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on Undistributed Collections Are Needed' which was released on April 
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Report to the Chairman, Committee on Finance, U.S. Senate:

United States General Accounting Office:

GAO:

March 2004:

Child Support Enforcement:

Better Data and More Information on Undistributed Collections Are 
Needed:

GAO-04-377:

GAO Highlights:

Highlights of GAO-04-377, a report to the Chairman, Committee on 
Finance, U.S. Senate 

Why GAO Did This Study:

Congress established the child support enforcement program in 1975 to 
ensure that parents financially supported their children. State 
agencies administer the program and the Office of Child Support 
Enforcement (OCSE) in the Department of Health and Human Services 
oversees it. In 2002, state agencies collected over $20 billion in 
child support, but $657 million in collections from 2002 and previous 
years were undistributed—funds that were delayed or never reached 
families. One method used to collect child support, intercepting 
federal tax refunds, involves all state agencies, OCSE, and two 
Department of the Treasury agencies—the Internal Revenue Service (IRS) 
and the Financial Management Service (FMS). GAO was asked to address 
(1) how the total amount of undistributed collections changed over the 
years, (2) the causes of undistributed collections, (3) states’ efforts 
to reduce these funds, and (4) OCSE’s efforts to assist states. GAO 
analyzed OCSE data, administered a survey, visited 6 state agencies and 
interviewed officials. 

What GAO Found:

OCSE reported that the amount of undistributed collections for fiscal 
year 1999 was $545 million and $657 million for fiscal year 2002; 
however, these amounts may not be accurate. State agencies had 
different interpretations of what comprised undistributed collections 
and data reported by several state agencies were found to be unreliable 
throughout this time period. OCSE revised the reporting form, but data 
accuracy concerns remain, in part, because OCSE does not have a process 
to ensure the accuracy of undistributed collections data. 

Federal law, some state policies, and inaccurate or missing information 
were the underlying causes of nearly all types of undistributed 
collections. State agencies determined how long they held collections 
from joint tax refunds and if they held collections received before 
they were due. Federal law allows collections intercepted from joint 
tax refunds to be held for up to 180 days and in response to GAO’s 
survey, 34 state agencies reported holding them for 180 days. Missing 
or inaccurate information, such as invalid addresses, also leads to 
undistributed collections. Based on state agencies’ survey responses, 
GAO determined the median value of the undistributed collections from 
joint tax refunds was about $1.8 million and the median value of four 
other types of undistributed collections exceeded $350,000.

State agencies GAO visited took steps to better understand and reduce 
undistributed collections. Of the 6 state agencies visited, 5 had 
analyzed their undistributed collections cases, 4 adopted performance 
goals, and officials from all 6 state agencies stressed the importance
of researching collections that were missing information. In addition, 
officials stated that using automated processes to receive and 
distribute collections helped reduce the number of collections with 
missing or inaccurate information. 

OCSE has provided some assistance to help state agencies reduce their 
undistributed collections. However, the Department of the Treasury has 
not provided OCSE information that would allow state agencies to 
distribute collections from joint tax refunds to families sooner. 
Further, OCSE’s efforts to obtain this information have been minimal.

What GAO Recommends:

GAO recommends that OCSE periodically review undistributed collections 
data and that OCSE, IRS, and FMS work together to identify a way to 
share information on collections held from joint tax refunds. OCSE did 
not explicitly agree or disagree with the recommendations. IRS and FMS 
agreed with the recommendation.

www.gao.gov/cgi-bin/getrpt?GAO-04-377.

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Cornelia M. Ashby at 
(202) 512-7215 or ashbyc@gao.gov).

[End of section]

Contents:

Letter:

Results in Brief:

Background:

OCSE Reported Millions in Undistributed Collections, but Data Were 
Unreliable:

Federal Law, Some State Policies, and Inaccurate, or Missing 
Information Delayed or Prevented Distribution of Certain Collections:

State Agencies Took Steps to Reduce Undistributed Collections:

OCSE Has Assisted States' Efforts to Reduce Undistributed Collections, 
but the Department of the Treasury Has Not Provided Information That 
Would Help States Distribute Collections from Some Joint Tax Refunds 
Sooner:

Conclusion:

Recommendations for Executive Action:

Agency Comments and Our Evaluation:

Appendix I: Scope and Methodology:

Appendix II: Survey of State Directors of Child Support Enforcement:

Appendix III: Comments from the Department of Health and Human 
Services:

Appendix IV: Comments from the Department of the Treasury:

Appendix V: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Staff Acknowledgments:

Tables:

Table 1: Amount of Tax Refund Offset Collections from 1999 to 2002:

Table 2: Categories and Types of Collections to Be Reported as 
Undistributed:

Table 3: Overestimates of Undistributed Collections and Year Reported:

Table 4: Time Period Collections from Joint Tax Refunds Are Held:

Table 5: Amounts for Nine Types of Undistributed Collections Reported 
by State Agencies as of June 30, 2003:

Table 6: Summary of State Agencies' Responses Regarding the Helpfulness 
of OCSE Efforts:

Figures:

Figure 1: Types of Collections and Number of State Agencies That 
Included Them in Undistributed Collections Reported to OCSE:

Figure 2: Number of Years State Agencies Reported Holding Collections 
before Declaring Them Abandoned Property:

Figure 3: Portion of Collections Distributed to Parents Electronically:

Abbreviations:

CSE: Child Support Enforcement:

EFT: Electronic Funds Transfer:

FMS: Financial Management Service:

FPLS: Federal Parent Locator Service:

HHS: Department of Health and Human Services:

IRS: Internal Revenue Service:

OCSE: Office of Child Support Enforcement:

PRWORA: Personal Responsibility and Work Opportunity Reconciliation Act:

TANF: Temporary Assistance to Needy Families:

TOP: Treasury Offset Program:

United States General Accounting Office:

Washington, DC 20548:

March 19, 2004:

The Honorable Charles E. Grassley: 
Chairman: 
Committee on Finance: 
United States Senate:

Dear Mr. Chairman:

In 2002, the Office of Child Support Enforcement (OCSE), in the 
Department of Health and Human Services, reported that billions of 
dollars in child support were collected but that payments totaling $657 
million were delayed or never reached the families for whom they were 
intended. These undistributed child support payments are a concern 
because child support is an important source of income for many 
families. According to a 2003 report, for 36 percent of poor children 
living in families headed by single mothers, child support payments 
comprised almost one-third of the family's income in 2001. The 1996 
Personal Responsibility and Work Opportunity Reconciliation Act 
(PRWORA)[Footnote 1] generally requires state child support enforcement 
agencies to disburse child support collections within 2 business days, 
if sufficient information identifying the recipient is provided. In 
addition, portions of child support collections must be distributed to 
state government programs, such as Temporary Assistance to Needy 
Families (TANF), to reimburse them for cash assistance provided to 
families.

Although state child support enforcement agencies administer the child 
support program, the federal government plays a major role.[Footnote 2] 
OCSE funds two-thirds of the program's administrative costs; 
establishes policies and guidance; provides technical assistance, such 
as designing curricula and providing support for staff training; and 
oversees and monitors state agencies. Additionally, OCSE is responsible 
for taking the necessary steps to help resolve issues at the federal 
level that affect the child support program such as processes that 
prevent child support payments from reaching families in a timely 
manner. OCSE and state agencies collect child support through various 
methods, such as intercepting the federal tax refunds of noncustodial 
parents--parents who do not have primary care, custody, or control of 
their children--who are delinquent in paying their child 
support.[Footnote 3] If the noncustodial parent has a new spouse and 
files a joint tax return, generally, only the portion of the refund due 
to the noncustodial parent should be intercepted. Federal law allows 
state agencies to hold collections from certain intercepted federal 
joint tax refunds for up to 6 months to provide time for the new spouse 
to ask for his or her share of the refund by filing an "injured spouse" 
claim with the Department of the Treasury.

In an effort to understand the issues associated with undistributed 
child support collections, you requested that we address the following 
questions: (1) How has the total amount of undistributed collections 
changed in the last few years? (2) What are the causes of undistributed 
collections? (3) What are state agencies doing to reduce undistributed 
collections? (4) How has OCSE assisted state agencies' efforts to 
reduce the amount of undistributed collections?

We obtained information from several sources that provided some data 
for all of the objectives. We conducted a mail survey of all 54 IV-D 
child support enforcement agencies. Forty-eight state agencies 
responded to the survey. We did not assess the reliability of the data 
the state agencies reported in response to our survey. However, we 
reviewed the data for completeness and reasonableness. We conducted 
site visits to 6 state agencies. We selected California, Florida, Iowa, 
New York, Texas, and Virginia because they represented diversity in 
amounts of undistributed collections, and geographical location, and 
they provided examples of statewide and county administered programs. 
We interviewed federal and state officials, reviewed related reports 
and analyzed applicable laws and regulations. In addition, we took 
specific steps to address each of the objectives. To address how 
undistributed collections have changed, we analyzed OCSE data for 
fiscal years 1999 to 2002 reported by state agencies. The fiscal year 
1999 data was the earliest year with data comparable to fiscal year 
2002; the most current data available at the time of our review. We 
assessed the reliability of undistributed collections data reported to 
OCSE and found that the data were inconsistent and unreliable. We also 
reviewed state and federal reports that discussed issues associated 
with calculating and reporting undistributed collections. To identify 
the causes of undistributed collections, steps state agencies have 
taken to reduce undistributed collections, and assistance OCSE has 
provided to state agencies, we reviewed relevant research and audit 
reports; examined OCSE guidance and documents related to funded 
projects; and interviewed child support advocates and experts.

We conducted our work between May 2003 and March 2004 in accordance 
with generally accepted government auditing standards. See appendix I 
for more details on our scope and methodology and appendix II for a 
copy of our survey.

Results in Brief:

OCSE reported that the amount of undistributed collections for fiscal 
year 1999 was $545 million and $657 million for fiscal year 2002; 
however, these amounts may not be accurate because state agencies had 
different interpretations of what comprised undistributed collections 
and data reported by several state agencies were found to be unreliable 
throughout this time period. A little more than half of the 48 state 
agencies that responded to our survey reported that they included 
collections they would distribute in the next 2 business days and 
collections to be distributed to other government programs, while the 
others did not. In its 2002 preliminary annual report, OCSE 
acknowledged the limitations of its data due to reporting discrepancies 
and has revised the reporting form and related instructions to provide 
state agencies with uniform definitions of undistributed collections. 
However, even with a new form and uniform definitions, concerns remain 
about data accuracy within state agencies. For example, 1 state 
reported in 2003 that it had overestimated its undistributed 
collections amount by more than $160 million due to accounting errors. 
Data accuracy concerns remain, in part, because OCSE does not verify or 
periodically review undistributed collections data as it does other 
performance and financial data.

Federal law and some state policies as well as inaccurate or missing 
information were underlying causes for nearly all undistributed 
collections. Federal law allows collections from joint tax refunds to 
be held for up to 180 days. In response to our survey, 34 state 
agencies reported that they held these collections for 180 days. 
Inaccurate or missing case information also contributed to 
undistributed collections. For example, information needed to determine 
the correct amount of the collection to be distributed to custodial 
parents who are current or former TANF recipients was sometimes 
incorrect or missing, which caused payments to be delayed. 
Additionally, invalid addresses for custodial parents caused payments 
to be returned. Our analysis of state agency survey data found that 
many state agencies reported holding more that $1 million from joint 
tax refunds and several hundred thousand dollars in other types of 
collections.

To better understand and reduce undistributed collections, state 
agencies we visited devoted resources to analyzing and resolving their 
undistributed collections, established performance goals, and 
encouraged the use of automated payment processes. Nearly all of the 
state agencies we visited conducted extensive analyses of the specific 
causes of undistributed collections. For example, 1 state agency 
commissioned a study with a private firm to determine the causes of 
undistributed collections based on a review of thousands of cases. Four 
state agencies adopted specific performance goals and 1 state agency 
had a goal to maintain an undistributed collections balance of no more 
than 1 percent of total collections. State agencies we visited 
highlighted the importance of dedicating staff to resolving cases with 
missing information and invalid addresses for custodial parents. 
Additionally, state agencies reported that the increased use of 
electronic processes for receiving and distributing funds reduced the 
amount of undistributed collections because fewer collections had 
missing or inaccurate information. Thirty-seven state agencies reported 
using direct deposit to distribute child support payments and 9 state 
agencies reported using debit cards, which work like other automated 
teller machine cards, credited with the child support payments. 
Officials from 2 state agencies we visited told us that these processes 
reduced the cost of operating the program. For example, officials from 
1 state agency reported saving over $300,000 per month with the use of 
direct deposit.

OCSE has provided some assistance to help state agencies reduce 
undistributed collections, but does not have the information needed to 
help reduce undistributed collections from some joint tax refunds. OCSE 
has focused attention on reducing undistributed collections, shared 
best practices and information with state agencies at child support 
conferences, and funded several projects related to undistributed 
collections. To address one of the causes of undistributed collections, 
in March 2003, OCSE issued guidance informing the state child support 
enforcement program directors that they could use the Federal Parent 
Locator Service (FPLS)--a computer matching system with access to 
federal information sources--to help locate custodial parents. However, 
the Department of the Treasury has not provided OCSE with some 
information on "injured spouse" claims filed with tax returns and 
resolved, that would allow state agencies to more quickly distribute 
collections from joint tax refunds. OCSE's efforts to obtain more 
information on "injured spouse" claims have been minimal.

In this report, we are recommending that the Secretary of Health and 
Human Services (HHS) direct the Commissioner of the Office of Child 
Support Enforcement to periodically review undistributed collections 
data from state agencies to help improve the accuracy of the data; and 
we are also recommending that the Secretary of Health and Human 
Services and the Secretary of the Treasury work together to identify a 
cost-effective approach for obtaining information related to 
intercepted tax refunds so that these collections can be distributed to 
families sooner.

The Department of Health and Human Services and the Department of the 
Treasury provided written comments on a draft of this report. In 
commenting on the draft, the Department of Health and Human Services 
did not explicitly agree or disagree with our recommendations, but 
raised concerns about implementing them. The Department of the Treasury 
agreed with our recommendation. Copies of the written comments from the 
Department of Health and Human Services are in appendix III and the 
comments from the Department of the Treasury are in appendix IV.

Background:

Child support is not legally owed until a child support order is issued 
that stipulates the amount the legally identified noncustodial parent-
-the parent who does not have primary care, custody, or control of the 
child--is required to pay and when these payments are due. The Child 
Support Enforcement (CSE) program, established in 1975 under Title IV-
D of the Social Security Act,[Footnote 4] established federal standards 
for state CSE programs to ensure that parents provide support to their 
children. Services provided through the CSE program include locating 
absent noncustodial parents, establishing paternity and support orders, 
and collecting and distributing child support payments. All 50 states, 
the District of Columbia, Guam, Puerto Rico, and the Virgin Islands 
operate CSE programs.However, many aspects of implementing the child 
support program are generally under the purview of the state rather 
than the federal government.

For fiscal year 2002, OCSE reported over 16 million child support cases 
and collections of more than $20 billion. One method for collecting 
child support is intercepting federal tax refunds. Congress enacted the 
Federal Tax Refund Offset program in 1981.[Footnote 5] Initially the 
Internal Revenue Service (IRS), an agency within the Department of the 
Treasury, OCSE, and the state agencies operated the program. In 1998 
the Financial Management Service (FMS), another agency within the 
Department of the Treasury, assumed primary responsibility for the 
program. Now, all state agencies, OCSE, IRS, and FMS play a role in the 
program. Table 1 shows the amount of collections offset from tax 
refunds from 1999 to 2002.

Table 1: Amount of Tax Refund Offset Collections from 1999 to 2002:

Calendar year: 1999; 
Child support offsets (in billions): $1.3.

Calendar year: 2000; 
Child support offsets (in billions): $1.4.

Calendar year: 2001; 
Child support offsets (in billions): $1.7.

Calendar year: 2002; 
Child support offsets (in billions): $1.5.

Source: OCSE.

[End of table]

To start the offset process, state agencies identify those noncustodial 
parents that meet the program criteria. For example, for non-TANF 
cases, the amount of past due support the noncustodial parent owes must 
be at least $500. The state agencies, or OCSE on behalf of the state 
agencies, must send a written notice to the noncustodial parent at 
least 30 days in advance of sending his or her name to OCSE for the 
offset program. This notice includes, among other things, information 
about filing "injured spouse claims."[Footnote 6] State agencies send 
OCSE the names of the eligible noncustodial parents and the amount owed 
and OCSE transmits this information to FMS. FMS adds this information 
to its debtor file that includes information on those who owe child 
support as well as those who owe other federal debts.[Footnote 7] IRS 
processes the tax returns, and then forwards information to FMS on 
those individuals who are due refunds. FMS compares this information to 
its debtor file and, if there is a match, offsets the refund by the 
amount of child support owed. After the refunds have been offset, FMS 
notifies the individual, and transfers the offset funds and information 
to OCSE. OCSE then distributes the funds and information to the 
appropriate state agency.

When a noncustodial spouse has filed a joint tax return, FMS may offset 
the refund if either person owes child support. FMS, acting on behalf 
of the Secretary of the Treasury, must notify OCSE, which notifies the 
state agencies when the withholding is being made from a refund based 
on a joint return, and provides the names and addresses of each 
taxpayer. Under these circumstances, the state agency is permitted to 
delay distribution of the amount withheld until the Secretary of the 
Treasury notifies the state agency that the spouse has received his or 
her proper share of the refund. This delay may not exceed 6 months. 
However, the law allows a spouse 6 years to file an "injured spouse" 
claim. If the spouse files a timely "injured spouse" claim and is found 
to be entitled to a portion of the withheld amount, IRS will process 
the claim and allocate the appropriate amount to each person. If the 
spouse's claim is filed after the funds have been forwarded to the 
state agency, and the spouse is found to be entitled to a portion of 
the withheld amount, FMS sends the spouse his or her portion and the 
state agencies must reimburse the Treasury. OCSE data shows that from 
March to August 2003, almost $200 million dollars were collected from 
offsets of non-TANF joint tax refunds.

PRWORA amended portions of the Social Security Act, including some 
provisions that pertained to child support enforcement. One provision 
required state agencies to establish a state disbursement unit to 
centralize collection and disbursement of child support payments in 
order to receive federal funds.[Footnote 8] In addition to distributing 
collections from noncustodial parents to custodial parents, state 
agencies also distribute collections to:

other government programs such as TANF[Footnote 9] and Foster Care 
programs[Footnote 10] as reimbursement for benefits provided to 
families. For example, as a condition of receiving temporary cash 
assistance, parents must apply for child support enforcement services 
and agree to give all or a portion of their child support to the state. 
In fiscal year 2002, OCSE reported that custodial parents who were 
receiving public assistance comprised about three million cases, and 
those who formerly received public assistance comprised about seven 
million cases.

State agencies are required to report collection and distribution 
information quarterly to OCSE through the Quarterly Report of 
Collections, Form OCSE-34A. On the form, net undistributed collections 
equal the total amount of undistributed collections, less those 
considered undistributable or abandoned property according to state 
laws.

OCSE Reported Millions in Undistributed Collections, but Data Were 
Unreliable:

OCSE has reported millions in undistributed collections from fiscal 
year 1999 to 2002, but the amounts may not be accurate. State agencies 
had different interpretations of what comprised undistributed 
collections and some state agencies reported data that were found to be 
unreliable throughout this time period. Although OCSE revised the 
reporting form for fiscal year 2004, which should improve consistency 
in the types of collections reported as undistributed, data accuracy 
remains a concern. OCSE does not audit or periodically review 
undistributed collections data as it does other performance and 
financial data.

Types of Collections Reported as Undistributed Differed:

Although OCSE reported that the amount of undistributed collections for 
fiscal year 1999 was $545 million and $657 million for fiscal year 
2002, OCSE also reported and our survey results indicated that state 
agencies varied in the types of collections they reported as 
undistributed. In its preliminary annual report for fiscal year 2002, 
OCSE acknowledged that interpretation of the data on undistributed 
collections was limited due to the variation in the types of 
collections included.[Footnote 11] This report indicated that some 
state agencies included collections to be distributed within 2 business 
days; collections received before they were due; and collections to be 
distributed to other government programs, while other state agencies 
did not. In our survey, we asked state agencies if they included these 
types of collections as well as collections to be distributed pending 
legal resolution and collections received from intercepting joint tax 
refunds. Of the 48 state agencies that responded, nearly all indicated 
that they included collections received before they were due to the 
custodial parent, collections pending legal resolution, and collections 
received from joint tax refunds. Thirty of the state agencies responded 
that they included collections to be distributed in 2 business days and 
28 state agencies included collections to be distributed to other 
government programs. Figure 1 illustrates the state responses.

Figure 1: Types of Collections and Number of State Agencies That 
Included Them in Undistributed Collections Reported to OCSE:

[See PDF for image]

[End of figure]

OCSE has taken steps to improve data consistency. OCSE revised its 34A 
form and related instructions in fiscal year 2003 to improve the 
consistency of undistributed collections data. According to OCSE 
officials, this change was also made to provide more information about 
the composition of undistributed collections. Prior to the changes, all 
collections were reported under one category, and it was not possible 
to distinguish between collections pending distribution and collections 
requiring further research in order to distribute them.

As of fiscal year 2004, state agencies are required to report total 
collections under two categories. The first category, "undistributed 
collections pending distribution," includes collections that state 
agencies reasonably expect to distribute through typical business 
processing in the future. For example, collections held because of a 
legal dispute over the amount of support owed will be distributed as 
soon as the matter is resolved. The second category, "undistributed 
collections unresolved," includes collections that require the child 
support staff to obtain more information before they can be 
distributed. These include but are not limited to collections (1) 
lacking information to match them to a case, (2) missing current 
addresses for a parent, and (3) from checks that were issued but the 
time frame for which to cash them had expired. According to OCSE 
officials, another new reporting form has been developed for use 
beginning in fiscal year 2005 that will require state agencies to 
report amounts for 10 types of undistributed collections included under 
the two categories. These officials informed us that the form is 
subject to review and approval by the Office of Management and Budget. 
Table 2 summarizes the two categories and the 10 types of collections 
to be reported as undistributed collections.

Table 2: Categories and Types of Collections to Be Reported as 
Undistributed:

Undistributed collections pending distribution: Collections that were 
received within the past 2 business days following receipt, and pending 
distribution within federal timelines; 
Undistributed collections unresolved: Unidentified collections.

Undistributed collections pending distribution: Collections being held 
for up to 6 months that were offset from non-TANF joint tax refunds; 
Undistributed collections unresolved: Collections pending the location 
of the custodial or noncustodial parent.

Undistributed collections pending distribution: Collections received 
before they were due; 
Undistributed collections unresolved: Collections initially disbursed 
by check that remain uncashed and considered stale-dated and non-
negotiable in accordance with state law and procedures.

Undistributed collections pending distribution: Collections held 
pending resolution of legal disputes and any timely appeal (Examples 
include contested paternity or dispute over the balance of support 
owed.); 
Undistributed collections unresolved: Collections with inaccurate or 
missing information. (Examples include but are not limited to 
collections received that do not correspond to the amount owed or 
collections received for accounts that have been closed or have not yet 
been opened.).

Undistributed collections pending distribution: Collections processed 
but not yet distributed to other state or federal agencies 
administering programs such as TANF; 
Undistributed collections unresolved: Other collections remaining 
undistributed. 

Source: Form OCSE-34A.

[End of table]

Some State Agencies Reported Inaccurate Amounts of Undistributed 
Collections:

In addition to differences in the types of undistributed collections 
that state agencies reported, 4 state agencies reported data accuracy 
problems in 2002 and 2003 that were found to be overestimates. The 
cumulative amounts of these undistributed collections ranged from about 
$5 million to $168 million and, according to state officials, the 
actual amounts of undistributed collections were lower than reported. 
The state agencies and the amounts of the overestimates are summarized 
in table 3.

Table 3: Overestimates of Undistributed Collections and Year Reported:

State agency: California; 
Amount of overestimate: $168,000,000[A]; 
Year reported: 2003.

State agency: Michigan; 
Amount of overestimate: $25,000,000; 
Year reported: 2002.

State agency: Missouri; 
Amount of overestimate: $5,000,000; 
Year reported: 2002.

State agency: Nebraska; 
Amount of overestimate: $5,300,000; 
Year reported: 2003. 

Source: State agencies and GAO analysis.

Note: Not all state agencies could provide information needed to 
determine the exact time period associated with these overestimates.

[A] OCSE officials reported that this amount was recalculated to be 
about $163 million and noted that this claim as well as similar claims 
from other state agencies are subject to federal review.

[End of table]

Most of the errors were accounting mistakes discovered by the state 
agencies. Officials from the California Department of Child Support 
Services reviewed the state's accounting of undistributed collections 
and found that some local officials had included collections in their 
totals multiple times because they had misinterpreted a policy. They 
thought that disbursements could only be reported if collections were 
also reported in the same period and, as a result, when they disbursed 
funds they again added these collections into their totals. This 
resulted in overstating amounts for total collections and for 
undistributed collections. Nebraska's overestimate occurred partly 
because collections received before they were due for non-TANF cases 
were immediately distributed, but the officials did not show them as 
being distributed until the official due date. In Missouri, nearly all 
of the overestimate was spousal support collected by the state 
disbursement unit that was erroneously reported as child support 
collections. For the remainder, in Missouri, when a collection from a 
joint tax refund had been distributed to a custodial parent and the 
amount was later adjusted in the same reporting quarter because of an 
"injured spouse" claim, the adjusted amount was added as a new 
collection. An audit of Michigan's child support program revealed that 
it failed to account for the distribution of payments that noncustodial 
parents paid directly to custodial parents.

The reports related to these overestimates also indicated that having 
multiple jurisdictions involved with recording collections contributed 
to the errors. Local agencies in California used forms that did not 
always include the federal data elements used by the state agency to 
report undistributed collections. Nebraska discovered errors when its 
state disbursement unit took over the collection and distribution 
process from clerks at multiple courts.

OCSE Did Not Hold State Agencies Accountable for Accurately Reporting 
Undistributed Collections:

While OCSE is required to audit some child support data, it does not 
have a process to ensure the accuracy of data on undistributed 
collections. OCSE is required to audit the reliability of the 
performance indicators used as the basis for paying financial 
incentives to state agencies.[Footnote 12] Officials told us they are 
conducting these audits annually. To ensure the reliability of the 
data, OCSE selects representative sample cases for a detailed audit and 
reviews supporting documentation to check for errors. OCSE is also 
required to conduct financial audits to determine whether federal and 
other funds used to administer the program are being appropriately 
expended and properly accounted for. These audits are required to 
include an examination of collections and disbursements of child 
support payments for proper processing and accounting treatment. 
Although OCSE's general instructions for the collection of data used 
for its annual report reminds state agencies that they should report 
reliable and complete information, OCSE officials told us they have 
only reviewed data on undistributed collections in special 
circumstances. For example, the Department of Health and Human Services 
and OCSE conducted at least three special reviews of California's 
undistributed collections data since fiscal year 1994 that revealed 
problems with the accuracy and reliability of the data. According to 
OCSE officials, the agency does not have the resources to routinely 
review data on undistributed collections in the way it reviews other 
program data.

Reviews of undistributed collections data do not have to be done the 
same way other program data are reviewed. To minimize the impact on 
OCSE's resources, the reviews of the undistributed collections data 
could be done in conjunction with one of the other routine audits and 
could be limited to a portion of the state agencies on a rotational 
basis, for example, one third of the states each year. Without more 
accurate data on undistributed collections, OCSE cannot be certain 
about the amount of collections that are not being distributed to 
families in a timely manner. Further, without accurate data, OCSE 
cannot determine whether undistributed collections are more problematic 
for certain state agencies than for others.

Federal Law, Some State Policies, and Inaccurate, or Missing 
Information Delayed or Prevented Distribution of Certain Collections:

The underlying causes for nearly all undistributed collections were 
federal law, state policies, as well as inaccurate or missing 
information. Federal law allowed state agencies to hold collections 
from joint tax refunds and state agencies set polices that guided how 
long these refunds and other collections were held. Invalid addresses 
for custodial parents or missing case information also contributed to 
undistributed collections. For example, information needed to determine 
the correct amount of the collection to be distributed to families who 
are or were receiving public assistance was sometimes inaccurate or 
missing, and delayed distribution of these collections. Our analysis of 
state agency survey data found that many state agencies reported 
holding more that $1 million from joint tax refunds and several hundred 
thousand in other types of collections.

Federal Law and State Policies Determined How Long Certain Collections 
Were Held:

Federal law and policies in some state agencies contributed to certain 
collections being counted as undistributed. While state agencies are 
generally required to distribute collections in 2 days, federal law 
allows state agencies to hold collections from joint tax refunds for up 
to 180 days. Our survey results revealed that the majority of state 
agencies held collections intercepted from joint tax refunds for 180 
days and a few distributed them in 1 to 2 days. Table 4 summarizes this 
survey data.

Table 4: Time Period Collections from Joint Tax Refunds Are Held:

Number of state agencies: 4; 
Number of days collections are held: 1-2.

Number of state agencies: 2; 
Number of days collections are held: 23-30.

Number of state agencies: 2; 
Number of days collections are held: 60[A].

Number of state agencies: 4; 
Number of days collections are held: 99-170.

Number of state agencies: 34; 
Number of days collections are held: 180[B].

Source: GAO survey.

Note: Two state agencies did not answer this question.

[A] One state indicated that it distributed these collections 60 days 
after the end of the month it received them.

[B] We converted the responses that were 6 months to 180 days. One 
state reported that it distributed collections from tax refunds within 
1 day following the 180-day hold and another state indicated 2 days, 
following the 180-day hold.

[End of table]

In addition, state agencies had policies on whether or not they held 
child support collections received before they were due.[Footnote 13] 
Depending on how early collections are received, they may be held for 
several months and counted as undistributed collections during that 
time. Twenty-one state agencies reported that they immediately 
distributed collections that were received before they were due for 
non-TANF cases and 20 state agencies reported that they held these 
collections until they were due. Seven state agencies had other 
policies. For example, 1 state agency reported that it authorized its 
case managers to distribute the collections based on the preferences of 
the custodial parent and another state reported it would hold as much 
as 1 month of support received before it was due and refund the 
remaining amount to the noncustodial parent.

State policies regarding how long undistributed collections are held 
before they are declared abandoned affects reported amounts of 
undistributed collections. Eleven state agencies reported that their 
policies require undistributed collections to be declared abandoned 
property after 1 year, while 1 state indicated its policy was to hold 
collections for up to 7 years. Eleven state agencies did not specify a 
number of years after which undistributed collections were declared 
abandoned property. Figure 5 shows the range of times reported by 44 
state agencies.

Figure 2: Number of Years State Agencies Reported Holding Collections 
before Declaring Them Abandoned Property:

[See PDF for image]

Notes: Three state agencies did not report whether or not they 
specified number of years. One state agency reported that it specified 
a number of years after which undistributed collections are 
reclassified as abandoned property, but did not indicate how many 
years.

[End of figure]

Inaccurate or Missing Information Contributed to Undistributed 
Collections:

Some undistributed collections were the result of invalid addresses for 
custodial parents or missing information. State officials told us that 
custodial parents often moved without informing the child support 
agency of their new address and that the U.S. Postal Service did not 
forward collections to new addresses, but rather returned them to the 
child support enforcement agency. According to state officials, 
noncustodial parents did not always include identifying information on 
their payments. For example, state officials said they sometimes 
received money orders from noncustodial parents that were illegible or 
lacked information, such as the case number or full name, needed to 
match them to the right case.

Missing or inaccurate information on TANF or former TANF cases 
contributed to undistributed collections. Officials from 2 state 
agencies we visited explained that some collections could not be 
distributed to the custodial parent until they determined the correct 
amount owed to the government. According to Florida officials, this 
contributed to nearly 50 percent of its approximate $28 million in 
undistributed collections. The state cited two major reasons for this 
problem: (1) data inaccuracies due to the conversion of cases from the 
former statewide system to the state agency's new automated system and 
(2) difficulties exchanging information between the automated systems 
of the child support agency processing the payments and the TANF 
agency. A 2001 report issued by the Department of Health and Human 
Services' Office of Inspector General found that 11 state agencies 
experienced difficulties in distributing child support to families 
leaving TANF.[Footnote 14] Among the reasons state agencies cited were 
problems exchanging information with TANF agencies and inaccurate 
addresses for custodial parents receiving TANF benefits. The report 
also noted that 28 of 51 state agencies surveyed reported problems with 
the automated exchanges of information between the child support 
enforcement and the TANF agencies. These problems included incompatible 
design of state TANF and child support enforcement agencies' automated 
systems and timing of information exchanges, which, according to the 
report, could have caused child support payment delays and 
underpayments after clients left the TANF program.

State officials also said that missing information from employers as 
well as inaccurate payments contributed to the amount of undistributed 
collections. For example, according to state officials, employers, 
including some federal agencies, did not always identify the cases for 
which the withheld wages were designated or mailed one check for 
multiple cases with the sum of the withheld wages not matching the 
total amount of the check.[Footnote 15] Additionally, some employers 
sent payments for more than was due. In its examination of 
undistributed collections, a report from a private firm indicated that 
in New York City, 40 percent of undistributed collections were from 
payments that were not due. In some instances employers sent inaccurate 
payments because the state agencies had not notified them that the 
amount to be withheld had changed. Such changes would be needed in 
cases such as those in which previously owed child support had been 
paid and only current support was to be withheld, or if the child had 
reached the age at which child support payments terminated. Officials 
from 1 state agency we visited, told us that they waited to notify 
employers about changes in the amount to be withheld until over-
payments had been collected. In other cases, officials told us that 
employers sent inaccurate payments because they did not always 
correctly calculate the amount to be withheld. For example, if a child 
support order stipulated that $100 was to be paid each month and $50 
were deducted in each of 26 biweekly pay periods, at the end of the 
year, the noncustodial parent would have paid $1,300 instead of the 
$1,200 that was owed. Depending on the state's policy, this $100 
overpayment could be returned to the noncustodial parent, distributed 
to the custodial parent before it was due, or held until it was due.

Many State Agencies Reported Holding More than $1 Million from Joint 
Tax Refunds and Several Hundred Thousand Dollars in Other Types of 
Undistributed Collections:

In response to our survey, 32 state agencies provided dollar amounts 
for undistributed collections from joint tax refunds. The median value 
reported for these collections was $1.8 million. Of these 32 state 
agencies, 19 reported an amount of $1 million dollars or higher with 3 
reporting amounts greater than $10 million dollars. In 15 state 
agencies this was the largest amount reported for any of the nine types 
of undistributed collections we listed on the survey. For the 9 state 
agencies that provided values for all nine types, we determined that 
undistributed collections from joint tax refunds ranged from 27 to 48 
percent of total undistributed collections. Our survey requested data 
as of June 2003, and OCSE officials explained that the amount of 
undistributed collections from joint tax refunds is generally higher in 
March through September.

Many officials cited the potential financial loss as the primary reason 
they are unwilling to assume the risk of releasing these collections 
before 180 days. State agencies are fully responsible for payments made 
in error and must either attempt to recover money that has been 
distributed to custodial parents or suffer the financial loss that 
comes from reimbursing the Treasury for the "injured spouse" claims. 
One state agency we visited, Texas, reduced the time it held 
collections from joint tax refunds from 120 days to 90 days after 
analysis of its data showed that the benefit of distributing these 
collections outweighed the financial risk of holding them.

While high values were consistently reported for undistributed 
collections from joint tax refunds, our analysis also revealed that the 
median value of four other types of undistributed collections that 
state agencies reported exceeded $350,000. These undistributed 
collections included those received before they were due, pending legal 
resolution, with an invalid address for custodial parents, and with 
data problems. Table 5 illustrates the median amounts and ranges 
reported for the nine types included in our survey as well as the 
number of state agencies that reported an amount.

Table 5: Amounts for Nine Types of Undistributed Collections Reported 
by State Agencies as of June 30, 2003:

Types of undistributed collections: Collections from joint tax refunds; 
Median amount (rounded): $1,750,000; 
Minimum amount: 0; 
Maximum amount (in millions): $13.9; 
Number of state agencies that reported an amount: 32.

Types of undistributed collections: Collections received before they 
were due; 
Median amount (rounded): $466,000; 
Minimum amount: 0; 
Maximum amount (in millions): $8.0; 
Number of state agencies that reported an amount: 33.

Types of undistributed collections: Collections pending legal 
resolution; 
Median amount (rounded): $431,000; 
Minimum amount: $9,700; 
Maximum amount (in millions): $10.2; 
Number of state agencies that reported an amount: 24.

Types of undistributed collections: Collections with an invalid address 
for custodial parents; 
Median amount (rounded): $399,000; 
Minimum amount: $1,300; 
Maximum amount (in millions): $5.2; 
Number of state agencies that reported an amount: 35.

Types of undistributed collections: Collections with data problems 
(overpayments, no active case, missing or inaccurate data, etc.); 
Median amount (rounded): $363,000; 
Minimum amount: 0; 
Maximum amount (in millions): $14.2; 
Number of state agencies that reported an amount: 30.

Types of undistributed collections: Collections sent to custodial 
parents that can no longer be cashed; 
Median amount (rounded): $125,000; 
Minimum amount: 0; 
Maximum amount (in millions): $5.8; 
Number of state agencies that reported an amount: 19.

Types of undistributed collections: Collections lacking sufficient 
information to identify them; 
Median amount (rounded): $94,000; 
Minimum amount: $1,100; 
Maximum amount (in millions): $4.5; 
Number of state agencies that reported an amount: 35.

Types of undistributed collections: Collections to be distributed in 2 
business days; 
Median amount (rounded): $65,000; 
Minimum amount: 0; 
Maximum amount (in millions): $4.7; 
Number of state agencies that reported an amount: 26.

Types of undistributed collections: Collections to be distributed to 
other government programs; 
Median amount (rounded): $6,200; 
Minimum amount: 0; 
Maximum amount (in millions): $3.7; 
Number of state agencies that reported an amount: 20. 

Source: GAO survey.

Note: The types of undistributed collections are slightly different 
from the types OCSE uses because we administered our survey before the 
34A form was officially revised.

[End of table]

State Agencies Took Steps to Reduce Undistributed Collections:

State agencies we visited took various steps to better understand and 
resolve undistributed collections. They devoted resources to analyzing 
their undistributed collections to help identify the specific causes. 
Additionally, 4 state agencies we visited established specific 
performance goals and all state agencies we visited emphasized regular 
monitoring of undistributed collections. State agencies also 
implemented processes to resolve cases with missing information and 
used electronic processes that helped to reduce the number of 
collections with invalid addresses for custodial parents and 
unidentified collections.

State Agencies Analyzed and Monitored Undistributed Collections:

To help reduce their undistributed collections, officials from 5 of 6 
state agencies we visited stated that they devoted resources to better 
understanding these collections. Beginning in 2000, California 
assembled a team from various units within the state child support 
enforcement agency, such as the fiscal and information technology 
units, to analyze their undistributed collections. The initiative 
lasted 3 years and included the design and implementation of a new 
collections and distribution reporting system, verification of the 
amount and sources of undistributed collections, and publication of a 
report in June 2003. Another state agency, New York, awarded a 
yearlong, million dollar contract to a private firm to analyze its 
undistributed collections. The contractor developed a sampling plan and 
reviewed thousands of undistributed collections to determine their 
sources and how long the money had been held. In addition, the 
contractor evaluated technological solutions and identified general 
strategies for reducing the largest types of undistributed collections.

Officials from 4 state agencies we visited emphasized that in order to 
reduce undistributed collections, it is necessary to establish 
performance goals and measures and compare program results with those 
goals. Four of the state agencies we visited established performance 
goals and measures to help them monitor undistributed collections. 
Florida established a series of performance accountability measures, 
including resolution of collections requiring additional research and 
timeliness of disbursements, to track the overall operation of its 
disbursement unit. Virginia established its goal for undistributed 
collections at 3 percent of monthly collections and was considering 
lowering that baseline to 2 percent as well as maintaining less than 
$50,000 in unidentified collections. An objective in California's 
strategic plan is to ensure that no more than 1 percent of collections 
due families remain undistributed at any time. Texas established 
benchmark amounts for each type of undistributed collections.

Officials from all of the state agencies we visited highlighted the 
importance of monitoring undistributed collections to ensure that goals 
are being met. Three of the state agencies we visited had detailed 
automated reports to help them monitor undistributed collections. These 
reports varied from state to state, but the examples provided included 
data on the total dollar value of undistributed collections, number of 
cases, number of collections, and dates collections were received. 
Also, several state agencies produced data reports for each field or 
local office. For example, a monthly management report in Virginia 
enabled the state officials to monitor the performance of its 22 
district offices. According to our survey, nearly all state agencies 
indicated that they routinely produced statistical data on 
undistributed collections. For example, 27 state agencies produced 
daily reports and 12 produced weekly reports.[Footnote 16]

State Agencies Took Steps to Address Missing Information and Improve 
Payment Processes:

State agencies we visited dedicated staff and focused resources on 
resolving cases with missing information and invalid addresses. Some 
state agencies used automated methods to receive and transmit 
collections. Additionally, 1 state agency automated two processes that 
helped reduce its undistributed collections.

Resolving Missing Information and Invalid Addresses:

Officials from all of the state agencies we visited highlighted the 
importance of dedicating staff to researching collections involving 
missing information. In Virginia, the state disbursement unit separated 
collections with missing information, such as a social security or case 
number, from those with this information. The team contacted employers, 
courts, or other state agencies to obtain the needed information. A 
database of the most difficult collections along with contact 
information and instructions was maintained in order to reduce 
processing time on similar collections received in the future. The team 
typically resolved unidentified collections within 72 hours. Other 
state disbursement units we visited also had specific staff dedicated 
to researching payments with missing information in order to distribute 
them as soon as possible.

State agencies also focused resources on resolving cases with invalid 
addresses for custodial parents. State officials cited the importance 
of allowing staff to access federal, state, and private databases to 
locate custodial parents. Officials in 1 state said they had a contract 
with a private vendor because they found this information to be most 
useful. Virginia's system automatically searched databases to match 
cases that needed information. Such databases included FPLS,[Footnote 
17] state licensing agencies, and credit bureaus. In Texas, an 
indicator was added to case records to allow field workers to 
automatically refer cases with invalid addresses to special enforcement 
investigators. In addition, a new report was created to show all cases 
with collections held due to missing addresses so that field staff 
could focus their efforts on these cases. This change resulted in the 
distribution of almost $1 million in the first 4 months of 
implementation. Also, state officials from the 4 state disbursement 
units we visited told us that customer service representatives 
routinely verified addresses when contacted by custodial or 
noncustodial parents.

Using Automated Processes:

Officials from 4 of the 6 state agencies we visited encouraged 
employers to use Electronic Funds Transfer (EFT) when transmitting 
collections to the state disbursement unit as a way to improve 
efficiency and reduce undistributed collections. According to OCSE 
officials and a representative from the American Payroll Association, 
converting to electronic payments for child support means having to 
purchase software or make programming changes to payroll systems, which 
can initially be costly. As an alternative to EFT, 5 state agencies, 
including 1 we visited, Florida, developed a process to allow employers 
to send payments to the state disbursement unit over the Internet. A 
state agency's Web based payment service operates much like other 
online banking services in that an employer registers for the service, 
receives a user identification and password and can then access the Web 
site each pay period to make the payments for each of its employees. 
State agencies generally offered these services free of charge to 
employers.

State agencies also provided alternative ways for noncustodial parents 
to transmit their payments. Florida offered noncustodial parents the 
option of paying their support over the Internet. Texas had a pilot 
project with a grocery chain to allow noncustodial parents to pay their 
child support at their stores, and then the stores would transmit the 
payment to the state disbursement unit electronically. In another pilot 
project, New York partnered with a private vendor that sells money 
orders. Noncustodial parents could provide the payment to the vendor 
who would then transmit the payment electronically to the state 
disbursement unit.

In addition to receiving collections electronically, many state 
agencies distributed collections to parents electronically. Thirty-
seven state agencies that responded to our survey indicated they 
offered direct deposit--a process whereby money is directly transferred 
to a checking or savings account--and 9 reported that they issued a 
state debit card. Officials from all the state agencies we visited 
explained that direct deposit is not an option for many of their 
customers because they do not have bank accounts. For anyone without a 
bank account, a state debit card is an alternative. The card may be 
used to purchase goods or services as well as to obtain cash. 
Safeguards have been included that prevent custodial parents from 
withdrawing cash or making purchases that would cause an overdraft of 
the available child support funds. In response to our survey, most 
state agencies indicated that they send 40 percent or fewer of their 
collections to parents electronically. Figure 6 shows the portion of 
collections that state agencies reported distributing to parents 
electronically.

Figure 3: Portion of Collections Distributed to Parents Electronically:

[See PDF for image]

[End of figure]

While most state agencies offered at least one form of electronic 
distribution to parents, in 2003, Iowa began requiring all parents to 
receive collections electronically. Exceptions to this requirement were 
based on individual circumstances.[Footnote 18] Officials told us that 
as of January 2004, about 95 percent of custodial parents in Iowa were 
receiving collections electronically.

Automated processes to receive and distributed collections can help 
reduce undistributed collections. According to state agency officials, 
methods that allow state agencies to receive collections electronically 
can help reduce undistributed collections due to fewer incorrect or 
unidentified collections. Electronic methods for distributing 
collections to families can also reduce the number of undistributed 
collections. With direct deposit and state debit cards, funds are 
transferred from the state directly to a financial institution and even 
if the custodial parent changes addresses, the collections can continue 
to be deposited. As such, by using direct deposit and state debit 
cards, undistributed collections due to invalid addresses of the 
custodial parents and those due to paper checks that can no longer be 
cashed are reduced.

In addition to reducing undistributed collections, officials from 2 
state agencies told us that electronic distribution to parents reduces 
many processing costs and requires limited manual intervention. Iowa 
officials predicted a combined savings to the state and federal 
government of about $35,000 a month by sending collections to parents 
electronically. Officials in Texas reported a cost savings of $1.34 per 
transaction by using direct deposit versus mailing a check, a savings 
of over $300,000 in a typical month.

Additionally, Texas automated two of its child support processes that 
will help prevent undistributed collections. In 2000, Texas established 
an automated mechanism to issue refunds to noncustodial parents for 
collections that exceeded the amount owed. Previously, manual 
intervention was required to release these collections. According to 
officials, this program saved hundreds of hours of staff time and 
enabled them to quickly process refunds. Also in 2000, Texas developed 
an automated process to issue new wage withholding orders to employers 
when circumstances of cases changed, such as a reduction in the amount 
owed. In the first 60 days after implementation, Texas issued over 
15,000 new orders to employers.

State Agencies Reported Earning Interest and Income:

Many state agencies reported earning interest and program income. OCSE 
issued a memorandum in 1989 that encouraged state agencies to deposit 
all child support collections in interest-bearing accounts. According 
to our survey, 32 state agencies reported that they kept all 
undistributed collections in interest-bearing accounts, 4 state 
agencies reported keeping some undistributed collections in interest-
bearing accounts and 11 state agencies reported that they did not keep 
their collections in these accounts. One state agency did not answer 
the question. State agencies are required to deduct interest earned and 
income from program costs and can charge fees to help recover some of 
their administrative costs. For example, state agencies are required to 
charge non-TANF families an application fee, and can charge fees for 
tax refund offsets and various services and expenses such as case 
maintenance fees, or a fee to establish a support order. Our prior 
reports concluded that most states either did not charge fees or 
charged minimal fees.[Footnote 19] For fiscal year 2002, state agencies 
reported earning almost $50 million in interest and income. The amounts 
reported ranged from $0 to $15 million.

OCSE Has Assisted States' Efforts to Reduce Undistributed Collections, 
but the Department of the Treasury Has Not Provided Information That 
Would Help States Distribute Collections from Some Joint Tax Refunds 
Sooner:

OCSE has provided some assistance to help state agencies reduce their 
undistributed collections. OCSE focused attention on reducing 
undistributed collections, shared best practices, and funded projects. 
However, OCSE does not have information on some "injured spouse" claims 
that could reduce the amount of time collections from some joint tax 
refunds are held.

OCSE Provided Some Assistance to State Agencies:

In fiscal years 2002 and 2003, OCSE focused on reducing undistributed 
collections. In its fiscal year 2002 annual report, OCSE stated that it 
was taking actions to understand the composition of undistributed 
collections and identify efforts state agencies could take to 
distribute more collections to families. Additionally, OCSE emphasized 
that improved customer service by state agencies helps reduce 
undistributed collections. According to state officials, customer 
service representatives are encouraged to ask for updated information 
from parents, thereby reducing the number of cases with incorrect 
addresses. In fiscal year 2003, OCSE partnered with the National 
Council of Child Support Directors to refine the categories of 
undistributed collections and obtain state data and best practices. 
Also, OCSE issued guidance in March 2003 to reduce the number of cases 
with invalid addresses. This guidance informed state agencies that they 
could access FPLS to locate custodial parents as well as to locate 
noncustodial parents.

OCSE funded research and provided technical assistance to state 
agencies to help them reduce undistributed collections. Between fiscal 
years 2000 and 2002, OCSE awarded three contracts. The first contract 
awarded in fiscal year 2000, for about $135,000, funded research to 
identify approaches for reducing undistributed collections in 11 state 
agencies with large caseloads or amounts of collections. In addition, 
this contractor reviewed undistributed collections in two New York 
counties and identified factors in their business processes and 
automated systems that prevented them from further reducing these 
collections. According to OCSE, a second contract was also awarded in 
fiscal year 2000 for about $112,000 that funded research focused on 
understanding the extent and causes of undistributed collections across 
state agencies and highlighting best practices for distributing such 
collections. Additionally, OCSE officials said that a third contract 
was awarded in fiscal year 2002 for about $300,000 that funded research 
to review undistributed collections in 5 state agencies.

Beginning in fiscal year 2000, OCSE made projects designed to reduce 
undistributed collections a priority for demonstration grants, and 
awarded five grants.[Footnote 20] In fiscal year 2000, OCSE awarded one 
grant for about $188,000, and in fiscal year 2002, OCSE awarded four 
grants--one each to Texas, and the District of Columbia and two to 
Indiana--for a total amount of about $500,000. The goals for each of 
the fiscal year 2002 projects were different. For example, the goal for 
one project was to evaluate the use of state debit cards as a way to 
reduce undistributed collections.

Further, OCSE actively encouraged more use of EFT, which as previously 
stated can help reduce undistributed collections. In July 2003, the 
OCSE Commissioner sent a letter to 80 private sector employers that 
employ a large number of noncustodial parents encouraging them to use 
EFT to pay the child support they withheld from their employees' wages. 
During several conferences sponsored by employer organizations, OCSE 
promoted electronic payment by distributing literature and making 
presentations. Additionally, in 2002 OCSE staff assisted the NACHA--
Electronic Payments Association's Child Support Task Force by helping 
to identify issues associated with promoting the electronic collection 
and distribution of child support payments. OCSE also worked with 
several federal agencies on issues related to electronic payment. For 
example, OCSE worked with the Defense Finance and Accounting Service to 
encourage more use of electronic payments.

OCSE shared information about initiatives state agencies took to reduce 
undistributed collections in its publications. Each month OCSE 
published its "Child Support Report" with information about various 
child support topics. Descriptions of successful state efforts related 
to undistributed collections were featured in several editions. OCSE 
also published an annual compendium of best practices in child support 
enforcement and several of the entries in its 2002 edition were related 
to undistributed collections.

In addition to these publications, OCSE has discussed or arranged 
sessions on undistributed collections at conferences, forums, and 
training sessions. OCSE officials also reported that regional meetings 
have included sessions focused on reducing undistributed collections. 
For example, officials from Region VII organized a workshop where 
perspectives on reporting and best practices were addressed.[Footnote 
21] In July 2003, OCSE initiated monthly audio conference calls to 
foster discussions on implementing best practices such as electronic 
funds distribution. As of December 2003, OCSE had arranged five calls 
with a range of 25 to 38 state agencies participating.[Footnote 22]

As part of our survey, we asked state agencies how helpful various OCSE 
efforts related to undistributed collections have been. For the most 
part, state agencies reported that OCSE's efforts have been helpful and 
many reported that discussions of best practices at forums were greatly 
or extremely helpful. However, several state agencies reported that 
OCSE's efforts were hardly or not at all helpful. Table 6 summarizes 
the state agencies' responses.

Table 6: Summary of State Agencies' Responses Regarding the Helpfulness 
of OCSE Efforts:

OCSE effort: Dissemination of best practices; 
Hardly or not at all helpful: 5; 
Somewhat or moderately helpful: 31; 
Greatly or extremely helpful: 9; 
Have not participated in effort: 2.

OCSE effort: In-person training; 
Hardly or not at all helpful: 7; 
Somewhat or moderately helpful: 9; 
Greatly or extremely helpful: 4; 
Have not participated in effort: 27.

OCSE effort: Discussion of best practices at forums; 
Hardly or not at all helpful: 7; 
Somewhat or moderately helpful: 18; 
Greatly or extremely helpful: 15; 
Have not participated in effort: 7.

OCSE effort: Policy documents; 
Hardly or not at all helpful: 8; 
Somewhat or moderately helpful: 30; 
Greatly or extremely helpful: 6; 
Have not participated in effort: 2. 

Source: GAO survey.

Note: One state did not answer this question at all and 1 state did not 
provide a response about the helpfulness of the policy documents.

[End of table]

The Department of the Treasury Has Not Provided OCSE Information on 
Collections from Some Joint Tax Refunds:

OCSE and state agencies are not receiving information from the 
Department of the Treasury about approved "injured spouse" claims that 
are submitted at the time a tax return is filed. Such information is 
important because state agencies may delay disbursement of tax-offset 
collections for a period of up to 180 days to allow for the possibility 
of a reversal based on an "injured spouse" claim. IRS officials 
explained that while they do not know the type of debt owed when they 
process the claims, they have estimated that about 55,000 "injured 
spouse" claims related to the offset of non-TANF joint tax refunds for 
child support have been filed with the tax returns each year.[Footnote 
23] Additionally, these officials commented that when the claims were 
filed with tax returns and approved, the amount due the "injured 
spouse" was allocated before the file was sent to FMS. However, the 
information FMS sent to OCSE, which was then forwarded to the state 
agencies, did not identify these collections as having had their 
"injured spouse" claims satisfied. As our survey results show, most 
state agencies delayed distributing all collections from joint tax 
refunds.

IRS officials explained that federal law and current processes have 
played a role in determining the information provided to OCSE on 
approved "injured spouse" claims. IRS officials stated that their 
disclosure statute[Footnote 24] allows, but does not require, them to 
provide OCSE and the states with information on specific tax offsets 
for payment of past due child support. The officials also explained 
that they include data on the payment file they send to FMS that could 
enable FMS to determine whether the "injured spouse" claim has been 
processed. Furthermore, the IRS officials said that it would be very 
costly to reprogram the IRS data systems to enable them to provide OCSE 
information on "injured spouse" claims.

FMS officials we spoke with stated that until recently, they were not 
aware that OCSE needed notification on the payment of injured spouse 
claims[Footnote 25] and they expressed concern about the cost 
associated with changing their system in order to provide the 
information to OCSE. The FMS officials added that neither IRS nor OCSE 
emphasized the need for information on injured spouse claims when FMS 
became responsible for and set up their systems to support the tax-
offset program. Furthermore, in order for FMS to send OCSE more 
information about injured spouse claims, they would have to reprogram 
their data files and change at least two data systems. They also stated 
that it would take at least 3 years to modify the systems and would be 
very costly. FMS officials suggested that the more cost-effective 
solution would be for IRS to send OCSE the requested information:

Although the offset program has been operating for almost 20 years, 
OCSE's efforts to obtain the information on "injured spouse" claims 
from the Department of the Treasury began in late 2001. According to 
OCSE officials, they have discussed the need for additional information 
with officials from the Department of the Treasury on several 
occasions. Further, in February 2003, OCSE's Commissioner sent a letter 
to the Department of the Treasury requesting that the two agencies 
involved in the Tax Offset Program, IRS and FMS, provide information 
that identifies which joint tax refunds involve "injured spouse" 
claims. FMS and IRS formed a work group to investigate ways to shorten 
the process related to satisfying these claims. However, according to 
an FMS official, there has been little movement in response to OCSE's 
letter and as of January 2004, the Department of the Treasury had not 
responded to OCSE's letter. If the Department of the Treasury provided 
OCSE and state agencies with information on the satisfied "injured 
spouse" claims filed with the initial tax returns, state agencies could 
immediately release the offset collections to the families.

Conclusion:

Receipt of child support is critical for many custodial parents and 
their children. However, no one is certain about the amount of child 
support collections that are not distributed to families on time, if at 
all. By revising the quarterly collections form, OCSE has taken the 
first step to improving data about undistributed collections, but more 
reliable data are needed in order for OCSE and the state agencies to 
know more about undistributed child support collections and to be able 
to take appropriate actions to help reduce them.

While the total amount of undistributed child support collections is 
uncertain, it is clear that millions of dollars being held for months 
are collections from joint tax refunds. State agencies need more 
information about those "injured spouse" claims that are filed with the 
tax returns and approved. As the federal partner and overseer of this 
program, it is OCSE's role to work with other federal agencies, such as 
the Department of the Treasury, to remove barriers that hinder 
fulfilling its mission. Furthermore, since collections held from joint 
tax refunds represent a large amount of state agencies' total 
undistributed collections, it is in the best interest of the child 
support program for OCSE to focus more attention on getting this 
information. Additionally, the Secretary of the Treasury needs to 
provide OCSE and state agencies information about satisfied "injured 
spouse" claims. If the Department of the Treasury provides this 
information, collections held from some joint tax refunds could reach 
families sooner.

Recommendations for Executive Action:

To better measure the amount of and help reduce undistributed 
collections, we are making three recommendations.

We recommend that the Secretary of Health and Human Services direct the 
Commissioner of OCSE to:

* review undistributed collections data from state agencies 
periodically in conjunction with one of the other routine reviews to 
help improve the accuracy of the data and:

* work closely with the Department of the Treasury to identify a cost-
effective approach for obtaining information on "injured spouse" claims 
in order to enable collections from some joint tax refunds to reach 
families sooner.

We also recommend that the Secretary of the Treasury direct the 
Commissioner of IRS and the Commissioner of FMS to work together with 
OCSE to identify a cost-effective approach for providing OCSE 
information needed to identify those collections that have had their 
"injured spouse" claims satisfied so that these collections can be 
distributed to families sooner.

Agency Comments and Our Evaluation:

We received written comments on a draft of this report from HHS. These 
comments are reprinted in appendix III. The department did not 
explicitly agree or disagree with either of our recommendations. In 
response to our recommendation to review undistributed collections 
data, HHS stated that conducting these reviews in conjunction with the 
data reliability audits would substantially increase the time needed to 
complete them due to the variability of the undistributed collections 
data and that the data reliability audits must be completed on time. As 
we stated in our report, such reviews of undistributed collections data 
could be done in a number of ways and would not necessarily have to be 
done with data reliability audits. Also, HHS stated that its audit 
resources are insufficient to routinely audit any other function or 
area except data reliability. We also noted their concern about limited 
resources in the report. With regard to the recommendation that OCSE 
work with IRS and FMS, HHS stated that it has been working with IRS and 
FMS. We added more detail to this section in the report. HHS also 
agreed with our finding that information on approved injured spouse 
claims could significantly reduce undistributed collections and get 
money to families in a timelier manner. However, the HHS comments also 
noted concerns about a direct exchange of information between IRS and 
OCSE because OCSE's current interaction is strictly with FMS, and it 
would be more complex, time consuming and costly to add the additional 
interfaces and processing that would be required for a direct exchange 
with IRS. We did not recommend a specific approach for sharing the 
information.

We also received written comments on a draft of this report from the 
Department of the Treasury. These comments are reprinted in appendix 
IV. The Department of the Treasury agreed with our recommendation. In 
commenting, the Acting Chief Financial Officer stated that although 
neither IRS nor FMS can readily provide OCSE information on satisfied 
injured spouse claims, and that significant programming changes would 
be needed, IRS and FMS would work together with OCSE to develop a cost-
effective way to advise OCSE when injured spouse claims have been 
satisfied.

In addition to written comments, officials from HHS, FMS, and IRS 
provided technical comments. We incorporated these comments in the 
report as appropriate.

As arranged with your office, unless you publicly announce its contents 
earlier, we plan no further distribution of this report until 30 days 
from its issue date. At that time we will send copies of this report to 
appropriate congressional committees, the Secretary of Health and Human 
Services, the Secretary of the Treasury, and other interested parties. 
In addition, this report will be available at no charge on GAO's Web 
site at http://www.gao.gov.

If you have any questions regarding this report, please call me on 
(202) 512-8403. Other contacts and acknowledgments are listed in 
appendix V.

Sincerely yours,

Cornelia M. Ashby: 
Director, Education, Workforce, and Income Security:

[End of section]

Appendix I: Scope and Methodology:

To accomplish our objectives, we conducted a mail survey of all 54 IV-
D child support enforcement directors, conducted site visits to 6 state 
agencies, interviewed federal and state officials, as well as reviewed 
related reports and analyzed laws and regulations.

We sent each director a self-administered mail-back questionnaire. To 
ensure that our survey questions were clear, unbiased, specific, and 
easy to understand, we pretested the survey instruments in 3 state 
agencies and discussed the appropriateness of the survey questions with 
OCSE. We electronically mailed follow-up letters and replacement copies 
of the survey to nonrespondents to encourage response. Forty-eight 
state agencies participated in the survey. Nonrespondents included 
Arizona, Indiana, Guam, Mississippi, New Jersey, and Virgin Islands. We 
requested data as of June 30, 2003, and administered the survey from 
September to November 2003. We did not assess the reliability of the 
data reported by state agencies in response to our survey. However, we 
reviewed the data for completeness and reasonableness.

We visited Virginia, New York, Florida, Texas, Iowa, and California. We 
selected the state agencies so as to obtain diversity in the amount of 
collections and balances of undistributed collections, geographic 
location, number of clients served, and whether the child support 
program was county or state administered. Of the state agencies we 
visited, 3--Iowa, Texas, and Virginia--had undistributed collection 
balances lower than the national average of 3 percent and were cited by 
the Office of Child Support Enforcement (OCSE) as having best practices 
in reducing and or improving payment distribution practices. Two of the 
state agencies--California and New York--had balances of undistributed 
collections that were higher than the national average of 3 percent 
while 1 state, Florida, had a balance of about 3 percent.

In addition to our overall approach, we took specific steps for each of 
the objectives. To address how the data on undistributed collections 
has changed in the last few years, we reviewed and analyzed OCSE data 
on undistributed collections for fiscal years 1999 to 2002 as reported 
by state agencies. We began with fiscal year 1999 data because that was 
the earliest year with data comparable to fiscal year 2002; the most 
current year data were available at the time of our review. As a part 
of our analysis we (1) reviewed and compared the data for each fiscal 
year and (2) identified issues associated with the calculation and 
reporting of undistributed collections through interviews with state 
and OCSE officials. Additionally, we analyzed survey responses that 
identified the types of funds state agencies classify and report as 
undistributed collections. We cited findings from an internal review 
conducted in California, however, we did not verify the methodology 
used in this review. To identify the causes of undistributed 
collections, we reviewed relevant literature and past audit reports on 
the causes of undistributed collections. We cited relevant findings 
from two of these reports. The report issued by the Department of 
Health and Human Services Office of Inspector General was conducted in 
accordance with Quality Standards for Inspections issued by the 
President's Council on Integrity and Efficiency. We did not verify the 
methodology used in the report produced by a private firm. We also 
reviewed laws, regulations, and policies governing child support 
distribution practices to gain an understanding of the required time 
frames for distribution of child support payments. We interviewed child 
support advocates and experts to obtain their opinions on the causes 
for undistributed collections.

To identify what state agencies are doing to reduce undistributed 
collections and to determine what guidance OCSE has given state 
agencies to help reduce undistributed collections, we reviewed relevant 
documents and agency audit reports. We also reviewed documents issued 
by the National Council of Child Support Directors and collected 
information on relevant OCSE-funded research. In addition, we also 
interviewed child support advocates and experts, as well as federal and 
state officials to obtain their perspectives on how OCSE has helped 
state agencies reduce undistributed collections and additional actions 
that OCSE can take.

[End of section]

Appendix II: Survey of State Directors of Child Support Enforcement:

[See PDF for image]

[End of survey]

[End of section]

Appendix III: Comments from the Department of Health and Human 
Services:

DEPARTMENT OF HEALTH & HUMAN SERVICES	
Office of Inspector General:

Washington, D.C. 20201:

MAR 12 2004:

Ms. Cornelia M. Ashby 
Director, Education, Workforce, and Income Security Issues 
United States General Accounting Office 
Washington, D.C. 20548:

Dear Ms. Ashby:

Enclosed are the Department's comments on your draft report entitled, 
"Child Support Enforcement - Better Data and More Information on 
Undistributed Collections Are Needed." The comments represent the 
tentative position of the Department and are subject to reevaluation 
when the final version of this report is received.

The Department provided several technical comments directly to your 
staff.

The Department appreciates the opportunity to comment on this draft 
report before its publication.

Sincerely,

Signed by: 

Dara Corrigan:

Acting Principal Deputy Inspector General:

Enclosure:

The Office of Inspector General (OIG) is transmitting the Department's 
response to this draft report in our capacity as the Department's 
designated focal point and coordinator for General Accounting Office 
reports. OIG has not conducted an independent assessment of these 
comments and therefore expresses no opinion on them.

COMMENTS OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES ON THE GENERAL 
ACCOUNTING OFFICE'S DRAFT REPORT, "CHILD SUPPORT ENFORCEMENT: BETTER 
DATA AND MORE INFORMATION ON UNDISTRIBUTED COLLECTIONS ARE NEEDED," 
(GAO-04-377):

The Department of Health and Human Services (HHS) appreciates the 
opportunity to comment on the General Accounting Office's (GAO) Draft 
Report.

Recommendation 1:

We recommend that the Secretary of HHS direct the Commissioner of the 
Office of Child Support Enforcement (OCSE) to:

* review undistributed collections (UDC) data from State agencies 
periodically in conjunction with one of the other routine reviews to 
help improve the accuracy of the data.

Response:

GCSE revised the 34A reporting form and related instructions. 
Categories and types of collections to be reported as undistributed 
will be reported under the headings: 1) "Undistributed collections 
pending distribution," and 2) "Undistributed collections unresolved," 
with detailed instructions on what should be included under each 
category. Use of these headings, with accompanying definitions, will 
help ensure consistency in reporting across the States. It will also 
enable GCSE to accurately assess the nature of UDC in the States and 
better target technical assistance. As States become more experienced 
in reporting UDC under these headings, GCSE will evaluate the data 
received in the new reports and determine which States need additional 
analysis.

If the GAO's recommendation intends that UDC reviews be performed in 
conjunction with the Data Reliability Audits (DRA), then the 
recommendation would create substantial problems for the States and 
difficulties for GCSE. Adding a review of UDC to the reliability audits 
would substantially increase the time needed to complete the audits due 
to the variability of UDC records and the complexity of auditing a UDC 
balance for accuracy and reliability. The DRA cannot be delayed because 
GCSE uses the findings to calculate the award of performance 
incentives, which the States rely on for budget purposes. GCSE and 
States also use the findings for corrective actions that need to be 
made to avoid penalties.

GCSE reviews UDC with its discretionary time after the DRAB are 
complete. In this regard, GCSE plans to look at California UDC later 
this year after the DRA work is complete, if contract resources are not 
available to provide timelier audit services. Due to limited resources, 
discretionary audit staff time is scheduled to areas that will have the 
greatest overall benefit to the child support enforcement program. This 
could include UDC, as well as other important areas, particularly 
audits of administrative costs.

However, audit resources are insufficient to routinely audit any other 
function or area except data reliability.

Recommendation 2:

We recommend that the Secretary of HHS direct the Commissioner of the 
OCSE to 
work closely with the Department of the Treasury to identify a cost-
effective approach for obtaining information on "injured spouse" claims 
in order to enable collections from joint tax refunds to reach families 
sooner.

We recommend that the Secretary of the Treasury direct the Commissioner 
of the Internal Revenue Service (IRS) and the Commissioner of the 
Financial Management Service (FMS) to work together and with GCSE to 
identify a cost-effective approach for providing GCSE information 
needed to identify those collections that have had their "injured 
spouse" claims satisfied so that these collections can be distributed 
to families sooner.

Response:

GCSE has been working with IRS and FMS to gain additional information 
on the filing of injured spouse claims in order to be able to share 
that information with 
States. Currently, OCSE is notified if the offset is related to a joint 
return. It is important to know the processing status of an injured 
spouse claim in order to assist the States in distribution of the 
offset. For example, when it is known that an injured spouse claim has 
been filed and processed the States could immediately release the 
collection to the family, rather than holding the money for 180 days. 
This information could significantly reduce UDC and get the money to 
families in a timelier manner.

There are concerns regarding the mention of a direct exchange of 
information between IRS and OCSE, as OCSE's interaction is strictly 
with FMS. It would be more complex, time-consuming, and costly to add 
the additional interfaces and processing that would be required to 
implement this proposition. It is OCSE's understanding that the 
operation was transferred from IRS to FMS about 5 years ago, at least 
in part, to improve the efficiency and cost-effectiveness of the 
program. The proposition of adding a direct interface between GCSE and 
IRS seems contrary to the original intent of the transfer. We are 
pleased that IRS does not note any legal barrier to sharing this 
information with OCSE.

As part of our ongoing effort to gain additional information on joint 
returns, OCSE met with FMS on March 12, 2004.

[End of section]

Appendix IV: Comments from the Department of the Treasury:

DEPARTMENT OF THE TREASURY 
WASHINGTON, D.C. 20220:

MAR 8 2004:

Ms. Cornelia M. Ashby 
Director, Education, Workforce, and Income Security Issues 
U.S. General Accounting Office 
441 G Street, N.W. 
Washington, D.C. 20548:

Dear Ms. Ashby:

The Department of the Treasury has received for comment a copy of the 
draft report (GAO-04-377), entitled Child Support Enforcement: Better 
Data and More Information on Undistributed Collections Are Needed. The 
draft report contains one recommendation that relates to the Department 
of the Treasury's role in the collection of delinquent child support 
debt. We concur with the recommendation that the Internal Revenue 
Service (IRS) and the Financial Management Service (FMS) work with the 
Office of Child Support Enforcement (GCSE) to identify a cost-effective 
approach for providing GCSE information needed to identify those 
collections that have had their "injured spouse" claims satisfied so 
that these collections can be distributed to families sooner.

IRS and FMS have enjoyed a positive working relationship for many 
years. Their mutual interests cross many operational lines and their 
staffs engage in problem solving and cooperative efforts on a daily 
basis. As your report notes, IRS and FMS are currently collaborating on 
a joint project reviewing the processing of injured spouse claims to 
determine if the processing cycle time can be reduced. We are confident 
that IRS and FMS will collaboratively develop a feasible, cost 
effective way to provide the necessary Injured Spouse information to 
GCSE.

Currently, neither IRS nor FMS captures injured spouse claim 
information in such a way as to allow either agency to readily provide 
the required information to OCSE, and significant programming changes 
would be needed by either agency to identify satisfied Injured Spouse 
Claims to OCSE. Nevertheless, IRS and FMS will continue to work 
together and with GCSE to develop a mutually satisfactory, cost-
effective way to advise GCSE when injured spouse claims impacting the 
distribution of their collections have been satisfied. In addition, IRS 
and FMS will jointly develop a corrective action plan to address the 
work that will be needed to fulfill this requirement.

Thank you for the opportunity to respond to this draft GAO report. If 
you have any questions or wish to discuss these comments further, 
please contact Floyd L. Williams (IRS, Director, Legislative Affairs) 
at (202) 622-4725 or Alvina McHale (FMS, Director, Legislative and 
Public Affairs) at (202) 874-6604.

Sincerely,

Signed by: 

Barry K. Hudson:

Acting Chief Financial Officer:

cc: Donald Hammond 
Richard Gregg 
Ronny S. Rhodes: 

[End of section]

Appendix V: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Carolyn M. Taylor (202) 512-2974, taylorcm@gao.gov 
Rebecca A. Christie (312) 220-7720, christier@gao.gov:

Staff Acknowledgments:

In addition to those named above the following individuals made 
important contributions to this report: Vernette Shaw, Carolyn Boyce, 
Jay Smale, Corinna Nicolaou, James Rebbe, and Paul Schearf.

FOOTNOTES

[1] Pub. L. No. 104-193, § 312(b) (Aug. 22, 1996).

[2] In this report we will refer to the state child support enforcement 
agencies as state agencies. 

[3] Under some circumstances, the Secretary of the Treasury may collect 
past due child support by offsetting federal tax refunds and other 
types of federal payments. Collections from federal joint tax refunds 
are held only for non-TANF cases. In this report, the use of the word 
"non-TANF" means that the child support is owed to a custodial parent 
who is not a TANF recipient. Joint tax refunds subsequently mentioned 
in this report refer to federal non-TANF joint tax refunds. 

[4] 42 U.S.C. §§ 651-669b.

[5] Omnibus Budget Reconciliation Act of 1981, Pub. L. No. 97-35, § 
2331 (Aug. 13, 1981).

[6] IRS Form 8379.

[7] The Treasury Offset Program (TOP) is a centralized debt collection 
program developed by FMS. TOP is designed to assist agencies in the 
collection of delinquent debt owed to the federal government. FMS 
disburses payments on behalf of over 400 federal agencies. 

[8] State disbursement units are also responsible for collecting and 
disbursing all payments under support orders, including spousal 
support.

[9] The 1996 Personal Responsibility and Work Opportunity 
Reconciliation Act created TANF. TANF emphasizes the importance of work 
and personal responsibility rather than dependence on government 
benefits. After 2 years of assistance, or sooner if the state 
determines that the recipient is ready, TANF adults are generally 
required to be engaged in work or work-related activities. A lifetime 
limit of 60 months (or less, at the state's option) is placed on 
adults' receipt of cash benefits. Families receiving TANF benefits or 
benefits under the federally assisted foster care program or the 
Medicaid program automatically receive CSE services free of charge. 
Under PRWORA, TANF recipients generally must assign their rights to 
current child support payments to the state.

[10] Foster care programs are authorized under Title IV-E of the Social 
Security Act. 

[11] OCSE's final annual statistical report for fiscal year 2002 was 
published November 2003.

[12] 42 U.S.C. § 652(a)(4)(C). Moreover, the Child Support Performance 
and Incentive Act of 1998 requires that states have complete and 
reliable data for purposes of computing incentives. 42 U.S.C. § 658a(b)
(5)(B). The performance measures for incentive payment base amounts are 
paternity establishment, support order establishment, current payments 
distributed, and cost effectiveness. 42 U.S.C. § 658a(b)(4). According 
to HHS, the Secretary is required to conduct an audit for each fiscal 
year for incentive purposes.

[13] These collections are also referred to as future payments.

[14] Distributing Collected Child Support to Families Exiting TANF. 
Department of Health and Human Services, October 2001. OEI-05-01-00220.

[15] Wage withholding is a procedure whereby an employer automatically 
deducts a specified amount from an employee's wages or income to pay a 
child support obligation. All support orders issued after January 1, 
1994, must contain provisions for wage withholding, except when there 
is a good cause not to require it or an alternative arrangement is 
reached by both parties.

[16] Three of the 27 state agencies that reported producing daily 
reports also reported that they produced weekly reports.

[17] FPLS is a computerized national location network operated by OCSE. 
FPLS obtains address and employer information, as well as data on child 
support cases in every state, compares them and returns matches to the 
appropriate states. This helps child support enforcement agencies 
locate noncustodial parents.

[18] Officials told us that some exceptions were granted to 
individuals, for example, if they could not reasonably access a 
financial institution.

[19] U.S. General Accounting Office, Child Support Enforcement: 
Opportunity to Defray Burgeoning Federal and State Non-AFDC Costs, GAO/
HRD-92-91 (Washington, D.C.: June 5, 1992); Child Support Enforcement: 
Opportunity to Reduce Federal and State Costs, GAO/T-HEHS-95-181 
(Washington, D.C.: June 13, 1995); and Child Support Enforcement: Clear 
Guidance Would Help Ensure Proper Access to Information and Use of Wage 
Withholding by Private Firms, GAO-02-349 (Washington, D.C; Mar. 26, 
2002).

[20] Section 1115 of the Social Security Act authorizes OCSE to provide 
funding to state Title IV-D agencies for demonstration activities 
intended to add to the knowledge and to promote the objectives of the 
Child Support Enforcement Program. The four priority areas for fiscal 
year 2002 were to (1) increase the rate of cases with collections 
through better use of automation and improved public-private 
collaboration projects for interstate cases, (2) increase the rate of 
cases with collections from low-income noncustodial parents, (3) reduce 
and limit the amount of undistributed collections by having states 
better track and distribute more of the undistributed child support 
that they have collected, and (4) further the national goals of the 
Child Support Program.

[21] Region VII includes Iowa, Kansas, Missouri, and Nebraska.

[22] OCSE told us that these discussions are recorded and available to 
state agencies that could not participate in the original call.

[23] About 182,500 injured spouse claims were filed related to offsets 
for child support and about 60 percent, 110,000, were filed with the 
original return. Approximately half of the claims are for non-TANF 
cases.

[24] 26 U.S.C. § 6103(l)(10).

[25] Under the Social Security Act provision on collection of past-due 
support from federal tax refunds, a state "may delay distribution of 
the amount withheld until the State has been notified by the Secretary 
of the Treasury that the other person filing the joint return has 
received his or her proper share of the refund, but such delay may not 
exceed six months." 42 U.S.C. § 664(a)(3)(B). While this section of law 
does not explicitly require Treasury to affirmatively inform OCSE or 
the states that an injured spouse claim has been paid, we believe that 
the statute contemplates that Treasury notify the state when the other 
person filing the joint return has received his or her share of the 
refund. See H.R. Conf. Rep. No. 98-925, at 56 (1984).

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