Child Support Enforcement
N00H00
Child Support Enforcement Department of Human Resources
Operating Budget Data ($ in Thousands) FY 10 Actual
FY 11 Working
FY 12 Allowance
FY 11-12 Change
% Change Prior Year
General Fund Contingent & Back of Bill Reductions Adjusted General Fund
$6,096 0 $6,096
$15,112 0 $15,112
$18,005 -432 $17,574
$2,893 -432 $2,462
19.1%
Special Fund Contingent & Back of Bill Reductions Adjusted Special Fund
18,539 0 $18,539
12,578 0 $12,578
12,746 -8 $12,738
167 -8 $159
Federal Fund Contingent & Back of Bill Reductions Adjusted Federal Fund
61,881 0 $61,881
56,428 0 $56,428
56,078 -259 $55,819
-350 -259 -$609
-1.1%
Adjusted Grand Total
$86,516
$84,119
$86,131
$2,012
2.4%
16.3% 1.3% 1.3% -0.6%
The fiscal 2012 allowance of the Child Support Enforcement Administration (CSEA) increases by approximately $2.0 million, or 2.4%, compared to the fiscal 2011 working appropriation after accounting for across-the-board and contingent reductions. Increases in the general fund appropriation (approximately $2.5 million, or 16.3%) and special fund appropriation ($159,331, or 1.3%) are partially offset by a decrease in federal funds of $608,832, or 1.1%.
Major changes in the fiscal 2012 allowance occur in the area of personnel to reflect a restoration of salaries from furlough reductions and full funding of health insurance, the contract for privatized child support operations in Baltimore City, and the restoration of funding for various contracts.
Note: Numbers may not sum to total due to rounding. For further information contact: Tonya D. Zimmerman
Analysis of the FY 2012 Maryland Executive Budget, 2011 1
Phone: (410) 946-5530
N00H00 – DHR – Child Support Enforcement
Personnel Data FY 10 Actual Regular Positions Contractual FTEs Total Personnel
721.50 12.71 734.21
FY 11 Working
FY 12 Allowance
716.00 1.00 717.00
716.00 1.00 717.00
51.84 35.00
7.24% 4.89%
FY 11-12 Change 0.00 0.00 0.00
Vacancy Data: Regular Positions Turnover and Necessary Vacancies, Excluding New Positions Positions and Percentage Vacant as of 12/31/10
One position was abolished in the fiscal 2011 budget. During fiscal 2011, 4 positions were abolished in the local operations of CSEA as part of the requirements of Section 44 of the fiscal 2011 budget bill requiring the abolition of 500 positions statewide. A 0.5 position was also abolished.
As of December 31, 2010, CSEA had a vacancy rate of 4.89%, or 35 positions. To meet its turnover expectancy of 7.24%, CSEA needs to maintain 51.84 vacant positions in fiscal 2012. At its current level of vacancy, CSEA will not be able to meet its turnover expectancy.
The turnover expectancy in fiscal 2012 throughout the Department of Human Resources, (DHR) including CSEA, contains an adjustment to recognize salary savings from planned delays in filling vacant positions and savings from administrative reorganizations to consolidate duplicative services within the department.
Analysis of the FY 2012 Maryland Executive Budget, 2011 2
N00H00 – DHR – Child Support Enforcement
Analysis in Brief Major Trends CSEA Performance in Cases with Support Orders and Cases with Paternity Established Continues to Improve: CSEA’s performance in the percent of cases with a support order continued to improve in federal fiscal 2010 exceeding the federal goal of 80% for the third straight year. The percent of cases with paternity established increased by more than three percentage points in federal fiscal 2010. Child Support Collections Impacted by Economic Conditions: Several measures of performance in CSEA that relate to collection activity worsened in federal fiscal 2010 as a result of the economic conditions. In federal fiscal 2010, the total collections, percent of current support paid, and percent of cases with arrears for which a payment was received decreased from federal fiscal 2009. Child Support Caseload Continues to Decline: Continuing recent trends, the child support caseload declined in federal fiscal 2010 to 248,027. After an increase in federal fiscal 2009, the cases associated with the Temporary Cash Assistance program decreased in federal fiscal 2010.
Recommended Actions Funds 1.
Reduce funding for laboratory services.
2.
Reduce funding for Baltimore City privatization contract to the estimated cost in fiscal 2012. Total Reductions
$ 100,000 577,209 $ 677,209
Updates Transition in the Privatization Contract: Beginning October 1, 2010, Queen Anne’s County child support operations returned to State operations after more than 10 years of privatization. The transition was reported by DHR to be trouble free. Privatized operations will continue in Baltimore City. A new contract with Policy Studies, Inc. was approved by the Board of Public Works in December 2010. Annual Fee Shortfall: Beginning October 1, 2007, CSEA began collections of the $25 annual fee for child support imposed by the federal Deficit Reduction Act of 2005. Effective October 1, 2008, Chapter 162 of 2008 changed the State’s eligibility for fee collections. As a result of this change, CSEA collected approximately $1.0 million less than it might have under the federal requirement. Analysis of the FY 2012 Maryland Executive Budget, 2011 3
N00H00 – DHR – Child Support Enforcement
Status of Corrective Actions for Audit Findings: The audit for CSEA dated October 2008 included 15 findings, 9 of which were repeated from the previous audit. As of December 2010, CSEA considered corrective actions for 10 of these findings completed.
Analysis of the FY 2012 Maryland Executive Budget, 2011 4
N00H00
Child Support Enforcement Department of Human Resources
Operating Budget Analysis Program Description The Child Support Enforcement Administration (CSEA) administers and monitors child support services provided by local departments of social services and other agencies, provides technical assistance, formulates policy, develops and implements new programs, and ensures compliance with regulations and policy. CSEA also operates several centralized programs including:
locating noncustodial parents;
establishing paternity;
enforcing support orders;
collecting and disbursing payments; and
processing interstate cases.
The key goal of CSEA is to enable, encourage, and enforce parental responsibility.
Performance Analysis: Managing for Results As shown in Exhibit 1, CSEA exceeded the federal performance goal in the percent of cases with a support order for the third consecutive year in federal fiscal 2010. CSEA continued to improve its performance in this area in federal fiscal 2010 with an increase of approximately 1.5 percentage points. CSEA attributes this to an increase in demand for State child support services from customers with private support orders as a result of the economic downturn.
Analysis of the FY 2012 Maryland Executive Budget, 2011 5
N00H00 – DHR Child Support Enforcement
Exhibit 1
Child Support Caseload Under Order Federal Fiscal 2007-2012 90% 80%
82.82%
84.82%
78.93%
81.28%
83.82%
80.13%
2007
2008
2009
2010
2011 Est.
2012 Est.
70% 60% 50% 40% 30% 20% 10% 0%
Cases in State Child Support Caseload with Support Orders
Goal
Source: Department of Human Resources; Governor’s Budget Books
CSEA increased the percent of cases with paternity established by more than 3.0 percentage points in federal fiscal 2010, as shown in Exhibit 2. CSEA attributes the improved performance in this measure to changes in the ability to obtain and count certain paternity establishments with information received from the Division of Vital Records. Despite this increase, CSEA’s performance in the percent of cases with paternity established was below the preliminary national average for federal fiscal 2009 in both federal fiscal 2009 (4.04 percentage points) and federal fiscal 2010 (0.67 percentage points).
Analysis of the FY 2012 Maryland Executive Budget, 2011 6
N00H00 – DHR Child Support Enforcement
Exhibit 2
Child Support Caseload with Paternity Established Federal Fiscal 2007-2012 100% 90% 80% 70% Cases
60% 50% 40% 30% 20% 10% 0% 2007
2008
Cases with Paternity Established
2009
2010
2011 Est.
2012 Est.
Preliminary National Average for Federal Fiscal 2009
Note: There are two options for measuring performance in the area of paternity establishment for federal incentive payments, percent of the State child support caseload with paternity established and percent statewide with paternity established. In the Managing for Results submission, the Department of Human Resources reports on the percent of the State child support caseload with paternity established, which is not the measurement used for its incentive payment determination. Source: Department of Human Resources; Governor’s Budget Books
CSEA’s ability to collect current child support and child support arrearages was impacted by the economic downturn in federal fiscal 2010. As shown in Exhibit 3 and Exhibit 4, the percent of current support paid and percent of cases with arrears for which a payment is received decreased in federal fiscal 2010 after several years of modest improvement. As a result, CSEA remains well below the federal goal of 80% for these measures. However, as shown in Exhibit 3, CSEA’s performance in the percent of current support paid was above the preliminary national average for federal fiscal 2009 in both federal fiscal 2009 and 2010. The Department of Human Resources (DHR) should comment on actions it intends to take to improve performance in these areas to maximize its ability to receive federal incentive payments.
Analysis of the FY 2012 Maryland Executive Budget, 2011 7
N00H00 – DHR Child Support Enforcement
Exhibit 3
Current Child Support Paid Federal Fiscal 2007-2012 90% 80% 70%
63.77%
64.58%
64.89%
2007
2008
2009
64.46%
65.46%
66.46%
2010
2011 Est.
2012 Est.
60% 50% 40% 30% 20% 10% 0% Percent of Current Child Support Paid Preliminary National Average for Federal Fiscal 2009 Goal Source: Department of Human Resources; Governor’s Budget Books
Exhibit 4
Cases with Arrears for Which a Payment Is Received Federal Fiscal 2007-2012 100% 80%
62.26%
62.86%
63.57%
61.57%
62.57%
63.57%
60% 40% 20% 0% 2007
2008 2009 2010 2011 Est. Percent of Cases with Arrears for Which a Payment Is Received Preliminary National Average for Federal Fiscal 2009 Goal
Source: Department of Human Resources; Governor’s Budget Books
Analysis of the FY 2012 Maryland Executive Budget, 2011 8
2012 Est.
N00H00 – DHR Child Support Enforcement
The decreased ability of CSEA to collect on child support in federal fiscal 2010 also translated into a decrease in total collections, as shown in Exhibit 5. Despite this, total collections in federal fiscal 2010 were above the collections in federal fiscal 2008. Cumulative arrearages as of the last day of federal fiscal 2010 increased from the last day of federal fiscal 2009, as shown in Exhibit 6. Cumulative arrearages tend to increase over time; however, a change in federal policy led to the exclusion of certain interstate cases in the calculation and ultimately led to a decrease in cumulative arrearages between federal fiscal 2007 and 2008. The economic downturn was a factor in the increase in cumulative arrearages in federal fiscal 2010. Exhibit 5
Total Collections Federal Fiscal 2005-2010 ($ in Millions) $600
$500
$495.9 $473.0
$482.6
2005
2006
$510.6
$512.5
$511.3
2008
2009
2010
$400
$300
$200
$100
$0 2007
Source: Department of Human Resources
Analysis of the FY 2012 Maryland Executive Budget, 2011 9
N00H00 – DHR Child Support Enforcement
Exhibit 6
Cumulative Arrearages Federal Fiscal 2005-2010 ($ in Millions) $1,800 $1,600
$1,539.5
$1,573.4
$1,491.3
$1,528.2 $1,486.4
$1,494.6
2008
2009
$1,400 $1,200 $1,000 $800 $600 $400 $200 $0 2005
2006
2007
2010
Source: Department of Human Resources
As shown in Exhibit 7, the State child support caseload decreased by slightly more than 10% between federal fiscal 2005 and 2010. The number of cases associated with the Temporary Cash Assistance program also resumed the recent trend of decreases in federal fiscal 2010, after an increase in federal fiscal 2009. Despite the decrease in the total number of cases, the number of cases in the State child support caseload involving children born out of wedlock that have had paternity established continued to increase. The number of cases with arrears continued the year-to-year fluctuation with a slight decrease in federal fiscal 2010.
Analysis of the FY 2012 Maryland Executive Budget, 2011 10
N00H00 – DHR Child Support Enforcement
Exhibit 7
Child Support Caseload Federal Fiscal 2005-2010 300,000 276,167 265,146
260,419
255,866
252,030
250,000
200,000
191,053
195,256
159,075
156,987
155,461
30,415
26,547
24,816
192,021
195,456
157,351
193,645
248,027
193,342
157,411 160,333
150,000
100,000
50,000 22,961
25,425
24,021
0 2005
2006
2007
2008
2009
2010
Total Cases State Child Support Cases Born Out of Wedlock with Paternity Established Cases with Arrears Caseload Associated with TCA TCA: Temporary Cash Assistance Source: Department of Human Resources; Governor’s Budget Books
Fiscal 2011 Actions Impact of Cost Containment Section 44 of the fiscal 2011 budget bill required the Governor to abolish 500 positions in the Executive Branch as of June 30, 2011. The positions and the funds associated with them Analysis of the FY 2012 Maryland Executive Budget, 2011 11
N00H00 – DHR Child Support Enforcement
have been removed from the fiscal 2011 working appropriation. CSEA’s share of the reduction was 4 full-time equivalent positions and $100,441 in fiscal 2011, which represents an ongoing annualized savings of $276,459 for employee salary and fringe benefit expenditures. DHR reports that services have not been impacted by the abolition of these positions.
Proposed Budget As shown in Exhibit 8, the fiscal 2012 allowance of CSEA increases by approximately $2.0 million, or 2.4%, compared to the fiscal 2011 working appropriation, after accounting for across-the-board and contingent reductions. The general ($2.5 million) and special ($159,331) fund increases are partially offset by a decrease of $608,832 in federal funds. The increase occurs largely among personnel expenditures, which increase by approximately $3.4 million before accounting for across-the-board and contingent reductions. Employee and retiree health insurance expenditures increase by approximately $2.3 million to fully fund the expected costs. The fiscal 2011 allowance contained a series of negative entries in salaries, wages, and fringe benefits throughout DHR’s budget, which essentially served as an unallocated budget reduction. CSEA’s share of the approximately $17.4 million total fund unallocated reduction was $1.9 million. Section 42 of the fiscal 2011 budget bill required DHR to submit a plan to allocate the reductions to the objects, programs, and subprograms in which the reductions were to actually occur to the Department of Budget and Management (DBM). After reviewing and approving the plan, DBM was to reflect the allocation of the reduction in the appropriations included in the Fiscal Digest. These reductions were primarily allocated to the employee and retiree health insurance appropriations, although $3.0 million was reduced from the Temporary Disability Assistance Program budget. Ultimately, CSEA’s share of this allocation was $1.6 million. Regular earnings increase as a result of the restoration of salaries from the furlough reductions as well as to account for prior year reclassifications, an increase of $690,899.
Impact of Cost Containment The fiscal 2012 budget reflects several across-the-board actions. In fiscal 2012, CSEA’s share of the reduction is $99,127 in general funds, $3,032 in special funds, and $97,551 in federal funds for changes in employee health insurance. Reductions contingent upon statutory changes include $164,068 in general funds, $5,019 in special funds, and $162,466 in federal funds for retiree prescription drug benefits and $168,395 in general funds for retirement benefits. To the extent that CSEA has positions abolished under the Voluntary Separation Program, additional reductions will be implemented by the Administration.
Analysis of the FY 2012 Maryland Executive Budget, 2011 12
N00H00 – DHR – Child Support Enforcement
Exhibit 8
Proposed Budget DHR – Child Support Enforcement ($ in Thousands)
How Much It Grows:
General Fund
Special Fund
Federal Fund
Total
2011 Working Appropriation
$15,112
$12,578
$56,428
$84,119
18,005
12,746
56,078
86,830
Amount Change
$2,893
$167
-$350
$2,711
Percent Change
19.1%
1.3%
-0.6%
3.2%
-$432
-$8
-$259
-$699
Adjusted Change
$2,462
$159
-$609
$2,012
Adjusted Percent Change
16.3%
1.3%
-1.1%
2.4%
2012 Allowance
Contingent Reductions
Where It Goes: Personnel Expenses Employee and retiree health insurance (net of contingent and across-the-board reductions) partially due to fiscal 2011 underfunding ..................................................................$1,742 Regular earnings primarily due to restoration of furlough reduction ............................................ 691 Employee retirement (net of contingent reductions) ..................................................................... 343 Social Security contributions ........................................................................................................ 45 Turnover adjustments .................................................................................................................... -24 Workers’ compensation premium adjustments ............................................................................. -73 Other fringe benefit adjustments ................................................................................................... 16 Contractual Services Restoration of funding for the call center, new hire registry, and State disbursement unit contracts ................................................................................................................................... 1,580 Contract for local area network for maintenance, development, and implementation of child support applications .............................................................................................................
243
Genetic testing services for paternity establishment due to increased demand for testing by the Judiciary and addition of Baltimore City to the contract ...............................................
209
Tax refund and unemployment intercept contracts with the Maryland Comptroller and the Department of Labor, Licensing, and Regulation ..............................................................
30
Analysis of the FY 2012 Maryland Executive Budget, 2011 13
N00H00 – DHR – Child Support Enforcement
Where It Goes: Contractual Services Anne Arundel County child support office for administrative support services provided by Anne Arundel County ......................................................................................................... Queen Anne’s County child support office contracts for security guard, courier, and process services ........................................................................................................................ Federal Parent Locator Service and Child Support Enforcement Network System ...................... Paternity Affidavit Program ..........................................................................................................
27 11 -32 -34
Reinvestment fund allocation to local child support office and cooperative reimbursement agreement agencies .......................................................................................... -114 End of Excellence through Evaluation demonstration grant in Baltimore City to use community based navigation systems to assist low-income noncustodial parents operate within the child support enforcement system .............................................................. -154 Check Printing and Mailing .......................................................................................................... -205 End of Survive and Thrive Demonstration Grant in Prince George’s County to assist unemployed noncustodial parents in obtaining employment, modifying child support orders when appropriate, and encourage mediation as needed ................................................ -379 Baltimore City privatization contract ............................................................................................-1,847 t Other Changes Decrease in rent owed to the Department of General Services (DGS) more than offset by non-DGS rent ........................................................................................................................... 91 Travel ............................................................................................................................................ 6 Utilities .......................................................................................................................................... -13 Telephone and postage to align with recent experience ................................................................ -172 Other changes................................................................................................................................ 22 Total $2,012 Note: Numbers may not sum to total due to rounding
Fund Source Changes The American Recovery and Reinvestment Act of 2009 (ARRA) temporarily reinstated the ability of the State to match Child Support Reinvestment Funds, the fund that receives federal incentive payments for child support performance, with federal funds. The temporary reinstatement ended September 30, 2010. During the period of this reinstatement, CSEA relied more heavily on the use of Child Support Reinvestment Funds than it had in the recent past and reduced general fund expenditures. As shown in Exhibit 9, in fiscal 2008 and 2009, CSEA had general fund expenditures of more than $16.6 million. However, in fiscal 2010, CSEA had only $6.1 million of general fund expenditures but was able to maintain a comparable level of federal fund expenditures as a result of
Analysis of the FY 2012 Maryland Executive Budget, 2011 14
N00H00 – DHR – Child Support Enforcement
Exhibit 9
CSEA Fund Sources 2008-2012 ($ in Thousands) $100,000 $90,037.2 $90,000
$85,710.5
$86,515.8
$86,829.5 $84,118.8
$80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 2008 General Fund
2009
2010 Special Fund
2011 Working 2012 Allowance Appropriation Federal Fund
CSEA: Child Support Enforcement Agency Source: Governor’s Budget Books
the agency’s use of special funds, including the Child Support Reinvestment Fund. The fiscal 2011 working appropriation returns to a more normal level of general fund use, $15.1 million. However, the fiscal 2011 budget accounts for an ability to match the Child Support Reinvestment Funds with federal funds for one quarter, slightly reducing the level of general funds required. To maintain a similar total level of spending in fiscal 2012 as in fiscal 2011, either more general funds would be required to account for the inability to match Child Support Reinvestment Funds with federal funds at any point during the fiscal year, or additional Child Support Reinvestment Funds would be required to make up for the lost federal fund match for items supported with this funding. Although the total budget of CSEA increases, the increase occurs almost entirely among general fund expenditures (an increase of approximately $2.5 million) recognizing the need for additional general funds to generate the same level of federal fund match. However, federal fund Analysis of the FY 2012 Maryland Executive Budget, 2011 15
N00H00 – DHR – Child Support Enforcement
appropriations decrease recognizing lost federal fund matching opportunities due to the use of Child Support Reinvestment fund rather than general funds for some planned expenditures. The fiscal 2012 allowance anticipates the use of approximately $8.7 million of Child Support Reinvestment Funds, comparable to expenditures in fiscal 2009 and 2010. While DHR anticipates receiving additional money into this fund each year, the level of Child Support Reinvestment Fund use in the fiscal 2012 budget is greater than the amount received in all recent federal fiscal years, as shown in Exhibit 10. In addition, Section 28 of the Budget Reconciliation and Financing Act (BRFA) of 2010 authorized the transfer of interest from special fund accounts to the general fund in fiscal 2010 and 2011, further reducing the amount of special funds available from the Child Support Reinvestment Fund. The BRFA of 2011 would permanently credit the special fund interest to the general fund. Exhibit 10
CSEA Reinvestment Funds Received Federal Fiscal 2004-2010 $8,000,000
$7,437,072
$7,246,481
$7,466,290
$7,000,000 $6,207,966
$6,389,777
$6,000,000 $4,988,347 $5,000,000 $4,346,710 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 2004
2005
2006
2007
2008
2009
CSEA: Child Support Enforcement Administration Notes: Funds received in a particular year recognize performance from a previous fiscal year. Source: Governor’s Budget Books
Analysis of the FY 2012 Maryland Executive Budget, 2011 16
2010
N00H00 – DHR – Child Support Enforcement
The higher use of Child Support Reinvestment Funds than the amount of these funds received would imply that the special fund balance will be drawn down. As the balance of this fund declines, CSEA would be expected to need to budget and use only the level of these funds it anticipates receiving in each year, which would ultimately be expected to increase the required level of general fund expenditures. DHR anticipates the balance of the Child Support Reinvestment Fund to be approximately $1.4 million in fiscal 2011 and $0.4 million in fiscal 2012. DHR should comment on when the use of Child Support Reinvestment Funds might be limited to the amount received in each year and how this would impact service provision.
Analysis of the FY 2012 Maryland Executive Budget, 2011 17
N00H00 – DHR – Child Support Enforcement
Recommended Actions Amount Reduction 1.
Reduce funding for laboratory services. The allowance increases by $208,854, or 71.7%, compared to the fiscal 2011 working appropriation. This action provides for an increase of slightly more than $100,000 from the fiscal 2011 working appropriation.
$ 100,000 SF
2.
Reduce funding for Baltimore City privatization contract to the estimated cost in fiscal 2012. This action provides approximately $7.95 million for this contract.
196,251 SF 380,958 FF
Total Reductions
$ 677,209
Total Special Fund Reductions
$ 296,251
Total Federal Fund Reductions
$ 380,958
Analysis of the FY 2012 Maryland Executive Budget, 2011 18
N00H00 – DHR – Child Support Enforcement
Updates 1.
Transition in the Privatization Contract
The Child Support Enforcement Privatization Pilot Program was first authorized in Chapter 491 of 1995. Under this project, Baltimore City and Queen Anne’s County child support operations were privatized. This pilot project was reauthorized several times through legislation. The most recent authorization, Chapters 312 and 392 of 2003, expired on September 30, 2009, after legislation during the 2009 session (House Bill 1448) failed to pass out of both houses. In December 2003, a contract with Policy Studies, Inc. (PSI) for the privatized child support operations in Baltimore City and Queen Anne’s County was approved by the Board of Public Works (BPW). This contract had a base period from January 1, 2004, to March 31, 2008, with two one-year renewal options. BPW approved the two renewal options in November 2007 and March 2009. In February 2010, BPW approved an extension of the contract, beyond the expiration date of March 31, 2010, to allow sufficient time to procure a new contract for Baltimore City only and to transition Queen Anne’s County back to State operations. The contract was extended a second time, until February 28, 2011, for Baltimore City only.
Transition of Queen Anne’s County Child Support Operations DHR decided, rather than continuing to operate Queen Anne’s County child support through a privatization contract, to return the child support operations back to State operations similar to most other jurisdictions. The 2009 Joint Chairmen’s Report requested DHR submit a copy of the transition plan for Queen Anne’s County to the budget committees. This report was submitted in February 2010. The transition plan identified key activities that would need to be undertaken during the transition. This plan focused on five areas: logistics, budget, personnel, facilities, and communications with activities including:
the assistant director of the Kent County Department of Social Services (DSS) assisting with the transition plan and implementation;
identifying positions for use in Queen Anne’s County from existing vacancies and funding for the costs of operations;
recruiting, hiring, and training new employees;
coordination of moving the office and developing a space plan for the DSS office;
Analysis of the FY 2012 Maryland Executive Budget, 2011 19
N00H00 – DHR – Child Support Enforcement
coordinating information technology issues including installation of equipment and acquisition of telephone lines; and
notification of customers.
The assistant director of the Kent County DSS assumed the role of supervising both Queen Anne’s County and Kent County child support operations. In addition, 5 vacant positions were identified as available to be used for Queen Anne’s County child support operations. Two other positions, budgeted in the State offices of the Child Support Enforcement Administration, were identified to provide legal and clerical support for Queen Anne’s County. A detailed timeline for the completion of tasks and the responsible entity was also included in the transition plan. The fiscal 2011 legislative appropriation included 5 positions and $282,489 to support the office. DHR announced the return of the child support services to the Queen Anne’s County DSS on October 1, 2010. DHR indicated that it was able to meet all the timelines identified in the transition plan and all positions for the new operations in Queen Anne’s County were filled. There were no difficulties experienced by DHR nor Queen Anne’s County DSS during the transition.
Transition of Baltimore City Child Support Operations In May 2010, DHR released a request for proposal (RFP) for privatized child support services in Baltimore City. The RFP outlined minimum performance levels for the Baltimore City office for each federal fiscal 2011 to 2015. In addition, the RFP indicated that the contractor would be awarded an incentive payment of $50,000 for each area in which the performance goal was met or exceeded. Goals were identified for each federal fiscal 2011 to 2015. Goals for federal fiscal 2011 are:
paternity establishment 86%;
support order establishment 78%;
current collection 53%; and
arrearage collection 53%.
Based on information provided by DHR, if the federal fiscal 2011 goals for performance had been in effect in federal fiscal 2010, Baltimore City would have met only one of the performance goals. On December 1, 2010, BPW approved a new contract for privatization services in Baltimore City. The contract has a base period of three years and three months with two one-year option periods, including a 90-day transition period, extending from December 2, 2010, through February 28, 2014. Three companies responded to the RFP. The contract was awarded to the incumbent contractor, PSI.
Analysis of the FY 2012 Maryland Executive Budget, 2011 20
N00H00 – DHR – Child Support Enforcement
Although the contract was awarded to the incumbent contractor, a transition period was required. Under the new contract, CSEA will assume certain functions previously carried out by the contractor (the court unit, undisbursed collections unit, and investigations unit). Time is required to train the personnel to perform these functions. These functions will be carried out by the 32 State employees that are still working with the Baltimore City Office of Child Support Enforcement under privatization. Also, the contractor must provide network connectivity and install a new Interactive Voice Response System. DHR noted that the contractor may also need to refresh and install computer equipment. As in previous contracts, the payments to the contractor are based on a percent of collections in each year. In fiscal 2012, PSI will receive 9.7% of the collections. The fiscal 2012 allowance contains approximately $8.5 million for the contract costs in fiscal 2012. However, DHR estimated the contract costs in fiscal 2012 would be approximately $7.9 million.
2.
Annual Fee Shortfall
The federal Deficit Reduction Act of 2005 imposed a $25 annual fee for child support cases handled by the State child support enforcement agency where $500 has been collected in the federal fiscal year, and the individual has never received public assistance. The federal government reduces the federal financial participation that states receive for child support by 66% of the amount that could be collected from this fee. This means that the federal government reduces funding by $16.50 for each eligible case. States have several options for the implementation of this fee: (1) pay the fee from state funds (i.e., absorb the lost revenue); (2) charge the applicants; (3) charge the noncustodial parents; and (4) deduct the fee from support received after $500 has been collected. Chapter 483 of 2007 allowed CSEA to collect this fee by deducting it from the child support payments of cases where $500 was collected in a federal fiscal year, and the individual has never received public assistance. This legislation was in effect for one year, October 1, 2007, to September 30, 2008. Chapter 162 of 2008 altered the State collection of the annual fee. Under this statute, CSEA deducts the $25 fee for individuals who have never received public assistance only after $3,500 has been collected in a federal fiscal year. In effect, the State absorbs the lost revenue for cases in which between $500 and $3,499 are collected in a federal fiscal year.
Annual Fee Collections In federal fiscal 2010, CSEA reports that 81,406 cases would have been eligible for collection of the annual fee under the federal requirement (collection after $500 in the federal fiscal year). Based on this number of eligible cases the federal government would have reduced funding by about $1.3 million or $16.50 per case. The State could have collected a maximum of a little over $2 million. Under the State eligibility rules for collection only 44,072 cases were eligible for collection. CSEA was able to collect this fee for 41,122 of these cases for a total collection of
Analysis of the FY 2012 Maryland Executive Budget, 2011 21
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approximately $1.0 million. This amount is not sufficient to offset lost federal revenue and is about $1.0 million less than the State might have collected under the federal requirement.
3.
Status of Corrective Actions for Audit Findings
In October 2008, the Department of Legislative Services, Office of Legislative Audits (OLA) released a fiscal compliance audit for CSEA covering the period March 10, 2004, to August 31, 2007. The previous audit, dated May 17, 2005, contained 21 findings and indicated that the accountability and compliance level of CSEA was unsatisfactory. OLA determined that in the audit released in October 2008 CSEA’s accountability and compliance level was no longer unsatisfactory. However, the audit still contained 15 findings, of which 9 were repeated from the previous audit. CSEA has made progress on implementing corrective actions for each of the findings, as shown in Appendix 2. CSEA considers the corrective actions for 10 of the 15 audit findings completed.
Enforcement Procedures The audit contained six findings and recommendations related to issues of enforcement procedures, of which four were repeat findings. CSEA considers corrective actions for three of these findings completed. Some activity is required for the remaining three findings. Finding 1 focused on CSEA’s use of occupational license suspension and the State Lottery Agency (SLA) match. CSEA reports that an electronic interface is being developed for three agencies (Department of Natural Resources, Maryland Comptroller of the Treasury, and the Department of Transportation). This interface is expected to be available in March 2011. For all other agencies, DHR expects to continue to match data manually through the use of spreadsheets. SLA matching improvements have been completed. Finding 3 indicated that CSEA did not effectively use seizure of bank accounts as a collection tool. In July 2010, CSEA implemented an automated process for administrative garnishments. In addition, CSEA has signed garnishment agreements with nearly all of the available institutions. CSEA has referred to the Office of Attorney General the four remaining institutions. CSEA reports that since April 2010 more than $740,000 has been collected from this process. Finding 5 noted that CSEA did not adequately investigate driver’s license suspension referrals rejected by the Motor Vehicle Administration due to system edits. In November 2010, a modification was made to the Child Support Enforcement System to improve the record of actions in the Case Action Log related to the referral process allowing for a complete record when no match was determined. In addition, local child support offices are to complete and return to the State offices of CSEA the quarterly report of cases with a rejection for a driver’s license suspension due to system edits.
Analysis of the FY 2012 Maryland Executive Budget, 2011 22
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Bank Accounts The audit contained two findings related to bank accounts. CSEA considers corrective actions for one of the two findings completed. Finding 9 indicated that CSEA did not analyze the proper distribution of $2.4 million that was transferred to its central bank account from a local child support office account. CSEA continues to perform quarterly reconciliations before unidentified funds are forwarded to the Comptroller of the Treasury as unclaimed/abandoned property. CSEA expects to complete this reconciliation on or before October 31, 2012.
Accounts Receivable Finding 15 explained that CSEA did not always perform adequate collection efforts for funds it was owed related to cancelled federal income tax intercepts. OLA recommended that the delinquent tax recoupment accounts be forwarded to the Central Collections Unit. In September 2010, DHR received advice of counsel from the Office of Attorney General that not all of the amounts could be considered administrative debt. However, the Office of Attorney General recommended two options to the department for these accounts. One of these options would allow these debts to be considered administrative debts and then be transferred to the Central Collection Unit. CSEA chose to follow this recommendation.
Analysis of the FY 2012 Maryland Executive Budget, 2011 23
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Appendix 1
Current and Prior Year Budgets Current and Prior Year Budgets DHR – Child Support Enforcement ($ in Thousands) General Fund
Special Fund
Federal Fund
Reimb. Fund
Total
Fiscal 2010 Legislative Appropriation
$17,828
$10,920
$58,305
$0
$87,053
Deficiency Appropriation
0
-2,193
3,871
0
1,678
Budget Amendments
-9,903
11,426
3,670
0
5,193
Cost Containment
-1,828
-8
-605
0
-2,442
Reversions and Cancellations
0
-1,607
-3,360
0
-4,967
Actual Expenditures
$6,096
$18,539
$61,881
$0
$86,516
Legislative Appropriation
$15,112
$12,578
$55,863
$0
$83,553
Budget Amendments
0
0
566
0
566
$15,112
$12,578
$56,428
$0
$84,119
Fiscal 2011
Working Appropriation
Note: Numbers may not sum to total due to rounding.
Analysis of the FY 2012 Maryland Executive Budget, 2011 24
N00H00 – DHR – Child Support Enforcement
Fiscal 2010 The fiscal 2010 actual expenditures of CSEA were $537,156 lower than the legislative appropriation. CSEA’s fiscal 2010 general fund expenditures were approximately $11.7 million lower than the legislative appropriation. Salaries and wages adjustments resulted in a net decrease of approximately $9.9 million. Other decreases were the result of cost containment actions to:
use special funds instead of general funds for salaries and wages ($786,623);
delay filling vacant positions ($605,394); and
reflect furlough savings ($436,335).
The fiscal 2010 special fund expenditures were approximately $7.6 million higher than the legislative appropriation. The largest increase, approximately $10.1 million, was for salaries and wage adjustments in the local operations of CSEA. An increase of approximately $1.4 million provided funding for contractual services related to a medical support contract, the call center, and interactive voice recording. The remaining increase ($172,019) represents the special fund portion of a deficiency appropriation to support laboratory services for paternity establishment. These increases were partially offset by a deficiency appropriation that withdrew approximately $2.4 million so the funds could be used for information technology projects in DHR administration and $7,906 in cost containment actions to reflect furlough savings. CSEA also cancelled approximately $1.6 million as a result of the availability of federal funds to match Child Reinvestment Funds due to the ARRA. CSEA’s actual fiscal 2010 federal fund expenditures were approximately $3.6 million higher than the legislative appropriation. An increase of approximately $3.6 million through a deficiency appropriation recognized the availability of additional federal funds due to the child support provision in the ARRA. Another increase represents the federal fund portion of a deficiency appropriation to support laboratory services for paternity establishment ($257,908). The remaining increases supported contractual services for a medical support contract, the call center, and interactive voice recording (approximately $3.5 million), and salaries and wages in the local operations of CSEA ($127,839). These increases were partially offset by cost containment actions of $605,392 resulting from the delayed filling of vacant positions. CSEA cancelled approximately $3.4 million of the federal fund appropriation primarily due to lower than anticipated expenditures in the State operations of Child Support (approximately $2.7 million) in the areas of:
medical support due to start-up delays;
interstate case reconciliation due to start-up delays;
privatization due to declining collection payment rates;
Analysis of the FY 2012 Maryland Executive Budget, 2011 25
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local area network;
check mailing; and
research and data analysis.
The remainder of the cancellation ($688,100) was related to lower than anticipated lease and genetic testing services expenditures in the local operations of CSEA.
Fiscal 2011 The fiscal 2011 appropriation of CSEA has increased by $565,800 to provide funding for two ongoing demonstration grants. The Survive and Thrive grant in Prince George’s County ($411,700) assists unemployed noncustodial parents in obtaining employment, modifying child support orders (as appropriate), and encouraging mediation (as needed). The Excellence through Evaluation Grant in Baltimore City ($154,100) uses a community-based navigation service to assist low-income noncustodial parents operate in the child support system with goals to increase the payment of child support and involvement with children.
Analysis of the FY 2012 Maryland Executive Budget, 2011 26
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Appendix 2
Audit Findings and Corrective Actions Finding CSEA did not request licensing authorities to suspend occupational licenses and the State Lottery match was not always effective
Corrective Actions Revised policy regarding suspension of licenses. Changes to IT system to improve lottery intercept. Contacting agencies that participate in licensing activity and determine methods for sharing information and processing requests for suspensions. Develop an electronic interface for matching licensing information for certain agencies (Department of Transportation, Department of Natural Resources, Comptroller).
Expected Completion Date State Lottery Agency matching process considered completed State licensing authority matching in progress (electronic interface to be available March 2011)
Match through excel spreadsheets for other agencies. Completed Social Security numbers of Revised policy on Social Security Number collection. obligors were not always Send quarterly reports on missing Social Security obtained and recorded in Numbers and quarterly onsite monitoring. the Automated Child Support System Ongoing visits to large metropolitan local departments for case review. Pursue garnishment agreements with various financial In progress Seizure of delinquent obligor bank accounts was institutions (currently 172 of 180 have signed, 4 are exempt, referred remaining 4 to the OAG). not effectively used as a collection tool Development of automated process of administrative garnishment which has been implemented.
Documentation of enforcement of medical support orders was lacking
Plan to expand to other accounts through brokerages and asset management organizations. Update policies and train on revised policies.
Completed
Enhancements to CSES.
Contract for an automated matching process, matches are then used to update files in CSES. Driver’s license suspension Distribute quarterly report. referrals rejected by MVA Develop a policy regarding follow-up for the review of were not adequately possible matches and updates CSES. investigated Develop a process in CSES to document a confirmed no match for MVA records, which has been implemented.
Analysis of the FY 2012 Maryland Executive Budget, 2011 27
In progress, continue to review quarterly reports
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Appendix 2 (Cont.)
Finding Corrective Actions CSEA did not ensure that a Implemented Early Intervention Pilot which focuses on local office’s follow-up with actions taken if a first payment is not made; project is no longer in effect. delinquent obligors was timely Develop enhancement to CSES to generate follow-up notices at 30, 60, and 90 days delinquent. Effective procedures were Develop new policies regarding changes in custody not in place to detect child resulting from death of the custodial parent support payments being issued to deceased Develop a matching processing with the Division of Vital individuals Records.
Expected Completion Date Completed
Completed
Received advice from the OAG on whether to proceed with actions against those that had cashed checks. Of the $1.1 million noted in the audit, CSEA is seeking to Completed Undisbursed funds were not sent to the Comptroller resolve these amounts. of the Treasury as required Forward monthly those collections meeting the criteria of by law abandoned property. CSEA did not analyze the Analyzed the relationship of identified transferred funds Quarterly proper disposition of and the prior payments from the central disbursement reconciliations to $2.4 million that was account for two quarters, expect to complete additional continue until on or transferred to its central bank reconciliations before determining surplus or deficit. before account from a local child October 31, 2012 support office account Following determination, any excess will be forwarded as abandoned property, and any deficit would lead to a request for funding. CSEA was unable to Obtained supporting documentation for the $825,000. Completed substantiate the propriety of an $825,000 reconciling adjustment CSEA could not document Development and implementation of contract monitoring Completed duties. that adequate controls were established by the Completed a monitoring report for the contract for each central receipt and quarter beginning with the quarter ending in processing contractor December 2007 through the quarter ending in June 2009. Contractor performance evaluations completed in June and December 2008 will now conduct annual reviews, the first was for December 2009.
Analysis of the FY 2012 Maryland Executive Budget, 2011 28
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Appendix 2 (Cont.)
Finding CSEA did not verify billings or take appropriate action when contractors were not performing in accordance with established goals
Expected Corrective Actions Completion Date Initiated a variety of steps to verify billings including Completed having the cooperative reimbursement agreement agencies provide support documentation for various expenditures, prepare quarterly contract monitoring reports to evaluate contract agency performance with a corrective action plan that is review and approved if necessary.
New language in federal fiscal 2010 contracts allows CSEA to withhold funds if the corrective action plan is not implemented. CSEA did not take sufficient Revised audit review tool. Completed actions to address contractor noncompliance with certain Plan to pursue fiscal sanctions for case processing contract requirements deficiencies and failure to meet minimum performance standards in future contracts. Completed CSEA had not established Review role assignment to job function and complete monthly audits of employee access. adequate controls to prevent or detect Modified certain security roles to provide separation of unauthorized changes to duties. critical data Forwarded administrative debt to CCU; however Policy Changes to CSEA did not always additional debt forwarding is on hold per CCU be were expected to perform adequate be finalized collection efforts on certain notification. December 31, 2010. accounts receivable Requested opinion of the OAG to clarify the status of administrative debts. Worked with OAG to determine options for collection of intercept refunds; made determination of option to pursue that will allow amounts to be considered administrative debt. CCU: Central Collections Unit CSEA: Child Support Enforcement Agency CSES: Child Support Enforcement System IT: information technology MVA: Motor Vehicle Administration OAG: Office of the Attorney General Boldface type indicates repeat findings.
Analysis of the FY 2012 Maryland Executive Budget, 2011 29
Object/Fund Difference Report N00H00 – DHR – Child Support Enforcement
Object/Fund
FY 11 Working Appropriation
FY 12 Allowance
FY 11 - FY 12 Amount Change
Percent Change
721.50 12.71 734.21
716.00 1.00 717.00
716.00 1.00 717.00
0.00 0.00 0.00
0% 0% 0%
Objects 01 Salaries and Wages 02 Technical and Spec. Fees 03 Communication 04 Travel 06 Fuel and Utilities 07 Motor Vehicles 08 Contractual Services 09 Supplies and Materials 10 Equipment – Replacement 11 Equipment – Additional 12 Grants, Subsidies, and Contributions 13 Fixed Charges Total Objects
$ 44,416,252 556,487 580,445 174,019 90,622 46,028 36,043,051 399,904 12,477 197,500 145,462 3,853,524 $ 86,515,771
$ 42,515,038 157,803 751,733 83,221 125,109 88,339 35,179,321 357,274 0 0 80 4,860,873 $ 84,118,791
$ 45,954,692 158,415 579,709 89,436 112,095 85,119 34,545,447 353,516 0 0 85 4,951,007 $ 86,829,521
$ 3,439,654 612 -172,024 6,215 -13,014 -3,220 -633,874 -3,758 0 0 5 90,134 $ 2,710,730
8.1% 0.4% -22.9% 7.5% -10.4% -3.6% -1.8% -1.1% 0.0% 0.0% 6.3% 1.9% 3.2%
Funds 01 General Fund 03 Special Fund 05 Federal Fund Total Funds
$ 6,095,769 18,539,205 61,880,797 $ 86,515,771
$ 15,112,146 12,578,340 56,428,305 $ 84,118,791
$ 18,005,309 12,745,722 56,078,490 $ 86,829,521
$ 2,893,163 167,382 -349,815 $ 2,710,730
19.1% 1.3% -0.6% 3.2%
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Analysis of the FY 2012 Maryland Executive Budget, 2011 31
Positions 01 Regular 02 Contractual Total Positions
FY 10 Actual
Note: The fiscal 2011 appropriation does not include deficiencies. The fiscal 2012 allowance does not include contingent reductions.
Appendix 3
Fiscal Summary DHR – Child Support Enforcement
Program/Unit
FY 10 Actual
FY 11 Wrk Approp
FY 12 Allowance
Change
FY 11 - FY 12 % Change
$ 44,772,122 41,743,649
$ 43,376,342 40,742,449
$ 46,360,468 40,469,053
$ 2,984,126 -273,396
6.9% -0.7%
Total Expenditures
$ 86,515,771
$ 84,118,791
$ 86,829,521
$ 2,710,730
3.2%
$ 6,095,769 18,539,205 61,880,797
$ 15,112,146 12,578,340 56,428,305
$ 18,005,309 12,745,722 56,078,490
$ 2,893,163 167,382 -349,815
19.1% 1.3% -0.6%
$ 86,515,771
$ 84,118,791
$ 86,829,521
$ 2,710,730
3.2%
General Fund Special Fund Federal Fund Total Appropriations
N00H00 – DHR – Child Support Enforcement
Analysis of the FY 2012 Maryland Executive Budget, 2011 32
06 Local Child Support Enforcement Administration 08 Support Enforcement – State
Note: The fiscal 2011 appropriation does not include deficiencies. The fiscal 2012 allowance does not include contingent reductions
Appendix 4
Child Support Enforcement Department of Human Resources
Operating Budget Data ($ in Thousands) FY 10 Actual
FY 11 Working
FY 12 Allowance
FY 11-12 Change
% Change Prior Year
General Fund Contingent & Back of Bill Reductions Adjusted General Fund
$6,096 0 $6,096
$15,112 0 $15,112
$18,005 -432 $17,574
$2,893 -432 $2,462
19.1%
Special Fund Contingent & Back of Bill Reductions Adjusted Special Fund
18,539 0 $18,539
12,578 0 $12,578
12,746 -8 $12,738
167 -8 $159
Federal Fund Contingent & Back of Bill Reductions Adjusted Federal Fund
61,881 0 $61,881
56,428 0 $56,428
56,078 -259 $55,819
-350 -259 -$609
-1.1%
Adjusted Grand Total
$86,516
$84,119
$86,131
$2,012
2.4%
16.3% 1.3% 1.3% -0.6%
The fiscal 2012 allowance of the Child Support Enforcement Administration (CSEA) increases by approximately $2.0 million, or 2.4%, compared to the fiscal 2011 working appropriation after accounting for across-the-board and contingent reductions. Increases in the general fund appropriation (approximately $2.5 million, or 16.3%) and special fund appropriation ($159,331, or 1.3%) are partially offset by a decrease in federal funds of $608,832, or 1.1%.
Major changes in the fiscal 2012 allowance occur in the area of personnel to reflect a restoration of salaries from furlough reductions and full funding of health insurance, the contract for privatized child support operations in Baltimore City, and the restoration of funding for various contracts.
Note: Numbers may not sum to total due to rounding. For further information contact: Tonya D. Zimmerman
Analysis of the FY 2012 Maryland Executive Budget, 2011 1
Phone: (410) 946-5530
N00H00 – DHR – Child Support Enforcement
Personnel Data FY 10 Actual Regular Positions Contractual FTEs Total Personnel
721.50 12.71 734.21
FY 11 Working
FY 12 Allowance
716.00 1.00 717.00
716.00 1.00 717.00
51.84 35.00
7.24% 4.89%
FY 11-12 Change 0.00 0.00 0.00
Vacancy Data: Regular Positions Turnover and Necessary Vacancies, Excluding New Positions Positions and Percentage Vacant as of 12/31/10
One position was abolished in the fiscal 2011 budget. During fiscal 2011, 4 positions were abolished in the local operations of CSEA as part of the requirements of Section 44 of the fiscal 2011 budget bill requiring the abolition of 500 positions statewide. A 0.5 position was also abolished.
As of December 31, 2010, CSEA had a vacancy rate of 4.89%, or 35 positions. To meet its turnover expectancy of 7.24%, CSEA needs to maintain 51.84 vacant positions in fiscal 2012. At its current level of vacancy, CSEA will not be able to meet its turnover expectancy.
The turnover expectancy in fiscal 2012 throughout the Department of Human Resources, (DHR) including CSEA, contains an adjustment to recognize salary savings from planned delays in filling vacant positions and savings from administrative reorganizations to consolidate duplicative services within the department.
Analysis of the FY 2012 Maryland Executive Budget, 2011 2
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Analysis in Brief Major Trends CSEA Performance in Cases with Support Orders and Cases with Paternity Established Continues to Improve: CSEA’s performance in the percent of cases with a support order continued to improve in federal fiscal 2010 exceeding the federal goal of 80% for the third straight year. The percent of cases with paternity established increased by more than three percentage points in federal fiscal 2010. Child Support Collections Impacted by Economic Conditions: Several measures of performance in CSEA that relate to collection activity worsened in federal fiscal 2010 as a result of the economic conditions. In federal fiscal 2010, the total collections, percent of current support paid, and percent of cases with arrears for which a payment was received decreased from federal fiscal 2009. Child Support Caseload Continues to Decline: Continuing recent trends, the child support caseload declined in federal fiscal 2010 to 248,027. After an increase in federal fiscal 2009, the cases associated with the Temporary Cash Assistance program decreased in federal fiscal 2010.
Recommended Actions Funds 1.
Reduce funding for laboratory services.
2.
Reduce funding for Baltimore City privatization contract to the estimated cost in fiscal 2012. Total Reductions
$ 100,000 577,209 $ 677,209
Updates Transition in the Privatization Contract: Beginning October 1, 2010, Queen Anne’s County child support operations returned to State operations after more than 10 years of privatization. The transition was reported by DHR to be trouble free. Privatized operations will continue in Baltimore City. A new contract with Policy Studies, Inc. was approved by the Board of Public Works in December 2010. Annual Fee Shortfall: Beginning October 1, 2007, CSEA began collections of the $25 annual fee for child support imposed by the federal Deficit Reduction Act of 2005. Effective October 1, 2008, Chapter 162 of 2008 changed the State’s eligibility for fee collections. As a result of this change, CSEA collected approximately $1.0 million less than it might have under the federal requirement. Analysis of the FY 2012 Maryland Executive Budget, 2011 3
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Status of Corrective Actions for Audit Findings: The audit for CSEA dated October 2008 included 15 findings, 9 of which were repeated from the previous audit. As of December 2010, CSEA considered corrective actions for 10 of these findings completed.
Analysis of the FY 2012 Maryland Executive Budget, 2011 4
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Child Support Enforcement Department of Human Resources
Operating Budget Analysis Program Description The Child Support Enforcement Administration (CSEA) administers and monitors child support services provided by local departments of social services and other agencies, provides technical assistance, formulates policy, develops and implements new programs, and ensures compliance with regulations and policy. CSEA also operates several centralized programs including:
locating noncustodial parents;
establishing paternity;
enforcing support orders;
collecting and disbursing payments; and
processing interstate cases.
The key goal of CSEA is to enable, encourage, and enforce parental responsibility.
Performance Analysis: Managing for Results As shown in Exhibit 1, CSEA exceeded the federal performance goal in the percent of cases with a support order for the third consecutive year in federal fiscal 2010. CSEA continued to improve its performance in this area in federal fiscal 2010 with an increase of approximately 1.5 percentage points. CSEA attributes this to an increase in demand for State child support services from customers with private support orders as a result of the economic downturn.
Analysis of the FY 2012 Maryland Executive Budget, 2011 5
N00H00 – DHR Child Support Enforcement
Exhibit 1
Child Support Caseload Under Order Federal Fiscal 2007-2012 90% 80%
82.82%
84.82%
78.93%
81.28%
83.82%
80.13%
2007
2008
2009
2010
2011 Est.
2012 Est.
70% 60% 50% 40% 30% 20% 10% 0%
Cases in State Child Support Caseload with Support Orders
Goal
Source: Department of Human Resources; Governor’s Budget Books
CSEA increased the percent of cases with paternity established by more than 3.0 percentage points in federal fiscal 2010, as shown in Exhibit 2. CSEA attributes the improved performance in this measure to changes in the ability to obtain and count certain paternity establishments with information received from the Division of Vital Records. Despite this increase, CSEA’s performance in the percent of cases with paternity established was below the preliminary national average for federal fiscal 2009 in both federal fiscal 2009 (4.04 percentage points) and federal fiscal 2010 (0.67 percentage points).
Analysis of the FY 2012 Maryland Executive Budget, 2011 6
N00H00 – DHR Child Support Enforcement
Exhibit 2
Child Support Caseload with Paternity Established Federal Fiscal 2007-2012 100% 90% 80% 70% Cases
60% 50% 40% 30% 20% 10% 0% 2007
2008
Cases with Paternity Established
2009
2010
2011 Est.
2012 Est.
Preliminary National Average for Federal Fiscal 2009
Note: There are two options for measuring performance in the area of paternity establishment for federal incentive payments, percent of the State child support caseload with paternity established and percent statewide with paternity established. In the Managing for Results submission, the Department of Human Resources reports on the percent of the State child support caseload with paternity established, which is not the measurement used for its incentive payment determination. Source: Department of Human Resources; Governor’s Budget Books
CSEA’s ability to collect current child support and child support arrearages was impacted by the economic downturn in federal fiscal 2010. As shown in Exhibit 3 and Exhibit 4, the percent of current support paid and percent of cases with arrears for which a payment is received decreased in federal fiscal 2010 after several years of modest improvement. As a result, CSEA remains well below the federal goal of 80% for these measures. However, as shown in Exhibit 3, CSEA’s performance in the percent of current support paid was above the preliminary national average for federal fiscal 2009 in both federal fiscal 2009 and 2010. The Department of Human Resources (DHR) should comment on actions it intends to take to improve performance in these areas to maximize its ability to receive federal incentive payments.
Analysis of the FY 2012 Maryland Executive Budget, 2011 7
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Exhibit 3
Current Child Support Paid Federal Fiscal 2007-2012 90% 80% 70%
63.77%
64.58%
64.89%
2007
2008
2009
64.46%
65.46%
66.46%
2010
2011 Est.
2012 Est.
60% 50% 40% 30% 20% 10% 0% Percent of Current Child Support Paid Preliminary National Average for Federal Fiscal 2009 Goal Source: Department of Human Resources; Governor’s Budget Books
Exhibit 4
Cases with Arrears for Which a Payment Is Received Federal Fiscal 2007-2012 100% 80%
62.26%
62.86%
63.57%
61.57%
62.57%
63.57%
60% 40% 20% 0% 2007
2008 2009 2010 2011 Est. Percent of Cases with Arrears for Which a Payment Is Received Preliminary National Average for Federal Fiscal 2009 Goal
Source: Department of Human Resources; Governor’s Budget Books
Analysis of the FY 2012 Maryland Executive Budget, 2011 8
2012 Est.
N00H00 – DHR Child Support Enforcement
The decreased ability of CSEA to collect on child support in federal fiscal 2010 also translated into a decrease in total collections, as shown in Exhibit 5. Despite this, total collections in federal fiscal 2010 were above the collections in federal fiscal 2008. Cumulative arrearages as of the last day of federal fiscal 2010 increased from the last day of federal fiscal 2009, as shown in Exhibit 6. Cumulative arrearages tend to increase over time; however, a change in federal policy led to the exclusion of certain interstate cases in the calculation and ultimately led to a decrease in cumulative arrearages between federal fiscal 2007 and 2008. The economic downturn was a factor in the increase in cumulative arrearages in federal fiscal 2010. Exhibit 5
Total Collections Federal Fiscal 2005-2010 ($ in Millions) $600
$500
$495.9 $473.0
$482.6
2005
2006
$510.6
$512.5
$511.3
2008
2009
2010
$400
$300
$200
$100
$0 2007
Source: Department of Human Resources
Analysis of the FY 2012 Maryland Executive Budget, 2011 9
N00H00 – DHR Child Support Enforcement
Exhibit 6
Cumulative Arrearages Federal Fiscal 2005-2010 ($ in Millions) $1,800 $1,600
$1,539.5
$1,573.4
$1,491.3
$1,528.2 $1,486.4
$1,494.6
2008
2009
$1,400 $1,200 $1,000 $800 $600 $400 $200 $0 2005
2006
2007
2010
Source: Department of Human Resources
As shown in Exhibit 7, the State child support caseload decreased by slightly more than 10% between federal fiscal 2005 and 2010. The number of cases associated with the Temporary Cash Assistance program also resumed the recent trend of decreases in federal fiscal 2010, after an increase in federal fiscal 2009. Despite the decrease in the total number of cases, the number of cases in the State child support caseload involving children born out of wedlock that have had paternity established continued to increase. The number of cases with arrears continued the year-to-year fluctuation with a slight decrease in federal fiscal 2010.
Analysis of the FY 2012 Maryland Executive Budget, 2011 10
N00H00 – DHR Child Support Enforcement
Exhibit 7
Child Support Caseload Federal Fiscal 2005-2010 300,000 276,167 265,146
260,419
255,866
252,030
250,000
200,000
191,053
195,256
159,075
156,987
155,461
30,415
26,547
24,816
192,021
195,456
157,351
193,645
248,027
193,342
157,411 160,333
150,000
100,000
50,000 22,961
25,425
24,021
0 2005
2006
2007
2008
2009
2010
Total Cases State Child Support Cases Born Out of Wedlock with Paternity Established Cases with Arrears Caseload Associated with TCA TCA: Temporary Cash Assistance Source: Department of Human Resources; Governor’s Budget Books
Fiscal 2011 Actions Impact of Cost Containment Section 44 of the fiscal 2011 budget bill required the Governor to abolish 500 positions in the Executive Branch as of June 30, 2011. The positions and the funds associated with them Analysis of the FY 2012 Maryland Executive Budget, 2011 11
N00H00 – DHR Child Support Enforcement
have been removed from the fiscal 2011 working appropriation. CSEA’s share of the reduction was 4 full-time equivalent positions and $100,441 in fiscal 2011, which represents an ongoing annualized savings of $276,459 for employee salary and fringe benefit expenditures. DHR reports that services have not been impacted by the abolition of these positions.
Proposed Budget As shown in Exhibit 8, the fiscal 2012 allowance of CSEA increases by approximately $2.0 million, or 2.4%, compared to the fiscal 2011 working appropriation, after accounting for across-the-board and contingent reductions. The general ($2.5 million) and special ($159,331) fund increases are partially offset by a decrease of $608,832 in federal funds. The increase occurs largely among personnel expenditures, which increase by approximately $3.4 million before accounting for across-the-board and contingent reductions. Employee and retiree health insurance expenditures increase by approximately $2.3 million to fully fund the expected costs. The fiscal 2011 allowance contained a series of negative entries in salaries, wages, and fringe benefits throughout DHR’s budget, which essentially served as an unallocated budget reduction. CSEA’s share of the approximately $17.4 million total fund unallocated reduction was $1.9 million. Section 42 of the fiscal 2011 budget bill required DHR to submit a plan to allocate the reductions to the objects, programs, and subprograms in which the reductions were to actually occur to the Department of Budget and Management (DBM). After reviewing and approving the plan, DBM was to reflect the allocation of the reduction in the appropriations included in the Fiscal Digest. These reductions were primarily allocated to the employee and retiree health insurance appropriations, although $3.0 million was reduced from the Temporary Disability Assistance Program budget. Ultimately, CSEA’s share of this allocation was $1.6 million. Regular earnings increase as a result of the restoration of salaries from the furlough reductions as well as to account for prior year reclassifications, an increase of $690,899.
Impact of Cost Containment The fiscal 2012 budget reflects several across-the-board actions. In fiscal 2012, CSEA’s share of the reduction is $99,127 in general funds, $3,032 in special funds, and $97,551 in federal funds for changes in employee health insurance. Reductions contingent upon statutory changes include $164,068 in general funds, $5,019 in special funds, and $162,466 in federal funds for retiree prescription drug benefits and $168,395 in general funds for retirement benefits. To the extent that CSEA has positions abolished under the Voluntary Separation Program, additional reductions will be implemented by the Administration.
Analysis of the FY 2012 Maryland Executive Budget, 2011 12
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Exhibit 8
Proposed Budget DHR – Child Support Enforcement ($ in Thousands)
How Much It Grows:
General Fund
Special Fund
Federal Fund
Total
2011 Working Appropriation
$15,112
$12,578
$56,428
$84,119
18,005
12,746
56,078
86,830
Amount Change
$2,893
$167
-$350
$2,711
Percent Change
19.1%
1.3%
-0.6%
3.2%
-$432
-$8
-$259
-$699
Adjusted Change
$2,462
$159
-$609
$2,012
Adjusted Percent Change
16.3%
1.3%
-1.1%
2.4%
2012 Allowance
Contingent Reductions
Where It Goes: Personnel Expenses Employee and retiree health insurance (net of contingent and across-the-board reductions) partially due to fiscal 2011 underfunding ..................................................................$1,742 Regular earnings primarily due to restoration of furlough reduction ............................................ 691 Employee retirement (net of contingent reductions) ..................................................................... 343 Social Security contributions ........................................................................................................ 45 Turnover adjustments .................................................................................................................... -24 Workers’ compensation premium adjustments ............................................................................. -73 Other fringe benefit adjustments ................................................................................................... 16 Contractual Services Restoration of funding for the call center, new hire registry, and State disbursement unit contracts ................................................................................................................................... 1,580 Contract for local area network for maintenance, development, and implementation of child support applications .............................................................................................................
243
Genetic testing services for paternity establishment due to increased demand for testing by the Judiciary and addition of Baltimore City to the contract ...............................................
209
Tax refund and unemployment intercept contracts with the Maryland Comptroller and the Department of Labor, Licensing, and Regulation ..............................................................
30
Analysis of the FY 2012 Maryland Executive Budget, 2011 13
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Where It Goes: Contractual Services Anne Arundel County child support office for administrative support services provided by Anne Arundel County ......................................................................................................... Queen Anne’s County child support office contracts for security guard, courier, and process services ........................................................................................................................ Federal Parent Locator Service and Child Support Enforcement Network System ...................... Paternity Affidavit Program ..........................................................................................................
27 11 -32 -34
Reinvestment fund allocation to local child support office and cooperative reimbursement agreement agencies .......................................................................................... -114 End of Excellence through Evaluation demonstration grant in Baltimore City to use community based navigation systems to assist low-income noncustodial parents operate within the child support enforcement system .............................................................. -154 Check Printing and Mailing .......................................................................................................... -205 End of Survive and Thrive Demonstration Grant in Prince George’s County to assist unemployed noncustodial parents in obtaining employment, modifying child support orders when appropriate, and encourage mediation as needed ................................................ -379 Baltimore City privatization contract ............................................................................................-1,847 t Other Changes Decrease in rent owed to the Department of General Services (DGS) more than offset by non-DGS rent ........................................................................................................................... 91 Travel ............................................................................................................................................ 6 Utilities .......................................................................................................................................... -13 Telephone and postage to align with recent experience ................................................................ -172 Other changes................................................................................................................................ 22 Total $2,012 Note: Numbers may not sum to total due to rounding
Fund Source Changes The American Recovery and Reinvestment Act of 2009 (ARRA) temporarily reinstated the ability of the State to match Child Support Reinvestment Funds, the fund that receives federal incentive payments for child support performance, with federal funds. The temporary reinstatement ended September 30, 2010. During the period of this reinstatement, CSEA relied more heavily on the use of Child Support Reinvestment Funds than it had in the recent past and reduced general fund expenditures. As shown in Exhibit 9, in fiscal 2008 and 2009, CSEA had general fund expenditures of more than $16.6 million. However, in fiscal 2010, CSEA had only $6.1 million of general fund expenditures but was able to maintain a comparable level of federal fund expenditures as a result of
Analysis of the FY 2012 Maryland Executive Budget, 2011 14
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Exhibit 9
CSEA Fund Sources 2008-2012 ($ in Thousands) $100,000 $90,037.2 $90,000
$85,710.5
$86,515.8
$86,829.5 $84,118.8
$80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 2008 General Fund
2009
2010 Special Fund
2011 Working 2012 Allowance Appropriation Federal Fund
CSEA: Child Support Enforcement Agency Source: Governor’s Budget Books
the agency’s use of special funds, including the Child Support Reinvestment Fund. The fiscal 2011 working appropriation returns to a more normal level of general fund use, $15.1 million. However, the fiscal 2011 budget accounts for an ability to match the Child Support Reinvestment Funds with federal funds for one quarter, slightly reducing the level of general funds required. To maintain a similar total level of spending in fiscal 2012 as in fiscal 2011, either more general funds would be required to account for the inability to match Child Support Reinvestment Funds with federal funds at any point during the fiscal year, or additional Child Support Reinvestment Funds would be required to make up for the lost federal fund match for items supported with this funding. Although the total budget of CSEA increases, the increase occurs almost entirely among general fund expenditures (an increase of approximately $2.5 million) recognizing the need for additional general funds to generate the same level of federal fund match. However, federal fund Analysis of the FY 2012 Maryland Executive Budget, 2011 15
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appropriations decrease recognizing lost federal fund matching opportunities due to the use of Child Support Reinvestment fund rather than general funds for some planned expenditures. The fiscal 2012 allowance anticipates the use of approximately $8.7 million of Child Support Reinvestment Funds, comparable to expenditures in fiscal 2009 and 2010. While DHR anticipates receiving additional money into this fund each year, the level of Child Support Reinvestment Fund use in the fiscal 2012 budget is greater than the amount received in all recent federal fiscal years, as shown in Exhibit 10. In addition, Section 28 of the Budget Reconciliation and Financing Act (BRFA) of 2010 authorized the transfer of interest from special fund accounts to the general fund in fiscal 2010 and 2011, further reducing the amount of special funds available from the Child Support Reinvestment Fund. The BRFA of 2011 would permanently credit the special fund interest to the general fund. Exhibit 10
CSEA Reinvestment Funds Received Federal Fiscal 2004-2010 $8,000,000
$7,437,072
$7,246,481
$7,466,290
$7,000,000 $6,207,966
$6,389,777
$6,000,000 $4,988,347 $5,000,000 $4,346,710 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 2004
2005
2006
2007
2008
2009
CSEA: Child Support Enforcement Administration Notes: Funds received in a particular year recognize performance from a previous fiscal year. Source: Governor’s Budget Books
Analysis of the FY 2012 Maryland Executive Budget, 2011 16
2010
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The higher use of Child Support Reinvestment Funds than the amount of these funds received would imply that the special fund balance will be drawn down. As the balance of this fund declines, CSEA would be expected to need to budget and use only the level of these funds it anticipates receiving in each year, which would ultimately be expected to increase the required level of general fund expenditures. DHR anticipates the balance of the Child Support Reinvestment Fund to be approximately $1.4 million in fiscal 2011 and $0.4 million in fiscal 2012. DHR should comment on when the use of Child Support Reinvestment Funds might be limited to the amount received in each year and how this would impact service provision.
Analysis of the FY 2012 Maryland Executive Budget, 2011 17
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Recommended Actions Amount Reduction 1.
Reduce funding for laboratory services. The allowance increases by $208,854, or 71.7%, compared to the fiscal 2011 working appropriation. This action provides for an increase of slightly more than $100,000 from the fiscal 2011 working appropriation.
$ 100,000 SF
2.
Reduce funding for Baltimore City privatization contract to the estimated cost in fiscal 2012. This action provides approximately $7.95 million for this contract.
196,251 SF 380,958 FF
Total Reductions
$ 677,209
Total Special Fund Reductions
$ 296,251
Total Federal Fund Reductions
$ 380,958
Analysis of the FY 2012 Maryland Executive Budget, 2011 18
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Updates 1.
Transition in the Privatization Contract
The Child Support Enforcement Privatization Pilot Program was first authorized in Chapter 491 of 1995. Under this project, Baltimore City and Queen Anne’s County child support operations were privatized. This pilot project was reauthorized several times through legislation. The most recent authorization, Chapters 312 and 392 of 2003, expired on September 30, 2009, after legislation during the 2009 session (House Bill 1448) failed to pass out of both houses. In December 2003, a contract with Policy Studies, Inc. (PSI) for the privatized child support operations in Baltimore City and Queen Anne’s County was approved by the Board of Public Works (BPW). This contract had a base period from January 1, 2004, to March 31, 2008, with two one-year renewal options. BPW approved the two renewal options in November 2007 and March 2009. In February 2010, BPW approved an extension of the contract, beyond the expiration date of March 31, 2010, to allow sufficient time to procure a new contract for Baltimore City only and to transition Queen Anne’s County back to State operations. The contract was extended a second time, until February 28, 2011, for Baltimore City only.
Transition of Queen Anne’s County Child Support Operations DHR decided, rather than continuing to operate Queen Anne’s County child support through a privatization contract, to return the child support operations back to State operations similar to most other jurisdictions. The 2009 Joint Chairmen’s Report requested DHR submit a copy of the transition plan for Queen Anne’s County to the budget committees. This report was submitted in February 2010. The transition plan identified key activities that would need to be undertaken during the transition. This plan focused on five areas: logistics, budget, personnel, facilities, and communications with activities including:
the assistant director of the Kent County Department of Social Services (DSS) assisting with the transition plan and implementation;
identifying positions for use in Queen Anne’s County from existing vacancies and funding for the costs of operations;
recruiting, hiring, and training new employees;
coordination of moving the office and developing a space plan for the DSS office;
Analysis of the FY 2012 Maryland Executive Budget, 2011 19
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coordinating information technology issues including installation of equipment and acquisition of telephone lines; and
notification of customers.
The assistant director of the Kent County DSS assumed the role of supervising both Queen Anne’s County and Kent County child support operations. In addition, 5 vacant positions were identified as available to be used for Queen Anne’s County child support operations. Two other positions, budgeted in the State offices of the Child Support Enforcement Administration, were identified to provide legal and clerical support for Queen Anne’s County. A detailed timeline for the completion of tasks and the responsible entity was also included in the transition plan. The fiscal 2011 legislative appropriation included 5 positions and $282,489 to support the office. DHR announced the return of the child support services to the Queen Anne’s County DSS on October 1, 2010. DHR indicated that it was able to meet all the timelines identified in the transition plan and all positions for the new operations in Queen Anne’s County were filled. There were no difficulties experienced by DHR nor Queen Anne’s County DSS during the transition.
Transition of Baltimore City Child Support Operations In May 2010, DHR released a request for proposal (RFP) for privatized child support services in Baltimore City. The RFP outlined minimum performance levels for the Baltimore City office for each federal fiscal 2011 to 2015. In addition, the RFP indicated that the contractor would be awarded an incentive payment of $50,000 for each area in which the performance goal was met or exceeded. Goals were identified for each federal fiscal 2011 to 2015. Goals for federal fiscal 2011 are:
paternity establishment 86%;
support order establishment 78%;
current collection 53%; and
arrearage collection 53%.
Based on information provided by DHR, if the federal fiscal 2011 goals for performance had been in effect in federal fiscal 2010, Baltimore City would have met only one of the performance goals. On December 1, 2010, BPW approved a new contract for privatization services in Baltimore City. The contract has a base period of three years and three months with two one-year option periods, including a 90-day transition period, extending from December 2, 2010, through February 28, 2014. Three companies responded to the RFP. The contract was awarded to the incumbent contractor, PSI.
Analysis of the FY 2012 Maryland Executive Budget, 2011 20
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Although the contract was awarded to the incumbent contractor, a transition period was required. Under the new contract, CSEA will assume certain functions previously carried out by the contractor (the court unit, undisbursed collections unit, and investigations unit). Time is required to train the personnel to perform these functions. These functions will be carried out by the 32 State employees that are still working with the Baltimore City Office of Child Support Enforcement under privatization. Also, the contractor must provide network connectivity and install a new Interactive Voice Response System. DHR noted that the contractor may also need to refresh and install computer equipment. As in previous contracts, the payments to the contractor are based on a percent of collections in each year. In fiscal 2012, PSI will receive 9.7% of the collections. The fiscal 2012 allowance contains approximately $8.5 million for the contract costs in fiscal 2012. However, DHR estimated the contract costs in fiscal 2012 would be approximately $7.9 million.
2.
Annual Fee Shortfall
The federal Deficit Reduction Act of 2005 imposed a $25 annual fee for child support cases handled by the State child support enforcement agency where $500 has been collected in the federal fiscal year, and the individual has never received public assistance. The federal government reduces the federal financial participation that states receive for child support by 66% of the amount that could be collected from this fee. This means that the federal government reduces funding by $16.50 for each eligible case. States have several options for the implementation of this fee: (1) pay the fee from state funds (i.e., absorb the lost revenue); (2) charge the applicants; (3) charge the noncustodial parents; and (4) deduct the fee from support received after $500 has been collected. Chapter 483 of 2007 allowed CSEA to collect this fee by deducting it from the child support payments of cases where $500 was collected in a federal fiscal year, and the individual has never received public assistance. This legislation was in effect for one year, October 1, 2007, to September 30, 2008. Chapter 162 of 2008 altered the State collection of the annual fee. Under this statute, CSEA deducts the $25 fee for individuals who have never received public assistance only after $3,500 has been collected in a federal fiscal year. In effect, the State absorbs the lost revenue for cases in which between $500 and $3,499 are collected in a federal fiscal year.
Annual Fee Collections In federal fiscal 2010, CSEA reports that 81,406 cases would have been eligible for collection of the annual fee under the federal requirement (collection after $500 in the federal fiscal year). Based on this number of eligible cases the federal government would have reduced funding by about $1.3 million or $16.50 per case. The State could have collected a maximum of a little over $2 million. Under the State eligibility rules for collection only 44,072 cases were eligible for collection. CSEA was able to collect this fee for 41,122 of these cases for a total collection of
Analysis of the FY 2012 Maryland Executive Budget, 2011 21
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approximately $1.0 million. This amount is not sufficient to offset lost federal revenue and is about $1.0 million less than the State might have collected under the federal requirement.
3.
Status of Corrective Actions for Audit Findings
In October 2008, the Department of Legislative Services, Office of Legislative Audits (OLA) released a fiscal compliance audit for CSEA covering the period March 10, 2004, to August 31, 2007. The previous audit, dated May 17, 2005, contained 21 findings and indicated that the accountability and compliance level of CSEA was unsatisfactory. OLA determined that in the audit released in October 2008 CSEA’s accountability and compliance level was no longer unsatisfactory. However, the audit still contained 15 findings, of which 9 were repeated from the previous audit. CSEA has made progress on implementing corrective actions for each of the findings, as shown in Appendix 2. CSEA considers the corrective actions for 10 of the 15 audit findings completed.
Enforcement Procedures The audit contained six findings and recommendations related to issues of enforcement procedures, of which four were repeat findings. CSEA considers corrective actions for three of these findings completed. Some activity is required for the remaining three findings. Finding 1 focused on CSEA’s use of occupational license suspension and the State Lottery Agency (SLA) match. CSEA reports that an electronic interface is being developed for three agencies (Department of Natural Resources, Maryland Comptroller of the Treasury, and the Department of Transportation). This interface is expected to be available in March 2011. For all other agencies, DHR expects to continue to match data manually through the use of spreadsheets. SLA matching improvements have been completed. Finding 3 indicated that CSEA did not effectively use seizure of bank accounts as a collection tool. In July 2010, CSEA implemented an automated process for administrative garnishments. In addition, CSEA has signed garnishment agreements with nearly all of the available institutions. CSEA has referred to the Office of Attorney General the four remaining institutions. CSEA reports that since April 2010 more than $740,000 has been collected from this process. Finding 5 noted that CSEA did not adequately investigate driver’s license suspension referrals rejected by the Motor Vehicle Administration due to system edits. In November 2010, a modification was made to the Child Support Enforcement System to improve the record of actions in the Case Action Log related to the referral process allowing for a complete record when no match was determined. In addition, local child support offices are to complete and return to the State offices of CSEA the quarterly report of cases with a rejection for a driver’s license suspension due to system edits.
Analysis of the FY 2012 Maryland Executive Budget, 2011 22
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Bank Accounts The audit contained two findings related to bank accounts. CSEA considers corrective actions for one of the two findings completed. Finding 9 indicated that CSEA did not analyze the proper distribution of $2.4 million that was transferred to its central bank account from a local child support office account. CSEA continues to perform quarterly reconciliations before unidentified funds are forwarded to the Comptroller of the Treasury as unclaimed/abandoned property. CSEA expects to complete this reconciliation on or before October 31, 2012.
Accounts Receivable Finding 15 explained that CSEA did not always perform adequate collection efforts for funds it was owed related to cancelled federal income tax intercepts. OLA recommended that the delinquent tax recoupment accounts be forwarded to the Central Collections Unit. In September 2010, DHR received advice of counsel from the Office of Attorney General that not all of the amounts could be considered administrative debt. However, the Office of Attorney General recommended two options to the department for these accounts. One of these options would allow these debts to be considered administrative debts and then be transferred to the Central Collection Unit. CSEA chose to follow this recommendation.
Analysis of the FY 2012 Maryland Executive Budget, 2011 23
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Appendix 1
Current and Prior Year Budgets Current and Prior Year Budgets DHR – Child Support Enforcement ($ in Thousands) General Fund
Special Fund
Federal Fund
Reimb. Fund
Total
Fiscal 2010 Legislative Appropriation
$17,828
$10,920
$58,305
$0
$87,053
Deficiency Appropriation
0
-2,193
3,871
0
1,678
Budget Amendments
-9,903
11,426
3,670
0
5,193
Cost Containment
-1,828
-8
-605
0
-2,442
Reversions and Cancellations
0
-1,607
-3,360
0
-4,967
Actual Expenditures
$6,096
$18,539
$61,881
$0
$86,516
Legislative Appropriation
$15,112
$12,578
$55,863
$0
$83,553
Budget Amendments
0
0
566
0
566
$15,112
$12,578
$56,428
$0
$84,119
Fiscal 2011
Working Appropriation
Note: Numbers may not sum to total due to rounding.
Analysis of the FY 2012 Maryland Executive Budget, 2011 24
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Fiscal 2010 The fiscal 2010 actual expenditures of CSEA were $537,156 lower than the legislative appropriation. CSEA’s fiscal 2010 general fund expenditures were approximately $11.7 million lower than the legislative appropriation. Salaries and wages adjustments resulted in a net decrease of approximately $9.9 million. Other decreases were the result of cost containment actions to:
use special funds instead of general funds for salaries and wages ($786,623);
delay filling vacant positions ($605,394); and
reflect furlough savings ($436,335).
The fiscal 2010 special fund expenditures were approximately $7.6 million higher than the legislative appropriation. The largest increase, approximately $10.1 million, was for salaries and wage adjustments in the local operations of CSEA. An increase of approximately $1.4 million provided funding for contractual services related to a medical support contract, the call center, and interactive voice recording. The remaining increase ($172,019) represents the special fund portion of a deficiency appropriation to support laboratory services for paternity establishment. These increases were partially offset by a deficiency appropriation that withdrew approximately $2.4 million so the funds could be used for information technology projects in DHR administration and $7,906 in cost containment actions to reflect furlough savings. CSEA also cancelled approximately $1.6 million as a result of the availability of federal funds to match Child Reinvestment Funds due to the ARRA. CSEA’s actual fiscal 2010 federal fund expenditures were approximately $3.6 million higher than the legislative appropriation. An increase of approximately $3.6 million through a deficiency appropriation recognized the availability of additional federal funds due to the child support provision in the ARRA. Another increase represents the federal fund portion of a deficiency appropriation to support laboratory services for paternity establishment ($257,908). The remaining increases supported contractual services for a medical support contract, the call center, and interactive voice recording (approximately $3.5 million), and salaries and wages in the local operations of CSEA ($127,839). These increases were partially offset by cost containment actions of $605,392 resulting from the delayed filling of vacant positions. CSEA cancelled approximately $3.4 million of the federal fund appropriation primarily due to lower than anticipated expenditures in the State operations of Child Support (approximately $2.7 million) in the areas of:
medical support due to start-up delays;
interstate case reconciliation due to start-up delays;
privatization due to declining collection payment rates;
Analysis of the FY 2012 Maryland Executive Budget, 2011 25
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local area network;
check mailing; and
research and data analysis.
The remainder of the cancellation ($688,100) was related to lower than anticipated lease and genetic testing services expenditures in the local operations of CSEA.
Fiscal 2011 The fiscal 2011 appropriation of CSEA has increased by $565,800 to provide funding for two ongoing demonstration grants. The Survive and Thrive grant in Prince George’s County ($411,700) assists unemployed noncustodial parents in obtaining employment, modifying child support orders (as appropriate), and encouraging mediation (as needed). The Excellence through Evaluation Grant in Baltimore City ($154,100) uses a community-based navigation service to assist low-income noncustodial parents operate in the child support system with goals to increase the payment of child support and involvement with children.
Analysis of the FY 2012 Maryland Executive Budget, 2011 26
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Appendix 2
Audit Findings and Corrective Actions Finding CSEA did not request licensing authorities to suspend occupational licenses and the State Lottery match was not always effective
Corrective Actions Revised policy regarding suspension of licenses. Changes to IT system to improve lottery intercept. Contacting agencies that participate in licensing activity and determine methods for sharing information and processing requests for suspensions. Develop an electronic interface for matching licensing information for certain agencies (Department of Transportation, Department of Natural Resources, Comptroller).
Expected Completion Date State Lottery Agency matching process considered completed State licensing authority matching in progress (electronic interface to be available March 2011)
Match through excel spreadsheets for other agencies. Completed Social Security numbers of Revised policy on Social Security Number collection. obligors were not always Send quarterly reports on missing Social Security obtained and recorded in Numbers and quarterly onsite monitoring. the Automated Child Support System Ongoing visits to large metropolitan local departments for case review. Pursue garnishment agreements with various financial In progress Seizure of delinquent obligor bank accounts was institutions (currently 172 of 180 have signed, 4 are exempt, referred remaining 4 to the OAG). not effectively used as a collection tool Development of automated process of administrative garnishment which has been implemented.
Documentation of enforcement of medical support orders was lacking
Plan to expand to other accounts through brokerages and asset management organizations. Update policies and train on revised policies.
Completed
Enhancements to CSES.
Contract for an automated matching process, matches are then used to update files in CSES. Driver’s license suspension Distribute quarterly report. referrals rejected by MVA Develop a policy regarding follow-up for the review of were not adequately possible matches and updates CSES. investigated Develop a process in CSES to document a confirmed no match for MVA records, which has been implemented.
Analysis of the FY 2012 Maryland Executive Budget, 2011 27
In progress, continue to review quarterly reports
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Appendix 2 (Cont.)
Finding Corrective Actions CSEA did not ensure that a Implemented Early Intervention Pilot which focuses on local office’s follow-up with actions taken if a first payment is not made; project is no longer in effect. delinquent obligors was timely Develop enhancement to CSES to generate follow-up notices at 30, 60, and 90 days delinquent. Effective procedures were Develop new policies regarding changes in custody not in place to detect child resulting from death of the custodial parent support payments being issued to deceased Develop a matching processing with the Division of Vital individuals Records.
Expected Completion Date Completed
Completed
Received advice from the OAG on whether to proceed with actions against those that had cashed checks. Of the $1.1 million noted in the audit, CSEA is seeking to Completed Undisbursed funds were not sent to the Comptroller resolve these amounts. of the Treasury as required Forward monthly those collections meeting the criteria of by law abandoned property. CSEA did not analyze the Analyzed the relationship of identified transferred funds Quarterly proper disposition of and the prior payments from the central disbursement reconciliations to $2.4 million that was account for two quarters, expect to complete additional continue until on or transferred to its central bank reconciliations before determining surplus or deficit. before account from a local child October 31, 2012 support office account Following determination, any excess will be forwarded as abandoned property, and any deficit would lead to a request for funding. CSEA was unable to Obtained supporting documentation for the $825,000. Completed substantiate the propriety of an $825,000 reconciling adjustment CSEA could not document Development and implementation of contract monitoring Completed duties. that adequate controls were established by the Completed a monitoring report for the contract for each central receipt and quarter beginning with the quarter ending in processing contractor December 2007 through the quarter ending in June 2009. Contractor performance evaluations completed in June and December 2008 will now conduct annual reviews, the first was for December 2009.
Analysis of the FY 2012 Maryland Executive Budget, 2011 28
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Appendix 2 (Cont.)
Finding CSEA did not verify billings or take appropriate action when contractors were not performing in accordance with established goals
Expected Corrective Actions Completion Date Initiated a variety of steps to verify billings including Completed having the cooperative reimbursement agreement agencies provide support documentation for various expenditures, prepare quarterly contract monitoring reports to evaluate contract agency performance with a corrective action plan that is review and approved if necessary.
New language in federal fiscal 2010 contracts allows CSEA to withhold funds if the corrective action plan is not implemented. CSEA did not take sufficient Revised audit review tool. Completed actions to address contractor noncompliance with certain Plan to pursue fiscal sanctions for case processing contract requirements deficiencies and failure to meet minimum performance standards in future contracts. Completed CSEA had not established Review role assignment to job function and complete monthly audits of employee access. adequate controls to prevent or detect Modified certain security roles to provide separation of unauthorized changes to duties. critical data Forwarded administrative debt to CCU; however Policy Changes to CSEA did not always additional debt forwarding is on hold per CCU be were expected to perform adequate be finalized collection efforts on certain notification. December 31, 2010. accounts receivable Requested opinion of the OAG to clarify the status of administrative debts. Worked with OAG to determine options for collection of intercept refunds; made determination of option to pursue that will allow amounts to be considered administrative debt. CCU: Central Collections Unit CSEA: Child Support Enforcement Agency CSES: Child Support Enforcement System IT: information technology MVA: Motor Vehicle Administration OAG: Office of the Attorney General Boldface type indicates repeat findings.
Analysis of the FY 2012 Maryland Executive Budget, 2011 29
Object/Fund Difference Report N00H00 – DHR – Child Support Enforcement
Object/Fund
FY 11 Working Appropriation
FY 12 Allowance
FY 11 - FY 12 Amount Change
Percent Change
721.50 12.71 734.21
716.00 1.00 717.00
716.00 1.00 717.00
0.00 0.00 0.00
0% 0% 0%
Objects 01 Salaries and Wages 02 Technical and Spec. Fees 03 Communication 04 Travel 06 Fuel and Utilities 07 Motor Vehicles 08 Contractual Services 09 Supplies and Materials 10 Equipment – Replacement 11 Equipment – Additional 12 Grants, Subsidies, and Contributions 13 Fixed Charges Total Objects
$ 44,416,252 556,487 580,445 174,019 90,622 46,028 36,043,051 399,904 12,477 197,500 145,462 3,853,524 $ 86,515,771
$ 42,515,038 157,803 751,733 83,221 125,109 88,339 35,179,321 357,274 0 0 80 4,860,873 $ 84,118,791
$ 45,954,692 158,415 579,709 89,436 112,095 85,119 34,545,447 353,516 0 0 85 4,951,007 $ 86,829,521
$ 3,439,654 612 -172,024 6,215 -13,014 -3,220 -633,874 -3,758 0 0 5 90,134 $ 2,710,730
8.1% 0.4% -22.9% 7.5% -10.4% -3.6% -1.8% -1.1% 0.0% 0.0% 6.3% 1.9% 3.2%
Funds 01 General Fund 03 Special Fund 05 Federal Fund Total Funds
$ 6,095,769 18,539,205 61,880,797 $ 86,515,771
$ 15,112,146 12,578,340 56,428,305 $ 84,118,791
$ 18,005,309 12,745,722 56,078,490 $ 86,829,521
$ 2,893,163 167,382 -349,815 $ 2,710,730
19.1% 1.3% -0.6% 3.2%
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Analysis of the FY 2012 Maryland Executive Budget, 2011 31
Positions 01 Regular 02 Contractual Total Positions
FY 10 Actual
Note: The fiscal 2011 appropriation does not include deficiencies. The fiscal 2012 allowance does not include contingent reductions.
Appendix 3
Fiscal Summary DHR – Child Support Enforcement
Program/Unit
FY 10 Actual
FY 11 Wrk Approp
FY 12 Allowance
Change
FY 11 - FY 12 % Change
$ 44,772,122 41,743,649
$ 43,376,342 40,742,449
$ 46,360,468 40,469,053
$ 2,984,126 -273,396
6.9% -0.7%
Total Expenditures
$ 86,515,771
$ 84,118,791
$ 86,829,521
$ 2,710,730
3.2%
$ 6,095,769 18,539,205 61,880,797
$ 15,112,146 12,578,340 56,428,305
$ 18,005,309 12,745,722 56,078,490
$ 2,893,163 167,382 -349,815
19.1% 1.3% -0.6%
$ 86,515,771
$ 84,118,791
$ 86,829,521
$ 2,710,730
3.2%
General Fund Special Fund Federal Fund Total Appropriations
N00H00 – DHR – Child Support Enforcement
Analysis of the FY 2012 Maryland Executive Budget, 2011 32
06 Local Child Support Enforcement Administration 08 Support Enforcement – State
Note: The fiscal 2011 appropriation does not include deficiencies. The fiscal 2012 allowance does not include contingent reductions
Appendix 4
