Child Support Enforcement: Reorienting Management Toward Achieving Better
Program Results (Chapter Report, 10/25/96, GAO/HEHS/GGD-97-14).

Pursuant to a congressional request, GAO reviewed the Office of Child
Support Enforcement's (OCSE) management of the child support enforcement
program, focusing on OCSE progress in: (1) strengthening its partnership
with state and local child support enforcement programs; (2) achieving
national program goals; (3) improving assessment of state program
results; and (4) redesigning the federal incentive funding structure for
improved state performance.

GAO found that: (1) OCSE has strengthened its partnership with the
states by jointly developing goals for increasing the number of
paternities established, the number of support orders obtained, and the
amount of collections received; (2) while OCSE has not audited state
program results, it has made efforts to simplify its audit processes and
assess the accuracy of state-reported data; (3) OCSE efforts toward
achieving results-oriented management of the child support enforcement
program continue to be hampered by the lack of a funding structure with
real financial incentives for improved state results; (4) OCSE officials
do not audit state program results because of the lack of performance
measures, absence of penalties for poor-performing states, and limited
staff resources; and (5) OCSE needs to establish long-term strategies
for achieving national program goals by establishing its own priorities
and projecting anticipated results from its operations.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS/GGD-97-14
     TITLE:  Child Support Enforcement: Reorienting Management Toward
             Achieving Better Program Results
      DATE:  10/25/96
   SUBJECT:  Government collections
             Child support payments
             State-administered programs
             Federal/state relations
             Strategic planning
             Children
             Parents
             Technical assistance
IDENTIFIER:  Aid to Families with Dependent Children Program
             OCSE Measuring Excellence Through Statistics Program
             AFDC
             Federal Parent Locator Service
             HHS Child Support Enforcement Program
             Alabama
             Illinois
             Minnesota
             New Jersey
             Oregon
             Texas
             Virginia

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Cover
================================================================ COVER

Report to the Chairman, Committee on Finance, U.S.  Senate

October 1996

CHILD SUPPORT ENFORCEMENT -
REORIENTING MANAGEMENT TOWARD
ACHIEVING BETTER PROGRAM RESULTS

GAO/HEHS/GGD-97-14

Child Support Enforcement

(106601)

Abbreviations
=============================================================== ABBREV

  ACF - Administration for Children and Families
  AFDC - Aid to Families With Dependent Children
  GPRA - Government Performance and Results Act of 1993
  HHS - Department of Health and Human Services
  METS - Measuring Excellence Through Statistics
  OCSE - Office of Child Support Enforcement
  OMB - Office of Management and Budget

Letter
=============================================================== LETTER

B-271600

October 25, 1996

The Honorable William V.  Roth, Jr.
Chairman, Committee on Finance
United States Senate

Dear Mr.  Chairman:

This report, prepared at your request, examines the federal Office of
Child Support Enforcement's (OCSE) management of the nation's child
support enforcement program.  It evaluates the progress OCSE has made
in implementing previous GAO recommendations to reorient its
management of the program toward results and makes recommendations to
the Secretary of Health and Human Services.

We will send copies of the report to the Secretary of Health and
Human Services; the Ranking Minority Member of the Senate Committee
on Finance; and the Chairmen and Ranking Minority Members of the
Senate Committee on Governmental Affairs; the House Committee on
Government Reform and Oversight; and the House Subcommittee on Human
Resources, Committee on Ways and Means.  We also will send copies to
other interested parties and make copies available to others upon
request.

Please contact us--Jane L.  Ross at (202) 512-7215 or L.  Nye Stevens
at (202) 512-8676--if you have any questions.  Other GAO contacts and
major contributors to this report are listed in appendix IV.

Sincerely yours,

Jane L.  Ross
Director, Income Security Issues
Health, Education, and Human Services Division

L.  Nye Stevens
Director, Federal Management and
 Workforce Issues
General Government Division

EXECUTIVE SUMMARY
============================================================ Chapter 0

   PURPOSE
---------------------------------------------------------- Chapter 0:1

Each year, the Department of Health and Human Services' (HHS) Office
of Child Support Enforcement (OCSE) and state child support programs
face the growing needs of millions of individuals seeking child
support services.  In 1995, OCSE reported an estimated caseload of
20.1 million custodial parents seeking such services through the
nation's child support enforcement program, an increase of about 50
percent over the total caseload reported in 1991.  States collected
about $10.8 billion in child support payments for 3.8 million of
these cases in 1995, or about 19 percent of the caseload.\1

In 1994, GAO reported that the child support enforcement program
lacked essential management tools to improve its responsiveness to
the child support needs of children and families.  As a result, GAO
recommended that OCSE focus its program management on long-term
outcomes by (1) strengthening its partnership with state and local
child support enforcement programs to improve operations, (2)
developing its own management strategies for helping to achieve
national program goals, (3) reorienting its audit function to assess
state program results, and (4) redesigning the federal incentive
funding structure to provide greater impetus for improved state
performance.  OCSE agreed to address GAO's recommendations through
implementation of the Government Performance and Results Act (GPRA)
of 1993, legislation to promote efficiency and effectiveness of
federal programs and establish a system to set goals for program
performance and measure results.\2 At the request of the Chairman,
Senate Committee on Finance, this report assesses OCSE's progress in
addressing GAO's recommendations.

--------------------
\1 In response to growing caseloads, some states have moved to
privatize the collection of child support payments.  See Child
Support Enforcement:  States and Localities Move to Privatized
Services (GAO/HEHS-96-43FS, Nov.  20, 1995) and Child Support
Enforcement:  States' Experience With Private Agencies' Collection of
Support Payments (GAO/HEHS-97-11, Oct.  23, 1996).

\2 For a more detailed discussion of GAO's earlier findings, see
Child Support Enforcement:  Families Could Benefit From Stronger
Enforcement Program (GAO/HEHS-95-24, Dec.  27, 1994).

   BACKGROUND
---------------------------------------------------------- Chapter 0:2

The child support enforcement program, established in 1975 under
title IV-D of the Social Security Act, provides services such as
locating absent parents, establishing paternity, obtaining and
enforcing child support orders, collecting support payments, and
enforcing court-mandated requirements to provide health insurance for
eligible children.  In 1995, recipients included about 10.8 million
families who received Aid to Families With Dependent Children (AFDC)
benefits and about 9.3 million families who did not.  State and local
governments administer the program, and OCSE establishes national
policies and monitors state and local programs.  Program costs are
shared by the federal and state governments, with the federal
government paying about two-thirds of state program costs, about $2.1
billion in 1995.

Recent federal initiatives, such as GPRA, have attempted to improve
program management throughout the government by focusing managerial
priorities and accountability on the intended outcomes of federal
programs and services, rather than on resource or activity measures,
such as staffing levels and tasks completed.  GPRA's stated purpose
is to improve program effectiveness, service delivery, and
congressional decision-making.

To reorient federal planning and management toward program results,
GPRA requires federal agencies to (1) develop strategic plans
containing mission statements and outcome-related strategic goals,
(2) develop annual performance goals and indicators, and (3) prepare
annual reports with information on the extent to which the agency has
met its annual performance goals.  In addition to these steps, a key
practice used by federal and state agencies in reinforcing
results-oriented management is to create incentives that increase
accountability for results.\3

--------------------
\3 These steps and related critical practices are described in more
detail in Executive Guide:  Effectively Implementing the Government
Performance and Results Act (GAO/GGD-96-118, June 1996).

   RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3

OCSE is making progress in reorienting its management of the child
support enforcement program toward program results.  For example,
OCSE and the states approved 5-year national goals and objectives for
increasing the number of paternities established, support orders
obtained, and collections received, thereby focusing OCSE's
management orientation on key program outcomes.  In addition, OCSE
has negotiated voluntary performance agreements with states
specifying intended state program results.  As a critical next step,
OCSE needs to develop its own long-term strategies for how it will
help achieve the national program goals.  Such a plan should
prioritize OCSE's responsibilities, specify intended results, and
develop measures for assessing its own performance.

As OCSE reorients its management of the child support enforcement
program, it faces additional challenges in fostering improved state
program results.  For example, OCSE's audits continue to focus on
state compliance and it has not yet begun to audit state progress
toward achieving program goals, as GAO previously recommended.
Several reasons that OCSE officials cited for not auditing state
program results include the lack of performance measures coupled with
the absence of penalties for poor-performing states, as well as
limited staff resources to conduct both compliance and program
results audits.  GAO believes, however, that OCSE has the experience
and expertise to readily design and implement program results audits.
Moreover, the resource issue will be mitigated by the 1996 welfare
reform legislation, which vests primary responsibility for reviewing
compliance with the states.\4

Another obstacle facing OCSE is a federal incentive funding structure
that is based on maximizing child support collections relative to
administrative costs rather than reflecting all the program goals,
thus limiting its use as an incentive for improved results.  GAO
found that all states currently receive some incentive payments
regardless of how well they perform such functions as collecting
support payments.  The current incentive payment structure does not
base payments on paternities and support orders established.

Under the welfare reform legislation enacted in August 1996, HHS and
the states are required to develop a new incentive funding structure
and report to the Congress by March 1, 1997.  The legislation does
not specify the contents of the new structure.  In contrast to
current federal incentive funding, GAO sees this new legislation as
an opportunity for HHS to more strongly link incentive funding with
demonstrated state performance.

--------------------
\4 The Personal Responsibility and Work Opportunity Reconciliation
Act of 1996.

   PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4

      JOINTLY DEVELOPED GOALS
      STRENGTHEN FEDERAL/STATE
      PARTNERSHIP
-------------------------------------------------------- Chapter 0:4.1

In February 1995, OCSE and the states approved the program's first
national strategic plan containing jointly developed outcome-oriented
goals and objectives for increasing the number of paternities and
support orders established and the amount of collections received.
For each goal, such as establishing paternity for all children, OCSE
and the states have identified objectives or interim results that
must be achieved to meet a stated goal.  Under paternity
establishment, for example, the objective is to increase
establishment of paternities within 1 year of birth.  OCSE and most
state officials that GAO contacted believe the joint planning process
has strengthened the federal/state partnership by enabling them to
help shape the national program's long-term goals and objectives.

OCSE and states have also developed voluntary performance agreements
that project expected increases in paternities established, support
orders obtained, and collections received in each state.  OCSE
officials believe, however, that without legislation that ties the
incentive funding structure to state performance, they cannot
effectively use these agreements as a tool to help achieve the
national goals.  For example, if a state met or exceeded its goals
for establishing paternities and obtaining support orders, the
current structure would not reward its progress.

Because states often need help planning and implementing their child
support enforcement programs, OCSE has provided information on how to
implement new legislative requirements, such as procedures for
suspending and revoking the driver's or other licenses of parents who
have not met their child support obligations.  OCSE officials and
most state program officials believe that OCSE has been responsive to
their requests for technical assistance.  However, officials in four
states that GAO contacted said that OCSE should provide additional
assistance to improve state program results.  For example, officials
in Alabama said that it would be helpful if OCSE developed staffing
standards, as currently required by federal law, to assist states in
their workload management.

      OCSE NEEDS ITS OWN LONG-TERM
      STRATEGIES FOR HELPING TO
      ACHIEVE NATIONAL GOALS
-------------------------------------------------------- Chapter 0:4.2

To complement state efforts, OCSE also recognizes the need to develop
its own strategies for how it will contribute to achieving the
national program goals by establishing its own priorities, projecting
anticipated results from its operations, and developing performance
measures to assess its own performance.  GAO reported earlier that
OCSE did not have a planning process that focused on outcomes for its
role in leading the program.\5 Beginning in 1995, OCSE established
for its top managers annual performance agreements that are intended
to hold managers and staff accountable for implementing certain tasks
and responsibilities, such as promoting effective collection
techniques.  In addition to these annual agreements, however, OCSE
also needs to develop its own long-term management strategies for how
it will help achieve the newly established program goals.

--------------------
\5 GAO/HEHS-95-24, Dec.  27, 1994.

      OCSE FACES ADDITIONAL
      CHALLENGES IN FOSTERING
      IMPROVED STATE PROGRAM
      RESULTS
-------------------------------------------------------- Chapter 0:4.3

Effective oversight mechanisms, such as conducting results-oriented
audits and obtaining accurate and comparable state-reported data, are
management tools that can help foster state progress toward
increasing the number of paternities established, support orders
obtained, and collections received.  GAO previously reported that
OCSE audits were focused on processes and not state program results.
OCSE had included over 50 criteria for assessing compliance with
federal requirements and state program procedures.  To provide a more
results-oriented oversight capability, GAO previously recommended
placing greater emphasis on auditing state program results.

OCSE has not yet begun to audit state program results.  Its officials
told GAO that they could not effectively audit these results without
approved performance measures and penalties to enforce audit
findings.  In addition, OCSE officials believe that their staff
resources would be strained by conducting both program results and
legislatively required compliance audits.  Without such audits,
states continue to believe that OCSE's compliance audits are not an
effective management tool to help them improve program results.

GAO believes that OCSE should conduct program results audits to
investigate problems that inhibit the effectiveness of state programs
and recommend, when appropriate, corrective actions.  OCSE has the
expertise and knowledge that would allow it to design and conduct
such audits.  Moreover, the 1996 welfare reform legislation requires
states to review and report annually on their compliance with federal
program requirements.  Instead of conducting compliance audits, OCSE
is required under the new legislation to review the states'
compliance reports and provide them with comments, recommendations
for corrective actions, and technical assistance.  These changes
should reduce OCSE's workload previously associated with compliance
audits and allow it to begin conducting program results audits.

While it has not yet audited state program results, OCSE has made
efforts to simplify its audit processes and assess the accuracy of
state-reported data.  In December 1994, OCSE streamlined its audits
by reducing the number of audit criteria for determining state
compliance with federal requirements.  For example, OCSE reduced the
number of criteria to assess state compliance with required
procedures for opening and closing child support enforcement cases.
Beginning in 1994, OCSE also increased its emphasis on auditing the
accuracy of state program data and the systems through which states
report their data to OCSE.  At the time of GAO's review, OCSE had
conducted reporting system reviews in 20 states, most of which found
data inaccuracies and unreliable reporting systems.

In addition to data inaccuracies reported through OCSE's audits,
discrepancies among state programs' data also magnify difficulties in
assessing state performance.  OCSE officials believe that data
discrepancies, such as differences in how states define a child
support case, reflect variances in state domestic law and other
dissimilarities in state-administered programs.  Recognizing these
difficulties, OCSE has attempted to improve the comparability of
performance data by establishing standard definitions for its
performance measures and pilot testing those measures.  In response
to OCSE's request, six states are participating in the pilot.

      FEDERAL INCENTIVE FUNDING
      STRUCTURE REMAINS WEAKLY
      LINKED WITH STATE
      PERFORMANCE
-------------------------------------------------------- Chapter 0:4.4

A major constraint to OCSE's achieving results-oriented management of
the child support enforcement program has been the lack of a funding
structure that has real financial incentives for improved state
results.  The incentive funding structure remains weakly linked with
state program performance.  Incentive payments, based on a ratio of
collections to state program costs, do not consider state progress
toward achieving the other two national goals of establishing
paternities and obtaining support orders.  In addition, states can be
awarded 6 to 10 percent of their collections based on their
collections-to-cost ratio, and all receive at least 6 percent in
incentive funds regardless of how well or poorly they perform.

OCSE and state officials that GAO interviewed agreed that the current
incentive funding structure needs to be improved.  The newly enacted
Personal Responsibility and Work Opportunity Reconciliation Act of
1996 requires HHS and the states to develop a revised incentive
funding structure that must be revenue-neutral to the federal
government and report to the Congress by March 1, 1997.  The new
structure will become effective for fiscal year 2000.  The
legislation does not say how the new incentive funding structure
should be revised.  GAO believes that a new structure should base
incentive payments on an assessment of state progress toward meeting
each of the three program goals.  For such a structure to provide
real impetus for improved performance, it must also utilize approved
performance measures and audits of state program results.

   RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:5

GAO is making a number of recommendations to the Secretary of HHS
that include having OCSE develop its own long-term management
strategies and program priorities, conduct program results audits of
state progress toward achieving the national program goals, and
include payments in the new incentive system, required by recent
welfare reform legislation, that are based on state progress toward
achieving the program goals.

   AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:6

HHS expressed its commitment to moving forward in the direction of
GAO's recommendations (see app.  III).  For example, OCSE has created
a series of federal/state work groups to address longer-term issues
and planned major enhancements to the Federal Parent Locator Service.
As OCSE proceeds, GAO believes that OCSE also should ensure that it
has strategies to establish its own priorities, specify anticipated
results from its program activities, and develop measures to assess
its performance.

While HHS cited welfare reform legislation that requires that OCSE
assess the accuracy of state-reported data, GAO believes that OCSE's
audit function should also address why states have not met
performance targets and make recommendations for improvement.

HHS also stated that OCSE has made progress toward revising the basis
on which states receive incentive payments.  While these steps show
promise in strengthening the linkage between the incentive funding
structure and state performance, the revised structure, when fully
implemented, should base payments on state progress made toward
achieving all three program goals as GAO recommends.

GAO also obtained comments on selected segments of the draft report
from four states included in its review.  These states and HHS
provided technical comments that GAO incorporated in the final report
as appropriate.

INTRODUCTION
============================================================ Chapter 1

The general well-being of children and families is a critical
national policy goal.  Current priorities aimed at protecting
children and preserving families include an effective child support
enforcement program to meet the needs of millions of parents who
annually seek child support for their eligible children.  In our
report, Child Support Enforcement:  Families Could Benefit From
Stronger Enforcement Program (GAO/HEHS-95-24, Dec.  27, 1994), we
found that the Office of Child Support Enforcement (OCSE) lacked
essential management tools, such as programwide planning and
goal-setting, to assess and improve program performance.  On the
basis of these findings, we made several recommendations to
strengthen OCSE's leadership and management of the program.  Given
the need to improve program management, the Chairman, Senate
Committee on Finance, asked us to assess the progress that OCSE has
made in implementing our previous recommendations.

   CHILD SUPPORT ENFORCEMENT
   PROGRAM OVERVIEW
---------------------------------------------------------- Chapter 1:1

A rise in welfare costs resulting from out-of-wedlock birth rates and
parental desertion, coupled with a growing demand to relieve
taxpayers of the financial burden of supporting these families,
prompted the Congress to create the national child support
enforcement program.  Created in 1975 under title IV-D of the Social
Security Act, the program's purpose is to strengthen existing state
and local efforts to find noncustodial parents, establish paternity,
obtain support orders, and collect support payments.  The national
program incorporated the already existing state programs.

Increasingly, the child support enforcement program has faced the
growing demands of millions of children and families seeking support
payments.  In 1995, the program reported an estimated 20.1 million
cases, an increase of about 50 percent over the previous 5 years.  In
that year, states collected about $10.8 billion in child support
payments for 3.8 million cases, or 19 percent of the program's
caseload.  Expenditures to administer the child support enforcement
program totaled about $3.0 billion, of which $2.1 billion was paid by
the federal government.  In response to the growing caseloads and as
a way to improve performance, some states have privatized child
support enforcement services to supplement their own
state-administered programs.\6

The program serves two populations:  families receiving Aid to
Families With Dependent Children (AFDC)\7 and those who do not.  The
Congress believed that government welfare expenditures could be
reduced and to some extent prevented by recouping AFDC benefits from
noncustodial parents' child support payments.  In addition, the
Congress believed that earlier enforcement of child support
obligations for families not receiving AFDC could help prevent these
families from needing support in the form of welfare benefits.

Families entering the child support enforcement program require
different combinations of services at different times.  In some
cases, the child's paternity has not been established and the
location of the alleged father is unknown.  In these cases, the
custodial parent needs help with every step:  locating the alleged
father, establishing paternity and a child support order, enforcing
the order, and collecting the support payment.  In other cases, the
custodial parent may have a child support order, and child support
enforcement agencies must periodically review and, possibly, modify
the order as a result of changes in the employment status or other
circumstances pertaining to the noncustodial parent.  For AFDC
recipients, the family receives the first $50 of any current child
support payment each month without a decrease in its AFDC payment.\8

Any remainder of the child support payment is retained by the federal
and state governments in proportion to their respective AFDC
payments.  Payments that are collected on behalf of non-AFDC families
are sent to the families.

The child support enforcement program is an intergovernmental program
involving the federal, state, and local governments.  Federal
responsibility for the program lies within the Department of Health
and Human Services' (HHS) Administration for Children and Families
(ACF).  Within ACF, OCSE central office and regional office staff
develop policy and oversee the state-administered programs.  Figure
1.1 illustrates the partnership arrangements among key players
involved in overseeing and administering the child support
enforcement program.

   Figure 1.1:  The Federal/State
   Partnership in the Child
   Support Enforcement Program

   (See figure in printed
   edition.)

The child support enforcement program envisions an aggressive federal
role in ensuring that states provide effective child support
services.  Federal law requires OCSE to establish standards for state
program effectiveness and to monitor the operation of state programs
through periodic audits.  To help ensure program effectiveness, OCSE
has the authority to assess financial penalties if an audit reveals
that a state has failed to meet certain program standards.  Among
other functions, regional office staff review state child support
enforcement plans to ensure consistent adherence with federal
requirements.  OCSE also is authorized to work with the states to
help them plan, develop, design, and establish effective programs.
In addition, OCSE is responsible for maintaining effective working
relationships with federal, state, and local government officials;
national interest groups; and other key stakeholders in the child
support field.

State child support enforcement agencies are responsible for all
activities leading to securing from noncustodial parents financial
support and medical insurance coverage for children.  The agencies
provide four principal services:  (1) locating absent parents, (2)
establishing paternity, (3) obtaining and enforcing child support
orders, and (4) collecting support payments.  To meet federal
requirements and receive federal funds, state child support
enforcement programs must have HHS-approved plans indicating
compliance with federal law and regulations and must operate in
accordance with those plans.  HHS can levy financial penalties
against states found substantially out of compliance with their plan.

There are significant differences in the ways state child support
enforcement programs are organized, which state organization they
report to, what relationships exist between the child support
enforcement program and other state agencies, and the policies and
procedures that are followed.  These characteristics usually vary by
the type of service delivery structure, levels of court involvement
required by state family law, population distribution, and other
variables.  For example, some state child support agencies operate
their programs with state funds through a network of regional
offices, while others share the federal funding with and supervise
county and other local jurisdictions' operations.

The child support enforcement funding structure was designed to share
program costs between the federal and state governments.  The federal
government matches 66 percent of states' administrative and certain
management information systems development costs\9 and 90 percent of
laboratory costs related to paternity establishment.  The federal
government also pays incentives to states for collection efficiency.
These incentives are calculated separately for AFDC and non-AFDC
collections by dividing the amount collected for each category by
total program administrative costs.  On the basis of these
calculations, states with higher ratios of collections to program
costs receive more incentive funds than states with lower ratios.
Incentive payments for AFDC collections range from amounts equal to 6
to 10 percent of the collections.  Incentive payments for non-AFDC
collections also range from 6 to 10 percent of non-AFDC collections
but cannot be greater than 115 percent of the AFDC incentive
payments.  These incentive payments are funded from the federal
portion of recovered AFDC collections.  States must share incentives
with local governments that bear some of the program's administrative
costs.  However, states may use the incentive payments and AFDC
recoveries to fund programs other than child support enforcement.

--------------------
\6 GAO/HEHS-96-43FS, Nov.  20, 1995, and GAO/HEHS-97-11, Oct.  23,
1996.

\7 As of July 1, 1997, AFDC will be replaced by block grants under
the Temporary Assistance for Needy Families program.

\8 The Personal Responsibility and Work Opportunity Reconciliation
Act of 1996 eliminates the requirement to pass the first $50 of child
support to families receiving AFDC.

\9 The federal government reimburses states for 90 percent of their
management information systems' development costs incurred or planned
before fiscal year 1996.

   GAO-REPORTED MANAGEMENT
   CHALLENGES
---------------------------------------------------------- Chapter 1:2

We reported earlier\10 that clear federal management strategies
coupled with state management efforts could better position the child
support enforcement program to serve the families that depend on it.
The increase in children needing support has focused attention on
federal and state efforts to enforce parental responsibilities to
support their children.  However, these efforts have been hampered by
management weaknesses, such as the lack of programwide planning and
accurate data, that have kept OCSE from developing specific
strategies for contributing to improved program performance and
judging how well the program is working.  We also reported that OCSE
had reduced the level of technical assistance it provided to state
programs following reductions in federal program resources.  Various
organization and staffing changes reduced the number of federal staff
assigned to the child support enforcement program, thereby creating
communication problems between federal and state program officials.
OCSE audits and data collection efforts, while satisfying legal
requirements for monitoring and tracking the states' programs, did
not provide either OCSE or the states with adequate information on
program results.  Moreover, we reported that federal incentive
funding was not sufficiently aligned with desired program outcomes.

On the basis of these and other findings, we made several
recommendations to the Secretary of HHS to focus management of the
child support enforcement program on results.  These recommendations
address four key program areas for which OCSE has responsibility:
(1) strengthening its partnership with state child support programs,
(2) developing its own management strategies for how it will
contribute to improved program results, (3) reorienting its audit
processes to assess state results, and (4) realigning federal
incentive funding with state performance.  OCSE said it would address
our recommendations in the course of its implementation of the
Government Performance and Results Act (GPRA) of 1993, legislation
that focuses federal departments' and agencies' management on program
results.

--------------------
\10 GAO/HEHS-95-24, Dec.  27, 1994.

   GPRA PROVIDES OPPORTUNITY FOR
   OCSE TO MANAGE FOR RESULTS
---------------------------------------------------------- Chapter 1:3

GPRA requires federal agencies to reorient program management toward
results.  Traditionally, federal agencies have used factors such as
the amount of program funds, the level of staff deployed, or the
number of tasks completed as measures of performance.  By only using
these kinds of measures, an agency has not considered whether its
programs have produced real results.  Today's environment is more
results-oriented.  The Congress, executive branch, and the public are
beginning to hold agencies accountable less for inputs and outputs
than for outcomes, such as how programs affect participants' lives.

Under GPRA, federal agencies are faced with reorienting their
policies, planning efforts, and operations toward measuring and
improving program results.  To reorient federal planning and
management, GPRA requires federal agencies to (1) define their
mission and desired outcomes, (2) measure performance, and (3) report
performance information as a basis for making management
decisions.\11 The first step--defining mission and desired
outcomes--requires agencies to develop strategic plans containing
mission statements and outcome-related strategic goals.  The
Environmental Protection Agency, for example, launched the National
Environmental Goals Project, a long-range planning initiative under
which it involved stakeholders in developing measurable goals, such
as managing and cleaning up radioactive waste, for the agency to
pursue in improving the quality of the nation's environment.  The
second step--measuring performance--requires agencies to develop
annual performance plans with annual performance goals and indicators
to measure performance.  The National Oceanic and Atmospheric
Administration, for example, set up a method to measure its
performance by measuring changes in the lead time it gives the public
before severe weather events.  The third step--reporting performance
information--requires agencies to prepare annual performance reports
with information on the extent to which they have met their annual
performance goals.  To implement this step, the Department of
Veterans Affairs initiated efforts to provide caregivers improved
medical outcomes data to use in improving services to veterans.

To begin implementing GPRA, the Office of Management and Budget (OMB)
designated 68 pilot tests for performance planning and reporting in
26 federal entities.  OCSE was one of the federal agencies selected
by OMB in 1994 to undertake a pilot test.\12 OMB based its selection
of OCSE, in part, on OCSE's previous efforts to develop a 5-year
strategic plan; its ability to quantify program goals, such as child
support collections; and the involvement of state and local
governments as key program administrators.

--------------------
\11 These steps and related critical practices are described in more
detail in GAO/GGD-96-118, June 1996.

\12 OCSE also selected 27 states, two counties, two cities, and
Puerto Rico to operate local GPRA demonstration programs intended to
place greater emphasis on desired program outcomes.  Appendix I
describes the state and county demonstration programs operated in the
states we selected for case study work.

   SCOPE AND METHODOLOGY
---------------------------------------------------------- Chapter 1:4

To review OCSE's progress made toward implementing our previous
recommendations, we examined OCSE program management and conducted
case studies in seven states (see fig.  1.2).  We interviewed OCSE
central office and regional staff and obtained relevant documentation
to discuss and analyze management initiatives undertaken since our
previous review.  We also interviewed state and local program
officials to obtain their perspectives on any recent changes in their
interactions with OCSE.  Regarding OCSE's implementation of GPRA, we
reviewed GPRA documentation, such as strategic plans, performance
reports, memoranda, and studies.  Our review also included interviews
with officials in HHS' Office of the Secretary, ACF, and OMB.  In
addition, we reviewed changes in OCSE's management policies and
practices since our previous report.  We did not assess, however, the
child support enforcement program results attributable to such
changes because of the relatively short period of time they had been
in effect.

   Figure 1.2:  States Selected
   for Case Studies of Child
   Support Enforcement Programs

   (See figure in printed
   edition.)

The seven case studies we conducted were designed to obtain
information on local program priorities and state interactions with
OCSE regional and central office staff.  We judgmentally selected
states that differed in their fiscal health, geographic location,
demographics, program administration, status of any state GPRA pilot
projects (see fig.  1.3), and management reform initiatives.

   Figure 1.3:  States Selected by
   OCSE for GPRA Pilot Projects

   (See figure in printed
   edition.)

Note:  OCSE also selected five other jurisdictions as pilot projects,
including two counties, two cities, and Puerto Rico.

On the basis of these selection criteria, we reviewed child support
enforcement programs in Alabama, Illinois, Minnesota, New Jersey,
Oregon, Texas, and Virginia.  Our case studies also included
interviews with officials in six regional offices, covering 33 state
or local programs, as shown in table 1.1.  In addition, we
interviewed representatives from five national interest groups--the
Center for Law and Social Policy, Children's Defense Fund, National
Council of Child Support Enforcement Administrators, National
Institute for Responsible Fatherhood and Family Development, and
Association for Children for Enforcement of Support--to obtain their
views on implementation of the child support enforcement program.
Appendix II contains a profile of selected program and demographic
data for each state included in our review.

                         Table 1.1

           HHS Regional Offices Contacted and the
             Corresponding State or Local Child
                Support Enforcement Programs

Regional office
(location)          Corresponding programs
------------------  --------------------------------------
Region II (New      New Jersey, New York, Puerto Rico, and
York)               Virgin Islands

Region III          Delaware, District of Columbia,
(Philadelphia)      Maryland, Pennsylvania, Virginia, and
                    West Virginia

Region IV           Alabama, Florida, Georgia, Kentucky,
(Atlanta)           Mississippi, North Carolina, South
                    Carolina, and Tennessee

Region V (Chicago)  Illinois, Indiana, Michigan,
                    Minnesota, Ohio, and Wisconsin

Region VI (Dallas)  Arizona, Louisiana, New Mexico,
                    Oklahoma, and Texas

Region X (Seattle)  Alaska, Idaho, Oregon, and Washington
----------------------------------------------------------
We conducted our review from June 1995 through August 1996 in
accordance with generally accepted government auditing standards.
HHS provided comments on a draft of this report.  These comments are
presented and evaluated in chapter 4 and included in appendix III.
We also obtained comments from states selected for our case studies.
Their suggested revisions and technical comments from HHS were
included in the report as appropriate.

FEDERAL/STATE PARTNERSHIP
STRENGTHENED; OCSE NEEDS ITS OWN
STRATEGIES TO MANAGE FOR RESULTS
============================================================ Chapter 2

OCSE has made progress in reorienting its management toward program
results by working with the states to develop national goals and
objectives for increasing the number of paternities established,
support orders obtained, and collections received.  Through this
joint planning process, OCSE has also strengthened its partnership
with state child support enforcement programs.  The partnership was
further strengthened by OCSE's designating regional staff to provide
technical assistance responsive to local needs.  As a next step in
its planning process, OCSE needs to develop its own long-term
strategies for how it will help achieve the national goals and
objectives, in addition to annual performance agreements established
for top managers.

   OCSE AND THE STATES DEVELOPED
   NATIONAL GOALS AND OBJECTIVES
   AND STRENGTHENED THEIR
   PARTNERSHIP
---------------------------------------------------------- Chapter 2:1

In February 1995, OCSE and the states developed and approved a
strategic plan with national goals and objectives for the child
support enforcement program.  In our earlier review, we found that
OCSE's planning efforts had not focused on overall program goals.
Except for paternity establishment, the program lacked long-term
goals and objectives.  In addition, OCSE had not sought input from
its state partners, leading to uncertainty and frustration among
state officials regarding the future direction of the program and
their lack of participation in program planning.

      NATIONAL PROGRAM GOALS AND
      OBJECTIVES ESTABLISHED
-------------------------------------------------------- Chapter 2:1.1

Recognizing the need to improve its planning process and working
relationships with states, OCSE sought to reorient its management
focus toward program outcomes and involve states in the development
of program goals and objectives.  GPRA provided legislative impetus
for OCSE to initiate a new management orientation intended to look
beyond traditional management and planning priorities, such as
process-oriented tasks and activities.  In 1994, as the first step in
this long-term process, OCSE specified performance levels that states
were expected to achieve in such areas as paternities established and
collections received.  However, state program officials strongly
objected to this mandate, because they did not have an opportunity to
participate in this planning process.

Following these initial planning efforts, OCSE sought to obtain wider
participation from program officials at the federal, state, and local
levels of government.  In addition, OCSE established task forces
consisting of federal, state, and local officials to help focus
management of the program on long-term goals.  OCSE regional
officials also worked with states to help reorient program management
toward results.  During the planning process, participants agreed
that the national goals and objectives would be based on the
collective suggestions of the states and that the plan's final
approval would be reached through a consensus.  After reaching
consensus, OCSE and state program officials for the first time
approved mutually acceptable goals and objectives, as shown in table
2.1.

                         Table 2.1

              Child Support Enforcement Goals
            Developed Jointly by OCSE and State
                     Program Officials

Program service
area                Program goal
------------------  --------------------------------------
Paternities         All children have parentage
established         established

Support orders      All children in child support
established         enforcement cases have financial and
                    medical support orders

Collections         All children in child support
received            enforcement cases receive financial
                    and medical support from both parents
----------------------------------------------------------
For each goal, the participants identified interim objectives that,
if achieved, would represent progress toward the stated goal.  For
example, OCSE and the states first agreed to increase the number of
paternities established within 1 year of birth to help meet the goal
of establishing paternity for all children with child support
enforcement cases.

At the time of our review, OCSE and the states also were developing
performance measures, such as the percentage of children in the child
support enforcement caseload with paternity resolved, as statistical
tools for identifying state progress toward achieving these goals.
In addition, OCSE intends to work with states to develop performance
standards against which it will assess the quality of state
performance, consistent with GPRA.

      PERFORMANCE AGREEMENTS WITH
      STATES ATTEMPT TO LINK
      NATIONAL AND STATE GOALS
-------------------------------------------------------- Chapter 2:1.2

In an effort to achieve the program goals established under GPRA,
OCSE has encouraged its regional staff to develop performance
agreements with states.  These agreements are to specify both general
working relationships between OCSE regional offices and state program
officials and performance goals for each state.  In four states that
we visited, regional and state officials negotiated mutually
acceptable goals for the agreements.  OCSE officials said that by
working toward the goals in each agreement, states would help meet
the desired national increases in the number of paternities
established, support orders obtained, and collections received.

OCSE officials said, however, that they are limited in using the
performance agreements as an effective management tool for fostering
improved program performance.  They explained that OCSE does not
currently have the statutory authority to link federal incentive
funding to the achievement of performance goals included in each
agreement.  OCSE officials also stated that, until legislation making
that link is enacted, they must rely on the good will of states to
improve program results.  The limitations of the current incentive
funding structure are discussed in further detail in chapter 3.

      FEDERAL/STATE PARTNERSHIP
      STRENGTHENED
-------------------------------------------------------- Chapter 2:1.3

Since our previous review, OCSE and the states have worked to
strengthen their partnership.  Joint program planning conducted by
both OCSE and state officials in 1994 and 1995 has increased the
states' influence in developing the national goals and objectives,
compared with the level of state involvement we previously reported.
During this joint planning, state officials had an opportunity to
discuss the challenges that they face as the programs' principal
administrators.  Child support program officials in five of seven
states we contacted generally believe that OCSE made a commitment to
work actively with states as partners.

As program partners, state officials had the opportunity to develop,
amend, and approve specific program objectives.  For example, OCSE
and state officials created a Performance Measures Work Group to
develop statistical measures for assessing state progress toward
achieving the national goals and objectives.  The work group, which
consists of officials from ACF, OCSE, and state and local child
support enforcement programs, met several times in 1995 and 1996 to
discuss mutually acceptable performance measures.  OCSE also selected
32 local GPRA pilot programs that states and counties believed would
strengthen federal/state commitment to improve program results.
Appendix I contains a brief description of the five state and county
pilot programs operated in the states we reviewed.  These pilots
cover a broad range of program services and focus state and local
program management on goals and objectives similar to those
established at the national level.

      OCSE TECHNICAL ASSISTANCE
      GENERALLY RESPONSIVE TO
      STATE NEEDS, BUT COULD BE
      BETTER TARGETED IN CERTAIN
      CASES
-------------------------------------------------------- Chapter 2:1.4

To further strengthen its partnership with states, OCSE improved its
technical assistance in response to state program needs.  In our
earlier review of the child support enforcement program, we reported
that HHS had experienced workforce reductions in the 1980s, leading
to fewer resources in OCSE.  As a result, technical assistance and
training, which had formed a large part of OCSE efforts to foster
improved program results, virtually disappeared.  In addition, an
HHS-wide reorganization left OCSE with no organizational control over
those HHS regional staff serving as contact points for the states on
some program matters.  Since our previous review, HHS has reorganized
staffing assignments in its 10 regional offices to decentralize
program decision-making.  As a result, OCSE central and regional
office staff, often designated as child support enforcement program
managers and specialists, are now providing technical assistance more
responsively to state needs.

Program officials in six of seven states included in our review were
generally satisfied with the responsiveness of OCSE regional staff.
For example, Oregon officials stated that child support enforcement
officials in federal Region X have continually provided technical
assistance on regulatory interpretations and have sponsored forums to
discuss other issues pertaining to customer service and specialized
interstate cases.  New Jersey program staff also said that they
worked closely with OCSE officials in Region II to identify state
GPRA pilot project strategies, such as processing criminal child
support enforcement cases, that could be used to improve the New
Jersey program.

On the whole, OCSE officials believe that they have been responsive
to state inquiries.  In certain cases, several state officials and
national interest groups we contacted believe that OCSE could provide
more effective guidance or financial support to improve state
programs.  For example:

  -- Alabama child support enforcement officials stated it would be
     helpful if OCSE developed staffing standards, as currently
     required by federal law, in cooperation with state child support
     staff.  Such standards could be used by states to assist in
     caseload distributions and workload management.

  -- In Minnesota, child support officials in four counties believed
     that, through additional funding, OCSE could promote state and
     local level development of innovative approaches to service
     delivery.

  -- Several national interest groups we contacted believe that OCSE
     does not actively promote innovative approaches to state program
     improvement.  Representatives from these groups said that OCSE
     has not fulfilled its role in fostering improved state programs.
     While the representatives told us that OCSE has assembled
     relevant program data as a central depository of information,
     they believe that OCSE should work more closely with states to
     help foster improved program results.

   OCSE NEEDS TO DEVELOP ITS OWN
   STRATEGIES TO HELP ACHIEVE
   NATIONAL GOALS AND OBJECTIVES
---------------------------------------------------------- Chapter 2:2

While OCSE has made notable progress in developing national goals and
objectives for the program as a whole and establishing performance
agreements with states, as a next step it now needs to develop its
own plan for realizing the long-term program goals.  As the federal
partner in child support enforcement, OCSE has responsibility to help
achieve the national goals developed jointly with states.  Further,
GPRA requires OCSE to develop such strategies by describing the
operational processes, skills, technologies, and resources required
to meet the program's goals.

As we reported in December 1994, the scope of OCSE responsibilities
has grown with each expansion in legislative requirements, such as
provisions contained in the Child Support Enforcement Amendments of
1984 and the Family Support Act of 1988.  OCSE has undertaken
initiatives to address issues as diverse as developing a standardized
form for withholding income from noncustodial parents who owe child
support to piloting a system for identifying parents' Social Security
numbers.

In response to its growing responsibilities, OCSE recognizes the need
to establish its own strategies for how it will help achieve newly
established program goals.  Beginning in 1995, key
managers--including the Assistant Secretary for Children and
Families, who is also the Director of Child Support Enforcement, and
the Deputy Director of Child Support Enforcement--developed their own
annual performance agreements in consultation with selected states.
These agreements, similar to personnel contracts for the federal
government's Senior Executive Service, are intended to hold OCSE
senior managers and staff accountable for achieving program goals.
For example, the 1996 agreement between the Assistant Secretary and
Deputy Director cites the national program goals and a mixture of 52
measurable and abstract process goals that the Deputy Director is
required to meet, including promoting "effective asset identification
and collection techniques" and continuing "a meaningful dialogue with
national public interest groups."

While performance agreements have been developed for its top
managers, OCSE also needs to develop its own long-term management
strategies for helping to achieve the program goals, prioritize its
responsibilities, specify intended results from its operations, and
identify measures for assessing its own performance.  Unlike
long-term management strategies for the organization, the performance
agreements specify annual program goals for OCSE's top managers.  For
example, one such performance agreement indicates that OCSE will
promote the review and modification of child support orders to help
foster the self-sufficiency of eligible clientele.  However, the
agreement does not specify how each manager will promote such a tool,
how such promotion will contribute toward achieving the national
goals, or any performance measures for assessing progress toward
meeting the goals through this particular activity.  Without its own
long-term management strategies for helping to achieve the national
program goals, OCSE will be hindered in establishing its priorities
and applying its resources in ways that will effectively contribute
to improved program results.

OCSE FACES ADDITIONAL CHALLENGES
IN FOSTERING IMPROVED STATE
PROGRAM RESULTS
============================================================ Chapter 3

While OCSE has established national goals and objectives through a
strengthened partnership with state child support enforcement
programs, it faces additional challenges in fostering improved state
performance.  To help move management of the program toward a more
results-oriented focus, OCSE undertook efforts to improve its audit
processes, the quality of state-reported data, and the federal
incentive funding structure.  Beyond these initial efforts, more
needs to be accomplished in all three areas in order to further
OCSE's reorientation toward managing for results.

   DESPITE IMPROVEMENTS, OCSE
   AUDITS REMAIN COMPLIANCE
   FOCUSED
---------------------------------------------------------- Chapter 3:1

We reported earlier that OCSE's audit role was focused more on
assessing state compliance with federal program requirements than on
assessing the effectiveness of state programs.  Therefore, we
recommended that OCSE change its audit function to focus more on
state program results.  While compliance audits are needed, program
results audits, in contrast, would (1) measure state progress toward
accomplishing the national goals; (2) investigate barriers to
effective child support enforcement programs; (3) recommend program
improvements, when appropriate; and (4) ensure that the data states
submit on their performance are accurate and comparable across
states.

      OCSE PRIMARILY AUDITS
      STATES' COMPLIANCE WITH
      PROGRAM REQUIREMENTS
-------------------------------------------------------- Chapter 3:1.1

Currently, OCSE's audits, which include a substantial compliance
review and several more specialized audits,\13 remain largely focused
on state compliance with federal program requirements.  While OCSE
officials agreed that their audits, as currently constructed, are
insufficient for assessing state program results, they identified
several reasons why they do not conduct such program results audits.
According to the Director of OCSE's Division of Audit, OCSE cannot
use a program results audit until it and the states approve
performance measures currently under consideration.  He said that
once these performance measures are finalized they can then be used
as criteria for auditing program results.  The Director also
indicated that if OCSE was not relieved of its current statutory
requirement to conduct the substantial compliance audits, its
operations would be strained by having to conduct both compliance and
program results audits with limited staff resources.  The Director of
OCSE's Division of Audit also believed that a penalty provision
similar to that used for its substantial compliance audits would be
needed to sanction states for poor performance.  He said that without
a penalty provision, program results audits would be construed by
states as merely advisory.  Other OCSE officials said that, given
their current emphasis on compliance audits, it may be inappropriate
to penalize states for poor performance while finding them in
compliance with regulatory requirements.

We believe that OCSE can conduct program results audits that would
provide states with valuable information to use in improving program
results.  First, we believe that OCSE could conduct such audits
without approved performance measures by using its accumulated
knowledge of state practices and results.  Once approved, however,
performance measures could provide OCSE auditors with additional
criteria to assess state progress toward achieving the national
goals.  Also, program results audits could be conducted at the
discretion of OCSE's Director, Division of Audit, considering the
history of each state's program, staff workloads, and other factors.
In addition, recent welfare reform legislation--the Personal
Responsibility and Work Opportunity Reconciliation Act of
1996--requires that states review and report annually on their
compliance with federal program requirements.  Instead of conducting
compliance audits, OCSE is required under the legislation to review
the states' compliance reports and provide them with comments,
recommendations for corrective actions, and technical assistance.
This should reduce OCSE's workload previously associated with
compliance audits, thereby making resources available to conduct the
program results audits.  Finally, we do not believe that penalties
are necessary because the intent of such audits would be to help
states improve their performance.

--------------------
\13 The scope of OCSE's substantial compliance audit, conducted at
least once every 3 years, covers a broad array of federal regulations
intended to determine whether a state's entire child support
enforcement program meets federal requirements.  OCSE's specialized
audits, which include reporting system reviews, audits of
undistributed collections, and limited cost reviews, are designed to
determine whether a state has met federal requirements in specific
areas of program administration.

      OCSE STREAMLINED AUDITS AND
      FOCUSED REVIEWS ON STATE
      REPORTING SYSTEMS
-------------------------------------------------------- Chapter 3:1.2

While OCSE has not yet audited state program results, it has
undertaken other initiatives to improve its oversight of state
programs.  Previously, states expressed concern about the scope,
complexity, and length of time it took to respond to substantial
compliance audits conducted by OCSE.  At the time of our previous
review, OCSE relied on an audit approach that had over 50 compliance
criteria.  These criteria included 29 for auditing state compliance
with federal requirements and 23 to ensure that states provided child
support services in accordance with their approved state plans.  For
these audits, states had to provide the necessary evidence to
demonstrate the extent to which they met the applicable criteria.  In
addition, audits were untimely--sometimes final reports were not
issued until 2 years after the period audited.  In these cases, the
audits were not a useful management tool to states.

In December 1994, OCSE issued final regulations to streamline its
substantial compliance audits and make them less burdensome to
states.  Using a materiality test,\14 OCSE decided that if 90 percent
or more of all states met a particular criterion, thus demonstrating
general proficiency, that criterion would be deleted from the
substantial compliance audit.  As a result of eliminating several
criteria, these audits have been redefined and now focus on state
compliance with service-related criteria.

In addition to its efforts to streamline its audit processes, OCSE
has undertaken efforts to assess the accuracy of state data.  In our
previous report, we recommended that OCSE reexamine its audit role to
support accurate state performance reporting.  Since our
recommendation, OCSE has placed greater emphasis on its reporting
system reviews, which analyze the procedures and systems states use
to accumulate, record, and report data.  Since 1994, OCSE conducted
reporting system reviews in 20 states, most of which found that the
audited state did not have reliable systems for reporting data
accurately and that improvements will be needed as OCSE moves to
results-oriented management.  To date, OCSE has received responses
from six states on actions they have taken to address its findings
and recommendations.  OCSE suspects that it is possible that other
states are taking action to correct problems identified but have not
yet provided documentation of these actions.  Of those states that
have notified OCSE, typical corrective actions include the following:

  -- establishing procedures requiring periodic reconciliations of
     collections and expenditure data to ensure accuracy,

  -- revising states' automated system programming to generate
     collections data without the need for manual data entry, and

  -- revising states' reporting format to document the cumulative
     fees collected from absent parents for the cost of blood testing
     to determine paternity.

The greater emphasis that OCSE has placed on assessing the accuracy
of state-reported data corresponds to its audit role contained in the
recent welfare reform legislation.  This law requires that OCSE, at
least once every 3 years, assess the completeness, reliability, and
security of data and the accuracy of state reporting systems.

--------------------
\14 Standards of materiality are defined as the relative importance
or relevance of an item included in or omitted from the analysis of
operations.

   WHILE EFFORTS ATTEMPT TO
   RESOLVE DATA PROBLEMS,
   DISCREPANCIES AMONG STATES
   MAGNIFY CHALLENGES IN ASSESSING
   PERFORMANCE
---------------------------------------------------------- Chapter 3:2

In addition to the data accuracy issues surfaced through OCSE's
reporting system reviews, the lack of comparable data across state
and local jurisdictions compounds the challenges OCSE faces in
measuring state performance.  For example, data discrepancies
resulting from differences in the way the states define what
constitutes a child support case contribute to the current difficulty
of uniformly measuring state performance.  In OCSE's move toward
results-oriented management under GPRA, quality data that are
accurate and comparable will be needed to make performance-based
incentive payments to states and management decisions on the future
direction of child support enforcement.  In addition to the reporting
systems reviews, the efforts of OCSE's Performance Measures Work
Group to develop a set of GPRA performance measures may also prove
useful in improving data quality by bringing about greater
comparability in state reporting.

Given the numerous entities that can be involved in state child
support enforcement programs, such as courts, hospitals, and other
state and county agencies, we earlier reported that OCSE needed
universally understood definitions and procedures by which states can
collect and report data.  As early as 1992, OCSE undertook efforts
through its Measuring Excellence Through Statistics (METS) initiative
to improve the comparability of state-reported data by developing
standard data definitions for key child support enforcement terms,
including a definition for what constitutes a child support
enforcement case.  In the process of developing measures to assess
state performance, the Performance Measures Work Group has built upon
the work of the METS initiative by incorporating the use of
standardized definitions for measuring state performance.  For
example, measures that have been developed to assess state
performance in obtaining support orders require that states use the
METS definition of a child support enforcement case to report these
data.

In 1996, OCSE requested that states test the data requirements for
performance measures currently under development.  It asked that
states identify differences in how they currently compile and report
data and how they would be compiled and reported using performance
measures.  While at the time of our review no state had yet provided
OCSE any substantive feedback on the pilot, OCSE officials said that
data requirements for several of the proposed performance measures
would require states to obtain data from sources other than those
that currently provide information on program factors such as
out-of-wedlock births and the location of noncustodial parents.

   FEDERAL INCENTIVE FUNDING
   STRUCTURE REMAINS WEAKLY LINKED
   TO STATE PERFORMANCE
---------------------------------------------------------- Chapter 3:3

In our previous report, we found that the incentive funding structure
has yet to achieve its potential.  In practice, all
states--regardless of performance--received some incentive payments.
Moreover, the amount of incentive payments depends on a state's
collections and program costs and does not reflect success in
achieving each of the three program goals, such as establishing
paternities and obtaining support orders.  Therefore, we previously
recommended that OCSE reexamine the incentive funding structure
because of its poor linkage to state program outcomes.  Today, the
incentive funding structure remains weakly linked with state program
performance.  A new arrangement that considers progress toward
achieving the national program goals will be needed in order to
foster improved program results.

State child support enforcement programs receive 66 percent of their
program costs through federal financial participation and additional
funds as a result of the incentive funding policy prescribed by law.
In 1995, incentive payments to states were estimated at $400 million.
However, the current incentive funding structure has two major
limitations.  First, while funding is awarded to states on the basis
of a collections-to-cost ratio, the current structure does not
consider other program results, such as increased paternities
established and support orders obtained.  Second, states receive
incentive funding equal to at least 6 percent of their collections,
regardless of how well or poorly they perform.  Therefore, as
currently constructed, federal funding does not provide a real
incentive for states to improve their performance.

OCSE officials told us that the current incentive funding structure
does not provide them an effective means to foster improved program
results at the state level.  They said, for example, that the
performance agreements OCSE currently has with the states to improve
program results are unenforceable.  Under the existing incentive
funding structure, if a state fails to meet or exceed stated goals,
OCSE does not have the statutory authority to alter the existing
incentive funding scheme to adjust the state's award consistent with
its performance.

The state program officials we interviewed also agree that the
current incentive funding structure needs improvement.  In designing
a new structure, state officials believe that the existing pool of
incentive funds should not be reduced and that incentive payments
should be based on one or more of several standards, such as
improving state performance, surpassing an aggregate level of
performance, or completing appropriate corrective actions.  State
officials also believe that OCSE must help states meet the standards
under a new system and should be held accountable for states'
successes or failures.  In response to these state views, OCSE
officials have continued to work closely with the states to include
their priorities in development and approval of the measures used to
assess performance of the program.  In addition, state officials
cited the continued need for uniform data definitions, such as those
included in METS, and compliance with program requirements to help
ensure that the new system is fair to all states.

The Personal Responsibility and Work Opportunity Reconciliation Act
of 1996, when fully implemented, will establish a new incentive
funding structure.  It requires the Secretary of HHS, in consultation
with the states, to develop a new incentive funding structure that
provides payments to states based on performance.  The Secretary must
report details of the new system to the Congress by March 1, 1997.
The system developed will become effective for fiscal year 2000; the
current structure will remain effective until then.  While the
legislation requires HHS and the states to develop a new structure,
it does not specify the factors on which incentive payments should be
based.

CONCLUSIONS, RECOMMENDATIONS, AND
AGENCY COMMENTS
============================================================ Chapter 4

To date, through implementation of GPRA and other undertakings, OCSE
has made notable progress toward establishing a results-oriented
framework for the child support enforcement program.  While OCSE has
additional steps to take, the challenges it faces in managing for
results can be met.

The national child support enforcement program, however, continues to
face growing service needs without the benefit of knowing how OCSE
plans to help achieve the program's newly established goals and
objectives.  We believe that OCSE should develop its own long-term
management strategies, as we had previously recommended, to help meet
the national goals and objectives.  In accordance with GPRA
requirements, OCSE's activities, core processes, and resources should
be aligned to support its mission and help it achieve these goals.
Through long-term management strategies, OCSE can prioritize its
expanding program responsibilities, conduct operations in direct
support of the national goals, specify the results anticipated from
implementing its strategies, and develop measures for assessing its
own performance.  By strengthening the linkage between its management
strategies and the national goals, we believe that OCSE will be in a
better position to foster improved program results.

While OCSE has initiated certain management improvements to establish
program goals and strengthen its partnership with states, limitations
in its audit processes and the federal incentive funding structure
continue to constrain improvements in program results.  While we
recognize that performance measures have yet to be approved, we
continue to believe that OCSE should assess state program performance
to identify problems states encounter that inhibit their
effectiveness and, when appropriate, recommend actions to help states
improve their performance.  Once approved, performance measures would
help define audit criteria for assessing state performance.
Moreover, program results audits could help OCSE respond to state
requests for additional information on how to improve program
performance.

The incentive funding structure remains weakly linked with state
performance.  New welfare reform legislation--the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996--
requires HHS and the states to develop a new incentive funding
structure.  The act does not specify the factors to be used in
assessing state performance.  We believe that the structure should be
realigned so that incentive payments are earned for progress toward
the agreed upon national goals of increasing the number of
paternities established, support orders obtained, and collections
received.  By realigning incentive funding with state performance,
OCSE would be better equipped to reward states for progress toward
achieving the national goals.

   RECOMMENDATIONS
---------------------------------------------------------- Chapter 4:1

We recommend that the Secretary of HHS direct OCSE, as part of its
GPRA efforts, to do the following:

  -- Develop its own long-term management strategies, in conjunction
     with the states, to help increase paternities established,
     support orders obtained, and collections received.  Such
     strategies should (1) prioritize OCSE's roles and
     responsibilities, (2) specify results that OCSE anticipates from
     its prioritized operations, and (3) develop performance measures
     for assessing its own performance.

  -- Conduct program results audits of state progress toward
     achieving the national program goals.  These audits should
     assess the accuracy of state-reported data; investigate barriers
     to achieving improved program results; and recommend approaches,
     when appropriate, for states to meet program goals.

  -- Include payments in the new incentive system, required by recent
     welfare reform legislation, that are based on state progress
     toward increasing paternities established, support orders
     obtained, and collections received.

   AGENCY COMMENTS
---------------------------------------------------------- Chapter 4:2

HHS provided written comments on a draft of this report (see app.
III).  HHS generally concurs with our recommendations.  The
Department expressed its commitment to moving forward in the
direction of our recommendation that OCSE develop its own long-term
management strategy.  It stated that developing longer-term
management strategies and program priorities can be beneficial and
cited steps OCSE has taken in this direction, such as creating a
series of federal/state work groups to address longer-term issues and
planning major enhancements to the Federal Parent Locator Service.
We are encouraged by the Department's commitment to OCSE developing
its own long-term management strategy and by these initial efforts.
As OCSE proceeds to fully implement our recommendation, it also
should ensure that, as the national office for the child support
enforcement program, it has strategies to establish its own
priorities, specify anticipated results from its program activities,
and develop measures to assess its performance.

In response to our recommendation on program results auditing, HHS
commented that with the enactment of welfare reform, OCSE will be
required to conduct program results audits.  While welfare reform
legislation requires that OCSE verify the accuracy of state-reported
data, our recommendation covers several additional steps essential
for reorienting OCSE's audit function toward program results.
Specifically, program results audits conducted by OCSE should
investigate why states have not met performance targets and make
recommendations, when appropriate, to assist states in improving
their performance.

With regard to our recommendation related to developing a new
incentive funding structure, HHS stated that OCSE, through its
strategic planning process and the Performance Measures Work Group,
has made progress toward revising the basis on which states receive
incentive payments.  While these steps show promise in strengthening
the linkage between the incentive funding structure and state
performance, the revised structure, when fully implemented, should
base payments on state progress made toward achieving all three
program goals as we recommend.

HHS also provided technical comments that we incorporated in the
final report as appropriate.

LOCAL PARTICIPATION IN OCSE'S GPRA
PILOT PROJECT
=========================================================== Appendix I

OCSE invited state and county governments to begin their own GPRA
pilots to help them become familiar with GPRA principles.  In
response, 27 states, two counties, two cities, and Puerto Rico
volunteered to participate by working on projects that focus on
specific issues related to the national goals and objectives.  For
example, some states are focusing on efforts to improve child support
collections through employment counseling for noncustodial parents.
In certain cases, the local GPRA pilots cover the full range of child
support services; other pilots focus on a more narrow set of
services, such as locating noncustodial parents.  Still other states
have initiated demonstrations integrating child support and AFDC
program services.

The pilots included in our case studies are briefly described below.

      ILLINOIS:  EMPLOYMENT
      COUNSELING/
      "ONE STOP SHOPPING"
------------------------------------------------------- Appendix I:0.1

Illinois proposes to increase the number of support orders enforced
and collections received by establishing a unit to address the
employment needs of noncustodial parents and to streamline certain
program procedures.  Procedures that could be streamlined include
employment services for noncustodial parents and use of cooperative
agreements.

      HENNEPIN COUNTY, MINNESOTA:
      MEASURING PROGRAM
      PERFORMANCE
------------------------------------------------------- Appendix I:0.2

Hennepin County initiated a pilot project to test the relationship
between federal incentive funding passed through to county child
support enforcement programs and performance in several areas,
including paternity establishment and the review and adjustment of
child support orders.

      NEW JERSEY:  SHARING
      PROCEDURES AND CASE
      SELECTION CRITERIA AND
      FACILITATING PATERNITY
      ESTABLISHMENT
------------------------------------------------------- Appendix I:0.3

New Jersey intends to share procedures and case selection criteria
with other states in federal Region II to increase the number of
criminal cases submitted to the U.S.  Attorney's Office.  The state
also proposes to develop a birth facility/hospital-based model that
permits electronic processing of voluntary paternity acknowledgments,
notification of births, parent information, and other data essential
to assist in establishing paternity.

      TEXAS:  COLLOCATION OF CHILD
      SUPPORT/AFDC CASE PROCESSING
------------------------------------------------------- Appendix I:0.4

Texas plans to improve the information gathered from custodial
parents at the time they apply or recertify for AFDC so that state
officials have the necessary information to establish and enforce
child support when AFDC caseworkers refer cases to child support
enforcement officials.

      VIRGINIA:  WELFARE/CHILD
      SUPPORT INTERFACE
------------------------------------------------------- Appendix I:0.5

Virginia child support officials proposed a project to develop
performance indicators that measure and improve coordination between
welfare and child support agencies in rural, suburban, and urban
areas.

SELECTED PROGRAM AND DEMOGRAPHIC
CHARACTERISTICS OF CASE-STUDY
STATES
========================================================== Appendix II

                                                                               Percent of
                  Principal                                                       female-
                  state                        State              Percent of       headed
                  entity      State-or    population   State per    children   households
                  administer  county-            (in      capita          in      without
State (federal    ing the     run         thousands)     income,    poverty,      spouse,
region)           program\a   program         , 1995        1994        1989         1990
----------------  ----------  ----------  ----------  ----------  ----------  -----------
Alabama (IV-      Department  State            4,253     $17,924        24.0         54.4
Atlanta)          of Human
                  Resources

Illinois (V-      Department  State           11,830      23,607        16.8         55.2
Chicago)          of Public
                  Aid

Minnesota (V-     Department  County           4,610      22,258        12.4         64.1
Chicago)          of Human
                  Services

New Jersey (II-   Department  County           7,945      27,741        11.0         46.8
New York)         of Human
                  Services

Oregon (X-        Department  State            3,141      20,469        15.2         64.3
Seattle)          of Human
                  Resources

Texas (VI-        Office of   State           18,724      19,719        24.0         59.6
Dallas)           the
                  Attorney
                  General

Virginia (III-    Department  State            6,618      22,499        13.0         53.6
Philadelphia)     of Social
                  Services
-----------------------------------------------------------------------------------------
\a Other entities may also assist in administering the state's child
support enforcement program.

Source:  State child support programs, U.S.  Bureau of the Census.

(See figure in printed edition.)Appendix III
COMMENTS FROM THE DEPARTMENT OF
HEALTH AND HUMAN SERVICES AND OUR
EVALUATION
========================================================== Appendix II

(See figure in printed edition.)

(See figure in printed edition.)

   GAO COMMENTS
-------------------------------------------------------- Appendix II:1

1.  We are encouraged by HHS' commitment to OCSE developing its own
long-term management strategy and by these initial efforts.  As OCSE
proceeds to fully implement our recommendation, it also should ensure
that, as the national office for the child support enforcement
program, it has strategies to establish its own priorities, specify
anticipated results from its program activities, and develop measures
to assess its performance.

2.  While welfare reform legislation requires that OCSE verify the
accuracy of state-reported data, our recommendation covers several
additional steps essential for reorienting OCSE's audit function
toward assessing state program results.  Specifically, program
results audits conducted by OCSE should investigate why states have
not met performance targets and make recommendations, when
appropriate, to assist states to improve their programs.

3.  Steps taken by OCSE and the states to strengthen the linkage
between the incentive funding structure and state performance show
promise toward revising the basis on which states receive incentive
payments.  As a pivotal element in reorienting program management
toward results, the revised structure when fully implemented should
base payments on state progress made toward achieving all three
program goals as we recommend.

GAO CONTACTS AND STAFF
ACKNOWLEDGMENTS
========================================================== Appendix IV

GAO CONTACTS

Mark E.  Ward, Evaluator-in-Charge, (202) 512-7274
David P.  Bixler, Assistant Director, (202) 512-7201

STAFF ACKNOWLEDGMENTS

In addition to those named above, the following individuals made
important contributions to this report:  J.C.  Mihm directed our work
on implementation of GPRA; Gregory Curtis and Kevin C.  Malone
designed project tasks, conducted interviews, analyzed data, and
wrote sections of the report; James P.  Wright provided guidance on
methodological and analytical issues; Kevin M.  Kumanga, Catherine V.
Pardee, Christopher D.  Morehouse, and Lisa R.  Shames offered their
perspectives on program management derived from past GAO work; and
Dayna K.  Shah and Mary W.  Reich provided legal assistance.

RELATED GAO PRODUCTS
============================================================ Chapter 1

Child Support Enforcement:  States' Experience With Private Agencies'
Collection of Support Payments (GAO/HEHS-97-11, Oct.  23, 1996).

Executive Guide:  Effectively Implementing the Government Performance
and Results Act (GAO/GGD-96-118, June 1996).

Managing for Results:  Achieving GPRA's Objectives Requires Strong
Congressional Role (GAO/T-GGD-96-79, Mar.  6, 1996).

Child Support Enforcement:  States and Localities Move to Privatized
Services (GAO/HEHS-96-43FS, Nov.  20, 1995).

Managing for Results:  Status of the Government Performance and
Results Act (GAO/T-GGD-95-193, June 27, 1995).

Child Support Enforcement:  Opportunity to Reduce Federal and State
Costs (GAO/T-HEHS-95-181, June 13, 1995).

Child Support Enforcement:  Families Could Benefit From Stronger
Enforcement Program (GAO/HEHS-95-24, Dec.  27, 1994).

Managing for Results:  State Experiences Provide Insights for Federal
Management Reforms (GAO/GGD-95-22, Dec.  21, 1994).

Child Support Enforcement:  Federal Efforts Have Not Kept Pace With
Expanding Program (GAO/T-HEHS-94-209, July 20, 1994).

Improving Government:  Actions Needed to Sustain and Enhance
Management Reforms (GAO/T-OCG-94-1, Jan.  27, 1994).

*** End of document. ***