Child Support Enforcement
Better Data and More Information on Undistributed Collections Are Needed Gao ID: GAO-04-377 March 19, 2004Congress established the child support enforcement program in 1975 to ensure that parents financially supported their children. State agencies administer the program and the Office of Child Support Enforcement (OCSE) in the Department of Health and Human Services oversees it. In 2002, state agencies collected over $20 billion in child support, but $657 million in collections from 2002 and previous years were undistributed--funds that were delayed or never reached families. One method used to collect child support, intercepting federal tax refunds, involves all state agencies, OCSE, and two Department of the Treasury agencies--the Internal Revenue Service (IRS) and the Financial Management Service (FMS). GAO was asked to address (1) how the total amount of undistributed collections changed over the years, (2) the causes of undistributed collections, (3) states' efforts to reduce these funds, and (4) OCSE's efforts to assist states. GAO analyzed OCSE data, administered a survey, visited 6 state agencies and interviewed officials.
OCSE reported that the amount of undistributed collections for fiscal year 1999 was $545 million and $657 million for fiscal year 2002; however, these amounts may not be accurate. State agencies had different interpretations of what comprised undistributed collections and data reported by several state agencies were found to be unreliable throughout this time period. OCSE revised the reporting form, but data accuracy concerns remain, in part, because OCSE does not have a process to ensure the accuracy of undistributed collections data. Federal law, some state policies, and inaccurate or missing information were the underlying causes of nearly all types of undistributed collections. State agencies determined how long they held collections from joint tax refunds and if they held collections received before they were due. Federal law allows collections intercepted from joint tax refunds to be held for up to 180 days and in response to GAO's survey, 34 state agencies reported holding them for 180 days. Missing or inaccurate information, such as invalid addresses, also leads to undistributed collections. Based on state agencies' survey responses, GAO determined the median value of the undistributed collections from joint tax refunds was about $1.8 million and the median value of four other types of undistributed collections exceeded $350,000. State agencies GAO visited took steps to better understand and reduce undistributed collections. Of the 6 state agencies visited, 5 had analyzed their undistributed collections cases, 4 adopted performance goals, and officials from all 6 state agencies stressed the importance of researching collections that were missing information. In addition, officials stated that using automated processes to receive and distribute collections helped reduce the number of collections with missing or inaccurate information. OCSE has provided some assistance to help state agencies reduce their undistributed collections. However, the Department of the Treasury has not provided OCSE information that would allow state agencies to distribute collections from joint tax refunds to families sooner. Further, OCSE's efforts to obtain this information have been minimal.
RecommendationsOur 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.
Director: Team: Phone:GAO-04-377, Child Support Enforcement: Better Data and More Information on Undistributed Collections Are Needed
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Report to the Chairman, Committee on Finance, U.S. Senate:
United States General Accounting Office:
GAO:
March 2004:
Child Support Enforcement:
Better Data and More Information on Undistributed Collections Are
Needed:
GAO-04-377:
GAO Highlights:
Highlights of GAO-04-377, a report to the Chairman, Committee on
Finance, U.S. Senate
Why GAO Did This Study:
Congress established the child support enforcement program in 1975 to
ensure that parents financially supported their children. State
agencies administer the program and the Office of Child Support
Enforcement (OCSE) in the Department of Health and Human Services
oversees it. In 2002, state agencies collected over $20 billion in
child support, but $657 million in collections from 2002 and previous
years were undistributed”funds that were delayed or never reached
families. One method used to collect child support, intercepting
federal tax refunds, involves all state agencies, OCSE, and two
Department of the Treasury agencies”the Internal Revenue Service (IRS)
and the Financial Management Service (FMS). GAO was asked to address
(1) how the total amount of undistributed collections changed over the
years, (2) the causes of undistributed collections, (3) states‘ efforts
to reduce these funds, and (4) OCSE‘s efforts to assist states. GAO
analyzed OCSE data, administered a survey, visited 6 state agencies and
interviewed officials.
What GAO Found:
OCSE reported that the amount of undistributed collections for fiscal
year 1999 was $545 million and $657 million for fiscal year 2002;
however, these amounts may not be accurate. State agencies had
different interpretations of what comprised undistributed collections
and data reported by several state agencies were found to be unreliable
throughout this time period. OCSE revised the reporting form, but data
accuracy concerns remain, in part, because OCSE does not have a process
to ensure the accuracy of undistributed collections data.
Federal law, some state policies, and inaccurate or missing information
were the underlying causes of nearly all types of undistributed
collections. State agencies determined how long they held collections
from joint tax refunds and if they held collections received before
they were due. Federal law allows collections intercepted from joint
tax refunds to be held for up to 180 days and in response to GAO‘s
survey, 34 state agencies reported holding them for 180 days. Missing
or inaccurate information, such as invalid addresses, also leads to
undistributed collections. Based on state agencies‘ survey responses,
GAO determined the median value of the undistributed collections from
joint tax refunds was about $1.8 million and the median value of four
other types of undistributed collections exceeded $350,000.
State agencies GAO visited took steps to better understand and reduce
undistributed collections. Of the 6 state agencies visited, 5 had
analyzed their undistributed collections cases, 4 adopted performance
goals, and officials from all 6 state agencies stressed the importance
of researching collections that were missing information. In addition,
officials stated that using automated processes to receive and
distribute collections helped reduce the number of collections with
missing or inaccurate information.
OCSE has provided some assistance to help state agencies reduce their
undistributed collections. However, the Department of the Treasury has
not provided OCSE information that would allow state agencies to
distribute collections from joint tax refunds to families sooner.
Further, OCSE‘s efforts to obtain this information have been minimal.
What GAO Recommends:
GAO recommends that OCSE periodically review undistributed collections
data and that OCSE, IRS, and FMS work together to identify a way to
share information on collections held from joint tax refunds. OCSE did
not explicitly agree or disagree with the recommendations. IRS and FMS
agreed with the recommendation.
www.gao.gov/cgi-bin/getrpt?GAO-04-377.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Cornelia M. Ashby at
(202) 512-7215 or ashbyc@gao.gov).
[End of section]
Contents:
Letter:
Results in Brief:
Background:
OCSE Reported Millions in Undistributed Collections, but Data Were
Unreliable:
Federal Law, Some State Policies, and Inaccurate, or Missing
Information Delayed or Prevented Distribution of Certain Collections:
State Agencies Took Steps to Reduce Undistributed Collections:
OCSE Has Assisted States' Efforts to Reduce Undistributed Collections,
but the Department of the Treasury Has Not Provided Information That
Would Help States Distribute Collections from Some Joint Tax Refunds
Sooner:
Conclusion:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Survey of State Directors of Child Support Enforcement:
Appendix III: Comments from the Department of Health and Human
Services:
Appendix IV: Comments from the Department of the Treasury:
Appendix V: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Staff Acknowledgments:
Tables:
Table 1: Amount of Tax Refund Offset Collections from 1999 to 2002:
Table 2: Categories and Types of Collections to Be Reported as
Undistributed:
Table 3: Overestimates of Undistributed Collections and Year Reported:
Table 4: Time Period Collections from Joint Tax Refunds Are Held:
Table 5: Amounts for Nine Types of Undistributed Collections Reported
by State Agencies as of June 30, 2003:
Table 6: Summary of State Agencies' Responses Regarding the Helpfulness
of OCSE Efforts:
Figures:
Figure 1: Types of Collections and Number of State Agencies That
Included Them in Undistributed Collections Reported to OCSE:
Figure 2: Number of Years State Agencies Reported Holding Collections
before Declaring Them Abandoned Property:
Figure 3: Portion of Collections Distributed to Parents Electronically:
Abbreviations:
CSE: Child Support Enforcement:
EFT: Electronic Funds Transfer:
FMS: Financial Management Service:
FPLS: Federal Parent Locator Service:
HHS: Department of Health and Human Services:
IRS: Internal Revenue Service:
OCSE: Office of Child Support Enforcement:
PRWORA: Personal Responsibility and Work Opportunity Reconciliation Act:
TANF: Temporary Assistance to Needy Families:
TOP: Treasury Offset Program:
United States General Accounting Office:
Washington, DC 20548:
March 19, 2004:
The Honorable Charles E. Grassley:
Chairman:
Committee on Finance:
United States Senate:
Dear Mr. Chairman:
In 2002, the Office of Child Support Enforcement (OCSE), in the
Department of Health and Human Services, reported that billions of
dollars in child support were collected but that payments totaling $657
million were delayed or never reached the families for whom they were
intended. These undistributed child support payments are a concern
because child support is an important source of income for many
families. According to a 2003 report, for 36 percent of poor children
living in families headed by single mothers, child support payments
comprised almost one-third of the family's income in 2001. The 1996
Personal Responsibility and Work Opportunity Reconciliation Act
(PRWORA)[Footnote 1] generally requires state child support enforcement
agencies to disburse child support collections within 2 business days,
if sufficient information identifying the recipient is provided. In
addition, portions of child support collections must be distributed to
state government programs, such as Temporary Assistance to Needy
Families (TANF), to reimburse them for cash assistance provided to
families.
Although state child support enforcement agencies administer the child
support program, the federal government plays a major role.[Footnote 2]
OCSE funds two-thirds of the program's administrative costs;
establishes policies and guidance; provides technical assistance, such
as designing curricula and providing support for staff training; and
oversees and monitors state agencies. Additionally, OCSE is responsible
for taking the necessary steps to help resolve issues at the federal
level that affect the child support program such as processes that
prevent child support payments from reaching families in a timely
manner. OCSE and state agencies collect child support through various
methods, such as intercepting the federal tax refunds of noncustodial
parents--parents who do not have primary care, custody, or control of
their children--who are delinquent in paying their child
support.[Footnote 3] If the noncustodial parent has a new spouse and
files a joint tax return, generally, only the portion of the refund due
to the noncustodial parent should be intercepted. Federal law allows
state agencies to hold collections from certain intercepted federal
joint tax refunds for up to 6 months to provide time for the new spouse
to ask for his or her share of the refund by filing an "injured spouse"
claim with the Department of the Treasury.
In an effort to understand the issues associated with undistributed
child support collections, you requested that we address the following
questions: (1) How has the total amount of undistributed collections
changed in the last few years? (2) What are the causes of undistributed
collections? (3) What are state agencies doing to reduce undistributed
collections? (4) How has OCSE assisted state agencies' efforts to
reduce the amount of undistributed collections?
We obtained information from several sources that provided some data
for all of the objectives. We conducted a mail survey of all 54 IV-D
child support enforcement agencies. Forty-eight state agencies
responded to the survey. We did not assess the reliability of the data
the state agencies reported in response to our survey. However, we
reviewed the data for completeness and reasonableness. We conducted
site visits to 6 state agencies. We selected California, Florida, Iowa,
New York, Texas, and Virginia because they represented diversity in
amounts of undistributed collections, and geographical location, and
they provided examples of statewide and county administered programs.
We interviewed federal and state officials, reviewed related reports
and analyzed applicable laws and regulations. In addition, we took
specific steps to address each of the objectives. To address how
undistributed collections have changed, we analyzed OCSE data for
fiscal years 1999 to 2002 reported by state agencies. The fiscal year
1999 data was the earliest year with data comparable to fiscal year
2002; the most current data available at the time of our review. We
assessed the reliability of undistributed collections data reported to
OCSE and found that the data were inconsistent and unreliable. We also
reviewed state and federal reports that discussed issues associated
with calculating and reporting undistributed collections. To identify
the causes of undistributed collections, steps state agencies have
taken to reduce undistributed collections, and assistance OCSE has
provided to state agencies, we reviewed relevant research and audit
reports; examined OCSE guidance and documents related to funded
projects; and interviewed child support advocates and experts.
We conducted our work between May 2003 and March 2004 in accordance
with generally accepted government auditing standards. See appendix I
for more details on our scope and methodology and appendix II for a
copy of our survey.
Results in Brief:
OCSE reported that the amount of undistributed collections for fiscal
year 1999 was $545 million and $657 million for fiscal year 2002;
however, these amounts may not be accurate because state agencies had
different interpretations of what comprised undistributed collections
and data reported by several state agencies were found to be unreliable
throughout this time period. A little more than half of the 48 state
agencies that responded to our survey reported that they included
collections they would distribute in the next 2 business days and
collections to be distributed to other government programs, while the
others did not. In its 2002 preliminary annual report, OCSE
acknowledged the limitations of its data due to reporting discrepancies
and has revised the reporting form and related instructions to provide
state agencies with uniform definitions of undistributed collections.
However, even with a new form and uniform definitions, concerns remain
about data accuracy within state agencies. For example, 1 state
reported in 2003 that it had overestimated its undistributed
collections amount by more than $160 million due to accounting errors.
Data accuracy concerns remain, in part, because OCSE does not verify or
periodically review undistributed collections data as it does other
performance and financial data.
Federal law and some state policies as well as inaccurate or missing
information were underlying causes for nearly all undistributed
collections. Federal law allows collections from joint tax refunds to
be held for up to 180 days. In response to our survey, 34 state
agencies reported that they held these collections for 180 days.
Inaccurate or missing case information also contributed to
undistributed collections. For example, information needed to determine
the correct amount of the collection to be distributed to custodial
parents who are current or former TANF recipients was sometimes
incorrect or missing, which caused payments to be delayed.
Additionally, invalid addresses for custodial parents caused payments
to be returned. Our analysis of state agency survey data found that
many state agencies reported holding more that $1 million from joint
tax refunds and several hundred thousand dollars in other types of
collections.
To better understand and reduce undistributed collections, state
agencies we visited devoted resources to analyzing and resolving their
undistributed collections, established performance goals, and
encouraged the use of automated payment processes. Nearly all of the
state agencies we visited conducted extensive analyses of the specific
causes of undistributed collections. For example, 1 state agency
commissioned a study with a private firm to determine the causes of
undistributed collections based on a review of thousands of cases. Four
state agencies adopted specific performance goals and 1 state agency
had a goal to maintain an undistributed collections balance of no more
than 1 percent of total collections. State agencies we visited
highlighted the importance of dedicating staff to resolving cases with
missing information and invalid addresses for custodial parents.
Additionally, state agencies reported that the increased use of
electronic processes for receiving and distributing funds reduced the
amount of undistributed collections because fewer collections had
missing or inaccurate information. Thirty-seven state agencies reported
using direct deposit to distribute child support payments and 9 state
agencies reported using debit cards, which work like other automated
teller machine cards, credited with the child support payments.
Officials from 2 state agencies we visited told us that these processes
reduced the cost of operating the program. For example, officials from
1 state agency reported saving over $300,000 per month with the use of
direct deposit.
OCSE has provided some assistance to help state agencies reduce
undistributed collections, but does not have the information needed to
help reduce undistributed collections from some joint tax refunds. OCSE
has focused attention on reducing undistributed collections, shared
best practices and information with state agencies at child support
conferences, and funded several projects related to undistributed
collections. To address one of the causes of undistributed collections,
in March 2003, OCSE issued guidance informing the state child support
enforcement program directors that they could use the Federal Parent
Locator Service (FPLS)--a computer matching system with access to
federal information sources--to help locate custodial parents. However,
the Department of the Treasury has not provided OCSE with some
information on "injured spouse" claims filed with tax returns and
resolved, that would allow state agencies to more quickly distribute
collections from joint tax refunds. OCSE's efforts to obtain more
information on "injured spouse" claims have been minimal.
In this report, we are recommending that the Secretary of Health and
Human Services (HHS) direct the Commissioner of the Office of Child
Support Enforcement to periodically review undistributed collections
data from state agencies to help improve the accuracy of the data; and
we are also recommending that the Secretary of Health and Human
Services and the Secretary of the Treasury work together to identify a
cost-effective approach for obtaining information related to
intercepted tax refunds so that these collections can be distributed to
families sooner.
The Department of Health and Human Services and the Department of the
Treasury provided written comments on a draft of this report. In
commenting on the draft, the Department of Health and Human Services
did not explicitly agree or disagree with our recommendations, but
raised concerns about implementing them. The Department of the Treasury
agreed with our recommendation. Copies of the written comments from the
Department of Health and Human Services are in appendix III and the
comments from the Department of the Treasury are in appendix IV.
Background:
Child support is not legally owed until a child support order is issued
that stipulates the amount the legally identified noncustodial parent-
-the parent who does not have primary care, custody, or control of the
child--is required to pay and when these payments are due. The Child
Support Enforcement (CSE) program, established in 1975 under Title IV-
D of the Social Security Act,[Footnote 4] established federal standards
for state CSE programs to ensure that parents provide support to their
children. Services provided through the CSE program include locating
absent noncustodial parents, establishing paternity and support orders,
and collecting and distributing child support payments. All 50 states,
the District of Columbia, Guam, Puerto Rico, and the Virgin Islands
operate CSE programs.However, many aspects of implementing the child
support program are generally under the purview of the state rather
than the federal government.
For fiscal year 2002, OCSE reported over 16 million child support cases
and collections of more than $20 billion. One method for collecting
child support is intercepting federal tax refunds. Congress enacted the
Federal Tax Refund Offset program in 1981.[Footnote 5] Initially the
Internal Revenue Service (IRS), an agency within the Department of the
Treasury, OCSE, and the state agencies operated the program. In 1998
the Financial Management Service (FMS), another agency within the
Department of the Treasury, assumed primary responsibility for the
program. Now, all state agencies, OCSE, IRS, and FMS play a role in the
program. Table 1 shows the amount of collections offset from tax
refunds from 1999 to 2002.
Table 1: Amount of Tax Refund Offset Collections from 1999 to 2002:
Calendar year: 1999;
Child support offsets (in billions): $1.3.
Calendar year: 2000;
Child support offsets (in billions): $1.4.
Calendar year: 2001;
Child support offsets (in billions): $1.7.
Calendar year: 2002;
Child support offsets (in billions): $1.5.
Source: OCSE.
[End of table]
To start the offset process, state agencies identify those noncustodial
parents that meet the program criteria. For example, for non-TANF
cases, the amount of past due support the noncustodial parent owes must
be at least $500. The state agencies, or OCSE on behalf of the state
agencies, must send a written notice to the noncustodial parent at
least 30 days in advance of sending his or her name to OCSE for the
offset program. This notice includes, among other things, information
about filing "injured spouse claims."[Footnote 6] State agencies send
OCSE the names of the eligible noncustodial parents and the amount owed
and OCSE transmits this information to FMS. FMS adds this information
to its debtor file that includes information on those who owe child
support as well as those who owe other federal debts.[Footnote 7] IRS
processes the tax returns, and then forwards information to FMS on
those individuals who are due refunds. FMS compares this information to
its debtor file and, if there is a match, offsets the refund by the
amount of child support owed. After the refunds have been offset, FMS
notifies the individual, and transfers the offset funds and information
to OCSE. OCSE then distributes the funds and information to the
appropriate state agency.
When a noncustodial spouse has filed a joint tax return, FMS may offset
the refund if either person owes child support. FMS, acting on behalf
of the Secretary of the Treasury, must notify OCSE, which notifies the
state agencies when the withholding is being made from a refund based
on a joint return, and provides the names and addresses of each
taxpayer. Under these circumstances, the state agency is permitted to
delay distribution of the amount withheld until the Secretary of the
Treasury notifies the state agency that the spouse has received his or
her proper share of the refund. This delay may not exceed 6 months.
However, the law allows a spouse 6 years to file an "injured spouse"
claim. If the spouse files a timely "injured spouse" claim and is found
to be entitled to a portion of the withheld amount, IRS will process
the claim and allocate the appropriate amount to each person. If the
spouse's claim is filed after the funds have been forwarded to the
state agency, and the spouse is found to be entitled to a portion of
the withheld amount, FMS sends the spouse his or her portion and the
state agencies must reimburse the Treasury. OCSE data shows that from
March to August 2003, almost $200 million dollars were collected from
offsets of non-TANF joint tax refunds.
PRWORA amended portions of the Social Security Act, including some
provisions that pertained to child support enforcement. One provision
required state agencies to establish a state disbursement unit to
centralize collection and disbursement of child support payments in
order to receive federal funds.[Footnote 8] In addition to distributing
collections from noncustodial parents to custodial parents, state
agencies also distribute collections to:
other government programs such as TANF[Footnote 9] and Foster Care
programs[Footnote 10] as reimbursement for benefits provided to
families. For example, as a condition of receiving temporary cash
assistance, parents must apply for child support enforcement services
and agree to give all or a portion of their child support to the state.
In fiscal year 2002, OCSE reported that custodial parents who were
receiving public assistance comprised about three million cases, and
those who formerly received public assistance comprised about seven
million cases.
State agencies are required to report collection and distribution
information quarterly to OCSE through the Quarterly Report of
Collections, Form OCSE-34A. On the form, net undistributed collections
equal the total amount of undistributed collections, less those
considered undistributable or abandoned property according to state
laws.
OCSE Reported Millions in Undistributed Collections, but Data Were
Unreliable:
OCSE has reported millions in undistributed collections from fiscal
year 1999 to 2002, but the amounts may not be accurate. State agencies
had different interpretations of what comprised undistributed
collections and some state agencies reported data that were found to be
unreliable throughout this time period. Although OCSE revised the
reporting form for fiscal year 2004, which should improve consistency
in the types of collections reported as undistributed, data accuracy
remains a concern. OCSE does not audit or periodically review
undistributed collections data as it does other performance and
financial data.
Types of Collections Reported as Undistributed Differed:
Although OCSE reported that the amount of undistributed collections for
fiscal year 1999 was $545 million and $657 million for fiscal year
2002, OCSE also reported and our survey results indicated that state
agencies varied in the types of collections they reported as
undistributed. In its preliminary annual report for fiscal year 2002,
OCSE acknowledged that interpretation of the data on undistributed
collections was limited due to the variation in the types of
collections included.[Footnote 11] This report indicated that some
state agencies included collections to be distributed within 2 business
days; collections received before they were due; and collections to be
distributed to other government programs, while other state agencies
did not. In our survey, we asked state agencies if they included these
types of collections as well as collections to be distributed pending
legal resolution and collections received from intercepting joint tax
refunds. Of the 48 state agencies that responded, nearly all indicated
that they included collections received before they were due to the
custodial parent, collections pending legal resolution, and collections
received from joint tax refunds. Thirty of the state agencies responded
that they included collections to be distributed in 2 business days and
28 state agencies included collections to be distributed to other
government programs. Figure 1 illustrates the state responses.
Figure 1: Types of Collections and Number of State Agencies That
Included Them in Undistributed Collections Reported to OCSE:
[See PDF for image]
[End of figure]
OCSE has taken steps to improve data consistency. OCSE revised its 34A
form and related instructions in fiscal year 2003 to improve the
consistency of undistributed collections data. According to OCSE
officials, this change was also made to provide more information about
the composition of undistributed collections. Prior to the changes, all
collections were reported under one category, and it was not possible
to distinguish between collections pending distribution and collections
requiring further research in order to distribute them.
As of fiscal year 2004, state agencies are required to report total
collections under two categories. The first category, "undistributed
collections pending distribution," includes collections that state
agencies reasonably expect to distribute through typical business
processing in the future. For example, collections held because of a
legal dispute over the amount of support owed will be distributed as
soon as the matter is resolved. The second category, "undistributed
collections unresolved," includes collections that require the child
support staff to obtain more information before they can be
distributed. These include but are not limited to collections (1)
lacking information to match them to a case, (2) missing current
addresses for a parent, and (3) from checks that were issued but the
time frame for which to cash them had expired. According to OCSE
officials, another new reporting form has been developed for use
beginning in fiscal year 2005 that will require state agencies to
report amounts for 10 types of undistributed collections included under
the two categories. These officials informed us that the form is
subject to review and approval by the Office of Management and Budget.
Table 2 summarizes the two categories and the 10 types of collections
to be reported as undistributed collections.
Table 2: Categories and Types of Collections to Be Reported as
Undistributed:
Undistributed collections pending distribution: Collections that were
received within the past 2 business days following receipt, and pending
distribution within federal timelines;
Undistributed collections unresolved: Unidentified collections.
Undistributed collections pending distribution: Collections being held
for up to 6 months that were offset from non-TANF joint tax refunds;
Undistributed collections unresolved: Collections pending the location
of the custodial or noncustodial parent.
Undistributed collections pending distribution: Collections received
before they were due;
Undistributed collections unresolved: Collections initially disbursed
by check that remain uncashed and considered stale-dated and non-
negotiable in accordance with state law and procedures.
Undistributed collections pending distribution: Collections held
pending resolution of legal disputes and any timely appeal (Examples
include contested paternity or dispute over the balance of support
owed.);
Undistributed collections unresolved: Collections with inaccurate or
missing information. (Examples include but are not limited to
collections received that do not correspond to the amount owed or
collections received for accounts that have been closed or have not yet
been opened.).
Undistributed collections pending distribution: Collections processed
but not yet distributed to other state or federal agencies
administering programs such as TANF;
Undistributed collections unresolved: Other collections remaining
undistributed.
Source: Form OCSE-34A.
[End of table]
Some State Agencies Reported Inaccurate Amounts of Undistributed
Collections:
In addition to differences in the types of undistributed collections
that state agencies reported, 4 state agencies reported data accuracy
problems in 2002 and 2003 that were found to be overestimates. The
cumulative amounts of these undistributed collections ranged from about
$5 million to $168 million and, according to state officials, the
actual amounts of undistributed collections were lower than reported.
The state agencies and the amounts of the overestimates are summarized
in table 3.
Table 3: Overestimates of Undistributed Collections and Year Reported:
State agency: California;
Amount of overestimate: $168,000,000[A];
Year reported: 2003.
State agency: Michigan;
Amount of overestimate: $25,000,000;
Year reported: 2002.
State agency: Missouri;
Amount of overestimate: $5,000,000;
Year reported: 2002.
State agency: Nebraska;
Amount of overestimate: $5,300,000;
Year reported: 2003.
Source: State agencies and GAO analysis.
Note: Not all state agencies could provide information needed to
determine the exact time period associated with these overestimates.
[A] OCSE officials reported that this amount was recalculated to be
about $163 million and noted that this claim as well as similar claims
from other state agencies are subject to federal review.
[End of table]
Most of the errors were accounting mistakes discovered by the state
agencies. Officials from the California Department of Child Support
Services reviewed the state's accounting of undistributed collections
and found that some local officials had included collections in their
totals multiple times because they had misinterpreted a policy. They
thought that disbursements could only be reported if collections were
also reported in the same period and, as a result, when they disbursed
funds they again added these collections into their totals. This
resulted in overstating amounts for total collections and for
undistributed collections. Nebraska's overestimate occurred partly
because collections received before they were due for non-TANF cases
were immediately distributed, but the officials did not show them as
being distributed until the official due date. In Missouri, nearly all
of the overestimate was spousal support collected by the state
disbursement unit that was erroneously reported as child support
collections. For the remainder, in Missouri, when a collection from a
joint tax refund had been distributed to a custodial parent and the
amount was later adjusted in the same reporting quarter because of an
"injured spouse" claim, the adjusted amount was added as a new
collection. An audit of Michigan's child support program revealed that
it failed to account for the distribution of payments that noncustodial
parents paid directly to custodial parents.
The reports related to these overestimates also indicated that having
multiple jurisdictions involved with recording collections contributed
to the errors. Local agencies in California used forms that did not
always include the federal data elements used by the state agency to
report undistributed collections. Nebraska discovered errors when its
state disbursement unit took over the collection and distribution
process from clerks at multiple courts.
OCSE Did Not Hold State Agencies Accountable for Accurately Reporting
Undistributed Collections:
While OCSE is required to audit some child support data, it does not
have a process to ensure the accuracy of data on undistributed
collections. OCSE is required to audit the reliability of the
performance indicators used as the basis for paying financial
incentives to state agencies.[Footnote 12] Officials told us they are
conducting these audits annually. To ensure the reliability of the
data, OCSE selects representative sample cases for a detailed audit and
reviews supporting documentation to check for errors. OCSE is also
required to conduct financial audits to determine whether federal and
other funds used to administer the program are being appropriately
expended and properly accounted for. These audits are required to
include an examination of collections and disbursements of child
support payments for proper processing and accounting treatment.
Although OCSE's general instructions for the collection of data used
for its annual report reminds state agencies that they should report
reliable and complete information, OCSE officials told us they have
only reviewed data on undistributed collections in special
circumstances. For example, the Department of Health and Human Services
and OCSE conducted at least three special reviews of California's
undistributed collections data since fiscal year 1994 that revealed
problems with the accuracy and reliability of the data. According to
OCSE officials, the agency does not have the resources to routinely
review data on undistributed collections in the way it reviews other
program data.
Reviews of undistributed collections data do not have to be done the
same way other program data are reviewed. To minimize the impact on
OCSE's resources, the reviews of the undistributed collections data
could be done in conjunction with one of the other routine audits and
could be limited to a portion of the state agencies on a rotational
basis, for example, one third of the states each year. Without more
accurate data on undistributed collections, OCSE cannot be certain
about the amount of collections that are not being distributed to
families in a timely manner. Further, without accurate data, OCSE
cannot determine whether undistributed collections are more problematic
for certain state agencies than for others.
Federal Law, Some State Policies, and Inaccurate, or Missing
Information Delayed or Prevented Distribution of Certain Collections:
The underlying causes for nearly all undistributed collections were
federal law, state policies, as well as inaccurate or missing
information. Federal law allowed state agencies to hold collections
from joint tax refunds and state agencies set polices that guided how
long these refunds and other collections were held. Invalid addresses
for custodial parents or missing case information also contributed to
undistributed collections. For example, information needed to determine
the correct amount of the collection to be distributed to families who
are or were receiving public assistance was sometimes inaccurate or
missing, and delayed distribution of these collections. Our analysis of
state agency survey data found that many state agencies reported
holding more that $1 million from joint tax refunds and several hundred
thousand in other types of collections.
Federal Law and State Policies Determined How Long Certain Collections
Were Held:
Federal law and policies in some state agencies contributed to certain
collections being counted as undistributed. While state agencies are
generally required to distribute collections in 2 days, federal law
allows state agencies to hold collections from joint tax refunds for up
to 180 days. Our survey results revealed that the majority of state
agencies held collections intercepted from joint tax refunds for 180
days and a few distributed them in 1 to 2 days. Table 4 summarizes this
survey data.
Table 4: Time Period Collections from Joint Tax Refunds Are Held:
Number of state agencies: 4;
Number of days collections are held: 1-2.
Number of state agencies: 2;
Number of days collections are held: 23-30.
Number of state agencies: 2;
Number of days collections are held: 60[A].
Number of state agencies: 4;
Number of days collections are held: 99-170.
Number of state agencies: 34;
Number of days collections are held: 180[B].
Source: GAO survey.
Note: Two state agencies did not answer this question.
[A] One state indicated that it distributed these collections 60 days
after the end of the month it received them.
[B] We converted the responses that were 6 months to 180 days. One
state reported that it distributed collections from tax refunds within
1 day following the 180-day hold and another state indicated 2 days,
following the 180-day hold.
[End of table]
In addition, state agencies had policies on whether or not they held
child support collections received before they were due.[Footnote 13]
Depending on how early collections are received, they may be held for
several months and counted as undistributed collections during that
time. Twenty-one state agencies reported that they immediately
distributed collections that were received before they were due for
non-TANF cases and 20 state agencies reported that they held these
collections until they were due. Seven state agencies had other
policies. For example, 1 state agency reported that it authorized its
case managers to distribute the collections based on the preferences of
the custodial parent and another state reported it would hold as much
as 1 month of support received before it was due and refund the
remaining amount to the noncustodial parent.
State policies regarding how long undistributed collections are held
before they are declared abandoned affects reported amounts of
undistributed collections. Eleven state agencies reported that their
policies require undistributed collections to be declared abandoned
property after 1 year, while 1 state indicated its policy was to hold
collections for up to 7 years. Eleven state agencies did not specify a
number of years after which undistributed collections were declared
abandoned property. Figure 5 shows the range of times reported by 44
state agencies.
Figure 2: Number of Years State Agencies Reported Holding Collections
before Declaring Them Abandoned Property:
[See PDF for image]
Notes: Three state agencies did not report whether or not they
specified number of years. One state agency reported that it specified
a number of years after which undistributed collections are
reclassified as abandoned property, but did not indicate how many
years.
[End of figure]
Inaccurate or Missing Information Contributed to Undistributed
Collections:
Some undistributed collections were the result of invalid addresses for
custodial parents or missing information. State officials told us that
custodial parents often moved without informing the child support
agency of their new address and that the U.S. Postal Service did not
forward collections to new addresses, but rather returned them to the
child support enforcement agency. According to state officials,
noncustodial parents did not always include identifying information on
their payments. For example, state officials said they sometimes
received money orders from noncustodial parents that were illegible or
lacked information, such as the case number or full name, needed to
match them to the right case.
Missing or inaccurate information on TANF or former TANF cases
contributed to undistributed collections. Officials from 2 state
agencies we visited explained that some collections could not be
distributed to the custodial parent until they determined the correct
amount owed to the government. According to Florida officials, this
contributed to nearly 50 percent of its approximate $28 million in
undistributed collections. The state cited two major reasons for this
problem: (1) data inaccuracies due to the conversion of cases from the
former statewide system to the state agency's new automated system and
(2) difficulties exchanging information between the automated systems
of the child support agency processing the payments and the TANF
agency. A 2001 report issued by the Department of Health and Human
Services' Office of Inspector General found that 11 state agencies
experienced difficulties in distributing child support to families
leaving TANF.[Footnote 14] Among the reasons state agencies cited were
problems exchanging information with TANF agencies and inaccurate
addresses for custodial parents receiving TANF benefits. The report
also noted that 28 of 51 state agencies surveyed reported problems with
the automated exchanges of information between the child support
enforcement and the TANF agencies. These problems included incompatible
design of state TANF and child support enforcement agencies' automated
systems and timing of information exchanges, which, according to the
report, could have caused child support payment delays and
underpayments after clients left the TANF program.
State officials also said that missing information from employers as
well as inaccurate payments contributed to the amount of undistributed
collections. For example, according to state officials, employers,
including some federal agencies, did not always identify the cases for
which the withheld wages were designated or mailed one check for
multiple cases with the sum of the withheld wages not matching the
total amount of the check.[Footnote 15] Additionally, some employers
sent payments for more than was due. In its examination of
undistributed collections, a report from a private firm indicated that
in New York City, 40 percent of undistributed collections were from
payments that were not due. In some instances employers sent inaccurate
payments because the state agencies had not notified them that the
amount to be withheld had changed. Such changes would be needed in
cases such as those in which previously owed child support had been
paid and only current support was to be withheld, or if the child had
reached the age at which child support payments terminated. Officials
from 1 state agency we visited, told us that they waited to notify
employers about changes in the amount to be withheld until over-
payments had been collected. In other cases, officials told us that
employers sent inaccurate payments because they did not always
correctly calculate the amount to be withheld. For example, if a child
support order stipulated that $100 was to be paid each month and $50
were deducted in each of 26 biweekly pay periods, at the end of the
year, the noncustodial parent would have paid $1,300 instead of the
$1,200 that was owed. Depending on the state's policy, this $100
overpayment could be returned to the noncustodial parent, distributed
to the custodial parent before it was due, or held until it was due.
Many State Agencies Reported Holding More than $1 Million from Joint
Tax Refunds and Several Hundred Thousand Dollars in Other Types of
Undistributed Collections:
In response to our survey, 32 state agencies provided dollar amounts
for undistributed collections from joint tax refunds. The median value
reported for these collections was $1.8 million. Of these 32 state
agencies, 19 reported an amount of $1 million dollars or higher with 3
reporting amounts greater than $10 million dollars. In 15 state
agencies this was the largest amount reported for any of the nine types
of undistributed collections we listed on the survey. For the 9 state
agencies that provided values for all nine types, we determined that
undistributed collections from joint tax refunds ranged from 27 to 48
percent of total undistributed collections. Our survey requested data
as of June 2003, and OCSE officials explained that the amount of
undistributed collections from joint tax refunds is generally higher in
March through September.
Many officials cited the potential financial loss as the primary reason
they are unwilling to assume the risk of releasing these collections
before 180 days. State agencies are fully responsible for payments made
in error and must either attempt to recover money that has been
distributed to custodial parents or suffer the financial loss that
comes from reimbursing the Treasury for the "injured spouse" claims.
One state agency we visited, Texas, reduced the time it held
collections from joint tax refunds from 120 days to 90 days after
analysis of its data showed that the benefit of distributing these
collections outweighed the financial risk of holding them.
While high values were consistently reported for undistributed
collections from joint tax refunds, our analysis also revealed that the
median value of four other types of undistributed collections that
state agencies reported exceeded $350,000. These undistributed
collections included those received before they were due, pending legal
resolution, with an invalid address for custodial parents, and with
data problems. Table 5 illustrates the median amounts and ranges
reported for the nine types included in our survey as well as the
number of state agencies that reported an amount.
Table 5: Amounts for Nine Types of Undistributed Collections Reported
by State Agencies as of June 30, 2003:
Types of undistributed collections: Collections from joint tax refunds;
Median amount (rounded): $1,750,000;
Minimum amount: 0;
Maximum amount (in millions): $13.9;
Number of state agencies that reported an amount: 32.
Types of undistributed collections: Collections received before they
were due;
Median amount (rounded): $466,000;
Minimum amount: 0;
Maximum amount (in millions): $8.0;
Number of state agencies that reported an amount: 33.
Types of undistributed collections: Collections pending legal
resolution;
Median amount (rounded): $431,000;
Minimum amount: $9,700;
Maximum amount (in millions): $10.2;
Number of state agencies that reported an amount: 24.
Types of undistributed collections: Collections with an invalid address
for custodial parents;
Median amount (rounded): $399,000;
Minimum amount: $1,300;
Maximum amount (in millions): $5.2;
Number of state agencies that reported an amount: 35.
Types of undistributed collections: Collections with data problems
(overpayments, no active case, missing or inaccurate data, etc.);
Median amount (rounded): $363,000;
Minimum amount: 0;
Maximum amount (in millions): $14.2;
Number of state agencies that reported an amount: 30.
Types of undistributed collections: Collections sent to custodial
parents that can no longer be cashed;
Median amount (rounded): $125,000;
Minimum amount: 0;
Maximum amount (in millions): $5.8;
Number of state agencies that reported an amount: 19.
Types of undistributed collections: Collections lacking sufficient
information to identify them;
Median amount (rounded): $94,000;
Minimum amount: $1,100;
Maximum amount (in millions): $4.5;
Number of state agencies that reported an amount: 35.
Types of undistributed collections: Collections to be distributed in 2
business days;
Median amount (rounded): $65,000;
Minimum amount: 0;
Maximum amount (in millions): $4.7;
Number of state agencies that reported an amount: 26.
Types of undistributed collections: Collections to be distributed to
other government programs;
Median amount (rounded): $6,200;
Minimum amount: 0;
Maximum amount (in millions): $3.7;
Number of state agencies that reported an amount: 20.
Source: GAO survey.
Note: The types of undistributed collections are slightly different
from the types OCSE uses because we administered our survey before the
34A form was officially revised.
[End of table]
State Agencies Took Steps to Reduce Undistributed Collections:
State agencies we visited took various steps to better understand and
resolve undistributed collections. They devoted resources to analyzing
their undistributed collections to help identify the specific causes.
Additionally, 4 state agencies we visited established specific
performance goals and all state agencies we visited emphasized regular
monitoring of undistributed collections. State agencies also
implemented processes to resolve cases with missing information and
used electronic processes that helped to reduce the number of
collections with invalid addresses for custodial parents and
unidentified collections.
State Agencies Analyzed and Monitored Undistributed Collections:
To help reduce their undistributed collections, officials from 5 of 6
state agencies we visited stated that they devoted resources to better
understanding these collections. Beginning in 2000, California
assembled a team from various units within the state child support
enforcement agency, such as the fiscal and information technology
units, to analyze their undistributed collections. The initiative
lasted 3 years and included the design and implementation of a new
collections and distribution reporting system, verification of the
amount and sources of undistributed collections, and publication of a
report in June 2003. Another state agency, New York, awarded a
yearlong, million dollar contract to a private firm to analyze its
undistributed collections. The contractor developed a sampling plan and
reviewed thousands of undistributed collections to determine their
sources and how long the money had been held. In addition, the
contractor evaluated technological solutions and identified general
strategies for reducing the largest types of undistributed collections.
Officials from 4 state agencies we visited emphasized that in order to
reduce undistributed collections, it is necessary to establish
performance goals and measures and compare program results with those
goals. Four of the state agencies we visited established performance
goals and measures to help them monitor undistributed collections.
Florida established a series of performance accountability measures,
including resolution of collections requiring additional research and
timeliness of disbursements, to track the overall operation of its
disbursement unit. Virginia established its goal for undistributed
collections at 3 percent of monthly collections and was considering
lowering that baseline to 2 percent as well as maintaining less than
$50,000 in unidentified collections. An objective in California's
strategic plan is to ensure that no more than 1 percent of collections
due families remain undistributed at any time. Texas established
benchmark amounts for each type of undistributed collections.
Officials from all of the state agencies we visited highlighted the
importance of monitoring undistributed collections to ensure that goals
are being met. Three of the state agencies we visited had detailed
automated reports to help them monitor undistributed collections. These
reports varied from state to state, but the examples provided included
data on the total dollar value of undistributed collections, number of
cases, number of collections, and dates collections were received.
Also, several state agencies produced data reports for each field or
local office. For example, a monthly management report in Virginia
enabled the state officials to monitor the performance of its 22
district offices. According to our survey, nearly all state agencies
indicated that they routinely produced statistical data on
undistributed collections. For example, 27 state agencies produced
daily reports and 12 produced weekly reports.[Footnote 16]
State Agencies Took Steps to Address Missing Information and Improve
Payment Processes:
State agencies we visited dedicated staff and focused resources on
resolving cases with missing information and invalid addresses. Some
state agencies used automated methods to receive and transmit
collections. Additionally, 1 state agency automated two processes that
helped reduce its undistributed collections.
Resolving Missing Information and Invalid Addresses:
Officials from all of the state agencies we visited highlighted the
importance of dedicating staff to researching collections involving
missing information. In Virginia, the state disbursement unit separated
collections with missing information, such as a social security or case
number, from those with this information. The team contacted employers,
courts, or other state agencies to obtain the needed information. A
database of the most difficult collections along with contact
information and instructions was maintained in order to reduce
processing time on similar collections received in the future. The team
typically resolved unidentified collections within 72 hours. Other
state disbursement units we visited also had specific staff dedicated
to researching payments with missing information in order to distribute
them as soon as possible.
State agencies also focused resources on resolving cases with invalid
addresses for custodial parents. State officials cited the importance
of allowing staff to access federal, state, and private databases to
locate custodial parents. Officials in 1 state said they had a contract
with a private vendor because they found this information to be most
useful. Virginia's system automatically searched databases to match
cases that needed information. Such databases included FPLS,[Footnote
17] state licensing agencies, and credit bureaus. In Texas, an
indicator was added to case records to allow field workers to
automatically refer cases with invalid addresses to special enforcement
investigators. In addition, a new report was created to show all cases
with collections held due to missing addresses so that field staff
could focus their efforts on these cases. This change resulted in the
distribution of almost $1 million in the first 4 months of
implementation. Also, state officials from the 4 state disbursement
units we visited told us that customer service representatives
routinely verified addresses when contacted by custodial or
noncustodial parents.
Using Automated Processes:
Officials from 4 of the 6 state agencies we visited encouraged
employers to use Electronic Funds Transfer (EFT) when transmitting
collections to the state disbursement unit as a way to improve
efficiency and reduce undistributed collections. According to OCSE
officials and a representative from the American Payroll Association,
converting to electronic payments for child support means having to
purchase software or make programming changes to payroll systems, which
can initially be costly. As an alternative to EFT, 5 state agencies,
including 1 we visited, Florida, developed a process to allow employers
to send payments to the state disbursement unit over the Internet. A
state agency's Web based payment service operates much like other
online banking services in that an employer registers for the service,
receives a user identification and password and can then access the Web
site each pay period to make the payments for each of its employees.
State agencies generally offered these services free of charge to
employers.
State agencies also provided alternative ways for noncustodial parents
to transmit their payments. Florida offered noncustodial parents the
option of paying their support over the Internet. Texas had a pilot
project with a grocery chain to allow noncustodial parents to pay their
child support at their stores, and then the stores would transmit the
payment to the state disbursement unit electronically. In another pilot
project, New York partnered with a private vendor that sells money
orders. Noncustodial parents could provide the payment to the vendor
who would then transmit the payment electronically to the state
disbursement unit.
In addition to receiving collections electronically, many state
agencies distributed collections to parents electronically. Thirty-
seven state agencies that responded to our survey indicated they
offered direct deposit--a process whereby money is directly transferred
to a checking or savings account--and 9 reported that they issued a
state debit card. Officials from all the state agencies we visited
explained that direct deposit is not an option for many of their
customers because they do not have bank accounts. For anyone without a
bank account, a state debit card is an alternative. The card may be
used to purchase goods or services as well as to obtain cash.
Safeguards have been included that prevent custodial parents from
withdrawing cash or making purchases that would cause an overdraft of
the available child support funds. In response to our survey, most
state agencies indicated that they send 40 percent or fewer of their
collections to parents electronically. Figure 6 shows the portion of
collections that state agencies reported distributing to parents
electronically.
Figure 3: Portion of Collections Distributed to Parents Electronically:
[See PDF for image]
[End of figure]
While most state agencies offered at least one form of electronic
distribution to parents, in 2003, Iowa began requiring all parents to
receive collections electronically. Exceptions to this requirement were
based on individual circumstances.[Footnote 18] Officials told us that
as of January 2004, about 95 percent of custodial parents in Iowa were
receiving collections electronically.
Automated processes to receive and distributed collections can help
reduce undistributed collections. According to state agency officials,
methods that allow state agencies to receive collections electronically
can help reduce undistributed collections due to fewer incorrect or
unidentified collections. Electronic methods for distributing
collections to families can also reduce the number of undistributed
collections. With direct deposit and state debit cards, funds are
transferred from the state directly to a financial institution and even
if the custodial parent changes addresses, the collections can continue
to be deposited. As such, by using direct deposit and state debit
cards, undistributed collections due to invalid addresses of the
custodial parents and those due to paper checks that can no longer be
cashed are reduced.
In addition to reducing undistributed collections, officials from 2
state agencies told us that electronic distribution to parents reduces
many processing costs and requires limited manual intervention. Iowa
officials predicted a combined savings to the state and federal
government of about $35,000 a month by sending collections to parents
electronically. Officials in Texas reported a cost savings of $1.34 per
transaction by using direct deposit versus mailing a check, a savings
of over $300,000 in a typical month.
Additionally, Texas automated two of its child support processes that
will help prevent undistributed collections. In 2000, Texas established
an automated mechanism to issue refunds to noncustodial parents for
collections that exceeded the amount owed. Previously, manual
intervention was required to release these collections. According to
officials, this program saved hundreds of hours of staff time and
enabled them to quickly process refunds. Also in 2000, Texas developed
an automated process to issue new wage withholding orders to employers
when circumstances of cases changed, such as a reduction in the amount
owed. In the first 60 days after implementation, Texas issued over
15,000 new orders to employers.
State Agencies Reported Earning Interest and Income:
Many state agencies reported earning interest and program income. OCSE
issued a memorandum in 1989 that encouraged state agencies to deposit
all child support collections in interest-bearing accounts. According
to our survey, 32 state agencies reported that they kept all
undistributed collections in interest-bearing accounts, 4 state
agencies reported keeping some undistributed collections in interest-
bearing accounts and 11 state agencies reported that they did not keep
their collections in these accounts. One state agency did not answer
the question. State agencies are required to deduct interest earned and
income from program costs and can charge fees to help recover some of
their administrative costs. For example, state agencies are required to
charge non-TANF families an application fee, and can charge fees for
tax refund offsets and various services and expenses such as case
maintenance fees, or a fee to establish a support order. Our prior
reports concluded that most states either did not charge fees or
charged minimal fees.[Footnote 19] For fiscal year 2002, state agencies
reported earning almost $50 million in interest and income. The amounts
reported ranged from $0 to $15 million.
OCSE Has Assisted States' Efforts to Reduce Undistributed Collections,
but the Department of the Treasury Has Not Provided Information That
Would Help States Distribute Collections from Some Joint Tax Refunds
Sooner:
OCSE has provided some assistance to help state agencies reduce their
undistributed collections. OCSE focused attention on reducing
undistributed collections, shared best practices, and funded projects.
However, OCSE does not have information on some "injured spouse" claims
that could reduce the amount of time collections from some joint tax
refunds are held.
OCSE Provided Some Assistance to State Agencies:
In fiscal years 2002 and 2003, OCSE focused on reducing undistributed
collections. In its fiscal year 2002 annual report, OCSE stated that it
was taking actions to understand the composition of undistributed
collections and identify efforts state agencies could take to
distribute more collections to families. Additionally, OCSE emphasized
that improved customer service by state agencies helps reduce
undistributed collections. According to state officials, customer
service representatives are encouraged to ask for updated information
from parents, thereby reducing the number of cases with incorrect
addresses. In fiscal year 2003, OCSE partnered with the National
Council of Child Support Directors to refine the categories of
undistributed collections and obtain state data and best practices.
Also, OCSE issued guidance in March 2003 to reduce the number of cases
with invalid addresses. This guidance informed state agencies that they
could access FPLS to locate custodial parents as well as to locate
noncustodial parents.
OCSE funded research and provided technical assistance to state
agencies to help them reduce undistributed collections. Between fiscal
years 2000 and 2002, OCSE awarded three contracts. The first contract
awarded in fiscal year 2000, for about $135,000, funded research to
identify approaches for reducing undistributed collections in 11 state
agencies with large caseloads or amounts of collections. In addition,
this contractor reviewed undistributed collections in two New York
counties and identified factors in their business processes and
automated systems that prevented them from further reducing these
collections. According to OCSE, a second contract was also awarded in
fiscal year 2000 for about $112,000 that funded research focused on
understanding the extent and causes of undistributed collections across
state agencies and highlighting best practices for distributing such
collections. Additionally, OCSE officials said that a third contract
was awarded in fiscal year 2002 for about $300,000 that funded research
to review undistributed collections in 5 state agencies.
Beginning in fiscal year 2000, OCSE made projects designed to reduce
undistributed collections a priority for demonstration grants, and
awarded five grants.[Footnote 20] In fiscal year 2000, OCSE awarded one
grant for about $188,000, and in fiscal year 2002, OCSE awarded four
grants--one each to Texas, and the District of Columbia and two to
Indiana--for a total amount of about $500,000. The goals for each of
the fiscal year 2002 projects were different. For example, the goal for
one project was to evaluate the use of state debit cards as a way to
reduce undistributed collections.
Further, OCSE actively encouraged more use of EFT, which as previously
stated can help reduce undistributed collections. In July 2003, the
OCSE Commissioner sent a letter to 80 private sector employers that
employ a large number of noncustodial parents encouraging them to use
EFT to pay the child support they withheld from their employees' wages.
During several conferences sponsored by employer organizations, OCSE
promoted electronic payment by distributing literature and making
presentations. Additionally, in 2002 OCSE staff assisted the NACHA--
Electronic Payments Association's Child Support Task Force by helping
to identify issues associated with promoting the electronic collection
and distribution of child support payments. OCSE also worked with
several federal agencies on issues related to electronic payment. For
example, OCSE worked with the Defense Finance and Accounting Service to
encourage more use of electronic payments.
OCSE shared information about initiatives state agencies took to reduce
undistributed collections in its publications. Each month OCSE
published its "Child Support Report" with information about various
child support topics. Descriptions of successful state efforts related
to undistributed collections were featured in several editions. OCSE
also published an annual compendium of best practices in child support
enforcement and several of the entries in its 2002 edition were related
to undistributed collections.
In addition to these publications, OCSE has discussed or arranged
sessions on undistributed collections at conferences, forums, and
training sessions. OCSE officials also reported that regional meetings
have included sessions focused on reducing undistributed collections.
For example, officials from Region VII organized a workshop where
perspectives on reporting and best practices were addressed.[Footnote
21] In July 2003, OCSE initiated monthly audio conference calls to
foster discussions on implementing best practices such as electronic
funds distribution. As of December 2003, OCSE had arranged five calls
with a range of 25 to 38 state agencies participating.[Footnote 22]
As part of our survey, we asked state agencies how helpful various OCSE
efforts related to undistributed collections have been. For the most
part, state agencies reported that OCSE's efforts have been helpful and
many reported that discussions of best practices at forums were greatly
or extremely helpful. However, several state agencies reported that
OCSE's efforts were hardly or not at all helpful. Table 6 summarizes
the state agencies' responses.
Table 6: Summary of State Agencies' Responses Regarding the Helpfulness
of OCSE Efforts:
OCSE effort: Dissemination of best practices;
Hardly or not at all helpful: 5;
Somewhat or moderately helpful: 31;
Greatly or extremely helpful: 9;
Have not participated in effort: 2.
OCSE effort: In-person training;
Hardly or not at all helpful: 7;
Somewhat or moderately helpful: 9;
Greatly or extremely helpful: 4;
Have not participated in effort: 27.
OCSE effort: Discussion of best practices at forums;
Hardly or not at all helpful: 7;
Somewhat or moderately helpful: 18;
Greatly or extremely helpful: 15;
Have not participated in effort: 7.
OCSE effort: Policy documents;
Hardly or not at all helpful: 8;
Somewhat or moderately helpful: 30;
Greatly or extremely helpful: 6;
Have not participated in effort: 2.
Source: GAO survey.
Note: One state did not answer this question at all and 1 state did not
provide a response about the helpfulness of the policy documents.
[End of table]
The Department of the Treasury Has Not Provided OCSE Information on
Collections from Some Joint Tax Refunds:
OCSE and state agencies are not receiving information from the
Department of the Treasury about approved "injured spouse" claims that
are submitted at the time a tax return is filed. Such information is
important because state agencies may delay disbursement of tax-offset
collections for a period of up to 180 days to allow for the possibility
of a reversal based on an "injured spouse" claim. IRS officials
explained that while they do not know the type of debt owed when they
process the claims, they have estimated that about 55,000 "injured
spouse" claims related to the offset of non-TANF joint tax refunds for
child support have been filed with the tax returns each year.[Footnote
23] Additionally, these officials commented that when the claims were
filed with tax returns and approved, the amount due the "injured
spouse" was allocated before the file was sent to FMS. However, the
information FMS sent to OCSE, which was then forwarded to the state
agencies, did not identify these collections as having had their
"injured spouse" claims satisfied. As our survey results show, most
state agencies delayed distributing all collections from joint tax
refunds.
IRS officials explained that federal law and current processes have
played a role in determining the information provided to OCSE on
approved "injured spouse" claims. IRS officials stated that their
disclosure statute[Footnote 24] allows, but does not require, them to
provide OCSE and the states with information on specific tax offsets
for payment of past due child support. The officials also explained
that they include data on the payment file they send to FMS that could
enable FMS to determine whether the "injured spouse" claim has been
processed. Furthermore, the IRS officials said that it would be very
costly to reprogram the IRS data systems to enable them to provide OCSE
information on "injured spouse" claims.
FMS officials we spoke with stated that until recently, they were not
aware that OCSE needed notification on the payment of injured spouse
claims[Footnote 25] and they expressed concern about the cost
associated with changing their system in order to provide the
information to OCSE. The FMS officials added that neither IRS nor OCSE
emphasized the need for information on injured spouse claims when FMS
became responsible for and set up their systems to support the tax-
offset program. Furthermore, in order for FMS to send OCSE more
information about injured spouse claims, they would have to reprogram
their data files and change at least two data systems. They also stated
that it would take at least 3 years to modify the systems and would be
very costly. FMS officials suggested that the more cost-effective
solution would be for IRS to send OCSE the requested information:
Although the offset program has been operating for almost 20 years,
OCSE's efforts to obtain the information on "injured spouse" claims
from the Department of the Treasury began in late 2001. According to
OCSE officials, they have discussed the need for additional information
with officials from the Department of the Treasury on several
occasions. Further, in February 2003, OCSE's Commissioner sent a letter
to the Department of the Treasury requesting that the two agencies
involved in the Tax Offset Program, IRS and FMS, provide information
that identifies which joint tax refunds involve "injured spouse"
claims. FMS and IRS formed a work group to investigate ways to shorten
the process related to satisfying these claims. However, according to
an FMS official, there has been little movement in response to OCSE's
letter and as of January 2004, the Department of the Treasury had not
responded to OCSE's letter. If the Department of the Treasury provided
OCSE and state agencies with information on the satisfied "injured
spouse" claims filed with the initial tax returns, state agencies could
immediately release the offset collections to the families.
Conclusion:
Receipt of child support is critical for many custodial parents and
their children. However, no one is certain about the amount of child
support collections that are not distributed to families on time, if at
all. By revising the quarterly collections form, OCSE has taken the
first step to improving data about undistributed collections, but more
reliable data are needed in order for OCSE and the state agencies to
know more about undistributed child support collections and to be able
to take appropriate actions to help reduce them.
While the total amount of undistributed child support collections is
uncertain, it is clear that millions of dollars being held for months
are collections from joint tax refunds. State agencies need more
information about those "injured spouse" claims that are filed with the
tax returns and approved. As the federal partner and overseer of this
program, it is OCSE's role to work with other federal agencies, such as
the Department of the Treasury, to remove barriers that hinder
fulfilling its mission. Furthermore, since collections held from joint
tax refunds represent a large amount of state agencies' total
undistributed collections, it is in the best interest of the child
support program for OCSE to focus more attention on getting this
information. Additionally, the Secretary of the Treasury needs to
provide OCSE and state agencies information about satisfied "injured
spouse" claims. If the Department of the Treasury provides this
information, collections held from some joint tax refunds could reach
families sooner.
Recommendations for Executive Action:
To better measure the amount of and help reduce undistributed
collections, we are making three recommendations.
We recommend that the Secretary of Health and Human Services direct the
Commissioner of OCSE to:
* review undistributed collections data from state agencies
periodically in conjunction with one of the other routine reviews to
help improve the accuracy of the data and:
* work closely with the Department of the Treasury to identify a cost-
effective approach for obtaining information on "injured spouse" claims
in order to enable collections from some joint tax refunds to reach
families sooner.
We also recommend that the Secretary of the Treasury direct the
Commissioner of IRS and the Commissioner of FMS to work together with
OCSE to identify a cost-effective approach for providing OCSE
information needed to identify those collections that have had their
"injured spouse" claims satisfied so that these collections can be
distributed to families sooner.
Agency Comments and Our Evaluation:
We received written comments on a draft of this report from HHS. These
comments are reprinted in appendix III. The department did not
explicitly agree or disagree with either of our recommendations. In
response to our recommendation to review undistributed collections
data, HHS stated that conducting these reviews in conjunction with the
data reliability audits would substantially increase the time needed to
complete them due to the variability of the undistributed collections
data and that the data reliability audits must be completed on time. As
we stated in our report, such reviews of undistributed collections data
could be done in a number of ways and would not necessarily have to be
done with data reliability audits. Also, HHS stated that its audit
resources are insufficient to routinely audit any other function or
area except data reliability. We also noted their concern about limited
resources in the report. With regard to the recommendation that OCSE
work with IRS and FMS, HHS stated that it has been working with IRS and
FMS. We added more detail to this section in the report. HHS also
agreed with our finding that information on approved injured spouse
claims could significantly reduce undistributed collections and get
money to families in a timelier manner. However, the HHS comments also
noted concerns about a direct exchange of information between IRS and
OCSE because OCSE's current interaction is strictly with FMS, and it
would be more complex, time consuming and costly to add the additional
interfaces and processing that would be required for a direct exchange
with IRS. We did not recommend a specific approach for sharing the
information.
We also received written comments on a draft of this report from the
Department of the Treasury. These comments are reprinted in appendix
IV. The Department of the Treasury agreed with our recommendation. In
commenting, the Acting Chief Financial Officer stated that although
neither IRS nor FMS can readily provide OCSE information on satisfied
injured spouse claims, and that significant programming changes would
be needed, IRS and FMS would work together with OCSE to develop a cost-
effective way to advise OCSE when injured spouse claims have been
satisfied.
In addition to written comments, officials from HHS, FMS, and IRS
provided technical comments. We incorporated these comments in the
report as appropriate.
As arranged with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
from its issue date. At that time we will send copies of this report to
appropriate congressional committees, the Secretary of Health and Human
Services, the Secretary of the Treasury, and other interested parties.
In addition, this report will be available at no charge on GAO's Web
site at http://www.gao.gov.
If you have any questions regarding this report, please call me on
(202) 512-8403. Other contacts and acknowledgments are listed in
appendix V.
Sincerely yours,
Cornelia M. Ashby:
Director, Education, Workforce, and Income Security:
[End of section]
Appendix I: Scope and Methodology:
To accomplish our objectives, we conducted a mail survey of all 54 IV-
D child support enforcement directors, conducted site visits to 6 state
agencies, interviewed federal and state officials, as well as reviewed
related reports and analyzed laws and regulations.
We sent each director a self-administered mail-back questionnaire. To
ensure that our survey questions were clear, unbiased, specific, and
easy to understand, we pretested the survey instruments in 3 state
agencies and discussed the appropriateness of the survey questions with
OCSE. We electronically mailed follow-up letters and replacement copies
of the survey to nonrespondents to encourage response. Forty-eight
state agencies participated in the survey. Nonrespondents included
Arizona, Indiana, Guam, Mississippi, New Jersey, and Virgin Islands. We
requested data as of June 30, 2003, and administered the survey from
September to November 2003. We did not assess the reliability of the
data reported by state agencies in response to our survey. However, we
reviewed the data for completeness and reasonableness.
We visited Virginia, New York, Florida, Texas, Iowa, and California. We
selected the state agencies so as to obtain diversity in the amount of
collections and balances of undistributed collections, geographic
location, number of clients served, and whether the child support
program was county or state administered. Of the state agencies we
visited, 3--Iowa, Texas, and Virginia--had undistributed collection
balances lower than the national average of 3 percent and were cited by
the Office of Child Support Enforcement (OCSE) as having best practices
in reducing and or improving payment distribution practices. Two of the
state agencies--California and New York--had balances of undistributed
collections that were higher than the national average of 3 percent
while 1 state, Florida, had a balance of about 3 percent.
In addition to our overall approach, we took specific steps for each of
the objectives. To address how the data on undistributed collections
has changed in the last few years, we reviewed and analyzed OCSE data
on undistributed collections for fiscal years 1999 to 2002 as reported
by state agencies. We began with fiscal year 1999 data because that was
the earliest year with data comparable to fiscal year 2002; the most
current year data were available at the time of our review. As a part
of our analysis we (1) reviewed and compared the data for each fiscal
year and (2) identified issues associated with the calculation and
reporting of undistributed collections through interviews with state
and OCSE officials. Additionally, we analyzed survey responses that
identified the types of funds state agencies classify and report as
undistributed collections. We cited findings from an internal review
conducted in California, however, we did not verify the methodology
used in this review. To identify the causes of undistributed
collections, we reviewed relevant literature and past audit reports on
the causes of undistributed collections. We cited relevant findings
from two of these reports. The report issued by the Department of
Health and Human Services Office of Inspector General was conducted in
accordance with Quality Standards for Inspections issued by the
President's Council on Integrity and Efficiency. We did not verify the
methodology used in the report produced by a private firm. We also
reviewed laws, regulations, and policies governing child support
distribution practices to gain an understanding of the required time
frames for distribution of child support payments. We interviewed child
support advocates and experts to obtain their opinions on the causes
for undistributed collections.
To identify what state agencies are doing to reduce undistributed
collections and to determine what guidance OCSE has given state
agencies to help reduce undistributed collections, we reviewed relevant
documents and agency audit reports. We also reviewed documents issued
by the National Council of Child Support Directors and collected
information on relevant OCSE-funded research. In addition, we also
interviewed child support advocates and experts, as well as federal and
state officials to obtain their perspectives on how OCSE has helped
state agencies reduce undistributed collections and additional actions
that OCSE can take.
[End of section]
Appendix II: Survey of State Directors of Child Support Enforcement:
[See PDF for image]
[End of survey]
[End of section]
Appendix III: Comments from the Department of Health and Human
Services:
DEPARTMENT OF HEALTH & HUMAN SERVICES
Office of Inspector General:
Washington, D.C. 20201:
MAR 12 2004:
Ms. Cornelia M. Ashby
Director, Education, Workforce, and Income Security Issues
United States General Accounting Office
Washington, D.C. 20548:
Dear Ms. Ashby:
Enclosed are the Department's comments on your draft report entitled,
"Child Support Enforcement - Better Data and More Information on
Undistributed Collections Are Needed." The comments represent the
tentative position of the Department and are subject to reevaluation
when the final version of this report is received.
The Department provided several technical comments directly to your
staff.
The Department appreciates the opportunity to comment on this draft
report before its publication.
Sincerely,
Signed by:
Dara Corrigan:
Acting Principal Deputy Inspector General:
Enclosure:
The Office of Inspector General (OIG) is transmitting the Department's
response to this draft report in our capacity as the Department's
designated focal point and coordinator for General Accounting Office
reports. OIG has not conducted an independent assessment of these
comments and therefore expresses no opinion on them.
COMMENTS OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES ON THE GENERAL
ACCOUNTING OFFICE'S DRAFT REPORT, "CHILD SUPPORT ENFORCEMENT: BETTER
DATA AND MORE INFORMATION ON UNDISTRIBUTED COLLECTIONS ARE NEEDED,"
(GAO-04-377):
The Department of Health and Human Services (HHS) appreciates the
opportunity to comment on the General Accounting Office's (GAO) Draft
Report.
Recommendation 1:
We recommend that the Secretary of HHS direct the Commissioner of the
Office of Child Support Enforcement (OCSE) to:
* review undistributed collections (UDC) data from State agencies
periodically in conjunction with one of the other routine reviews to
help improve the accuracy of the data.
Response:
GCSE revised the 34A reporting form and related instructions.
Categories and types of collections to be reported as undistributed
will be reported under the headings: 1) "Undistributed collections
pending distribution," and 2) "Undistributed collections unresolved,"
with detailed instructions on what should be included under each
category. Use of these headings, with accompanying definitions, will
help ensure consistency in reporting across the States. It will also
enable GCSE to accurately assess the nature of UDC in the States and
better target technical assistance. As States become more experienced
in reporting UDC under these headings, GCSE will evaluate the data
received in the new reports and determine which States need additional
analysis.
If the GAO's recommendation intends that UDC reviews be performed in
conjunction with the Data Reliability Audits (DRA), then the
recommendation would create substantial problems for the States and
difficulties for GCSE. Adding a review of UDC to the reliability audits
would substantially increase the time needed to complete the audits due
to the variability of UDC records and the complexity of auditing a UDC
balance for accuracy and reliability. The DRA cannot be delayed because
GCSE uses the findings to calculate the award of performance
incentives, which the States rely on for budget purposes. GCSE and
States also use the findings for corrective actions that need to be
made to avoid penalties.
GCSE reviews UDC with its discretionary time after the DRAB are
complete. In this regard, GCSE plans to look at California UDC later
this year after the DRA work is complete, if contract resources are not
available to provide timelier audit services. Due to limited resources,
discretionary audit staff time is scheduled to areas that will have the
greatest overall benefit to the child support enforcement program. This
could include UDC, as well as other important areas, particularly
audits of administrative costs.
However, audit resources are insufficient to routinely audit any other
function or area except data reliability.
Recommendation 2:
We recommend that the Secretary of HHS direct the Commissioner of the
OCSE to
work closely with the Department of the Treasury to identify a cost-
effective approach for obtaining information on "injured spouse" claims
in order to enable collections from joint tax refunds to reach families
sooner.
We recommend that the Secretary of the Treasury direct the Commissioner
of the Internal Revenue Service (IRS) and the Commissioner of the
Financial Management Service (FMS) to work together and with GCSE to
identify a cost-effective approach for providing GCSE information
needed to identify those collections that have had their "injured
spouse" claims satisfied so that these collections can be distributed
to families sooner.
Response:
GCSE has been working with IRS and FMS to gain additional information
on the filing of injured spouse claims in order to be able to share
that information with
States. Currently, OCSE is notified if the offset is related to a joint
return. It is important to know the processing status of an injured
spouse claim in order to assist the States in distribution of the
offset. For example, when it is known that an injured spouse claim has
been filed and processed the States could immediately release the
collection to the family, rather than holding the money for 180 days.
This information could significantly reduce UDC and get the money to
families in a timelier manner.
There are concerns regarding the mention of a direct exchange of
information between IRS and OCSE, as OCSE's interaction is strictly
with FMS. It would be more complex, time-consuming, and costly to add
the additional interfaces and processing that would be required to
implement this proposition. It is OCSE's understanding that the
operation was transferred from IRS to FMS about 5 years ago, at least
in part, to improve the efficiency and cost-effectiveness of the
program. The proposition of adding a direct interface between GCSE and
IRS seems contrary to the original intent of the transfer. We are
pleased that IRS does not note any legal barrier to sharing this
information with OCSE.
As part of our ongoing effort to gain additional information on joint
returns, OCSE met with FMS on March 12, 2004.
[End of section]
Appendix IV: Comments from the Department of the Treasury:
DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220:
MAR 8 2004:
Ms. Cornelia M. Ashby
Director, Education, Workforce, and Income Security Issues
U.S. General Accounting Office
441 G Street, N.W.
Washington, D.C. 20548:
Dear Ms. Ashby:
The Department of the Treasury has received for comment a copy of the
draft report (GAO-04-377), entitled Child Support Enforcement: Better
Data and More Information on Undistributed Collections Are Needed. The
draft report contains one recommendation that relates to the Department
of the Treasury's role in the collection of delinquent child support
debt. We concur with the recommendation that the Internal Revenue
Service (IRS) and the Financial Management Service (FMS) work with the
Office of Child Support Enforcement (GCSE) to identify a cost-effective
approach for providing GCSE information needed to identify those
collections that have had their "injured spouse" claims satisfied so
that these collections can be distributed to families sooner.
IRS and FMS have enjoyed a positive working relationship for many
years. Their mutual interests cross many operational lines and their
staffs engage in problem solving and cooperative efforts on a daily
basis. As your report notes, IRS and FMS are currently collaborating on
a joint project reviewing the processing of injured spouse claims to
determine if the processing cycle time can be reduced. We are confident
that IRS and FMS will collaboratively develop a feasible, cost
effective way to provide the necessary Injured Spouse information to
GCSE.
Currently, neither IRS nor FMS captures injured spouse claim
information in such a way as to allow either agency to readily provide
the required information to OCSE, and significant programming changes
would be needed by either agency to identify satisfied Injured Spouse
Claims to OCSE. Nevertheless, IRS and FMS will continue to work
together and with GCSE to develop a mutually satisfactory, cost-
effective way to advise GCSE when injured spouse claims impacting the
distribution of their collections have been satisfied. In addition, IRS
and FMS will jointly develop a corrective action plan to address the
work that will be needed to fulfill this requirement.
Thank you for the opportunity to respond to this draft GAO report. If
you have any questions or wish to discuss these comments further,
please contact Floyd L. Williams (IRS, Director, Legislative Affairs)
at (202) 622-4725 or Alvina McHale (FMS, Director, Legislative and
Public Affairs) at (202) 874-6604.
Sincerely,
Signed by:
Barry K. Hudson:
Acting Chief Financial Officer:
cc: Donald Hammond
Richard Gregg
Ronny S. Rhodes:
[End of section]
Appendix V: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Carolyn M. Taylor (202) 512-2974, taylorcm@gao.gov
Rebecca A. Christie (312) 220-7720, christier@gao.gov:
Staff Acknowledgments:
In addition to those named above the following individuals made
important contributions to this report: Vernette Shaw, Carolyn Boyce,
Jay Smale, Corinna Nicolaou, James Rebbe, and Paul Schearf.
FOOTNOTES
[1] Pub. L. No. 104-193, § 312(b) (Aug. 22, 1996).
[2] In this report we will refer to the state child support enforcement
agencies as state agencies.
[3] Under some circumstances, the Secretary of the Treasury may collect
past due child support by offsetting federal tax refunds and other
types of federal payments. Collections from federal joint tax refunds
are held only for non-TANF cases. In this report, the use of the word
"non-TANF" means that the child support is owed to a custodial parent
who is not a TANF recipient. Joint tax refunds subsequently mentioned
in this report refer to federal non-TANF joint tax refunds.
[4] 42 U.S.C. §§ 651-669b.
[5] Omnibus Budget Reconciliation Act of 1981, Pub. L. No. 97-35, §
2331 (Aug. 13, 1981).
[6] IRS Form 8379.
[7] The Treasury Offset Program (TOP) is a centralized debt collection
program developed by FMS. TOP is designed to assist agencies in the
collection of delinquent debt owed to the federal government. FMS
disburses payments on behalf of over 400 federal agencies.
[8] State disbursement units are also responsible for collecting and
disbursing all payments under support orders, including spousal
support.
[9] The 1996 Personal Responsibility and Work Opportunity
Reconciliation Act created TANF. TANF emphasizes the importance of work
and personal responsibility rather than dependence on government
benefits. After 2 years of assistance, or sooner if the state
determines that the recipient is ready, TANF adults are generally
required to be engaged in work or work-related activities. A lifetime
limit of 60 months (or less, at the state's option) is placed on
adults' receipt of cash benefits. Families receiving TANF benefits or
benefits under the federally assisted foster care program or the
Medicaid program automatically receive CSE services free of charge.
Under PRWORA, TANF recipients generally must assign their rights to
current child support payments to the state.
[10] Foster care programs are authorized under Title IV-E of the Social
Security Act.
[11] OCSE's final annual statistical report for fiscal year 2002 was
published November 2003.
[12] 42 U.S.C. § 652(a)(4)(C). Moreover, the Child Support Performance
and Incentive Act of 1998 requires that states have complete and
reliable data for purposes of computing incentives. 42 U.S.C. § 658a(b)
(5)(B). The performance measures for incentive payment base amounts are
paternity establishment, support order establishment, current payments
distributed, and cost effectiveness. 42 U.S.C. § 658a(b)(4). According
to HHS, the Secretary is required to conduct an audit for each fiscal
year for incentive purposes.
[13] These collections are also referred to as future payments.
[14] Distributing Collected Child Support to Families Exiting TANF.
Department of Health and Human Services, October 2001. OEI-05-01-00220.
[15] Wage withholding is a procedure whereby an employer automatically
deducts a specified amount from an employee's wages or income to pay a
child support obligation. All support orders issued after January 1,
1994, must contain provisions for wage withholding, except when there
is a good cause not to require it or an alternative arrangement is
reached by both parties.
[16] Three of the 27 state agencies that reported producing daily
reports also reported that they produced weekly reports.
[17] FPLS is a computerized national location network operated by OCSE.
FPLS obtains address and employer information, as well as data on child
support cases in every state, compares them and returns matches to the
appropriate states. This helps child support enforcement agencies
locate noncustodial parents.
[18] Officials told us that some exceptions were granted to
individuals, for example, if they could not reasonably access a
financial institution.
[19] U.S. General Accounting Office, Child Support Enforcement:
Opportunity to Defray Burgeoning Federal and State Non-AFDC Costs, GAO/
HRD-92-91 (Washington, D.C.: June 5, 1992); Child Support Enforcement:
Opportunity to Reduce Federal and State Costs, GAO/T-HEHS-95-181
(Washington, D.C.: June 13, 1995); and Child Support Enforcement: Clear
Guidance Would Help Ensure Proper Access to Information and Use of Wage
Withholding by Private Firms, GAO-02-349 (Washington, D.C; Mar. 26,
2002).
[20] Section 1115 of the Social Security Act authorizes OCSE to provide
funding to state Title IV-D agencies for demonstration activities
intended to add to the knowledge and to promote the objectives of the
Child Support Enforcement Program. The four priority areas for fiscal
year 2002 were to (1) increase the rate of cases with collections
through better use of automation and improved public-private
collaboration projects for interstate cases, (2) increase the rate of
cases with collections from low-income noncustodial parents, (3) reduce
and limit the amount of undistributed collections by having states
better track and distribute more of the undistributed child support
that they have collected, and (4) further the national goals of the
Child Support Program.
[21] Region VII includes Iowa, Kansas, Missouri, and Nebraska.
[22] OCSE told us that these discussions are recorded and available to
state agencies that could not participate in the original call.
[23] About 182,500 injured spouse claims were filed related to offsets
for child support and about 60 percent, 110,000, were filed with the
original return. Approximately half of the claims are for non-TANF
cases.
[24] 26 U.S.C. § 6103(l)(10).
[25] Under the Social Security Act provision on collection of past-due
support from federal tax refunds, a state "may delay distribution of
the amount withheld until the State has been notified by the Secretary
of the Treasury that the other person filing the joint return has
received his or her proper share of the refund, but such delay may not
exceed six months." 42 U.S.C. § 664(a)(3)(B). While this section of law
does not explicitly require Treasury to affirmatively inform OCSE or
the states that an injured spouse claim has been paid, we believe that
the statute contemplates that Treasury notify the state when the other
person filing the joint return has received his or her share of the
refund. See H.R. Conf. Rep. No. 98-925, at 56 (1984).
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