Mr. Chairman and members of the Committee: Thank you for giving me the
opportunity to testify today on the progress of child support information
systems development and the Administration's recommendations for revamping the
incentive system for State child support enforcement programs. Systems
development and restructuring of the distribution of incentives are two key
elements in strengthening the child support enforcement program as envisioned
under last year's welfare reform bill.
The Administration and this Committee are in full agreement that child
support is an essential part of welfare reform. It sends a message of
responsibility to both parents and is a vital part of moving families toward
work and self-sufficiency. Child support also can act as a safety net to help
ensure that single parent families don't need assistance. Once families have
attained independence, child support can keep them from falling back onto public
assistance rolls. We are proud of this Administration's record on child support
enforcement and anxiously await the positive results that the provisions of
welfare reform will bring to further meet these critical goals.
President Clinton has made improving child support enforcement and
increasing child support collections a top priority. Since taking office,
President Clinton has cracked down on non-paying parents and strengthened
child support enforcement, resulting in record child support collections. In FY
1996, $12 billion in child support was collected on behalf of the children of
America.
This amount represented a 50 percent increase in child support collections
since FY 1992. We estimate that in FY 1997 we will collect over $13 billion.
Since FY 1992, the number of paying child support cases has increased by 36
percent. In addition, over one million paternities were established in FY 1996,
including IV-D paternities and in-hospital paternity acknowledgments, almost
doubling the number established in 1992. These accomplishments are impressive,
but projections on the impact of the new provisions tell us they are only the
beginning.
The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA)
included the tough child support measures President Clinton called for from the
start, including license revocation and the development of a national new hire
reporting system. Child support enforcement at the Federal and State levels is
being transformed by these measures. Today, I will focus my testimony on two
critical areas: development of a new incentive structure and state automated
systems.
CHILD SUPPORT INFORMATION SYSTEMS
Statewide automated enforcement systems are critical to the success of the
child support program. Computerized systems are the only means to provide both
prompt and reliable processing of information. With a current national caseload
of 20 million, we must move forward aggressively with new technologies if we are
to keep up with the massive volume of information and transactions in every
State.
Since the inception of the child support program, we've all recognized the
importance of automation. By the mid-1980's all IV-D agencies had some level of
automation serving families in their States. Now, newer technologies allow us to
consider ever- more advanced applications for child support information systems.
With the Family Support Act of 1988, Congress acknowledged the increased
importance of automation to child support and required statewide automated
systems in all States by October, 1995 and later extended that deadline to
October, 1997.
- Automation of state child support programs:
- allows a worker to initiate a case or automatically initiates a case for
families receiving public assistance;
- begins locating absent parents and tracks automated searches of State
databases such as the Department of Motor Vehicles, and refers hard-to-find
cases to the Federal Parent Locator Service;
- tracks, monitors and reports on efforts to establish paternity and
support orders;
- accepts and processes case updates and keeps the caseworker informed
about due dates arid activities;
- monitors compliance with support orders and initiates enforcement actions
such as wage withholding or tax refund offset;
- bills cases, processes Payments and makes disbursements; and
- maintains information for accounting, reporting and monitoring.
With required safeguards, states ensure that all of this information is
secure and held in strictest privacy.
As of today, sixteen States have been certified as having computerized
systems which are comprehensive and statewide. Many others are very close to
completion. Meeting this certification requirement is crucial. While many States
are using significant levels of certification, a comprehensive and statewide
system is a necessary foundation for new provisions enacted last year to track
parents across State lines and ensure they pay what they owe. It is much more
efficient and economical to handle child support cases with such a system,
especially in an environment where greater than 30 percent of the cases involve
more than one state.
What happens if a State does not meet the October 1, 1997 statutory deadline
for completing their system? Having a comprehensive child support system
operating statewide is a State Plan requirement. Accordingly, by December 31,
1997 a State must certify to us through its State Plan that its system meets
Family Support Act requirements. Under current law we will notify any State
without such a system in place that we intend to disapprove its State plan and
notify the State of its appeal rights. The penalty for failure to meet the
statutory deadline is cessation of all Federal child support enforcement funding
including the 66 percent of program operating costs. I should note that if a
State is not operating a child support enforcement program under an approved
State plan, its TANF funds will also be lost.
Our goal is to maintain State accountability, while working with States and
providing the necessary assistance to ensure they have certified automated
systems that will enable them to operate an effective child support enforcement
program. All of us involved in developing these systems -- the Office of Child
Support Enforcement, State child support agencies, the corporate community --
realize that completing these complex systems is not an easy task.
However, despite this complexity, many States have succeeded in designing
and implementing these critical computer systems. Together we must continue our
efforts to make automation a reality in all States.
Child Support Enforcement Incentive Funding
The Personal Responsibility and Work Opportunity Reconciliation Act required
us, in consultation with State directors of IV-D programs, to recommend to
Congress a new incentive funding system for the State child support enforcement
programs based on program performance. These recommendations were contained in
our Child Support Enforcement Incentive Funding Report to Congress which was
submitted to this Committee on March 15, 1997. In my last appearance before you
on March 20, 1997, I gave testimony on the content of this Report and our
collaborative effort with the States to develop a new incentive funding system
for the child support enforcement program.
The jointly-developed, revenue neutral incentive funding proposal is tough
and would push States to improve performance. This formula will ensure good
outcomes for families and has a broad consensus among the States and other child
support enforcement stakeholders. Since the completion of the incentives report
we have moved forward with the States on developing standard data definitions to
improve child support performance reporting.
The current incentive funding system is based on maximizing child support
collections relative to administrative costs. A minimum incentive payment is
made to all States regardless of whether performance is good or poor. Currently,
States can run inefficient programs and still receive large amounts in
incentives. We all recognize that this does not create a significant incentive
for the achievement of program goals.
To meet the Congressional charge to the Secretary of HHS to change the
incentive funding system, we convened a workgroup of State and Federal partners.
The workgroup developed a formula that rewards States for their performance in
five critical areas: paternity establishment, support order establishment,
collections on current support, collections on support past due (arrearages),
and cost effectiveness. There is full consensus from State partners that these
measures represent the appropriate focus for the program.
The workgroup also established performance standards for each of the
measures. These standards would determine the amount of incentive a State would
receive for a certain level of performance and reward States for maintaining
high performance or making substantial gains in improving their performance. The
standards are designed to provide tough but reachable targets for performance by
rewarding States with higher incentives as they improve. The standards for the
first four measures include a performance threshold. Under this plan, and unlike
the current system, no incentive would be paid unless a State achieves a
significant improvement in performance. For the final measure on cost
effectiveness, if a State collects less than two dollars for every one dollar
expended, no incentive would be paid.
Each State would earn five scores based on performance on each of the five
measures. Workgroup members believed all the measures were important, but the
first three measures -- paternity establishment, support order establishment and
collections on current support -- were critical. Paternity establishment and
support order establishment are prerequisites of collecting current support,
which is essential for family self-sufficiency. Performance on the first three
measures could earn a slightly higher incentive than the last two measures --
collections on arrearages and cost effectiveness.
The amount of potential incentive payments for each measure available to
each State would be based upon a percentage of its own State child support
collections -- its "collections base." The collection base includes collections
in both Temporary Assistance to Needy Families (TANF) cases and former
assistance cases. The collections base also includes collections made for
families who were never on assistance. However, we recommend that collections in
TANF cases and former TANF cases be weighted double, e.g., every dollar
collected counts as $2. Counting collections for incentives purposes in this way
accomplishes three objectives:
- States with large former TANF caseloads would no longer be penalized by a
cap as in the current formula. Many States are moving families off welfare and
their success is not being recognized because of this cap under current law.
- States would have a strong incentive to pursue action on TANF cases and
former TANF cases. For these families, child support is critical to achieving
independence and not returning to public assistance rolls.
- Direct savings to State and Federal governments result from collecting
child support in TANF cases. Costs of other public benefit programs such as Food
Stamps and Medicaid could also be avoided by making collections in these cases.
Because this system would for the first time be performance- based, some
States would naturally lose incentives by moving to the new system. To help
States prepare for the new system, we recommend that the formula be phased in
over two years. For FY 2000, a State would earn half of what it would have
earned under the old formula and half of what it earns under the new
calculation. In FY 2001, the new formula would be fully implemented. This would
give States more time to adjust their programs, budget for any financial impact
and improve their performance. Of course, the office of Child Support
Enforcement would continue to work with States to assist them during this
transition.
The workgroup was concerned that with the enactment of welfare reform, the
child support enforcement program is likely to change dramatically in the next
few years. Therefore, the report recommends that the child support program's
results and effects of the new incentive system should be reviewed periodically.
Limited discretion should be granted to the Secretary of Health and Human
Services to make appropriate changes, in consultation with the States, based on
the program's actual results and effects every three to five years.
The workgroup's report includes recommendations with respect to other
aspects of program funding beyond incentives. We have endorsed the workgroup's
recommendations with respect to the incentive formula itself, but have reserved
judgment on other aspects of the recommendations because further work may be
needed.
We now have the groundwork in place for a more results-oriented management
of the National child support enforcement program. We strongly urge Congress to
pass legislation on the recommended incentive funding system to allow the child
support enforcement program to truly be driven by achieving results for families
and children in need of support.
Conclusion
In conclusion, Mr. Chairman, let me restate:
Much progress has been made in developing statewide automated child
support systems. Continuing automation efforts are critical to future success in
providing support to America's children.
The recommended incentive funding formula, developed in consultation with
the States, would reward performance and remain revenue neutral. It is tough but
fair and will lead to positive results for families.
I want to thank the Committee for your work on behalf of America's children.
Their future will be significantly improved because of the new collection
tools and other reforms required of States by welfare reform.
