This is a repost of the following Facebook Memo I posted on 8/28/12:
Memo To Followers:
Federal Title IVD Payments and Bonuses to States For the Collection and Administration of Child Support Payments.
Recently, I’ve been getting some queries about why I’ve been hammering so much on the issue of child support payments. And, I suspect, we’ve lost a follower or two because I’ve sort of ratcheted up the rhetoric on this topic a bit lately.
In fact, a couple of weeks a ago, we were having a discussion on this page in which I was asserting that States can receive anywhere from $1 to $2 in Federal subsidy payments for every dollar they collect and administer in child support payments. And it was during one of this discussion that one of our followers asked the simple question, “Do you have any documentation on this?”.
Well, at the time, the only information I had available was budget information from the Office of Child Support Enforcement from 2009. So I contacted Michael McKormick at the American Coalition for Fathers and Children and he confirmed that my information was also the most recent published data he had as well (He also noted that Obama administration has been highly resistant to publishing any current budget data on this matter….).
In any case, enter my new best friend, Rita Fuerst Adams from Fathers and Families (Fathersandfamilies.org).
Because Rita was able to track down for me the actual act that describes exactly how these payments and bonuses are calculated.
I’ve Attached The Link For You Below. But Here Is The Short Story Version:
*The program is administered by the Office of Child Support Enforcement within the Administration of Children and Families; which is governed by the Department of Health and Human Services.
* The Act governing the program is known as the `Child Support Performance and Incentive Act of 1998′.
* There are bonus and penalty measures that determine the funding.
* Incentive Payments to States –
(1) IN GENERAL- The incentive payment for a State for a fiscal year is equal to the incentive payment pool for the fiscal year, multiplied by the State incentive payment share for the fiscal year.
(2) INCENTIVE PAYMENT POOL-
(A) IN GENERAL- In paragraph (1), the term `incentive payment pool’ means–
(i) $422,000,000 for fiscal year 2000;
(ii) $429,000,000 for fiscal year 2001;
(iii) $450,000,000 for fiscal year 2002;
(iv) $461,000,000 for fiscal year 2003;
(v) $454,000,000 for fiscal year 2004;
(vi) $446,000,000 for fiscal year 2005;
(vii) $458,000,000 for fiscal year 2006;
(viii) $471,000,000 for fiscal year 2007;
(ix) $483,000,000 for fiscal year 2008; and
(x) for any succeeding fiscal year, the amount of the incentive payment pool for the fiscal year that precedes such succeeding fiscal year, multiplied by the percentage (if any) by which the CPI for such preceding fiscal year exceeds the CPI for the second preceding fiscal year.
(B) CPI- For purposes of subparagraph (A), the CPI for a fiscal year is the average of the Consumer Price Index for the 12-month period ending on September 30 of the fiscal year. As used in the preceding sentence, the term `Consumer Price Index’ means the last Consumer Price Index for all-urban consumers published by the Department of Labor.
*** So essentially, the pool value increases every year at growth rate equal to the consumer price index. Which for 2012, would put the incentive pool at a little over 530,000,000****
(3) STATE INCENTIVE PAYMENT SHARE- In paragraph (1), the term `State incentive payment share’ means, with respect to a fiscal year–
(A) the incentive base amount for the State for the fiscal year; divided by
(B) the sum of the incentive base amounts for all of the States for the fiscal year.
Now, here’s where it gets important, because this is where the base value figures are established:
(4) INCENTIVE BASE AMOUNT- In paragraph (3), the term incentive base amount’ means, with respect to a State and a fiscal year, the sum of the applicable percentages (determined in accordance with paragraph (6)) multiplied by the corresponding maximum incentive base amounts for the State for the fiscal year, with respect to each of the following measures of State performance for the fiscal year:
(5) MAXIMUM INCENTIVE BASE AMOUNT-
(A) IN GENERAL- For purposes of paragraph (4), the maximum incentive base amount for a State for a fiscal year is–
(i) with respect to the performance measures described in subparagraphs (A), (B), and (C) of paragraph (4), the State collections base for the fiscal year; and
(ii) with respect to the performance measures described in subparagraphs (D) and (E) of paragraph (4), 75 percent of the State collections base for the fiscal year.
Skipping some stuff here…
(C) STATE COLLECTIONS BASE- For purposes of subparagraph (A), the State collections base for a fiscal year is equal to the sum of–
(i) 2 times the sum of–
(I) the total amount of support collected during the fiscal year under the State plan approved under this part in cases in which the support obligation involved is required to be assigned to the State pursuant to part A or E of this title or title XIX; and
(II) the total amount of support collected during the fiscal year under the State plan approved under this part in cases in which the support obligation involved was so assigned but, at the time of collection, is not required to be so assigned; and
(ii) the total amount of support collected during the fiscal year under the State plan approved under this part in all other cases.
(A) The paternity establishment performance level.
(B) The support order performance level.
(C) The current payment performance level.
(D) The arrearage payment performance level.
(E) The cost-effectiveness performance level.
**So, you can see two important things here.
First, the reimbursements, payments, and bonuses are NOT determined by a reimbursement of State expenses incurred. In fact, the minimization of State Collection Costs is a bonus item.
Secondly, and this is really important, the figures used are the child support funds that States have under administration.
*** See the link for the actual tables for calculating bonuses, etc****
And here is something I found interesting. Check this out:
(c) TREATMENT OF INTERSTATE COLLECTIONS- In computing incentive payments under this section, support which is collected by a State at the request of another State shall be treated as having been collected in full by both States, and any amounts expended by a State in carrying out a special project assisted under section 455(e) shall be excluded.
***i.e. If two States are working together to collect funds, they both get credit for the purposes of establishing bonuses – this is pure gravy.
Note a couple of things here.
First, the bonus values are doubled for the categories of paternity test performance and cost performance.
So why would the Feds care about State costs? Because this is the bonus and incentive program, and States already receive a 66% dollar for dollar reimbursement for administrative costs (and I’m not sure, I’ll have to check, but i think there is a way they can finagle the remaining 34% to get even dollar for dollar match) under a different section of the Social Security Act.
So, there you have it.
States can get up to 100% reimbursement for administrative costs plus up to two times the bonus pool share for two categories along with the rest of it.
Now add to this, the fact that Courts often charge fees for posting these certified payments, and may assess additional fees and fines for enforcement, and you’ve got a very lucrative incentive for States and Courts to maximize child support payments.
In Other Words, It Should Be No Surprise That:
(1) Child Support payments are maximized, regardless of whether the NCP can afford them. States and Courts don’t care; the debt can’t go way or be retroactively reduced.
(2) Equal and Shared parenting is disincented – this will reduce revenue to the States and Courts.
(3) More and more States are requiring mandatory garnishments and payment administration. People who are already paying on time will improve their performance ratings for bonus calculations.
(4) States like TX make it difficult for non-paternal parents relieve themselves of child support burdens.
(5) Why States and Courts are not persuaded by reasonable and humane arguments for shared parenting reforms.
The system has been corrupted by money and the Feds are driving this corruption.
It’s time to fire politicians.