Jrlly I!b!M) CHILD SUPPORT ENFORCEMENT More States Reporting Debt to Credit Bureaus to Spur Collections E NllllllllI Ill 142107 RESTRICTED-- Not to be released outside the General Accounting Of!fke unless specifically approved by the Office of Congressional Relations. - RELEASED 2 United States GAO General Accounting Office Washington, D.C. 20548 Human Resources Division R-234817 July 31, 1990 The Honorable Daniel P. Moynihan United States Senate Dear Senator Moynihan: In a January 30, 1989, request and in later discussions with your office, we were asked to provide information on state reporting of child sup- port debt to credit bureaus to increase collections. Specifically, you asked that we determine l the states that are reporting child support debt to credit bureaus, l the procedures for such credit reporting, l the evidence available on the effects of credit reporting on child support collections, and l any legal implications of credit reporting. Since 1984, an increasing number of state child support enforcement Results in Brief agencies have begun reporting child support debt to credit bureaus to help increase collections from noncustodial parents. As required by fed- eral law, all state agencies have procedures to respond to credit bureau requests for information about such parents’ child support debt. In addi- tion, many agencies have gone beyond this legal requirement and are routinely reporting information to credit bureaus. How, when, and what information is reported, however, vary among the agencies. While little empirical evidence is available on the effects of credit reporting, most agencies that have reported information to credit bureaus believe it results in increased collections. Our research and discussions with fed- eral and state child support enforcement officials disclosed few federal or state legal impediments to state agencies’ reporting child support debt to credit bureaus. The Congress created the Child Support Enforcement Program in the Background Social Services Amendments of 1974. The purpose of this program is to strengthen state and local efforts to locate noncustodial parents, estab- lish paternity, obtain support orders, and collect support payments. The Office of Child Support Enforcement (OCSE) in the Department of Health and Human Services (HHS) is responsible for administering the program at the federal level. OCSE'S responsibilities include approving state plans, auditing state program compliance, and funding 66 percent of states’ Page 1 GAO/HRD-90-113 Child Support Enforcement , c ‘\ ” --&- 0-234317 operating costs. State child support enforcement agencies have responsi- bility for program administration at the state and local levels. State and local agencies’ responsibilities include submitting and implementing pro- gram plans and providing such services as collecting and distributing child support payments. Since the program’s inception, the Congress has passed various laws aimed at increasing the program’s effectiveness, including the Child Support Enforcement Amendments of 1984. Among other things, these amendments set minimum standards for states’ reporting child support debt to credit bureaus by requiring states to enact laws establishing pro- cedures for responding to credit bureaus’ requests for information about noncustodial parents who are $1,000 or more in arrears and live in the state. Some states have gone beyond what the amendments require and are routinely reporting some child support information to credit bureaus, such as when a noncustodial parent’s child support arrears reach a certain level. This report provides information primarily about state agencies’ routine reporting of child support debt to credit bureaus. Credit bureaus combine information from child support agencies with credit information from other sources and sell it in the form of credit reports to credit grantors, such as banks. Credit grantors use these reports, among other things, to decide whether to approve car, home, and other loan applications, taking into consideration such factors as applicants’ outstanding debt and payment histories. Credit bureaus reportedly maintain information on over 100 million consumers nationwide. To collect information on child support agencies’ credit-reporting activi- Scopeand ties and experiences, we (1) conducted telephone interviews of child Methodology support enforcement officials in the 50 states and the District of Columbia, Puerto Rico, Guam, and the Virgin Islands (hereafter referred to as states); (2) interviewed federal child support and credit industry officials, such as representatives of credit bureaus and credit grantors; and (3) reviewed records and interviewed officials of Nebraska’s state child support enforcement agency and the local agency in Marion County, Indiana, both of which use routine credit reporting. To identify evidence on the effects of credit reporting, we reviewed rele- vant literature; interviewed and gathered information from state child support enforcement agency officials; and reviewed the results of an @X-funded study of the effects of credit reporting in Marion County, Page 2 GAO/~90413 Child Support Enforcement 5234317 Indi,ana. To identify legal issues, we (1) reviewed the Social Security Act, Fair Credit Reporting Act, and Privacy Act of 1974 and (2) dis- cussed the legal implications of credit reporting with officials in state agencies, HHS, and the Federal Trade Commission’s Division of Credit Practices. We did not independently verify all information provided by federal, state, and local officials or reported in the ocsE-funded study. Our work was conducted between December 1988 and January 1990 and, with the above exception, was done in accordance with generally accepted government auditing standards. In addition to establishing the credit-reporting procedures required by Many State Agencies the 1984 Child Support Enforcement Amendments, all states have, or Use Routine Credit plan to establish, procedures for automatically or periodically reporting Reporting; Others plan to credit bureaus child support debt and various other information on noncustodial parents. As shown in figure 1, the number of state agencies to Follow using such routine reporting has grown from 2 in 1984 to 21 as of Sep- tember 1989. Eight additional state agencies had established routine credit-reporting procedures by that time, but had not yet used them. Figure 1: Growth in State Agency Use of Routine Credit Reporting 60 Cumulative Number of Statea (Jan. 1984 Sept.1989) 40 30 r 1984 Year Page 3 GAO/HRD90-113 Child Support Enforcement R-234817 The other 25 state agencies said they plan to use routine reporting in the future.1 Officials in 17 of these agencies said they plan to establish pro- cedures by the end of 1992, and another plans to do so in 1995. The other seven did not estimate when they would have the procedures developed. The status of each state’s development and use of routine credit-reporting procedures is illustrated in figure 2. The 29 state agencies with routine reporting procedures established them for different reasons. Officials in 17 agencies said that the major reason was to help increase support collections. In seven other agencies, the main reason was that routine reporting was viewed as a cost- effective way of complying with the federal requirement to respond to credit bureau inquiries. Two others adopted routine reporting primarily because of OCSEprompting, and the remaining three had different reasons. State agencies that had not established routine reporting procedures indicated several reasons why they had not. Twenty-two agencies cited concerns related to their lack of automated information or credit bureaus’ preference for automated reporting. Others noted that (1) information on noncustodial parents might be inaccurate; (2) routine reporting procedures might be costly to establish or operate; (3) federal or state laws and regulations restrict credit reporting, such as limiting who can be reported; and (4) local jurisdictions already routinely report. State child support enforcement agencies’ credit-reporting procedures States’ Procedures for vary. The 21 agencies that routinely report to credit bureaus use dif- Reporting to Credit ferent criteria for deciding whom to report, provide different informa- Bureaus Vary tion, and have other procedural differences. Agencies also use different criteria and provide different information in responding to credit bureaus’ inquiries (see app. I). ‘Officials in five of these agencies said that one or more local jurisdictions in their states already use routine reporting. Page 4 GAO/HRD-90-113 Child Support Enforcement e R-234817 Figure 2: Status of State Agency Use of Routine Credit Reporting (Sept. 1989) Reporting Procedures in place; reporting pending Plans to report in future; procedures pending Note: The District of Columbia routinely reports credit information. Puerto Rico, Guam, and the Virgin Islands do not have routine procedures, but plan to routinely report in the future. Criteria for deciding which noncustodial parents to report vary among state agencies with routine reporting experience. As illustrated in figure 3, all agencies except one use arrears as criteria in deciding whom to Page 6 GAO/HRD90-113 Child Support Enforcement B-234817 report.’ Seventeen agencies use dollar thresholds, ranging from $1 to $2,000, as their arrears criteria, Eleven use days-in-arrears thresholds, ranging from 1 to 60 days. Some state agencies also use other criteria in deciding whom to report to credit bureaus. For example, New York reports noncustodial parents only if the state agency knows such par- ents’ social security numbers and the parents (1) are in arrears, (2) live in the state, and (3) are on federal and state income tax refund intercept lists.:%Appendix II provides the criteria that each state agency uses in deciding whom to report. Figure 3: Criteria State Agencies Use for Routine Reporting (Sept. 1989) 2S Numberof StateAgencies Note: This is based on the 21 state agencies that routinely report child support informatlon (see app. It). “Vermont reports virtually all noncustodial parents, including those who are current with their sup port payments. California, which did not routinely report to credit bureaus, was required by state law to develop, by July 1, 1990, statewide procedures for reporting all court-ordered obligations. These requirements are more aggressive than existing federal requirements. “Intercepting federal or state income tax refunds is a technique for collecting child support debt. It involves reducing the amount of the noncustodial parent’s tax refund by the amount of the parent’s arrears. Page 6 GAO/HRD-90-113 Child Support Enforcement E234817 OCSE and some credit industry officials told us they would like more state agencies to report all noncustodial parents, including those without arrears. OCSE officials said that they would like states to report all such parents because, among other reasons, doing so would enhance credit bureaus’ effectiveness as an information source for locating noncus- todial parents whose whereabouts are unknown. OCSE officials also said that credit bureaus normally do not request information about specific individuals from state agencies, preferring instead to routinely receive such information. Credit industry officials said that other sources gener- ally report information on all persons, regardless of whether they are behind in their payments. Further, the industry officials believe that noncustodial parents who pay support on time should benefit from having this favorable information in their credit reports. The state agencies with routine reporting experience also report dif- ferent types of information to credit bureaus, as shown in figure 4. For example, 19 agencies provide information on noncustodial parents’ cur- rent arrears, and 16 report monthly support obligations. Appendix III provides details on the types of information that each state agency rou- tinely reports to credit bureaus. Page 7 GAO/HRD-90-113 Child Support Enforcement B-234817 Figure 4: Information State Agencies Routinely Report (Sept. 1989) 25 Number of State Agencies 20 15 10 6 Note, This is based on the 21 state agencies that routinely report child support informatlon (see app. III). There are also procedural differences among state agencies, such as when agencies report noncustodial parents and how the agencies main- tain and update parents’ payment records reported to credit bureaus. Differences in state agencies’ routine reporting practices are illustrated by comparing Alaska’s and Nebraska’s systems. Alaska’s child support enforcement agency maintains automated state- wide child support account information, including such data as monthly obligations, payments, and current arrears. The agency’s computer scans the accounts each month to identify noncustodial parents whose child support debt has become $1,000 or more in arrears for at least 30 days. If this threshold has been met, the agency notifies the noncus- todial parent by regular mail that his or her information will be pro- vided to the credit bureau. If the parent does not contest the proposed action within 15 days, the information is reported to the local credit bureau using an automated data tape. Each month the state agency automatically updates the arrears information with the credit bureau. Page 8 GAO/HRD-90-113 Child Support Enforcement , .* -.?U*. B.234317 In contrast, Nebraska’s child support enforcement agency reports non- custodial parents once a year if they are in arrears $25 or more for at least 1 day. Each September, the Nebraska agency uses district court records to add new names to a list of noncustodial parents with such arrears for both the state income tax refund intercept program and credit reporting. In October, a notice is mailed to the parents advising them of the intended tax intercept and that information may be reported to credit bureaus. The parents have until the end of November to contest either action. A list of parents who have not brought their accounts current is then sent to the credit bureaus in December using an automated data tape. Each month thereafter, the court clerks manually update the payment records for noncustodial parents who have been reported to the credit bureaus and send the updated information to the state agency. In turn, the state agency transmits the revised information to the credit bureaus by automated data tape. The limited evidence that is available on the effects of credit reporting Limited Evidence indicates positive results. An @XX-funded study as well as data system- Indicates Positive atically gathered by four states with routine reporting experience indi- Effects From Credit cate that credit reporting results in increased collections. Also, officials in state agencies with credit-reporting experience generally believe Reporting reporting results in increased collections, but they had little empirical evidence to support their belief. The ocsJ+funded study and some state agency officials also reported other benefits associated with credit reporting. Empirical Evidence Available empirical evidence, although sparse, indicates that routine Indicates Routine Credit credit reporting results in increased collections. The ocss-funded study of the effects of routine credit reporting in Marion County, Indiana, indi- Reporting Results in cated that collections on noncustodial parents’ accounts reported to Increased Collections credit bureaus were 20 percent higher than collections on unreported accounts. During the 1 l-month study period-August 1988 through *June 1989-total collections averaged $1,208 for reported parents com- pared to $1,006 for unreported parents. OCSE officials said that child support agencies with less aggressive enforcement procedures than those used by Marion County, whose collections per dollar spent are much higher than the comparable national figure, may have reaped even greater benefits from credit reporting. Data systematically gathered by officials in 4 of the 21 states with rou- tine reporting experience also indicated increased collections. For example, in Maine, after receiving the state agency’s notice that their Page 9 GAO/HRD-90-113 Child Support Enforcement =r-- B-234817 account information was going to be reported to the credit bureau, over 1,000 noncustodial parents took actions, such as paying their child sup- port debt or signing agreements to pay or have wages withheld. Collec- tions during the month following the notifications were reported to be more than $555,000 greater than collections during the same month of the previous year. An agency official believed that credit reporting was responsible for some of the increase, but noted that other factors also could have contributed. Child support collections in New Mexico also reportedly increased over $400,000 during the 15-month period fol- lowing the agency’s initial notification that noncustodial parents’ account information was going to be reported to credit bureaus. Officials Believe Credit State and federal child support enforcement officials believe credit Reporting Results in reporting results in increased support collections. Officials in the 35 state agencies that have reported information to credit bureaus-21 Increased Collections that routinely report and 14 that have responded to credit bureau inquiries-generally believe that such reporting results in increased col- lections. Officials in 20 agencies said credit reporting results in increased collections of arrears; 18 of these officials also said it results in increased monthly collections. Officials in two agencies noted that credit reporting was particularly effective in collecting child support from self- employed noncustodial parents, whose income cannot be withheld through an employer. Officials in 14 state agencies provided examples of cases in which collec- tions had been made as a result of credit reporting. A Kentucky parent made a cash payment of eighteen lOO-dollar bills to avoid being reported to the credit bureau. In Kansas, a noncustodial parent made a $38,000 lump-sum payment as a result of credit reporting. OCSE also believes routine reporting results in increased collections. In its November 1988 publication, A Guide About Child Support Enforcement for Credit Grantors, OCSE stated that routine credit reporting encourages noncustodial parents to make timely support payments. Also, OCSE believes that credit reporting helps keep such parents from overex- tending themselves, thereby increasing their ability to pay child support. Related Benefits Other benefits associated with credit reporting have been identified. The WE-funded study and officials in 28 state agencies with credit- Page 10 GAO/HRD-90-113 Child Support Enforcement B-234817 - reporting experience reported that credit bureaus are a useful informa- tion source for locating noncustodial parents whose whereabouts are unknown4 The study also reported that credit bureaus were a good source of information about noncustodial parents’ assets, such as auto- mobiles. Such information is useful for placing liens on such assets.“, (j Federal and state laws present few legal impediments to state agencies’ Few Legal reporting child support debt to credit bureaus. A few state agency offi- Impediments to cials erroneously believe federal law limits which noncustodial parents Credit Reporting can be reported to credit bureaus. Federal law, however, merely sets forth minimum reporting requirements, including who must be reported, and does not preclude states from reporting others. Concerning state law, agency officials in two states said such laws prevent routine reporting but are being revised to allow such reporting. Further, our research and discussions with agency officials identified no court deci- sions or current lawsuits relative to the reporting of child support infor- mation to credit bureaus. Federal Laws Set Forth Two federal laws-the Social Security and Fair Credit Reporting Acts- Basic Requirements, specifically address credit reporting and provide safeguards to protect noncustodial parents7 Neither precludes states from reporting any non- Present No Major custodial parent with a legitimate support obligation. Some state agency Obstacles to Credit officials, however, erroneously believe the Social Security Act restricts Reporting who can be reported to credit bureaus. The Social Security Act sets forth specific credit-reporting requirements for state child support enforcement agencies. It requires state agencies to provide information in response to credit bureau inquiries about non- custodial parents who are $1,000 or more in arrears and live in the state. Before information is disclosed, however, agencies must notify the “Our report Interstate Child Support: Better Information Needed on Absent Parents for Case Pursuit (GAO/HRtklO-41 ,May 24, 1990) discusses information sources useful for locating noncustodial parents. “The Child Support Enforcement Amendments of 1984 require states to establish procedures to impose liens against real or personal property. A lien, which is another tool for collecting debt, including overdue child support, is a claim against property. “State agencies may buy information about noncustodial parents from credit bureaus whether or not the agencies report child support information. 70ur legislative review also included the Privacy Act of 1974, as amended. This law applies only to federal agencies and not to state child support enforcement agencies. Page 11 GAO/HI&D&@113 Child Support Enforcement parents of the proposed action and provide them an opportunity to con- test its accuracy. In addition, the law requires that all procedural due process requirements of the state be met. The Fair Credit Reporting Act governs credit bureaus’ use of consumer credit information, including that provided by state child support enforcement agencies. The law also provides the following safeguards for persons reported to credit bureaus, including noncustodial parents whose child support information has been reported to credit bureaus by state agencies. . A consumer has a right to contest any item in his or her report. If an item is contested, the credit bureau must reverify the information within a reasonable time. If the report is corrected, the consumer may request that the correct information be forwarded to earlier recipients of the report without charge. l Credit bureaus must furnish to consumers, upon their request, the names of all parties to whom the consumer’s credit report had been pro- vided within the last 6 months. . Any person reported to a credit bureau has the right to place a state- ment in his or her credit report refuting entries made by others, including child support agencies, if the credit bureau does not resolve the problem. . Credit bureaus may not disclose information in a consumer’s credit report except under certain circumstances8 A few state agency officials have erroneously interpreted the Social Security Act to restrict whom they can report to credit bureaus. Offi- cials in several states said that this law allows them to report only par- ents with arrears. While the Social Security Act establishes minimum requirements for credit reporting, nothing in the law prohibits child sup- port enforcement agencies from providing information to credit bureaus on any noncustodial parent with a legitimate child support obligation. ‘Credit bureaus may provide state child support agencies any noncustodial parent’s name, address, and employer, but may not provide other information in the parent’s credit report unless the agency certifies that the information will be used for permissible purposes. In a July 26, 1979, letter to OWE, the Federal Trade Commission said that collecting child support pursuant to an existing court order is a permissible purpose. Page 12 GAO/HRD-90-113 Child Support Enforcement B.234817 Few State Legal ’ According to state officials, state laws also present few legal impedi- Impediments to Credit ments to state agencies’ reporting child support debt to credit bureaus. Officials in two states identified laws that have prevented routine credit Reporting Identified reporting, but said that these laws were being revised to allow such reporting. Officials in several other state agencies said that although state laws affect credit reporting, they do not present significant impediments. Officials in Arkansas and Michigan said that state laws that have pre- vented routine credit reporting were being revised to allow such reporting. An Arkansas official said that the state ceased routine reporting because a noncustodial parent had challenged the state’s right to do so. The parent had argued that Arkansas law permitted responding only to credit bureau inquiries about specific individuals. Although no lawsuit was filed, the state stopped reporting and is redrafting its legislation to specifically permit routine reporting. Simi- larly, a Michigan official said that state law had been interpreted to pro- hibit providing information to credit bureaus except in response to specific individual inquiries, but that a new law was being drafted to permit routine reporting of information about all parents in arrears more than 1 month or $1,000. Some state privacy and other laws affect credit reporting, but were not identified by state agency officials as major impediments. Officials in three states said state privacy laws are considered when providing information to credit bureaus, but are not significant obstacles to credit reporting. In addition, officials in several other state agencies said that state laws limit them to reporting only those noncustodial parents who have arrears. agreed with our findings and said that OCSE is issuing a letter to Agency Comments IIIIS states clarifying that federal law and regulations set a minimum stan- dard-not limits-for states’ credit reporting. We incorporated HHS’S suggested changes to clarify the report as appropriate, including changing the credit-reporting status of Arizona. (See app. IV.) As arranged with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days from its issue date. At that time, we will send copies to other interested con- gressional committees, the Secretary of Health and Human Services, the Director of the Office of Child Support Enforcement, and the state child Page 13 GAO/HRD-90-113 Child Support Enforcement B-234817 support agencies. We will also make copies available to others on request. If you have any questions about this report, please contact me on (202) 275-5365. Major contributors to this report are listed in appendix IV. Sincerely yours, Gregory J. McDonald Associate Director, Income Security Issues Page 14 GAO/HRLMO-113 Child Support Enforcement Page 16 GAO/HRlMO-113 Child Support Enforcement Contents Letter Appendix I SelectedInformation on State Agency Procedures for Responding to Credit Bureau Inquiries Appendix II Criteria Used by State Agencies for Routinely Reporting to Credit Bureaus Appendix III 24 Information Reported by State Agencies Routinely Reporting to Credit Bureaus Appendix IV 25 Comments From the Department of Health and Human Services Appendix V 27 Major Contributors to This Report Page 16 GAO/J%RD-SO-113 Child Support Enforcement Related GAO Products 28 Tables Table I. 1: Criteria Used in Deciding Whom to Report in 18 Response to Credit Bureau Inquiries Table 1.2: Information Reported to Credit Bureaus 20 Figures Figure 1: Growth in State Agency Use of Routine Credit 3 Reporting (Jan. 1984 - Sept. 1989) Figure 2: Status of State Agency Use of Routine Credit 5 Reporting (Sept. 1989) Figure 3: Criteria State Agencies Use for Routine 6 Reporting (Sept. 1989) Figure 4: Information State Agencies Routinely Report 8 (Sept. 1989) Abbreviations GAO General Accounting Office IIIIS Department of Health and Human Services OCSE Office of Child Support Enforcement Page 17 GAO/HRD-90-113 Child Support Enforcement Appendix I SelectedLnformation on State Agency Procedures for Respondingto Credit Bureau Inquiries Table 1.1:Criteria Used in Deciding Whom to Report in Response to Credit Bureau Inquiries Minimum Minimum On income tax amount in days in Known social intercept IisP State arrears arrears security number Federal State Other --- Alabama ----_- ..-- $1,000 X Alaska -- -- X -___ Arizona . 30 x -- ___- Arkansas X -..- California -~ X _-- Colorado . 31 x X X In-state-__...-. parents only Connecticut 1,000 -- ____- --. _________ Delaware _ -....1,000 .~-~..-._---.____ .- -- District of Columbia 1,000 Florida 500 ~___ -_______ Georgia 500 30 x X Guam . . ~-. Hawaii 1,000 -~____~____. X -.-. X -__-..- Idaho 500 31 x -- -- X _______ ilknois 1,000 0 x Indiana h 7 b -- Iowa X Kansas 100 1 ___- Kentucky 150 -_ ..-___ LouIslana . 30 l ___.-.- -___ Maine 50 30 .___ -- __- -.-_ Maryland 1 1 Massachusetts 1,000 _____.--- Mrchigan ______..______._.~ -_______.. .~-.---.- Minnesota oo- ._---...-~~. 30(-.-~~ X .._.-1,000 --~ -__ .______ ~__ Mississippr _ . . .._--... ..-____..~~ ._.-- _ Missouri 1,000 30 x -~- X X Montana 1 -.______-- 1 Nebraska 25 1 x -.___. Nevada. In-state parents only - New Hampshire . 31 x __- Ned Jersey. ..~. ‘. ~~~~... 1,000 N&w Mexico 1,000 60 X New .^^ York ~~ . . .-.... .- 1,000 X X X In-state parents only North Carolina 500 North Dakota ._ ..__-- -__.---_ ---k- __..... -_~- .._ ______-1,000 30 x In-state parents only Ohio X c .”_...-.... ..-.-_. --. (continued) Page 18 GAO/HRIMO-113 Child Support Enforcement ---T- Appendix I Selected Information on State Agency Procedures for Responding to Credit Bureau Inquiries Minimum Minimum On income tax amount in days in Known social intercept lista State --.---~ arrears arrears security number Federal State Other Oklahoma . 1,000 60 __-.. Oregon X ~___. Pennsylvania d In-state parents only 1,000 Puerlo RICO X . In-state parents only .--_- Rhode Island 150 30 South Carolina 1,000 .-._ .---..- .__-- ___-- -__-. South Dakota 1 1 Tennessee X Texas Utah Vermont Vrrgin Islands 500 Vtrgtnia Washrnglon 1,000 West Vrrgrnra 1,000 In-state parents only Wtsconsin llOO0. Wyominq e Legend X = Needed for noncustodial parent to be reported Blank = Not needed l = State agency official did not know “A collection technique that rnvolves reductng noncustodial parent’s tax refunds by amount of arrears “The arrears amount may vary by county; it is not specified by the state agency. Counties may also set other criteria. ‘Counties may set other criteria “Days rn arrears varies by county and terms of court order “Does not report married noncustodial parents who voluntarily acknowledge paternity of a child born out of wedlock; policy being revised. Page 19 GAO/HRD99-113 Child Support Enforcement Appendix I Selected Information on State Agency Procedures for Responding to Credit Bureau Inquiries Table 1.2: Information Reported to Credit Bureaus Social Noncustodial Monthly Current Highest Last -C;;z; parent’s support arrears arrears arrears Payment state address obligation amount ____ amount ___.- payment history Alabama X X Alaska X X . . . . 0 __--_..--- Anzona .~~~~-..~~ . ~~~~ ~~_ X X --- Arkansas X . X X X X X Callfornla X X X X X Colorado X X X Connecticut X x X .....~~_ _. .~ .x-~.. .._- xX X -~ X ---.--. _~-X..._-..-.~.-..~~--..- X ~. ~~~~. Delaware X X X X -~~~._~~~_~~~~ ..~ Dlstnct of Columbia X X X X X Florida Georgia Guam Hawaii Idaho lllinols Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota MISSISSIPPI Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohlo (continued) Page 20 GAO/HRD-90-113 Child Support Enforcement - Appendix I Selected Information on State Agency Procedures for Responding to Credit Bureau Inquiries Social Noncustodial Monthly Current Highest Last f=;p; support arrears arrears arrears Payment State . ..__- - Kxz: obligation amount amount payment history Oklahoma X X X x~~ -- x X Oregon X X -____ X - X Pennsylvania X X ~.---_.___ Puerlo Rico X X -_X ____.- X X X X ---__ Rhode island X X X X X X -___...- South Carolina X X X X X - South Dakota X X X X X _____-_____ Tennessee X X X X X Texas X X X X____..-.-__X X X Utah X ___ X X ____-.-- Vermont X X X X X X X Virgin Islands X X X x -- x X X Vlrginla X X X X --- ----____ ___-- Washington X .__..^ .~ X X West Vlrginla X X ~.___ Wisconsin X X X.__..---___.___ X . Wvomina X . X X . . X Legend X = Yes Blank = No l= State agency official CM not know Page 21 GAO/HRD-90-113 Child Support Enforcement , 1 Appendix II Criteria Used by State Agencies for Routinely ’ Reporting to Credit Bureaus Minimum Minimum On income tax amount in days in Known social intercept listb State” _-..__....._.~. arrears arrears security number Federal State Other Alaska $1,000 30 x c .-. ..-- ..__-.-.---. Delaware -. 1,000 District of Columbia 1,000 Florida 500 X Georgia 500 X X Idaho ---____- -_-___- 500 31 x X --.~.- -____ ---. Kentucky 150 Louisiana d 30 l Mame 50 30 ~- -- Massachusetts” 1,000 X Mlssoun’ 1,000 30 x X X Nebraska 25 1 x X New Mexico 1,000 60 X New York 1,000 X X X In-state parents only North Dakota 1,000 30 x In-state parents only Oklahoma 1,000 60 Oregon 9 9 x d 31 x Rhode Island” ~--- ______. Tennessee 2,000 X X I Utah 1 30 I k Vermont Legend X = Needed to report noncustodial parent Blank = Not needed to report noncustodial parent l = State agency official did not know or not applicable aArizona, Arkansas, Illinois, Iowa, Kansas, Montana, New Jersey, and Washington had routine reporting procedures, but had not used them at the time we interviewed state officials. “A collection technique that involves reducing noncustodial parents’ tax refunds by amount of arrears. ‘Does not report out-of-state noncustodial parents if another state is involved in enforcement. dAmount not specified. ‘Began reporting in February 1989, but temporarily stopped reporting from July through October due to problems with data accuracy. ‘Manually reports when all other enforcement options are unsuccessful. State is developing an auto mated system. Qeports when arrears equal 3 months of payments “Reported 6,000 cases on June 30, 1989. No additional reporting due to problems with data accuracy. State plans to resume reporting in January 1991, when a new automated information system is installed ‘Reports noncustodial parents of children on welfare once each year, and updates information when payments are made. State is developing procedures for reporting nonwelfare cases. Page 22 GAO/HRD-90-113 Child Support Enforcement Appendix II Crltmia Ueed by State Agencies for Routinely Reporting to Credit Bureaus IReport only noncustodial parents with arrears recognized by the district court, which may be as low as $1 but usually total $100 or more. kDoes not report if risk of spousal abuse would increase. Page 23 GAO/HRD-90-113 Child Support Eniorcement Appendix III Formation Reported by State Agencies Routinely Reporting to Credit Bureaus Social Noncustodial Monthly Current Highest Last security support arrears arrears arrears Payment Statea number ~~~nef: obligation amount amount payment history Alaska X X X X X X Delaware X X X __.- X X X X District of Columbia X X x - -~- X --~ X Florida X X X ______ Georgia . ..-. X .~..--.-.--..--.-.-----______ X ..---- -- X X X _______________ Idaho ~~~-...--..- X X __-__ X ~- X ~____ Kentucky -- X X X ..-____ X X ___~ Louisiana X X -___ X X X -. Maine X X - X Massachusetts X X ___- ___-- X X MISSOURI X X X X___. Nebraska X X X X ~___-- X X New Mexico X X X __--- -.X X X .____- New York X X X X X North Dakota X X X X X Oklahoma -- X X -. -__- -. ~- X X -. X -- X Oregon X X X -. X X X Rhode Island X X X X . . Tennessee X b _---..-X-_-- .-__ ~- -.- -.-.--. Utah X X c .-~.-- -..- -- ___--..- - Vermont X X X X X X X Legend: X = Yes Blank = No l = State agency official did not know “Arizona, Arkansas, Illinois, Iowa, Kansas, Montana, New Jersey, and Washington had routine reporting procedures, but had not used them at the time we interviewed state officials. “Reports noncustodial parents of children on welfare once each year, and updates rnformation when payments are made. State is developing procedures for reporting nonwelfare cases. ‘Qeport only noncustodial parents with arrears recognized by the district court, which may be as low as $1 but usually total $100 or more. Page 24 GAO/HRD-90-113 Child Support Enforcement . PW *$%ents From the Department of Health and Human Services DEPARTMENTOF HEALTH 0 HUMAN SERVICES Oflice of Inspector General Washtnglon. D.C. 20201 Mr. Lawrence H. Thompson Assistant Comptroller General United States General Accounting Office Washington, D.C. 20548 Dear Mr, Thompson: Enclosed are the Department's comments on your draft report, "Child Support Enforcement: More States Reporting Debt to Credit Bureaus to Spur Collections." The comments represent the tentative position of the Department and are subject to reevaluation when the final version of this report is received. The Department appreciates the opportunity to comment on this draft report before its publication. Sincerely yours, Q!III Richard P. Kusserow Inspector General Enclosure Page25 GAO/HRD-90-113 Child Support Enforcement Appendix IV Comments From the Department of Health and Human Services COIMENTS OF THE DEPARTRRRTOF HEALTH AND HWAN SERVICES ON THE U.S. QENERAL ACCOUNTING OFFICE'S REPORT, ‘MORE STATES REPORTING DEBT TO CREDIT BUREAUS TO SPUR COLLECTIONS’ General Comments We agree with GAO's overall findings relative to States reporting to credit bureaus. The following are some areas we suggest clarification or emphasis: 1. Clarification is needed regarding the definition of an operating system for States reporting to credit bureaus. The Office of Child Support Enforcement (OCSE) collects quarterly information from regional offices on the status of States in reporting information to the credit reporting agencies (CRAs). Our reports ahow that as of September 30, 1989, 17 States have operating systems for reporting to CRAs, as opposed to 22 in GAO's report. The five States that we show a different status for are: Arizona and New Jersey as pilot testing; Massachusetts as developing: and Missouri and Washington as planning. The difference may be in the definition used for identifying States with an operating system. Our definition of an operating system is that a State has an established system to routinely report child support data to a credit reporting agency which includes one of the following methods of reporting: (1) an automated or manual operation; (2) routinely provides data to CRAs; (3) IRS tape exchange; (4) updates information monthly to yearly; or (5) an operating agreement with one or more CRAs. 2. We suggest emphasizing in the report that the law and regulation set minimum requirements and do not limit credit reporting. In fact, the reporting requirement as outlined is less than the credit industry standard of monthly updated information. The report should encourage States to explore expanded reporting - an example is California's credit reporting which goes beyond what is required. The OCSE is issuing a letter to States to clarify that the law and regulation set a minimum standard, not the limit, for States' credit reporting. We concur with GAO'S position that any research or experimental design not prohibit credit reporting services. Page 26 GAO/HRD-SO-113 Child Support Enforcement &Bendix V Major Contributors to This Report David P. Bixler, Assistant Director, (202) 275-8610 Human Resources Daniel M. Brier, Assistant Director Division, Byron S. Galloway, Evaluator-in-Charge Washington, D.C. Patricia M. Bundy, Staff Evaluator Mark S. Vinkenes, Senior Social Science Analyst Margie K. Shields, Regional Assignment Manager San Francisco David F. Fiske, Site Senior Regional Office Delores J. Ammay, Staff Evaluator Jonathan M. Silverman, Reports Analyst Page 27 GAO/HRD-90-113 Child Support Enforcement Related GAO Products Interstate Child Support: Better Information Needed on Absent Parents for Case Pursuit (GAO~HRD-90-41, May 24, 1999). Child Support: State Progress in Developing Automated Enforcement Systems (GAOIHRD-89-lam, Feb. 10, 1989). Interstate Child Support: Case Data Limitations, Enforcement Problems, Views on Improvements Needed (GAO/HRD-89-25, Jan. 27, 1989). Child Support: Need to Improve Efforts to Identify Fathers and Obtain Support Orders (GAOIHRD-87-37, Apr. 30, 1987). Child Support: States’ Progress in Implementing the 1984 Amendments (GAO/HRD-87-11,Oct. 3, 1986). (IM466) Page 28 GAO/HRD-90-113 Child Support Enforcement -_- ,-” . I_ ._.--_.----..- -~ -_-“-..l-l_ll.._---. 11*,1” I. .“. ..--.-_.1 “.----- -..- - . .---.--I__- .-.___^ _..__ “,.“.l”l _ 1,, II ,,,,, __““. **I .._ ‘1’1~ first L’ivta copies of’ t~wlr report art’ l’rw. Adtiit,ional copies art’ 62.00 t~at’lr.
Child Support Enforcement: More States Reporting Debt to Credit Bureaus to Spur Collections
Published by the Government Accountability Office on 1990-07-31.
Below is a raw (and likely hideous) rendition of the original report. (PDF)