if an amendment to the cooperative agreement is not necessary under State law, regulations, rules, standards or the terms of the agreement in order to include costs eligible for FFP under Section 404 of P.L. 96-265, the court does not agree to amend its cooperative agreement to receive FFP in the newly eligible cost.
Requirements for Courts for Whom Amendments Are Necessary.
If State law, regulations, rules, standards or the terms of a cooperative agreement require that an amendment to the cooperative agreement be made in order to cover changes in the availability of FFP such as those made by Section 404 of P.L. 96-265, an amendment to this effect must be executed. As required by 45 CFR 304.21, FFP is available only as of the first day of the calendar quarter in which the amendment is executed.
Requirements for Courts Not Under Cooperative Agreements.
For a court not currently under a cooperative agreement, a cooperative agreement must be executed in accordance with the requirements of 45 CFR 302.34 and 304.21 in order for any costs to be eligible for Federal reimbursement. As required by 45 CFR 304.21, FFP is available only as of the first day of the calendar quarter in which the agreement is executed.
Special Requirements Pertaining to 1978 Base Period Expenditures.
Section 404(a) of P.L. 96-265 provides that "the aggregate amount of the expenditures" for which reimbursement is claimed under this statute must be "reduced (but not below zero) by the total amount of [such] expenditures . . . which weremade by the State for the 12-month period beginning January 1, 1978." The administration of this provision requires that 1978 expenditures for applicable eligible items be reconstructed for each cooperative agreement. Claims will be reimbursed only for expenditures that are: (a) eligible under Section 404, (b) incurred on behalf of child support cases receiving IV-D services under the State plan, and (c) in excess of the 1978 level for each agreement.
According to Section 404(a), costs which must be included in the 1978 base expenditures are those "attributable to the performance of services which are directly related to, and clearly identifiable with, the operation of [the IV-D State] plan." Thus, the 1978 base period expenditure figures which are reconstructed by courts in order to make claims for FFP under Section 404 should include only 1978 expenditures relative to the activities now eligible for reimbursement under Section 404 incurred at that time on behalf of cases receiving services under the IV-D State plan. Cases receiving services under the IV-D State plan during the 1978 base period are those for which either (a) an assignment under 45 CFR 232.11 was in effect, or (b) an application for services under 45 CFR 302.33 had been made. Expenditures incurred for other types of child support cases should not be included in the reported calendar year 1978 costs.
Section 404(a) specifies that the 1978 base period expenditures which are used to reduce the amount of Federal reimbursement for the newly eligible costs must be the "total amount" of such costs which were incurred in 1978. OCSE interprets this to apply even if claims filed under an agreement do not include all the costs for which reimbursement is available under Section 404. Therefore, under these interim instructions, the 1978 base period expenditure figure for each agreement must include all the costs incurred in calendar year 1978 for the activities now eligible under Section 404, regardless of whether all such costs are claimed for reimbursement under the agreement.
In OCSE-AT-80-14, courts and IV-D agencies were instructed to reconstruct the 1978 base period figures in accordance with allocation methods specified in OCSE-AT-77-03, dated January 28, 1977. However, in light of the potential difficulties faced by courts in reconstructing these costs, theinstructions of OCSE-AT-80-14 permit allocation methods different from those specified in AT-77-03, if these alternative methods are approved by Regional Offices. These instructions remain in effect.
As with any item of expenditure upon which a claim for FFP is based, the 1978 base period expenditure figures are subject to Federal audit procedures. Claims for FFP in costs above the 1978 level are similarly subject to review. Thus, courts which submit claims for reimbursement of costs under the provisions of Section 404 of P.L. 96-265 must maintain in their files sufficient documentation to verify the accuracy of the reported 1978 expenditure level. Failure to do so could result in a disallowance of all expenditures for which FFP was claimed under Section 404, since it would be impossible to determine if any of the costs claimed were in excess of 1978 expenditures.
State IV-D Agency Requirement.
Under these interim instructions, before any claim for FFP in the cost of activities eligible under Section 404 will be paid with respect to a particular agreement, the State IV-D agency shall submit to the Regional Office the lump sum total of all the expenditures incurred for such activities under that agreement during calendar year 1978. A separate 1978 base period figure must be submitted to the Regional Office for each cooperative agreement. Claims for FFP in the newly eligible costs under each agreement for any calendar year shall be based upon current costs, minus the reported calendar year 1978 expenditures for that agreement. This rule applies both to agreements which cover a single court and agreements which cover more than one court.
INQUIRIES TO: OCSE Regional Representatives
Office of Child Support