Child Support Enforcement: Strong Leadership Required to Maximize Benefits of Automated Systems
Released: 1997-07-17T00:00:00

Letter

Introduction

The general well-being of children and families is a critical national policy goal. Current priorities are aimed at protecting children and preserving families, including meeting the needs of millions of parents who annually seek child support for their eligible children. However, when noncustodial parents fail to provide financial support, millions of children must rely on welfare programs. In 1995, over 9 million of the 13.6 million people receiving benefits from the Aid to Families With Dependent Children (AFDC) program were children.

The Child Support Enforcement Program

The Congress created the national Child Support Enforcement Program in 1975 as title IV-D of the Social Security Act. This intergovernmental program involves federal, state, and local governments. The Department of Health and Human Services’ (HHS) regional office staff and the Office of Child Support Enforcement (OCSE) oversee the state-administered programs. The purpose of the program is to increase collections from noncustodial parents and reduce federal, state, and local welfare expenditures. As shown in figure 1.1, reported collections in fiscal year 1995 were 80 percent higher than they were in 1990.

Total collections in billions of dollars The number of reported child support cases has also increased 60 percent—from 13 to 20 million cases over that same time period. As a result, according to HHS, the number of cases in which collections are being made has remained about 18 to 20 percent.

Families entering the Child Support Enforcement Program require different combinations of services at different times, and child support enforcement agencies are directly responsible for providing these services. For instance, 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, obtaining and enforcing a child support order, and collecting the support payment. In other cases, the custodial parent may already have a child support order; in such a case, the child support enforcement agency must review and possibly modify the order as a result of changes in the employment status or other circumstances of the noncustodial parent before tackling enforcement.

State child support enforcement programs are organized in significantly different ways. They report to different state agencies and follow different policies and procedures. In addition, relationships between the state child support enforcement programs and other state agencies differ. 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 manage their programs centrally (operating a number of state offices), while others allow the counties or other governmental entities or even private companies to manage the programs locally.

States Are Developing Federally Funded Information Systems to Support the Program

Growing caseloads, increased costs, and social demands have given rise to the need to implement expedited processes for establishing and enforcing payment of child support. As such, automation was (and still is) seen by many, including the federal government, as an effective tool for addressing this need. In 1980, the Congress promoted the development of automated systems that could improve the performance of the child support program. Public Law 96-265 authorized the federal government to pay up to 90 percent of the states’ total costs incurred in planning, designing, developing, installing, or enhancing these systems. The systems are required by OCSE to be implemented statewide and be capable of carrying out mandatory functional requirements, including case initiation, case management, financial management, enforcement, security, privacy, and reporting. Incorporating these requirements can help locate noncustodial parents and monitor child support cases. Since 1981, the federal government has spent over $2 billion for automated systems to assist states in collecting child support.

The Family Support Act of 1988 mandated that by October 1, 1995, each state have a fully operational automated child support system that meets federal requirements. At that time, the 90-percent development funding was to be discontinued. In addition, if a state did not have its system certified as fully operational by this date, the act declared that the state’s child support program may have its program funding reduced. However, by October 1, 1995, only five states had met the deadline. Therefore, the Congress passed Public Law 104-35, extending the deadline to October 1, 1997.

Developing child support enforcement systems is a joint federal and state responsibility. In providing most of the funding for systems, the federal government, through OCSE, is responsible for providing leadership, technical assistance, and standards for effective systems development. OCSE is also responsible for assessing states’ automated systems and ensuring that states are effectively using the 90-percent funding.

To receive 90-percent federal funding for the development of an automated child support enforcement system, a state is required to develop and submit an advance planning document (APD) to OCSE, describing its proposed system. The APD is reviewed by OCSE’s Division of Child Support Information Systems and by HHS’ regional, program, and financial management staff to ensure that the proposed system incorporates the minimum functional requirements and will meet federal, state, and user needs in a cost-effective manner. After the APD is approved, OCSE provides 90-percent funding for the project and monitors its progress. Federal regulations and OCSE guidance (1) require states to update their APDs when projects have significant changes in budget or scope and (2) give OCSE the authority to suspend funding if a state’s development does not substantially adhere to its approved plan. When the state considers its system complete, a state official requests that the federal government certify that its system meets requirements. After certification, a state is authorized to receive additional funding to maintain its operational system.

Recent Welfare Reform Legislation

While states are still trying to meet the challenges of the 1988 act, they are also faced with newer challenges. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 requires that states implement specific expedited and administrative procedures intended to expand the authority of the state child support agency and improve the efficiency of state child support programs. In order to comply with the expedited processes requirement, states have to meet specific time frames for establishing paternity and establishing and enforcing support orders.Under current law their statewide systems must automatically perform specific locate, establishment, enforcement, and case management functions and maintain financial management, reporting, and under the new law states’ security and privacy functions. In addition, under the new law states must enhance their current statewide systems to electronically interface with other federal and state agencies. This is needed to establish, for example, central case registries and new-hire directories. Therefore, to successfully comply with the welfare reform legislation, it is critical that the states and OCSE have fully operational child support systems in place.

Objectives, Scope, and Methodology

In 1992, in response to a request from the Senate Committee on Finance, we reviewed HHS’ oversight of states’ efforts to develop automated child support enforcement systems. In August 1992, we issued a report citing major problems with oversight and monitoring of these development efforts. We reported that while taking timely corrective action on known problems is critical to developing well designed automated systems, OCSE had not required needed changes in some states facing serious systems problems. We, therefore, made recommendations to HHS for improvement. On June 20, 1996, Representative Henry J. Hyde requested that we conduct a follow-up review. Later, Representative Lynn C. Woolsey joined in this request.

Our specific objectives were to determine (1) the status of automated state systems, including costs, (2) whether HHS had implemented our 1992 recommendations, and (3) whether HHS was providing effective federal oversight of state systems development.

To accomplish these objectives, we reviewed federal laws and regulations on OCSE’s oversight of state development of automated systems. We assessed OCSE systems guidelines, policies and procedures, and correspondence with the states. We also interviewed officials in OCSE’s Office of Child Support Information Systems and Division of Audit to discuss their continued roles and responsibilities in overseeing the planning, development, and implementation of state child support enforcement systems.

To update our knowledge of automated systems issues, we analyzed state planning documents, OCSE certification reports, and state audit reports of automated systems. In addition, we reviewed financial reports produced by OCSE’s statistical and reporting systems; however, we did not independently verify data contained in these reports. We coordinated with the HHS Office of Inspector General and reviewed, analyzed, and summarized the results of its nationwide child support systems state survey. We also interviewed selected contractors developing and implementing child support enforcement systems. Further, we conducted a focus group of 18 state officials, representing 14 states (California, Connecticut, Delaware, Georgia, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New York, Ohio, and Texas) and Los Angeles County to determine the benefits, barriers, and solutions to developing automated child support systems.

We performed our work at OCSE headquarters in Washington, D.C. We also surveyed all 10 HHS regional offices and visited 5 (Atlanta, Dallas, Denver, New York, and Philadelphia) to gain an understanding of the history of each state’s development effort and of OCSE’s role in providing regional oversight and technical assistance. Further, we visited six states (Alabama, California, Massachusetts, Ohio, Texas, and Washington) and Los Angeles County. We selected these locations based on the following criteria: levels of funding requested, methods used to develop systems (e.g., in-house, contractor, and combination of in-house and contractor), caseload, geographic location, phase of development (e.g., pilot, implementation, enhancement, in operation), and level of certification. During our site visits we assessed the systems’ status, best practices, and barriers to implementing systems using relevant components of our system assessment methodology. We also reviewed various state and contractor systems-related documents and correspondence and interviewed state agency officials.

We conducted this work between August 1996 and March 1997, in accordance with generally accepted government auditing standards. We requested written comments from the Secretary of Health and Human Services or her designee. The Inspector General provided us with written comments, which are discussed in chapter 6 and reprinted in appendix IV.

Systems Yield Benefits, but Deadline May Not Be Met

Many states have made progress in their automation projects, and state officials report that the systems have already demonstrated benefits. However, some states’ costs are twice as high as originally estimated, and the extent of final costs is not yet known. Progress in developing systems varies—some states have automated many features, while others are in the earlier phases of development and may not be certified or operational by the October 1, 1997, deadline.

Automated Systems Appear to Be Helping States

According to state program and systems managers, child support enforcement systems have improved program effectiveness and worker productivity by automating inefficient, labor-intensive processes and monitoring program activities. Systems have improved efficiency by automating the manual tasks of preparing legal documents related to support orders and calculating collections and distributions, including interest payments. Further, automated systems can help locate absent parents through interfaces with a number of state and federal databases more efficiently than could the old, manual process. These systems have also improved tracking of paternity establishment and enforcement actions. The following examples show specific reported improvements in program performance since states began developing their automated systems.

According to one systems official, while it is difficult to attribute benefits entirely to the system, “the system has changed the way business is done in the child support office.” The automated system assisted the state’s staff in increasing the number of parents located from almost 239,000 in fiscal year 1995 to over 581,000 in fiscal year 1996—a reported increase of 143 percent. Additionally, while using the system from July 1994 through December 1996, the staff increased the number of support orders established by over 78 percent, the number of paternities established by almost 89 percent, and child support collections by almost 13 percent.

Officials from another state noted that staff performance increased with the new system because it gives staff a new tool to use to improve their productivity. Collections per employee have more than doubled—from about $162,000 to $343,000 annually. The system has also helped the state reduce the time required to process payments: The turnaround time for checks for nonwelfare custodial parents dropped from 29 days to processing a payment in only seconds and issuing checks within 24 hours.

Officials from the same state also reported that the automated system allowed cases to be viewed on-line by several individuals simultaneously, eliminating the bottlenecks created by manually searching, retrieving, and delivering hard copy case files. Before the state implemented its new system, 11 percent of the child support staff was dedicated to the manual process of retrieving files.

Billions Spent for Automated Systems Not Yet in Compliance With Federal Mandates

States have spent billions of dollars on automated child support enforcement systems. Costs for developing and operating these systems continue to mount, while progress in developing systems varies. Despite the escalating costs, only 12 systems have been certified, and as many as 14 states may not meet the October 1997 deadline.

Systems Costs Continue to Increase; Vary Widely From State to State

According to OCSE records, states have spent over $2.6 billion since the early 1980s to develop, operate, maintain, and modify county and statewide automated child support systems. Of these costs, the federal government has paid 66 to 90 percent of states’ systems costs, amounting to more than $2 billion. Since 1980, federal expenditures for child support enforcement systems have risen dramatically. Figure 2.1 shows the history of federal funding for these systems from fiscal year 1981 through fiscal year 1996. As the chart reveals, federal spending escalated as states began working to comply with the 1988 act. Appendix I provides the total reported costs for each state’s child support system and the federal and state shares of those expenditures, and appendix II provides the enhanced and regular federal expenditures.

Although the 90-percent enhanced funding ended on October 1, 1995, the Congress later retroactively extended it to October 1, 1997, for those states having approved enhanced funding in their APDs as of September 30, 1995.

States generally underestimated the costs of developing and operating child support enforcement systems. During our seven site visits, we compared the projected costs in the original APDs with the most recent estimates. While two sites’ original estimates were fairly accurate, the remaining five were significantly understated. For example, in total, current cost estimates for the states we visited are about twice as high as originally planned. In addition, at least 10 states are now discovering that their systems will cost more to operate once they are completed. While these states expected cost increases as a result of added system functionality, increased information storage, and the use of sophisticated databases, estimated operating costs for some new systems may be even higher than anticipated. For example, one state’s initial estimate showed the new system’s data processing costs would be three to five times higher than that of the old system. However, according to a state official, those costs will likely be six to seven times higher than the current system’s operating costs. Operating that state’s new system may cost nearly $7 million more annually than the old system.

Further, costs for developing and operating child support systems have varied greatly among the states—from a low of $1.5 million to a high of $344 million. The difference can be attributed to a variety of factors, including caseload size, whether the states or the counties administer the child support program, the number of attempts states made to develop child support enforcement systems, the way the systems were developed—by modifying an existing system or developing a new one, and the kind of system being developed.

Few States Certified as Deadline Approaches

Only five systems were certified and seven conditionally certified as of March 31, 1997. OCSE grants full certification when a system meets all functional requirements and conditional certification when the system needs only minor corrections that do not affect statewide operation. Figure 2.2 indicates which states have certified and conditionally certified systems as of March 31, 1997.

The certified and conditionally certified states represent only 14 percent of the nation’s reported child support caseload. Further, according to OCSE’s director of state child support information systems, as many as 14 states—6 with caseloads over 500,000—may not have statewide systems that fully meet certification requirements in place by this October 1. These states represent 44 percent of the nation’s child support caseload. OCSE does not yet know how long it will take or how much it will cost to bring these states into compliance with federal requirements. In addition, 2 of these states that chose to update their existing systems rather than develop new child support enforcement systems may need to redesign their systems.

Responding to an HHS Office of Inspector General survey, 36 of the 42 states that are not certified reported that they will meet the 1997 deadline. However, this task may well present a challenge for many of them. While almost two-thirds of the states reported that they were either enhancing operational systems to meet certification requirements or in the conversion or implementation phases, the remaining one-third of the states responding to the 1996 survey stated that parts of their systems are only in the design, programming, or testing phases of systems development—with major phases to be completed, including conversion and statewide implementation. State systems officials in our focus group considered conversion to be one of the most difficult problems and a barrier to successful implementation.

Problems Impeded Earlier Progress as Recommendations Not Fully Implemented

All too often an organization’s inability to take basic but necessary steps to decrease systems development risks leads to failure. Problems consistently identified in reviews by GAO and others include information systems that do not meet users’ needs, exceed cost estimates, or take significantly longer than expected to complete. In its efforts to assist in the development of automated, statewide child support enforcement systems, OCSE is no exception. The agency did not define requirements promptly, adequately assess systems issues prior to mandating a transfer policy, or seek to identify and aggressively correct problems early in the development process. The lack of sound, timely federal guidance, coupled with some states’ own inadequate systems approaches, caused systems development activities to proceed with increased risks.

Delayed Functional Requirements Slowed Progress

The federal and state governments and private industry recognize that an investment of time and resources in requirements definition has the biggest program payoff in the development of systems that are on time, cost-effective, and meet the needs of its users. Major systems decisions hinge on baseline requirements; these requirements, therefore, must be defined early. Without them, reasonable estimates of the scope, complexity, cost, and length of a project cannot be adequately developed.In addition, failure to clearly and accurately define requirements may preclude alternatives, restrict competition, and further increase the risk of cost and schedule overruns.

According to OCSE’s director of state child support information systems, the agency was expected to develop federal requirements for the statewide systems by October 1990. However, OCSE did not publish federal regulations—which described in general the program and automated systems—until October 1992. The agency did provide draft systems development guidance—functional requirements—to the states, but it was not disseminated until July 1992. OCSE did not provide the states with final systems functional requirements until June 1993.

OCSE acknowledges that the federal requirements were late; it attributes this primarily to its not using an incremental approach in releasing the requirements to the states. Rather than issuing certain requirements as they were defined, it waited until all requirements could be issued together. This was done because OCSE believed that certain underlying policy issues needed to be resolved before requirements could be made final and released. In addition, because OCSE’s minimum requirements were extensive and difficult policy issues needed to be resolved, the review and approval process also contributed to the delayed issuance of requirements. According to OCSE, it took time to assess policy issues, determine the most effective way to automate related changes, and accurately define related requirements. For example, according to OCSE, before it could even begin to define requirements related to the replacement of monthly mail-in notices (e.g., of a client’s child support status) with telephone recordings, complex policy decisions had to be considered.

Another example of a policy issue needing resolution, according to OCSE, was related to guidance on financial distributions. For instance, OCSE had to assess how systems would handle the required “$50 pass-through” policy of the program. This policy states that the first $50 of current child support payments collected for a child also covered under Aid to Families With Dependent Children (AFDC) must be delivered to the mother of that child rather than to the state AFDC office. While this policy sounds simple, it presented a certain degree of administrative complexity, especially for cases in which support payments were not made on time. In such a case, regardless of how many months a payment has been in arrears, only $50 (for the current month) goes directly to the mother.

We have indicated in the past that an agency in the process of defining and analyzing requirements should assess the impact of changes on other organizational elements; therefore, we agree that policy issues such as these must be addressed prior to developing detailed requirements. We also agree with OCSE that where possible, it should have made final and issued certain requirements sooner, using an incremental approach.

Delays in issuing final systems functional requirements meant more than just a late start; they compounded other problems. Uncertainties about final requirements slowed some states’ development activities and contributed to contractor problems. Seven of the 10 regions we surveyed indicated that the delay in requirements had an adverse effect on their states’ development. The following excerpts illustrate the impact of the delay on certain state projects.

An official of one region (representing four states) indicated that the requirements were issued much later than needed and ranked the “lack of timely final functional requirements” the number one impediment to states’ systems development. This official added that all four of its states “wanted better clarification in black and white as to . . . what the system should look like, how it should operate . . . etc.” The regional official added that its states were “left to figure this out for themselves, then they to pass a certification review that is totally subjective in the areas of functionality and level of automation.”

Another regional official said that all five of its states began their projects prior to receiving final requirements; however, they were reluctant to finalize anything until final requirements were issued. Another HHS regional official said, “the delay in getting official regulations published impacted contracts with the vendors and was an embarrassment to ACF [yet, because of the deadline imposed], development efforts went forward.”

Still another region surveyed indicated that requirements were somewhat late and, for four of its six states, this was an impediment. However, a regional official alluded to strong contractor relations as one of the primary reasons that the delay was not a problem (but otherwise could have been) for two of the region’s states. The official stated, “the effect of timing on unique. Each was building one system that supported a few offices throughout each jurisdiction. Each also had a fairly good working relationship with its vendor. Because of the nature of the projects, the type of environment and working relationship with the vendor, .”

Likewise, during our visits to individual states, four of them attributed their systems development problems to late functional requirements. One state official noted that the late functional requirements and short time frames contributed to development delays and increased costs. Another state noted that the delay in functional requirements contributed to many changes in the contract and, eventually, to contract termination. Finally, in one state, the child support systems’ development contract had to be amended to address modifications to the functional requirements. In fact, three work segments in the contract had to be added as a result of these modifications, increasing project costs by at least $210,000 due to reprogramming.

The HHS Office of Inspector General has similarly reported that several states experienced systems problems as a result of late functional requirements. In response to the Office of Inspector General survey, one state official noted that the state’s system was designed to meet the requirements set out in the draft guidelines; once the final requirements were issued, the state had to shift to a new initiative and virtually start over. Another state official said “. . . the late issuance of the certification guide was a major factor in the decision to delay statewide implementation of the system. The delay in receiving the guide caused [the state] to compress the development cycle of subsystem, putting a higher risk on the success of the overall system.”

Premature Policy Mandate Also Delayed Development, Increased Costs

In addition to being hindered by the delay in functional requirements, states encountered delays in developing systems and incurred more costs as a result of OCSE’s policy requiring states to transfer systems. Two years after the passage of the 1988 act, OCSE required states to “transfer” existing child support systems from other states or counties rather than building entirely new systems. While certainly a reasonable approach for saving money, at the time of this policy mandate, only a few available systems had been certified as meeting OCSE’s old requirements and no systems were certified based on the more extensive 1988 act. As a result, states had difficulty transferring these systems and adapting them for their own programs. OCSE had intended for the transfer policy to be an efficient method of building systems; however, in many cases, the transfer policy actually slowed systems development and led to increased systems costs when states attempted to transfer incompatible, incomplete, or inadequately tested systems.

Policy Mandate Poorly Planned and Implemented

Before issuing its transfer policy, OCSE did not perform sufficient analyses to support the requirement that states transfer systems. By not thoroughly evaluating the available alternatives, OCSE had no assurance that states would be able to transfer systems in an effective and efficient manner. As a result, states were faced with choosing from a limited number of systems, some of which were incomplete or unsuitable for their systems environments.

OCSE established the transfer policy on October 9, 1990; it said that all states must transfer a child support system from another state or county. OCSE noted that states needed to review other states’ systems and determine how these systems varied from their own systems requirements. According to OCSE, this sharing of technology among states would decrease the installation time for automated systems and reduce the risk of systems failures due to poor system design or inadequate planning.

The transfer policy required states to reuse software. Software reuse can be an appropriate part of systems development projects. According to the National Bureau of Standards, one of the most effective means of improving the productivity of software development is to increase the proportion of software that is reused. Reusable software not only increases productivity, but also improves reliability and reduces development time and cost. However, many technical, organizational, and cultural issues usually need to be resolved before widespread reuse of software should be mandated. In this case, this was not done.

If properly implemented, OCSE’s transfer policy could have saved states time and money in developing child support systems. As early as 1987, we reported that sharing state systems could save OCSE time and money.However, we also noted at that time that OCSE had not adopted standards or provided adequate oversight of states’ efforts to develop compatible and transferable automated systems. Careful and detailed alternatives analyses are required prior to selecting software to be transferred. Analyses should consider functional requirements; standardization of data elements; compatibility of software and hardware platforms; and other factors, such as caseload processing, organizational structure, state and contractor expertise and skills, and any unique state requirements. For alternatives, state agencies should consider only completed systems that have been tested, validated, and successfully used in operation to ensure that benefits will be achieved.

Two factors intensified the need for adequate planning for software reuse: states’ different organizational structures and methods of administering the program and the magnitude of changes required by OCSE’s implementation of the 1988 act. Since states administer the federal child support program, each state determines how its program will be organized and operated. These differences in state programs affect systems development. For example, county-administered states faced an additional challenge in complying with the 1988 requirement to have one statewide child support system. Those states had to build systems that considered the needs of users in all of their county offices, complicating system design. Careful planning for software reuse was especially important. Under the 1988 act and implementing regulations, states were required to obtain and track more detailed information on each absent parent, child, and custodial parent. OCSE mandated that states transfer systems before making the requirements final, so they were unable to first evaluate the ability of the transfer systems to meet those requirements.

Despite its lack of requirements, oversight, and alternatives analyses, OCSE mandated the transfer policy without performing sufficient analyses or feasibility studies of existing certified systems as potential transfer candidates. Only eight certified systems were available when the mandate was issued, and these were certified based on the 1984 requirements. At the same time, no automated systems were certified based on the more extensive 1988 act, making it highly unlikely that the available systems would be suitable for transfer to other states. While, in July 1994, OCSE changed its transfer policy making it optional, this was after most states had attempted to transfer systems and when systems efforts had progressed further.

Only one state we visited noted that it had successfully transferred another system. It was among the last to transfer a system, initiating the transfer in 1994. Moreover, the state began its project after the final federal requirements were issued, conducted thorough analyses of three potential systems, and transferred a system that had already been certified as meeting the 1988 requirements. In addition, the system selected was the result of a successful, earlier transfer from another location.

However, some states we visited did not take as thorough an approach and faced difficulties in attempting to transfer existing child support systems.

One project team we visited spent almost $400,000 attempting to transfer a system from another state, only to discover that the transfer was not possible because the system was not compatible with its existing operation.

Another state’s official explained that, to meet the mandate and the 1995 deadline, his state attempted to transfer a system that was immature, incomplete, and inadequately tested. While the state started to implement parts of the transfer system, the entire system was not delivered until a year later, increasing project costs.

Yet another state attempted to have a contractor modify a transfer system that was also incomplete. Later, the entire effort was abandoned, wasting over a million dollars and contributing to a delay of several years.

The HHS Office of Inspector General recently reported that 71 percent of states said that their attempts to transfer a system delayed, rather than enhanced, development of an automated system. In response to that survey, one state official noted, “. . . when we began our project there were no systems certified to the 1988 level. We chose one state’s system as our transfer model and wasted about a year documenting all of its deficiencies in order to justify not transferring it.” In addition, we were told by officials in several other states that they transferred only concepts from other systems—that the amount of computer code actually transferred was negligible.

GAO Recommendations Only Partially Addressed Despite Delays and Escalating Costs

In our 1992 report, we stated that efforts to develop child support enforcement systems were plagued by problems, particularly in the area of federal oversight provided to states. According to laws and regulations, OCSE is responsible for continually reviewing and assessing the planning, design, development, and installation of automated systems to determine whether such systems will meet federal requirements. OCSE is required to monitor 90-percent federally funded child support systems to ensure that they are successfully developed and are cost-effective. If this is not the case and if a state is not substantially adhering to its approved plan, OCSE is authorized to suspend federal funding.

Past compliance reviews conducted by OCSE’s systems division identified many deficiencies with states’ development of automated child support systems and escalating costs. For example, development of three severely flawed systems continued at a total cost of over $32 million before they were stopped and redirected by OCSE. Rather than directing needed remedial actions when these problems were identified, OCSE informed the states of the deficiencies yet continued to fund the systems based on states’ assurances that the problems would be addressed. Further, OCSE’s systems division did not routinely use audit division reports to help monitor development because it was not required to do so.

In 1992, we recommended that OCSE (1) work with the audit division to identify and resolve systems-related problems, (2) use its authority to suspend federal funding when major problems existed, and (3) require states to implement needed corrective actions when first identified. Despite the seriousness of the problems we identified in 1992 and recurring problems since then, the only recommendation fully implemented by OCSE was the first one, regarding working with the audit division to identify and resolve systems-related problems. OCSE reviews audit reports prior to certification visits and the auditors are now members of the certification review teams. In addition, officials in both the systems and audit areas stated that communication and coordination between the two have improved substantially since our 1992 report.

Even though systems costs were escalating, OCSE did not fully implement the other two recommendations. It continues to assert that the federal government should work with the states to correct deficiencies rather than take enforcement actions. However, law and regulations require that OCSE monitor the 90-percent federally funded child support systems to ensure that they are successfully developed. OCSE is authorized to suspend federal funding if a state is not substantially adhering to its approved plan. While HHS regional staff noted that OCSE either held up, reduced, or stopped funding to 18 states since the 1988 act, almost 60 percent of these reported disruptions were due to insufficient information on the required APD or the state’s exceeding its authorized funding level. OCSE believes that suspending funds is counterproductive to helping states meet the deadline.

Even when funding was held up for major systems-related problems, efforts to correct these problems did not appear to be timely. For example, one HHS regional official suggested to OCSE that it hold up funding for projects in his region, yet, according to this official, the agency did not stop any funding until one of those projects’ “initial efforts crashed.” In another instance, OCSE had serious concerns about the status and future direction of one state’s project, staffing levels, and methods of incorporating changes in code. As a result, it held up funding for several months. However, some problems were not identified until 2 years into the project’s life cycle; as of the end of our review, OCSE was still working with the state to resolve them. In another case, OCSE identified problems with poorly documented code, inadequate planning and guidance, and contract management but did not stop federal funding.

According to OCSE’s systems division director and analysts, states have primary responsibility for developing their systems and therefore the federal government should not assume a primary role in directing how states should develop systems and remedy problems. We disagree with OCSE’s approach of continuing to fund systems with serious problems that endanger the projects’ success. Such an approach involves the risk of needing to fix serious problems later in the development process, when it is much more costly and time-consuming to do so.

Inadequate Federal Oversight and Leadership Continue to Hinder States’ Development Efforts

Because of the complexity, costs, and large caseloads associated with the child support program, effective development of automated systems requires continuing oversight and strong leadership. Yet despite the pressure that federal and state agencies are under to improve their child support enforcement services, the development of statewide automated systems is hampered by ineffective federal leadership and some inadequate state development approaches. Major mechanisms OCSE uses to oversee states’ systems development projects include reviews of the states’ advance planning documents (APDs); advance planning document updates (APDUs); and certification reviews, which are assessments to determine if projects meet federal requirements. While these reviews provide OCSE information on states’ plans for designing automated systems, the agency does not effectively use the APDs to oversee, monitor, or control the systems development projects, and the certifications are performed too late in the process to detect and correct problems.

In short, critical systems development decision points are not monitored by OCSE and reviews of states’ systems are primarily focused on determining whether all federal requirements have been met. Further, OCSE has not completed nationwide analyses or post-implementation reviews to effectively assess lessons learned, hindering its ability to provide more thorough, helpful leadership. OCSE acknowledges these facts, yet cites a management approach that holds states responsible for developing their systems; OCSE believes it lacks the technical expertise and resources needed to be involved at critical points in the development process.

APD Use Inadequate to Redirect States

While the review of APDs is one of OCSE’s principal vehicles for monitoring states’ systems activities, the agency’s review is inadequate for systems monitoring because OCSE does not require a disciplined, structured approach for developing or reviewing systems. As such, the APDs are not used to measure systems development progress at key decision points; rather, according to state officials, APDs are used primarily as a funding approval mechanism only, requiring the states to report information and plans on the basis of a deadline that may or may not be realistic. Consequently, systems problems may go undetected until much later in the process when they are considerably more difficult and expensive to correct.

APDs are written plans of action submitted by states to request federal funds for designing, developing, and implementing their systems. According to an OCSE guide, the three primary purposes of the APD process are to (1) describe in broad terms a state’s plan for managing the design, development, implementation, and operation of a system that meets federal, state, and user needs in an efficient, comprehensive, and cost-effective manner, (2) establish system and program performance goals in terms of projected costs and benefits, and (3) secure federal financial participation for the state. The document contains the state’s statement of needs and objectives, requirements analysis, and alternatives analysis. The APD also sets forth the project management plan with a cost-benefit analysis, proposed budget, and prospective cost allocations. To obtain continued federal funding throughout the system’s life, a state submits an APDU to report the system’s status and to request additional funding—annually or, if needed, more frequently.

Public Law 100-485 requires that states submit APDs to OCSE and that based on the APDs, OCSE review, approve, and fund information systems. This review focuses on ensuring that each state incorporates the minimum functional requirements by the legislatively mandated date of October 1, 1997. OCSE is also required to review the security requirements, intrastate and interstate interfaces, staff resources, hardware requirements, and the feasibility of the proposed plan. HHS regional staff support OCSE by monitoring states’ development efforts and, at times, assist the states in preparing their APDs and APDUs. In addition, regional staff provide states technical assistance and suggestions to help the states comply with systems requirements.

A well-defined, disciplined structure for systems development, covering the status of systems at critical design points, is key to preventing software development problems and encouraging strong, effective management oversight. For example, phases include systems planning and analysis, design, development, and implementation. These are major milestones in any system development project and are to be used to identify risks, assess progress, and identify corrective actions needed before proceeding to the next phase. Appendix III provides an overview of typical systems development phases. The key is to identify system risks and problems early in the design, in order to avoid major failures and abandoned projects, and to help ensure that major segments do not have to be extensively recoded or redesigned.

While states recognize the benefits of using a structured systems development approach and may provide OCSE with information on each of these phases in their APDUs, OCSE does not effectively use this information for determining the adequacy or progress of the systems development projects. APDUs are revised annually, rather than corresponding to major system phases. According to OCSE’s director of state child support information systems, the agency has not monitored the projects using a structured approach because it lacks the technical expertise and resources needed to be involved at critical points in the development process. Recent funding from the welfare reform legislation has allowed OCSE to conduct more frequent reviews; it is critical to assess systems development activities at each phase and to identify problems and any potential risks early, before moving forward to the next phase.

Further, OCSE has not provided specific guidance describing the information needed in the APDUs to assess different phases of development. For example, while OCSE requires that the states provide schedules of systems development activities, these schedules—formats, descriptions, and structure—vary from state to state and, even within a state, may vary from year to year, making it difficult to effectively assess state progress and monitor systems development. Specifically, some APDUs do not provide information on how much data have been converted, code written, modules produced, nor portions and results of the modules tested, again hindering OCSE’s ability to effectively measure progress.

While state officials indicated that the APDUs were useful for budgetary purposes, officials at six out of seven locations we visited said that APDUs are not useful in helping them manage their systems developments. “They are an administrative exercise to justify obtaining funding,” said one. Officials also noted that the deadline seemed to be OCSE’s primary concern; even when the deadline seemed impossible to meet, the states were forced to present inaccurate schedules.

Problems in State Development Approaches Not Corrected or Redirected

Because of the significant financial investment in information systems and their crucial role in helping locate noncustodial parents, a structured systems development approach is essential to reducing major systems risks. In several instances, even when states’ APDUs contained adequate information to identify significant problems in approach, OCSE has not required the states to correct the deficiencies. As a result, more money was spent and systems underwent further development without disciplined, structured systems development approaches, increasing the likelihood of system failures.

In the case of one state we visited, as shown in figure 4.1, despite three revisions to time estimates for systems testing, OCSE approved each updated estimate. Only after the state officials told OCSE that delays and problems were occurring did the agency, in November 1996 and in February 1997, review systems progress. State officials told us that they wanted the OCSE review to identify that the time for testing was insufficient to support the state in vendor discussions, yet the agency had not, as of March 31, 1997, reported on this matter. According to OCSE’s director of child support information systems, the review focused only on one specific functional requirement and was not a comprehensive systems review, and would not, therefore, address the software testing issue.

In systems development, building and testing sections of computer code and then using test results to refine the software are critical. Testing results need to be considered in correcting errors and improving identified inefficiencies. Despite this essential need for systems testing, in the example in figure 4.1, OCSE continued to approve the APDUs and fund the project, without assessing the increasing risks. The APDUs also showed that the state was not following a structured systems development approach and was developing software while at the same time attempting to integrate software in preparation for systems testing. According to this state’s systems project director, the project’s costs increased from $30 million to over $50 million, in part because of the poor quality of software developed. If work on a later phase proceeds before an earlier phase is completed, one risks problems from condensing work and truncating the process. Completion of the automated system is now uncertain.

In another state we visited, OCSE had ample indication that the state’s system was experiencing difficulty, yet failed to act until just recently. In August 1993, the state initially scheduled implementation to last until April 1996—a period of 39 months. The estimated completion date was subsequently extended twice—first in September 1995 by an additional 10 months (to February 1997), and then again in October 1996 by an additional 5 months (to July 1997). These extensions, taken together, prolonged the implementation phase by almost 40 percent, from an initially envisioned 39 months to 54 months. The 1995 updated estimate should have signaled to OCSE that the state’s system needed help. However, not until the state requested a substantial increase—$133 million in project costs—did OCSE, in January 1997, question the state’s systems progress. According to OCSE’s director of child support information systems, the agency should have visited this state sooner to provide technical assistance. Given that the October 1996 update judged implementation to be less than half finished, it is questionable whether the July 1997 target is even realistic.

OCSE has not effectively provided program oversight by detecting and redirecting states’ approaches that are inadequate and threaten successful systems development. When planning and developing a system, a state must ensure that it meets users’ needs, provides the intended benefits to users and their constituencies, and is developed on time; otherwise, it will not be effective. Gaining commitment and support from key decisionmakers is particularly important for states developing child support systems because they serve a variety of users—district attorneys, county and state officials, and court officers. Key users’ needs should be considered, and general agreement is critical in developing systems’ requirements and design. However, not all states clearly defined their functional requirements and user needs.

In one state, the system design was insufficient because it did not clearly define functional requirements and did not gain the support and involvement of key county officials. While OCSE reviewed requirements and reported minor deficiencies, it did not mention any serious problems in the state’s systems development approach. Yet just 1 year later, after the state had an independent contractor conduct a risk assessment of the project, state officials acknowledged that the approach needed to be completely revamped. According to OCSE’s director of child support information systems, the agency’s review for this state focused only on whether functional requirements were being met rather than the systems approach being followed. She further noted that the state is responsible for developing the system and obtaining system buy-in from the users. Because of OCSE’s large financial investment in systems—the approval of $154 million for this state alone—and the importance of gaining user acceptance for successful systems development, we believe the state and federal agencies are both responsible.

Two states we visited also encountered similar problems by not involving all key players—program, systems, and management officials—in the decision-making process. In one state, the information resources management official was not involved in the systems planning and implementation. Later a disagreement occurred in policy decisions related to operating the system, resulting in an abrupt change in management of the system. Consequently, the project’s direction is uncertain and the system conversion progress has been delayed. Another state allowed its child support program office to develop its system without ensuring that key officials with technical program and managerial expertise were adequately involved. Systems problems were identified late in development, and project management was changed to put more emphasis on technical project experience. If this technical expertise had been involved initially, the system might have been more successfully planned and implemented.

Certification Reviews Narrow in Focus and Performed Too Late for Effective Oversight

While OCSE does review and certify states’ systems to determine if functional requirements are being met, as described in the 1988 act and the agency’s implementing regulations, these reviews are conducted toward the end of a systems development project, at the states’ request, and are not performed at critical decision points (such as analysis, design, coding, and testing). Thus, these reviews are too late to identify problems and redirect approaches. Despite being the predominant stakeholder for over $2.6 billion worth of child support systems, OCSE maintains that its philosophy is to work with the states as opposed to suspending funding until problems are corrected, allowing federally financed projects to proceed when such projects do, in fact, require redirection.

Two types of reviews are conducted by OCSE: functional and certification reviews. During a functional review, OCSE helps the state work on specific system requirements. For example, it may telephone or visit the state to discuss how to meet automation requirements for the noncustodial parent locating function. The certification review comprises a two-level process, level 1 and level 2. A level 1 review is performed when an automated system is installed and operational in one or more pilot locations. (OCSE created this level of review in 1990 due to state requests for agency guidance prior to statewide implementation.) A level 2 review is conducted when OCSE visits the state to determine if the system meets certification requirements. The certification review normally takes a week to perform; the OCSE review team is made up of headquarters systems officials and HHS regional personnel representing the systems, fiscal, program, and audit functions.

Prior to a certification review, OCSE provides a questionnaire including questions on how the system meets specific federally required functions (such as case initiation and the detail supporting this function) and a test deck of financial transactions (mainly test cases of different types of child support payment distributions) to be run on the state’s system. OCSE also supports, through federal funds, child support user group meetings so state officials can meet and share related systems experiences.

OCSE’s reviews—functional and certification—of state systems focus on whether functional requirements are met, while they lack but need comprehensive assessments of the systems’ development approaches and schedules. Since 1991, OCSE has visited, assessed, and reported on 31 states’ system development projects. We reviewed all of these and found that 28 of the 31 functional and certification reviews focused primarily on systems’ functional requirements. Specifically, OCSE determines whether the system can initiate a new case, locate an absent parent, establish a support order, manage cases, enforce cases, perform financial distributions, perform management reporting, and maintain security/privacy. Suggestions for improving the efficiency and effectiveness of the systems’ operations are discussed in reports following these reviews. For example, recommendations include having the states consider automating more functions, such as developing an automatic tickler file to remind caseworkers of required actions or an approaching time frame. While suggestions for improved efficiency in automation are valuable, OCSE’s reviews lack a comprehensive assessment of the states’ systems development approach, including the overall design, project management, user involvement, and delays in major milestones and critical tasks. While 3 of the 31 reviews did address systems development approaches and overall project management, OCSE officials noted that they only do this type of review for states that are experiencing delays and significant problems.

Even though OCSE required states to submit APDs by October 1, 1991, all but 1 of the 31 functional and certification reviews conducted by OCSE were performed in October 1995 or later. Since OCSE only does certification reviews upon state request and toward the end of systems development, much of the federal funding had already been spent.

Even when OCSE identifies state systems problems and notifies the states, corrective actions do not always follow. In one state, OCSE performed two reviews and noted that the state had serious managerial problems. There was no project manager for extended periods of time, and users did not support the project, despite the fact that a key early step in designing a proposed system is identifying and satisfying users’ needs. Even after the second review was performed and the problems noted in the first review had not been corrected, OCSE took no action to stop or delay the project or to suspend funding. Again, according to OCSE systems analysts, the agency’s main focus is to help states fix problems as they arise; agency officials believe that withholding funds is counterproductive to meeting deadlines. As a result, the federal government has approved over $50 million for this one system; it has been in partial operation—primarily in the smaller counties—since mid-1993, and its expected completion is still not known.

In another example, OCSE approved a state’s proposal to meet functional requirements by developing a distributed system estimated to cost nearly $178 million to complete and maintain through 2000. This system involves developmental costs for at least 23 county databases, plus additional costs to maintain separate systems. While OCSE questioned the state about the additional costs of personnel, the agency’s certification process does not require that a state receive an approval before moving from one phase of development to the next. By not visiting the project to review critical design documents, the agency was not able to effectively assess the distributed processing strategy and associated costs or to suggest an alternative approach. This state now estimates that the system will cost about $311 million to complete and maintain through 2000. Further, according to state officials, the system will not meet the October 1997 deadline.

Systems managers from three states we visited indicated their desire that OCSE play a more active role. Systems that are being developed are very sophisticated, and the officials said that it was important for OCSE to assess the management and direction of the project early to avoid or minimize problems later. One state official said that OCSE should see itself as a stakeholder in the development of these systems and not just a reviewer to see if certain requirements were followed. Another official noted that OCSE is scrupulously hands-off with all, especially with the private sector. Another state official told us that because the contractor’s work was so poor and late in delivery, the state had to support the project with more of its own staff, contributing to an increased cost of $20 million. When the state asked for assistance from OCSE on how to handle the contractor, they were told that “it was a state contract and it had to be resolved at that level.”

Further, while a recent HHS Office of Inspector General survey noted that 70 percent of the states felt that OCSE’s guidance was good to excellent—including the certification guide, clarification of requirements, and questions and answers on functional requirements—43 percent said they needed additional technical assistance. One state official said “there has been very little monitoring to date. The delays will come when we request certification and OCSE doesn’t like what it sees.” Another state official noted, “It would have been helpful to have had more compliance reviews and technical reviews of designs, but it was probably not practical given OCSE’s staffing resources.” Finally, another state official noted “I’ve only known OCSE to be the gatekeeper with regard to funding and ultimate certification. I don’t have any experience to see them in another role.”

Lack of Nationwide Perspective Inhibits Effective Leadership

The narrowness of OCSE’s reviews limits its ability to gain a nationwide perspective on the status of states’ systems development; this, in turn, hinders effective leadership in earlier stages. OCSE has completed neither a comprehensive, nationwide analysis nor post-implementation reviews to determine whether state systems are sound financial investments. Such analyses are essential to assessing the ongoing progress of child support systems and evaluating the impact of automated systems on program goals and objectives—including any lessons learned. While the Administration for Children and Families (ACF) developed an automated system to help the agency perform individual state and nationwide analyses, we found the system was not being fully used, was not user friendly, and contained errors in about half of the states’ data.

Because OCSE has not conducted a nationwide assessment, it has not analyzed the hardware, software, database structures, and networks supporting state child support systems; as a result, state officials have had to discuss these issues through informal means. If OCSE had performed a nationwide analysis, it would have a sound basis for encouraging states to share innovative database designs, software, and other technologies for greater efficiencies and cost savings. Further, analyses of systems costs, benefits, and schedules from a nationwide perspective would help identify where improvements are needed in a timely manner. Aggregate data on projects help identify recurring problems, successes, and other trends for decision-making purposes.

To collect states’ data more effectively, assess systems costs, and monitor projects nationwide, ACF created the State System Approval Information System (SSAIS). This was designed to establish a more accurate way of tracking state systems projects. SSAIS tracks the historical data on automated systems projects—including the child support program—on a state-by-state basis. Users may access the following data on any state project: (1) funding requests, reviews, and approvals, (2) names of contractors, (3) completed systems reviews, and (4) notes from systems reviews.

While we commend ACF’s actions to develop this system, we found that SSAIS recorded incorrect funding levels for nearly half of the projects. During our comparison of OCSE’s approval letters and the data in SSAIS, we found errors, such as duplicate entries and entries for systems projects no longer underway, and inconsistencies, such as entries for some states that included planning costs while entries for other states did not. Specifically, SSAIS showed that the states were authorized to spend nearly $1.9 billion on automated child support systems projects, while hard copy approval letters maintained by OCSE indicated that the states were authorized to spend about $100 million less.

OCSE’s director of state child support information systems acknowledged that SSAIS is not yet comprehensive, complete, or user friendly. She said that for these reasons, OCSE was not fully using or relying on the SSAIS entries at the time of our review. However, she acknowledged that our review led the division to assign a higher priority to correcting discrepancies in SSAIS and to establishing a consistent policy regarding entries for planning costs.

In addition to tracking systems development nationwide, post-implementation reviews are the basic means of ensuring that systems meet program objectives and identify techniques for improving work processes, data integrity, and project management—thereby avoiding costly systems mistakes. This information is also helpful in identifying the benefits of information technology projects and prioritizing technology investments that best meet mission needs. To date, OCSE has not completed post-implementation reviews on any of the 12 certified or conditionally certified child support systems.

OCSE’s information systems director called post-implementation reviews important. However, she said that until recently, resource constraints limited OCSE’s ability to complete such reviews. Instead, OCSE focused its resources on assessing the states’ progress in meeting system certification requirements. Under welfare reform, 1 percent of the federal share of child support payments collected annually will be provided for state child support programs and systems oversight. According to OCSE’s information systems director, this will allow OCSE to conduct post-implementation reviews.

Welfare Reform Places New Demands on Child Support Systems

Recently enacted welfare reform legislation substantially increases the importance of collecting child support payments from noncustodial parents, since for welfare recipients who lose eligibility, child support may be their only remaining source of income. As such, it will be even more important that state automated systems operate correctly and efficiently in helping eligible child support recipients collect funds due them. The law also places specific new requirements on states relating to the functioning of their systems. Recognizing the importance of these developments, OCSE plans to change its approach and issue functional requirements incrementally, and has taken steps to work with the states; however, the impact of welfare reform and associated costs is not yet known. Another demand on systems development will be monitoring and ensuring that new statewide child support enforcement systems, as well as existing systems that interface with the new systems, will process date-sensitive information correctly in the year 2000 and beyond.

Welfare Reform Features Automated Systems

In August 1996, the Congress enacted the Personal Responsibility and Work Opportunity Reconciliation Act, fundamentally changing the nation’s welfare system into one that requires work in exchange for a 5-year program of assistance; implementing many of its most critical features involves automated systems. The law contains work requirements, a performance bonus that rewards states for moving welfare recipients into jobs, and comprehensive child support enforcement measures. It also provides support for families moving from welfare to work—including increased funding for child care and guaranteed medical coverage. Provisions are also included to improve automation in order to increase paternity establishment, obtain more information on work and residence locations of noncustodial parents, and process child support orders and collections.

Both the states and ACF will be required to address these provisions by developing new databases or enhancing existing automated child support systems before October 1, 2000. A $400 million cap has been placed on enhanced federal matching funds through 2001 for development costs of automated systems, and funds are to be allocated to the states on the basis of existing workloads and level of needed automation.

Welfare reform further underscores the need for streamlined business processes and automated systems for the child support program. Since welfare reform establishes time limits and eligibility restrictions on individuals in the Temporary Assistance for Needy Families block grant, states are being faced with the need to increase child support collections. According to experts, this likely will force some states to manage child support cases differently and require modifications to existing laws governing child support operations. States will be required to automate many child support operations to more efficiently disclose, exchange, and compare information on noncustodial parents owing delinquent support payments. Some of the more significant state welfare reform systems requirements include establishing, by October 1, 1997, or following the close of the next regular legislative session, a statewide system for tracking paternity orders and acknowledgements of paternity; developing, by October 1, 1997, a new-hire registry on which employers will report information on employees recently hired, with the capability of reporting the information to a national database and issuing wage withholding notices to employers within 2 business days, and making data comparisons with the case registry database by May 1, 1998; developing, by October 1, 1998, a central case registry for all child support cases and support orders established or modified in the state after that date and, as of that date, capable of making data comparisons; and establishing, by October 1, 1998 (or by October 1, 1999, if court administered), a centralized unit to collect and disburse child support payments, and by October 1, 2000, a statewide child support system that meets all requirements.

To comply with these mandates, many states will not only have to reassess the way child support cases are managed administratively but electronically as well. This may include developing new databases and electronic links to other public and private organizations, including financial institutions; credit bureaus; the Internal Revenue Service; and state agencies—including judicial, corrections, licensing, business ownership, motor vehicle, labor, vital statistics, and Medicaid. For example, the requirement to develop a registry of paternities will likely result in the development of a new database that interfaces with departments or bureaus responsible for tracking statewide births. However, tracking these data electronically may be a challenge since some states have not automated the departments or bureaus responsible for birth certificates.

The states will also have to develop automated interfaces with the national Federal Parent Locator Service and the yet-to-be-developed federal case registry and new-hire registry databases. The Federal Parent Locator Service is an electronic system that cross-matches data to help locate noncustodial parents across state lines through links with other state systems and existing national databases, such as those of the Internal Revenue Service, Social Security Administration, and Department of Labor.

Both the new-hire registry and the federal case registry will also need to be designed to receive and compare state data on child support cases and noncustodial parents. The states, in turn, will be required to develop similar databases that electronically interface with these national systems. The federal new-hire and case registry systems must be completed by October 1, 1997, and October 1, 1998, respectively. OCSE has contracted with several vendors to develop the software for these databases and to provide states with technical assistance.

Many states will have to adapt their existing systems and change laws governing child support operations to implement many of these systems requirements. For example, three states we visited indicated that existing laws governing the child support program and new-hire reporting requirements for employers would have to be amended or rescinded before mandated systems requirements could be implemented. Other states will have to make welfare reform system changes while finishing work on child support systems mandated by the 1988 act.

OCSE Plans to Address Welfare Reform

While OCSE has initiated some steps to identify welfare reform systems issues and plans to change its approach in issuing functional requirements, the agency does not yet know the impact the legislation will have on state systems. As of March 31, 1997, OCSE had not developed functional requirements for implementing welfare reform or fully analyzed the impact of these provisions on existing state child support systems. Guidance for developing the new-hire registries had not been completed, even though these registries are due to be in operation by October 1, 1997. However, OCSE does plan to apply lessons learned from technology projects mandated as part of the 1988 Family Support Act and release technical guidance for systems changes required by welfare reform incrementally. The early release of technical guidance should help states decide on systems requirements as soon as possible, minimizing project delays.

With the increased funding being made available through welfare reform, OCSE plans to conduct more on-site reviews of child support systems projects to help identify and prevent costly systems development problems during earlier stages of the projects. The agency has also supported ACF user groups and established electronic information bulletin boards to identify and share information on systems issues. Further, OCSE is participating in welfare reform work groups with the states to discuss policy and systems-related issues. In January 1997, the agency also created a federal, state, and local government initiative to work with the eight largest states—representing almost 50 percent of the child support cases. This initiative focuses on improving program performance, which may include automated systems issues. In addition, the agency recently queried the states to identify technical support needs and planned to issue, in May 1997, a national plan to better address OCSE technical assistance to the states’ systems activities. Despite these early attempts to work with the states, according to OCSE’s information systems director, the agency does not know the impact the welfare reform will have on the states’ child support systems. She noted that until the requirements are defined, the extent of systems changes and their costs are not known.

Millennium Changes Are Also Important to Automation

The change in century could have a significant impact on state systems that process date-dependent information related to child support. Ensuring that all state child support enforcement systems adequately address the processing of information that is date-dependent is critical. Correcting noncompliant year-2000 software may be expensive. Among these systems are those that must interface directly and provide information to the newly-developed child support enforcement systems. Many older state systems that will still be in operation in 2000 were programmed using 2 digits to represent the year—such as “97” for 1997. However, in such a format 2000 is indistinguishable from 1900.

OCSE has stated that it has informed the states that both the new child support systems and their applications software under development, as well as the existing systems that must still interface with the new statewide systems and their applications software, must be year-2000 compliant.

Conclusions, Recommendations, and Agency Comments

Thanks to technology, many states are better able to locate noncustodial parents who owe child support payments, seize government tax refunds or benefits, and issue child support payments to families more efficiently. But this progress has been expensive. The cost of developing state child support enforcement systems has risen over the past 15 years to the point that it now exceeds $2.6 billion, of which $2 billion is federal funds. The amount remaining to be spent to bring all states into full legal compliance is unknown. At the time of our review, most states did not yet have fully functional child support enforcement systems. Aside from new requirements resulting from welfare legislation, only 12 states had federally certified child support enforcement systems; as many as 14 states—responsible for about 44 percent of the national caseload—may well miss the October 1, 1997, deadline for completing their automated systems.

The causes are widespread. States have underestimated the magnitude, complexity, and costs of their projects and operations, and they could have received better guidance and assistance from the federal government, specifically OCSE. The lack of progress in the development of state child support systems also can be partly attributed to the agency’s limited leadership and oversight and some states’ inadequate systems approaches. OCSE’s release of final functional requirements for the state systems was late, which encouraged some states to automate many tasks without adequate requirements management or control. Though ready, some states hesitated to make their systems’ requirements final; it must be remembered that deadlines loomed, with or without final requirements. Another factor was OCSE’s mandated transfer policy, which was premature and poorly implemented. This alone caused long-term problems, increased costs, and delays.

Against this backdrop, which included the failure to fully implement recommendations we made some 5 years ago, OCSE allowed state systems with serious problems to proceed, thus escalating spending with no assurance that effective, efficient systems would result—and many indicators to the contrary. Specifically, OCSE did not establish levels of oversight and technical review commensurate with the size and complexity of this nationwide undertaking. It did not require states to follow a structured systems development approach; nor did OCSE assess progress at critical decision points, thereby missing opportunities to intervene and successfully redirect systems development.

OCSE relied on required annual planning documents, which were optimistic projections and for many states did not relate to the critical phases of system development. Certifications were narrowly focused and conducted only at a state’s request, when the state was ready. While OCSE has supported state-to-state interaction with users’ groups, the agency itself cannot develop a truly nationwide perspective without an understanding of the trends that typify development of individual state systems. Lacking this knowledge, OCSE cannot disseminate valuable information to states in earlier stages of development.

During the last 5 years, when much of the money has been spent and when it was most critical for OCSE to take a leadership role and evaluate states’ efforts, agency and HHS regional officials noted that their oversight was hindered by limited technical expertise and resources. Critical areas of systems expertise—systems development, systems engineering, and program management—are essential to assess how effectively systems are being implemented.

Because of the magnitude of the caseload, the funds being provided, and the importance of the program’s mission, it is essential that both federal and state officials take responsibility for developing effective and efficient automated child support systems. While evaluating states’ efforts is one major component of OCSE’s role, it is important that the agency considers itself a stakeholder in these efforts. The problem appears to stem from OCSE’s view of its role—one of merely monitoring requirements and approving funds rather than being held accountable for effective systems development approaches.

With the enactment of welfare reform, OCSE’s role becomes much more important: for those who may no longer be eligible for welfare benefits and rely solely on child support, the effectiveness of their state’s system will be critical. Effective, strong federal leadership will be necessary if we are determined to support those who rely on these automated systems.

Recommendations

We are making several recommendations to increase the likelihood of developing state automated child support systems that will perform as required. To maximize the federal government’s return on costly technology investments, we recommend that the Secretary of Health and Human Services direct and ensure that the Assistant Secretary of the Administration for Children and Families take the following actions.

Develop and implement a structured approach to reviewing automation projects to ensure that significant systems development milestones are identified and that the costs of project decisions are justified during the entire effort. We recommend each major systems phase be reviewed and, at critical points—analysis, design, coding, testing, conversion, and acceptance—that OCSE, according to preestablished criteria, formally report to the state whether it considers the state ready to proceed to the next milestone or phase.

Develop a mechanism for verifying that states follow generally accepted systems development practices to minimize project risks and costly errors. OCSE should revise the guidance for the APDs and APDUs to ensure that these documents provide the information needed to assess different phases of development and are consistent from year to year. This information should include clearly defined requirements; schedules reflecting the amount of data converted, code written, modules produced, and the results of testing; and other measures to quantify progress.

Use an evaluative approach for planned and ongoing state information technology projects that focuses on expected and actual cost, benefits, and risks. OCSE should require states to implement needed corrective actions for federally funded systems when problems and major discrepancies in cost and benefits are first identified. If a state experiences delays and problems and is not following generally accepted systems development practices, OCSE should suspend funding until the state redirects its approach.

Evaluate current staff systems knowledge, skills, and abilities and identify what additional technical expertise is needed. Develop the technical skills needed to allow OCSE to become more actively involved with the states at critical points in their development processes, and enhance the skills of existing systems reviewers through additional training. This expertise should include program management, software development, and systems engineering.

Conduct timely post-implementation reviews on certified child support systems to determine whether they are providing expected benefits, identify any lessons learned, and assess innovative technical solutions.

At least annually assess the progress of child support systems projects nationwide to gain and share with the states a broader perspective on costs, systemic problems, potential solutions, and innovative approaches. Information should be shared with other states to help reduce costs and improve effectiveness of the child support program nationally—especially any practices or systems that could benefit states attempting to develop or implement welfare reform systems requirements.

Assess the impact of welfare reform on existing child support programs—including automated systems and business operations—and determine whether states will be able to implement systems requirements within established time frames and without exceeding the $400 million cap. This assessment should also include an estimate of additional regular rate funding for automated systems that states may need to comply with the requirements of welfare reform.

Provide the states with technical requirements for implementing welfare reform systems, including the new-hire, central case, centralized collection, and disbursement registries in enough time to allow the states to meet the legislatively mandated deadlines of October 1997, 1998, and ultimately 2000.

Agency Comments and Our Evaluation

HHS disagreed with our recommendations on agency monitoring and oversight and suspending federal funding for flawed state systems, while generally agreeing with our other recommendations. HHS officials’ primary concern with the report was the degree of federal stewardship appropriate in the effective development of automated state child support enforcement systems. The Department notes that we have a different perception of the appropriate federal role in state automated systems development than is authorized. The Department indicated that reviewing state systems at critical phases would increase the administrative burden on the states, and result in OCSE’s “micromanagement” of state projects. Further, officials reiterated their belief that withholding funds was counterproductive to developing automated systems. Finally, HHS expressed concern about our presentation of the level of state automation and systems costs. The Department did, however, generally agree with our recommendations regarding assessing OCSE’s technical resources, conducting post-implementation and nationwide systems reviews, and defining—in a timely manner—welfare reform requirements.

We have reviewed HHS’ comments, and found no reason to change our conclusions and recommendations. HHS views OCSE’s role narrowly, as one of monitoring requirements and approving funds. The agency believes its role is to assist states in meeting mandated deadlines, rather than more actively monitoring and overseeing state systems development activities with an eye towards helpful intervention. We disagree with HHS’ approach. Instead of placing the responsibility solely with the states, OCSE is also accountable for effective state systems development. According to statutory requirements, the agency should review, assess, and inspect systems throughout development. Given the significance of state child support enforcement systems to the operation of the program and the magnitude of expenditures, it is critical that these systems be developed correctly and efficiently from the beginning. A philosophy of providing funds, despite serious systems problems and costly mistakes, misses the opportunity to reduce the risk of systems failure and save taxpayer dollars. OCSE does not evaluate or assess states’ systems development projects using a disciplined, structured approach. The agency’s reviews are narrowly focused and, as a result, not effective or timely in assessing the states’ systems approaches and progress. A summary of the Department’s comments and our evaluation is provided below. HHS’ comments are reprinted in appendix IV of this report.

HHS’ Role Narrowly Focused

We do not agree with HHS’ position that OCSE’s role be primarily focused on providing technical assistance and guidance. HHS’ statutory responsibilities, as set forth in the Social Security Act, delineate a leadership role in developing child support enforcement systems. Section 452(a) of this act provides that a “designee of the Secretary” (Office of Child Support Enforcement) shall, . . . “review and approve state plans” for child support enforcement programs, “establish standards” for state programs, “review and approve state plans,” and “evaluate the implementation of state programs.” With regard to child support management information systems, Section 452(d) provides that OCSE shall, “on a continuing basis, review, assess, and inspect the planning, design, and operation of management information systems . . . with a view to determining whether, and to what extent, such systems meet and continue to meet requirements imposed .”

The agency’s advance planning document (APD) guide, also refers to its leadership role in approving, monitoring, and certifying state systems programs to ensure that federal expenditures are made wisely. In HHS’ response to our report, it noted elsewhere that the agency “has the authority, which it frequently exercises, to require states to send an as-needed APD at critical milestones in its life cycle methodology.” And in response to comments from states concerning the extent of OCSE’s reviews, HHS said that it intends to continue monitoring state systems projects, noting that it has “responsibilities for assuring that the expenditure of federal funds on state systems is necessary for the effective and efficient operation of the programs.” This is consistent with recent legislation that requires more effective oversight of systems development activities. The Clinger-Cohen Act of 1996 and recent Office of Management and Budget guidance for managing information technology investments specify the need for greater accountability for systems during the critical development and implementation phases.

The federal government is a major stakeholder in these systems, paying about $2 billion dollars over the last 15 years. As such, it is critical that OCSE’s current approach to monitoring and overseeing state systems be improved to ensure that the federal government’s investment in systems is spent wisely. Our recommendations reflect systems development practices that are widely used in both the private and public sectors. Monitoring at critical points in the development process allows earlier intervention and greater opportunity to correct problems before they become more costly. We disagree that this approach constitutes micromanagement; we believe that to do less constitutes lax management. These activities also need not create an administrative burden. OCSE does not have to impose additional reporting requirements on the states; it must simply streamline its existing reporting process to ensure the inclusion of key pieces of information at critical phases. It is imperative that HHS take advantage of its legislatively authorized oversight and monitoring role. In the absence of such action, HHS is likely to continue to provide little added value to states; instead, it will remain merely a bureaucratic hurdle for states to climb to fund critically important systems.

HHS asserts that OCSE should provide technical assistance to the states, rather than suspend federal funding—especially given the statutory deadline. We disagree. Federal regulations provide for the suspension of federal funding when states’ systems under development cease to substantially comply with requirements and other provisions of the APD.Further, irrespective of the deadline, allowing systems to be developed ineffectively and inefficiently at the expense of the taxpayers is not supporting the goals and underlying intent of the legislation. Allowing a state to go forward before correcting inadequacies in approach contributes to rising systems’ costs.

In this report and in our 1992 report, we pointed out that OCSE continues to fund systems with serious problems—problems that threaten their very success. As discussed in this report, such an approach invites the need to correct serious problems later in the development process, when it is more costly and time-consuming to do so.

OCSE has periodically suspended state funding for automation projects. As we reported, however, almost 60 percent of these disruptions were due to insufficient information on the required APD, or for states’ exceeding their authorized funding levels—not for more substantive issues on the soundness of the development approach itself. Even when funding was held up for major systems-related problems, efforts to correct these problems did not appear to be made in a timely fashion. Further, in cases in which an HHS regional official suggested that OCSE hold up funding for a project, the agency did not stop funding until the project “crashed.”

Weaknesses in OCSE’s Current Process

HHS agreed that the states are encountering automation problems and that states need a greater degree of oversight. The Department stated that OCSE follows a structured approach in reviewing states APD submissions. We believe this approach is not sufficient oversight. While we described the agency’s review process—APD and certification reviews, we believe that the APD process should ensure that systems development activities at critical decision points are evaluated. OCSE does not consistently monitor state systems development at critical milestone points, such as the completion of design or requirements development. We noted that OCSE’s certification reviews are usually conducted toward the end of the development process, and as such are often too late to help identify problems and redirect the approach.

Structured Methodology Supports Systems Variability

Another issue raised by HHS was that with a variety of concurrent systems development activities, including the staggering welfare reform deadlines, it may be difficult to use our suggested “one structured methodology fits all.” We are certainly not advocating that OCSE require or impose a “one structured methodology fits all” approach. A structured approach to reviewing systems development—irrespective of the particular methodology used—would also allow for systems variability, including the differences in project size, scope, and complexity. The key to a structured approach is the identification of critical milestones that are the basis for systems reviews. States value this process; one state official noted that its project would be unmanageable without it. Other state officials told us that OCSE should play a more active role, and that they considered it important that the agency assess the management and direction of the project early to avoid or minimize later problems.

Post-Implementation Reviews Planned

HHS concurred with our recommendation to conduct post-implementation reviews on certified child support systems. The agency has plans in fiscal year 1998 to conduct both technical assistance visits and post-implementation reviews to further identify lessons learned and assess innovative technical solutions.

Nationwide Assessment Initiated

HHS agreed on the importance of a nationwide assessment of child support systems projects and has taken steps in that direction. The Department noted that it has developed the State System Approval Information System (SSAIS) and uses electronic means for information sharing. However, it is critical that OCSE continue to maintain and use accurate information from the SSAIS and develop a sound nationwide basis for encouraging states to share innovative database designs, software, and other technologies for greater efficiencies and costs savings, and for identifying recurring problems. With a systematic and comparison-based assessment, OCSE could recognize trends and identify best practices that could be shared. Identifying and taking action on such issues would be a significant benefit of increased oversight.

Magnitude of Welfare Reform

HHS agreed on the importance of providing states with technical requirements associated with recent welfare reform legislation. As HHS noted, states’ systems funding was not limited to the $400 million enhanced funding. We recognize that the welfare reform requirements are substantial, and that the legislation will allow states to be reimbursed at the regular and enhanced rate. The monetary magnitude of accommodating welfare reform systems requirements further underscores the importance of effective federal oversight, including comprehensive assessments of systems implications and timely issuance of systems requirements.

Noncertified Systems Show Partial Benefits; Yet Systems Costs Are Significant

HHS believes our report incorrectly noted that noncertified states have “no automation” to enforce child support collections. We acknowledge that state systems that are not yet certified may have some automation. In fact, we noted that state officials indicated that partially automated systems have improved their capability to locate noncustodial parents, increased paternity establishment and collections, and provided greater staff efficiency. We also noted, however, that OCSE officials said that as many as 14 states may not meet the deadline for certification, leaving about 44 percent of the national caseload without the full benefits of automation.

As envisioned by the Congress in implementing this legislation, some states have attained benefits; however, child support enforcement systems costs continue to increase, and the extent of final costs is not yet known. We acknowledge that systems’ costs include developing new systems and maintaining and enhancing systems that were certified prior to 1988. OCSE, however, does not track these costs separately. Some states did not design new systems; rather, they built upon existing ones. In these cases, the costs attributable to the 1988 act would be less than those of states that developed entirely new systems. However, states that updated their existing systems may now, as the October 1, 1997, deadline draws near, need to significantly redesign their systems to fully meet child support certification requirements and support welfare reform legislation.

HHS indicated that the costs of automation should be carefully placed in perspective and also compared automation costs to the agency’s administrative costs. We recognize that systems costs may be a small percentage of the total administrative costs; however, we do not believe that $2.6 billion is inconsequential. We recognize and cite examples where OCSE’s weak oversight contributed to the rising costs that could have been avoided if more of a proactive leadership role was demonstrated by the agency. These systems will play a critical role in effectively administering the child support and welfare programs in the future. As such, it is incumbent upon the Department and OCSE to ensure that the dollars invested in these systems are spent wisely, and provide an effective return on investment.