United States General Accounting Office GAO Report to the Chairman, Subcommittee on Human Resources, Committee on Ways and Means, House of Representatives June 1999 CHILD SUPPORT ENFORCEMENT Effects of Declining Welfare Caseloads Are Beginning to Emerge GAO/HEHS-99-105 United States GAO General Accounting Office Washington, D.C. 20548 Health, Education, and Human Services Division B-280957 June 30, 1999 The Honorable Nancy L. Johnson Chairman, Subcommittee on Human Resources Committee on Ways and Means House of Representatives Dear Madam Chair: Nearly two-thirds of the 13.7 million American women and men raising children alone did not receive any child support in 1995. Many of these custodial parents head poor families that receive cash assistance under the Temporary Assistance for Needy Families (TANF) program, while others care for families not currently receiving cash assistance but who are at risk of becoming impoverished. The Child Support Enforcement (CSE) program, a federal-state partnership, was designed to • promote parental responsibility for children in welfare and nonwelfare families, • help the federal government and states recover their welfare payments to needy families by allowing these entities to retain the child support payments they collect from noncustodial parents who owe support, and • keep families currently not on welfare from becoming welfare recipients by helping them collect child support payments owed to them. As a condition of receiving federal TANF funds, states are required to operate CSE programs that are approved by the federal Office of Child Support Enforcement (OCSE) within the Department of Health and Human Services (HHS). TANF families are required to participate in the CSE program. Families that do not receive TANF may request CSE services, for which they are usually charged a nominal fee. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193) changed welfare law to help families become less dependent on welfare and move them toward self-sufficiency, in part, by improving child support collections and limiting to 5 years the amount of time families can receive welfare payments. For example, the law required that the federal government and states create directories of new employee hires to more effectively locate parents who owe child support. It also required that families be given priority in receiving past due child support payments once they leave welfare. In addition, the law required HHS to revise its performance incentive system. As a result, states are now Page 1 GAO/HEHS-99-105 Child Support Financing B-280957 required to reinvest the incentive payments in their CSE programs. Once families leave the welfare rolls, they can continue to receive the CSE services they need. Such services include locating absent parents, establishing paternity and child support orders, and collecting payments owed. In fiscal year 1997, child support collections nationwide for welfare and nonwelfare families totaled $2.8 billion and $10.5 billion, respectively. However, since 1994, an increasing number of states have begun to pay out more to operate their CSE programs than they receive back in recovered welfare payments and incentive payments.1 Several states attribute this change to the decline in welfare caseloads, which began in 1994 and has accelerated since the passage of the welfare reform law. This welfare caseload decline has meant fewer CSE welfare cases where the federal government and the states keep the recovered collections (generally referred to as retained collections). At the same time, CSE nonwelfare caseloads and collections, which are paid directly to families, have increased. Given the overall decline in CSE welfare caseloads, the steady growth in CSE nonwelfare caseloads, and the welfare reform changes affecting the federal government’s and states’ financing of the program, you asked us to address the following questions: • How have CSE welfare collections changed since 1994? • What have been the net savings/cost experiences of state and federal CSE programs? • For those states that have experienced declines in CSE welfare collections, how have these declines affected their state’s CSE program funding? • What are the future implications of caseload declines and welfare reform changes for the CSE program? To answer these questions, we analyzed annual report data for fiscal years 1990 through 1996 and preliminary data for fiscal years 1997 and 1998 from OCSE.2, 3 We also interviewed CSE officials in the seven states that have experienced declines in their retained collections—the portion of welfare 1 This is referred to as net cost. Net savings result when a state pays out less to operate its CSE program than it receives in recovered welfare payments and incentive payments. The CSE program may produce other savings, such as cost avoidance in welfare, Food Stamps, and Medicaid. See Laura Wheaton and Elaine Sorensen, “Reducing Welfare Costs and Dependency: How Much Bang for the Child Support Buck?” Georgetown Public Policy Review (Fall 1998). These estimated savings are not included in OCSE calculations of CSE net savings or costs. 2 The preliminary fiscal year 1998 data are not yet complete. Some fiscal year 1998 collections have not yet been distributed among the federal government, the states, and families. 3 Our analysis covered the 50 states, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands, herein referred to as states. Page 2 GAO/HEHS-99-105 Child Support Financing B-280957 collections not given to families or to the federal government—between fiscal years 1995 and 1997. We conducted our work between July 1998 and April 1999 in accordance with generally accepted government auditing standards. Despite significant declines in TANF caseloads and CSE welfare caseloads, Results in Brief total state CSE welfare collections nationwide increased 11 percent between fiscal years 1994 and 1997. While declines in CSE welfare cases might have been expected to lower CSE welfare collections for the states and federal government, the CSE program’s ability to intercept more money from delinquent noncustodial parents’ income tax refunds more than offset the effects of the caseload declines. However, collections decreased for some individual states. Seven states (Indiana, Maryland, Missouri, South Carolina, Tennessee, Vermont, and Wisconsin) experienced a drop in the amount of CSE collections that they kept in fiscal year 1997 relative to the amount that they retained in fiscal year 1995. During the period from fiscal year 1994 to fiscal year 1997, a declining majority of states realized net savings from the CSE program while the federal government experienced net costs. In fiscal year 1997, the states collectively spent about $1.1 billion to operate their CSE programs and retained about $1.6 billion in recovered welfare payments and incentive payments. The federal government, on the other hand, spent about $2.3 billion to fund the CSE program and retained about $1 billion in recovered welfare benefits. The differing results for the states and federal government are not surprising since the federal government pays two-thirds of the program’s administrative costs and also awards the states incentive payments from its share of CSE welfare collections. Between fiscal years 1994 and 1997, the numbers of states experiencing net costs increased from 12 to 22 because of increased administrative costs, reduced CSE welfare collections, and declining incentive payments. While declining caseloads have resulted in lower retained collections in seven states, CSE officials in those states said the decline did not negatively affect their CSE program funding. The way a state chooses to finance its CSE program determines its sensitivity to fluctuations in CSE welfare collections. For example, if a state pays for its program from its general fund, its program funding may not be affected by a reduction in retained collections. If, however, a program is at least partially funded from the amounts collected and retained, a reduction in such amounts could have a Page 3 GAO/HEHS-99-105 Child Support Financing B-280957 considerable effect on program funding. Only one of the seven states used retained collections as a funding source. The effects of TANF caseload declines and welfare reform changes are just beginning to emerge. Future caseload declines—evidence of a significant reduction in families’ dependence on government cash assistance—are likely to reduce retained state and federal CSE welfare collections. At the same time, nonwelfare caseloads and costs are likely to increase. The welfare reform provision that gives families a greater priority in receiving past due payments will also reduce the amount of CSE welfare collections retained by the states and federal government. The implementation of a new incentive payment program will result in less stable program revenues for the states. The welfare reform law, however, also required the federal government and the states to create powerful new tools to enforce the collection of child support, such as federal and state directories of CSE orders and new employee hire information, that may ameliorate the expected declines in CSE welfare collections, yet increase states’ administrative costs. In addition, some states are considering expanding their service fees for CSE nonwelfare cases; such fees could serve to defray federal and state CSE costs. In this connection, we recommended in 1992 that the Congress require states to charge a minimum percentage service fee for each successful CSE nonwelfare collection. The Congress has considered this option, but to date no action has been taken to require such fees. We continue to believe that this recommendation has merit. The Congress created the federal CSE program as title IV-D of the Social Background Security Act in 1975. OCSE in HHS is responsible for providing leadership, technical assistance, and standards for state CSE programs. States or local offices, under state supervision, deliver CSE services to families. The federal government and the states share administrative costs to operate the program at the rate of 66 and 34 percent, respectively, and also share any recovered costs and fees at the same rate. In fiscal year 1997, administrative costs for the program were $3.4 billion and welfare and nonwelfare collections totaled almost $13.4 billion. The federal and state governments share CSE collections from welfare cases by the same percentage as they funded welfare benefits in fiscal year 1996. The federal government’s share is inversely related to state per capita income and ranges from 50 percent in high per capita income states, such as California, to about 80 percent in low per capita income states, Page 4 GAO/HEHS-99-105 Child Support Financing B-280957 such as Mississippi. The collections that the federal and state CSE programs keep are referred to as retained collections. Currently, the federal government awards incentive payments to states solely on the basis of each state’s cost efficiency in collecting child support in both welfare and nonwelfare cases.4 Incentive payments are paid out of the federal government’s share of retained collections. States can earn incentive payments ranging from 6 to 10 percent of both welfare and nonwelfare collections, depending upon their cost efficiency.5 The welfare reform law required HHS and the states to develop a new incentive program. The Child Support Performance and Incentive Act of 1998 (P.L. 105-200) amended the law to provide that states’ incentive payments be based upon five performance-based outcome measures.6 Starting in fiscal year 2000, this new incentive plan will be phased in and will include a fixed pool of incentive payments for which all states must compete.7 The CSE program unlike most other federal social programs generates revenue for its federal and state partners. Thus, the program is often discussed in terms of savings and costs realized. The states’ and federal government’s net financial savings or costs from the CSE program are determined by their respective share of (1) retained CSE welfare collections, (2) performance incentives paid or received for both welfare and nonwelfare cases, and (3) administrative costs incurred, as illustrated in figure 1. 4 Cost efficiency is determined by dividing welfare and nonwelfare collections each by total administrative costs. 5 A state’s total nonwelfare incentive payment, however, is limited to 115 percent of its welfare incentive payment. All but two states reached the 115-percent cap on nonwelfare incentive payments in fiscal year 1994. Therefore, reductions in welfare collections affect both the welfare and nonwelfare incentive payments. 6 GAO recommended that the incentive payment system be aligned with performance-based outcome goals for collection and noncollection results. See Child Support Enforcement: Families Could Benefit From Stronger Enforcement Program (GAO/HEHS-95-24, Dec. 27, 1994) and Child Support Enforcement: Reorienting Management Toward Achieving Better Program Results (GAO/HEHS/GGD-97-14, Oct. 25, 1996). 7 The five performance measures are the paternity establishment percentage, the percentage of cases with support orders, the collection rate for current support, the percentage of cases with collections on arrears, and the total dollars collected per dollar of expenditures. Page 5 GAO/HEHS-99-105 Child Support Financing B-280957 Figure 1: State and Federal CSE Savings/Cost Formula Federal 66% of Net Child Support Savings or Costs = Share of Retained Collections – Incentive Payments to States – Administrative Costs State Incentive Payments 34% of Net Child Support Savings or Costs = Share of Retained Collections + Received From – Administrative Federal Government Costs The welfare reform law made significant changes in the nation’s welfare policy and the CSE program. TANF represents a significant departure from the Aid to Families With Dependent Children (AFDC) program, introducing a 5-year limit on federal cash assistance to ensure that such assistance is temporary for most recipients.8, 9 AFDC and its successor program, TANF, have experienced a 45-percent decline in the numbers of families receiving cash assistance since the AFDC program reached its all-time high in 1994. As illustrated in figure 2, the total numbers of families began to decline in 1995, and the decline accelerated in 1996 when the welfare reform law was enacted. Caseload declines between 1994 and 1998 ranged from about 20 percent in Hawaii to a high of almost 90 percent in Wisconsin and Wyoming (see app. I). 8 Before the welfare reform law passed in 1996, 14 states were granted waivers under section 1115 of the Social Security Act, allowing them to experiment with assistance time limits ranging from 18 months to 5 years. While state policies regarding exemptions and extensions varied, these state waivers were the first efforts to make assistance temporary for a specified period of time. 9 Federal TANF assistance to a family including an adult is limited to 60 months (whether or not they are consecutive). However, some states, such as Georgia and Utah, adopted shorter time limits as part of their TANF programs. For families reaching time limits, states may continue to provide aid with state funds. Page 6 GAO/HEHS-99-105 Child Support Financing B-280957 Figure 2: Families Receiving AFDC/TANF, 1936-98 Families in Millions 6 5 4 3 2 1 0 36 56 66 76 86 46 19 6 98 9 19 19 19 19 19 19 19 Year Note: Data for 1998 are as of December 1998. Source: HHS Administration for Children and Families. Because almost every welfare case results in one or more CSE welfare cases, this decline in AFDC/TANF families resulted in a decline in CSE welfare cases and a corresponding increase in CSE nonwelfare cases in most states (see app. II).10 As figure 3 shows, CSE welfare cases began to decline from 10 Clients may request a good cause exemption from cooperating with the CSE program if their cooperation could result in physical or emotional harm to the child or the parent. Federal regulations require states to automatically open a CSE nonwelfare case for a former welfare recipient unless that person specifically declines continued services. Page 7 GAO/HEHS-99-105 Child Support Financing B-280957 their all-time highs in fiscal year 1994 while CSE nonwelfare cases continued to rise.11 Figure 3: Welfare and Nonwelfare CSE Caseloads, FY 1994-97 Caseloads in Millions 10 9 8 7 6 5 8,189,569 9,947,678 7,879,725 7,985,983 6,461,723 7,379,629 9,347,875 8,783,238 4 3 2 1 0 1994 1995 1996 1997 Year Welfare Nonwelfare Note: Preliminary data from OCSE indicate that this trend continued through fiscal year 1998, with welfare and nonwelfare caseloads of about 5.7 million and 11 million, respectively. Source: OCSE data. 11 State administrative actions may also affect caseload declines. For example, Arizona, Georgia, Illinois, New Mexico, and Puerto Rico reported an increase in the number of CSE case closures in fiscal year 1995 because of either data clean-up efforts that were necessary for data conversion into new computer systems or revised criteria for case closure. Page 8 GAO/HEHS-99-105 Child Support Financing B-280957 States have experienced a sharp decline in the numbers of TANF families Welfare Child Support and CSE welfare cases, yet their total CSE welfare collections generally Collections Have increased between fiscal years 1994 and 1997. While declining CSE welfare Risen as TANF cases would be expected to result in lower CSE welfare collections, total CSE welfare collections rose 11 percent largely because CSE programs have Caseloads Have been able to intercept more money from the income tax refunds of Declined delinquent noncustodial parents. The federal and state shares of collections rose even higher because of a welfare law change that allows them to retain a greater share of CSE welfare collections. In designing the 1996 welfare reform legislation, the Congress recognized that one or more of its changes could adversely affect the amount of retained state CSE collections. Therefore, the welfare reform law contained a provision to hold states harmless for declines in their CSE welfare collections. That is, it guaranteed that starting in fiscal year 1997, states would receive a supplemental payment, commonly referred to as a hold harmless payment, if their retained collections dropped below their fiscal year 1995 levels. In fiscal year 1997, seven states were not able to maintain their retained CSE welfare collections at 1995 levels and thus were eligible to receive hold harmless payments from the federal government. Total Welfare Child Between fiscal years 1994 and 1997, total CSE welfare collections increased Support Collections 11 percent. As shown in table 1, CSE welfare collections peaked in fiscal Generally Increased year 1996 and declined slightly in fiscal year 1997.12 At the same time, the portion of collections retained by the states and federal government Between Fiscal Years 1994 increased by 30 percent and 37 percent, respectively, as a result of a and 1997 welfare reform provision that allows them to retain a greater share of CSE welfare collections that were formerly paid to welfare families. 12 Between fiscal years 1990 and 1993, CSE welfare collections increased 38 percent. This suggests a slowing in the rate of CSE welfare collection growth. Page 9 GAO/HEHS-99-105 Child Support Financing B-280957 Table 1: State and Federal Shares of Total CSE Welfare Collections, FY Dollars in thousands 1994-97 Fiscal year 1994 1995 1996 1997 Total welfare CSE collections $2,549,723 $2,689,392 $2,855,066 $2,842,681a Federal share 762,341 821,551 888,258 1,044,288 State share 890,717 938,865 1,013,666 1,158,831 Incentive payments to states 407,242 399,919 409,142 411,527 Payments to families 457,125 474,428 480,406 157,033b Medical support payments 32,299 54,629 63,570 70,683 a Preliminary data from OCSE for fiscal year 1998 indicate that welfare collections declined to about $2.6 billion. b Payments to families that are no longer required since the passage of the welfare reform law are not included. Source: OCSE data. As the numbers of TANF cases and CSE welfare caseloads have declined, there has been a corresponding increase in the number of CSE nonwelfare cases in which collections go directly to families. From fiscal year 1994 to 1997, CSE nonwelfare caseloads increased 21 percent (see fig. 3), and CSE nonwelfare collections increased 44 percent as families have transitioned from the welfare rolls (see fig. 4).13 13 Preliminary data from OCSE indicate a higher nonwelfare caseload increase of 34 percent between fiscal years 1994 and 1998 and a 60 percent increase in nonwelfare collections during the same period. Page 10 GAO/HEHS-99-105 Child Support Financing B-280957 Figure 4: CSE Welfare and Nonwelfare Collections, FY 1994-97 Collections in Billions 12 10.5 10 9.2 8.1 8 7.3 6 4 2.9 2.8 2.5 2.7 2 0 1994 1995 1996 1997 Year Welfare Nonwelfare Note: Preliminary data from OCSE for fiscal year 1998 indicate that welfare collections declined to about $2.6 billion while nonwelfare collections increased to about $11.5 billion. Source: OCSE data. An increase in the amount of money intercepted from delinquent noncustodial parents’ federal income tax refunds significantly increased the amount of total CSE welfare collections. Under the federal income tax refund offset program, state CSE agencies submit to the Internal Revenue Service (IRS) the names, Social Security numbers, and amount of past-due Page 11 GAO/HEHS-99-105 Child Support Financing B-280957 child support of people who are behind in their child support payments.14 When IRS processes tax returns, it identifies the returns of those who owe past-due child support. If a tax refund is due, all or part of it is intercepted to offset past-due child support payments. From 1994 to 1997, the amount of money intercepted for CSE welfare cases increased 59 percent from $442 million to $704 million.15 Over this same period, the amount of money intercepted for nonwelfare cases increased 72 percent from $181 million to $311 million. Intercepting income tax refunds is the second largest source of CSE collections after wage withholding. In addition to the total increase in CSE welfare collections, the proportion of these collections retained by the states and federal government also increased. The new welfare reform law eliminated the $50 disregard provision, which previously required that the first $50 of support collected each month be passed through to welfare families and not deducted from their welfare cash assistance payment. In fiscal year 1997, this change provided almost $300 million in additional funds to be split between the states and federal government. States were allowed to continue a family pass-through policy if they so chose; however, the federal government no longer helps to finance such a policy. The Center for Law and Social Policy reported that about 23 states have continued some type of disregard policy. As noted in table 1, reported payments to families declined from $480 million in fiscal year 1996 to $157 million in fiscal year 1997. However, fiscal year 1997 statistics do not include state-only payments to families that may be made out of the state share of collections. Some States Received In fiscal year 1997, seven states—Indiana, Maryland, Missouri, South Supplemental Federal Carolina, Tennessee, Vermont, and Wisconsin—were eligible for hold Payments Because Their harmless payments totaling about $14 million because their retained collections dropped below their fiscal year 1995 levels. The hold harmless CSE Welfare Collections Declined 14 Most states have state tax refund offset programs as well. In fiscal year 1997, states intercepted $66 million in state tax refunds for CSE welfare cases and $53 million for nonwelfare cases. 15 The increase in tax refund collections suggests that more noncustodial parents were working and had reportable income. This increase is somewhat offset by a decline in the amount of unemployment payments intercepted. They declined from $85 million in fiscal year 1994 to $63 million in fiscal year 1997. Page 12 GAO/HEHS-99-105 Child Support Financing B-280957 payments ranged from about $480,000 in Missouri to $5.4 million in Tennessee.16 In six of the seven states, CSE officials attributed the decline in CSE welfare collections to the decline in TANF caseloads. In Missouri, collections declined because the state temporarily moved its federal TANF cases into a state-only welfare program to delay the start of welfare recipients’ time limits. The welfare reform law does not require states to use their hold harmless payments to fund CSE programs. However, in four of the seven hold harmless states—Indiana, Missouri, South Carolina, and Tennessee—the hold harmless payment went to the CSE agency. A fifth state, Vermont, is currently seeking legislative authority to reinvest its hold harmless payment in its CSE program. Wisconsin returned the hold harmless payment to its Department of Workforce Development, the agency that houses its CSE program. Finally, in Maryland, the state is investing its hold harmless payment in its TANF program. While fiscal year 1998 statistics are not yet complete, HHS staff estimate that as many as 20 states will be eligible for hold harmless payments as a result of declining retained CSE welfare collections. The Congressional Budget Office estimates that hold harmless payments to states will reach approximately $50 million in fiscal year 2000, gradually declining to $40 million in fiscal year 2004. However, the administration’s proposed budget for fiscal year 2000 calls for the elimination of hold harmless payments. From fiscal year 1994 to fiscal year 1997, states continued to experience Despite Overall net savings from the CSE program, while the federal government’s net costs Savings, More States continued to rise. Although the federal government has always paid the Are Joining the lion’s share of program costs, a growing number of states are beginning to experience net costs from their CSE programs, and individual states’ Federal Government savings or costs varied widely. Four of the 32 states that continued to in Experiencing Net experience net savings also received hold harmless payments because their fiscal year 1997 retained collections fell below their 1995 levels. Costs Although more states are experiencing net costs, they are not permitted to use unspent TANF funds to make up for reductions in their CSE revenues. 16 Tennessee’s fiscal year 1997 collections were $7.7 million lower than its fiscal year 1995 collections. However, the state’s hold harmless payment was limited to the federal share of collections from that state. Page 13 GAO/HEHS-99-105 Child Support Financing B-280957 States Unevenly Share In 1997, states experienced estimated net savings of $467 million from Program Savings and Costs their CSE programs while the federal government experienced an estimated net cost of $1.3 billion. A state’s savings or costs are determined by combining its retained collections and incentive payments and subtracting its one-third share of administrative costs. Federal savings or costs are determined by taking the federal government’s share of retained collections and subtracting the state incentive payments and the federal government’s two-thirds share of administrative costs. Because of this basic financing structure, states have always realized net savings, while the federal government has always experienced net costs. As illustrated in figure 5, this basic pattern continued between fiscal years 1994 and 1997. Page 14 GAO/HEHS-99-105 Child Support Financing B-280957 Figure 5: State and Federal Net CSE Savings or Costs, FY 1994-97 Dollars in Millions 500 0 -500 -1000 -1500 1994 1995 1996 1997 Fiscal Year Total Net Costs States' Net Savings Federal Net Costs Note: HHS estimates that overall state savings will continue until fiscal year 2001, when states overall will begin to show net costs. Source: OCSE data. The states’ program savings or costs varied widely in fiscal year 1997, as shown in appendix III. California led the 32 states experiencing net savings from their CSE programs, receiving back about $178 million more than its program cost; Arkansas experienced the largest net costs of about $6 million. The numbers of states experiencing net program savings Page 15 GAO/HEHS-99-105 Child Support Financing B-280957 declined from 42 in 1994 to 32 in 1997 as a result of increased administrative costs, reduced CSE welfare collections, and declining incentive payments (see fig. 6). 17,18 Figure 6: Number of States Experiencing Net Costs or Savings in Number of States CSE Programs 50 43 40 38 35 32 30 22 20 19 16 11 10 0 1994 1995 1996 1997 Year Net Savings Net Costs Note: HHS estimates that 30 states experienced net costs in fiscal year 1998. Source: OCSE data. 17 Hold harmless payments are not considered in OCSE’s calculation of net savings or costs. If hold harmless payments were considered, the number of states experiencing net savings would increase to 34. 18 Alabama, Alaska, Delaware, Nevada, New Hampshire, and Puerto Rico attributed the increases in fiscal year 1995 administrative costs to increased expenditures for automated systems. Page 16 GAO/HEHS-99-105 Child Support Financing B-280957 Some States That Because the hold harmless payment is based on changes in retained Experienced Net Savings collections only and not the entire net savings or costs equation, four Also Received Hold states experienced net savings and were also eligible for hold harmless payments totaling almost $7 million for fiscal year 1997. These four states Harmless Payments realized total net savings of almost $15 million in fiscal year 1997; however, this was a decline of $25 million from their fiscal year 1995 net savings (see table 2). Declines in net savings can occur if retained collections decline, earned incentive payments decline, or administrative costs increase (see fig. 1). Table 2: State Share of Program Savings or Costs, Fiscal Years 1995 FY 1995 program FY 1997 program Change, FY and 1997, for States That Received State saving or (costs) saving or (costs)a 1995-97 Hold Harmless Payments in Fiscal Indiana $18,261,945 $10,311,881 ($7,950,064) Year 1997 Maryland 4,819,028 (321,631) (5,140,659) Missouri 7,694,840 1,850,554 (5,844,286) South Carolina 190,946 (817,850) (1,008,796) Tennessee 7,519,056 (947,506) (8,466,562) Vermont 1,557,276 745,853 (811,423) Wisconsin 12,694,857 1,982,694 (10,712,163) Total 52,737,948 12,803,995 (39,933,953) a The calculation of the states’ net program savings or costs do not include the hold harmless payments the states received for fiscal year 1997. Source: OCSE data. Unspent TANF Funds Although some states have large unspent balances of state TANF funds, HHS Cannot Be Used to Offset has determined that these funds cannot be used to offset reductions in Reductions in CSE states’ CSE revenue. The unspent balances of state TANF funds resulted from the welfare reform law’s fundamental change in the way the federal Revenue government finances cash assistance to families. The law eliminated the open-ended entitlement of the AFDC program and replaced it with a flexible, capped block grant. The amount of each state’s block grant is based on time periods when welfare caseloads and federal spending were at historically high levels. From January 1996 to December 1998, however, the number of families receiving TANF declined by almost 40 percent. While states must maintain a statutory “maintenance-of-effort” level relative to their previous spending limits, they are also allowed to carry forward Page 17 GAO/HEHS-99-105 Child Support Financing B-280957 unused TANF funds without fiscal year limitation.19 Some states have begun to accrue large unspent TANF balances because of declining welfare caseloads and the fixed block grant funding mechanism. As of September 1998, 32 states had accumulated unspent TANF balances totaling $2.7 billion. These balances ranged from about $6 million in Vermont to $606 million in New York (see app. III). With an increasing number of states beginning to experience net costs from their CSE programs, some states have asked whether they can use their unspent TANF funds to offset reductions in their CSE revenues. We asked HHS for its interpretation of section 404(a)(1) of the Social Security Act, which covers this issue, and it provided a written response (see app. V). HHS said that while CSE services are “reasonably calculated” to accomplish the purposes of the TANF program, unspent TANF balances may not be used to pay for required CSE services such as locating noncustodial parents, establishing paternity and support orders, and enforcing support orders.20 However, states may spend TANF funds on supplemental CSE services or activities not required under the CSE program. One example of an allowable supplemental CSE service might be a job-training program for noncustodial parents that could increase their potential for paying child support. Declining Collections Did State budgeting practices and policies determine how CSE programs are Not Affect CSE Funding in financed and whether CSE revenues are returned to the program. The way Seven States a state chooses to finance its program determines the extent to which a decline in collections might affect its CSE program. In the President’s budget for fiscal year 1999, the Office of Management and Budget directed HHS to consult with its state partners and stakeholders and propose a new overall financing structure for the CSE program. As part of this process, HHS contracted with The Lewin Group to develop information on how the states finance their CSE programs and use the retained collections and incentive payments that go to the states. Lewin reported that states have 19 States are required to maintain at least 75 percent of their historic welfare spending levels. Maintenance-of-effort requirements are based on states’ fiscal year 1994 spending on AFDC, Job Opportunities and Basic Skills (JOBS), and Emergency Assistance programs; related administrative costs; and AFDC-related child care programs such as the AFDC/JOBS child care, Transitional Child Care, and At-Risk Child Care programs. See Welfare Reform: Monitoring Required State Spending Levels (GAO/HEHS-99-20R, Nov. 30, 1998). 20 HHS also determined that state expenditures for required CSE services could not be claimed toward states’ maintenance-of-effort requirements. Page 18 GAO/HEHS-99-105 Child Support Financing B-280957 chosen to fund their CSE programs in one of four ways.21 The method chosen determines how sensitive a state’s CSE program funding is to changes in retained collections and incentive payments, from the more stable financing in category 1 to the least stable financing in category 4. Figure 7 shows the funding sources that states used to finance their programs in fiscal year 1997. 21 The Lewin Group, Inc., ECONorthwest, “State Financing of Child Support Enforcement Programs: Briefing on Findings” (Briefing prepared for Assistant Secretary for Planning and Evaluation and the OCSE, HHS, Nov. 23, 1998). Page 19 GAO/HEHS-99-105 Child Support Financing B-280957 Figure 7: Sources of CSE Funding, by State Category 1: General/Special Funds–10 States Category 2: General/Special Funds and Earmarked Federal CSE Incentives–25 States Category 3: General/Special Funds, Earmarked Federal CSE Incentives, and Retained CSE Welfare Collections–11 States and District of Columbia Category 4: Federal CSE Incentive Payments and Retained CSE Welfare Collections–4 States Source: The Lewin Group. Page 20 GAO/HEHS-99-105 Child Support Financing B-280957 The Lewin Group’s work provides a good framework for examining how changes in retained collections and incentive payments might affect a state’s CSE program. For example, a category 1 state CSE program relies on general/special funds and may not be directly affected by changes in retained collections and incentive payments. A category 4 state CSE program, however, would be directly affected if retained collections and incentive payments changed because these are the sole funding sources. State CSE officials in six of the seven hold harmless states said the fiscal year 1997 decline in their CSE welfare collections had little or no effect on their CSE agencies’ funding because they do not use retained collections to fund their CSE programs. Maryland, Tennessee, Vermont, and Wisconsin returned their collections to their welfare agencies as reimbursement for welfare payments; South Carolina placed its collections in a social services discretionary fund; and Indiana deposited its collections in the state’s general revenue fund. Missouri is the only hold harmless state that used retained collections to fund its CSE program. However, state officials said declining CSE collections had no effect on Missouri’s program in fiscal year 1997 because the state had sufficient retained CSE collections to cover program costs.22 As states implement welfare reform strategies that emphasize finding Caseload Declines employment for welfare recipients and helping them to become less and Welfare Reform dependent on government cash assistance, further TANF caseload declines Changes Will Affect are possible along with reductions in retained state and federal CSE welfare collections. In addition, the new policy that gives families a greater priority State and Federal in receiving past due support will result in fewer CSE retained collections, Child Support and the new incentive payment program will likely result in less stable CSE program financing. The expected declines in CSE program revenues, Programs however, may be ameliorated as states gain experience with the new enforcement tools mandated under welfare reform. More states may also seek to increase CSE revenues by adopting expanded service fees for CSE nonwelfare cases. Caseload Declines and The large decrease in the size of welfare caseloads nationally indicates a Families First Policy Will significant reduction in families’ dependence on cash assistance—an Exert a Negative Influence intended consequence of the 1996 welfare reform law. As more families leave the welfare rolls, however, more CSE payments collected will be on Retained Collections 22 Declines in collections and incentive payments may also have an impact on local CSE programs if a state shares these revenues with them. Our review and analysis did not include the effects of declining CSE welfare collections on local programs. Page 21 GAO/HEHS-99-105 Child Support Financing B-280957 given directly to the families, resulting in fewer CSE retained welfare collections to be divided between the states and federal government. In addition, the welfare reform law contained a provision that gives families greater priority in receiving arrearage payments once they leave welfare. The implementation of this “families first” policy will also affect the amount of collections retained by the states and federal government. As this policy is phased in between fiscal years 1998 and 2001, more CSE collections will go to families to help them stay off welfare. Conversely, fewer collections will be retained by the states and federal government. New Incentive Payment The Child Support Performance and Incentive Act of 1998 amended some Program Will Bring welfare reform provisions and required OCSE to base the states’ incentive Changes to Child Support payments on five performance-based outcome measures that will be phased in starting in fiscal year 2000. The new measures are likely to Financing change both positively and negatively the incentive payment amounts states receive, depending upon the outcomes under each performance measure. In addition, incentive payments to the states will no longer be open-ended. Rather, a fixed pool of incentive payments, shared by all the states, will be established. Each state’s performance, therefore, will be judged and rewarded in relation to every other state’s performance at the end of the fiscal year, making it harder for states to plan in advance for expected incentive payments. The 1998 act also requires states to reinvest their federal incentive payments in their CSE programs starting in fiscal year 2000. This requirement is not likely to provide substantial amounts of new revenues to the states’ CSE programs. According to the Lewin study, about 70 percent of federal incentive payments are already distributed to state and/or local CSE programs. However, states that currently fund their CSE programs solely with general/special funds could experience some funding instability. These states are considered to have the most stable funding because they do not rely upon CSE program revenues, which vary from year to year, to run their programs. If these states use incentive payments to supplant rather than supplement their program funds, as the law requires, they will introduce some uncertainty into their financing streams. Whether more or less money will be available to these programs remains to be seen. However, if these states use the incentive payments to supplement their current funding, the payments will provide increased funding for CSE programs. Page 22 GAO/HEHS-99-105 Child Support Financing B-280957 New Enforcement Tools The welfare reform law included new tools that could help CSE programs and Adopting Fees Could increase their efficiency and maintain their collections from a declining CSE welfare caseload. The law required OCSE and the states to create Offset Effects of Declining federal and state registries of CSE orders, directories of new employee TANF and CSE Welfare hires,23 and quarterly wage reports to aid in the location of noncustodial Caseloads and Revenues parents and the enforcement of child support orders. In addition, the law established new custodial parent cooperation requirements and penalties to strengthen existing requirements and to simplify the paternity establishment process.24 Finally, the law required states to perform data matches with financial institutions and revoke noncustodial parents’ driver’s, professional and occupational, and recreational licenses if they fail to comply with CSE orders. The national new-hire and support order registries offer significant potential for increasing CSE collections, especially those from interstate cases, which constitute about one-third of the total caseload. For example, in fiscal year 1998, its first year of operation, the National Directory of New Hires enabled OCSE to match over 1 million state requests to locate noncustodial parents against its central registry and provide states with information about them. In addition, the new custodial parent cooperation requirements could result in more accurate and more complete noncustodial parent information at the time a welfare case is opened, thus helping states locate noncustodial parents. To help defray rising administrative costs that decrease state child support revenues, CSE programs can collect fees from nonwelfare parents who receive services resulting in successful collections. Parents receiving TANF benefits receive free child support services, but nonwelfare families must pay an application fee of up to $25. For nonwelfare families, states can charge fees on a sliding scale, pay the fees out of state funds, or recover fees from noncustodial parents. As we noted in a previous report and testimony, many nonwelfare parents receiving child support services could afford to pay some of the costs of these services, yet most states had 23 Employers are required to report identifying information on all new hires to state directories of new hires, where the information is matched against databases of CSE orders so that enforcement activities, such as the implementation of wage withholding orders, can begin. This information, in turn, is forwarded to a national directory of new hires for use by all states. 24 The welfare reform law moved the determination of custodial parent cooperation from the welfare agency to the CSE agency, and mandated that welfare assistance be reduced by at least 25 percent if a custodial parent does not cooperate with the CSE agency. It also gave the CSE agency the authority to order genetic testing in contested cases, and stipulated that a signed acknowledgement of paternity be considered a legal finding of paternity unless rescinded within 60 days. Page 23 GAO/HEHS-99-105 Child Support Financing B-280957 not collected any significant portion of these costs.25 For example, in 1992 we reported that of the 617,962 women requesting child support services in 1989, 42 percent reported incomes exceeding 200 percent of the poverty level and 21 percent exceeded 300 percent. However, 31 states charged an application fee of $1 or less, and most of these states paid the fee for the nonwelfare family. Also, Lewin noted in its 1998 study that fees constitute a small share of state CSE revenues, although Louisiana, North Carolina, and Ohio are now considering expanding their service fees. We continue to believe that states could significantly offset declining child support revenues by charging a percentage service fee. On the basis of our past work we found that a 15-percent service fee would have recovered all 1994 administrative costs incurred by states for nonwelfare parents. A percentage fee, ultimately set by the Congress, would not require up-front costs to nonwelfare parents as the current application fees do and should not discourage them from seeking the child support services they need even if collections are not realized. Also, percentage fees would not impose a financial burden on parents with limited income because fees would be collected only when child support payments are received. States could continue to retain the option to pay the fee themselves or pay the fee and recover it from the noncustodial parent. Moreover, such fees would be easy to administer by state child support offices. Citing GAO’s work, the House Budget Committee’s report on the fiscal year 1996 budget resolution suggested that a percentage service fee on nonwelfare collections be considered as a budget savings option.26 To date, the Congress has not enacted such fees. The expected outcomes of welfare reform are changing the fiscal and Observations political environment in which the CSE program operates. Declining caseloads—both TANF and CSE welfare—have reduced the revenue some states have historically realized from the CSE program. At the same time, newly mandated methods for collecting more child support from noncustodial parents have increased states’ program responsibilities and costs. The federal government, on the other hand, has continued to incur program costs primarily because it reimburses states for a two-thirds share of their CSE expenditures. Moreover, the federal government’s net 25 Child Support Enforcement: Opportunity to Defray Burgeoning Federal and State Non-AFDC Costs (GAO/HRD-92-91, June 5, 1992) and Child Support Enforcement: Opportunity to Reduce Federal and State Costs (GAO/T-HEHS-95-181, June 13, 1995). 26 H.R. Rep. No. 104-120, at 108 (1995). Page 24 GAO/HEHS-99-105 Child Support Financing B-280957 costs are likely to grow as caseloads shrink and states spend more in administrative costs to implement enforcement tools required by the welfare reform law. Growing net costs for the states and federal government will likely encourage both program partners to (1) reexamine how the CSE program is financed and (2) weigh these new fiscal realities against the program’s social and fiscal benefits of promoting parental responsibility and recovering welfare costs. In our previous work we have concluded that individuals who use Matter for nonwelfare CSE services should pay some portion of the costs incurred by Congressional the states and federal government. We previously recommended that the Consideration Congress amend title IV-D of the Social Security Act to require states to charge a minimum percentage service fee for each successful CSE nonwelfare collection in order to defray the cost of providing CSE nonwelfare services. The Congress has considered this option but to date has not enacted such fees. CSE nonwelfare costs continue to rise as CSE welfare caseloads decline, signaling future declines in CSE revenues. The Congress and states may wish to reconsider the option of charging a minimum percentage service fee on CSE nonwelfare collections that would be shared at the same rate the federal government and states share administrative costs—two-thirds and one-third, respectively. This would, to some extent, alleviate the growing financial burden to the federal government and states. We requested comments from HHS on a draft of this report, but none were Agency Comments provided. We are sending copies of this report to the Honorable William V. Roth, Jr., Chairman, and the Honorable Daniel Patrick Moynihan, Ranking Minority Member, Senate Committee on Finance; the Honorable John H. Chafee, Chairman, and the Honorable John B. Breaux, Ranking Minority Member, of the Finance Committee’s Subcommittee on Social Security and Family Policy; the Honorable Donna E. Shalala, Secretary of Health and Human Services; and the Honorable Olivia Golden, Assistant Secretary for Children and Families, HHS. We will also make copies available to others on request. If you or your staff have any questions about this report, please contact Cynthia M. Fagnoni or Karen A. Whiten at (202) 512-7215. Key contributors Page 25 GAO/HEHS-99-105 Child Support Financing B-280957 to this assignment were Kevin M. Kumanga, Christopher Morehouse, and Regina Santucci. Sincerely yours, Richard L. Hembra Assistant Comptroller General Page 26 GAO/HEHS-99-105 Child Support Financing Page 27 GAO/HEHS-99-105 Child Support Financing Contents Letter 1 Appendix I 30 Total AFDC/TANF Families, January 1994 Through December 1998 Appendix II 32 Changes in Average CSE Welfare and Nonwelfare Caseloads, FY 1994-97 Appendix III 34 Selected State Program Statistics Appendix IV 36 Estimates of State CSE Program Savings, FY 1997 Appendix V 38 HHS Clarification of Whether TANF Funds May Be Used to Support CSE Programs Related GAO Products 40 Page 28 GAO/HEHS-99-105 Child Support Financing Contents Tables Table 1: State and Federal Shares of Total CSE Welfare 10 Collections, FY 1994-97 Table 2: State Share of Program Savings or Costs, Fiscal Years 17 1995 and 1997, for States That Received Hold Harmless Payments in Fiscal Year 1997 Figures Figure 1: State and Federal CSE Savings/Cost Formula 6 Figure 2: Families Receiving AFDC/TANF, 1936-98 7 Figure 3: Welfare and Nonwelfare CSE Caseloads, FY 1994-97 8 Figure 4: CSE Welfare and Nonwelfare Collections, FY 1994-97 11 Figure 5: State and Federal Net CSE Savings or Costs, FY 1994-97 15 Figure 6: Number of States Experiencing Net Costs or Savings in 16 CSE Programs Figure 7: Sources of CSE Funding, by State 20 Abbreviations AFDC Aid to Families With Dependent Children CSE Child Support Enforcement HHS Department of Health and Human Services IRS Internal Revenue Service JOBS Job Opportunities and Basic Skills OCSE Office of Child Support Enforcement TANF Temporary Assistance for Needy Families Page 29 GAO/HEHS-99-105 Child Support Financing Appendix I Total AFDC/TANF Families, January 1994 Through December 1998 Percentage change State Jan. 1994 Jan. 1995 Jan. 1996 Jan. 1997 Jan. 1998 Dec. 1998 1994-97 1994-98a Alabama 51,181 47,376 43,396 37,972 25,123 20,850 (26) (59) Alaska 12,578 12,518 11,979 12,224 10,392 8,388 (3) (33) Arizona 72,160 71,110 64,442 56,250 41,233 36,125 (22) (50) Arkansas 26,398 24,930 23,140 21,549 14,419 12,486 (18) (53) California 902,900 925,585 904,940 839,860 727,695 641,359 (7) (29) Colorado 41,616 39,115 35,661 31,288 21,912 15,367 (25) (63) Connecticut 58,453 60,927 58,124 56,095 51,132 37,944 (4) (35) Delaware 11,739 11,306 10,266 10,104 7,053 5,087 (14) (57) District of Columbia 26,624 26,624 25,717 24,752 22,451 19,751 (7) (26) Florida 254,032 241,193 215,512 182,075 121,006 91,791 (28) (64) Georgia 142,459 141,284 135,274 115,490 84,318 61,475 (19) (57) Guam 1,840 2,124 2,097 2,349 2,213 2,361 28 28 Hawaii 20,104 21,523 22,075 21,469 23,578 16,562 7 (18) Idaho 8,677 9,097 9,211 7,922 1,920 1,502 (9) (83) Illinois 238,967 240,013 225,796 206,316 175,445 139,806 (14) (41) Indiana 74,169 68,195 52,254 46,215 37,298 36,866 (38) (50) Iowa 39,623 37,298 33,559 28,931 25,744 22,193 (27) (44) Kansas 30,247 28,770 25,811 21,732 14,595 12,784 (28) (58) Kentucky 79,437 76,471 72,131 67,679 54,491 44,494 (15) (44) Louisiana 88,168 81,587 72,104 60,226 46,593 45,401 (32) (49) Maine 23,074 22,010 20,472 19,037 15,526 14,012 (17) (39) Maryland 79,772 81,115 75,573 61,730 49,075 39,014 (23) (51) Massachusetts 112,955 104,956 90,107 80,675 68,651 59,154 (29) (48) Michigan 225,671 207,089 180,790 156,077 128,892 100,676 (31) (55) Minnesota 63,552 61,373 58,510 54,608 48,893 46,322 (14) (27) Mississippi 57,689 53,104 49,185 40,919 25,510 18,292 (29) (68) Missouri 91,598 91,378 84,534 75,459 62,872 53,788 (18) (41) Montana 12,080 11,732 11,276 9,644 6,789 5,517 (20) (54) Nebraska 16,145 14,968 14,136 13,492 13,809 11,844 (16) (27) Nevada 14,077 16,039 15,824 11,742 11,263 9,064 (17) (36) New Hampshire 11,427 11,018 9,648 8,293 6,489 6,455 (27) (44) New Jersey 121,361 120,099 113,399 102,378 89,030 68,522 (16) (44) New Mexico 33,376 34,789 34,368 29,984 20,219 25,692 (10) (23) New York 449,978 461,006 437,694 393,424 347,536 301,918 (13) (33) North Carolina 131,288 127,069 114,449 103,300 78,473 64,470 (21) (51) North Dakota 6,002 5,374 4,976 4,416 3,351 3,123 (26) (48) Ohio 251,037 232,574 209,830 192,747 147,093 123,902 (23) (51) (continued) Page 30 GAO/HEHS-99-105 Child Support Financing Appendix I Total AFDC/TANF Families, January 1994 Through December 1998 Percentage change State Jan. 1994 Jan. 1995 Jan. 1996 Jan. 1997 Jan. 1998 Dec. 1998 1994-97 1994-98a Oklahoma 47,475 45,936 40,692 32,942 25,860 20,895 (31) (56) Oregon 42,695 40,323 35,421 25,874 19,249 16,829 (39) (61) Pennsylvania 208,260 208,899 192,952 170,831 140,446 117,828 (18) (43) Puerto Rico 59,425 55,902 51,370 48,359 43,474 38,159 (19) (36) Rhode Island 22,592 22,559 21,775 20,112 19,242 19,135 (11) (15) South Carolina 53,178 50,389 46,772 37,342 27,514 20,205 (30) (62) South Dakota 7,027 6,482 6,189 5,324 3,956 3,476 (24) (51) Tennessee 111,946 105,948 100,884 74,820 53,837 57,691 (33) (48) Texas 285,680 279,911 265,233 228,882 158,252 121,606 (20) (57) Utah 18,063 17,195 15,072 12,864 10,931 10,191 (29) (44) Vermont 9,917 9,789 9,210 8,451 7,591 6,696 (15) (32) Virgin Islands 1,090 1,264 1,437 1,335 1,167 1,139 22 4 Virginia 74,717 73,920 66,244 56,018 44,247 39,295 (25) (47) Washington 103,068 103,179 99,395 95,982 82,852 64,933 (7) (37) West Virginia 40,869 39,231 36,674 36,805 18,914 9,943 (10) (76) Wisconsin 78,507 73,962 65,386 45,586 13,860 10,185 (42) (87) Wyoming 5,891 5,443 4,975 3,825 1,340 893 (35) (85) Total 5,052,854 4,963,071 4,627,941 4,113,775 3,304,814 2,783,456 (19) (45) a Through December 1998. Page 31 GAO/HEHS-99-105 Child Support Financing Appendix II Changes in Average CSE Welfare and Nonwelfare Caseloads, FY 1994-97 Percentage Percentage change change in CSE in CSE nonwelfare State welfare caseload caseload Alabama (27) 20 Alaska 1 21 Arizona (44) 17 Arkansas (22) 20 California 4 6 Colorado (18) 23 Connecticut (3) 21 Delaware (14) 6 District of Columbia (8) 50 Florida (48) 31 Georgia (40) 10 Guam 46 26 Hawaii 24 (10) Idaho 4 87 Illinois (14) 27 Indiana (48) (1) Iowa (21) 39 Kansas (23) 38 Kentucky (24) 23 Louisiana (36) 44 Maine (10) 17 Maryland 4 34 Massachusetts (20) 37 Michigan 5 26 Minnesota (13) 43 Mississippi (59) 82 Missouri (35) 4 Montana (26) 15 Nebraska (19) (5) Nevada (2) 14 New Hampshire (29) 39 New Jersey (27) 1 New Mexico (33) 17 New York (18) 13 North Carolina (22) 41 North Dakota (16) 46 (continued) Page 32 GAO/HEHS-99-105 Child Support Financing Appendix II Changes in Average CSE Welfare and Nonwelfare Caseloads, FY 1994-97 Percentage Percentage change change in CSE in CSE nonwelfare State welfare caseload caseload Ohio (11) 11 Oklahoma (22) 34 Oregon (30) 42 Pennsylvania (20) 1 Puerto Rico (27) 26 Rhode Island (15) (24) South Carolina (39) 31 South Dakota (26) 33 Tennessee (47) (7) Texas (17) 44 Utah (21) 65 Vermont (16) 34 Virgin Islands 15 3 Virginia (30) 44 Washington (15) 19 West Virginia (16) 72 Wisconsin (66) 80 Wyoming (68) 758 Total (19) 21 Page 33 GAO/HEHS-99-105 Child Support Financing Appendix III Selected State Program Statistics State FY 1995-97 change in Hold program State share of State harmless Unspent savings Change in AFDC/TANF/ Paid share of Net payment TANF or program foster care incentives,administrative change, (if any), FY balance, (costs),b savings, State collections actual costsa FY 1995-97 1997 9/30/98 FY 1997 FY 1995-97 Alabama $1,406,248 $254,839 $3,778,116 $5,439,203 $37,377,861 ($3,290,905) $5,381,539 Alaska 1,549,948 572,377 (774,700) 1,347,625 5,628,650 1,427,751 Arizona 1,990,041 401,145 1,061,566 3,452,752 34,189,609 (3,344,885) 3,459,585 Arkansas 1,099,101 505,222 (6,924,713) (5,320,390) (5,641,213) (5,505,745) California 86,241,904 19,102,159 (35,753,112) 69,590,951 177,731,427 66,957,702 Colorado 3,906,439 910,602 (2,329,346) 2,487,695 81,206,230 8,999,890 1,509,940 Connecticut 12,340,603 1,317,352 (1,728,091) 11,929,864 17,120,569 13,444,311 Delaware 285,200 (30,135) (1,172,726) (917,661) (1,281,765) (1,097,458) District of Columbia 376,200 (97,178) (66,971) 212,051 24,406,030 (375,821) 208,989 Florida 11,128,606 2,219,282 (11,872,261) 1,475,627 252,922,151 11,547,158 (249,731) Georgia 4,567,643 (1,048,940) (4,194,014) (675,311) 51,695,673 4,950,930 (5,849,793) Guam 6,098 (29,219) (65,834) (88,955) (727,038) 42,713 Hawaii 721,994 54,440 256,465 1,032,899 6,100,900 1,645,645 1,106,254 Idaho 82,314 (86,888) (1,175,466) (1,180,040) 29,502,444 (358,589) (1,023,744) Illinois 11,386,935 1,841,402 (10,583,405) 2,644,932 6,609,567 2,644,931 Indiana (1,311,594) (2,857,785) (1,056,205) (5,225,584) $1,311,594 10,311,881 (7,950,064) Iowa 1,357,125 (333,772) (2,805,556) (1,782,203) 28,873,740 10,173,323 (2,386,677) Kansas 1,100,482 (56,195) 5,749,025 6,793,312 21,616,607 3,651,692 6,874,005 Kentucky 1,567,800 134,603 (2,518,813) (816,410) 43,885,017 1,691,156 (2,004,980) Louisiana 1,311,207 (81,541) 14,793 1,244,459 123,516,902 (1,027,718) 1,070,050 Maine 2,707,889 842,635 (1,179,723) 2,370,801 10,146,483 3,787,571 Maryland (1,155,414) (1,652,711) (3,195,918) (6,004,043) 1,155,414 79,856,787 (321,631) (5,140,659) Massachusetts 912,441 (1,318,675) (1,763,088) (2,169,322) 22,964,102 (2,503,738) Michigan 6,743,610 (2,754,507) (17,463,017) (13,473,914) 89,260,877 32,652,828 (16,903,867) Minnesota 3,567,047 (8,088) (5,189,046) (1,630,087) 136,927,526 10,559,586 (1,390,253) Mississippi 920,768 61,855 (211,899) 770,724 (2,523,105) 812,430 Missouri (479,278) (527,042) (4,583,311) (5,589,631) 479,278 1,850,554 (5,844,286) Montana 522,931 185,435 (1,275,913) (567,547) (260,039) (297,470) Nebraska 1,063,986 188,222 (3,291,813) (2,039,605) 24,624,396 (3,409,424) (2,139,339) Nevada 725,413 638,492 (4,831,982) (3,468,077) (4,158,831) (3,257,149) New Hampshire 286,055 72,767 (57,355) 301,467 5,953,212 1,577,606 420,304 New Jersey 5,301,698 104,896 (4,637,177) 769,417 170,258,386 17,605,878 635,954 New Mexico 492,281 (39,650) (3,346,118) (2,893,487) 30,899,415 (4,074,136) (2,990,814) (continued) Page 34 GAO/HEHS-99-105 Child Support Financing Appendix III Selected State Program Statistics State FY 1995-97 change in Hold program State share of State harmless Unspent savings Change in AFDC/TANF/ Paid share of Net payment TANF or program foster care incentives,administrative change, (if any), FY balance, (costs),b savings, State collections actual costsa FY 1995-97 1997 9/30/98 FY 1997 FY 1995-97 New York 22,843,288 5,751,867 (6,878,650) 21,716,505 605,881,273 63,961,714 20,081,540 North Carolina 5,955,684 58,173 (7,194,608) (1,180,751) 93,148,981 1,587,632 (1,265,801) North Dakota 123,028 (21,444) (68,021) 33,563 821,150 33,563 Ohio 9,778,686 573,337 (19,095,949) (8,743,926) (3,674,606) (9,435,284) Oklahoma 1,255,304 322,315 (926,404) 651,215 110,238,480 3,150,124 908,697 Oregon 403,728 70,212 (3,704,582) (3,230,642) 1,767,372 (3,780,388) Pennsylvania 4,074,539 (1,106,633) (4,254,637) (1,286,731) 245,036,264 30,183,573 (787,286) Puerto Rico 271,527 (190,599) 2,309,534 2,390,462 (7,390,997) (2,228,606) Rhode Island 2,126,115 985,234 (211,284) 2,900,065 6,526,593 9,183,961 3,041,709 South Carolina (717,524) (354,597) 125,158 (946,963) 717,524 23,810,926 (817,850) (1,008,796) South Dakota 353,172 (56,571) (699,623) (403,022) 7,981,636 1,098,701 (239,690) Tennessee (7,662,533) (1,347,549) (213,219) (9,223,301) 5,392,257 48,265,922 (947,506) (8,466,562) Texas 10,781,476 3,059,596 (8,138,850) 5,702,222 410,190 (5,801,427) Utah 926,859 134,222 (1,179,215) (118,134) 13,550,431 (1,395,212) 130,334 Vermont (573,318) 27,030 58,451 (487,837) 573,318 5,571,572 745,853 (811,423) Virgin Islands 75,241 55,263 (536,151) (405,647) (227,358) 666,655 Virginia 2,030,935 (91,323) 568,582 2,508,194 9,215,419 2,116,483 Washington 8,135,630 346,001 (1,086,477) 7,395,154 141,452,770 33,264,513 7,395,154 West Virginia 1,385,471 357,425 (946,544 796,352 80,717,433 (1,777,699) 706,014 Wisconsin (4,452,505) (3,962,831) (5,094,779) (13,510,115) 4,452,505 49,019,541 1,982,694 (10,712,163) Wyoming 127,749 (252,810) (618,290) (743,351) (681,634) (767,894) Total $219,966,273 $22,841,717 $197,124,556 $439,932,546 $14,081,890 $2,704,275,585c $467,084,559 $45,584,879 a A negative number represents an increase in costs from FY 1995 to FY 1997. b Hold harmless payments are not included in the calculation of program savings or costs. c Total does not include unspent TANF balances for Guam, Puerto Rico, and the Virgin Islands. Page 35 GAO/HEHS-99-105 Child Support Financing Appendix IV Estimates of State CSE Program Savings, FY 1997 State share of State share of AFDC/TANF/foster care State incentive administrative State program savings State collections payments expendituresa or (costs)b,c Alabama 6,275,920 3,598,175 13,165,000 (3,290,905) Alaska 8,661,147 3,232,503 6,265,000 5,628,650 Arizona 8,380,583 4,203,232 15,928,000 (3,344,185) Arkansas 4,489,920 3,247,867 13,379,000 (5,641,213) California 263,233,517 74,627,910 160,130,000 177,731,427 Colorado 16,669,043 5,863,847 13,533,000 8,999,890 Connecticut 24,770,770 7,862,799 15,513,000 17,120,569 Delaware 3,529,167 1,058,068 5,869,000 (1,281,765) District of Columbia 2,815,419 1,008,760 4,200,000 (375,821) Florida 42,741,234 16,074,924 47,269,000 11,547,158 Georgia 18,068,352 11,008,578 24,126,000 4,950,930 Guam 259,905 208,057 1,195,000 (727,038) Hawaii 5,704,850 1,687,795 5,747,000 1,645,645 Idaho 2,895,003 1,849,408 5,103,000 (358,589) Illinois 36,523,099 11,412,468 41,326,000 6,609,567 Indiana 14,305,146 5,941,735 9,935,000 10,311,881 Iowa 14,956,569 5,979,754 10,763,000 10,173,323 Kansas 11,128,194 3,999,498 11,476,000 3,651,692 Kentucky 11,148,123 5,576,033 15,033,000 1,691,156 Louisiana 6,570,232 3,781,050 11,379,000 (1,027,718) Maine 9,886,078 5,733,405 5,473,000 10,146,483 Maryland 17,849,696 5,047,673 23,219,000 (321,631) Massachusetts 33,422,193 9,467,909 19,926,000 22,964,102 Michigan 66,344,288 21,135,540 54,827,000 32,652,828 Minnesota 28,818,840 8,970,746 27,230,000 10,559,586 Mississippi 4,342,334 3,248,561 10,114,000 (2,523,105) Missouri 18,583,251 7,826,303 24,559,000 1,850,554 Montana 2,373,720 1,389,241 4,023,000 (260,039) Nebraska 4,567,088 1,805,488 9,782,000 (3,409,424) Nevada 4,053,331 2,708,838 10,921,000 (4,158,831) New Hampshire 4,694,002 1,478,604 4,595,000 1,577,606 New Jersey 43,625,445 12,481,433 38,501,000 17,605,878 New Mexico 2,596,841 1,385,023 8,056,000 (4,074,136) New York 100,437,812 31,373,902 67,850,000 63,961,714 North Carolina 25,947,433 10,718,199 35,078,000 1,587,632 North Dakota 1,858,914 973,236 2,011,000 821,150 (continued) Page 36 GAO/HEHS-99-105 Child Support Financing Appendix IV Estimates of State CSE Program Savings, FY 1997 State share of State share of AFDC/TANF/foster care State incentive administrative State program savings State collections payments expendituresa or (costs)b,c Ohio 48,013,415 16,939,979 68,628,000 (3,674,606) Oklahoma 7,181,327 3,657,797 7,689,000 3,150,124 Oregon 10,242,906 5,383,466 13,859,000 1,767,372 Pennsylvania 52,433,761 16,933,812 39,184,000 30,183,573 Puerto Rico 580,627 388,376 8,360,000 (7,390,997) Rhode Island 8,515,395 3,645,566 2,977,000 9,183,961 South Carolina 5,604,580 3,566,570 9,989,000 (817,850) South Dakota 2,059,940 1,150,761 2,112,000 1,098,701 Tennessee 5,936,304 5,431,190 12,315,000 (947,506) Texas 38,248,009 16,756,181 54,594,000 410,190 Utah 5,366,098 3,181,690 9,943,000 (1,395,212) Vermont 1,916,409 1,182,444 2,353,000 745,853 Virgin Islands 145,576 112,066 485,000 (227,358) Virginia 21,701,453 6,060,966 18,547,000 9,215,419 Washington 54,484,696 16,363,817 37,584,000 33,264,513 West Virginia 4,154,214 2,180,087 8,112,000 (1,777,699) Wisconsin 18,057,573 8,458,121 24,533,000 1,982,694 Wyoming 1,661,719 566,647 2,910,000 (681,634) Total $1,158,831,461 $409,926,098 $1,101,673,000 $467,084,559 a OCSE estimate. b Hold harmless payments are not included in the calculation of program savings or costs. c GAO calculation based on preliminary OCSE data. Page 37 GAO/HEHS-99-105 Child Support Financing Appendix V HHS Clarification of Whether TANF Funds May Be Used to Support CSE Programs Page 38 GAO/HEHS-99-105 Child Support Financing Appendix V HHS Clarification of Whether TANF Funds May Be Used to Support CSE Programs Page 39 GAO/HEHS-99-105 Child Support Financing Related GAO Products Supplemental Security Income: Increased Receipt and Reporting of Child Support Could Reduce Payments (GAO/HEHS-99-11, Jan. 12, 1999). Welfare Reform: Early Fiscal Effects of the TANF Block Grant (GAO/AIMD-98-137, Aug. 18, 1998). Welfare Reform: Child Support an Uncertain Income Supplement for Families Leaving Welfare (GAO/HEHS-98-168, Aug. 3, 1998). Welfare Reform: States Are Restructuring Programs to Reduce Welfare Dependence (GAO/HEHS-98-109, June 18, 1998). Child Support Enforcement: Certification Process for State Information Systems (GAO/AIMD-98-134, June 15, 1998). Child Support Enforcement: Strong Leadership Required to Maximize Benefits of Automated Systems (GAO/AIMD-97-72, June 30, 1997). Child Support Enforcement: Early Results on Comparability of Privatized and Public Offices (GAO/HEHS-97-4, Dec. 16, 1996). Child Support Enforcement: States’ Experience With Private Agencies’ Collection of Support Payments (GAO/HEHS-97-11, Oct. 23, 1996). Child Support Enforcement: States and Localities Move to Privatized Services (GAO/HEHS-96-43FS, Nov. 20, 1995). Child Support Enforcement: Timely Action Needed to Correct System Development Problems (GAO/IMTEC-92-46, Aug. 13, 1992). Medicaid: Ensuring That Noncustodial Parents Provide Health Insurance Can Save Costs (GAO/HRD-92-80, June 17, 1992). (116021) Page 40 GAO/HEHS-99-105 Child Support Financing Ordering Information The first copy of each GAO report and testimony is free. Additional copies are $2 each. 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Child Support Enforcement: Effects of Declining Welfare Caseloads Are Beginning to Emerge
Published by the Government Accountability Office on 1999-06-30.
Below is a raw (and likely hideous) rendition of the original report. (PDF)