Department of Health and Human Servces


OFFICE OF


INSPECTOR GENERAL


FOllOW-UP ON AFDC ABSENT


PARENTS


Richard P. Kusserow 

INSPECTOR GENERA 

-81270 
EXECUTIVE SUMMAR 


PURE 

This inspection was conducted to follow up on a series of 1987 studies related to 

child support enforcement for Aid to Families With Dependent Chidren (AFDC) 

cases. 

BACKGROUN 

Our prior studies found that AFDC chid support collections could be increased 

signifcantly if child support enforcement agencies (called IV-D agencies) would 

systematically review the earnings of absent parents. We found that while absent 

parents may have little or no earnngs when AFDC was established, their earnings 

did increase over time. In this study, we wanted to determne what changes had 

occurred in the cases previously studied, both in the child support being paid, and in 

the abilty of the absent parent to make child support payments. 

MEODOLOY 

We repeated our earlier methodology of tracing absent parent earngs through 

Social Security Admistration (SSA) records. We then followed up with the 

IV-D agencies who, based on our previous studies, had received employer 

identification and employer address inormation for 1 277 absent parents who had 

earned over $10,000 in 1985. We examied the IV-D records to determe whether 

AFDC payments were stil being made, what the current court order was, what 

present arrearages exist, and whether automatic wage withholdig of chid support 

was in place. 

FIINGS 

Mos AFDC absen paen ea over $10,00 in 198 ea at le tht amun

1986 an 198 Als, moe AFDC absen paen cr th $10,00 theshold each 

year. Avemge ef for the absen pa ined frm $17,787 in 198 

$19,522 in 198 

Th W-D age hae take actin on some of th cases we refered to th vi th 

Ofe of Ch Suppo Enforcem (OCSE) in 1987 However th are cases ma of th st AFDC cases whih need to be re-ope for pole actn

esblih, mo, or enforce chi suport orc 
RECOMMATIONS 

We recognize the substantive actions that the Administration for Children and 

Families (ACF) has taken in implementing the Family Support Act of 1988. These 

activities are particularly significant in their attempt to establish a more systematic 

approach to review both current and older child support cases. The IV-D agencies 

can obtain absent parent wage information from the Internal Revenue Servce (IRS) 

via Project 1099, and are required annually to query the Federal Parent Locator 

Servce for absent parent location information. However, these actions individually 

fall short of gatherig the data necessary to impose wage withholding, or establish 

health insurance for AFDC children who must otherwse rely on Medicaid. 

RECOMMENDATION 1: Th OCSE shoul peorm an anl data match wi SSA 

or IRS record relyg on data sumied by th State. Th OCSE shoul reqe all 

State to partpate in the annl match un a State perform it own 

more freq matck States peormg th own match shoul be able to id all 

absen paren wages and emploer frm relible soures li State' emplo record. 

This report, and prior work of the Offce of Inspector General in this area 

demonstrates the effectiveness of systematically trackig absent parent earngs 

through matches with SSA records. Other records, such as IRS or State employment 

records, could be equally' usefu in determg absent parent employers, wages, and 

location. 

We believe this annual data match is an additional, but signcant, tool for OCSE to 

use in conjunction with performance standards and periodic review of the adequacy 

of court orders. The performance standards and the periodic adequacy review of 

court orders may not identif all cases where AFDC absent parents have the abilty 

to signficantly contribute to the support of thier children receiving welfare. 

RECOMMENDATION 2. Th OCSE sho ene th W-D agen use 

informn in th annl match to esblih, mo, an enforce cou ord 

apprpr in accorde wi th peorme st an th Fami Support Act. 

Information provided by the annual match may provide location information on 

absent parents whose wherabouts were previously unown. Where this occurs, a 

support order should be established or enforced in accordance with the performance 

standards. The OCSE should issue gudance to IV-D agencies requig that 

inormation from the annual data match be considered when reviewig support 

orders in accordance with this provision. 

These recommendations further the Secretary s objective of having absent parents assume 

personal responsibilty for their children, especially for those absent parents whose 

children are receiving welfare.

DEPARTMAL COMM 

The ACF concurs there is great potential for increasing child support collections by 

means of a systematic review of all cases for location and asset information. 

However, ACF does not endorse our recommendation for an annual data match 

since it goes beyond the requirements of the Family Support Act of 1988. The 

Assistant Secretary for Planning and Evaluation questions whether the recommended 

data match would provide useful information. The Assistant Secretary for 

Management and Budget comments that without cost data and cost-effectiveness 

measures being provided, it is questionable that the earnings of AFDC absent 

parents are sufficient to make their pursuit worthwhile. 

OIG REPONSE TO DEPARTMAL COMM 

In 1987, we recommended an annual data match and estimated that AFDC child 

support collections would be increased by $307 millon annually. The OCSE 

concurred with the need for an active, aggressive approach to increasing collections 

on AFDC cases. 

We believe an annual data match is vital to enforcing the Chid Support 

Enforcement Amendments of 1984, which requies mandatory wage withholding of 

child support where the support is at least 30 days in arrears. These amendments 

also requie child support orders provide health insurance for chidren where the 

absent parent has access to that coverage. 

The curent requirement that States make an annual attempt to locate absent 

parents through the Federal Parent Locator Servce falls short of gathering the data 

necessary to impose wage withholding, or to establish health insurance for AFDC 

chidren who must otherwse rely on Medicaid. We believe that an annual data 

match might replace the current requiement since it provides more inormation to 

the agency. 

State IV-D agencies also can access IRS data through Project 1099, which provides 

both location and wage inormation. However, this data can neither be disclosed to 

a thid par, nor be used to modif chid support cour orders. The recommended 

data match avoids these pitfalls since SSA data can be used for chid support 

enforcement puroses.


The longitudial nature of this inspection shows the value of the SSA data over time. 

The age of the data does not appear to dish its use as an indicator of which 

absent parents have earned, and continue to earn at signcant levels. Further work 

can then be pursued on individual cases to obtai up to date earngs inormation. 

However, if more curren data can be obtained instead of SSA data, we support its 

use. What is important is the tapping of all earngs data for absent parents, and performg this fuction on a regular, routine basis. 
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . .. 

TABLE OF CONTENTS


EXECUTIV SUMY PAGE 

INTODUCfION . . . . . . . . . . . 1


Purpose . . . . . . . . . . . . . . . 1


Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 

Methodology . . . . . . . . . . . . 2 

FINDINGS . . . . . . . . . . . . . . . . 4 

Most AFDC absent parents earng over $10 00 in 1985 earned at least 

that amount in 1986 and 1987. Also, more AFC absent parents cross 

that $10 000 threshold each year. Average earnings for these absent parents 

increased from $17 787 in 1985 to $19 522 in 1987 .................... 4


The IV-D agencies have taken action on some of the cases we referred to 

them via OCSE in 1987. However, there are numerous cases, many of them 

stil AFDC cases, which need to be re-opened for possible action to establish 

modif, or enforce child support orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 

RECOMMNDATIONS 

DEPARTMNTAL COMMNTS 

OIG RESPONSE TO DEPARTMNTAL COMMNTS 

APPENDICES 

Appendi A: Agency Comments on Draf Report . . . . . . . . . . . . . . . . .. AAdmstration for Chidren and Famiies . . . . . . . . . . . . . . . . . . . . AAssistant Secretary for Plannng and Evaluation . . . . . . . . . . . . . .. AAssistant Secretary for Management and Budget . . . . . . . . . . . . . . . AAppendi B: Offce of Inspector General Response to 

Agency Comments . . . . . . . . . . . . . . . 
INTRODUCTION


PUROSE 

This inspection was conducted to follow up on a series of 1987 studies related to child 

support enforcement for Aid to Familes With Dependent Children (AFDC) cases. These 

studies showed that many absent parents had the financial abilty to significantly contribute 

to the support of their AFDC children. In this inspection, we wanted to determine what 

changes had occurred in the cases previously studied, both in the child support being paid 

and in the abilty of the absent parent to make child support payments. 

BACKGROUN 

Our 1987 studies found that AFDC child support collections could be increased signficantly 

if child support enforcement agencies (called IV-D agencies) would systematically review 

the earnings of absent parents. We found that while absent parents may have little or no 

earnngs when AFDC was established, their earnings did increase over time. 

In our 1987 studies, we examined over 4 60 cases where (1) there was no support order 

in place; or, (2) the monthly support order in place was $50 or less per child; or, (3) 

arrears existed. The IV- agency had a Social Security Number (SSN) for the absent 

parent in each case we reviewed.


Welfare payments had been made for at least 2 years in all of the sample cases. These 

were perceived to be the "hard-core" AFC cases, dicult to work, and unliely to result 

in a paying child support order, other than a mial one. 

We obtained 1985 earngs data on the sample cases from the Social Security 

Admiistration (SSA), and furnshed this to the Offce of Chid Support Enforcement 

(OCSE) in the Adminstration for Chdren and Familes (ACF). They in turn passed on 

this information to the IV -D agencies. Specifc employer identifcation and address were 

furnshed on all cases where the absent parent earned at least $10 00 in 1985. 

In response to these inspections, OCSE arranged for chid support agencies to access 

Internal Revenue Servce (IRS) records. The IRS data would not only provide earnings 

and employer data, but also furnsh a recent home address for the absent parent. 
The Family Support Act of 1988 also deals with the problems raised in these reports by 

setting standards for paternity establishment, requiring periodic review of court orders for 

adequacy, and mandating that the withholding of child support from absent parents' wages 

be included in all new and modified court orders. States must incrementally increase their 

paternity establishments if not establishing paternities at the average level for all States. 

States must also review all AFDC cases every 3 years to determine whether the existing 

court order is appropriate with State guidelines. The OCSE has proposed regulations to 

address these requirements. 

The OCSE also issued Standards for Program Operations, (usually called performance 

standards) for IV-D agencies effective October 1990. These standards specify minimum 

case actions for IV- agencies to take, and the timeframes in which to perform these 

actions. Some standards are for locating the absent parent, taking paternity actions once 

an absent parent has been located, establishing and enforcing support obligations, and for 

closing cases. The Federal AFDC match to States would be reduced from 1 to 5 percent 

if a State is not in substantial compliance with the performance standards. 

Prospectively, OCSE auditors will use these standards when they examine sample cases 

to determine whether reasonable efforts to locate absent parents have been made by the 

IV-D agencies. And once located, OCSE wil determine whether efforts have been made 

to establish paternity, modif low court orders, enforce existing court orders by collecting 

outstanding arrears, and establish wage withholding and medical support. The performance 

standards should also prevent cases being closed prematurely.


METHODOLOY 

We repeated our earlier methodology of tracing absent parent earnings through SSA 

records. We gathered 1986 and 1987 earnings information on the 4 637 absent parents 

we had previously reported on when we used their 1985 earngs. We now had earnings 

information for 1985, 1986, and 1987. 

We then followed up with the IV- agencies who, based on our previous studies, had 

received employer identifcation and employer address inormation for 1 277 absent parents 

who had eared over $10 00 in 1985. 

We examied the IV-D records to determe whether AFDC payments were stil being 

made, what the curent court order was, what present arrearages exist, and whether 

automatic wage withholdig of chid support was in place. 
Current case data was obtained from the 12 IV- agencies included in our earlier 

inspections. Those contacted were: Maricopa County, Arzona; Adams County, Colorado; 

Hartford, Connecticut; Hilsborough County, Florida; Topeka, Kansas; Prince Georges 

County, Maryland; Hennepin County, Minnesota; Suffolk County, New York; Cuyahoga 

County, Ohio; San Antonio, Texas; Pierce County, Washington; and Dane County, 

Wisconsin. 
FINDINGS


FIING 1: Most AF absnt parents earg over $10 00 in 198 eared at least 

that amount in 198 and 198. Al, more AF absent parents cros that $10 

theshold each year. Averae eargs for thes absent parents increasd from $17 787 

in 198 to $19 522 in 198. 

Absent parents who earned over $10 000 in 1985 usually earned at least that amount in 

subsequent years. Six-two percent earned over $10,00 in all 3 years. 

Seventy-five percent of those who earned over $10 00 earned at least that amount in 

1986. Nearly 80 percent of those earning over $10,00 in 1986 earned at that level in 

1987. 

Large increases in earnings were enjoyed by some AFDC absent parents. Six-two showed 

gains of more than $20 00 from 1985 to 1987. Two absent parents increased their yearly 

earnings by more than $50 000 in this period. 

The following chart ilustrates the continued earning potential of this group once they 

began earning at levels above the minimum wage. Each year more of the "hard-core 

AFDC cases become cases where child support can now be collected. These are cases 

where modification of low court orders, automatic wage withholding, medical support, and 

collection of arrears can be instituted. 

Char 1

Not only are more of these absent parents able to contribute to the support of their 

children, their abilty to pay at higher levels is also evident. The following chart 

demonstrates that more AFDC absent parents are earnng wages at higher levels each 

year. 

Char 2


MORE ABSENT PARENTS ARE


EARNING AT HIGHER LEVELS*


(1985 N-1.277;1986 N-1.349;1987 N-1. 426) 

Earnings 

over $30K 131

182 

$25-30K 

Year 

EH 1985 $20-25K fZ 1986 

1987 

$15-20K 

$10-15K 

100 200 300 400 500 600 700 

Number of Absent Parents 

-For those earning )$10K 
........................................................

.............. ..................................$...........................................

Of special concern are the 269 absent parents in the sample who earned over $25 000 in 

1987. Eighty-eight percent of them (236) had earned over $10 000 in 1985, so the IVagencies were aware of their earnings abilty, and the probable employer of these absent 

parents. These absent parents enjoyed a significant growth in their earnings from 1985 to 

1987 of almost 50 percent. The following chart ilustrates this rise. 

Cha 3


EARNINGS GROWTH 

FOR THOSE WITH INCOME OVER $25K IN 1987 

(N-269) 

35 ..............................................................................."""''' 35-,--15 ....


30 .............


286 

25........


20 .......................................................................


1985 1986 1987 

YEAR 

There are serious inequities in the payment of chid support by absent parents who earn 

over $25,00 yearly. Fifeen percent of the AFC absent parents with unodied court 

orders earned over $25 00 in 1987. The monthly cour order for this group averages $49. 

These absent parents averaged nearly $36 00 in income that year. We found a glarig example of the imediate need to modi cour orders in one absent parent who earned 

over $65 000 and is paying an $80 monthly support order for his AFC chid. 

Absent parents who earned over $25,00 in 1987 and who are in arrears owe more than 

500 in child support on average. Fif-five percent of the AFC absent parents in this 

group do not have an automatic wage withholding of their chid support obligation. Thirnine percent of those without wage withholding had increased their chid support debt since 

our prior studies, despite their substantial earngs. 
FIING 2: The IV-D agencies have taen acton on some of the caes we referred to 

them via OCE in 198. However, there are numerous ca many of them sti 

caes, which nee to be re-opened for poible acton to establih, mod, or enforce chid 

support orders. 

The following summary depicts the IV-D activity on the information furnished. 

Char 4

PATERNI7 CAES


Paternty has been established, and child support has been ordered on 24 percent 

of the cases referred where the absent parent earned over $10 00 in 1985. 

However, the child support ordered does not appear to be commensurate with the 

absent parent earnings. In one extreme case, an absent parent earning over $32 000 

was ordered to pay only $60 monthly child support. His child remains on AFDC. 

The absent parents' 1987 earnings in these paternity establishment cases averaged 

$16 317. Using the Wisconsin child support guidelines for one child as an example a monthly support order corresponding to these earnings would be $231. 

contrast, the actual court orders in these cases average $182 monthly. 

Of the paternity cases that remain open at the IV-D agencies, 31 percent are 

AFDC cases. The average 1987 absent parent earnings on the open AFDC cases 

was $19 039; the non-AFDC cases averaged $19 018. 

MODIFICATION CAES 

The IV- agencies obtained upward modifications of child support orders on 29 

percent of the cases where the absent parent earned over $10 00 in 1985. The 

average amount of the court order on these cases more than doubled, from $84 

to $188. (We had referred cases to OCSE for absent parents with this earnings 

level and a monthly child support order of less than $50 per child. In spite of 

these modifications, more than half remain AFDC cases. 

The increased court orders stil did not keep pace with absent parent earnings. 

The average AFDC order increased from $84 to $167 monthly. One striking 

example of this inequity was an absent parent who earned over $30 00 in 1985 

and above that level in 1986 and 1987. His cour order did increase -but only from 

$10 to $25 monthly for his AFC chid. 

FIVe of the cu wher paterty had be established and chid support awarded, were in Cuyahoga County, Ohio. 

county be paicipating in a paternity demonstration project in Apri 198. It is unow whether any of the ca 

had refem to Cuog County were included in this project. 

We us the Wisnsin chd support gudelies for exmple purp sice they ar among the simplest State guidelines to 

apply. Use of other State guidelines would reult in lesr or grter month chd support obligatioDl. The Wisnsin 

guidelines were als us in our original AFC chid support report for compan pur. 

One of our sample counties, Suffolk Nev York conducted a spe project to mod cour orders in ea 1988. They 

limited their scpe to ca where automatic wage withholding of chid support wa alrdy takig place. Twenty percent 

of the AFC ca in their projec were clos as a reult of their modifcation effort. It is unknow whether any of the ca in our sample were included in their project. 
Significantly, on the cases that are no longer AFDC cases and a modification 

occurred, the average monthly court order rose from $85 to over $217. On pending 

cases where the 1987 absent parent earnings remain above $10 000, more than half 

are current AFDC cases. The average absent parent earnings increased from 

$15 862 to $19 777 for this group. Increasing the AFDC orders using the Wisconsin 

guidelines for these cases would raise the average monthly support payment for one 

child from $83 to $280. 

The current non-AFDC cases where no increase has taken place, show a rise in 

average earnings from $18 111 to $22 667 during this period. The average nonAFDC order for these cases would climb from $86 to $321 for one child, if these 

court orders were modified using the Wisconsin guidelines. 

ARGE CASES 

The IV - D agencies have collected all the arrears on 17 percent of the cases 

identified in our earlier studies. The arrears collected in these cases averaged 

026. Additionally, arrears have decreased on another 35 percent of the cases. 

The average decrease in chid support owed in these cases has been substantial 

347 in 1987 down to $2 845 today. 

However, child support arrears have increased for 13 percent of the absent parents 

despite their earnings increasing significantly. This group averaged $15 464 in 1985 

earnings, and owed an average of $5 66 in chid support. By 1987, their average 

earnngs had increased 26 percent to $19 492. Their arrears had risen 62 percent 

to over $9 00. One particular egregious case showed an absent parent who earned 

over $20 00 in 1985, and over $25 00 in the two subsequent years. During this 

time his arrears increased by more than $7 00 for his two AFDC-children. 

Although he was workig in the same State where his children live, no wage 

withholding of his wages has been effected. 

The current cases with arrears total more than $5. mion owed in child support. 

The AFC support stil owed on these cases is more than $4.4 milion. 

Wage withholdig of chid support is now frequently used by agencies to 

collect curent support due and recover arrears. Although we did not gather 

frequency of wage withholdig data in our earlier studies, this automatic payroll 

deduction is now in place on 26 percent of the cases with arrears. 

The absent parents from whom current support is being collected by wage 

withholding have reduced their total arrears from $960 629 to $842 284 since 1987. 

Likewise, the arrears only cases where wage withholdig is in place have shown a 

decrease in arrears from $111 182 to $74 519. 
RECOMMENDATIONS


The IV-D agencies did take some actions to establish, modify and enforce child support 

orders for AFC children identified in our prior studies. However, fewer than one-fourth 

of the paternity referrals led to a court order, 7 of 10 cases with low orders remain 

unmodified, and only half of the arrearage referrals have resulted in lower arrears than 

3 years ago. Although these cases were perceived as the "hard-core" AFDC child support 

cases, there is now substantial evidence that many of these absent parents now, or in the 

future, will be able to signficantly contribute to their children s support. We recognize that 

paternity cannot be established on all cases, and that other absent parent familal 

obligations will mitigate against a modified court order in some cases. 

The IV-D agencies have an ongoing need to know absent parent wages and employers 

which a data match can provide. Ths information enables the IV-D agencies to enforce 

child support orders as required by the Chid Support Enforcement Amendments of 1984 

which call for imposing automatic wage withholding whenever chid support is in arrears 

for 30 days. Medical insurance provided by the absent parents' employer often covers 

children receiving child support. Private health insurance would eliminate costly Medicaid 

outlays for those AFC children covered. 

We recognize the substantive actions that the Admnistration for Chdren and Familes 

(ACF) has taken in implementing the Family Support Act of 1988. These activities are 

particularly significant in their attempt to establish a more systematic approach to review 

both current and older child support cases. The IV-D agencies can obtain absent parent 

wage information from Internal Revenue Servce (IRS) via Project 1099, and are required 

annually to query the Federal Parent Locator Servce for absent parent location 

information. However, these actions individually fall short of gatherig the data necessary 

to impose wage withholdig, or establish health insurance for AFDC children who must 

otherwse rely on Medicaid. 

RECOMMATION 1: The OCE should perform an anua data match with SSA 

or IR recrds relyg on data submitted by the States. The OCE should requie al 

States to pacite in the anua match unes a State perform its ow anua or more 

frequent, match State performg their ow match should be able to identi al absent 

parent wa and employers from reliable source lie State' employent recrds. 

Ths report, and prior work of the OIG in this area, demonstrates the effectiveness of 

systematically trackig absent parent earnings through matches with SSA records. Other 

records, such as IRS or State employment records, could be equally useful in determng 

absent parent employers, wages, and location. 

Prior DIG studies point out the considerable sags that can be achieved in tbes intance. See "Child Support 

Enforcementfird Pany Medical Liabilty," OAI-07-8-05, Septembe 1987, and "Cordination of Third Pany Liability 

Information between Chid Support Enforcement and Medicaid," OAI-0-8-0," Decmbe 1989. 
We believe this annual data match is an additional, but significant tool for OCSE to use 

in conjunction with performance standards and the periodic review of adequacy of the court orders. The data match is necessary since the performance standards and the 

periodic adequacy review of court orders may not identify all cases where the AFDC 

absent parent has the abilty to significantly contribute to the support of his children 

receiving welfare.


The annual data match should identify to IV- agencies those absent parents without 

court orders, with low court orders, or with arrears who are not having wages withheld 

automatically or who are not reducing their arrears. The IV-D agency actions required 

by the performance standards or the adequacy review would then ensue on appropriate 

cases. Inaction on these cases could serve as an early warning of possible noncompliance 

with the OCSE performance standards or" the Family Support Act. 

RECOMMATION 2: The OCE should ensure that IV-D agencies us inormation 

in the anua match to establih, mod, and enforce cour orders as appropriate, in 

accrdace with the performance stadads and the Fam Support Act 

The performance standards require IV- agencies to take specific actions to locate an 

absent parent in paternity cases, and to begi the legal processes to establish paternity 

after the absent parent has been located. Likewise, the performance standards also 

mandate minimum activities to enforce cases in arrears. Both tyes of cases require the 

IV-D agencies to act withi specifed timeframes dependig on the case circumstances. 

Information provided by the annual match may provide location information on absent 

parents whose wherabouts were previously unown. Where this occurs, a support order 

should be established or enforced in accordance with the performance standards. The 

current requirement that States make an annual attempt to locate absent parents falls short 

of gathering the data necessary to impose wage withholdig, or establish health insurance 

for AFDC children. We believe that an annual data match might replace the current 

requirement since it provides more information to the IV-D agency. 

In addition, a key provision of the Famiy Support Act requires IV-D agencies, beginning 

October 1993, to review all AFC orders every 36 months (and non-AFDC orders every 

36 months on request of either parent) and make revisions to the orders, where 

appropriate. The OCSE has proposed reguations defing this review as "an objective 

evaluation of complete, accurate, up-to-date information necessary for application of the 

State s guidelies for support. The OCSE should issue gudance to IV- agencies 

requing that inormation from the annual data match be considered when reviewing 

support orders in accordance with this provision. 

These recommendations further the Secretary s objective of having absent parents assume 

personal responsibility for their children, especially for those absent parents whose children 

are receiving welfare.

DEPARTMAL COMM 

The ACF concurs there is great potential for increasing child support collections by means 

of a systematic review of all cases for location and asset information. However, ACF does 

not endorse our recommendation for an annual data match since it goes beyond the 

requirements of the Family Support Act of 1988. The Assistant Secretary for Planning and 

Evaluation questions whether the recommended data match would provide useful 

information. The Assistant Secretary for Management and Budget comments that without 

cost data and cost-effectiveness measures being provided, it is questionable that the 

earnings of AFDC absent parents are sufcient to make their pursuit worthwhile. 

OIG REPONSE TO DEPARTMAL COMM 

In 1987, we recommended an annual data match and estimated that AFDC child support 

collections would be increased by $307 millon annually. The OCSE concurred with the 

need for an active, aggessive approach to increasing collections on AFDC cases. 

We believe an annual data match is vital to enforcing the Chid Support Enforcement 

Amendments of 1984, which requires mandatory wage withholding of child support where 

the support is at least 30 days in arrears. These amendments also require child support 

orders provide health insurance for children where the absent parent has access to that 

coverage. 

The current requirement that States make an annual attempt to locate absent parents 

through the Federal Parent Locator Servce falls short of gatherig the data necessary to 

impose wage withholdig, or to establish health insurance for AFDC children who must 

otherwse rely on Medicaid. We believe that an annual data match might replace the 

current requirement since it provides more inormation to the IV-D agency. 

State IV-D agencies also can access IRS data through Project 109, which provides both 

location and wage information. However, this data can neither be disclosed to a third 

part, nor be used to modify chid support cour orders. The recommended data match 

avoids these pitfalls since SSA data can be used for chid support enforcement purposes. 

The longitudial nature of this inspection shows the value of the SSA data over time. 

The age of the data does not appear to diish its use as an indicator of which absent 

parents have eared, and continue to earn at signcant levels. However, if more current 

data can be obtaied instead of SSA data, we support its use. What is important is the 

tapping of all earngs data for absent parents, and performg this fuction on a reguar 

routine basis. 
APPENDIX A


AGENCY COMM ON TI DRA REORT 
" ,L&",("I' 

DEPARTMENT Of HEALTH &. HUMAN SERVICES 

AOMINISTRATION FOR CHILDREN ANti FAMILIES 

370 L' Enfanl PromenaOe, S, 

WashIngton , D. C. 204 

Date: June ll, 1991


To: RichArd P. Kusserow 

Inspector General


lIro1U: JQ Anne S. BArnhart 

Assistant Secretary
 for Children and F il ies 

Subj ect : Commen . on Oftio. of Inspector General Draft 

Report, "Follow-Up on Aroc Absent Parents"


We aqree with the casic find1ns that ther is a qrGAt aGal of


potential fQr increasinq child sUPPQrt collections through


systematic case tollow-up to establish, upwardly modify and/or


force orders as appropriate. However, We disagree with your


specific recommen4atione requirinq mandatory annual 4atA


che. with IRS and aSA and ensuring that the, information garnered rough such matches is utilized tQ e8 ab11sh, modlfy enforce oourt or4ers. 

The Office of Child support Enforcement (OCSE) requires states


tQ utilize all po..ible resources at the Stat. and federal level ana move .. quiCkly a. po.sible to e.ta li8h ana/or
 enforce order. and get in.quita le orders modified. In AU9us 19a9, QCS2 1.s e4 reiUlations prescribinq stan4ar4. for operations which state IV-D a9 program ncies must meet. .. These rules impose requirement, and time frame. for takinq appropriate aQtions, includinq locatinq ab.ent parents, .8tabliShment of


t obliqa ion. ..tab11shment ot ernity and enforcement of suppo t obligat!ons. Stat.s were required to meet these
 standards by Oc ob. 1, 19'0. 

Our specifio oomment. concerning the report I . recommendations follow: . 

QIq R .nda 

erm ,
 :l :i ::A 1n: :h !SA OJ: 

Ooq 

Thi. recommendation retleot. our po.1tion that a .yatematic


r.v1.w of looation and ..s.t information .houl


b. conducted in

A ­
Paqe 2 - Mr. Richard Xusserow


all cases to establish an enforce orders as well as determine
 which should 
 e tarqetea tor mod1fioation. We cannot, hQwever 

aqree with your recommendation, since i qoes beyonQ the revia
 and mod1ticat1on requirements speoified in 
 he Family s pport Act ot 1988.

The Act specifies that State guidelines for setting child


support award amounts be used as a rebuttable presumption in


estaclishinq the amount of ch.ild support orders and that these 

elines be reviewed at least every four years to ensure


their appliQ tion results in appropriate child support award


amounts. The Act a180 r$quires that State. must have & plan


icat1nq how and when child aupport oraGrs in effect in the


States are to be
 .viewea and adjusted. Beqinninq October 13;- 1993, States must review child: Gupport orders in AFDC IV-I: 

cases no lat.er than 3,6 months after t.h.e order., or the most 

recent review, unless review would. not b'G in the best interest 

of the child. In non-AFDC cases, state. are required to review


order. upon request. of either parent. justments to order. 

are to be 1n accordance with State quid.lin.. for setting child


.uppo t award amount.. F$deral equ1ation8 imp1ementinq 

preau ptive quiQel1ne requirements were issued May 15, 1991. 

OCSE nas expan ed the availability, scope and efticiency of


resources available to a8.1. states in their performance of


tne functions associated with order ..tabliahment, moditication


an4 enforcement. Th... resourc.. include the Federal Parent


Locator Service (rpts) and project 1099. 

he FiLS makes it possiDle for tne States to aocess SSA and


IRS intormat1on on & weaklY ba81s (quarterly tQ= the IRS
 the absent parent (AP) social security number (SSN) is unknown) 

and 49 state Imployment Security Aqencies (SESAS) on a 


quarterly basis. SSA provide. e=ployer names and addresses.


They will not, because ot an IRS contidentiality requirement, 

prQvide wa9. data to the FPLS. Inatead, wage intormation trorn 

IRS come. through project 1099. IRS provides individuals'


name. and adgr..... from their latest tax return. SESAs 

cvi4. the most ourren employer address and quarterly wage


information. The FPLS i. currently limited to conductinq four


croe.matohe. and i. limited in the numb. of ca... that can be
 proces..d. Over 3 million casas were submitted to the FPLS in 

FY'9C. over 1. 5 million ca... have been submitted to date this 

fiscal y.ar.


oes! Project 1099 provid.. the Stat.. with quarterly access to


IRS 1099 intormation, includinq AP addre.., waqe and asset


information a. well aa employer and financial institution
 a4dre.. in:Orm ion. over 1. 8 million ca..s were submitted in FY , 90 . h1. haa incre.sed 
 c over 1. 7 mill ien ca.e. 8ubmi t te4

for the tirst two quarter. of this tiscal year. To participate 

A ­
. j 

:,:

Page 3 - Mr. Richard Kusserow


in Proj eet 1099 , the State must certify that it meets the
 stringent IRS requirements regar inq the safeguarding of
 information. In addition, the St te must certify that the information will not be disclosed to third parties or in


11t1qation relatinq to the establishment and enforcement of
 child support oDliqations. For this reason, we do not mandate uaage ot Project 1099. 

OIG Recommendation: 

The OC9E V-D aqeD2es ue
 nf2r pure 

ht annual mlltch:Jq elt,l;l 18J mQ 

a. a pr1tt accordance with t 

and tha Fami y S ort Ac 

ce c 

rf rm nce & andar t. t "r

OCS! Comment 

OCSE au itors regularly review the performance of the States meeting the requirements 
 ot the Child Support !nforceme
 Proiram. Ensuring that the performance standards aspeot of the 

Act are ca rie4 out roperly wo ld be a routine part of this
 process. 

In addition, we are constantly aisseminatin9 information


memoranda, action transmittals newslett. , "Dear Collea
 e" letters, s, ete., in an effort to provide states with as much 

information .s possible on how to pursue child eupport in the


m08t .ftective and $tt1cient way 

similar information in this 
 pO..ible. We will disseminate


instance, when apprcpriate.


A ­

DEPARTMENT OF HEALTH $. HUMAN SERVICES Ofce of the Secretary (Jl .If'''''Q Washington , DC. 20201 

TO: Richard P. Kusserow 

Inspector General 

FROM: Assistant Secretary for 

Planning and Evaluation 

SUBJECT : OIG Draft Report:

OEI-05-89-01270 

Follow- on "JaC Aba aren1: 

As requested, we have reviewed your draft report. We recommend 

that additional information be presented in the Background, 

Methodology, and Findings sections and that serious consideration


be given to revising the report recommendations.


Backaround 

Information should be added to this section which indicates that


in the period under review--1985 through 1987--many of the Child


Support Enforcement requirements discussed were not yet in
 effect. Guidelines were not mandatory until October 1989. Use 

of wage withholding for arrears cases was not fully implemented


in all states until FY 1988. Periodic review and adjustment for 

AFDC cases is not mandatory until October 1993. While it is true 

that some states did undertake these activities prior to


implementation of the 1984 Child Support Amendments and 1988


Family Support Act, most states were not required to use these


tools or practices until the federal requirement went into
 effect. This information would clarify why some states may not 

have followed up on all information provided to them by the IG' s
 office. 

Methodoloq 

More detailed information is needed in this section about the


timing and flow of information from the IG' s office back to the
 IV-D agencies. Dates need to be provided regarding when the 

information was provided and when the re-review was conducted.


Based on the information provided, it is not clear whether IV-D


agencies could have acted (or could have completed action) based
 on the information provided by the IG' s office. It would also be 

helpful to identify the "age" of the information provided to the
 states. Although not indicated in the report, it would appear 

that the earnings and employment information may have been two to


three years old before it was provided to the state and may no


longer have been useful for follow-up purposes.


A ­
Page 2 - Richard P. Kusserow


Findinas 

While the first finding may be factually correct, the


presentation of the information could easily lead one to


assume that most AFDC absent fathers have substantial


income. Your data shows this is not correct. The text


should more clearly indicate that most AFDC absent parents


(about 70 percent) show no earnings reported to the SSA in


the three years examined in this study. Only 17 percent of 

the study population earned. over $10, 000 in all three years 

and even smaller percentages earned over $10, 000 in one year


or in each of two years (percentages cannot be computed from


the text). Very few, only about five percent, showed


substantial earnings gains during the period and the modal


income is substantially lower than the average income. 

Also, it is not clear from the findings whether the AFDC


absent fathers who did have employment for two or more years


remained at the same job and/or same location over that


period of time.


The findings regarding IV-D action on the 1, 277 AFDC absent 

parents with earnings in 1985 need to be clarified.


First, the numer of cases in each category (paternity, 

modification, arrears) and the numer of cases which remain 

open as AFDC cases and non-AFDC cases need to be provided in


order to make the percentage more meaningful. For example, 

under the paternity section, it is not clear how many cases


remain open and how many of those are still AFDC cases. It 

is also not clear how many of the " referred" cases still had


earnings by the time the cases were referred. 

Second, use of averages can be very misleading when


ascertaining how much could be obtained in child support


collections. Some studies conducted before mandatory


quidelines went into place indicated that low-income fathers


tended to pay a higher proportion of earnings in child


support than did higher-income fathers (Sonenstein and


Calhoun, 1988 and Garfinkel and Wong, 1987). It would be


more germne to indicate what proportion of men were paying 

within $10-$15 of the "simulated" quideline amount. It is 

also important to note that for a numer of states, the 

rate" used in the child support calculation is not a flat


rate as it is in Wisconsin, but tends to decrease as income


increases. 

Third, the " arrears" discussion needs to indicate if all 

cases with earnings were amenable to wage witholding. 

Additionally, the same period of time should be used when


comparing arrears collected and not collected. It is not

Page 3 - Richard P. Kusserow


possible to tell whether the time frame being used is 1985­


1990 or 1985-1987. It is also not clear in how many cases


arrearages were building during a period when the AFDC


absent father had no reported earnings. 

In sum, the report should be careful not to imply that the


IV-D agencies were not responsive to the information


provided by the IG, when all the facts are not known or at


least not presented.


Recommendations 

While we agree that automated data matches can provide important


information necessary to work some cases, it would appear


unrealistic, potentially costly, and unnecessary to perform


annual data matches with SSA or IRS on every child support case


in the system. Such matches would produce a glut of information


which is out-of-date and not relevant to the next action needed


on most cases. The performance standards, which went into effect


in October of 1990, require that all cases where absent parents


cannot be located be referred to the FPLS annually to try to
 obtain information sufficient to locate the absent parent. The 

FPLS has access both to SSA and IRS information. For other 

activities such as enforcement and establishment, the information


available through state sources, such as the Department of Motor


Vehicles or State Employment Agencies, would provide much more


relevant and up-to-date information. 

The recommendations should include a discussion of potential


costs and benefits of performing such extensive matches. While 

such data matches are usually not expensive on a per case basis, 

it seems excessive to ru annual matches to locate the 2 out of 

637 absent parents who have unusually high earnings. This


comes to a hit rate of less than 1/2 of 1 percent for individuals


with incomes over $50, 000 per year and a hit rate of less than 10


percent for parents with incomes over $30, 000 per year. The cost 

to the states and Federal Governent would have to be minimal or 

the increase in AFDC child support collections would have to be


substantial in order for the benefits to exceed the costs. Note 

that costs of preparing information for a data tape and of


reviewing the informtion from the SSA files to determine if it 

is more recent than anyting else in the file would have to be 

included in any discussion of cost. 
Page 4 - Richard P. Kusserow


The second recommendation should be deleted. Through the audit, 

OCSE is already responsible for ensuring that states act in a


timely and appropriate manner to obtain information and to


establish and enforce child support orders. Since it is unclear 

that the annual match information is " complete, accurate, or up-


to-date, " requiring its use could be counterproductive. 

If you have any questions, please call Jane Baird at 245-2409. 

Aal l:? A,y
 in Gerry 

A ­
...

'Clr, 

DEPARTMENT OF HEALTH II HUMAN SERVICES Qfof the Secet 

Washington , D. C. 20201 

MEMORAUM TO TH INSPECTOR GENERA 

From Kevin E. Moley fJ, 

Assistant Secreta for Manag ent and Budget 

Subj ect: OIG Draft Report: "Follow-Up on AFDC Absent Parents, II. 

OEI-05-89-01270 

We have reviewed the draft report entitled, "Follow-Up on AFDC


Absent Parents " and have several concerns. These are discussed 

below: 

Cost 

We are concerned that the report does not contain cost data or


cost-effectiveness measures for the annual matches in which all 

states would be required to participate. In the absence of such 

information, it is difficult to know if these approaches are


justified--especially for every IV-D case in the nation--or if


they are as effective as other matches available to the States. 

Given this, it seems questionable to require that all states
 participate in annual matching specifically against the IRS and 

SSA data bases, especially in light of how few absent parents in 

AFDC cases have earnings of a magnitude to make pursuit


worthwhile. 

We believe that the report should address the fact that cost data 

is not available at this time for these matches. 

Aae of the Data


We are also concerned that the information contained in the SSA


and IRS data bases is relatively old compared to that in other

data bases which States can access. The age of this data reduces 

its utility to IV-D agencies for locate purposes, and makes


follow-up difficult.


Compounding this problem, the OIG used 1985 data to do its 1987 

study, and data for 1986, 1987, and 1988 for its 1990 study. 

Thus, when States received information to follow-up, it was


already an additional two or more years out of date. This 

appears to largely account for the low numer of actions States 

were able to take after receiving the data: state inaction does


not appear to be the problem. The report needs to clarify that

this was the case. Similarly, the methodology should note that 

matches for the same individual across several years were only


available for a small percentage of the caseload examined. This 

A ­
Page2 - Memorandum to the Inspector General


should be highlighted to offset the perception likely to be


obtained by the casual reader that far more absent parents have


earnings than actually do. 

This suggests, again, that matching against the SSA and IRS data


bases may be another tool for some cases, but not necessarily a
 tool with universal applicability. 

Redundancy 

Third, we would note that since the original study was done, the 

Family Support Act has been passed and the Child Support


standards for Program Operations regulations publ ished. 

Under the Standards for Program Operations regulations, published


in August, 1989, all States are already required, at least


annually, to submit to the Federal Parent Locator Service (FPLS), which includes the IRS and SSA data bases, cases in which


location is needed and for which previous attempts at location


have failed. Thus, states are already required to do some


referral to the recommended data bases, largely removing the need


to mandate a new national matching program.


Also as a result of the new law and regulations , states are now


required to review and modify child support cases on a reqular


basis, and to use state quidelines to set support levels. States 

must also take appropriate actions in establishing paternity, and


locating absent parents and enforcing support orders within
 specific timeframes. Together, we believe that the statute and 

the regulations obviate the need for the report' s second


recommendation, that OCSE ensure that IV-D agencies use


information garnered from the matches to establish, modify and
 enforce court orders. 
APPENDIX 


OFFCE OF INSPECfOR GENE REPONSE TO AGENCY COMM 
REONSE TO ACF COMM 

While supporting the need for a systematic review of location and asset information 

ACF does not support t e recommendation for an annual review since it goes 

beyond the scope of the Family Support Act of 1988. The ACF feels that access to 

this information through the Federal Parent Locator Servce (FPLS), and through 

Project 1099, a way of accessing IRS information, should provide the information 

IV-D agencies need. 

However, both of these efforts limit the data available to IV-D agencies. The FPLS 

is limited in the total number of cases it can process, and in the number of 

crossmatches it can perform. Project 1099 puts restrictions on the use of its 

information, so its diminished value in establishing or modifyg court orders 

mitigates against its use for this purpose. 

We feel an annual data match is vital to enforcing the Child Support Enforcement 

Amendments of 1984, which requires mandatory wage withholding of child support 

where the support is at least 30 days in arrears. These amendments also provided 

that health insurance for chidren be provided where the absent parent has access to 

that coverage. The curent requiement that States make an annual attempt to locate 

absent parents falls short of gatherig the data necessary to impose wage 

withholdig, or establish health insurance for AFDC children. We believe that an 

annual data match might. replace the current requirement since it provides more 

information to the IV-D agency. 

REONSE TO ASPE COMM 

In order to judge whether IV-D agencies had sufcient time to take action on the 

cases provided them in 1987, the ASPE wished to know when our review took place. 

We requested the SSA earngs records in 1988, with 1986 and 1987 

data then available. Our on-site review at the State IV-D agencies did 

not take place until the sumer of 1990. The IV-D agencies had at 

least 2 1/2 years to take action on the cases referred to them. 

The age of the inormation given to the IV-D agencies is also questioned by ASPE. 

Our view is that this follow-up report shows how extremely valuable 

this inormation is. Once absent parents reach a certain level of 

income, the tendency is to maintain that level of earngs. 
The ASPE suggests that our first finding could have pointed out that 69 percent of 

the AFDC absent parents did not have income over $10 000, and that very few 

earned over $10 000 each year. 

This is not correct since we were reporting only on . "hard-core" AFDC 

cases, at least 2 years old, where there was no court order, or the 

monthly court order was $50 or less per child, or where arrears existed. 

As our initial series of studies demonstrated, these cases were not being 

pursued at all by the IV-D agencies, since they were not considered to 

be "productive" cases. 

Our intent is to demonstrate that through the use of a data match 

IV-D agencies would be able to locate those absent parents with the 

abilty to contribute toward their AFDC children, through cash and 

medical insurance. 

If all AFDC absent parents were included in our inspection, we would 

have expected to fid a much larger percentage of absent parents 

earning over the threshold amount. 

The ASPE suggests that the actual number of paternty, modification and arrears 

cases be provided instead of percentages. 

Some cases overlapped categories (e.g., modication and arrears), so 

the actual numbers were omitted to avoid confsion that might occur 

when the total of the individual categories would exceed the 1 277 

actual absent parents reviewed.


The ASPE comments that using averages of earngs can be misleadig in

determg the amount of a court order, and that in actual percentages, low-income 

fathers tended to pay more in chid support that higher income fathers. 

We used a very simple formula purely as an ilustration. We applied 

the formula only to cases where the absent parent earngs suggested a 

chid support order approxiately three times or greater than the 

curent order. We did not study the phenomenon of disproportionate 

percentages suggested by ASPE. 
The ASPE suggests that cases in arrears where the absent parent is working may not 

be "amenable" to wage withholding. 

The Child Support Enforcement Amendments of 1984 require 

immediate wage withholding on cases where the child support is 

30 days in arrears, and make no provision for determining "amenable 

cases. 

The ASPE suggests the time frame for computing arrears was unclear. 

Chart 4 shows the actions taken on cases from the time we origially 

gathered data to our on-site review of the same cases in 

mid- 1990. 

The ASPE states there is no way to tell if arrears accrued during a period when the 

absent parent had no earnngs. 

Ths study does not attempt to capture that data. 

The ASPE questions the value of pursuig these cases in this manner. 

As OCSE has shown, the age of recently-obtained SSA data is 

irelevant since it coincides with the quarterly State wage inormation in 

more than 80 percent of the cases. Whe we support the use of any 

complete and current data to accomplish a systematic review of chid 

support cases, there are limitations to the FPLS, IRS, and State wage 

information. We suggest the SSA data as one alternative that avoids 

the pitfalls associated with other sources. 

We have not performed a cost-benefit analysis. However, based on our 

1987 studies, we estimate that AFDC chid support collections would 

increase by more than $307 mion annually. Of that annual increase 

the Federal share would be $103 mion. 

The ASPE suggests delethtg the fial recommendation that calls for OCSE to 

monitor the data match though the audit process. 

We feel that when a systematic data match is requied for 

agencies, OCSE should have the responsibilty to ensure compliance 

and that appropriate action is taken on cases identifed. 

B - 4 
REONSE TO ASMB COMM 

The age of the informati m given to the IV-D agencies is questioned by ASMB. 

Our view is that this follow-up report shows how extremely valuable 

this information is. Once absent parents reach a certain level of 

income, the tendency is to maintain that level. 

The ASMB comments that without cost data and cost-effectiveness measures being 

provided, it is questionable that the earnngs of AFDC absent parents are suffcient 

to make their pursuit worthwhile. 

We have not performed a cost-benefit analysis. However, based on our 

1987 studies, the annual AFDC child support collections would increase 

by more than $307 milion. Of that the Federal share would be $103 

millon. 

The ASMB feels that due to the OCSE performance standards, and the Family 

Support Act of 1988, the recommendations may be redundant. 

We feel that without an annual data match, State IV-D agencies wil 

waste valuable time pursuig location leads where there is no chance at 

all to establish, collect or modi court orders. At present, an annual 

FPLS match gives IV-D agencies a plethora of data with no way to 

judge which lead is important. 

The annual data match we propose wi obtain the same location 

information for the absent parent, with the added benefit of 

distingushig which absent parent had no earngs and which one had 

earned $25 00 annualy each of the last 3 years. 

B - 5