# Presentation: 535371

## Distribution Under PRWORA 

- DISTRIBUTION PRINCIPLESMODULE

- Distribution Under PRWORA

- H/T 3-1

**Notes:**
43
Display this slide before beginning the distribution principles module.

## Distribution Under PRWORA

- Never Assistance Cases
- Current Assistance Cases
- Former Assistance Cases

- H/T 3-2

**Notes:**
44
Under pre-PRWORA Federal distribution law, we were only concerned with two types of cases:  assistance cases and non-assistance cases.  We only dealt with these two case types because whenever a family went onto assistance, the family assigned its right to all support accruing up until the family left assistance.  Also, each time the family went back onto assistance, everything was assigned.

The new Federal distribution law makes a distinction between distribution in three types of cases:  Never Assistance Cases, Current Assistance Cases, and Former Assistance Cases.  Now that you have some familiarity with the changes in the assignment of support rights, you should see the importance of making the distinction between these three case types.

We will discuss the differences in distribution between these three case types  during this module.

## Distribution Under PRWORA

- Date Assignment(s) Executed
- Date of Distribution

- H/T 3-3

**Notes:**
45
Before determining how a child support payment should be distributed, you must not only know the current case type of the case to which you will be applying the payment, but you must also know the dates  any assignments were executed AND the rules to apply depending on the date in which you are going to distribute the payment to the case.

This information is important, due to the way in which assignments will change as the new Federal requirements are phased-in.

During this module you will learn about how child support payments will be applied during different time periods, depending on case type and depending on the different assignments which exist on the case.

## Distribution in “Never Assistance” Cases

- Distribution in “Never Assistance” Cases

- “Never Assistance” Case is a case in which
- the family has never received assistance.
- All collections are disbursed to the family.

- H/T 3-4

**Notes:**
46
First, let’s discuss distribution in never-assistance cases.

The same rule applies across all time periods:  in never assistance cases, all collections are disbursed to the family.

This is the same rule as we have applied in the past to what we called non-assistance cases.  Nothing has changed with respect to distribution in these types of cases.

## Distribution in “Current Assistance” Cases

- Distribution in “Current Assistance” Cases

- 	1.  Pay to the Federal Government the Federal share of the total collection,
- 	2. Retain, or pay to the family, the State share of the collection,
- 	3. Pay collections exceeding URA to the family.

- H/T 3-5

**Notes:**
47
Now let’s discuss distribution in Current Assistance cases.

Effective October 1, 1996 (the date the new Federal distribution statute went into effect), child support must be distributed in the following order in all current assistance cases:  
(1) first pay to the Federal Government its share (determined by the Federal medical assistance percentage) of the entire collection, 
(2) second, retain, or pay to the family, the State share of the collection, and, 
(3) third, pay collections exceeding the total cumulative amount of unreimbursed assistance to the family.

These rules apply to all current assistance cases October 1, 1996 and later.

The key change in the way support is distributed in current assistance cases is the requirement to pay the Federal share off the top of the total collection.  The feds must get their share before the State does what it chooses with the State share of the collection.

## New Features in “Current Assistance” Cases

- New Features in “Current Assistance” Cases

- No Federal mandate/participation in
- $50 pass-through payment
- payments of excess current support over grant amount (former 45 CFR 302.51(b)(3))

- H/T 3-6

**Notes:**
48
Let’s discuss the new features in current assistance cases that have resulted from this change in Federal distribution law.

First, prior Federal law required the States to pay both the $50 passthrough and excess over grant payments, sometimes called (b)(3) payments, to families while the family received assistance.  The Federal Government shared in the cost of such payments.

Under the new law, the Federal Government ceased to participate in these payments effective October 1, 1996.  Any such payments made by the States must now come entirely out of the State share of collections.

Some States have already stopped the payment of one or both of these payments.  Decisions to continue or discontinue these payments in your State are policy decisions you must make.  We will cover policy decisions in more detail later.

## Distribution in “Former Assistance” Cases

- Distribution in “Former Assistance” Cases

- Distribution in “Former Assistance” cases is time sensitive for Plan A.
- October 1, 1997 - September 30, 2000
- October 1, 2000 and later
- New distribution in “Former Assistance” cases under Plan B begins October 1, 1998.

- H/T 3-7

**Notes:**
49
Now we will cover the most complex part of distribution:  how to distribute child supper in former assistance cases.

Because of the changes to the assignment of rights, distribution under Plan A is time-sensitive:  how you apply payments in former assistance cases will depend on whether you are distributing money prior to, or after, October 1, 2000.

In Plan B States, all of the distribution changes will take place at one time:  October 1, 1998 and later.

In this module, we will cover changes to distribution under “Plan A”.  Distribution in former assistance cases under “Plan B” will work the same way as post-September 2000 distribution under Plan A.

## Distribution of Collections 10/1/97 thru 9/30/2000 (Plan A)

- 	In former assistance cases, pay collections in the following order:
- 		1. Current support to the family,
- 		2. Never-Assigned arrears to the family,
- 		3. All remaining arrearages (in any order).

- H/T 3-8

**Notes:**
50
First we will discuss distribution in former assistance cases for the period October 1, 1997 through September 30, 2000.

In a former assistance case during this time period, child support collections must first be applied to current support, second to never-assigned arrears, and third to any remaining arrearages (temporarily assigned, permanently assigned, unassigned) in any order the State chooses.

In some States, post-assistance (Never-Assigned) arrears were not paid first once the family terminated from assistance.  Prior to PRWORA, the Federal law allowed States to determine in which order to pay all arrears after assistance terminated.
Under the new Federal law, arrears which accrue after the assistance period must be paid to the family before collections may be applied to any other arrearage. This requirement took effect on October 1, 1997 (except for those States who are electing Plan B, in which case it takes effect October 1, 1998).

Let’s take a look at an example of how distribution will work during this time period.

## H/T 3-9

**Notes:**
51
Go through slides with participants, first providing a layout of how the table is constructed:  identify how the columns are labeled and the distinction in the table between distribution of the payment, and cumulative balances at the end of the month.  Explain that, for each example, we will determine the application of a payment during several months, taking into consideration: case type, payment type, and the time period in which we are doing the distribution.  Text to set up the next slide is provided at the bottom of the preceding slide.  Do not advance slides until you have set up the next month and participants have provided answers.  Use a laser pointer.

In this example, the case is a former assistance case.  Support accrues at $100 per month.  In the first month, no payment was received.  The arrears at the end of the month are $500 Never-Assigned arrears, $200 Permanently assigned arrears, and $700 Temporarily assigned arrears.  The unreimbursed assistance is $1300.
You’ll see in your notebooks that we have provided you with a duplicate of this slide.  As we progress through the example, you may want to write-in what we do during the subsequent months in the blanks provided.
In the second month, a $500 payment was received.   Since it is after 10/1/1997 and before 10/1/2000, how would the payment be distributed?

## H/T 3-10

**Notes:**
52
Answer:  First we would apply $100 to current support.  Then we would apply the remaining $400 to Never-Assigned arrears.

Let’s review the distribution ordering rules you will apply in former assistance cases during this time period:  first apply support to current, second to Never-Assigned arrears, third (in this State) to permanently assigned arrears, and fourth to temporarily assigned arrears.  Modify these rules based on options chosen within the State.  Both the excel slide and the text accompanying the slide may need to be modified.  Write ordering rules on a flipchart, or on an overhead projector transparency.

Arrears at the end of the month are:  $100 Never-Assigned arrears, $200 Permanently assigned arrears, and $700 Temporarily assigned arrears.  The unreimbursed assistance remains $1300 since we did not apply any of the payment to assigned arrears.

In the third month, a $500 payment was received.   How would the payment be distributed?  Go through columns with participants, pointing to each column as you go with the laser pointer.

## H/T 3-11

**Notes:**
53
45
Answer:  First we would apply $100 to current support.  Then we would apply $100 to pay off the remaining Never-Assigned arrears.  Then we would apply $200 to the Permanently Assigned arrears (paying them off), then the remaining $100 to temporarily assigned arrears.

The arrears at the end of the month are:  $0 Never-Assigned arrears, $0 Permanently assigned arrears, and $600 Temporarily assigned arrears.  The unreimbursed assistance is now $1000 since we applied $300 of the payment to assigned arrears.

Are there any questions about how payments are applied to former assistance cases during this time period?  We’ll go through additional examples of this type of distribution, later in the module.

Now let’s discuss distribution in former assistance cases after September 30, 2000.

## Distribution of Collections 10/1/2000 and Later

- 	In former assistance cases, pay collections in the following order:
- 		1. Current support,
- 		2. Never-Assigned arrears,
- 		3. Unassigned and Conditionally-assigned arrears,
- 		4. Permanently assigned arrears,
- 		5. Unassigned during assistance arrears.

- H/T 3-12

**Notes:**
54
In former assistance cases after September 30, 2000, child support must be paid in the following order:
(1)  first, to current support,
(2)  second, to never-assigned arrears,
(3)  third to unassigned and/or to conditionally assigned arrears in any order the State chooses, and
(4)  fourth, to permanently assigned arrears (and any unassigned arrears which accrued during assistance periods).

Because we are talking about non-IRS collections, the only assigned support which may be retained by the State is that which is applied to permanently assigned arrears.  Under these distribution ordering rules, the State will be paid last.

Let’s now look at the prior example, this time looking at distribution in a former assistance case after October 1, 2000.

## H/T 3-13

**Notes:**
55
Again, in this example, the case is a former assistance case.  Support accrues  $100 per month.  

In the first month, no payment was received.  The arrears at the end of the month are $500 Never-Assigned arrears, $200 Permanently assigned arrears, and $700 Conditionally assigned arrears.  The unreimbursed assistance is $1300.

As you can see, we no longer have temporarily assigned arrears.  That is because (quiz the participants)?  Answer: the family is no longer receiving assistance AND the date is later than September 30, 2000.

In the second month, a $500 payment was received.   Since it is after 10/1/2000, how would the payment be distributed?   Go through the columns with the participants, using the laser pointer.

## H/T 3-14

**Notes:**
56
Answer:  First we would apply $100 to current support.  Then we would apply the remaining $400 to Never-Assigned arrears.  As you can see, the results are the same as in the prior example because we haven’t exhausted Never-Assigned arrears yet.

Again, let’s review the distribution ordering rules you will apply in former assistance cases after September 30, 2000:  first to current, second to Never-Assigned arrears, third to conditionally assigned and unassigned arrears, and fourth to permanently assigned arrears.

In this example, the arrears at the end of the month are:  $100 Never-Assigned arrears, $200 Permanently assigned arrears, and $700 Conditionally assigned arrears.  The unreimbursed assistance remains $1300 since we did not apply any of the payment to Permanently assigned arrears.

In the third month, a $500 payment was received.   Now how would the payment be distributed?  Go through columns with participants using the laser pointer.

## H/T 3-15

**Notes:**
57
49
Answer:  First we would apply $100 to current support.  Then we would apply $100 to pay off the remaining Never-Assigned arrears.  Then we would apply the remaining $300 to conditionally assigned arrears.  The entire payment would be disbursed to the family this time.

The arrears at the end of the month are:  $0 Never-Assigned arrears, $200 Permanently assigned arrears, and $400 Conditionally assigned arrears.  The unreimbursed assistance is still $1300 because we didn’t apply any of the payment to permanently assigned arrears.

Are there any questions about how non-IRS child support payments are applied in former assistance cases after September 30, 2000?  

We will be covering additional examples of this later in this module.

Now we will discuss how IRS intercept payments will be applied in former assistance cases after September 30, 2000.

## Distribution of IRS Tax Offset Collections 10/1/2000 and Later

- 	In former assistance cases, pay IRS Tax Refund Offset collections in the following order:
- 		1. Assigned arrears to the State, up to URA,
- 		2. Arrears in excess of URA to the family.

- H/T 3-16

**Notes:**
58
Effective 10/1/2000, all IRS intercept payments must be first applied to any assigned arrears in former assistance cases.  Assigned arrears effective October 1, 2000 are both permanently assigned arrears and conditionally assigned arrears (and temporarily assigned arrears in current assistance cases).  IRS collections may be applied to any of these arrearages in any order the State chooses, and must be retained by the State up to the amount of unreimbursed assistance.

IRS tax offset collections which exceed the amount of unreimbursed assistance or the amount of the assigned arrears (whichever is less), must be disbursed to the family, up to the amount of the total unpaid child support obligation.

IRS collections can never be applied to current support obligations.

NOTE:  Under PRWORA, monies collected by State tax offset or other State offsets must be applied under the NON-IRS distribution rules.  The only collections which can be applied to arrears first (when current support is owed on a case) ARE IRS PAYMENTS.

## H/T 3-17

**Notes:**
59
Now let’s take a look at a third version of our example, this time applying an IRS tax offset payment after September 30, 2000.

Again, in this example, the case is a former assistance case.  Support accrues under the support order at $100 per month.  

In the first month, no payment was received. The arrears are the same at the end of the month as in the last example:  $500 Never-Assigned arrears, $200 Permanently assigned arrears, and $700 Conditionally assigned arrears.  The unreimbursed assistance is $1300.

## H/T 3-18

**Notes:**
60
In the second month, a $500 payment was received.   The payment is applied the same as in the last example:  First we would apply $100 to current support.  Then we would apply the remaining $400 to Never-Assigned arrears.  

Again, the arrears at the end of the month are:  $100 Never-Assigned arrears, $200 Permanently assigned arrears, and $700 Conditionally assigned arrears.  The unreimbursed assistance remains $1300.

In the third month, a $500 payment was received.   This time the payment is an IRS intercept payment.  Now how would the payment be distributed?

Go through the columns with the participants, using the laser pointer.

## Example #2(c): Distribution of IRS Tax Refund Offset in Former Assistance Cases Post - 9/30/2000

**Example #2(c): Distribution of IRS Tax Refund Offset in Former Assistance Cases Post - 9/30/2000**

- Distribution of Payments during Month

- Cumulative Balances at the End of the Month

- Current Support

- Arrearages

- Case

- Amt. of

- Family

- State

- Family

- State

- Family

- State

- Month

- Type

- Payment

- Never-

- Condition.

- Perm.

- Temp.

- Never-

- Condition.

- Perm.

- Temp.

- Assigned

- Assigned

- Assigned

- Assigned

- Assigned

- Assigned

- Assigned

- Assigned

- URA

**1/01**

**FA**

**500  **

**700  **

**200  **

**1,300  **

**2/01**

**FA**

**500  **

**100  **

**400  **

**100  **

**700  **

**200  **

**1,300  **

**3/01**

**FA**

**500* **

**300***

**200***

**200  **

**400  **

**0  **

**800  **

- * IRS Tax Refund Offset

**Notes:**
61
Answer:  In this example, we would apply the first $200 of the IRS payment to permanently assigned arrears (paying them in full) then the remaining $300 to Conditionally assigned arrears.  The State would retain the full $500 since URA is equal to or greater than $500.

Let’s review the order of distribution of IRS intercepts after October 1, 2000.  In former assistance cases in this State, IRS payments will first be applied to Conditionally assigned arrears, second to permanently assigned arrears, and third to Never-Assigned and Unassigned arrears.

The arrears at the end of the month would be:  $200 Never-Assigned arrears (remember that an additional $100 accrued here since we did not receive any payments during the month which could be applied to current support), $0 Permanently assigned arrears, and $400 Conditionally assigned arrears.  The unreimbursed assistance would be reduced to $800 since the State retained the entire $500 payment.

That concludes the material we will cover on the changes to distribution.  We will follow this segment with additional examples of how distribution will work under PRWORA.  Are there any questions at this time? (break here)

## DISTRIBUTION DRILLSMODULE

- DISTRIBUTION DRILLSMODULE

- Applying the Principles

- H/T 3-20

**Notes:**
62
Display this slide before beginning the distribution drills module.

## Distribution While a Family Moves On and Off Assistance

- Rule #1:
- Determine Case Type at time of payment application.

- H/T 3-21

**Notes:**
63
Before we begin applying the new distribution principles in a variety of case scenarios, let’s review some standard rules that we should apply whenever it is necessary to determine the distribution of a particular payment.

Before you can properly apply monies to a case, you must apply the following Four rules.

First, determine if the case is never assistance, current assistance, or former assistance.   This is important because, as we learned in the prior module, different ordering rules apply based on the status of the case at the time of payment application.

Let’s review:  In never-assistance cases?   All collections are disbursed to the family.  In current assistance cases?  Federal Government receives its share of the entire collection, the State retains or disburses to the family the State share of the collection, excess over unreimbursed assistance goes to the family.  In former assistance cases?  10/1/97 - 9/30/2000: current, never-assigned, unassigned, permanently assigned, temporarily assigned; Post-9/30/2000: current, never-assigned, unassigned, conditionally assigned, permanently assigned.

## Distribution While a Family Moves On and Off Assistance

- Rule #2:
- Determine Payment Type at time of payment application.

- H/T 3-22

**Notes:**
64
The second piece of information you need to know when determining the distribution of a payment, is the payment type of the payment in question.  

Is the payment you are distributing an IRS tax offset payment or a non-IRS tax offset payment?

Remember that different rules apply to the application of IRS payments.  IRS tax offset payments are still applied to assigned arrears first, as they were pre-PRWORA, however now there are more varieties of assigned arrears to which the payment may be applied.

Let’s review how IRS payments will be applied:

October 1, 1997 - September 30, 2000?  Apply to permanently assigned arrears, temporarily assigned arrears, never assigned and unassigned arrears.  Never to current support.  October 1, 2000 and later?  Apply to permanently assigned arrears, temporarily/conditionally assigned arrears, never assigned/unassigned arrears.  Never to current support

## Distribution While a Family Moves On and Off Assistance

- Rule #3:
- Determine the date of payment application.

- H/T 3-23

**Notes:**
65
The third piece of information you need to know when determining the distribution of a payment, is today’s date or the date in which you will apply the payment.

The date, and whether you are a Plan A or Plan B State, will determine how you will apply the payment.  Different distribution ordering rules will apply based on this information.

Let’s review:  If you are a Plan A State, you must apply the appropriate ordering rules depending on the date of payment application:  Pre-October 1997, October 1997 - September 2000, or October 2000 and later.

If you are a Plan B State, you must apply Pre-October 1998 rules or Post September 1998 rules. 

## Distribution While a Family Moves On and Off Assistance

- Rule #4:
- Determine Total URA Balance for application of  payments to assigned arrearages.

- H/T 3-24

**Notes:**
66
The fourth piece of information you need to know when determining the distribution of a payment, is the total cumulative unreimbursed assistance balance at the time of payment application.

Due to the limitation on assignments, this is important to know so that the State may determine whether or not it may retain all or part of the collection.  If the collection exceeds the unreimbursed assistance balance, then all or part of the collection must be disbursed to the family.

Transition:  The case scenarios which will follow are what we call our “reality cases.”   Most of the cases we deal with on a daily basis, as you know,  contain a combination of assistance periods and non-assistance periods. The case scenarios we will cover today will encompass all case types, time periods and payment types.

Allow time to set up overhead projector, if necessary.  See instructor’s note on next slide.

## (This H/T also includes H/T 3-25 thru 3-33)

- H/T 3-34

**Notes:**
76
Answer:  $100 to current, $100 to pay off the existing Never-Assigned arrears, and then the remaining $100 to temporarily assigned arrears.  What are the arrears balances at the end of the month?

$0 Never-Assigned, $100 temporarily  assigned, and URA would be reduced to $1200.

Are there any questions about how payments were applied in this case scenario?

Transition:  Now we’re going to look at the same example, but this time we will be in the year 2000.

## (This H/T also includes H/T 3-35 thru 3-43)

- H/T 3-44

**Notes:**
86
Answer:  $100 to current, $100 to Never-Assigned arrears, $100 to conditionally assigned arrears.

Arrears at month’s end are:  $0 unassigned arrears; $100 conditionally assigned arrears.  URA remains $1500.

Are there any questions about how support was applied in this case scenario?

Transition:  Now let’s look at the very same example, this time applying payments to temporarily assigned arrears first.

## (This H/T also includes H/T 3-45 thru 3-53)

- H/T 3-54

**Notes:**
96
Answer: $100 to current, $100 to never-assigned arrears, $100 permanently assigned arrears.

Balances at end of month:  $0 never-assigned arrears, $100 permanently assigned arrears; URA is reduced to $1400.

Now we’re going to look at the same example, this time applying an IRS payment during both time periods.  This time I will advance through everything except the last month of the example, since the distribution is a repeat of what we went through earlier.

## H/T 3-63

**Notes:**
105
Answer:  The entire $300 would be applied to temporarily assigned arrears.  
Balances at end of month:  $200 never-assigned (no application of payment to current support), $100 temporarily assigned; URA 1200.

Now let’s look at the same example beginning in the year 2000, again applying an IRS payment.

Advancing quickly through the first 6 slides ...

## (This H/T also includes H/T 3-64 thru 3-71)

**Notes:**
114
Answer:  The entire $300 would be applied to conditionally assigned arrears and is retained by the State to reimburse public assistance expenditures.  

Balances at end of month:  $200 never-assigned (no application of payment to current support), $100 Conditionally assigned; URA 1200.

Now let’s look at another example ...

.

## (This H/T also includes H/T 3-73 thru 3-79)

**Notes:**
122
Answer:  First, when the family went back on assistance, all unassigned arrears and  all never-assigned arrears became temporarily assigned to the State.  Therefore, the balances at month’s end would be:  $400 permanently assigned arrears (for support which accrued and was unpaid during July 1998), and $1000 temporarily assigned arrears (600 + 400 = 1,000); URA = $300.

And that’s all of the examples we are going to do today!  If you would like to review them further, or work through additional examples, your appendix contains all of the examples from the Distribution Action Transmittal.  Some of the examples are similar to the those that we reviewed today.  

Are there any questions about distribution?
THIS IS THE LAST SLIDE OF THE DISTRIBUTION MODULE.  DO NOT ADVANCE THE POWERPOINT PRESENTATION UNTIL THE BEGINNING OF THE POLICY MODULE.

Next, we will move into a review of the Policy options right after you have completed your evaluation for this module (quick stretch break here).