EFT/EDI Child Support Payments

Background

The Financial Management Service, Payment Automation Branch, in cooperation with the Department of Health and Human Services (DHHS), Office of Child Support Enforcement (OCSE), is working with federal agencies that process payroll on-site to convert their wage withholding child support payments from checks to electronic funds transfer (EFT)/Electronic Data Interchange (EDI).

The payments targeted for conversion to EFT/EDI are payments from orders issued to agencies from a child support enforcement entity that are directed to a State child support enforcement agency or the State's designated disbursement unit (SDU). The payments will be processed through the Automated Clearing House (ACH) network using the ACH Cash Concentration and Disbursement (CCD+) or the Corporate Trade Exchange (CTX) format for those federal agencies, and States with CTX capability.

Specifically, these are child support payments within the jurisdiction of the Federal Child Support Enforcement Program initially legislated in 1975, under Title IV-D of the Social Security Act. The Act required state governments to set up their own programs to locate absent parents, establish paternity and support, enforce support, and collect and distribute child support payments.

The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 which provided strong measures for ensuring child support enforcement further strengthened the Child Support Enforcement Program. The PRWORA, also called the Welfare Reform legislation of 1996, required that States develop EFT/EDI centralized collection and disbursement capability. This provided the means for which federal agencies can now process child support payments, normally sent to several different State county, or local child support enforcement entities, to one central location within a State.

• The conversion to EFT/EDI child support payments supports the mandatory EFT provision of the Debt Collection Improvement Act of 1996, Welfare Reform legislation, and is in line with the FMS' move towards an all-electronic payment environment. The FMS implemented a successful pilot of the Child Support Payment Application with a selected number of federal/state agencies. An FMS CSP Web site: www.fms.treas.gov/csp has been established, and includes a Federal Agency Guide for implementing EFT/EDI child support payments, State Child Support Enforcement Program contacts, and other program information. The governmentwide implementation of the EFT/EDI Child Support Payment Application is in support of federal agencies processing EFT/EDI payments to States that have established centralized collection capability.
  
  
• The child support payments that are processed through FMS to State child support enforcement agencies are in the CCD+ payment format with a single 80-character addendum record. The addendum record is structured with the National Automated Clearing House Association (NACHA) endorsed Child Support Banking Convention, DED (Deduction) Segment. The DED Segment Convention permits the federal agency to provide additional information with the child support payment to allow accurate posting to the federal employees' accounts by the State child support enforcement agency. Though child support payments will be processed primarily in the CCD+ACH format, FMS is prepared to assist federal agencies in developing ACH Corporate Trade Exchange (CTX) or EDI 820, multiple addenda, processing capability.
  
  
• The child support payments are processed in the CCD+/CTX format to the State's designated financial institution (FI). The State's FI will credit the account of the State agency, and transmit the payment information to the State agency as instructed. The State agency will credit the appropriate federal employee's account, upon receipt of the child support payment information, and transmit the child support payment to the custodial parent within two business days.
  
  
• Federal EFT and check payments are impacted by the state government wide change to centralized collections. Since EFT and check payments are processed to one State location, the State child support enforcement agency should notify the federal employers of changes in the State's payment processing location or information requirements. The State child support enforcement agency's collection location is not always the child support enforcement agency in the State where the income withholding is issued.
  
  
• Federal agencies are encouraged to work in close coordination with the State child support enforcement agencies to assure that the appropriate child support payments are issued to the state's designated location. The State child support enforcement agency responsible for collection of child support payments should provide the federal agency with the state's program procedures, and electronic banking information necessary to transmit payments to the state agency's FI.
  
  
• EFT/EDI child support payments have substantial benefits for the federal and state governments, and the parents, and children involved.
  
  
• EFT/EDI is the most efficient and the least costly method for payments and collections.
  
  
• Government internal controls are strengthened and reconciliation is streamlined.
  
  
• EFT payments eliminate concern on the part of employers and employees about timely or lost payments.
  
  
• Custodial parents can better plan and manage their finances, with timely child support.
  
  
• Timely and consistent payments will help improve the quality of life for the children receiving child support.
  
  
• Federal agencies that are prepared to convert the targeted child support payments from checks to EFT/EDI are asked to access the CSP Web site address noted above for additional information, and contact their servicing Treasury, FMS Regional Financial Center for further guidance.
  
  
• For general questions, contact the AFC Help Desk at (512) 342-7300 or e-mail afc.help@fms.treas.gov.
  
  
• The information on this page and CSP Web Site specifically provides program information for federal agencies to convert certain employee withholding child support payments from checks to EFT/EDI.