Welfare Reform: Child Support an Uncertain Income Supplement for Families
Leaving Welfare (Letter Report, 08/03/98, GAO/HEHS-98-168).

Pursuant to a congressional request, GAO provided information on how
successful states are likely to be in obtaining child support for
families whose benefits are subject to time limits, focusing on: (1) how
successful states that experimented with time-limited benefits before
welfare reform have been in obtaining child support for families who
reach their limits; (2) how successful states have been in obtaining
child support for families within a 5-year period, the maximum time a
family may receive Temporary Assistance for Needy Families (TANF)
benefits; and (3) the implications time limits have for states and
families.

GAO noted that: (1) many TANF families may not be able to count on child
support as a steady source of income when their time-limited welfare
benefits expire; (2) in the first three states to enforce welfare
benefit time limits--Connecticut, Florida, and Virginia--only about 20
to 40 percent of families had any child support collected for them in
the 12 months before their welfare benefits were terminated; (3) about
one-half or more of the child support cases without collections lacked a
child support order legally obligating a noncustodial parent to pay
child support at the time the families' assistance was terminated,
despite having a long history in the child support program before time
limits were implemented; (4) for families whose child support was
secured, the median collections among the three states ranged from a
total of $581 to $1,348 for the 12-month period; (5) in two
high-performing child support states, Minnesota and Washington, GAO
observed better outcomes for a sample of Aid to Families with Dependent
Children child support cases that first opened in 1992 and remained open
for 5 years; (6) about two-thirds of the families received some child
support in the last 12 months of that period; (7) support order
establishment rates were higher for these cases as well: in both states,
orders were established within 5 years for more than 80 percent of the
cases that needed them; (8) the median amounts of child support
collected for these families ranged from $1,875 to $2,118 for the
12-month period; (9) despite these outcomes, about one-third of the
child support clients in these states reached the end of the 5-year
period without any child support; (10) to better ensure that child
support is available for families in a time-limited welfare system,
states will need to improve their child support performance for families
already in the welfare system and for those who enter it for the first
time; (11) in the three states GAO studied that had imposed time limits
on families already receiving aid, from one-half to three-quarters of
the families could not get child support because the state did not or
could not locate the noncustodial parent; (12) it is also important for
states to move quickly to pursue child support for families that have
just begun receiving aid; (13) state officials told GAO that information
on noncustodial parents is best pursued early and aggressively to
achieve successful outcomes; and (14) GAO's analysis showed that
successful outcomes are most likely within 2 years after a family begins
receiving child support services.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-98-168
     TITLE:  Welfare Reform: Child Support an Uncertain Income 
             Supplement for Families Leaving Welfare
      DATE:  08/03/98
   SUBJECT:  Child support payments
             Welfare recipients
             Public assistance programs
             Single parents
             Welfare benefits
             State-administered programs
IDENTIFIER:  HHS Temporary Assistance for Needy Families Program
             HHS Child Support Enforcement Program
             Connecticut
             Florida
             Virginia
             AFDC
             Aid to Families with Dependent Children Program
             Minnesota
             Washington
             
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Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Human Resources, Committee on
Ways and Means, House of Representatives

August 1998

WELFARE REFORM - CHILD SUPPORT AN
UNCERTAIN INCOME SUPPLEMENT FOR
FAMILIES LEAVING WELFARE

GAO/HEHS-98-168

Child Support and Time-Limited Welfare

(116004)


Abbreviations
=============================================================== ABBREV

  AFDC - Aid to Families With Dependent Children
  HHS - Department of Health and Human Services
  OCSE - Office of Child Support Enforcement
  TANF - Temporary Assistance for Needy Families

Letter
=============================================================== LETTER


B-277623

August 3, 1998

The Honorable E.  Clay Shaw
Chairman, Subcommittee on Human Resources
Committee on Ways and Means
House of Representatives

Dear Mr.  Chairman: 

The Personal Responsibility and Work Opportunity Reconciliation Act
of 1996 places a 5-year limit on assistance to families under the
Temporary Assistance for Needy Families (TANF) block grant.  The TANF
block grant replaced the Aid to Families With Dependent Children
(AFDC) program, which in 1996 made more than $20 billion in benefit
payments to a monthly caseload of about 4.6 million families.  Before
this welfare reform legislation, 14 states had adopted time-limited
welfare programs under federally approved waivers.  The increased
emphasis on the temporary nature of assistance makes child support,
along with employment, a more important means for families receiving
aid to become self-sufficient or to support themselves once they
reach their time limits.\1

Historically, however, the state-operated, federally supervised child
support enforcement program has never been able to obtain collections
on more than about 13 percent of its AFDC child support cases.  As a
result, there is a great deal of interest in the extent to which the
child support program can ensure that all families receive child
support before and after their cash welfare benefits are terminated. 

This report responds to your request for information on how
successful states are likely to be in obtaining child support for
families whose benefits are subject to time limits.  Specifically, it
addresses

  -- how successful states that experimented with time-limited
     benefits before welfare reform have been in obtaining child
     support for families who reach their limits;

  -- how successful states have been in obtaining child support for
     families within a 5-year period, the maximum time a family may
     receive TANF benefits; and

  -- the implications time limits have for states and families. 

To determine how successful states were in obtaining child support
for families reaching time limits for welfare benefits under state
waivers, we analyzed child support outcomes for families terminated
from welfare in Connecticut, Florida, and Virginia, the first states
to enforce time limits.  These states' time limits were 21 months, 2
or 3 years, and 2 years, respectively.  To ascertain how successful
states had been in obtaining child support for families within a
5-year period, we analyzed child support outcomes on a set of new
AFDC child support cases that began in 1992 and remained open for 5
years in two states selected because of their high performance in
providing child support services--Minnesota and Washington.\2
Finally, to assess the implications of time limits for families and
states, we analyzed the results from the two sets of states and
discussed the results with officials from the Office of Child Support
Enforcement (OCSE) within the Department of Health and Human Services
(HHS) and the states we reviewed.  Although we did not verify the
accuracy of the states' databases, the automated case files are
considered the official state case files.  We conducted our work
between April 1997 and February 1998 in accordance with generally
accepted government auditing standards.  (App.  I provides additional
details about the scope and methodology of our work). 


--------------------
\1 In May 1997, 93 percent of welfare families were single-parent
households, usually headed by women. 

\2 Outcomes were tracked regardless of whether the child support
cases had changed from AFDC to non-AFDC status.  Less than
one-quarter of these cases remained AFDC child support cases
continuously for the entire 5 years. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Many TANF families may not be able to count on child support as a
steady source of income when their time-limited welfare benefits
expire.  In the first three states to enforce welfare benefit time
limits--Connecticut, Florida, and Virginia--only about 20 to 30
percent of families had any child support collected for them in the
12 months before their welfare benefits were terminated.  About
one-half or more of the child support cases without collections
lacked a child support order legally obligating a noncustodial parent
to pay child support at the time the families' assistance was
terminated, despite having a long history in the child support
program before time limits were implemented.  For families whose
child support was secured, the median collections among the three
states ranged from a total of $581 to $1,348 for the 12-month period. 

In two high-performing child support states, Minnesota and
Washington, we observed better outcomes for a sample of AFDC child
support cases that first opened in 1992 and remained open for 5
years.  About two-thirds of the families received some child support
in the last 12 months of that period.  Support order establishment
rates were higher for these cases as well:  In both states, orders
were established within 5 years for more than 80 percent of the cases
that needed them.  The median amounts of child support collected for
these families ranged from $1,875 to $2,118 for the 12-month period. 
Despite these outcomes, about one-third of the child support clients
in these states reached the end of the 5-year period without any
child support. 

To better ensure that child support is available for families in a
time-limited welfare system, states will need to improve their child
support performance for families already in the welfare system and
for those who enter it for the first time.  In the three states we
studied that had imposed time limits on families already receiving
aid, from one-half to three-quarters of the families could not get
child support because the state did not or could not locate the
noncustodial parent.  This indicates that many families already
receiving aid who did not have collections before time-limit policies
began may be unlikely to obtain child support before their welfare
benefits expire unless states can do a better job of locating
noncustodial parents.  It is also important for states to move
quickly to pursue child support for families that have just begun
receiving aid.  State officials told us that information on
noncustodial parents is best pursued early and aggressively to
achieve successful outcomes.  Our analysis showed that successful
outcomes are most likely within 2 years after a family begins
receiving child support services. 


   BACKGROUND
------------------------------------------------------------ Letter :2

In 1975, the Congress created the federal child support enforcement
program as title IV-D of the Social Security Act.  The program's
original purpose was to strengthen state and local efforts for
obtaining child support for families receiving AFDC and for any
non-AFDC individuals who apply for child support services.  The
program provides a broad range of services, including basic services
such as locating the noncustodial parent or parents, establishing
paternity through genetic tests or other means, establishing support
orders obligating noncustodial parents to pay specific amounts, and
collecting the payment of support owed.\3 While the ultimate goal
under the program is to collect child support for each case, any one
case may need a different combination of basic services before
collections can begin.  To illustrate these different combinations of
needed services, figure 1 gives a breakdown of the services
Virginia's child support cases needed when time limits began.  For
example, at the beginning of the 2-year time limit, 4 percent of the
custodial parents already had a support order in place but the
noncustodial parents needed to be located and their support orders
needed to be enforced through wage-withholding or other means. 
Appendix II describes the basic child support enforcement services. 

   Figure 1:  Services Virginia's
   Child Support Cases Needed When
   Time Limits Began

   (See figure in printed
   edition.)

Child support enforcement is a joint federal and state
responsibility.  Within the federal government, OCSE is responsible
for providing leadership, technical assistance, and standards for
effective state programs.  States or local offices under state
supervision deliver child support services to families.  The federal
government and the states share administrative costs at the rate of
66 percent and 34 percent, respectively.  In fiscal year 1996,
administrative costs for the program were $3 billion and collections
totaled $12 billion.  About 13 percent of the 7.4 million AFDC child
support cases and 28 percent of 9.3 million non-AFDC child support
cases nationwide received at least one support payment in 1996. 

The new welfare reform law significantly changed our nation's welfare
policy.  Since 1935, AFDC had entitled single-parent families to
receive monthly cash assistance generally for as long as they met
income and other eligibility criteria and had children under age 18. 
TANF represents a significant departure from this approach, placing a
5-year limit on federal aid designed to ensure that assistance is
temporary for most recipients.\4 \5 Before the welfare reform law
passed, however, 14 states were granted waivers under section 1115 of
the Social Security Act allowing them to experiment with assistance
time limits ranging from 18 months to 5 years.\6 Although state
policies regarding exemptions and extensions varied, these state
waivers were the first efforts to make assistance temporary based
solely on a specified period of time.  Table 1 summarizes some
provisions of the time-limited programs adopted in the three states
we reviewed. 



                                     Table 1
                     
                     Summary of Time Limit Waivers Adopted in
                        Connecticut, Florida, and Virginia

                                       Date of
                                       first
                          Date         termination  Statewide    Extensions
State        Time limit   adopted      s            or local     possible
-----------  -----------  -----------  -----------  -----------  ---------------
Connecticut  21 months    February     November     Statewide    Yes
                          1996         1997

Florida      2 or 3       March 1995   February     Local\b      Yes
             years\a                   1997

Virginia     2 years      July 1995    July 1997    Phased in    Yes
                                                    statewide\c
--------------------------------------------------------------------------------
\a Time limit varied depending on recipient's job readiness. 

\b Escambia County. 

\c First terminations affected recipients in Culpeper and Lynchburg
districts; statewide phase-in was complete by October 1997. 

The Congress also wanted to encourage parental responsibility by
requiring OCSE and the states to strengthen the existing child
support enforcement program by adopting new enforcement tools.  These
tools include federal and state registries of child support orders,
federal and state directories of new employee hires, and state
reporting of quarterly wage reports to help locate noncustodial
parents and enforce support orders.\7 As all states move to implement
these tools, many states are also working to complete the statewide
automated systems required by federal law.  From fiscal year 1981
through fiscal year 1997, the states have spent about $3.2 billion in
federal and state funds to develop these systems to manage their
caseloads.  However, as of March 30, 1998,\8 only 25 of the 54 child
support enforcement systems had been certified by HHS.\9

In addition, the welfare reform legislation established new custodial
parent cooperation requirements and penalties to strengthen existing
requirements and to simplify the paternity establishment process.\10
The law also included additional tools such as the matching of data
with states' financial institutions and the revocation of
noncustodial parents' driver's, professional and occupational, and
recreational licenses to enforce the payment of child support. 
Finally, the Congress required that HHS in consultation with the
states develop and report to the Congress on a new incentive payment
system to encourage states to operate effective programs. 


--------------------
\3 Other services include client intake, customer service, pursuing
delinquent noncustodial parents, and updating and adjusting support
orders. 

\4 Federal TANF assistance to a family including an adult is limited
to 60 months (whether or not they are consecutive).  However, some
states, like Georgia and Utah, adopted shorter time limits as part of
their TANF programs.  For families reaching time limits, states may
continue to provide aid with state funds. 

\5 At termination, families may have earnings or income from other
sources, and may continue to receive benefits from government
programs such as Food Stamps or Medicaid. 

\6 The 14 states are Connecticut, Delaware, Florida, Hawaii,
Illinois, Louisiana, Nebraska, North Carolina, Ohio, Oregon, South
Carolina, Tennessee, Virginia, and Wisconsin. 

\7 Employers are required to report identifying information on all
new hires to state directories of new hires, where the information is
matched against databases of child support orders so that enforcement
activities such as the implementation of wage withholding orders can
begin.  This information, in turn, is forwarded to a national
database of new hires for use by all states. 

\8 Six months after the mandatory certification date for these
systems. 

\9 For further information on states' progress, see Child Support
Enforcement:  Strong Leadership Required to Maximize Benefits of
Automated Systems (GAO/AIMD-97-72, June 30, 1997) and Child Support
Enforcement:  Certification Process for State Information Systems
(GAO/AIMD-98-134, June 15, 1998). 

\10 The welfare reform legislation moved the determination of
custodial parent cooperation from the welfare agency to the child
support agency, mandated that welfare assistance be reduced by a
minimum 25 percent if a custodial parent does not cooperate with the
child support agency, gave the child support agency the authority to
order genetic testing in contested cases, and stipulated that a
signed acknowledgment of paternity be considered a legal finding of
paternity unless rescinded within 60 days. 


   MOST FAMILIES WHOSE AID WAS
   TERMINATED LACKED CHILD SUPPORT
------------------------------------------------------------ Letter :3

In the first three states to enforce time limits, most families who
reached their 21-month to 3-year time limits did not have any child
support collected for them during the 12 months before their welfare
termination.  Moreover, in about one-half to two-thirds of these
families' child support cases, child support was not due at
termination because a support obligation had not yet been
established. 


      MOST FAMILIES LEFT
      ASSISTANCE WITHOUT CHILD
      SUPPORT
---------------------------------------------------------- Letter :3.1

Only about 20 to 30 percent of families reaching their time limits
had any child support collected for them in the 12 months before
termination.  Figure 2 shows the status of welfare families' child
support cases during the 12-month period before termination.\11 The
median annual amounts due for all cases with a current support order
in Connecticut, Florida, and Virginia were $3,054, $2,134, and
$2,067, respectively.  However, as shown in table 2, the amount
collected for families rarely equaled the full amount due.  On
average, the amount collected ranged from 43 percent to 52 percent of
the amount due.  For families with child support collected, median
child support collections ranged from $581 to $1,348 and mean
collections ranged from $1,065 to $1,388 for the 12-month period. 

   Figure 2:  Status of Welfare
   Families' Child Support Cases
   in the 12 Months Before
   Termination

   (See figure in printed
   edition.)



                                Table 2
                
                   Distribution of Families by Child
                Support Collected Relative to Amount Due
                Within the 12 Months Before Termination

                                        Connecticu
Percentage of families receiving                 t   Florida  Virginia
--------------------------------------  ----------  --------  --------
100 percent of the amount due                   13        12         2
50 to 99 percent of the amount due              20        21        17
1 to 49 percent of the amount due               26        38        39
0 percent of the amount due                     41        29        41
----------------------------------------------------------------------

--------------------
\11 A welfare family may have more than one child support case
associated with it because a custodial parent may have children
related to different noncustodial parents. 


      MANY FAMILIES STILL NEEDED
      BASIC CHILD SUPPORT SERVICES
      AT TERMINATION
---------------------------------------------------------- Letter :3.2

Upon reaching termination, many families in the three states still
required one or more basic child support services, including locating
the noncustodial parent and establishing paternity and support
orders, before collections and enforcement could begin.  From 56 to
81 percent of all child support cases reviewed still needed at least
one of these basic services when welfare benefits expired.  One-half
to about two-thirds of these cases had been open in the child support
system for 5 years or longer.\12

Locating a noncustodial parent is an essential precondition of all
child support collections, for without location, paternity and
support orders cannot be established, orders cannot be enforced, and
collections cannot be made.  In addition, locating a noncustodial
parent may be necessary even though paternity has previously been
established and a support order is in place.  As figure 3 shows, from
56 to 81 percent of the noncustodial parents who needed to be located
at the start of the time limit were not located by the time welfare
benefits were terminated. 

   Figure 3:  Percentage of
   Noncustodial Parents Who Needed
   to Be Located and Were Not by
   End of Time Limit

   (See figure in printed
   edition.)

Note:  Outcomes are shown as a percentage of cases needing
noncustodial parent location at the start of the time limit:  74
percent of cases needed locations in Connecticut, 54 percent in
Florida, and 34 percent in Virginia. 

State officials said locating noncustodial parents for families with
older child support cases was particularly problematic.  Information
initially provided by custodial parents when they applied for welfare
is no longer current, and new information is rarely forthcoming. 
Some noncustodial parents, like the custodial parents, are less
educated, have fewer skills, and are less likely to be regularly
employed.  Therefore, they are harder to locate through employment
sources.  State officials also said noncustodial parents are often
mobile, work "off the books," and some may quit their jobs as soon as
they are located through their employers.\13 \,\14

Another basic child support service that may still be needed is
establishing paternity.  Of the large proportion of the cases we
reviewed needing paternity established at the start of the time
limit, the vast majority still did not have paternity established by
the time welfare benefits were terminated.  From 71 percent to 79
percent of the child support cases that needed to have paternity
established did not have paternity established by the time welfare
benefits ended, as shown in figure 4. 

   Figure 4:  Percentage of Cases
   Still Needing Paternity
   Established at End of Time
   Limit

   (See figure in printed
   edition.)

Note:  Outcomes are shown as a percentage of cases that needed
paternity established at start of time limit:  43 percent of cases
needed paternity established in Connecticut, 63 percent in Florida,
and 49 percent in Virginia. 

Most of the cases reviewed needed support orders established at the
start of the time limit, and the vast majority of them still did not
have orders established by the time welfare benefits were terminated. 
From 75 to 79 percent of the child support cases needing orders
remained without orders at termination, as illustrated by figure 5. 

   Figure 5:  Percentage of Cases
   Still Needing Support Order
   Establishment at End of Time
   Limit

   (See figure in printed
   edition.)

Note:  Outcomes are shown as a percentage of cases needing a support
order established at the start of the time limit:  65 percent needed
support orders in Connecticut, 77 percent in Florida, and 58 percent
in Virginia. 


--------------------
\12 Many cases had been open for longer than 5 years.  For example,
in Connecticut, the oldest child support case we reviewed first
opened in 1982, and the oldest cases in Florida and Virginia dated
from 1980 and 1987, respectively. 

\13 Lack of income may be a barrier to collecting child support from
some noncustodial parents.  For further information, see Ronald B. 
Mincy and Elaine J.  Sorensen, "Deadbeats and Turnips in Child
Support Reform," Journal of Policy Analysis and Management, Vol.  17,
No.  1 (1998), pp.  44-51. 

\14 Manpower Demonstration Research Corporation's Fair Share
Demonstration also found that many noncustodial parents in
welfare-related cases have sporadic work histories, characterized by
frequent job changes.  For more information, see Working With
Low-Income Cases:  Lessons for the Child Support Enforcement System
From Parents' Fair Share (New York, N.Y.:  Manpower Demonstration
Research Corporation, May 1998). 


   FAMILIES FACING 5-YEAR TIME
   LIMIT MAY ALSO LACK CHILD
   SUPPORT WHEN THEIR BENEFITS
   EXPIRE
------------------------------------------------------------ Letter :4

The outcomes in two states with strong child support performance
demonstrate how states may achieve better results establishing
paternity, obtaining support orders, and collecting child support.\15
In these states, we reviewed new AFDC child support cases that were
first opened in 1992 and remained open for 5 years--the maximum
length of time a family may receive federal TANF aid.  About
two-thirds of the cases that remained open for 5 years\\16 received
some child support in the last 12 months of the period.  Yet, despite
the greater success rate of these states, about one-third of their
child support clients would have reached the end of a 5-year time
limit without any child support, as shown in figure 6. 

   Figure 6:  Child Support Status
   of Cases at the End of 5 Years

   (See figure in printed
   edition.)


--------------------
\15 Outcomes in the two sets of states may differ because of the
types of cases reviewed.  In Connecticut, Florida, and Virginia,
about one-half to two-thirds of cases reviewed had been open in the
child support system for 5 years or more.  In Minnesota and
Washington, all cases reviewed were new to their child support
systems.  State child support officials told us that new cases were
more likely to produce successful outcomes. 

\16 In both states, all cases opened as AFDC child support cases. 
About 27 percent of all these cases reviewed remained open child
support cases for 5 years.  In Minnesota, 21 percent of the cases
that were open continuously for 5 years remained AFDC child support
cases for the entire period, and in Washington, the corresponding
figure was 24 percent. 


      SOME CHILD SUPPORT WAS
      COLLECTED FOR MOST CASES
      WITHIN 5 YEARS
---------------------------------------------------------- Letter :4.1

About two-thirds of the cases that remained open for 5 years had some
child support collected for them in the last 12 months.  However, the
majority of cases did not receive the full amount due, as shown in
table 3.  The median annual amounts due for all cases with a current
support order in Minnesota and Washington were $2,351 and $2,358,
respectively.  The amount collected per case averaged 69 to 83
percent of the full amount due, higher than the cases reviewed in the
first states to enforce time limits.  For cases with collections, the
median child support collections ranged from $1,875 to $2,118 and
mean collections ranged from $2,211 to $2,316 in the last 12
months.\\17



                                Table 3
                
                 Distribution of Cases by Child Support
                Collected Relative to Amount Due Within
                 the Last 12 Months of the Time Period

Percentage of cases receiving                  Minnesota    Washington
------------------------------------------  ------------  ------------
100 percent of the amount due                         24            12
50 to 99 percent of the amount due                    36            31
1 to 49 percent of the amount due                     14            27
0 percent of the amount due                           26            31
----------------------------------------------------------------------

--------------------
\17 The amounts collected were lower for cases that remained open
AFDC child support cases for the entire 5-year period.  The mean
amount collected was $1,891 in Minnesota and $1,598 in Washington. 


      BASIC SERVICES PROVIDED, BUT
      ONE-THIRD OF CASES RECEIVED
      NO COLLECTIONS
---------------------------------------------------------- Letter :4.2

States achieved high rates of paternity and support order
establishment during the 5-year period.  More than 80 percent of
cases needing paternity or support order establishment or both
received these basic services during the 5-year period, as figures 7
and 8 show.  However, about one-third of all the cases that remained
open for 5 years had no child support collected for them during the
last 12 months of the period. 

   Figure 7:  Percentage of Cases
   With Paternity Established
   Within 5 Years

   (See figure in printed
   edition.)

Note:  Outcomes are shown as a percentage of cases needing paternity
established at case opening:  57 percent of cases in Minnesota and 33
percent in Washington. 

   Figure 8:  Percentage of Cases
   With Support Orders Established
   Within 5 Years

   (See figure in printed
   edition.)

Note:  Outcomes are shown as a percentage of cases needing a support
order established at case opening:  87 percent of Minnesota cases and
80 percent of Washington cases. 


   IMPLICATIONS FOR STATES AND
   FAMILIES FACING TIME-LIMITED
   WELFARE
------------------------------------------------------------ Letter :5

Time limits are being implemented on the two different sets of
families represented in our study:  those already receiving aid
before time limits began and those whose assistance will begin under
time limits.  Many of the families already receiving aid who did not
have collections before the time limits began may be unlikely to
obtain child support before welfare benefits expire unless states can
improve their performance in locating noncustodial parents.  In
addition, families who begin receiving aid under time limits are much
more likely to receive some support before their benefits expire if
states aggressively pursue their cases.  A state's success in
obtaining child support can provide an important supplement to a
family's earnings.  If states expect to obtain child support for
families before their time-limited welfare benefits expire, the
states will need to improve their performance and ensure that they
effectively implement the new tools provided by the Congress. 


      STATES MUST IMPROVE THEIR
      PERFORMANCE IN LOCATING
      NONCUSTODIAL PARENTS FOR
      FAMILIES ALREADY RECEIVING
      WELFARE
---------------------------------------------------------- Letter :5.1

Our findings from the three states that implemented time limits under
waivers indicate that many welfare families that did not get child
support before the time limits began may be unlikely to obtain it
before their welfare benefits expire unless states can locate
noncustodial parents.  Failure to locate the noncustodial parent was
the primary reason efforts did not succeed in the three states that
had implemented time-limited aid.  One-half to three-quarters of the
cases that needed a support order or paternity established could not
get these services because the state could not or did not locate the
noncustodial parent. 

Fifty-nine to 90 percent of the cases not receiving child support in
these states were cases that had been open for more than 5 years. 
Although state officials told us that locating noncustodial parents
for families who have been receiving welfare for several years is
particularly difficult, opportunities may exist for states to renew
or enhance their efforts to pursue child support for these cases. 

The implementation of time-limited assistance may motivate custodial
parents to provide more current noncustodial parent information as
their benefits expire.  In addition, the new federal law requires
states to reduce a family's grant amount by at least 25 percent for
failure to cooperate with child support enforcement and gives states
the option to deny assistance to the entire family.\18

OCSE officials suggested that states may need to employ new
strategies to work with families who have been receiving welfare for
several years.  Custodial parents in these cases may have to be
reinterviewed to obtain current noncustodial parent information and
to be educated on the benefits of obtaining child support in a
time-limited welfare environment.  Coupled with the new enforcement
tools available to states, this new information could lead to better
location and collection outcomes. 


--------------------
\18 A survey conducted by the American Public Welfare Association in
the summer of 1997 found that 16 states have policies to terminate
grants on this basis.  See Survey Notes:  Issues Affecting Children,
Vol.  1, No.  3 (1998), p.  7.  Prior law allowed states to sanction
or deny assistance to adults who failed to cooperate with child
support enforcement requirements without good cause, but not to deny
assistance to the children. 


      NEW CASES ALSO MUST BE
      PURSUED AGGRESSIVELY TO
      ENSURE SUCCESS
---------------------------------------------------------- Letter :5.2

States will also need to aggressively pursue new cases opened under
time limits to help ensure successful outcomes.  Our analysis of
cases that first opened in 1992 and remained open for 5 years in two
states showed that more than 70 percent of the paternities and
support orders ever established on these cases were obtained within
the first 2 years after opening.  In addition, state officials told
us that noncustodial parent information has to be pursued early and
aggressively to achieve successful outcomes. 


      CHILD SUPPORT CAN BE AN
      IMPORTANT SUPPLEMENT TO
      POST-ASSISTANCE FAMILY
      INCOME
---------------------------------------------------------- Letter :5.3

Once a family reaches the end of its cash assistance, child support
can be an important supplement to its income.  Many families who
leave welfare are employed in low-wage jobs.  For example, in our
recent report on TANF implementation in seven states, we found three
states tracking wages for welfare recipients, with mean wages for
welfare recipients placed in jobs ranging from $5.60 to $6.60 per
hour.\19 At these wage levels, many working families' earnings are
near or below the federal poverty level.\20 Although these families'
incomes may be increased through the earned income tax credit and
they may benefit from receiving other aid, including food stamps and
medical assistance, they also may incur significant work-related
expenses.\21 For such families, child support payments could further
enhance family incomes or reduce their need for public assistance.  A
study released in 1993 focusing on divorced women in Wisconsin found
that receiving even minor amounts of child support can play a
significant role in keeping families self-sufficient.\22

However, for those families without earnings, child support is
unlikely to replace families' lost cash assistance.  For example, in
the first three states to enforce time limits, the mean monthly child
support collected ranged from 22 percent to 60 percent of the mean
grant received in the month before termination. 


--------------------
\19 Welfare Reform:  States Are Restructuring Programs to Reduce
Welfare Dependence (GAO/HEHS-98-109, June 18, 1998). 

\20 Working full time at $6.60 an hour equals an annual income of
$13,728.  In 1997, the federal poverty level for a family of four was
$16,050. 

\21 The earned income tax credit provides a refundable credit to
low-income, working taxpayers. 

\22 Daniel R.  Meyer, "Child Support and Welfare Dynamics:  Evidence
From Wisconsin," Demography, Vol.  30 (1993), pp.  45-62. 


      STATES FACE CHALLENGES TO
      IMPROVED PERFORMANCE
---------------------------------------------------------- Letter :5.4

If states expect to ensure that families receive child support before
their time-limited welfare benefits expire, they will need to get
their statewide automated systems operational and certified, ensure
that the new tools are effectively implemented, and improve their
performance.  State officials from all five states reviewed believed
that the new tools mandated under welfare reform will help improve
performance in their states.  For example, they cited the national
new-hire and support order registries as tools that offer significant
potential improvement for their interstate caseloads, which
constitute about one-third of their total caseloads.\23 In addition,
they expected the new custodial parent cooperation requirements to
result in more accurate and more complete noncustodial parent
information at welfare intake, which should help them locate
noncustodial parents. 

However, officials in Connecticut, Florida, and Virginia also said
they were challenged by rising caseloads and resource limitations.  A
Virginia official told us, for example, that despite rising
caseloads, the child support agency had not been authorized to hire
any child support staff in the last 4 years, and thus is currently 17
percent under authorized strength.  To improve performance and take
full advantage of the potentially powerful new tools provided by
welfare reform, states will have to either increase their
productivity or commit additional resources to ensure that the tools
are effectively implemented. 


--------------------
\23 An interstate case is one in which the custodial parent lives in
one state and the noncustodial parent lives in another.  Interstate
cases are considered to be more difficult because of location
problems, paperwork delays, and interjurisdictional difficulties. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :6

In commenting on a draft of our report, HHS agreed with several of
the major implications cited, including the importance of improving
the location of noncustodial parents and aggressively pursuing new
cases and that child support can be an important supplement to
postassistance family income.  However, HHS questioned whether the
past experience of a limited number of states should be used to
predict the future performance of all states, especially with the new
tools available to the states under welfare reform.  We agree that
our results should not be used to project future collection rates
nationwide.  However, we believe our work highlights the challenges
states and families face in the new time-limited welfare environment. 
We also agree that new tools, such as the national new-hire and
support order registries, hold the promise of improving states' child
support performance.  HHS also noted that the child support
collections potential is often limited by the lack of job skills and
low educational attainment of the fathers associated with welfare and
former welfare families.  We discuss in our report how these factors
make some noncustodial parents less likely to be regularly employed
and more difficult to locate, and we cite studies suggesting that
lack of income may be a barrier to collecting child support.  (HHS'
comments are in app.  III.)

We also provided copies of a draft of this report to the five states
covered in our review, who provided technical comments, which we
incorporated as appropriate. 


---------------------------------------------------------- Letter :6.1

We are sending copies of this report to the Chairmen and Ranking
Minority Members of the Senate Committee on Finance and its
Subcommittee on Social Security and Family Policy; the Secretary of
HHS; and HHS' Assistant Secretary for Children and Families.  We also
will make copies available to others on request. 

If you or your staff have any questions about this report, please
contact Gale C.  Harris, Assistant Director, at (202) 512-7235 or
Kevin M.  Kumanga, Senior Evaluator, at (202) 512-4962.  Other major
contributors to this report are Patricia Elston, Anndrea Ewertsen,
and Christopher Morehouse. 

Sincerely yours,

Mark V.  Nadel
Associate Director
Income Security Issues


SCOPE AND METHODOLOGY
=========================================================== Appendix I


   INTRODUCTION
--------------------------------------------------------- Appendix I:1

Time-limited welfare is being imposed on two distinctively different
sets of welfare child support cases--existing cases and new cases. 
Additionally, time limits on TANF aid vary in length, from a maximum
of 5 years, as specified in federal law, to shorter periods as
determined by the states.\24 To assess the outcomes for these
different sets of cases, we used two different units of analysis. 
For the existing cases in the states that implemented shorter time
limits under waivers, we examined the child support outcomes for
families whose aid was terminated at the end of their time limits. 
To do this, we reviewed all the child support cases associated with
each family.  To determine the extent to which states with relatively
good performance in child support enforcement obtained child support
for new welfare child support cases over a 5-year benefit period, we
sampled and reviewed individual child support cases as the indicator
of state agencies' likely performance.\25


--------------------
\24 Before the passage of federal welfare reform, 14 states had
adopted time limits ranging from 21 months to 5 years under approved
waivers.  After the passage of federal welfare reform, all states
were subject to maximum time limits of 5 years, with shorter time
limits available at state option.  As of November 1997, the National
Governors' Association reported that 20 states had time limits of
less than 5 years. 

\25 The child support payments for families in our 5-year child
support cases may be understated because they reflect only the
payments made by our sample noncustodial parent and not by all
noncustodial parents who may have been associated with the welfare
case.  In Connecticut, Virginia, and Florida where we examined all
the child support cases associated with each welfare case, about 9,
13, and 38 percent of the families, respectively, received payment
from more than one noncustodial parent. 


   REVIEW IN THREE STATES IN WHICH
   FAMILIES HAD ALREADY REACHED
   TIME LIMITS
--------------------------------------------------------- Appendix I:2

To track child support outcomes for welfare recipients whose welfare
benefits have been terminated, we selected the three states in which
families first faced benefit termination under state waivers approved
before federal welfare reform.  These states were Connecticut,
Florida, and Virginia (see table 1 for summary of time limits adopted
in these states).  We then identified the child support cases
associated with the families whose welfare benefits expired.\26 Table
I.1 shows the number of welfare cases and their child support cases
analyzed for this report.\27 In Connecticut and Florida, we drew a
random sample of welfare cases; in Virginia, we reviewed the child
support cases of all families whose welfare benefits had been
terminated. 



                               Table I.1
                
                 Summary of Welfare Cases That Had Been
                 Terminated and Their Associated Child
                             Support Cases

                           Universe of       Number of       Number of
                         welfare cases   welfare cases   child support
                          terminated\a        reviewed  cases analyzed
----------------------  --------------  --------------  --------------
Connecticut                    \ 353\b              90             123
Florida                            173             104             212
Virginia                            59              59              92
----------------------------------------------------------------------
\a Represents all welfare cases terminated through October 1997 in
Connecticut, September 1997 in Florida (Escambia County), and
November 1997 in Virginia. 

\b Estimated. 

In each state, we gathered case data for analysis by reviewing
automated case files.  We identified the child support services each
case needed from the date the time limits began and tracked the child
support outcomes that had been achieved for these cases when time
limits expired.\28 In most cases, these child support cases had been
open for many years before the time limits were imposed. 
Specifically, we determined whether the noncustodial parent needed to
be located and whether the case needed paternity or support order
establishment at the date the time limits went into effect.  For all
cases with orders, whether they were established before or after the
time limits were imposed, we also tracked the amount of current child
support due and collected during the 12 months before time limits
expired to determine the likelihood that families would have child
support after their welfare benefits end.  Our unit of analysis was
the welfare family:  that is, we identified all child support cases
associated with the same welfare case and combined the total amounts
due and collected on their behalf.  Additionally, we annualized the
financial outcomes for cases that had less than a full year of
current support due during the period reviewed. 


--------------------
\26 A welfare case may have more than one child support case
associated with it because a custodial parent may have children
related to different noncustodial parents.  In the states we
reviewed, on average, we found from 1.37 to 2.06 child support cases
for each welfare case. 

\27 We excluded certain child support cases inappropriate for this
analysis.  For example, we excluded mistaken openings and duplicate
cases, cases belonging to custodial parents whose welfare benefits
were not in fact terminated, cases involving children not receiving
assistance, cases with dead noncustodial parents, and cases that
opened outside the review period. 

\28 With respect to locating noncustodial parents, we accepted as
evidence of successful location information such as a verified home
or employer address. 


   REVIEW OF OUTCOMES DURING
   5-YEAR PERIOD IN TWO STATES
--------------------------------------------------------- Appendix I:3

Because most states have adopted 5-year time limits, we selected two
states in which we tracked child support outcomes for 5 years.  To
select these states, we developed an index of child support
performance using preliminary 1996 data.  We assigned scores for
performance in specific areas, with additional weights for
performance on AFDC cases.\29

We focused on states with strong performance in these areas, with the
rationale that outcome data from these states could show how
high-performing states have been able to meet the child support needs
of their clients in a 5-year period.  We ranked the states according
to these scores and selected Minnesota and Washington from the 10
states with the highest scores. 

In both states, we gathered case data for analysis by reviewing
automated case files.  To track child support outcomes for 5 years,
we identified new welfare cases that opened in June 1992 and the
child support cases associated with each welfare family.  Each child
support case represents one noncustodial parent.  We randomly
selected our cases from this universe of child support cases. 

We collected data for more than 200 cases in each state and focused
our analysis on the cases that remained open child support cases for
the entire 5-year period--63 cases in Minnesota and 54 in
Washington.\30 We tracked outcomes regardless of whether the child
support cases had changed from an AFDC to a non-AFDC status.  Less
than one-quarter of these cases remained AFDC child support cases
continuously for the entire 5 years.  We identified the child support
services each case needed from the date the case opened and tracked
the child support outcomes that had been achieved for these cases
through May 1997, after 5 years had elapsed.  Specifically, we
determined whether the case needed paternity or support order
establishment.  For cases with orders, we also tracked the amount of
current child support due and collected during the 12 months before
time limits expired.  We tracked collections by child support case
only.  Table I.2 shows the number of child support cases identified,
sampled, and analyzed for this report. 



                               Table I.2
                
                 Summary of Cases Identified, Sampled,
                              and Analyzed

                             Number of    Total number
                         child support        of child       Number of
                              cases in   support cases   child support
                        sampling frame        reviewed  cases analyzed
----------------------  --------------  --------------  --------------
Minnesota                          539             233              63
Washington                       1,633             201              54
----------------------------------------------------------------------
As stated earlier, a large proportion of the child support cases
closed before the end of the 5-year period and therefore were not
included in our analysis.  About half of the cases were closed by the
midpoint of the 5-year period.  Figures I.1 and I.2 show the numbers
and percentages of cases that closed each year during the period we
reviewed. 

   Figure I.1:  Numbers and
   Percentages of Cases That
   Closed Each Year in Minnesota

   (See figure in printed
   edition.)

\a Represents case closures from January through May 1997. 

\b Represents case closures from June through December 1992. 

   Figure I.2:  Numbers and
   Percentages of Cases That
   Closed Each Year in Washington

   (See figure in printed
   edition.)

\a Represents case closures from January through May 1997. 

\b Represents case closures from June through December 1992. 

The most frequently noted reasons for closing a child support case
were the custodial parent moving out of the state or country, the
custodial and noncustodial parents' reuniting or the noncustodial
parent being added to the welfare grant, the case being closed
because the custodial parent refused to cooperate, or the state's
failing to locate the noncustodial parent.\31 Collectively, these
reasons accounted for about 48 and 40 percent, respectively, of the
case closures in Minnesota and Washington. 


--------------------
\29 Scores were assigned for performance above the national average
in the following areas:  total cases with collections, total cases
with support orders, the rate of increase in collections for 5 years,
total cases with support orders and collections, paternities
established, support orders established, the percentage of AFDC grant
amounts recovered through child support payments, and the percentage
of AFDC child support due and collected.  Additional selection
criteria included early adoption of certain enforcement tools before
federal welfare reform:  specifically, new-hire reporting, license
revocation, and in-hospital paternity establishment. 

\30 We excluded certain cases that were inappropriate for this
analysis.  For example, we excluded mistaken openings and duplicate
cases, cases with dead noncustodial parents; cases that were not
pursued by the state for good cause, and cases in which the child had
reached age 18 or was adopted. 

\31 Federal regulations allow states to close child support cases in
which the noncustodial parent's location is unknown, if the state has
made regular unsuccessful attempts using multiple sources to locate
the noncustodial parent during a 3-year period. 


   SAMPLING ERROR
--------------------------------------------------------- Appendix I:4

To arrive at the estimates presented in this report, in every state
but Virginia (where we selected all families whose aid was
terminated), we sampled from either a population of those who were
terminated from AFDC, or a pool of those who joined the AFDC rolls in
June 1992.  Because we analyzed samples of cases to estimate
characteristics of the entire population of such cases, our estimates
of percentages and dollar amounts have standard errors associated
with them.  A standard error is the variation that occurs by chance
because a sample, rather than the entire population, was analyzed. 
The size of the standard error reflects the precision of the
estimate.  The smaller the standard error, the more precise the
estimate.  Following is a description of the sizes of the standard
errors for the estimates presented in this report. 

The standard error for the estimated mean support amount due and the
estimated mean support amount collected varied by state, but for no
state was it greater than $615 for the mean amount due and $759 for
the mean amount collected. 

The standard error for the estimated percentage of noncustodial
parents for whom either location, paternity establishment, or a
support order was needed varied by state, but in no state did it
exceed 13 percentage points. 

The standard error for the percentage of AFDC families that received
no support money varied by state but was in no state greater than
12.3 percentage points.  The standard error for the percentage of the
support order amounts due and received for families varied by state,
but in no state did they exceed 13.7 percentage points. 

All of the standard errors were calculated at the 95-percent
confidence level.  This means that the chances are about 95 out of
100 that the range defined by the estimate, plus or minus the
standard error, contains the true percentage or dollar figure we
would have found if we had analyzed data from the entire population. 


BASIC CHILD SUPPORT ENFORCEMENT
SERVICES
========================================================== Appendix II

Location includes efforts at local, state, and federal levels to
identify a noncustodial parent's address, Social Security number,
place of employment, and other characteristics.  It might include
efforts to directly contact individuals; contacts with public and
private institutions, such as credit bureaus and state and federal
income tax agencies; and the use of computer tape matches with state
and federal databases. 

Paternity establishment is the identification of the legal father of
a child, usually through the courts or expedited through hearings in
a quasi-judicial or administrative body.  Paternities are established
in either of two ways:  (1) through voluntary acknowledgment by the
father or, (2) if contested, through a determination made on the
basis of scientific and testimonial evidence. 

Support order establishment involves the development of a support
order that legally obliges the noncustodial parent to pay child
support and provide medical insurance coverage when it is available
at reasonable cost.  The child support enforcement agency must help
custodial parents initiate an action in court or through an
administrative or expedited legal process that will produce such an
order.  The child support enforcement agency helps determine a
child's financial needs and the extent to which the noncustodial
parent can provide financial support and medical insurance coverage. 
Support orders are subject to periodic review and adjustment at least
every 3 years in welfare cases and upon parental request in
nonwelfare cases. 

Collections and enforcement involve enforcing, monitoring, and
processing payments.  To enforce payment on delinquent cases or to
ensure regularity and completeness of current accounts, child support
enforcement agencies have a wide array of techniques at their
disposal.  These techniques include bonds and security deposits,
federal and state tax intercepts, garnishments, liens, and wage
withholding, among others.  Noncustodial parents' payments must also
be monitored, recorded, and distributed. 




(See figure in printed edition.)Appendix III
COMMENTS FROM THE DEPARTMENT OF
HEALTH AND HUMAN SERVICES
========================================================== Appendix II



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)

RELATED GAO PRODUCTS

Welfare Reform:  States Are Restructuring Programs to Reduce Welfare
Dependence (GAO/HEHS-98-109, June 18, 1998). 

Child Support Enforcement:  Strong Leadership Required to Maximize
Benefits of Automated Systems (GAO/AIMD-97-72, June 30, 1997). 

Welfare Reform:  States' Early Experiences With Benefit Termination
(GAO/HEHS-97-74, May 15, 1997). 

Child Support Enforcement:  Early Results on Comparability of
Privatized and Public Offices (GAO/HEHS-97-4, Dec.  16, 1996). 

Child Support Enforcement:  Reorienting Management Toward Achieving
Better Program Results (GAO/HEHS/GGD-97-14, Oct.  25, 1996). 

Child Support Enforcement:  States' Experience With Private Agencies'
Collection of Support Payments (GAO/HEHS-97-11, Oct.  23, 1996). 

Child Support Enforcement:  States and Localities Move to Privatized
Services (GAO/HEHS-96-43FS, Nov.  20, 1995). 

Child Support Enforcement:  Opportunity to Reduce Federal and State
Costs (GAO/T-HEHS-95-181, June 13, 1995). 

Child Support Enforcement:  Families Could Benefit From Stronger
Enforcement Program (GAO/HEHS-95-24, Dec.  27, 1994). 

Child Support Enforcement:  Federal Efforts Have Not Kept Pace With
Expanding Program (GAO/T-HEHS-94-209, July 20, 1994). 

Child Support Enforcement:  Credit Bureau Reporting Shows Promise
(GAO/HEHS-94-175, June 3, 1994). 

Child Support Assurance:  Effect of Applying State Guidelines to
Determine Fathers' Payments (GAO/HRD-93-26, Jan.  23, 1993). 


*** End of document. ***