FOR IMMEDIATE RELEASE: HHS ISSUES GUIDANCE ON USE OF PRIVATE AGENCIES HHS Secretary Tommy G. Thompson today announced new guidance to state child support enforcement agencies in working with custodial parents and guardians who wish to use private collection agencies to assist them in the collection of child support. "While the nation’s child support program has become much more effective at collecting child support in recent years, too many children still do not receive the support that they need and deserve," said Secretary Thompson. "We recognize that private agencies are a good option for some parents. Where possible, parents should have a choice, but they need to be prudent in making sure they know what they are agreeing to when they sign a contract." The new guidance will help states in counseling parents who are considering hiring a private agency to help collect child support to insure they can make an informed choice. It addresses the need for parents to obtain clear information on items such as length of contracts, services to be provided and fees. The guidance will also address inconsistencies among state child support agencies in their efforts to cooperate with private collection agencies. "We want to make clear that, for those who wish to hire a private agency to assist them in collecting child support, state child support agencies should cooperate with the private collectors that parents have hired," HHS Assistant Secretary for Children and Families Wade F. Horn said. "We are clarifying that federal law allows the states to send the parents’ child support payments to them in care of their private collection agencies." About $19 billion was collected in child support in fiscal year 2001 for the more than 17 million child support cases worked by state government agencies. About 68 percent of cases with orders had a collection, which is double the percent of cases with collections in 1997. And, while the percentage of total cases in which a collection was made has also doubled since 1997, it stands at 44 percent. A recent study by the U.S. General Accounting Office found that private collection agencies and state child support agencies report similar collection rates. The study also found that PCAs charged fees averaging 29 percent of child support collected and that half of them charge additional fees. Government child support agencies provide their services free to those receiving cash assistance, Medicaid and foster care payments. Services are provided for a nominal fee to others.
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