[Federal Register Volume 65, Number 239 (Tuesday, December 12, 2000)]
[Rules and Regulations]
[Pages 77742-77753]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31612]



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Part III





Department of Health and Human Services





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Administration for Children and Families



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45 CFR Part 308



State Self-Assessment Review and Report; Final Rule

  Federal Register / Vol. 65 , No. 239 / Tuesday, December 12, 2000 / 
Rules and Regulations  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Part 308

RIN 0970-AB96


State Self-Assessment Review and Report

AGENCY: Office of Child Support Enforcement (OCSE), ACF, HHS.

ACTION: Final rule.

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SUMMARY: These regulations implement a provision of the Social Security 
Act added by the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 (PRWORA), which requires each State to 
annually assess the performance of its child support enforcement 
program and to provide a report of the findings to the Secretary of the 
Department of Health and Human Services (DHHS).

EFFECTIVE DATE: December 12, 2000.

FOR FURTHER INFORMATION CONTACT: Jan Rothstein, OCSE Division of Policy 
and Planning, (202) 401-5073. Hearing impaired individuals may call the 
Federal Dual Party Relay Service at 800-877-8339.

SUPPLEMENTARY INFORMATION:

Statutory Authority

    These regulations are published under the authority of the Social 
Security Act (the Act), as amended by the Personal Responsibility and 
Work Opportunity Reconciliation Act of 1996 (Pub. L. 104-193). Section 
454(15)(A) of the Act (42 U.S.C. 654(15)(A)) contains a requirement for 
each State to annually assess the performance of the State's child 
support enforcement program under title IV-D of the Act in accordance 
with standards specified by the Secretary, and to provide a report of 
the findings to the Secretary.
    These regulations are also published under the general authority of 
section 1102 of the Act (42 U.S.C. 1302) authorizing the Secretary to 
publish regulations necessary for the efficient administration of the 
title IV-D program.

Background

    Prior to PRWORA, Federal law specified that States that had been 
audited and found not to be in substantial compliance with Federal 
requirements were subject to a financial penalty of between 1 and 5 
percent of the State's funding under the title IV-A program. These 
audits were performed every 3 years. The penalty could be held in 
abeyance for up to one year to allow States the opportunity to 
implement corrective actions to remedy the program deficiency. At the 
end of the corrective action period, a follow-up audit was conducted. 
If the follow-up audit showed that the deficiency had been corrected, 
the penalty was rescinded. Section 342(b) of PRWORA revised section 
452(a)(4) of the Act, changing Federal audit requirements to focus on 
data reliability and to assess performance outcomes instead of 
determining compliance with process steps.
    At the same time, section 342(a) of PRWORA amended the Act by 
adding a new section 454(15)(A) of the Act to require each State to 
conduct an annual review of its Child Support Enforcement (IV-D) 
program to determine if Federal requirements are being met and to 
provide an annual report to the Secretary of DHHS on the findings. The 
changes to sections 452 and 454(a)(15) of the Act mean that the Federal 
government's audit responsibilities now focus primarily on results and 
fiscal accountability while States are to focus on the responsibilities 
for child support service delivery in accordance with Federal mandates. 
The annual self-assessment's purpose is to give a State the opportunity 
to assess whether it is meeting Federal requirements for providing 
child support services and providing the best services possible. There 
are no financial sanctions associated with a State's self-assessment. 
It is to be used as a management tool, to help a State evaluate its 
program and assess its performance.
    Following the enactment of PRWORA and to ensure broad input, OCSE 
consulted with a wide variety of program stakeholders to get 
recommendations on how to proceed. These recommendations addressed: the 
criteria to be covered in annual reports to the Secretary; the 
methodology for reviewing the criteria; and an approach for reporting 
the results of these reviews. OCSE considered these recommendations in 
developing the proposed rule.
    Prior to writing the proposed rule, OCSE received suggestions on 
self-assessment reviews at national and regional meetings, including 
meetings with the American Public Human Services Association, formerly 
known as the American Public Welfare Association (APWA) and the 
National Child Support Enforcement Association (NCSEA). In addition, 
several child support advocacy groups informally provided comments. 
Comments were also solicited from State IV-D directors.

Federal Role

    The Federal role in the self-assessment review process includes 
receiving reports submitted pursuant to section 452(a)(4)(B) of the Act 
and, as appropriate, provide to the States comments, recommendations 
for additional or alternative corrective action, and any technical 
assistance that a State may need. The Federal involvement includes, but 
is not limited to: approving IV-D State plan amendments certifying that 
the State has a self-assessment review process; providing review 
requirements, guidelines, instructions and methodologies for the review 
to the State; responding to requests for help from the State; providing 
interpretation of compliance standards; developing continuing 
partnerships; reviewing and providing appropriate comments on self-
assessment reports; developing a self-assessment review module; 
overseeing the implementation of the self-assessment process in the 
States; periodically analyzing self-assessment reports to identify 
``best practices'' to be shared with other States and providing 
comments and recommendations regarding the appropriateness of proposed 
corrective action or alternative correction action.

Description of Regulatory Provisions

    These regulations implement the statutory requirement that a State 
annually assess the performance of its IV-D program and submit a report 
of the findings to the Secretary by adding a new part 308, ``Annual 
State Self-Assessment Review and Report'' to existing rules in Chapter 
III governing the child support enforcement program under title IV-D of 
the Act.
    Section 308.0 sets the scope of the regulation and specifies this 
is applicable only to the annual State self-assessment review and 
report process.
    Section 308.1 provides the components of the self-assessment 
implementation methodology that States must use including: sampling, 
scope of review, the review period, and reporting.
    Section 308.1(a) addresses the obligation of the IV-D agency to 
maintain the responsibility and control for all reviews, review 
findings and the content of the annual report. We have revised the 
regulatory language in this section since publication of the proposed 
rule to delete requirements on organizational placement and to clarify 
responsibilities in response to comments received that the requirement

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could be read as IV-D responsibility for control of reviews only when 
the self-assessment is privatized.
    Section 308.1(b) specifies that a State must either review all of 
its cases or conduct sampling which meets the criteria specified. Due 
to the differences in administrative structures in States, we did not 
prescribe a single sampling formula for universal use by all States. 
Instead, under paragraph (b), a State has discretion in designing its 
own sampling methodologies that could be tailored to meet individual 
State needs. However, under paragraphs (b)(2) and (3), each State must 
maintain a minimum confidence level of 90 percent for each criterion, 
select statistically valid samples, and assure that there are no 
portions of the IV-D case universe omitted from the sample selection 
process.
    The following checklist has been developed to provide guidance in 
the form of a series of steps that should be taken during the 
development and application of a sampling methodology. This checklist 
is not intended as a definitive pronouncement or mandate from OCSE, but 
only as a guide outlining a generic sampling approach. We provide it 
for reference and guidance only.
    1. Define the reason(s) for collecting and evaluating the data: 
i.e. each State must evaluate its performance with regard to each 
required program compliance criterion set forth in section 308.2.
    2. Plan the data collection method(s):
    a. Identify the criteria to be evaluated (refer to section 308.2).
    b. Select a method of data collection/evaluation.
    c. Establish a minimally acceptable level of performance.
    d. Set a desired confidence level pursuant to Federal requirements.
    e. Choose a method of random selection (e.g., simple random 
selection or systematic random selection).
    3. Collect the required data: After selecting the sample cases, 
obtain the case files and/or the pertinent computer records containing 
the necessary data elements.
    4. Process the collected data: Evaluate each case for each 
criterion to determine if an action was required, and if the required 
action was taken. Tabulate the results of the sample or samples.
    5. Analyze the data. Quantify results and statistically evaluate 
the results obtained.
    6. Present the results for each criterion in a tabular format and 
provide a narrative explanation of the results obtained.
    Section 308.1(c) relates to the scope of the self-assessment 
review. This paragraph requires a State to review all required criteria 
articulated in section 308.2 on a yearly basis.
    Section 308.1(d) provides for a 12-month review period, beginning 
no later than 12 months after the effective date of this final rule and 
occurring again each 12 month period thereafter. We revised this 
section in response to comments to clarify when the review period 
begins and ends. The 12-month review period is consistent with prior 
audit review periods and allows enough time to evaluate the case 
processing timeframes in part 303. States should continue to use the 
same review periods they used prior to publication of this final rule 
and should make no break in their reviewing processes. States need not 
match each other's review periods, provided that case samples selected 
are from the period that will be reviewed and reflected in their 
report. Self-assessment reviews can be conducted in one of two ways: 
historically or incrementally. Using the historical approach, a State 
begins its self-assessment review after the end of the period to be 
reviewed. We have made changes to the language in this section to 
explain and clarify what the duration of the review period is.
    Using the incremental approach, a State selects cases from several 
periods during the review period and adds the results to provide a 
picture of performance for the entire period. The State would draw a 
separate sample for each incremental review period. The incremental 
approach enables the State to spread its review effort over time and 
make more efficient use of available resources because the sample size 
could be smaller, while allowing the State to identify problem areas 
and take corrective action prior to the end of the review period. For 
those States who review their case samples incrementally, the cases 
selected must be reviewed and evaluated for the actions required at the 
beginning of the incremental review period.
    Section 308.1(e) addresses the contents of the annual reports and 
requires copies to be sent to the Commissioner, OCSE and the applicable 
Regional Office. The State must submit its written report no later than 
6 months after the end of the review period. For example, if the review 
period ends September 30, 2000, the report would be due by March 31, 
2001. We revised this section to clarify that States should submit a 
description of any corrective actions proposed and/or taken.
    Section 308.2 lists and provides descriptions of the required 
program compliance criteria. In all cases, States must have the 
required procedures specified in the regulations. In this section we 
are requiring States to use benchmarks for performance that are 
identical to those that were required when previous Federal audit 
standards were in place. The benchmarks for determining the adequacy of 
performance continue to be appropriate under the new system of self-
assessment reviews because States are being asked to measure themselves 
on the same performance criteria as under previous audit standards. 
States should use the benchmarks to determine when corrective action is 
necessary, i.e. if they fail to meet one or more benchmarks. Reviews of 
closed cases would need to demonstrate that appropriate action was 
taken in 90 percent of the cases reviewed. Further, reviews of the 
other required program criteria would need to show that appropriate 
action was taken in 75 percent of the cases reviewed.
    Section 308.2(a) requires reviews of closed IV-D cases to determine 
whether the case met one or more Federal case closure criteria under 
section 303.11.
    Section 308.2(b)(1) requires the review of State actions to 
establish paternity and support orders. A case would meet the review 
requirement if an order for support was required and established during 
the review period, notwithstanding the relevant timeframes. Section 
308.2(b)(2) addresses the necessary procedures to follow when an order 
was required but not established during the review period.
    Section 308.2(c) requires the review of State actions to enforce 
child support orders. If income withholding was appropriate, a case 
would meet the review requirement if it was received during the review 
period, notwithstanding the mandatory timeframes. A review of the 
enforcement of orders would include all cases in which an ongoing 
income withholding is in place, as well as those cases in which new or 
repeated enforcement actions were required during the review period. We 
made changes to this section to correct a typing mistake that appeared 
in the proposed rule, to clarify the locate sources that are 
appropriate to use, and to specify the timeframes for sending a notice 
to the employer to withhold income if information is obtained from the 
State Directory of New Hires or other recognized sources.
    Section 308.2(d) describes reviews of the disbursement of 
collections. This review would include a determination of whether 
States are complying with the 2-day requirement for disbursing

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certain collections. States that fail to meet the 2-day time frame but 
are under an alternative penalty for failure to meet the State 
disbursement unit (SDU) deadline should mention that fact in their 
self-assessment reports. Section 308.2(d) requires States to determine 
whether disbursements of collections were made in compliance with the 
Act. We made changes to this section based on a comment we received 
regarding review of payments received. The regulatory language now 
indicates that States must review the last payment received for each 
case. We also deleted language in this section to clarify the 
requirement.
    Section 308.2(e) requires reviews of securing and enforcing medical 
support orders. This includes measuring whether the requirements were 
met for: including a medical support provision in all new orders; 
taking steps to determine whether reasonable health insurance is 
available when health insurance is included in the order; informing the 
Medicaid agency when coverage was obtained; determining whether the 
custodial parent was informed of policy information when coverage has 
been obtained; determining whether employers are informing the State of 
lapses in coverage; and determining whether the State transferred 
notice of the health care provision to a new employer when a 
noncustodial parent changed employment.
    Section 308.2(f) addresses the review and adjustment of orders. A 
case meets the review requirement if it was reviewed and met the 
conditions for adjustment notwithstanding the applicable timeframes. An 
examination of the review and adjustment criterion includes reviews of 
assistance cases, review of cases where adjustments were not necessary, 
repeated location efforts, notices to the custodial and non-custodial 
parents informing them of their rights to request reviews within 180 
days of determining that a review should be conducted, and reviews of 
whether both parties were given 30 days to contest adjustments if the 
cost-of-living or automated methods had been utilized. We have made 
minor revisions to the regulatory language in this section to clarify 
the actions required.
    Section 308.2(g) addresses interstate services. The review 
criterion includes the initiating State's responsibility to refer cases 
to the responding State within 20 days of determining that the 
noncustodial parent is in another State pursuant to section 
303.7(b)(2); providing responses to the responding State with requested 
additional information within 30 calendar days of the request pursuant 
to section 303.7(b)(4); notifying the responding State of new 
information within 10 working days pursuant to section 303.7(b)(5); and 
sending a request for review of a child support order within 20 
calendar days after receiving a request for review and adjustment under 
the Uniform Interstate Family Support Act (UIFSA) pursuant to section 
303.7(b)(6). In recognition of the fact that passage of UIFSA and other 
PRWORA administrative enforcement actions have changed the way 
interstate cases are processed, we encourage States to use one-state 
action to take any enforcement action they can on a case, rather than 
referring all cases for two-state action. We have revised the final 
rule to provide for the referral of interstate cases where appropriate.
    Reviews must also include determining compliance with 
responsibilities of the responding State in interstate cases, including 
central registry requirements for review of submitted documentation for 
completeness, forwarding the case to the State Parent Locator Service 
for locate services, acknowledgment of the receipt of the case and 
requests for missing documentation from the initiating State, and 
whether the IV-D agency in the initiating State was informed of where 
the case was sent for action. The review would also determine whether 
the central registry responded to inquiries from other States within 
five working days of receipt of a request for a case status review 
pursuant to section 303.7(a)(4).
    Section 308.2(b), (c), and (f) contain language that previously 
appeared in the former Federal audit regulations at section 305.20 
relative to certain missed timeframes. As we stated in the preamble to 
the final Federal audit regulations in 1994 (59 FR 66204), the State 
should not be penalized when timeframes are missed in a case if a 
successful result is achieved (paternity or a support order is 
established, an order is adjusted, income is withheld, or a collection 
is made or distributed), since these results are the main goals of the 
child support enforcement program. We emphasize that all timeframes, 
including those for paternity establishment, support order 
establishment, review and adjustment, and income withholding, are still 
Federal requirements that States must meet.
    Other timeframes that must be reviewed for compliance include: 10 
days to forward the case upon locating the non-custodial parent in a 
different jurisdiction pursuant to section 303.7(c)(5) and (6); two 
business days to forward any support payments collected to the 
initiating State pursuant to section 303.7(c)(7)(iv); and 10 working 
days to notify the initiating State upon receipt of new information 
pursuant to section 303.7(c)(9).
    Section 308.2(h) addresses the timeframes applicable to the 
expedited processes criterion pursuant to section 303.101(b)(2)(i) and 
in keeping with previous definitions of substantial compliance in 
former section 305.20, we are proposing a benchmark of 75 percent for 
the number of cases to be completed within 6 months and a benchmark of 
90 percent for the number of cases to be completed within one year. The 
75 and 90 percent benchmark standards apply to the establishment of 
orders from the date of service of process to the time of disposition.
    Section 308.3 lists and describes the optional program areas of 
review, which include program direction and program service 
enhancements. Section 308.3(a) pertains to the review of State program 
direction.
    The first optional category, Program Direction, should be an 
analysis of the relationships between case results relating to program 
compliance areas, and performance and program outcome indicators. While 
this review category is optional, by including the information, States 
have the opportunity to demonstrate how they are trying to manage their 
resources to achieve the best performance possible. This evaluation 
should explain the data and how the State adjusted its resources and 
processes to meet goals and improve performance. In this section, 
States are encouraged to discuss new laws and enforcement techniques, 
etc., that are contributing to increased performance. Barriers to 
success, such as State statutes, may also be discussed in this section.
    Section 308.3(b) pertaining to the optional review of State program 
service enhancements is envisioned as a report of practices initiated 
by the State that are contributing to improving program performance and 
customer service.
    Examples include improvement of client services through the use of 
expanded office hours, kiosks, internet, and voice response systems. 
This is an opportunity for a State to promote its programs and 
innovative practices. Some examples of innovative activities that a 
State may elect to discuss in the report include: steps taken to make 
the program more efficient and effective; efforts to improve client 
services; demonstration projects testing creative new ways of doing 
business; collaborative efforts being taken with partners and 
customers; innovative

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practices which have resulted in improved program performance; actions 
taken to improve public image; and access/visitation projects initiated 
to improve non-custodial parents' involvement with the children. A 
State also could discuss in this review area whether the State has a 
process for timely dissemination of applications for IV-D services in 
cases that are not receiving public assistance, when requested, and 
child support program information to recipients referred to the IV-D 
program, as required by section 303.2(a).

Response to Comments

    On October 8, 1999 we published a Notice of Proposed Rulemaking in 
the Federal Register with a 60 day comment period (64 FR 55102). We 
received 73 comments from 19 State and local IV-D agencies, national 
child support enforcement organizations, advocacy groups representing 
custodial parents and children, and the general public. Two commenters 
wrote solely to express their support for the notice of proposed 
rulemaking. A summary of the comments received and our responses 
follow.
    General Comments
    Comment: One commenter was concerned that States that modify the 
review standards by imposing a higher standard on themselves than 
required by the final rule would make themselves more susceptible to a 
Federal audit over substantial compliance issues.
    Response: We welcome the idea that States will want to hold 
themselves to higher standards then those set by this final rule. 
Certainly, performance on the program compliance criteria that exceeds 
the standards would represent greater benefits for children and 
families. States should be assured that setting higher standards for 
themselves will not mean greater attention from OCSE or increase the 
likelihood of Federal audits. The Incentive Payments and Audit 
Penalties NPRM (64 FR 55074, October 8, 1999) proposed that OCSE would 
conduct audits for such purposes as OCSE may find necessary. This could 
include circumstances under which the results of two or more State 
self-assessments show evidence of sustained poor performance or 
indicate that the State has not corrected deficiencies identified in 
previous self-assessments. However, we would certainly not be more 
likely to audit a State because it failed to meet a self-imposed higher 
performance standard.
    Comment: One commenter was concerned because the NPRM does not 
address penalties for a State's failure to produce an adequate self-
assessment. They thought a Federal compliance audit should be triggered 
by a State's failure to audit its own compliance adequately.
    Response: The statute requires States, as a condition of State plan 
approval, to provide for a process for annual reviews of and reports to 
the Secretary on the State IV-D program. Therefore, a State's failure 
to provide for the process in its State plan or to conduct such a 
review and submit the findings to the Secretary in accordance with 
Federal requirements would result in steps to initiate State plan 
disapproval and loss of all Federal IV-D funding.
    Comment: Another commenter was concerned that the integrity of the 
self-assessment process would be threatened by the possibility of a 
Federal audit for accurately assessing a weak area.
    Response: We expect States to use the self-assessment as a 
management tool and to be entirely accurate and objective when 
reporting their performance. To do otherwise would only harm the State 
and its future performance. PRWORA revised Federal audit requirements 
from a process-based system to a performance-based system. This means 
balancing the Federal government's oversight responsibilities with 
States' responsibilities for child support service delivery and fiscal 
accountability. However, we want to point out that the Secretary 
retains the right to conduct substantive compliance audits, but would 
likely assert that right only in the most egregious circumstances such 
as where the State fails to take steps to correct sustained poor 
performance.
    Comment: Four commenters addressed what they think is an 
inconsistency between the incentive and penalty NPRM and this NPRM. 
They think this NPRM states that the self-assessment review is not tied 
to fiscal sanctions while section 305.60(c)(2)(i) of the incentive and 
penalty NPRM says self-reviews can lead to audits which may lead to 
penalties. These commenters think the final rule on self-assessments 
should state clearly that States would not be subject to a fiscal 
penalty as a result of self-assessment reviews.
    Response: We want to be very clear on this point: States will not 
incur a fiscal penalty as a direct result of poor performance reported 
in a self-assessment review. We want to encourage States to report 
accurately and fully their actual performance in the self-assessment 
reviews. Self-assessment reviews are management tools for States to 
assess and improve their performance. However, section 452(a)(4)(C) of 
the Act established that the Secretary may conduct audits for such 
purposes as she may find necessary, including audits to determine 
substantial compliance. Financial penalties are potential consequences 
of these separate, Federal audits. Audits to determine substantial 
compliance could be triggered by: evidence of systemic problems with a 
State's child support program, on-going performance issues that are not 
addressed or corrected in more than one State self-assessment, and 
similar problems.

Self-Assessment Implementation Methodology--Section 308.1

    Comment: One commenter thought the effective date of the NPRM was 
unclear. The commenter also thought the review date was unclear and 
wondered, if a State chooses to conduct a review with an incremental 
approach, how would the end of the review period be determined?
    Response: This regulation is effective upon publication. Each self-
assessment review period covers a 12-month period. For clarification, 
we revised the language in section 308.1(d). The regulatory standards 
would be applied beginning with the start of the first new review 
period occurring after publication. It is expected that States will 
continue to use the same review periods that they have been using for 
the past two years and that there will be no gaps. All subsequent self-
assessment review periods would then immediately follow the time period 
of the previous review period. The report documenting and presenting 
the results of the review are due to OCSE no later than 6 months after 
the end of the review period. As stated previously, States may choose 
to use historical or incremental approaches to their self-assessment 
reviews. States have discretion in choosing the duration of their 
increments. If, for example, a State chooses a quarterly increment, it 
could start on October 1 and would then end December 31. Each 
subsequent quarterly incremental review period would then end 3-months 
later.
    Comment: Several commenters suggest allowing States to apply for 
extensions of the self-assessment reporting deadline in recognition 
that States with more complicated review processes will need more time.
    Response: We do not think extensions will be necessary. States are 
currently conducting reviews that are very similar in scope and content 
to the reviews required by this regulation and by and large, States are 
conducting the reviews with little or no problems. OCSE is available to 
assist States should they encounter any problems.
    Comment: We received 10 comments on the requirement that the 
sampling

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methodology for self-assessments must maintain a minimum confidence 
level of 90 percent for each criterion. Most commenters suggested using 
an overall confidence level of 90 percent for all criteria. Another 
commenter was concerned that their statewide system would be unable to 
pull cases by criterion and so would be unable to achieve a minimum 
confidence level of 90 percent for each criterion.
    Response: For a self-assessment review to be a useful tool for 
management, it must provide accurate, and reliable information. 
Information provided should identify program strengths and weaknesses 
as well as provide meaningful estimates of current performance.
    As we understand it, States that have raised the 90 percent 
confidence level issue are advocating the use of one sample selected 
from the IV-D caseload to review all eight required performance 
criteria. This approach would likely result in adequate representation 
for some of the reviewed criteria and inadequate representation for 
other reviewed criteria. This would occur because the action that needs 
to be reviewed for one or more of the criteria may occur infrequently 
in the population, while the action needed to be reviewed for other 
criteria may occur more frequently. Consequently, the likelihood that 
the sample will contain cases having the attribute being sought could 
potentially be quite low. As a result, small samples are selected, and 
the effect of detected errors on the sample estimate are magnified 
because the computed standard error associated with the estimate 
derived from the sample (point estimate or efficiency rate) will more 
than likely be large. This could result in relatively poor performance 
being accepted as possibly being in compliance with Federal 
requirements. It also appears that these States are suggesting that 
they then be allowed to combine the results for all eight criteria and 
compute an overall compliance rate and determine the confidence level 
attributable to that rate. This action would emphasize the performance 
of the criteria with the most representation, and mitigate or de-
emphasize the performance of those criteria with minimal 
representation. This would not facilitate results that would be useful 
to States as a management tool to accurately assess their performance.
    We used 90 percent confidence as the value for the confidence level 
variable in the sample size computation to reduce the sample sizes 
States would need to conduct their self-assessment reviews. Under 
previous audits, the OCSE Auditors used a 95 percent confidence level. 
In order to determine sample size for self-assessment purposes, one 
must consider: confidence level (the degree of confidence to place in 
the derived estimate), sampling error (the degree of error that can be 
accepted), and expected rate of occurrence of the attribute to be 
sampled. Varying these three factors influences the size of sample 
required. Varying the precision and desired confidence level can 
dramatically affect the sample size determination and overall benefit/
impact of the effort. Sampling error has the largest effect on sample 
size. In other words, as the acceptable error percentage increases the 
sample size decreases. The converse is true in the case of a confidence 
level. An increase in the sampling error percentage from 5 percent to 
10 percent, coupled with a decrease in the confidence level (i.e., from 
95 percent to 90 percent) required, would significantly reduce the 
sample size required. The problem often encountered when the sample 
size has been reduced by changing both the confidence level and 
sampling error in opposite directions is a sample that produces a large 
standard error associated with the estimate derived. This can result in 
fairly poor performance being seen as compliance. For all of these 
reasons, we think it would be imprudent to take the commenters 
suggestion and we have retained the original confidence levels in the 
final rule.
    In response to the commenter concerned about his statewide system's 
inability to meet the requirements, OCSE will provide any State the 
technical assistance it needs to meet these requirements. Statewide 
systems should be able to meet these requirements and need to be able 
to for Federal reporting requirements.
    Comment: One commenter recommended the reference to a formal self-
assessment ``unit'' be amended to permit the States flexibility to 
assign staff rather than create a formal unit. The commenter thinks 
PRWORA requires a process for self-assessment but not a unit. The 
commenter thinks this recommendation is consistent with the workgroup's 
recommendation.
    Response: The commenter's point is well taken. PRWORA simply 
requires that a process be put in place. Although it would be 
preferable that a formal self-assessment unit be established, it is not 
required. However, we encourage States to establish a formal unit 
because of the following benefits: (1) Continuity--the possibility that 
the same staff would be conducting the annual reviews over the course 
of several years, and (2) Familiarity--the possibility that the staff 
will have experience with the Child Support Program and the review 
instrument used. We have deleted the provisions on organizational 
placement from the final rule. We have specified only that the IV-D 
agency must ensure that requirements are met and maintain 
responsibility for the review and report. States have the flexibility 
to establish a self-assessment unit within the IV-D agency, another 
State agency, or within the umbrella agency containing the IV-D agency 
or privatize the self-assessment.
    Comment: Two commenters requested that we add language that appears 
to be missing from 308.1(a)(1) that appears in (a)(2) regarding a 
State's ability to privatize self-assessment functions as long as the 
IV-D agency maintains responsibility for and control of the results 
produced and the contents of the annual report.
    Response: As discussed in the preceding comment, we have revised 
this section to increase clarity and removed the specific 
organizational requirements.
    Comment: One commenter thought there was an inconsistency between 
the language in the preamble relating to organizational placement for 
the self-assessment unit and the requirements specified in section 
308.1(a). The commenter was concerned that section 308.1(a) could be 
read to mean that the IV-D agency only had sole responsibility for the 
self-assessment when the self-assessment is privatized.
    Response: We do not believe there was an inconsistency. The 
preamble state that it would be ideal if the organizational placement 
was within the IV-D agency because this would enable the IV-D agency to 
draw on the experience of IV-D staff who have the skills and 
qualifications needed to analyze the program. However, we recognized in 
the preamble that this is not always possible. We revised section 
308.1(a) to read as follows: ``The agency must ensure the review meets 
Federal requirements and must maintain responsibility for and control 
of the results produced and contents of the annual report.''
    Comment: One commenter suggested that the final rule should not 
stipulate a report format. It should only state that the report must 
contain the review methodology, the compliance findings and corrective 
action plan, if needed.
    Response: We are stipulating a general report format. Section 
308.1(e)(2) states that the report must include but is not limited to 
an executive summary; a description of optional program criteria

[[Page 77747]]

covered by the review; a description of sampling methodology used, if 
applicable; the results of the review; and description of any 
corrective action proposed and/or taken. We have specified this format 
because we need to be sure that we receive comparable information from 
all States. States are free to use any report format they choose that 
includes the required information. We want to be clear that we are not 
requiring a specific corrective action plan format. States must 
describe how they will change their programs to better achieve the 
goals of the child support program and meet the self-assessment 
benchmarks. We revised section 308.1(e)(iv) to indicate that the State 
must include a description of any corrective action proposed and/or 
taken.
    Comment: One commenter suggested allowing States to submit a 
subsequent report 3 to 6 months following the initial report instead of 
including any corrective actions proposed and/or taken in the initial 
report.
    Response:  We believe 3 to 6 months is too short a period of time 
to expect to have significant results from corrective actions. The 
purpose of requiring States to report on corrective actions in their 
self-assessment reports is to ensure that States have explicit plans in 
place to address performance problems to ensure they do not continue to 
occur in subsequent years.
    Comment: One commenter was concerned that the schedule of reporting 
would be an undue burden on States, causing them to evaluate and report 
on a different schedule than all other Federal reporting. The commenter 
was also concerned that requiring the review to begin immediately when 
the rule becomes effective does not allow States the ability to review 
any new rule changes and develop procedures, train staff, and implement 
reviews based on the new standards.
    Response: We believe the regulation gives States flexibility in 
determining when to start their review periods. We revised section 
308.1(d) to make it clear that each review period must cover a 12-month 
period, the first of which must begin no more than 12 months after the 
effective date of this final rule. The review requirements in this rule 
are consistent with the review components spelled out in program 
instructions issued two years ago in OCSE-AT-98-12.
    Comment: Two commenters urged that the regulations require States 
to use comparable review periods and methodologies over time. The 
commenter thought that the assessments would lose their value as a way 
to analyze changes in performance over time if the framework shifts 
from year to year.
    Response: We do not think it is necessary to place this restriction 
on States. We expect that States will make every effort to standardize 
the process using their statewide systems and that the annual self-
assessments will be comparable to as great an extent as possible. 
Again, we wish to stress our overarching concern that these reviews be 
useful to States as management tools to assess their own performance.
    Comment: Two commenters suggested additional steps be taken to 
ensure self-assessments are meaningful and useful. They thought the 
Secretary should ensure the reports are available to the public and 
other interested parties. In addition, they thought that the required 
elements should be described in detail including specific findings for 
each criteria. The commenters also thought the relationship between 
self-assessment and corrective action is not clear and that the final 
regulations should require corrective action plans if a self-assessment 
reveals substantial noncompliance.
    Response: We believe that by following the directives in the final 
rule, States will design self-assessment reviews that serve them 
meaningfully as management tools to review their progress in serving 
families and children. States are free to make these reviews available 
to the public and they would be available through the Freedom of 
Information Act process if necessary. We do not agree that further 
detail is needed to describe the required elements of the self-
assessment. States are required to include in their self-assessment 
reports a description of any corrective actions proposed and/or taken. 
This description is to be part of the management tool, designed to help 
the State achieve the benchmarks and improve its performance in the 
future. We believe States will propose corrective actions when needed.
    Comment: One commenter noted that the NPRM requires that the self-
assessment report contain ``any corrective actions proposed and/or 
taken.'' Based on the description of the Federal role in the self-
assessment process, it appeared to the commenter that the corrective 
action plans are subject to Federal acceptance. Yet, the commenter 
noted, the proposed rule contains no detail about what a corrective 
action plan should contain. The commenter requested more clarification 
about corrective action plans.
    Response: States are not required to request or receive Federal 
approval of any corrective action proposed or taken. Again, we want to 
be clear that we are not requiring a specific corrective action plan. 
As stated earlier, a State must describe how it will change its 
programs to better achieve the goals of the program and the benchmarks 
of the self-assessment. The action described should be clearly aimed at 
solving all the problems identified in the review. Since the main 
purpose of these reviews is to assist States in evaluating their own 
performance against a list of eight program criteria, we think the 
States are in the best position to determine what corrective action is 
needed to address program deficiencies. We are available to provide any 
needed technical assistance in this area.
    Comment: One commenter thought it was not clear that the State must 
provide a corrective action plan to describe any corrective action 
proposed or taken as part of its self-assessment review if a self-
assessment indicates serious program deficiencies. The commenter 
recommended changing the word ``any'' to ``the'' in section 
308.1(e)(2)(v).
    Response: We have made the suggested change.
    Comment: One commenter thought the proposed regulation was unclear 
on what action OCSE will take if a State fails to file a corrective 
action plan as mentioned in section 308.1(e)(2)(v) or files one which 
does not meet the criteria established in the final rules. The 
commenter recommended adding a subsection (f) to section 308.1 
indicating what OCSE will do if no report or an inadequate report is 
filed. The recommendation was that this subsection should make it clear 
that failure to submit a report or submission of an inadequate report 
would trigger the process for State plan disapproval.
    Response: Section 454(15) of the Act requires States to have a 
process for annual reviews of and reports to the Secretary on the State 
IV-D program. Therefore, failure to have such a process would trigger 
the State plan disapproval process. However, that was not the intent of 
the reference to corrective action in section 308.1(e). The principal 
purpose of the self-assessment process is to serve as a management tool 
for the IV-D program. We wish States to use the process to determine, 
what, if any, deficiencies exist in their IV-D program so that these 
deficiencies can be addressed and corrected. If a State fails to submit 
a self-assessment report, OCSE would work with that State to try to 
resolve any issues that might be preventing the State from submitting a 
self-assessment report. However, if a State fails to make a good faith 
effort to

[[Page 77748]]

resolve any barriers and submit a self-assessment report, we would 
begin taking the steps necessary to disapprove the State plan pursuant 
to sections 452(a)(3) and 455(a) of the Act and sections 301.10 and 
301.13 of this chapter.
    Comment: One commenter noted that OCSE-AT-98-12 contained the 
suggestion that States submit a copy of their report to the OCSE Area 
Audit Office. They wondered if a copy of the self-assessment annual 
report should be sent to the OCSE Area Audit Office.
    Response: Section 308.1(e) requires States to provide a report of 
the results of the self-assessment review to the appropriate OCSE 
Regional Office and to the Commissioner of OCSE. OCSE will share the 
self-assessment results with all interested parties within the 
Administration for Children and Families. If a State is concerned about 
a particular Area Audit Office receiving a copy of the review, it is 
free to send one to that office.

Required Program Compliance Criteria--Section 308.2

    Comment: One commenter believes section 308.2(g) on interstate 
services should be revised to recognize the encouragement of direct 
enforcement across State lines that exists under the Uniform Interstate 
Family Support Act (UIFSA). Another commenter was concerned that 
section 308.2(g)(1)(i) fails to recognize long arm jurisdiction for 
instances other than paternity establishment as provided for under 
UIFSA. A third commenter thought that for purposes of self-assessment, 
cases should not be defined as interstate until the local IV-D agency 
has determined the assistance of another State must be engaged in the 
enforcement of the case.
    Response: We recognize that the regulations on the processing of 
interstate cases do not take into account the direct enforcement 
activities that are authorized under UIFSA and PRWORA. OCSE has a 
workgroup made up of Federal and State staff and child support experts, 
called the Interstate Reform Initiative, which is working to make 
suggestions to revise the way interstate cases are processed and 
working to develop a consensus from which new interstate regulations 
can be written. We expect to be revising the interstate regulations in 
the next few years. At that time we will ensure full consistency 
between State self-assessments and interstate regulations. In the 
meantime, we have amended the final rule to take into account the fact 
that it may not be necessary to refer a case to another State in order 
to take appropriate enforcement actions by adding the words ``if 
referral is appropriate'' to section 308.2(g)(1)(i). Accordingly, the 
20-day time period for referring a case to another State's central 
registry when it is determined that the non-custodial parent is in 
another State applies only where referral is necessary in order to take 
the appropriate action on the case.
    Commenter: One commenter noted that the regulation at section 
308.2(g) refers to current regulations on interstate case processing. 
The commenter thought it is important to note, however, that these 
regulations no longer reflect the reality of interstate case 
processing. Direct income withholding, direct lien filing and expanded 
jurisdiction for establishment of a support order have lessened the 
need for States to automatically refer a case to another jurisdiction 
simply upon finding the parent in another jurisdiction. The commenter 
thinks more accurate policy interpretations may be found in OCSE-AT-98-
30. At a minimum, the commenter thinks comments and guidance in this 
regulation should acknowledge this deficiency and reference the work 
being done to update the regulations such as the work of the Interstate 
Reform Initiative.
    Response: As noted in the previous response, we have amended the 
final rule to take into account these changes until revised interstate 
case processing regulations are issued.
    Comment: One commenter believes that since implementation of a SDU 
is an administrative requirement, it is not a case level program 
criterion and should not be included in a self-assessment review. The 
commenter also questioned how the standard could be measured at the 75 
percent standard and recommended that the requirement be deleted.
    Response: We have revised the language in section 308.2(d) to make 
it clearer that the 75 percent requirement applies only to the timing 
of disbursements of collections. We also deleted 308.2(d)(1) which 
would have required the implementation of an SDU.
    Comment: One commenter believed section 308.2(d)(2) required review 
of all payments received on a case during the previous quarter. Since 
some cases might have 12 payments this could increase the possibility 
of noncompliance and is not what the workgroup said in the OCSE-AT-98-
12. The commenter suggests using either the workgroup recommendation or 
limiting the payments reviewed to the 3 most recent collections 
received within the last quarter of the review period.
    Response: In accordance with the workgroup recommendation, we have 
revised section 308.2(d)(2) to indicate that States must review against 
the last payment received for each case.
    Comment: One commenter believed it is inappropriate to allow States 
to treat a case as meeting the requirements if a result was achieved 
within the annual review period notwithstanding the timeframes. The 
commenter recommends requiring States to determine and report its 
actual level of performance and the associated 90 percent confidence 
intervals. The commenter wants the regulation to make clear that the 
compliance levels of 75 percent or 90 percent represent minimum 
performance levels that trigger a requirement of a corrective action 
plan.
    Response: We agree that the compliance levels represent minimum 
performance levels and encourage States to perform beyond these levels. 
However, we are not requiring States to report their actual levels of 
performance to us because this is a State management tool. 
Additionally, while timeframes are important in ensuring the provision 
of effective and timely services, States' primary focus should be on 
whether bottom line results of providing child support services are 
being achieved. We would however expect States to address any problems 
they are having in meeting the required timeframes in the corrective 
action section of their reports.
    Comment: One commenter recommended that the self-assessment also 
include review of State performance in other key areas such as 
effectiveness in providing services to families leaving TANF.
    Response: We encourage States to go as far beyond the minimum 
standards stated in the regulation as they choose. Section 308.3 
provides States the option to report on such performance.
    Comment: One commenter thought the section of the preamble 
describing section 308.2(f) should be rewritten. The segment stating 
``notices to the custodial and non-custodial parents informing them of 
their rights to request reviews within 180 days of determining that a 
review should be conducted'' appears to be a combination of two 
truncated phrases (one dealing with the notice of right to request 
review and the other dealing with the 180 day time frame for completing 
a review). Even after editing this sentence, the grammar in this entire 
paragraph needs to be reworked.
    Response: We do not agree that substantial rewriting is needed of 
either the preamble or the regulatory language. We have made some minor 
changes to the regulatory language in section

[[Page 77749]]

308.2(f) which makes the section clearer.
    Comment: One commenter wrote that section 308.2(c)(3)(i) regarding 
orders that were needed for enforcement during the review period should 
not include the phrase ``at a minimum, all of the,'' referring to 
locate sources since the regulations regarding locate in section 303.3 
do not require all of the locate sources listed to be used.
    Response: We agree and have made the requested change to section 
308.2(c)(3)(i).
    Comment: One commenter was concerned that the wording in section 
308.2(b)(2) is not consistent with its subsection (iv), since the 
former refers to situations where an ``order was required, but not 
established'' and the latter lists ``establishing an order'' as a 
possible outcome.
    Response: We do not agree that this language is inconsistent. 
Section 308.2(b)(2) states that ``if an order was required, but not 
established during the review period,'' subsections (i) through (iv) 
are a list of possible last required actions. If establishment of an 
order was the last required action on the case and the State failed to 
establish the order, section 308.2(b)(2)(iv) would apply. We do not 
think rewriting is necessary.
    Comment: One commenter requested we define ``enforcement 
collection'' as used in section 308.2(c)(2).
    Response: In section 308.2(c)(2) a typing mistake appeared in the 
NPRM. The first sentence should read ``If income withholding was not 
appropriate, and a collection was received. * * * The final rule 
corrects this error.
    Comment: We received two comments about section 308.2(c)(3)(iv). 
The comments concerned the deadlines for actions to be taken. The 
commenters' understanding is that the requirement to send an income 
withholding order to the employer within two business days after the 
date information regarding a newly hired employee is entered into the 
State Directory of New Hires applies only at the point in time when a 
statewide automated system is in place.
    Response: The requirement to send an income withholding notice 
within two business days after the date information regarding a newly 
hired employee is entered into the State Directory of New Hires is not 
tied to the implementation of a statewide automated System. Pursuant to 
sections 453A(f) and (g) of the Act, States were required to match the 
social security numbers of newly hired employees with those of 
individuals in the State case registry beginning not later than May 1, 
1998. Notice of a match is required to be sent to the IV-D agency which 
in turn was required to send an income withholding order to the 
employer within two business days of the entry of the employee's name 
in the SDNH. In addition, section 454A(g)(1) of the Act requires 
transmission of withholding orders and notices to employers within two 
business days after receipt of notice of, and the income source subject 
to, such withholding from a court, another State, an employer, the 
Federal Parent Locator Service or another source recognized by the 
State. This requirement was effective not later than October 1, 1999. 
We revised section 308.2(c)(3)(iv) to specify and correct the 
timeframes for sending a notice to the employer to withhold income if 
information is obtained from the State Directory of New Hires or other 
recognized sources.
    Comment: One commenter notes that section 308.2 fails to include a 
number of the general case evaluation rules set forth in Exhibit 1 of 
the OCSE-AT-98-12. For example, the Exhibit directs that certain cases 
should be excluded from further analysis because there was insufficient 
time to take the required case action or that the case documentation 
cannot be located or is inadequate. The commenter recommends amending 
the section to include the general case evaluation directions set forth 
in the exhibit.
    Response: OCSE-AT-98-12 does not apply to this rule and therefore 
it would not be appropriate to attach the exhibit to the final rule. 
However, if insufficient time has elapsed during the review period to 
take the required action in the case, we would suggest they exclude the 
case from the sample as OCSE did when performing compliance audits. The 
State's failure to locate a case or the lack of documentation on the 
case is not a basis for case exclusion. If a case is lost or lacks 
documentation, we would question what, if any, service was provided to 
the IV-D client. It should be noted that the self-assessment process 
allows for a certain number of cases to be discounted as not meeting 
the requirements. We do not support broad exclusions of lost or non-
documented cases, as that would not support the goals of the self-
assessment process.
    Comment: One commenter thought the final rule should require States 
to analyze and report on complaints filed as part of the self-
assessment.
    Response: While we recognize the importance of customer service in 
providing service to families and children, in writing this regulation 
we were trying to stay as close as possible to focusing on the 
responsibilities for child support service delivery in accordance with 
Federal mandates. We encourage States to report on customer service or 
other issues in the optional program direction or program service 
enhancement areas.
    Comment: One commenter suggested we allow States to review cost of 
living adjustments (COLA) for purposes of adjusting orders instead of 
the review and adjustment processes.
    Response: We think the regulation already allows States this 
flexibility. The regulation at section 308.2(f)(2)(iv) allows States to 
use COLA or automated methods to review and adjust support orders.
    Comment: One commenter suggested renumbering subsections 
308.2(f)(2)(iii) and (iv) because these subsections deal with ``notice 
of right to request review'' requirements which should stand apart from 
the review and adjustment process covered earlier in the subsection.
    Response: We agree and have made revisions to this section in the 
regulation.

Optional Program Areas of Review--308.3

    Comment: One commenter thought this section should be deleted from 
the regulations as it addresses optional areas of review and has no 
statutory basis.
    Response: Under section 1102 of the Act, the Secretary has the 
authority to regulate beyond the statute if we think it is necessary 
for the efficient administration of the program. We believe the 
optional aspects are beneficial and add an extra dimension to the self-
assessments. They are, as noted, optional.
    Comment: Two commenters recommended that analysis of program 
direction and service enhancements be mandatory.
    Response: While we appreciate that the commenters were concerned 
about adding to the breadth of the self-assessment review in this 
manner, we do not believe it is necessary to mandate these aspects of 
the self-assessments at this time. Should circumstances change over 
time we may revisit these regulations as warranted.

Executive Order 12866

    Executive Order 12866 requires that regulations be drafted to 
ensure that they are consistent with the priorities and principles set 
forth in the Executive Order. The Department has determined that this 
rule is consistent with these priorities and principles. The changes in 
this rule contain the Secretary's standards for State self-assessment 
reviews that largely replace previously required mandatory Federal 
audits. The

[[Page 77750]]

rule was determined to be significant and was reviewed by the Office of 
Management and Budget.

Assessment of Federal Regulations and Policies on Families

    Section 654 of the Treasury and General Government Appropriations 
Act of 1999 requires Federal agencies to determine whether a policy or 
regulation may affect family well-being. If the agency's conclusion is 
affirmative, then the agency must prepare an impact assessment 
addressing seven criteria specified in the law. These regulations will 
not have an impact on family well-being as defined in the legislation.

Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (Pub. L. 96-354) requires the 
Federal government to anticipate and reduce the impact of regulations 
and paperwork requirements on small entities. The Secretary certifies 
that these regulations will not have a significant economic impact on a 
substantial number of small entities because the primary impact of 
these regulations is on State governments.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995, Public Law 104-13, all 
Departments are required to submit to the Office of Management and 
Budget (OMB) for review and approval any reporting or recordkeeping 
requirements inherent in a final rule. This final rule contains 
reporting requirements in Part 308, which the Department submitted to 
OMB for its review. OMB filed comment on the collection, reporting it 
had concerns about the utility of the collection. OCSE understands OMB 
is concerned about balancing the value to OCSE of the information 
collection against the burden placed on State CSEs to collect the 
information. We would like to clarify that the requirement to have a 
process for annual reviews of and reports to the Secretary on the 
State's IV-D program, including such information as may be necessary to 
measure State compliance with Federal requirements for expedited 
procedures is a requirement of section 454(15) of the Act. The Act 
requires that States perform self-assessments using such standards and 
procedures as are required by the Secretary, under which the State IV-D 
agency will determine the extent to which the program is operated in 
compliance with the Act. In addition, as stated in several places in 
the NPRM and in this final rule, OCSE envisions the self-assessment as 
a management tool to enable States to improve their CSE programs.
    Section 308.1(e) contains a requirement that a State report the 
results of annual self-assessment reviews to the appropriate OCSE 
Regional Office and to the Commissioner of OCSE. The information 
submitted must be sufficient to measure State compliance with title IV-
D requirements and case processing timeframes. The results of the 
report will be disseminated via ``best practices'' to other States and 
also be used to determine if technical assistance is needed and the use 
of resources to meet goals. The State plan preprint page for this 
requirement (page 2.15, Federal and State Reviews and Audits) was 
approved by OMB July 7, 1997 under OMB Number 0970-0017.
    The likely respondents to this information collection include State 
child support enforcement agencies of the 50 States, the District of 
Columbia, Guam, Puerto Rico, and the Virgin Islands.
    We have resubmitted the information collection request to OMB. The 
information collection requirements in this final rule are not 
effective until approved by OMB.

Unfunded Mandates Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 requires 
that a covered agency prepare a budgetary impact statement before 
promulgating a rule that includes any Federal mandate that may result 
in the expenditure by State, local, and Tribal governments, in the 
aggregate, or by the private sector, of $100 million or more in any one 
year. If a covered agency must prepare a budgetary impact statement, 
section 205 further requires that it select the most cost-effective and 
least burdensome alternative that achieves the objectives of the rule 
and is consistent with the statutory requirements. In addition, section 
203 requires a plan for informing and advising any small government 
that may be significantly or uniquely impacted by the final rule.
    We have determined that the final rule will not result in the 
expenditure by State, local, and Tribal governments, in the aggregate, 
or by the private sector, of more than $100 million in any one year. 
Accordingly, we have not prepared a budgetary impact statement, 
specifically addressed the regulatory alternatives considered, or 
prepared a plan for informing and advising any significantly or 
uniquely impacted small government.

Executive Order 13132 Federalism Assessment

    Executive Order 13132 on Federalism applies to policies that have 
federalism implications, defined as ``regulations, legislative comments 
or proposed legislation, and other policy statements or actions that 
have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distributions 
of power and responsibilities among the various levels of government.'' 
While this rule does not have federalism implications for State or 
local governments as defined in the executive order, we consulted with 
representatives of State IV-D programs in developing the rule and their 
input is reflected.

Congressional Review

    This final rule is not a major rule as defined in 5 U.S.C., Chapter 
8.

List of Subjects in 45 CFR Part 308

    Auditing, Child support, Grant programs--social programs, Reporting 
and recordkeeping requirements.

(Catalog of Federal Domestic Assistance Program No. 93.563, Child 
Support Enforcement Program)

    Dated: June 26, 2000.
Olivia A. Golden,
Assistant Secretary for Children and Families.
    Dated: August 22, 2000.
Donna E. Shalala,
Secretary, Department of Health and Human Services.

    For the reasons set forth in the preamble, 45 CFR Chapter III is 
amended by adding a new part 308 as set forth below:

PART 308--ANNUAL STATE SELF-ASSESSMENT REVIEW AND REPORT

Sec.
308.0   Scope.
308.1   Self-assessment implementation methodology.
308.2   Required program compliance criteria.
308.3   Optional program areas of review.

    Authority: 42 U.S.C. 654(15)(A) and 1302.


Sec. 308.0  Scope.

    This part establishes standards and criteria for the State self-
assessment review and report process required under section 454(15)(A) 
of the Act.


Sec. 308.1  Self-assessment implementation methodology.

    (a) The IV-D agency must ensure the review meets Federal 
requirements and must maintain responsibility for and control of the 
results produced and contents of the annual report.

[[Page 77751]]

    (b) Sampling. A State must either review all of its cases or 
conduct sampling which meets the following conditions:
    (1) The sampling methodology maintains a minimum confidence level 
of 90 percent for each criterion;
    (2) The State selects statistically valid samples of cases from the 
IV-D program universe of cases; and
    (3) The State establishes a procedure for the design of samples and 
assures that no portions of the IV-D case universe are omitted from the 
sample selection process.
    (c) Scope of review. A State must conduct an annual review covering 
all of the required criteria in Sec. 308.2.
    (d) Review period. Each review period must cover a 12-month period. 
The first review period shall begin no later than 12 months after the 
effective date of the final rule and subsequent reviews shall each 
cover the same 12-month period thereafter.
    (e) Reporting. (1) The State must provide a report of the results 
of the self-assessment review to the appropriate OCSE Regional Office, 
with a copy to the Commissioner of OCSE, no later than 6 months after 
the end of the review period.
    (2) The report must include, but is not limited to:
    (i) An executive summary, including a summary of the mandatory 
program criteria findings;
    (ii) A description of optional program areas covered by the review;
    (iii) A description of sampling methodology used, if applicable;
    (iv) The results of the self-assessment reviews; and
    (v) A description of the corrective actions proposed and/or taken.


Sec. 308.2  Required program compliance criteria.

    (a) Case closure. (1) The State must have and use procedures for 
case closure pursuant to Sec. 303.11 of this chapter in at least 90 
percent of the closed cases reviewed.
    (2) If a IV-D case was closed during the review period, the State 
must determine whether the case met requirements pursuant to 
Sec. 303.11 of this chapter.
    (b) Establishment of paternity and support order. The State must 
have and use procedures required in this paragraph in at least 75 
percent of the cases reviewed.
    (1) If an order for support is required and established during the 
review period, the case meets the requirements, notwithstanding the 
timeframes for: establishment of cases as specified in Sec. 303.2(b) of 
this chapter; provision of services in interstate IV-D cases per 
Sec. 303.7(a), (b), (c)(4) through (6), and (c) (8) and (9) of this 
chapter; and location and support order establishment under 
Secs. 303.3(b)(3) and (5), and 303.4(d) of this chapter.
    (2) If an order was required, but not established during the review 
period, the State must determine the last required action and determine 
whether the action was taken within the appropriate timeframe. The 
following is a list of possible last actions:
    (i) Opening a case within 20 days pursuant to Sec. 303.2(b) of this 
chapter;
    (ii) If location activities are necessary, using all appropriate 
sources within 75 days pursuant to Sec. 303.3(b)(3) of this chapter. 
This includes all the following locate sources as appropriate: 
custodial parent, Federal and State Parent Locator Services, U.S. 
Postal Service, State employment security agency, employment data, 
Department of Motor Vehicles, and credit bureaus;
    (iii) Repeating location attempts quarterly and when new 
information is received in accordance with Sec. 303.3(b)(5) of this 
chapter;
    (iv) Establishing an order or completing service of process 
necessary to commence proceedings to establish a support order, or if 
applicable, paternity, within 90 days of locating the non-custodial 
parent, or documenting unsuccessful attempts to serve process in 
accordance with the State's guidelines defining diligent efforts 
pursuant to Secs. 303.3(c) and 303.4(d) of this chapter.
    (c) Enforcement of orders. A State must have and use procedures 
required under this paragraph in at least 75 percent of the cases 
reviewed. Enforcement cases include cases in which ongoing income 
withholding is in place as well as cases in which new or repeated 
enforcement actions were required during the review period.
    (1) If income withholding was appropriate and a withholding 
collection was received during the last quarter of the review period 
and the case was submitted for Federal and State income tax refund 
offset, if appropriate, the case meets the requirements of 
Sec. 303.6(c)(3) of this chapter, notwithstanding the timeframes for: 
establishment of cases in Sec. 303.2(b) of this chapter; provision of 
services in interstate IV-D cases under Sec. 303.7(a), (b), (c)(4) 
through (6), and (c) (8) and (9) of this chapter; and location and 
income withholding in Secs. 303.3(b)(3) and (5), and 303.100 of this 
chapter.
    (2) If income withholding was not appropriate, and a collection was 
received during the review period, and the case was submitted for 
Federal and State income tax refund offset, if appropriate, then the 
case meets the requirements of Sec. 303.6(c)(3) of this chapter, 
notwithstanding the timeframes for: establishment of cases in 
Sec. 303.2(b) of this chapter; provision of services in interstate IV-D 
cases under Sec. 303.7(a), (b), (c)(4) through (6) and (c) (8) and (9) 
of this chapter; and location and enforcement of support obligations in 
Secs. 303.3(b)(3) and (5), and 303.6 of this chapter.
    (3) If an order needed enforcement during the review period, but 
income was not withheld or other collections were not received (when 
income withholding could not be implemented), the State must determine 
the last required action and determine whether the action was taken 
within the appropriate timeframes. The following is a list of possible 
last required actions:
    (i) If location activities are necessary, using all appropriate 
location sources within 75 days pursuant to Sec. 303.3(b)(3) of this 
chapter. Location sources include: custodial parent, Federal and State 
Parent Locator Services, U.S. Postal Service, State employment security 
agency, Department of motor vehicles, and credit bureaus;
    (ii) Repeating attempts to locate quarterly and when new 
information is received pursuant to Sec. 303.3(b)(5) of this chapter;
    (iii) If there is no immediate income withholding order, initiating 
income withholding upon identifying a delinquency equal to one month's 
arrears, in accordance with Sec. 303.100(c) of this chapter;
    (iv) If immediate income withholding is ordered, sending a notice 
to the employer directing the employer to withhold from the income of 
the employee an amount equal to the monthly (or other periodic) support 
obligation (including any past due support obligation) of the employee, 
within:
    (A) Two business days after the date information regarding a newly 
hired employee is entered into the State Directory of New Hires and in 
which an information comparison conducted under section 453A(f) of the 
Act reveals a match;
    (B) Two business days after receipt of notice of, and the income 
source subject to withholding from a court, another State, an employer, 
the FPLS or another source recognized by the State.
    (v) If income withholding is not appropriate or cannot be 
implemented, taking an appropriate enforcement action (other than 
Federal and State income tax refund offset), unless service of process 
is necessary, within no more

[[Page 77752]]

than 30 days of identifying a delinquency or identifying the location 
of the non-custodial parent, whichever occurs later in accordance with 
Sec. 303.6(c)(2) of this chapter;
    (vi) If income withholding is not appropriate or cannot be 
implemented and service of process is needed, taking an appropriate 
enforcement action (other than Federal and State income tax refund 
offset), within no more than 60 days of identifying a delinquency or 
locating the non-custodial parent, whichever occurs later, or 
documenting unsuccessful attempts to serve process in accordance with 
the State's guidelines for defining diligent efforts and 
Sec. 303.6(c)(2) of this chapter;
    (vii) If the case has arrearages, submitting the case for Federal 
and State income tax refund offset during the review period, if 
appropriate, in accordance with Secs. 303.72, 303.102 and 303.6(c)(3) 
of this chapter.
    (d) Disbursement of collections. A State must have and use 
procedures required in this paragraph in at least 75 percent of the 
cases reviewed. With respect to the last payment received for each 
case:
    (1) States must determine whether disbursement of collection was 
made within two business days after receipt by the State Disbursement 
Unit from the employer or other source of periodic income in accordance 
with section 457(a) of the Act, if sufficient information identifying 
the payee is provided pursuant to section 454B(c) of the Act.
    (2) States may delay the distribution of collections toward 
arrearages until resolution of any timely appeals with respect to such 
arrearages pursuant to section 454B(c)(2) of the Act.
    (e) Securing and enforcing medical support orders. A State must 
have and use procedures required under this paragraph in at least 75 
percent of the cases reviewed. A State must:
    (1) Determine whether all support orders established during the 
review period included medical support. If not, determine whether 
medical support was included in the petition for support to the court 
or administrative authority pursuant to sec. 466(a)(19) of the Act and 
Sec. 303.31(b)(1) of this chapter.
    (2) If a requirement for medical support is included in the order, 
determine whether steps were taken to determine if reasonable health 
insurance was available pursuant to Sec. 303.31(a)(1) and (b)(7) of 
this chapter.
    (3) If reasonable health insurance was available, but not obtained, 
determine whether steps were taken to enforce the order pursuant to 
Sec. 303.31(b)(7) of this chapter.
    (4) Determine whether the IV-D agency informed the Medicaid agency 
that coverage had been obtained when health insurance was obtained 
during the review period pursuant to Sec. 303.31(b)(6) of this chapter.
    (5) Determine whether the custodial parent was provided with 
information regarding the policy when health insurance was obtained 
pursuant to Sec. 303.31(b)(5) of this chapter.
    (6) Determine whether the State requested employers providing 
health coverage to inform the State of lapses in coverage pursuant to 
Sec. 303.31(b)(9) of this chapter.
    (7) Determine whether the State transferred notice of the health 
care provision to a new employer when a noncustodial parent was ordered 
to provide health insurance coverage and changed employment and the new 
employer provides health care coverage.
    (f) Review and adjustment of orders. A State must have and use 
procedures required under this paragraph in at least 75 percent of the 
cases reviewed.
    (1) If a case has been reviewed and meets the conditions for 
adjustment under State laws and procedures and Sec. 303.8 of this 
chapter and the order is adjusted or a determination is made as a 
result of a review during the self-assessment period that an adjustment 
is not needed in accordance with the State's guidelines for setting 
child support awards, the State will be considered to have taken 
appropriate action in that case, notwithstanding the timeframes for: 
establishment of cases in Sec. 303.2(b) of this chapter; provision of 
services in interstate IV-D cases under Sec. 303.7(a), (b), (c)(4) 
through (6), and (c) (8) and (9) of this chapter; and location and 
review and adjustment of support orders contained in Secs. 303.3(b)(3) 
and (5), and 303.8 of this chapter.
    (2) If a case has not been reviewed, the State must determine the 
last required action and determine whether the action was taken within 
the appropriate timeframe. The following is a list of possible last 
required actions:
    (i) If location is necessary to conduct a review, using all 
appropriate location sources within 75 days of opening the case 
pursuant to Sec. 303.3(b)(3) of this chapter. Location sources include: 
custodial parent, Federal and State Parent Locator Services, U.S. 
Postal Service, State employment security agency, unemployment data, 
Department of Motor Vehicles, and credit bureaus;
    (ii) Repeating location attempts quarterly and when new information 
is received pursuant to Sec. 303.3(b)(5) of this chapter;
    (iii) Within 180 calendar days of receiving a request for a review 
or locating the non-requesting parent, whichever occurs later, 
conducting a review of the order and adjusting the order or determining 
that the order should not be adjusted pursuant to sec. 303.8(e) of this 
chapter;
    (iv) If an adjustment was made during the review period using cost 
of living or automated methods, giving both parties 30 days to contest 
any adjustment to that support order pursuant to sec. 466(a)(10)(A)(ii) 
of the Act.
    (3) The State must provide the custodial and non-custodial parents 
notices, not less often than once every three years, informing them of 
their right to request the State to review and, if appropriate, adjust 
the order. The first notice may be included in the order pursuant to 
sec. 466(a)(10)(C) of the Act.
    (g) Interstate services. A State must have and use procedures 
required under this paragraph in at least 75 percent of the cases 
reviewed. For all interstate cases requiring services during the review 
period, determine the last required action and determine whether the 
action was taken during the appropriate timeframe:
    (1) Initiating interstate cases:
    (i) Except when using the State's long-arm statute for establishing 
paternity, if referral is appropriate, within 20 calendar days of 
determining that the non-custodial parent is in another State and, if 
appropriate, receipt of any necessary information needed to process the 
case, referring that case to the responding State's interstate central 
registry for action pursuant to Sec. 303.7(b)(2) of this chapter.
    (ii) If additional information is requested, providing the 
responding State's central registry with requested additional 
information within 30 calendar days of the request pursuant to 
Sec. 303.7(b)(4) of this chapter.
    (iii) Upon receipt of new information on a case, notifying the 
responding State of that information within 10 working days pursuant to 
Sec. 303.7(b)(5) of this chapter.
    (iv) Within 20 calendar days after receiving a request for review 
and adjustment pursuant to Sec. 303.7(b)(6) of this chapter.
    (2) Responding interstate cases:
    (i) Within 10 working days of receipt of an interstate IV-D case, 
the central registry reviewing submitted documentation for 
completeness, forwarding the case to the State Parent Locator Service 
(PLS) for locate or to the appropriate agency for processing, 
acknowledging receipt of the case and requesting any missing 
documentation from the initiating State, and informing

[[Page 77753]]

the IV-D agency in the initiating State where the case was sent for 
action, pursuant to Sec. 303.7(a)(2) of this chapter.
    (ii) The Central registry responding to inquiries from other States 
within five working days of a receipt of request for case status review 
pursuant to Sec. 303.7(a)(4) of this chapter.
    (iii) Within 10 days of locating the non-custodial parent in a 
different jurisdiction or State, forwarding the case in accordance with 
Federal requirements pursuant to Secs. 303.7(c)(5) and (6) of this 
chapter.
    (iv) Within two business days of receipt of collections, forwarding 
any support payments to the initiating State pursuant to sec. 
454B(c)(1) of the Act.
    (v) Within 10 working days of receipt of new information notifying 
the initiating State of that new information pursuant to 
Sec. 303.7(c)(9) of this chapter.
    (h) Expedited processes. The State must have and use procedures 
required under this paragraph in the amounts specified in this 
paragraph in the cases reviewed for the expedited processes criterion.
    (1) In IV-D cases needing support orders established, regardless of 
whether paternity has been established, action to establish support 
orders must be completed from the date of service of process to the 
time of disposition within the following timeframes pursuant to Sec. 
303.101(b)(2)(i) of this chapter:
    (i) 75 percent in 6 months; and
    (ii) 90 percent in 12 months.
    (2) States may count as a success for the 6-month standard cases 
where the IV-D agency uses long-arm jurisdiction and disposition occurs 
within 12 months of service of process on the alleged father or non-
custodial parent.


Sec. 308.3  Optional program areas of review.

    (a) Program direction. A State may include a program direction 
review in its self-assessment for the purpose of analyzing the 
relationships between case results relating to program compliance 
areas, and performance and program outcome indicators. This review is 
an opportunity for States to demonstrate how they are trying to manage 
their resources to achieve the best performance possible. A program 
direction analysis could describe the following:
    (1) Initiatives that resulted in improved and achievable 
performance accompanied with supporting data;
    (2) Barriers impeding progress; and
    (3) Efforts to improve performance.
    (b) Program service enhancement. A State may include a program 
service enhancement report in its self-assessment that describes 
initiatives put into practice that improved program performance and 
customer service. This is an opportunity for States to promote their 
programs and innovative practices. Some examples of innovative 
activities that States may elect to discuss in the report include:
    (1) Steps taken to make the program more efficient and effective;
    (2) Efforts to improve client services;
    (3) Demonstration projects testing creative new ways of doing 
business;
    (4) Collaborative efforts being taken with partners and customers;
    (5) Innovative practices which have resulted in improved program 
performance;
    (6) Actions taken to improve public image;
    (7) Access/visitation projects initiated to improve non-custodial 
parents' involvement with the children and;
    (8) Efforts to engage non-custodial parents who owe overdue child 
support to pay that support or engage in work activities, such as 
subsidized employment, work experience, or job search.
    (c) A State may provide any of the optional information in 
paragraphs (a) and (b) of this section in narrative form.

[FR Doc. 00-31612 Filed 12-11-00; 8:45 am]
BILLING CODE 4150-04-P