Improve the State s Child Support Enforcement Efforts: Introduction

It is the stated position of the United States government that any person who becomes the parent of a child automatically incurs the responsibility of providing for that child. 1 The federal Child Support Enforcement (CSE) program exists to enforce that responsibility.

Congress established the CSE program in 1975 as Title IV-D of the Social Security Act. Responding to concern that recipients of Aid to Dependent Children (now Aid to Famili es with Dependent Children, or AFDC) were often children of living but absent parents, Congress sought to limit the growth of public assistance caseloads by ensuring that non-custodial parents supported their children. Since 1975, the CSE program has under gone major amendments in 1984 and again in the Family Support Act of 1988, which reaffirmed the philosophy that parents have primary responsibility for their children s financial security.

Program Structure
The CSE program participates in establishing pat ernity for children born out-of-wedlock; establishing child-support orders for children of absent parents; locating absent parents; collecting support payments from obligors, who are absent parents under court order to pay child support, and enforcing supp ort orders in cases where obligors become delinquent. Title IV-D mandates that state CSE programs provide the full range of child-support enforcement services to all current and former AFDC, Medicaid and foster care recipients and to all other custodial pa rents who apply for services.

In addition to collecting and enforcing regular child-support payments, the program is also mandated to enforce medical support by requiring obligors to enroll their children in group health plans if the plans are available at reasonable cost. Medical supp ort enforcement saves the state money and benefits the state Medicaid agency by allowing the agency to recoup Medicaid expenditures. In states where the CSE and Medicaid programs are housed in one agency, this also benefits t he CSE program by increasing the agency budget. However, CSE programs do not benefit directly by enforcing medical support orders.

The CSE program operates as a federal-state partnership like the Medicaid and AFDC programs. Each state designates a single state agency as the CSE agency. The agency administers the program in that state.

Unlike the Medicaid and AFDC programs, the CSE program also involves counties because child support is under the jurisdiction of county-level domestic relations courts. Chil d-support enforcement, therefore, involves a complex arrangement of federal, state and local relationships. The administrative structure of CSE programs complicates the essential tasks of the state CSE program.

The Child Support System
A child support case consists of one absent parent and that parent s court-ordered obligation to pay a certain sum of money to support a child or children who live with their other parent. Every order constitutes a separate case; thus, one absent parent may be a party in man y cases if that parent has children with different custodial parents. One custodial parent may also be a party in more than one case if that parent has children with different absent parents. A child can of course be a party in only one case, since each ch ild can have only one absent and one custodial parent.

The county domestic relations court or a parallel administrative office sets the support amount, or award, at a percentage of the absent parent s income, using mandated guidelines which take into account various factors such as the number of children in the case, the custodial parent s income and new marital status, and the presence of children by other marriages.

The absent parent pays the support to the child s custodial parent through an office known as the registry in the county where the support order was established. In cases that have not come to the state CSE program for enforcement, the registry records the payment and issues a new check to the custodial parent. In CSE cases, the registry records the payment and forwards the payment to the CSE collection office for disbursement to the custodial parent.

Child support orders traditionally have been established when married couples with children divorce. As the rate of out-of-wedlock births continues to rise, there is an increasing need to establish support orders for children of never-married parents. Supp ort cannot be ordered in these cases until legal paternity has been established through voluntary acknowledgement or judicial processes involving genetic testing.

Collections and Funding
In cases where the custodial parent is not receiving AFDC, the custodial parent receives the entire amount of the support payment. In cases where the custodial parent is an AFDC client, however, only $50 of the support payment goes to the family. The $50 i s known as the disregard because it is not counted as income against the family s AFDC grant. If the amount of the support payment exceeds the AFDC grant, the family is removed from the AFDC rolls and recei ves the entire support amount.

After the disregard, the remainder of the child support payment in AFDC cases is retained by the state and considered to be AFDC cost-recovery, a reimbursement to the state and federal governments for the costs of supporting the absent parent s children through public assistance. The retained collections are split between the state and the federal AFDC program according to the federal AFDC match rate, leaving the state with around 35 percent of the retained amount, or aroun d 25 percent of the entire support amount before the disregard.

The state has discretion regarding the use of the state s share of retained collections. Most states still use the collections to fund the AFDC program, since the collections are supposed to represent recovered AFDC costs. In these states, the CSE program is funded through a regular general revenue appropriation. In all states, the CSE program receives federal incentives based on total AFDC and non-AFDC collections. These incentives plus the program s regular appropriation receive a 66 percent federal administrative match; all these funds together comprise the program s operating budget.

In Texas, the retained collections are reinvested into the CSE program. The collections are appropriated to the program via a general revenue appropriation. The program receives almost no additional general revenue appropriations. Thus, for Texas, AFDC col lections are the basis of the entire funding mechanism for the CSE program.

Health-care providers who serve Medicaid patients are supposed to bill Medicaid rather than any third-party payor, leaving Medicaid to recover the cost through third-party recovery. In child-support cases involving medical support enforcement, the state Medicaid office recovers costs incurred by children who are covered under their absent parent s group health plan by billing the insurance company for the amount of Medicaid expenditures.

CSE in Texas
Most states designate the state AFDC agency as the CSE agency. Texas is one of three states housing their CSE programs in the Office of the Attorney General. Texas CSE program moved from the Texas Department of Human Services to the Attorney General s Office in 1985.

Over the past eight years, the Texas program has made impressive strides, winning praise from Congress in 1991 as the nation s most improved CSE program. The CSE budget more than tripled due to the Legislature s decision to reinvest state retained child support collections into the program. Collections soared from $18 million in 1983 to $300 million in 1992, and the Texas program came to be seen as a leader in setting national child support policy.
Notwithstanding these achievements, Texas CSE program is currently struggling to fulfill federal mandates and is in jeopardy of losing its stature as a model program. The program is collecting support in only 11 percent of AFDC cases and 22 percent of non -AFDC cases. A recent management audit estimated that there is a total of $1.6 billion in obligated and unobligated support due in the CSE caseload, of which the program collected $301 million in 1992. 2 A 1989 audit of the medical support enforcement component of the program identified a potential $22.6 million in Medicaid costs that the CSE program should be recovering; the program currently collects less than $2 million in Medicaid cost recovery. 3

Texas does not compare favorably with other states on most of the common outcome measures for CSE programs. Texas establishes paternity in 22 percent of CSE cases involving out-of-wedl ock births, compared with the national average of 43 percent, even though the state spends far more resources on paternity establishment than most other states. Texas recovers 9 percent of AFDC payments through child-support collections, compared with the national average of 10.3 percent. Nine states, including Arkansas and Alabama, recover more than 20 percent of AFDC payments. Texas CSE program s cost effectiveness ratio is also one of the nation s lowest. 4

Texas is struggling with the increasing federal mandates and guidelines that are constraining all state CSE programs. Congress has added and will probably continue to add new groups to states mandated CSE caseloads. CSE programs are also hindered by a poor economy which has left the states attempting to force support payments from obligors who may themselves be receiving public assistance.

Demographic changes are adding another wrinkle to the child support problem. The CSE program, originally envisioned as enforcing support in cases of divo rce, faces an increasing need to establish paternity in cases where the parents were never married. As teen parents make up a growing proportion of the CSE caseload, the state must establish orders in many cases knowing that years will go by before the obl igor will be in a position to make meaningful financial contributions to the family.

Failure of the state to collect child support has serious negative consequences for Texas children and Texas taxpayers. For the children, child support frequ ently represents the lifeline that keeps them from falling into poverty. Children who do not receive child support face increased risk of poverty and its associated evils. For the taxpayers, child support collections help reduce the amount of state and fed eral resources devoted to supporting the children of absent parents.

Beyond the immediate effect of child support collections on state AFDC costs, child support payments today have implications for the state s future. By keeping children out of poverty, the absent parent s support helps prevent all the problems associated with childhood poverty: drug abuse, crime, unemployment and teen pregnancy.

Whatever the problems might be with child support at the federal level, Texas must address the state program s problems quickly and decisively. Texas CSE caseload is growing at the rate of more than 150,000 cases per year. Without significant changes to the CSE program and legislation affecting it, caseworkers will not be able to maintain even the current percen tages of obligated and paying cases. While the installation of the new automated system, Texas Child Support Enforcement System (TEXCSES), will help Texas child-support enforcement problems, it is not the answer. Without new legislation, the new system s potential to process cases will be limited.

This report sets forth a number of recommendations for improving child support enforcement in Texas.

Many of the recommendations suggest strategies for improving AFDC collections. Because of t he CSE funding structure, increasing AFDC collections would increase all the funding sources for the program, as well as saving the state Medicaid and AFDC funds. However, strategies to increase AFDC collections can be effective only up to a point. The bro ad societal issues of out-of-wedlock birth and unemployment will continue to constrain the CSE program from fully realizing its goal of providing support to children. Other recommendations in this report address these issues.

Implementing these recommend ations would save the state administrative costs, increase revenues and, most important, provide additional support to Texas families. The Texas CSE program would become much more efficient and effective, and in the process, regain a leadership role in set ting national child support policy.

1 U.S. Department of Health and Human Services, Office of Child Support Enforcement, 15th Annual Report to Congress for the Period Ending September 30, 1990 (Washington, D.C.: U.S. Government Printing Office, 1992).
2 Texas State Auditor s Office, Management Audit of the Texas Child Support Enforcement Program (Austin, Texas, October 1992).
3 U.S. Department of Health and Human Services, Health Care Finance Administration, Medicaid Oversight Report, Texas Medicaid Program (Austin, Texas, October 1990).
4 U.S. Office of Child Support Enforcement, 15th Annual Report to Congress.