Child Support Enforcement

The expected outcomes of welfare reform are changing the fiscal and political environment in which the Child Support Enforcement (CSE) Program operates. Declining caseloads--both in the Temporary Assistance for Needy Families and CSE welfare--have reduced the revenue some states have historically realized from the CSE program. At the same time, newly mandated methods for collecting more child support from noncustodial parents have increased states' responsibilities and costs. The federal government, on the other hand, has continued to incur program costs primarily because it reimburses states for a two-thirds share of their CSE expenditures. Moreover, the federal government's net costs are likely to grow as caseloads shrink and states spend more on administrative costs to implement enforcement tools required by the welfare reform law. Rising net costs for the states and the federal government will likely encourage both program partners to (1) reexamine how the CSE program is financed and (2) weight these new fiscal realities against the program's social and fiscal benefits of promoting parental responsibility and recovering welfare costs.

GAO noted that: (1) despite significant declines in the Temporary Assistance for Needy Families (TANF) caseloads and CSE welfare caseloads, total state CSE welfare collections nationwide increased 11 percent between fiscal years (FY) 1994 and 1997; (2) while declines in CSE welfare cases might have been expected to lower CSE welfare collections for the states and federal government, the CSE program's ability to intercept more money from delinquent noncustodial parents' income tax refunds more than offset the effects of the caseload declines; (3) seven states experienced a drop in the amount of CSE collections that they kept in FY 1997 relative to the amount that they retained in FY 1995; (4) during the period from FY 1994 to FY 1997, a declining majority of states realized net savings from the CSE program while the federal government experienced net costs; (5) in FY 1997, the states collectively spent about $1.1 billion to operate their CSE programs and retained about $1.6 billion in recovered payments and incentive payments; (6) the federal government spent about $2.3 billion to fund the CSE program and retained about $1 billion in recovered welfare benefits; (7) between FY 1994 and FY 1997, the numbers of states experiencing net costs increased from 12 to 22 because of increased administrative costs, reduced CSE welfare collections, and declining incentive payments; (8) while declining caseloads have resulted in lower retained collections in seven states, CSE officials in those states said the decline did not negatively affect their CSE program funding; (9) the way a state chooses to finance its CSE program determines its sensitivity to fluctuations in CSE welfare collections; (10) the effects of TANF caseload declines and welfare reform changes are just beginning to emerge; (11) future caseload declines are likely to reduce retained state and federal CSE welfare collections; (12) nonwelfare caseloads and costs are likely to increase; (13) the welfare reform provision that gives families a greater priority in receiving past due payments will also reduce the amount of CSE welfare collections retained by the states and federal government; (14) the implementation of a new incentive payment program will result in less stable program revenues for the states; and (15) the welfare reform law, however, also required the federal government and the states to create powerful new tools to enforce the collection of child support that may ameliorate the expected declines in CSE welfare collections, yet increase states' administrative costs.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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