On this 5th day of June 2001, the National Council of Child Support Directors resolves that:
Congress should amend the federal legislation that imposes fiscal penalties on states that have failed to implement 1) a statewide child support automated system by October 1, 1997 and 2) PRWORA requirements for certification by October 1, 2000. The amendments should:
* Subtract a state's information technology expenditures in the year prior to the year in which a technology penalty is applied from the dollar amount on which the technology penalty is calculated,
* Allow for reinvestment by reducing the penalty amount by any additional state general funds invested in the program. Additional state funds would be the amount allocated to the program, which exceeds the state general funds allocated in the year prior to the year in which the penalty is applied; and
* Require the Secretary of the Department of Health and Human Services (HHS) to hold in abeyance any penalty assessed in a fiscal year if the Secretary determines a state to be in compliance with the approved corrective action plan. The penalty shall not be imposed if a state continues to make a good-faith effort to achieve compliance and to meet the terms of the corrective action plan.
In an effort to ensure improved performance Congress should also utilize a reinvestment strategy for all child support program penalties. Thus, Congress should require the Secretary to work in consultation with states to develop a plan by which all child support program penalties could be reinvested and to submit this plan to Congress.
Current federal law requires the Secretary of HHS to apply fiscal sanctions to those states that have failed to comply with specified performance standards, including those states that failed to implement a statewide automated system by October 1, 1997. Penalties are levied by withholding a percentage of the federal share of program administrative costs, including all or a portion of a state's information technology expenditures. The percentage amount increases for each year a state is out of compliance with the performance standard. The percentage ranges from 4 percent in the first year to 30 percent in the fifth and subsequent years. Federal Fiscal Year 2002 is the first year that some states move into the 30 percent penalty.
The penalty structure makes coming into compliance more difficult. Penalties are assessed as a percentage of the federal share of administrative costs. If a state increases spending to come into compliance with automation requirements, the base upon which penalties are assessed is increased, thereby discouraging program investment. Additionally, penalties force states to make procurement and technology decisions around avoiding federal penalties and not prudent technology goals and system objectives.
States facing penalties are making great efforts to meet child support information systems requirement, recognizing the importance of these tools for an effective child support program. However, the considerable size of the penalties, up to 30 percent of yearly spending, diverts resources that could be used to meet federal requirements and provide critical services to families and children. States should be allowed to reinvest child support penalties as they can in other human service programs, in order that their ability to achieve federal program objectives not be undermined.
NCCSD agrees that accountability for completing program or technology requirements is appropriate, but that accountability should not impede a state's ability to direct resources to the problem or to invest in other program initiatives. The ultimate goal is to ensure systems and policies that improve services to children and families, and achieve the Congressional objectives for the child support program.
The National Governor's Association (NGA), the National Conference of State Legislatures (NCSL) and the American Public Human Services Association (APHSA) have adopted policy positions supporting federal law change that would permit states to reinvest federal penalties in their state programs.