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Testimony on Child Support Information Systems Development by Davis Gray Ross
Deputy Director, Office of Child Support Enforcement
Administration for Children and Families
U.S. Department of Health and Human Services

Before the House Committee on Ways and Means, Subcommittee on Human Resources
September 10, 1997


Mr. Chairman and members of the Committee: Thank you for giving me the opportunity to testify today on the progress of child support information systems development and the Administration's recommendations for revamping the incentive system for State child support enforcement programs. Systems development and restructuring of the distribution of incentives are two key elements in strengthening the child support enforcement program as envisioned under last year's welfare reform bill.

The Administration and this Committee are in full agreement that child support is an essential part of welfare reform. It sends a message of responsibility to both parents and is a vital part of moving families toward work and self-sufficiency. Child support also can act as a safety net to help ensure that single parent families don't need assistance. Once families have attained independence, child support can keep them from falling back onto public assistance rolls. We are proud of this Administration's record on child support enforcement and anxiously await the positive results that the provisions of welfare reform will bring to further meet these critical goals.

President Clinton has made improving child support enforcement and increasing child support collections a top priority. Since taking office, President Clinton has cracked down on non-paying parents and strengthened child support enforcement, resulting in record child support collections. In FY 1996, $12 billion in child support was collected on behalf of the children of America.

This amount represented a 50 percent increase in child support collections since FY 1992. We estimate that in FY 1997 we will collect over $13 billion. Since FY 1992, the number of paying child support cases has increased by 36 percent. In addition, over one million paternities were established in FY 1996, including IV-D paternities and in-hospital paternity acknowledgments, almost doubling the number established in 1992. These accomplishments are impressive, but projections on the impact of the new provisions tell us they are only the beginning.

The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) included the tough child support measures President Clinton called for from the start, including license revocation and the development of a national new hire reporting system. Child support enforcement at the Federal and State levels is being transformed by these measures. Today, I will focus my testimony on two critical areas: development of a new incentive structure and state automated systems.

CHILD SUPPORT INFORMATION SYSTEMS

Statewide automated enforcement systems are critical to the success of the child support program. Computerized systems are the only means to provide both prompt and reliable processing of information. With a current national caseload of 20 million, we must move forward aggressively with new technologies if we are to keep up with the massive volume of information and transactions in every State.

Since the inception of the child support program, we've all recognized the importance of automation. By the mid-1980's all IV-D agencies had some level of automation serving families in their States. Now, newer technologies allow us to consider ever- more advanced applications for child support information systems. With the Family Support Act of 1988, Congress acknowledged the increased importance of automation to child support and required statewide automated systems in all States by October, 1995 and later extended that deadline to October, 1997.

  • Automation of state child support programs:

    1. allows a worker to initiate a case or automatically initiates a case for families receiving public assistance;

    2. begins locating absent parents and tracks automated searches of State databases such as the Department of Motor Vehicles, and refers hard-to-find cases to the Federal Parent Locator Service;

    3. tracks, monitors and reports on efforts to establish paternity and support orders;

    4. accepts and processes case updates and keeps the caseworker informed about due dates arid activities;

    5. monitors compliance with support orders and initiates enforcement actions such as wage withholding or tax refund offset;

    6. bills cases, processes Payments and makes disbursements; and

    7. maintains information for accounting, reporting and monitoring.

With required safeguards, states ensure that all of this information is secure and held in strictest privacy.

As of today, sixteen States have been certified as having computerized systems which are comprehensive and statewide. Many others are very close to completion. Meeting this certification requirement is crucial. While many States are using significant levels of certification, a comprehensive and statewide system is a necessary foundation for new provisions enacted last year to track parents across State lines and ensure they pay what they owe. It is much more efficient and economical to handle child support cases with such a system, especially in an environment where greater than 30 percent of the cases involve more than one state.

What happens if a State does not meet the October 1, 1997 statutory deadline for completing their system? Having a comprehensive child support system operating statewide is a State Plan requirement. Accordingly, by December 31, 1997 a State must certify to us through its State Plan that its system meets Family Support Act requirements. Under current law we will notify any State without such a system in place that we intend to disapprove its State plan and notify the State of its appeal rights. The penalty for failure to meet the statutory deadline is cessation of all Federal child support enforcement funding including the 66 percent of program operating costs. I should note that if a State is not operating a child support enforcement program under an approved State plan, its TANF funds will also be lost.

Our goal is to maintain State accountability, while working with States and providing the necessary assistance to ensure they have certified automated systems that will enable them to operate an effective child support enforcement program. All of us involved in developing these systems -- the Office of Child Support Enforcement, State child support agencies, the corporate community -- realize that completing these complex systems is not an easy task.

However, despite this complexity, many States have succeeded in designing and implementing these critical computer systems. Together we must continue our efforts to make automation a reality in all States.

Child Support Enforcement Incentive Funding

The Personal Responsibility and Work Opportunity Reconciliation Act required us, in consultation with State directors of IV-D programs, to recommend to Congress a new incentive funding system for the State child support enforcement programs based on program performance. These recommendations were contained in our Child Support Enforcement Incentive Funding Report to Congress which was submitted to this Committee on March 15, 1997. In my last appearance before you on March 20, 1997, I gave testimony on the content of this Report and our collaborative effort with the States to develop a new incentive funding system for the child support enforcement program.

The jointly-developed, revenue neutral incentive funding proposal is tough and would push States to improve performance. This formula will ensure good outcomes for families and has a broad consensus among the States and other child support enforcement stakeholders. Since the completion of the incentives report we have moved forward with the States on developing standard data definitions to improve child support performance reporting.

The current incentive funding system is based on maximizing child support collections relative to administrative costs. A minimum incentive payment is made to all States regardless of whether performance is good or poor. Currently, States can run inefficient programs and still receive large amounts in incentives. We all recognize that this does not create a significant incentive for the achievement of program goals.

To meet the Congressional charge to the Secretary of HHS to change the incentive funding system, we convened a workgroup of State and Federal partners. The workgroup developed a formula that rewards States for their performance in five critical areas: paternity establishment, support order establishment, collections on current support, collections on support past due (arrearages), and cost effectiveness. There is full consensus from State partners that these measures represent the appropriate focus for the program.

The workgroup also established performance standards for each of the measures. These standards would determine the amount of incentive a State would receive for a certain level of performance and reward States for maintaining high performance or making substantial gains in improving their performance. The standards are designed to provide tough but reachable targets for performance by rewarding States with higher incentives as they improve. The standards for the first four measures include a performance threshold. Under this plan, and unlike the current system, no incentive would be paid unless a State achieves a significant improvement in performance. For the final measure on cost effectiveness, if a State collects less than two dollars for every one dollar expended, no incentive would be paid.

Each State would earn five scores based on performance on each of the five measures. Workgroup members believed all the measures were important, but the first three measures -- paternity establishment, support order establishment and collections on current support -- were critical. Paternity establishment and support order establishment are prerequisites of collecting current support, which is essential for family self-sufficiency. Performance on the first three measures could earn a slightly higher incentive than the last two measures -- collections on arrearages and cost effectiveness.

The amount of potential incentive payments for each measure available to each State would be based upon a percentage of its own State child support collections -- its "collections base." The collection base includes collections in both Temporary Assistance to Needy Families (TANF) cases and former assistance cases. The collections base also includes collections made for families who were never on assistance. However, we recommend that collections in TANF cases and former TANF cases be weighted double, e.g., every dollar collected counts as $2. Counting collections for incentives purposes in this way accomplishes three objectives:

  • States with large former TANF caseloads would no longer be penalized by a cap as in the current formula. Many States are moving families off welfare and their success is not being recognized because of this cap under current law.

  • States would have a strong incentive to pursue action on TANF cases and former TANF cases. For these families, child support is critical to achieving independence and not returning to public assistance rolls.

  • Direct savings to State and Federal governments result from collecting child support in TANF cases. Costs of other public benefit programs such as Food Stamps and Medicaid could also be avoided by making collections in these cases.

Because this system would for the first time be performance- based, some States would naturally lose incentives by moving to the new system. To help States prepare for the new system, we recommend that the formula be phased in over two years. For FY 2000, a State would earn half of what it would have earned under the old formula and half of what it earns under the new calculation. In FY 2001, the new formula would be fully implemented. This would give States more time to adjust their programs, budget for any financial impact and improve their performance. Of course, the office of Child Support Enforcement would continue to work with States to assist them during this transition.

The workgroup was concerned that with the enactment of welfare reform, the child support enforcement program is likely to change dramatically in the next few years. Therefore, the report recommends that the child support program's results and effects of the new incentive system should be reviewed periodically. Limited discretion should be granted to the Secretary of Health and Human Services to make appropriate changes, in consultation with the States, based on the program's actual results and effects every three to five years.

The workgroup's report includes recommendations with respect to other aspects of program funding beyond incentives. We have endorsed the workgroup's recommendations with respect to the incentive formula itself, but have reserved judgment on other aspects of the recommendations because further work may be needed.

We now have the groundwork in place for a more results-oriented management of the National child support enforcement program. We strongly urge Congress to pass legislation on the recommended incentive funding system to allow the child support enforcement program to truly be driven by achieving results for families and children in need of support.

Conclusion

In conclusion, Mr. Chairman, let me restate:

Much progress has been made in developing statewide automated child support systems. Continuing automation efforts are critical to future success in providing support to America's children.

The recommended incentive funding formula, developed in consultation with the States, would reward performance and remain revenue neutral. It is tough but fair and will lead to positive results for families.

I want to thank the Committee for your work on behalf of America's children. Their future will be significantly improved because of the new collection tools and other reforms required of States by welfare reform.


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