Background of Survey:
Due to the changing climate in child support and a trend towards self-sufficiency rather than cost recovery, NCSEA and NCCSD combined forces in a sub-committee to take a look at trends in distribution and funding. We questioned states on the status of the implementation of PRWORA Distribution and various pass through and disregard policies; asked their opinion about pending legislation; and asked for their ideas on ways to fund the Child Support Enforcement Program. 28 states responded to the recent survey of child support directors.

Status of Implementation of PRWORA Distribution

Of the states responding, 21 states had completely implemented PRWORA distribution

Of remaining 7 states, 3 will complete distribution in June 2001, 1 in August, 2 in December and the last was unsure.

Status of Pass Through and Disregard Policies

• Since the federal government no longer participates in the disregard of current support for TANF clients, many states have discontinued a disregard policy.
  
• Of our 28 states,12 states no longer passthrough support to current TANF clients.
  
• Other states have continued the policy in some of the following manners:
  
• $50 passed through and disregarded
  
• all support passed through deducted $ for $ from grant
  
• all support passed through, $100 disregarded
  
• DEFRA payment or excess URA
  
• Gap payment
  
• Pass through the state share of the old escrow payment.
  
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Effect of mandatory passthrough for current TANF clients on funding for the Child Support Program

Child Support Program Funding/Program Operations

• No direct impact on child support program as funded from state general fund, however, could have impact on future requests for staff.
  
• Child Support program funding not effected, but effect on TANF funding
  
• Have to request additional general funds from the legislature with no assurance of receiving the funds. If the funds were not replaced, significant cutbacks in program operations would have to be made.
  
• IV-D program would compete with all other state agencies for those general revenue funds
  

TANF Funding

• Mandatory pass through for TANF recipients would effect retained collections that are used by some states to partially fund their CSE program.
  
• TANF state share as revenue to offset state fund appropriations; the loss of this revenue would have to be made up from other sources, i.e., state funds and this is not very likely.
  

Retained Collections

• Child Support recoveries would be reduced.
  

Obtain Additional Federal Funding

• Funding could be addressed in part by allowing the TANF program to determine how much of the child support should be considered in determining eligibility for TANF benefits.
  
• If states are given options for TANF passthrough, the federal share should be forgiven.
  

Automated Systems

• Systems changes for child support and TANF would be needed.
  
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Impact of federal law changes to require that IRS refunds be paid to the former TANF client prior to the state debt being satisfied

Effect on funding for the Child Support Program

• Reduce the amount of money retained by the state which is used to fund the CS program and would also result in significant drop in federal funding as this money is used to draw down the federal share.
  
• IRS refunds are our biggest source of TANF collections.
  
• No direct impact on the child support program; funded out of general fund, but could have impact on ability to obtain additional staff.
  
• Programmatic Impact
  
• Scaling back private contracts for in-Hospital paternity, procedure development on the Internet and pursuit of computer system enhancements.
  
• Decrease in our resources leading to staff reductions or delays in systems enhancements
  
• Severe cuts in program staffing and operations would be required to balance the budget. Performance would suffer; jeopardize incentive funding and perhaps even get to the point of being out of compliance with state plan
  

Ways to address the loss of funding

• The cap on incentives needs to be removed.
  
• Reduce TANF services to families who are receiving them today.
  
• Delay in recouping TANF related debt.
  
• State legislature would need to account for the loss of TANF funds from the state general fund to operate at the same level. Major cutbacks if funds not replaced out of general funds
  
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  Should the scheme by which child support payments are distributed be simplified or changed in some manner?
  
  
  

Reasons Not to Simplify

Self-Sufficiency versus Cost Recovery

• Strike balance between self-sufficiency and the funding needed to keep the Child Support program in operation.
  

Public Policy

• Since so many states have already completed the work required to implement PRWORA rules, it seems like the goal should be related to good public policy and program financing, not simplification for systems and staff.
  

Clients/Staff

• The majority of clients are only marginally affected by the various number of “buckets”
  
• At this date it would be more confusing for clients and staff, as well as a waste of resources to make any additional changes.
  
• Once we began paying family arrears first, customers had fewer questions about distribution.
  

Automated System

• The automated system when programmed is able to track the various types of support.
  

Funding

• Any simplification to distribution would mean a loss of retained collections. The simplification would require financing that, unless financed 100% with federal funding, would be difficult for the state to support.
  
• Distribution changes are contingent upon funding changes. Without additional funding from the federal government, states cannot afford to lose retained collections. Partial funding of the proposal would reduce the service level of the State.
  
• The federal program would have to finance the pass through of child support currently recovered by the State to ensure no loss of program services.
  
• The State could not support the pass through of recoverable support, plus pay the federal share of the recoverable amount to the federal government.
  
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Reasons and Ways to Simplify

Self-sufficiency

• Easier for clients to understand what happened to their money.
  
• Allow low income families to retain a greater portion of collections;
  
• Not penalize families for delaying going on welfare;
  

Encourage NCP to Pay

• Motivation for the NCP to pay to family on TANF as the family actually sees the money.
  

Administration/Resources

• States could have the option of budgeting collections as income in the TANF re-determination process if they could not afford to take the financial hit.
  
• Simplify the job of child support worker who currently spends a significant amount of time trying to understand current distribution rules so they can explain these rules to the parents.
  
• Allow child support agencies to focus more time and resources on collection.
  
• Simplifies the development of computer systems used to distribute child support collections
  

Methods of Simplification

• Pass through all child support to families, including any assigned arrears that may exist.
  
• Create only two categories of arrears and direct Federal Tax Refund Intercept money first to families in former assistance cases.
  
• Eliminate the PRWORA arrearage categories and implement three arrearage categories: 1) pre–assistance (arrearages that accrued before the family received TANF), 2) during assistance (arrearages that accrued during a TANF period); and 3) never–assistance (arrearages that accrued after the family stopped receiving TANF and arrearages the accrued if the family never received assistance).
  
• Distribution should go back to the Pre - TANF distribution. Option to distribute to the families first, if the individual was no longer receiving public assistance and the Federal Government would allow and not penalize either option.
  
• Pass through an amount up to the total monthly ordered support payments to families while on TANF and allow the TANF program to decided whether child support payments given to families should be counted as income in determining TANF benefits.
  
• Distribution should be simplified by giving states the option to pass through all child support collections to families with forgiveness of the federal share for those states that disregard at least 50 percent of collections passed through to current TANF families.
  

Changes mandatory or optional

• Interstate Impact
  
• People move from state to state, and having different distribution schemes in each place would be problematic, and confusing. A mandatory change would ensure uniformity between states
  
• Reconciliation of arrears (IRI)
  
• Favors the mandatory simplification of the current distribution rules only if enhanced funding will be available for automated system adaptations and only if a permanent greater federal match rate will be established for funding of the IV–D program
  
• Public Policy
  
• Concept of passing money through to families is sound public policy
  
• The practical argument for making the provisions mandatory is that it's administratively easier when everyone does things the same way.
  
• Easier to convince the legislature and department to make the change if mandatory.
  

Impact on Clients

• If it were optional, clients would be confused as to how money was to be disbursed.
  
• The TANF client would be adversely affected in terms of benefits received through other programs that count child support as income.
  
• Impact on TANF funding
  
• Custom-fit the policies regarding family income for TANF and former TANF families to how TANF and Child Support programs structured.
  

Flexibility

• Maximum flexibility so that they may deal with program funding issues.
  

Impact on CS funding and automations

• If no funding changes are made, the changes must be optional.
  
• Automated system adaptations and the funding scheme impacts are too great to be completed without the assurance of enhanced federal funding for system changes, and an increase in federal match rate for ongoing expenditures in support of the IV–D program.
  
• States face enormous challenges from current mandates within an environment of limited resources. Distribution changes impact automation and funding. The funding implications for child support programs are more obvious in states where retained collections are dedicated or semi-dedicated for child support purposes, but declines in retained collections would affect all states.
  

Recommended changes for funding to CS Program

FFP/Fees

• Increase federal match (75%?)
  
• Maintain FFP rate
  
• Continuation of 80% funding for systems past 10/1/01
  
• Enhanced/90% funding for systems changes
  
• FFP for bad checks and related costs
  
• Eliminate the requirement to report fees as program income if they are set at a minimal level (at or below 2% of collections, capped at $10 per month) and institute a fee structure applied to all Former TANF and Never TANF cases.
  
• FFP for functions performed for all non-IVD functions (such as all payments, fatherhood programs and long-term training programs)
  
• Enhanced FFP for any new or revised programs including medical that are mandated allowing states to implement these mandates without impacting their child support budget.
  
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• Incentives
  
• Remove cap on incentives
  
• Increase funding for incentives
  
• The new incentive formula should be structured in such a way as to make it easier for states to estimate their incentive payments.
  
• Change incentive formula to eliminate the “state fair share” idea. This creates a disincentive for states to improve their programs, because in some instances, states could improve their performance measures but not see a substantial increase in the incentive.
  
• Incentive structure to focus on all collections equally to recognize the changing caseload.
  
• Eliminate the financial aspect of competition for incentive dollars amongst the states
  
• Incentive money should receive FFP.
  
• Bonus or incentive system for families first.
  
• Reanalyze the computation of the “State's Collection Base” in consideration of the anticipated decrease in public assistance cases
  
• Incentive calculations need to revert to a simplified formula based on cost effectiveness:
  

Federal share of collections

• Remove requirement to reimburse fed share of pass through
  
• Replace the lost state revenue plus fund the increases:
  
• Federal government to share in the loss of retained collections used to fund the program.
  
• Pass through the federal share only allowing states to continue to retain their share
  

TANF

• States should be allowed to use TANF block grant monies to fund child support programs, as child support enforcement is a significant tool to allow families to become or remain self-sufficient.
  
• Credit for pass through towards TANF MOE
  
• Allow any additional child support arrears that are given to families to be paid for by TANF funds or to count toward TANF Maintenance of Effort (MOE).
  
• Increase in TANF funding
  
• Allow TANF dollars to be used to as the state match.
  
• Neither child support nor TANF funding be examined in a vacuum
  

Penalties

• Remove the Paternity penalty after 90%.
  
• When States are penalized for State Plan violations, that states be given an opportunity to take corrective action before the penalty is implemented
  

Other

• No recommend changes and supports the current funding scheme
  
• Count the amount of recovery of Medicaid Costs due to CS obtaining private health insurance as a collection for the purpose of the incentive calculation.
  
• Additional grants/funding for innovation for multi-state projects
  
• Targeted funding for specific program initiatives
  
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Recommended Programmatic Changes

Re-Visit Mission of Child Support Program and Simplification:

• Scale back scope of CS program to basics of locate, paternity, establishment, collection, enforcement
  

Medicaid Only

• We need to do something with regard to Medicaid Only cases. My suggestion would be to allow for a Medicaid case to be closed for non-cooperation, regardless of their Medicaid status. This would remove them from the incentive calculation, and would give us at least a chance at increasing our available funding through improved performance.
  

Joint State/Federal Efforts

• Joint State/Federal Efforts: Feds brokering a deal to allow for credit card payments w/o fees.
  

Barriers to Changing the Program
General Fund Appropriations/Budget

• The largest barrier is the need for additional general fund appropriations.
  
• Slow down of economy will hurt future support for state programs.
  
• Current budget shortfall is a serious barrier to state funding.
  
• Limited state budgets and the competition for these limited funds.
  

CS Funding Linked to Collections

• The major barrier to CS funding is linking child support funding to collections.
  
• The change in the IV-D caseload in the mandate of processing Non IV-D payments has
  
• increased demand on the Program yet we are receiving no increased funding as
  
• a result of lost revenue.
  
• The reduced TANF caseload equates to reduce cost recovery, making it impractical to continue to rely on TANF recoveries to fund the CS program.
  

State Legislator Reaction/Federal Regulations

• The main barrier to state funding of the child support program is simply that state legislatures are not accustomed to paying for this function – and they are being asked to pay for it just as the program is declining in cost effectiveness.
  
• There is a tension between the amount of federal regulation (control) and the request that states put more money into the program.
  

Incentive cap and non-timely disbursement of incentives

• The cap on the incentive pool.
  
• Non timely disbursement of incentives due to the Data Reliability Audits.
  
• Unstable and unpredictable prospective financial planning environment.
  

Competition with other social service programs

• No longer a cost recovery program – unable to compete with other social service programs.
  

Should Child Support Funding Changes be advocated in Congress as Part of the TANF Reauthorization Debate?

Tie to TANF Program or treat child support program separate from TANF

• No, The CS community needs to think carefully about tying the program to TANF since we are working to be recognized as more than a cost recovery program. The fed government should make a commitment to the child support program separate from the TANF program.
  

DO NOT Block grant child support program

• Supports CS funding changes being addressed but only if it excludes any discussions regarding block granting the program.
  

Family Economic Self Sufficiency

• Supports increased TANF funding to support options that states may choose to enhance family economic self-sufficiency, whether that be through pass-through and/or disregard, or some other income enhancing strategy such as promoting education and employment for low-income non-custodial parents; providing grant increases to all families (not just offering more dollars to those 30-40% of TANF families who get child support payments); allowing states to retain collections and reinvest that into strategies for family self-sufficiency.
  
• through of child support
  
• Pass-through of child support for post-TANF and TANF families and disregard for TANF families is one of many self-sufficiency strategies, and therefore should be made within the framework of the TANF reauthorization. Within the framework of TANF does not necessarily mean at the same exact time or within the same exact bill, but in a thoughtful and connected manner.
  

Cap on incentives for program performance

• Specific Child support changes should include the lifting of the cap on incentives for program performance to encourage states to invest in the child support program and focus on outcomes. 4 states
  
• Other than incentives, prefer that the funding structure and FFP rate be left alone. Even if it is not all that we would want, I can not imagine it would get better. If we mess with it, we may end up with a block grant.
  
• Yes. Increase FFP rate or increased incentives to well-performing states, but without a formula that puts states in competition - foster cooperation for mutual good, not competition.
  

Other Ideas

• Child support should not be viewed as a cost recovery program, but as an integral part of our strategy to promote self-sufficiency for families. By allowing more of the child support collected to go directly to the family, the proposed distribution rules would possibly provide extra monthly income that help families that no longer receive TANF benefits stay off welfare. While it is not possible to quantify potential dollar savings in TANF payments, it is logical to assume that more money for families would reduce the need for assistance.
  
• While due to the changing nature of the caseload, the obvious emphasis is now on self-sufficiency that does not negate our role, when appropriate, to save the tax payer money by ensuring that NCPs DO support their children. Whether it is called cost recovery, or cost avoidance, its importance should not be minimized. This role extends not only to financial support, but also to medical. While some say that medical assistance is “good welfare” and therefore we should not recover costs, if NCP has ability to pay towards medical, without jeopardizing financial support, he should do so. But medical support is a much broader arena in which a number of entities need to collaborate…CS cannot, and should not, take the whole burden, nor should we be the one being measured for ensuring that all children have medical coverage…we are just ONE of the players.
  
• It seems that the public policy, especially on pass-through is widely supported; however the fiscal implications will necessarily drive the decisions on how much the government can afford to provide. Simplification will belong to those who are willing to pay the price; and, the more a state can afford to pay, or is willing to pay, the more simplification will result. Not all states will be in the same place to make these very important and complex decisions, or be ready policy-wise and fiscally to implement them within the same timeframes. There must be room for flexibility in policy and in implementation on the pass-through issue, and that is something that should be included because it may enable forward movement for those states that want to move ahead and are willing and able to fund it, while preserving all states' ability to provide core CS services. I recognize the issue raised by the success of welfare reform that has resulted in a shrinking pool of retained collections funding. This is significant and should be accounted for; however, as economic conditions foretell growing caseloads for TANF, or higher unemployment rate, what will that mean for the CS program?
  
• Emphasize the need to de-link CS funding to collections. The current funding formula roots go back to the beginning of the program. Funding needs to be changed to account for the new mission of child support programs in achieving self-sufficiency.
  
• The child support mission has been expanded to include many elements that often conflict with the goal to obtain support for families immediately. For example: A medical insurance order that requires coverage and the cost is well beyond what a non-custodial parent can afford. In these situations, the immediate, positive, benefit of child support can be drastically reduced. The more requirements we take on, the more we dilute our resources and reduce our ability to give families an immediate financial benefit from collections. This dilution tends to create reactive legislation that often hurts the mission by adding more complexity. Let's give PRWORA a chance to work.
  
• We need to continue to argue from the interstate posture of this program. Child support will NOT be successful (and families will not be supported) if left to individual states to “do their own thing.” I think we need to embrace federal regulation (as tough as that sometimes is) and then argue federal funding from that position.
  
• Social policy and fiscal policy are not yet balanced. The drive to insure parental responsibility is ever increasing, while the funding needed to achieve these goals is lacking. Without sufficient financial resources, social policy success will be constrained.
  
• For States the loss of State Revenue and finding alternative sources for funding is the main issue. If we are to continue these issues need to be addressed.
  
• Clear and concise direction from Congress and federal government is required. States must know for sure if the child support program is a cost recovery program or a family income supplement. Clarity of purpose will help state program sell the strategy to state lawmakers and it will help us to better focus and mobilize our efforts and resources. The federal government must be flexible to allow state to experiment with different models of service delivery as a family income supplement program
  
• The role of CS programs in providing self-sufficiency income to families needs to be recognized and enhanced to better position the program for the future. The continuation of the bifurcation of treatment for TANF/former TANF and never-TANF families limits its current role and recognition as a family maintenance mechanism.
  
• Like any debt, the person owing support should be able to understand where his payments go. Similarly, the person receiving the money should be able to predict what she will receive if a payment is made. Simplify, simplify, simplify.
  
• Opposed to developing a medical support indicator at this time that will affect program incentive funding. Much more study and research must be done before this measure is put in place. Many recommendations of the medical support work group exceed normal child support operations and staff skills. With high caseloads, it is unreasonable to measure our success until these issues can be addressed in a satisfactory manner.