Child Support Enforcement:

Effects of Declining Welfare Caseloads Are Beginning to Emerge

HEHS-99-105: Published: Jun 30, 1999. Publicly Released: Jun 30, 1999.

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Cornelia M. Ashby
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Pursuant to a congressional request, GAO reviewed the Child Support Enforcement (CSE) program, focusing on: (1) changes in CSE welfare collections since 1994; (2) the net savings/cost experiences of state and federal CSE programs; (3) those states that have experienced declines in CSE welfare collections and how these declines affected their state's CSE program funding; and (4) the future implications of caseload declines and welfare reform changes for the CSE program.

GAO noted that: (1) despite significant declines in the Temporary Assistance for Needy Families (TANF) caseloads and CSE welfare caseloads, total state CSE welfare collections nationwide increased 11 percent between fiscal years (FY) 1994 and 1997; (2) while declines in CSE welfare cases might have been expected to lower CSE welfare collections for the states and federal government, the CSE program's ability to intercept more money from delinquent noncustodial parents' income tax refunds more than offset the effects of the caseload declines; (3) seven states experienced a drop in the amount of CSE collections that they kept in FY 1997 relative to the amount that they retained in FY 1995; (4) during the period from FY 1994 to FY 1997, a declining majority of states realized net savings from the CSE program while the federal government experienced net costs; (5) in FY 1997, the states collectively spent about $1.1 billion to operate their CSE programs and retained about $1.6 billion in recovered payments and incentive payments; (6) the federal government spent about $2.3 billion to fund the CSE program and retained about $1 billion in recovered welfare benefits; (7) between FY 1994 and FY 1997, the numbers of states experiencing net costs increased from 12 to 22 because of increased administrative costs, reduced CSE welfare collections, and declining incentive payments; (8) while declining caseloads have resulted in lower retained collections in seven states, CSE officials in those states said the decline did not negatively affect their CSE program funding; (9) the way a state chooses to finance its CSE program determines its sensitivity to fluctuations in CSE welfare collections; (10) the effects of TANF caseload declines and welfare reform changes are just beginning to emerge; (11) future caseload declines are likely to reduce retained state and federal CSE welfare collections; (12) nonwelfare caseloads and costs are likely to increase; (13) the welfare reform provision that gives families a greater priority in receiving past due payments will also reduce the amount of CSE welfare collections retained by the states and federal government; (14) the implementation of a new incentive payment program will result in less stable program revenues for the states; and (15) the welfare reform law, however, also required the federal government and the states to create powerful new tools to enforce the collection of child support that may ameliorate the expected declines in CSE welfare collections, yet increase states' administrative costs.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: A provision in the Personal Responsibility and Family Promotion Act of 2003 (H.R.-4) stated that in addition to current fees, states must impose an annual service fee on individuals who never received TANF assistance and for whom the state has collected at least $500. This approach would yield the same results as intended by GAO's recommendation--reduce the growing financial burden to the federal government and the states. The bill passed the House on February 13, 2003.

    Matter: CSE nonwelfare costs continue to rise as CSE welfare caseloads decline, signaling future declines in CSE revenues. Congress and the states may wish to reconsider the option of charging a minimum percentage service fee on CSE nonwelfare collections that would be shared at the same rate the federal government and states share administrative costs--two thirds and one-third, respectively. This would, to some extent, alleviate the growing financial burden to the federal government and states.


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