WEST VIRGINIA AND PENNSYLVANIA

DEBIT CARDS

Goal:Provide full child support payments to the custodial parent quickly and reduce state payment processing costs and undistributed collections.

Several guiding principles were identified as the two states implemented the debit card program. These principles are:

• All customers should have the ability to withdraw funds without charge.
• All customers should have reasonable access to their funds in their local community.
• The cost to disburse funds through debit cards should be less than the cost of disbursement by check.
• The card design should not be unique, so as not to stigmatize customers.
• Disbursement by check will not be an option, but customers may choose between a debit card and direct deposit.

Strategic Plan: Supports Strategy 3 of the National Child Support Strategic Plan.

Description:In 2004 and 2005, Pennsylvania and West Virginia adopted a debit card process for disbursement of child support payments. With very few exceptions, custodians receive child support payments through either a posting to their debit card or a direct deposit to their bank account.

Both states identified four major problems with their original child support payment process:

• In many cases, the family was not receiving the full child support payment due to issues involved in negotiating checks. For example, in some jurisdictions, 50% of all customers do not have a bank account. These "unbanked" custodial parents were often required to use check cashing agencies which charge as much as 30% of the check's value for their services.
• Both states experienced mail service disruption during natural disasters and terrorist attacks. The service disruption resulted in child support agencies being unable to send child support payments to the custodial parents that were experiencing the mail disruptions.
• The problem of undistributed collections affects many child support programs. One factor in the accumulation of undistributed collections can involve locating the custodial parent.
• States are facing substantial pressure to reduce costs. State budgets are getting tighter as states struggle to "do more with less." Both states were confronted with high payment processing fees and costs associated with fraud and lost child support checks.

In order to address these issues, Pennsylvania and West Virginia decided to provide custodial parents with two choices. Custodial parents could either have child support payments posted to their own bank account or they could have a posting to a debit card that was issued to them by the state. Before implementation, all significant partners were informed of the payment processing changes.

West Virginia's fee structure is listed below:

• Free Visa branded support debit card
• Unlimited free POS (Point of Service) purchases (signature and PIN)
• 2 free ATM cash withdrawals per month
• 8 free ATM balance inquiries per month
• Unlimited free online balance inquiries
• Unlimited Voice Recognition Unit/Interactive Voice Response calls
• 2 free CSR (Customer Service Representative) calls per month to the company administering debit cards

Results:Pennsylvania and West Virginia debit card payment processing is fully operational statewide. Debit cards have helped solve all four problems listed above.

• In both states, the family receives the full child support payment. For example, an "unbanked" family receiving a $200 child support payment would have paid up to $60 in check cashing fees. Since the debit card system was established, the family receives the full $200 payment which can be used as needed by the family. Some families are using the debit card payments for savings or accumulating funds for a particular purpose such as buying school clothing.
• Payments are posted immediately. Custodial parents no longer depend on mail delivery service.
• Undistributed collections are substantially lower. For example, in Pennsylvania, UDC for address holds are down by 85%. In Philadelphia address holds were reduced by $37,000 and that category of UDC is falling.
• Payment processing costs are substantially lower. In West Virginia, postage costs for checks were reduced by 90%. Pennsylvania is saving $2 million annually in printing, postage and fraud reduction.

Location: The Pennsylvania and West Virginia Debit Card programs are both implemented statewide.

Funding: Minimal IV-D funding was used. Much of the cost of the program was absorbed by the vendors.

Replication Advice:

• Strong leadership to keep Project on task
• Weekly conference calls with vendor/agency staff with written feedback/notes from conference calls
• Identify right personnel/decision makers for team
• Outreach to custodial parents and legislative office staff
• Timely answers to the many implementation questions
• PATIENCE
• Weekly review of task list
• Avoid having critical work due during the holidays
• Do not roll out new programs during the State Legislative Session
• Avoid whole-state roll-out at one time
• Re-verify addresses prior to card mailing
• Make card mailing packet eye-catching
• Customer and staff education early in the process
• Major publicity (newspapers, etc.) is very important

Contact:

Pennsylvania: Jody Pender,

Financial Programs Manager

Phone: 717-705-5106

Email: jodypender@pacses.com

West Virginia: Hal Pendell

Chief Financial Officer

Email: hpendell@wvdhhr.org