Puerto Rico

Electronic Funds Transfer (PROJECT DIRECT DEPOSIT)

Description/Goal

The goal was to use EFT to improve the collection of wage withholdings. Prior to Puerto Rico's July 1995 IV-D reorganization (from a court-based to an administrative-based process), income withholdings from wages represented less than 4% of total collections. The use of EFT was phased in. All support payments, including EFT wage withholdings, are now made to the privatized-collections vendor, Banco Popular de Puerto Rico.

(Dual language copies of the EFT Order are available upon request)

Results

IV-D costs per transaction: Payment at Bank Branch - $1.50

Mailed Payment - $0.45 to 0.50

EFT Payment - $0.20

Estimated minimum Monthly Savings over 1-98: $1,800.00

(The savings calculation does not include employers who used EFT prior to the issuance of EFT orders, i.e. 1-98 EFT employers - in addition, the benefit to custodial parents who receive more timely and consistent payments as a result of this project has not been quantified)

The increased use of EFT payments, and EFT's inherent accuracy and speed, has allowed Puerto Rico's ASUME/vendor team to consistently distribute approximately 99% of support collections within 24 hours of receipt.

The great majority of the employer community has welcomed the initiative, and there have been no organized attempts to oppose the 1997 amendment. The IV-D program, in turn, continues to realize savings as EFT payments replace mailed-in payments and window payments at Banco Popular branches. Finally, the renewed focus on income withholdings has led to continued increases in the percentage of total collections available for distribution received from wage withholdings.

Location

Statewide from inception.

Funding

Regular federal matching.

Replication Advice: Employer outreach vital to successful implementation. However, EFT law should include penalty provision. Expect employer response to be positive. This should hold true throughout the Nation, since Puerto Rico is a base for many multi-state employers.