SPEAKERS CONTENTS INSERTS Tables
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CHILD SUPPORT SYSTEM IMPROVEMENTS
SUBCOMMITTEE ON HUMAN RESOURCES
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
SEPTEMBER 10, 1997
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Printed for the use of the Committee on Ways and Means
COMMITTEE ON WAYS AND MEANS
BILL ARCHER, Texas, Chairman
PHILIP M. CRANE, Illinois
BILL THOMAS, California
E. CLAY SHAW, Jr., Florida
NANCY L. JOHNSON, Connecticut
JIM BUNNING, Kentucky
AMO HOUGHTON, New York
WALLY HERGER, California
JIM McCRERY, Louisiana
DAVE CAMP, Michigan
JIM RAMSTAD, Minnesota
JIM NUSSLE, Iowa
SAM JOHNSON, Texas
JENNIFER DUNN, Washington
MAC COLLINS, Georgia
ROB PORTMAN, Ohio
PHILIP S. ENGLISH, Pennsylvania
JOHN ENSIGN, Nevada
JON CHRISTENSEN, Nebraska
Page 3 PREV PAGE TOP OF DOCWES WATKINS, Oklahoma
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
CHARLES B. RANGEL, New York
FORTNEY PETE STARK, California
ROBERT T. MATSUI, California
BARBARA B. KENNELLY, Connecticut
WILLIAM J. COYNE, Pennsylvania
SANDER M. LEVIN, Michigan
BENJAMIN L. CARDIN, Maryland
JIM McDERMOTT, Washington
GERALD D. KLECZKA, Wisconsin
JOHN LEWIS, Georgia
RICHARD E. NEAL, Massachusetts
MICHAEL R. McNULTY, New York
WILLIAM J. JEFFERSON, Louisiana
JOHN S. TANNER, Tennessee
XAVIER BECERRA, California
KAREN L. THURMAN, Florida
A.L. Singleton, Chief of Staff
Janice Mays, Minority Chief Counsel
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Subcommittee on Human Resources
E. CLAY SHAW, Jr., Florida, Chairman
DAVE CAMP, Michigan
JIM McCRERY, Louisiana
MAC COLLINS, Georgia
PHILIP S. ENGLISH, Pennsylvania
JOHN ENSIGN, Nevada
J.D. HAYWORTH, Arizona
WES WATKINS, Oklahoma
SANDER M. LEVIN, Michigan
FORTNEY PETE STARK, California
ROBERT T. MATSUI, California
WILLIAM J. COYNE, Pennsylvania
WILLIAM J. JEFFERSON, Louisiana
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records of the Committee on Ways and Means are also published in electronic form. The printed hearing record remains the official version. Because electronic submissions are used to prepare both printed and electronic versions of the hearing record, the process of converting between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process is further refined. The electronic version of the hearing record does not include materials which were not submitted in an electronic format. These materials are kept on file in the official Committee records.
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Advisory of September 3, 1997, announcing the hearing
U.S. Department of Health and Human Services, Hon. David Gray Ross, Deputy Director, Office of Child Support Enforcement
U.S. General Accounting Office, Joel C. Willemssen, Director, Information Resources Management, Accounting and Information Management Division
American Public Welfare Association, Robert Doar
Arizona Department of Economic Security, Nancy Mendoza
Center for Law and Social Policy, Vicki Turetsky
Children's Defense Fund, Nancy Ebb
Department of Information Technology, Pontiac, MI, John E. Mahoney
Florida Department of Revenue, Jim Zingale
Missouri Division of Child Support Enforcement, Teresa Kaiser
New York State Office of Child Support Enforcement, Robert Doar
Policy Studies, Inc., Denver, CO, Robert G. Williams
SUBMISSIONS FOR THE RECORD
American Fathers Coalition, Stuart A. Miller, statement
Association for Children for Enforcement of Support, Inc., Geraldine Jensen, statement
Page 6 PREV PAGE TOP OF DOC California, State of, Office of Child Support Enforcement, Leslie L. Frye, statement
Louisiana District Attorneys' Association, E. Pete Adams, statement
National Child Support Enforcement Association, Joel K. Bankes, letter and attachments
CHILD SUPPORT SYSTEM IMPROVEMENTS
WEDNESDAY, SEPTEMBER 10, 1997
House of Representatives,
Committee on Ways and Means,
Subcommittee on Human Resources,
The Subcommittee met, pursuant to notice, at 10:03 a.m., in room B318, Rayburn House Office Building, Hon. E. Clay Shaw, Jr., (Chairman of the Subcommittee) presiding.
[The advisory announcing the hearing follows:]
FROM THE COMMITTEE ON WAYS AND MEANS
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SUBCOMMITTEE ON HUMAN RESOURCES
CONTACT: (202) 2251025
FOR IMMEDIATE RELEASE
September 3, 1997
Shaw Announces Hearing on Child Support
Congressman E. Clay Shaw, Jr., (RFL), Chairman, Subcommittee on Human Resources of the Committee on Ways and Means, today announced that the Subcommittee will hold a hearing on the Administration's proposal for a reformed child support incentives system and on the progress of States in meeting the child support automatic data processing requirements of the 1988 Family Support Act. The hearing will take place on Wednesday, September 10, 1997, in room B318 of the Rayburn House Office Building, beginning at 10:00 a.m.
In view of the limited time available to hear witnesses, oral testimony at this hearing will be from invited witnesses only. Witnesses will include representatives from the Administration, State child support program directors, child advocacy groups, and private companies participating in child support enforcement programs. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing.
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In each of the States and territories, the child support enforcement program is financed by three streams of money: Federal reimbursement of 66 percent of all valid State expenditures on the State child support program; a share of the child support collections in welfare cases; and incentive payments of up to 10 percent of collections.
For many years, critics have argued that Federal incentive payments, which now have reached nearly $500 million per year, do not effectively reward high performance by States. The biggest perceived flaw in the payment system is that States receive Federal payments of at least 6 percent of collections regardless of their program's efficiency. Thus, a State that spends $1 million dollars to collect $1 million dollars would still receive an incentive payment of $60,000.
The extensive amendments to the child support program contained in last year's welfare reform legislation (P.L. 104193) required the Secretary of the Department of Health and Human Services (HHS) to study the incentive system and to make recommendations for reform of the system. Based on testimony received at the Subcommittee's March 20, 1997, hearing on the administration's report (which was completed in February 1997) and on subsequent discussions with individuals and groups interested in child support, the Subcommittee is preparing to consider legislation in this area. Witnesses have been asked to comment on potential legislation and related issues.
The hearing will also present an opportunity for HHS to update the Subcommittee on how many States are expected to meet the October 1, 1997, deadline for implementing the automatic data processing systems required by prior Federal legislation.
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In announcing the hearing, Chairman Shaw stated: ''There is almost universal agreement that the current child support incentive system is inadequate. Thanks to the bipartisan agreement we now have on the outlines of a new incentive system, we have a good chance to enact legislation this year that will greatly strengthen our nation's child support system.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Any person or organization wishing to submit a written statement for the printed record of the hearing should submit at least six (6) single-space legal-size copies of their statement, along with an IBM compatible 3.5-inch diskette in ASCII DOS Text or WordPerfect 5.1 format only, with their name, address, and hearing date noted on a label, by the close of business, Tuesday, September 16, 1997, to A.L. Singleton, Chief of Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. If those filing written statements wish to have their statements distributed to the press and interested public at the hearing, they may deliver 200 additional copies for this purpose to the Subcommittee on Human Resources office, room B317 Rayburn House Office Building, at least one hour before the hearing begins.
Each statement presented for printing to the Committee by a witness, any written statement or exhibit submitted for the printed record or any written comments in response to a request for written comments must conform to the guidelines listed below. Any statement or exhibit not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.
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1. All statements and any accompanying exhibits for printing must be typed in single space on legal-size paper and may not exceed a total of 10 pages including attachments. At the same time written statements are submitted to the Committee, witnesses are now requested to submit their statements on an IBM compatible 3.5-inch diskette in ASCII DOS Text or WordPerfect 5.1 format. Witnesses are advised that the Committee will rely on electronic submissions for printing the official hearing record.
2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.
3. A witness appearing at a public hearing, or submitting a statement for the record of a public hearing, or submitting written comments in response to a published request for comments by the Committee, must include on his statement or submission a list of all clients, persons, or organizations on whose behalf the witness appears.
4. A supplemental sheet must accompany each statement listing the name, full address, a telephone number where the witness or the designated representative may be reached and a topical outline or summary of the comments and recommendations in the full statement. This supplemental sheet will not be included in the printed record.
The above restrictions and limitations apply only to material being submitted for printing. Statements and exhibits or supplementary material submitted solely for distribution to the Members, the press and the public during the course of a public hearing may be submitted in other forms.
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Note: All Committee advisories and news releases are available on the World Wide Web at 'HTTP://WWW.HOUSE.GOV/WAYS_MEANS/'.
The Committee seeks to make its facilities accessible to persons with disabilities. If you are in need of special accommodations, please call 2022251721 or 2022263411 TTD/TTY in advance of the event (four business days notice is requested). Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.
Chairman SHAW. If people can start to take their seats, we will try to start on time this morning. If everybody can take their seats, we will proceed.
One of the unheralded achievements of last year's welfare reform law was the set of provisions that are now putting the Nation's child support program onto a sound business footing. As a result of this legislation, we can expect child support collections to continue the rapid rate of increase they have enjoyed for the past several years.
Today's hearing is designed to examine two important aspects of our attempts to make the child support program more efficient. Our first panel will examine legislative proposals for improving the child support incentive system. The development of this legislation gets my vote for the most rational and effective policy process of the last several years.
Page 12 PREV PAGE TOP OF DOC Here is how we created this legislation: Recognizing the problems with the current incentive system in last year's welfare reform, Congress directed the Secretary to consult with the States and to propose revisions in the incentive system by March of this year.
The Secretary quickly appointed a work group composed primarily of administration officials and the directors of State child support programs. After several meetings, the group reached an accord on the outlines of a new incentive system. The Secretary organized these recommendations into an excellent and straightforward report and presented the report to Congress right on schedule.
Our first witness and good friend, Judge David Gray Ross, played a major role in organizing the incentive work group and in preparing the administration's report.
As many in this audience will recall, our Subcommittee held a hearing on the administrative report and recommendations on March 20. Since then, we have been meeting with advocates, administration officials, House and Senate staff, State child support directors, and others to develop bipartisan legislation. We have made drafts of the legislation available and have been getting comments on early drafts for the past 3 weeks.
Sandy and I will introduce our bipartisan bill early next week. We then intend to mark up the bill in Subcommittee and at Full Committee by the end of the month, with action on the House floor likely late this month or early next month. If we can achieve prompt Senate action, we expect to pass a bill the President can and will sign before the end of this season.
The second matter before the Subcommittee today is the status of automatic data processing in the States. We all are in agreement that a vital part of operating an efficient child support program is data processing.
Congress has now imposed two separate sets of data processing requirements on the States, one set in the Family Support Act of 1988 and a second set in last year's welfare reform bill. The Family Support Act required States to meet its data processing requirement by October 1, 1995. As a result of delays in the publication of regulations and other reasons, Congress changed that deadline to October 1, 1997, less than 1 month from today.
Page 13 PREV PAGE TOP OF DOC I am happy to report that, as Judge Ross will discuss in more detail in a moment, between 35 and 40 States have met and are very close to meeting the deadline. This is a major achievement and shows that we are on the right track. I congratulate all of those States that will make the deadline. I also congratulate HHS for the excellent assistance that they have given the States, working toward implementing their data system. But we have at least 10 States that have not met the deadline.
Let me say that I know all these States have made a valiant effort to meet the deadline. So we must continue to work intensely with these States so they can create an efficient data system at the earliest possible moment, and we must give them incentives to do so.
I also want the States and others to understand that we will not change the deadline again. As the judge will explain, October 1 is the key date in the process that will last 6 to 8 months before actual fines are imposed on States. During this period, we will work with HHS and others on a bipartisan basis to study exactly why several States missed their deadline. We will look carefully at the penalty procedure and determine the best way to help all States create an efficient and effective data system.
Given our success in so many States and with continuing help from HHS, the States' vendors, and not least from the child advocacy community, I have no doubt that we can help every State create an effective and efficient system.
The child support program is working. The stellar bipartisan reform and last year's welfare reform are making the program work even better. When we pass the new incentive programs this fall, the program will work still better. The key to continued improvement is to do just what our Subcommittee is doing today, to build bipartisan consensus for legislating reforms and to learn from and overcome our problems.
[The opening statement follows:]
Page 14 PREV PAGE TOP OF DOCOpening Statement of Hon. E. Clay Shaw, Jr.
One of the unheralded achievements of last year's welfare reform law was the set of provisions that are now putting the nation's child support program onto a sound business footing. As a result of this legislation, we can expect child support collections to continue the rapid rate of increase they have enjoyed for the past several years. Today's hearing is designed to examine two important aspects of our attempts to make the child support program more efficient.
Our first panel will examine legislative proposals for improving the child support incentive system. The development of this legislation gets my vote for the most rational and effective policy process of the last several years. Here's how we created this legislation.
Recognizing the problems with the current incentive system, in last year's welfare reform Congress directed the Secretary to consult with the states and to propose revisions in the incentive system by March of this year. The Secretary quickly appointed a work group composed primarily of administration officials and the directors of state child support programs. After several meetings, the group reached accord on the outlines of a new incentive system. The Secretary organized these recommendations into an excellent and straightforward report and presented the report to Congress right on schedule. Our first witness, Judge David Grey Ross, played a major role in organizing the incentive work group and in preparing the Administration's report.
As many in this audience will recall, our Subcommittee held a hearing on the Administration report and recommendations on March 20. Since then, we have been meeting with advocates, Administration officials, House and Senate staff, state child support directors, and others to develop bipartisan legislation.
We have made drafts of the legislation available and have been getting comments on early drafts for the past three weeks. Sandy and I will introduce our bipartisan bill early next week.
Page 15 PREV PAGE TOP OF DOC We then intend to markup the bill in Subcommittee and at Full Committee by the end of this month, with action on the House Floor likely late this month or early next month. If we can achieve prompt Senate action, we expect to pass a bill the President can sign before the end of this session.
The second matter before the Subcommittee today is the status of automatic data processing in the states. We are all in agreement that a vital part of operating an efficient child support program is data processing. Congress has now imposed two separate sets of data processing requirements on the statesone set in the Family Support Act of 1988 and a second set in last year's welfare reform bill.
The Family Support Act required states to meet its data processing requirements by October 1, 1995. As a result of delays in the publication of regulations and other reasons, Congress changed the deadline to October 1, 1997less than 1 month from today.
I am happy to report that, as Judge Ross will discuss in more detail in a moment, between 35 and 40 states have met or are very close to meeting the deadline. This is a major achievement and shows that we are on the right track. I congratulate all those states that will make the deadline. I also congratulate HHS for the excellent assistance they have given states working toward implementing their data systems.
But we have at least 10 states that have not met the deadline. Let me say that I know all these states have made valiant efforts to meet the deadline. We must continue to work intensively with these states so they can create an efficient data system at the earliest possible moment.
I also want the states and others to understand that we will not change the deadline again. As the Judge will explain, October 1 is a key date in a process that will last 6 to 8 months before actual fines are imposed on states. During this period, we will work with HHS and others on a bipartisan basis to study exactly why several states missed the deadline. We will look carefully at the penalty procedure and determine the best way to help all states create efficient and effective data systems. Given our success in so many states, and with continuing help from HHS, the states, vendors, and not least from the child advocacy community, I have no doubt that we can help every state create an effective and efficient system.
Page 16 PREV PAGE TOP OF DOC The child support program is working. The stellar bipartisan reforms in last year's welfare reform law are making the program work even better. When we pass the new incentive program this fall, the program will work still better. The key to continued improvement is to do just what our Subcommittee is doing todayto build bipartisan consensus for legislating reforms and to learn from and overcome our problems.
Chairman SHAW. At this time, I will yield to Mr. Levin for such opening statement as he cares to make.
Mr. LEVIN. Thank you, Mr. Chairman, and I salute you for your attention to an issue critically important to children, single-parent families, and to the effective implementation of welfare reform and the Federal child support enforcement program.
The job that pays a living wage is one component of self-sufficiency for families. And for single parents with a child support order, a noncustodial parent who supports the family every month can be equally important.
We have seen some progress since the seventies when Congress began to insist the States give priority to child support enforcement. Collections have risen from $1 billion a year to more than $11 billion in 1995. That same year, more than 5,000,000 parents were located and paternity was established for over 600,000 children. These, as you have indicated, are good results, but not good enough.
Of the 9.9 million females in the families who are eligible for child support, only 56 percent had child support orders. That means 4 1/2 million families did not even have an order to enforce. Those with child support orders often are not much better off. Only half of those due money from a noncustodial parent actually receive 100 percent of their court-ordered payment. And full automation, the cornerstone of a truly effective child support enforcement system, continues to elude many States, despite a decade-long commitment by the Federal Government to shoulder 90 percent of the cost. Today's hearing will look at both the current incentive structure as well as Federal requirements for an automated computer system.
Page 17 PREV PAGE TOP OF DOC In the mideighties, when we designed the current incentive structure, we may have done the best we could with limited information available to us. After nearly a decade of experience, we are now in a position to create a more sophisticated system that truly rewards performance. Many thanks to the Department of Health and Human Services and all those involvedand there have been manyin putting together the proposal we have before us today.
By the way, Mr. Chairman, maybe it would be good to place that in the record since youyes, the draft legislation. Do you want us to do that?
Chairman SHAW. Without objection, we will place it in the record, but with the explicit provision that this possibly could change from the bill that will actually be filed next week.
Mr. LEVIN. Good.
[The following was subsequently received:]
[The official Committee record contains additional material here.]
Mr. LEVIN. The Chairman and myself and all of us on the Subcommittee want to continue to receive your comments. To be sure, a wholesale change of this magnitude may be a bit daunting to the States because of the uncertainty of the size of incentive payments coupled with the dramatic change that our entire welfare system must undergo.
Before we conclude that some States may lose Federal funds under the new system, let us remember that it will be several years before the new incentives are fully implemented, and the goal is for all States to continue working and to qualify for the new incentives.
Page 18 PREV PAGE TOP OF DOC Let me make a few comments about the computer issue. I am pleased with the progress that has been made on the implementation of the automated systems which are essential to an effective child support enforcement program. But I am concerned that after several extensions, as many as 10 States, including my own, may not meet the October 1 deadline for implementation.
This is especially troubling since many of the child support reforms and the new welfare law depend on a fully functioning, efficient computer network. I am anxious to know just what is standing in the way for the remaining States.
I want to thank John Mahoney, the director of the Department of Information Technology of Oakland County, Michigan, for taking the time to share his insights on this problem with the Subcommittee.
Thank you, Mr. Chairman, and I am anxious now to receive the testimony.
[The opening statement follows:]
Opening Statement of Hon. Sander M. Levin
This morning, we focus our attention on an issue critically important to children, to single parent families, and to the effective implementation of welfare reformthe Federal Child Support Enforcement Program. A job that pays a living wage is one component of self-sufficiency for families, and for single parents, a child support order and a non-custodial parent who supports the family every month can be equally important.
We have seen some progress since the 1970's when Congress began to insist that States give priority to child support enforcement. Collections have risen from $1 billion a year to more than $11 billion in 1995. That same year, more than 5 million parents were located and paternity was established for over 600,000 children. These are good results.
But not good enough. Of the 9.9 million female-headed families in 1991 eligible for child support, only 56 percent had child support orders. That means 4.5 million families didn't even have an order to enforce. Those with child support orders aren't that much better offonly about half of those due money from a non-custodial parent actually receive 100% of the their court-ordered child support payment.
Page 19 PREV PAGE TOP OF DOC And full automationthe cornerstone of a truly effective child support enforcement systemcontinues to elude many states, despite a decade-long commitment by the Federal government to shoulder 90 percent of the cost of such systems.
Today's hearing will look at both the current incentive structure as well as federal requirements for an automated computer system.
In the mideighties when we designed the current incentive structure, we may have done the best we could with limited information available to us. After nearly a decade of experience, we are now in a position to create a more sophisticated system that truly rewards performance. Many thanks to the Department of Health and Human Services and all those involved in putting together the proposal we have before us today.
To be sure, a wholesale change of this magnitude may be a bit daunting to states because of the uncertainty over the size of incentive payments coupled with the dramatic changes our entire welfare system is undergoing.
But before we conclude that some states may lose Federal funds under this new system, let's remember that it will be several years before the new incentives are fully implemented and the goal is for all states to continue working and qualify for the new incentives. Let me also make a few comments about the computer issue. I am pleased with the progress that has been made on implementation of the automated systems which are essential to an effective child support enforcement program.
But I am dismayed that after several extensions, as many as 10 States, including my own, may not meet the October 1, deadline for implementation. This is especially troubling since many of the child support reforms of the new welfare law depend on a fully functioning, efficient computer network.
I am anxious to know just what is standing in the way for the remaining States and I want to thank John Mahoney, the Director of the Department of Information Technology of Oakland County, Michigan for the taking the time to share his insights on this problem with the Subcommittee.
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Chairman SHAW. Thank you, Sandy.
I would like to point out, before Judge Ross starts his testimony, I would like to point out to the Members the items that are in your packet there in front of you. Dr. Haskins refers to this as exciting material. I might say that his excitement is set at a lower temperature than mine.
Mr. LEVIN. You come from Florida, Mr. Chairman.
Chairman SHAW. There are a list of functions that the State computer systems must perform as required by the 1988 Family Support Act and the 1996 welfare reform legislation. The second is a map drafted by HHS that shows the status of the States in implementing the 1988 computer system requirements. The third is a report from the report on States' implementation of the 1988 computer system requirements written by the HHS and Inspector General. The fourth is a report on State implementation on 1988 computer system requirements written by the General Accounting Office. And the fifth is a copy of the current version of the bipartisan committee bill creating the new and incentive systems.
I think that you might find this helpful as the witnesses testify this morning.
At this time, I would like to invite Judge Ross to the witness table. He is Deputy Director of the Office of Child Support Enforcement, U.S. Department of Health and Human Services, and has worked closely with this Subcommittee through the drafting of so much legislation.
Page 21 PREV PAGE TOP OF DOC Judge Ross.
STATEMENT OF HON. DAVID GRAY ROSS, DEPUTY DIRECTOR, OFFICE OF CHILD SUPPORT ENFORCEMENT, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Mr. ROSS. Mr. Chairman and Members of the Subcommittee, thank you very much for giving me the opportunity to testify today on the progress of child support information systems and the administration's recommendations for revamping the incentive system. Systems development and the restructuring of the distribution of incentives are two key elements in strengthening our Nation's child support program.
The administration and this Committee are in full agreement that child support is a central part of welfare reform. That sends a message of responsibility to both parents and is a vital part of moving families toward work and self-sufficiency. Child support can also act as a safety net that helps ensure that single-parent families don't need assistance. Once families obtain independence, child support can keep them from falling back on the public assistance rolls.
Today I would like to focus my testimony in two critical areas, a new incentive structure and State automated systems. Statewide automated systems are critical to the success of our program. Computerized systems are the only means to provide both prompt and reliable processing of information. With a current national caseload of more than 20 million, we must move forward aggressively with new technologies if we are to keep up with the massive volume of information and transactions in every State.
As of today, 16 States have been certified. Many others are close to completion. Meeting this certification requirement is crucial. While many States are using significant levels of automation to process child support cases as they move toward certification, a comprehensive statewide system is a necessary foundation for the new provisions enacted last year to track parents across State lines and assure that they pay what they owe.
Page 22 PREV PAGE TOP OF DOC What happens if the State does not meet the October 1 statutory deadline? Having a comprehensive child support program operating statewide is a State plan requirement. Accordingly, by December 31, a State must certify to us through its State plan that its automated system meets Family Support Act requirements. Under current law, we will notify any State without such a system in place that we intend to disapprove its State plan and notify the State of its appeal rights.
The penalty under the law for failure to meet the statutory deadline is cessation of all Federal child support enforcement funding, including the 66 percent matching for program operating costs. I should note that if a State is not operating a child support enforcement program under an approved State plan, its TANF funds will also be lost.
Many States have succeeded in designing and implementing these critical computer systems. Together, we must continue our efforts to make automation a reality in all States.
Now, the Personal Responsibility and Work Opportunity Reconciliation Act required us, in consultation with State directors of IVD programs, to recommend to Congress a new incentive funding system based on program performance. These recommendations were contained our report to you on March 15. In my last appearance, I gave testimony on the content of the report and our collaborative effort with the States to develop a new incentive funding system.
The jointly developed, revenue-neutral, incentive funding proposal is tough and would push States to improve performance. This formula will ensure good outcomes for children and families. Since the completion of the incentives report, we have moved forward with the States on developing standard data definitions to further improve performance reporting. The current funding system is based on maximizing child support collections relative to administrative costs.
A minimum incentive payment is made to all States regardless of whether performance is good or poor. Currently, States can run inefficient programs and still receive large amounts of incentives. We all recognize that this does not create a significant incentive for the achievement of program goals.
Page 23 PREV PAGE TOP OF DOC To meet the congressional charge of the Secretary, we convened a work group of State and Federal partners. The work group developed a formula to reward States for their performance in five critical areas: Paternity establishment, support order establishment, collections on current support, collections on support past due, and cost effectiveness. There is full consensus from State partners that these measures represent the appropriate focus for the program. Under this plan, unlike the current, no incentive will be paid to the poor performers unless the State achieves a significant improvement in performance.
The amount of potential incentive payments for each measure available to each State will be based upon a percentage of its own State child support collections. However, we do recommend that collections of TANF cases and former TANF cases be weighted double.
Counting collections for incentive purposes this way accomplishes two objectives: States with large former TANF caseloads will no longer be penalized by a cap, as in the current formula, and many States are successful in moving families off welfare, and this success is not being recognized because of the cap in the current law.
Second, States have a strong incentive to pursue the action on TANF cases and former TANF cases. For these families, child support is critical for achieving independence and not returning to the public assistance rolls.
Because this system would, for the first time, be performance-based, some States would naturally lose incentives by moving to the new system. To help States prepare for this, we recommend the formula be phased in over a 2-year period.
Finally, I want to thank the Subcommittee for your work on behalf of America's children. Their future will be significantly improved because of the new collection tools and other reforms required of States by welfare reform.
[The prepared statement follows:]
Page 24 PREV PAGE TOP OF DOCStatement of Hon. David Gray Ross, Deputy Director, Office of Child Support Enforcement, U.S. Department of Health and Human Services
Mr. Chairman and Members of the Committee: Thank you for giving me the opportunity to testify today on the progress of child support information systems development and the Administration's recommendations for revamping the incentive system for State child support enforcement programs. Systems development and restructuring of the distribution of incentives are two key elements in strengthening the child support enforcement program as envisioned under last year's welfare reform bill.
The Administration and this Committee are in full agreement that child support is an essential part of welfare reform. It sends a message of responsibility to both parents and is a vital part of moving families toward work and self-sufficiency. Child support also can act as a safety net to help ensure that single parent families don't need assistance. Once families have attained independence, child support can keep them from falling back onto public assistance rolls. We are proud of this Administration's record on child support enforcement and anxiously await the positive results that the provisions of welfare reform will bring to further meet these critical goals.
President Clinton has made improving child support enforcement and increasing child support collections a top priority. Since taking office, President Clinton has cracked down on non-paying parents and strengthened child support enforcement, resulting in record child support collections. In FY 1996, $12 billion in child support was collected on behalf of the children of America. This amount represented a 50 percent increase in child support collections since FY 1992. We estimate that in FY 1997 we will collect over $13 billion. Since FY 1992, the number of paying child support cases has increased by 36 percent. In addition, over one million paternities were established in FY 1996, including IVD paternities and in-hospital paternity acknowledgements, almost doubling the number established in 1992. These accomplishments are impressive, but projections on the impact of the new provisions tell us they are only the beginning.
Page 25 PREV PAGE TOP OF DOC The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) included the tough child support measures President Clinton called for from the start, including license revocation and the development of a national new hire reporting system. Child support enforcement at the Federal and State levels is being transformed by these measures. Today, I will focus my testimony on two critical areas: development of a new incentive structure and state automated systems.
Child Support Information Systems
Statewide automated enforcement systems are critical to the success of the child support program. Computerized systems are the only means to provide both prompt and reliable processing of information. With a current national caseload of 20 million, we must move forward aggressively with new technologies if we are to keep up with the massive volume of information and transactions in every State.
Since the inception of the child support program, we've all recognized the importance of automation. By the mid-1980's all IVD agencies had some level of automation serving families in their States. Now, newer technologies allow us to consider ever-more advanced applications for child support information systems. With the Family Support Act of 1988, Congress acknowledged the increased importance of automation to child support and required statewide automated systems in all States by October, 1995 and later extended that deadline to October, 1997.
Automation of state child support programs:
(1) allows a worker to initiate a case or automatically initiates a case for families receiving public assistance;
(2) begins locating absent parents and tracks automated searches of State databases such as the Department of Motor Vehicles, and refers hard-to-find cases to the Federal Parent Locator Service;
Page 26 PREV PAGE TOP OF DOC (3) tracks, monitors and reports on efforts to establish paternity and support orders;
(4) accepts and processes case updates and keeps the caseworker informed about due dates and activities;
(5) monitors compliance with support orders and initiates enforcement actions such as wage withholding or tax refund offset;
(6) bills cases, processes payments and makes disbursements; and
(7) maintains information for accounting, reporting and monitoring.
With required safeguards, States ensure that all of this information is secure and held in strictest privacy.
As of today, sixteen States have been certified as having computerized systems which are comprehensive and statewide. Many others are very close to completion. Meeting this certification requirement is crucial. While many States are using significant levels of automation to process child support cases as they move towards certification, a comprehensive and statewide system is a necessary foundation for new provisions enacted last year to track parents across State lines and ensure they pay what they owe. It is much more efficient and economical to handle child support cases with such a system, especially in an environment where greater than 30 percent of the cases involve more than one state.
What happens if a State does not meet the October 1, 1997 statutory deadline for completing their system? Having a comprehensive child support system operating statewide is a State Plan requirement. Accordingly, by December 31, 1997 a State must certify to us through its State Plan that its system meets Family Support Act requirements. Under current law we will notify any State without such a system in place that we intend to disapprove its State plan and notify the State of its appeal rights. The penalty for failure to meet the statutory deadline is cessation of all Federal child support enforcement funding including the 66 percent of program operating costs. I should note that if a State is not operating a child support enforcement program under an approved State plan, its TANF funds will also be lost.
Page 27 PREV PAGE TOP OF DOC Our goal is to maintain State accountability, while working with States and providing the necessary assistance to ensure they have certified automated systems that will enable them to operate an effective child support enforcement program. All of us involved in developing these systemsthe Office of Child Support Enforcement, State child support agencies, the corporate communityrealize that completing these complex systems is not an easy task.
However, despite this complexity, many States have succeeded in designing and implementing these critical computer systems. Together we must continue our efforts to make automation a reality in all States.
Child Support Enforcement Incentive Funding
The Personal Responsibility and Work Opportunity Reconciliation Act required us, in consultation with State directors of IVD programs, to recommend to Congress a new incentive funding system for the State child support enforcement programs based on program performance. These recommendations were contained in our Child Support Enforcement Incentive Funding Report to Congress which was submitted to this Committee on March 15, 1997. In my last appearance before you on March 20, 1997, I gave testimony on the content of this Report and our collaborative effort with the States to develop a new incentive funding system for the child support enforcement program.
The jointly-developed, revenue neutral incentive funding proposal is tough and would push States to improve performance. This formula will ensure good outcomes for families and has a broad consensus among the States and other child support enforcement stakeholders. Since the completion of the incentives report we have moved forward with the States on developing standard data definitions to improve child support performance reporting.
Page 28 PREV PAGE TOP OF DOC The current incentive funding system is based on maximizing child support collections relative to administrative costs. A minimum incentive payment is made to all States regardless of whether performance is good or poor. Currently, States can run inefficient programs and still receive large amounts in incentives. We all recognize that this does not create a significant incentive for the achievement of program goals.
To meet the Congressional charge to the Secretary of HHS to change the incentive funding system, we convened a workgroup of State and Federal partners.
The workgroup developed a formula that rewards States for their performance in five critical areas: paternity establishment, support order establishment, collections on current support, collections on support past due (arrearages), and cost effectiveness. There is full consensus from State partners that these measures represent the appropriate focus for the program. The workgroup also established performance standards for each of the measures. These standards would determine the amount of incentive a State would receive for a certain level of performance and reward States for maintaining high performance or making substantial gains in improving their performance. The standards are designed to provide tough but reachable targets for performance by rewarding States with higher incentives as they improve. The standards for the first four measures include a performance threshold. Under this plan, and unlike the current system, no incentive would be paid unless a State achieves a significant improvement in performance. For the final measure on cost effectiveness, if a State collects less than two dollars for every one dollar expended, no incentive would be paid.
Each State would earn five scores based on performance on each of the five measures. Workgroup members believed all the measures were important, but the first three measurespaternity establishment, support order establishment and collections on current supportwere critical. Paternity establishment and support order establishment are prerequisites of collecting current support, which is essential for family self-sufficiency. Performance on the first three measures could earn a slightly higher incentive than the last two measurescollections on arrearages and cost effectiveness.
Page 29 PREV PAGE TOP OF DOC The amount of potential incentive payments for each measure available to each State would be based upon a percentage of its own State child support collectionsits ''collections base.'' The collection base includes collections in both Temporary Assistance to Needy Families (TANF) cases and former assistance cases. The collections base also includes collections made for families who were never on assistance. However, we recommend that collections in TANF cases and former TANF cases be weighted double, e.g., every dollar collected counts as $2. Counting collections for incentives purposes in this way accomplishes three objectives:
States with large former TANF caseloads would no longer be penalized by a cap as in the current formula. Many States are moving families off welfare and their success is not being recognized because of this cap under current law.
States would have a strong incentive to pursue action on TANF cases and former TANF cases. For these families, child support is critical to achieving independence and not returning to public assistance rolls.
Direct savings to State and Federal governments result from collecting child support in TANF cases. Costs of other public benefit programs such as Food Stamps and Medicaid could also be avoided by making collections in these cases.
Because this system would for the first time be performance-based, some States would naturally lose incentives by moving to the new system. To help States prepare for the new system, we recommend that the formula be phased in over two years. For FY 2000, a State would earn half of what it would have earned under the old formula and half of what it earns under the new calculation. In FY 2001, the new formula would be fully implemented. This would give States more time to adjust their programs, budget for any financial impact and improve their performance. Of course, the Office of Child Support Enforcement would continue to work with States to assist them during this transition.
The workgroup was concerned that with the enactment of welfare reform, the child support enforcement program is likely to change dramatically in the next few years. Therefore, the report recommends that the child support program's results and effects of the new incentive system should be reviewed periodically. Limited discretion should be granted to the Secretary of Health and Human Services to make appropriate changes, in consultation with the States, based on the program's actual results and effects every three to five years.
Page 30 PREV PAGE TOP OF DOC The workgroup's report includes recommendations with respect to other aspects of program funding beyond incentives. We have endorsed the workgroup's recommendations with respect to the incentive formula itself, but have reserved judgment on other aspects of the recommendations because further work may be needed.
We now have the groundwork in place for a more results-oriented management of the National child support enforcement program. We strongly urge Congress to pass legislation on the recommended incentive funding system to allow the child support enforcement program to truly be driven by achieving results for families and children in need of support.
In conclusion, Mr. Chairman, let me restate:
Much progress has been made in developing statewide automated child support systems. Continuing automation efforts are critical to future success in providing support to America's children.
The recommended incentive funding formula, developed in consultation with the States, would reward performance and remain revenue neutral. It is tough but fair and will lead to positive results for families.
I want to thank the Committee for your work on behalf of America's children. Their future will be significantly improved because of the new collection tools and other reforms required of States by welfare reform.
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Chairman SHAW. Thank you, Judge Ross, for fine testimony.
Mr. CAMP. No questions.
Chairman SHAW. Sandy.
Mr. LEVIN. Well, once again, your testimony is received with a lot of support up here. And I don't think we have to manufacture any controversy that real. So let me just ask you a more general question about where this is all going. What is a realistic objective, do you think, for us to set in terms of child support payments in this country?
Mr. ROSS. I am entering into a performance agreement with the Secretary, which will have us at $20.8 billion by the end of this Presidential term, which is pretty high. And it seems to me that is a reasonable expectation in the next 3 years.
Not everybody agrees with me. But when we set the goal at $12 billion when we first came to this job, no one agreed with me on that one, and we made it. So it seems to me it is not an unreasonable expectation. That really amounts to a 15-percent increase compounded per year from the beginning of the term for the next 4 years. So I would hope that $20.8 billion can be achieved. That, of course, assumes the systems will be in placeand that we will continue to have the attention that has been given to us recently.
Mr. LEVIN. And that would be roughly what percentage of the amount involved in court orders?
Mr. ROSS. Well, it depends on whose figures you useand I am happy to see you have in your folder several different sets of figures, but $34 billion is the figure we estimate as possible support. That includes, of course, people who find themselves lawyers and use them to make modifications in necessary orders.
But I would say in the terms of the percentage that it is just a percentage increase. Obviously, $20 billion compared to $8 billon collected when we started would be a good increase. That is a 150-percent increase over that time period.
Page 32 PREV PAGE TOP OF DOC Mr. LEVIN. Thank you.
Chairman SHAW. Judge, to follow up on Mr. Levin's questioning, what percentage of the parents are in compliance with their obligation? Do we know that figure?
Mr. ROSS. Not a hard number. What we say is, in 50 percent of the cases where there are orders, they are partially compliant; 25 percent of those people pay the total amount, and another 25 percent pay nothing.
Chairman SHAW. Only 25 percent of the largely fathers are in compliance with the court order?
Mr. ROSS. The latest number I remember is in terms of the orders established and, again, there are a couple ways to count it.
Chairman SHAW. That is disgraceful. I think that certainly shows a need for what we need to do.
Mr. ROSS. Fifty percent is what they are telling me.
Chairman SHAW. Fifty percent of full compliance. That is still rather critical.
Mr. ROSS. Right.
Chairman SHAW. It shows a need for reform.
Mr. ROSS. Oh, absolutely.
Chairman SHAW. Mr. McCrery.
Mr. MCCRERY. Mr. Ross, as a part of your recommendations, do you include a requirement that all incentive payments be used by the States for child support enforcement?
Mr. ROSS. We certainly do. We think that is key to the improvement of the program.
We have a number of States now where the money, which essentially is child support money that goes back to the State, is then put in different programs. So the work group that formed this recommendation felt as though it should be included. I notice that the Committee's billof course, first draft of the billdoes include that.
Page 33 PREV PAGE TOP OF DOC But the answer to the question is yes, the work group recommends that. And, frankly, it is important because it helps those States that are having problems with all the things they need to do to get up and running. Being able for child support purposes is important as opposed to building roads and doing other things.
I understand fully the States' financial problems, that they may need the money for other purposes, but it seems logical to me that child support incentives should be plowed back into child support programs until such time as we are performing at a much better rate than we are now.
Mr. MCCRERY. Well, what is the rationale, just the general rationale for incentive payments?
Mr. ROSS. The Old or New Testament, I think, says: Where the pocketbook is, there, the heart shall be also. It seems to me that if we are paying incentives to a program, we are going to pay them for good performance, then that will drive the program toward good performance.
Mr. MCCRERY. Well, sir, if I can try to rephrase
Mr. ROSS. I am probably in trouble saying that. I just thought of it.
Mr. MCCRERY. No; I think it is apropos.
But if I might rephrase, you are saying if you give the States some financial incentive to collect child support payments, they will do a better job of collecting them? Is that pretty much the rationale?
Mr. ROSS. Yes, sir. And the reason for that
Mr. MCCRERY. Let me continue then.
Mr. ROSS. OK.
Mr. MCCRERY. In my State, just to give you an example, the district attorneys, of course, are charged with the responsibility to carry out this program and to collect the child support, and they now use their incentive payments not only to support their operations with respect to child support enforcement but with other operations of their office. It is very important to many of them in terms of meeting their budget.
Page 34 PREV PAGE TOP OF DOC It seems to me that if you require the district attorneys in Louisiana to put back all of their incentive payments into the child support enforcement program and not allow them to use those incentive payments for other operations in their office, it has a perverse effect, because then if they have all the money they need to run their child support enforcement and they are doing the best job they can possibly do in child support enforcement, there is no incentive then for them to do any better, because they got all they need. And the other operations are suffering.
So my DAs tell me that your proposal to force them to put all 100 percent of the money back into child support enforcement won't do them any good and, in fact, will make them less enthusiastic about the program. So if, in fact, your rationale is to encourage States to do a better job for child support enforcement, it seems to me you might want to rethink and this Subcommittee might want to rethink that particular requirement.
Chairman SHAW. Mr. Hayworth.
Mr. HAYWORTH. Thank you, Mr. Chairman.
Judge, thanks for coming down today and for that new HHS interpretation of scripture. It is always good to see the new international version, now the HHS version.
As you know, Judge, the Subcommittee is contemplating two actions regarding automatic data processing. First, we think the determination of all IVD funding should be reserved for only the very worst cases in which the States define to the Federal Government. So we want to provide the Secretary with authority to impose fines on States that don't meet the October 1, 1997 deadline for completing their data systems.
Second, we would like to work with the administration and others to carefully examine the various recommendations we will hear today and to consider new approaches to helping States meet the new system requirements created by last year's welfare reform law.
Are you in support of these two actions?
Page 35 PREV PAGE TOP OF DOC Mr. ROSS. Well, I have to obviously see what precisely we are talking about before I can take a position on it. But, as I am sure you are aware, Arizona is certified, so we are off to a good start, with the State of Arizona and Nancy Mendoza, you will hear from later.
I don't think anyone wants to hurt children, but at the same time there has to be, it seems to me, forward movement, and together we have to figure out how to do that. We need, obviously, the specific proposals to see what they are and work as part of a group to perhaps shape those proposals. But I think it certainly needs to be done.
Mr. HAYWORTH. Right. Well, I appreciate your kind words for Arizona and look forward to hearing from Ms. Mendoza in a little while. And I guess, to borrow a phraseit is not scriptural, but I think Mr. Perot usedI guess we will all be all ears today to hear the different proposals and different solutions some States have found.
Thanks for coming, Judge.
And I have no questions, Mr. Chairman.
Chairman SHAW. Mr. Camp.
Mr. CAMP. Just to follow up on that line of questioning, a sanction that basically terminates the entire IVD program may actually have the opposite effect.
Mr. ROSS. I hope so.
Mr. CAMP. And I wondered what your thoughts were on a sanction that really was maybe a smaller percentage of the funding as opposed to terminating the whole thing.
Mr. ROSS. Again, what I talked about earlier is what the law is now.
In terms of giving a recommendation here today, I think perhaps it is a little premature for me to do that for, frankly, a number of reasons. But the fact is that we certainly are willing to work with the Subcommittee in providing for new legislation.
Page 36 PREV PAGE TOP OF DOC Mr. CAMP. All right. Thank you.
Thank you, Mr. Chairman.
Chairman SHAW. Thank you, Mr. Camp.
Mr. Collins, do you have any questions of Judge Ross?
Mr. COLLINS. No, sir.
Chairman SHAW. Judge Ross, we certainly appreciate your good work and your continuing attention to this problem and the fulfillment of your rosy predictions.
I think that all of us up here would agree that, in the long-term, we owe a responsibility to the kids to provide probably the best antidote to poverty and tothe best cure for poverty, excuse meand to take care of these kids and make sure that there is parental responsibility for bringing these kids into the world as well as to see to their well-being.
Thank you very much.
Mr. ROSS. Thank you very much.
I can't resist saying, Mr. Chairman, the last time I was here, I promptly left and had a heart attack. So I am hoping that doesn't happen today.
Mr. HAYWORTH. Stay with us, Judge. Stay with us.
Chairman SHAW. I would like the record to show that we treated the judge with the greatest respect.
Mr. ROSS. Thank you.
Chairman SHAW. Thank you, Judge.
Our next panel will be discussing the incentive payment reform. We have Nancy Ebb, who is a senior staff attorney of the Children's Defense Fund of Washington, DC. We have Nancy Mendoza, who is the assistant director of the Division of Child Support Enforcement of the Department of Economic Security from Phoenix, Arizona. We have Teresa Kaiser, director of the Division of Child Support Enforcement for the Department of Social Services in Jefferson City, Missouri.
Page 37 PREV PAGE TOP OF DOC Ms. Ebb, if you would proceed. We have all of your written testimony, which will be made a part of your record, and you may summarize as you see fit.
STATEMENT OF NANCY EBB, SENIOR STAFF ATTORNEY, CHILDREN'S DEFENSE FUND
Ms. EBB. Thanks for the opportunity to testify today.
Changing incentives to reward positive outcomes is an important step for children. The current system needs replacement. It rewards even poor performers and doesn't focus attention on outcomes that matter to children.
The proposal developed by HHS and States and reflected in the Subcommittee drafts is a very strong one. While there is some debate around the edges, broad consensus has developed about this proposal and it deserves passage.
Our written testimony highlights a number of ways the proposal can be and, we believe, should be strengthened. But I do want to underscore our basic support for its broad outlines. I would like to highlight some of our most important recommendations.
First, there should be an incentive to reward good medical support enforcement. Particularly in light of new funding for uninsured children enacted by Congress in H.R. 2015, States have exciting opportunities to expand effective medical support enforcement.
Since 1984, States have been required to seek medical support from the noncustodial parent where it is available at reasonable cost. But this is not a task many of them have taken seriously. According to GAO, in 27 HHS reviews of State medical support enforcement, 20 were not enforcing medical support orders, even where medical support was available through the noncustodial parent's employer.
H.R. 2015 provides new funding so that low-income parents, including noncustodial parents, can get insurance for their children at reasonable cost even if it is not available through the employer. And especially given this new funding, I think it is important that we take medical support enforcement seriously.
Page 38 PREV PAGE TOP OF DOC Child support can make an extraordinary difference, and the Sacramento Child Support Office is a terrific example of this. There, the child support office offers noncustodial parents the chance, when a medical support order is entered, to sign up for either an HMO or Blue Cross through a plan operated by the child support agency. If the noncustodial parent becomes unemployed and can no longer continue to pay premiums, the agency offers the custodial parent the chance to pay premiums. This is very creative medical support enforcement programming.
I think we really need an incentive for medical support to encourage States to pursue medical orders where it is available to the noncustodial parents or to follow California's example of similar creative programming so we can reach some of the 10 million uninsured children.
Next, incentives for back support collections. The Subcommittee draft does include an incentive based on collections of back support. It doesn't distinguish between back support that goes to the State to offset past welfare expenditures and back support collections that go to families.
Failure to make this distinction creates an incentive that can reward States for collections that actually don't benefit families at all.
Under welfare reform, the basic principle in distributing back support on behalf of former welfare families is that the law puts families first. The one exception is that back support collected through the Federal tax intercept is kept by the States before it is paid to the families. This was a compromise from the House position, which would have put families first in all cases. It is reinforced in the current iteration of the back support incentive, and we think it should be corrected to reflect the intent of the policy that was embodied in welfare reform.
Third, should incentives be awarded based on State data that is incomplete or unreliable? We think not. Many States have actually struggled to produce reliable data. Last October, GAO noted that OCSC had collected reporting system reviews in 20 States, most of which found data inaccuracies and unreliable data. It is just plain not right to give States incentives based on this kind of data, and we think that a denial of incentives should actually match a penalty passed in H.R. 2015 for unreliable data.
Page 39 PREV PAGE TOP OF DOC Finally, we urge that once performance-based incentives are in place, HHS do what GAO recommends: State program results audits that give us all some insight into why State programs are not making progress when they are not meeting performance standards or not getting incentives.
Our current audit system doesn't give us a sense, when States aren't making progress, of what the management barriers are, what are the barriers to progress that could be corrected as we try to progress toward performance-based outcomes. This kind of review would give us all some insight and help us all help States make progress toward desired outcomes.
Thanks for your attention and your work on this very critical issue.
[The prepared statement follows:]
Statement of Nancy Ebb, Senior Staff Attorney, Children's Defense Fund
The Children's Defense Fund (''CDF'') appreciates the opportunity to testify about the need for changes in child support enforcement incentives to states. CDF is a privately supported charity that advocates for the interests of low income children. We work intensively on child support. CDF receives no federal grants or contracts. In my testimony today, I am not representing any entity that receives federal grants or contracts. We welcome the opportunity to comment on proposals to improve incentives for state child support enforcement performance. With many other groups represented in this room, we worked hard on child support improvements included in the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). We are proud of many of these changes, and hopeful that they will help make child support what it must bea regular, reliable source of income for children that helps keep food on the table and a roof over their heads. In many states, there is still a chasm between that goal and the performance of state child support systems. Changing incentives so they reward positive outcomes for children is the next important step towards reducing the gap between promise and performance. The current system, based only on a state's cost-effectiveness ratio, needs to be replaced. Under the current system, every state, no matter how dismal its record, gets a minimum incentive payment. As the Congressional Research Service has noted, ''under the current financing arrangement, states can run inefficient programs and still make a profit from the CSE program.''(see footnote 1) This perpetuates mediocrity and ill-serves children.
Page 40 PREV PAGE TOP OF DOC
Incentives that measure only cost-effectiveness can skew efforts in favor of high-dollar, easy-to-work cases, and away from the harder ones (for example, labor-intensive cases where paternity is contested, or a non-custodial parent is self-employed and hiding income). Such incentives do nothing to measure whether states are achieving the outcomes that truly make a difference for children. We should reward states that establish paternity and support obligations where necessary, and that quickly enforce orders so child support is income a custodial parent and child can rely upon. If the system does not make progress towards these outcomes, then no matter how cost-effective it is, it is not succeeding for children. And particularly in a world of time-limited welfare, it is essential that child support enforcement is effective, so that custodial parents with low earnings can rely on child support to help supplement their own efforts and make work a viable alternative to welfare.
The PRWORA required the Secretary of Health and Human Services, in consultation with directors of state child support programs, to recommend to Congress a new incentive scheme based on program performance. In broad outline, we support the recommendations of the Incentive Funding Work Group made in response to this Congressional directive. Their recommendations take a big step towards a performance-based system that rewards outcomes that make a difference. They help ensure that federal expenditures will hold states accountable and put child support dollars in the pockets of single-parent families.
This testimony makes suggestions about how to improve the Work Group proposal to strengthen outcomes for children. At the same time, we wish to emphasize an important message: there is a broad degree of consensus about the core proposal. Congress has a window to enact performance-based incentives this session. We hope this Subcommittee will take a leadership role in ensuring that Congress makes the most of this opportunity.
Our testimony outlines specific ways the Work Group proposal can be strengthened:
Page 41 PREV PAGE TOP OF DOC There should be a reward for effective medical support enforcement
The arrearage measure should be changed to reward states that put families first
There should be a bonus for overall good performance
In addition, the testimony addresses issues that have arisen during discussions about the incentive proposal, and that have not yet been resolved:
Incentives should be awarded only if state data used to claim them is complete and reliable
Performance-based incentives should be coupled with program results audits by HHS that measure state progress towards achieving the performance goals established by incentives, identify barriers to progress, and recommend strategies to improve progress
Phase-in of incentives should not be so prolonged that it defeats the performance-based focus of the new incentive scheme
Incentive funds should be re-invested in the child support program, and should be used to supplement, not supplant, historical state expenditures
Base funding for the program should be maintained at 66 percent to ensure that states have adequate resources to improve and sustain performance
Rewarding Effective Medical Support Enforcement. The proposal does not measure or reward state pursuit of medical support. We strongly urge that incentives include a measure of state effectiveness in obtaining and enforcing medical support awards. Since 1984, federal law has required that states take steps to obtain an order for medical support as well as for child support where insurance coverage is available through the noncustodial parent at reasonable cost. These requirements have been strengthened and clarified over the years. Particularly in light of new funding for uninsured children provided in H.R. 2015, states have exciting opportunities to expand medical support coverage for children. Medical support incentives should encourage state child support agencies to link with state health agencies and take advantage of the opportunity this bipartisan legislation creates.
Page 42 PREV PAGE TOP OF DOC Historically, state medical support enforcement has been spotty at best. In FY 1994, according to OCSE data, 58 percent of support orders established included health insurance, up from 46 percent in 1991. However, only 32 percent of orders enforced or modified in FY 1994 included health insurance, down from 35 percent in 1991.
Moreover, obtaining an order does not mean that it is enforcedthat a child actually is enrolled in a health plan so the child can see a doctor or get a prescription filled. According to a GAO report, in 27 reviews of state CSE medical support programs between 1987 and 1991 conducted by OCSE and HCFA, at least 13 state programs were not consistently petitioning to include health insurance in support orders, and 20 were not enforcing orders to provide health insurance. GAO noted that ''States are not ensuring that noncustodial parents provide health insurance for their children even when such insurance is available through the noncustodial parents' employers.''(see footnote 2)
Aggressive enforcement of medical support is important. Health coverage for children is eroding. In 1994 and 1995, the number of children reported by the Census Bureau to lack health coverage was at the highest level ever recorded10 million children uninsured year round, or one in seven American children. Employer funding of family health coverage has dropped dramatically over time, with children losing health coverage at twice the rate of adult losses. Since 1989, the number of children without private coverage has grown by an average of 1.2 million a year, or nearly 3,300 a day.(see footnote 3)
States can expand coverage by pursuing support available through the non-custodial parent's employer. If that coverage is not available, then it is important to note that H.R. 2015 provides $4 billion in annual grants to states to cover uninsured children, either through Medicaid or a separate state program. Under this program, parents of low-income children can buy coverage for their children, paying premiums that would appear to meet the medical support definition of ''reasonable cost.'' As a general rule, states may pay some or all of child health insurance premium costs for families with incomes at or below 200 percent of the federal poverty line ($26,600 a year for a family of three). The remaining family share of child health insurance premiums could be paid by the non-custodial parent under a medical support order. Even if family income is too high to qualify for premium subsidies, states can permit families to purchase coverage for otherwise uninsured children by paying full premium costs. In such cases, states could similarly direct the non-custodial parent to pay premium costs under a medical support order.
Page 43 PREV PAGE TOP OF DOC A pilot program by Sacramento, California's child support agency shows how a child support agency can be an effective link to such coverage. There, the agency offers a noncustodial parent who lacks other insurance the opportunity to buy a child coverage through a health maintenance organization or Blue Cross at the time he or she is ordered to pay child support and medical coverage. If the non-custodial parent loses employment, the custodial parent is offered the chance to sign up on behalf of the child so that insurance does not lapse.
The current incentive system, based on cost-effectiveness, provides no reward for effective medical support. Because medical support does not generate cash collections, success or failure in obtaining medical support has no consequence under the current incentive system. Indeed, expenditures to enforce medical support actually have negative effects under the cost-effectiveness incentive measure: medical enforcement costs drive up administrative expenditures without bringing in countable cash collections. This medical support ''disincentive'' should be changed under a new incentive system.
An initial objection to a medical support incentive was that states did not have the data to track whether medical support was obtained. However, the Office of Child Support Enforcement's Measuring Excellence through Statistics (METS) initiative, a cooperative effort with states, appears poised to agree on new reporting forms. These new forms include state reports of cases where health insurance is ordered and cases where health insurance is provided as ordered. Thus, data should be available to measure state performance in this area.
An incentive measure should be added to reward states that do a good job of pursuing medical support. If such a measure cannot be immediately enacted, then at a minimum the new legislation should follow the consultative process used to develop the proposed incentives and require that within a year the Secretary of Health and Human Services, in consultation with State directors of programs under part D of title IV of the Social Security Act and representatives of affected groups, develop a new medical support incentive measure to augment, in a revenue neutral manner, the system under section 458. The new system would provide incentive payments to any State based on such State's effective performance in establishing and enforcing medical support orders. Not later than October 1, 1998, the Secretary should be required to report on the new system to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate, and should have authority to incorporate these recommendations into the incentive scheme.
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Arrearages: Putting Families First.
The Work Group gives states an incentive for collections of arrearages. It does not distinguit welfare expenditures, and arrearages that go to families. Failure to make this distinction creates an incentive that may reward states for collections that do not benefit families.
Under distribution changes made by the PRWORA, the basic principle in distributing arrearages on behalf of former welfare families is that the law ''puts families first.'' Former welfare families are paid back child support owed to them before the state keeps back child support owed to the state to offset the cost of welfare. The one exception to this policy is that child support collected through the federal income tax intercept on behalf of former welfare families is kept by the state instead of being paid to the family. This was a compromise from the House position, which would have put families first in all cases, regardless of which enforcement technique was used to collect arrears.
The danger of this compromise is that states no longer have an incentive to use any arrears enforcement technique other than the federal income tax intercept, since arrears collected through any other mechanism go to families instead of to the state. It's an especially troubling compromise because the tax intercept is the most efficient, low-cost, first-line technique for collecting back support. States should be encouraged to use the tax intercept, because it is proven effective. At the same time, if states use it as their first strategy for collecting arrears, former welfare families are likely to be left out in the cold: states benefit before families do, despite the legislative intent to put families first.
The Work Group arrears proposal perpetuates this perverse incentive. Under its proposal, states that rely heavily on the tax intercept may qualify for an incentive even though former welfare families do not see any benefit from arrears collections.
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The best solution to this dilemma is to change the distribution scheme, restoring it to the House version in which all arrears go to families first, regardless of the method of collection. It was good policy the first time around. If that is not possible, however, then the arrearage incentive should be changed to distinguish between collections that go to states and collections that go to families. Incentives should be calculated based on collections that go to families. There is no reason to give states a double rewardallowing them to keep arrears instead of passing them on to families, and then paying them an incentive for doing so.
Rewarding Overall Good Performance.
The Work Group's proposal gives states incentives if they meet any of the performance measures. In addition to rewarding states for meeting individual measures, the incentive scheme should encourage states to improve overall performance. States that perform well across the board should receive special recognition and encouragement. These are the states that are genuinely making child support work for children, instead of meeting individual indicators that do not add up to good program performance.
The incentive proposal should include a bonus pool to reward states that qualify for incentives under all of the measures. Alternatively, it could give a bonus to states that qualify for incentives under the measures that receive the greatest weight.
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Awarding Incentives Based on Complete And Reliable Data.
When states do a good job on key performance measures, they deserve to be rewarded. Yet many states have struggled to produce reliable data. Last October, a GAO report noted that beginning in 1994, OCSE has ''increased its emphasis on auditing the accuracy of state program data and the systems through which states report their data to OCSE. At the time of GAO's review, OCSE had conducted reporting system reviews in 20 states, most of which found data inaccuracies and unreliable reporting systems.''(see footnote 4) States should not be able to claim incentives based on unreliable data that does not fairly measure performance.
A number of steps will help clean up the data: the collaborative federal-state METS project, which establishes uniform reporting definitions across states; automated systems; state self-assessments; and the H.R. 2015 provision that HHS must review at least every three years whether state data is reliable and complete, and has authority to penalize states if their data are incomplete or unreliable (unless that violation is of a technical nature). However, unless a comparable provision is included in the incentive legislation, we could face an odd scenario: a state could be under a penalty for unreliable data, and yet qualify for an incentive payment based on the same, unreliable data. This hardly seems right.
Provide that states cannot qualify for an incentive payment based on data that has been determined by HHS to be incomplete or unreliable. Direct the Secretary to provide states with guidance about what constitutes incomplete or unreliable data, and with technical assistance to help ensure data quality.
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Using Program Results Audits to Identify Barriers And Improve Performance.
New incentives take the next important step to improve state child support enforcement. On the eve of taking this step, it's important to ask what related steps should be taken to improve performance. There is one that is made possible by the development of new performance measuresprogram results audits that look at whether states are making progress towards these new performance outcomes, and that identify barriers to progress. Program results audits that pinpoint barriers to good outcomes, and ways to eliminate those barriers, can be an important management tool. They can reinforce the message that results for children count, and help states improve.
The current audit system does not mesh with the new incentive emphasis on results. Under current law, states are audited for ''compliance'' with procedural requirements, as well as the validity of their data. These are important measures, which give some insight into the program. Yet states have historically argued that child support enforcement is a ''process-driven'' system that does not measure or reward good performance. They are not systematically audited to determine what policies and management practices are working or failing in their programsif states do not meet performance expectations, why is that happening? What are the barriers to performance, and how can they be eliminated?
Last year's GAO report suggests that program results reviews are an important supplement to performance measures such as the proposed incentives:
While OCSE has initiated certain management improvements to establish program goals and strengthen its partnership with states, limitations in its audit processes and the federal incentive funding structure continue to constrain improvements in program results. While we recognize that performance measures have yet to be approved, we continue to believe that OCSE should assess state program performance to identify problems states encounter that inhibit their effectiveness and, when appropriate, recommend actions to help states improve their performance... Moreover, program results audits could help OCSE respond to state requests for additional information on how to improve program performance.(see footnote 5)
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Such reviews could help states find problems and fix them. One of the most frustrating aspects of the current system is that the data often tell us that state child support systems do not serve children well. Yet there is little information about why that is so. Federal reviews that identify barriers to performance, and suggest management improvements, could be an important adjunct to performance-based incentives. Such reviews would be useful for program managers, legislators, and advocates trying to get a handle on why a state program is not making progress, and what should be done to get it moving in the right direction.
Require that HHS reviews include program results audits in addition to compliance and data oversight.
Phasing in New Incentives.
The Work Group proposes that the new incentive system be phased in over a two year period beginning in fiscal year 2000. This phase-in is desirable. Under the new system, some states will be winners. Poor performers will be losers. The phase-in gives states advance notice of how they must improve their system to avoid losing incentives. It gives them time to benefit from the many program improvements required under the PRWORA before they face the challenge of a performance-based incentive system. This strikes us as a fair balance between the need to move to a performance-based system and the need to give poor performers a chance to improve.
Some states and the American Public Welfare Association have sought a longer phase-in, arguing that they will be financially hurt unless they are given more time to prepare. It is in everyone's interest to ensure that programs have enough funding to perform effectively for children. However, it is also important to move ahead quickly to reward good performance and to deny rewards when states fail to perform. The two-year phase-in gives states ample notice.
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Adopt the Work Group's proposed phase-in. If a longer phase-in is adopted, at a minimum the incentives should include a medical support incentive, since a longer phase-in provides the opportunity to reach consensus and generate data on the issue.
Reinvesting Incentives in Child Support.
Incentives are funded out of the federal share of child support collected on behalf of children on welfare. This money is raised the hard way: instead of being paid to our poorest children, child support collected on their behalf is split between state and federal governments to fund incentives and to offset welfare costs. When dollars are diverted from such a poor population, there should an especially high standard for looking at where that money is reinvested. Instead of requiring that state incentive payments be used to expand or improve child support services, there is currently no restriction on how incentive payments can be used. Not all states reinvest incentive payments in the program. Rather, they deposit payments in general revenue funds, where they can be used to fund state costs(see footnote 6)prisons, or highways, for examplethat do not benefit low income children. Other states invest incentive payments in child support, but use the incentive payments to replace state expenditures, rather than to expand services or to demonstrate new approaches to effective enforcement. Id.
The Work Group proposes that incentive payments received by a state must be reinvested in child support. We agree. Discussions of the proposal have floated the prospect that incentives could be spent in related areas, such as domestic violence or work programs for noncustodial parents. These are issues worthy of increased public investment. At the same time, many child support programs are resource-starved. Their performance reflects that fact.(see footnote 7) Before incentives are invested in other programs, states should be required to ensure that their child support program is adequately funded and is at the highest performance level.
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Require that child support incentives be reinvested in child support, and supplement rather than supplant historical state expenditures.
Retaining Sufficient Base Funding to Get The Job Done.
Under current law, the federal government pays 66 percent of the administrative cost of child support enforcement. Discussions of incentive reform have included a proposal to lower this basic administrative match, and put more money in incentive payments. The Work Group indicates its ''strong belief'' that funding should remain at 66 percent so states have the resources and staff to operate effectively. We agree.
Incentives are important to spur better performance. Bad actors should not simply continue to collect federal dollars that do not translate into effective help for children. At the same time, one of the keys to improving poor performance is investing in the program. If the basic match for administrative costs is cut from 66 percent, states with poor records will have even fewer resources to improve. Caseloads will continue to be unmanageable. Even the economies of scale that better automation provide will not make up for resource-poor programs.
Retain the basic 66 percent match rate.
The Children's Defense Fund appreciates the opportunity to present testimony on a viable incentive scheme. We appreciate the hard work that has produced such a consensus on the broad outlines of an incentive proposal, and urge that Congress move quickly to put a new incentive plan in place. We look forward to working with you in this effort. We are grateful for your continuing interest in child support, an area which is as important to children as it is detailed and thorny.
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Chairman SHAW. Thank you, Ms. Ebb.
STATEMENT OF NANCY MENDOZA, ASSISTANT DIRECTOR, ARIZONA DEPARTMENT OF ECONOMIC SECURITY
Ms. MENDOZA. Thank you, Chairman Shaw, Members of the Subcommittee.
I want to start by commending the Secretary and the process that was used in the development of the incentive formula. The process was inclusive, responsive, and flexible. The five performance factors that are being recommended are the right things to reward in this program and to direct and focus the energies of State child support enforcement programs.
In the 6 months since the incentive proposal was provided, there have been continuing discussions regarding additional refinements and improvements that need to be made to ensure successful implementation of the incentive formula. While there is broad consensus on the factors, there is a lack of accounting for variation in State demographics and State policies within the formula. Certain measures which are designed to gauge the performance of child support enforcement programs may, in fact, be indirect measures of key State policy demographics or policies.
For example, in terms of the out-of-wedlock birth rate, you will see attached to my statement a bar chart that depicts the variation among States in out-of-wedlock births from a low of 15 percent in one State to a high of 45.4 percent in another State. The job of achieving high performance in the area of paternity establishment is made more difficult for States with high out-of-wedlock birth rates, and the effects of that are compounded in the area of order establishment since a legal paternity is a prerequisite to order establishment.
Page 52 PREV PAGE TOP OF DOC Congress has previously recognized that out-of-wedlock birth rates may impair a child support enforcement program's ability to perform well and allows the Secretary to adjust for that in the paternity establishment percentage. No similar provision is provided in the incentive formula.
Another area where there is variation from State to State is whether participation in the IVD program is mandatory or voluntary. Arizona does not require nonpublic assistance cases to become IVD cases. In States with such voluntary policies, a larger portion of the caseload is likely to be a public assistance caseload wherein it is more difficult to obtain orders of support and collections. Based on recent data, the range of nonpublic assistance cases and caseloads is from a low of 24 percent to a high of 76 percent. So the composition of States' caseloads varies significantly.
An incentive system that does not acknowledge variations among States holds State governments responsible for matters that are beyond their reasonable control and may penalize States for exercising policy discretion where no Federal requirement exists.
Congress historically has adjusted for demography State by State. Examples of this are in the Federal medical assistance percentage which varies from State to State based on per capita income, which results in the Federal share ranging from 50 to 78 percent of the Medicaid payment. In the recently enacted Budget Reconciliation Act, the Child Health Program, the allocation will be varied based on the number of low-income uninsured children and the cost in each State. Under the TANF grant, States were given three options for their block grant base to account for historic differences in welfare policies. While these kinds of State-by-State adjustments do add complexity to a formula, they often achieve a result that is more fair and based on the recognition of variations among States.
The recommendation is that while the incentive formula is being implemented, the Secretary conduct and report results of statistical analyses of these types of variations to determine whether adjustments to the formula are warranted to provide a more equitable distribution of funding still based on performance.
Page 53 PREV PAGE TOP OF DOC The second issue I would like to address is related to the phase-in. There has been some discussion of that. The currently proposed phase-in is, in my opinion, too brief to allow for a good analysis of the impact of the formula and to make the kinds of adjustments for State demographics that I mentioned. Based on data that was provided to the work group, some reductions may seriously impair the ability of State programs to continue to improve their programs and to serve families. Furthermore, given the interstate nature of this program, losses in any one State will likely affect performance of other States, since one-third of the caseload is interstate in nature.
The recommendation is that we distinguish between the factors in the formula and the actual application of the funding. The factors, the five that have been mentioned, should be implemented immediately upon the enactment of the legislation. We need to give a clear and unambiguous message as to what is to be rewarded in this program.
However, the impact of the use of those factors should be mitigated by a longer phase-in. APWA has asked the Office of Child Support to examine what a 20 percent per year phase-in might be. There is no specific recommendation here about the timing of the phase-in just that it needs to be lengthened in order to continue to improve programs.
Finally, I would indicate that we need to look at how non-IVD expenditures are accounted for in the formula under cost effectiveness.
Thank you for the opportunity to address the Subcommittee this morning.
[The prepared statement and attachments follow:]
Statement of Nancy Mendoza, Assistant Director, Arizona Department of Economic Security
Page 54 PREV PAGE TOP OF DOC My name is Nancy Mendoza. I am the Child Support Director for the State of Arizona. I have been involved with the development and subsequent analysis of the incentive formula in a variety of capacities. I represented Region IX on the Secretary's Incentive Work Group. I chair the Funding Subcommittee of the National Child Support Enforcement Association (NCSEA). I am a member of Child Support Subcommittee of the American Public Welfare Association (APWA) which is chaired by Dr. Linda J. Blessing, Director of the Arizona Department of Economic Security. In my remarks I will address issues raised by Arizona, as well as concerns and recommendations of the National Child Support Enforcement Association (NCSEA) and the American Public Welfare Association (APWA.) Attachments A and B contain the written statements from those organizations. The Arizona Child Support Enforcement program has made a sustained and concerted effort to improve performance in recent years. The program received the ''Most Improved State'' award from NCSEA in 1994. Arizona ranked first in the nation in increased collections from 19921996. (U.S. Department of Health and Human Service, HHS NEWS, October 23, 1996.) Based upon data published in the DHHS Twentieth Annual Report to Congress, Arizona ranked fifth in the nation in the increase in support orders established during fiscal year 1996. We achieved Level II certification of our automated system in July, 1996. We recognize that even with these accomplishments, many children continue to lack the financial support to which they are entitled. We continue to work aggressively on behalf of those children.
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) required the Secretary of Health and Human Services to recommend to Congress a new incentive funding system for the State child support enforcement program to be implemented beginning in federal fiscal year 2000. The new formula is to be based on program performance and must be cost neutral to the federal government. The Secretary consulted with a work group of child support directors and submitted her recommendations to Congress in March, 1997. The process by which the incentive proposal was developed by the Secretary was inclusive, responsive and flexible. The resulting proposal serves as a sound foundation for the next phase of deliberation and refinement. The five performance factors: paternity establishment; support order establishment; collections on current support; collections on arrearages; and cost effectiveness, are the appropriate areas for which to reward achievement and to direct and focus the energies of state child support enforcement programs. While there is broad consensus that these are the correct factors to use in an incentive formula for the child support program, achievement on these factors is dependent to some degree on a state's demographics; the formula does not address demographic variation among the states. Arizona and a number of other states will be adversely impacted if these variations are not considered.
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Issue #1.Variations in states' caseload demographics and policies are not addressed by the formula
All states' funding will be determined in like manner on the factors irrespective of unique state population characteristics. This is problematic for Arizona and for a number of other states. Key demographic characteristics and policies may work against a state's ability to achieve high ''scores'' on certain measures intended to gauge child support enforcement performance. These characteristics and policies include:
1. Higher than average out-of-wedlock birth rate.
Attachment C is a bar chart depicting the disparity among states on this factor. Nationally, the rate ranges from a low of 15.7% in Utah, to a high of 45.4% in Mississippi. Arizona falls within the 3539.9 segment with an out-of-wedlock birth rate of 38.2%. (U.S. Department of Health and Human Services, Monthly Vital Statistics Report, Vol. 44, No. 11(S), Table 16, June 24, 1996.) It is more difficult to achieve the required paternity establishment ratios when starting with more out-of-wedlock births. The negative effects of this are compounded because without a high paternity establishment ratio, it is impossible to obtain a high ratio of support-ordered cases, as legal paternity is a prerequisite to the establishment of an order. Congress recognized that the out-of-wedlock birth rate in a state may impede a child support enforcement program from achieving required paternity establishment percentages. 42 USC, Section 652 (g)(3)(A) provides that the Secretary may take into account the ''percentage of children in a State who are born out of wedlock'' in determining the ability of a State to meet the paternity establishment percentage requirement. Although the Secretary has not used this discretionary authority, Congress acknowledged the need to allow for this consideration. No similar provision has been included in the incentive formula.
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2. State Policy Regarding Voluntary Participation in the IVD Program.
Arizona does not require non public assistance cases to become IVD cases. We actively publicize the availability of IVD services to non public assistance families and make them available at no cost to the parties. In states with such voluntary policies, a larger portion of the caseload is comprised of public assistance cases in which it is often more difficult to obtain support payments. States that do not require non public assistance cases to be handled by the IVD agency, may find themselves at a relative disadvantage under the proposed incentive formula. Based on the DHHS Twentieth Annual Report to Congress, non public assistance cases comprise from a low of 24% to a high of 76% of states' total caseloads.
The proposed formula does not adjust for these demographic and policy variables. It is assumed that a state's performance is related solely to its effectiveness and efficiency. An incentive system that does not acknowledge the variations among states, holds state governments responsible for matters that are beyond their reasonable control and penalizes states for exercising policy discretion in an area where no federal requirement exists.
Congress frequently and regularly adjusts funding mechanisms to account for the heterogeneity among states, both in areas of demography and policy. For example:
Federal Precedents for Formula Adjustments Based on Demographic Variables
The Federal Medical Assistance Percentage (FMAP) is used to calculate the federal share of Medicaid and other payments to the states. This formula is adjusted in accordance with the average per capita personal income in each state. In 1996, the federal share ranged from 50% to 78%.
Page 57 PREV PAGE TOP OF DOC The recently enacted Balanced Budget Reconciliation Act of 1997 expanded health care coverage for children under a newly created Title XXI. For FYs 982000, the formula for this program provides that each state will receive a proportional allocation based on the number of uninsured low-income children in the state multiplied by a cost factor for that state.
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 created a program to promote the access of non-custodial parents to their children. The formula for the allocation of this program was based on the number of children in the state living with one biological parent.
Federal Precedent for Formula Adjustments Based on State Policy Variables
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 created the cash assistance block grant. Because of significant variation in historical welfare policies among states, Congress provided a multi-tier funding option which allowed states to receive either: (1) the average of federal payments based on expenditures for AFDC benefits and administration, Emergency Assistance, and JOBS in fiscal years 199294; or (2) federal payments in 1994; or (3) federal payments in fiscal year 1995.
While these adjustments based on state-by-state variations add complexity to funding formulae, they achieve a result which is more fair and which is based on a recognition of the differences among states. The American Public Welfare Association has had a long-standing policy calling for Congress to recognize variations among states in its consideration of new policies.
Recommendation.The incentive legislation should direct the Secretary to conduct and report the results of statistical analyses of key sources of states' caseload demographic variation which are determined to be correlated to child support enforcement program performance. The legislation should require the Secretary to recommend adjustments in the application of the incentive formula where warranted as a result of the aforementioned research.
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Issue #2.Phase-in time frame is not adequate
The Secretary's proposal includes a phase-in schedule which provides that in the first year of the formula, one-half of the incentives earned by a state will be based on the current formula and one-half will be based on the proposed formula. In the second year, the entire incentive allocation will be based on the new formula. This proposal relies unnecessarily on a dual system in the first year. Additionally, this short one-year phase-in plan also precludes the careful and measured analysis of the impact of the formula prior to its full application. Based upon data provided to the Incentives Work Group by the Office of Child Support Enforcement, it is projected that some states will experience incentive losses of a magnitude that would seriously impair the ability of those states to serve families and to improve their programs. Furthermore, given the interstate nature of the child support program, a negative impact on any one state will affect all other states.
Congress should adopt a more gradual phase-in of the funding component of the incentive formula. This will allow time for the Secretary to assess the impact of the formula and to propose adjustments for demographic variables which are determined statistically to be correlated to performance. While it is recommended that the funding component of the formula be phased-in over a longer period, it is also recommended that the new factors upon which incentives are based be implemented in a single year. This will simplify the calculation in the first year and provide a clear and unambiguous message that these are the areas of performance which Congress intends to reward.
Page 59 PREV PAGE TOP OF DOC During the phase-in period, the amount of the increase or decrease in a state's incentives should be limited to a specific percent increase or decrease from a base year Under this approach, a state's performance on the new incentive factors would be calculated and an amount of incentive dollars der decrease of over X%, the amount would be adjusted to limit the gain or loss to the percent provided in the formula. APWA has requested that the Office of Child Support Enforcement produce estimates of this approach using a 20% gain or loss as an example. (See Attachment B.) Extending the phase-in period will also provide an opportunity for the Secretary to complete validations of data integrity. Data integrity has been a concern related to the implementation of the new incentive proposal.
Issue #3.Non IVD expenditures are included in the calculation of cost effectiveness
As a result of the enactment of PRWORA, state IVD agencies will be required to perform certain activities on behalf of non IVD cases. Beginning on October 1, 1998, states will process wage withholding payments on behalf of non IVD cases with orders entered after January 1994. Additionally, states will be obtaining court orders on non IVD cases and loading those orders into the State Case Registry. States will incur significant costs associated with these functions. The expenditures associated with these tasks are currently included in the cost effectiveness calculation. However, the collections on these cases are not considered in the collections base.
Exclude costs associated with the inclusion of non IVD cases in the state case registry and non IVD payment processing in the cost effectiveness ratio unless non IVD collections are included in the collections base.
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Issue #4Collections on behalf of persons diverted from public assistance are treated as ''never welfare'' collections
As states experiment with new ways to prevent welfare dependency, many are implementing programs that provide support services rather than cash assistance to persons in need of help. These individuals, under the previous AFDC program, would have been determined eligible for cash assistance. Under the new approach, they are ''diverted'' from assistance. Concerns have been expressed that states which utilize a diversion approach will be negatively impacted by the incentive formula because collections on behalf of ''diverted'' clients would be considered ''never welfare'' collections. These collections receive less weight in the collections base.
Recommendation.The incentive legislation should direct the Secretary to determine whether it is technically feasible to include persons who under previous welfare policies would have been found eligible for cash assistance, but who are being diverted from public assistance as a result of welfare reform, as TANF/Former TANF cases for the purpose of establishing the collections base. The Secretary must also determine whether the inclusion of collections on behalf of such persons can be done in a manner which retains the cost neutrality of the incentive system proposal.
Thank you for the opportunity to address the Subcommittee on this important topic.
[The official Committee record contains additional material here.]
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Chairman SHAW. Thank you, Ms. Mendoza.
STATEMENT OF TERESA KAISER, DIRECTOR, MISSOURI DIVISION OF CHILD SUPPORT ENFORCEMENT
Ms. KAISER. Thank you, Chairman Shaw and Members of the Human Resources Subcommittee, for the opportunity to address you today.
The child support program is one of the largest federally funded social programs. As such, it makes sense to fund the program in part on performance-based incentives.
I represented the child support directors of the Region VII States, which are Nebraska, Missouri, Kansas, and Iowa, in the preparation of recommendations to the Secretary regarding the proposed child support incentive funding structure.
Last fall and winter, representatives from the Office of Child Support Enforcement and State IVD directors met several times at various locations and by conference calls as the incentive funding work group. Each State director who represented a Federal region was to share information with the other directors within their region and bring back to the work group the comments and concerns of those not attending.
Over the course of several months and after diligent effort, the work group reached consensus on the funding formula which the Secretary has presented to you. We have agreed that we should abandon a formula that rewards only collection and focuses on all of the important goals of the program: Paternity establishment, support order establishment, timely collection of current support, effective collection of arrearages, and still important cost effectiveness.
Page 62 PREV PAGE TOP OF DOC Even though not all States would financially benefit immediately from a shift to a performance-based incentive system based on current numbers, State directors were willing to put the good of the whole program first and commit to the five areas of the funding formula. Our mutual goal is to improve performance in our States. This working consensus was made possible by the work of previous State directors and our partners within HHS in preparing a national strategic plan for the child support program. The goals of this strategic plan lent themselves well to becoming the focus of the incentive structure.
We, the members of the work group, and the IVD directors fully support the Secretary's formula. Should the formula be altered, the IVD directors respectfully request that they be at the table for any alterations.
I would like to share information with you on specific areas of concern raised in previous testimony. First of all, medical support. We are concerned, as you are, that medical support enforcement continues as a program goal and have included medical support enforcement in the performance measures of orders established. We share concerns about assuring medical support be provided to children as ordered. However, we currently have neither base line data nor needed comprehensive Federal legislation on this issue. It is premature to base part of the incentive formula on this.
Second, I would like to address the cap on ''never'' welfare. In the past, our program has focused on the recovery of welfare costs as a benchmark. However, this very focus is at the heart of the problem that States are experiencing with the current incentive formula.
The Clinton administration reports a 24-percent decline in the welfare rolls since January 1993. What the dwindling welfare rolls mean in a practical sense to the child support program is that the better a State is in helping families move from welfare to self-sufficiency with work programs plus child support, the less the State receives in incentive payments.
Page 63 PREV PAGE TOP OF DOC In Missouri, for example, last year we increased child support collection 17 percent. However, we were unable to increase our collections on the welfare portion of our caseload, because the welfare rolls were dwindling rapidly, which gave us an overall improvement in collections of 12.7 percent; no improvement in collections on the welfare side; and yet considerable effort was made just to remain the same with dwindling welfare rolls.
Missouri has had its own welfare reform program since 1994. Our welfare rolls are at a new, all-time low. In addition to moving families off welfare, we also help to ensure other families never have to apply for assistance. These families never even count in our welfare equation.
We vigorously oppose any cap that would either reward States that have a higher percentage of welfare recipients or would fail to reward States that divert families from welfare in the first place.
Last, I would like to speak to you about the phase-in. While the original recommendation of the work group contained a 2-year phase-in plan, the National Child Support Enforcement Association has recommended the plan be phased in in a way that mitigates large decreases that would cripple some States' programs. This recommendation was developed in the spirit of compromise as some States stand to lose a considerable incentive under the original plan.
A phase-in that mitigates losses as well as allowing for an orderly reinvestment of any incentive increases is in the best long-term interests of all States. We are very dependent on each other's programs to effectively establish and enforce child support orders across the country.
Thank you, Mr. Chairman, and Members of the Subcommittee.
[The prepared statement follows:]
Page 64 PREV PAGE TOP OF DOCStatement of Teresa Kaiser, Director, Missouri Division of Child Support Enforcement
Good morning Chairman Shaw and Members of the Human Resources Subcommittee.
It is my privilege to address you today. I am Teresa Kaiser, director of the Missouri Division of Child Support Enforcement and a previous director of the Idaho child support program. I am also a board member of the National Child Support Enforcement Association and a member of the American Public Welfare Association's Child Support Committee.
The child support program is one of the largest federally funded social programs. As such, it makes sense to fund the program in part with performance-based incentives. I represented the child support directors of the Region VII states (Nebraska, Missouri, Kansas and Iowa) in the preparation of recommendations to the Secretary regarding the proposed child support incentive-based funding structure.
In the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), Congress directed the Secretary of Health and Human Services, in consultation with state child support directors, to develop a new incentive system. Congress mandated that such system shall provide additional payments to any state based on such state's performance. The secretary was to make a report on the recommendations to the Committee on Ways and Means of the House of Representatives by March 1, 1997. The Secretary has complied.
Last fall and winter, representatives from the Office of Child Support Enforcement (OCSE) and the state IVD directors met several times at various locations and by conference calls as the Incentive Funding Workgroup. Each state director, who represented a federal region, was to share information with other directors within their regions and bring back to the work group the comments and concerns of the directors not attending. Over the course of several months and after diligent effort, the workgroup reached consensus on the funding formula.
Page 65 PREV PAGE TOP OF DOC We have agreed that we should abandon a formula that rewards only collections and focus on all of the important goals of the programpaternity establishment, support order establishment, timely collection of current support, effective collection of arrearages and (still important) cost effectiveness.
Even though not all states would financially benefit immediately from the shift to a performance-based incentive system based on current numbers, state directors were willing to put the good of the whole program first and commit to the five areas of the funding formula. Our mutual goal is to improve performance in our states. This work and consensus were made possible by the previous work of the state directors and our partners within HHS in preparing a national strategic plan for the child support program. The goals of this strategic plan lent themselves well to becoming the focus of the incentive structure.
We, the members of the workgroup and the IVD directors, fully support the Secretary's report. Should the formula be altered, the directors have respectfully requested that they be at the table.
I would like to share information with you on specific areas of concern.
We are concerned, as you are, that medical support enforcement continues as a program goal and have included medical support enforcement in the performance measure of orders established. We share concern about assuring medical support be provided to children as ordered. However, we currently have neither baseline data nor needed comprehensive federal legislation on this issue. It is premature to base part of the incentive formula on this.
Cap On ''Never'' Welfare
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In the past, our program has focused on the recovery of welfare costs as a benchmark. However, this very focus is at the heart of the problems states are experiencing with the current incentive program. The Clinton Administration reports a 24 percent decline in the welfare rolls since January 1993. What the dwindling welfare rolls mean in a practical sense to the child support program is that the better a state is in helping families move from welfare to self-sufficiency, with work programs plus child support enforcement, the less the state receives in incentive payments. In Missouri last year, we increased collections overall by 12.7 percent. Yet, the 17 percent increase in non-welfare collections was offset by flat welfare collections. Missouri has had its own welfare reform program since 1994. Our welfare rolls are at a new, all-time low. In addition to moving families off welfare, we also help to ensure other families never have to apply for assistance. These families never ever count in our welfare equation. We vigorously oppose any ''cap'' that would either reward states with higher percentages of welfare recipients or would fail to reward states that divert families from welfare in the first place.
You have no doubt heard discussion about the reliability of states' data. This was a concern of our work group as well. However, let's not let this concern risey. While we need to continue to monitor this area, we are already scrutinizing the data and working toward improvement. As the states' new systems are certified, we again must demonstrate data integrity. A review of this area perhaps one or two years into the new process makes more sense than to fail to act now.
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While the original recommendation of the workgroup contained a two-year phase-in plan, NCSEA has recommended the plan be phased-in in a way that mitigates large decreases that could cripple some states' programs. This recommendation was developed in the spirit of compromise as some states stand to lose considerable incentives under the original plan. A phase-in that mitigates losses as well as allowing for an orderly reinvestment of any incentive increases is in the best longterm interest of all the states. We are very dependent on each other's programs to effectively establish and enforce child support orders across the country.
The APWA is presently in a research mode, gathering information before making a recommendation on the phase-in approach. To my remarks, I have attached a copy of an August 11, 1997, letter from APWA to Judge Ross, deputy director of OCSE, requesting assistance in the information gathering. The letter expresses APWA's current stance, which is to explore immediate implementation of the formula with a 20 percent cap on increases or decreases in the amount of incentive funding per year to any state for five years. This phase-in approach is attractive to APWA members because it:
(1) Allows all states to benefit immediately from the new formulaand its focus on performance;
(2) Mitigates large funding changes in any one yeara concern to the affected state and families it serves, as well as to all states due to the program's interstate nature; and
(3) Alleviates immediate data integrity concerns.
Last week, the IVD directors held a conference call regarding the phase-in proposal. The directors involved in the call do not oppose the new phase-in concept. Most of the representatives report that states in their regions would also support the new concept. Some of the representatives are polling their states to ensure that this compromise is acceptable to all states.
Page 68 PREV PAGE TOP OF DOC In summary, strong support exists for implementing a new, incentive funding formula. To have reached a consensus with so many diverse interests is, in and of itself, noteworthy. We strongly support the Secretary's recommendations and urge you to accept them.
Chairman SHAW. Thank you, Ms. Kaiser.
Mr. Hayworth, would you like to inquire?
Mr. HAYWORTH. Mr. Chairman, thank you very much, because I am very pleased that Ms. Mendoza is here, coming all the way from Phoenix, with all the monsoons out there and everything, to get back here to Washington to talk about the success that you have experienced.
Thanks for your input as we are developing this process.
I want to revisit one of the challenges you talked about in your testimony, Nancy, about the varying demographics. I want to revisit that a little bit. And if you can encapsulate again what you think is vitally important for us as we are dealing with this challenge of the varying demographics.
Ms. MENDOZA. Thank you, Mr. Hayworth.
I believe that there are variations in the composition of caseloads in the various States that may have an impact on their ability to perform well on the incentive formula.
We see the variation in the out-of-wedlock birth rate from State to State. The job before a State that has an out-of-wedlock birth rate of 15 percent in terms of achieving a high level of paternity establishment is much different than the job facing the State that is starting with an out-of-wedlock birth rate of 45 percent. The State with that high rate of out-of-wedlock births may exert great effort and achieve, let us say, a 20-percent increase in a given year. Under this formula, they would still only receive 50 percent of the incentives on that particular measure.
Page 69 PREV PAGE TOP OF DOC I think that the Secretary can do some statistical analyses to see what kinds of variations really are statistically significant and might warrant some adjustments to the formula so that we are really measuring program performance and not indirectly measuring sociocultural characteristics of a State.
Mr. HAYWORTH. Let us also talk about another concern that you brought up, and that is the phase-in of these particular policies and the application here. When you talk about the longer phase-in processand I believe you were talking about almost a percentage approachcan you revisit that for me for just a second and amplify that testimony?
Ms. MENDOZA. Yes. I distinguish between the implementation of the factors and the implementation of the funding. I believe that the factors should be implemented immediately. Currently, it is proposed that they be implemented half one year and half the next in terms of the factors.
I think we can go immediately, because these are the right factors to reward in performance. However, the funding impact, as projected, will be so significant that it may undermine State efforts to continue to improve their programs.
There isn't a specific recommendation in terms of what is the right percent. I think that the Secretary can do some analysis to see what would be an appropriate approach. We know that some States are looking toward the new incentive formula, because they are going to be benefiting by it and need those additional resources to offset welfare losses.
So there needs to be some balancing between those States that stand to gain and those States that stand to lose. I am familiar with funding formulas in other Federal programs, particularly under the Elementary and Secondary Education Act Title I, where changes in formula are phased in over a longer period with certain set increases and decreases until these standards are achieved.
Mr. HAYWORTH. I want to thank you again for coming and for your leadership in this regard and for helping Arizona lead the way. Thanks very much.
Page 70 PREV PAGE TOP OF DOC Ms. MENDOZA. Thank you.
Chairman SHAW. Thank you, Mr. Hayworth.
Mr. Levin may inquire.
Mr. LEVIN. Well, you have heard the bells, and we just have a couple of minutes and probably want to finish and not keep you. So let me just suggest, Ms. Ebb, that, perhaps in writing or drop us a note, you would like to comment on Ms. Kaiser's comment about the insufficient base line data.
Your testimony on the medical support area was compelling, but I think we need to address the issue that you have raised, Ms. Kaiser. So why don't wewe are not going to mark up this bill for a few days anyway, so why don't you give us your input between now and then.
Ms. EBB. Actually, my written testimony does address the data issue, and there are some exciting developments in that area.
Mr. LEVIN. But do go back and hit this head on, if you would
Ms. EBB. Sure.
Mr. LEVIN. Whether it is premature or not.
Thank you, Mr. Chairman.
Chairman SHAW. Thank you.
Mr. COLLINS. Mr. Chairman, as an incentive to the lady from Missouri and the lady from Arizona to get back to the office and collect outstanding child support, I am going to withhold questions.
Chairman SHAW. Mr. English.
Mr. ENGLISH. No questions, Mr. Chairman. Thank you.
Page 71 PREV PAGE TOP OF DOC Chairman SHAW. Well, I would like to thank this panel for giving us some very fine, fine testimony. It is always important for us to find out the impact of what we are doing, particularly outside of this city. And we very much appreciate your being with us.
We are going to recess.
Are there two votes on the floor? I understood there was also going to be a Journal vote. So we are going to be out of here for 15, maybe as long as 20 minutes.
I would like to ask the next panel to be ready to testify immediately after our return. I will be limiting testimony to 5 minutes. I apologize for not letting people go over. But if you could summarize your testimony as best you can, I would appreciate it, because I know that the Members have conflicts, particularly at 12 o'clock, and so I am going to try to complete the hearing by 12 o'clock this afternoon.
Thank you very much again for your testimony. And we will be in recess for approximately 15 minutes.
Chairman SHAW. In about 10 or 15 minutes they are going to have another vote, but I thought maybe we would go ahead and get started with the next panel. I would assume that a number of the Membersit looks like maybe all of the Membersare staying down there for that next vote.
The next panel is to discuss automated data processing systems. This is Joel C. Willemssen. I think I am pronouncing that correctly; there are two l's and two s'sI bet you have been misspelling that all of your lifehe is the Director of Information Resources Management of the U.S. General Accounting Office. Robert Williams, who is president of Policy Studies, Inc. in Denver, Colorado; Vicki Turetsky, who is the senior staff attorney for the Center for Law and Social Policy in Washington, DC; Robert Doar, who is the director of the New York State Office of Child Support Enforcement, on behalf of the American Public Welfare Association here in Washington; John Mahoney, who is director of the Oakland County Department of Information Technology in Pontiac, Michigan; and Jim Zingale, who is the deputy executive director of the Florida Department of Revenue in Tallahassee, Florida.
Page 72 PREV PAGE TOP OF DOC I thank all of you for being here.
STATEMENT OF JOEL C. WILLEMSSEN, DIRECTOR, INFORMATION RESOURCES MANAGEMENT, ACCOUNTING AND INFORMATION MANAGEMENT DIVISION, U.S. GENERAL ACCOUNTING OFFICE
Mr. WILLEMSSEN. Thank you, Mr. Chairman, and thank you for inviting us to testify today
Chairman SHAW. Thank you, again.
Mr. WILLEMSSEN [continuing]. On the results of our recent review of States' development of automated child support enforcement systems. As requested, I will briefly summarize the major points of our testimony and of the report that we issued this summer.
Mr. Chairman, States' automated child support enforcement systems can offer many tangible benefits. These include increases in worker productivity and dollars collected, a decrease in the amount of time needed to process payments, and improved tracking of paternity establishment and enforcement actions. However, many States' progress in implementing these often complex automated systems has been slow and costly. Since 1981, approximately $2.6 billion has been spent on these systems, with about $2 billion of that being Federal funds.
As costs have continued to mount, the States' progress has varied considerably. Many seriously underestimated the cost, complexity, and time needed to implement these systems. Several major problem areas have impeded progress in developing and implementing these systems. An example of this was OCSE's delay in setting the requirements for the States' systems; that is, determining what the systems are supposed to do. Originally expected in 1990, final requirements were not issued by OCSE until 1993.
In addition, the lack of progress can be partly attributed to the need for more effective leadership of OCSE. Along with funding, law and regulations require the Federal Government, through OCSE, to provide leadership and technical assistance and set standards for systems development. However, OCSE's oversight of State child support systems has not been effective or timely in assessing system approaches and progress.
Page 73 PREV PAGE TOP OF DOC Further, OCSE has not used available tools to monitor and control major system investments. Rather, it operates in large part through paperwork reviews tied to funding authorizations. It also does not require that States follow a structured, disciplined approach for systems development.
To address these weaknesses, we have made several recommendations to the Secretary of HHS that we believe, if implemented, will enhance the likelihood of developing effective systems. These include developing and implementing a structured approach for reviewing automation projects; evaluating planned and ongoing projects in terms of estimated and actual cost, benefits, and risks; and providing the States with the requirements for implementing systems in time to accommodate welfare reform and meet new, legislatively mandated deadlines.
That concludes the summary of my statement. Thank you.
[The prepared statement follows:]
Statement of Joel C. Willemssen, Director, Information Resources Management, Accounting and Information Management Division, U.S. General Accounting Office
Mr. Chairman and Members of the Subcommittee:
We appreciate the opportunity to share with you today the results of our recent review of automated systems being developed by the states to aid in the enforcement of child support payments. Our report on this subject, published June 30,(see footnote 8) details a number of recommendations we believe the Department of Health and Human Services (HHS) must implement to increase the likelihood that states will develop effective systems.
Collection of child support continues to lag nationwide; according to HHS, payment is made in only about 20 percent of cases. As a result, millions of children may not be adequately provided for or may need to rely on welfare. Child support payments will become even more important to recipients who may cease to be covered under the new welfare legislation.
Page 74 PREV PAGE TOP OF DOC Along with evaluating the implications of the welfare reform legislation, our review focused on the status of state development activities, including costs incurred, and the role of HHS in overseeing state efforts. As you know, current law calls for implementation and federal certification of statewide systems to track determination of paternity and child support collections by October 1 of this yearjust 3 weeks from today.
In brief, Mr. Chairman, our review found that while automation can be quite beneficial in locating more noncustodial parents and increasing collections, the progress of many states in implementing automated systems has been slow. At the same time, a great deal of money has been spent, with the federal government funding 90 percent of state costs associated with systems development. The lack of progress can be partly attributed to the limited leadership of HHS' Office of Child Support Enforcement (OCSE) and the inadequate systems approaches of some states. Specifically, OCSE did not perform technical reviews commensurate with the size and complexity of this nationwide undertaking. OCSE did not require states to follow a structured systems development approach, nor did it assess progress at critical decision points, thereby missing opportunities to intervene and successfully redirect systems development. As a result, development in many states has floundered, even as funding continued to be approved.
Our report makes several specific recommendations to the Secretary of Health and Human Services designed to help states develop automated child support enforcement systems that perform as required, and to maximize the federal government's return on costly technology investments.
My testimony today will discuss the benefits that automated systems are beginning to provide as well as the cost to date, problems that impeded early progress, the need for stronger federal leadership, and challenges posed by the new welfare legislation.
The Child Support Enforcement Program
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The general well-being of children and families has long been a critical national policy goal. The Child Support Enforcement Program was created by the Congress in 1975 as title IVD of the Social Security Act. Its goals are to increase the collection of child support from noncustodial parents, and to reduce the federal, state, and local expenditures that often fill the gap when such support is not provided. In 1996, over 8 million children relied on welfare, constituting over two-thirds of those individuals receiving benefits under Aid to Families With Dependent Children (AFDC).(see footnote 9)
State-administered, the child support program is overseen by OCSE along with HHS regional offices nationwide. Total collections jumped 80 percent from 1990 to 1995from $6 billion to almost $11 billion. Yet the total number of cases also increased over the same period, rising from 13 million to 20 million. Consequently, the number of cases in which collections are being made has remained between 18 and 20 percent.
State programs are directly responsible for providing the child support enforcement services that families need; these services can range from establishing a child's paternity to locating the absent parent and obtaining a court order for payment, along with collection. These state programs are organized in different ways and follow different policies and procedures; some are managed centrally, while others are run locally by government entities or private contractors.
As in many other areas, automation has been viewed as a critical tool in addressing the rapidly growing caseloads and increasing costs. In 1980 the Congress, seeking to promote the use of automated systems to assist in child support collection, authorized federal payment of 90 percent of states' total costs in planning, designing, developing, installing, or enhancing such systems.
Page 76 PREV PAGE TOP OF DOC OCSE requires that these systems be implemented statewide, and be capable of performing several specific functions.(see footnote 10) The Family Support Act of 1988 mandated that each state have such a system operational by October 1, 1995. However, when only five states were able to meet this date, the Congress extended the deadline by 2 years, to October 1 of this year.
Developing these systems requires completion of a difficult, complex series of tasks. Along with funding, law and regulations require the federal governmentthrough HHSto provide leadership and technical assistance and to set standards for effective systems development. The federal government must also oversee the process through state visits, review of planning documents, and a final, on-site certification once a state requests it. OCSE also has the authority to suspend or withhold funding, althoughuntil recentlythis was rarely invoked. Once certified, states can obtain additional federal funding66 percentfor operations and maintenance.
Systems Costly Yet Show Benefits; Some States Will Miss Deadline
Many states have made progress in their automation projects, and officials report tangible benefits from their systems. Benefits reported by state program and systems personnel include an improved ability to locate noncustodial parents through the ability of automated systems to interface with other state and federal databases, improved tracking of paternity establishment and enforcement actions, an increase in dollars collected, and a decrease in the amount of time needed to process payments achieved through greater worker efficiency and productivity.
Benefits do, however, come at a high price. As the chart attached to my statement today indicates, through fiscal year 1996, that price has been a federal contribution of about $2 billion of the total $2.6 billion spent. And as costs have continued to mount, states' progress has varied considerably; many states seriously underestimated the costs and time required for developing such systems.
Page 77 PREV PAGE TOP OF DOC According to both state and federal officials, at least some states will be unable to make next month's deadline. At the close of our audit work on March 31 of this year, OCSE's director of state child support information systems estimated that 14 statesrepresenting 44 percent of the nation's total caseloadwould likely miss the October certification deadline. Irrespective of the specific numbers, however, it seems clear that on October 2, the challenge of implementing these systems nationwide will, to a great extent, remain.
Problems Impeded Early Development Progress
Historically, three major problem areas have impeded progress in developing and implementing child support systems. The first was OCSE's delay in setting systems requirements. Private industry and all levels of government acknowledge the importance of defining requirements because of the substantial payoff later in developing systems that are cost-effective, completed on time, and meet users' needs. Originally expected in 1990, final requirements were not established until June 1993. Obviously, states could proceed only so far in development until knowing what specific functions their systems would need to perform; this also caused problems with contractors. OCSE explained this delay by citing its own failure to use an incremental approach to defining requirements, along with a lengthy review process.
The second area that made the development process more difficult for states was a 1990 OCSE decision that states transferfor their own usesystems that were already in operation in other states. The idea behind this mandate is sound; software reuse, as it is called, can reduce development time and cost, improve productivity, and improve the reliability of the software itself. However, this directive was made before OCSE had assessed whether a sufficient number of systems were available to be transferred. In fact, only eight certified systems were in useand these were certified on the basis of OCSE's older requirements. No systems had been certified using the more extensive 1988 requirements. Consequently, many states attempted to transfer systems that were incomplete and/or otherwise incompatible, causing additional expense and delay.
Page 78 PREV PAGE TOP OF DOC Third, OCSE has been reluctant to implement a recommendation made in our 1992 report(see footnote 11)to suspend federal funding when major problems are identified. It cited its belief that the ''most constructive approach, especially with a statutory deadline, is to provide technical assistance to the [s]tates rather than suspend funding.'' It has temporarily, however, withheld funding when it found variations in cost figures or had other concerns about a system's direction.
Ineffective Federal Leadership Inhibits States' Progress
In addition to these early problems, OCSE's oversight of state child support systems has been narrowly focused throughout and, as a result, ineffective in assessing the states' systems development approaches and progress. One of the primary ways in which OCSE obtains information about state plans and progress is through state advance planning documents and their updates. Yet OCSE does not use these tools to proactively oversee, monitor, or control major investments in systems development projects. Rather, it operates in large part through paperwork review tied to funding authorization and monitoring of self-assessed progress.
OCSE also does not require that states follow a structured, disciplined approach to systems development becauseaccording to OCSE itselfit lacks the necessary technical expertise and resources to evaluate progress at critical points in the systems development process. Instead, it has focused mainly on whether states are meeting or expect to meet systems requirementsaccording to the states' own evaluationsand their progress toward meeting this October's deadline.
Another critical factor is whether actions cited in planning documents provided to OCSE are properly carried out and reflect what the states are actually doing. We found that states were sometimes put in a position of having to present inaccuratesome felt impossibleschedules showing that they would indeed meet the October deadline; otherwise, continued funding was jeopardized. As one state official put it, ''[the planning documents] are an administrative exercise to justify obtaining funding.''
Page 79 PREV PAGE TOP OF DOC OCSE's oversight has also been constrained by its timing. Since the detailed certification reviews of systems come only at the end of the development process, when invited in by states that see their systems as complete, the opportunity to change direction earlywhen problems are first notedis missed.
A final problem we see in OCSE's approach is that it monitors systems development strictly on a state-by-state basis. What would be more helpful to the statesespecially those farther behind in the development processwould be a nationwide perspective in which trends could be assessed and best practices and lessons learned could be shared, in the hopes that similar problems could be avoided by other states.
[The official Committee record contains additional material here.]
Welfare Reform Raises the Stakes
As you know, Mr. Chairman, the welfare reform legislation enacted last year dramatically altered the nation's welfare system by requiring work in exchange for time-limited assistance.(see footnote 12) Child support is an integral part of welfare reform, because for those who find themselves newly ineligible for traditional welfare benefits and, for whatever reason, unable to work, child support payments may be the only remaining means of support.
Given this new reality, states are required to operate child support enforcement programs that meet federal requirements in order to be eligible for Temporary Assistance for Needy Families block-grant funding. OCSE plans to release guidance to states incrementally as policy decisions are made final; this is critical if states are to incorporate such new requirements while at the same time finishing development of basic child support enforcement systems.
Page 80 PREV PAGE TOP OF DOC Another demand that must be simultaneously met is the need to develop systemsand reconfigure existing systems that interface with themthat can process date-sensitive information into the next century and beyondwhat has come to be known as the Year 2000 problem.(see footnote 13)
Federal Leadership Must be Strengthened
The challenges being faced by those forced to do without the child support to which they are entitled compel the federal government to fulfill its legislative mandate of providing leadership and ensuring that systems are developed that can help track noncustodial parents who are not paying child support. To enhance the likelihood of developing effective systems, we have recommended that the Secretary of Health and Human Services direct that the Assistant Secretary, Administration for Children and Families, take a number of actions, including
developing and implementing a structured approach to reviewing automation projects;
developing a mechanism for verifying that states follow generally accepted systems development practices to minimize project risks and costly errors;
using an evaluative approach for planned and ongoing state information technology projects, one that focuses on expected and actual costs, benefits, and risks;
conducting timely post-implementation reviews on certified child support systems to determine whether they are providing expected benefits; and
providing the states with technical requirements for implementing welfare reform systems with sufficient time to allow the states to meet new legislatively mandated deadlines.
Page 81 PREV PAGE TOP OF DOC Quick action on these and other recommendations that we have made can go a long way toward implementing effective systems that will locate more noncustodial parents and increase collections.
Mr. Chairman, this concludes my statement. I would be happy to respond to any questions that you or other Members of the Subcommittee may have at this time.
Chairman SHAW. Thank you, sir.
STATEMENT OF ROBERT G. WILLIAMS, PRESIDENT, POLICY STUDIES, INC., DENVER, COLORADO
Mr. WILLIAMS. Thank you, Chairman Shaw, for this opportunity to testify today on automated child support enforcement systems.
My perspective on this issue is somewhat unusual. My company, PSI, performed a range of supporting roles in the development of about a dozen statewide automated child support systems, but we are also a user of seven different State computer systems as a privatized operator of child support agencies.
In our experience, many positive results have been realized from the 1988 mandate that all States develop statewide computer systems for child support. We all recognize, however, that the 9-year effort to automate State child support systems has encountered many problems. Based on this national experience and the challenges of the new PRWORA requirements, a new child support strategy is clearly needed. What follows are suggestions for a new automation approach that is intended to achieve the maximum gains in program performance from the limited technology resources that are available.
Page 82 PREV PAGE TOP OF DOC First, let me talk about a proposal for fixed allotment funding. Enacting of PRWORA has created an opportunity for a creative break from the past. Unlike the earlier 90-percent enhanced funding under the Family Support Act, the 80-percent enhanced funding under PRWORA is capped at $400 million.
Since we can assume that all of the money will need to be spent, why not just provide each State with a fixed allocation, then let the State use it to meet the statutorily required requirements as it sees fit? The statutory requirements are clear enough, and States would have to meet certain other standards for communicating data to the Federal Government and between States.
The States that can meet PRWORA automation requirements without spending their full allotment should be permitted to redirect the remaining funds to other advanced child support technology applications. States that needed additional money would be allowed to spend regular administrative funds at the 66 percent matching rate.
Second, then, this fixed allotment approach would eliminate the need for the APD process and separate Federal certification criteria. With closed-end funding, there would be no justification for a bureaucratic oversight process. This would do away with two contributors to the excessive costs and delays encountered by States in bringing up their existing systems.
Third, adopting a fixed allotment approach will create the opportunity to redirect the role of Federal technology staff. It will enable them to stop performing their currently defined roles of certification cops. And I don't mean that as pejorative on the individuals involved but, rather, the kind of roles that they are being required to play. Instead, their efforts could be shifted to tracking new technologies and facilitating the propagation of technologies found to be appropriate.
Fourth, there is some need for flexible State implementation of PRWORA requirements. States are given until October 1, 2000, to complete automation of all PRWORA child support requirements, but virtually all of the individual requirements laid out in the statute have to be met before that date, and the sheer volume of requirements is likely to outrun the ability of many States to develop timely automated support. It may make sense, then, to give the Secretary of DHHS limited discretion to approve deviations from statutory implementation for deadlines for individual States where such deviations are based on sound development plans for automation.
Page 83 PREV PAGE TOP OF DOC And, finally, I think there is some significant need for simplification of what is a frightfully complicated program, and if we mounted some serious effort to simplify the program, this would greatly reduce development and operation costs and reduce the risk of developmental failure.
In conclusion, I think these recommendations would provide the structure for a flexible State-driven approach to automation of the child support program. This would greatly contribute to continuing improvements in program performance and lower program costs.
[The prepared statement follows:]
Statement of Robert G. Williams, President, Policy Studies, Inc., Denver, Colorado
Mr. Chairman and Members of the Subcommittee, thank you for this opportunity to testify concerning automated child support enforcement systems. My perspective on this issue is somewhat unusual. On the one hand, Policy Studies Inc. (PSI) performed a range of supporting roles in the development of statewide automated systems in a dozen states. On the other hand, we are a major user of many different state systems because our privatized operations are (or will be) relying on these systems in seven states.
In this testimony, I start with a few observations about the many benefits already being realized from these automated systems, along with our own views of some of the problems that have arisen. Drawing from these successes and failures, we propose a dramatic break from past practices that would transform the federal role in child support automation. Under a system of fixed child support technology allotments to states, the federal role of ''certification cops'' would be put to rest, along with the ponderous cycle of Advanced Planning Documents (APDs) and APD updates. The federal staff could focus on assuming a technology leadership role, and the states could focus on maximizing benefits from technology to improve staff productivity and child support collections.
Page 84 PREV PAGE TOP OF DOC I would also like to note that I last testified before this subcommittee on February 1995, then on the subject of child support privatization. At that time, I suggested that enactment of the full range of proposed child support reforms would do more to improve our operations than any other new laws. Mr. Chairman, I would like to extend our heartfelt thanks to you, the members of the Subcommittee, and the staff for your outstanding accomplishment in crafting the child support provisions of PRWORA. This is truly a remarkable law. The response of states has been exceptionally rapid and compliant. The positive effects of this legislation are already being felt. There can be no doubt that this law alone will greatly increase the well-being of custodial parents and their children across the nation through the more timely and consistent establishment and enforcement of child support orders.
What Went Right, and What Went Wrong?
Many positive results have been realized from the 1988 mandate that all states develop statewide computer systems for child support. Although no one knows for sure, our best guess is that somewhere around 40 states will have operational systems by the October 1st deadline, or within a few months afterwards. These systems will be able to meet federal certification standards, either as is, or with some adjustments. Even many of the remaining states will have greatly improved automation relative to their earlier capabilities.
It is difficult to overstate the benefits that will be derived from these systems. To explain, let me offer the example of Tennessee. In that State, where we operate the child support program in 4 out of the 31 Judicial Districts, automation has been almost completely lacking until the recent implementation of the new statewide system, TCSES. While not without its difficulties, the TCSES development effort went well and the system is within weeks of being operational statewide. What does this system mean to local operations? For the first time, other than limited local office systems, there will be systematic tracking of all case actions. Searches of databases to locate obligors, which previously had to be laboriously checked one at a time (if they were accessible at all), are now checked automatically. This enables us to take more timely establishment or enforcement actions. Cases that were unknowingly being worked in several counties are now identified and worked in only one. The system has laid the groundwork (along with New Hire Reporting) to automatically identify employers and issue wage assignments for those owing child support.
Page 85 PREV PAGE TOP OF DOC One of the most valuable benefits of the system is that Clerks of Court have access he function was actually performed manually in many places. What this means is that some Clerks of Court were previously writing payment records into oversize ledger books by hand. In some of our small offices, we would have to send staff into the Clerk's offices for two or three days per month to manually identify and record child support payments. Green eyeshades and quill pens would not have been out of place in these environments. Now Clerks enter payments directly in TCSES. The computer system maintains the payment histories and counts the collections.
These kinds of benefits are being replicated everywhere that new computer systems are coming up. More child support orders will be established, collections will increase, and we will get far more productivity out of our expensive staff resources.
But we all know that development of automated child support systems has been a painful process. Because of the immense technical complexity of these systems, even successful implementations have taken their toll. Where success is not yet within reach, the frustration is very high.
What have been the problems? Like virtually all technically demanding implementations, these systems have taken too long and cost too much. Some small group of states will not even be within striking distance of success by October 1st. A handful may even have to scrap their longstanding developmental efforts and start over. The worst problem is that the development efforts that are furthest behind tend to be in the largest states. This means that a disproportionate share of the national IVD caseload has been adversely affected.
Some of the causes of these problems have been well documented by General Accounting Office and DHHS Office of Inspector General reports, as well as other commentators. The transfer methodology was misguided; rather than speeding development, it generally resulted in added time and cost. Federal ''one-size-fits-all'' certification requirements were excessively rigid and inconsistently applied. The APD process slowed development without protecting the federal or state governments from failures.
Page 86 PREV PAGE TOP OF DOC Some states encountered major problems in forging the political consensus needed for successful development from disparate groups such as county-operated child support agencies, prosecuting attorneys, and clerks of court. Some states failed to deploy the needed technical, programmatic, and/or management expertise. Last, but not least, private contractors had a decidedly mixed record. In most states, contractors willingly bid to overly optimistic schedules. In most states, contractors under-estimated the complexity of the development and over-estimated their own capabilities. In some states, contractors have failed to deliver viable systems.
While I do not want to dwell on the past, I would like to focus our attention on several other issues that contributed to states' problems in developing these systems. These are instructive in considering how to gain more reliable benefits from our child support technology expenditures in the future.
All or Nothing Mega Systems.
The safest systems development path is a step-by-step modular one. While not always feasible, a progressive development strategy would build systems one piece at a time, preferably starting with an existing structure. In contrast, the federally-mandated development process forced states to funnel all of their technology efforts into a single, monolithic, statewide system. Worse, because of the transfer requirement, this system had to be imported from elsewhere. A state like Oregon, which already had a system with advanced functionality but aging technical infrastructure, was required to ignore its existing technological resource and try importing something else. Only after that effort failed, did Oregon go back to the sounder strategy of rebuilding around a computer system that was working well.
In the meantime, during the time that the statewide systems were under development, other expenditures on new technology were frozen. While Corporate America was busily replacing 1980's mainframe technology with graphically-based, powerful personal computers linked into local and wide area networks, states remained locked into the old technology for child support applications. The transfer requirement and the single statewide system requirement seemed to dictate mainframe applications, while the freezing of federal matching funds for expenditures on smaller-scale, interim systems prevented experimentation with the newer, client/server technologies. Only a few of the most innovative states were able to incorporate modern, graphically-based (Windows) technology into their child support systems in other than a token way.
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The Ponderous APD Process.
Because the enhanced funding was uncapped, a process had to be devised to regulate it. This took the form of Advanced Planning Documents, APDs, and APD Updates. Realistically, this may have been as good as any other way to meter out the money. However, this overlaid a heavy bureaucratic procedure on an already challenging developmental job. Frequent changes in this type of development are inevitable, and even desirable. They result from more sophisticated understandings of requirements as the design process evolves, changes in technology, and more detailed schedule planning. Whenever states changed their plans, they had to submit APD updates. The resources and time delays entailed by this process undoubtedly contributed to the higher than expected development costs and, especially, to the longer than expected development times.
The Certification Straitjacket.
States had to build their systems to a one-size-fits-all set of certification requirements. Taken alone, the requirements seem quite reasonable, but there were two serious problems with their application. First, they were interpreted with a minimum of flexibility. For example, one certification standard required that the IVD system incorporate automated interfaces to connect with the IVA, IVE, and Medicaid programs. This is good, except that states were required to build these interfaces even if the other programs were not yet automated. A more reasonable approach would have been to waive the requirement if there was nothing to connect to, and let states build those interfaces later. Second, there was little or no latitude accorded to the unique requirements of specific states. Wyoming had to meet the same requirements as California and vice-versa, even though California has 50 times as many child support cases. Logic dictates that, based on size alone, there would have been differences in automation needs, and the level of automation that would have been justified.
Page 88 PREV PAGE TOP OF DOC Another problem with certification requirements was their all or nothing nature. There was no concept of progressive certification that would have accommodated modular development. This increased the risks of development and delayed the time that any benefits from automation could be attained.
What Went Wrong: A Summary.
There is general agreement that the development efforts went on longer and cost more than expected. There have also been a series of notable failures that have left a disproportionate number of larger states without systems ready for certification (although generally not totally bereft of useful automation). Nine years after enactment of the federal mandate, however, everyone involved has become humbled by the extraordinary complexity of the technical challenges that needed to be overcome for successful implementations. Given the high failure rates for large-scale systems developments, these results are not surprising, but that does not make the consequences any less disturbing.
Perhaps almost as problematic are the complex user interfaces, lack of developmental flexibility, and high operating costs of those systems that have been successfully implemented. The good news is that most of the systems provide good functionality and that states are now a great deal more technologically sophisticated because of their hard-earned experience. A new strategy is needed, however, to support the continued rapid development required by PRWORA and other programmatic changes, to achieve lower computer system operating costs, to improve staff productivity, and to further enhance automated enforcement measures.
A New Technology Strategy for Child Support
Page 89 PREV PAGE TOP OF DOC Effective use of advanced technology is a critical element in the continued operational improvement of the child support program. With the certification deadline almost upon us, and the challenge of implementing the stringent PRWORA requirements already underway, now is the time to re-think a national technology strategy.
Fixed Allotment Funding.
Enactment of PRWORA has created an opportunity for a creative break with the past. Unlike the earlier 90 percent enhanced funding, the 80 percent enhanced funding under PRWORA is capped at $400 million. When that money is parceled out to the states, it may not be enough to pay for all the changes required in their automated systems. What is important, however, is that the funding limit obviates the need for a continuous federal approval process. There is no longer a need to control an open-ended pot of funds. And states have developed enough technical sophistication (if they did not already have it in the first place) that federal technical oversight can no longer be justified on grounds of state deficiencies in capabilities.
Since we can assume that all of the money will need to be spent, why not just provide each state with a fixed allocation, then let the state use it to meet the statutorily mandated requirements as it sees fit? The statutory requirements are clear enough, and states would have to meet certain other standards for communicating data to the federal government, or between states. Many states have already implemented the new hire reporting requirements, for example, even without the benefit of a certification guide. PRWORA specifies the minimum set of required data elements and the processing deadlines. DHHS has promulgated a data protocol for passing new hire data to the federal new hire registry. This should be enough.
Under this proposal, states that could meet the PRWORA automation requirements without spending their full allotment could re-direct the remaining funds to other advanced child support technology applications. Thus, a state could spend leftover funds on imaging, expanded client/server functionality, upgrading the system architecture, adding functions, or enhancing management reporting and analysis (a critical need, in our view). Such opportunities are likely to arise only for those states that have been unusually effective stewards of past automation spending. States that needed additional money to meet PRWORA requirements after their allotment was exhausted would be allowed to spend regular administrative funds at the 66 percent matching rate.
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Elimination of APD and Certification Processes.
This approach would eliminate the need for the APD process and separate federal certification criteria. With closed end funding, there would be no justification for a bureaucratic oversight process. If states made poor decisions about spending their allocation, they would have to finish the job with larger increments of their own funds. In terms of required federal monitoring, the only issues should be: (1) Are the funds being spent on PRWORA implementation or other child support automation? (2) Is the state providing its share of matching funds? There will be a separate issue of whether the state has met PRWORA deadlines, but that is tied in with broader issues of program compliance.
As I noted earlier, one drawback of the certification process has been that it has borne no direct relationship to an overall performance improvement plan for a state. For states spending part of their fixed allotment on non-PRWORA work, the advent of new performance standards will be a powerful motivator to focus automation spending on innovations that improve outcomes. Why should any additional federal monitoring be necessary when the financial incentives will be pointing states in the right direction?
A Leadership Role for Federal Technology Staff.
Adopting a fixed allotment approach will create the opportunity to re-direct the role of federal child support technology staff. These staff have been so busy performing their defined roles of ''certification cops'' that they have not had the time or energy to lead in the identification, testing, and propagation of new technology. They have been forced into a reactive rather than proactive role.
Page 91 PREV PAGE TOP OF DOC In contrast, if the federal information technology staff could assume a leadership position with respect to emerging technologies, there would be valuable benefits for both the federal and state governments. In such a role, they would be responsible for tracking new technologies, encouraging a range of pilot tests for promising new approaches, evaluating the results of the tests, and facilitating the propagation of technologies found to be appropriate.
Imaging technology is a good example. Within the past few years, imaging has become especially promising because the price of high-volume data storage has dropped precipitously, and because the newer imaging systems use standard personal computer hardware and Windows software. In local offices, imaging systems have the potential to increase staff efficiency significantly. A good system can eliminate many hours of filing documents, tracking down files, and searching for the correct documents. For offices already equipped with PCs and local area networks, the marginal cost of installation and operation can be relatively modest.
There are other innovative imaging applications that are possible as well. In New Jersey, for example, our company operates an imaging system as one component of a statewide voluntary paternity acknowledgment program. As soon as a voluntary paternity acknowledgment form is received and approved in the program office, our staff scan the form into an imaging system. From that point forward, an electronic version of the form is available for viewing and printing in any child support office in the State. This expedites the support order establishment process and minimizes the expense of paper handling.
Apparently the federal agency is currently trying to determine under what circumstances it should allow states to spend money on imaging technology. Rather than serving as a bureaucratic limiter on state funding decisions, it would be better if they were encouraging tests of imaging under a range of conditions. They could then perform careful evaluations of the effects of such technology on child support enforcement operations, the benefits relative to the costs, and how the technology can be best used. If use of the technology were justified, they could facilitate its propagation by disseminating information and providing technical assistance.
Page 92 PREV PAGE TOP OF DOC This type of role would benefit the federal government by improving the technological infrastructure of the program. Rapid application of effective technology would improve the productivity of limited staff resources. By producing better information, enhanced technology would enable state and local (as well as private) managers devise better performance enhancement strategies. By automating more functions, it would increase the number of support orders and the proportion of orders paying, and improve other key programmatic outcomes.
Flexible State Implementation of PRWORA Requirements.
States are given until October 1, 2000 to complete automation for all PRWORA child support requirements. However, virtually all of the individual PRWORA requirements must be met well before that date. The sheer volume of requirements will outrun the ability of many states to develop timely automated support. Moreover, the Congressional deadlines for the specific requirements may not accord with a logical development path for automation.
It may make sense, then, to give the Secretary of DHHS limited discretion to approve deviations from statutory implementation deadlines for individual states, where such deviations are based on sound development plans. The Secretary should not be allowed to authorize deviations for core functions such as new hire reporting, centralized case registry, and centralized payment processing. Moreover, it is important that such authority be used sparingly, because it should not be construed as an effort to back away from PRWORA requirements. Rather, it should be considered only as a limited power that permits states to follow more logical automation development paths.
Page 93 PREV PAGE TOP OF DOC The child support enforcement program is frightfully complicated. This complexity starts with the detailed requirements of federal statutes and regulations. It is compounded by their interaction with family law statutes and program structures in each state.
Some of this complexity is inherent to the program, but some is not. Yet, the complexity drives hundreds of millions of dollars in additional costs for computer development, computer operation, and state and local staff. There has been no serious effort to step back from the existing structure, examine each one of the requirements that has been added through the years, and develop recommendations for streamlining the program. It is our belief that such an effort would yield major benefits.
For automation alone, program simplification would greatly reduce development and operating costs. It would also reduce the risks of developmental failure. It is clear that many of the missteps that were made in putting together the most recent round of child support systems stemmed from the complexity of the program that was being automated.
At the heart of any assessment of the potential for program simplification would be a stringent benefit/cost analysis of each requirement. There are numerous program requirements (and there have been numerous automation requirements) where it has not been readily apparent that the benefits outweigh the costs.
The Family Support Act automation mandate has been valuable. The great majority of states either have, or are close to having, comprehensive statewide automated child support enforcement systems. These systems are already paying large dividends in the form of easier location of obligors and alleged fathers, more rapid and sure application of enforcement remedies, and improved staff productivity. That this success has been marred by problems in some states should not cause us to minimize the accomplishments that have been achieved by dint of hard efforts by federal, state, and contractor staff. Most of this automation would not have come about without the mandate of the Family Support Act.
Page 94 PREV PAGE TOP OF DOC At the same time, the benefit of hindsight allows us to identify flawed policies that have limited the success of the nine-year effort. Rapid, flexible, and continual application of appropriate information technology is essential to improving the effectiveness of the child support enforcement program. States did not even reach the 1997 systems certification deadline before being confronted with a new round of requirements under PRWORA. Moreover, it is clear that the central focus of the program must be on performance, as exemplified by the new incentive structure discussed in this hearing.
These factors point to the critical need for a clean break with past federal automation policy. Rather than dividing up the PRWORA automation allocation based on some perceived ''need,'' and having these state allotments controlled to excess through traditional APD and certification processes, flat amounts should be given to each state based on a formula distribution. This will enable the federal technological staff to re-direct their efforts into assuming a technology leadership role. More importantly, it will reduce states' development time and costs.
This is the kind of flexible, state-driven approach that can greatly contribute to improvements in program performance and lower program costs. Additional benefits could be obtained from affording the states limited flexibility in their PRWORA implementation timetables, and in finding ways to simplify what has become an inordinately complex program.
Chairman SHAW. Thank you.
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STATEMENT OF VICKI TURETSKY, SENIOR STAFF ATTORNEY, CENTER FOR LAW AND SOCIAL POLICY
Ms. TURETSKY. Thank you, Mr. Chairman. I appreciate the opportunity to testify about the October 1 computer deadline.
The consequences of missing the October deadline are potentially devastating to States and to low-income families. As Judge Ross explained, if a State fails to get up a computer system on time, and the State's child support plan is not approved, the State could lose all of its Federal TANF and child support funding. In my testimony, I will focus on the problem-solving steps that Congress and HHS should take to respond to the anticipated failure of most States to meet the deadline.
To begin with, the magnitude of the computer problem is not clear. I urge HHS and the States to put the problem squarely and openly on the table by identifying those States that are closer to certification and those States that are further behind. It does appear that the majority of States have some level of automation currently, and while many will miss the deadline, they will get there over time. Then there are perhaps a handful of other States that are floundering. These States include California and some of the other big locally administered States responsible for a disproportionate share of the child support caseload.
The 16 States that are actually certified represent less than 20 percent of the nationwide caseload. A dozen more States are in the review pipeline. If all of those States are certified, less than half of the caseload would be covered.
Other States are further behind. According to the GAO and HHS, as many as 10 to 14 States and territoriesthe other half of the caseloadare not likely to have fully operational systems by the deadline.
While there are many reasons for the delay, States with complex administrative and political environments have had particular trouble implementing child support systems. Let me be clear. This is not simply a big State problem, although big caseloads are a part of the complexity. Rather, it is primarily those big States in which the child support program is administered through the counties, the courts, or other local governments that are in trouble. Several of these States operate fragmented, decentralized programs with many State and local players that have sometimes resisted State direction. The decentralized systems also have been the most costly to implement, according to our data.
Page 96 PREV PAGE TOP OF DOC You cannot easily automate without the hard work of simplifying and standardizing your underlying and business practices. For the States in the most trouble, the main problem does not appear to be the technology. It is the program underneath the technology. Systems have been made much more complex than they need to be in order to accommodate divergent county practices.
I strongly urge Members of this Subcommittee to retain the current requirement that States have a statewide system. The States and localities should not be allowed to avoid the tough management decisions about how to streamline State programs. While HHS can evaluate different technological solutions, the system must operate uniformly and seamlessly statewide. New York should be able to go to California and not have to deal with each county separately.
Where should we go from here? I recommend the following approach: The deadline should not be extended. Instead, HHS should begin the formal sanctioning process. The main point of sanctions should be to focus Federal and State attention and resources on problem solving. The risk of sanctions should be real enough and tough enough to motivate the State legislature to break through the logjams without devastating low-income families that rely on TANF and child support services.
Ideally, HHS would have a range of credible graduated sanctions at its disposal. To accomplish this, Congress may want to provide HHS with clearer authority on how it should handle the sanctioning process, but at the same time, it should be careful to protect the integrity of the overall plan disapproval process.
Next, all States that miss the deadline should be required to develop a serious corrective action plan. The plan should be developed through a structured problem-solving process lead by HHS and should tackle managerial and structural barriers that have impeded systems development.
Page 97 PREV PAGE TOP OF DOC HHS should be encouraged to evaluate its current capacity and hire outside help if it needs it. HHS should report quarterly to Congress. And, finally, I agree with Mr. Hayworth's suggestion that HHS, with the help of States, advocates, and experts, should reassess and restructure the certification process for the new computer requirements of 1996.
[The prepared statement and attachments follow:]
Statement of Vicki Turetsky, Senior Staff Attorney, Center for Law and Social Policy
Members of the Subcommittee, I am a Senior Staff Attorney at the Center for Law and Social Policy. CLASP is a non-profit organization engaged in research, analysis, technical assistance and advocacy on issues affecting low income families. We do not receive any federal funding. I appreciate this opportunity to testify about the October 1997 child support computer deadline. CLASP has tracked child support computer developments for several years. In my testimony, I will focus on the problem-solving steps that Congress and HHS should take to respond to the anticipated failure of most states to have a certified system by the extended deadline.
Why is automation so important?
When Congress enacted the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, it counted on the child support program to help families leave or stay off of TANF. The child support provisions of the Act were designed to help states substantially improve their performance and to open up a real possibility of child support payments to families. The Act builds on existing state automation requirements, and assumes that states would finish their systems on time. If states do not get their systems in place, the most critical improvements in the new law can not be implemented.
Page 98 PREV PAGE TOP OF DOC It is clear that without automation and the new legislative improvements, nationwide child support performance is going nowhere fast. CLASP's five-year analysis of state child support performance indicators between 1991 and 1995(see footnote 14) (including 4 of the 5 recommended in the incentive report) indicates that nationwide performance was flat for most indicators. For the most part, child support performance did not improve at all during the five-year period, despite slowed caseload growth, a drop in non-marital birth rates, and a strong economy during the last two years of the period. Expenditures grew faster than collections. Even if all computer costs are excluded, cost-efficiency barely improved. However, 1995 data does offer modest encouragement, with collections increasing at a faster pace than the caseload. This may mean that partial automation may be starting to show some results. (See graphs.)
[The official Committee record contains additional material here.]
How far behind are state computers?
Let me say first that it is not altogether clear which states are close to certification and which states are further behind. HHS and the states need to put the problem squarely and openly on the table, so that Congress and the public can accurately assess the magnitude of the problem. It does seem clear that there are really two different groups of states that will miss the deadline. There are states that have some level of automation and, while they will miss the deadline, they are relatively assured of getting there. This is probably the majority of states. Then there are perhaps a handful of other states that are floundering. These states include California and some of the other big locally-administered states responsible for a disproportionate share of the nationwide caseload. California alone represents 12 percent of the nationwide caseload.
Page 99 PREV PAGE TOP OF DOC We do know that only 16 states are certified right now, even though the deadline is only three weeks away. This represents less than 20 percent of the nationwide IVD caseload. A dozen more states are in the review pipeline, that is, they have requested or obtained certification reviews. If you assume that all of the states in the pipeline meet the certification requirementswhich is a generous assumptionless than half (43 percent) of the nationwide caseload would be in certifiable states. Others, of course, may submit review requests in the next three weeks. It will take HHS several months after the deadline to complete their reviews. We also know that some states are not even close to making the deadline. According to the GAO, as many as 14 states may not have certifiable systems by the deadline. This represents 44 percent of the nationwide caseload.(see footnote 15) Results of a survey conducted a year ago by the Inspector General for HHS(see footnote 16) indicated that 16 states were lagging far behind in the development process, and had not begun to convert their data or implement their systems, both difficult and lengthy stages in the process.
Finally, we know that child support computer costs are escalating rapidly. Federal child support costs increased 78 percent in 1995 alone. In 1997, total computer development and operational costs can be expected to hit $3 billion.
Why have states have such difficulty developing automated systems?
There are a number reasons. Delayed federal specifications, a poorly structured technology transfer policy, a narrow certification process, ineffective state and vendor working relationships, a shortage of expertiseall of these contributed to delayed implementation nationwide. But I would like to focus on one particular problem here. States with complex administrative and political environments have had the most trouble implementing child support systems.
Page 100 PREV PAGE TOP OF DOC Let me be clear. This is not simply a ''big state problem,'' although big caseloads are a part of the complexity. Rather, it is primarily those big states in which the child support program is administered through counties, the local courts, or other local governments that have had the most trouble planning and implementing systems. Several of these states operate fragmented, decentralized programs with many state and local players, including locally elected officials. Often local players with ties to the governor and state legislature have resisted state direction. Sometimes, no one has really taken control of the development process. CLASP's analysis of per-case cost data reflects that by and large, the decentralized states are also more expensive to automate.
You can not easily automate without the hard work of simplifying and standardizing your underlying business practices. For the states in the most trouble, the main problem does not appear to be the technology. It is the program underneath the technology. You can not overlay a computer system on top of a fragmented program and expect it to work well. Systems have been made much more complex than they need to be in order to accommodate divergent county practices. It is no surprise that the computer does not work if it includes a half dozen different options simply to open a case file. The Little Hoover Commission, a state commission charged with assessing California's child support program, found that the state's county-driven computer system ''made implementing SACSS a nightmare. Because every county has its own existing system and its own level of technology, SACSS has had to be shoe-horned to fit each county.''(see footnote 17)
There has been considerable discussion in recent weeks about whether to modify the requirement that states have a statewide system. I strongly urge members of this Subcommittee to retain the current statewide requirement. States and localities should not be allowed to avoid the tough management decisions about how to streamline the state program. In fact, there may be a variety of technological solutions, and HHS can evaluate them. However, the system must operate uniformly statewide and it must be seamless to families, employers, and other states. New York should be able to go to California to get action, and should not have to deal with each county separately.
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What should be done?
The bottom line is that Congress must be confident that all states will either have a functional, certified computer within real time, or be held accountable for failing. Any further use of federal computer funds must be carefully monitored and rigorously cost-justified. The deadline should not be extended. Enhanced federal funding should not be extended. Instead, I recommend the following approach:
1. HHS should begin the formal sanctioning process for every state without a certified computer by October 1. The main point of sanctions should be to focus federal and state attention and resources on the problem. The risk of sanctions should be real enough and tough enough to motivate the state legislature to break through logjams, without devastating program beneficiarieslow-income families receiving TANF and child support services. Ideally, HHS would have a range of graduated, credible sanctions at its disposal and would use them judiciously. These potentially could include a loss of incentive payments.
2. Next, all states that miss the deadline should be required to develop a serious corrective action plan. The plan should be developed through a structured federal-state problem-solving process in each state. States that are closer to completion would have to lay out a real timetable and submit to federal inspections prior to certification. States that are in more serious trouble would have to enter into a rigorous assessment and planning process led by HHS. The planning process must be tough, disciplined, and skilled. It would tackle not only technical compliance, but managerial and structural barriers that have impeded systems development. The plan should be based on a structured systems development approach that assesses progress at each critical milestone. The GAO has made a number of recommendations in this area.
3. The plan should be tailored to each state, but it must not circumvent federal requirements. In particular, the Congress should hold states to the requirement that the system must be statewide. The plan would also look forward, building towards changes needed by the year 2000.
Page 102 PREV PAGE TOP OF DOC 4. Such a process would demand much more leadership, resources and expertise from HHS than the current certification process has required. To succeed, HHS must provide in-depth, hands-on direction and must have the power to impose sanctions. HHS should be encouraged to evaluate its current capacity, and to hire impartial outside experts that are proficient not only in the technology, but also in program management and decision-making processes. Such experts could help HHS structure and guide a corrective planning process that can really work.
5. HHS should report quarterly to Congress, and make any recommendations it has for improving the computer problem-solving process. The GAO should continue to fulfill its important oversight role.
6. HHS, with the help of states, advocates, and experts, should reassess and restructure the current certification process.
Is there room in the current law to implement the recommended process?
Let me put it this way: the legal framework does not make it easy. While there may be room for alternative interpretations, Congress may want to provide HHS with clearer authority on how it should handle the sanctioning process. If Congress decides to clarify HHS's authority, it should do so in a way that is narrowly tailored to the computer problem, and preserves the overall integrity of the plan disapproval process.
Historically, HHS has interpreted the law to create two separate sanctioning tracks. The first track is a ''plan disapproval'' process. In order to qualify for federal child support funding, states must have an approved state plan. In order to have an approved child support state plan, the state must have a computer. In order to qualify for TANF funding, the state must certify that the state will operate a child support program under an approved child support state plan. Historically, HHS has interpreted the law to mean that if a state plan is missing anything, the plan can not be approved and all child support funds must be cut off. If the child support state plan can not be approved, then TANF funds also are at risk. In other words, if a state fails to get its computer system up on time and the state's child support plan is not approved, then the state could lose all of its child support and TANF funding.(see footnote 18)
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The second track is a ''corrective compliance'' action. If the child support state plan has everything it is supposed to have, but the state does not live up to its state plan, then HHS has treated the problem as a compliance issue, subjecting the state to the 1 to 5 percent penalty on TANF funds provided for in section 409(a)(8) of the Social Security Act. In a corrective compliance action, the state must submit and comply with a corrective plan. There are no express sanctions against child support funds. In other words, if the state does not comply with its state plan, the state is subject to TANF penalties, but not child support penalties.
Neither process is perfectly suited to the computer problem, but as a practical matter, the noncompliance process is the better alternative. The plan disapproval process leads to a complete cut-off of child support and TANF funding. This result would be devastating to families, without solving the problem. On the other hand, the main problem with the noncompliance process is that the sanctions may not be tough enough to force real problem resolution. The noncompliance process results in a relatively small cut in TANF funds and leaves child support funds untouched.
We can not strengthen the capacity of state child support programs without automation. It is critical that HHS and remaining uncertified states solve the problems, and implement competent systems that meet federal requirements now and in the future. If they can not, then Congress must consider a different approach to the child support program.
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Chairman SHAW. Thank you.
STATEMENT OF ROBERT DOAR, DIRECTOR, NEW YORK STATE OFFICE OF CHILD SUPPORT ENFORCEMENT; ON BEHALF OF THE AMERICAN PUBLIC WELFARE ASSOCIATION
Mr. DOAR. Thank you, Mr. Chairman. And thank you for inviting me to testify on behalf of both Governor Pataki and APWA.
I want to speak for just a minute about the situation in New York. We expect to meet the certification deadline. However, what Congress and the administration does with regard to those States that will not meet the deadline will affect all of us, and it will affect us in New York vis-a-vis those other States because of the interstate nature of child support enforcement. It will also affect those States and all of us as we move to implement the mission that you gave us with regard to welfare reform. Nineteen ninety-eight is going to be a very important year. We need to have the ability to meet those demands, and the penalty, as it is currently outlined, would make that very difficult.
There are lots of reasons for why we are in this position. But what I would like to focus on is what we need to do in the future to not have it happen again.
First, we would urge Congress to pass legislation which defines a corrective action plan without the current penalty for failure to be certified. Second, it should require HHS to issue outcome-based regulations that would tell the States where they need to get at the end of the day but not how we have to get there with every step. That, I think, is the principal problem that we face. And, thirdand this is a particularly important onethe regulations need to permit States to link county-based systems in the way outlined in appendix B of the testimony which I have submitted.
Page 105 PREV PAGE TOP OF DOC The key concept with this is that, to the external world, States, Federal databases, the recipients of our services, the child support system would function as a single system but they still could be linked together. It is very important that we can have one entry point, but we need not have all the systems be exactly alike. So I think that that really is the future of child support.
We talk about, what are we going to do about large county-based systems? If we can have a system that we can enter at one point but doesn't necessarily meet the very detailed specifications of the current certification process, I think that would advance the child support program.
Thank you again for allowing me to testify.
[The prepared statement and attachments follow:]
Statement of Robert Doar, Director, New York State Office of Child Support Enforcement; on behalf of the American Public Welfare Association (APWA)
My name is Robert Doar. Thank you for the opportunity to testify today. I am the director of the New York State Office of Child Support Enforcement. I am here to testify on behalf of both the Pataki administration and the American Public Welfare Associationa bipartisan organization that represents the human service agencies of the 54 states and jurisdictions on policy issues.
The purpose of my testimony is to say that federal-state systems procedures need to be changed, both in the short-term to allow states that are not expected to meet current certification requirements to continue to deliver effective child support programs, and in the long-term to better meet the systems and program demands of the post-welfare reform world.(see footnote 19)
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But first, a little background: As you know, the Family Support Act of 1988 required states to implement statewide automated child support systems by 1995. Congress extended this deadline by two years because the Department of Health and Human Services (HHS) was two years late in issuing regulations, impeding state start-up. Thank you for that extension. It has allowed the majority of states the time necessary to complete their systems. In fact, New Yorkwhile having faced many challengesexpects to meet the 1997 deadline. While only a handful of states are expected to miss the deadline, they are large states, comprising perhaps 45 percent of the nation's child support caseload. The largest states have faced the greatest challenges because federal rules fail to allow the flexibility needed to meet the certification requirements.(see footnote 20)
During this period, while states struggled with the system certification requirements, we also made significant progress in helping the people we serve. And the numbers show that:
In 1992, annual collections totaled $6 billion. In 1996, annual collections exceeded $12 billiona 100% increase.
In 1992, paternity establishments totaled 512,000. By 1996, paternity establishments had doubled to just over 1 million.
In 1992, 2.8 million families received child support collections through this program. In 1996, 4 million families received child supporta 43% increase.
In order for this improvement to continue, we need changes to the federal-state systems procedures.
Page 107 PREV PAGE TOP OF DOC These changes will benefit all states. First, an estimated one-third of the child support caseload is interstate. All states depend on each other for effective interstate enforcement. If one state suffers, we are all impactedas are the nation's families. Second, all states must implement the new program and systems requirements enacted by Congress in July 1996. Unless we change the way we do business, we will perpetuate the very problems we face today.
I'd like to emphasize this last point. Next year is going to be a pivotal year for the Personal Responsibility and Work Opportunity Reconciliation Actthe most important piece of social legislation passed since the Voting Rights Act. In order for states to meet the needs of those who are on welfare, or are recently off welfare, or are trying to avoid welfare, we must have effective child support programs. And unless we make changes to the systems certification process and the method by which we deal with states that fail to meet certification, we will not be able to fulfill the vital mission you gave us last yearto help families reach self-sufficiency by delivering effective child support services.
I. Solutions to Ensure Implementation of 1997 Child Support Systems
In July 1997, APWA asked the Administration and Congress to allow states that have been unable to meet the 1997 deadline the flexibility they need to comply. Our recommendations, which have also been adopted by the National Child Support Enforcement Association (NCSEA) and the National Council of State Child Support Enforcement Administrators (NCSCSEA), call for the following:
Amend federal policy to allow states that are not federally certified by October 1, 1997 to have federal funding available to operate their child support and TANF programs by replacing the child support information systems State Plan disallowance process with a corrective action period (CAP) that permits continued federal funding of programs. This solution is critical because the immediate penalties and federal funding reductions will cripple program services to the point that affected states will not be able to help the child support clients they serve today;(see footnote 21)
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Change the state system certification requirements to focus on expected program outcomesrather than specifying specific architectural design requirementsto assure the best results from state and federal investments in technology; and
Allow a state to link Title IVD(see footnote 22) child support automated systems if the linkage results in a seamless uniform system that meets the current program requirements and the state child support agency determines, after considering cost-effectiveness, caseload size and customer orientation, that linking systems is the best way to meet requirements.(see footnote 23)
Many Causes Contributed to Systems Delays
Causes of states' inability to meet the statutory deadline are numerous and federal, state, county and private sector partners share the blame.
First, no models exist for implementing such large complex automation to serve the multitude of parties and meet the political and regulatory needs of the numerous jurisdictions involved in administering the child support program. States must partner with counties, courts, district attorneys and prosecutorial offices, employers, financial institutions, and other state agencies such as vital statistics, employment security, welfare, Medicaid, food stamps, and revenue. They must track current information for both custodial parents, noncustodial parents, and their children and respond immediately to their customer service needs. Even private sector experts have said that never before has automation been implemented to manage such complex relationships.
To further complicate child support systems development, HHS prescribed, through its certification requirements and other regulatory and policy materials, specific systems architectural and software configurations, which were developed based on technology known during the 1980s but which are not necessarily appropriate in light of current technology. These requirements put states in the position of developing systems to meet certification requirements rather than to accomplish the mission of the child support program.
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Other causes include:
Federal barriers such as the transfer requirement(see footnote 24) and prescriptive process-oriented certification criteria (see Appendix A for a more detailed discussion);
Changes mid-stream in technologies, management, and federal regulations and requirements (examples include that HHS made the transfer requirement optional too late and failed to make certification standards available in final form until June 1993);
Lengthy processes for state procurement and federal approval of private-sector contracts;
A shortage of talented and experienced technical staff and project and executive managers among states, the federal government, and the private sector;
The private sector's inability to complete contracted work to specifications or within time frames; and
The significant length of time needed to convert large caseloads from their old format to the new format used by the statewide automated system.
Large Systems Development is Inherently Risky in Both Public and Private Sector
Systems development in both the private and public sectors is a complex, lengthy process. Failures are public and painful, such as the recently revealed difficulties the Internal Revenue Service has had in updating its antiquated system. The following data on private computer development and implementation projects illustrate the risk:
Page 110 PREV PAGE TOP OF DOC many large projects requiring extensive software design and development, system integration, and large outsourcing tend to fail,
30%50% of large computer implementations (over $1 million) fail in some manner,
only 10%16% of large projects meet deadlines and budget,
almost 30% are canceled before completed, and
over 50% of software projects overran estimates by 189%, costing U.S. companies $59 billion a year in 1994.(see footnote 25)
Despite Systems Challenges, Child Support Program Continues Improving
Although some states have yet to achieve full system certification, the child support program continues to make significant improvements. Governors across the nation laud the record state collections of $12 billion in 1996, an increase of 50% since 1992. Paternity establishment almost doubled to nearly 1 million cases in FY 1996, from 516,000 in 1992. And the number of families actually receiving child support rose to 4 million cases with collections, an increase of 43 percent, over 2.8 million in 1992.
Despite these programmatic improvements, a strict interpretation of existing law, regulation and policy could result in a loss of federal funds for state programs: both a state's TANF block grant funds as well as all of its child support administrative funds are subject to penalty. These penalties would pose significant fiscal difficulties for states and ensure a reversal of the program improvements realized to date. Currently, there is no corrective action process by which HHS can pursue alternate methods of achieving state compliance with these requirements, other than withholding significant amounts of federal funds. A corrective action period must be established.
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II. Solutions to Ensure an Efficient, Effective Federal-State Systems Relationship Over the Long-term
States strongly support efforts to ensure effective stewardship of public funds. We want a process that meets this goal while ensuring, rather than inhibiting, program performance. Information technology can and should improve the business of the program it supports, and the federal-state relationship should guarantee it does. Instead, the current child support systems development effort has driven states to focus on meeting prescriptive certification requirements, not necessarily to focus on improving program efficiency and effectiveness. APWA calls on the federal government to address this and other problems that will continue to plague human service systems unless they are fixed.(see footnote 26)
To do so, APWA recommends that the federal government(see footnote 27)
Fundamentally alter its philosophy toward human service information systems development, financing, procurement, regulation, and systems approval with a particular focus on integrating automation into the overall strategic plan of the human service program; and
Establish in cooperation with APWA, states and other appropriate groups a state-federal information technology partnership with strong involvement of state program and information systems staff to submit recommendations to the Administration and Congress, as necessary. The recommendations should address current barriers and solutions to information systems development with a focus on reengineering the systems approval process.
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Overhaul of the Federal Systems Approval Process
Even prior to the debate over welfare and child support reform, states and APWA called for substantive overhaul to the federal APD and certification processes, warning about the problems. In response, HHS established a State-Federal Information Technology Partnership(see footnote 28) in 1993 to develop consensus on a number of policy itemsboth short-term and long-termto begin reforming the manner that federal and state governments acquire, apply, and implement human service information systems.
Fortunately, the Partnership's work led to positive administrative changes such as making the transfer requirement an option (as discussed earlier) and rewriting regulations to raise the equipment and service threshold amounts above which APDs and related procurement documents must be submitted for prior federal approval.(see footnote 29) Removing these and other barriers has incrementally contributed to improving the federal financial oversight process and serves as a promising sign that a continued state-federal partnership could lead to additional progress.
Prior Federal-State Focus on Change Needs Follow-Through
As part of this same change in policy, HHS and FNS stated that they ''intend to revise their APD regulations to provide additional relief and flexibility to States'' and that they were committed to ''investigating new ways to further modify or replace the existing APD process.'' They listed the following areas to be further investigated and initiatives to be undertaken with State representatives:
Page 113 PREV PAGE TOP OF DOC 1. alternative funding of state systems;
2. performance and accountability standards;
3. application software ownership rights(see footnote 30)
4. APD review and operating standards;
5. Regional Office consistency;
6. technical assistance and model systems;
7. cooperative purchasing;
8. allocation of common costs;
9. the role of State Chief Information Technology officials.
While APWA and New York commend the agencies for this foresight, we are now urging them to study and implement the technology reforms we desperately need. Since the above ideas were generated over three years ago, additional concepts have been discussed.(see footnote 31) For example, current federal provisions require that state human service programs develop and submit state plans to receive federal program funding; state directors must also conduct internal strategic planning to operate sound programs. Information technology development could be integrated into this state planning process to ensure program goals are met in a cost-effective way.
Child support agencies are implementing the major new program and systems requirements the new welfare reform law mandatesand that states support. Even under such pressure, states continue to increase their performance in the child support program. In New York, we will collect more than $800 million on behalf of the people we serve this year. That represents a $220 million increase over 1994 (a 28% increase for the calendar year). Still, many barriers impede state agencies from applying good business practices to program operation and the automated systems development and implementation that support programs. Now is the time to follow through with analyzing and implementing options for change. APWA looks forward to continued work with Congress and the federal agencies to modernize federal information systems approval processes to ensure both state financial accountability and program performance.
Page 114 PREV PAGE TOP OF DOC Thank you for the opportunity to testify today.
Current Systems Approval Processes
The current APD and certification processes are cumbersome and time-consuming. They slow states' implementation of critical information systems projects and they do not logically relate to or ensure state systems or program performance. Explanation of APD and Certification Processes The federal government has established two principal processes for systems approvalAdvance Planning Documents (APD) and certification.(see footnote 32)
Advance Planning Document Process
The APD process applies to systems expenditures for the child support, child welfare, Medicaid and Food Stamp programs. (Until PRWORA's enactment, the APD process also applied to AFDC, JOBS, and child care systems.) The federal agencies with responsibility for human service information systems approvalthe HHS Administration for Children and Families, the HHS Health Care Financing Administration, and the U.S. Department of Agriculture Food and Consumer Servicehave designed the APD process to:
broadly describe the state's plan for managing the design, development, implementation, and operation of a system that meets federal, state, and user needs in an efficient, comprehensive, and cost-effective manner;
Page 115 PREV PAGE TOP OF DOC establish systems and program performance goals in terms of projected costs and benefits; and,
secure federal financial participation (FFP) for the state.
The APD process requires states to submit to federal agencies of one or a series of documentsa Planning APD (PAPD), an Implementation APD (IAPD), an Annual APD Update (APDU), and as-needed, other APD Updates, solicitation documents, contracts, and contract amendments.
Planning APDa written plan of action to determine the need for, feasibility of, and projected costs and benefits of an automated data processing equipment or services acquisition. Includes statement of need, project management plan for planning, planning project budget, and estimate of total project cost.
Implementation APDa written plan of action to request federal financial participation in the costs of designing, developing, and implementing the system. Includes statement of needs and objectives; summary of results of requirements analysis, feasibility study, and alternative analysis (multiple alternatives), cost-benefit analysis (for each alternative), project management plan, proposed budget, and prospective cost allocation.
Annual APD Updatean annual written report on the status of systems projects, requests for additional funding, and reporting of post-implementation costs and benefits. Includes references to the approved APD and all approved changes, project status report, revised project management plan, revised project budget, cost allocation/distribution changes, and actual costs and benefits (once the system is operational.).
As-Needed APD Updatesa written report for requesting additional funding, clarifying project information requirements, and requesting HHS approval for significant project changes.
Contracting Documentsstates must submit for prior approval sole source justifications, solicitation documents, contracts, and contract amendments.
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For child support information systems, HHS added by regulation to the APD procedure a certification process for verifying that a state's automated child support information system is comprehensive, statewide, operational, efficient and effective, and integrated. In making the certification, HHS assesses the system in eight functional areas that are meticulously detailed in a certification guide: case initiation, locate, establishment, enforcement, case management, financial management, reporting, and security and privacy. States have encountered significant barriers to successful systems development inherent in these procedures and call for their reform.
One regulatory barrier, the ''transfer requirement,'' has caused numerous problems and inefficiencies for states and private sector companies over the years in all human service programs. In July 1994 APWA and states succeeded in convincing HHS and the USDA Food and Consumer Service to make the transfer requirement an option rather than a mandate, but the problems states faced continue to plague systems in place today.
The transfer requirement directed states implementing an automated system to acquire it by locating and using a federally-approved information system already operating in another state. This requirement was based on a false presumption that states had identical systems and program needs. In addition, the transfer requirement locked states into replication of old technologies.
In order to innovate, states had to entirely tear down and rebuild the transferred system rather than improving architectural models and adopting contemporary technologies.
Page 117 PREV PAGE TOP OF DOC One example is California's child support information system. California's information systems vendor decided to transfer the New England Child Support Enforcement System (NECSES). NECSES was designed using early systems technology, to serve Maine and New Hampshire, each with caseloads of approximately 45,00052 times less than the child support caseload of California. The system has been unable to handle these larger caseloads, and California counties are seeking alternate systems strategies, especially those that use more modern client-server technology.
Examples of Drawbacks of the Current APD and Certification Processes:
The exacting APD documentation process requires extensive time for state staff to complete and federal staff to review and approve. Federal staff time spent conducting complex document reviews diminishes their role in evaluating alternative systems and disseminating best practice information. This same dynamic is true at the state level.
The prescriptive, lengthy bureaucratic APD process hinders state flexibility and contributes to delays in state systems development and implementationto the point that by the time the system is implemented, innovation is squelched or the technology is outmoded.
The federal focus on process compliance rather than project and program outcomes forces states to invest resources in point-by-point responses to regulatory specifications rather than improving program performance through strategic use of automation.
These systems processes are not integrated into program planning even though the purpose of automation is to enhance program outcomes.
Examples of Specific APD Requirements that States Find Problematic:
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Even though system upgrades have become a routine process in states, the federal process requires prior federal approval of routine system modifications and enhancementsdiverting resources to bureaucratic processes rather than allowing a focus on program outcomes. For example, routine technological upgrades, replacement of obsolete or depreciated equipment, and normal system growth are not considered operational expenses and are thus subject to APD prior approval.
Redundant processes require not only federal agency approval of the overall APD, but also a second separate review of the specific contracts and Requests for Proposals already included in the APD review.
Examples of Specific Certification Requirements that States Find Problematic:
The interpretation of the term ''statewide'' forces states to use a single software, hardware and architectural configuration rather than allowing a programmatic and functional definition that requires uniform outcomes across local jurisdictions using automation to produce a seamless single state system (see Appendix B for a more detailed discussion of this problem).
The criteria for determining whether a system has met a certifiable level of automation is so detailed that it compels states to automate operations to unnecessary degrees with no evidence of cost-benefits.
The requirement that all system functions be fully coordinated and integrated can require unnecessary programming when the need for such integration may not expand beyond limited functional areas or may only reach a minute population.
Some certification requirements unnecessarily involve the child support program as a middle broker in transactions that could be more efficiently and effectively performed between primary parties. One example is the area of IVE foster care distribution. Furthermore, neither the APD nor certification processes provide a corrective action process for states not meeting system certification deadlines. Such a process would allow these states to demonstrate the steps they are taking to meet certification requirements.
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Statewide Systems vs. Single State Systems
The Family Support Act of 1988 required that state child support programs implement automation to achieve specific program outcomes. Federal system regulations for these child support automated systems interpret the statutory requirement for a ''single statewide system'' to mean that every child support worker/organization use a single software, hardware and architectural configuration to meet the goal of ''statewideness.'' The current certification process has focused on each state having only one automated system and with all the users in the state required to use that single system. This requirement has caused major problems for many states, particularly large, county-based states.
What is needed today is a redefinition of single state system to mean a system that is operational statewide and meets all programmatic requirements. This system could be comprised of more than one linked automated system. The key to this concept is that, to the external world (the other states, federal databases, and the recipients of service), the child support system would function as a single system. Access would be through a single point of entry for other states and the federal linked databases.
The technology to effectively and efficiently link various systems and produce a single database has only recently become feasible. Today's technology not only allows for linking different automated systems but allows states to do so with lower development costs than building and deploying a single new system.
Page 120 PREV PAGE TOP OF DOC Comparison of the characteristics of a Single System and a Statewide System:
Single State System: A Current Problem
DefinitionA technical definition of a system requiring a single software, hardware & architectural configurationone way to automate an entire state.
Efficiency & effectivenessThe common belief is that a single software, hardware and architectural configuration is the least expensive model. New technology has undercut the need for structural uniformity. A single hardware platform and operating system for the entire state does not assure efficient, effective system development or operation.
Design PhilosophyOne size fits all. Requires sacrifices in many areas to find an agreed upon approach for handling caseloads of 150 to 2,000,000.
Potential for Successful ImplementationAlthough feasible in smaller state administered programs, this concept has proven to be unsuccessful for many large, county based systems.
Data element structureAll data elements on the system are identical from site to site. Allows data matches with other states, federal data bases and allows for standard federal reporting.
FunctionalityPerforms all federally required activity in the FSA 88 system regulations, as prescribed by the federal certification requirements.
Development time framesLong for nearly all states. Particularly lengthy for large, county based states as business process compromises must be made.
Training RequirementsUsually lengthy due to the need to train all the state child support staff on a new system.
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Statewide System: A Needed Solution
DefinitionA programmatic and functional definition which requires uniform outcomes across local jurisdictions using automation.
Efficiency & effectivenessLinking various systems may be more efficient and effective because decision making is based on programmatic functionality and available technology, not on the technical aspects of the architecture.
Design PhilosophyFocus is on local needs and differences, e.g., allows for specialization of functions in 1 site & generalization in another.
Potential for Successful ImplementationThis concept may be the only way large, county based states can implement all the requirements of the FSA 88 system.
Data element structureAll elements have same definition in all sites. Local data elements may slightly vary structurally from 1 site to another, but exist in a standard form in a central location so they appear identical externally. Allows data matches with other states & federal data bases & allows for standard federal reporting.
FunctionalityPerforms all required functions to produce results required by federal regulations.
Development time framesPotentially shorter due to the flexibility to modify already existing systems.
Training RequirementsPotentially shorter because only missing functionality from currently used local systems must be added.
Page 122 PREV PAGE TOP OF DOC ''Statewideness'' is a programmatic concept of ensuring that services are provided uniformly across a state, and that states can interact with on another using a common ''language.'' Achieving statewideness is not dependent on a particular software, hardware or architectural configuration. New technology can enable states to achieve ''statewideness'' through standard requirements for data and communication protocols, without the need to abandon local automation initiatives. The focus should be on the desired outcome''statewideness''not on the process of a ''single statewide system.''
APWA Letter to HHS Calling for Systems Reform Partnership
American Public Welfare Association
August 11, 1997
Principal Deputy Assistant Secretary
Administration for Children and Families
Department of Health and Human Services
Aerospace Building, Suite 600
370 L'Enfant Promenade, SW
Washington, DC 20447
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I am writing to ask for your assistance in an area that is a major concern to statesinformation systems. At the recent APWA meeting of the National Council of State Human Service Administrators, APWA adopted two policy agreements geared to resolving both the short-term challenges some large states are facing with their child support information systems and the long-term problems that are embedded in the current federal-state information systems process.
Information Systems Challenges and Solutions
As you know, APWA is very interested in working to address and avoid in the future the problems states currently face with:
the October 1997 child support information systems deadline, and
the federal-state relationship regarding human service information systems development, financing, procurement, regulation, and approvalincluding the advance planning document (APD) and certification process.
APWA on behalf of state human service commissioners urges you to continue building on the federal-state partnership in child support by using your administrative authority to work with states to address the 1997 systems crisis. APWA recommends that HHS adopt following solutions to this problem: (1) change the child support information systems state plan disallowance process to allow for a corrective action plan (CAP) that permits for continued federal funding during the CAP period; (2) allow a state to link a limited number of local systems if this linkage is requested by the state agency, is warranted by the state's caseload size, and results in a seamless, uniform system that meets the current program requirements; and, (3) adapt the current state system certification requirements to focus instead on expected program results such as PRWORA's changes to the child support system.
Page 124 PREV PAGE TOP OF DOC Further, APWA believes that the challenges states and the federal government are now facing related to child support systems are a symptom of broader problems that exist in the federal-state systems relationship. Therefore, I strongly urge your agency to undertake a concerted effort in partnership with states to examine this process, define the problems, and rapidly address them to ensure they are avoided in the future.
Attached are two APWA Resolutions on these topics: one reflects systems solutions related to the 1997 child support deadline and the other focuses on the need for broader systems approval reform to avoid such problems in the future.
Additionally, APWA is interested in working with Congress as necessary to facilitate quick implementation of such solutions, and has communicated this to the Hill.
Thank you very much for focusing federal attention from your office on this area of utmost importance. It will help states as well as the families that benefit from human service programs nationwide. APWA sincerely appreciates the work of your office and looks forward to a strong partnership to resolve the information systems challenges facing state and federal government.
I hope to be in touch soon about next steps for such a partnership to move forward in this areas.
|Sidney Johnson III|
Page 125 PREV PAGE TOP OF DOC [The official Committee record contains additional material here.]
APWA Resolution to Make Proprietary Ownership Rights an Option
WHEREAS, Information systems play an essential, fundamental role in supporting both the administrative and program capacity for delivering social services in an efficient and effective manner, and
WHEREAS, Many social service systems are mandated by federal statutory and regulatory requirements and the costs for software development, operations, maintenance, and enhancements of these systems are a significant burden on state budgets; and
WHEREAS, Federal regulations at 45 CFR 95.617 and 7 CFR 277.18(1) (Software and Ownership Rights for HHS and FCS, respectively) require that a ''state and local government will have all ownership rights in software or modifications thereof and associated documentation designed, developed or installed with federal financial participation [FFP],'' and that ''the federal government reserves a royalty-free, non-exclusive, and irrevocable license to reproduce, publish, or otherwise use'' such material, and that ''FFP is not available for proprietary applications software developed specifically for the public assistance programs'' covered by these regulations, and that these regulations are not based in statutory language; and
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WHEREAS, States are allowed to lease general-purpose, commercially available software packages with FFP (such as Windows and word processing packages) and are allowed to lease commercially-available systems that require customization (such as financial systems), but are not allowed to lease systems covered under the Social Security Act as cited above, even though similar restrictions do not exist for other state systems supporting programs not funded under the Social Security Act but that are leased with FFP; and
WHEREAS, Such restrictive regulations have the effect of increasing software costs by (a) preventing states from leasing software from vendors who would incur all development costs, and who would then spread their development costs over sales to multiple states, and who would retain the rights to the software that they paid to develop; and (b) forcing each state to develop its own separate software for welfare, child welfare, child support enforcement, Medicaid, etc.; and
WHEREAS, The Federal-State Information Technology Partnershipmade up of representatives from the American Association of Public Welfare Information Systems Managers Affiliate (AAPWISM), the National Association of State Information Resource Executives (NASIRE), and systems experts from HHS, USDA, and OMBin May 1994 recommended examining ''changing application software ownership rights policy'' to ''consider allowing vendors to retain ownership of application software and allow them to offer it to individual states for a fee;'' and
WHEREAS, Removing software ownership restrictions would increase the options available to states for acquisition of necessary software without increasing states' paperwork or staffing levels and without restricting states' options to pursue the current method of independent software development and state ownership of software rights; and
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WHEREAS, Trends in technology have resulted in decreased costs for hardware and proprietary software, but increased costs for custom software, so that software restricted from proprietary ownership can be an expensive path for states; and
WHEREAS, With purchase of non-restricted software a state can know exactly what it is buying and can calculate the life-cycle costs; and WHEREAS, An expected effect of eliminating the restriction on software ownership rights is that software costs would decrease, software quality would improve, and systems would be available sooner to support social service administration and service delivery;
THEREFORE BE IT RESOLVED that the National Council of State Human Service Administrators urges the U.S. Department of Health and Human Services and the U.S. Department of Agriculture to revise their regulations governing software and ownership rights:
1. To continue to provide FFP for software development for public assistance programs, and to require that state and local governments have all ownership rights to software and documentation that they pay to develop with FFP,
2. To expand FFP regulations to include purchase and leasing of proprietary software developed specifically for public assistance programs, and
3. To eliminate the regulatory requirement that states have ownership rights to all software installed with FFP.
Adopted by the National Council of State Human Service Administrators March 1, 1995
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Options and Ideas for Discussion to Reform Systems Approval Processes
The following items are options APWA recommends for consideration to replace the current APD and certification processes:
Allow a corrective action period for systems implementation. Current federal compliance requirements related to system development are very specific; consequences of non-compliance are vague. Policies, where existent, appear to require HHS to impose severe penalties on states in the event of non-compliancea consequence that would insure that struggling states could not meet such requirements.
Integrate the information systems approval process into the overall state plan approval process required in each federal human service program area, rather than continuing it as a stand-alone approval disconnected from the program that the system is intended to serve.
Implement an information systems approval process that relies on the assessment of outcomes based upon functional performance standards tied to program goals and demonstrated returns on investment, rather than based on line-by-line review of planning and implementation documents at the front-end that are de-linked from program objectives;
Implement a routine auditing process contingent upon relief from burdensome APD and certification requirements and targeted investigations if the federal government suspects that laws have been violated; and,
Redirect federal activities to oversight of new systems development and implementation rather than modifications or replacement of components to already-approved systems.
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Chairman SHAW. Thank you.
STATEMENT OF JOHN E. MAHONEY, DIRECTOR, DEPARTMENT OF INFORMATION TECHNOLOGY, PONTIAC, MICHIGAN
Mr. MAHONEY. Yes. Mr. Chairman and the Subcommittee, I appreciate the opportunity to come here today and speak before you.
I come here not as a representative of the State of Michigan but more specifically as a representative of one of the large counties that comprises Wayne, Macomb, Genesee, and Oakland. Between the four of us, we represent 55 percent of the caseload in the State of Michigan. And, as the gentleman from New York pointed out, there are some compelling reasons why we should take a hard look at systems that exist in these existing counties, and I am sure this is true throughout other States.
In the four counties, we have met and discussed our situation, where we are today, and one of the issues that we face is that each and every one of the counties in its own rightand I think rightfully sobelieves that their system does an excellent job in doing what needs to be done. I understand that we need to pass information on at a Federal level, but, again, don't tell us in detail how we do that; let us come up with some ways of doing that.
I will give you some examples of local deals that I think are important. In our county, for example, we have an imaging system that has allowed us to go paperless in our Friend of the Court for over the last 7 years, resulting in, through attrition, we have dropped 26 people from the staff at Friend of the Court. And I think that is a significant reduction.
Page 130 PREV PAGE TOP OF DOC We have voice response, allowing customers, if you will, constituents, to call in and get their balances on their accounts, thereby freeing up staff to do other more meaningful work than working as telephone operators. We do electronic funds transfer. We have over 40 percent of our caseload where we can pay within hours as opposed to the 2 days that is the target, I believe, now in the existing system.
We are all faced with this dastardly thing called the year 2000. All four of these counties and, again, everyone throughout the country, throughout the world, is faced with this issue. It has put a rather large burden on everyone.
In the process of trying to be rather shortI know our time is somewhat limited hereI do have the written testimony for you to go through, but I think these are the highlights that I would like to point out today. And, again, I appreciate the opportunity, and I laud you for the legislation. I think it is something that is very well needed. But we need to talk, I think, in a little more detail about how we implement these types of things.
[The prepared statement follows:]
Statement of John E. Mahoney, Director, Department of Information Technology, Pontiac, Michigan
Oakland County appreciates the invitation to express it's concerns involving the State of Michigan's implementation of the Child Support Enforcement System (CSES) in connection with the Family Support Act of 1998 (FSA88). It is the County's belief that changes to the existing federal legislation should be flexible, allow for the use of locally-based computer systems, and create incentives targeted at improving collections. To date, the State of Michigan has not been successful in obtaining changes in federal legislation that could otherwise mitigate the need for a State-wide computer systema system that has proven to be ineffective, does not work for larger counties, and has been costly to create and operate.
Page 131 PREV PAGE TOP OF DOC Over the past 90 days, Oakland, Wayne, Macomb and Genesee Counties met to discuss their common problems with the State's CSES implementation. These four counties represent approximately 55% of the entire State's case load, or roughly 450,000 Friend of the Court cases. Each County believes that their individual systems satisfy their local user requirements.
These local systems provide functions and features individually that would be sorely missed if eliminated through implementation of a common, State-wide system. At times, a common system could result in the denigration of the current system functionality. Locally-based systems can be spared through the extraction of data needed to meet federal guidelines and yet, maintain their regional specialization. It is quite likely that this approach could be implemented at a minimum cost and in a more timely manner than a common State-wide system used by 83 independent counties.
Oakland County has several key features in its system that are not being considered as part of the base State-wide system, including: imaging, voice mail, and electronic funds transfer (EFT: wire transfers). The County eliminated over 26 positions and improved access to case files when it installed imaging. Presently, the County may be unable to access these images under a State-wide system that fails to address this concernmaking record access impossible. Voice mail involves thousands of automated calls tied directly to the computer system account balances avoiding the need for attended telephone call processing, thus diverting staff time to more effective uses. The State-wide benchmark for collections and receipts processing under consideration is to ensure that recipients are mailed a check within two days of the receipt of fundsOakland turns around over 40% of the case load (all that are on EFTs) in hours. If a State-wide system denigrates the cash payment processing in Oakland County, who will be held accountable for this reduction in service?
These are but small examples of the many functions and features that would be eliminated if the State continues to pursue a path of a single system that improves most county child support enforcement systems, but does not target a high water mark of technology currently available. The State has interpreted the federal guidelines as stating that there must be a single State system serving each of the State's 83 independent counties which range in size from hundreds of cases to almost 300,000 cases in Wayne County. The imposition of this federal mandate has required the replacement of hardware, software and requisite training of local personnel that is costly to manage and terribly inefficient.
Page 132 PREV PAGE TOP OF DOC Alternatively, the County would strongly suggest that defining the core elements of the data required to improve child enforcement to be maintained centrally is key to the proposed ''Data Warehouse'' concept. Once defined, the independently maintained county systems can pass the data to the central repository upon which all counties could access through a low-cost browsing tool as needed. This proposal is far cheaper, easier to manage and should be able to be installed in each county and the State with a minimum of effort. However, the State is unwilling to consider this option as the federal administrators have denied the State this option.
Federal legislation should set the goals necessary to enable the States to accomplish the policy concerns of Washington D.C. It is fundamentally troublesome to not only set policy goals, but to dictate how the goals shall be carried out when technology is moving as rapidly as it is. Goals, combined with a properly installed incentives/disincentives, should be the mechanism behind the ensuring compliance with Washington's goals. After all, Michigan lead the nation in aggregate collections through its decentralized county-based child support enforcement systems in 13 of the past 15 yearswe must be doing something right!
An article entitled ''The Child Support Computer Meltdown'' (Governing, September 1997 issue) clearly indicates that the entire child support enforcement system requirements mandated by the federal government must be challengedits simply is not working as anticipated. Ms. Dawn Shattuck, Chief Information Officer of the State's Family Independence Agency, has indicated that child support enforcement systems must be flexible to allow for local needs, complexities and caseloads. This article reinforces the position taken by the four Counties noted above and Oakland in particular over the past several years.
Recently, the County requested that the following language be included in the ''Balanced Budget Act of 1997'' legislation:
States with local or court-based collection systems may meet regulatory compliance by establishing a state-wide central repository for data (e.g. data warehousing), provided such data is accessible to all parties involved in child support enforcement efforts.
Page 133 PREV PAGE TOP OF DOC The County strongly encourages that this language be included in future legislation that addresses the CSES efforts for Michiganif not the nation. It is hoped that the above memorandum briefly outlines the County's concerns.
Mr. CAMP [presiding]. Thank you very much for your testimony.
STATEMENT OF JIM ZINGALE, DEPUTY EXECUTIVE DIRECTOR, FLORIDA DEPARTMENT OF REVENUE
Mr. ZINGALE. Thank you.
We come at this from a little different perspective in Florida. We are not a social service agency. I am deputy director of the Florida Department of Revenue. We got the child support enforcement program from HRS about 3 years ago. That transition for us has been 3 years of looking at this program in depth, and my particular effort has been to examine the computer and its applications in terms of running it.
We are one of the large States that expects to be federally certified. Unfortunately, like some of the testimony we hear, I don't really believe we are going to have an efficient system when we are certified, nor do we believe it is going to be a flexible system that is designed to get us into the 21st century. Certification and efficiency are two things we don't believe in all States are compatible.
If you look at our history, our history starts in 1988. Florida was one of the first States that grasped the concept of full integration of a welfare system, and we went forward in 1988. That was bad. Those that remember the years of the Florida system being in the newspaper on a daily basis, we had computer crashes on an ongoingon an ongoing, living, daily world. We had activity out there that generated massive amounts of calculation errors.
Page 134 PREV PAGE TOP OF DOC PA rolled out first. Child support rolled out in 1992. But all the critical elements of child support were not in place in 1992. The major calculation pieces, like the financial module, were not in place.
But what we did do when we started in 1988 is, you lock yourself into 1978 to 1982 technology, and that is certainly what we did. We have one of the largest IBM mainframes in the world, a 3097J. It is the largest water-cooled computer in the world. That is good. We have got 5,200 concurrent users, 6 to 7 million transactions a day, we are told one of the largest volumes in the world, 20,000 batch runs a month. Last year, it was running frequently at 99 to 95 percent of capacity, which is not good. It is up 24 hours a day, 365 days a year. If you want to get something changed, you have got to schedule it months in advance. It has got to run on the weekends or a holiday.
That technology in the early eighties gave us IMS hierarchical database. Nobody would design a computer system today with an IMS hierarchical database. It is rigid; it is difficult; it takes us 2 1/2 days to read our database. If we want to go in and read our child support database, it takes us 2 1/2 days.
We have got 6 million lines of COBOL code. Believe me, if you are sending your kid to college, don't tell him to be a COBOL programmer; it is a dead language. We have got 6 millionlines of COBOL code fully integrated. Those that are worrying about the year 2000 well know what is in demand today. A COBOL programmer can get a $40,000 pay raise by just leaving your office and going somewhere else. If we want to make a change, we have got to hire a COBOL programmer to make our changes, and right now they are leaving us en masse. But we do expect to be federally certified.
A strange thing that happened over the last 9 years is that technology changed rapidly. There are relational databases. There are fourth generational languages that make change substantially easier. There are data warehouses that read your databases radically different and actually generate meaningful management reports, in all honestly, not the stuff we send to Congress and Washington every year. There is client server technology. There is a radical revolution that went on since we designed our system in the early eighties.
Page 135 PREV PAGE TOP OF DOC You have given us some wonderful changes in welfare reform, some very meaningful tools, and the expectation is, with financial institution data match, new hire reporting, central deposit and collection systemsand distribution systems, that they will be quickly integrated into these systems. It won't happen in Florida. It is going to take us a long time to integrate those systems in Florida.
So we fully expect to be certified. There won't be a whole lot of cheers, more a sigh of relief. We believe we built a nice 1985 Edsel, and that is what it is; it is a 1985 Edsel. It is slow; it is difficult to change; it has got low gas mileage and not high performance.
And that is what Federal certification means to us. We are not doing back flips over Federal certification, but we are spending every waking hour to get it certified.
[The prepared statement and attachments follow:]
Statement of Jim Zingale, Deputy Executive Director, Florida Department of Revenue
II. Requirements Early 1980's
ES9021082 (The largest water cooled computer)
9672R83 (Smaller newer technology)
MVS connected with Parrell Sysplex in order to share resources.
Page 136 PREV PAGE TOP OF DOC Processor utilization has dropped to 85% with the new hardware and Sysplex.
(This is still high in a mainframe environment)
Lines of Code
Six (6) Million
Six to Seven Million per Day
Batch Jobs Run
20,000+ per month
SEA (Migrating to TCP/IP)
III. Emerging Technology
Relational Data Base DB2
Fourth Generation Languages Reusable Code
Data WarehouseData Base Clean-up
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IV. Programmatic Mandates
Financial Institutional Data Match
New Hire Reporting
Central Collection and Distribution
Cradle to Grave Privatization
V. Florida's Federal Certification Status
Good Chance for Certification
Well Working Edsel
Difficult to Get Parts
Difficult to Find a Good Mechanic
Difficult to Change
Poor Gas Mileage
Page 138 PREV PAGE TOP OF DOC On September 15, 1996 the FLORIDA system listed about 2.6 million CSE casesincluding 1.1 million closed and suspended cases, 0.1 million Locate Only cases (cases referred from another state for the purpose of locating individuals), and 1.4 million cases demanding either establishment of a new or enforcement of an existing child support obligation. About 370,000 cases are shown as being obligated, leaving 1.1 million cases for which a support order remains to be established.
Many of these unobligated cases are either duplicates or invalids that were created erroneously by FLORIDA. Others are unable to be pursued based on either insufficient, inaccurate, or outdated case information or a change in the underlying status of the individuals associated with the case. Although individual case analysts may be aware of these cases and can direct their work activities accordingly, FLORIDA is unable to distinguish between ''good' and ''bad'' cases and will conduct activities, generate alerts, and produce reports based on all cases in the system. Thus, the presence of ''bad'' cases not only places an increased strain on the system but also results in highly inaccurate reports. Consequently, the clean-up of the FLORIDA database is a high priority in achieving CSE's goal of significantly improving the delivery of its services and correctly reporting on their results.
Since a manual review of each and every unobligated case would require an inordinate amount of case analysts' time, an automated method to identify and close cases in accordance with federal case closure criteria (45 CFR 303.11) was devised. This method consists of an off-line analysis of specific CSE and PA information related to all CSE cases listed in FLORIDA and the subsequent creation of a file listing all of the cases able to be closed based on predetermined criteria. Based on the specific circumstances, some of these cases may be closed immediately while others may require a written notification to the custodial parent sixty calendar days prior to the intended closure. This file then is uploaded into FLORIDA to effect the closure of these cases either immediately or within sixty days from the mailing date of the last notification letter. Should a custodial parent's response to this letter indicate an interest in continuing use of CSE's services, the closure date originally input into FLORIDA will manually be inactivated by the case analyst and the case will remain open.
Page 139 PREV PAGE TOP OF DOC The requirement for a closure letter is addressed in 45 CFR 303.11(c) which states that, in cases that are to be closed for reasons of emancipation (45 CFR 303.11(b)(1)) or lack of essential information (45 CFR 303.11(b)(12), ''the State must notify the custodial parent in writing sixty calendar days prior to closure of the case of the State's intent to close the case'' and further states that ''the case must be kept open if the custodial parent supplies information in response to the notice which could lead to the establishment of paternity or support order or enforcement of an order.'' However, these criteria pertain only to cases associated with custodial parents that have a service relationship with the IVD agency, indicating that such closure letters do not need to be sent on cases that are associated with custodial parents identified as not receiving CSE services. According to federal interpretation, a case may be closed not only if the custodial parent fails to respond to the closure letter but also if the closure letter is returned as undeliverable, provided that the letter is retained for future reference.
Based on the analysis of the FLORIDA CSE caseload as of September 15, 1996, 610,686 cases52% of FLORIDA's unobligated caseloadwere targeted for closure, 359,865 of which required a notification letter to be sent to the custodial parent. Responses received from custodial parents and changes in case circumstances subsequent to September 15,1996 led to the exclusion of 50,801 of these closure candidates and established the final number of cases able to be closed at 559,885. The last one of these cases was closed on January 20, 1997.
The method of identifying those cases able to be closed systematically in accordance with federal guidelines consisted of a sequential process of downloading FLORIDA case data into an off-line database, isolating all unobligated duplicate and invalid cases, subjecting the remaining unobligated cases to seven independently applied closure ''filters,'' removing any cases from the resulting list of closure candidates that required to be handled manually, mailing the custodial parent notification letters and, lastly, uploading the final closure candidates into the FLORIDA system to effect the case closure. The remainder of this document provides a detailed discussion of this process.
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On September 15, 1996 over 125 million records including data on all individuals, accounts, activities, addresses, and case comments pertaining to the 2,585,692 child support cases listed in FLORIDA on that date were copied onto 100 data tapes for transfer to a separate computer within the Department of Revenue. Using SAS (Statistical Analysis Software), these records then were arranged into 11 separate related databases requiring a total of 6.8 giga bytes of storage capacity and allowing the detailed analysis necessary to identify those of the 1,173,916 unobligated cases able to be closed in accordance with federal guidelines.
Many cases currently listed in FLORIDA are duplicatesdefined as two or more cases listing the same custodial and non-custodial parent. Others may be considered invalid since they either list the same individual as both the custodial and non-custodial parent, or fail to identify either the custodial parent, non-custodial parent, or dependent(s). Whereas duplicate cases ought to be eliminated by merging the subordinate case(s) into the case identified as the dominant, invalid cases should be eliminated by either identifying a possible duplicate dominant case as a merger candidate or correcting the current data deficiencies.
Due to the complexities involved in creating a program that automatically merges duplicate cases, cases identified as subordinate cases initially are targeted for closure. By choosing a unique code for identifying the reason for closing these cases, they may later be merged manually into the dominant case. To prevent closure of the ''wrong'' case, only those cases that are exact duplicates were closed systematically, limiting this effort to those duplicates that match another case not only based on the custodial and non-custodial parent but also based on all of the dependents. In addition, all invalid cases for which a dominant case was able to be identified were closed systematically. All other duplicate and invalid cases will require a manual review in order to identify the dominant case or correct any data deficiencies. Since the custodial parent's case with CSE will not be affected by the closure of subordinate duplicate cases, no notifications letters need to be mailed.
Page 141 PREV PAGE TOP OF DOC In order to identify the dominant case within a set of duplicate cases, a program was designed to isolates the dominant case based on a six-level sorting routine. The initial sort pertains to the individuals associated with the case and arranges the cases by dependents, custodial parents, and non-custodial parents so that cases containing references to the same dependents, custodial parents, and non-custodial parents are grouped together. The second level sort arranges the cases within these groups according to their stage in the process of establishing an obligation by listing obligated cases before establishment cases and the latter before pre-establishment cases. The third level pertains to the public assistance status of the custodial parent associated with the case, listing cases associated with current PA recipients first. The fourth level pertains to the case comments and lists the cases according to the age of the most recent comment. The fifth level considers the case type and lists responding cases before public assistance cases, and the latter before non-assistance cases. The sixth level looks at the Social Security number of the non-custodial and custodial parent and arranges the cases such that real Social Security Numbers appear before pseudo Social Security numbers. A manual review of 300 cases consisting of 150 subordinate duplicate cases able to be closed together with the associated 150 dominant cases indicated that the program correctly identified the dominant and subordinate cases.
Application of this criterion identified 42,502 cases, or 3.6% of FLORIDA's unobligated caseload, for closurenone of which required a notification letter to be mailed.
Following the de-duplication process, the remaining FLORIDA unobligated cases were subjected to a series of seven sequential closure criteria or ''filters,'' leading to the identification of 596,773 additional unobligated cases able to be closed.
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1. Non-AFDC Pre-Establishment Cases
In compliance with section 409.2567, F.S., which states that CSE is to provide its services ''upon acceptance of public assistance or upon proper application filed with the department,'' Florida requires that custodial parents who have never received AFDC benefits formally request CSE services via submission of a signed application (the NA Contract) and a $25 application fee. Consequently, no service relationship exists between CSE and those custodial parents unless such an application has been filed with CSE.
Pre-establishment cases associated with custodial parents residing in Florida who have never received AFDC benefits are created based on an affirmative answer to the question as to whether CSE services are desired irrespective of an approval for AFDC. Since none of these custodial parents have appeared for the required personal interview with a CSE case analyst during which to submit a formal signed application and the appropriate fee, no contract exists between them and the CSE program. Consequently, these cases cannot be considered as receiving CSE services and may be closed without prior notification to the custodial parent.
Based on the classification of case types, all CSE cases of the type 06 and 07 should be associated with custodial parents who reside in Florida and have never received AFDC benefits. However, system inaccuracies may result in erroneous case type assignments and mistakenly include former AFDC recipients within these case types. By matching all custodial parents associated with case types 06 and 07 to the 1996 public assistance database, those individuals that have in fact received AFDC benefits during this time period and, therefore, have a service relationship with CSE, may be identified. The cases associated with these custodial parents are then excluded from the case types 06 and 07 selected for closure.
Manual review of a random sample of over 50 cases obtained during the Leon County Model Office project which fulfilled the criteria of being a case type 06 or 07 associated with a custodial parent that has not received AFDC during the 1996 calendar year indicated that all were able to be closed. A follow-up review of the first 50 cases identified during the statewide analysis as fulfilling this criterion further confirmed this result. Consequently, an automated closure of cases selected via this criterion is expected to generate no error.
Page 143 PREV PAGE TOP OF DOC Application of this criterion identified 49,516 cases, or 4.2% of FLORIDA's unobligated caseload, for closurenone of which required a notification letter to be mailed.
According to 45 CFR 303.11(b)(1), a CSE case may be closed if the child has reached the age of majority and there exists no current support order. However, common practice has been for CSE to pursue an order for retroactive support if the case has been filed with the court prior to the child having reached the age of majority. Section 95.11(3)(b), F.S., allows an action related to the determination of paternity to be commenced up to four years from the date the child reaches majority. Consequently, any unobligated case in which all of the dependents have reached majority and that has not been filed with the courts prior to the date the youngest child reaches majority may be closed by CSE. Should the youngest child reach majority within the preceding four years and paternity remains an issue, the custodial parent may need to be notified in writing of CSE's intent to close the case.
Whereas each dependent's emancipation date can be determined accurately (provided the date of birth was entered correctly into FLORIDA), information regarding the date on which the case has been filed with the court or regarding whether paternity is at issue is, if available at all, extremely inaccurate. In order to prevent cases that may have been filed with the court from being selected for closure, Establishment cases that show any indication of legal action within the past 36 months or have been established within the prior 12 months are determined as ineligible for closure. Since FLORIDA's sole paternity indicator consists of the extremely unreliable paternity ''flag,'' no provisions can be made to ensure that letters requesting the custodial parent to indicate continued interest in CSE's services are mailed only on cases in which paternity is an issue.
Page 144 PREV PAGE TOP OF DOC Within Leon County, 1,347 Pre-Establishment case were associated with emancipated dependents only and an additional 1,015 Establishment cases fulfilled the criteria of all dependents having reached majority, not having been established within the past 12 months, and not having had any legal activity within the past 36 months. Manual review of the 1,015 Establishment cases indicated that 46 were unable to be closed either due to the existence of a support account on FLORIDA (11 cases) or based on some reference within the case comments to an existing support, custody, or divorce order (33 cases) or an incarcerated non-custodial parent (2 cases). Although the 11 obligated cases are able to be identified via a modification of the analysis program, none of the remaining 35 cases can be identified automatically. Hence, automated closure of cases identified via a modified emancipation criterion would generate an error rate of about 1.5%. However, the review of the first 50 cases identified during the statewide analysis as fulfilling this criterion indicated that all could be closed without the possibility of an error.
Application of this criterion identified an additional 99,244 cases, 8.2% of FLORIDA's unobligated caseload, for closure and required a closure letter for all but 24,357 PA Pending cases.
3. Former AFDC Cases
Regulating services for former recipients of public assistance, section 409.2569, F.S., states that ''the IVD agency shall continue to provide services after the recipient ceases to receive benefits unless otherwise advised in writing or in person not to do so by the former recipient.'' Closure of non-AFDC cases is discussed in 45 CFR 303.11(b)(12), which allows for the closure of a non-AFDC case receiving CSE services provided CSE ''documents the circumstances of the custodial parent's noncooperation and an action by the custodial parent is essential for the next step in providing IV-D services.''
Page 145 PREV PAGE TOP OF DOC Consequently, unobligated cases associated with custodial parents who are former recipients of AFDC need to be serviced by CSE unless either specific instructions to the contrary are received from the custodial parent or noncooperation of the custodial parent can be documented. Custodial parents associated with Pre-Establishment cases have never appeared for the required personal interview with a CSE case analyst which is essential for obtaining the information necessary for pursuing the case. Therefore, Pre-Establishment cases associated with former AFDC recipients may be closed in accordance with 45 CFR 303.11(b)12) if the custodial parent fails to respond to a written request to contact CSE and schedule an interviewprovided the custodial parent was notified that failure to respond is interpreted as noncooperation and will lead to closure of the case. Cases classified as ''PA Arrears Only'' (case type 13) are associated either with former Foster Care cases or with former PA recipients who have declined further CSE services. These cases originally were established based on the assumption of a possible recovery of public assistance benefits by the State of Florida. However, an intervening change in CSE policy has since established that these case may not be pursued further by CSE and, hence, allows for these cases to be closed without the requirement of a closure letter to be sent to the custodial parent.
Based on the classification of case types, all CSE case types 11 and 13 should be associated with custodial parents who currently do not receive public assistance but have in the past. However, system problems may result in erroneous case type assignments and mistakenly include current recipients of public assistance within these case types. Similarly, not all the custodial parents associated with cases types 01 and 02, which should include only cases linked to current AFDC recipients, may in fact presently receive AFDC. By matching all custodial parents associated with case types 01, 02, 11 and 13 to the 1996 public assistance database, individuals who currently do not receive public assistance benefits may be identified. To prevent any errors related to an individual's public assistance status, only those individuals that have not received AFDC benefits during the past 90 days are considered ''former'' AFDC recipients. Pre-Establishment cases of the types 01, 02, and 11 and all unobligated cases of the type 13 that are associated with these custodial parents may then be selected for closure.
Page 146 PREV PAGE TOP OF DOC Manual review of a random sample of 60 Leon County Pre-Establishment cases fulfilling the criterion of being a case type 11 associated with a custodial parent who formerly received public assistance benefits indicated that fifty-seven were able to be closed. The three remaining cases were associated with custodial parents who received AFDC benefits after the download of the PA information from FLORIDA. By introducing a routine in the program responsible for uploading the file containing the cases to be closed which verifies the PA status of custodial parents and excludes those cases associated with custodial parents who currently receive public assistance benefits, this error can be eliminated. Consequently, an automated closure of cases selected via this criterion is expected to generate no error, which was confirmed by the manual review of the first 50 cases identified statewide as fulfilling this criterion.
Application of this criterion identified an additional 189,209 cases, 16.2% of FLORIDA's unobligated caseload, for closure and required closure letters to be generated for all but 20,652 cases.
4. Case Inactivity
Establishment cases associated with custodial parents who currently do not receive AFDC and show no record of any contact with the custodial parent within the past 24 months may be closed according to 45 CFR 303.11(b)(12). Based on the presumption that updated information is essential for CSE to further pursue the case, CSE may notify the custodial parent in writing to contact CSE and supply information designed to update the case information on file. Provided the custodial parent was also notified that failure to respond will be interpreted as noncooperation and lead to the closure of the case, all cases associated with custodial parents that do not respond to the letter then may be closed.
Since a case analyst customarily records every contact with the custodial parent within the case commentary section on FLORIDA, cases fitting this profile may be identified by determining the date associated with the most recent comment available. All cases of the type 01, 02, 06, 07, and 11 that have been verified against the public assistance database as not being associated with cure (defined as individuals that have received AFDC benefits during the past 90 days) and that show no record of a comment within the past 24 months may be selected for closure under this criterion. To avoid any errors, a routine identical to the one discussed under ''Former AFDC Cases'' will be employed when entering the closure information on FLORIDA.
Page 147 PREV PAGE TOP OF DOC Manual review of a random sample of 187 Leon county cases fulfilling this criterion resulted in the closure of 139 cases. A cursory review of the remaining 48 cases (26%) revealed case type errors and inaccurate public assistance information as the main reasons for failing to close the case, errors that will be eliminated via introduction of the program routine discussed above. Based on a manual review of the first 50 cases identified during the statewide analysis as fulfilling this criterion, none would be closed in error.
Application of this criterion identified an additional 119,476 cases, 10.2% of FLORIDA's unobligated caseload, for closure and required closure letters to be generated for all cases.
5. Unknown Non-Custodial Parents
Unobligated cases associated with custodial parents who currently do not receive public assistance (defined as individuals that have received no AFDC benefits during the past 90 days) and list the non-custodial parent as ''unknown'' may be closed based on 45 CFR 303.11(b)(12) since the name of the putative non-custodial parent is essential in order for CSE to further pursue the case. CSE may notify the custodial parent in writing to contact CSE and disclose the name of the non-custodial parent. Provided the notification advised that a failure to respond will be interpreted as noncooperation and lead to the closure of the case, all of these cases may then be selected for future closure. Based on the manual review of the first 50 cases identified during the statewide analysis as fulfilling this criterion, none would be closed in error.
Application of this criterion identified an additional 6,553 cases, .6% of FLORIDA's unobligated caseload, for closure and required closure letters to be generated for all cases.
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6. Locate Only and PA Pending Cases
Constituting requests by other states for the location of individuals presumed to reside in Florida, Locate Only cases (case type 16) are automatically entered into FLORIDA so as to be included in the systematic data exchange between FLORIDA and other state agencies for a period of 90 days. Due to FLORIDA programming errors, however, none of these cases have ever been closedresulting in 108,816 open active Locate Only cases on FLORIDA dating as far back as May 1991. Introducing the requirement of an establishment date within the past 180 days in order to be able to remain open on FLORIDA, 95,649 Locate Only cases may be identified for closure.
Constituting referrals from the PA program prior to the approval or denial of AFDC benefits, PA Pending cases (case type 17) are intended to change into the appropriate PA or NA case type upon the final decision regarding the custodial parent's qualification for AFDC benefits. Due to FLORIDA programming errors, however, many of these cases have never changed typeresulting in 159,329 open active PA Pending cases on FLORIDA dating as far back as March 1991. Since a decision upon a request for public assistance is generally made within no more than two months, a requirement can be introduced that a PA Pending case, in order to be able to remain open on FLORIDA, either be established within the past 180 days or be associated with a custodial parent who appears on the 1996 public assistance database. Based on this criterion, 35,585 additional PA Pending cases can be identified for closure.
Application of these criteria identified an additional 131,234 cases, 11.2% of FLORIDA's unobligated caseload, for closurenone of which required a notification letter to be mailed.
Page 149 PREV PAGE TOP OF DOC7. Multiple Custodial Parents
Noting that ''states may not, through the IVD program, establish judgments for reimbursement of public assistance'' and that ''the responsibility of the IVD agency is to establish ongoing support obligations for children'' OCSEAT9304 indicates that an order for retroactive support may only be established in conjunction with an order for current support. Orders for current support, however, can only be pursued on behalf of the custodial parent that actually has physical custody of the dependent(s). CSE thus is unable to proceed with a case in which the custodial parent can be identified as currently not having custody of the child(ren) and, therefore, may close the case.
These cases may be identified by matching the CSE data with the public assistance database and determining which custodial parent, if any, currently receives AFDC benefits on behalf of the dependent(s) listed on the CSE case. Should such a custodial parent be identified, all unobligated cases associated with the same dependent(s) but a different custodial parent can be closed. To eliminate any errors, only those custodial parents in receipt of an AFDC check during September 1996 or approved to receive an AFDC check during a future month were considered as having physical custody of the children covered in the AFDC grant.
Application of this criterion identified an additional 1,541 cases, .1% of FLORIDA's unobligated caseload, for closure and required closure letters to be generated for all cases.
Having identified 639,275 cases for closure, 54.5% of FLORIDA's unobligated caseload, two types of adjustments were made leading to the removal of a total of 28,589 cases requiring manual intervention from the closure list.
Page 150 PREV PAGE TOP OF DOC The first adjustment consisted of the removal of 8,583 interstate cases due to a need to coordinate closure of these cases with other states' IVD agencies rather than the custodial parents. As a side effect, removal of these interstate cases will reduce the error rate associated with the closure of establishment cases based on the emancipation criterion: of the 35 Leon County cases that would have been closed in error, all but 11 were interstate cases.
The second adjustment consisted of the removal of 20,006 cases requiring a notification letter to a custodial parent that was associated with another case listing the same non-custodial parenti.e. a duplicate casebut different dependents. Unable to close these cases systematically as exact duplicates, manual review will be required to determine the dominant case into which to merge the subordinate case. Although these cases could be closed in conjunction with a custodial parent notification letter, the custodial parent may not be aware of the duplicate case's existence and, thus, misinterpret the closure letter as pertaining to the case required to remain open. To prevent such confusion, manual intervention will be required to eliminate these cases.
Based on these adjustments, a total of 610,686 cases were targeted for systematic closure.
To effect the actual closure of the cases on FLORIDA, a two-step process consisting of the upload of the closure candidates and the verification of basic case data was employed. A tape containing the case number, closure code, and targeted closure date associated with each of the 610,686 cases identified as closure candidates was uploaded to FLORIDA on November 24, 1996. Verification of basic case data led to the removal of 46,469 cases from the closure candidates based on either the establishment of a support order (3,633) or the approval for AFDC benefits or MediCaid (40,836) after the September 15, 1996 data download. Of the remaining 564,217 closure candidates, 10,606 were found to already have been closed or merged into another case since the data download, leaving 553,557 to receive a pending history transaction specifying a targeted closure date.
Page 151 PREV PAGE TOP OF DOC On November 30, 1996, 171,886 of these cases automatically closed on FLORIDA. The remaining 381,671 cases were subjected to a second caseload verification program run on December 29, 1996 which removed the pending history transaction on 4,332 cases based on either the establishment of an obligation (63 cases) or the approval for AFDC or MediCaid benefits (4,269 cases) since the first caseload verification program. Excluding the effect of the responses received from custodial parents wishing to continue their case with CSE, the remaining 377,339 cases closed automatically on December 31, 1996 (351,592 cases) and January 21, 1997 (25,747 cases). Consequently, the number of cases able to be closed automatically as a result of this project was finalized at 559,885.
Custodial Parent Notification Letters
Of the cases identified as closure candidates, 359,865 required a notification letter to be sent to the custodial parent informing him/her of the Department's intent to close the case and soliciting a response from those custodial parents wishing to continue their case within 30 days of this letter's receipt. The first phase of this mailing amounted to 333,447 letters and was completed October 31, 1996allowing a tentative closure date of December 31, 1996. The second phase consisting of the remaining 26,418 letters was completed November 21, 1996establishing a tentative closure date of January 21,1997 for these cases.
About 120,000 letters (33.3%) were returned as undeliverable, establishing CSE's inability to contact and, consequently, provide continued services to the custodial parentand allowing these cases to be closed. An additional 14,479 letters (4.0%) were returned to the Department by custodial parents wishing to continue their case. Only if the information newly supplied by the custodial parent was found to be sufficient to allow the Department to continue its pursuit of the case was the case prevented from being closed.
Page 152 PREV PAGE TOP OF DOCAddendum
Based on the employment of systematic analysis tools to conduct a review of FLORIDA's child support enforcement caseload, the closure of these 559,885 cases was able to be completed at a total out-of-pocket cost of $135,148, consisting solely of expenses related to the mailing of the 359,865 custodial parent notification lettersa cost of $.024 per case.
Based on experiences obtained during the manual caseload review conducted in conjunction with the Model Office project in Leon County, a manual effort to review all open cases in FLORIDA, identify those cases able to be closed in accordance with federal guidelines, perform the actual closure of the case, and generate the files required to produce the custodial parent notification letters would have required an additional $4.7 millionoccupying 148 case analysts, 9 WPSOs and 16 supervisors for a period of 12 months.
Provided with FLORIDA generated lists containing the names and Social Security numbers of the custodial and non-custodial parents associated with each of the 1,543,008 open child support cases, these case analysts would have had to conduct four individual tasks to effect the closure of these cases. The first task consists of the determination as the whether a court-ordered child support obligation exists on the caserequiring an average review time of 1 minute per case. The second, most time consuming, task consists of identifying those of the 1,173,916 unobligated cases able to be closed in accordance with federal case closure criteriademanding a review time of 10 minutes per case. The third task consists of performing the actual closure of the 610,686 identified closure candidates on FLORIDAtaking an average time of 2.5 minutes per case. The fourth, and final, task consists of entering the names and addresses pertaining to the 359,865 cases requiring a notification letter into an electronic file so as to be able to generate the lettersat an average time of 2.5 minutes per letter. With the exception of the data entry task which could be accomplished by WPSO positions (PG10), these tasks require knowledge of both the CSE program and FLORIDA, thus demanding the use of case analysts (PG16) positions. Assuming an FTE utilization rate of 80%, completion of these tasks thus would require 148 case analyst FTE and 9 WPSO FTE. In addition, one supervisory position would be needed for each group of 10 case analysts and WPSOsfor a total of 16 supervisor FTE (PG17). Based on the minimum salary requirement effective January 1, 1997, the total salary expense associated with these positions amounts to $3.476m. Estimated at 35.6% of salaries, benefits would add an additional $1.241m, establishing a total personnel related cost of $4.713mas detailed below.
Page 153 PREV PAGE TOP OF DOC
Mr. CAMP. Thank you very much. And thank you all for your testimony.
Mr. English, if you want to take a minute. I have some questions I want to ask if you want to take a minute. Or if you would like to go now.
Mr. ENGLISH. Go ahead, Mr. Chairman, and I will follow you.
Mr. CAMP. All right. Thank you.
Mr. Mahoney, I wasn't here for all of your testimony, we had a series of votes, but I did happen to look at your written testimony. And I know that in Michigan, being from Michigan myself, that the four counties in the southeast part of the State have much of the State's caseload. And I think in your testimony, 55 percent of the entire caseload is in Oakland, Wayne, Macomb, and Genesee Counties.
Mr. MAHONEY. Yes, sir.
Mr. CAMP. And my question to you is, is it your understanding that in order for the State of Michigan to meet this single data system requirement, that there would be significant modifications to the current system?
Mr. MAHONEY. Yes. What we have been looking at recentlyand I have to say that I think the relationship between us, and us being the four counties in the State of Michigan, has greatly improved in the last short while. There have been some changes up there. I understand there is some angst generated because of this legislation and this wanting to keep these homegrown systems with their peculiarities.
Page 154 PREV PAGE TOP OF DOC We have looked at what they refer to as a transfer system, and that is the possibility of taking one of the four large county systems and somewhat modifying it to satisfy the needs of the large counties, the issue being, you can't take a system that serves Wayne County, for example, with approximately a quarter of a million cases, and expect that same system to work in one of the ones up north, Gogebic or one of the smaller counties that has maybe 200 or 300 cases. So it would require a considerable amount of modification to each and any one of those systems to do that.
Again, the concern is this localthe specialized things that we have put into our systems that we just really don't want to take away. And we don't want to talk to our constituents and say, oh, by the way, you used to be able to get this, but you can't have it anymore.
Mr. CAMP. What do you think it would cost to modify the current system?
Mr. MAHONEY. We don't have any exact numbers at this point, because we are not settled on any one of the four as a transfer system. We have a meeting coming up tomorrow, as a matter of fact, if we can get to it, in Lansing to discuss this.
Our recommendation, of courseI say ours; again, this is the four counties. We are looking at using the newer technologies and programs going to a data warehousing concept where the data can be stripped off from the local county databases, forwarded to the State to a data warehouse, allowing some inquiries there that would make it an interactive system. And as I think was mentioned earlier, we get a little more caught up in the current technology. You know, if we take any more than 3 weeks vacation, we have to be retained in this business.
Mr. CAMP. Thank you.
Mr. Chairman, do you want to ask?
Chairman SHAW. That is OK.
Page 155 PREV PAGE TOP OF DOC Mr. CAMP. As the system is modified, would you be able to continue to operate your current system as is, or would you have to completely shut down?
Mr. MAHONEY. Well, there would be some interruption at the time any new programs are implemented. Again, we are under the same ball of rocks they are talking about in Florida. We have millions of lines of COBOL code as well.
Our recommendation would be, though, if we take the data that is in our existing system, strip it off, that can be done in batch runs at night and forwarded to the State without any real impact on the customer, because most of the work for them, as far as they are concerned, is done during the normal business hours.
There would be data elements, I am sure, that may be required, we may not capture today, and we would have to look at capturing those as well.
Mr. CAMP. You mentioned this data warehouse system. My understanding of that is, that it would allow the counties to link together in some way. Is my understanding correct?
Mr. MAHONEY. Yes. The concept of data warehousing is basically a large area of, let us call it a big collection, literally a warehouse of information. And without drastically modifying existing systems and pulling information from them, putting them in this data warehouse, they would be in a common database that would be available to any and all; anyone throughout the State could inquire on it. The requirements of the Federal Government could be met, because you could pull the information off there and, of course, forward it to the Federal level.
I guess the way we look at it, it is the best of both worlds: We don't interrupt what we do today, and we meet the requirement, because we certainly have nono reason to not want to meet this. I mean, we are not here to say that. We want to do what is best for the constituents, and I guess we are fighting for their benefit, too.
Page 156 PREV PAGE TOP OF DOC Mr. CAMP. Right. I appreciate that very much.
Mr. Zingale, do you think that the penalty of terminating all Federal child support funding should be in place for any State that misses the data processing deadline of October 1?
Mr. ZINGALE. Well, we haven't given that much thought in Florida, because we hope to make it. But I would certainly say that, for us, I think we all have common objectives. We translated, fairly simple, in Florida, more money to more kids more quickly.
I think the computer is just a tool. If the tool is effective at increasing productivity, I would hope that is what you are looking at. I believe what you need is a reasonable assessment of every system, not whether it meets Federal certification or not, but a reasonable assessment of every system and where its deficiencies are and what it can do to get productive, not necessarily certified. I don't translate ''certified'' and ''productive'' as the same thing.
There are some States that maybe should abandon Federal certification and take a totally different route. That is very hard for Congress to do, because we typically try to look at everybody the same. But everybody's solutions aren't the same in the computer world today. We are kind of stuck back in the eighties. People that have started in the nineties are much further along with an effective system than we are. And I think it is an individual assessment and you shouldn't have a blanket tool.
Mr. CAMP. Thank you. I appreciate that.
Mr. Doar, you recommended a statewide system as opposed to a single State system. Could you just briefly tell us the differences between those two approaches?
Mr. DOAR. Well, the statewideness is a concept, a programmatic concept, of ensuring that services are provided uniformly across the State, and States can interact with one another using a common language. That is the objective, that is the ultimate end, to have something that meets the goals of the program with regard to service toward our customers but doesn't necessarily have a one-size-fits-all application designed by HHS. That is really the ultimate concept. It is the end result that is important, not how we get there.
Page 157 PREV PAGE TOP OF DOC Mr. CAMP. Thank you.
Mr. Williams, I wasn't here for your oral testimony, but I understand that youand please correct me if this isn't a correct summary of your written testimonythat you would give the States basically their share of the funds, establish outcome measures in terms of functional abilities of each data system, and then have HHS give technical assistance. Is that a fair brief summary of your approach?
Mr. WILLIAMS. I think you summarized it extremely well. I think what I am saying is that we should just give the States a fixed formula allocation and put out the money on some formula basis. And we already have outcome measures because of the new incentive standards that were being discussed by the previous panel. And we already have statutory specifications as to what the States have to do.
For example, new hire reporting. States are going to have to start to have an ability to handle new hire reporting by employers 20 days from now and the ability to pass their new hire reporting data to the Federal Government starting 20 days from now. There is a statutory listing of data elements in PRWORA already, timeframes in PRWORA. There is a format that has already been specified to pass the data to the Federal Government.
I may be missing something, but it is not clear to me what extra we would get out of some detailed certification standards that would overlay on top of that.
Mr. CAMP. What sort of information are you receiving back from the State IVD directors, if you have had a chance to run this by any of them, or HHS, for that matter?
Mr. WILLIAMS. I have had a limited discussion with a handful of IVD directors, and I would say there is cautious interest in that concept. I have not had a discussion with HHS about it.
Mr. CAMP. OK. Thank you very much. Thank you.
Page 158 PREV PAGE TOP OF DOC Chairman SHAW. Mr. Levin.
Mr. LEVIN. Thank you, Mr. Chairman.
I have had a chance now and then over the years to see the open county system in operation. Let me just then ask you, Mr. Mahoney, very concretely: How do we resolve this issue? You are suggesting a change in the law that would allow the county and the State to link in a way that would now meet the present requirements of Federal law. I mean, is that what you are suggesting?
Mr. MAHONEY. Yes, I guess that is basically what we are saying.
Mr. LEVIN. Because the time for vagueness is kind of over. We are going to be moving on legislation. So let us talk concretely.
Mr. MAHONEY. Yes, we would like to see a change that would allow the larger systems throughout the county to feed some type of a data warehousing decision that we could do through the State. That is the direction we would like to go, and we see that as the easiest fix for the issue today.
That will not satisfy the smaller counties. There will still have to be some type of State available system that can be put in the smaller counties, such as the one that is out there today, or maybe some of the smaller counties would work off a centralized system at the State level because of the difference in caseload.
But, again, to protect these systems that are in place and the dollars that have been spent over the years, this is the direction that we feel we should be going in, and any change in legislation that would allow that is something we would be in favor of.
Mr. LEVIN. How would that be done without eroding the rigor of Federal requirements?
Mr. MAHONEY. Well, I think if it is done where it will still require the necessary data to be collected at the Federal level, to me, or to us, that is the bottom line. If we meet the Federal requirement as far as the data that is collected and disseminated not only to the Federal people but to anyone in thein the Friend of the Court community throughout the country, we have met the requirement, or at least the way we see what the requirement should be.
Page 159 PREV PAGE TOP OF DOC Mr. LEVIN. I think, Mr. Doar, you maybe touched on this issue. But, Mr. Willemssen, do you have any comment on that?
Mr. WILLEMSSEN. I am not eminently familiar with Michigan's case, but based on the testimony I have heard, I think one of the issues that the State would need to address is that it sounds like it has multiple systems for various counties. I think it needs to identify the architectural characteristics of all those individual systems so that, to the extent that it wants to put them all together, it can identify the cost of building the necessary interfaces to do that.
If the architectural characteristics of these many different systems are quite dissimilar, that cost could be quite high. You have got to trade that kind of scenario off against a scenario at the other end of the spectrum of maybe we need to almost start over. And, again, not knowing Michigan's situation, you have got to look at various alternatives and the costs and risks of those alternatives.
Mr. LEVIN. Does anybody else have any comment on this issue?
Yes, Mr. Williams.
Mr. WILLIAMS. Yes, I would like to take a stab at that if I could. Essentially, at the local level, you need a lot more information on a daily basis to support those processes that are going on every single day. So you need a lot more detailed information. For example, if you are establishing paternity, you need information on whether papers have been served or whether they are still outstanding.
At the State level, you need much higher level information. You don't necessarily need to know every single little microstep of the process, exactly what is going on that day, but you need to know how many cases have had paternity established, and maybe you have to have monthly reports on where they are in the process.
So you can have systems that support local operations with a great deal of flexibility as long as you are sending common data elements up to the State to support the data interchanges for locate purposes and to support the central clearinghouse, payment clearinghouse activities, and generation income withholdings and the like.
Page 160 PREV PAGE TOP OF DOC Mr. LEVIN. All right. That doesn't quite answer the question, though, whether that change is advisable. I understand your concept, butyes, Ms. Turetsky.
Ms. TURETSKY. I think what Congress does not want to do is add to the fragmentation of this program. There may well be a technological set of solutions in a particular State given the particular circumstances at the State. It doesn't strike me that it should be a legislative solution but, rather, a planning and design solution that is worked out after an expert and careful and serious planning process.
The purpose of our recommendation that there be a corrective action process is really to get at the issues of what is standing in the way of automation of the State. And one of those barriers we know is fragmentation. If, through that serious process, there are some technological and programmatic decisions that can be made that will get the State to the goal, that is the context of which it should be made, not at the congressional level right now.
Mr. LEVIN. But no one is suggesting we make those decisions here.
Ms. TURETSKY. I believe
Mr. LEVIN. The question is, under present Federal law, what you are suggesting, Mr. Mahoney, I don't think is doable. Or am I wrong?
Mr. MAHONEY. Because of the single system requirement.
Mr. LEVIN. Yes. Maybe this isn't the time to discuss it, butwell, Mr. Haskins and Deborah, they both say that that is correct. So Ron and Deborah, when they agree, we tend to listen.
Mr. HASKINS. Both times.
Chairman SHAW. That is scary.
Mr. LEVIN. So, then there would be a requirement of a change in the law; right?
Page 161 PREV PAGE TOP OF DOC And, Ms. Turetsky, you are saying
Ms. TURETSKY. Mr. Levin, I am saying that no change in the law should be made, that there is an HHS waiver approval process that ought to be used after there has been a serious assessment of what has gone wrong in the States that are at the stage of trying to decide what system to
Mr. LEVIN. So you are saying there is already a waiver procedure.
Ms. TURETSKY. That is right. And
Mr. LEVIN. Which applies to this issue?
Ms. TURETSKY. That is correct.
Mr. LEVIN. Well, then, there wouldn't be a requirement of change of the law. I mean, so I guess we need to explore that, whether the waiver procedure is applicable.
Mr. Doar, you are shaking your head.
Mr. DOAR. I believe that when the judge testified earlier, he took the law, as it currently exists, as pretty inflexible with regard to systems, unfortunately. And that is the concern a State like New York has that is concerned about other States not being ablelosing all of their funding because of failure to meet this deadline.
Chairman SHAW. Would you repeat what you just said, please?
Mr. DOAR. I think what I just said before is that the system sanctioned situation with regard to failure to meet certification is pretty inflexible with regard to, you are either there or you are not, and HHS
Chairman SHAW. Let me interrupt, if you don't mind.
Mr. LEVIN. No, no. Please do.
Chairman SHAW. Maybe we can step on each other's time a little bit and get some things out.
Page 162 PREV PAGE TOP OF DOC Is that because of the legislation itself, or is it because of the interpretation of HHS of the legislation?
Mr. DOAR. Well, with regard to the details in the certification requirements that are in our case, for instance, particularly difficult, it has to do with regs and certification. With regard to the penalty
Chairman SHAW. The congressional intention was to set up goals rather than micromanage. That is not to say we didn't overstep that in the legislation. But what I am trying to figure out here, and what Mr. Levin is trying to figure out, is what is in the legislation that prevents the States from going ahead along the lines that you and Mr. Mahoney have discussed.
Mr. DOAR. I think
Chairman SHAW. And I understand Mr. Zingale, too.
Mr. LEVIN [continuing]. The sense is, it seems to be the waiver, it is notit is unlikely that the waiver process applies to this issue when there is a requirement of a single system.
Mr. DOAR. We have been asking this question, by the way, for some time. Other States have been doing the same.
Mr. LEVIN. Mr. Chairman, I think, in your leadership, we need to really understand that in the next few days.
Chairman SHAW. It would help if I understood computers, which I don't. I think that is what is giving me a lot of trouble.
Mr. LEVIN. I may ask my grandchild, my 5-year-old grandchild.
Mr. DOAR. I think that with regard to the way the incentive formula methodology was done, that is more consistent with the kind of working together approach that I think would be more productive.
Page 163 PREV PAGE TOP OF DOC Chairman SHAW. Mr. English.
Mr. ENGLISH. Thank you, Mr. Chairman.
Ms. Turetsky, in observing the States that are able or are about to reach the data requirements and those that are not, what are the common characteristics of those States that are on track to achieve the data requirements on time versus those that are unable to do so? What are their common characteristics? And what would that suggest for us as a policy to encourage those who aren't achieving the thresholds to get there?
Ms. TURETSKY. I haven't done a State-by-State study, and so much of the information I have about the systems is anecdotal or reported to me. But I have had experience as a State administrator in a county-based system, and I understand the environment in which a State administrator operates where there are several loci of authority and jurisdiction.
One of the things that the States that have had difficulty getting to the goal have in common is a very fragmented, decentralized system, where you have a carriage and 10 horses and all of the horses are pulling a different way.
Now, you could have a carriage that has 10 horses that are all pulling in the same direction, a decentralized system where policies are standardized and uniform where they need to be, but that isn't the situation of the States that have had difficulty.
I don't want to oversimplify this, because there have been a lot of problems and a lot of reasons for the difficulty in automating, but that is one.
So the States that have done better in this process have tended to either be State managed and State directed, or they have been county-based systems where the counties go along with the program.
Now, that going along with the program probably implies a good intrastate process where the State and the counties are working toward a common goal and working things through. And it seems to me one of the most important things to happen now for those States that are in serious trouble here is to get that kind of serious process going so that there can be at the end a common set of objectives and a common set of ways to get there. And I think that is what hasn't happened in some of the States that are lagging so far behind. People are working hard, they are very interested, they are very protective of their clientele, but they are all going in different directions, and they have not been able to break that logjam.
Page 164 PREV PAGE TOP OF DOC Mr. ENGLISH. Mr. Zingale, your comment.
Mr. ZINGALE. I kind of put States in these classes: You have very large, mega States that are centralized, like Florida; very large States that are decentralized or county based; you have for the middle-sized States in the same two categories; and small States, most of those are all centralized. So that is one variable.
Those that obviously have county-based systems that are large struggle with how to bring that stuff up to the statewide level. I think if you go and look at it, though, the other major variable is when you started. As you heard our testimony, when you start early, you start with very old, very difficult to change technology. When you start late, you gain some of the advantages of the modern technology. Some of the best systems I have seen when we were in Rhode Island, you know, were very small, modern technology; they can make changes tomorrow. The changes they could make tomorrow would take us 6 months in Florida.
So it depends on when you started, it depends on what technology you started with, and it depends on whether you had to overcome a county-based mentality to get there.
Mr. ENGLISH. Other comments? Mr. Williams.
Mr. WILLIAMS. I was struck by the Office of Inspector General report that said that they couldn't detect any pattern between county-based and not county-based, in-house versus contractor, large or small. I think it is a little bit too early, because I think we have to see in the end who comes up and who doesn't come up, and I think it is something that somebody is going to have to take a more in-depth look at.
And the other thing that I would point to just operationally is, I think the States that have succeeded were ones that put together a team that involves child support knowledgeable people and technical people. And they somehow had to bridge that gap and form a working team, and the States that failed or have not been as successful tended to be ones where that bridge was not developed.
Page 165 PREV PAGE TOP OF DOC Mr. ENGLISH. Thank you for your testimony.
Mr. Chairman, I appreciate the opportunity to listen to this panel. It has, I think, added a lot.
I have to express that I come into this with a great deal of reservation about extending some of these deadlines, and I think there has to be a compelling case for doing so at this point. I am weighing very much the testimony of this panel, and I appreciate the opportunity to participate.
Chairman SHAW. You know, it seems here, just sitting here, that the more I learn about the problem, the more I don't understand. And I think that is exactly where we all are at this particular point.
Mr. Zingale, you were, in your testimonyand I apologize that I was out. It was my turn to run out and vote to keep this going at the time when you, from my own State, were testifying. But I have been briefed on your testimony.
And the question that I would have for you is: Particularly in talking about the technology gap between the Florida system and what is available out there right now, we appropriate about $2 billion to this system in order to get the States up and where they weren't getting into a situation of an unfunded mandate. There is about $400 million left that will be available, as I recall the figures.
This was intended to be a one-shot deal in order to bring everybody online. And then the various States were to take care of their own obsolescence and everything else to continue the technology within their own budgets. And it was thought by the Committee of the Congress, and I assume the administration, that these systems would, in the long run, pay for themselves through the collections that they would afford.
Where do we go from here? Did Florida build in any funding for obsolescence within their budget? Have you spent Florida's share of the $2 billion, or do you still have some of those funds in order to update the Florida system? Because you have really got to go along two tracks. One is to keep your present system in operation, and the other is to start working on a new system with new technology if the obsolescence factor is as strong as you have indicated it is.
Page 166 PREV PAGE TOP OF DOC Mr. ZINGALE. Well, we took a threefold approach, if I could take just a moment. The first fold was to fully recognize that the child support enforcement system in Florida had been neglected for a very long time and it was inadequately funded.
So we took the welfare reform bill and we went to our legislature and asked for the moon and received a 40-percent increase in funding and 325 positions, which is about a 40-percent increase in our caseload, and a substantial amount of interface and privatization of our caseload, both on the front end and 2,000 cases cradle-to-grave. So that was trying to get the resource level up.
The second goal was to get federally certified. And a lot of our brain power and thinking power in terms of what we had to do has, in all honesty, 7 days a week for the last year and a halfhas been devoted to getting federally certified. Whether that certified system would be the best choice in the world or not wasn't our decision; we just plowed forward to get certified.
Chairman SHAW. You are telling us that the certification deadline has forced this upon you to go forward with obsolescence technology.
Mr. ZINGALE. Yes. And at the expense of putting modules up and not cleaning them up after you got them to get them up. So they do run. They don't run as efficiently as they should run.
Our stage now was to take the other piece of welfare reform, which were the new mandates that we really welcome and thank you for, the things that were in the welfare reform bill that give us the tools, and are trying to step back from that a little bit and trying to figure out how we can develop them offline with new technology.
We really struggle. We are one that really welcomes the public-private partnership, have a major privatization effort out on the street right now, had a major effort 2 years ago with the back-end collection.
Page 167 PREV PAGE TOP OF DOC But we find it very difficult to interface with the private sector on an ongoing basis. I was talking to one of the vendors today responding to our RFP's, you know, basically lamenting that, you know, gee, we are going to have to work on the Florida system; that is going to be difficult to us; wouldn't it be nice to use our own systems?
So there is the new way of thinking about running a child support system which isn't the way we thought about running a child support system in 1982. It is different. It is radically different today than it was back in the early eighties. States that have gone to different ways of running the program don't find the old technology very accommodating in that area.
So, yes, we are going to come and attack that $400 million and figure out what our share is, but we haven't had much time to think about that right now. We did a study to try to figure out if we could separateI don't know if you heard, we are a revenue agencyif we could separate our piece of the Florida system and segregate it out so at least we had ownership and control of it, but that hasn't occurred and probably can't for some time because of the welded technology.
But next year's request is for another chunk of resources, and I will go back and look at that $400 million and see what is left of it.
Chairman SHAW. I guess the only question that remains unasked, at least I am assuming it is unasked, is what use is being made of the system as it is today and what advance have we made because of the systems that are up and working and the effect on enforcement? Does anybody care to take that one on?
Mr. DOAR. Well, I think that is one of the questions that this issue seems to overcome. The fact is that the child support programs, while they are not there yet totally, have made great strides in the past 3 years. Collections are up significantly in many of the large States and across the country.
Page 168 PREV PAGE TOP OF DOC Chairman SHAW. Are they up because of the systems that have been mandated
Mr. DOAR. I could say that
Chairman SHAW [continuing]. Across the State lines?
Mr. DOAR. There may be some of that. There also have been significant programmatic changes that have happened with regard to the States that were a little bit ahead of the welfare reform mandates. There has been a greater interest in it publicly.
In New York State, where we have a system which we think will be certified, we have increased collections by $200 million a year in 3 years. That is a nice improvement, in spite of the fact that we have a system similar to the one in Florida that may meet certification but still could be better.
Chairman SHAW. We obviously have a lot more work to do.
Mr. COYNE. I have no questions.
Chairman SHAW. I would like to thank this panel. You certainly have left us with a lot of questions as well as a lot of good information. Obviously, this Committee is going to have to work further on this. And I would ask the staffs on both sides of the aisle to come back with some recommendations.
And in coming back with those recommendations, I would also like you to give to this panel of witnesses and such other people as you feel that you should and, of course, working with HHS, to go through sort of a comment period on what you might recommend to us so that we can get this thing going.
This is tremendously important. I think this is probably the silent trigger that is going to really make welfare reform work in the long run through parental responsibility, and it is important that we don't make any errors.
Page 169 PREV PAGE TOP OF DOC It sounds kind of like the $2 billion that we have already spent is probably paying some dividends. However, I think it sounds like we may have overstepped a bit in our requirements, which has caused the States to make some pretty costly decisions in the process.
But hopefully we can get this resolved. We won't get it resolved as part of this legislation, but I would hope that early next year we can have hearings on this and go toward correcting some of the problems before we get into the next deadline that HHS will be working with under the legislation that will go through this year.
Thank you very much, all of you, and all the witnesses for being with us. We are adjourned.
[Whereupon, at 12:15 p.m., the hearing was adjourned.]
[Submissions for the record follow:]
Statement of Stuart A. Miller, Senior Legislative Analyst, American Fathers Coalition
Mr. Chairman and Subcommittee Members:
The American Fathers Coalition (AFC) has long advocated that the Federal Office of Child Support Enforcement (OCSE) be abolished and replaced with the Federal Office of Child Support Compliance. The rationale behind this concept is that we believe a system which encourages and facilitates voluntary compliance is superior to our current system which necessitates enforcement.
The current incentive of ''more is better'' has had many unintended consequences. Many second families, men, women, and children, have been destroyed because of unrealistically high support orders levied against the primary breadwinner in those families, by bureaucrats and judges who are consciously or subconsciously trying to meet federal incentive criteria.
Recently President Clinton boasted about the record amount of child support collected. This doesn't necessarily mean that children are better off financially or that the Office of Child Support Enforcement is doing a better job. It more likely means that our families are deteriorating at such a rapid rate that there is an unprecedented increase in the number of support orders being issuedand hence, more support collected.
Page 170 PREV PAGE TOP OF DOC It would be prudent to see a child financially supported for the balance of the child's dependent years with realistic support orders than to get the most amount possible for a few months before the obligor is forced to go underground. If an obligor can afford to pay $300 per month but the state orders the obligor to pay $400 per month, the obligor will not be able to afford to live, get to work, support a second family, etc. It will not be long until all support stops flowing. This is one of the unintended consequences of the current incentive plan.
Many states refuse to comply with federal law requiring review and modification of support orders if there is a possibility that it may mean a downward modification of support, even if it is warranted because of injury, illness, unemployment, etc. Why? Because of the current incentive structure.
But most insidious, is the answer to the question ''How do you collect more child support money to get the federal incentive?'' Get more support orders. How do you get more support orders? Remove all incentives for maintaining two-parent, married, intact families. Remove all obstacles to quick, easy, divorces. Encourage out-of-wedlock births. Eliminate due process and establish child support orders without service, notice, or opportunity to be heard. Give administrative agencies authority to issue support orders bearing the same weight as judicial decrees and make the appeals process practically impossible except for those knowledgeable enough or financially capable enough to make it through the regulatory quagmire of the support enforcement system.
The incentives to the states should be based on percentages of orders where there is compliance. A state with 80% compliance rate would and should receive higher incentives than a state with 70% compliance. Furthermore, states should be rewarded for the percentages of intact families they have, not the reverse! Such incentives would encourage them to support two-parent, married, intact families rather than the existing perverse incentive of only rewarding them for broken families. The focus on families and overall compliance, not just a focus on financial child support enforcement, can only lead the states to start doing things that will have unexpected and wonderful benefits for men, women, children, families, and society in general.
Page 171 PREV PAGE TOP OF DOC As long as you continue to keep the incentives based on the ''more is better'' philosophy, you will find the agencies coming back every session asking for bigger and bigger sticks with which to beat the money out of parents, even before they have had a chance to implement or evaluate the effectiveness of the big sticks you gave them the session before. You will also find them asking for more and more waivers of due process rights when it pertains to child support issues. But most importantly, you will see an ever decreasing number of two-parent, married, intact families and a nation full of mostly ''at-risk'' children. Then you need to ask yourself ''is it any surprise we got what we paid for?''
Make the incentives family focused and based on compliance, not the amount collected.
Statement of Geraldine Jensen, Association for Children for Enforcement of Support, Inc. (ACES)
ACES is the largest child support organization in the United States, with 350 chapters in 47 states, and over 35,000 members nationwide. ACES members are typical of the 16 million families entitled to child support payments. We have joined together to work for improved child support enforcement. According to the federal Office of Child Support Enforcement there are 30 million children in America owed over $40 billion in unpaid child support. Only 20% of cases open at government Title IVD Child Support Agencies received a payment as of the end of 1996.
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Child Support Computer Systems
It is unacceptable for state government and the U.S. Department of Health and Human Services/Administration of Families and Children to say that 13 years is not enough time and $2.6 Billion is not enough money for all states to have a statewide child support enforcement tracking system on-line and fully functional. Childhoods have been lost while the states and the federal government argue over procedures and politics. Technology for state child support computers is available. After all, we can use a credit card from almost anywhere in the world. Local credit card companies can keep track of our account balance, if we pay our bills and how much available credit we have. Certainly a computer system can be developed which knows how much child support is due, how much is paid and what is owed. Certainly this computer could communicate with other computers just like credit card computers can!
Some advocates and state officials, will ask you to give states one more chance to get their statewide child support enforcement computers online in each state, while millions of children owed support have lost their chance to grow up free from poverty. Few of the large population states will meet the October 1, 1997 deadline. This is an extended deadline given to states in the Personal Responsibilities and Work Opportunity Reconciliation Act of 1996 after failure to meet the October 1, 1995 deadline established in the 1988 Family Support Act. The states have already been given two chances and over 13 years to get statewide child support enforcement computer systems.
The state-based system was created in 1975 and only 15% of the children needing support received a payment. Nine years later, the collection rate was about 20% and half of the children needed support orders when the Child Support Amendments were enacted, states were mandated to put the computer systems in place and were eligible to begin receiving 90% federal funding for the development and installation of statewide computer tracking systems. States did little or nothing at all to accomplish this mandate. In 1988, the collection rate was stagnant, most states failed to have a system in place as outlined in the 1984 child support amendments, so the Family Support Act required the states to have systems on-line by October 1, 1995. The states had 13 years to develop and implement these systems. October 1, 1995 came and went with only one state (Montana) meeting the deadline.
Page 173 PREV PAGE TOP OF DOC In 1996, the national child support collection rate was still stagnant at 20% and states were given their second chance and the deadline was extended to October 1, 1997. Now that deadline is less than one month away and now, only seven states (Montana, Colorado, Connecticut, New Hampshire, Virginia, Washington and Wyoming) have fully certified child support computer systems. Eight other states (Arizona, Delaware, Idaho, Georgia, Louisiana, Mississippi, Utah, and West Virginia) have conditional certifications which means that the system is missing at least one of the components. OCSE reports tat as many as 40 states will be on-line by October 1, 1997 however since the large population states are not among them, about 4045% of the child support caseload will remain un-computerized.
ACES conducted a survey of each state child support office to gather information about the status of the child support computer systems in the United States. The research was completed by ACES Staff who called each state and talked with the designated spokesperson for the child support computer system in that state.
The survey found that generally, the majority of states complained about having to comply with the Federal Regulations for developing the state computer systems, as outlined in the 1988 Family Support Act. Many states also complained that they were dissatisfied with the written Federal Regulations and the lack of specific guidelines from the federal government.
23 states had to use more than one vendor, which made this the most common problem reported. In fact, Michigan reported using 1215 different vendors to develop their system and Florida is currently being sued for over $100 million by a previous vendor.
19 states reported problems with converting the data from the old child support systems into the new one. Four of these states reported problems with manually data entering information from the hard copies of the child support case files.
Page 174 PREV PAGE TOP OF DOC 19 states reported other technical problems which include: 8 systems were not sending the payments out to the families; 6 states had problems finding the technical expertise to develop the system; 2 systems could not process interstate cases and 2 state computer systems would not interface with the existing welfare computer systems.
We invested over $2.6 billion on these child support computer systems and only have seven states with operational systems as a return on the investment. We have lost a whole generation of children to non-support because of a broken system, not because of the lack of laws, or money.
Michigan: The MICSE (Michigan Child Support Enforcement System) was developed after spending $77 million and was incapable of handling the large caseload in the Metropolitan counties in Michigan. During the developmental phase the one of the metropolitan counties (Oakland) child support office would not allow the computer designers into their building to continue working on the system. The Michigan Auditor General's Office completed a study on the system and released a report in January 1997. The report found that the system would not work in the large counties and recommended the entire system be scrapped and a new one designed. Michigan is now in the process of designing a completely new system.
Indiana: The different county agencies (Prosecutor's Office, County Clerks and County Courts) involved in the child support enforcement program are fighting over who has control of the computer system. Over two thirds of the county run child support offices will not allow the computer vendors responsible for developing ISETS (Indiana Support Enforcement Tracking System) into their offices to set up the system. Over $34 million has already been invested in the Indiana system and it is only operating in one third of Indiana's counties.
Page 175 PREV PAGE TOP OF DOC Ohio: SETS ( Support Enforcement Tracking System) has been in the design phase since 1984. The original contractor (ERC) that was hired to design, develop and implement the system promised that SETS would be fully operational statewide by 1990. Technicians from ERC could not get SETS to function at a demonstration of the system held during a 1990 Ohio Human Services Director's Fall Conference. ERC was involved in a bid rigging scandal that caused the resignation of the Director of the Ohio Department of Human Services in 1990. The contract with ERC was canceled in early 1991 and the entire system was scrapped. ERC sued the state foren hired staff to design, develop and implement a new system instead of contracting with another private vendor. ODHS promised that the system would be on-line statewide, by Oct. 1,1995. Smaller counties were supposed to begin phasing over to SETS in the fall of 1994, which did not happen. In 1995 ODHS settled the case with ERC, out of court, for $400,000. In 1997, ODHS planned to have 10 cases on SETS in each county by the October 1, 1997 deadline and felt sure that this would meet the federal requirements of having a statewide system The Federal Office of Child Support has publically stated that 10 cases per county across the state does not meet the statewide requirement.
California: The state has already invested over $344 million in SACSS (Statewide Automated Child Support System) that is missing the transfer component that sends the child support collected to the families and is missing information on interstate cases. In addition, Los Angeles County does not want to use SACSS and instead wants to obtain a federal waiver to have their own system rather than using the system developed for the rest of the state. California is now considering scrapping SACSS and starting all over.
The GAO conducted an year long investigation into the problems with the state child support computer systems. The report, Strong Leadership Required to Maximize Benefits of Automated Systems, was released in July 1997. The GAO found that the states underestimated the magnitude, complexity and costs of developing the child support systems. They also found that the states lacked guidance and assistance from the Federal Office of Child Support Enforcement. OCSE allowed states with serious problems to continue with the development of the systems without any kind of oversight on their part. OCSE did not require the states to follow a structured approach in developing the systems and failed to monitor the progress of the states. As a result, when the states encountered problems, OCSE did not know about the problems and could not give any direction to solve the problems.
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ACES is asking you not to give the states another chance. Please do not give them another extension of time in getting the state child support computer systems online. The states have proven that they are not taking these deadlines seriously or they would have met the initial October 1, 1995 deadline. We have been told by several state child support officials that they are not worried about missing the October 1, 1997 deadline. They are confident that they will not lose any federal money if they do not make the deadline. Without the fear of losing money, the states will not take the drastic measures needed to implement the systems. We ask that you suspend paying all federal child support incentive money to every state that fails to meet the October 1, 1997 deadline. The states should no longer receive federal reimbursement at the enhanced rate of 80% of the costs of the computer systems. The states need to be made aware that wasting $2.6 Billion of taxpayers money is unacceptable and that the federal government will no longer tolerate states blatantly ignoring federally mandated deadlines. Millions of children already have to suffer because of one ''deadbeat'' parent and should not have to suffer because they live in a state with a ''deadbeat'' computer system.
Since the child support computer systems are not on line and functioning, and the national child support collection rate has remained stagnant at around 20% for 6 years, child support reform is needed. We urge you to consider HB2189, sponsored by U. S. Representative Henry Hyde, and U.S. Representative Lynn Woolsey, which will create a national child support enforcement system under the Social Security Administration. The Internal Revenue Service will be responsible for collecting the child support from pay checks just as they currently do FICA taxes. The Social Security Administration will then be responsible for sending their payments to the family and for keeping track of the payments. This will make children as important as taxes.
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Child Support Funding
Background: Under current law, states receive funding for the child support enforcement program two ways. The first is through federal reimbursement of 66% of the costs to run the program, 80% of the costs of the development and implementation of the child support computers, and 90% of the costs to establish paternity. The second is through child support incentive payments that are based on the actual dollars of support collected by the state and the state's cost efficiency ratio.
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 required the Secretary of the Department of Health and Human Services to develop recommendations for the restructuring of the child support incentive payments paid to the states. We are asking you not to adopt the flawed child support incentive structure proposed by HHS and to consider adopting ACES' recommendations.
Instead of basing incentives only on collections, they should also be based on the state's performance in five areasestablishing paternity, establishing child support orders, collection of current child support, collection of child support arrears and the cost effectiveness of the program. The states should achieve a minimum level of performance to obtain any incentive payment.
Paternity: the recommended minimum performance level would be 50% unless the state's performance is less than 50%, they then would be required to improve their previous year's performance by 10%.
Page 178 PREV PAGE TOP OF DOC Establishing orders: minimum performance level would be 50% unless the state's performance is less than 50%, then they would be required to improve the previous year's performance by 5%.
Collecting both current support and arrears, the recommended performance level is 40%, unless the state's performance is less than 40%, then they would be required to improve their previous year's performance by 5%.
The state's would be required to meet at least a 2:1 cost effectiveness ratio to receive incentive payments.
It is Unacceptable that Children Reliant on Government Child Support Enforcement Services Have Only a 20% Chance of Receiving a Child Support Payment. HHS' Plan Would Increase This To Only a 25% Chance. It is too Little too Late!
This recommendation does not include all services the states are mandated to provide to families needing child support services. The proposal is missing locating absent parents, establishing medical support orders, enforcing medical support orders and modifying child support orders.
Most states are already at or very close to the 50% performance level for establishing paternity, establishing child support orders, collecting current child support and collecting child support arrears. This means that most states would be eligible to receive the incentive payments by staying stagnant and not improving their performance in the 5 proposed areas.
Page 179 PREV PAGE TOP OF DOCSolution:
ACES recommends that unless a state's performance is at least 60% for paternity and order establishment cases it would be required to improve their previous year's performance by 10 percentage points. If the state's performance is less than 70% for collectng current child support and arrears they should be required to improve their previous year's performance by 10 percentage points.
Additional performance standards should be established for location of absent parents which require states to meet a standard of 90% of all cases needing location efforts being processed through federal and state parent locators. If states do not meet the 90% standard they should improve by 25 percentage points.
Medical support performance standers for 78% of their cases (this is the percentage of cases in which non-custodial parents have access to health insurance from their employers as reported by an OCSE study). If states performance is less than 78%, they should improve by 10 percentage points. 100% of their new case should include language for medical support applicable when parents have health insurance available to them from their employers
States should have performance standards which measure if timely action has been taken; such as: action with-in 90 days to modify an order upon the request of either parent. If states do not accomplish this is 75% of their cases, they should have to improve at a minium rate of 10 percentage points.
States that have already achieved above the minimum standard, should be rewarded by receiving progressively higher incentive payments. If a state reaches an 80% standard for establishing paternity, establishing child support orders, collecting current child support and collecting child support arrears they should receive the maximum incentive payment amount. States who achieve a 5:1 cost effectiveness ratio, should receive the highest incentive payment amount for the category in which they meet that ratio.
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If a state has reached their performance level in one of the categories, but not in the remaining categories, they will receive incentive money for that category. The states will concentrate on their strongest area of performance to ensure that they receive incentive money for that category and ignore their weakest areas. In most states, the weakest areas are establishing paternity and establishing child support orders. The most vulnerable children will once again be ignored.
The amount of money available to each state to fund incentive payments should be based on that particular state's total child support collections. This ''collection base'' should include collections in TANF (Temporary Assistance for Needy Familieswelfare) cases; post-TANF cases and non-TANF cases. Support collected for TAIF and post-TAIF cases should be double counted to reward states for working these cases that they deem more difficult.
The states would be required to reinvest the money that they receive through incentive payments back into the program.
Page 181 PREV PAGE TOP OF DOC This proposal does not require the states to reinvest all federal funding back into the program. Many states put the money they receive for the federal reimbursement of 66% of the costs to run the program and 90% of the costs to establish paternity into the state's general fund.
States should be required to reinvest all federal funding, reimbursement and incentives into the state child support program.
The new incentive structure should begin in the year 2000 and should be phased into operation with half of a state's incentive money based on the old formula and half on the new formula.
This will create confusion and chaos. It is actually giving the states another entire year before the new structure would take effect.
Time is running out for the children. The new incentive structure should begin NOW!
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The new incentive structure should be periodically reviewed and changes made if they are needed.
The reasons for making adjustments to the proposed incentive structure are not in the proposal. This will give states who are failing to meet the proposed standards an opportunity to change the structure to fit their needs.
Statement of Leslie L. Frye, California Office of Child Support Enforcement
I want to thank the Chairman and Members of the Subcommittee for the opportunity to address the important topic of the proposed change to the Child Support Enforcement Program incentive system. In the six months since the Secretary of the Department of Health and Human Resources issued her report on this subject to Congress, there has been a great deal of discussion about the merits of her proposal. While there is much to agree upon in the report, our analysis of the potential impact of the proposed incentive system continues to raise concerns in two specific areas: the phase-in plan, and the removal of the limit on incentives for non aided families. I appreciate the opportunity to inform the Committee of our support for much of the proposal, and to explain our concerns in a few areas.
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Areas Of Agreement
We wholeheartedly support the Secretary's proposal to broaden the criteria on which states earn incentives for child support collections. We believe that the state and federal members of the work group that developed the proposal clearly understood the importance of a balanced incentive program which recognizes that the current single criterion of cost effectiveness does not capture the full range of activity by which program success can be measured. The five criteria, paternities established, support orders established, current support collected, arrears payments, and cost effectiveness, represent widely recognized performance outcomes for the Child Support Enforcement Program.
We also agree that revenues earned through the incentive program should be reinvested in the Child Support Enforcement Program, and have state law in California which requires this already. These revenues are used locally as matching funds for federal financial participation in the program, and the reinvestment requirement ensures that programs have a source of funding for continual growth and improvement.
We also endorse the Secretary's recommendation to group collections on behalf of families who exit the welfare rolls with collections for families currently receiving public assistance, for incentive purposes. The current system caps the incentives a state can earn on collections for families who have left (or never received) public assistance at 115 percent of incentives earned on collections for welfare families. As families leave welfare, fulfilling the policy goal of welfare reform, the amount of incentives a state can earn also declines.
The Secretary's proposal offers an excellent mechanism for addressing this ''disincentive'' the PRWORA. It also is in line with policy positions taken by the American Public Welfare Association and the National Council of State Child Support Enforcement Administrators in 1994, when the public debate on welfare reform was shaping up.
Page 184 PREV PAGE TOP OF DOC It is estimated that nationwide about 40 percent of the collections now categorized as ''non-welfare'' collections are actually made on behalf of families who formerly received public assistance. Grouping these collections with collections for current welfare recipients would in effect ''uncap'' incentives for almost all states.
Areas Of Concern
Our first area of concern is the Secretary's proposal to completely uncap incentives on collections for families who never received public assistance. We believe that this feature of her recommendation will provide a financial imperative for states to pursue collections for this population, to the detriment of collections on behalf of current or former welfare recipients. States will likely be driven to implement ''universal'' child support systems, in which all citizens would be required to pay support through a government agency by the fiscal incentives created by the Secretary's proposal.
Why do we say this? It's a matter of doing the math. The Secretary would pay an unlimited amount of incentive on collections both for families who never received aid, as well as for those on or near welfare dependency. The welfare dollars count twice in the Secretary's proposal, so there is supposedly a favorable weighting for ''welfare'' collections. However, on average, a non-welfare collection is about 3.4 times a collection for a welfare family. And, on average, welfare families are much farther away from a successful collection when they enter the system (i.e., paternity is less likely to be established; fewer welfare families have child support orders in place). Using the average collection data from the federal Office of Child Support's data for fiscal year 1996 and a hypothetical (maximum) incentive rate of 4.5 percent:
Page 185 PREV PAGE TOP OF DOC Clearly, it would be in a state's interest to maximize its activity in pursuing the easier, higher non-welfare collections in order to maximize incentives earned. The more families a state program ''recruits'' into its program who have never received public assistance, the higher its incentives and the better its performance (thus, the higher its incentive rate). States such as California, which have high rates of public assistance and a preponderance of current and former welfare recipients in its Child Support Enforcement Program caseload will earn incentives at lower rates and on a lower base, than will universal programs. We recognize that services to ensure regular child support payments are very important to many working poor families, and we do and certainly want to serve this population. However, the fiscal drivers in the proposed incentive system should be carefully watched to ensure that states operate a balanced Child Support Enforcement Program. Continuing to cap incentives for ''never welfare'' collections at some percentage of ''welfare/former welfare'' collections will keep states focused on improving their performance on behalf of the neediest families, as well as support services to families who have never received public assistance.
Our second concern is with the phase-in period. The Secretary's proposal significantly changes the way child support program performance is evaluated and rewarded, and therefore how programs will be structured to maximize funding. There is potential for significant swings in funding, with some states realizing large increases and others losing substantial amounts in the space of a single year. It is not clear that either scenario will lead to good program outcomes across the nation. We would recommend that the effects of the transition to the new system be mitigated, such as by limiting the year-to-year changes during the first five years of its implementation, so that the Secretary can monitor the impact that the new system is having on the program's goals. Further, we would request that the study of the effects of the new system not be held off until after implementation is complete, but rather be ongoing. In particular, we would urge that program performance be evaluated separately for the ''never welfare'' and ''current and former welfare'' segments of the population to ensure that services are not deteriorating in one, in favor of the other.
Page 186 PREV PAGE TOP OF DOC Further, the incentive proposal will require different reporting of data and, in some instances, a redefinition of data elements we now report. This work is going on right now. A federal-state work group is meeting September 810, 1997 in San Francisco to revise the reporting forms and instructions that will be needed to implement the Secretary's plan. Then will come the lengthy internal and external review and approval processes, before the documents can be released to states for reprogramming their automated systems to accommodate the changes. Whether all of this can be done in time to begin reporting in the new way by October 1, 1998 is questionable. Absent sound data reported uniformly from all states, the new incentive system will lack credibility. Whether a state has a certified child support automated system is not the issue; it is whether the state can modify its reporting mechanisms to provide accurate data that will be required to support the incentive model.
In conclusion, we are hopeful that the concerns we raise can be addressed as we move forward together to improve the Child Support Enforcement Program nationwide. This is truly a national program, in that about one-third of our caseload involves people living in different states, and the ability of one state to marshall resources affects the likelihood of success in all. We are particularly concerned that we not lose sight of the needs of the poorest families who use our services in the effort to maximize state revenues. As welfare collections decline and incentives for ''never welfare'' collections grow, state profits will soar and federal revenues from recovered costs of public assistance will plummet. I urge that Congress take the long view of maintaining a strong Child Support Enforcement Program as a partner in helping families achieve self-sufficiency, as envisioned by the Personal Responsibility and Work Opportunity Reconciliation Act, and keep a close watch over the effects of this new incentive system on states' efforts to meet that challenge.
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Statement of E. Pete Adams, Louisiana District Attorneys' Association
When Congress created a national child support program in 1975 by enacting Title IVD of the Social Security Act, the role of Louisiana's District Attorneys was also greatly enhanced. In Louisiana, District Attorneys had been prosecuting criminal neglect of family cases for many years, and were familiar with the devastating effects that nonpayment of support obligations had upon families and particularly, children. District Attorneys were therefore a natural partner for providing child support services to the public, and agreed to share the cost. As a result of this commitment, Louisiana's Department of Social Services, Office of Support Enforcement Services began to contract with them to establish, collect and enforce past and present support obligations.
That partnership has been a success for more than two decades. In FY 95/96, the State of Louisiana, through the IVD program, collected over $153 million in child support obligations on behalf of Louisiana's children. In FY 96/97, that figure swelled to over $169 million. Louisiana's District Attorneys were vital in that accomplishment.
In exchange for providing these services to the public, the State of Louisiana agreed to reimburse District Attorneys for their reasonable operating costs, up to the prevailing rate of federal financial participation (currently 66%). The remaining 34% in expenditures is borne by each District Attorney who participates in the program. Additionally, District Attorneys receive monthly incentive payments which are based upon a percentage of AFDC collections and non-AFDC collections, and are calculated according to 45 CFR 303.52. Incentive payments are received only in cases in which the District Attorney:
Page 188 PREV PAGE TOP OF DOC 1. Obtained or was a party to obtaining or entering a legally enforceable order of child and/or medical support;
2. Amended or was a party to amending an existing judgment which allows the IVD program to receive any support payments;
3. Obtained or was a party to obtaining a legally enforceable and binding agreement for support; and/or
4. Enforces a judgment, income assignment order or binding agreement for support within the terms of their contract.
District Attorneys in Louisiana have remained committed to the child support program, and have continued to effectively serve those who request help in an efficient and professional manner through the 1985 and 1996 major revisions to the program.
Louisiana State Policy requires that all contracting District Attorneys operate within federal law, federal regulations, state law and state policy. These laws, regulations and policies are part of the contract that each participating District Attorney executes with the State Office of Support Enforcement Services. Additionally, the Federal Office of Child Support Enforcement (OCSE) Audit Division performs periodic audits of each state's IVD program. Federal OMB Circular A87 on Cost Principles controls those costs which can be reimbursed.
Under the current incentive system, the use of incentive payments is discretionary, and they may be expended for any lawful purpose. However, the proposed federal legislation for implementing a new incentive system provides as follows:
''(g) REINVESTMENT.A State to which a payment is made under this section shall expend the full amount of the payment to carry out the State plan approved under this part.''
District Attorneys occupy a unique position with respect to child support in Louisiana. Parents have come to depend heavily on them to obtain the support their children need and deserve. With sixty-four (64) offices throughout the state, District Attorneys provide a vital local point of service that no other entity can duplicate. It is also unquestioned that District Attorneys perform these services at a significantly lower cost than if the State solely provided them. This economy combined with local points of service allows for increased attention to be given to individual cases, and for services to be provided to needy children and families with greater expediency.
Page 189 PREV PAGE TOP OF DOC As a contract provider of child support services, Louisiana's District Attorneys are critically dependent upon the discretionary incentives they receive. Not only do District Attorneys use these funds to enhance the quality of the child support services they provide, they are also used to improve the criminal justice system overall. Often, these funds are used to hire additional staff and to provide legal and other forms of training for District Attorney employees. Additionally, District Attorneys dedicate incentive payments toward a number of special programs in the areas of victim assistance, domestic violence, juvenile and other educational and outreach programs within their communitiesprograms which could otherwise not exist.
It is imperative that Louisiana's District Attorneys have the appropriate tools and funding to enable them to continue to perform these important public services which benefit the criminal justice system overall. Should the reinvestment provision of the new incentive system limit the discretionary nature of incentive funds for District Attorneys, the ramifications in many offices will be severe. The greatest loss would be an immediate reduction in the number of District Attorneys willing to provide these services by cooperative agreement.
The District Attorneys of Louisiana urge the House Subcommittee on Human Resources to consider language which would not hinder the use of incentive payments for District Attorneys. The overall impact that limiting the use of these funds would have on prosecutors cannot be underestimated.
National Child Support
Page 190 PREV PAGE TOP OF DOCEnforcement Association
September 12, 1997
A.L. Singleton, Chief of Staff
Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, DC 20515
Dear Mr. Singleton:
Thank you for the opportunity to submit written statements for consideration by the Subcommittee and for inclusion in the printed record. I am submitting Resolutions of the National Child Support Enforcement Association (NCSEA), adopted by the Board of Directors at their annual meeting last month in Phoenix. These resolutions directly address both subjects of your September 10 hearing: the Administration's proposal for a reformed child support incentives system and child support automatic data processing requirements.
The attached NCSEA Resolutions include:
Resolution Regarding the Secretary's March 1997 Report to Congress on Child support Enforcement Incentives
Resolution Regarding IVD Automated Systems
Endorsement of the American Public Welfare Association (APWA) resolution on the federal government's role in human services information management.
NCSEA represents child support professionals from all aspects of the Nation's child support program including State Administrators/Directors, Judges and Hearing Officers, Prosecutors, Caseworkers, and Corporate Associates, among others. Our mission is to protect children's well being through effective child support enforcement. We thank you again for your consideration. Please advise if we can be of assistance.
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Joel K. Bankes
cc: Honorable E. Clay Shaw, Jr.
Endorsement of Resolution of American
Public Welfare Association
August 26, 1997
The National Child Support Enforcement Association (NCSEA) endorses the July 23, 1997, resolution of the American Public Welfare Association (APWA) on the federal government's role in human services information management, which resolved:
That the National Council of State Human Service Administrators calls on the federal government to fundamentally alter its philosophy toward human service information systems development, financing, procurement, regulation, and systems approval with a particular focus on integrating automation into the overall strategic plan of the human service program; and
Page 192 PREV PAGE TOP OF DOC That the Council urges the federal government to establish, in cooperation with APWA and states, a state-federal information technology partnership with strong involvement of the state program and information systems staff to submit recommendations to the Administration and Congress, as appropriate, that address current barriers and solutions to information systems development with a focus on reengineering the systems approval process.
NCSEA further resolves to urge the federal government to include NCSEA representatives in these discussions.
Information technology systems should support the business of the child support enforcement program. The current systems development effort has driven states to focus on meeting the prescriptive certification requirements, not necessarily to focus on improving program efficiency and effectiveness.
State human service programs must develop strategic plans which address integrating information technology into service delivery, as well as appropriate system development itself in a strategic way to ensure program goals are met in a cost-effective manner.
Current federal compliance requirements related to system development are very specific; consequences of noncompliance are vague. Policies, where existent, appear to require DHHS to impose severe financial penalties on states in the event of non-compliance, insuring states cannot meet these requirements.
The National Council of State Human Service Administrators in a March 24, 1993, resolution called for a paradigm shift in the way that the federal government requires states to conduct business that involves information systems development and technology and resulted in the formation of a state-federal information technology (IT) partnership (including representatives from APWAISM, APWA, the National Association of State Information Resource Executives, and federal agencies) that identified both short-term and long-term IT goals, with both the federal government and states committing to their implementation.
Page 193 PREV PAGE TOP OF DOC NCSEA supports the work of the APWA in encouraging a shift in the way the federal government approaches system development efforts.
Resolution Regarding the Secretary's March 1997 Report to Congress
on Child Support Enforcement Incentives
August 26, 1997
The National Child Support Enforcement Association resolves that:
An alternative phase-in plan to that proposed in the Secretary's Report to Congress be implemented to take into account and mitigate the immediate negative impact upon states of the proposed incentive formula by limiting the amount of the increase or decrease to a state's incentives to a specific percent increase or decrease from a base year. The base year may be the same base year selected by the state for the purposes of TANF block grant funding. We further support the exclusive use of the new formula beginning in the first year of implementation, phased in as described above.
Costs associated with the inclusion of non IVD cases in the state case registry and non IVD payment processing be excluded from the cost effectiveness ratio, unless non IVD collections are included in the collections base.
Persons who under previous welfare policies would have been found eligible for cash assistance, but who are being diverted from public assistance as a result of welfare reform, be included as TANF/Former TANF cases for the purpose of establishing the collections base, if this can be done in a cost-neutral manner and is technically feasible.
Page 194 PREV PAGE TOP OF DOC As part of the ongoing review of the incentive formula, the Secretary conduct an analysis which would calculate state achievement on the performance measures separately for TANF/Former TANF populations and for ''never TANF'' populations to determine the effects of the new incentive formula on these populations.
NCSEA endorses the process utilized by the Secretary for the development of the incentive proposal. NCSEA endorses the overall outcome of the incentive proposal and particularly the specific performance measures contained therein. The Work Group of IVD Directors and federal officials did not have adequate time to consider certain issues that may have a significant impact on states. Based on data available at this time, it appears that some states will experience incentive losses of a magnitude that would seriously impair the ability of those states to serve families and to improve their programs. Furthermore, given the interstate nature of the child support program, a negative impact on any one state will affect all other states. The resolutions outlined above are designed to promote a successful implementation of the new incentive formula while attempting to avoid inadvertent negative impacts to the program. It is also imperative that the new formula be enacted this year to enable states to have adequate lead time to prepare for the changes to automation and operation.
Resolution Regarding IVD Automated Systems
Page 195 PREV PAGE TOP OF DOC
August 28, 1997
Be it resolved that the National Child Support Enforcement Association calls on the Administration and Congress to:
1. Change the child support information systems State Plan disallowance process to allow for a corrective action plan (CAP) that permits continued federal funding during the CAP period:
2. For purposes of the CAP and future system requirements, change the state system certification requirements to focus on expected program outcomes rather than specifying specific architectural design requirements to assure the best results from state and federal investments in technology; and
3. Allow a state to link Title IVD automated systems if the linkage results in a seamless uniform system that meets the current program requirements and the state child support agency determines, after considering such factors as cost-effectiveness, caseload size and customer orientation, that linking systems is the most practical way to meet requirements.
A number of states believe they will not meet the October 1, 1997, certification deadline for implementing Family Support Act systems. According to a July 1997 General Accounting Office report, states comprising up to 55 percent of the nation's Child Support Enforcement Program caseload will face immediate penalties and federal funding reductions, which will cripple program services to the point that they will not be able to support self-sufficiency programs.
Page 196 PREV PAGE TOP OF DOC Causes of states' inability to meet the statutory deadline are numerous and shared among federal, state, county and private sector partners, including:
federal barriers, such as the transfer requirement and prescriptive process-oriented certification criteria;
changes in regulations and federal requirements (i.e., the transfer requirement made optional too late, changes in the certification guidelines and regulations), Congressional mandates, technologies, and management;
lengthy processes for state procurement and federal approval of vendor contracts;
a shortage of talented and experienced technical staff and project and executive managers among states, the federal government, and vendors;
vendor inability to complete contracted work to specifications or within time frames;
the significant length of time needed to convert large caseloads to a new system; and
difficulty for states to achieve political consensus, despite the federal mandate.
Systems development in the private and public sectors is a complex, lengthy process. Failures are public and painful, such as the recently revealed difficulties the Internal Revenue Service has had in updating its antiquated system. The following data on private computer development and implementation projects illustrate the risk(see footnote 33)
many large projects requiring extensive software design and development, system integration, and large outsourcing tend to fail;
Page 197 PREV PAGE TOP OF DOC 30%50% of large computer implementations (over $1 million) fail in some manner;
only 10%16% of large projects meet deadlines and budget;
almost 30% are canceled before completed; and
over 50% of software projects overran estimates by 189%, costing U.S. companies $59 billion a year in 1994.
To further complicate systems development in the Child Support Enforcement Program, the Department of Human Services prescribed, through its certification requirements and other regulatory and policy materials, specific systems architectural and software configurations, which were developed based on technology known during the 1980's but which are not necessarily appropriate in light of current technology. These requirements put states in the position of developing systems to meet certification requirements rather than to accomplish the mission of the child support program.
Although most states have yet to achieve full systems certification, the Child Support Enforcement Program continues to make significant improvements. Governors across the nation laud the increases their states have achieved in collections (99.6% increase from FFY 1990 to 1996) and paternities established (154.9% increase from FFY 1990 to 1996).
Despite these programmatic improvements, a strict interpretation of existing law, regulation and policy would result in a loss of federal funds for states' child support programs of between 1% and 5% of a state's TANF block grant funds, as well as all of its IVD (child support) administrative funds. These penalties would pose significant fiscal difficulties for states and ensure a reversal of the program improvements realized to date. Currently, there is no corrective action process by which DHHS can pursue alternate methods of achieving compliance with these requirements, other than withholding significant amounts of federal funds.
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(Footnote 1 return)
The Child Support Enforcement Program: Policy and Practice, US Congress, House Committee on Ways and Means, Subcommittee on Human Resources (report prepared by the Congressional Research Service), 101st Cong., 1st sess., 1989, Committee Print WMCP 10119.
(Footnote 2 return)
GAO/HRD9280, Medicaid: Ensuring that Noncustodial Parents Provide Insurance Can Save Costs, June 1992 at 1, 78.
(Footnote 3 return)
US Bureau of the Census, March Current Population Surveys, 1990, 1995 and 1996.
(Footnote 4 return)
GAO, Child Support Enforcement: Reorienting Management Toward Achieving Better Program Results, GAO/HEHS/GGD9714, October 1996 at 67.
(Footnote 5 return)
GAO, Child Support Enforcement: Reorienting Management Toward Achieving Better Program Results at 34.
(Footnote 6 return)
GAO, Child Support Enforcement: Families Could Benefit From Stronger Enforcement Program, GAO/HEHS9524, December 1994 at 46.
(Footnote 7 return)
The bottom line in child support is that you get what you pay for. When CDF ranked state child support performance using OCSE data, we found a significant relationship between how much states invest per case and how many cases have at least some child support collected. For example, in FY 1992, of the four states with the highest expenditures per case, three led the country in percentage of cases with any collection. Conversely, the four states with the lowest expenditures per case had among the worst collections records. These states ranked 48th, 34th, 46th, and 43rd in the country in percentage of cases with any collection. Ebb, Enforcing Child Support: Are States Doing the Job?, June 1994 at 8.
(Footnote 8 return)
Child Support Enforcement: Strong Leadership Required to Maximize Benefits of Automated Systems (GAO/AIMD9772, June 30, 1997).
(Footnote 9 return)
Effective July 1, 1997, AFDC was replaced by TANFTemporary Assistance for Needy Familiesin block-grant form.
(Footnote 10 return)
These functions include case initiation, case management, financial management, enforcement, security, privacy, and reportingall requirements that can help locate noncustodial parents and monitor child support cases.
(Footnote 11 return)
Child Support Enforcement: Timely Action Needed to Correct Systems Development Problems (GAO/IMTEC9246, Aug. 13, 1992).
(Footnote 12 return)
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
(Footnote 13 return)
The Year 2000 problem arises because many computer systems were designed such that using ''00'' to signify the year can be read as 1900, rather than 2000. See Year 2000 Computing Crisis: Time Is Running Out for Federal Agencies to Prepare for the New Millennium (GAO/TAIMD97129, July 10, 1997).
(Footnote 14 return)
1995 is the last available year for which data has been made available. Data is from U.S. Department of Health and Human Services (HHS), Child Support Enforcement: 20th Annual Report to Congress For the Period Ending September 30, 1995, and preceding annual reports.
(Footnote 15 return)
HHS, Office of Inspector General, Implementation of State Child Support Certified Data Systems, OEI049600010 (April 1997).
(Footnote 16 return)
U.S. General Accounting Office, Child Support Enforcement: Strong Leadership Required to Maximize Benefits of Automated Systems, GAO/AIMD9772 (June 1997).
(Footnote 17 return)
State of California, Little Hoover Commission, Enforcing Child Support: Parental Duty, Public Priority (May 1997), 84.
(Footnote 18 return)
The plan disapproval process was recently described in an HHS action transmittal to states, OCSEAT9705 (April 28, 1997).
(Footnote 19 return)
Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) (P.L. 104193), enacted into law on August 22, 1996.
(Footnote 20 return)
See Appendix A for details about the federal approval process and inherent barriers.
(Footnote 21 return)
Strict interpretation of existing law and regulation could result in a loss of federal funds for states' child support programs of both a state's TANF block grant funds, as well as all of its child support administrative funds.
(Footnote 22 return)
Title IVD of the Social Security Act authorizes the federal and state child support programs.
(Footnote 23 return)
See Appendix B for an explanation of the difference between statewideness and single statewide system.
(Footnote 24 return)
The transfer requirement directed states implementing an automated system to acquire it by locating and using an federally-approved information system already operating in another state.
(Footnote 25 return)
Source: David Wright Tremaine LLP, compiled from original sources.
(Footnote 26 return)
As mentioned in footnote 2 above, see Appendix A for details about the federal approval process and inherent barriers.
(Footnote 27 return)
See Appendix C for copy of APWA letter to Assistant Secretary Olivia Golden urging establishment of such a process.
(Footnote 28 return)
The IT partnership included representatives from the APWA-Information Systems Management Affiliate, APWA, the National Association of State Information Resource Executives, and federal agencies including HHS Office of Systems, the HHS Health Care Financing Administration, and the USDA Food and Consumer Service (the federal agency that funds the state-administered Food Stamp Program).
(Footnote 29 return)
See Appendix D for a copy of the Administration's policy statement, HHS/FNS Action Transmittal 945.
(Footnote 30 return)
See Appendix E for APWA Resolution from March 1, 1995 calling to make proprietary rights an option.
(Footnote 31 return)
See Appendix F for a list of options and ideas states have generated as discussion items for developing solutions to address systems problems.
(Footnote 32 return)
This summary of APDs and certification is based on information in the HHS September 1996 State Systems APD Guide and the June 1993 HHS document, ''Automated Systems for Child Support Enforcement: A Guide for States.''
(Footnote 33 return)
Source: David Wright Tremaine, LLP, compiled from original sources.