Child Support Enforcement: More Focus on Labor Costs and Administrative Cost Audits Could Help Reduce Federal Expenditures
Published: 2006-07-06T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Congress established federal standards for the child support enforcement program (CSE) in 1975. State agencies administer the program and the Office of Child Support Enforcement (OCSE) in the Department of Health and Human Services (HHS) oversees it. The CSE program provides several services, including collecting child support payments from noncustodial parents--those who are not the primary caregivers--and distributing these payments to families. Generally, the federal government reimburses state agencies 66 percent of their costs for administering the CSE program. GAO determined (1) how total net federal expenditures for administrative costs changed from fiscal year 2000 to fiscal year 2004; (2) the categories of costs that contributed most to administrative costs in recent years; and (3) steps state agencies have taken to manage costs, and steps OCSE has taken to help state agencies and ensure federal funds have been used appropriately. GAO analyzed program data, surveyed all 54 state agencies and visited 6, interviewed program officials, and reviewed laws, policies, and reports.
section_title: What GAO Found
paragraphs: From fiscal year 2000 to fiscal year 2004, total net federal expenditures for administrative costs (the cost after deducting child support collections for families receiving benefits from other government programs) increased by about 23 percent. After adjusting for inflation, total net federal expenditures increased from about $2.2 billion to $2.8 billion. Also, during this period, collections increased by about 12 percent from about $19 billion to $22 billion, and the program's cost effectiveness measure (the ratio of collections to total administrative expenditures) increased about 4 percent. Personnel costs were cited as a major contributor to federal expenditures for administrative costs in fiscal years 2002 to 2004 by the 49 state agencies that responded to the relevant question in our survey. Most state agencies also cited as major costs cooperative agreements under which staff from other state agencies are paid to perform CSE program duties, automated data systems, and contracts with private firms. Several of these categories involve labor costs, and from fiscal years 2000 to 2004, the number of full-time-equivalent (FTE) employees funded by the CSE program increased about 2,200. Yet, OCSE has not developed guidelines to help state agencies manage their FTEs and related labor costs. State agencies reported implementing cost-saving initiatives, and while OCSE has helped state agencies manage costs, it has conducted a limited number of administrative cost audits to help ensure the appropriate use of federal funds. At least one-half of the state agencies reported implementing 7 of the 10 cost-saving initiatives listed in our survey, and many reported cost savings. To help state agencies manage their programs, OCSE issued guidance, created federal/state work groups, and sponsored conferences. OCSE is required to conduct audits of state agencies' administrative costs, and from March 2004 to March 2006, OCSE issued eight administrative cost audit reports. All of these audit reports raised questions about inappropriate expenditures. Although OCSE expects to have more resources available to conduct audits, it does not plan to use these resources to conduct more administrative cost audits.

section_title: Letter
paragraphs: In 1975, Congress established federal standards for state child support  In 1975, Congress established federal standards for state child support  enforcement (CSE) programs to ensure that parents financially support  enforcement (CSE) programs to ensure that parents financially support  their children. The CSE program was authorized by Title IV-D of the Social  their children. The CSE program was authorized by Title IV-D of the Social  Security Act as a federal and state partnership. The Office of Child  Security Act as a federal and state partnership.   In most places, a single state agency  Guam administer a CSE program.
42 U.S.C. §§ 651-669b.
In addition to these 54 CSE agencies, some American Indian tribes administer CSE  programs. In this report we refer to the 54 CSE agencies as “state agencies.”
Over the years, Congress has authorized various enforcement tools, such  as garnishment of wages and revocation of licenses, to help increase  collections, and Congress has provided funds for systems to automate  many CSE program operations and make them more efficient. According  to OCSE’s annual reports, from fiscal years 1995 to 2004, the net federal  share of expenditures for the CSE program increased by one-third, in  nominal dollars, and the program’s critical measure of cost effectiveness— the ratio of dollars collected divided by total administrative  expenditures—did not change significantly. These increased expenditures  raise questions about the factors that affect program costs and the extent  to which state agencies are effectively managing the cost of their CSE  programs. In an effort to provide information about more recent federal  expenditures and the issues associated with the cost of administering the  CSE program, this report addresses the following questions: (1) How have  total net federal expenditures for administrative costs changed from fiscal  year 2000 to fiscal year 2004? (2) What categories of costs have  contributed most to federal expenditures for administrative costs in recent  years? (3) What steps have state agencies taken to manage costs, and what  steps has OCSE taken to help state agencies and ensure federal funds have  been used appropriately?
We obtained information from several sources in conducting this review.  To address how federal expenditures for administrative costs have  changed from fiscal year 2000 to fiscal year 2004, we obtained and  analyzed the net federal share of expenditure data for each state agency  for each of these years. We also examined collections, number of cases,  cost-effectiveness ratios, and the number of full-time-equivalent (FTE)  employees to gain some perspective about changes in expenditures. We  performed procedures to assess the reliability of the system that maintains  data related to funds administered by HHS’ Administration for Children  and Families (ACF), including funds provided to state agencies for the  CSE program. We found these data to be sufficiently reliable for our  review. For some analyses, we adjusted these data for inflation to get a  truer picture of changes over several years. Also, we calculated the median  amounts for expenditures and collections because of the wide variation  among state agencies. To obtain information for the other objectives, we  conducted a survey, site visits, and interviews and reviewed related  documents. We sent an e-mail survey to the 54 state agencies and received  responses from all of them. The survey asked state agencies to (1) identify  the five cost categories that contributed most to their administrative costs  during fiscal years 2002 to 2004 and estimate the percentage that each  category comprised, (2) provide information on selected cost-saving  initiatives identified by OCSE as best practices, and (3) rate the extent to  which various OCSE assistance efforts had been helpful. We did not assess  the reliability of the data state agencies reported in response to our survey,  but we reviewed their responses for completeness and reasonableness.  Also, we conducted site visits in the following six states: California,  Connecticut, Maryland, Ohio, South Carolina, and Utah. We selected these  states because they represented diversity in changes in the amounts of  federal expenditures for fiscal years 2002 to 2004; geographical location;  and operational structure, that is state- or county-operated programs. In  addition, we interviewed federal and state agency officials and child  support experts, reviewed related reports, and analyzed applicable laws  and regulations. We conducted our work between June 2005 and June  2006 in accordance with generally accepted government auditing  standards. See appendix I for more details on our objectives, scope, and  methodology.
subsections: section_title: Background
paragraphs: The CSE program makes services available to any parent or other person  with custody of a child who has a parent living outside of the home. These  services are available automatically for families receiving assistance under  the Temporary Assistance for Needy Families (TANF), Medicaid, and  Foster Care programs. Other families seeking government child support  services can apply through their state agency or one of the tribes running  the program. For these families, there is an application fee. Figure 1  illustrates the major services provided by the CSE program.
The CSE program is financed by federal and state funds. Federal funds  come from three funding streams—the federal match, also known as the  federal financial participation; incentive payments; and grants. Generally,  federal matching funds reimburse state agencies 66 percent of the  administrative costs for their CSE programs. In addition to matching  funds, the federal government pays state agencies incentive funds to  encourage them to achieve program goals. Incentive funds are capped, and  in fiscal year 2004, $454 million were allocated for incentive payments.  State agencies must reinvest their incentive funds in the CSE program.  Federal funds also are available through grants. Grants for special  improvement projects, demonstration projects, and child access and  visitation programs are generally awarded annually. OCSE has received an  annual appropriation of $1.8 million for special improvement project  grants or demonstration projects to promote the program’s overall  objectives. Additionally, since fiscal year 1997, OCSE has distributed  approximately $10 million per year to state agencies to support child  access and visitation grants for activities such as mediation, counseling,  education, development of parenting plans, noncustodial parent visitation  enforcement (including monitoring and supervision), and development of  noncustodial parent visitation and alternative custody guidelines.  According to a November 2005 report, state agencies used a number of  funding sources to finance their share of CSE program administrative  costs.  These funding sources included federal incentive payments, child  support collected for parents receiving assistance through the TANF  program, state general funds, state general funds paid as incentives,  county general funds, and fees, along with several other sources that were  mentioned less often by state agencies. While state agencies generally  used more than one revenue source, they also varied in the combination of  the revenue sources they used.
For the CSE program, federal and state expenditures are generally offset  by certain collections as well as fees and interest payments. Child support  collections for families that receive benefits from the TANF and Foster  Care programs are deducted from the total federal and state expenditures  and paid to these programs as reimbursements. For example, in fiscal year  2004 about $2 billion in child support collections for families that received  TANF benefits were deducted from total CSE expenditures—the federal  government was reimbursed $1.1 billion, and state agencies were  reimbursed about $900 million. In addition, some state agencies collect  fees from parents for their services, and such fees are also deducted from  total expenditures. Also, expenditures are reduced by interest income that  accrues to state agencies for collections deposited in interest-bearing  accounts.
Over the years, Congress has passed numerous laws that have had an  impact on the CSE program, including the following:    The Social Security Disability Amendments of 1980 included a  provision that gave state agencies 90 percent matching funds for the  cost of developing, installing, and enhancing approved automated data  systems. In 1997, we reported that state agencies had spent over   $2.6 billion since the early 1980s to develop their systems, and the  federal government had paid from 66 to 90 percent of the systems’  costs, which amounted to more than $2 billion.
The Child Support Enforcement Amendments of 1984 addressed many  aspects of the program. For example, this act required that all states  provide for the use of mandatory wage withholding procedures and  expedited processes for establishing and enforcing support orders.  The act made available federal matching funds at the 90 percent rate  for the development and installation of automated data systems to  facilitate income withholding and other procedures. The act reduced  the overall federal matching rate to 68 percent for fiscal years 1988 and  1989, and to 66 percent for fiscal year 1990 and thereafter. Also, the act  established procedures for intercepting state income tax refunds,  imposing liens against real and personal property, and reporting  delinquency information to consumer reporting agencies.
The Family Support Act of 1988 established several requirements. For  instance, the Secretary of HHS was required to set time limits within  which collections must be distributed to families, and state agencies  were required to meet federal standards for the establishment of  paternity and to provide for wage withholding in accordance with child  support orders. Also, this act made it mandatory for states to  computerize their CSE programs and required states to have their  automated data systems certified by October 1, 1995.
The Personal Responsibility and Work Opportunity Reconciliation Act  of 1996 (PRWORA) included many provisions related to the CSE  program. For example, PRWORA reinstated the 90 percent matching  rate through September 30, 1997, to enable state agencies to complete  the development and implementation of their automated data systems  and extended the deadline for implementation to October 1, 1997.  PRWORA also provided a matching rate of 80 percent, capped at   $400 million for fiscal years 1996 to 2001, for system development and  implementation costs related to automated data processing  requirements. In addition, PRWORA provided state agencies with new  enforcement tools, such as suspension of licenses, denial of passports,  and financial institution data matches, and included procedures for the  periodic review and adjustment of support orders by state agencies.  Furthermore, PRWORA required audits to assess the completeness,  reliability, and security of the data used in calculating performance  indicators and audits of the financial management of states’ programs,  including assessments of whether federal and other funds were being  appropriately expended and properly accounted for.
The Child Support Performance and Incentive Act (CSPIA) of 1998  established several new procedures and changed the method for  calculating incentive payments. Since 1975, the federal government  has paid incentives to state agencies to encourage program  improvement. The new incentive system established by CSPIA links  incentive payments to performance in five areas: paternity  establishment, order establishment, collections of current child  support, collections of child support in arrears, and cost effectiveness.  CSPIA specifies the percentage of incentive funds that a state agency  can receive on the basis of the state agency’s level of performance in  each of these areas. For example, the applicable percentage of  incentive funds for cost-effectiveness ratios is shown in table 1.
The Deficit Reduction Act of 2005 included provisions that will affect  CSE program funds. The act reduced the match rate for paternity  testing from 90 percent to 66 percent effective October 1, 2006;  eliminated the federal match for incentive payments effective October  1, 2007; and required states to impose an annual fee of $25 on each  family that never received TANF benefits and for which the program  collects $500 a year. The Congressional Budget Office (CBO)  estimated that by 2010 the federal share of administrative costs would  be reduced by $1.8 billion from eliminating the federal match for  incentive payments and by $28 million from the lower match rate for  paternity testing.  CBO also estimated that the federal government  would receive an additional $172 million from the annual fee. Further,  CBO estimated that total funding for the program could fall 15 percent  by 2010 if states did not adjust their own spending for CSE programs.  This act also included provisions that will reduce federal expenditures  for several other programs.
We have expressed concern about the federal government’s financial  condition and the nation’s growing fiscal imbalance. Also, we have  reported that if the federal government is to effectively address this  concern, it cannot accept all of the existing programs, policies, and  activities as givens, and that rethinking the base of existing federal  spending is an important step.
As the federal partner, OCSE has several responsibilities. OCSE sets  policies and standards, provides technical assistance, and evaluates state  agency performance. OCSE also collects and reviews expenditure data  that state agencies submit using OCSE’s Quarterly Report of Expenditures  and Estimates. OCSE maintains these data in the Grants Application  Tracking and Evaluation System (GATES) operated by ACF.   Furthermore, OCSE is responsible for helping state agencies administer  their programs. Routinely OCSE has developed and disseminated to state  agencies a compendium of what it considers best practices. Each  compendium describes several best practices, provides information on the  results of implementing the practices, and identifies a contact person. In  transmitting the compendium, OCSE stated that it does not endorse any  particular practice, but believes that by providing the state agencies with  solutions undertaken at the state and local levels, general program  performance can be improved.
section_title: Net Federal Expenditures, Collections, and the Nationwide Cost- Effectiveness Ratio Increased
paragraphs: Overall from fiscal year 2000 to fiscal year 2004, total net federal  expenditures for administrative costs increased about 23 percent. Net  federal expenditures increased in more than one-half of the state agencies,  and the net federal cost per case increased about 36 percent. Also,  collections and the nationwide cost-effectiveness ratio have increased.
subsections: section_title: Total Net Federal Expenditures and Total Collections Increased
paragraphs: Total net federal expenditures for administrative costs increased about   23 percent, and the net federal median expenditure increased more than   2 percent. From fiscal year 2000 to fiscal year 2004, total net federal  expenditures increased from about $2.2 billion to nearly $2.8 billion.  While total net federal expenditures increased each year, the largest  increase, in nominal dollars, was about 14 percent from fiscal year 2000 to  fiscal year 2001. Overall, the median net federal expenditure increased  from about $25 million to about $26 million between fiscal years 2000 and  2004. However, the median net federal expenditure for state agencies with  state-operated programs decreased about 4 percent from about $20 million  in fiscal year 2000, to $19 million in fiscal year 2004, while the median net  federal expenditure for state agencies with county-operated programs  increased about 11 percent—from about $59 million to about $66 million.  According to a CSE program expert and a state agency official from a state  we visited, expenditures for county-operated programs may be higher  because of possible duplication in administrative functions at the state and  county levels. Figure 2 shows the trends in total net and median net  federal expenditures.
Overall, total net federal expenditures from fiscal year 2000 to fiscal year  2004 increased for more than one-half of the state agencies; however, the  percentages varied. From fiscal year 2000 to fiscal year 2004, total net  federal expenditures increased in 30 of the 54 state agencies. These  increases ranged from about 1 percent to over 400 percent, and the median  for these state agencies was 14.8 percent. According to comments from  HHS on a draft of this report, many of the large increases and decreases  are a result of adjustments for under or over reporting expenditures in a  previous quarter. Total net federal expenditures increased most in Maine  and California, reflecting special circumstances in both states. According  to Maine’s state agency director, the agency made adjustments over  several quarters to correct its reporting of interest income earned. In  California, state agency officials explained that most of the increase was  attributable to costs associated with developing and implementing its  statewide automated data system. Nearly all state agencies (51) had at  least 1 year when net federal expenditures decreased. For example, net  federal expenditures for Alabama’s program decreased from fiscal year  2000 to fiscal year 2001 and increased in other fiscal years, while net  federal expenditures for Mississippi’s program decreased in each of the  fiscal years from 2000 to 2003. Figure 3 shows the percentage change in  net federal expenditures by state agency during fiscal year 2000 to fiscal  year 2004. Appendix II provides data on annual percentage changes in net  federal expenditures, using nominal numbers, for each state agency for  fiscal years 2000 to 2004.
For fiscal years 2000 to 2004, the median net federal cost per case  increased 36 percent, as measured in nominal dollars, and the number of  cases declined about 1.5 million; however, the median net federal cost per  case generally increased, even when the number of cases remained about  the same. From fiscal year 2000 to fiscal year 2001, the number of cases  remained at about 17 million, and the median net federal cost per case  increased from $121 to $138, in nominal dollars. During fiscal years 2002 to  2004, the program managed about 16 million cases per year and the  median net federal cost per case continued to increase. Table 2  summarizes the number of cases and median net federal cost per case.
Total and median collections increased, and the CSE program is collecting  from a larger percentage of its cases. From fiscal year 2000 to fiscal year  2004, total collections increased about 12 percent from $19 billion to about  $22 billion. During the same period, collections increased for most state  agencies, but the percentage of increase varied among the state agencies  and from year to year. For example, from fiscal year 2000 to fiscal year  2001, collections in Vermont increased about 5 percent and collections in  Illinois increased about 17 percent. From fiscal year 2003 to fiscal year  2004, collections in Vermont increased about 15 percent, while Illinois’  collections increased about 9 percent. Appendix III provides data on  annual percentage changes in total collections for each state agency for  fiscal years 2000 to 2004. According to comments from HHS on a draft of  this report, many of the large increases and decreases in collections are a  result of adjustments for under or over reporting in a previous quarter.  Overall, median collections also increased, and the median collections for  state agencies with county-operated programs were higher than for state  agencies with state-operated programs. The median collection for county- operated programs was about $519 million in fiscal year 2000 and   $567 million in fiscal year 2004, while the median collection for state- operated programs increased from about $141 million to $156 million  during this period. Also, OCSE data indicate that the program has received  collections for a larger percentage of the cases. In fiscal year 2000, OCSE  reported the program received collections for about 42 percent of the  cases, and, in fiscal year 2004, the program received collections for about  52 percent of the cases.
section_title: The Nationwide Cost- Effectiveness Ratio Also Increased
paragraphs: From fiscal year 2000 to fiscal year 2004, the nationwide cost-effectiveness  ratio—the ratio of collections divided by total federal and state  administrative expenditures—increased about 4 percent. As shown in  table 3, the nationwide cost-effectiveness ratio from fiscal year 2000 to  fiscal year 2004 ranged from 4.13 to 4.38 and decreased during fiscal years  2000 to 2002.  Furthermore, the percentage change in the nationwide cost- effectiveness ratio has varied from a decrease of 1.9 percent from fiscal  year 2001 to fiscal year 2002 to an increase of 4.6 percent from fiscal year  2002 to fiscal year 2003. Percentage changes in the cost-effectiveness ratio  by state agency and nationwide are listed in appendix IV. According to  comments from HHS on a draft of this report, many of the large increases  and decreases in the cost effectiveness ratios are a result of adjustments  for under or over reporting expenditures and/or collections in a previous  quarter.
On a state agency basis, the cost-effectiveness ratios varied. For example,  for fiscal year 2004, the cost-effectiveness ratio ranged from 8.70 for  Hawaii to 1.83 for the Virgin Islands. During each of the fiscal years 2000 to  2004, four state agencies had a cost-effectiveness ratio below 2.0—the  minimum to receive an incentive payment. Also, during fiscal years 2000  to 2004, the annual performance of more than 80 percent of the state  agencies declined at least once. For example, for fiscal years 2000 to 2004,  Delaware’s cost-effectiveness ratios were 3.19, 2.93, 3.66, 3.03, and   3.01, respectively. Due to the way that the incentive program is structured,  states with declining cost-effectiveness performance have received  incentive funds for these years because they were over the 2.0 minimum  ratio.
section_title: All State Agencies Reported Personnel as a Major Cost Category, but OCSE Has Not Developed Staffing Guidelines
paragraphs: Of the 54 state agencies, 49 responded to this question and cited personnel  costs as a major cost category during fiscal years 2002 to 2004. These costs  represented the largest share of administrative costs cited by 38 state  agencies. In addition to personnel costs, most state agencies identified the  following as major cost categories: cooperative agreements under which  state CSE agencies reimburse other agencies to perform child support  enforcement functions, automated data systems, and contracts with  private vendors. As shown in figure 4, these categories represented smaller  percentages of state agencies’ costs than personnel costs. Appendix V  provides more information about the range of percentages reported by  state agencies for the most frequently cited cost categories. Overall, state  agencies reported that several major cost categories involved labor  costs—state personnel, staff from other state and local agencies, and  contractors—and reflect an increase in the number of FTE employees over  the last several years. While OCSE regulations address general staffing  requirements, OCSE has not developed staffing guidelines to help state  agencies manage their labor costs.
subsections: section_title: All State Agencies Reported That Personnel Costs Were a Major Contributor to Their Administrative Costs, and Most State Agencies Also Cited Cooperative Agreements, Automated Data Systems, and Contracts as Major Costs
paragraphs: All 49 state agencies cited personnel costs as one of their largest cost  categories during fiscal years 2002 to 2004. The median of the  percentages state agencies provided for personnel costs was 44 percent of  total administrative costs. Officials from 38 state agencies ranked  personnel as their largest cost category and estimated that this category  represented from 30 percent to 80 percent of their total administrative  costs during fiscal years 2002 to 2004. Personnel costs include salaries and  benefits for all state agency employees. In fiscal year 2002, the CSE  program nationwide had about 43,000 FTEs, and in fiscal years 2003 and  2004, the program had about 42,000 FTEs. State agency officials with  whom we spoke said that personnel costs represent a large percentage of  the total administrative costs for several reasons. State agency officials  explained that personnel costs are affected by higher salaries for  experienced staff and increasing health benefits costs. According to a  representative of a national child support organization, for state agencies  with collective bargaining agreements, the terms of these agreements can  affect personnel costs. Also, officials from county-operated states that we  visited commented that the state agency has limited control over how the  counties compensate their personnel.
Cooperative agreements were cited by 37 of 49 state agencies as among  their largest administrative cost categories, and the median of the  percentages state agencies provided for this category was 15 percent.  Cooperative agreements were the largest cost category for 3 state  agencies, where these costs represented 40 percent to 70 percent of total  administrative costs. Under the cooperative agreements that we reviewed,  state CSE agencies reimbursed other state or local agencies for services  critical to the CSE program. For example, in California, the CSE agency  has cooperative agreements with the state tax agency, in order to use  certain enforcement tools. Additionally, the Nebraska and South Carolina  CSE agencies have cooperative agreements with county clerks of the  court, and the Iowa agency has cooperative agreements with local sheriffs  to serve court papers to noncustodial parents. According to OCSE data,  state agencies used about 16,400 FTEs under cooperative agreements to  provide CSE program services in fiscal year 2004, an increase of about   1 percent since fiscal year 2002. According to state agency officials, it can  be challenging for CSE agencies to manage the costs charged by other  agencies under cooperative agreements. In an attempt to manage such  costs, CSE agency officials in Utah told us that after they detected  increased charges from the Attorney General’s office to cover attorneys’  pay increases, they capped the payments to that office.
Automated data systems costs were included among the largest cost  categories by 35 of 49 state agencies, and the median of the percentages  these state agencies provided for this cost category was 13 percent.  Automated data systems were the largest cost category for 5 state  agencies, where these costs represented 25 percent to 65 percent of total  administrative costs. These included costs for ongoing maintenance as  well as for enhancements. According to an OCSE official, automated  systems continuously require enhancements to meet new requirements  and operational changes to keep up with technology. Moreover, according  to a state CSE agency official from Utah, the state periodically raises the  costs for processing data and accessing the mainframe for all state  agencies, and in 1 year, the cost for the state CSE agency increased by   38 percent.
Contract costs were included by 41 of 49 state agencies among their  largest cost categories, and the median of the percentages these state  agencies provided for this cost category was 11 percent of total  administrative costs. Contracts were the largest cost category for 3 state  agencies, where these costs represented 49 percent to 68 percent of total  costs. According to several state agency officials with whom we spoke,  state agencies have contracted with private sector companies for a wide  range of services, including testing blood to establish paternity, obtaining  information from credit bureaus to help locate noncustodial parents,  operating call centers, identifying assets, and processing payments. State  agencies may combine multiple services in a single contract. For example,  state agency officials in Connecticut told us that the agency uses a single  contract to obtain many services such as processing payments, handling  clients’ inquiries, providing outreach services to clients, managing a Web  site that provides information on case status, and automating certain  notices. In addition, some state agencies have hired contractors to operate  the CSE program at the local level. For example, Tennessee relies on  contractors for all local services in 24 of the state’s 95 counties, and an  agency official estimated that contract costs represented about 52 percent  of the state agency’s administrative costs during fiscal years 2002 to 2004.  According to OCSE data, state agencies contracted for about 2,300 FTEs in  fiscal year 2004, a decrease of about 11 percent since fiscal year 2002.  According to a state agency director, contracting can be an option for state  agencies when the state has placed a cap on personnel levels.
Additionally, some of the 49 state agencies reported that other costs were  among their largest cost categories during fiscal years 2002 to 2004.  Twenty-four state agencies cited rent among their largest cost categories,  postage was cited by 15 state agencies, and 12 state agencies included  telecommunications costs. The medians of the percentages that state  agencies provided for each of these categories ranged from 2.3 percent to  3.9 percent of total administrative costs.
section_title: Several Major Cost Categories Reflected Increased FTEs Funded by the CSE Program, but OCSE Has Not Developed Staffing Guidelines
paragraphs: State and local CSE personnel, staff working under cooperative  agreements, and individuals hired through contracts contributed to three  of the categories that state agencies said were among the major  contributors to federal expenditures for administrative costs. As shown in  table 4, the number of FTEs funded for state CSE programs increased by  about 2,200 from fiscal year 2000 to fiscal year 2004.
Furthermore, among selected state agencies with similar numbers of  cases, the number of FTEs varied widely as did the percentage of cases  with collections and the cost-effectiveness ratios. Table 5 shows that for   7 state agencies with about 150,000 to 249,000 cases, the number of FTEs  in fiscal year 2004 ranged from 460 in Connecticut to 1,559 in Minnesota.   Also, table 5 shows that the number of cases per FTE varied from 457 in  Connecticut to 158 in Minnesota. Additionally, the Iowa CSE program,  with 293 cases per FTE, had the highest percentage of cases with  collections, and the Puerto Rico CSE program, with 272 cases per FTE,  had the highest cost-effectiveness ratio.
According to two state agency officials and a CSE expert, although many  state agency operations are automated, the program’s processes remain  labor-intensive. For example, one state agency official noted that  automation has helped facilitate the processes of locating noncustodial  parents and enforcing child support orders. However, this official also said  that the additional information obtained through automation, such as data  to help identify assets, can involve due process considerations that give  noncustodial parents the right to a hearing. Agency staff may need to talk  to these parents about their rights and responsibilities and to attend  hearings—services that cannot be automated. Additionally, this official  commented that while new program requirements established by federal  law have created new enforcement tools, they have also led to processes  that can be very labor-intensive. Another state agency official said that  even with automation, caseworkers still need to work closely with families  to ensure that data reflect families’ current situations.
Furthermore, while OCSE has issued regulations that address minimum  organizational and staffing requirements, OCSE officials said they have not  reviewed the number of FTEs per state agency or issued specific  guidelines. The OCSE regulations state the IV-D agency is to have an  organizational structure and sufficient staff to fulfill various program  functions and sufficient resources to meet performance and time  standards. Also, the regulations include a provision under which the  Secretary of HHS may set resource standards for a state if it is determined  as a result of an audit that the state is not in substantial compliance with  program performance standards and the Secretary determines that  inadequate resources were a major contributing factor. OCSE officials said  that it is more appropriate for state agencies to determine their resource  needs because of the many differences in the operations among the state  agencies, such as whether they are state- or county-operated. OCSE  officials also stated that OCSE has not reviewed state agencies’ FTEs or  developed guidelines to help state agencies manage the number of FTEs  and the related costs. Furthermore, OCSE officials said that given the  demands on the program, they do not expect staffing levels to ever  decline.
section_title: State Agencies Reported Implementing Cost- Saving Initiatives, and While OCSE Has Helped State Agencies, It Has Not Conducted Administrative Cost Audits in Most States
paragraphs: State agencies reported they had implemented cost-saving initiatives  identified in our survey, and while OCSE has provided assistance to help  state agencies, it has not conducted administrative cost audits in most  states to help ensure that federal funds have been used appropriately.  Most state agencies reported that savings from implementing cost-saving  initiatives were reinvested in the program. OCSE has provided a range of  assistance to help states manage costs, and state agencies have generally  found that assistance helpful. However, OCSE has completed a limited  number of administrative cost audits from March 2004 to March 2006, even  though all of the completed audits raised questions about inappropriate  expenditures.
subsections: section_title: State Agencies Reported Implementing Many Cost- Saving Initiatives and Reinvesting the Savings in the Program
paragraphs: Nearly all state agencies reported they had implemented 4 of the 10 cost- saving initiatives identified in our survey. Also, at least one-half of the state  agencies reported they had implemented 3 other initiatives, while fewer  than one-half of the state agencies reported implementing the remaining   3 initiatives. Of the 10 initiatives, 6 have been implemented by some state  agencies for a decade or more, while others have been implemented more  recently. For example, 9 state agencies reported having implemented voice  response systems before fiscal year 1995. By contrast, electronic  distribution of collections via debit cards did not begin to be implemented  by any state agency until fiscal year 2000, and most of the state agencies  with debit cards reported they implemented them in or after fiscal year  2004. State agencies reported several reasons for not implementing  initiatives, including lack of funds or staff to perform the work, issues  related to protecting program and client data, and the need to meet other  state or CSE program priorities. Table 6 provides more information about  the cost-saving initiatives in our survey, and appendix VI identifies the  initiatives that state agencies reported they had implemented.
For many state agencies, participation in certain initiatives has been  voluntary, and the extent of participation has varied. According to an  OCSE November 2005 update of a survey of all state agencies conducted  by the Massachusetts state agency, most state agencies offered direct  deposit as an option, with the percentage of payments made via direct  deposit ranging from 10 percent to 73 percent. Also, according to the  results of this survey, some state agencies—such as Illinois and Nebraska-- offered debit cards to custodial parents on a voluntary basis, and the  percentage of payments made via debit cards in a state ranged from about  3 percent to 70 percent. The survey data are consistent with what we  found in the states we visited. In Utah and Connecticut, for example,  direct deposit is voluntary and officials said that 41 percent and 46 percent  of payments, respectively, were made through direct deposit. Electronic  transmittal of wages withheld by employers for child support payments is  another example of an electronic payment method that is voluntary, in this  case for the employer. For example, in Alaska, a state agency official told  us that about 53 percent of payments withheld from wages are received  electronically. According to state agency officials with whom we spoke in  Utah and Connecticut, as well as an OCSE official, participation in  electronic payment initiatives has not been higher for several reasons,  such as the initial start-up costs employers incur and the clients’ lack of  familiarity with these methods and preference for cash. Also, according to  an official from the Utah state agency, debit card fees, such as ATM fees  that clients may be charged to access their funds, have affected  participation. Officials in Connecticut and Utah said that their agencies  have tried to increase participation through repeated educational efforts,  such as periodically distributing brochures and letters. In Utah, officials  said these efforts typically increase participation 10 percent to 15 percent  after each campaign. Similarly, Connecticut officials also described  outreach efforts to increase participation and estimated that about   30 custodial parents had enrolled in direct deposit each week in state  fiscal year 2005. Other state agencies, such as North Dakota and Puerto  Rico, have sought to attain the maximum participation possible by  requiring clients to choose either direct deposit or debit cards.
State agencies reported savings and other benefits after implementing the  10 initiatives listed in our survey. For example, New York reported saving  $4.5 million since fiscal year 1993 after implementing electronic transfer of  wages withheld by employers for child support payments, and Texas  estimated that by providing online training for its staff, the state agency  had saved $650,000 since fiscal year 2001. Also, officials in Connecticut  stated that direct deposit costs them 17 cents per payment, while issuing a  paper check costs about 61 cents to produce and mail. In addition to cost  savings, states can realize other benefits from implementing these  initiatives, such as time savings from quicker processes, enhanced  customer service, or the opportunity to use staff for other program needs.  Our 2004 report found that debit cards can help states avoid or minimize  the problem of undistributed collections—funds that were delayed or  never reached families. Also, debit cards ensured receipt of child support  payments during Hurricanes Katrina and Rita, according to agency and  federal officials. Additionally, payments that are transferred electronically  can be credited to multiple cases simultaneously, according to Utah state  agency officials.
Most state agencies (38) reported that they reinvested the savings from  implemented initiatives in the CSE program. For example, state agency  officials we interviewed in Connecticut and Utah told us that once  resources are no longer needed for developing and implementing a new  initiative, they reallocate these resources to other tasks. In Utah, a state  agency official with whom we spoke estimated that by implementing an  automated voice response system and a customer service Web site and by  providing training on how to answer clients’ inquiries efficiently, the state  agency was able to shift four full-time staff who formerly handled  customer service calls to other projects. Conversely, five state agencies  reported that they did not reinvest their savings. For example, the Nevada  state agency reported that savings were returned to the state general fund  per state requirements, and the Vermont state agency reported that in  some cases state funding for the program was reduced by the amount of  the savings.
Additionally, state agency officials told us about other practices that they  implemented to reduce costs, beyond the initiatives specified in our  survey. For example, in Connecticut, the state agency has adopted  practices as varied as using videoconference facilities to allow  caseworkers to attend hearings that can help reduce travel costs and  printing double-sided notices to clients. In Utah, the state agency has  automated notices to noncustodial parents regarding pending wage  withholding. In Virginia, the state agency automated intercept of  unemployment insurance payments in fiscal year 2003 and reported total  costs savings of $240,000 as a result. The Georgia state agency reported  implementing Internet-enabled voice communication to reduce telephone  costs.
section_title: OCSE Has Taken Steps to Help State Agencies Manage Costs
paragraphs: OCSE issued guidance and awarded grants to state agencies to help them  manage costs. OCSE issued guidance on a wide range of topics addressing  program operations that may directly or indirectly lead to cost savings. For  example, OCSE has issued guidance on electronic disbursement of  payments, criteria for closing cases, multistate financial institution data  matches, and review and adjustment of support orders. In addition, OCSE  has awarded grants to help state agencies develop and implement certain  initiatives. For example, in fiscal year 2002, OCSE awarded Indiana a  $100,000 grant to investigate the use of debit cards to reduce undistributed  collections, Texas a $71,630 grant to develop electronic payment methods  for noncustodial parents, North Carolina a $200,000 grant for an outgoing  automated voice response system to send reminders to clients, and  Colorado a $100,000 grant for Web-site technology to increase customer  services.
OCSE has created several work groups consisting of federal and state  agency officials to address specific issues of concern to all state agencies.  Some examples of these federal/state work groups are discussed as  follows:    Work group on a Standardized Electronic Wage Withholding Order:  OCSE convened a work group in 2004 to develop a standardized  method for the electronic transmission of wage withholding orders to  employers. The work group was composed of representatives from  state and tribal child support enforcement agencies, employers, federal  agencies (Social Security Administration, Department of Defense, and  the United States Postal Service), and a large payroll processing  company. This work group developed, among other things, a draft  electronic wage withholding order for state agencies to notify  employers of a wage withholding action. According to OCSE,  electronic transmission of wage-withholding orders will increase  processing efficiency and improve the speed with which payments are  made to families and also reduce the cost of postage and processing  paper documents.
The National Judicial/CSE Collaboration Work Group: OCSE  convened this work group in 2004 to help improve collaboration  between child support enforcement agencies and courts. This work  group’s goals include improving case processing and facilitating  electronic data and document exchange between state agencies and  courts.
National Child Support Enforcement Training Work Group: This  work group met in 2005 to identify training needs and resources  available to address strategies in the Strategic Plan. The goal is to  develop a strategy for meeting training needs in order to improve  program results and customer services at all levels.
Also, OCSE has facilitated information exchanges in other ways. OCSE  has sponsored conferences and invited representatives from state agencies  who have experience with specific initiatives to appear on panels to share  ideas with representatives from other state agencies. According to an  OCSE official, OCSE is working with state agencies to add information  about various initiatives to its existing automated systems certification  guide. State agencies interested in implementing certain initiatives will be  able to consult the guide to learn from what others have done. The guide  will also have information about the availability of grants to help states  implement the initiatives. According to this official, the first draft of the  amended guide will be available to the state agencies for comment in June  2006. In addition, OCSE held telephone conferences with state agencies on  specific subjects. For example, according to an OCSE official, OCSE  arranged a teleconference in February 2006 to enable state agencies that  had implemented debit cards to share their experiences and expertise with  state agencies interested in implementing them. OCSE officials noted that  they also distributed CD-ROMs to state agencies with information on the  Web-based customer service practices of 6 state agencies.
Generally, state agencies responding to our survey viewed OCSE  assistance favorably. In particular, as shown in table 7, nearly all of the  state agencies reported that OCSE’s efforts to create federal/state work  groups, hold conferences or sponsor training, issue guidance, and  facilitate information exchange were very or moderately helpful.
section_title: OCSE Has Conducted a Limited Number of Administrative Cost Audits
paragraphs: Although OCSE is required to perform audits to determine whether federal  and other funds made available to carry out the state program are being  appropriately expended, OCSE has not conducted administrative cost  audits in most states. From March 2004 to March 2006, OCSE issued eight  administrative cost audit reports--an average of 4 per year.  The issued  reports show that all of the audits were limited in scope and all raised  questions about inappropriate expenditures. For example, one audit of  costs claimed for one quarter found that the federal government paid  approximately $670,000 for unallowable collection costs and litigation  settlements claimed by the Texas state agency. Another audit that  examined expenses claimed for one quarter recommended that the  Vermont state agency reimburse the federal government $603,057 for  failing to properly report interest income and abandoned property as  program income and claiming costs not related to the CSE program. Table  8 summarizes the administrative cost audits completed as of March 2006.
An OCSE official explained that OCSE completed a limited number of  administrative costs audits because most of its resources were devoted to  completing data reliability audits associated with the federal incentive  payments.  In fiscal year 2004, OCSE notified state agencies that it would  not perform data reliability audits annually but would conduct audits  every 2 or 3 years, based on prior audit results. In addition, the notice  indicated that this approach would increase the resources available to  conduct other audits. According to an OCSE official, additional  administrative cost audits have not been planned and that unless OCSE  gets more audit resources, it is likely that few administrative cost audits  will be conducted. This official also explained that OCSE has added  reviews related to medical support in anticipation of a medical support  incentive payment measure and this effort has taken resources from other  audit work.  In commenting on a draft of this report HHS informed us  that OCSE’s approach for conducting fewer data reliability audits has not  yet increased available audit resources.
OCSE’s audit plan identifies several types of audits and reviews and shows  that most of the planned audits are not administrative cost audits. The  plan lists 16 administrative cost audits—also referred to as limited cost  audits, as well as  37 data reliability audits, 17 data reliability reviews,   4 paternity audits, and 36 medical support reviews.36, 37 According to an  OCSE official, the audit plan needs to be updated to reflect current  information and status of the assignments.
In commenting on a draft of this report, HHS stated that OCSE is required to perform a  data reliability review each year for those state agencies that are not receiving a data  reliability audit and that while reviews consume less time than an audit, reviews require a  significant amount of time and resources.
According to an agency official, the paternity audits are done when a state agency’s data  fails the data reliability audit and then resubmits the data in a subsequent fiscal year.
According to agency officials, a statewide review of Ohio’s CSE program was not  available because audits are done at the county level.
The five standards for internal control are (1) control environment—management and  employees should establish and maintain an environment throughout the organization that  sets a positive and supportive attitude toward internal control and conscientious  management; (2) risk assessment—internal control should provide for an assessment of  the risks the agency faces from both external and internal sources; (3) control activities— activities that help ensure management’s directives are carried out-- should be effective and  efficient in accomplishing the agency’s control objectives; (4) information and  communications—information should be recorded and communicated to management and  others within the entity who need it and in a form and within a time frame that enables  them to carry out their internal control and other responsibilities; and (5) monitoring— internal control monitoring should assess the quality of performance over time and ensure  that the findings of audits and other reviews are promptly resolved. offices, issues identified during data reliability audits, knowledge of  possible problems from other sources and how long it has been since the  prior audit. OCSE officials did not cite the level of expenditures for  administrative costs as a factor that was considered in planning  administrative cost audits.
section_title: Conclusions
paragraphs: In addition to the changes made by the Deficit Reduction Act of 2005 that  will affect federal expenditures for the CSE program, there may be other  opportunities to reduce the federal expenditures for the CSE program.  Although many state agencies reported implementing several initiatives  that have resulted in savings, most state agencies reported that they have  reinvested funds in other CSE program areas. As such, state agencies have  not used savings from implemented initiatives to reduce administrative  costs. State agencies also reported that several of the cost categories that  were major contributors to federal expenditures for administrative costs  were related, at least in part, to the number of FTEs devoted to the  program, including state and local CSE agency personnel; staff from other  state and local agencies that provide services under cooperative  agreements; and contractors. Although OCSE has established minimum  organizational and staffing requirements, OCSE has not conducted a study  to establish FTE or staffing guidelines to determine whether there are  additional opportunities to improve the efficiency of the CSE program and  reduce administrative costs.
Furthermore, OCSE has not conducted administrative cost audits in most  states. Of the administrative cost audits recently completed by OCSE, all  have raised questions about inappropriate expenditures or unallowable  costs. Nonetheless, most of the completed and planned audits are focused  on incentive payment data and indicators, and although OCSE expects to  have more resources available to conduct audits, it does not plan to use  these resources to conduct more administrative cost audits.  The audits  related to the incentive payments are important, however many more  federal dollars have been spent for administrative costs, and the federal  expenditures for administrative costs have been increasing and are not  capped. From the federal government’s perspective, more focus on  administrative cost audits would be a prudent use of resources. Also, in  developing its plans for administrative cost audits, OCSE officials did not  cite total expenditures for administrative costs as a factor in determining  which state agencies to audit. Without conducting administrative cost  audits in more states, and without a plan for conducting audits based in  part on the level of expenditures, OCSE cannot ensure that federal funds  have been appropriately spent.
section_title: Recommendations for Executive Action
paragraphs: To help manage the administrative costs for the child support enforcement  program and ensure federal funds are being appropriately spent, we are  making three recommendations. We recommend that the Secretary of  Health and Human Services direct the Commissioner of OCSE to    conduct a study of and develop guidelines for the number of full-time-    direct resources gained from conducting fewer data reliability audits  for the incentive payments to completing more administrative cost  audits, and    develop an audit plan that considers total expenditures as one of the  factors used to select state agencies for administrative cost audits.
section_title: Agency Comments and Our Evaluation
paragraphs: We received written comments on a draft of this report from HHS. These  comments are reproduced in appendix VII.  HHS also provided technical  comments, which we incorporated when appropriate.
HHS did not explicitly agree or disagree with our recommendations. In  response to our recommendation to conduct a study of and develop  guidelines for the number of full-time-equivalent employees, HHS stated  that OCSE will consider doing such a study. HHS also noted that OCSE  issued a report that reviewed collections, expenditures, caseload, and  other data by full-time-equivalent employees for the 1997 and 1998 time  frame.  We reviewed this report and determined that while it summarizes  these data, it does not address guidelines.
In response to our recommendation to develop a plan to conduct  administrative cost audits, HHS commented that OCSE has developed  plans to conduct administrative cost audits in the past, has conducted  those audits, and will continue to develop plans in the future.  We revised  the report to acknowledge that OCSE has a plan for conducting  administrative cost audits as well as other audits and to incorporate  information from the technical comments about the plan. Additionally, we  modified this recommendation to better reflect our intent to encourage  OCSE to complete more administrative cost audits than it completed  during the 2004 to 2006 time period and to consider total expenditures for  administrative costs when planning these audits. In light of our finding  that all of the completed administrative cost audits have identified  inappropriate or unallowable expenditures, additional audits are needed to  help ensure that federal funds are used appropriately.
HHS also identified several areas that needed further clarification. HHS  suggested that we explain that the CSE program locates custodial parents  and that custodial as well as noncustodial parents may apply for services.   We modified the report to include these facts.  HHS also said that the  report does not note that staffing declined since fiscal year 2003. We did  not make any changes in response to this comment since data in the report  show this decline. In addition, HHS commented that we did not discuss  the relationship between spending and performance and referred to the  findings in a report done by the Lewin Group, Inc. We did not include an  analysis of the relationship between spending and the performance  measures because that analysis was beyond the scope of our work for this  review.  As for the Lewin report, we did not include findings from this  report because they were based on fiscal year 1997 data, and the report  includes a statement that the findings should be interpreted carefully  because of several problems associated with measures that are proxies for  performance, data quality, missing variables, and other factors.  Additionally, the HHS comments pointed out that our report did not  include certain provisions in the Deficit Reduction Act of 2005 or mention  estimated income or savings related to this act.  We added this information  to the report.
We are sending copies of this report to the Secretary of Health and Human  Services, Directors of state child support enforcement agencies in the  states we visited, and other interested parties.  In addition, we will make  copies available to others upon request.  Also, this report will be available  at no charge on GAO’s Web site at http://www.gao.gov.
If you or your staff have any questions about his report, please contact me  at 202-512-7215 or AshbyC@gao.gov.  Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix VIII.
section_title: Appendix I: Objectives, Scope, and Methodology
subsections: section_title: Objectives
paragraphs: The objectives of this study were to determine (1) how total net federal  expenditures for administrative costs have changed from fiscal year 2000  to fiscal year 2004, (2) the categories of cost that have contributed most to  federal expenditures for administrative costs in recent years, and (3) steps  state agencies have taken to manage costs and steps the Office of Child  Support Enforcement (OCSE) has taken to help state agencies and to  ensure federal funds have been used appropriately.
section_title: Scope and Methodology
paragraphs: In conducting our review, we used multiple methodologies. We   (1) analyzed program data for all 54 state agencies for fiscal years 2000 to  2004; (2) conducted a survey of state agencies; (3) visited 6 state agencies;  (4) interviewed OCSE and state agency officials as well as child support  experts; and (5) reviewed relevant laws and regulations, pertinent reports  and studies, and applicable OCSE policy and guidance documents. We  conducted our work between June 2005 and June 2006 in accordance with  generally accepted government auditing standards.
subsections: section_title: Analyses of Program Data
paragraphs: To determine how net federal expenditures for administrative costs have  changed, we obtained data from the system that maintains information  related to funds administered by Health and Human Services’ (HHS)  Administration for Children and Families, including funds provided to  state agencies. This system is known as the Grants Application Tracking  and Evaluation System (GATES). Before analyzing the data, we took  several steps to assess its reliability. We interviewed HHS officials  responsible for managing GATES and obtained information about the  system such as its purpose, the procedures to ensure that it captures all  records, and tests or edit checks to assure that data are accurate. We also  obtained copies of the system manual and system audit reports. Because  the state agencies are the sources for the GATES data, we also interviewed  state agency officials and asked them about reviews and routine audits of  the data, and we obtained copies of system audit reports as well as  documents that summarized the procedures for ensuring data accuracy.  Additionally, we compared expenditure data from several state agencies  with data from GATES and found they were nearly identical. Furthermore,  we reviewed results of OCSE’s data reliability audits of state agencies’  data related to the performance incentive measures, including collections,  and cost-effectiveness ratios. On the basis of these steps, we determined  the data from GATES were sufficiently reliable for the purposes of this  report.
We obtained and analyzed several sets of state CSE program data for fiscal  years 2000 to 2004. We analyzed the net federal share of state expenditures  and calculated the percentage change and the median amounts.  Additionally, we examined other program data to gain some perspective  about changes in the net federal expenditures for administrative costs.  Specifically, for fiscal years 2000 to 2004, we examined collections,  number of cases, the cost-effectiveness ratios, and the number of full-time- equivalent employees. To determine the cost per case, we used the total  number of cases at the end of each fiscal year and the nominal net  expenditures for each year. We calculated the median amounts for  expenditures and collections because of the wide variation among state  agencies.  Since the data span a 5-year period, we considered it  appropriate to adjust the expenditure and collection data for inflation,  using the price index for the U.S gross domestic product when the analysis  covered a period of years.  These data, in 2004 dollars, were used in  discussing trends in net federal expenditures for administrative costs and  collections.  However, when we calculated percentage changes from year  to year, we used nominal dollars to be consistent with data previously  reported to Congress.
section_title: Survey of State Agencies
paragraphs: We designed and administered a survey to all 54 state agencies. The survey  asked state agencies to identify the administrative cost categories in which  they incurred costs during fiscal years 2002 to 2004 and to estimate the  percent of the state’s administrative costs for the five categories that  accounted for the largest percentages. The survey also asked state  agencies whether they had implemented 10 cost-saving initiatives and, if  so, when each was implemented and what the cost savings had been, if  any. We selected these 10 cost-saving initiatives after reviewing OCSE’s  Compendium of State Best Practices and Good Ideas in Child Support  Enforcement for 2001, 2002, and 2003—the most recent years available at  the time of our review. We selected initiatives that had demonstrated  dollar savings or the potential for dollar savings. The last section of the  survey asked state agencies to rate how helpful certain OCSE efforts had  been in reducing or minimizing their administrative costs and if there were  other actions OCSE could take to help state agencies reduce or minimize  administrative costs. Surveys were sent via an e-mail as a MSWord  attachment in November 2005, and all 54 state agencies sent in responses  by February 2006.
Because we received responses from all of the state agencies, our results  are not subject to sampling error. However, the practical difficulties of  conducting any survey may introduce other types of errors, commonly  referred to as nonsampling errors. For example, differences in how a  particular question is interpreted and the sources of information available  to respondents in answering a question can introduce unwanted variability  into the survey results. We included steps in both the data collection and  data analysis stages to minimize such nonsampling errors. For example,  the survey instrument was developed by a GAO survey specialist in  collaboration with staff knowledgeable about the CSE program. In  addition, the survey was reviewed by another GAO survey specialist and  pretested telephonically with two state agencies to develop a survey  instrument that was relevant, easy to comprehend, unambiguous, and  unbiased. We made changes to the content and format of the survey  instrument based on the review and the results of the pretests. To further  reduce nonsampling error, respondents entered their responses directly  into the survey instrument and returned them electronically. Responses  were then reviewed by GAO staff for completeness and internal  consistency, and when data seemed questionable, we followed up with  state agency officials for clarification.
Survey responses were then keypunched into the database used for  analysis and these data were 100 percent verified for accuracy of data  entry. When the data were analyzed, a second, independent analyst  checked all computer programs.
section_title: Visits to State Agencies
paragraphs: We visited state agencies in 6 states—California, Connecticut, Maryland,  Ohio, South Carolina, and Utah. We selected these states because they  represented diversity in changes in federal expenditures during fiscal  years 2002 to 2004, geographical location, and operational structure (state-  or county-operated). During these visits, we interviewed state officials and  obtained their opinions and perspectives about key issues. We discussed  administrative cost trends for their state, the categories of cost that  contributed most to their total administrative costs, and steps taken to  reduce costs, including implementing the cost-saving initiatives. We also  collected administrative cost data for fiscal years 2002 to 2004, state  agency policies and procedures, and relevant reports.
section_title: Interviews of officials, representatives, and experts
paragraphs: We interviewed many CSE program officials and representatives from  various organizations to learn more about each of the objectives. We  interviewed several key OCSE officials, including the Commissioner,  Director of the Office of Audits, Director of State and Tribal Systems, and  the Director of the Planning, Research and Evaluation Division. Several of  these interviews focused on OCSE’s efforts to help states manage their  administrative costs and their efforts to help ensure that federal funds  were used appropriately. In addition, we obtained their views on reasons  the expenditures have increased and the factors that have contributed  most to these increases. We also discussed our objectives with  representatives from the National Child Support Enforcement Association  and the National Council of Child Support Directors. These discussions  covered each of the objectives and the participants shared their views and  insights. For example, the participants expressed their opinions about  personnel costs as a major contributor to administrative costs, various  cost-saving initiatives, and OCSE’s efforts to help state agencies. In  addition, we interviewed experts and professionals with extensive  knowledge of the child support program. Specifically, we discussed the  objectives with professionals from the Center for Law and Social Policy  (CLASP) and the Urban Institute.
section_title: Reviews of laws, policies, and reports
paragraphs: During the course of this work, we obtained and reviewed numerous  documents. We reviewed provisions in several laws that affected the CSE  program, including, among others, the Personal Responsibility and Work  Opportunity Reconciliation Act of 1996, the Child Support Performance  and Incentive Act, and the Deficit Reduction Act of 2005. We examined  OCSE’s policies and guidance, strategic plans, forms and instructions for  reporting administrative costs as well as other OCSE reports and  documents related to administrative costs. We obtained and reviewed  documents and reports prepared by state agencies, the Congressional  Budget Office, CLASP, the Congressional Research Service, the Urban  Institute, and the Lewin Group and ECONorthwest. In addition, we  reviewed several prior GAO reports.
section_title: Appendix II: Annual Percentage Changes in Net Federal Expenditures, by State Agency, for Fiscal Years 2000 to 2004
paragraphs: Appendix II: Annual Percentage Changes in  Net Federal Expenditures, by State Agency,  for Fiscal Years 2000 to 2004 Percentage change, by fiscal year  (8.4)  (3.0) (1.8) (9.3) (3.6) (2.2) (6.0)  (11.8) (9.9) (5.2) (1.5) (3) (16.3) (12.0) (38.3) (1.4) (29.8) (27.1) (51.4) (58.2) (8.4) (8.1) (26.9) (20.3) (19.9) (8.1) (18.8) (15.4) (14.2) (5.0) (7.0) (355.0) (93.3) (12.5) (4.3) (27.2) (1.2) (5) (3.2) (12.8) (19.1) (7.2) (2.4) (5.3) (19.2) (1.2) (8.0) (20.7) (2.7) (6.7) (4.2) (14.4) (8) (1.4) (1.8) (15.7) (5.2) (3.3) (8) (19.3) (16.5) (2.1)  (5)
Percentage change, by fiscal year  (1.2) (3.9) (4.9) (9) (10.4) (6.0) (10.2) (11.5) (6.7) (10.4) (5.1) (4.5) (23.7) (10.5) (9.3) (18.7) (2.4) (8.8) (13.3) (2.9) (8.7) (3.7) (1.6) (1.8) (57.0) (33.3) (9.6) (16.7) (4.7) (21.6) (17.7) (4.3)
section_title: Appendix III: Annual Percentage Changes in Collections, by State Agency, for Fiscal Years 2000 to 2004
paragraphs: Appendix III: Annual Percentage Changes in  Collections, by State Agency, for Fiscal Years  2000 to 2004 Percentage change, by fiscal year  (2.4) (3.5) (11.4) (3.3) (3.0) (8.6) (2.8) (10.4)
Percentage change, by fiscal year  (3.2)  (1.4) (3.0) (4.8) (1.0) (1.6)
section_title: Appendix IV: Percentage Changes in the Cost- Effectiveness Ratio by State Agency and Nationwide
paragraphs: Appendix IV: Percentage Changes in the Cost- Effectiveness Ratio by State Agency and  Nationwide Percentage change in the cost-effectiveness ratio from the previous fiscal year  (9.23) (5.57) (1.12) (6.01) (26.82) (8.23) (12.02) (2.59) (20.79) (17.21) (0.66) (22.30)  (22.21)  (5.71) (11.00) (1.95) (1.37) (28.79) (12.83) (0.71) (5.37) (10.62) (4.77) (1.94) (11.46) (14.33) (11.42) (19.07) (8.35) (3.36) (11.44)
Percentage change in the cost-effectiveness ratio from the previous fiscal year  (3.45) (11.76) (4.27) (1.86) (0.73)  (9.57) (1.68) (3.97) (9.82) (5.67) (1.21) (3.82) (0.54) (2.91) (8.28) (0.44) (6.78) (2.64) (2.62) (0.67) (7.36) (1.90)
section_title: Appendix V: Percentages Reported by State Agencies for Most Frequently Cited Cost Categories
subsections: section_title: Category reported as largest cost category
section_title: Appendix VI: State Agencies’ Implementation of Certain Cost-Saving Initiatives
section_title: Appendix VII: Comments from the Department of Health and Human Services
section_title: Appendix VIII: GAO Contact and Staff Acknowledgments
paragraphs: In addition to the person named above, Carolyn M. Taylor, Assistant  Director; Susan Higgins, Analyst in Charge; Tim Hall; Sheila McCoy, Chris  Morehouse; Vernette Shaw; Wilfred Holloway; Cathy Hurley; Stu Kaufman;  and James Rebbe made key contributions to this report.