Child Support Enforcement (CSE) FY 2002 Preliminary Data Report

April 29, 2003

Department of Health and Human Services
Administration for Children and Families
Office of Child Support Enforcement
Division of Planning, Research, and Evaluation

Table of Contents

Preface

Child Support Enforcement (CSE) Program Background, Results, and Summary Tables
Program Background
Program Results for FY 2002
Table 1: Financial Overview, FY 2002
Table 2: Statistical Overview, FY 2002
Table 3: Program Trends for Fiscal Years 1998, 2001, and 2002
Table 4: Total Distributed Collections, FY 2002
Table 5: Statistical Program Status, FY 2002
Table 6: Paternity Statistics, FY2002¹
Table 7: Total Distributed Collections Per Full-Time Equivalent Staff, FY 2002
Table 8: Total Amount of Current Support Due, FY 2002
Table 9: Total Amount of Support Collected and Distributed as Current Support, FY2002
Table 10: Total Amount of Arrearages Due, FY 2002
Table 11: Total Amount of Support Collected and Distributed as Arrears, FY 2002
Table 12: Cases with Arrears Due and Paying Towards Arrears, FY 2002
Table 13: Collections and Expenditures, FY 2002
Table 14: Cost Effectiveness Ratios, FY 2002
Table 15: Paternity Establishment, FY 2002
Table 16: Interstate - Collections Forwarded to Other States, FY 2002
Table 17: Undistributed Collections, FY 2001 and 2002
Table 18: Unaudited Performance Incentive Scores, FY 2002

CSE Nationwide, Regional, and State Box Scores
Regional Scores
State Scores

CSE Program Charts and Graphs
Figure 1 - Total Caseload, FY 2002
Figure 2 - Total Distributed Collections, FY 2002
Figure 3 - Total Expenditures, FY 1998 - 2002
Figure 4 - Total Collections by Method of Collection, FY 2002
Figure 5 - IV-D and State In-Hospital and Other Paternities Acknowledged, FY 1998 - 2002
Figure 6 - Support Orders Established, FY 2002
Figure 7 - Interstate Collections, FY 1998 - 2002
Figure 8 - Interstate Cases - Cases Sent and Received from Another State, FY 1999 - 2002
Figure 9 - Traditional Cost Effectiveness Ratio and CSPIA Effectiveness Ratio, FY 1999 - 2002
Figure 10 - Number of Children in the IV-D Program, FY 2002

Appendix
Incentive Formulas
Incentive Payment Determination

Preface: The Story Behind the Numbers

I think one of the most useful tools for deciding on priorities is the process of figuring out the story behind the numbers. For the most part, when I look at the preliminary 2002 numbers for the nation's child support enforcement program, I find the story very encouraging.

Actually, I see two clear stories: the productivity of the program and increasing reliability of child support as a source of income for families. There are also two stories that aren't sufficiently clear: the reasons for undistributed collections and the amount of child support arrears owed and not collected. We should carefully examine the stories behind these numbers to see what they tell us about our administrative operating priorities and our policy agenda.

Productivity of the child support enforcement program

• Total child support collections reached a record high of over $20 billion. That's a pretty impressive return on a $5 billion investment to operate the program. And it's up over 40% in the last 5 years.
• During last 4 years, the caseload went down over 7%. We're getting a lot more money in, even though the caseload is lower.
• Last year, the child support professionals of the IV-D program collected $313,000 for each full-time equivalent staff member. This year, they collected $326,000 each. At a time when states are struggling with budgets, these pros are demonstrating measurably increased productivity.

Increased reliability of child support as a source of income for families

• The child support enforcement program is becoming less a revenue stream to reimburse governments for welfare expenditures, and more a source of income for families. Eighty-nine percent of collections went to families in 2002. While overall collections went up 6% last year, payments distributed to families went up nearly 8%. A small percentage of our caseload is composed of welfare recipients: 17%. The largest group of clients on our caseload is families who used to be getting public assistance: 46%. Welfare "leavers" are relying on child support income that helps prevent them from becoming welfare "returners."
• Over 70% of the parents who came to the child support enforcement program for help have child support orders in place (up from 66% last year). Nearly 70% of the cases with orders got collections (up about 2% from last year).
• The percentage of total cases that actually got a collection is finally approaching 50%. (For families not currently getting public assistance, the proportion getting a collection is already over 50%.) The big story here is a 74% increase in 5 years. Don't miss the impact of this story in all the figures: that's a 74% increase in 5 years in the likelihood that if a parent asks us for help, that family is going to actually get the help. That's what I mean when I say that the story behind the numbers is child support as a more reliable source of income: families who need our help can increasingly rely on us producing results.

Trying to figure out the story behind undistributed collections

Undistributed collections - child support that states collected and did not distribute by the end of the year - represent about 3% of total collections. Comparing the fourth quarter (end-of-year) reports for 2002 to those of 2001, states report an 11% decrease in undistributed collections. And more than 30 states reported decreases. But I'm not sure whether these changes warrant any judgments about progress made, because the tools that we have to figure out the story behind these numbers aren't sharp enough.

I'm not certain that these numbers are interpretable in any meaningful way. For example, it's apparent that some states include collections received in the last 48 hours that will be distributed to known addresses on time, and other states don't. Some states include 'advance' collections that are being properly held for future distribution to families; others don't. Some states report funds that are being held to pay for foster care expenses, and others don't. States vary in how they handle tax refund intercepts, portions of which may be owed to spouses who filed joint returns. (One state holds 4% of such collections; another holds over 50%.) These numbers don't tell us whether states are making sufficient efforts to distribute collections when custodial parents' addresses are out of date or when employers' wage-withholding records don't match the amount of their checks.

We're taking actions that will help us figure out the story behind the numbers and get those dollars out to families.

• The Child Support Enforcement Program Quarterly Report of Collections (OCSE 34A) is being revised to separate undistributed collections into two categories. One will include payments that are properly held and will go out on time to known addresses (like the 'advance' payments and the joint tax-return interceptions). The other will include collections that can't be distributed without more research (like locating the custodial parent's current address or reconciling the employer's mismatched check and recorded amounts).
• We're working with the National Council of Child Support Directors to develop a detailed report (a supplementary schedule to the 34A) that breaks down undistributed collections even further.
• We are sharing data tables from the Federal Tax Offset program with states. These show the amount of joint-payee tax intercepts for non-public assistance families, to help states determine how much of these collections to hold for how long.
• We have contracted for technical assistance for states with large balances of undistributed collections. The contractor will identify specific problems and recommend solutions.
• We are identifying best practices of states that have systematically examined and properly reduced their undistributed collections.
• We are funding several program improvement grants to states for demonstrating successful techniques for resolving undistributed collections.
• We are scrutinizing the reports of states that show significant changes in undistributed collections, to identify useful methods for getting undistributed collections distributed and to ensure that states have made sufficient efforts to get them to families.
• We are reminding child support enforcement program administrators of the usefulness of the Federal Parent Locator Service as a tool for finding custodial parents.

Dealing with the debt

The amount of arrears (unpaid child support owed) that has accrued over the years is numbing: over $90 billion. We know that child support professionals are not ignoring the debt; in 2002, collections were made in about 60% of the arrears cases. But, in spite of increased success in collecting and distributing payments on arrears, the amount of the debt increased by 5% over last year.

So, we have begun more systematically examining the numbers in a determined effort to learn the story behind them.

• We've learned that about $71 billion of the total accrued debt has been certified by states for the tax offset program and other enforcement tools operated by the Federal Parent Locator Service. That is already a provocative difference. Do the other $20 billion of reported debt represent exceptionally small debt amounts (less than $150 in some cases, less than $25 in others) that don't meet the threshold for our most effective automated enforcement practices? Not likely. More likely: there are $20 billion in reported debt that are "rolled over", picked up from prior-year reports year after year with no families associated with them.
• We've learned that about half of the debt that is submitted for enforcement is owed to the government (assigned to the government for prior welfare cost reimbursement) and half is owed to families. This, too, is a provocative finding. Certainly, published reports about the enormity of child support debt don't typically point out that half is owed to the government and half is owed to families. How would an increased understanding of this story behind the numbers affect policymaking? Would state budget officials increase funding for staff to collect old child support debt, knowing that so much of it would be returned to states? Would judges be more likely to try debt leveraging - i.e., compromising arrears when current support is reliably paid to families - if they knew that so much of the debt is not owed to families?
• Our initial analyses of the story behind the debt numbers suggest that about 2/3 of the debt and about 2/3 of the people who owe it earned less than $10,000 last year. (We looked at reported quarterly wages and have not yet looked at other sources of income.) In other words, it appears that most of the debt is owed by extremely poor debtors. This does not diminish the importance of prosecuting parents who can meet their obligations to their children and refuse to do so, but it certainly suggests that we need to take another look at the potential for partnering with job-training agencies, trying new approaches to default orders, and other potential program initiatives.
• Finally, our initial examination of the story behind the debt numbers suggests that most of the debt is owed in cases with both parents in the same state. These huge arrears are not being built up because of difficulties with enforcing orders across state lines.

We expect to keep pursuing this story behind the numbers, examining the number of years that child support debts have been owed, the proportion of the debt owed for interest, penalties, and retroactive support, and other details. We'll need to rely on our state partners to pin down this story, and we're confident that they'll respond, just as they have responded to our efforts to pin down the various categories of undistributed collections. Our hope is that, as the story emerges, it will guide decision-making and priority-setting. This is a systematic, practical, get-things-accomplished approach, and we think it is potentially much more effective than just expressing dismay at the size of the debt.

The child support program has invested a lot in sophisticated automation tools, staff training, publicity campaigns, and other tools. The increased productivity of the program is making child support a more reliable source of income for the families who depend on it. By systematically examining the data on our successes and failures, we can be smart about how we set our work priorities. It's vital that we do so, because state budget constraints and automation exhaustion can't be permitted to disappoint the families who depend on us.

Sherri Z. Heller

Child Support Enforcement Program Background, Results, and Summary Tables

Program Background

The Child Support Enforcement (CSE) program, established in 1975, has helped strengthen families and reduce welfare dependency by ensuring that parents live up to the responsibility of supporting their children. Many families have been able to remain self-sufficient and off public assistance due to the services received from the Child Support Enforcement program.

The program is an intergovernmental operation functioning in 54 separate states and jurisdictions. Many states have agreements with prosecuting attorneys, other law enforcement agencies, and officials of family or domestic relations courts to carry out the program at the local level. Some state programs are under the Revenue Department or the Attorney General.

Child support enforcement services are required for families receiving assistance under the Temporary Assistance for Needy Families (TANF) program. In addition, child support services are available to families not receiving TANF who apply for such services, as well as families who were formerly on TANF. Current child support payments collected on behalf of former TANF families are distributed to the families. Child support payments collected on behalf of non-TANF families are also forwarded to the families.

The following Office of Child Support Enforcement (OCSE) preliminary data report^[1] highlights financial and statistical achievements of the Child Support Enforcement program for fiscal year 2002. This report is a first look at fiscal year 2002 data and shows advancements made in the Child Support program over the previous year. The information is taken from state-submitted reports on program status sent to OCSE quarterly, for financial data, and annually for statistical data.

Program Results for FY 2002

The following report provides information on the Child Support Enforcement (CSE) program for fiscal year 2002.Data show that during FY 2002, $20.1 billion in child support payments were collected. Total caseload was over 16.0 million. The CSE program had 1.5 million paternities established or acknowledged, and 1.2 million new child support orders were established.

Preliminary Data. The Child Support Performance and Incentive Act of 1998 (CSPIA)^[2] requires that states have complete and reliable data for purposes of computing incentives. Federal auditors begin to review state data after the mandatory December 31^st deadline for data submissions. However, readers should note that no assumption has been made in this report regarding data reliability for each state as a result of these audits. The numbers are presented as submitted to OCSE.

Caseload. OCSE defines a child support case as a parent (mother, father, or putative father) who is now or eventually may be obligated under law for the support of a child or children receiving services under the title IV-D program.

A current assistance case is a case in which the children are: (1) recipients of Temporary Assistance for Needy Families (TANF) under title IV-A of the Social Security Act or (2) entitled to Foster Care maintenance payments under title IV-E of the Social Security Act. In addition, the children's support rights have been assigned by a caretaker to the state and a referral to the state IV-D agency has been made. A former assistance case is a case in which the children were formerly receiving title IV-A (AFDC or TANF) or title IV-E Foster Care services. A never assistance caseis a case in which the children are receiving services under the title IV-D program, but are not currently eligible for and have not previously received assistance under titles IV-A or IV-E of the Social Security Act. This includes cases in which the family is receiving IV-D services as a result of a written application for IV-D services (including cases in which children are receiving state, not title IV-E, foster care services) or a case in which they are Medicaid recipients notreceiving additional assistance.

There were over 16.0 million cases reported in the Child Support Enforcement program during fiscal year 2002. This represents a 5.9 percent decrease in caseload since fiscal year 2001. There were 2.8 million current assistance cases, 7.4 million former assistance cases, and 5.9 million never assistance cases reported in fiscal 2002 (table 2).

Paternities Established. When children are born out of wedlock, establishing paternity is a first step for obtaining a child support order. Paternity establishment involves the legal establishment of fatherhood for a child. Paternity can be established by a voluntary acknowledgement signed by both parents, as part of an in-hospital or other acknowledgement program. States must have procedures that allow paternity to be established or acknowledged at least up to the child's eighteenth birthday.

Paternity was established or acknowledged for over 1.5 million children in fiscal year 2002, a 3.2 percent decrease from fiscal year 2001. There were over 687,000 IV-D legal paternity establishments and almost 830,000 in-hospital and other paternities acknowledged for fiscal year 2002 (tables 2 and 3).

Orders Established. State administrators must use standard guidelines to determine how much a parent should pay for child support. CSE staff can take child support cases to court or to an administrative hearing process to establish the order.

There were 1.2 million orders for child support established in fiscal year 2002. Never assistance orders made up 43 percent of the support orders established for fiscal year 2002, current assistance orders accounted for 20 percent, and former assistance accounted for 36 percent (table 2).

Collections. Total child support collections were $20.1 billion for fiscal year 2002 (tables 1 and 3). This was a 6.2 percent increase in collections over the $19.0 billion collected during fiscal year 2001. Collection data are shown under the following reporting categories: current IV-A and IV-E assistance($1.7 billion), former assistance ($8.3 billion), and never assistance ($10.2 billion) in tables 1 and 3, and TANF and non-TANF in table 3 to allow comparisons with previous years.

Child support payments are collected through various methods, such as income withholding, unemployment compensation interception, and state or federal income tax refund offsets. Income withholding accounts for 65 percent of total collections received (almost $15.5 billion) in FY 2002. Money collected and sent to families totaled almost $18.0 billion in FY 2002, an increase of 8 percent since FY 2001.

Collections per Full-Time Equivalent Staff. The amount of child support collected nationally per full-time equivalent staff (FTE) was nearly $326,000 in fiscal year 2002 (table 7). There were almost 62,000 FTE staff working in the child support program in the states and jurisdictions in fiscal year 2002.

Expenditures and Incentives. In fiscal year 2002, total administrative expenditures were $5.2 billion, a 7.2 percent increase from fiscal year 2001 (table 3). The federal share of expenditures was $3.4 billion and the state share was $1.8 billion. The federal government reimburses states for 66 percent of the majority of allowable expenditures, 90 percent for laboratory paternity costs, and 80 percent for some information technology systems costs.^[3]

For FY 2002, the majority of states (27) showed increases in total expenditures. However, most of those states (16) showed an increase of less than 10 percent.^[4] Estimated incentive paymentsfor fiscal year 2002 were $338 million. Actual incentives earned for fiscal year 2002 cannot be determined until data reliability audits are complete for every state. At that time, final incentive levels can be determined, and estimated and actual incentives can be reconciled.^[5] (See the appendix for an example of how an incentive payment is determined.)

Collections Due and Distributed. The total amount of current support due for fiscal year 2002 was over $26.2 billion (table 8). About $15.1 billion, or 58 percent, of that amount was collected and distributed (table 9). The total amount of arrearages reported for all previous fiscal years was $92.3 billion (table 10), and over $6.2 billion was collected and distributed (table 11). There were 10.6 million cases with arrears due in fiscal year 2002 and 6.3 million of these cases had collections (table 12). Hence, 59 percent of obligors owing arrears made some payment toward their arrears in fiscal year 2002. In addition, there were $1.2 billion in interstate collections forwarded to other states in that year (table 16).

Other Statistics. In fiscal year 2002, program increases were noted for total cases in which a collectionwas made. At 7.8 million cases, this is almost a 5 percent increase over the number of paying cases for fiscal year 2001.

There were 11.3 million cases with an order in fiscal year 2002. This is a 2 percent increase over the number of cases with orders reported in the previous fiscal year.

The total number of children in CSE cases totaled almost 17.9 million in fiscal year 2002. This represents a slight decrease from the number reported for fiscal year 2001.

The traditional cost-effectiveness ratio for fiscal year 2002 was $3.88 (table 14). Cost-effectiveness represents the amount of child support collected for every $1.00 expended on the program. With the effective date of CSPIA, state programs are evaluated with a new cost-effectiveness measure. The CSPIA cost-effectiveness ratio was $4.13^[6] for fiscal year 2002 (table 14). This new cost-effectiveness ratio still compares collections to costs, but makes several adjustments to the comparison. For example, collections states send to other states are included with other collections in the CSPIA ratio, allowing states to get credit for success in interstate cases.

CSE Program Charts & Graphs

Figure 1: Total Caseload, FY 2002

The (CSE) caseload dropped due to a decline in welfare cases. Former assistance cases comprises the largest part of the caseload.

The total Child Support Enforcement (CSE) caseload for FY 2002 was over 16.0 million. The 7,375,664 former assistance cases reported in FY 2002 accounted for over 46 percent of total cases. Never assistance cases (5,879,249) accounted for 37 percent of the caseload, while the remaining 17 percent were current assistance cases (2,806,289).

Source: Form OCSE-157 lines 1+ 3

Figure 2: Total Distributed Collections, FY 2002

Child support collections continue to grow. About half is for families never on assistance and half for families currently or formerly assistance families.

Collections continue to increase with a reported $20.1 billion in FY 2002, a 6.2 percent increase from the previous fiscal year. Collections for former ($8,298,404,027), current ($1,682,081,420), and never ($10,156,381,624) assistance cases were 41 percent, 8 percent, and 51 percent, respectively, of total distributed collections.

Source: Form OCSE-34A line 8

Figure 3: Total Expenditures, FY 1998 - FY 2002

Billions ($)	$3.6	$4.0	$4.5	$4.8	$5.2

Expenditures increase around $400 million dollars each year.

The federal government reimburses states for 66 percent of the majority of allowable expenditures, 90 percent for laboratory paternity cost, and 80 percent for some ADP systems cost. The $5.2 billion in total administrative expenditures reported in FY 2002 is a 7.2 percent increase from the $4.8 billion reported in FY 2001.

Source: Form OCSE-396A line 9A+C

Figure 4: Total Collections by Method of Collections, FY 2002

Wage withholding continues to be the most effective way of collecting child support.

Income withholding is the most effective method of collections with child support. Almost $15.5 billion (65 percent of total collections) was collected using this method in FY 2002. In addition to payments received in IV-D cases, income withholding also includes amounts received from non-IV-D child support cases for processing through the state disbursement unit. Federal income tax refund offsets amounted to almost 7 percent of the total collected in FY 2002 ($1.5 billion). Together, state tax ($210 million) and unemployment offsets were over 3 percent of total distributed collections. The remaining $5.0 billion (26 percent of collections for FY 2002) were payments received through other enforcement techniques or collections received from other states.

Source: Form OCSE-34A lines 2a thru 2g

Wage withholding includes IV-D and non-IV-D collections. Approximately $3.9 billion were non-IV-D collections from wage withholding.

Figure 5: IV-D and State In-Hospital and Other Paternities Acknowledged, FY 1998 - FY 2002

Thousand	1,462	1,600	1,554	1,568	1,518

The increase in the number of paternities established is largely due to the in-hospital paternity acknowledgement program.

The combined total number of IV-D and state in-hospital and other paternities acknowledged was 1,517,897 in FY 2002. The number of IV-D paternities was 687,909 and the number of state in-hospital and other paternities were 829,988 for FY 2002. The total number of IV-D paternities established or acknowledged decreased 3.2 percent from FY 2001 as a result of decreasing caseloads. From FY 1998 to FY 2002 combined totals showed an increase of 3.9 percent over the five-year period.

Source: Form OCSE-157 lines 10 and 16

State paternity acknowledgements include an unknown number of acknowledgements for children in the IV-D caseload.

Figure 6: Support Orders Established, FY 2002 (Million)

The number of support orders established remained stable over the last five years.

The total number of support orders established in FY 2002 was 1,220,078, an increase of 3.3 percent from FY 2001. Current assistance cases (248,365) represented 20 percent of all support orders established, former assistance cases (441,637) were 36 percent of all support orders established, and never assistance cases (530,076) accounted for 44 percent.

Source: Form OCSE-157 line 17

Figure 7: Interstate Collections, FY 1998 - FY 2002 (Million $)

Interstate collections have reached record levels.

Collections made on behalf of families in other states totaled over $1.2 billion in FY 2002. This was nearly a 17 percent increase over the $1,032 million collected in FY 1998.

Source: Form OCSE-34A line 5E

Figure 8: Interstate Cases - Cases Sent to and Received From Another State, FY 1999 - FY 2002

Cases Sent

Cases Received

The interstate caseload continues to rise.

There were 1,040,851 cases sent in FY 2002, this is an increase of 4.2 percent since FY 1999. Total cases received in FY 2002 were 934,745, almost a 2 percent increase over the last four years.

Source: Form OCSE-157 lines 1A and 1B

Figure 9: Traditional Cost Effectiveness Ratio and CSPIA* Cost Effectiveness Ratio, FY 1999 - FY 2002

States collect about $4.00 in child support for every dollar spent on the program.

The cost effectiveness ratio is the amount of child support collected for every dollar expended on the program. The traditional cost-effectiveness ratio for FY 2002 was $3.88, and the CSPIA cost-effectiveness ratio was $4.13.

Source: Forms OCSE-34A and 396A

*Child Support Performance and Incentive Act of 1998

Figure 10: Number of Children in the IV-D Program, FY 2002 (Million)

The ratio of children per case has remained the same for the past two years.

State officials reported that the total number of children in the IV-D program for FY 2002 was 17,872,648. The number of children in the IV-D program has declined due to declines in the child support caseload. Since the number of cases open was over 16.0 million, the average number of children per case is 1.11.

Source: Form OCSE-157 line 4

APPENDIX

CSPIA Incentive Measure Formulas
INCENTIVE MEASURE	FORM AND LINE NUMBERS
IV-D PEP
(Number of Children in the Caseload in the FY or as of the end of the FY Who Were Born Out-of-Wedlock with Paternity Established or Acknowledged) divided by (Number of Children in the Caseload as of the End of the Preceding FY Who were Born Out-of-Wedlock)	(OCSE-157 Line 6) divided by (OCSE-157 Line 5 (of the preceding FY))
STATEWIDE PEP
(Number of Minor Children in the State Born Out-of-Wedlock with Paternity Established or Acknowledged During the FY) divided by (Number of Children in the State Born Out-of Wedlock During the Preceding FY)	(OCSE-157 Line 9) divided by (OCSE-157 Line 8 (of the preceding FY))
SUPPORT ORDER ESTABLISHMENT
(Number of IV-D Cases with Support Orders) divided by (Number of IV-D Cases)	(OCSE-157 Line 2) divided by (OCSE-157 Line 1)
CURRENT COLLECTIONS
(Amount Collected for Current Support in IV-D Cases) divided by (Amount Owed for Current Support in IV-D Cases)	(OCSE-157 Line 25 divided by (OCSE-157 Line 24)
ARREARAGE COLLECTIONS
(Number of IV-D Cases Paying Toward Arrears) divided by (Number of IV-D Cases With Arrears Due)	(OCSE-157 Line 29) divided by (OCSE-157 Line 28)
COST EFFECTIVENESS
(Total IV-D Dollars Collected) divided by (Total IV-D Dollars Expended)	(OCSE-34A Lines 8 + 5 + 13 of column (e) ) divided by (OCSE-396A Lines 9 columns (A) + (C) - 1(b) columns (A) + (C) )
STATE COLLECTIONS BASE
2(Current Assistance + Former Assistance Collections + Medicaid) + Never Assistance Collections	OCSE-34A: 2((Line 8 columns a+b+c) + (Line 5 columns a+b+c)) + Line 8 column d + Line 5 column d + Line 13 column e

How an Incentive Payment is Determined

Because of the complexity of the incentives formula set forth in section 458 of the Social Security Act, we have included an example of how the system would work in a particular year for State A. Let's make the following assumptions regarding State A (See table A):

• State A's paternity performance level is 54 percent, making its applicable percent 64 percent (see table C)
• State A's order establishment performance level is 79 percent, making its applicable percent 98 percent (see table C)
• State A's current support collections performance level is 41 percent, making its applicable percent 51 percent (see table D)
• State A's arrearage support collections performance level is 40 percent, making its applicable percent 50 percent (see table D)
• State A's cost-effectiveness ratio is 3.00, making its applicable percent 60 percent (see table E)
• State A's collections base is $50 million (determined by 2 times the collections for Current Assistance, Former Assistance, and Medicaid casesplus collections for other cases)

• The maximum incentive for State A is:

  • $32 million collections base for paternity ($50 mil. times 0.64), plus
  • $49 million collections base for orders ($50 mil. times 0.98), plus
  • $25.5 million collections base for current collections ($50 mil. times 0.51), plus
  • $18.8 million collections base for arrearage collections ($50 million times 0.75^[7] times 0.50) plus
  • $22.5 million collections base for cost-effectiveness ($50 million times 0.75^[8] times 0.60) equals
  • Resulting in a maximum incentive base amount of $147.8 million for State A.

Table A

Measure	State A's Performance Level	Applicable Percent based on Performance	Weight	State A's Collection Base (assumed to be $50.0 million)
Paternity Establishment	54%	64%	1.00	$32.0 million
Order Establishment	79%	98%	1.00	$49.0 million
Current Collections	41%	51%	1.00	$25.5 million
Arrearage Collections	40%	50%	0.75	$18.8 million
Cost-Effectiveness	$3.00	60%	0.75	$22.5 million
State A's Maximum Incentive Base Amount				$147.8 million

• We must now make some assumptions regarding the other States. Let's assume that there are only two other States in our country--and the maximum incentive base amount is $84 million for State B and $50 million for State C, making the total maximum incentive base amount $281.8 million for all three States (See table B).
• We must now determine what State A's share of the $281.8 million is. It is 52 percent ($147.8 divided by $281.8).

Table B

State	Maximum Incentive Base Amounts	State's Share of $281.8 million	Incentive Payment Pool $422 million
A	$147.8	0.52	$219.4 mil.
B	$ 84.0	0.30	$126.6 mil.
C	$ 50.0	0.18	$ 76.01 mil.
Totals	$281.8	1.00	$422.0 mil.

• Let us assume it is FY 2000, so the incentive payment pool for the FY is $422 million (see table F).
• Since State A's share is 0.52, this State has earned 52 percent of the $422 million incentive payment pool that Congress is allowing, or $219.4 ($422 mil. times 0.52) million incentive payment for this particular fiscal year.

Table C^[9]

If the Paternity Establishment or Support Order Performance Level Is:

At Least:	But Less Than:	The Applicable Percentage Is:	At Least:	But Less Than:	The Applicable Percentage Is:
80%		100%	64%	65%	74%
79%	80%	98%	63%	64%	73%
78%	79%	96%	62%	63%	72%
77%	78%	94%	61%	62%	71%
76%	77%	92%	60%	61%	70%
75%	76%	90%	59%	60%	69%
74%	75%	88%	58%	59%	68%
73%	74%	86%	57%	58%	67%
72%	73%	84%	56%	57%	66%
71%	72%	82%	55%	56%	65%
70%	71%	80%	54%	55%	64%
69%	70%	79%	53%	54%	63%
68%	69%	78%	52%	53%	62%
67%	68%	77%	51%	52%	61%
66%	67%	76%	50%	51%	60%
65%	66%	75%	0%	50%	0%

Table D^[10]

If the Current Collections or Arrearage Collections Performance Level Is:

At Least:	But Less Than:	The Applicable Percentage Is:	At Least:	But Less Than:	The Applicable Percentage Is:
80%		100%	59%	60%	69%
79%	80%	98%	58%	59%	68%
78%	79%	96%	57%	58%	67%
77%	78%	94%	56%	57%	66%
76%	77%	92%	55%	56%	65%
75%	76%	90%	54%	55%	64%
74%	75%	88%	53%	54%	63%
73%	74%	86%	52%	53%	62%
72%	73%	84%	51%	52%	61%
71%	72%	82%	50%	51%	60%
70%	71%	80%	49%	50%	59%
69%	70%	79%	48%	49%	58%
68%	69%	78%	47%	48%	57%
67%	68%	77%	46%	47%	56%
66%	67%	76%	45%	46%	55%
65%	66%	75%	44%	45%	54%
64%	65%	74%	43%	55%	53%
63%	64%	73%	42%	43%	52%
62%	63%	72%	41%	42%	51%
61%	62%	71%	40%	41%	50%
60%	61%	70%	0	40%	0

Table E^[11]

If the Cost-Effectiveness Performance Level Is:

At Least:	But Less Than:	The Applicable Percentage Is:
5.00		100%
4.50	4.99	90%
4.00	4.50	80%
3.50	4.00	70%
3.00	3.50	60%
2.50	3.00	50%
2.00	2.50	40%
0.00	2.00	0

Table F

Mandated Incentive Pool Payment, FY 2000-2008

The incentive payment pool is: $422,000,000 for fiscal year 2000 $429,000,000 for fiscal year 2001 $450,000,000 for fiscal year 2002 $461,000,000 for fiscal year 2003 $454,000,000 for fiscal year 2004 $446,000,000 for fiscal year 2005 $458,000,000 for fiscal year 2006 $471,000,000 for fiscal year 2007 $483,000,000 for fiscal year 2008

For each fiscal year following fiscal year 2008, the incentive payment pool will be multiplied by the percentage increase in the CPI between the two preceding years. For example for fiscal year 2009, if the CPI increases by 1 percent between fiscal years 2007 and 2008, then the incentive pool for fiscal year 2009 would be a 1 percent increase over the $483,000,000 incentive payment pool for fiscal year 2008, or $487,830,000.

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[1] This report was prepared by Renée Jackson, Adrienna Johnson, Delores Johnson, Nina Campbell and Ken Dittmar under the leadership and direction of Joyce Pitts. Please direct comments to jpitts@acf.hhs.gov.

[2] The Child Support Performance and Incentive Act of 1998 (CSPIA)provided for an alternative penalty procedure for states that fail to meet federal child support data processing requirements. In addition, CSPIA reformed federal incentive payments for an effective child support program by requiring a performance-based incentive system.

[3] OCSE charges an assortment of fees to states in return for services provided to state agencies administering the child support program. These fees reduce the total amount of expenditures that are eligible for FFP. Total expenditures (including state and federal shares) reported are net of these fees.

[4] Four of those states showed increases of more than 20 percent, with one state showing an increase of over 30 percent.

[5] It should be noted that the new incentives established by the Child Support Performance and Incentive Act of 1998 went into partial effect in fiscal year 2000 and fully account for states' incentives for fiscal year 2002.

[6] See appendix for all the CSPIA performance measurement formulas.

[7] Because the measure has less weight.

[8] Because the measure has less weight.

[9] Use this table to determine the maximum incentive levels for the paternity establishment and support order performance measures.

[10] Use this table to determine the maximum incentive levels for the current and arrearage support collections performance measures.

[11] Use this table to determine the maximum incentive level for the cost-effectiveness performance measure.