Overview
The Big 8+1 Initiative, has identified the processing of interstate payments through state disbursement units (SDUs) and the reduction of undistributed collections (UDC) as areas of concern to be addressed through a technical assistance and technology transfer. The federal Office of Child Support Enforcement has contracted with PSI to coordinate the Task Order.
As one of the deliverables of the Task Order, PSI has prepared this report to summarize the major concerns, basic needs, and best practices of the Big 8+1 States related to reducing undistributed collections. This report also describes the general approach PSI proposes to develop and deliver technical assistance.
Systematic Approach for Reducing Undistributed Collections
In conversations with the states about their various approaches to reducing undistributed collections, PSI has identified the steps in a systematic approach to solving this problem.
- Divide the solution for reducing UDC into two objectives—reducing backlog and preventing accumulation.
- Develop the reporting capacity necessary to get a good picture of the categories, age, size, and trends of UDC balances.
- Explore strategies to reduce the backlog.
- Identify root causes for UDC and explore strategies to prevent accumulation.
- Consider whether due process and administrative review procedures are necessary.
- Involve field, IT, and policy staff in choosing options to be implemented.
- Consider involving representatives from advocacy groups in the decision making process.
- Test the impact of the options selected, preferably with a pilot project.
- Develop an implementation plan to coordinate the phases of the project.
- Develop a communication plan to prepare IV-D staff, customers and stakeholders of pending changes.
Discussion of States' Largest Undistributed Collection Categories and Their Best Practices
Typically, the largest undesirable categories of undistributed collections are payments with missing addresses for the custodial parents and overpayments waiting to be refunded.
Many States have developed strategies to reduce undistributed collections in these and other categories. Through initial discussions with the States, PSI has gathered a representative sampling of best practices for reducing UDC.
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>Enhanced Location Searches.
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>Outreach to Employers.
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>Utilize Special Project Teams.
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>Computer System Modifications.
For a complete list of the relative sizes of UDC categories and states' best practices, please see Appendix A.
Recommended Approach for Technical Assistance Delivery
Collectively, states have indicated that locating noncustodial parents and identifying payments that are initially unidentified are their top technical assistance priorities. PSI will work with the states seeking technical assistance to choose the strategies appropriate for their respective situations. Using on-site visits or telephone conference calls, PSI will then help each of these states to customize a systematic approach for designing, implementing, and carrying out a strategy to reduce its UDC balances.
For a summary of states' technical assistance priorities, please see Appendix A.
Conclusion
Through PSI's work with the Big 8+1 States, we have identified the systematic approach many states use to develop strategies that reduce undistributed collections. We have also identified the best practices that are the result of the strategies. Our next step in this process involves developing a menu of strategies that reduce undistributed collections. PSI will use this menu of strategies to help each state select best practices and customize them to its specific needs.
APPENDIX A
Reducing Undistributed Collections
OCSE Task Order 19: Technology Transfer to Big 8+1 States
State Feedback to Discussion Topic Organizer
March 20, 2001 – Revised April 9, 2001
1. Categories of Undistributed Collections and their Relative Sizes (As of 9/30/00)
| Undistributed Collection Category |
Florida |
Illinois |
Michigan |
New Jersey |
Ohio |
Pennsylvania |
Texas |
| A. |
Payment to custodial parent which is either “undisbursed” or returned to the state because of invalid address |
8.45% |
4.70% |
|
46% |
35% |
21% |
25.00% |
| B. |
Federal tax refund offset held during review period |
14.36% |
9.50% |
39.00% |
43% |
14% |
24% |
9.00% |
| C. |
State tax refund offset held during review period |
|
|
|
|
.08% |
|
|
| D. |
Non-tax refund collections held during review period |
|
|
|
|
2% |
23% |
4.00% |
| E. |
Refunds of overpayments to non-custodial parents |
9.95% |
56.00% |
|
.5% |
|
|
11.00% |
| F. |
Refunds of overpayments to employers and income providers |
|
|
|
|
|
|
|
| G. |
Refunds of overpayments to other political entities |
|
|
|
|
|
|
|
| H. |
Unidentified payments |
0.16% |
1.50% |
|
1% |
4% |
2% |
2.00% |
| I. |
Future child support payments |
1.69% |
|
|
|
|
18% |
33.00% |
| J. |
Child support payments processed and not yet certified for check issuance (“timing issue”) |
|
|
23.25% |
|
.04% |
|
|
| K. |
Child support payments processed but not yet transferred to TANF or IV-E Agency |
9.18% |
1.60% |
|
|
|
< 1% |
|
| L. |
Other: pass-through rejects originated by DPA/KIDS but disbursed by DHS |
|
0.90% |
|
|
|
|
|
| M. |
Other: Payments identified but not posted to case—includes future child support |
|
7.60% |
|
|
|
|
|
| N. |
Other: Support order delete/re-add |
|
|
|
|
|
|
11.00% |
| O. |
Other: Judicial order holds |
|
|
|
|
13% |
|
|
| P. |
Other: Emancipation-related holds |
|
|
|
|
8% |
|
|
| Q. |
Other: Miscellaneous disbursement holds, including holds from case reviews |
5.34% |
18.20% |
|
|
|
<1% |
4.00% |
| R. |
Other: No grant/insufficient TANF in URA balance |
40.21% |
|
|
|
|
|
|
| S. |
Other: Unprocessed payments |
|
|
|
|
|
|
1.00% |
| T. |
Other: Welfare undistributed |
|
|
|
|
|
10% |
|
| U. |
Other: Category not Specified |
10.65% |
|
37.75% |
.5% |
23.88% |
<1% |
|
- State Rankings of Technical Assistance Priorities (“5” Indicates Highest Priority)
| Issue |
California |
Florida |
Illinois |
New> Jersey |
New> York |
Ohio |
Pennsylvania |
Texas |
| A. |
Improving strategies to locate custodial parents who have child support payments waiting to be disbursed to them |
4 |
3 |
5 |
5 |
5 |
2 |
1 |
5 |
| B. |
Developing a method to identify in-state payments that were initially unidentified |
2 |
4 |
4 |
3 |
1 |
5 |
2 |
5 |
| C. |
Developing a method to identify interstate payments that were initially unidentified |
1 |
5 |
4 |
2 |
1 |
5 |
5 |
5 |
| D. |
Developing a procedure to quickly refund payments to non-custodial parents, employers, and political entities |
3 |
4 |
3 |
1 |
1 |
3 |
3 |
5 |
| E. |
Developing procedures to identify the root causes that lead to undistributed collections |
5 |
2 |
5 |
4 |
1 |
1 |
4 |
5 |
| F. |
Other: Obtaining resources at state and local levels to dedicate toward reducing undistributed collections |
|
|
|
|
5 |
|
|
|
| G. |
Other: Implementing program changes on the FLORIDA system to reduce occurrence of UDC and enhancements for processing |
|
5 |
|
|
|
|
|
|
3. Special Projects for Reducing Undistributed Collections
| State |
Description of Project |
| California |
Standardizing counties' financial reports, which include undistributed collections, to feed into the State's OCSE 34A Report. |
| Florida |
· |
Formed the Undistributed Collections Resolution Action Team (UCRAT) to identify and analyze the reasons collections become undistributed, including root causes in the system. · |
Developed action plans for manual reviews and processing for the three top categories: NCP refunds, disbursement holds, and insufficient unreimbursed public assistance balances. · |
Florida has proposed legislative changes to provide a method to determine payments as undistributable and unidentifiable and a method by which to process these payments. |
| Illinois |
N/A Liability Project – A federal audit prompted the State to conduct an analysis of UDC that accumulated before 12/31/97. Funds Remaining Project – The State has undertaken a project that identifies and prioritizes all UDC. |
| New Jersey |
New Jersey is currently in the process of purchasing licenses from Lexis-Nexis. This location tool may be used to locate custodial parents and thereby result in increased distribution of collections. |
| New York |
Between March and September 1999, we completed a project that used FPLS searches and Contractor staff performing credit bureau searches to obtain new addresses for custodial parents. |
| Texas |
IV-D managers have made the efficient distribution of child support payments a high priority. To reduce UDC, Texas developed a 3 step process: 1) determine the primary causes of UDC, 2) work the backlog of UDC, and 3) procedures and processes to minimize growth of UDC. |
4. Payment Processing Strategies and Technology for Reducing Undistributed Collections
| State |
Description of Strategy |
| California |
California does not have a central state system at this time. Payment processing is county-driven. We are aggressively pursuing more specific oversight to assure UDC is reduced. |
| Florida |
· |
Expect that EFT/EDI should help reduce undistributed collections when fully implemented by the states. · |
Provide new data sources for SDU contractor to consult. · |
Expand employer outreach function by contacting the employer soon after a receiving a payment with insufficient data. · |
SDU contractor is developing technology to allow direct payments over the Internet via credit card, debit card, and electronic check. · |
Consideration should be given to establishing uniform payment data requirements nationwide. |
| Illinois |
· |
Reduced UDC by increasing response time in updating the main child support computer system with data from the State Disbursement Unit, and vice versa. · |
Reduced the number of UDC payments by implementing the use of EFT/EDI. Law requires many employers to use EFT/EDI (complying with NACHA standards), and the UDC is reduced when using this method of payment. |
| New York |
· |
The SDU vendor is required to perform employer outreach to reduce the number of payments from employers received without sufficient information to properly credit the payments. · |
In addition, if we are unable to reach the employer within the required timeframe, the employer is mailed an Insufficient Information notice stressing the need to send complete and accurate information with future payments. The notice also mentions electronic submission alternatives. |
| Ohio |
· |
Ohio payment processing strategies include: 1) Scannable Billing Coupons, 2) Employer Billing Statements/Coupons, and 3) Remitter Database. · |
Ohio has been assisting large employers (Federal Institutions such as USPS and DFAS) in data clean-up effort before initiating EFT/EDI. Most payments remitted by EFT are able to be processed and posted to the proper case(s). |
| Pennsylvania |
· |
Increased the volume of EFT/EDI and other electronic payments. · |
Initiated the use of supplemental payment information requests whenever a payment that has a name and address but cannot be associated with a support case is received at SCDU. |
| Texas |
· |
Imaging technology is available for payment processing staff to quickly research and identify payments. · |
As employers submit the largest percentage of payments, develop an effective outreach plan that encourages them to place correct information on either checks or files. |
5. Computer System Strategies to Reduce Undistributed Collections
| State |
Description of Strategy |
| Florida |
Successful in implementing three 'quick' programming changes, one of which resulted in resolution of $1.4M of undistributed collections. |
| Illinois |
Reduced the amount of UDC by employing periodic synchronization of data between the SDU and the Clerk of the Circuit Court's computer systems. |
| New Jersey |
A monthly file is created from the database that allows workers at the SDU to access case data by docket number, address, ZIP code or employer. This has proven to be beneficial in identifying payments with no case numbers, with no SSN, or with illegible names. |
| New York |
We will be looking at the possibility of performing a match against new hire information as an internal source to identify a new address for custodial parents. |
| Ohio |
Ohio uses SETS as a primary source of research. Cases can be searched and identified by name, SSN, case number, or support order number. Ohio also relies on information obtained through remitter contact as well as county contact. Employers can also be searched by name to identify contact information. |
| Pennsylvania |
We have automated the release of payments on hold for missing address so that when an address is added for the member, all payments on address hold are immediately issued. |
| Texas |
· |
To support the field efforts for cases without addresses, the OAG is in the process of developing the Locate and Asset Search System On-Line (LASSO) program for locating custodial parents. · |
Modify income withholding process to automatically adjust the withholding amount when the NCP no longer owes arrears. |
6. Statutes and Administrative Policies that Reduce Undistributed Collections
| State |
Description of Statutes and Policies |
| Florida |
· |
Florida has also centralized activities in an effort to use off-line location tools to locate custodial parents and process collections to them. · |
Florida contracted with a vendor to develop an automated 'audit' program (CADET) to expedite complicated financial case reviews. |
| Illinois |
· |
New processes that enable us to locate more CPs/NCPs; e.g., new hire reporting and expanded state and federal case registry. · |
A statute that authorizes the transfer of abandoned child support payments to the State's Division of Unclaimed Property. · |
State statutes requiring EFT/EDI with business over 250 employees. |
| New Jersey |
Unidentified payments are now worked by the SDU rather than by the local probation divisions. This has yielded a significant reduction in the amount of unidentified payments. |
| Ohio |
Ohio requires two pieces of identifying information. If the payment only has one piece of posting information, the money is not processed but is returned to the remitter explaining the need to remit the payment with more information. |
| Texas |
· |
Under Texas law, if the custodial parent dies without a will, her property, including her child support arrears, would pass one-third to her surviving husband and two-thirds to her children – both the children included in the child support order in question, and any other children by different fathers. · |
Future support will be passed through to non-public assistance families instead of waiting until the month it is due. |