oversight

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)

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
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              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



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-.?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
                                                                                                                                                                                                                             -_-
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                                                                                 ‘1’1~ first L’ivta copies of’ t~wlr report                                                           art’ l’rw. Adtiit,ional          copies art’
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