Child Support Enforcement: Early Results on Comparability of Privatized and Public Offices
Released: 1996-12-16T00:00:00

Letter

Background

In 1975, the Congress created the federal child support enforcement program as title IV-D of the Social Security Act. The program’s purpose is to strengthen state and local child support enforcement efforts for obtaining child support for families who receive Aid to Families With Dependent Children (AFDC) benefits and for any non-AFDC individuals who apply for services. Services provided to these clients include locating noncustodial parents, establishing paternity and child support orders, and collecting support owed. Appendix II contains a glossary of child support enforcement services.

Child support enforcement is a joint federal and state responsibility. Within the federal government, OCSE, in the Department of Health and Human Services (HHS), is responsible for providing leadership, technical assistance, and standards for effective state programs. States or local offices under state supervision deliver child support services to families. The federal government and the states share program costs, including contract costs, at the rate of 66 percent and 34 percent, respectively. In 1995, administrative costs for the program were $3.1 billion and collections totaled $10.8 billion. About 19 percent of the cases in the child support program nationwide received a payment in 1995.

To help meet the demands of growing caseloads in an environment of resource constraints and increasing federal requirements, some states have turned to privatization. In our November 1995 report to you, we provided information on states’ privatization of child support enforcement services and identified 37 states that had privatized or planned to privatize portions of their child support caseloads. Some of these states chose to augment their public programs by privatizing particular services, such as locating noncustodial parents or collecting support owed, while 12 others looked to private sector contractors to assume all local child support services. Under full-service privatization, states contract out all or most of the services traditionally performed by a local public entity, usually a county or judicial district. Additionally, since our November 1995 report, Ohio, South Carolina, and West Virginia have initiated full-service privatization efforts. Figure 1 shows the states in which we have identified fully privatized local offices as of September 1996. Appendix III provides further information on each of these fully privatized offices, including the local jurisdictions they serve, the contractor, and the contract length and its payment terms.

Most contracts for full-service privatization provide for the contractor to be paid an amount equal to a percentage of the collections generated. Therefore, as a contractor’s collections increase or decrease, the contractor’s payment—or the administrative costs paid to operate the office—rises or falls proportionately. In our November 1995 report, we noted payment rates in effect ranging from about 10 percent to 32 percent of collections. Some contracts provide for variable rates that decline over the life of the contract. In these cases, a higher initial payment rate is intended to help the contractor defray start-up costs. Most contracts provide for 2 to 5 years of service.

States Privatize to Improve Child Support Services, Handle Growing Caseloads, and Obtain Additional Resources

Overall, officials in the states with full-service privatization efforts most frequently cited a desire to improve the child support services offered, the need to serve their soaring caseloads, and the ability to deploy additional child support staff as reasons why they fully privatized local offices. At two offices, state officials estimated that caseloads had reached about 1,000 per worker, and they could not get the authority to hire additional public staff. Other major reasons cited by officials include the local child support offices’ difficulties in meeting increasing federal program requirements; legislative or executive directives mandating privatization as a way to improve state performance; and local public entities, such as the district attorney, ceasing to provide child support services when faced with rising caseloads, staffing constraints, and additional federal requirements.

State officials in the three states we reviewed cited similar rationales for privatizing the four offices we reviewed within their states. In Virginia and Arizona, officials cited the need to serve growing caseloads. Arizona officials also wanted to provide better service to areas previously considered underserved. At both the offices we examined in Tennessee, state officials eventually turned to privatization after the local district attorneys no longer wanted to operate the local child support offices. State officials had been encouraging the district attorney at one office to improve office performance. Both district attorneys believed that, without additional staff, their offices could no longer meet the federal performance standards and, consequently, both terminated their child support services. Faced with the loss of the governmental service providers, the state contracted out the operation of both child support offices.

Some states have implemented full-service privatization in a way that minimizes displacement of public employees. In Virginia and Arizona, existing districts were subdivided to create new offices in February and March 1994, respectively. Creating new privatized offices in an existing district is considered easier than replacing an established office because no public workers are displaced, according to state officials. At both Tennessee offices, which were privatized in July 1992 and July 1993, the public workers lost their jobs, but according to state officials, most were offered positions with the private contractor.

Outcomes Are Comparable, but Cost-Effectiveness Varied

Our analysis suggests that fully privatized offices can produce performance outcomes comparable to those of public child support programs. In outcome measures such as locating noncustodial parents, establishing paternity and support orders, and obtaining collections for the cases we reviewed, the privatized offices in Arizona and Tennessee performed about as well as their public counterparts and the one in Virginia did significantly better. While performance outcomes show that the privatized offices did at least as well or better than their public counterparts, the cost-effectiveness results were more mixed for the periods reviewed.

Virginia’s Privatized Office Matched or Exceeded Public Office Outcomes and Was More Cost-Effective

In Virginia, the privately run office that we studied in Hampton performed as well as or better than the public office in Portsmouth that we compared it with. These offices serve similar client populations in suburban and rural areas in the same part of the Tidewater area of Virginia. As table 1 illustrates, the Hampton office established paternity and support orders and made collections for higher percentages of the selected cases than did the Portsmouth office during our 18-month review period. The difference for collections was statistically significant after controlling for differences in caseload characteristics between the offices, such as the percentage of AFDC cases and the services that cases needed, while the differences for establishing paternity and support orders approached statistical significance. The difference in location rates was not statistically significant.

With regard to the cost-effectiveness of the two offices, Hampton’s cost to collect $1 of support was 60 percent lower than that for Portsmouth during the period reviewed. As table 2 shows, the contractor was paid 11.5¢ for each $1 collected, while the public office spent 18.4¢. Also, according to the contract, the contractor’s payment will decline to 9.95¢ per $1 collected in the final year of the 5-year contract.

Additionally, to determine whether privatization resulted in disproportionate increases in state costs, we compared administrative costs before and after privatization. In Virginia, the privatized office’s administrative costs did not increase dramatically after privatization. In state fiscal year 1994, the first year of privatization, the privatized office’s administrative costs grew by less than 1 percent over the previous year’s imputed costs. In the second year after privatization, the privatized office’s administrative costs increased by about 22 percent, a growth rate similar to the public office’s 21-percent increase.

Arizona’s Privatized Office Performed as Well as Public Office and Was More Cost-Effective

In Arizona, performance outcomes on our review cases revealed that the privately run office in Yavapai County did about as well as the public office in Mohave County that we compared it with; however, the privatized office was more cost-effective during our 18-month review period. Although some differences in outcomes between the public and private offices appear to exist (see table 3) none of the differences was large enough to be statistically significant either before or after controlling for AFDC status and kinds of services needed.

Regarding overall cost-effectiveness, the privatized office had a lower cost per $1 collected during the period reviewed. Mohave County spent 34.8¢ per $1 collected, while the contractor received 29.5¢ per $1 collected for operating the Yavapai County program (see table 4). In addition, under the terms of the contract, the contractor’s payment rate will fall to 24.0¢ for every $1 collected in the final year of the 4-year contract.

We were unable to examine the rate of change in the privatized office’s administrative costs before and after privatization and compare it with the public office’s rate of change. Arizona officials could not break out preprivatization administrative costs for Yavapai County only, which had been served at one time by a multicounty unit. Additionally, the officials believed that such a comparison would be inappropriate, because Yavapai’s cases had been underserved before privatization.

Tennessee’s Privatized Offices Show Mixed Results

Performance and cost-effectiveness results were mixed in Tennessee, where we reviewed two privatized offices. In the first privatized office, we did not have a sufficient number of cases to compare the public and privatized offices’ performance in locating noncustodial parents, establishing paternity and support orders, and collecting support owed. However, we were able to compare the offices’ collections and administrative costs for the review period. At this office, our comparison of collections and administrative costs showed that the public Fifth Judicial District office provided services at a lower cost per $1 collected during the 18-month review period (see table 5). The public office cost was 9.9¢ per $1 collected, while the privatized office was paid 15.0¢. Both offices serve rural populations within the Knoxville area.

Finally, at the second privatized office we reviewed in Tennessee, where we analyzed performance and cost-effectiveness before and after privatization, the privatized office generally maintained comparable performance and cost-effectiveness while serving a more challenging caseload. This office, Tennessee’s Twentieth Judicial District, which includes Nashville, was privatized in state fiscal year 1994. Table 6 shows the percentage and table 7 shows the number of cases receiving needed services for a 5-year period beginning with state fiscal year 1991. Five years of data are presented to show data fluctuations from year to year.Comparing the data over the 5-year period shows that while the percentage of cases receiving needed services from the privatized office remained about the same or declined in certain years, the actual numbers of cases receiving most services rose dramatically. Even for the service that showed a decline—the number of cases receiving a collection—the dollar amount of collections in the Twentieth Judicial District increased over 40 percent in the first 2 years of privatization, as compared with 29 percent in the rest of the state.

State officials attribute the increase in the number of cases receiving services to the contractor’s automated case management system and the employment of additional child support caseworkers and attorneys. This increase in the number of services provided, however, is not reflected in the percentage of cases receiving services because of large increases in identified case needs. State officials attributed this increase to the contractor’s systematic review of case files before entering the cases into its automated system.

With regard to cost-effectiveness, the privatized program in the Twentieth Judicial District was about as cost-effective as the public program had been. As shown in table 8, in state fiscal year 1993, the year before privatization, the cost for each $1 collected was 10.4¢ for the district attorney’s office, rising to 12.1¢ in the first year of privatization and declining to 10.7¢ the following year.

While the cost-effectiveness of the program was about the same, administrative costs did increase after privatization. In state fiscal year 1994, this office’s administrative costs increased by 28.5 percent over the previous year, in contrast to an increase of 6.1 percent in the rest of the state. The following year, administrative costs grew by 32.7 percent in the Twentieth Judicial District, virtually the same rate as in the rest of the state, 32.6 percent.

Factors Believed to Affect Performance and Cost-Effectiveness

State and contractor officials believed that several factors affect an office’s performance and cost-effectiveness. Factors generally believed to benefit contractors include the increased flexibility contractors have in acquiring resources, managing staff, and having greater access to technology. For example, in Virginia, the contractor was able to obtain computer and other equipment for the new office in Hampton within 90 days of signing the contract. In contrast, state officials described a situation in an unrelated office where delivery of needed equipment was expected to take 7 months under an expedited state acquisition process. Likewise, in Arizona, the contractor had the flexibility to open two privatized offices within 2 months of signing the contract and to replace two managers within the first year of operation. Arizona state officials told us that the removal of state managers could not be accomplished as quickly. Officials in all three states also cited contractors’ advantages in technology, such as automated systems for case management, as a possible factor affecting performance differences. Furthermore, in Virginia, the contractor provided additional technologies including extensive databases for locating noncustodial parents, bar-coded files for data management, and the use of videos during intake for consistent and complete orientation of both custodial and noncustodial parents.

In addition to the state officials’ beliefs, contractor officials also suggested factors that they believed favorably affected performance outcomes, such as their emphasis on timely and efficient processing of new cases, the co-location of child support workers in AFDC offices for case intake, and expanded evening and weekend office hours. Contractor officials in Arizona, however, believe that their performance was negatively affected by unexpectedly high staff turnover during our review period.

In addition to factors affecting performance outcomes, the major factor affecting the cost-effectiveness of full-service privatization is how much a state has to spend to acquire these services. We identified contract payment rates ranging from about 10 percent to 32 percent of collections. These contract rates are affected by the level of contractor competition and the volume, composition, and collection potential of the caseload. For example, because AFDC cases are considered more labor-intensive to work, state officials said that an office with a high percentage of AFDC cases may require a higher payment rate than one with fewer AFDC cases. Finally, all payment rates are subject to the vagaries of the marketplace. Payment rates that are initially beneficial to a state could change when the service is rebid or reawarded.

Welfare Reform Partially Resolves the Issue of Access to IRS Data

One major issue that could have impeded future full-service privatization—contractors’ access to IRS tax information—has been partially resolved by the recent enactment of welfare reform legislation. The issue focuses on whether full-service child support enforcement contractors have the same authority to access IRS data for locating noncustodial parents and enforcing child support orders as public offices have under the law. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 partially resolves this issue by authorizing contractors access to certain tax information.

Currently, IRS, through OCSE, provides states and local child support offices a number of valuable location and collection services. For example, OCSE’s Federal Parent Locator Service (FPLS) can request from IRS the social security number and address from a noncustodial parent’s most recent tax return. In addition, IRS’ Project 1099 program offers child support programs information on sources of earned and unearned income, such as banks and mutual funds, that are reported on IRS Form 1099 and can be used to locate noncustodial parents and their assets. Also, IRS’ income tax refund offset program has been the second largest source of collections for the child support program. In 1995, it offset over $828 million of delinquent child support payments from about 1.2 million delinquent noncustodial parents’ tax refunds, in addition to providing offices with filers’ addresses. OCSE and the states have granted full-service contractors access to these IRS services and information in the belief that these contractors act in the same capacity as public child support offices; that is, as a designated local child support agency of the state.

Before enactment of the welfare reform legislation, however, IRS officials took the position that section 6103(l) of the Internal Revenue Code did not authorize child support contractors access to this information. In reports it issued in January 1995 and March 1996, IRS found Nebraska and Tennessee out of compliance with the Internal Revenue Code during tax data safeguard reviews because the states had granted contractors access to IRS data. IRS officials are concerned about their ability to safeguard tax information and oppose further disclosure of IRS information for nontax administrative purposes. Federal, state, and contractor officials told us that prohibiting access to IRS data would affect the expansion and continuing operation of privatized full-service child support offices.

At the same time that OCSE and IRS have been working on this issue, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 has partially resolved this access issue. Section 316(g)(4) of the act amends section 6103(l) of the Internal Revenue Code to permit state child support agencies to disclose to contractors the addresses and social security numbers of noncustodial parents and the amount of tax refunds withheld for past-due child support. OCSE officials said that this permits contractors access to FPLS and tax refund offset data, but denies contractors access to unearned income information currently received under the Project 1099 program.

OCSE officials believe that the act partially addresses the issue of access to data, but does not address contractors’ access to the Form 1099 information that states and contractors believe serves as a valuable enforcement tool. One possible solution to this continuing problem, according to IRS, is to have a state child support entity verify this information with its original source. Once the data are verified, the information is not subject to nondisclosure requirements. Therefore, in order for the contractor to gain access to Project 1099 program information, a state entity would have to verify it with its source (for example, a financial institution), thus entailing a separate process. However, according to state officials, requiring this additional level of verification by public employees may negate some of the perceived benefits of full-service privatization. Alternatively, under the new law, contractors may have another avenue to obtain unearned income data. Section 372 of the act requires states to match data quarterly with in-state financial institutions. However, HHS noted that it will be some time before data from these matches are available in all states.

While welfare reform legislation provides contractors limited access to restricted tax data, it is too early to assess what effect these changes will have on contractors’ use of the full range of enforcement tools currently available to public offices.

Conclusions

As child support programs continue to face resource constraints, full-service privatization appears to offer states the opportunity to supplement their child support enforcement services. The results of our examination of full-service privatization show that the offices we reviewed performed at least as well as public offices. However, these results are limited to the cases we reviewed and do not reflect the performance of public or private offices overall within the states selected. Furthermore, because full-service privatization of child support enforcement is relatively new, the extent to which it offers comparable performance and cost-effectiveness remains an issue for additional evaluation over the long term.

Agency Comments

In commenting on a draft of this report (see app. V), HHS said that the report can be a valuable resource to states as they consider full-service privatization of child support enforcement functions. With respect to our observation that the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 has partially resolved the issue of access to IRS data, HHS noted that it will be some time before financial institution data are available in all states. We revised the final report to reflect the availability of such data.

We also received technical comments from HHS, IRS, and the three states and three contractors that we reviewed and incorporated them in the final report as appropriate.

We are sending copies of this report to the Chairmen and Ranking Minority Members of the Senate Committee on Finance and its Subcommittee on Social Security and Family Policy and the House Subcommittee on Human Resources, Committee on Ways and Means; the Secretary of HHS; and HHS’ Assistant Secretary for Children and Families. We also will make copies available to others on request. If you or your staff have any questions about this report, please contact David P. Bixler, Assistant Director, at (202) 512-7201 or Kevin M. Kumanga, Senior Evaluator, at (202) 512-4962. Other major contributors to this report are Christopher Morehouse, Steven Machlin, Catherine Pardee, and Suzanne S. Sterling.

Scope and Methodology

We compared three of the four fully privatized offices we selected for our review with similar public offices, as illustrated in table I.1. The privatized offices selected for these comparisons were Yavapai County, Arizona; the Seventh Judicial District of Tennessee (Anderson County); and the Hampton District Office in Hampton, Virginia. We also compared another privatized office, the Twentieth Judicial District of Tennessee (Davidson County), with the public office that preceded it because it could not be matched with a comparable public office in the state. These private programs were selected because they are among the most mature examples of full-service privatization, having been privatized between 1992 and 1994 (see app. IV for additional information); represent a diversity of geographical and urban/suburban/rural program settings; and include all three of the major full-service contractors. At the time of our review, Policy Studies, Inc., was the contractor for Yavapai County, Arizona; Maximus ran the programs in Tennessee’s Seventh and Twentieth Judicial Districts; and Lockheed Martin IMS managed the office in Hampton, Virginia.

Policy Studies, Inc.

Seventh Judicial District (Anderson County)

Fifth Judicial District (Blount County)

Twentieth Judicial District (Davidson County)

Twentieth Judicial District (Davidson County)

To identify public offices for comparison and analysis, we asked state officials to nominate offices for review that had performance records similar to the privatized office before privatization. We then compared these offices with the privatized office, using the selection criteria identified in table I.2, and selected the office that most closely resembled the privatized program before privatization.

Performance (for 3 years before privatization)

For each pair of offices, we defined our sets of cases to review as all those opened in a given month (July 1994 for Arizona and Virginia, January 1994 and randomly selected additional cases from February 1994 for Tennessee). We chose to review new cases to provide both public and private offices the greatest opportunities for successful outcomes and to ensure that neither office had the advantage of any experience with any of the cases. We tracked performance outcomes for an 18-month period. To further assure comparability of cases between the two offices, we excluded cases that (1) closed and did not reopen during the 18-month period; (2) were forwarded to other states to be worked because the noncustodial parent resided out of state; (3) needed specialized services, usually medical support only; or (4) were mistaken referrals, duplicate cases, or otherwise inappropriate for analysis. Table I.3 shows the number of cases in our original cohorts for each pair of offices, the number of cases excluded, and the number of cases remaining for analysis of outcomes. In each state, we gathered case data for analysis by reviewing case files or automated case management data. Additionally, each state provided collections and administrative cost data for the cost-effectiveness analysis, and Tennessee provided the data for the analysis of the Twentieth Judicial District’s performance before and after privatization. We did not verify the state-provided data.

The results of our review represent the performance of these offices on a small set of new cases for an abbreviated time period and do not necessarily represent long-term public and private performance overall within these states. However, because both new and existing cases must be equally served, the results can be viewed as a reasonable indication of the overall performance of these offices for that time period.

We also did not compare the performance and cost outcomes of the selected contracts across states because significant differences exist in state demographics, caseloads, child support enforcement tools available under state law, judicial and administrative systems, and levels of state automation, among other factors.

Outcome Analysis

To compare the outcomes of the private and public offices for cases that were in the system for 18 months, we analyzed differences between the paired offices for Virginia and Arizona in outcomes in each of the following four areas: location, paternity establishment, support order establishment, and collection. All the cases were included in the analysis for collections because all needed collections. However, for each of the other services, cases that did not need the particular service at case opening were excluded from the analysis. Tables I.4 and I.5 contain the number of cases and successful outcomes observed for the paired offices in Virginia and Arizona, respectively.

We did not conduct a similar analysis for the paired offices in Tennessee because of the small number of cases at the public office that met our criteria for inclusion. Table I.6 shows summary data for the cases from the private office in Tennessee.

Logistic Regression Models

In addition to calculating simple observed differences for the four activities, we used a multivariate statistical technique—logistic regression—to assess whether differences between offices were statistically significant after adjusting for differences in caseload characteristics. In each model, the dependent or outcome variable reflected whether an attempted action was successful or not (1 if successful, 0 otherwise), while the primary independent variable of interest was office type (1 if public, 0 if private). We included other independent variables in the models to adjust for caseload characteristics that could influence an office’s performance. These variables included AFDC status at case opening (1 if AFDC, 0 otherwise) and, if relevant to the outcome analyzed, whether the case needed a particular action at case opening (1 if needed, 0 otherwise). Table I.7 shows the distribution of cases on these characteristics for each office in our analysis.

Table I.8 contains the coefficients obtained from the logistic regression models and their respective levels of statistical significance (p-value). The model coefficients reflect the magnitude of the relationship between each independent and outcome variable. In general, the more the coefficient differs from 0, the more closely the variables are related. The p-value for each coefficient represents the probability that our analysis would have produced a coefficient of that magnitude or greater (that is, more different from 0) if the two variables were not related. We considered coefficients with p-values lower than .05 to be statistically significant. We considered coefficients with p-values between .05 and .06 to be approaching statistical significance. Our analysis assumes that the cases we analyzed represent random samples of all new cases handled by the offices. While we analyzed all cases meeting certain criteria that were opened in a particular month, for the purpose of assessing statistical significance we considered these cases as point-in-time samples that are representative of each office’s general performance on new cases.

We conducted our study between August 1995 and October 1996 in accordance with generally accepted government auditing standards.

Basic Child Support Enforcement Services

Location includes efforts at local, state, and federal levels to identify a noncustodial parent’s address, social security number, place of employment, and other characteristics. This might include efforts to directly contact individuals; contacts with public and private institutions, such as credit bureaus, state and federal income tax agencies; and the use of computer tape matches.

Paternity establishment is the identification of the legal father of a child, usually through the courts or expedited through hearings in a quasi-judicial or administrative body. Paternities are established in either of two ways: (1) through voluntary acknowledgment by the father or (2) if contested, through a determination made on the basis of scientific and testimonial evidence.

Support order establishment involves the development of a support order that legally obliges the noncustodial parent to pay child support and provide medical insurance coverage when available at reasonable cost. The child support enforcement agency must assist custodial parents in initiating an action in court or through an administrative or expedited legal process that will produce such an order. The child support enforcement agency helps in the determination of a child’s financial needs and the extent to which the noncustodial parent can provide financial support and medical insurance coverage. Support orders are subject to periodic review and adjustment at least every 3 years in AFDC cases and upon parental request in non-AFDC cases.

Collections and enforcement involves enforcing, monitoring, and processing payments. To enforce payment on delinquent cases or to ensure regularity and completeness of current accounts, child support enforcement agencies have a wide array of techniques at their disposal. These techniques include bonds and security deposits, federal and state tax intercepts, garnishments, liens, and wage withholding, among others. Noncustodial parents’ payments must also be monitored, recorded, and distributed.

Contract Information for Full-Service Child Support Privatization Initiatives in 15 States as of September 1996

Start date (contract length)

Policy Studies, Inc.

3/94 (4 years) 9/95 (1.8 years)

Greene County Child Support Enforcement, Inc.

9/95 (1.8 years)

Owen Support Services, Inc.

7/95 (2 years)

Brent Davis, Esq.

7/95 (2 years)

3rd Judicial District (Clay, Jackson, Lawrence, Randolph, and Sharp Counties)

Randolph County Judge/Multi Services, Inc.

7/95 (2 years)

14th Judicial District (Baxter, Boone, Marion, and Newton Counties)

Multi Services, Inc.

7/95 (2 years)

Fixed fee of $300,000, reimbursable expenses up to $330,000 1/96 (5 years)

Policy Studies, Inc.

7/94 (4 years)

Policy Studies, Inc.

1/96 (5 years) 11/96 (4 years)

Queen Anne’s County 11/96 (4 years) (continued)

Start date (contract length) 7/94 (5 years)

Policy Studies, Inc.

2/93 (5 years) 6/96 (3 years)

Kibois Community Action Foundation (nonprofit)

1993 (4 years)

Great Plains Improvement Foundation (nonprofit)

1993 (4 years)

Georgetown, Horry, Marion, and Williamsburg Counties 1/97 (5 years)

7th Judicial District (Anderson County)

7/92 (5 years)

20th Judicial District (Davidson County)

7/93 (5 years)

10th Judicial District (Bradley, McMinn, Monroe, and Polk Counties)

Policy Studies, Inc.

7/96 (5 years)

29th Judicial District (Dyer and Lake Counties)

Policy Studies, Inc.

2/92 (5 years)

27th Judicial District (Obion and Weakley Counties)

Policy Studies, Inc.

1/95 (5 years)

21st Judicial District (Hickman, Louis, Perry, and Williamson Counties)

1/97 (5 years)

Hampton and Chesapeake District Offices 2/94 (5 years) 1997 (5 years) (continued)

Start date (contract length)

Policy Studies, Inc.

9/96 (3 years)

Districts 1, 2, and 3 (Albany, Carbon, Laramie, Lincoln, Sweetwater, and Uinta Counties)

Policy Studies, Inc.

6/95 (4 years)

Districts 8 and 9 (Converse, Fremont, Goshen, Niobrara, Platte, Sublette, and Teton Counties)

5/95 (4 years) $724,000 + 8 percent of collections over $2.5 million (Table notes on next page)

The contract provides for service to non-AFDC clients only; the state continues to provide services to AFDC clients. Additionally, in Cobb and De Kalb Counties, the contractor serves in-state cases only.

This contract provides for the privatization of location, paternity establishment, administrative support order establishment, and certain customer relations services in the areas shown. The state continues to provide other services.

Under this performance-based contract, the caseload—both AFDC and non-AFDC—is shared by the contractor and the county child support agency. Currently, the contractor’s share of the county caseload is estimated by the state child support director to be about 40 percent.

The state legislature has authorized the creation of two new district offices in addition to those listed. The new district offices that would serve areas yet to be determined are to be established in state fiscal year 1997 and state fiscal year 1998.

Selected Demographic Characteristics of the Localities Reviewed

Unless otherwise noted, the source for all demographic data in this appendix is U.S. Bureau of the Census, County and City Data Book 1994 (Washington, D.C.: U.S. Bureau of the Census, 1994).

Virginia

Located in the Norfolk-Virginia Beach-Newport News metropolitan area, the Hampton District Office serves both suburban and rural areas. In 1992, the population in Hampton was about 137,000. Located in the same metropolitan area, the Portsmouth District Office serves Portsmouth City, with a 1992 population of about 105,000. In 1989, the median income in Hampton was $30,144 and in Portsmouth, $24,601. In 1989, 8.8 percent of the families in Hampton had incomes below the poverty level, compared with 14.9 percent in Portsmouth.

Like Portsmouth, in 1992, Hampton was among the top 25 counties/jurisdictions in the country in federal civilian employment. Hampton’s June 1994 caseload of 15,000 was about 42 percent AFDC and 58 percent non-AFDC. At the same time, Portsmouth served a caseload of about 14,000, about 51 percent of which were AFDC cases and 49 percent non-AFDC.

Statewide in 1992, there were 36.9 births to unmarried teenagers between 15 and 19 years old per 1,000 females. According to 1988 Bureau of the Census data, 11.7 percent of all births in Hampton were to mothers under 20 years old, compared with 18.6 percent in Portsmouth and 11.2 percent statewide.

Arizona

Yavapai County is north of Phoenix; its 1992 population was about 116,000, compared with about 106,000 in Mohave County. While Yavapai County is outside the state’s metropolitan areas, it has one major town within its borders—Prescott. Mohave County is in a metropolitan area (Las Vegas, Nevada); its major urban areas include Kingman, Bullhead City, and Lake Havasu City. In 1989, the median income in Yavapai was $22,060, and in Mohave, $24,002. In 1989, 9.8 percent of Yavapai’s families had incomes below the poverty level, compared with 8.7 percent in Mohave. In state fiscal year 1994, the Yavapai office had about 10,000 child support cases; about 24 percent were AFDC and 76 percent non-AFDC. At that time, Mohave’s caseload was about 15,000, 36 percent of which were AFDC cases.

Mohave County stands out among Arizona counties in two respects. Mohave’s population is highly mobile: from 1985 to 1990, the county led the state in the percentage of movers, 61.7 percent. Mohave County also had the highest population growth rate of any county in the state between 1980 and 1992: 89.8 percent.

Statewide, the unmarried teenage birth rate in 1992 was 62.7 per 1,000.Census data show that 15.3 percent of all births for Yavapai County in 1988 were to teenage mothers, 15.1 percent for Mohave, and 13.8 percent statewide.

Tennessee

Both the Seventh and Fifth Judicial Districts—Anderson County and Blount County, respectively—are in the Knoxville metropolitan area, with Anderson County lying north of the city and Blount County to its south. Anderson County’s 1992 population was about 70,500, compared with about 90,400 in Blount County. Major towns include Clinton and Oak Ridge in Anderson County and Maryville in Blount County. In 1989, Anderson County’s median income was $26,496, compared with $25,575 in Blount County. The percentage of families with incomes below poverty in 1989 was 11.5 percent in Anderson County and 10 percent in Blount County. From June 1994 through December 1995, the Seventh Judicial District served a caseload of about 4,600, almost evenly divided between AFDC and non-AFDC cases. During the same period, the Fifth Judicial District’s caseload was about 6,300, of which 73 percent were AFDC cases and 27 percent non-AFDC cases.

The Twentieth Judicial District serves Davidson County, which includes Nashville, which had a 1992 population of about 495,000. In 1989, the county’s median income was $27,821 and 13.4 percent of the county’s families had incomes below the poverty level. The child support caseload in state fiscal year 1994 was about 39,400, and 57 percent were AFDC cases.

Statewide, in 1992, there were 46.3 births to unmarried teenagers 15 to 19 years old per 1,000 females, close to the national average of 42.5.According to 1988 Census data, teenage mothers accounted for 16.0 percent of all births in Anderson County, 14.2 percent in Blount County, 15.2 percent in Davidson County, and 17.2 percent statewide.

Related GAO Products

Child Support Enforcement: Reorienting Management Toward Achieving Better Program Results (GAO/HEHS/GGD-97-14, Oct. 25, 1996).

Child Support Enforcement: States’ Experience with Private Agencies’ Collection of Support Payments (GAO/HEHS-97-11, Oct. 23, 1996).

Child Support Enforcement: States and Localities Move to Privatized Services (GAO/HEHS-96-43FS, Nov. 20, 1995).

Child Support Enforcement: Opportunity to Reduce Federal and State Costs (GAO/T-HEHS-95-181, June 13, 1995).

Child Support Enforcement: Families Could Benefit From Stronger Enforcement Program (GAO/HEHS-95-24, Dec. 27, 1994).

Child Support Enforcement: Federal Efforts Have Not Kept Pace With Expanding Program (GAO/T-HEHS-94-209, July 20, 1994).

Child Support Enforcement: Credit Bureau Reporting Shows Promise (GAO/HEHS-94-175, June 3, 1994).

Child Support Assurance: Effect of Applying State Guidelines to Determine Fathers’ Payments (GAO/HRD-93-26, Jan. 23, 1993).

Child Support Enforcement: Timely Action Needed to Correct System Development Problems (GAO/IMTEC-92-46, Aug. 13, 1992).

Medicaid: Ensuring That Noncustodial Parents Provide Health Insurance Can Save Costs (GAO/HRD-92-80, June 17, 1992).

Interstate Child Support: Wage Withholding Not Fulfilling Expectations (GAO/HRD-92-65BR, Feb. 25, 1992).

Interstate Child Support: Mothers Report Less Support From Out-of-State Fathers (GAO/HRD-92-39FS, Jan. 9, 1992).

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