. '
Department of Health and Human Servces

OFFICE OF

INSPECTOR GENERAL

CHILD SUPPORT ENFORCEMENT

INCENTIVE PAYMENTS

VIC' 
Richard P. Kusserow 
INSPECTOR GENERA 
JU 
1991 
qa  OFFICE OF INSPECTOR GENERA

The mission of the Offce of Inspector General (OIG), as mandated by Public Law 95-452 
as amended, is to protect the integrity of the Department of Health and Human Services
(HHS) programs as well as the health and welfare of beneficiaries served by those 
programs.
This statutory mission is carried out through a nationwide network of audits
, investigations
and inspections conducted by three OIG operating 
components: the Office of Audit
Servces, the Office of Investigations, and the Office of Evaluation and Inspections. The
OIG also informs the Secretary of HHS of program and management problems and
recommends courses to correct them. 
OFFICE OF AUDIT SERVICE 
The OIG's Office of Audit Servces (OAS) provides all auditing servces for HHS, either by
conducting audits with its own audit resources or by overseeing audit work done by others. 
Audits 'examine the performance of HHS programs and/or its grantees and contractors in
carryng out their respective responsibilities and are intended to provide independent 
assessments of HHS programs and operations in order to reduce waste, abuse, and
mismanagement and to promote economy and effciency throughout 
the Department. 
OFFICE OF INTIGATIONS 
The OIG's Office of Investigations (01) conducts criminal , and administrative 
, civil
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of 
unjust enrichment by providers. The 
investigative efforts of 01 lead to criminal convictions 
administrative sanctions, or civil money penalties. The 01 also oversees State Medicaid fraud 
control units which investigate and prosecute fraud and patient abuse in the 
Medicaid 
program. 
AN 
OFFICE OF EVALUATION  INSPECTONS 
The OIG's Offce of Evaluation and Inspections (OEI) conducts short-term management and
program evaluations (called inspections) that focus on issues of concern to the Department 
the Congress, and the public. The findings and recommendations contained in these 
inspection reports generate rapid, accurate, and up-to-date information on the effciency,
vulnerability, and effectiveness of departmental programs. 
This report was prepared under the direction of Willam C. Moran
, OEI Regional Inspector
General, and Natalie Coen, OEI Deputy Regional Inspector, Region V. Participating in this 
project were the following people: 
Chcago  Headquarters 
Joe Penkrot (Project Leader)  Susan Hardwick 
Suzanne Johnson (Lead Analyst) 
Ann O'Connor  Department of Health and Human Servces

OFFICE OF

INSPECTOR GENERAL

CHILD SUPPORT ENFORCEMENT

INCENTIVE PAYMENTS

VIC' 
Richard P. Kusserow 
INSPECTOR GENERA 
OEI-05-91-O750  - -
EXECUTIVE  SUMMARY

PUROSE 
This inspection was conducted to determine the tyes of activities and projects States 
fund with the Federal child support enforcement (CSE) incentive payments they 
receive. This study was requested by the Department of Health and Human 
Servces' Policy Council in connection with their review of child welfare programs. 
BACKGROUN 
In 1975, Congress created the CSE program, a joint Federal-State effort to foster 
family responsibilty and reduce Federal public assistance payments, by adding Title 
IV-D to the Social Security Act. Congress provides incentive payments to encourage 
States, counties, and other political subdivisions to cooperate in the collection of 
child support. 
In fiscal year 1989, Federal incentive payments to States totalled $234 milion. 
Federal regulations do not specify how incentive payments should be used by States. 
The only Federal requirement States must meet is to share incentive payments with 
any political subdivisions which share in the program costs. 
The Office of Inspector General contacted the State CSE agency in all 50 States, the 
District of Columbia, Guam, Puerto Rico, and the Virgin Islands to review whether 
or not any legislation or regulations exist that pertain specifically to the use and 
dissemination of CSE incentive payments. We also collected information from these 
54 respondents about their own State s uses of incentive payments. 
FJNINGS 
Thir-two States have no statues or regutions relatig to inentie paynts. 
Only 22 States have specific laws or regulations regarding incentive payments. 
However, often these laws or regulations only direct to what State account incentive 
payments go, rather than dictate how the State must spend the incentive payments. 
Only nine States mandate how incentive payments must be used. 
pa 
1h-foUT States report distrutg inentie  to counti or polial
sudivns. 
The remaining 20 States are not required to share incentive payments with counties 
or political subdivisions, since these entities are not sharing in the costs of the CSE 
program.  - -
Most States use inentie payents for ongoing CSE acties, but exrce wie
latitu in usg 
inentie payents. In 10 States, some or aU of the inentive 
payts  fu 
are deposied into the State s general  and are mingle with other 
end use of the inentie paynts cannot be sPeciall 
revenu.  Th 
determined in these intances. 
In addition to using incentive payments for CSE activities, some States use the 
incentive payments for other purposes, such as paying for part of the State share 
Aid to Familes with Dependent Children, Medicaid and/or Food Stamp program 
costs. 
At the State lee  few sPecil projects are fued by inentie payts. 
Ten of the 54 States reported that special projects, mostly for CSE purposes, had 
been funded through incentive payments.  . . . . . . . . . . . ..  ...   ....    ....    .....     .....     .....     .....     .....     .....     .....     .....     ......      ......      ......
. ..  ..  ..  ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ....    ....    ....  . .....     .....     .....     .....     .....     .....     .....     .....     .....     .....     ....    ...   ...   ...   ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..
TABLE  CONTENTS

PAGE 
EXECUTIVE SUMMAY 
INTRODUCTION. . . . . . . . . . . . . . . . . 
Purpose 
Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Methodology 
FINDINGS 
Thirty-two States have no statues or regulations relating to incentive payments 3 
Thirty-four States report distributing incentive payments to counties or 
political subdivisions. . . . . . . . . . . . . . . . 
Most States use incentive payments for ongoing CSE activities, but exercise 
wide latitude in using incentive payments. In ten States, some or all of the 
incentive payments are deposited into the State s general fund and are mingled 
with other revenues. The end use of the incentive payments cannot be 
specifically determined in 
these instances 
At the State level, few special projects are funded by incentive payments 
APPENDIX 
Appendix A: Summary of State Uses of Incentive Payments. . . . . . . . . . . . A INTRODUCTION

PUROSE 
This inspection was conducted to determine the tyes of activities and projects States 
fund with the Federal child support enforcement (CSE) incentive payments they 
receive. This study was requested by the Department of Health and Human 
Servce s Policy Council in connection with their review of child welfare programs. 
BACKGROUN 
In 1975, Congress created the CSE program, a joint Federal-State effort to foster 
family responsibility and reduce Federal public assistance payments, by adding Title 
IV-D to the Social Security Act. States were required to designate a single and 
separate agency to locate absent parents, establish paternity, and collect child 
support. These agencies are called IV-D agencies. The Office of Child Support 
Enforcement (OCSE), Administration for Children and Families
, has oversight 
responsibilty for these IV-D agencies. The OCSE helps States develop, manage, and 
operate their programs effectively and according to Federal law. 
Initially, the CSE focus was to establish and enforce child support court orders for 
the Aid to Families with Dependent Children (AFDC) population. The States share 
the AFDC child support collections with the Federal Government. 
The Congress 
also provided incentive payments to encourage States, counties, and other political 
subdivisions (often, a local prosecutor s office) to cooperate in the collection of child 
support. 
Beginning in 1984, States were required to provide all CSE servces for non-AFDC 
clients if they were not already doing 
so. Since States do not receive any share of 
the non-AFDC collections, the incentive formula was expanded to include incentive 
payments for non-AFDC collections made by States. 
States are limited in the 
amount of non-AFDC incentives they can claim relative to their AFDC incentives. 
Non-AFDC incentive payments to States are capped at 115 percent of their AFDC 
incentives. 
Federal regulations do not specify how incentive payments should be used. The only
Federal requirement States must meet is to share incentive payments with any 
political subdivisions which share in the program costs. The method of sharing is left 
to the States' discretion. Counties and political subdivisions can and do use incentive 
payments for a wide variety of activities, since there are no Federal requirements 
prescribing how these funds are to be used. 
In fiscal year 1989, total Federal incentive payments to States totalled $234 millon.  - -
METHODOLOY 
The Office of Inspector General (GIG) contacted the IV-D State directors in all 50 
States, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands 
review whether or not any legislation or regulations exist that pertain specifically to 
the use and dissemination of CSE incentive payments. We also collected information 
from these 54 respondents about their own State s uses of incentive payments. We 
did not independently verify the information supplied by the IV-D directors. 
This inspection did not trace the flow of incentive payments within a particular State 
or to counties and political subdivisions. We did not quantify the proportion of 
incentive payments retained by the State for IV-D purposes or used by the State for 
other purposes or passed through to units of local governments. Nor did we focus 
on how counties and political subdivisions use the incentive payments they receive. 
The OIG is auditing the flow of incentive payments in nine States (Alabama 
Arizona, California, Kentucky, Michigan, New Mexico, New York, Pennsylvania and 
Washington). This audit will determine how incentive payments are used at both the 
State and local level in these States. 
irlu 
Thoughut thisI rseploart  any referene to "th States  all 50 States, th Dist of Columbia, Guam Puo Rico 
an th Vugi  FINDINGS

FIING 	 Th-
two States have no statutes or regulations 
relatig to 
incentie payments. 
Only 22 States have specific laws or regulations regarding incentive 
payments. Nine 
States mandate how incentive payments must be used. (Appendix A summarizes 
how incentive payments in all States are treated, and specifically how they are used 
in the States that mandate expenditures. 
However, in the other 13 States with laws or regulations, the only direction regarding 
incentive payments is to what State account the incentive payments go, rather than 
dictating how the State must spend the incentive payments. (The table on page 4 
shows which States have laws or regulations relating to incentive payments and the 
disposition of these funds.

FIING 	 Th-
four States report ditributig incentie payments to 
counties or politica subdivions. 
States are required to distribute incentive payments to counties or political 
subdivisions that share in the costs of the CSE program. In States where some or all 
of the incentive payments go to 
counties or political subdivisions, these local entities 
often provide all CSE servces in their jurisdiction. (The table on the 
following page 
shows which States share incentives.) The 20 States who do not share incentive 
payments with counties or political subdivisions are not required to do so, since these 
entities are not sharing in the costs of the CSE program. 
States use a variety of formulas to determine the amount of 
incentives that local 
CSE agencies or others receive. Nineteen of the 34 
States that pass on incentive 
payments describe their formula as mirroring the Federal allocation formula for 
incentive payments. At least six States - Arkansas, California, Colorado, Kentucky, 
Minnesota, and Ohio - make additional incentive payments to further encourage 
counties or political subdivisions to increase child support collections
, or to stimulate 
performance on certain  , such as paternity cases. 
tyes of cases
There are no State requirements on how these entities spend incentive payments 
except in Californa, Ohio, Pennsylvania, South Carolina, and Tennessee, all of whom 
require expenditures on CSE activities.  ~~~
~~~~~~~~~~~
. .
..... .... .................  .. ,... .. ...... ......'()/#..... ...
... . ..
STATE' DISPOSmON OF FEDER CSE INCENT PAYMNT

LalRegti
Mate 
Inti State Madates 
P19a8 yt (I)  LStaatleR Heag IPti n  RPouuti  (R) Haw StateB Usee )IP   Haw 
State  (P)  (Se KEY  Entities Use IP 
AJabama  $ 2541 256  CSE, Local 
AJaska  387 785  YES  CSE, GenF  N/A 
Arzona  832 435  CSE, Local 
Arkansas  978 401  CSE, SW, Lol
California  270 555  YES
 R&P  Lol  YES 
Colorado  251 105  YES
 Lol 
Connecticut  090 846  CSE  N/A 
Delaware  735 224  CSE, GenF  N/A 
District of Columbia  636 644  YES  R & P
 CSE  N/A 
Florida  700 474  CSE, GenF, Local 
Georgia  846 361  CSE, Lol 
Guam  711  GenF  N/A 
Hawaii  899 327  YES  CSE, Lol 
Idaho  999 545  YES  R & P
 CSE, SW  N/A 
Ilinois  210  YES  R & P'  CSE, GenF, Lol 
Lol 
Indiana  294 849  YES  CSE, 
Iowa  309 068  CSE, AFC, Lol 
Kansas  808 700  CSE, SW, Lol 
Lol 
Kentuck-y  506 530  CSE, 
Louisiana  659 545  CSE, SW, Lol 
Maine  979 297  YES  R & P
 CSE, AFC  N/A 
Maryland  290,480  YES  AFC, Lol 
Massachusetts  890 527  YES  R&P  CSE  N/A 
Michigan  504 325  CSE, Lol
Minnesota  621 697  YES  AFC, Local 
Mississippi  576 129  CSE, Lol 
Lol 
Missouri  659 024  YES  CSE, 
Montana  777 632  CSE, GenF, Lol 
Nebraska  943 460  CSE, SW, Lol 
Lol 
Nevada  751 237  YES  CSE, 
New Hampshire  478 004  CSE  N/A 
Lol 
New Jersey  040 895  YES 
New Mexico  754 628  AFC  N/A 
New York  965 078  , Lol 
North Carolina
 293  CSE, Lol 
North Dakota  696 859  YES  CSE, AFC, Lol
Ohio  347 929  YES  R & P"  Lol  YES 
Oklahoma  430 811  CSE, SW, Lol 
Oregon  862 369  CSE, AFC, Lol 
Pennsylvania  137 100  CSE, Lol  YES 
Puerto Rico  520 241  YES  CSE  N/A 
Rhode Island  349 510  CSE, AFC  N/A 
South Carolina  062 878  YES  R & P'"  CSE, Lol  YES 
South Dakota  664 164  YES  GenF  N/A 
Tennessee  829 201  YES  R & P
 CSE, Lol 
Texas  144 214  CSE  N/A 
Utah  929 503  CSE, SW  N/A 
Vermont  691  CSE, AFC  N/A 
Virgin Islands  151  CSE, GenF  N/A 
Virginia  586  CSE, GenF  N/A 
Washington  363,35  CSE, AFC, GenF  N/A 
West Virginia  611,681  CSE, AFC,  N/A 
Wisconsin  967 701  CSE, Lol
Wyoming  337  Lol 
Nationwide IP Totals  $23 699 701 
KEY 
u.. 
. In each calendar quaner, funds in exce of anticipated IV -D needs are transferred to the  g)I:i.  W;.;
State s general fund. i:tS .
oo Local entities may fie a waiver of the State 
s mandate to us funds only for CSE activities.  .$W;  m$#fl  Ceagency. 
i#f# 
... Excess funds not used by locl entities in the fISl year earned, may be transferred to that 
entity s general fund.  - -- -
FJING 
Most States use incentie 
payments for ongoing CSE actties 
but exercie wide latitude in using incentie payments. In ten 
States, some or al of the incentie payments are deposited into 
the State s general fund and are migled with other revenues. 
The end use of the incentie payments caot be specica
determed in these instances. 
The only Federal requirement for States' use of incentive payments is to distribute 
them to counties or political subdivisions who share in the costs of the CSE program. 
Consequently, States have taken many different approaches in allocating and using 
these funds. Some States have more than one use for the incentives. (In Appendix 
, State IV-D agencies report the uses of incentive payments in their State. 
Although 45 States do not have 
laws or regulations prescribing the use of incentive 
payments, these States appear to have informal procedures for incentive payments 
that they follow. There appears to be no difference in the use of incentive payments 
among States with or without laws or regulations 
at the State level  governing the use 
of incentives. 
Direct uses of incentive payments by States include ongoing CSE operations 
improving IV-D automated systems, piloting CSE demonstration projects, and 
funding additional IV-D agency employees. Motivating IV-D agency employees and 
negotiations with the State legislature to fund additional staff are among the indirect 
uses of the incentive payments utilzed by the IV-D agency. 
In addition to using incentive payments for IV-D activities, some States use the 
incentive payments for other purposes. Several States use incentive payments to pay 
for part of the State share of AFDC, Medicaid and/or Food Stamp program costs.  FIING 	
At the State level, few special project are fuded by incentie 
payments. 
Ten of the 54 IV-D agency respondents were able to point to either recent 
current projects or accomplishments specifically funded by incentive payments to 
their States.2 These States and some of their diverse accomplishments, attained 
because of the incentive payments, follow. 
Delaware is using 1 percent of the incentives to fund a demonstration project 
on the review and modification of support orders. 
Georgia contracts with a collection agency to increase collections of arrears on 
very difficult cases. 
Iowa and Kentucky used the incentive payments to cover the 
costs of systems 
development. 
Massachusetts contracted to convert cases to their Department of Revenue 
when the CSE function was transferred to this agency. 
Nebraska earmarked incentives from 1985-1989 to fund the Nebraska 
Commission on Child Support. 
North Dakota increased AFDC monthly benefits from between 4 and 5 
percent effective July 1989. 
South Carolina was able to hire temporary key punchers when they converted 
to an automated system. 
Texas is conducting a pilot project on arrearage cases that links the IV-
agency with the State Attorney General, who monitors these cases. 
Washington used some non-AFDC incentive payments to implement 
recommendations of a State commission to improve program efficiency. 
Although not tied to specific events or projects, several State IV-D directors 
mentioned the importance of the incentive payments in funding additional staff. 
Mississippi, 270 IV-D agency time-limited positions are approved by the legislature 
contingent upon the yearly receipt of the incentive payment. 
It is not suriing tht so few States can cifte tsp ecial projects fud by inenve payts Incentive pay hae no 
separate idtity in mo States sine the  are usall credid to a State though a reconcilWton proces an not 
an actual tranfer of monies  - - - -
- -- - - -
APPENDIX A

SUMY  PAYM 
INCENT 
OF STATE USES OF 
This appendix reports IV-D agency respondents' views on how their State uses the 
Federal CSE incentive payments. 
Our inspection was limited to discussions with State CSE agencies (the IV-
director, in most instances). Therefore, the summary does not detail how 
counties or 
political subdivisions providing CSE servces use incentive payments passed on to 
them by the State. 
Our respondents reported varied uses of, and benefits derived from, incentive 
payments. Their comments reflect both the direct and indirect uses and benefits of 
incentive payments. 
States that have laws or regulations prescribing how incentives are to be spent are 
marked with an asterisk (* 
Alabama 
The incentive payments are used as a negotiating tool to encourage counties 
to enter into "cooperative agreements" with the State to administer CSE 
servces. These contracting entities (Le., district attorneys, courts) are 
reimbursed for their servces with the incentive payments. 
Alaska 
The incentive payments are credited to the State general fund, from which the 
IV-D agency receives its operating funds. 
Arna 
The incentive payments help meet the State s share of CSE administrative 
costs and also will be used to automate the IV-D caseload. The incentive 
payments are also shared with counties to help reimburse part of the counties 
CSE program expenses. 
J.
 - -
- - - -
Arka

The incentive payments are used primarily to fund the CSE program
, at least 
to the extent of covering the State s costs and reimbursing the 19 local 
governments it contracts with to perform CSE servces. The incentive 
payments are retained in a revolving account within the umbrella social 
servces agency. Using funds from this account, the State was able to develop 
a State-wide data system costing about $1.3 millon. 
Until 1991, it was the State s policy to use these incentive payments exclusively 
for the CSE program. However, the State is experiencing budget shortfalls 
and is using this money to help fund its other social servce programs. As a 
result, the balance in this revolving account has been diminished from a high 
of $7 milion down to its present balance of about $1.2 millon. 
Caorna * 
The State passes on all of the incentive payments to its counties. State law 
mandates that the counties use the incentive payments only for CSE servces: 
Any funds paid to a county ... over and above the county s cost of 
administering a CSE program, shall be used to support enforcement servces 
of the district attorney. 
Colorado 
The State passes on all of the incentive payments to the counties with no 
restrictions. This money helps to sell the CSE program to the counties and 
also encourages them to invest in the program. 
The State surveyed county usage of the incentive payments and found that: 
48.1 percent apply incentives to CSE servces; 
14.8 percent apply incentives to other social servces; 
24. 1 percent apply incentives to both CSE and social servces; and 
13.0 percent apply incentives to their general fund. 
Conneccut 
The incentive payments are used as a negotiating tool with the State 
legislature during budget negotiations. To date, the CSE agency has received 
full appropriation for all CSE servces. 
- I
 - - - - - - - - -
Hawai 
Most of the incentive payments are passed on to the 
counties to pay for the 
CSE program costs they incur. The State CSE agency retains a minimal 
surplus of incentive payments for its own use. 
Idaho 
The incentive payments are used to fund the CSE program. By statute, the 
incentive payments go into a "Cooperative Welfare Fund" where all deposits 
are perpetually appropriated for public welfare purposes. Thus, any incentive 
payments in excess of CSE program needs are used for 
other public welfare 
programs within the umbrella social servces agency. 
llois* 
The incentive payments are used to help fund the CSE program, including 
reimbursement for county contracted CSE servces. In each calendar quarter 
funds in excess of anticipated State CSE needs are transferred to the State 
general fund. 
Indiana 
The State CSE agency retains a small percentage of the incentive payments to 
fund the income withholding orders received from other States. 
Most of the incentive payments are passed on to counties using the following 
distribution to ensure equitable receipt of the funds: one-third of the 
incentives go to the county clerks, one-third to the prosecutors, and one-third 
to the county general fund. State law also mandates that incentive payments 
cannot be used to augment the salaries of elected county officials. 
Iowa 
The incentive payments go into the State general fund. At one time incentive 
payments were used specifically for system development. Now, it is State 
policy that about 60 percent of the incentive payments are used to help fund 
the AFDC program. 
Counties, providing CSE servces under cooperative agreement with the State 
receive about 40 percent of the incentive payments and primarily use them to 
offset CSE program costs. 
The incentive payments are also used by the State CSE agency as a 
bargaining chip because they are a revenue generating source.  - - - -  -- -- - - - - - - - - - - - -
Kaas 
The umbrella social services agency uses the incentive payments to offset 
revenue in its budget to the State legislature. The incentive payments are 
usually used to help make up a shortage of funds in the medical area. Also 
counties, providing CSE servces on behalf of the State, receive a portion of 
the incentive payments. 
Kentucky 
Most of the incentive payments (90-95 percent) are passed on to the political 
subdivisions, usually a contracting county attorney. These county entities use 
the money to maintain their CSE programs. 
A very small percentage of the incentive payments may be withheld for work 
the State CSE agency does on Internal Revenue Servce and State income tax 
refund intercepts. Prior to 1985, the State accrued some money, which was 
used for system development of a State-wide computer system. 
Louiiana 
The State pays most of the incentive payments (90-95 percent) to the 
participating district attorney offices under contract to perform CSE servces. 
The remaining incentive payments are distributed within the umbrella social 
services agency. All social programs, such as CSE, AFDC and Food Stamps 
benefit from the incentive payments. 
Maie 
By statute, incentive payments must be dedicated to reduce the State s share 
of AFDC and CSE costs. Incentive payments have helped contribute toward 
paying for support enforcement expenses, protective servces (e.g., child 
abuse), and to help fund the State s new Nexus computer system. 
Marland 
The State s share of the incentive payments are used to help fund the AFDC 
program costs. The remaining portion of the incentive payments are 
distributed to counties under contract with the State to perform CSE servces 
if they share in the costs of the program. 
5- .  . -
- - - - - - - -- -
Masachusett* 
The incentive payments are used exclusively by the State CSE agency. 
Initially, they were used to enhance the CSE program. Now, the incentive 
payments are being used to pay for CSE administrative costs due to reduced 
CSE appropriations. 
The State has used incentive payments in the following ways: 
(1) reimbursement for servces rendered under interagency agreements (i. 
district attorney offices and unemployment offices); (2) purchase of a new 
computer system; and, (3) reimbursement for contract servces performed by a 
vendor to come in and do " " on cases from the State 
court conversion
Department of Welfare to the State Department of Revenue. 
Michigan 
The incentive payments are used in the State CSE agency for legal support 
contracts, State incentive programs, and for salaries of child support staff. 
The State also allocates some of the incentive payments to the counties 
providing CSE services. 
Miesota 
The AFDC incentive payments are used by the State to offset AFDC costs. 
All of the non-AFDC incentive payments are passed on to 
the counties. 
Misisippi 
The incentive payments go into the State general fund and are budgeted by 
the legislature to fund CSE staff positions. The State passes on the incentive 
payments, again as staff positions, to the counties providing CSE servces. 
The CSE agency has funded 270 time-
limited positions with the incentive 
payments. 
Misour 
Most of the incentive payments (about 90 percent) are distributed to city or 
county governents who have a cooperative agreement with the State to 
provide CSE servces. A small percentage of the incentive payments is 
retained by the State CSE agency and used, in part, to fund 150 State CSE 
employees. The CSE agency also re-appropriated some of the incentive 
payments to help fund the State s share of the CSE administrative costs.  - -
. . - - - - -- - - - -- -
Montaa 
The incentive payments go into an "enterprise fund" and are used to cover the 
State s share of CSE costs. The State legislature designates the CSE agency 
budget. At the end of their fiscal year, any fund balance in 
excess of the 
State appropriation goes into the State general fund. 
Also, a portion of the AFDC incentive payments is shared with those counties 
under contract with the State to provide AFDC servces. The State CSE 
agency does all CSE casework. 
Nebraska 
Currently, about 38 percent of the incentive payments are retained and used 
by the umbrella social servces agency. In the future, this percentage will 
decrease to 30 percent. From 1985 through 1989 the incentive payments were 
earmarked for the State CSE agency s use, and used to fund the Nebraska 
Commission for Child Support. 
Presently, the CSE agency s budget is not increased by the incentive payments 
even though the funds may be used for CSE activities. The CSE agency 
subtracts the incentive payments from their AFDC budget request. The 
remaining portion of the incentive payments are passed on to the counties 
under cooperative agreement with the State to provide CSE servces. 
Nevada 
Most of the incentive payments (95 to 99 percent) are passed on to the 
county district attorney offces under cooperative agreement with the State to 
provide paternity establishment and enforcement servces. The remaining 
portion of the incentive payments go into the State general fund and used to 
benefit CSE and other social programs. 
New Hampshie

The incentive payments go into the State general fund and are used by the
State CSE agency to offset their 
administrative funds. 
New Jersey 
The law requires that all of the incentive payments be distributed to counties. 
C/ New Mexico 
The incentive payments are budgeted as an offset against the State s share of 
AFDC program costs. 
New York 
About 75 percent of the incentive payments are passed on to the counties. 
The balance of the incentive payments are used to offset the State s share of 
income maintenance expenditures. These payments are budgeted as part of 
the State general fund-local assistance account which includes, but is not 
limited to; AFDC, Home Relief, Supplemental Security Income, Emergency 
Assistance to Familes and Adults, and the Work Incentive Program. 
North Caolia 
The State CSE agency uses the incentive payments as a budget receipt 
offset its program costs. The State 
also passes on a portion of the incentive 
payments to counties performing CSE servces. 
North Dakota 
Seventy-five percent of the incentive payments are passed on to the counties 
under contract with the State to provide CSE servces. In July 1989, the State 
used its share of the incentive payments to increase AFDC benefits by 4 to 5 
percent. Beginning July 1 1991, the State CSE agency will be able to retain 
25 percent of the incentive payments for its own use. 
Ohio *

All of the incentive payments are passed on to the counties. The State 
mandates that the counties spend these funds on CSE activities. 
Oklahoma 
The incentive payments are used within the umbrella social servces agency to 
help fund CSE and other social and welfare programs. A portion of the 
incentive payments are also used for contract funding with district attorneys 
and Community Action programs. 
A.'  - - - - - - - -- - - - -
Oregon 
The State uses all of the AFDC incentive payments and half of the 
non-AFDC incentive payments to replace State general revenues. The 
remaining non-AFDC incentive payments are distributed among the following 
entities: (1) county prosecuting attorneys. under cooperative agreements to 
provide non-AFDC CSE servces; (2) State Support Enforcement Division 
office; and, (3) Child Support Enforcement Division within the State Attorney 
General' s Office. 
Pennlvana 
The incentive payments are retained in a restricted account and automatically 
roll over year by year if not used. The State uses most of these incentive 
payments to pay counties for the CSE servces they provide under cooperative 
agreement with the State. The State has also used the incentive payments to 
reimburse a "non-contract" county 
s paternity testing costs. 
About 2 years ago, the State implemented incentive awards for county child 
support workers who reach or exceed set goals. The awards are funded, in 
part, by the incentive payments. In 1990, the goals measured were: (1) 
AFDC and non-AFDC net collections; (2) the number of paternity 
establishments; and, (3) the number of upward modification petitions resulting 
in higher child support orders.

Counties under cooperative agreement with the State are required 
use the incentive payments to strengthen the mission of the CSE effort. 
Counties have used the incentive payments for one of three purposes: 
(1) to obtain goods and servces that would otherwse only be available 
through special funding; (2) to augment CSE employees' salaries; and 
(3) for CSE related capital 
expenditures not covered by the Federal 
share of administrative costs. 
Puerto Rico 
The incentive payments are retained in a special account and used by the 
CSE agency to fund its operating costs. These operating costs include 
traveling expenses, equipment, personal computers and other fixed costs 
except employees' salaries. 
A.'-:9  Rhode Island 
The incentive payments are budgeted as a receipt by the State CSE agency 
and used to offset AFDC expenses. Because the agency is seen as a revenue 
source, the legislature has allotted additional staff positions to the IV-
agency. 
South Caolia * 
The State budget proviso, with the effect of law, mandates that all incentive 
payments be used for CSE activities at both the State and county level. The 
State CSE agency retains about 22 percent of the incentive payments. The 
incentive payments have been used to hire temporary key punchers when the 
agency converted to an automated system; to purchase equipment and 
supplies; and, to replace funds lost due to State budget cuts. 
The remaining incentive payments (about 78 percent) are passed on to the 
counties' clerk of the court under contract to provide CSE servces. Counties 
must use the incentive payments for CSE activities. However, any excess 
incentive payments not used by the county in the fiscal year earned, may be 
transferred to that county's general fund. 
South Dakota 
The incentive payments go into State general revenues. Each year "it's a free-
for-air' in budget allocations , as all agencies compete for these funds. 
Tennessee 
Most of the incentive payments are passed on to political subdivisions 
participating in the IV-D program. The State has three tyes of political 
subdivisions: (1) district attorneys, (2) counties, and (3) county and district 
attorney combinations.

Any incentive payments earned in excess of 6 percent, are retained by 
the State and go into the general fund. This excess is used to offset 
State CSE agency expenses. 
1()n  .. -
Texa 
The incentive payments are held in a special account, along with AFDC 
collections, and appropriated for use by the State CSE agency to operate its 
CSE program. 
In addition, the incentive payments, in part, are currently funding a 
pilot project in some counties. This project entails a special computer 
hookup - called the Delinquent Monitoring System - with the State 
Attorney General's office. This system immediately informs the 
Attorney General's office of delinquent child support payments in the 
month of delinquency. 
Uta 
The incentive payments are used in the State umbrella social servces agency 
to operate the CSE program. Any excess funds not needed to fUn the CSE 
program are used to offset the State s public assistance costs. 
Vermont 
The incentive payments are used by the State to fund CSE and AFDC 
program costs. Currently, incentive payments account for about 45 to 50 
percent of the CSE agency s budget. 
Virgi Islands 
The incentive payments go into the general fund and are used, in part, as an 
offsetting revenue when funds are appropriated for the CSE program. 
Virgia 
The incentive payments go into a special fund along with AFDC collections 
and the Federal share of CSE administrative costs. Funds to fUn the CSE 
program are appropriated from this special fund. Each year, any funds in 
excess of CSE operating costs are returned to the State general fund, which 
amounts to about 4-
5 percent. 
1- - .
 Washigton 
The AFDC incentive payments are used to offset the State s share of AFDC 
administrative costs. The non-AFDC incentive payments go into the State 
general funds as offsetting revenue. 
In fiscal years 1989 and 1990 only, about 7 percent of the non-AFDC 
incentive payments were budgeted as supporting revenue to the IV-D program 
purpose of implementing the recommendations of a State 
for the specific 
Commission to improve program efficiency. 
West Virgia

Most of the incentive payments are used by the umbrella social servces 
agency to fund AFDC program costs. They may also be 
used to help fund 
CSE and other social servces programs within the agency. 
Wisconsin 
The State retains a small portion of the incentive payments to help offset CSE 
program costs. Most of the incentive payments are distributed to counties 
under contract with the State to provide CSE servces. The 
counties are also 
using the incentive payments to help offset CSE program 
costs. 
Wyomig 
payments are distributed to the county 
All of the incentive  prosecuting offices 
under cooperative agreement with the State to provide CSE servces. 
l2-