[Federal Register Volume 59, Number 235 (Thursday, December 8, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30107]


[[Page Unknown]]

[Federal Register: December 8, 1994]


                                                   VOL. 59, NO. 235

                                         Thursday, December 8, 1994

DEPARTMENT OF AGRICULTURE

Food and Consumer Service

7 CFR Parts 271, 273, and 275

[Amendment No. 362]
RIN 0584-AB58

 

Food Stamp Program; Child Support Deduction

AGENCY: Food and Consumer Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule is being proposed to implement a provision of the 
1993 Mickey Leland Childhood Hunger Relief Act establishing a child 
support deduction. The deduction would increase the benefits of food 
stamp households that pay legally obligated child support to a 
nonhousehold member.

DATES: Comments must be received on or before February 6, 1995, to be 
assured of consideration.

ADDRESSES: Comments should be submitted to Judith M. Seymour, 
Eligibility and Certification Regulation Section, Certification Policy 
Branch, Program Development Division, Food and Consumer Service, USDA, 
3101 Park Center Drive, Alexandria, Virginia, 22302, (703) 305-2496. 
Comments may also be datafaxed to the attention of Ms. Seymour at (703) 
305-2454. All written comments will be open for public inspection at 
the office of the Food and Consumer Service during regular business 
hours (8:30 a.m. to 5 p.m., Monday through Friday) at 3101 Park Center 
Drive, Alexandria, Virginia, Room 720.

FOR FURTHER INFORMATION CONTACT: Questions regarding the proposed 
rulemaking should be addressed to Ms. Seymour at the above address or 
by telephone at (703) 305-2496.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule has been determined to be significant and was 
reviewed by the Office of Management and Budget in conformance with 
Executive Order 12866.

Executive Order 12372

    The Food Stamp Program is listed in the Catalog of Federal Domestic 
Assistance under No. 10.551. For the reasons set forth in the final 
rule in 7 CFR 3015, Subpart V and related Notice (48 FR 29115), this 
Program is excluded from the scope of Executive Order 12372 which 
requires intergovernmental consultation with State and local officials.

Regulatory Flexibility Act

    This rule has been reviewed with regard to the requirements of the 
Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). Ellen Haas, 
Under Secretary for Food, Nutrition, and Consumer Services, has 
certified that this rule will not have a significant economic impact on 
a substantial number of small entities. State and local welfare 
agencies will be the most affected to the extent that they administer 
the Program.

Paperwork Reduction Act

    The reporting and recordkeeping burden associated with the 
eligibility, certification, and continued eligibility of food stamp 
recipients is approved under OMB No. 0584-0064. Current burden 
estimates for OMB No. 0584-0064 include burden associated with 
collecting and verifying information reported on the application to 
determine initial household eligibility and also on the change report 
and monthly report forms. The provision in 7 CFR 273.9 of this proposed 
rulemaking which allows an income deduction for certain child support 
payments does not alter burden estimates already approved under OMB No. 
0584-0064. The methodologies used to determine the burden estimates 
assume that all households will report information on each income and 
resource line of the application form and will be subject to the same 
level of reporting and verification burden as current levels require. 
The public reporting burden for the Food Stamp Program application is 
estimated to average 13.74 minutes per application. The proposed 
reporting requirements in 7 CFR 273.12 and 7 CFR 273.21 do not alter 
the burden estimate for reporting already approved under OMB No. 0584-
0064. Establishing a quarterly reporting option for the child support 
deduction will not increase the reporting burden because households are 
already required to report certain changes when they occur. At State 
agency option, quarterly reporting would replace change reporting for 
the child support deduction and would reduce the number of times a year 
a household would have to complete a food stamp application form. 
Comments regarding this burden estimate or any other aspect of this 
collection of information, including suggestions to reduce this burden 
may be sent to: U.S. Department of Agriculture, Clearance Officer, 
OIRM, room 404-W, Washington DC 20250 and to Wendy Taylor, OIRM, Office 
of Management and Budget, Paperwork Reduction Project (OMB No. 0584-
0064) Washington, DC 20503.

Executive Order 12778

    This rule has been reviewed under Executive Order 12778, Civil 
Justice Reform. This rule is intended to have preemptive effect with 
respect to any State or local laws, regulations or policies which 
conflict with its provisions or which would otherwise impede its full 
implementation. This rule is not intended to have retroactive effect 
unless so specified in the ``Effective Date'' paragraph of this 
preamble. Prior to any judicial challenge to the provisions of this 
rule or the application of its provisions, all applicable 
administrative procedures must be exhausted. In the Food Stamp Program 
the administrative procedures are as follows: (1) for Program benefit 
recipients--State administrative procedures issued pursuant to 7 U.S.C. 
2020(e)(1) and 7 CFR 273.15; (2) for State agencies--administrative 
procedures issued pursuant to 7 U.S.C. 2023 set out at 7 CFR 276.7 (for 
rules related to non-quality control (QC) liabilities) or Part 284 (for 
rules related to QC liabilities); (3) for Program retailers and 
wholesalers--administrative procedures issued pursuant to 7 U.S.C. 2023 
set out at 7 CFR 278.8.

Regulatory Impact Analysis

Need for Action

    This action is required as a result of the Mickey Leland Childhood 
Hunger Relief Act which amends the Food Stamp Act of 1977, as amended, 
to establish a child support deduction for households that pay legally 
obligated child support to a nonhousehold member.

Benefits

    The child support deduction would increase the number of 
potentially eligible food stamp recipients and would increase the 
benefit level of households entitled to the deduction.

Costs

    It is estimated that this action would increase the cost of the 
Food Stamp Program by less than $1 million in Fiscal Year 1994; $55 
million in Fiscal Year 1995; $125 million in Fiscal Year 1996; $130 
million in Fiscal Year 1997; and $145 million in Fiscal Year 1998.

Background

    On January 4, 1994, the Food and Consumer Service (FCS) published a 
notice in the Federal Register announcing a public hearing on January 
20, 1994. The public hearing was scheduled to provide an opportunity 
for State agencies, advocacy groups, and other interested parties to 
engage in public dialogue on issues concerning the regulatory 
provisions to be published in connection with the Food Stamp Act of 
1977 (Act) amendments made by the Mickey Leland Childhood Hunger Relief 
Act, Chapter 3, Title XIII, Omnibus Budget Reconciliation Act of 1993, 
Pub. L. 103-66, enacted August 10, 1993 (Leland Act). All provisions of 
the Leland Act pertinent to the Food Stamp Program (Program), including 
the child support deduction, were included as topics of dialogue during 
the public hearing.

Child Support Deduction

    A food stamp applicant's eligibility and coupon allotment are 
determined, in part, by the amount of income the household has 
available to spend on food after certain monthly expenses are deducted 
from the household's total monthly income. Household expenses that are 
deducted from income in determining food stamp eligibility and coupon 
allotment include: (1) a standard deduction (which is provided to all 
food stamp households); (2) an earned income deduction equal to 20 
percent of the household's gross earned income; (3) a medical deduction 
for expenses over $35 a month for elderly or disabled household 
members; (4) up to a certain limit, a dependent care deduction for the 
actual costs the household must pay for the care of children or other 
dependents while household members are seeking or maintaining 
employment or while they are participating in education or training 
programs; and (5) the costs for shelter which exceed 50 percent of 
income after other deductions. There is a limit on the shelter 
deduction for households without an elderly or disabled member.
    Section 13921 of the Leland Act (Pub. L. 103-66, Title I, Chapter 
3, August 10, 1993) amends section 5(e) of the Food Stamp Act to add a 
deduction for household members who make legally obligated child 
support payments to or for an individual living outside of the 
household. The provision is intended to encourage noncustodial parents 
to comply fully with their child support obligations. At the same time, 
the deduction will result in a more accurate reflection of the 
household's reduced ability to buy food. The legislative history (House 
Conference Report No. 213, 103d Congress, 1st Session (1993), p. 925) 
indicates that Congress did not want an undue administrative burden 
placed on the State agency as a result of this provision.
    The Department is addressing a number of issues related to the 
child support deduction in this proposed rule. These issues are 
discussed below and include: (1) definition of a legal obligation to 
pay child support and allowable amount of child support deduction; (2) 
verification; (3) budgeting and reporting procedures; (4) length of 
certification period; and (5) quality control requirements.

Legal Obligation and Amount of the Child Support Deduction

    To be eligible for the child support deduction, the statute 
requires that the household must be legally obligated to pay child 
support. The Department is aware that various arrangements may exist 
between unmarried, separated, or divorced parents with respect to child 
support. However, the law is specific that the deduction is allowed 
only for persons who have a legal obligation, such as a court order 
that would be upheld by a judge in a court of law, an order issued 
through an administrative process, or a legally enforceable separation 
agreement. Accordingly, the Department proposes to amend 7 CFR 273.9(d) 
to specify that persons who are legally obligated to pay child support 
to or for an individual living outside the household and who make such 
payments are eligible to receive a child support deduction.
    The Department is proposing in this rule to amend 7 CFR 273.9(d) to 
specify that the child support deduction must reflect the child support 
the household pays or expects to pay during the certification period, 
rather than the obligated amount. The legislation states that ``* * * 
households shall be entitled to a deduction for child support payments 
made (emphasis added) * * *.'' It is clear that the objective of the 
law is to allow a deduction on the basis of payments actually made, not 
the amount the household is legally obligated to pay. Current data show 
that 49 percent of parents who are legally obligated to pay child 
support either do not pay any support (24 percent) or pay less than the 
full amount of the support (25 percent). (Overview of Entitlement 
Programs, 1993 Green Book, Background Material and Data on Programs 
Within the Jurisdiction of the Committee on Ways and Means, Committee 
on Ways and Means, U.S. House of Representatives, p. 748.) 
Strengthening the child support system is an important goal of the 
Department. The Department believes that Congress did not intend to 
provide a deduction for child support payments that the household 
member did not actually pay. Such a deduction would simply be a 
windfall to absent parents who fail to meet their responsibilities to 
their children. Furthermore, a child support deduction that reflects 
actual payments would allow the household to include child support 
payments that were previously unpaid (i.e., arrearages). Most 
importantly, basing the deduction on amounts paid would most accurately 
reflect the current food assistance needs of the paying household.
    The Department also is including a clarification discussed in the 
legislative history of the Leland Act (114 Congressional Record, 
S10726, August 6, 1993). The history indicates that legally obligated 
payments paid on behalf of the nonhousehold member (such as paying rent 
to a landlord) must be considered as part of the child support 
deduction for the household making the payments. This would include any 
additional payments the noncustodial parent is legally obligated to 
make to obtain health insurance coverage for a child or children. 
Accordingly, the Department is proposing to specify in 7 CFR 273.9 that 
the child support deduction shall include payments the household makes 
on behalf of the nonhousehold member to the extent that the payments 
represent the household's child support obligation and have been 
ordered by a court or administrative authority. Alimony or spousal 
support payments that are made to or on behalf of a nonhousehold member 
or payments made in accordance with a property settlement would not be 
allowable as part of the child support deduction.
    The Department is also proposing to add conforming language at 7 
CFR 273.11(c)(1)(i) and (2)(iii) to provide procedures for allowing the 
child support deduction for households with ineligible members. As 
proposed, the child support deduction would be handled the same way as 
the earned income, standard, medical, dependent care, and excess 
shelter deductions. That is, the entire deduction would be allowed to 
households with members disqualified because of intentional Program 
violation or work requirements because the entire income of these 
household members is counted. In the case of ineligible aliens or 
members disqualified for refusal to obtain or apply for a social 
security number, the amount of child support paid or expected to be 
paid would be divided evenly among the household members, including the 
ineligible member, and all but the ineligible member's share would be 
deducted from household income.
    The Department is proposing to add the provision of section 13921 
of the Leland Act authorizing a child support deduction to the 
allowable deductions in 7 CFR 273.9(d) by redesignating paragraphs 
(d)(7) and (d)(8) as paragraphs (d)(8) and (d)(9) and by adding a new 
paragraph (d)(7) following the provisions for the standard utility 
allowance. In accordance with section 13921 of the Leland Act, the 
child support deduction must be determined in the food stamp benefit 
calculation prior to determining the household's excess shelter 
deduction and it would be preferable to insert the child support 
deduction before the shelter deduction at 7 CFR 273.9(d)(5). However, 
redesignating 7 CFR 273.9(d)(5) and subsequent paragraphs would require 
extensive renumbering of existing policy guidance and regulations in 
clearance. Therefore, the Department is proposing to place the new 
deduction following the standard utility allowance provisions. To 
ensure the correct calculation of allotments, however, the Department 
is proposing to amend 7 CFR 273.10 by redesignating paragraphs 
(e)(1)(i)(F) and(G) as (e)(1)(i)(G) and (e)(1)(i)(H) and adding a new 
paragraph (e)(1)(i)(F) to place the child support deduction before the 
shelter deduction in the order of allotment calculation. The Department 
will amend the food stamp application form and the food stamp worksheet 
to include a space for households to identify child support payments.

Verification of Child Support Deduction

    The Department is proposing that both the legal obligation to pay 
child support and the actual amount paid be verified. The household 
would be the primary source of verification of the legal obligation to 
pay child support, the amount of the obligation, and the amount paid. 
Any document that verifies the obligation to pay child support, such as 
a court order, administrative order, or legally enforceable separation 
agreement would be sufficient verification of the obligation and 
obligated amount. Acceptable verification of amounts paid would include 
canceled checks, wage withholding statements, verification of 
withholding from unemployment compensation, and statements from the 
custodial parent regarding direct payments or third party payments the 
noncustodial parent pays or expects to pay on behalf of the custodial 
parent. However, documents used to verify the household's legal 
obligation to pay child support would not be acceptable verification of 
the household's actual payments. If the household fails or refuses to 
submit required verification, the State agency would determine the 
household's eligibility and coupon allotment without consideration of 
the child support deduction.
    In addition, we are proposing that State agencies enter into 
agreements with their State Child Support Enforcement (CSE) agencies to 
obtain verification from CSE of child support payments made to the 
agency by individuals in food stamp households claiming the deduction. 
We are proposing that a match with CSE records be conducted at least 
once prior to the household's next recertification. For households 
certified for 3 months or fewer, the match would be required at 
alternate recertifications. The State agency would also be required to 
verify payments made to courts or CSE agencies in other States to the 
extent that verification can be obtained electronically.
    We are not proposing more specific requirements for scheduling the 
matches at this time because we realize that CSE systems enhancements 
are currently being developed. We encourage State food stamp and CSE 
agencies to comment on the feasibility of requiring more frequent 
matches with CSE information and the potential effectiveness of match 
data as verification of child support obligations and payments. Of 
particular concern is the effectiveness of automated verification 
procedures when the food stamp household and the custodial parent do 
not reside in the same State.
    State agencies would be required to notify applicants on the 
application form that child support information will be checked through 
computer matching with CSE. The information obtained through the match 
would be used to enable the State agency to make a more informed 
decision regarding the household's deduction for the new certification 
period. If the deduction is allowed prospectively based on an average 
of past payments and recent data are available from CSE, the CSE data 
could be used as the basis for anticipating future payments, taking 
into account any changes in circumstances reported at recertification. 
However, State agencies would not be required to conduct any month-by-
month reconciliation of amounts reported by the household and the CSE 
data. Because the deduction will frequently be based on an average of 
past payments, the amount of the deduction would not coincide with the 
actual payment made. State agencies would not be required to use the 
information retrospectively to establish claims or provide restored 
benefits. Information from CSE records is considered unverified upon 
receipt. Therefore, if there is a discrepancy between information 
provided by the household and that obtained from CSE records, the State 
agency would be required to give the household an opportunity to 
resolve the discrepancy in accordance with procedures at 7 CFR 
273.2(f)(9) for handling unverified data obtained through the Income 
and Eligibility Verification System.
    Accordingly, the Department is proposing to amend 7 CFR 273.2(f)(1) 
to add requirements related to verification of child support at initial 
certification. We are also proposing a conforming amendment to 7 CFR 
273.2(b)(2) requiring the State agency to notify applicants that child 
support information is subject to verification through computer 
matching. An amendment to 7 CFR 273.2(f)(8)(i) is also proposed to 
require verification of child support payments at recertification. 
Changes reported during the certification period would be verified in 
accordance with 7 CFR 273.2(f)(8)(ii). We are interested in obtaining 
comments on these verification requirements and suggestions for less 
burdensome ways of verifying child support payments.

Child Support Budgeting and Reporting Procedures

    The Leland Act and legislative history indicate that the Department 
may minimize requirements for budgeting and reporting changes in child 
support payments. Section 13921 of the Leland Act allows retrospective 
calculation of the support payments. Another option discussed in the 
legislative history (House Conference Report No. 213, 103rd Congress, 
1st Session (1993), p. 925) would permit State agencies to develop an 
average based on payments made during the last certification period 
(with appropriate adjustments to account for any changes in the child 
support order) rather than track the household's monthly payments. The 
Department is cognizant of the need to minimize the reporting and 
budgeting burden while also ensuring that households receive a 
deduction only for payments that are actually being made.
    Accordingly, the Department is proposing several procedures in this 
rule that strike a balance between the need to have accurate 
information and the need to minimize burdens on food stamp households 
and State agencies. State agencies will have the option to select the 
procedure(s) which best suits their needs.

Option 1--Change Reporting and Prospective or Retrospective Budgeting

    Current rules at 7 CFR 273.12 identify the changes a household must 
report during its certification period. Households must report certain 
changes within 10 days of the date the change becomes known. The 
Department proposes to amend the current reporting requirements at 7 
CFR 273.12 to establish reporting requirements for child support 
payments. The intent is to provide a means of obtaining information 
about payments being made that is not overly burdensome on the 
household or the State agency. Because the Department recognizes that 
some households will have a history of making child support payments 
while others will not, the proposal includes reporting and budgeting 
requirements for households with and without a child support payment 
record.
    Under this proposal, any household that is subject to change 
reporting (for the child support payment) under 7 CFR 273.12(a) would 
be required to report changes in the legal obligation, including but 
not limited to changes such as a child reaching an age limit at which 
child support is no longer legally obligated or a change in the legally 
obligated amount.
    For change reporting households that have a record of 3 or more 
months of paid child support, the State agency would average at least 3 
months of legally obligated child support and use the average as the 
household's support deduction, taking into account any anticipated 
changes in the legal obligation or other changes that would affect the 
payment. The average would be used to establish a household's child 
support payment for the certification period. The average would be 
adjusted during the certification period in accordance with any changes 
in the payment reported by the household or which otherwise become 
known to the State agency. At recertification, the State agency would 
obtain updated information on which to base a new average for the new 
certification period.
    For households without a record of at least 3 months of paid, 
legally obligated child support, the State agency would base the child 
support deduction on anticipated payments, exclusive of payments toward 
arrearages. The household would be required to report changes greater 
than $50 in the amount of legally obligated child support actually 
paid, excluding any amounts paid toward arrearages. The base from which 
to measure the $50 change would be the figure used at the most recent 
certification action to determine the household's allotment.
    Under current 7 CFR 273.12(a)(1)(i), households have to report a 
change in gross monthly income when the amount changes by more than 
$25. The Department considered proposing a $25 change reporting 
requirement for child support payments, but decided instead to increase 
the reporting threshold. Using a higher amount would mean that fewer 
small changes would have to be reported and processed, thereby saving 
time for both households and the State agency and minimizing the 
administrative burden. The Department believes the increased efficiency 
would offset any confusion caused by the inconsistency in the reporting 
thresholds. Included in the category of households without a payment 
record would be households with a newly established legal obligation 
and households that have failed to meet an obligation. These households 
would be certified initially for a short period, in accordance with 7 
CFR 273.10(f)(4), to allow development of a payment history prior to 
assignment of a longer period with a deduction based on averaged 
payments.
    With certain exceptions, households subject to change reporting may 
have their income and deductions budgeted prospectively or 
retrospectively. The Department is proposing that a State agency may 
budget child support payments either prospectively or retrospectively, 
depending on the reporting option selected.

Option 2--Quarterly Reporting and Prospective or Retrospective 
Budgeting

    The Department is proposing to include a new reporting option State 
agencies may use for households that are subject to change reporting 
requirements under 7 CFR 273.12 and are eligible to receive a child 
support deduction. Under this option, State agencies may require 
households to submit a quarterly report to report changes in the amount 
of child support paid and changes in the legal obligation. The 
household would remain responsible for reporting changes other than 
changes in child support payments as required by 7 CFR 273.12(a)(1) 
within 10 days.
    The Department is proposing quarterly reporting for two reasons: 
(1) it enables State agencies to assign longer certification periods 
while receiving periodic information on the actual amount of child 
support paid, and (2) it allows States to adjust the deduction on the 
basis of several months of data. Under this proposal, a State agency 
electing to use the quarterly reporting system would be required to 
provide the household with a quarterly report by the end of the second 
month in each quarter. The State agency's quarterly report must be 
written in clear, simple language, meet the bilingual requirements of 
Sec. 272.4(b), and contain the following:
    a. A requirement to report the actual amount of child support paid 
for the first 2 months of the quarter and the actual amount paid or 
anticipated for the third month;
    b. A requirement to report changes in the legal obligation to pay 
child support anticipated for the upcoming quarter, including but not 
limited to changes such as the completion of an obligation or a change 
in the legally obligated amount.
    c. A requirement to return the report to the State agency by a 
specified date in the third month in the quarter;
    d. Notification of the verification the household must submit with 
the report;
    e. The individual or agency unit available to assist the household 
in completing the form and the toll-free number (or number where 
collect calls will be accepted) which the household may use to obtain 
further information;
    f. A statement to be signed by the household member who is 
responsible for paying child support indicating his or her 
understanding that the information may result in a change in the 
household's food stamp benefits, including reduction or termination;
    g. A statement that failure to return the report by the required 
deadline may result in disallowance of the child support deduction;
    h. A reminder that other changes required to be reported under 7 
CFR 273.12(a)(1) must be reported within 10 days from the date the 
household becomes aware of the change; and
    i. A statement advising the household that the State agency will 
act on a change reported before the quarterly report is submitted;
    j. A brief description of the Food Stamp Program civil and criminal 
penalties for fraud.
    The State agency would use this report to make any changes in the 
household's child support deduction for the next 3 months. State 
agencies would be required to average the previous quarter's payments 
to determine the deduction for the following quarter. The State agency 
would also need to take into account any reported changes in the legal 
obligation to pay child support.
    Households must be given a reasonable time after the end of the 
second month to submit the quarterly report. If the household fails to 
file a quarterly report or files an incomplete report by the date set 
by the State agency, the State agency would be required to send the 
household a reminder notice advising the household that it has 10 days 
from the date the State agency mails the notice to file a complete 
quarterly report. If the household does not file a complete report by 
the extended filing date, the State agency would recalculate the 
household's eligibility and benefit level without allowing a deduction 
for child support. The State agency would not be allowed to terminate 
the household for failing to submit a complete quarterly report unless 
the household is otherwise ineligible.
    The State agency would be required to send an adequate notice as 
defined under current rules at 7 CFR 271.2 if the household fails to 
submit a complete report or if the information contained on a complete 
quarterly report results in a reduction or termination of benefits. 
Adequate notice is currently defined, in part, as a written notice that 
advises the household of an action the State agency intends to take. 
The notice may be received by the household prior to the date of the 
action, at the time the household receives its reduced benefits, or at 
the time the household would have received its benefits if the action 
the State agency intends to take is a termination of benefits. 
Households have 10 days from the mailing date of the notice to contest 
the State agency's action. State agencies may combine the reminder 
notice and adequate notice.
    The Department is further proposing in this rule to prohibit 
quarterly reporting for some food stamp households. Section 6(c)(3) of 
the Act prohibits dual reporting requirements. Thus, if the State 
agency elects to require a household to report any child support 
payments quarterly, the quarterly report would be the sole reporting 
requirement for reporting child support. Section 6(c)(1)(A) of the Act 
prohibits State agencies from requiring certain households such as 
migrant or seasonal farmworker households to submit periodic reports. 
We are including these statutory prohibitions in this proposal at 7 CFR 
273.12.
    The Department does not intend that changes other than changes in 
child support be included on the quarterly report. The Department has 
recently approved several waivers allowing State agencies to implement 
a quarterly reporting system for certain portions of the food stamp 
caseload. We will be reviewing the impact of these waivers to determine 
the feasibility of a more expanded quarterly reporting system. The 
quarterly report described in this rule pertains only to child support 
payments.

Option 3--Monthly Reporting and Retrospective Budgeting

    State agencies may require households (except certain legislatively 
exempt households) to report changes on a monthly report form under the 
current rules at 7 CFR 273.21 (i.e., monthly reporting households). All 
monthly reporting households are required to be budgeted 
retrospectively. Section 6(c) of the Act and corresponding regulations 
at 7 CFR 273.21(h)(3) allow the State agency to determine the changes 
the household must report monthly. Households that are required to 
report monthly under 7 CFR 273.21 would be required to report their 
monthly child support payments on the monthly report if the State 
agency includes the requirement on its monthly report. If a household 
that is required to report its child support payment on a monthly 
report fails to report or fails to submit required verification related 
to its child support payment, the State agency would determine the 
household's eligibility and allotment level without consideration of 
the child support deduction. If the State agency does not require the 
household to report its monthly child support payments on the monthly 
report, the household would be subject to change reporting for child 
support payments.

Summary of Child Support Deduction Reporting and Budgeting Procedures

    The intent of all the possible reporting and budgeting systems is 
to most accurately reflect a household's actual payment of child 
support while minimizing the burden on households and State agencies. 
For that reason, the Department has provided several options as 
discussed in detail above. In summary, the options are:
    (1) Change reporting: If a household has a record of at least 3 
months of paid child support, the State agency would budget the child 
support deduction either prospectively or retrospectively based on an 
average of the payments made in at least 3 previous months, and the 
household would be required to report within 10 days changes in the 
legal obligation to pay child support.
    If a household has no record of paying child support (or a record 
of less than 3 months) the State agency would budget the child support 
deduction prospectively or retrospectively using an estimate based on 
available information in accordance with 7 CFR 273.10(c), and 
households would be required to report within 10 days changes in the 
legal obligation and changes in the amount of the payment of $50 or 
more.
    (2) Quarterly reporting: The State agency may budget child support 
payments prospectively or retrospectively based on actual monthly 
information reported by the household on a quarterly report form.
    (3) Monthly reporting: The State agency may budget child support 
payments retrospectively based on actual amounts reported by the 
household on a monthly report.
    State agencies may choose one or more of these options. State 
agencies may use a combination of the options, depending on the 
budgeting and reporting systems already in place. That is, a State 
agency which has monthly reporting for part of its caseload and change 
reporting for other households, may opt to require the monthly 
reporting households to report changes in child support payments 
monthly while other households are required to report the changes 
within 10 days. However, a State agency may not impose a dual reporting 
requirement on a household. The Department does not believe that a 
household should be subject to all three reporting methods because the 
reporting requirements would be too cumbersome. Thus, no household 
would be required under this proposal to report child support on a 
change report, a monthly report, and a quarterly report. Regardless of 
the system used, the State agency must act on any reported change.
    Accordingly, the Department is proposing to amend 7 CFR 273.10, 7 
CFR 273.12 (a) and (b), 7 CFR 273.21(h) and 7 CFR 273.21(j)(3)(iii) to 
specify the requirements for the options State agencies may elect for 
child support reporting and budgeting. The Department is also proposing 
to amend 7 CFR 271.2 to define ``adequate notice'' as it relates to 
monthly reporting and quarterly reporting.

Child Support Deduction--Certification Periods

    Under current rules at 7 CFR 273.10(f), the State agency must 
establish a definite period of time (i.e., certification period) within 
which the household is eligible to receive benefits. Depending on 
household circumstances, the household may be certified for as short a 
period as 1 month but for no more than 12 months.
    The Department is not proposing special certification period 
requirements for households eligible to receive a child support 
deduction. Establishing special certification period requirements was 
considered, but during the January 20 hearing it was pointed out that 
current rules adequately address the situation of households that pay 
child support. Under current rules, households with no record of 
payments or which have extreme monthly variations in payments would be 
certified for a short period of time in accordance with 7 CFR 
273.10(f)(4). Households with a stable payment record and households 
that report their child support payments quarterly or monthly would be 
certified for longer periods from 6 to 12 months, in accordance with 7 
CFR 273.10(f)(5) and (8).

Child Support Deduction--Quality Control (QC)

    As indicated in the above discussion, Congress recognized the 
fluctuating nature of child support payments and intended that 
determining the monthly amount of the allowable child support deduction 
should not be a burden for State agencies. Accordingly, the Department 
has proposed to give State agencies flexibility in determining how to 
budget the payments, including use of averaging. According to the 
legislative history of the child support deduction provision (House 
Conference Report No. 213, 103rd Congress, 1st Session (1993), p. 925), 
State agencies would be able to average the payments made during one 
certification period and use that amount, taking into account any 
changes in the obligation, for the next certification period. The 
report indicates that ``The managers do not intend for this [averaging] 
procedure to deny a household a deduction for any child support 
actually paid, but rather the intention is to give States the option to 
use consistent budgeting procedures that would minimize the number of 
changes they would be required to make. State agencies correctly 
following such procedures would not be charged with quality control 
errors if the amount of child support that a household paid increased 
or decreased as long as the State agency adjusted the household's 
allotment prospectively at its next recertification.''
    To implement this provision, the Department proposes that the QC 
system would review the accuracy of the deduction at the most recent 
certification action prior to the sample month. Any unreported change 
in actual child support payments or obligation subsequent to the 
certification action would not be the basis for citing a household 
reporting error or a State agency error. A variance would exist if the 
QC reviewer determines that the State agency did not apply the proper 
deduction at the most recent certification action or that the household 
reported a change after the most recent certification action and the 
State agency failed to act or acted improperly on the reported change.
    Therefore, the Department proposes to add a paragraph to 7 CFR 
275.12(d)(2) to specify that any variances in the child support 
deduction resulting from unreported changes in actual child support 
payments or obligation shall be excluded from the QC error 
determination.

Implementation

    Section 13971 of the Leland Act provides that State agencies may 
implement Section 13921, Child Support Payments to Non-Household 
Members, on September 1, 1994, and shall implement the child support 
deduction no later than October 1, 1995. Therefore, we are proposing 
the amendments in this rule be effective on September 1, 1994, and be 
implemented no later than October 1, 1995. The provision must be 
implemented for all households that newly apply for Program benefits on 
or after October 1, 1995, or the date the State agency implements the 
provision prior to the required implementation date. State agencies 
would be required to adjust the cases of participating households at 
the next recertification, at household request, or when the case is 
next reviewed, whichever comes first. The State agency must provide 
restored benefits to such households back to October 1, 1995, or the 
date the State agency implemented the provision prior to October 1, 
1995. State agencies which fail to implement by October 1, 1995, shall 
provide benefits retroactive to October 1, 1995, or the date of 
application, whichever is later. Variances resulting from 
implementation of the provisions of the final rule would be excluded 
from error analysis for 120 days from the required implementation date, 
in accordance with section 13951 of Pub. L. 103-66, which amended 
section 16(c)(3)(A) of the Act, 7 U.S.C. 2025(c)(3)(A). State agencies 
which implement prior to the required implementation date must notify 
the appropriate regional office prior to implementation that they wish 
the variance exclusion period to begin with actual implementation, as 
provided in 7 CFR 275.12(d)(2)(vii)(A). Absent such notification, the 
exclusionary period will begin with the required implementation date.

List of Subjects

7 CFR Part 271

    Administrative practice and procedure, Food stamps, Grant programs-
social programs.

7 CFR Part 273

    Administrative practice and procedure, Aliens, Claims, Food stamps, 
Fraud, Grant programs-social programs, Penalties, Records, Reporting 
and recordkeeping requirements, Social security, Students.

7 CFR Part 275

    Administrative practice and procedures, Food stamps, Reporting and 
recordkeeping requirements.
    Accordingly, 7 CFR parts 271, 273, and 275 are proposed to be 
amended as follows:
    1. The authority citation of parts 271, 273, and 275 continues to 
read as follows:

    Authority: 7 U.S.C. 2011-2032.

PART 271--GENERAL INFORMATION AND DEFINITIONS


Sec. 271.2  [Amended]

    2. In Sec. 271.2, the definition of ``Adequate notice'' is amended 
by removing the words ``in a Monthly Reporting and Retrospective 
Budgeting system'' and adding in their place the words ``in a periodic 
reporting system such as monthly reporting or quarterly reporting''.

PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS

    3. In Sec. 273.2:
    a. a new sentence is added at the end of paragraph (b)(2),
    b. a new paragraph (f)(1)(xii) is added, and
    c. a new sentence is added at the beginning of paragraph 
(f)(8)(i)(A).
    The additions read as follows:


Sec. 273.2  Application processing.

* * * * *
    (b) Food Stamp application form. * * *
    (2) Income and eligibility verification system (IEVS). * * * The 
State agency shall also notify all applicants on the application form 
that information regarding child support payments may be verified with 
Child Support Enforcement agencies or courts.
* * * * *
    (f) Verification. * * *
    (1) Mandatory verification. * * *
    (xii) Legal obligation and actual child support payments. The State 
agency shall verify the household's legal obligation to pay child 
support, the amount of the obligation, and the monthly amount of child 
support the household actually pays. The household is responsible for 
providing verification of the legal obligation, the obligated amount, 
and the amount paid. The State agency shall accept any document that 
verifies the household's legal obligation to pay child support, such as 
a court or administrative order, or legally enforceable separation 
agreement. The State agency shall accept documentation verifying a 
household's actual payment of child support including, but not limited 
to, canceled checks, wage withholding statements, verification of 
withholding from unemployment compensation, and statements from the 
custodial parent regarding direct payments or third party payments the 
noncustodial parent pays or expects to pay on behalf of the custodial 
parent. Documents that are accepted as verification of the household's 
legal obligation to pay child support shall not be accepted as 
verification of the household's actual monthly child support payments. 
In addition to requiring verification from the household, the State 
agency shall be responsible for obtaining verification of the 
household's child support payments if the payments are made to the 
State's Title IV-D agency. State agencies shall enter into agreements 
with Child Support Enforcement (CSE) agencies to obtain data regarding 
the child support obligation and child support payment record of 
members of food stamp households receiving a child support deduction. 
The State agency shall match the records of food stamp recipients 
receiving a child support deduction against CSE automated data files. 
This match shall be conducted, at a minimum, at least once prior to the 
next recertification. For households certified for 3 months or fewer, 
the State agency shall conduct a match prior to alternate 
recertifications. The State agency shall use the information in 
determining the household's entitlement to a deduction in the new 
certification period. The State agency shall give the household an 
opportunity to resolve any discrepancy between household verification 
and CSE records in accordance with paragraph (f)(9) of this section.
* * * * *
    (8) Verification subsequent to initial certification. (i) 
Recertification. (A) At recertification the State agency shall require 
the household to verify the amount of legally obligated child support a 
household member pays to a nonhousehold member. * * *
* * * * *
    4. In Sec. 273.9, paragraphs (d)(7) and (d)(8) are redesignated as 
paragraphs (d)(8) and (d)(9), respectively, and a new paragraph (d)(7) 
is added to read as follows:


Sec. 273.9  Income and deductions.

* * * * *
    (d) Income deductions. * * *
    (7) Child support deduction. Child support payments paid by a 
household member to or for a nonhousehold member, provided that the 
household member has a legal obligation to pay child support and the 
payments are verified in accordance with Sec. 273.2(f). Households that 
fail or refuse to obtain necessary verification of their legal 
obligation or of their child support payments shall have their 
eligibility and benefit level determined without consideration of a 
child support deduction. If the noncustodial parent makes child support 
payments to a third party (e.g., a landlord or utility company) on 
behalf of the nonhousehold member in accordance with the support order, 
such payments shall be included in the child support deduction. 
Payments that are made by the household to obtain health insurance for 
the child or children shall also be included as part of the child 
support deduction. For households that have at least a three-month 
record of child support payments, the State agency shall allow a 
deduction for amounts paid toward arrearages. Alimony payments made to 
or for a nonhousehold member shall not be included in the child support 
deduction. Households that are eligible to receive a child support 
deduction shall report changes in accordance with the reporting 
requirements specified in Sec. 273.12 or Sec. 273.21.
* * * * *
    5. In Sec. 273.10:
    a. The introductory text of paragraph (d) is amended by adding the 
words ``child support'' between the words ``shelter,'' and ``and 
medical''.
    b. A new paragraph (d)(8) is added.
    c. Paragraph (e)(1)(i)(E) is amended by removing the reference 
``(e)(1)(i)(F)'' and adding in its place a reference to 
``(e)(1)(i)(G)''.
    d. Paragraphs (e)(1)(i)(F) and (e)(1)(i)(G) are redesignated as 
paragraphs (e)(1)(i)(G) and (e)(1)(i)(H), respectively, and a new 
paragraph (e)(1)(i)(F) is added.
    e. Newly redesignated paragraph (e)(1)(i)(G) is amended by removing 
the reference to ``(e)(1)(i)(G)'' and adding in its place a reference 
to ``(e)(1)(i)(H)''.
    The additions and revisions read as follows:


Sec. 273.10  Determining household eligibility and benefit levels.

* * * * *
    (d) Determining deductions. * * *
    (8) Child Support Deduction. The State agency shall budget child 
support payments either prospectively or retrospectively, depending on 
the reporting system used. In addition, the following budgeting 
procedures shall be used:
    (i) For change reporting households with a history of 3 or more 
months of paying child support, the State agency shall average at least 
3 months of child support, taking into account any anticipated changes 
in the legal obligation, and use that average as the household's 
support deduction.
    (ii) For change reporting households with no child support payment 
record or less than a 3-month record, the State agency shall estimate 
the anticipated payments (excluding payments toward arrearages) and use 
that estimate as the household's support deduction.
    (iii) For quarterly reporting households, the State agency shall 
initially use either paragraphs (d)(8)(i) or (d)(8)(ii) of this section 
as appropriate, then develop an average using the information provided 
in the quarterly report for subsequent quarters, making any necessary 
adjustments for anticipated changes.
    (iv) For monthly reporting households, the State agency shall 
initially use either paragraphs (d)(8)(i) or (d)(8)(ii) of this section 
as appropriate, then adjust the deduction as appropriate based on the 
monthly reports.
    (e) Calculating net income and benefit levels.
    (1) Net monthly income.
    (i) * * *
    (F) Subtract allowable monthly child support payments in accordance 
with Sec. 273.9(d)(5).
* * * * *


Sec. 273.11  [Amended]

    6. In Sec. 273.11,
    a. Paragraph (c)(1)(i) is amended by adding the words ``child 
support,'' after the words ``dependent care,''.
    b. Paragraph (c)(2)(iii) is amended by adding the words ``child 
support payment,'' after the word ``allowable'' in the second sentence 
and after the word ``deductible'' in the third sentence.
    7. In Sec. 273.12,
    a. The word ``and'' is removed at the end of paragraph (a)(1)(iv) 
and the period at the end of paragraph (a)(1)(v) is revised to read ``; 
and'' and a new paragraph (a)(1)(vi) is added.
    b. A new sentence is added after the first sentence of paragraph 
(a)(2).
    c. Paragraph (a)(4) is redesignated as paragraph (a)(5) and a new 
paragraph (a)(4) is added.
    d. The heading of paragraph (b) is revised, new introductory text 
is added to paragraph (b) and the introductory text of paragraph (b)(1) 
is revised.
    e. Paragraph (b)(2) is revised.
    The revisions and additions read as follows:


Sec. 273.12  Reporting changes.

    (a) Household responsibility to report.
    (1) * * *
    (vi) Changes in the legal obligation to pay child support, 
including termination of the obligation when a child reaches an age at 
which child support is no longer legally obligated. A household with 
less than a 3-month record of child support payments shall also be 
required to report changes greater than $50 from the amount used in the 
most recent certification action. Households required to report changes 
in child support on a quarterly or monthly report shall report actual 
monthly amounts paid in addition to changes in the legal obligation.
    (2)* * *Households that are required to report a change monthly as 
specified under Sec. 273.21 or that are required to report monthly 
child support payments on a quarterly report as specified under 
paragraph (a)(4) of this section shall not be required to report 
changes within 10 days of the date they become known to the household.* 
* *
* * * * *
    (4) The State agency may require a household that is eligible to 
receive a child support deduction in accordance with Sec. 273.9(d)(7) 
to report its monthly child support payments on a quarterly report.
    (i) A State agency that elects to require a household to report its 
monthly child support payments on a quarterly report shall provide the 
household with the quarterly report no later than the end of the second 
month in the quarter. The State agency shall provide the household a 
reasonable period after the end of the month in which to return the 
report. If the household does not file the report by the due date or 
files an incomplete report, the State agency shall provide the 
household with a reminder notice advising the household that it has 10 
days from the date the State agency mails the notice to file a complete 
quarterly report. If the household does not file a complete report by 
the extended filing date as specified in the reminder notice, the State 
agency shall determine the household's eligibility and benefits without 
consideration of the child support deduction. The State agency shall 
not terminate a household for failure to submit a quarterly report 
unless the household is otherwise ineligible. The State agency shall 
send the household an adequate notice as defined in Sec. 271.2 of this 
chapter if the household fails to submit a complete report or if the 
information contained on a complete quarterly report results in a 
reduction or termination of benefits. The quarterly report shall meet 
the requirements as specified in paragraph (b) of this section. The 
State agency may combine the content of the reminder notice and the 
adequate notice as long as the notice meets the requirements of the 
individual notices.
    (ii) The quarterly report form shall be the sole reporting 
requirement for reporting monthly child support payments. The State 
agency shall not include other items for the household to report on the 
quarterly report. The State agency shall not require households 
excluded from monthly reporting as specified in Sec. 273.21(b) to 
report monthly child support payments on a quarterly report. The State 
agency is also prohibited from requiring monthly reporting households 
to submit a quarterly report.
* * * * *
    (b) Report forms. The State agency shall provide the household with 
a form for reporting the changes required in paragraph (a) of this 
section and shall pay the postage for the household to return the 
report.
    (1) The report form for reporting changes within 10 days of the 
date the change becomes known shall, at a minimum, include the 
following:
* * * * *
    (2) The quarterly report form for reporting child support payments 
shall be written in clear, simple language and meet the bilingual 
requirements described in Sec. s272.4(b) of this chapter. The report 
shall include the following:
    (i) A requirement to report the actual amount of child support paid 
for the first two months of the quarter and the actual amount paid or 
anticipated for the third month;
    (ii) A requirement to report changes in the legal obligation to pay 
child support anticipated for the upcoming quarter, including but not 
limited to changes such as the completion of an obligation or a change 
in the legally obligated amount;
    (iii) The date in the third month by which the State agency must 
receive the form;
    (iv) Notification of the verification the household must submit 
with the report;
    (v) The name of the individual or agency unit available to assist 
the household in completing the form and the toll-free number (or 
number where collect calls will be accepted) which the household may 
use to obtain further information;
    (vi) A statement to be signed by the household member who is 
responsible for paying child support indicating his or her 
understanding that the information may result in changes in the level 
of benefits, including reduction or termination;
    (vii) A statement that failure to return the report by the required 
deadline may result in disallowance of the child support deduction;
    (viii) A reminder that other changes required to be reported under 
paragraph (a)(1) of this section must be reported within 10 days from 
the date the household becomes aware of the change;
    (ix) A statement advising the household that the State agency will 
act on changes in its monthly child support deduction if the household 
elects to report the change before submitting the quarterly report; and
    (x) A brief understandable description of the Food Stamp Program 
civil and criminal penalties for fraud printed in prominent and 
boldface lettering.
* * * * *
    8. In Sec. 273.21:
    a. The colon at the end of paragraph (h)(2)(v) is removed and a 
semicolon is added in its place and the period at the end of paragraphs 
(h)(2)(vii) and (h)(2)(viii) is removed and a semicolon is added in its 
place.
    b. A new paragraph (h)(2)(ix) is added.
    c. The period at the end of paragraphs (j)(3)(iii)(C) and 
(j)(3)(iii)(D) is removed and a semicolon is added in its place and a 
new paragraph (j)(3)(iii)(E) is added.
    The revision and additions read as follows:


Sec. 273.21  Monthly Reporting and Retrospective Budgeting (MRRB).

* * * * *
    (h) The monthly report form.* * *
    (2) Monthly report form.* * *
    (ix) If the State agency elects to require reporting of child 
support payments on the monthly report form, the State agency shall 
require the household to report changes in the actual monthly amount of 
child support paid and any changes in the legal obligation to pay child 
support.
* * * * *
    (j) State agency action on reports.* * *
    (3) Incomplete filing.* * *
    (iii)* * *
    (E) If the household does not report or verify its monthly child 
support payment or a change in its legal obligation, the State agency 
shall not allow a child support deduction.
* * * * *

PART 275--PERFORMANCE REPORTING SYSTEM

    9. In Sec. 275.12, a new paragraph (d)(2)(ix) is added to read as 
follows:


Sec. 275.12  Review of active cases.

* * * * *
    (d) Variance identification.* * *

    (2) Variances excluded from error analysis.* * *

    (ix) Any variance in a child support deduction which was the result 
of an unreported change subsequent to the most recent certification 
action shall be excluded from the error determination.

* * * * *

    Dated: November 30, 1994.

Ellen Haas,

Under Secretary for Food, Nutrition, and Consumer Services.

[FR Doc. 94-30107 Filed 12-7-94; 8:45 am]

BILLING CODE 3410-30-U