Mr. Chairman and members of the Committee: I want to thank you for giving me the opportunity
to testify today on the Administration's recommendations for revamping the incentive system for
State child support enforcement programs. The Administration is committed to timely and
effective implementation of the new welfare reform law and we view the incentive report as an
important early step in our efforts.
The Administration and this Committee are in full agreement that child support is an essential
part of welfare reform. It sends a message of responsibility to both parents and is a vital part of
moving families toward work and self-sufficiency. Once families have attained independence,
child support can keep them from failing back onto public assistance rolls. Child support also
acts as a safety net to ensure that single parent families don't need assistance in the first place.
We are proud of this Administration's record on child support enforcement and anxiously await
the positive results that the new provisions will bring to further meet these critical goals.
President Clinton has made improving child support enforcement and increasing child support
collections a top priority. Since taking office, President Clinton has cracked down on nonpaying
parents and strengthened child support enforcement, resulting in record child support collections.
In 1993, President Clinton proposed, and Congress adopted, a requirement that States establish
hospital-based paternity programs as a proactive way to establish paternity early in a child's life.
A series of Presidential directives and executive orders has made the federal government a model
employer in the area of child support enforcement, directed the Treasury Department to offset
child support debts against most federal payments, and sent a strong message through a variety of
means, including 'Wanted Lists" in Post Offices and Internet links, that failure to pay child
support will not be tolerated. In addition, the Justice Department has intensified its efforts to
investigate and prosecute those cases which fall under the Federal Child Support Recovery Act,
namely, parents who willfully fail to pay court-ordered child support to children living in other
States, where the statutory prerequisites are met.
All together, in FY 1996, $12 billion in child support was collected on behalf of the children of
America. This amount exceeded the President's Budget projection of $11.5 billion and
represented a 50 percent increase in child support collections since FY 1992. Since FY 1992, the
number of paying child support cases has increased by 36 percent. These accomplishments are
impressive, but projections on the impact of the new provisions tell us they are only the
beginning.
The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) includes the
tough child support measures President Clinton called for from the start and child support
enforcement at the Federal and State levels is being transformed by the these measures. Many
States have already taken steps to implement the new federal requirements. Forty-three States
have license revocation programs in place. Thirty-five States have recently enacted the Uniform
Interstate Family Support Act. And twenty-six States have adopted some form of reporting of
new hires.
At the Federal level, we have made great progress in making the expanded Federal Parent
Locator Service (FPLS) a reality. We have entered into contracts with several nationally
recognized and respected vendors to help us design and develop the expanded FPLS, manage the
project and enhance our quality assurance efforts, and assist us with providing training and
technical assistance to State agency users.
Finally, as required under PRWORA, we worked with the States to develop a new incentive
funding structure that rewards results and submitted our Child Support Enforcement Incentive
Funding Formula report to Congress last week. That report is the focus of my testimony today.
Child Support Enforcement Incentive Funding
I am happy to report that since my last appearance before this Committee on September 19,
1996, our collaborative effort with the States to develop a new incentive funding system for the
child support enforcement program has been successful. The jointly-developed, revenue neutral
incentive funding proposal is tough and would push States to improve performance. This
formula will ensure good outcomes for families and has a broad consensus among the States and
other child support enforcement stakeholders.
The current incentive funding system is based on maximizing child support collections
relative to administrative costs. A minimum incentive payment is made to all States
regardless of whether performance is good or poor. Currently, States can run inefficient
programs and still receive large amounts in incentives. We all recognize that this does not create
a significant incentive for the achievement of program goals. An improved results based
incentive system would take into account other measurable program results such as paternity
establishment, order establishment, and collections.
Our effort to develop a performance-based incentive system dovetailed with our thriving
State-Federal partnership and our effort to become a results-oriented program, as envisioned by
the Government Performance and Results Act (GPRA) of 1993. OCSE has completed the 2 year
pilot phase of its implementation of GPRA during which we forged a Federal-State partnership
that has accomplished much. I would like to briefly highlight our accomplishments.
- Federal and State partners have developed and reached consensus on a National Strategic
Plan with a mission, vision, goals and objectives.
- Federal and State partners reached consensus on outcome measures for each of the
Strategic Plan goals and objectives so that progress can be. tracked.
- The majority of States have entered into partnership agreements with ACF Regional
Offices that detail performance goals, technical assistance initiatives, and a shared
commitment to working together.
- OCSE and the association of State child support program directors have entered into a
partnership agreement that emphasizes communication, joint planning, and
co-responsibility for improving America's child support enforcement program.
Building on this new foundation of partnership with the States forged during the GPRA pilot, we
convened a group of State and Federal partners to meet the Congressional charge to the Secretary
of HHS to change the incentive funding system. The workgroup included 15 State and local
child support directors and 11 Federal central and regional office representatives. The
workgroup met November through January. Of the 14 State directors, 10 agreed to represent not
only their own States but also other States in their region. After each workgroup meeting, the
representatives consulted with the States in their region and brought that feedback to the next
meeting to assure the broadest possible consensus. Progress of the workgroup was also shared
with the American Public Welfare Association and advocacy groups.
The workgroup developed an incentive funding formula that rewards States for their performance
in five critical areas: paternity establishment, support order establishment, collections on current
support, collections on support past due (arrearages), and cost effectiveness. These measures are
consistent with the legislated mission of the program and the Strategic Plan and its outcome
measures. There is full consensus from State partners that these measures represent the
appropriate focus for the program.
The workgroup also established performance standards for each of the measures. These
standards would determine the amount of incentive a State would receive for a certain level of
performance and reward States for maintaining high performance or making substantial gains in
improving their performance. The standards are designed to provide tough but reachable targets
for performance by rewarding States with higher incentives as they improve. The standards for
the first four measures include a performance threshold. Under this plan, and unlike the
current-system, no incentive would be paid unless a State achieves a significant improvement in
performance. For the final measure on cost effectiveness, if a State collects less than two dollars
for every one dollar expended, no incentive would be paid.
Each State would earn five scores based on performance on each of the five measures. .
Workgroup members believed all the measures were important, but the first three measures -
paternity establishment, support order establishment and collections on current support -were
critical. Paternity establishment and support order establishment are prerequisites of collecting
current support, which is essential for family self-sufficiency. Performance on the first three
measures could earn a slightly higher incentive than the last two measures -collections on
arrearages and cost effectiveness.
The amount of potential incentive payments for each measure available to each State would be
based upon a percentage of its own State child support collections -- its 'collections base.' The
collection base includes collections in both Temporary Assistance to Needy Families (TANF)
cases and nonassistance cases. The collections base also includes collections made for families
who were never on assistance. However, we recommend that collections in TANF cases and
former TANF cases be weighted double, e.g., every dollar collected counts as $2. Counting
collections for incentives purposes in this way accomplishes three objectives:
- States with large former TANF caseloads would no longer be penalized by a cap as in the
current-formula. Many States are moving families off welfare and their success is not
being recognized because of this cap under current law.
- States would have a strong incentive to pursue action on TANF cases and former TANF
cases. For these families, child support is critical to achieving independence and not
returning to public assistance rolls.
- Direct savings to State and Federal governments result from collecting child support in
TANF cases. Costs of other public benefit programs such as Food Stamps and Medicaid
could also be avoided by making collections in these cases.
Because this system would for the first time be performance-based, some States would naturally
lose incentives by moving to the new system. To help States prepare for the new system, we
recommend that the formula be phased in over two years. For FY 2000, a State would earn half
of what it would have earned under the old formula and half of what it earns under the new
calculation. In FY 2001, the new formula would be fully implemented. This would give States
more time to adjust their programs, budget for any financial impact and improve their
performance. Of course, the Office of Child Support Enforcement would continue to work with
States to assist them during this transition.
The workgroup was concerned that with the enactment of welfare reform, the child support
enforcement program is likely to change dramatically in the next few years. Therefore, the report
recommends that the child support program's results and effects of the new incentive system
should be reviewed periodically. Limited discretion should be granted to the Secretary of Health
and Human Services to make appropriate changes, in consultation with the States, based on the
program's actual results and effects every three to five years.
The workgroup's report includes recommendations with respect to other aspects of program
funding beyond incentives. We have endorsed the workgroup's recommendations with respect to
the incentive formula itself, but have reserved judgment on other aspects of the recommendations
because further work may be needed on broader program funding issues.
The work accomplished to present this report through State-federal partnership is representative
of past collaboration and the future direction that we will take together to strengthen the program
and improve the lives of children.
In conclusion, Mr. Chairman, let me restate:
- The recommended incentive funding formula, developed in consultation with the States,
would reward performance and-remain revenue neutral. It is tough but fair and will lead to
positive results for families.
- The new incentive funding formula would complement the results-oriented State-Federal
partnership that has already successfully piloted the Government Performance and
Results Act.
- The Administration is committed to working with States and the Congress to address
TANF maintenance of effort issues which may result in costs to the Federal Government
due to the potential loss of child support collections.
I want to thank the Committee for your work on behalf of America's children. Their future will
be significantly improved because of the new collection tools and other reforms required of
States by welfare reform.
For example, we are committed to working with States and the Congress to develop legislation
to ensure that State flexibility under TANF does not result in costs to the Federal Government
due to the potential loss of child support collections.
Finally, in keeping with the mandate that the new incentive funding formula be cost neutral, we
have ensured that the new incentive formula would not cost more than the current formula.
During the legislative process, if subsequent cost estimates show that the formula is not cost
neutral, adjustments up or down can be made. In addition,. we have indicated in the report that
we will work with the Office of Management and Budget and our State partners to develop an
automatic adjustment mechanism to -ensure cost neutrality against the current system if the cost
estimates prove inaccurate.
Conclusion
We now have the groundwork in place for a more results-oriented management of the National
child support enforcement program. We strongly urge Congress to pass legislation on the
recommended incentive funding system to allow the child support enforcement program to truly
be driven by achieving results for families and children in need of support.
