Child Support Enforcement: Reorienting Management Toward Achieving Better Program Results
Published: 1996-10-25T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: GAO found that: (1) OCSE is making progress in reorienting its management of the child support enforcement program toward program results; (2) OCSE and the states have approved 5-year national goals and objectives for increasing the number of paternities established, the number of support orders obtained, and the amount of collections received; (3) OCSE has also negotiated voluntary performance agreements with states specifying intended program results; (4) OCSE audits continue to focus on state compliance rather than on state progress in achieving program goals because of a lack of performance measures, the absence of penalties for poor-performing states, and limited staff resources; (5) the OCSE federal incentive funding structure, which is based on maximizing child support collections relative to administrative costs rather than on all program goals, limits its use as an incentive for improved results; and (6) welfare reform legislation enacted in August 1996 presents the Department of Health and Human Services an opportunity to more strongly link incentive funding with demonstrated state performance.

section_title: Letter
paragraphs: 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.
subsections: section_title: Introduction
paragraphs: 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.
subsections: section_title: Child Support Enforcement Program Overview
paragraphs: 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.
The program serves two populations: families receiving Aid to Families With Dependent Children (AFDC) 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. 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.
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 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.
section_title: GAO-Reported Management Challenges
paragraphs: We reported earlier 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.
section_title: GPRA Provides Opportunity for OCSE to Manage for Results
paragraphs: 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. 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. 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.
section_title: Scope and Methodology
paragraphs: 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.
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.
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.
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.
section_title: Federal/State Partnership Strengthened; OCSE Needs Its Own Strategies to Manage for Results
paragraphs: 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.
subsections: section_title: OCSE and the States Developed National Goals and Objectives and Strengthened Their Partnership
paragraphs: 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.
subsections: section_title: National Program Goals and Objectives Established
paragraphs: 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.
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.
section_title: Performance Agreements With States Attempt to Link National and State Goals
paragraphs: 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.
section_title: Federal/State Partnership Strengthened
paragraphs: 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.
section_title: OCSE Technical Assistance Generally Responsive to State Needs, but Could Be Better Targeted in Certain Cases
paragraphs: 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.
section_title: OCSE Needs to Develop Its Own Strategies to Help Achieve National Goals and Objectives
paragraphs: 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.
section_title: OCSE Faces Additional Challenges in Fostering Improved State Program Results
paragraphs: 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.
subsections: section_title: Despite Improvements, OCSE Audits Remain Compliance Focused
paragraphs: 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.
subsections: section_title: OCSE Primarily Audits States’ Compliance With Program Requirements
paragraphs: Currently, OCSE’s audits, which include a substantial compliance review and several more specialized audits, 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.
section_title: OCSE Streamlined Audits and Focused Reviews on State Reporting Systems
paragraphs: 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, 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.
section_title: While Efforts Attempt to Resolve Data Problems, Discrepancies Among States Magnify Challenges in Assessing Performance
paragraphs: 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.
section_title: Federal Incentive Funding Structure Remains Weakly Linked to State Performance
paragraphs: 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.
section_title: Conclusions, Recommendations, and Agency Comments
paragraphs: 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.
subsections: section_title: Recommendations
paragraphs: 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.
section_title: Agency Comments
paragraphs: 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.