Child Support Enforcement: Families Could Benefit From Stronger Enforcement Program (Chapter Report, 12/27/94, GAO/HEHS-95-24). Greater federal leadership coupled with equally intensive state efforts could help the national child support enforcement program to better serve the families that depend on it. The dramatically rising number of children needing support--the child support enforcement caseload soared 180 percent between 1980 and 1992--has focused attention on federal and state efforts to force parents to support their children. However, these efforts have been stymied by management weaknesses that keep the Office of Child Support Enforcement (OSCE) from (1) effectively leading the program and the states, (2) judging how well the program is working, and (3) setting effective policies. Although the federal role is substantial--most program funding is federal--child support enforcement is very much a state activity. Today, states face common problems, such as increasing workloads that outpace resources, inadequate computer systems, and fragmented authority and unstandardized procedures among others. In response, states have developed a number of strategies, including augmenting their staffs with volunteers and contracting with private collection agencies, improving automation, and using innovative enforcement techniques. Many welfare reform proposals would further expand child support enforcement. Unless OSCE strengthens its management of its current program, it may have difficulty implementing any new responsibilities. --------------------------- Indexing Terms ----------------------------- REPORTNUM: HEHS-95-24 TITLE: Child Support Enforcement: Families Could Benefit From Stronger Enforcement Program DATE: 12/27/94 SUBJECT: Welfare benefits Aid to families with dependent children Public assistance programs Child support payments State-administered programs Federal/state relations Law enforcement Collection procedures Agency missions Strategic planning IDENTIFIER: HHS Child Support Enforcement Program AFDC OCSE Measuring Excellence Through Statistics Program California Delaware Arizona Iowa Kentucky Massachusetts New York Oregon Texas Virginia ************************************************************************** * This file contains an ASCII representation of the text of a GAO * * report. 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We are unable to accept electronic orders * * for printed documents at this time. * ************************************************************************** Cover ================================================================ COVER Report to the Chairman, Subcommittee on Federal Services, Post Office and Civil Service, Committee on Governmental Affairs, U.S. Senate December 1994 CHILD SUPPORT ENFORCEMENT - FAMILIES COULD BENEFIT FROM STRONGER ENFORCEMENT PROGRAM GAO/HEHS-95-24 Child Support Enforcement Abbreviations =============================================================== ABBREV ACF - Administration for Children and Families AFDC - Aid to Families With Dependent Children CSE - child support enforcement GPRA - Government Performance and Results Act of 1993 HHS - Department of Health and Human Services METS - Measuring Excellence Through Statistics OCSE - Office of Child Support Enforcement OBRA'93 - Omnibus Budget Reconciliation Act of 1993 Letter =============================================================== LETTER B-250916 December 27, 1994 The Honorable David Pryor Chairman, Subcommittee on Federal Services, Post Office and Civil Service Committee on Governmental Affairs United States Senate Dear Mr. Chairman: This report, prepared at your request, examines the national child support enforcement (CSE) program at both the federal and state levels. It discusses federal program management issues and what some state CSE programs are doing to overcome barriers hampering their child support enforcement efforts. The report makes recommendations to the Secretary of Health and Human Services to improve CSE (1) planning, (2) performance measurement, (3) federal accountability, (4) audits, and (5) program funding structure. As arranged with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from its issue date. At that time, we will send copies of the report to the Secretary of Health and Human Services; the chairmen and ranking minority members of the House Subcommittee on Human Resources, Committee on Ways and Means and the Senate Committee on Finance; and other interested parties. We also will make copies available to others upon request. This report was prepared under the direction of Jane L. Ross, Director, Income Security Issues. Please contact David P. Bixler, Assistant Director, at (202) 512-7201 if you have any questions. Other GAO contacts and major contributors to this report are listed in appendix VI. Sincerely yours, Janet L. Shikles Assistant Comptroller General EXECUTIVE SUMMARY ============================================================ Chapter 0 PURPOSE ---------------------------------------------------------- Chapter 0:1 Nonpayment of child support contributes to childhood poverty as well as to increases in the number of families receiving welfare.\1 Today, more than one-fifth of America's children live in poverty, and it has been estimated that half will live in single-parent families at some point in their lives. To help obtain the financial support noncustodial parents owe their children and to help single-parent families achieve or maintain economic self-sufficiency, the Congress established the intergovernmental child support enforcement program in 1975. In 1992, the federal Office of Child Support Enforcement (OCSE) reported a nationwide caseload of about 15.2 million cases, about 60 percent of which received welfare. The Chairman of the Subcommittee on Federal Services, Post Office and Civil Service, Senate Committee on Governmental Affairs, asked GAO to review the child support enforcement program to determine how the federal government could improve services to the states and to the families that depend on the program. GAO's review focused on (1) whether the program has essential management tools in place at the federal level to fulfill its mission, (2) how well OCSE has fulfilled its role in fostering the development of state child support enforcement programs, and (3) what the state programs are doing to overcome barriers hampering their efforts. GAO also examined the implications of welfare reform proposals and the impact of the Government Performance and Results Act of 1993 (GPRA). -------------------- \1 In this report, "welfare" refers to cash assistance provided to families under the Aid to Families With Dependent Children (AFDC) program. BACKGROUND ---------------------------------------------------------- Chapter 0:2 The federal government and the states share child support enforcement responsibilities. OCSE, within the Department of Health and Human Services (HHS), is responsible for providing leadership, technical assistance, and standards to develop effective state programs, which actually deliver child support enforcement services to families. Services include establishing paternity and support orders; locating noncustodial parents; updating support orders to be current with a noncustodial parent's income; obtaining medical support, such as medical insurance, from noncustodial parents; and collecting support payments. To help ensure state program effectiveness, the federal government uses a "carrot and stick" approach involving incentive payments, audits, and penalties. The federal government matches about two-thirds of state program administrative costs and makes incentive payments to states based on collections. Federal and state governments first became involved in child support enforcement activities with the aim of recovering government welfare costs. Child support owed by noncustodial parents of families receiving welfare was to be collected by state and local child support programs and then returned to the government, with a small portion going to the families. As the number of families receiving welfare rose in the 1970s, the Congress incorporated existing state and local efforts into the national child support enforcement program. Over time, the program expanded beyond the original aim of recovering welfare because the Congress believed that early enforcement of child support obligations could help prevent families' need for government support. For example, families that are not receiving welfare but that request program services must be served equally. RESULTS IN BRIEF ---------------------------------------------------------- Chapter 0:3 Greater federal leadership coupled with equally intensive state efforts could better position the national child support enforcement program to serve the families that depend on it. Dramatically increasing numbers of children needing support--the child support enforcement caseload grew 180 percent between 1980 and 1992--are focusing attention on federal and state efforts to enforce parents' responsibilities to support their children. However, these efforts have been hampered by management weaknesses that keep OCSE from (1) effectively leading the program and the states, (2) judging how well the program is working, and (3) setting effective policies. Because of declining resources, OCSE has diminished the level of technical assistance provided to state programs. Also, various organization and staffing changes have created communication problems between federal and state program officials. OCSE audits and data collection efforts, while satisfying legal requirements for monitoring and tracking the states' programs, do not provide either OCSE or the states with adequate information on program results. Now, under the impetus of GPRA, OCSE is getting started on management improvements that could position it to better serve states and families. OCSE has also proposed changing the incentive payment structure to encourage improved state performance. While the federal role is substantial--most program funding is federal--child support enforcement is very much a state activity. Today, states face common barriers such as increasing workloads that outpace resources, inadequate computer systems, and fragmented authority and unstandardized procedures among others. In response, states have developed a number of strategies, including augmenting their staffs with volunteers and contracting with private collection agencies, improving automation to help staff be more productive, and using innovative enforcement techniques. Some of the techniques various states have adopted are (1) requiring employers to report newly hired employees so parents who owe child support can be located, (2) using central lien indexes and tax record matching so parents' assets can be located, and (3) revoking driver's and professional licenses to encourage parents to pay what they owe. Many welfare reform proposals would further expand child support enforcement. Unless OCSE takes steps to strengthen its leadership and management of its current program, it may have difficulty implementing any new responsibilities. PRINCIPAL FINDINGS ---------------------------------------------------------- Chapter 0:4 THE CHILD SUPPORT ENFORCEMENT PROGRAM HAS LACKED ESSENTIAL MANAGEMENT TOOLS -------------------------------------------------------- Chapter 0:4.1 The child support enforcement program has lacked certain essential management tools to assess and improve current program performance. A well-articulated mission, programwide planning and goal-setting, and accurate data on program performance have not been available to guide program management. As the program expanded beyond welfare recovery, its mission became increasingly less clear. Legislative amendments expanded program efforts to include families not receiving welfare and activities, such as medical support enforcement, that do not focus directly on collections. In practice, this expanded mission has given the program competing priorities--without guidance from the federal level on how to manage those priorities. In the face of the program's expanded mission, OCSE's planning efforts focused on the agency and its processes, not on outcomes for either the national program as a whole or its own operations. Nor did these efforts seek input from key stakeholders, such as the Congress and the states. Only one national goal exists for the program, and this is a congressionally mandated standard for state performance in paternity establishment. Now, in response to GPRA requirements, OCSE is beginning a planning discipline that identifies priorities and outcomes. The child support enforcement program has also lacked accurate and consistent data that could be used to set goals for, assess, and improve program performance. Despite 20 years of required performance reporting, OCSE has not developed universally understood data definitions, and states collect data in ways that make aggregation and comparison impractical. OCSE and state officials acknowledge that needed data are not available, and OCSE has taken some actions on this issue. However, as of December 1994, OCSE was not in a position to know how the national program was actually performing. In concept, federal incentive payments reward state programs according to performance, but this funding mechanism has yet to achieve its potential. In practice, all states--regardless of performance--have received some incentive payments. Moreover, the amount of incentive payments depends on a state's collections and does not reflect other important activities, such as paternity establishment and medical support enforcement. The impact of the incentives is limited because states are not required to use incentive funds to expand their child support enforcement activities. Some states have used incentive payments for activities other than child support enforcement; others have used federal payments to offset the state part of matching funds for child support enforcement, according to a 1991 report by HHS' Office of the Inspector General. OCSE HAS NOT EFFECTIVELY FOSTERED STATE PROGRAM DEVELOPMENT -------------------------------------------------------- Chapter 0:4.2 As the Congress originally envisioned it, OCSE's role included fostering state program development by providing technical assistance and training, developing standards, and exercising federal oversight through audits. As HHS experienced workforce reductions in the 1980s, however, OCSE resources diminished. Technical assistance and training, which had formed a large part of OCSE efforts, virtually disappeared. In several instances, regulations were finalized after the effective dates of a law. In addition, an HHS-wide reorganization left OCSE with no organizational control over those HHS regional staff serving as contact points for the states on some program matters. State program staff had to contact various offices within HHS for different child support enforcement matters, and miscommunications between OCSE, HHS regional staff, and state program staff contributed to strained working relationships. By the early 1990s, OCSE's monitoring role had come into greater prominence, with more than half of remaining OCSE staff devoted to compliance audits. These audits focused on state compliance with federal requirements for administrative procedures and service delivery rather than on outcomes of state actions, such as how many paternities or support orders were established. State program staff said that while some audits had helped them gain state legislative support, the audits concentrated too much on administrative details and were too untimely to be a useful management tool for them, with audit reports sometimes issued 2 years after the period audited. OCSE recognizes that while the audits have spurred state actions, the audit approach needs to be changed to provide better insight into state program performance. OCSE is seeking to shift the emphasis from compliance with administrative procedures to ensuring state data integrity. OCSE, however, believes that this shift will require a legislative change. STATE CHILD SUPPORT ENFORCEMENT PROGRAMS FACE COMMON BARRIERS, USE MULTIPLE STRATEGIES -------------------------------------------------------- Chapter 0:4.3 Although states have received substantial federal funding for program development, at least five common barriers hinder state child support enforcement efforts: Workload continues to grow and become more time-consuming. Estimates of worker caseload ranged from 300 to 2,500 cases per worker, and officials believe that many cases now take more time than before. For example, the growing number of out-of-wedlock births means that more cases need paternity establishment--more than 40 percent of the caseload in one state. Child support enforcement program functions are only partially computerized. Some states do not have statewide computer systems. Other states have computerized some functions but others remain manual. One state had the computer capacity to seize noncustodial parents' bank assets but did not have caseload intake and parent location functions computerized. Another state had extensive case tracking capability but lacked the technology to identify assets and levy administrative liens through automation. State program staff lack control over local units. Some states wanted more uniform state implementation and were frustrated by dispersed program control. One state's audits documented that some local districts failed to implement state regulations for case processing. In another state, some judges did not follow state procedures. State legislatures do not always support state programs' proposed initiatives. Some states have been more successful than others in getting legislative support for new enforcement techniques, such as in-hospital paternity establishment; revocation of driver's and professional licenses of noncustodial parents who are delinquent in support payments; and using administrative, rather than judicial, processes for establishing support orders. Referrals from welfare offices lacked information that the child support enforcement program needed to do its work. GAO found in earlier work that poor coordination between welfare and child support agencies resulted in inadequate information about noncustodial parents, including identity, location, and earnings data.\2 The experiences of the state programs that GAO reviewed suggest that very little has changed. States that GAO reviewed were at different points in developing or adopting strategies to deal with the barriers they faced. The strategies included adding staff; refining AFDC intake procedures to facilitate child support enforcement; contracting out some functions to private entities; and using volunteers. States also used various techniques to garner legislative support and were making increased use of automation. The actions some states have taken also show that many decisions about adding resources, improving automation, and expanding the program's administrative processes lie within the control of state leadership and reflect the investments states can make in the program without the impetus of a federal mandate. -------------------- \2 Child Support: Need to Improve Efforts to Identify Fathers and Obtain Support Orders (GAO/HRD-87-37, Apr. 30, 1987). WELFARE REFORM PRESENTS ADDITIONAL OPPORTUNITIES AND CHALLENGES -------------------------------------------------------- Chapter 0:4.4 All the welfare reform proposals that GAO reviewed would add new enforcement tools but could also require more of OCSE and the states. In addition, some of the proposals would change the funding structure and OCSE's audit approach. Some proposals require greater centralization of state operations and give some states tools that they have sought, such as employer reporting of new hires or the ability to suspend professional or driver's licenses. However, new and expanded responsibilities may also strain OCSE's ability to effectively implement changes and increase state workloads. New demands under welfare reform could include broadening OCSE's role in developing and coordinating expanded automated systems at the state or federal level. In addition, state programs may also need greater technical assistance from OCSE and HHS to ensure effective state implementation. RECOMMENDATIONS ---------------------------------------------------------- Chapter 0:5 GAO is making several recommendations to the Secretary of Health and Human Services to strengthen OCSE's management and leadership. Among other things, these recommendations are aimed at establishing performance goals for OCSE; promoting greater federal accountability; reengineering OCSE audits of state performance to be more outcome-oriented rather than process-oriented; and revising the program funding structure to better support program priorities. AGENCY COMMENTS ---------------------------------------------------------- Chapter 0:6 HHS stated that the report provides a balanced appraisal of OCSE and the national program's accomplishments, and that GAO's recommendations are well taken. HHS provided additional information about actions that it has planned or has in progress that address several of GAO's recommendations. (See app. V.) While most of HHS' actions are appropriate, GAO has some specific concerns about HHS' response to establishing performance goals for OCSE; promoting greater federal accountability; and changing the audits and funding structure. (See pp. 95-97.) HHS also provided technical comments, as did program officials from selected states and several child support enforcement experts; their comments have been incorporated as appropriate. THE CHILD SUPPORT ENFORCEMENT PROGRAM: SIGNIFICANCE, ORGANIZATION, PERFORMANCE, AND REFORMS ============================================================ Chapter 1 Today, child support enforcement is an issue for more American families than ever before. The number of out-of-wedlock births and divorces has escalated in recent years, and it is estimated about half of American children will spend at least some time in single-parent families.\3 Many of these single-parent families, particularly those headed by young mothers, are at risk of welfare dependency. Child support is critical to these families' self-sufficiency. In the last 5 years, more and more single-parent families have sought government assistance from the Aid to Families With Dependent Children (AFDC) program, which requires recipients to cooperate with the child support enforcement (CSE) program. In addition, an increasing number of single-parent families not receiving AFDC have voluntarily sought CSE's help in obtaining child support from noncustodial parents. But in 1992, according to data reported by the federal Office of Child Support Enforcement (OCSE), only about 19 percent of the cases in the CSE program received any child support payments. In 1975, in response to the growth in the numbers of families receiving AFDC, the Congress created the national CSE program. The federal OCSE was created to monitor and help develop existing state and local child support enforcement programs. Child support collected for families receiving AFDC was to be returned to the government; child support collected for non-AFDC families would help these families avoid a need for cash assistance from the government. Over the years, the Congress steadily expanded CSE program enforcement tools, program requirements, and federal funding to states. In 1992, the federal government paid $1.7 billion to states in matching and other funds to serve a caseload of about 15 million families--8.7 million of whom received AFDC.\4 Because of his concerns, the Chairman of the Subcommittee on Federal Services, Post Office and Civil Service of the Senate Committee on Governmental Affairs asked us to review the CSE program to determine how the federal government could improve services to the states and the families who depend on state CSE activities. Our review focused on (1)whether the CSE program has the essential management tools in place at the federal level that a program needs to fulfill its mission; (2) how well the federal office, OCSE, has fulfilled its role in fostering the development of state CSE programs; and (3) what state CSE programs are doing to overcome barriers hampering CSE efforts. In addition, we examined implications of welfare reform proposals and the Government Performance and Results Act of 1993 (GPRA) for the CSE program. -------------------- \3 Family Impact Seminar, "Reducing Family Poverty: Tax-Based and Child Support Strategies," background briefing report (Washington, D.C.: Dec. 4, 1992). \4 The caseload estimate is from the Department of Health and Human Services' (HHS) Child Support Enforcement Seventeenth Annual Report to Congress, which contains data for fiscal year 1992. However, refer to pp. 44 and 45 of this report for the limitations of these data. THE CONGRESS CREATED THE NATIONAL CHILD SUPPORT ENFORCEMENT PROGRAM TO MEET GROWING NEED ---------------------------------------------------------- Chapter 1:1 Child support is a parental responsibility. However, because of the growing number of parents who fail to assume this responsibility, the Congress created the national CSE program in 1975 and significantly amended it in 1984 and 1988. The program's purpose is to strengthen existing state and local efforts to find noncustodial parents, establish paternity, obtain support orders, and collect support payments. Today, the program serves two populations: families receiving AFDC and those who do not. Although the services provided are essentially the same, collections are handled differently for the two groups, with a portion of the AFDC collections being returned to the state and federal governments and non-AFDC collections going directly to the families. Increases in both groups have caused caseloads to climb, and the service needs of both groups have become increasingly complex. ESTABLISHING CHILD SUPPORT: MAKING PARENTS RESPONSIBLE -------------------------------------------------------- Chapter 1:1.1 When two people, whether married or not, have a baby, they incur an obligation to provide for their child. When parents live apart, the parent not living with and providing day-to-day care for the child (the noncustodial parent) is expected to help the other parent (the custodial parent) provide for the child. Although children are entitled to support from parents who live apart, a legally binding document--a separation agreement or a support order--is needed to establish the appropriate amount of financial support and make the payment enforceable on the noncustodial parent. If the parents were married at the time of the child's birth, a support order is usually established when the parents separate or divorce. If the parents were not married when their child was born, the legal presumption of paternity conferred by marriage is lacking, and a permanent support order cannot be established or enforced on either parent until there is a legal determination of paternity.\5 Paternity is established in either of two ways: (1) through voluntary acknowledgment by the father or (2) if contested, through determination based on evidence such as scientific (genetic testing) and personal testimony. In such cases, paternity establishment confers on children the legal rights and privileges that a child born within a marriage has. Among them are rights to inheritance, medical and life insurance benefits, social security, and possibly veteran's benefits. -------------------- \5 In some cases, a temorary support order may be established before paternity is established. GOVERNMENT INVOLVEMENT TRIGGERED BY GROWING WELFARE CASELOADS -------------------------------------------------------- Chapter 1:1.2 Before the national CSE program, federal and state governments became involved in child support enforcement primarily through the AFDC program, which provided welfare benefits to children who had inadequate parental financial support. In 1950, the first relevant federal legislation required welfare agencies to notify appropriate law enforcement officials when AFDC was furnished to a child who had been abandoned by a parent.\6 Since 1968, federal statutes pertaining to the AFDC program have specifically required states to have programs for establishing paternity and obtaining support for children who receive AFDC. By 1975, an alarming rise in welfare costs resulting from out-of-wedlock birth rates and parental desertion as well as a growing demand to relieve taxpayers of the financial burden of supporting these families prompted the Congress to create the national CSE program as title IV-D of the Social Security Act. The Congress believed government welfare expenditures could be reduced, and to some extent prevented, by recouping AFDC benefits from noncustodial parents' child support payments. In addition, the Congress believed that earlier enforcement of child support obligations for families not receiving AFDC could help prevent these families from needing government support. The national CSE program incorporated the already existing state programs. -------------------- \6 See the Social Security Act Amendments of 1950, P.L. 81-734, sec. 321(b). AFDC AND NON-AFDC COLLECTIONS HANDLED DIFFERENTLY -------------------------------------------------------- Chapter 1:1.3 Families who receive AFDC, and families who do not, enter the CSE program in different ways; and the child support payments CSE collects for them are distributed differently. A mother who requests AFDC for her child is required as a condition of eligibility to assign her rights to child support to the government and to cooperate with the CSE program in locating and identifying the father of the child.\7 If the child support that CSE collects for an AFDC family does not, together with family income, make the family ineligible for AFDC, then all but $50 of the monthly support payment goes to the state and federal governments in proportion to their AFDC assistance to the family. The family continues to receive its full monthly AFDC grant plus the first $50 of the support payment. If the family does not receive AFDC, all the child support collected goes directly to the family.\8 Parents who do not receive AFDC are under no obligation to establish paternity or to use CSE services to collect child support. They do so, if at all, voluntarily. -------------------- \7 There are procedures to exempt custodial parents from cooperation for good cause. \8 If a family has stopped receiving AFDC, not all the child support collected may go to the family. In almost half the states, support paid above the current obligation amount is used to reimburse any child support owed to the state under the AFDC assignment provisions prior to payments owed to the family. THE CSE CASELOAD, ESPECIALLY NON-AFDC FAMILIES, HAS GREATLY EXPANDED -------------------------------------------------------- Chapter 1:1.4 Between 1980 and 1992, the nationwide CSE caseload\9 grew 180 percent, from 5.4 million to 15.2 million cases.\10 Part of that growth stemmed from the increase in the number of single-parent families receiving AFDC. The average monthly number rose more than 1 million in the past 5 years, increasing from nearly 3.6 million families in 1989 to just over 4.6 million in 1993. The larger portion of the CSE caseload increase, however, was in non-AFDC cases, which grew from 16 to 43 percent of the caseload during this period. In fiscal year 1992, there were 8.7 million AFDC cases and 6.5 million non-AFDC cases. Figure 1.1 shows the increase in the CSE caseload from fiscal year 1980 through 1992. Figure 1.1: Child Support Enforcement Caseload, Fiscal Years 1980-1992 (See figure in printed edition.) Source: OCSE annual reports. -------------------- \9 Throughout this report, CSE caseload refers to all cases enforced under title IV-D of the Social Security Act--both non-AFDC recipients who specifically request services and AFDC recipients who are automatically referred to and required to participate in the CSE program. \10 State data about 1992 caseloads and expenditures were the most recent available about state programs. INCREASING NUMBER OF YOUNG, UNWED PARENTS MAKES CASELOAD INCREASINGLY DIFFICULT TO SERVE -------------------------------------------------------- Chapter 1:1.5 Today, the CSE caseload is more difficult to serve than in the earlier years because there are more young, unwed parents. Various studies indicate that these cases usually require more services and are more difficult to successfully serve than those involving married or formerly married parents. For example, cases involving unwed parents require paternity establishment, which may be contested rather than acknowledged voluntarily. Also, unwed parents are usually less able and less willing than married or formerly married parents to pay child support. Such parents are generally younger and have less education and earning capacity. They are likely to be unemployed or unemployable and have little or no income with which to pay support--some are still in high school. In addition, some unwed parents are not aware of or do not fully understand the parental responsibilities that CSE agencies try to enforce. The growing size and complexity of the CSE caseload reflect major changes in demographic characteristics of the American family. High rates of divorce and out-of-wedlock birth have resulted in more children living in single-parent households. For example, the number of births to unmarried mothers increased 82 percent between 1980 and 1991. During the same period, the proportion of out-of-wedlock births rose from 18.4 to 29.5 percent of all births.\11 U.S. Bureau of the Census data indicate that there were 9.8 million custodial mothers aged 18 years and older in 1990--39 percent more than in 1979, the first year for which this information was available.\12 The increasingly difficult-to-serve nature of the CSE caseload and the links between nonpayment of child support, poverty, and increases in families receiving AFDC benefits are underscored by socioeconomic statistics. In 1989, according to U.S. Census data, 62 percent of all custodial mothers did not receive child support payments, largely because they lacked support orders.\13 In that same year, 32 percent of all custodial mothers were living below the poverty threshold, and three-quarters of them had not received child support.\14 Receiving child support appears to be a particular problem for never-married custodial mothers and their children--they made up 52 percent of the AFDC caseload in 1991, up from 21 percent in 1976.\15 Census data indicate that of all never-married custodial mothers, 75 percent did not have child support orders and slightly more than half had household incomes below the poverty level in 1989. -------------------- \11 Child Support Enforcement Seventeenth Annual Report to Congress, pp. 3-4. \12 Current Population Reports, Series P-60, No. 173, Child Support and Alimony: 1989 (Washington, D.C.: 1991), tables A-D. \13 Of 6.2 million custodial mothers who did not receive support, 4.2 million did not have support orders. Of the others, 1.2 million had orders but did not receive any payments, and 800,000 had orders but payments were not due that year. \14 Of those not receiving support, 75 percent did not have an order. \15 Families on Welfare: Sharp Rise in Never-Married Women Reflects Societal Trend (GAO/HEHS-94-92, May 31, 1994) and Families on Welfare: Teenage Mothers Least Likely to Become Self-Sufficient (GAO/HEHS-94-115, May 31, 1994). PROGRAM RESPONSIBILITY IS SHARED BY FEDERAL, STATE, AND LOCAL GOVERNMENTS ---------------------------------------------------------- Chapter 1:2 CSE is an intergovernmental program involving the federal, state, and local governments. Federal responsibility for the CSE program lies within HHS in the Administration for Children and Families (ACF). Within ACF, OCSE manages the CSE program at the federal level. A separate office within ACF, the Office of Information Systems Management/CSE Information Systems, approves, monitors, and certifies state information systems projects for all ACF programs, (funded under the Social Security Act), including CSE, and reports on CSE matters to the director of OCSE. In addition, ACF staff in HHS regional offices are responsible for review and approval of states' plans for all ACF programs, including CSE, AFDC, Job Opportunities and Basic Skills Training, and others,\16 and for ensuring consistent and uniform adherence to federal requirements governing all ACF formula and entitlement programs. Figure 1.2 displays the organization of CSE responsibilities within HHS. OCSE is responsible for providing leadership, technical assistance, and standards. When the Congress established the CSE program, it envisioned an aggressive federal role in ensuring that states actually develop strong and effective CSE programs. Title IV-D of the Social Security Act mandates that OCSE provide technical assistance to states to help them plan, develop, design, and establish effective CSE programs. The act also directs OCSE to establish standards for state program effectiveness and monitor the operation of state programs through periodic audits. To help ensure program effectiveness, OCSE has the authority to assess financial penalties if an audit reveals a state has failed to meet certain program standards. In addition, OCSE is responsible for maintaining relationships with federal, state, and local government officials, private organizations, and for individuals interested in the CSE program, and for coordinating and planning CSE activities to maximize program effectiveness. State CSE agencies are responsible for all activities leading to securing financial support and medical insurance coverage from noncustodial parents for children involved in CSE cases. To meet federal requirements and receive federal funds, state CSE programs must have HHS-approved plans indicating compliance with federal law and regulations and must operate programs in accordance with those plans. HHS can withhold federal funding from states that do not have approved plans. There are significant differences in the ways state CSE programs are organized, where they are placed in the states' organizational hierarchies, what relationships exist between the CSE program and other state agencies, and the policies and procedures that are followed. These characteristics usually vary by traditional state-local service delivery structures, levels of court involvement required by state family law, population distribution, and other state variables. For example, some state child support agencies operate their CSE programs with state funds through a network of regional offices, while others share the funding with and supervise county and other local jurisdictions' operations. Under both circumstances, certain program responsibilities may be contracted out to other entities. In addition, the state CSE agencies are not all in human services agencies; in a few states, CSE is in the state department of revenue or the attorney general's office. -------------------- \16 These include foster care and adoption assistance, child welfare, homeless youth, child care, and developmental disabilities. FUNDING DESIGNED TO CREATE A FEDERAL-STATE PARTNERSHIP ---------------------------------------------------------- Chapter 1:3 The CSE funding structure was designed to share program costs between the federal and state governments. The federal government matches 66 percent of states' administrative costs and 90 percent of their costs of developing management information systems\17 and certain other services related to paternity establishment. The federal government also pays incentives to states for collection efficiency. Incentives are calculated separately for AFDC and non-AFDC collections by dividing each by total program administrative costs. Incentive payments for AFDC collection efficiency range in amounts equal to 6 to 10 percent of the AFDC collections. Incentive payments for non-AFDC collections also range in amounts equal to 6 to 10 percent of non-AFDC collections but cannot be greater than 115 percent of the incentive payments paid for AFDC collection efficiency. These incentive payments are funded from the federal portion of recovered AFDC collections. Though federal matching funds are restricted to CSE program costs, states may use the incentive payments to fund programs other than CSE. They must, however, share incentives with local governments that bear some of the administrative costs of the CSE program. -------------------- \17 The 90-percent federal match for systems development costs expires at the end of fiscal year 1995. SERVICE DELIVERY IS DIVERSE AND COMPLEX ACROSS THE NATION ---------------------------------------------------------- Chapter 1:4 CSE is an administratively complex program. While the basic services are the same in every location, different families need different services. In addition, how services are delivered varies geographically. The common services mandated by federal law include client intake (including case establishment); locating noncustodial parents; establishing paternity; establishing, reviewing, and modifying support orders; enforcing financial and medical support obligations; and collecting and distributing support payments. Appendix I briefly describes these services and some of the activities and organizations involved with each of them. Families entering the CSE program require different combinations of these services at different times, and thus their cases flow through the program on different pathways. In some cases, the child's paternity has not been established and the location of the alleged father is unknown. In these cases, the custodial parent needs the CSE program to help with every step: locating the alleged father, establishing paternity and a child support order, enforcing the order, and distributing collections received. In other cases, the custodial parent may have a child support order and CSE agencies must periodically review and possibly modify the order to ensure continued conformity to state guidelines.\18 Order amounts may be increased or decreased with changes in noncustodial parents' ability to pay, for example, because of wage increases or job losses. Figure 1.3 illustrates various combinations and sequences of services that cases require as they flow through the program. Figure 1.3: CSE Services and Case Flows (See figure in printed edition.) Delivery of CSE services frequently involves the executive, legislative, and judicial agencies of state and local governments, such as tax collection agencies, the courts and district attorneys, as well as private institutions, such as banks, employers, and credit bureaus. At the local level, both enforcement and paternity establishment may involve the courts to varying degrees. One study of paternity establishment practices in a sample of nearly 250 counties found that the local agency responsible for child support was the department responsible for human services in 75 percent of the counties.\19 Only 43 percent of the counties, however, had paternity establishment handled solely by the department of human services. In most other counties, paternity establishment was a joint responsibility of the human services agency and a prosecuting or private attorney. Paternity and support order establishment and enforcement may be handled through a judicial or administrative process, depending on the state in which the custodial parent lives. Under a judicial process, authority to make paternity judgments, establish support orders, and take enforcement actions rests with the courts; proceedings take place in a legal setting and typically may involve district attorneys, state's attorneys, county attorneys, judges, legal aid societies, or private attorneys. In contrast, under an administrative process, an agency of the executive branch of state government has authority to administer certain aspects of state child support law or regulation without court approval being necessary for legally binding actions. The degree to which administrative rather than judicial processes are used varies across all states and within states. The functions and enforcement actions to which administrative processes are applied differ, as well as the degree to which the processes are used; the spectrum of processes is described as ranging from purely administrative to quasi-judicial to purely judicial.\20 -------------------- \18 All AFDC cases must be reviewed every 3 years, and non-AFDC cases must be reviewed at the request of either parent. \19 Pamela Holcomb, Kristin Seerfeldt, and Freya Sonenstein, Paternity Establishment in 1990: Organizational Structure, Voluntary Consent, and Administrative Practices (Washington, D.C.: The Urban Institute, 1992). \20 In most states, however, even those using purely administrative processes, judges still enter support orders in divorce proceedings. PROGRAM RESPONSIBILITY AND TOOLS HAVE EXPANDED WHILE FEDERAL EXPENDITURES HAVE GROWN ---------------------------------------------------------- Chapter 1:5 To help meet the increasing challenge of child support enforcement, the Congress has significantly amended CSE legislation over the years. In addition, federal expenditures have grown considerably. Most states continue to report net savings while federal net costs for the CSE program have increased. LEGISLATIVE PROGRAM EXPANSION -------------------------------------------------------- Chapter 1:5.1 Over the years, the Congress has expanded the responsibilities of the CSE program. Under the Child Support Enforcement Amendments of 1984 (P.L. 98-378), states are to treat AFDC and non-AFDC cases the same. The amendments also established the current funding structure. The Family Support Act of 1988 (P.L. 100-485) and the Omnibus Budget Reconciliation Act of 1993 (OBRA'93, P.L. 103-66) strengthened requirements for paternity establishment, medical support, and support order fairness and currency. In addition to expanding program responsibilities, the Congress also expanded program tools. The 1984 amendments, for example, required universal wage withholding provisions in all support orders, interception of federal tax refunds, and reporting delinquent payers to credit bureaus. The Family Support Act encouraged states to establish voluntary, civil paternity acknowledgment procedures and provided for establishment of paternity standards that states must achieve to avoid being penalized with reduced funding, among other things. Appendix II lists the major requirements. More recently, OBRA'93 strengthened the program by (1) requiring increased opportunities for unwed parents to voluntarily acknowledge or otherwise establish paternity in a less complicated and more timely manner, including in hospitals; (2) removing impediments to the enforcement of health insurance provisions in child support orders; and (3) strengthening the paternity establishment performance standards initiated by the Congress in the Family Support Act. INCREASED FEDERAL FINANCIAL EXPENDITURES FOR STATE CSE PROGRAMS -------------------------------------------------------- Chapter 1:5.2 Between 1980 and 1992, annual federal expenditures for matching funds to state CSE programs increased more than four-fold, from about $350 million to more than $1.3 billion. Figure 1.4 illustrates this trend. Federal incentive payments to states, paid out of the federal portion of the recovered AFDC funds, also increased, from $72 million in fiscal year 1980 to $339 million for fiscal year 1992. (See fig. 1.5.) Figure 1.4: Federal Expenditures for Matching Funds to State CSE Programs, Fiscal Years 1980-1992 (See figure in printed edition.) Source: OCSE annual reports. Figure 1.5: Federal Incentive Payments to State CSE Programs From the Federal Share of AFDC Collections, Fiscal Years 1980-1992 (See figure in printed edition.) Source: OCSE annual reports. FEDERAL NET COSTS FOR THE CSE PROGRAM HAVE INCREASED WHILE MOST STATES REPORTED NET SAVINGS -------------------------------------------------------- Chapter 1:5.3 From 1980 to 1992, federal government spending on state CSE programs increasingly outpaced what the federal government saved through AFDC recovery. During that period, however, at least 75 percent of the states reported a net savings due to their CSE programs. In other words, federal payments to states for CSE--matching funds and incentives--were not offset by federally retained AFDC collections, but state-reported CSE costs were more than offset by the combination of their retained AFDC collections and federal matching funds and incentive payments. Through fiscal year 1988, there were net savings to the public; since that time, costs have exceeded savings.\21 (See table 1.1.) Table 1.1 Net Budget Savings/Costs for States, Federal Government, and Taxpayers From the CSE Program, Fiscal Years 1980-1992 (Dollars in thousands) Fisc State net Federal net al budget budget savings/ Net savings/ year savings costs costs to taxpayers ---- ------------ ------------------ ------------------ 1980 $230,152 $-102,698 $127,454 1981 260,969 -128,377 132,592 1982 307,309 -147,946 159,363 1983 312,296 -138,078 174,218 1984 365,522 -105,048 260,474 1985 317,334 -230,888 86,446 \a 1986 275,644 -263,177 12,467 1987 341,826 -337,278 4,548 1988 381,001 -355,424 25,577 1989 403,333 -480,056 -76,723 1990 338,469 -528,135 -189,666 1991 385,059 -586,454 -201,395 1992 434,317 -604,946 -170,629 ---------------------------------------------------------- Note: Federal net savings/costs refer to the federal share of AFDC collections less incentive payments and matching funds paid to the states. \a According to the Congressional Research Service, the sudden decrease in taxpayer savings in 1985 was caused primarily by the implementation of the $50 "pass through" to AFDC families, effective in fiscal year 1985. Source: OCSE annual reports. -------------------- \21 Both the federal and state governments may also experience savings in the AFDC programs by keeping or moving families off of AFDC through successful child support enforcement efforts. Such savings, however, are difficult to measure. PERCEPTION OF PROGRAM'S PERFORMANCE VARIES WIDELY ---------------------------------------------------------- Chapter 1:6 A widespread public perception exists that the CSE program is failing to adequately address the nationwide problem of child support nonpayment. Some state program directors, however, believe CSE performance has improved over the years, citing rising collections in recent years in the face of an increasingly large and complex caseload often involving teenage parents and out-of-wedlock cases. In part, disagreements about program performance stem from differing notions of what can realistically be expected from the child support enforcement system. Advocates for children, policy analysts, human service and CSE professionals, and members of the Congress have characterized CSE's effect on the national child support enforcement problem as ranging from "unacceptable" to "dismal." In support of this assessment, they cite Bureau of the Census and other national survey data on the size of the problem nationwide. These data indicate that 62 percent of all custodial mothers in the United States did not receive child support in 1989. One study has estimated the gap between total child support that should be paid nationwide and total child support paid as $34 billion in 1990.\22 Advocates and others also have made specific criticisms of CSE's program performance on its current caseload. Using data reported by states to OCSE, some have faulted CSE because only 19 percent of all custodial parents served by the CSE program in 1992 actually received support payments. These observers also point out that of the 15.2 million cases in the CSE program in fiscal year 1992, more than 6.7 million cases, or about 44 percent, were without orders to pay support. In addition, they cite the fact that states reported collecting only about one-fourth of the child support due for fiscal year 1992 and prior years. Others in the child support enforcement community, however, believe that CSE program performance has improved greatly in recent years in the face of growing caseloads, federal mandates, and increasingly complicated out-of-wedlock cases. Between 1980 and 1992, states reported that dollar collections steadily increased by over 400 percent, from about $1.5 billion to $8 billion. In addition, both AFDC recovery and the proportion of cases for which collections were achieved increased between 1980 and 1992 along with a rise in the caseload. The program's recovery of AFDC payments increased approximately 118 percent, from a national rate of 5.2 percent to 11.4 percent. Similarly, the proportion of cases for which some collections were received increased 36 percent, from a rate of 13.7 percent to 18.7 percent. In part, the disagreement between those who criticize the program and those who defend its accomplishments hinges on differing notions of what are realistic and achievable expectations for the program. Some expect the program to achieve support for more of the families now in the program and to reach out and help additional families. Others have more limited expectations for various reasons, including the ever-increasing number of out-of-wedlock births, the fact that some custodial parents choose not to pursue child support, and uncertainties about the ability of some noncustodial parents to pay support. The ever-increasing number of out-of-wedlock births requires CSE to establish paternity on more cases--a sometimes difficult and time-consuming task. In-hospital voluntary paternity acknowledgment is extending CSE's reach early and has been shown to be increasing the number of paternities established and the efficiency of establishment. However, this initiative depends on the cooperation of both parents and results to date suggest that much remains to be done. Research reported in 1991 from the state of Washington, a pioneer of this approach, showed that nearly 40 percent of unmarried supposed fathers were signing voluntary acknowledgments. Other state programs' report similar results. These results mean that more than half of unwed fathers will have to be pursued through other means if child support is to be collected. Complicating the question of what realistic expectations are for CSE is the fact that not all custodial parents needing child support are served by the CSE program, and some choose not to use its services. According to 1987 Bureau of the Census data, 162,000 teenaged mothers were not awarded or were awarded but did not receive regular child support payments. Nearly 45 percent said they did not receive payments because they did not pursue the matter or did not want child support. Similarly, results from state demonstration projects of review and modification of orders also illustrate the reluctance of some families to have CSE involved in their cases. Reasons that non-AFDC custodial parents gave for refusing to have their awards reviewed included (1) fear of jeopardizing current payments, (2) desire to avoid court proceedings, (3) belief the noncustodial parent is paying all he or she can afford, and (4) doubt that the review would result in payments. Finally, program efforts may not guarantee that cooperative noncustodial parents will be able to pay support. Our previous work has shown that 9 percent of noncustodial fathers aged 23 to 31 have no income to pay support.\23 Other research has revealed that 27 percent of the noncustodial fathers who did not pay child support in 1990 were unemployed for at least part of that year. In addition, fathers' ability to pay has been shown to influence their compliance with child support awards.\24 -------------------- \22 Elaine Sorensen, Noncustodial Fathers: Can They Afford to Pay More Child Support? (Washington, D.C.: The Urban Institute, Jan. 1994). \23 Child Support Assurance: Effect of Applying State Guidelines to Determine Fathers' Payments (GAO/HRD-93-26, Jan. 21, 1993). \24 Judi Bartfield and Daniel Meyer, Are There Really Deadbeat Dads? The Relationship Between Ability to Pay, Enforcement, and Compliance in Nonmarital Child Support Cases, DP#994-93 (Madison, Wis.: Institute for Research on Poverty, Mar. 1993). CSE AND FEDERAL REFORM INITIATIVES ---------------------------------------------------------- Chapter 1:7 The CSE program is at the forefront of congressional efforts to reform government operations in general and, more specifically, to reform welfare. In August 1993, GPRA became law and the nationwide CSE program was subsequently selected as a pilot for the implementation of GPRA. In addition, in late 1993 and 1994, several welfare reform proposals emerged from the Congress and the administration that included changes for the CSE program. CSE IS AMONG PILOTS FOR GOVERNMENT MANAGEMENT REFORM -------------------------------------------------------- Chapter 1:7.1 CSE is among the pilot projects for government management reform under GPRA. Unlike most other pilots, however, the CSE pilot encompasses the entire federal and state CSE program, not just federal operations. The Congress enacted GPRA to strengthen federal program management with goal-setting, performance measurement, and results-reporting requirements. GPRA is intended to accomplish several government reforms, including improved (1) federal program effectiveness and public accountability, (2) service delivery, and (3) congressional decision-making. To that end, GPRA requires all federal agencies to have strategic plans by September 30, 1997, and performance plans by fiscal year 1999. To initiate program performance reform and identify the best way to implement this new system across the federal government, GPRA requires a series of pilots. As a pilot, OCSE is required to have a fiscal year 1995 performance plan by the start of that fiscal year. An OCSE official said the plan was submitted to HHS' Assistant Secretary for Management and Budget on September 27, 1994. WELFARE REFORM PROPOSALS CALL FOR CHANGES IN CSE -------------------------------------------------------- Chapter 1:7.2 Major welfare reform proposals introduced in the 103rd Congress contained changes for the CSE program. Some proposals call for more aggressive and stringent paternity establishment procedures, central support award registries in states, and centralized state collection procedures, among other measures. In addition, some of the welfare reform proposals would add to OCSE's responsibilities by requiring it to establish and operate national databases for support orders and other information. SCOPE AND METHODOLOGY ---------------------------------------------------------- Chapter 1:8 In doing our work, we reviewed the history of the CSE program, focusing on the period from 1980 to 1992, the most recent year for which data were available at the time of our review. We interviewed current and former program staff in all parts of the CSE program--at OCSE, in HHS regional offices, and in state and local CSE programs--including caseworkers, local office managers, county attorneys, state CSE and social service program directors, HHS and state auditors, and others. We also talked with CSE professionals affiliated with private companies, universities, advocacy groups, and policy and social research organizations. We continually reviewed published literature on child support and attended meetings of professional associations concerned with CSE issues. We analyzed CSE program statistics as reported by states and published by OCSE and discussed these with officials. To identify barriers that hinder state program CSE efforts and how states are addressing the barriers, we performed case studies in eight states: Arizona, Iowa, Kentucky, Massachusetts, New York, Oregon, Texas, and Virginia. (See app. III.) We selected these states because they represented different CSE caseload sizes, both centralized and decentralized program structures, administrative and judicial case processing approaches, a variety of performance histories as reflected in data submitted for OCSE annual reports, and different regions of the country. In addition, we reviewed socioeconomic data, including rates of out-of-wedlock births, divorce, and unemployment for these states and others. The scope of our work did not include the issues surrounding interstate child support enforcement. To assess the potential implications of welfare reform on the CSE program, we reviewed several welfare reform proposals containing changes to CSE. (See app. IV.) We conducted our review from November 1992 to December 1994 in accordance with generally accepted government auditing standards. HHS provided written comments on a draft of this report. These comments are discussed in chapter 5 and included in appendix V. We also obtained comments on a draft of this report from selected officials in each of the states we studied and several child support enforcement experts. Their suggested revisions were incorporated, as appropriate, into this report. CSE PROGRAM LACKS ESSENTIAL MANAGEMENT TOOLS ============================================================ Chapter 2 The CSE program lacks essential management tools to help fulfill its mission. Missing are a well-articulated mission, programwide planning and goal-setting, and accurate, consistent data that can be used to measure progress toward goals. In addition, the program's incentive funding structure is weakly linked to program performance. As the need for CSE services has continued to grow because of rising divorce rates and numbers of out-of-wedlock births, an evolving history has given CSE a complex mission. Originally intended primarily to recover federal and state welfare costs from the child support payments owed to AFDC families, CSE today is required to serve AFDC and non-AFDC families equally. In addition, some services, such as enforcing medical support, do not result in child support collections. As a result, the program faces competing priorities. In the face of this expanded mission, CSE lacks a program plan and measurable program goals that could be used to set priorities. Only one national goal exists--paternity establishment--and that was mandated by the Congress. In addition, despite nearly 20 years of state reporting, program data are inadequate for decision-making because of unclear definitions from OCSE and inaccurate reporting by the states. Finally, CSE's funding structure has not been effective in achieving program improvements. The structure of incentive payments continues to reflect CSE's original, narrower mission of recovering welfare costs, and the link between incentive payments and state program performance is weak. CSE'S MISSION HAS BECOME COMPLEX ---------------------------------------------------------- Chapter 2:1 The CSE program's mission has become more complex over time as the federal government expanded program requirements but made few changes to critical program components, such as the funding structure. As a result, different stakeholders--federal, state, and local program officials; custodial and noncustodial parents; advocacy groups; and elected leaders--have differing expectations of the program. Initially, states and the federal government focused the program's mission on easing taxpayer burden through recovering AFDC payments. Over time, the program's mission has been broadened from primary concern with government economy to concern with the economic security of children in both AFDC and non-AFDC families. In addition, some program activities, such as establishing medical support enforcement, focus more on noncollection outcomes and may use program resources without generating increased child support collections in the short term or at all. Despite these changes to the mission, important program components, such as the performance indicators used in federal audits of state programs and the structure of federal incentive payments to states, continue to emphasize AFDC cost recovery and welfare savings. Lack of alignment among program expectations--recover AFDC but also serve all in need and provide services that do not result in child support collections--has left state programs in awkward positions with their state legislatures and executive leadership. As one state program director observed to us, "[M]ost states are caught in an identity crisis now . . .. [W]e sold our program when it [was] supposed to generate revenue to reduce state cost . . .. [T]he taxpayers were the clients who were reimbursed the welfare expense . . .. [W]e [are] moving now toward providing services to families, but the structure and the funding is [sic] not supportive. It's not clear . . .. I think a national agenda would be very desirable." Moreover, given the competing priorities in program mission and the differing pressures generated by program expectations and requirements, state program directors must decide how to spread their resources among required collection and noncollection activities. In addition, welfare reform may further expand CSE's mission. Some proposals broaden the program to include all child support cases in the country. CSE'S ORIGINAL MISSION OF RECOVERING WELFARE COSTS COMPLICATED BY EXPANDING REQUIREMENTS -------------------------------------------------------- Chapter 2:1.1 CSE's original emphasis on recovering welfare costs has diminished as expanding requirements created a much broader and more complicated program mission. In addition to welfare recovery, there is now more emphasis on activities that require a long-term view of the program's overall social as well as financial benefits for both AFDC and non-AFDC families, such as medical support and paternity establishment. When the national CSE program was established in 1975, it focused on recovering AFDC payments. The priority placed on recovering AFDC payments was supported by state laws and the funding structure. Many states had laws allowing courts to set current support orders equal to a family's public assistance grant to recover all of the AFDC payments. In addition, the incentive payment structure established in 1975 rewarded states only for recoveries of AFDC collections. Thus, the primary beneficiaries of the early program were taxpayers, not families and children. As noted previously, in 1984 and 1988, the Congress extended CSE's authority and services, thus expanding CSE's mission. While continuing a focus on welfare cost recovery, these amendments raised the priority of several other aspects of CSE. The 1984 legislation increased emphasis on welfare prevention by providing that states serve AFDC and non-AFDC families in the same way. Providing equivalent service to non-AFDC families, however, has significantly increased most states' CSE caseloads as described in chapter 1 and illustrated in figure 1.1. In some states, the non-AFDC caseload is greater than the AFDC caseload. In addition, 1984 amendments and subsequent legislation\25 expanded state responsibilities by mandating the inclusion of medical support in child support orders and the provision of services to families who only receive Medicaid. To avoid a potential reliance on Medicaid, these mandates require state programs to ensure that parents provide medical insurance for their children whenever they have a reasonable opportunity to do so. However, medical support enforcement requires an investment of staff and automated resources that does not produce child support collections. Amendments in 1984 further reduced the emphasis on welfare recovery by setting a $50 limit on the amount of child support that AFDC families could retain.\26 This change allowed AFDC families to keep some of the child support collected, while the government retained less. However, some state program officials in the states we visited commented that this provision is an administrative "nightmare" and it added greater complexity to the distribution of collections. The 1988 amendments continued to broaden and complicate the program's mission by requiring states to (1) meet performance standards for paternity establishment and (2) undertake periodic review of child support orders and states' guidelines governing them to keep orders up-to-date. Paternity establishment is an essential first step toward obtaining a child support award and collection. However, it can be time-consuming and may not result in collections for some time, if at all, depending on case complexity and collectibility.\27 Another potentially time-consuming and labor-intensive activity, periodic review and adjustment of child support orders, has also been shown to substantially increase collections, but for a small percentage of cases. In addition, states now must respond to requests for review and modification from both noncustodial and custodial parents. -------------------- \25 The Omnibus Budget Reconciliation Act of 1987 (P.L. 100-203, sec. 9141) amended program requirements to provide CSE services to families who receive Medicaid. \26 The 1975 legislation had set a $20 limit, but that provision expired in 1976. No limit was in effect thereafter until the 1984 amendments. \27 Case complexity and collectibility depend on such factors as whether the case is contested; whether location, blood tests, subpoenas, and other program efforts are required; and the noncustodial parent's ability to pay. AUDIT PERFORMANCE INDICATORS AND INCENTIVE PAYMENTS ARE AIMED AT RECOVERING WELFARE COSTS -------------------------------------------------------- Chapter 2:1.2 Despite the movement to broaden CSE's mission, important program components--audit performance indicators and incentive payments-- remain focused on AFDC cost recovery, not the broader goal of contributing to families' economic security. OCSE is required to audit every state program at least once every 3 years, and the audit performance indicators for state programs emphasize AFDC collections. In addition to determining regulatory compliance, the audits assess the performance of state CSE programs by three indicators, two of which focus on AFDC collections: (1) AFDC collections divided by AFDC payments (less payments to unemployed parents),\28 (2) non-AFDC collections divided by administrative costs,\29 and (3) AFDC collections divided by administrative costs. The incentive payment structure continues to give priority to AFDC collections despite the changes in 1984. While expanding program emphasis beyond recovery of welfare costs, the 1984 amendments changed the incentive structure to reward state efforts to make non-AFDC collections as well as AFDC collections. However, in this scheme, AFDC collection efficiency still has priority because non-AFDC collection incentive payments are capped at 115 percent of AFDC collections. That is, no matter how well a state program does in collecting non-AFDC support, its efforts may not be fully rewarded. In addition, the lack of incentive payments for medical support efforts have given these efforts a low priority. AFDC collection efforts, therefore, drive state performance. Furthermore, HHS' Office of the Inspector General found that some state and local officials are concerned that using collection efficiency for determining incentives tends to penalize states for incurring additional significant costs that are not expected to yield increased total collections, both AFDC and non-AFDC, during the same year, such as costs for in-hospital voluntary paternity establishment programs aimed at new unwed parents. -------------------- \28 States make AFDC payments to children in single-parent families and two parent-families, who are needy because of the unemployment of one of their parents. In the calculation for the first indicator, AFDC payments to two-parent families are subtracted from the total amount of AFDC benefits paid. \29 The administrative costs used in these calculations may not include laboratory costs incurred in determining paternity if a state chooses to exclude them. SOME STATE LEADERS STILL EMPHASIZE CSE'S RECOVERY OF WELFARE COSTS AND GENERATION OF ADDITIONAL STATE REVENUE -------------------------------------------------------- Chapter 2:1.3 Despite the program's shifting emphasis away from recovery of welfare costs, some state leadership--legislative and executive decisionmakers--still expect CSE to generate revenue, according to state CSE officials. In the eight states we visited, many program officials said that state leadership tended to focus more on the program's revenue potential than on the social goals of promoting families' economic security. Some state program directors told us that their states' interest in CSE as a revenue generator makes it difficult for them to achieve a balanced program. For example, a senior Oregon program official said that it is difficult to go to the legislature with a message balancing both social and fiscal goals. He explained that the only way to get more money from the legislature is to emphasize the program's money-making potential. If the program's management went to the legislature and talked about economic self-sufficiency for custodial families, he believed they would lose the budget battle. Overall, he concluded, dollar goals are this program's clearest mission and the easiest to defend. New York Office of Child Support Enforcement officials expressed similar sentiments about their state legislature's goals. These officials believed the legislature's primary focus is on collections. As a result, state CSE officials made a deliberate decision to link child support enforcement to revenue generation, rather than presenting it as a programmatic expenditure along with other social programs to obtain more resources for the program. To meet the fiscal expectations of their legislatures and executive leaders, some state programs set priorities and risk audit findings of deficiencies that could result in financial penalties. For example, OCSE's 1988 audit of Iowa's CSE program revealed medical support enforcement deficiencies, and program officials were not surprised. The CSE director acknowledged that, in response to legislative expectations that the program generate revenue, they had focused their limited staff and automated resources on revenue-generating program activities. As a result, they did not give medical support enforcement priority attention before the audit because of the staff time and automated resources it would have required. WELFARE REFORM MAY FURTHER EXPAND CSE'S MISSION -------------------------------------------------------- Chapter 2:1.4 Among other changes, some welfare reform proposals would expand the responsibilities of CSE to create a central registry containing all child support orders, even those not now enforced under the program. The states, through a central public agency, would be responsible for collection and distribution of the payments. All but one of the proposals for including all orders in the program have criteria that allow parents not to participate in the order registry and all would allow parents not to participate with the central state collection agency. These proposals, however, might further move the focus of the program's mission away from welfare recovery because a larger portion of previously unserved non-AFDC families would be included. PLANNING AND GOAL-SETTING EFFORTS FALL SHORT ---------------------------------------------------------- Chapter 2:2 In the face of multiple and sometimes competing expectations among stakeholders, OCSE's past planning and goal-setting efforts have failed to set program priorities or outcomes; they have focused on OCSE's activities rather than on the CSE program as a whole. OCSE has not had a planning process that focused on outcomes for (1) the program as a whole or (2) its role in leading the program. Furthermore, except for paternity establishment, national and annual program goals that states are expected to achieve have not been defined for the program. The paternity establishment goals were defined by the Congress when it legislated paternity establishment standards in 1988. While results-oriented planning has not been legislatively required of OCSE in the past, it is recognized as an important tool for effective program management, and GPRA now requires it.\30 In response to the GPRA mandate for all federal agencies to develop strategic plans by September 1997, OCSE has taken the initiative to develop a strategic plan early. In addition, OCSE is a GPRA implementation pilot agency and, as such, is also preparing an annual performance plan before one is required. While this new planning effort appears to be avoiding some past weaknesses by including stakeholders and establishing long-term goals for the national CSE program, several issues remain to be addressed as OCSE continues to build its planning discipline. -------------------- \30 Our previous work (and that of others) has identified the importance of strategic planning and outcome measurement to effective program management. See "Management Vision Needed" in Department of Education: Long-Standing Management Problems Hamper Reforms (GAO/HRD-93-47, May 28, 1993) and explanation of strategic management in Management of VA: Implementing Strategic Management Process Would Improve Service to Veterans (GAO/HRD-90-109, Aug. 31, 1990); Program Performance Measures: Federal Agency Collection and Use of Performance Data (GAO/GGD-92-65, May 4, 1992); U.S. Department of Agriculture: Revitalizing Structure, Systems, and Strategies (GAO/RCED-91-168, Sept. 3, 1991); and Social Security: Sustained Effort Needed to Improve Management and Prepare for the Future (GAO/HRD-94-22, Oct. 27, 1993). PLANNING EFFORTS HAVE NOT FOCUSED ON OUTCOMES -------------------------------------------------------- Chapter 2:2.1 Although expanding responsibilities established multiple priorities for the CSE program over the years, OCSE had not engaged in a planning approach that solicited stakeholders' ideas, identified long-term goals for implementing the program's mission, or focused on program outcomes. Instead, previous planning efforts have principally focused on OCSE, not the national program, with an emphasis on process tasks and activities instead of on the desired outcomes of these activities. Past OCSE planning efforts were abandoned or were focused primarily on implementing 1984 and 1988 amendments. An early effort in 1980, entitled "Strategic Plan for the 1980's," was developed by OCSE staff with input only from HHS regional staff, not other stakeholders, but this plan was dropped a year after it was produced. OCSE's more recent planning efforts, before its GPRA pilot status, focused on its own activities rather than on what it planned to accomplish with these activities. For example, OCSE's plan listed activities such as "award and monitor new technology transfer contract" and "conduct judicial training conference using judicial curriculum guide." However, the plan did not identify what outcomes were expected or desired from these activities. In addition, OCSE did not develop or identify the indicators for measuring the effectiveness of these activities in the plan, the tracking document, or the periodic progress reports. EXCEPT FOR PATERNITY ESTABLISHMENT, NATIONAL AND ANNUAL PROGRAM GOALS ARE MISSING -------------------------------------------------------- Chapter 2:2.2 Although OCSE has advised state programs to develop goals, it has not done so for the national program. In the face of OCSE failure to set national or annual goals, the Congress mandated performance standards for state paternity efforts\31 in 1988 and amended them in 1993.\32 These paternity establishment standards effectively set a national goal for all states to eventually attain and differing annual goals for states, depending on their past paternity establishment performance. The standards hold all states accountable for improving performance until they reach a maximum, rather than a minimum, level of performance. As shown in table 2.1, the paternity establishment standard requires state programs to continuously improve on their individual performance until at least 75 percent of the cases that need paternity established have it established. In addition, greater proportionate improvement is required from low performers. Table 2.1 Required State Paternity Establishment Percentages Based on Past Year's Performance (For CSE cases requiring paternity establishment) Percentage established Required annual increase ----------------------------- ----------------------------- Less than 40 6 percentage points 40 or greater but less than 5 percentage points 45 45 or greater but less than 4 percentage points 50 50 or greater but less than 3 percentage points 75 75 None ------------------------------------------------------------ Source: 42 U.S.C. 652(g). In the absence of federally established goals in other areas, some states have developed their own goals. The Texas legislature, for example, holds the CSE program accountable for meeting a series of annual output and outcome goals. Output goals are established for such things as the number of (1) paternity actions filed, (2) notices of delinquencies filed, and (3) income tax refund offsets submitted to the Internal Revenue Service.\33 In addition, the Texas CSE program has an efficiency goal for its collections-to-cost ratio. Outcome goals include the number of (1) paternities established, (2) orders established or modified, and (3) collections obtained. -------------------- \31 The Senate Finance Committee stated in its report on the 1984 CSE amendments that OCSE "has not fully implemented the requirements for the establishment of standards of effectiveness." Child Support Amendments, Report No. 98-387 (Apr. 9, 1984). \32 Because of technical problems with the modification, regulations have not yet been issued implementing the revised standards. \33 Since our visit to Texas in 1993, the CSE program has changed its output goals. It no longer measures paternity actions filed. OCSE IS BEGINNING TO BUILD RESULTS-ORIENTED PLANNING DISCIPLINE -------------------------------------------------------- Chapter 2:2.3 In response to GPRA's mandate, OCSE is beginning to build a planning discipline that includes stakeholders and defines expected results and the means of measuring achievement, not just processes and activities or the quantity of output. OCSE is developing a strategic plan intended to articulate the fundamental mission of the program and establish long-range performance goals to implement its mission. Furthermore, unlike past planning efforts that did not include program stakeholders, OCSE has assembled a core planning team of OCSE and HHS regional office officials and state program representatives. In addition, OCSE has engaged state CSE program directors in the planning process and held focus groups at a national CSE conference to obtain comments and suggestions on its draft strategic plan from advocates and CSE professionals. OCSE's August 10, 1994, draft strategic plan goes beyond what GPRA requires of a strategic plan. In addition to a program mission and two general goals focusing on paternity and order establishment, OCSE has defined numerous objectives and many quantitative performance indicators for each goal. In contrast to past planning efforts, the objectives and performance indicators address such key areas as paternity and order establishment and medical support enforcement as well as collections. Also, in terms of collections, an objective is "to increase the collection rate" and various performance indicators are listed that can be used to measure the accomplishment of this objective. Such an objective will help the program identify what progress can be made in getting support payments for a larger proportion of families rather than simply increasing the absolute dollars collected. As a GPRA pilot project, OCSE has also developed an annual performance plan for fiscal year 1995 before such a plan is required from all federal agencies. The annual performance plan is intended to provide a direct link between the program's longer-term goals and what state programs and OCSE's managers and staff will need to accomplish each year. According to GPRA and the Office of Management and Budget guidance, such plans should include several elements such as (1) one or more performance goals, (2) performance indicators that will be used in measuring the goals, and (3) a description of the means to be used to verify and validate measured values. According to an OCSE official, the performance plan was submitted to the Office of Management and Budget by September 30, 1994, but it was not available for our review. However, another OCSE official said that the performance plan is not so detailed as to contain outcome goals for OCSE itself. The same OCSE official said these matters may be addressed in an in-house OCSE operating plan. SOME ISSUES REMAIN TO BE ADDRESSED IN OCSE'S PLANNING EFFORTS -------------------------------------------------------- Chapter 2:2.4 As of September 1994, OCSE's new planning efforts under GPRA had avoided repeating some past planning weaknesses and omissions, but OCSE had yet to address several important issues including outcomes and effectiveness measures for its own activities. However, OCSE officials said they recognize that the planning process is ongoing and that the strategic plan is a "living document" to which they expect to make continuous revisions. OCSE's August 1994 draft strategic plan described some important activities OCSE will undertake to achieve some of the plan's objectives, but the plan does not define how OCSE will measure the results of these activities or the outcomes expected from services they currently provide to the states. Failing to associate outcomes with activities is a past weakness that OCSE has the opportunity to correct through its current planning efforts, although it is not required of the GPRA strategic plan. For example, the plan states OCSE will "conduct an in-depth assessment of OCSE regulations, services, standards, and programs to identify contradictory and confusing regulations, unnecessary or ineffective services, and standards that do not contribute to customer service." However, OCSE does not indicate how it will measure the accomplishments from this activity. In addition, OCSE has not defined outcomes for itself regarding the services it provides to the states such as operating the Federal Parent Locator Service and processing state requests for federal tax refund interception by the Internal Revenue Service.\34 OCSE has also not provided outcomes for future timeliness of regulations, responsiveness to states about audits and policy questions, and regional HHS office commitment and feedback. These are the types of issues that OCSE will need to address if it is to build a meaningful planning discipline. An OCSE official told us that OCSE's services and results will be addressed in subsequent OCSE operating plans. Other issues that have not yet been addressed by the planning process are the actions needed by OCSE or the Congress to align the existing funding structure and audit approach with the CSE program's broad mission. However, an OCSE official told us that changes to the funding structure and audit were contained in the Clinton administration's welfare reform proposal submitted to the 103rd Congress. -------------------- \34 Federal tax refunds may be intercepted by the Internal Revenue Service and sent to state CSE programs to satisfy unpaid child support obligations. BETTER DATA ARE NEEDED FOR ACCURATE PERFORMANCE MEASUREMENT ---------------------------------------------------------- Chapter 2:3 Despite nearly 20 years of annual performance reporting, program data remain seriously flawed because of inadequate reporting standards and limited state reporting capabilities. As we have reported in the past, the resulting lack of accurate and consistent data hinders meaningful planning, analysis, performance measurement, and management improvement.\35 OCSE is attempting to improve program data reporting, but its main effort has been on hold because of the transition between administrations in 1993 and pending welfare reforms that could alter reporting requirements. Given these circumstances, current data collection will not adequately support the performance reporting GPRA requires. -------------------- \35 See Child Support: Need to Improve Efforts to Identify Fathers and Obtain Support Orders (GAO/HRD-87-37, Apr. 30, 1987). STATES ARE REQUIRED TO REPORT PROGRAM DATA TO OCSE ANNUALLY -------------------------------------------------------- Chapter 2:3.1 OCSE is mandated to prepare an annual report to the Congress no later than 3 months after the end of each fiscal year using data reported by the states. This report is supposed to include, among other information, program costs and collections, OCSE costs and staffing, caseload size, and service data from the states. Since 1977, there have been 17 such annual reports with increasing amounts of information about the CSE program. OCSE HAS NOT DEVELOPED UNIVERSALLY UNDERSTOOD DATA REPORTING STANDARDS -------------------------------------------------------- Chapter 2:3.2 OCSE has not developed universally understood or applied definitions and procedures by which the individual state CSE programs can collect and report data. An unduplicated caseload count, essential for accurate national program performance measurement, for example, is difficult to obtain because of the lack of universally applied definitions and procedures. Within OCSE's definition of a "case," for example, differences occur in reporting because of different state interpretations. OCSE defines a CSE case as "every absent [noncustodial] parent who is now or may eventually be obligated under law for the support of one or more dependent children." Some jurisdictions establish separate child support cases for each child with a custodial mother for whom the father is not identified because their fathers may be different; however, not all jurisdictions do this. Duplicate case counting can also occur when an AFDC case becomes a non-AFDC case as the result of successful collection efforts. The family may be counted both as an AFDC case and as an AFDC "arrears-only" case because delinquent child support is still owed for the time the family was receiving AFDC. In addition, OCSE's description of when a case may be closed is open to interpretation. As a result, collection rate statistics as well as total caseload figures can be misleading since all states are not equally aggressive in closing cases. OCSE has defined the criteria for case closure, but it has not set a time frame within which a case must be closed. Consequently, states that keep cases open longer than others may report higher caseloads and lower collection rates than those that close cases as soon as they meet OCSE's case closure criteria. STATE DATA ARE NOT AVAILABLE, RELIABLE, OR CONSISTENT -------------------------------------------------------- Chapter 2:3.3 Data basic to meaningful assessment of CSE program performance at the state and local levels are not available from all states, reliable, or consistent. Information that is available in one of the states we visited but not reported to OCSE, for example, includes the proportion of cases needing different services, such as location of the noncustodial parent, enforcement, wage withholding, and collection monitoring. Without this information, OCSE and state programs cannot develop an accurate picture of caseload needs for resource planning or measure progress in serving families. For example, simply knowing the absolute number of paternities established in a given year does not give program managers or policy analysts a way to measure the need for such a service. Both OCSE and state program officials told us that statistical analyses using the state-reported data to determine effective practices among states would be highly flawed because of poor data quality and inconsistent reporting. The percentage of collections from wage withholding, for example, is significantly underreported by one state program we visited because of limitations in its payment processing system, according to program officials. While this information is reported to the Congress, the state program does not find it a key piece of information for managing its operations. OCSE's annual reports contain numerous footnotes submitted by states to explain year-to-year variances in their reported data; these footnotes reveal the nature and range of problems casting doubt on the reliability of program data. Explanations for data variances provided in state notes include such problems as the following: contamination of information, lax data entry by the local office, local failure to report data, previous counting methodology resulting in inflated statistics, and adjustments in reporting methods. Cost data are also questionable because of varied state practices. States use different methods to collect and compute expenditure data, including caseload distribution, cost allocation, time studies, and educated guesses. Accounts receivable reported by states differ according to their procedures for writing off debts, including statutes of limitations, judgment-setting practices, and public assistance debts laws. Furthermore, states cannot accurately break down administrative costs by service, such as establishing paternity, locating noncustodial parents, and distributing support collections. OCSE HAS TRIED TO IMPROVE DATA AND ESTABLISH PERFORMANCE INDICATORS -------------------------------------------------------- Chapter 2:3.4 Recognizing that data quality is crucial to better program management, OCSE has made efforts to improve data quality and establish outcome-based performance indicators; but its main effort was suspended in late 1993 until changes to CSE as part of welfare reform are known. OCSE's main effort in this area, Measuring Excellence Through Statistics (METS), was implemented specifically to improve the quality of state statistical and financial data submissions. It involved meetings with state CSE directors and ACF regional staff and soliciting comments from all state CSE directors. Active from February 1992 through late 1993, METS encompassed efforts to revise the forms and instructions states are required to use to report program data, develop ideas for focusing the audit process on outcomes, and develop results-oriented performance measures. As of April 1993, most reporting definitions and procedures had been completed, except for a definition for accounts receivable and a procedure for counting interstate cases that would protect against double counting. More recently, in September 1994, an OCSE official told us that the audit staff is trying to build on the METS effort by looking into how states interpret OCSE's data definitions as well as evaluating state data collection systems and the quality of state data. CURRENT DATA COLLECTION WILL NOT ADEQUATELY SUPPORT GPRA PERFORMANCE REPORTING -------------------------------------------------------- Chapter 2:3.5 OCSE's current data collection from the states will not be adequate to support GPRA's performance reporting requirements. In addition to strategic and annual performance planning, GPRA requires annual performance reporting starting in March 2000 on what was actually accomplished and what goals were not met. This is a critical element for measuring the success of the planning efforts because reporting provides essential feedback to managers, policymakers, and the public. Therefore, it is important that data collected regarding CSE results be accurate. Annual planning will be more difficult if the inaccuracies and inconsistencies of past reporting are allowed to continue. FUNDING STRUCTURE NEEDS REEXAMINATION ---------------------------------------------------------- Chapter 2:4 Although performance-based incentive payments and funding flexibility are consistent with GPRA's focus on encouraging results-oriented government,\36 several problems with CSE's funding structure, including the incentive system, warrant reexamination. In addition to not having good data, a major problem is the weak link between performance and incentives. Since states may use incentive payments to fund other programs, not all states reinvest incentive payments in the program; instead they deposit the payments in the states' general revenue funds to be used to fund other programs. Also, states that do reinvest the funds in CSE frequently use the payments to cover a variety of CSE operational costs, thus reducing state investment in CSE, rather than supplementing state investment. Welfare reform may change this practice because some proposals include new funding structures. -------------------- \36 The National Performance Review led by Vice President Gore also emphasized results-oriented government. INCENTIVE STRUCTURE WEAKLY LINKED TO PERFORMANCE -------------------------------------------------------- Chapter 2:4.1 Despite congressional expectations, the present incentive structure is weakly linked to performance. Since 1984, the incentive payments have been expected to "encourage states to develop and improve efficient, cost-effective child support programs which balance services for AFDC and non-AFDC cases, both interstate and intrastate."\37 But all states, regardless of their performance as defined by collection-to-cost ratio, receive some incentive payments. In addition, continued minimal performance will still earn a state incentive payments. In contrast to the paternity establishment standards, goals are not set for improvement in ratios either year to year or over the long term. In effect, the potential of this structure as a management tool to change state performance is limited. OCSE has recognized the shortcomings in the existing structure, but proposed changes have not yet been enacted. Under the present incentives structure, all states receive incentives of at least 6 percent of their AFDC and non-AFDC collections, regardless of their collections-to-cost ratio. States achieving ratios of between 1.4 and 2.8 can earn up to 10 percent of their collections depending on their achieved ratio. As the Congressional Research Service has observed, "under the current financing arrangement, states can run inefficient programs and still make a profit from the CSE program."\38 In practice, few states earn the maximum incentive payments. An analysis of the collection-to-cost ratios for AFDC collections for fiscal years 1986 through 1992 showed most states earned 6 to 7 percent incentive payments on AFDC collections. In addition, fewer than five states earned the maximum of 10 percent each year. See figure 2.1 for this distribution. Figure 2.1: Distribution of Child Support Enforcement Incentive Payments Based on AFDC Collection-to-Cost Ratio, Fiscal Years 1986-1992 (See figure in printed edition.) Source: OCSE annual reports. During the same period, fiscal years 1986 through 1992, several states earned non-AFDC incentives from 7.5 to 8.5 percent, and 6 to 18 states earned the maximum non-AFDC incentive. However, few of these states were able to take advantage of the full incentive earned because the dollar amount of the incentive payments is capped at an amount equal to 115 percent of the AFDC incentive payments. See figure 2.2 for this distribution. Figure 2.2: Distribution of Child Support Enforcement Incentive Payments Based on Non-AFDC Collection-to-Cost Ratio, Fiscal Years 1986-1992 (See figure in printed edition.) Source: OCSE annual reports. Note: States may not receive the full dollar amount reflected in the percentages because the dollar amounts are capped at 115 percent of the AFDC incentive payments. OCSE has recognized the limitations of the incentive payment structure and has made two separate legislative proposals to make the structure more performance-based. In 1991, OCSE proposed rewards for performance in such activities as paternity establishment, order establishment, and AFDC terminations resulting from child support collections. It also suggested reducing incentives for cost-effectiveness. In addition, the proposal would have required states to reinvest the incentives in CSE. Officials at OCSE, however, said that the proposal was not pushed because of the change in administrations. Currently, OCSE is proposing to eliminate incentive payments and replace the entire funding structure with a graduated matching formula that would recognize different levels of state program performance. Under this proposal, certain levels of performance in at least five key areas would be rewarded with a larger federal match: (1) paternity establishment, (2) support order establishment, (3) the portion of child support cases in which payments are received, (4) the amount of collections compared to support owed, and (5) cost-effectiveness. Proposed legislative language for this type of funding structure was incorporated in the administration's 1994 welfare reform bill.\39 -------------------- \37 Child Support Enforcement Amendments of 1983, Committee on Ways and Means, U.S. House of Representatives, H.R. Rep. No. 98-527, (Nov. 10, 1983), p. 41. \38 The Child Support Enforcement Program: Policy and Practice, U.S. Congress, House Committee on Ways and Means, Subcommittee on Human Resources (report prepared by the Congressional Research Service), 101st Cong., 1st sess., 1989, Committee Print WMCP 101-19. \39 The administration's proposal is contained in H.R. 4605 and S. 2224 introduced in the 103rd Congress. INCENTIVE FUNDS ARE SOMETIMES USED TO SUPPLANT RATHER THAN SUPPLEMENT OTHER STATE CSE FUNDING -------------------------------------------------------- Chapter 2:4.2 Although many states do use at least some portion of the incentive payments to fund their CSE programs, the funds are sometimes used as part of the state match for federal funds rather than supplementing the state CSE budget and further expanding the program. In 1991, HHS' Office of Inspector General reported that nine states had laws or regulations that specifically mandated how incentives must be used.\40 In those nine states, incentive payments were passed along to local CSE operations or credited directly to the CSE program. Of the remaining states, 36 said they directed all or some portion of incentive payments to CSE. Those states indicated that they used incentive payments for CSE activities, including ongoing CSE operations, improving CSE automated systems, piloting CSE demonstration projects, and funding additional CSE agency employees. Ten states had used incentive payments to fund special CSE projects such as (1) a support order review and modification demonstration, (2) contracting with a private collection agency to pursue very difficult cases, and (3) automation development and preparation of cases for data entry or conversion to new systems. Further work by the Office of Inspector General and a survey of states conducted by Delaware found that incentive monies were used to make up the states' share of the CSE programs' operating or administrative costs. In a follow-up audit of nine selected states in 1991, the Office of Inspector General found, "Federal CSE incentives generally were used for the CSE program, reducing or eliminating the need for state/local general funds to fulfill matching requirements."\41 In Arizona, for example, the audit revealed that 70 percent of the incentive payments was used to reduce state or local program costs. The Inspector General concluded, "[T]he primary impact of incentive payments is that state CSE programs are funded, sometimes exclusively, by the federal government through the federal cost share and incentives." In fiscal year 1992, approximately 84 percent of states' total CSE administrative costs were reimbursed by the federal government through matching funds and incentive payments. -------------------- \40 See Child Support Incentive Payments, HHS, Office of Inspector General, Report #OEI-05-91-00750 (June 1991). "States" refers to the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, and the territories of Guam and the Virgin Islands. \41 See The Use and Equity of Child Support Enforcement Incentive Payments at Selected States, HHS, Office of Inspector General, Report #A-09-91-00034 (Apr. 22, 1992). The nine states were Alabama, Arizona, California, Kentucky, Michigan, New Mexico, New York, Pennsylvania, and Washington. WELFARE REFORM PROPOSALS INCLUDE DIFFERENT FUNDING STRUCTURES -------------------------------------------------------- Chapter 2:4.3 Three of the eight welfare reform proposals we reviewed would eliminate the existing incentive payment system and allow increasing federal match rates for different levels of performance. Under one, for example, states could earn a 5-percent increase in the match rate for improved performance establishing paternities and a 10-percent increase for improved overall performance. All three proposals would reward paternity establishment performance. In addition, one of the three proposals would reward state compliance with program and staffing standards. The other two propose aligning the funding structure with overall performance in a number of key areas, not just cost-effectiveness. Overall performance would include performance in (1) the areas of support order establishment, (2) child support cases in which payments are collected, (3) amount of collections compared with support owed, and (4) cost-effectiveness, as defined by the Secretary of HHS. By changing the funding structure to one that uses a matching formula exclusively, these proposals may eliminate some of the complexity in the current arrangement. The only expenditures that would be matched with federal funds would be CSE program expenditures. States would no longer receive incentive funds that (1) may be reinvested in the CSE program or spent elsewhere, (2) must be shared with local jurisdictions, and (3) are complicated to forecast because of the effect of the cap on non-AFDC incentives. Under all three proposals, the maximum federal matching rate a state could achieve would be equivalent to 90 percent of the state's costs--if that state achieved the highest level of performance. However, it is difficult to predict if any of the three proposals would actually increase total federal costs. We do not know how many states, if any, will achieve maximum performance under two of the proposals because the performance goals are not yet defined. Under the third proposal, a state would have to establish paternity in at least 80 percent of the cases needing paternity establishment, meet the program standards in at least 80 percent of the cases, and comply with staffing requirements set by the Secretary of HHS. To date, very few states have been able to establish paternity in 80 percent of the cases needing it, according to data reported by the states. OCSE HAS NOT EFFECTIVELY FULFILLED ITS ROLE OF FOSTERING STATE CSE PROGRAM DEVELOPMENT ============================================================ Chapter 3 Although the Congress envisioned that OCSE would take an aggressive role in ensuring that states develop strong and effective CSE programs, OCSE has not done so. Specifically, the Congress tasked OCSE with providing leadership, technical assistance, and standards for the CSE program as well as monitoring state programs. But as the program evolved, OCSE's ability to direct, assist, and communicate with state CSE programs did not keep pace with growing requirements. An HHS-wide reorganization left OCSE with little or no control over HHS regional staff who deal with state CSE program staff. In addition, its financial resources were reduced, nearly eliminating funding for training and technical assistance contracts to the states. Subsequently, communications between OCSE, HHS regional staff, and state program officials deteriorated, and working relationships became strained. On several occasions, OCSE has finalized regulations after the statutory effective dates of the legislated provisions, creating uncertainties for state programs. Also, while OCSE audits--its principal tool for monitoring state programs--have spurred state action in some cases, these audits have focused more on compliance with administrative procedures than on program outcomes. The audits have provided limited insight into how state programs could achieve better program results, and have come too late to be useful to some states. OCSE recognizes it needs to revise its audit approach and is taking steps to do so. Program personnel in many of the states we visited wanted more training and technical assistance from OCSE; some of these officials also expressed a desire to be more involved as OCSE drafts regulations. OCSE STAFF, FINANCIAL, AND TECHNICAL ASSISTANCE RESOURCES REDUCED ---------------------------------------------------------- Chapter 3:1 Since the mid-1980s, OCSE's ability to fulfill its mission has been affected by an HHS-wide reorganization and workforce reductions. The number of staff directly accountable to OCSE and OCSE's financial resources decreased. OCSE's capacity to provide on-site technical assistance to states, through both contracts and OCSE and regional staff, has nearly been eliminated. All areas in OCSE, such as policy development, program operations, and audits, experienced staff reductions; but today, more OCSE staff remain devoted to audits than technical assistance. HHS REORGANIZATION AND RESOURCE REDUCTIONS -------------------------------------------------------- Chapter 3:1.1 As the result of a fiscal year 1986 HHS-wide reorganization, regional staff devoted to CSE activities are no longer directly accountable to OCSE but instead report to HHS regional administrators. In 1986, OCSE was combined with five other major HHS programs, including AFDC, into the Family Support Administration to emphasize the family. (In 1991, the Family Support Administration became the Administration for Children and Families [ACF].) In addition to regional staff, OCSE's budgetary and administrative functions and automated systems unit were transferred to other Family Support Administration units. This reorganization changed the composition of OCSE staff and the amount of resources OCSE had at its disposal. To illustrate, in fiscal year 1986, before the reorganization, OCSE controlled 342 full-time positions--95 in regional offices and 247 in OCSE's Washington, D.C., office and area audit offices located around the country. In fiscal year 1987, however, after losing control of CSE regional office staff, OCSE's authorized positions dropped to 151. In addition to the loss of direct accountability from regional, financial, and information systems staff, OCSE's staff devoted to technical assistance, training, policy, planning, evaluation, audit, and research and regulations\42 was also reduced. From fiscal year 1980 to 1992, OCSE staff assigned to these activities decreased from 181 to 151. See figure 3.1. From fiscal year 1987 to 1992, staffing of the OCSE division responsible for training and technical assistance declined 37 percent, from 43 to 27. Figure 3.1: Staff Directly Accountable to OCSE, Fiscal Years 1980-1992 (See figure in printed edition.) Note: Fiscal year 1982 numbers not available. Source: OCSE annual reports. OCSE financial resources were also reduced beginning in the mid-1980s. Along with the staff resources that were removed from OCSE's control after the 1986 reorganization, OCSE's financial resources were reduced by over 50 percent. Part of this reduction included about $2 million in contracts for technical assistance, publications development, data processing, and other services. From fiscal year 1986 to 1987, these contracts declined from $5.3 million to $3.2 million. Total financial resources under OCSE's direct control in fiscal year 1992 were $10.4 million compared with $21.3 million in fiscal year 1986 when the regions were under OCSE's control. See figure 3.2. Figure 3.2: OCSE Financial Resources, Fiscal Years 1980-1992 (See figure in printed edition.) Note: The drop in OCSE's resources from $21.3 million in FY 1986 to $9.8 million in FY 1987 reflects an HHS reorganization during FY 1986 in which OCSE lost direct control of regional CSE staff and headquarters financial and information systems staff. Source: OCSE annual reports. -------------------- \42 That is, excluding financial and information systems management, and regional office staff transferred to other parts of ACF during 1986. TECHNICAL ASSISTANCE AND TRAINING TO STATES GREATLY REDUCED -------------------------------------------------------- Chapter 3:1.2 Despite its mission to provide technical assistance to state CSE programs, OCSE's resources for both direct and contracted work of this kind have been reduced. Throughout the 1980s, OCSE funded several contracts for training and technical assistance, but today has none. Also during the 1980s, particularly the early 1980s, both OCSE headquarters and regional staff provided extensive, direct, on-site technical assistance to the states and conducted formal management studies of local and state programs. Joint management studies are no longer done and on-site technical assistance is minimal in most regions. In fiscal year 1992, fewer than a quarter of OCSE's staff were devoted to providing training and technical assistance. Of OCSE's fiscal year 1992 staff of 151, 86 people, or 57 percent, were devoted to conducting compliance audits. OCSE funds for contracted training and technical assistance have been eliminated. OCSE officials said that in the early 1980s the office had contracting authority for $3 million in training and technical assistance. By fiscal year 1990, however, this had been reduced to $1 million and by fiscal year 1993 to $300,000. OCSE officials said they had no funds for contracted training and technical assistance in fiscal year 1994. OCSE's total contracts for publications development, printing, data processing, and other services, as well as training and technical assistance, were reduced from $7.1 million in fiscal year 1985 to $2.1 million in fiscal year 1992. At least six technical assistance efforts funded through contracts in the 1980s are no longer funded: (1) transferring best practices; (2) training state, local, and federal personnel; (3) assisting states in drafting legislation; (4) providing orientation and training to state judges and judicial and quasi-judicial staff; (5) providing links with the legal community of court clerks, the private bar, and prosecutors; and (6) publishing educational articles. In addition, in the first half of the 1980s, when HHS regional offices were still directly in the chain of command to OCSE, they provided extensive on-site technical assistance to state programs; they no longer do. They conducted formal management studies of local and state programs, sponsored conferences for judges, and met with and testified before state legislative committees. Regional staff also made presentations before public interest groups; state and local officials, including legislators, court personnel, judges, attorneys, and child support administrators; and others; and participated in educational panels. They also helped write television and radio public service announcements, assisted in drafting state legislation, and appeared on television and radio talk shows. At the time of our review, most HHS regions were providing minimal on-site technical assistance to states. OCSE and regional office staff jointly conducted comprehensive management reviews of state programs and provided on-site technical assistance during the early 1980s. Today, OCSE staff's technical assistance efforts are limited primarily to participating in national conferences, distributing pamphlets and self-help guides, writing letters, making telephone calls, and posting information on electronic bulletin boards. In fiscal year 1981, OCSE's program operations division performed 14 management reviews; whereas in fiscal year 1993, OCSE officials said they no longer do management reviews. The OCSE division director responsible for technical assistance told us the small staff and travel budget devoted to technical assistance severely limits their ability to compile and disseminate best practices and provide direct on-site training and assistance to state programs. In February 1993, 25 OCSE staff were devoted to training and technical assistance. At the same time, the travel budget for these staff was limited to $10,000. The OCSE official said that staff responsible for technical assistance are able to meet with regional offices only once a year; they have monthly telephone conference calls in lieu of more frequent personal contact. HHS CURRENT ORGANIZATION FOR CSE HAS NOT BEEN THE MOST EFFECTIVE ---------------------------------------------------------- Chapter 3:2 The current organization of CSE responsibilities within HHS has not been the most effective for providing program leadership. OCSE's ability to communicate, direct, and assist state programs is limited. For example, OCSE has no direct control over HHS regional resources for CSE, has no process for feedback from the regions on CSE work, and receives no definite up-front commitment of regional office resources to CSE. Furthermore, state CSE programs must deal with several points of contact at the federal level. Under this organization, misunderstandings and miscommunications of program policy and requirements have occurred between states, HHS regional offices, and OCSE. REGIONAL OFFICE CSE RESOURCES NOT ACCOUNTABLE TO OCSE -------------------------------------------------------- Chapter 3:2.1 OCSE has no direct control over CSE regional resources and no formal process for feedback from the regions. Before the 1986 reorganization that created the Family Support Administration (which later became ACF), regional CSE staff were directly accountable to OCSE.\43 Under the current organization structure, all regional staff report to regional administrators for ACF. These administrators must balance resources among all ACF programs, including CSE, to meet mandated ACF program requirements. However, there is no process for getting firm, up-front regional office commitment of resources to the CSE program--OCSE can only set priorities for areas of state programs to be examined by regions. In addition, there is no formal process for regional office feedback to OCSE on the results of their expenditure of resources on CSE. ACF's director of regional operations staff officials told us that it was impossible to determine the dollars and staff time spent by the HHS regional offices for CSE state technical assistance, training, or program reviews because of the intermingling of funds that occurred after the 1986 reorganization. Also, OCSE officials did not know if certain regional efforts cited in ACF's strategic plan for performance by regions were accomplished; they said the regions had not reported on them. For example, the plan stated that regions were going to develop joint plans with states to increase AFDC recovery and the number of paying cases, but OCSE did not know what had been done. -------------------- \43 The April 1991 reorganization combined the Family Support Adminstration, HHS' Office of Human Development Services and the Maternal and Child Health block grant programs administered by the Public Health Service into ACF, where OCSE remains today. SEVERAL POINTS OF CONTACT FOR STATES -------------------------------------------------------- Chapter 3:2.2 HHS' organization of CSE responsibilities affects communication with state programs. Currently, states must deal with at least five different HHS units for their CSE programs as illustrated in figure 3.3. An HHS regional official said it is confusing for the states to be dealing sometimes directly with OCSE for some things and other times with the regions. The nature of these contacts is summarized in table 3.1. Figure 3.3: HHS Points of Contact for State CSE Programs (See figure in printed edition.) Note: Highlighted boxes show states' points of contact within HHS. Table 3.1 HHS Points of Contact for State CSE Programs HHS organizational unit Nature of contact -------------------- ------------------------------------ OCSE, Washington, Federal tax refund intercepts; D.C. checks of Internal Revenue Service information; federal parent locator service; requests for waivers of program requirements; and verification of social security numbers with the Social Security Administration HHS regional offices State plan submission and ap