Child Support Enforcement:

States' Experience with Private Agencies' Collection of Support Payments

HEHS-97-11: Published: Oct 23, 1996. Publicly Released: Oct 23, 1996.

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Jane L. Ross
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Pursuant to a congressional request, GAO provided information on states' use of private agencies for the collection of child support payments, focusing on: (1) why states contract for these collection services; and (2) the factors affecting the financial outcomes of collection contracts for families and the federal and state governments.

GAO found that: (1) states contract with private agencies to collect past-due or hard-to-collect child support payments because they are finding it increasingly difficult to service their growing child support enforcement caseloads with available staff and budget resources; (2) under the terms of most collection contracts, states pay contractors only if collections are made, and contractor payments are often a fixed percentage of collections; (3) the federal and state governments retain most of the child support payments collected for families receiving Aid to Families with Dependent Children (AFDC) benefits, while non-AFDC families receive most of the support payments collected; (4) the federal government's share of the child support collections depends on how much it contributes to the state's welfare program and how much it pays in performance incentives and child support enforcement administrative costs; and (5) a review of 11 contracts showed that the federal government's financial outcomes ranged from a net cost of about $242,000 to revenues of $1.2 million.

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