Child Support Enforcement
Departures from Long-term Trends in Sources of Collections and Caseloads Reflect Recent Economic Conditions
Gao ID: GAO-11-196 January 14, 2011
In fiscal year 2009, the child support enforcement (CSE) program collected about $26 billion in child support payments from noncustodial parents on behalf of more than 17 million children. The CSE program is run by states and overseen by the Department of Health and Human Services (HHS). States receive federal performance incentive payments and a federal match on both state CSE funds and, except for fiscal year 2008, on the incentive payments, which must be reinvested into the program. The Deficit Reduction Act of 2005 (DRA) eliminated this incentive match beginning in 2008, but the American Recovery and Reinvestment Act of 2009 temporarily reinstated it for 2 years. DRA also gave states the option to give more child support collections to families receiving public assistance--the "family first" policy--rather than using it to reimburse government public assistance costs. GAO examined (1) how CSE collections and caseloads have changed in recent years, (2) how states have responded to federal funding changes, and (3) how states have responded to DRA's "family first" policy options. GAO reviewed laws, HHS policy documents, and CSE caseload, collections, and expenditure data and interviewed HHS officials, child support experts, and CSE officials in 10 states selected for variation in program size and geography. GAO is not making recommendations in this report. HHS generally agreed with the findings in this report.
In fiscal year 2009, the CSE program experienced several departures from past trends. For one, child support collections failed to increase nationwide for the first time in the history of the program in fiscal year 2009. HHS has reported that the recent recession contributed to the 1.8 percent decrease in child support collections. In addition, the amount of collections intercepted from unemployment insurance benefits nearly tripled, while collections automatically withheld from wages--the major source of collections--decreased for the first time. Also in fiscal year 2009, the number of CSE cases currently receiving public assistance increased, reversing another long-standing trend. This change is significant because it contributed to increased numbers of hard-to-collect cases in the CSE program, as noncustodial parents of children receiving public assistance are less likely to have a child support order in place and may have low wages with little available for collections. In fiscal years 2008 and 2009, states generally maintained their overall levels of CSE expenditures, although state officials told GAO they were concerned about ongoing budgetary constraints linked to economic conditions and uncertainty about funding levels. Preliminary HHS data show that total CSE expenditures grew by 2.6 percent in fiscal year 2008 as many states increased their own funding to maintain CSE operations when the federal incentive match was eliminated. Some state officials attributed this increase in part to state lawmakers' broad support for the program. In contrast to fiscal year 2008, a different picture emerged in fiscal year 2009, when the incentive match was temporarily restored but total CSE expenditures fell slightly by 1.8 percent, which HHS officials told GAO was due to state budget constraints. Most states nationwide have not implemented "family first" policy options since DRA. Several state CSE officials GAO interviewed said they support "family first" policies in principle, but funding constraints prevented implementing these options, because giving more child support collections to families means states retain less as reimbursement for public assistance costs.
GAO-11-196, Child Support Enforcement: Departures from Long-term Trends in Sources of Collections and Caseloads Reflect Recent Economic Conditions
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United States Government Accountability Office:
GAO:
Report to Congressional Requesters:
January 2011:
Child Support Enforcement:
Departures from Long-term Trends in Sources of Collections and
Caseloads Reflect Recent Economic Conditions:
GAO-11-196:
GAO Highlights:
Highlights of GAO-11-196, a report to congressional requesters.
Why GAO Did This Study:
In fiscal year 2009, the child support enforcement (CSE) program
collected about $26 billion in child support payments from
noncustodial parents on behalf of more than 17 million children. The
CSE program is run by states and overseen by the Department of Health
and Human Services (HHS). States receive federal performance incentive
payments and a federal match on both state CSE funds and, except for
fiscal year 2008, on the incentive payments, which must be reinvested
into the program. The Deficit Reduction Act of 2005 (DRA) eliminated
this incentive match beginning in 2008, but the American Recovery and
Reinvestment Act of 2009 temporarily reinstated it for 2 years. DRA
also gave states the option to give more child support collections to
families receiving public assistance”-the ’family first“ policy”-
rather than using it to reimburse government public assistance costs.
GAO examined (1) how CSE collections and caseloads have changed in
recent years, (2) how states have responded to federal funding
changes, and (3) how states have responded to DRA‘s ’family first“
policy options. GAO reviewed laws, HHS policy documents, and CSE
caseload, collections, and expenditure data and interviewed HHS
officials, child support experts, and CSE officials in 10 states
selected for variation in program size and geography. GAO is not
making recommendations in this report. HHS generally agreed with the
findings in this report.
What GAO Found:
In fiscal year 2009, the CSE program experienced several departures
from past trends. For one, child support collections failed to
increase nationwide for the first time in the history of the program
in fiscal year 2009. HHS has reported that the recent recession
contributed to the 1.8 percent decrease in child support collections.
In addition, the amount of collections intercepted from unemployment
insurance benefits nearly tripled, while collections automatically
withheld from wages”the major source of collections”decreased for the
first time. Also in fiscal year 2009, the number of CSE cases
currently receiving public assistance increased, reversing another
long-standing trend. This change is significant because it contributed
to increased numbers of hard-to-collect cases in the CSE program, as
noncustodial parents of children receiving public assistance are less
likely to have a child support order in place and may have low wages
with little available for collections.
In fiscal years 2008 and 2009, states generally maintained their
overall levels of CSE expenditures, although state officials told GAO
they were concerned about ongoing budgetary constraints linked to
economic conditions and uncertainty about funding levels. Preliminary
HHS data show that total CSE expenditures grew by 2.6 percent in
fiscal year 2008 as many states increased their own funding to
maintain CSE operations when the federal incentive match was
eliminated. Some state officials attributed this increase in part to
state lawmakers‘ broad support for the program. In contrast to fiscal
year 2008, a different picture emerged in fiscal year 2009, when the
incentive match was temporarily restored but total CSE expenditures
fell slightly by 1.8 percent, which HHS officials told GAO was due to
state budget constraints.
Most states nationwide have not implemented ’family first“ policy
options since DRA. Several state CSE officials GAO interviewed said
they support ’family first“ policies in principle, but funding
constraints prevented implementing these options, because giving more
child support collections to families means states retain less as
reimbursement for public assistance costs.
Figure: Changes in Child Support Collections by Source, Adjusted for
Inflation, Fiscal Year 2008-2009:
[Refer to PDF for image: vertical bar graph]
Constant 2009 dollars:
Child support collections: Income withholding;
Amount: -$824 million.
Child support collections: Tax intercepts;
Amount: -$674 million.
Child support collections: Unemployment insurance intercepts;
Amount: $1.057 billion.
Child support collections: Other;
Amount: -$199 million.
Child support collections: Total;
Amount: -$641 million.
Source: GAO analysis of OCSE data.
[End of figure]
View [hyperlink, http://www.gao.gov/products/GAO-11-196] or key
components. For more information, contact Kay Brown at (202) 512-7215
or brownke@gao.gov.
[End of section]
Contents:
Letter:
Background:
In Fiscal Year 2009, Growth of Child Support Collections Stalled and
Hard-to-Collect Cases Increased:
States Have Maintained Child Support Program Expenditures Amid
Concerns About Budget Constraints:
Most States Have Not Implemented "Family First" Policies, Citing
Budget Constraints:
Concluding Observations:
Agency Comments and Our Evaluation:
Appendix I: Incentives and Incentive Match Shares of CSE Expenditures
by State:
Appendix II: Congressional Budget Office's Estimates of the Financial
Impacts of the Deficit Reduction Act's Child Support Provisions:
Appendix III: Federal and State Shares of Child Support Expenditures:
Appendix IV: Comments from the Department of Health and Human Services:
Appendix V: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: State Pass-through and Disregard Policies for Current Child
Support Received by Families on Public Assistance:
Table 2: Incentives and Incentive Match as a Percentage of Total CSE
Expenditures in Each State, FY 2007:
Table 3: Federal and State Child Support Enforcement Expenditures,
Adjusted for Inflation, FY 2003-FY 2009:
Figures:
Figure 1: Inflation-Adjusted CSE Collections Since Full Program
Operation, in Constant 2009 Dollars:
Figure 2: Changes in the Amount of Child Support Collections by
Source, Adjusted for Inflation, FY 2008-FY 2009:
Figure 3: Child Support Caseload Composition, FY 2003-FY 2009:
Figure 4: National CSE Expenditures, Adjusted for Inflation, FY 1978-
FY 2009:
Figure 5: Inflation-Adjusted Total, State, and Federal CSE
Expenditures, FY 2007-FY 2009:
Figure 6: States' Uses of Restored Incentive Match Funds under the
Recovery Act:
Figure 7: States' Implementation of the $25 Annual Service Fee:
Abbreviations:
CBO: Congressional Budget Office:
CSE: Child Support Enforcement:
DRA: Deficit Reduction Act of 2005:
HHS: U.S. Department of Health and Human Services:
OCSE: Office of Child Support Enforcement:
TANF: Temporary Assistance for Needy Families:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
January 14, 2011:
The Honorable Charles E. Grassley:
United States Senate:
The Honorable Orrin G. Hatch:
United States Senate:
The Honorable Geoff Davis:
Chairman:
Subcommittee on Human Resources:
Committee on Ways and Means:
House of Representatives:
Millions of parents nationwide live apart from one or more of their
minor children. Child support payments from these noncustodial parents
can be an important source of income for children and the households
they live in. In fiscal year 2009 alone, the child support enforcement
(CSE) program collected about $26 billion in child support payments on
behalf of more than 17 million children, almost one in four children
nationwide. States administer the CSE program, which is overseen at
the federal level by the Department of Health and Human Services
(HHS). The federal government and states share the costs of the CSE
program, with the federal government providing a majority of the
funding. States receive their federal funds in the forms of a federal
match on their CSE expenditures and federal performance incentive
payments, which must both be reinvested into the program. Except for
fiscal year 2008, states have been eligible to receive the federal
match on the reinvested incentive payments. The Deficit Reduction Act
of 2005 (DRA) eliminated the federal match on states' incentive funds
in fiscal year 2008,[Footnote 1] but the American Recovery and
Reinvestment Act of 2009 (Recovery Act), passed in response to severe
economic conditions nationwide, temporarily reinstated the incentive
match for 2 years.[Footnote 2] Additionally, DRA provided states with
new policy options for their CSE programs, including options to
distribute more child support collections directly to families rather
than using these collections to reimburse government public assistance
costs.[Footnote 3]
Based on congressional interest in how the CSE program may have been
affected by changes under DRA and the Recovery Act, we will provide
information on the following questions: (1) How have CSE collections
and caseloads changed in recent years? (2) How have states responded
to changing federal funding since DRA was enacted? and (3) How have
states responded to DRA's "family first" policy options?
As criteria for our review, we examined relevant federal laws
affecting the CSE program, as well as HHS regulations and program
guidance on state implementation of CSE policies. To answer our
research questions, we reviewed HHS data and documentation on state
and national collections and caseloads; methods of collections;
federal and state CSE program expenditures; use of Recovery Act funds;
and state CSE policy choices. We also interviewed HHS officials to
gather information on the processes they use to ensure the
completeness and accuracy of CSE data and determined that the data
were sufficiently reliable for the purposes of describing changes in
collections, caseloads, and expenditures in recent years. To gather
information and context from states about changes to CSE programs in
recent years, we conducted interviews with state-level officials in 10
states: California, Georgia, Iowa, Louisiana, Maine, Michigan, New
York, Texas, Washington, and Wisconsin. These states were selected to
obtain variation in geographic, economic, and child support program
characteristics, such as caseloads, use of fees, and child support
distribution polices. We interviewed most state officials by
telephone, but to obtain perspectives from local CSE administrators as
well as state officials, we conducted site visits at three of the
above states (California, New York, and Texas). We cannot generalize
our findings from the state interviews and site visits beyond the
states and localities we spoke with. To gather additional perspectives
about changes to state CSE programs, we also interviewed HHS
officials, child support experts, and child support associations.
We conducted this performance audit from December 2009 to January
2011, in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
Background:
Services and Populations Served:
The CSE program was created in 1975, under the Social Security Act, to
enhance the well-being of children by assuring that financial
assistance is available from noncustodial parents not living in the
home.[Footnote 4] The CSE program makes services available upon
request to any custodial parent, which is a person with custody of a
child who has another parent living outside of the home. Parents who
receive public assistance through the Temporary Assistance for Needy
Families (TANF) and other federally-funded public assistance programs
automatically receive CSE services free, and many are required to
assign their rights to child support payments to the state.[Footnote
5] Child support collections obtained on behalf of these children may
then be retained by states and the federal government to reimburse
them for the costs of providing public assistance to these families.
State CSE agencies provide a range of services, including locating
noncustodial parents, establishing paternity, establishing child
support orders, collecting and distributing child support, and
reviewing and modifying support orders. In operating their programs,
states are required by federal law to operate statewide automated
systems to ensure that child support functions are carried out
effectively and efficiently.[Footnote 6] In addition, states are also
required to use several enforcement tools, including withholding child
support from noncustodial parents' wages, state and federal tax
refunds, and unemployment insurance benefits, as appropriate.[Footnote
7] In fact, the majority of child support is collected through wage
withholding, which involves employers withholding support from
noncustodial parents' wages and sending it to the CSE program for
distribution.
According to an HHS report, while the CSE mission has remained the
same since the program's inception, the program has shifted its
primary focus in recent years from reimbursing the government's public
assistance programs to maximizing the amount of support passed on to
families and pursuing new opportunities to improve the program's
effectiveness.[Footnote 8] Increasingly, to expand noncustodial
parents' engagement with the child support system and improve their
ability to pay child support, CSE programs provide additional services
such as fatherhood programs, referrals to job counseling or training,
or debt management programs.
HHS' Role:
The federal Office of Child Support Enforcement (OCSE) within HHS is
responsible for overseeing the state-run CSE programs, including
establishing policies, monitoring and evaluating state programs, and
providing technical assistance to help state agencies manage their
programs. OCSE provides technical assistance to states through a
variety of methods, including issuing federal regulations, policy
interpretations and guidance to states, hosting conferences and
webinars, establishing workgroups of CSE state officials on various
issues, publishing and distributing a monthly newsletter,
disseminating information on best practices, providing on-site
assistance with technology issues, and answering questions from states
via e-mail and phone calls. OCSE also maintains several national
databases, together known as the Federal Parent Locator Service, that
include, for example, a national registry of all child support orders
and information on all new hires nationwide. These databases are used
to identify and locate noncustodial parents and their employment or
assets and collect child support payments.
Program Funding:
The federal and state governments share the costs of administering the
CSE program.[Footnote 9] States finance their share using state and
local general funds, child support service fees,[Footnote 10] and
retained collections from families receiving public assistance. The
federal government reimburses state funds spent on eligible CSE
administrative expenses at a 66 percent match rate[Footnote 11]--
meaning that, for every $1 that a state spends on the CSE program, the
federal government reimburses it $.66. The result is that, in effect,
a state's net contribution of $.34 is nearly tripled. Each year, HHS
provides each state additional federal funds through incentive awards
for high performance. Federal incentive payments are distributed among
states based on their performance on five measures related to
paternities established, child support orders established, collections
of current and past-due child support payments, and cost
effectiveness.[Footnote 12] The total amount of incentive funds
available to be distributed to states, $504 million in fiscal year
2009, is determined by statute and changes according to the inflation
rate each year.[Footnote 13] In fiscal year 2007, incentive payments
funded 8 percent of total CSE program spending, and between 3 and 20
percent of CSE expenditures in each state.[Footnote 14] (See appendix
I for the percentages by state.) Under prior law, federal incentive
payments to states could be used for any purpose, including a deposit
into the state general revenue fund, and those funds that a state
chose to reinvest in the CSE program were treated as state funds and
matched at the 66 percent rate (meaning that the reinvested incentive
payments, plus the match, were nearly triple the incentive payment
alone). The Child Support Performance and Incentive Act of 1998
required states to reinvest all incentive payments back into the CSE
program, and the federal government continued to match these funds
[Footnote 15]
Recent Legislative Changes--Federal Financial Participation:
DRA included provisions that affect federal financial participation in
the CSE program as well as other aspects of the program. One
provision, which received significant attention from program
stakeholders and child support advocates, eliminated the federal match
for incentive payments beginning in fiscal year 2008.[Footnote 16]
This federal incentive match, as it has been called, funded about 16
percent of total CSE program expenditures nationwide in fiscal year
2007. This percentage varied by state, ranging from 6 to 39 percent.
With the elimination of this source of federal funding, states would
need to spend more of their own funds to maintain CSE program
expenditure levels.
At the time of DRA passage, the Congressional Budget Office (CBO)
estimated that eliminating the incentive match would result in savings
to the federal government of $4.6 billion over 10 years. CBO also
estimated that total CSE program expenditures (federal and state)
would fall 15 percent in the first year and result in a decline in
child support collections for families unless states increased their
own funding of the CSE program to compensate for the elimination of
the federal incentive match. (See appendix II for more details on
CBO's estimate.) The elimination of this match addressed some
policymakers' concern about federal funds matching federal incentive
funds and additional concerns that the federal government's portion of
CSE funding is too high. (Appendix III shows the state and federal
shares of CSE spending in recent years.) Other policymakers and
stakeholder groups countered that the incentive match was important
for maintaining the strong performance of the CSE program.
To date, the DRA provision eliminating the incentive match has been in
effect for fiscal year 2008 only, because more recent legislation
effectively suspended it for fiscal years 2009 and 2010. Beginning in
2007, the U.S. economy experienced a severe recession and, as a
result, the Congress passed the Recovery Act, which included
provisions affecting the CSE program. The Recovery Act suspended the
statutory language ending the federal incentive match for fiscal years
2009 and 2010. As of November 2010, states had received almost $1.5
billion in reinstated federal incentive match funds under the Recovery
Act.
Recent Legislative Changes--Encouraging States to Pass Through More
Child Support Collections to Families:
Another DRA provision was designed to encourage states to pay (or
"pass through") directly to families more of the child support
collected on behalf of current and former recipients of public
assistance--previously retained by the state to recover the costs of
providing their public assistance.[Footnote 17] These policies, called
"family first" policies, provide states the option to give more child
support directly to families without having to reimburse the federal
government for its share of the collections--that is, the portion that
would otherwise be required to be returned to the federal government.
Before 1996, states were required by federal law to pass through the
first $50 of child support collections directly to a family.[Footnote
18] This provision was repealed by the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996, and states had the option
to decide how much, if any, of the collections would be passed through
to a family.[Footnote 19] Pass-through policies can encourage
custodial parents to cooperate with the CSE program and may also
encourage noncustodial parents to comply with their child support
orders by ensuring that some of the support paid goes to the children.
However, passing through collections cost states in two ways: they had
to forego retaining their state share of the collections, and they
still had to pay the federal government its share of the amount passed
through. Under DRA, beginning October 1, 2008, the federal government
began sharing in the cost of passing through up to $100 per month for
a family with one child, and up to $200 per month for a family with
two or more children.[Footnote 20] States that choose to pass through
these amounts to the families do not have to pay the federal
government its share of the collections.
Child support pass-through and "family first" policies have evolved
over time and represent new ways of thinking about the mission of the
CSE program. One of the original goals of the CSE program was to help
recover the costs of providing public assistance, which is why
custodial parents applying for public assistance must assign to the
state the right to collect child support payments. In the early years
of the program, the income from retained collections served as a key
source of states' funding for their cash assistance programs. The CSE
program grew rapidly, primarily as families who had never received
public assistance joined the program. Over time, families receiving
public assistance have comprised a shrinking portion of the CSE
caseload, and collections on behalf of these families--and the amount
retained by state and federal governments--have decreased. As a
result, state CSE programs now have to compete with all other state
interests in obtaining state or local funding. This is a departure
from the past, when the CSE program was unique among social welfare
programs in that it added revenue to state treasuries.
In recent years, the importance of child support as a source of income
for low-income families has garnered national attention. For example,
Census Bureau data showed that, among poor households that received
it, child support constituted about 38 percent of family income in
2007.[Footnote 21] In addition, a 2003 Urban Institute study
determined that child support payments increased some families'
incomes enough in 1999 to reduce their dependency on programs such as
TANF, food stamps, and Medicaid, lowering government spending.
[Footnote 22] While passing through more child support to families may
result in forgone revenue for state and federal governments in some
situations, this study indicated that, in the longer term, and taking
into account a broader array of public costs, providing more child
support directly to families could also bring about financial benefits
to the government.
In Fiscal Year 2009, Growth of Child Support Collections Stalled and
Hard-to-Collect Cases Increased:
In Fiscal Year 2009, Growth of Child Support Collections Stalled
Nationwide for the First Time:
Until fiscal year 2009, child support collections nationwide, adjusted
for inflation, had steadily increased each year since the inception of
the program, peaking in fiscal year 2008 (see figure 1). However, in
fiscal year 2009, child support collections, adjusted for inflation,
declined by 2.1 percent from fiscal year 2008.[Footnote 23] In its
annual report for fiscal year 2009, OCSE stated that the downturn in
the American economy contributed to the decrease in child support
collections. In addition, the average amount of child support
collected per case declined by 3 percent to $1,670 in fiscal year
2009, the first such decline since 1994.
Figure 1: Inflation-Adjusted CSE Collections Since Full Program
Operation, in Constant 2009 Dollars:
[Refer to PDF for image: line graph]
Fiscal year: 1978;
Collection: $2.89 billion.
Fiscal year: 1979;
Collection: $3.41 billion.
Fiscal year: 1980;
Collection: $3.47 billion.
Fiscal year: 1981;
Collection: $3.48 billion.
Fiscal year: 1982;
Collection: $3.54 billion.
Fiscal year: 1983;
Collection: $3.88 billion.
Fiscal year: 1984;
Collection: $4.39 billion.
Fiscal year: 1985;
Collection: $4.82 billion.
Fiscal year: 1986;
Collection: $5.68 billion.
Fiscal year: 1987;
Collection: $6.67 billion.
Fiscal year: 1988;
Collection: $7.62 billion.
Fiscal year: 1989;
Collection: $8.34 billion.
Fiscal year: 1990;
Collection: $9.21 billion.
Fiscal year: 1991;
Collection: $10.17 billion.
Fiscal year: 1992;
Collection: $11.46 billion.
Fiscal year: 1993;
Collection: $12.54 billion.
Fiscal year: 1994;
Collection: $13.58 billion.
Fiscal year: 1995;
Collection: $14.62 billion.
Fiscal year: 1996;
Collection: $15.92 billion.
Fiscal year: 1997;
Collection: $17.39 billion.
Fiscal year: 1998;
Collection: $18.43 billion.
Fiscal year: 1999;
Collection: $20.16 billion.
Fiscal year: 2000;
Collection: $22.20 billion.
Fiscal year: 2001;
Collection: $23.02 billion.
Fiscal year: 2002;
Collection: $24.06 billion.
Fiscal year: 2003;
Collection: $24.79 billion.
Fiscal year: 2004;
Collection: $24.95 billion.
Fiscal year: 2005;
Collection: $25.42 billion.
Fiscal year: 2006;
Collection: $25.57 billion.
Fiscal year: 2007;
Collection: $25.81 billion.
Fiscal year: 2008;
Collection: $26.95 billion.
Fiscal year: 2009;
Collection: $26.39 billion.
Source: GAO analysis of OCSE data.
[End of figure]
OCSE data show changes in the way child support was collected in
fiscal year 2009, demonstrating some effects of the economic
recession. In fiscal year 2009, which was marked by high national
unemployment, the amount of collections intercepted from unemployment
insurance benefits nearly tripled, while collections withheld from
income decreased for the first time.[Footnote 24] (See figure 2.) As a
result of the nation's economic situation, many individuals, including
noncustodial parents, have become unemployed, and claims for
unemployment insurance benefits have reached very high levels, and the
duration of benefit receipt has increased, in part due to policy
changes.[Footnote 25],[Footnote 26]
Figure 2: Changes in the Amount of Child Support Collections by
Source, Adjusted for Inflation, FY 2008-FY 2009:
[Refer to PDF for image: vertical bar graph]
Constant 2009 dollars:
Child support collections: Income withholding;
Amount: -$824 million.
Child support collections: Tax intercepts;
Amount: -$674 million.
Child support collections: Unemployment insurance intercepts;
Amount: $1.057 billion.
Child support collections: Other;
Amount: -$199 million.
Child support collections: Total;
Amount: -$641 million.
Source: GAO analysis of OCSE data.
[End of figure]
Other outcomes that OCSE measures for the CSE program have remained
stable or increased slightly, such as the number of paternities and
child support orders established. From fiscal year 2008 to fiscal year
2009, the number of paternities established or acknowledged increased
slightly, and the number of child support orders established increased
by 6 percent. OCSE officials reported that these measures are not as
sensitive to the effects of the recession as collections, primarily
because they do not depend on the noncustodial parent's income.
Additionally, in fiscal year 2009, the CSE program's national cost-
effectiveness measure--the ratio of collections divided by CSE
administrative expenditures--declined very slightly from fiscal year
2008, because collections decreased slightly more than expenditures
did over this time period.
Recent Changes to the Composition of the Child Support Caseload
Resulted in Increases in Hard-to-Collect Cases:
In fiscal year 2009, the composition of the child support caseload
shifted when the number of CSE cases currently receiving public
assistance increased, reversing a long-standing trend, as shown in
figure 3.[Footnote 27] In the past 10 years, the number of CSE
families receiving public assistance has steadily declined, but this
population increased in fiscal year 2009, reflecting increasing TANF
caseloads.[Footnote 28] OCSE data also show a steady increase in the
number of child support cases that have never received public benefits
and a steady decrease in the number of cases that formerly received
public assistance, trends that continued in fiscal year 2009.[Footnote
29] Overall, the national child support caseload has remained fairly
steady since 2003, climbing slightly to 15.8 million cases in fiscal
year 2009.
Figure 3: Child Support Caseload Composition, FY 2003-FY 2009:
[Refer to PDF for image: multiple line graph]
Millions of cases:
Year: 2003;
Formerly Received Public Assistance: 7.37 million;
Never Received Public Assistance: 5.79 million;
Currently Receiving Public Assistance: 2.76 million.
Year: 2004;
Formerly Received Public Assistance: 7.28 million;
Never Received Public Assistance: 5.95 million;
Currently Receiving Public Assistance: 2.63 million.
Year: 2005;
Formerly Received Public Assistance: 7.29 million;
Never Received Public Assistance: 6.07 million;
Currently Receiving Public Assistance: 2.50 million.
Year: 2006;
Formerly Received Public Assistance: 7.27 million;
Never Received Public Assistance: 6.24 million;
Currently Receiving Public Assistance: 2.33 million.
Year: 2007;
Formerly Received Public Assistance: 7.20 million;
Never Received Public Assistance: 6.42 million;
Currently Receiving Public Assistance: 2.14 million.
Year: 2008;
Formerly Received Public Assistance: 7.07 million;
Never Received Public Assistance: 6.56 million;
Currently Receiving Public Assistance: 2.05 million.
Year: 2009;
Formerly Received Public Assistance: 6.87 million;
Never Received Public Assistance: 6.75 million;
Currently Receiving Public Assistance: 2.18 million.
Source: GAO analysis of OCSE data.
[End of figure]
There was substantial variation among states regarding CSE caseload
changes, with some states experiencing a more dramatic increase in the
number of CSE cases receiving public assistance. For example, CSE
officials in Michigan reported that the number of CSE cases currently
receiving public assistance in the state increased by 26 percent
between fiscal years 2008 and 2009.
Hard-to-Collect Cases Increasing:
The shift in the composition of CSE cases is significant because these
changes have contributed to increased numbers of hard-to-collect cases
in CSE programs. When a noncustodial parent is employed or owns
assets, the CSE program can usually obtain consistent collections
using automated systems and/or enforcement techniques, the most
critical being automated wage withholding.[Footnote 30] Conversely,
obtaining collections from a noncustodial parent with a limited
ability to pay, such as those whose employment or earnings have been
affected by the economic recession, is more difficult. State and local
officials we interviewed reported that the noncustodial parents
involved in CSE cases receiving public assistance are more likely to
have low incomes or barriers to employment, making it more difficult
to obtain collections. In fiscal year 2009, only 33 percent of the CSE
families currently receiving public assistance received any child
support collections at all, compared with 58 percent of CSE cases that
formerly received public assistance and 63 percent of CSE cases that
have never received public assistance. In addition, although federal
law requires recipients of public assistance to cooperate with the
state to establish paternity and obtain child support payments, some
state and local officials reported that custodial and noncustodial
parents in these cases may not be consistently cooperative with the
CSE program.[Footnote 31] Moreover, nationwide, a lower percentage of
public assistance cases have child support orders in place compared to
other types of cases, and CSE workers may have to take steps to
identify a noncustodial parent and establish a support order before
attempting to collect payments.
States we studied have responded to increases in hard-to-collect cases
by employing different strategies for obtaining collections depending
on the nature of the case. Generally, in-person outreach and other
staff-intensive enforcement tools have become more necessary to obtain
collections as incomes have declined in the current economic climate,
according to CSE officials we interviewed. Officials in several states
described strategies designed to assist low-income noncustodial
parents in fulfilling their child support obligations, such as case
management, reduced child support orders, and workforce services.
[Side bar: Supports for Noncustodial Parents:
Many officials we spoke with described programs to support and engage
noncustodial parents as part of the CSE process. These programs can
focus on fatherhood, employment, incarceration, and child access and
visitation. The overriding aim of these programs is to achieve
reliable child support payments and involvement of noncustodial
parents with their children. In Georgia, the CSE program refers
parents who are unemployed or underemployed to the Georgia Fatherhood
Program where they receive assessment, life skills training, job
readiness training, and job placement. The program‘s participants
receive short- and long-term skills training in fields such as
carpentry, computer repair, car repair, and welding. According to
officials in Georgia, the program has served over 25,000 people.
Additionally, the Georgia CSE program has established a Child Support
Problem Solving Court in two areas to help parents facing repeated
incarceration for nonpayment of support by combining the justice
system with rehabilitation services. The goals of both programs are to
help noncustodial parents address and remove barriers to their own
self-sufficiency and to encourage compliance with the CSE program. End
of side bar]
Other Child Support Workload Changes:
In addition to the changes in the child support caseload, some state
CSE officials reported that the economic downturn and budget
shortfalls have increased other aspects of child support caseworkers'
workloads. For example, as employment and income levels have changed
due to the economic recession, CSE programs have seen an increase in
the number of cases that require a modification of the legally
established child support obligation. Several states have responded to
this increased demand by implementing expedited review and adjustment
procedures, including "rapid response" teams. Finally, some state
officials expressed concerns that staffing levels for CSE programs are
beginning to decline due to state budget shortfalls. Hiring freezes
have caused additional workload strains in some states, according to
state and local CSE officials we interviewed. According to nationwide
data from HHS, the total number of full-time equivalent staff in CSE
programs remained fairly steady between fiscal year 2003 and fiscal
year 2008, but from fiscal years 2008 to 2009, the number of workers
fell by about 2.5 percent nationally and the number of CSE cases per
worker increased by 3 percent to 270. State CSE officials we
interviewed also reported that, in light of declining staff levels,
some CSE programs continue to look for ways to automate and expedite
processes in order to reduce the burden on staff.
States Have Maintained Child Support Program Expenditures Amid
Concerns About Budget Constraints:
States Generally Maintained Program Expenditure Levels in Fiscal Years
2008 and 2009:
Despite the elimination of the federal incentive match in fiscal year
2008, states generally increased state child support spending as
necessary to maintain their overall CSE program expenditure levels.
National CSE expenditures, adjusted for inflation, remained
essentially flat from fiscal year 2007 to fiscal year 2009. This
period of time was marked by the removal and restoration of the
federal incentive match as well as the economic recession.[Footnote
32] This flat rate is similar to the 1 percent annual decline in
expenditures the program has experienced, on average, since fiscal
year 2002. As shown in figure 4, this trend contrasts with the rising
expenditures of the program's earlier years, as its scale and scope
increased. Federal child support officials told us that the more
recent flattening may be due to decreases in child support caseloads
that began in the late 1990s, especially resource-intensive public
assistance cases. Additionally, they said that past expenditure
increases were largely a result of implementing CSE infrastructure,
such as automated systems. According to OCSE officials, most states
had completed this work by the early 2000s and were able to use the
improved efficiencies to continue increasing their collections each
year without increasing expenditures.
Figure 4: National CSE Expenditures, Adjusted for Inflation, FY 1978-
FY 2009:
[Refer to PDF for image: line graph]
Fiscal year: 1978;
Expenditures: $8.62 billion.
Fiscal year: 1979;
Expenditures: $9.19 billion.
Fiscal year: 1980;
Expenditures: $1.06 billion.
Fiscal year: 1981;
Expenditures: $1.10 billion.
Fiscal year: 1982;
Expenditures: $1.22 billion.
Fiscal year: 1983;
Expenditures: $1.32 billion.
Fiscal year: 1984;
Expenditures: $1.34 billion.
Fiscal year: 1985;
Expenditures: $1.46 billion.
Fiscal year: 1986;
Expenditures: $1.65 billion.
Fiscal year: 1987;
Expenditures: $1.82 billion.
Fiscal year: 1988;
Expenditures: $1.93 billion.
Fiscal year: 1989;
Expenditures: $2.17 billion.
Fiscal year: 1990;
Expenditures: $2.46 billion.
Fiscal year: 1991;
Expenditures: $2.66 billion.
Fiscal year: 1992;
Expenditures: $2.87 billion.
Fiscal year: 1993;
Expenditures: $3.16 billion.
Fiscal year: 1994;
Expenditures: $3.53 billion.
Fiscal year: 1995;
Expenditures: $4.07 billion.
Fiscal year: 1996;
Expenditures: $4.04 billion.
Fiscal year: 1997;
Expenditures: $4.46 billion.
Fiscal year: 1998;
Expenditures: $4.61 billion.
Fiscal year: 1999;
Expenditures: $5.12 billion.
Fiscal year: 2000;
Expenditures: $5.63 billion.
Fiscal year: 2001;
Expenditures: $5.87 billion.
Fiscal year: 2002;
Expenditures: $6.19 billion.
Fiscal year: 2003;
Expenditures: $6.10 billion.
Fiscal year: 2004;
Expenditures: $6.07 billion.
Fiscal year: 2005;
Expenditures: $5.92 billion.
Fiscal year: 2006;
Expenditures: $5.94 billion.
Fiscal year: 2007;
Expenditures: $5.81 billion.
Fiscal year: 2008;
Expenditures: $5.96 billion.
Fiscal year: 2009;
Expenditures: $5.85 billion.
Source: GAO analysis of OCSE data.
[End of figure]
In fiscal year 2008, the first--and, so far, only--year that the
federal incentive match was eliminated, total federal and state CSE
expenditures, adjusted for inflation, did not decrease. Instead, they
increased slightly by 2.6 percent, to $6.0 billion. This is notable,
as it indicates that states increased their own funding of the CSE
program to maintain operations in response to the elimination of the
federal incentive match, as shown in figure 5.[Footnote 33] However,
the national increase masks considerable variation among the states.
For example, large expenditure growth in five states accounted for the
majority of the national growth, and expenditures decreased in 22
states.[Footnote 34] Additionally, at the state level, while the
average change in inflation-adjusted expenditures was a 3 percent
increase, the states were spread widely around that figure. The
standard deviation was 12 percent, meaning that the range within which
a typical state could be expected to fall was between a 9 percent
decrease and a 14 percent increase in expenditures.[Footnote 35]
Figure 5: Inflation-Adjusted Total, State, and Federal CSE
Expenditures, FY 2007-FY 2009:
[Refer to PDF for image: multiple line graph]
Constant 2009 dollars:
Year: 2007;
Total expenditures: $5.8 billion;
Federal expenditures: $3.8 billion;
State expenditures: $2.0 billion.
Year: 2008;
Total expenditures: $6.0 billion;
Federal expenditures: $3.7 billion;
State expenditures: $2.2 billion.
Year: 2009;
Total expenditures: $5.8 billion;
Federal expenditures: $3.9 billion;
State expenditures: $2.0 billion.
Source: GAO analysis of OCSE data.
Note: While the federal match rate is 66 percent, in fiscal year 2008
when incentive funds were not matched, the effective federal share was
62 percent. Additionally, for each year, federal expenditures do not
include the approximately $500 million in federal outlays for
incentive payments to states. Instead, incentive payments received by
states are included as state expenditures in the year in which the
state spends them. The data also do not include any adjustments for
collections on behalf of public assistance recipients, which are
generally retained and shared by the federal government and the
states. For example, in fiscal year 2009, the federal government
received $945 million of these retained collections. The corresponding
state share was $741 million. However, some states pass through part
of their share to families or use it to help meet state spending
requirements for the TANF program, although data on the specific
amounts are not available.
[End of figure]
State CSE officials we interviewed reported that a variety of factors
contributed to state funding increases in fiscal year 2008. First,
several state officials told us that the CSE program had broad support
among state lawmakers, partly due to its emphasis on personal
responsibility and partly because program officials have performance
data available to illustrate the results of the program, such as the
amount of child support received by families. Additionally, in many
states, the CSE program is viewed as having advantages over some other
programs in state budget decisions, because state CSE spending
attracts federal matching dollars and federal incentive payments, and
state costs are somewhat offset by collections retained from families
receiving public assistance. Further, states do not have to spend
incentive funds in the year they are earned, and some states used
banked incentive funds from previous years to partially or completely
replace incentive match funds. Finally, anticipation that the federal
incentive match would be reinstated quickly was a factor in some
states, as there were at that time several federal legislative
proposals to that effect, and policymakers appropriated extra state
funds for only 1 year.
A somewhat different spending picture emerged in fiscal year 2009, the
year that the Recovery Act's 2-year restoration of the federal
incentive match took effect. Total state and federal CSE expenditures,
adjusted for inflation, declined by 1.8 percent in fiscal year 2009,
to $5.8 billion. OCSE officials told us that the economic recession
was the primary reason for decreasing child support spending in fiscal
year 2009, as the effects of the economic downturn were felt on state
budgets, causing them to tighten. Additionally, officials in several
states said the states had only appropriated supplemental CSE program
funds for 1 year (fiscal year 2008) in response to the repeal of the
incentive match, and these were not renewed when the incentive match
was restored. At the state level, 34 states experienced either
decreases in total expenditures in fiscal year 2009 or smaller
increases than they had in fiscal year 2008. The average change in
inflation-adjusted expenditures in fiscal year 2009 was 1 percent with
a standard deviation of 13 percent, so that typical states ranged from
a 12 percent decrease to a 14 percent increase.
Many States Have Reported Funding Uncertainty Since DRA Was Enacted in
2005:
According to state officials we interviewed, most states have
experienced funding uncertainty in recent years, beginning with the
elimination of the federal incentive match in fiscal year 2008, and
continuing due to state budget shortfalls and the economic recession.
In response to uncertainty about how much funding their CSE programs
would receive, some state officials reported a variety of efforts to
plan for the future, such as creating funding scenarios in which the
CSE program experienced a substantial funding cut.
In several states we interviewed, funding uncertainty has prompted the
implementation of cost-saving initiatives over the past several years.
Officials from two states further reported that although they
identified innovations that would have increased the efficiency of
their CSE programs, such as automating some CSE processes, these
initiatives required an initial investment before cost savings could
be realized. The states could not implement these cost-saving ideas
because they were unable to secure funding for the up-front costs due
to tight state budgets. Additionally, several state officials reported
that funding uncertainty after DRA caused the CSE program to delay or
cancel planned projects, such as technology upgrades.
Funding uncertainty also affected how CSE programs used the reinstated
federal incentive matching funds under the Recovery Act, according to
several CSE officials we interviewed. Because state officials
understood that the 2-year restoration of the incentive match was
temporary, some states were unwilling to use these funds for long-term
projects or staffing increases. In March 2010, an OCSE newsletter
described how states were using the restored incentive match funds.
(See figure 6.) OCSE reported that most state CSE programs planned to
target one of three general areas: basic program operations,
technology, and customer service. Several state officials we
interviewed confirmed that they were using the reinstated incentive
match funds to sustain program operations and avoid layoffs during
tight state budget climates. This is unlike prior years, when
incentive match funds might have been used for long-term projects
because funding was more predictable.
Figure 6: States' Uses of Restored Incentive Match Funds under the
Recovery Act:
[Refer to PDF for image: pie-chart]
Customer service (voice response systems, partnerships with fatherhood
or employment programs): 3 states;
Technology (systems enhancements, interfaces with other agencies): 16
states;
Basic program functions (staff, contracts, training, operations): 31
states.
Source: GAO analysis of information from OCSE Child Support Report
Newsletter.
[End of figure]
[Side bar: Efforts to Reduce Costs in Times of Funding Uncertainty:
Funding uncertainty has prompted states to attempt to lower their CSE
costs. In one state we interviewed, officials told us that after DRA
passed, state CSE officials formed a committee to plan for a potential
reduction in funds. The committee generated many recommendations,
including improvements to data systems, new fees, and streamlining of
CSE processes, that were estimated to result in cost savings and
revenue increases that could help mitigate the effects of the federal
incentive match the state was projected to lose. Although the state
eventually provided full replacement funding in its budget in fiscal
year 2008, state officials told us that the CSE program implemented
some of the recommendations, particularly those that increased program
efficiency and did not require significant investment or limit program
operations. However, state officials also explained that some of the
recommendations would have taken several years to implement, and that
the current budget situation in the state would make it difficult to
implement other recommendations that require up-front investment. End
of side bar]
Looking to the future, several of the state officials we interviewed
described funding uncertainty surrounding the expiration of the
incentive match in fiscal year 2011, as well as state budget
situations. Not knowing whether the incentive match will be extended
again or how much their future state CSE appropriations will be has
made planning more difficult. Several officials emphasized that even
states that maintained overall expenditure levels when the incentive
match was eliminated in fiscal year 2008 may not be able to do so
again in fiscal year 2011, as many state budget situations have
worsened since the economic recession. Some officials also noted that
the delivery of services beyond the core mission of the CSE program--
such as job skills training and fatherhood initiatives--is
particularly uncertain.[Footnote 36] These officials also told us
that, although they believe that these services and partnerships are
necessary to continue increasing their collections, particularly from
noncustodial parents who are underemployed or have barriers to
maintaining employment, these services would be reduced to preserve
core services in the event of dramatic budget shortfalls.[Footnote 37]
Overall, these state perspectives are in keeping with our recent work
finding that all levels of government face long-term fiscal challenges
that could have implications for the future delivery of
intergovernmental programs.[Footnote 38]
In addition, although child support fees are another potential source
of income for state CSE programs, many state officials we interviewed
told us that fees do not represent a large source of income in their
states and that they do not expect their policies regarding fees to
change. However, a few other state officials told us that if the
budget situation in their states became worse, they would consider
increasing existing fees or adding new ones, even if the amount
recovered was small.
Most States Have Not Implemented "Family First" Policies, Citing
Budget Constraints:
After DRA provided states with additional "family first" policy
options, most states did not change their policies and do not pass
through any child support payments to families on public assistance.
[Footnote 39] Before DRA, states could opt to pass through child
support payments to families receiving public assistance, rather than
retain the collections as reimbursement for their welfare expenses.
However, when states did so, they would have to forego their state
share of the collections, as well as pay the federal government its
share. DRA's options that allowed states to pass through up to $200
per family per month without having to pay the federal share
effectively reduced the cost to states of enacting these policies,
serving as a type of incentive for states to pass through collections.
However, in response to DRA's policy options, 43 states have elected
not to increase their pass-through policies (see table 1). Among these
states, 29 do not pass through any child support payments. The
remaining 14 states already passed through some of the child support
payment (and most disregard it as income for purposes of determining
the amount of TANF benefits the family is eligible for) and did not
elect to change the amount. Nevertheless, 11 states did change their
policies after DRA to strengthen their "family first" provisions, with
9 increasing the amount of their current pass-through and 2
implementing a pass-through for the first time.
Table 1: State Pass-through and Disregard Policies for Current Child
Support Received by Families on Public Assistance:
Policy change after DRA: No (43 states):
Pass-through and disregard policies: Do not pass through or disregard
anything: 29.
Pass-through and disregard policies: Do not pass through or disregard
anything;
States: Alabama, Arizona, Arkansas, Colorado, Florida, Guam, Hawaii,
Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland,
Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, North
Carolina, North Dakota, Ohio, Oklahoma, Puerto Rico, South Dakota,
Utah, Virgin Islands, Wyoming.
Pass-through and disregard policies: Some pass-through and disregard
policies: 14.
Pass-through and disregard policies: Pass-through in some
circumstances[A];
States: Georgia, South Carolina, Tennessee.
Pass-through and disregard policies: Up to $50 passed through and
disregarded;
States: Alaska, California, Connecticut, Delaware,[B] Illinois,
Maine,[B] Massachusetts, Michigan, Rhode Island.
Pass-through and disregard policies: All child support is passed
through and $50 is disregarded;
States: Vermont.
Pass-through and disregard policies: All child support is passed
through, but none of it is disregarded;
States: Minnesota.
Policy change after DRA: Yes (11 states):
Pass-through and disregard policies: Added pass-through and disregard
after DRA: 2.
Pass-through and disregard policies: Up to $150 passed through and
disregarded;
States: District of Columbia.
Pass-through and disregard policies: $50 is passed through and
disregarded per month per child, up to $200 per family;
States: Oregon.
Pass-through and disregard policies: Increased existing pass-through
and disregard after DRA: 9.
Pass-through and disregard policies: $75 is passed through and
disregarded;
States: Texas.
Pass-through and disregard policies: $100 is passed through and
disregarded;
States: New Jersey.
Pass-through and disregard policies: Up to $100 for one child/$200 for
two or more children is passed through and disregarded;
States: New Mexico, New York, Pennsylvania, Virginia, Washington,[C]
West Virginia.
Pass-through and disregard policies: Seventy-five percent of child
support payment is passed through and disregarded;
States: Wisconsin.
Source: GAO analysis of OCSE information.
[A] These states do not always pass through child support payments.
However, these states guarantee a certain minimum level of income for
families receiving TANF assistance. As a result, some of the child
support payments may be used to "fill the gap" between the family's
public assistance grant and the guaranteed minimum income.
[B] Delaware and Maine may give families more than the $50 pass-
through under TANF "fill-the-gap" policies.
[C] The state of Washington passed a law on December 11, 2010,
repealing its pass-through policies effective May 1, 2011.
[End of table]
DRA also gave states options to distribute all of the child support
collected on behalf of families formerly receiving TANF cash
assistance directly to the families without having to pay the federal
government's share.[Footnote 40] In addition to increasing these
families' incomes, this would simplify the CSE distribution process
for these cases. According to OCSE officials, at least three states--
New Jersey, Wisconsin, and West Virginia--have elected to implement
some of these options.
Most state officials we interviewed told us that funding constraints
were the primary reason that their states did not more fully implement
"family first" policy options. Passing through more child support to
families costs states money, as they must forgo their share of these
collections, even if they would no longer need to provide the federal
government its share. Most of the state CSE officials we talked to
expressed a desire to respond to these provisions and strengthen their
child support distribution policies to distribute more to families.
However, they reported that tight state budgets and funding
uncertainty have constrained these policy changes.
Nationwide, many states have decided to absorb the new mandatory
annual $25 service fee for families that receive at least $500 in
child support collections and have never received public assistance,
another DRA change.[Footnote 41] According to state documents filed
with OCSE, 22 states elected to pay the fee using state funds rather
than charging the fee to families, and 27 states assess the fee to the
custodial parent (see figure 7).[Footnote 42] Some CSE officials we
interviewed stated that their states absorbed the $25 service fee due
to concerns that the fee would be a burden, while others said that
they charged the fee to custodial parents because their states
couldn't afford to absorb the fee due to budgetary constraints. Some
of the latter told us that the reason they charged the service fee to
custodial, rather than noncustodial, parents was because it was easier
administratively. A few also reported that families affected by the
fee had voiced little opposition to it.
Figure 7: States' Implementation of the $25 Annual Service Fee:
[Refer to PDF for image: illustration]
Custodial parent pays:
The custodial parent can be charged either by retaining part of the
child support payment (after the first $500 has been collected) or by
charging the custodial parent a separate fee;
Number of states: 27:
Alabama;
Arizona;
Colorado;
Delaware;
Hawaii;
Idaho;
Iowa;
Kentucky;
Louisiana;
Michigan;
Minnesota;
Nebraska;
Nevada;
New Hampshire;
New York;
North Carolina;
North Dakota;
Oklahoma;
Oregon;
South Carolina;
Tennessee;
Utah;
Virgin Islands;
Virginia;
Washington;
Wisconsin;
Wyoming.
State pays:
The state pays the fee out of its own funds on behalf of the family;
Number of states: 22:
Alaska;
Arkansas;
California;
Connecticut;
District of Columbia;
Florida;
Guam;
Illinois;
Kansas;
Maine;
Maryland[A];
Massachusetts;
Montana;
New Jersey;
New Mexico;
Pennsylvania[B];
Puerto Rico;
Rhode Island;
South Dakota;
Texas;
Vermont;
West Virginia.
Noncustodial parent pays:
The noncustodial parent is charged a separate fee in addition to the
child support payment;
Number of states: 4:
Indiana;
Mississippi;
Missouri;
Ohio.
Noncustodial parent and custodial parent split the fee:
In Georgia, the noncustodial parent pays a $13 fee, and the remaining
$12 is withheld from the child support payment to the custodial parent;
Number of states: 1:
Georgia.
Source: GAO.
[A] The state of Maryland pays the fee until $3,500 has been
collected; after that, the custodial parent pays the fee.
[B] The state of Pennsylvania pays the fee until $2,000 has been
collected; after that, the custodial parent pays the fee.
[End of figure]
Concluding Observations:
The CSE program is large and complex, providing a broad range of
services to different populations. From its inception in 1975, the
program has generally grown rapidly and experienced significant shifts
in its populations served and funding mechanisms. The advances in
automation and enforcement tools over the past two decades, such as
wage withholding and tax refund intercepts, undoubtedly contributed to
the growth in collections over time. More recently, the program
experienced changes related to DRA, the economic recession, and the
Recovery Act. These changes have been accompanied by some departures
from previous trends but also an overall maintenance of core program
functions. Having a variety of collection mechanisms in place,
particularly unemployment insurance intercepts, helped the CSE program
respond to recent economic conditions and better ensure continuation
of some collections.
It is difficult to comment on states' likely actions and choices in
the future based on our findings here. For example, although we know
that many states increased their funding of the CSE program when the
incentive match was eliminated in fiscal year 2008, it is not clear
that states would increase funding in response to the elimination of
the incentive match in future years, especially given budgetary
conditions.
Additionally, since most states are not implementing "family first"
distribution options, it is possible that DRA's incentives to pass
through more child support collections directly to families are not
sufficiently compelling for states in the current environment. As a
result, now may not be the best time to assess state interest in these
policies. Overall, the recent recession may have affected the capacity
of state and local governments to provide services and implement new
policies, effects that are projected to be long-term. Because CSE
funding depends on state and local budgets to obtain the federal
match, the program may continue to experience funding uncertainty. In
this budget environment, even though the CSE program provides services
that help increase family incomes, it will likely have to compete with
other programs for scarce state resources.
Agency Comments and Our Evaluation:
We provided a copy of this draft report to HHS for comment and review.
In its response, reproduced in appendix IV, HHS stated that this
report is an accurate and balanced representation of current trends in
the CSE program. It also noted that the report recognizes a number of
ways in which the current economic environment is affecting the CSE
program, such as decreased collections from wage withholding and
increased collections attributable to unemployment compensation. HHS
suggested that we include more about the role of economic factors in
the highlights page. We think we had an appropriate amount of
information on economic factors in the highlights, although we did add
some wording. Additionally, HHS provided some figures on the federal
and state shares of CSE program costs, which were calculated using
different methods that are not comparable. We have added some
additional information on federal and state shares of child support
enforcement costs in appendix III. HHS also provided technical
comments that we incorporated as appropriate.
As agreed with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies to the
appropriate congressional committees and other interested parties. The
report also will be available at no charge on the GAO Web site at
[hyperlink, http://www.gao.gov].
If you or your staff members have any questions about this report,
please contact me at (202) 512-7215 or brownke@gao.gov. Contact points
for our Offices of Congressional Relations and Public Affairs may be
found on the last page of this report. GAO staff members who made key
contributions to this report are listed in appendix V.
Signed by:
Kay E. Brown:
Director, Education, Workforce, and Income Security Issues:
[End of section]
Appendix I: Incentives and Incentive Match Shares of CSE Expenditures
by State:
State child support enforcement (CSE) programs may vary in the extent
to which they rely on performance incentives and the corresponding
federal match to fund their programs. For each state, we estimated the
percentage of total CSE expenditures accounted for by federal matching
of incentive funds in fiscal year 2007, as shown in the last column of
table 2. For this estimate, we used data from the Office of Child
Support Enforcement (OCSE) on total expenditures and the amount of
incentive payments awarded to each state in fiscal year 2007. We did
not adjust the data for inflation. We calculated the 2007 incentive
match by assuming that the amount of incentive funds the state spent
on its CSE program that year was equal to the amount of incentive
payments it received in that year and that these funds were
matched.[Footnote 43] We then show the fiscal year 2007 incentive
payments as a percentage of total CSE expenditures, as well as the
estimated amount of federal incentive match as a percentage of total
CSE expenditures. This last column suggests that the federal incentive
match accounts for a much greater share of total program expenditures
in some states than in others.
Table 2: Incentives and Incentive Match as a Percentage of Total CSE
Expenditures in Each State, FY 2007:
State: South Dakota;
FY 2007 total CSE expenditures: $8,101,199;
FY 2007 incentive: $1,640,655;
FY 2007 incentive match (assumed): $3,184,801;
Incentive share of total CSE expenditures: 20.3%;
Incentive match share of total CSE expenditures (assumed): 39.3%.
State: Indiana;
FY 2007 total CSE expenditures: $54,766,680;
FY 2007 incentive: $9,125,871;
FY 2007 incentive match (assumed): $17,714,925;
Incentive share of total CSE expenditures: 16.7%;
Incentive match share of total CSE expenditures (assumed): 32.3%.
State: Texas;
FY 2007 total CSE expenditures: $284,365,470;
FY 2007 incentive: $44,833,456;
FY 2007 incentive match (assumed): $87,029,649;
Incentive share of total CSE expenditures: 15.8%;
Incentive match share of total CSE expenditures (assumed): 30.6%.
State: Rhode Island;
FY 2007 total CSE expenditures: $9,195,677;
FY 2007 incentive: $1,191,333;
FY 2007 incentive match (assumed): $2,312,587;
Incentive share of total CSE expenditures: 13.0%;
Incentive match share of total CSE expenditures (assumed): 25.1%.
State: Missouri;
FY 2007 total CSE expenditures: $85,893,717;
FY 2007 incentive: $11,025,613;
FY 2007 incentive match (assumed): $21,402,660;
Incentive share of total CSE expenditures: 12.8%;
Incentive match share of total CSE expenditures (assumed): 24.9%.
State: Iowa;
FY 2007 total CSE expenditures: $56,584,574;
FY 2007 incentive: $7,242,624;
FY 2007 incentive match (assumed): $14,059,212;
Incentive share of total CSE expenditures: 12.8%;
Incentive match share of total CSE expenditures (assumed): 24.8%.
State: Kentucky;
FY 2007 total CSE expenditures: $61,526,519;
FY 2007 incentive: $7,577,312;
FY 2007 incentive match (assumed): $14,708,900;
Incentive share of total CSE expenditures: 12.3%;
Incentive match share of total CSE expenditures (assumed): 23.9%.
State: North Dakota;
FY 2007 total CSE expenditures: $14,041,975;
FY 2007 incentive: $1,727,090;
FY 2007 incentive match (assumed): $3,352,587;
Incentive share of total CSE expenditures: 12.3%;
Incentive match share of total CSE expenditures (assumed): 23.9%.
State: Mississippi;
FY 2007 total CSE expenditures: $27,767,327;
FY 2007 incentive: $3,413,361;
FY 2007 incentive match (assumed): $6,625,936;
Incentive share of total CSE expenditures: 12.3v;
Incentive match share of total CSE expenditures (assumed): 23.9%.
State: South Carolina;
FY 2007 total CSE expenditures: $37,316,848;
FY 2007 incentive: $4,527,114;
FY 2007 incentive match (assumed): $8,787,926;
Incentive share of total CSE expenditures: 12.1%;
Incentive match share of total CSE expenditures (assumed): 23.5%.
State: Wisconsin;
FY 2007 total CSE expenditures: $112,188,122;
FY 2007 incentive: $13,544,370;
FY 2007 incentive match (assumed): $26,292,012;
Incentive share of total CSE expenditures: 12.1%;
Incentive match share of total CSE expenditures (assumed): 23.4%.
State: Massachusetts;
FY 2007 total CSE expenditures: $77,560,097;
FY 2007 incentive: $9,352,175;
FY 2007 incentive match (assumed): $18,154,221;
Incentive share of total CSE expenditures: 12.1%;
Incentive match share of total CSE expenditures (assumed): 23.4%.
State: Virginia;
FY 2007 total CSE expenditures: $87,637,646;
FY 2007 incentive: $10,535,116;
FY 2007 incentive match (assumed): $20,450,519;
Incentive share of total CSE expenditures: 12.0%;
Incentive match share of total CSE expenditures (assumed): 23.3%.
State: Michigan;
FY 2007 total CSE expenditures: $227,507,429;
FY 2007 incentive: $27,069,478;
FY 2007 incentive match (assumed): $52,546,633;
Incentive share of total CSE expenditures: 11.9%;
Incentive match share of total CSE expenditures (assumed): 23.1%.
State: Wyoming;
FY 2007 total CSE expenditures: $10,854,206;
FY 2007 incentive: $1,257,218;
FY 2007 incentive match (assumed): $2,440,482;
Incentive share of total CSE expenditures: 11.6%;
Incentive match share of total CSE expenditures (assumed): 22.5%.
State: Pennsylvania;
FY 2007 total CSE expenditures: $228,260,855;
FY 2007 incentive: v25,683,502;
FY 2007 incentive match (assumed): $49,856,210;
Incentive share of total CSE expenditures: 11.3%;
Incentive match share of total CSE expenditures (assumed): 21.8%.
State: North Carolina;
FY 2007 total CSE expenditures: $128,744,451;
FY 2007 incentive: $14,318,339;
FY 2007 incentive match (assumed): $27,794,424;
Incentive share of total CSE expenditures: 11.1%;
Incentive match share of total CSE expenditures (assumed): 21.6%.
State: West Virginia;
FY 2007 total CSE expenditures: $36,639,552;
FY 2007 incentive: $4,051,441;
FY 2007 incentive match (assumed): $7,864,562;
Incentive share of total CSE expenditures: 11.1%;
Incentive match share of total CSE expenditures (assumed): 21.5%.
State: Ohio;
FY 2007 total CSE expenditures: $262,269,907;
FY 2007 incentive: $28,931,937;
FY 2007 incentive match (assumed): $56,161,995;
Incentive share of total CSE expenditures: 11.0%;
Incentive match share of total CSE expenditures (assumed): 21.4%.
State: Tennessee;
FY 2007 total CSE expenditures: $84,698,396;
FY 2007 incentive: $8,923,582;
FY 2007 incentive match (assumed): $17,322,248;
Incentive share of total CSE expenditures: 10.5%;
Incentive match share of total CSE expenditures (assumed): 20.5%.
State: Georgia;
FY 2007 total CSE expenditures: $113,673,594;
FY 2007 incentive: $11,788,614;
FY 2007 incentive match (assumed): $22,883,780;
Incentive share of total CSE expenditures: 10.4%;
Incentive match share of total CSE expenditures (assumed): 20.1%.
State: Oregon;
FY 2007 total CSE expenditures: $59,849,575;
FY 2007 incentive: $6,027,030;
FY 2007 incentive match (assumed): $11,699,528;
Incentive share of total CSE expenditures: 10.1%;
Incentive match share of total CSE expenditures (assumed): 19.5%.
State: Idaho;
FY 2007 total CSE expenditures: $25,997,952;
FY 2007 incentive: $2,569,428;
FY 2007 incentive match (assumed): $4,987,713;
Incentive share of total CSE expenditures: 9.9%;
Incentive match share of total CSE expenditures (assumed): 19.2%.
State: Florida;
FY 2007 total CSE expenditures: $268,145,149;
FY 2007 incentive: $25,435,934;
FY 2007 incentive match (assumed): $49,375,637;
Incentive share of total CSE expenditures: 9.5v;
Incentive match share of total CSE expenditures (assumed): 18.4%.
State: Maine;
FY 2007 total CSE expenditures: $23,565,974;
FY 2007 incentive: $2,155,983;
FY 2007 incentive match (assumed): $4,185,144;
Incentive share of total CSE expenditures: 9.1%;
Incentive match share of total CSE expenditures (assumed): 17.8%.
State: Louisiana;
FY 2007 total CSE expenditures: $70,966,048;
FY 2007 incentive: $6,450,649;
FY 2007 incentive match (assumed): $12,521,848;
Incentive share of total CSE expenditures: 9.1%;
Incentive match share of total CSE expenditures (assumed): 17.6%.
State: Hawaii;
FY 2007 total CSE expenditures: $17,981,796;
FY 2007 incentive: $1,586,323;
FY 2007 incentive match (assumed): $3,079,334;
Incentive share of total CSE expenditures: 8.8%;
Incentive match share of total CSE expenditures (assumed): 17.1%.
State: Nebraska;
FY 2007 total CSE expenditures: $43,672,650;
FY 2007 incentive: $3,835,388;
FY 2007 incentive match (assumed): $7,445,165;
Incentive share of total CSE expenditures: 8.8%;
Incentive match share of total CSE expenditures (assumed): 17.0%.
State: Washington;
FY 2007 total CSE expenditures: $149,171,728;
FY 2007 incentive: $13,092,467;
FY 2007 incentive match (assumed): $25,414,790;
Incentive share of total CSE expenditures: 8.8%;
Incentive match share of total CSE expenditures (assumed): 17.0%.
State: New Hampshire;
FY 2007 total CSE expenditures: $20,650,540;
FY 2007 incentive: $1,792,225;
FY 2007 incentive match (assumed): $3,479,025;
Incentive share of total CSE expenditures: 8.7%;
Incentive match share of total CSE expenditures (assumed): 16.8%.
State: Puerto Rico;
FY 2007 total CSE expenditures: $42,730,626;
FY 2007 incentive: $3,519,933;
FY 2007 incentive match (assumed): $6,832,811;
Incentive share of total CSE expenditures: 8.2%;
Incentive match share of total CSE expenditures (assumed): 16.0%.
State: Arkansas;
FY 2007 total CSE expenditures: $47,968,535;
FY 2007 incentive: $3,938,930;
FY 2007 incentive match (assumed): $7,646,159;
Incentive share of total CSE expenditures: 8.2%;
Incentive match share of total CSE expenditures (assumed): 15.9%.
State: Minnesota;
FY 2007 total CSE expenditures: $153,593,104;
FY 2007 incentive: $12,393,144;
FY 2007 incentive match (assumed): $24,057,279;
Incentive share of total CSE expenditures: 8.1%;
Incentive match share of total CSE expenditures (assumed): 15.7%.
State: Utah;
FY 2007 total CSE expenditures: $44,345,072;
FY 2007 incentive: $3,482,664;
FY 2007 incentive match (assumed): $6,760,466;
Incentive share of total CSE expenditures: 7.9%;
Incentive match share of total CSE expenditures (assumed): 15.2%.
State: Alaska;
FY 2007 total CSE expenditures: $23,327,695;
FY 2007 incentive: $1,794,516;
FY 2007 incentive match (assumed): $3,483,472;
Incentive share of total CSE expenditures: 7.7%;
Incentive match share of total CSE expenditures (assumed): 14.9%.
State: Oklahoma;
FY 2007 total CSE expenditures: $61,065,670;
FY 2007 incentive: $4,642,414;
FY 2007 incentive match (assumed): $9,011,746;
Incentive share of total CSE expenditures: 7.6%;
Incentive match share of total CSE expenditures (assumed): 14.8%.
State: Arizona;
FY 2007 total CSE expenditures: $81,449,461;
FY 2007 incentive: $6,127,312;
FY 2007 incentive match (assumed): $11,894,193;
Incentive share of total CSE expenditures: 7.5%;
Incentive match share of total CSE expenditures (assumed): 14.6%.
State: Montana;
FY 2007 total CSE expenditures: $14,551,005;
FY 2007 incentive: $1,093,410;
FY 2007 incentive match (assumed): $2,122,502;
Incentive share of total CSE expenditures: 7.5%;
Incentive match share of total CSE expenditures (assumed): 14.6%.
State: New York;
FY 2007 total CSE expenditures: $350,075,044;
FY 2007 incentive: $25,865,261;
FY 2007 incentive match (assumed): $50,209,036;
Incentive share of total CSE expenditures: 7.4%;
Incentive match share of total CSE expenditures (assumed): 14.3%.
State: New Jersey;
FY 2007 total CSE expenditures: $230,201,602;
FY 2007 incentive: $16,593,059;
FY 2007 incentive match (assumed): $32,210,056;
Incentive share of total CSE expenditures: 7.2%;
Incentive match share of total CSE expenditures (assumed): 14.0%.
State: Alabama;
FY 2007 total CSE expenditures: $62,797,981;
FY 2007 incentive: $4,508,934;
FY 2007 incentive match (assumed): $8,752,636;
Incentive share of total CSE expenditures: 7.2%;
Incentive match share of total CSE expenditures (assumed): 13.9%.
State: Colorado;
FY 2007 total CSE expenditures: $71,734,494;
FY 2007 incentive: $5,126,572;
FY 2007 incentive match (assumed): $9,951,580;
Incentive share of total CSE expenditures: 7.1%;
Incentive match share of total CSE expenditures (assumed): 13.9%.
State: Kansas;
FY 2007 total CSE expenditures: $52,251,252;
FY 2007 incentive: $3,674,594;
FY 2007 incentive match (assumed): $7,133,036;
Incentive share of total CSE expenditures: 7.0v;
Incentive match share of total CSE expenditures (assumed): 13.7%.
State: Vermont;
FY 2007 total CSE expenditures: $14,139,576;
FY 2007 incentive: $928,539;
FY 2007 incentive match (assumed): $1,802,458;
Incentive share of total CSE expenditures: 6.6%;
Incentive match share of total CSE expenditures (assumed): 12.7%.
State: Maryland;
FY 2007 total CSE expenditures: $117,063,928;
FY 2007 incentive: $7,246,481;
FY 2007 incentive match (assumed): $14,066,698;
Incentive share of total CSE expenditures: 6.2%;
Incentive match share of total CSE expenditures (assumed): 12.0%.
State: Illinois;
FY 2007 total CSE expenditures: $175,720,098;
FY 2007 incentive: $10,842,241;
FY 2007 incentive match (assumed): $21,046,704;
Incentive share of total CSE expenditures: 6.2%;
Incentive match share of total CSE expenditures (assumed): 12.0%.
State: Delaware;
FY 2007 total CSE expenditures: $25,256,239;
FY 2007 incentive: $1,291,199;
FY 2007 incentive match (assumed): $2,506,445;
Incentive share of total CSE expenditures: 5.1%;
Incentive match share of total CSE expenditures (assumed): 9.9%.
State: Nevada;
FY 2007 total CSE expenditures: $46,516,256;
FY 2007 incentive: $2,333,787;
FY 2007 incentive match (assumed): $4,530,292;
Incentive share of total CSE expenditures: 5.0%;
Incentive match share of total CSE expenditures (assumed): 9.7%.
State: Connecticut;
FY 2007 total CSE expenditures: $76,184,231;
FY 2007 incentive: $3,488,751;
FY 2007 incentive match (assumed): $6,772,281;
Incentive share of total CSE expenditures: 4.6%;
Incentive match share of total CSE expenditures (assumed): 8.9%.
State: District of Columbia;
FY 2007 total CSE expenditures: $23,378,975;
FY 2007 incentive: $813,655;
FY 2007 incentive match (assumed): $1,579,449;
Incentive share of total CSE expenditures: 3.5%;
Incentive match share of total CSE expenditures (assumed): 6.8%.
State: California;
FY 2007 total CSE expenditures: $1,136,343,159;
FY 2007 incentive: $39,083,934;
FY 2007 incentive match (assumed): $75,868,814;
Incentive share of total CSE expenditures: 3.4%;
Incentive match share of total CSE expenditures (assumed): 6.7%.
State: New Mexico;
FY 2007 total CSE expenditures: $44,619,633;
FY 2007 incentive: $1,273,636;
FY 2007 incentive match (assumed): $2,472,352;
Incentive share of total CSE expenditures: 2.9%;
Incentive match share of total CSE expenditures (assumed): 5.5%.
State: Guam;
FY 2007 total CSE expenditures: $4,529,670;
FY 2007 incentive: $127,504;
FY 2007 incentive match (assumed): $247,507;
Incentive share of total CSE expenditures: 2.8%;
Incentive match share of total CSE expenditures (assumed): 5.5%.
State: Virgin Islands;
FY 2007 total CSE expenditures: $4,425,283;
FY 2007 incentive: $103,902;
FY 2007 incentive match (assumed): $201,693;
Incentive share of total CSE expenditures: 2.3%;
Incentive match share of total CSE expenditures (assumed): 4.6%.
State: National;
FY 2007 total CSE expenditures: $5,593,864,242;
FY 2007 incentive: $471,000,000;
FY 2007 incentive match (assumed): 914,294,118;
Incentive share of total CSE expenditures: 8.4%;
Incentive match share of total CSE expenditures (assumed): 16.3%.
Source: GAO analysis of OCSE data.
[End of table]
[End of section]
Appendix II: Congressional Budget Office's Estimates of the Financial
Impacts of the Deficit Reduction Act's Child Support Provisions:
In its estimate of the impact of the Deficit Reduction Act of 2005
(DRA)[Footnote 44] on federal expenditures before DRA was enacted, the
Congressional Budget Office (CBO) estimated that if states did not
adjust their own spending for the child support program in response to
the elimination of the incentive match, national child support
expenditures would fall by 15 percent in 2010. However, CBO assumed
that states would avoid half of this 15 percent reduction by
increasing their own funding of their child support programs. CBO
estimated that this provision of DRA would lower the federal share of
administrative costs for child support by about $1.8 billion between
fiscal years 2008 and 2010 and by $5.3 billion over the 7 years from
fiscal year 2008 to fiscal year 2015. The estimate assumed that the
incentive match would continue to be eliminated over this time period.
As stated earlier in this report, states increased their child support
funding in fiscal year 2008--the year the incentive match was
eliminated before its 2-year reinstatement by the American Recovery
and Reinvestment Act of 2009[Footnote 45]--by more than CBO
anticipated, for several reasons discussed in the report. The result
was that total CSE spending did not fall.
CBO also estimated that lower spending on the child support program
would lead to lower child support collections. The estimate assumed
that the percentage decline in collections would equal half the
percentage decline in total administrative spending. On that basis,
CBO estimated that the federal share of collections retained from
families receiving public assistance would drop by $128 million over
the 2008-2010 period and by $357 million over the 2008-2015 period
because of reduced spending in the child support program. CBO told us
that the assumption supposes that some dollars collected in the CSE
program are more expensive to collect than others. If CSE program
funding declined, the CBO estimate assumed that states would probably,
to some degree, lose some of the collections that are more costly to
obtain but continue to obtain most of the easier collections. As we
also stated earlier in the report, collections increased to reach
their peak in fiscal year 2008, the year the incentive match was
eliminated and total CSE expenditures increased slightly. We found
that collections fell slightly in fiscal year 2009 at the same time
the incentive match was reinstated and total CSE expenditures
decreased. We did not determine the extent to which the reduction in
spending, versus other factors such as the economic recession or the
increase in the number of hard-to-collect cases, caused the decline in
collections.
Finally, CBO assumed that eliminating the incentive match would cause
some states to maintain their current policies rather than adopt
"family first" policies. CBO estimated that this would save the
federal government $329 million over the fiscal year 2009 to fiscal
year 2015 time period because more collections would be retained by
the government in states that did not elect "family first" policies.
While we did not determine the effect of the incentive match on state
policy choices, most states have not implemented "family first"
policies to date and state officials told us that financial and
budgetary considerations were the primary factors affecting their
decisions.
[End of section]
Appendix III: Federal and State Shares of Child Support Expenditures:
In table 3, we used data from the Office of Child Support Enforcement
(OCSE) to reflect federal and state shares of child support
expenditures. We adjusted expenditures for inflation using constant
2009 dollars.
Table 3: Federal and State Child Support Enforcement Expenditures,
Adjusted for Inflation, FY 2003-FY 2009:
Dollars in millions (constant 2009 dollars):
Expenditure category: Adjusted federal expenditures;
2003: $4,578;
2004: $4,534;
2005: $4,405;
2006: $4,418;
2007: $4,323;
2008: $4,223;
2009: $4,390.
Expenditure category: Federal match[A];
2003: $4,038;
2004: $4,016;
2005: $3,912;
2006: $3,929;
2007: $3,834;
2008: $3,732;
2009: $3,886.
Expenditure category: Plus federal incentive payments[B];
2003: $540;
2004: $518;
2005: $493;
2006: $489;
2007: $489;
2008: $490;
2009: $504.
Expenditure category: Adjusted state expenditures[C];
2003: $1,527;
2004: $1,539;
2005: $1,511;
2006: $1,524;
2007: $1,486;
2008: $1,736;
2009: $1,460.
Expenditure category: State expenditures;
2003: $2,067;
2004: $2,058;
2005: $2,004;
2006: $2,013;
2007: $1,975;
2008: $2,226;
2009: $1,964.
Expenditure category: Minus incentive payments;
2003: -$540;
2004: -$518;
2005: -$493;
2006: -$489;
2007: -$489;
2008: -$490;
2009: -$504.
Expenditure category: Adjusted total CSE expenditures;
2003: $6,105;
2004: $6,073;
2005: $5,916;
2006: $5,942;
2007: $5,809;
2008: v5,959;
2009: v5,850.
Expenditure category: Federal share;
2003: 75%;
2004: 75%;
2005: 74%;
2006: 74%;
2007: 74%;
2008: 71%;
2009: 75%.
Expenditure category: State share;
2003: 25%;
2004: 25%;
2005: 26%;
2006: 26%;
2007: 26%;
2008: 29%;
2009: 25%.
Expenditure category: Retained collections;
2003: $2,475;
2004: $2,366;
2005: $2,255;
2006: $2,096;
2007: $1,979;
2008: $2,129;
2009: $1,686.
Expenditure category: Federal share;
2003: $1,366 (55%);
2004: $1,308 (55%);
2005: $1,248 (55%);
2006: $1,161 (55%);
2007: $1,095 (55%);
2008: $1,187 (56%);
2009: $945 (56%).
Expenditure category: State share[D];
2003: $1,109 (45%);
2004: $1,057 (45%);
2005: $1,007 (45%);
2006: $935 (45%);
2007: $885 (45%);
2008: $942 (44%);
2009: $741 (44%).
Source: GAO analysis of OCSE data.
[A] The federal match on the incentive payments is included in the
federal match figure for each year except fiscal year 2008, when
incentive payments were not matched.
[B] Federal incentive payments are paid to states based on specified
performance measures. These payments are to be reinvested into the
child support program.
[C] These data are adjusted to better reflect the shares of child
support expenditures that originate from state and federal
governments. Federal incentive payments that states receive are to be
spent on the child support program, but they do not have to be spent
in the year they were earned. States were not required to separately
report the amount of state expenditures comprised of federal incentive
payments, except fiscal year 2008. As a result, we assume that the
amount of federal incentive payments that a state spent in each year
is equal to the amount of federal incentive payments that a state
received in that year. We then subtract the amount of federal
incentive payments from state expenditures to estimate the amount of
expenditures that originated from the federal government.
[D] This may overstate the amount of collections that states retain,
as states may pass on some or all of the collections to the families
receiving public assistance. However, states were not required to
report this amount to the federal government in the past, although
OCSE is beginning to collect this information.
[End of table]
[End of section]
Appendix IV: Comments from the Department of Health and Human Services:
Department of Health and Human Services:
Office of The Secretary:
Assistant Secretary for Legislation:
Washington, DC 20201:
December 16, 2010:
Kay E. Brown, Director:
Education, Workforce, and Income Security Issues:
U.S. Government Accountability Office:
441 G Street N.W.
Washington, DC 20548:
Dear Ms. Brown:
Attached are comments on the U.S. Government Accountability Office's
(GAO) report entitled: "Child Support Enforcement: Departures from
Long-Term Trends in Sources of Collections and Caseloads Reflect
Recent Economic Conditions" (GAO-11-196).
The Department appreciates the opportunity to review this report
before its publication.
Sincerely,
Signed by:
Jim R. Esquea:
Assistant Secretary for Legislation:
Attachment:
[End of letter]
General Comments Of The Department Of Health And Human Services (HHS)
On The Government Accountability Office'S (GAO) Draft Report Entitled,
"Child Support Enforcement: Departures From Long-Term Trends In
Sources of Collections and Caseloads Reflect Recent Economic
Conditions" (GAO-11-196).
The Department appreciates the opportunity to comment on this draft
report. The draft report is an accurate and balanced representation of
current trends in the Child Support Enforcement Program, with many
trends attributable to the nation's current economic situation.
The report recognizes that the current economic environment is
impacting State Child Support Enforcement (CSE) programs in a number
of ways. We suggest that all of these reasons be identified in the
summary section. First, job loss has decreased collections
attributable from wage withholding and increased collections
attributable to unemployment compensation and one-time stimulus
payments. Second, State budget shortfalls have impacted State programs
in many States, both through direct funding cuts and through staff
attrition and furloughs. Third, the current uncertainty of the amount
of Federal funding that will be available in the coming years has
increased the difficulties the States are having with the ability for
both short- and long-range planning. This uncertainty is largely due
to the States not knowing whether incentive matching funds, cut by the
Deficit Reduction Act of 2005 (DRA) and temporarily reinstated by the
American Recovery and Reinvestment Act (ARRA) will continue. While the
current State budget shortfalls constrain State program funding and
staffing at the State level, the uncertainty of incentive matching at
the Federal level is exacerbating the situation.
The report notes that the Federal share of the cost of the program was
62 percent in 2008, the only year, so far, in which incentive
expenditures have not been matched with Federal funds. Prior to 2008,
the proportion of total Federal funding, including Federal matching
funds and incentive payments, was 74 percent of total program funding.
A previous GAO letter put the Federal contribution at a level we
believe is too high (88 percent).
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
Kay E. Brown, (202) 512-7215, brownke@gao.gov:
Staff Acknowledgments:
Gale C. Harris, Assistant Director; Brittni Milam, Analyst-in-Charge;
and Alison E. Grantham made significant contributions to all aspects
of this report. Miriam Hill and Srinidhi Vijaykumar also made key
contributions to this report. Russ Burnett and Stuart M. Kaufman
provided methodological support; Mimi Nguyen, Jeremy D. Sebest, and
Kathleen van Gelder provided writing and graphics assistance; and
Craig H. Winslow provided legal assistance.
[End of section]
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[End of section]
Footnotes:
[1] Pub. L. No. 109-171, § 7309, 120 Stat. 4, 147.
[2] Pub. L. No. 111-5, § 2104, 123 Stat. 115, 449.
[3] § 7301(b)(1)(B), 123 Stat. 142-43.
[4] Social Services Amendments of 1974, Pub. L. No. 93-647, § 101, 88
Stat. 2337, 2351-61.
[5] 42 U.S.C. §§ 654(5) and 608(a)(3). Families who must assign their
child support rights to the state include those receiving TANF
benefits, those whose children have been placed in a foster care home,
and some families receiving Medicaid. In this report, we include
applicable families whose children are in foster care funded under
Title IV-E of the Social Security Act or who receive Medicaid
assistance in our definition of families receiving public assistance.
Some families who are not receiving public assistance arrange their
child support privately, such as through a private attorney or mutual
agreement between the parents, rather than through the CSE program.
[6] 42 U.S.C. § 654a(a).
[7] 42 U.S.C. §§ 654(19), 666(a)(3)(A), 664 and 666(c)(1)(G)(i)(I),
respectively.
[8] Department of Health and Human Services, Administration for
Children and Families, Office of Child Support Enforcement, Child
Support Enforcement FY 2007 Annual Report to Congress (Washington,
D.C.: 2007).
[9] The CSE program is unusual among federal programs in that almost
all expenditures are administrative. The program does not fund child
support payments; these are paid by noncustodial parents. In this
report, we will generally refer to these administrative expenditures
as CSE expenditures.
[10] Federal law provides that, when families have never received
public assistance, states (1) must charge families an application fee
of up to $25; (2) may charge a fee of up to $25 when collecting child
support using the federal income tax offset; (3) may impose a fee for
performing genetic tests; and (4) must charge a service fee of $25
each year that it collects at least $500 on the family's behalf.
States must return 66 percent of income from mandatory and optional
fees to the federal government as cost reimbursement. 42 U.S.C. §
654(6).
[11] 42 U.S.C. § 655(a)(1) and (2).
[12] 42 U.S.C. 658a(a)(6).
[13] 42 U.S.C. § 658a(b).
[14] According to one study, this variation may be due to a number of
factors, such as state performance on incentive measures or overall
program spending levels. The Lewin Group and ECONorthwest, Anticipated
Effects of the Deficit Reduction Act Provisions on Child Support
Program Financing and Performance Summary of Data Analysis and IV-D
Director Calls (July 2007).
[15] Pub. L. No. 105-200, § 201, 112 Stat. 645, 648-58. The
requirement was phased in beginning in fiscal year 2000 and became
fully effective beginning with fiscal year 2002.
[16] § 7309, 121 Stat. 147. DRA included other funding-related
provisions: It reduced the match rate for paternity testing from 90
percent to 66 percent and required states to impose an annual fee of
$25 on each family who never received public assistance and for whom
the program collects at least $500 a year.
[17] Even after a family is no longer receiving public assistance, the
state may retain the right to pursue repayment for the costs of the
benefits they received. 42 U.S.C. § 657(a)(2). The share of the child
support collection that is distributed to the federal government is
based on a state's Federal Medical Assistance Percentage (used in the
Medicaid program), which varies inversely with state per capita income
(i.e., poor states have a higher federal matching rate, and wealthy
states have a lower federal matching rate). Nationally, about 55
percent of retained collections goes to the federal government.
[18] 42 U.S.C. § 457(b)(1) (1994). However, child support payments
collected from noncustodial parents of children residing in foster
homes, to the extent that the amounts collected exceed the foster care
maintenance payments made with respect to that child, may be set aside
for the child's future needs or passed through to the foster families.
42 U.S.C. § 457(f).
[19] Pub. L. No. 104-193, § 302, 110 Stat. 2105, 2200-04.
[20] § 7301(b)(1)(B)(i), 120 Stat. 142-43 (codified as amended at 42
U.S.C. § 657(a)(6)).
[21] Carmen Solomon-Fears, Child Support: An Overview of Census Bureau
Data on Recipients (Washington, D.C.: Congressional Research Service,
Nov. 17, 2009).
[22] Laura Wheaton, Child Support Cost Avoidance in 1999 (Final
Report). Prepared for HHS, Administration for Children and Families,
OCSE. (Washington, D.C.: Urban Institute, June 6, 2003).
[23] Unless otherwise noted, collections and expenditure data have
been adjusted for inflation based on 2009 dollars.
[24] The Omnibus Budget Reconciliation Act of 1981 required state
child support agencies to determine on a periodic basis whether
individuals receiving unemployment compensation owe support
obligations that are not being met. Pub. L. No. 97-35, § 2335(a), 95
Stat. 357, 863 (codified as amended at 42 U.S.C. § 654(19)). The child
support agency must reimburse the state employment security agency for
the administrative costs attributable to withholding unemployment
compensation.
[25] The Federal Parent Locator Service gives daily information to
state CSE programs on people claiming unemployment benefits, including
name, address, and Social Security number. In some instances, the CSE
program can send an income-withholding order directly to the state
workforce agency handling the unemployment insurance claim.
[26] Several extensions of the maximum duration of unemployment
insurance benefits have been authorized, resulting in an increase in
the length of time that individuals could collect unemployment
benefits. Additionally, the decrease in tax intercepts is primarily a
return to historical levels after a spike in these collections in
fiscal year 2008 due to economic stimulus payments in that year.
[27] OCSE defines a CSE "case" as a noncustodial parent (mother,
father, or putative/alleged father) who is now or eventually may be
obligated under law for the support of a child or children receiving
services under the CSE program. 45 C.F.R. § 305.1(a) (2009). If the
noncustodial parent owes support for two children by different women,
that would be considered two cases; if both children have the same
mother, that would be considered one case.
[28] Nationwide, the total number of families receiving TANF cash
assistance increased by almost 11 percent between October 2008 and
March 2010. Two recent GAO reports addressed changes to the TANF
program during the current economic recession. GAO, Temporary
Assistance for Needy Families: Implications of Recent Legislative and
Economic Changes for State Programs and Work Participation Rates,
[hyperlink, http://www.gao.gov/products/GAO-10-525] (Washington, D.C.:
May 28, 2010) and GAO, Temporary Assistance for Needy Families: Fewer
Eligible Families Have Received Cash Assistance since the 1990s, and
the Recession's Impact on Caseloads Varies by State, [hyperlink,
http://www.gao.gov/products/GAO-10-164] (Washington, D.C.: Feb. 23,
2010).
[29] One reason the number of CSE cases that formerly received public
assistance did not increase may have been that families remained on
the welfare rolls longer due to economic conditions. The trends in the
number of cases formerly receiving public assistance have generally
tracked the number of cases currently receiving public assistance, and
the 2009 increase in public assistance CSE cases may be followed in
the future by an increase in the number of former recipient CSE cases.
In addition, several state and local officials told us there has been
an increase in the number of families seeking public CSE services who
have never received public benefits and may have hired private child
support attorneys before the economic recession.
[30] Other collection techniques employed by CSE programs include:
regular billings; delinquency notices; liens on property; offsets of
unemployment compensation payments; seizure and sale of property;
reporting arrearages to credit agencies; seizure of state and federal
income tax refunds; attachment of lottery winnings and insurance
settlements of debtor parents; authority to seize assets of debtor
parents held by public or private retirement funds and financial
institutions; and federal imprisonment, fines or both. In addition, to
promote payment of child support, states can institute revocation of
various types of licenses (driver's, business, occupational,
recreational) for persons who are delinquent in their child support
payments.
[31] 42 U.S.C. § 645(29). In order to help a CSE office locate a
parent, establish paternity, and establish and/or enforce a child
support order, custodial parents are asked to provide the following
information about a noncustodial parent: name, address, and Social
Security number; employer information; names of friends and relatives;
information about income and assets; and a physical description or
photograph. According to some CSE officials, custodial parents may not
have this information or may not want to provide it to CSE officials
for a variety of reasons, such as a distrust of CSE officials or
because they do not believe they will receive the child support
payment.
[32] Fiscal year 2008 and 2009 figures are from preliminary data
provided by OCSE. The information was compiled from quarterly and
annual reports states submitted to OCSE. OCSE officials told us that,
although they are preliminary, these data are unlikely to change
significantly.
[33] Although the DRA provision eliminating the incentive match was
expected to result in lower federal CSE expenditures, the increase in
state funding in fiscal year 2008 reduced the amount of savings to the
federal government attributable to DRA, since new state dollars
invested in the CSE program were eligible to draw down additional
federal matching funds.
[34] In this report, we use the term "states" to refer to the 50
states, the District of Columbia, and the territories of Guam, Puerto
Rico, and the Virgin Islands.
[35] The low end of this range was calculated by subtracting the
standard deviation from the average, and the high end was calculated
by adding the standard deviation to the average. Numbers may be off by
1 due to rounding.
[36] OCSE provides some grants and waivers of federal rules to states
to fund services and activities that provide benefits for CSE programs
but do not meet the requirements for federal matching funds.
[37] For fiscal years 2006 through 2010, DRA also provided up to $50
million per year in competitive grants for responsible fatherhood
initiatives, which may include parenting education; mediation services
for both parents; explanation of the CSE program; conflict resolution,
stress-management and problem-solving training; peer support; and job
training. Sec. 7103(a), § 603(a)(2)(C)(i), 120-Stat. 139.
[38] GAO, State and Local Governments: Fiscal Pressures Could Have
Implications for Future Delivery of Intergovernmental Programs,
[hyperlink, http://www.gao.gov/products/GAO-10-899] (Washington D.C.:
July 30, 2010).
[39] The pass-through policies discussed in this section apply to
child support payments paid for the current month. States typically
have not passed through past-due payments, called arrears, to families
receiving TANF assistance.
[40] Even after a family is no longer receiving assistance, the
government continues to retain child support payments assigned during
the assistance period until the family's assistance costs have been
fully repaid.
[41] § 7310, 120 Stat. 147. In 1992, we noted the rising numbers of
CSE families that had never received public assistance. To help
recover more of these burgeoning costs, we recommended that the
Congress require states to charge these families a service fee for
each successful CSE collection. GAO, Child Support Enforcement:
Opportunity to Defray Burgeoning Federal and State Non-AFDC Costs,
[hyperlink, http://www.gao.gov/products/GAO/HRD-92-91] (Washington
D.C.: June 5, 1992).
[42] States are required to share the revenues from the fee with the
federal government. § 7310, 120 Stat. 147 (fee considered program
income). States electing to pay the fee out of state funds must still
submit the federal portion to the federal government.
[43] The actual amount of incentive funds spent by states in fiscal
year 2007 is not available, because states were not required to report
this information to OCSE in fiscal year 2007, and states can use
incentive payments received in one year in any future year.
[44] Pub. L. No. 109-171, 120 Stat. 4.
[45] Pub. L. No. 111-5, § 2104, 123 Stat. 115, 449.
[End of section]
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