Child Support Enforcement:

More Focus on Labor Costs and Administrative Cost Audits Could Help Reduce Federal Expenditures

GAO-06-491: Published: Jul 6, 2006. Publicly Released: Jul 6, 2006.

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Congress established federal standards for the child support enforcement program (CSE) in 1975. State agencies administer the program and the Office of Child Support Enforcement (OCSE) in the Department of Health and Human Services (HHS) oversees it. The CSE program provides several services, including collecting child support payments from noncustodial parents--those who are not the primary caregivers--and distributing these payments to families. Generally, the federal government reimburses state agencies 66 percent of their costs for administering the CSE program. GAO determined (1) how total net federal expenditures for administrative costs changed from fiscal year 2000 to fiscal year 2004; (2) the categories of costs that contributed most to administrative costs in recent years; and (3) steps state agencies have taken to manage costs, and steps OCSE has taken to help state agencies and ensure federal funds have been used appropriately. GAO analyzed program data, surveyed all 54 state agencies and visited 6, interviewed program officials, and reviewed laws, policies, and reports.

From fiscal year 2000 to fiscal year 2004, total net federal expenditures for administrative costs (the cost after deducting child support collections for families receiving benefits from other government programs) increased by about 23 percent. After adjusting for inflation, total net federal expenditures increased from about $2.2 billion to $2.8 billion. Also, during this period, collections increased by about 12 percent from about $19 billion to $22 billion, and the program's cost effectiveness measure (the ratio of collections to total administrative expenditures) increased about 4 percent. Personnel costs were cited as a major contributor to federal expenditures for administrative costs in fiscal years 2002 to 2004 by the 49 state agencies that responded to the relevant question in our survey. Most state agencies also cited as major costs cooperative agreements under which staff from other state agencies are paid to perform CSE program duties, automated data systems, and contracts with private firms. Several of these categories involve labor costs, and from fiscal years 2000 to 2004, the number of full-time-equivalent (FTE) employees funded by the CSE program increased about 2,200. Yet, OCSE has not developed guidelines to help state agencies manage their FTEs and related labor costs. State agencies reported implementing cost-saving initiatives, and while OCSE has helped state agencies manage costs, it has conducted a limited number of administrative cost audits to help ensure the appropriate use of federal funds. At least one-half of the state agencies reported implementing 7 of the 10 cost-saving initiatives listed in our survey, and many reported cost savings. To help state agencies manage their programs, OCSE issued guidance, created federal/state work groups, and sponsored conferences. OCSE is required to conduct audits of state agencies' administrative costs, and from March 2004 to March 2006, OCSE issued eight administrative cost audit reports. All of these audit reports raised questions about inappropriate expenditures. Although OCSE expects to have more resources available to conduct audits, it does not plan to use these resources to conduct more administrative cost audits.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: In commenting on this report in June 2006, HHS stated that OCSE will consider doing a study of the number of full-time equivalent employees. In October 2007, the agency said that there has been no change. HHS did not comment on this recommendation in FY08. In FY09, HHS commented that OCSE was unable to identify a reasonable method for performing a study and or developing guidelines for the number of full time equivalent employees. Moreover, since the release of the report, funding cuts and state budget deficits have resulted in widespread furloughs, hiring freezes, and lay-offs in state and county child support programs. In FY10, HHS reported that no action is likely to be taken.

    Recommendation: To help manage the administrative costs for the child support enforcement program and ensure federal funds are being appropriately spent, the Secretary of Health and Human Services should direct the Commissioner of OCSE to conduct a study of and develop guidelines for the number of full-time-equivalent employees.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Not Implemented

    Comments: In commenting on our report, HHS/OCSE did not address this recommendation. In October 2007, the agency reported that OCSE, Office of Audits, plans to use any resources available after completing the legislatively mandated data reliability audits to conduct limited cost audits. HHS did not comment on this recommendation in FY08. As of FY10, HHS reported that no action is likely to be taken.

    Recommendation: To help manage the administrative costs for the child support enforcement program and ensure federal funds are being appropriately spent, the Secretary of Health and Human Services should direct the Commissioner of OCSE to direct resources gained from conducting fewer data reliability audits for the incentive payments to completing more administrative cost audits.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Not Implemented

    Comments: In commenting on the report in June 2006, HHS/OCSE did not address this recommendation in any way. In October 2007, the agency reported that total expenditures are always considered as a factor in determining where to conduct limited cost auditing. HHS did not comment on this recommendation in FY08. In FY09, HHS maintained that total expenditures are always considered in determining where to conduct a limited cost audit. As of FY10, no additional action was taken by the agency on this recommendation.

    Recommendation: To help manage the administrative costs for the child support enforcement program and ensure federal funds are being appropriately spent, the Secretary of Health and Human Services should direct the Commissioner of OCSE to develop an audit plan that considers total expenditures as one of the factors used to select state agencies for administrative cost audits.

    Agency Affected: Department of Health and Human Services

 

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