FUNDING OF STATE CHILD SUPPORT PROGRAMS

  1. 3 Major Streams of Financing
      1. Federal Government’s commitment to reimburse States for
      1. 66 % of all allowable expenditures on child support activities
      1. Allowable Expenditures
      1. outlays for locating parents
      2. establishing paternity
      3. establishing orders
      4. collecting payments
      5. etc.

 

      1. Two Mechanisms Through Which Federal Financial Control of State Expenditures Is Exercised
      1. States must submit plans to the Secretary of DHHS outlining the specific child support activities they intend to pursue.
      2. The DHHS conducts a financial audit of State expenditures
      1. The Federal Government provides 90 % matching for two especially important child support activities
      1. The Federal Government pays 80-90 % of approved State expenditures on developing and improving management information systems.
      2. Congress provides 90 % funding for laboratory cost of blood testing.
      1. Child Support Collections
      1. Recovered TANF payments are split between the State and the Federal Government in accord with the percentage of Federal reimbursement of Medicaid benefits.

 

      1. Federal Incentive Payments
      1. Public Law 105-200, the Child Support Performance and Incentive Act of 1988 ( enacted July 16, 1998 )
      1. replaced the old incentive payment system with a new cost-neutral system of incentive payments that provides:
      1. incentive payments based on a % of the State’s collections ( with no cap on non-TANF collections )
      2. incorporation of five performance measures related to establishment of paternity and child support orders, collections of current and past-due support payments, and cost-effectiveness
      3. mandatory reinvestment of incentive payments into the CSE Program
      4. an incentive payment formula weighted in favor of TANF and former TANF families.
      1. the new system caps the Federal incentive pool, thereby forcing states for the first time to compete against each other for incentive dollars
      2. under the new system, a state may be eligible to receive an incentive payment for good performance.
      3. The total amount of the incentive payment received by a State depends on four factors:
      1. the total amount of money available in a given fiscal year from which to make incentive payments
      2. the State’s success in making collections on behalf of its caseload
      3. the State’s performance in the five areas mentioned above
      4. the relative success or failure of other State’s in making collections and meeting these performance criteria.