Department of Health and Human Servces


OFFICE OF


INSPECTOR GENERAL


CHILD SUPPORT ENFORCEMENT


INCENTIVE PAYMENTS


VIC' 

Richard P. Kusserow 

INSPECTOR GENERA 

qa JU 1991 
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, civil, and administrative 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. 

OFFICE OF EVALUATION AN 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 

Joe Penkrot (Project Leader) Headquarters 

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. 

1h-foUT States report distrutg inentie pa 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 are deposied into the State s general fu and are mingle with other 

revenu. Th end use of the inentie paynts cannot be sPeciall 

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. 

Thoughut this report any referene to "th States irlu all 50 States, th Dist of Columbia, Guam Puo Rico 

an th Vugi Isla 
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 tyes of cases, such as paternity 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


State 

AJabama 

AJaska 

Arzona 

Arkansas 

California 

Colorado 

Connecticut 

Delaware 

District of Columbia 

Florida 

Georgia 

Guam 

Hawaii 

Idaho 

Ilinois 

Indiana 

Iowa 

Kansas 

Kentuck-y 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New Hampshire 

New Jersey 

New Mexico 

New York 

North Carolina


North Dakota 

Ohio 

Oklahoma 

Oregon 

Pennsylvania 

Puerto Rico 

Rhode Island 

South Carolina 

South Dakota 

Tennessee 

Texas 

Utah 

Vermont 

Virgin Islands 

Virginia 

Washington 

West Virginia 

Wisconsin 

Wyoming 

Nationwide IP Totals 

198 Inti Payt (I) 

$ 2 541 256 

387 785 

832 435 

978 401 

270 555 

251 105 

090 846 

735 224 

636 644 

700 474 

846 361 

711 

899 327 

999 545 

210 

294 849 

309 068 

808 700 

506 530 

659 545 

979 297 

290,480 

890 527 

504 325 

621 697 

576 129 

659 024 

777 632 

943 460 

751 237 

478 004 

040 895 

754 628 

965 078 

293 

696 859 

347 929 

430 811 

862 369 

137 100 

520 241 

349 510 

062 878 

664 164 

829 201 

144 214 

929 503 

691 

151 

586 

363,35 

611,681 

967 701 

337 

$23 699 701 

State Ha IP 

LalRegtin 

YES 

YES


YES


YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

YES 

LalRegti Mate 

Routi (R) Pu (P) 

R&P 

R & P


R & P


R & P' 

R & P


R&P 

R & P" 

R & P'" 

R & P


Haw State Use IP 

(Se KEY Be) 

CSE, Local 

CSE, GenF 

CSE, Local 

CSE, SW, Lol Lol 

Lol 

CSE 

CSE, GenF 

CSE 

CSE, GenF, Local 

CSE, Lol 

GenF 

CSE, Lol 

CSE, SW 

CSE, GenF, Lol 

CSE, Lol 

CSE, AFC, Lol 

CSE, SW, Lol 

CSE, Lol 

CSE, SW, Lol 

CSE, AFC 

AFC, Lol 

CSE 

CSE, Lol

AFC, Local 

CSE, Lol 

CSE, Lol 

CSE, GenF, Lol 

CSE, SW, Lol 

CSE, Lol 

CSE 

Lol 

AFC 

, Lol 

CSE, Lol 

CSE, AFC, Lol Lol 

CSE, SW, Lol 

CSE, AFC, Lol 

CSE, Lol 

CSE 

CSE, AFC 

CSE, Lol 

GenF 

CSE, Lol 

CSE 

CSE, SW 

CSE, AFC 

CSE, GenF 

CSE, GenF 

CSE, AFC, GenF 

CSE, AFC, 

CSE, Lol Lol 

KEY 

State Madates 

Haw 

Entities Use IP 

N/A 

YES 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

YES 

YES 

N/A 

N/A 

YES 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

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. 

... Excess funds not used by locl entities in the fISl year earned, may be transferred to that i#f# 

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 

at the State level among States with or without laws or regulations 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 IVagency 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 cite special projects fud by inenve payts Incentive pay hae no 

separate idtity in mo States sine the ft are usall credid to a State though a reconcilWton proces an not 

an actual tranfer of monies 
APPENDIX A


SUMY OF STATE USES OF INCENT PAYM 

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 IVdirector, 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 "court conversion" on cases from the State 

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. 

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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 IVagency. 

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 freefor-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. 

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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 

for the specific purpose of implementing the recommendations of a State 

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 

All of the incentive payments are distributed to the county prosecuting offices 

under cooperative agreement with the State to provide CSE servces. 

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