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PIQ-03-02

DATE:January 30, 2003

TO: All State IV-D Directors

FROM: Sherri Z. Heller, Ed.D.

               Commissioner

               Office of Child Support Enforcement

RE: Recoupment of a Child Support Overpayment

Background: On August 5, 2002, OCSE issued PIQ-02-001 to respond to state inquiries regarding options available for states to recoup child support overpayments. In response to PIQ-02-001, OCSE has received additional inquiries regarding client permission and a vendor’s role in recoupment.

Question 1: If a state seeks to obtain client permission to recoup an overpayment during the IV-D application process, must the applicant for IV-D services be informed that consent to the recoupment of child support overpayments is not a prerequisite to receipt of IV-D services?

Answer: Yes. The applicant must be informed that the consent is optional and that the provision of IV-D services is not conditioned on his or her consent to recoupment of overpayments from future collections.

Question 2: Can a State Disbursement Unit (SDU) vendor follow the recoupment procedures outlined in PIQ-02-001 when there is an overpayment to a custodial parent? As the state’s agent, does the SDU have such authority or is the authority only given to the state? Can a vendor operating a full-service privatized office follow the recoupment procedures outlined in PIQ-02-001?

Answer: The term "state" is used throughout the child support regulations and is defined in 45 CFR 301.1. Often, however, the term "state" is used in OCSE policy to represent the IV-D program or agency. The regulations at section 302.12 require that the state plan provide for the establishment or designation of a single and separate unit (the IV-D agency) which is responsible and accountable for the operation of the child support program on behalf of the state. 45 CFR 302.12 further provides that the IV-D agency can delegate functions although the IV-D agency retains the responsibility for ensuring compliance with the requirements of the state plan, federal regulations and implementing policy. Section 454B(a)(2) of the Social Security Act also indicates that the SDU can be operated by a private contractor "directly responsible to the state agency."

Accordingly, the state agency has the authority to delegate the functions to the SDU or to private contractors, including delegating the authority to follow the recoupment procedures as outlined in PIQ-02-001. The SDU or private contractor would be operating on behalf of the state in carrying out these functions. If the state chooses to delegate the recoupment procedures, the contract with an SDU or a full service privatized office would need to lay out the recoupment procedures being delegated and the circumstances under which the procedures are to be used and the documentation to be maintained to substantiate permission. It also needs to specify the procedures for handling vendor errors. As noted in PIQ-02-001, the state needs to have processes in place that minimize the need to pursue the recoupment of an overpayment, such as requiring a vendor managing the SDU to absorb its own errors. Finally, the state would need to monitor the vendor's or contractor's compliance with the recoupment procedures to ensure that the procedures are being applied properly and that permission from custodial parents is being obtained correctly and without coercion.

cc: Regional Program Managers