THE MISSISSIPPI LEGISLATURE

The Joint Committee on

Performance Evaluation and Expenditure Review

Report # 528

The Division of Child Support Enforcement: An Operational Review of the Collection and Distribution of Child Support Payments

Executive Summary

Introduction

The Mississippi Department of Human Services’ Division of Child Support Enforcement (DCSE) collects child support payments from noncustodial parents1  and disburses them to the custodial parents to be used for the care and support of the child(ren) in their legal custody.

The PEER Committee received a complaint from a noncustodial parent regarding the division’s accounting for child support payments. The complainant alleged that he was submitting payments regularly, but that his account balance was not decreasing, according to statements he had received from the DCSE. After PEER brought the complainant’s case to the attention of DCSE officials, research by DCSE staff determined that an input error had resulted in the complainant’s overpaying approximately $4,500 in child support payments to a particular subcase.2  (See an explanation of how this condition occurred.)

In response to the complainant’s allegations and given PEER’s conclusions in previous reports regarding the division’s internal controls (see page 3 of the report), the PEER Committee conducted an operational review of the Department of Human Services’ Division of Child Support Enforcement. PEER’s review focused on the following questions:

• What is the Division of Child Support Enforcement’s process for receiving child support payments, applying them to the noncustodial parent’s account, and distributing them to the custodial parent?
• What managerial or operational problems could occur within the child support payment process that would result in failure to credit the noncustodial parent’s account or delay distribution of the funds to the custodial parent?
• Are there any additional management or operational issues that could affect the timeliness or effectiveness of the division’s handling of child support payments?

PEER conducted a random sample to determine whether errors existed in the initial establishment of cases in the system or in the receipting, posting, distribution, or disbursement processes within the Division of Child Support Enforcement. The sample population comprised cases submitted through the division’s Central Receipting and Disbursement Unit (CRDU) that had received a payment between June 1, 2008, and May 31, 2009, either by personal payment or by an employer withholding income from a paycheck. PEER selected a simple random sample of 385 subcases, based on a five percent error rate and a 95 percent confidence interval level.

Background

Statutory Authority and Purpose of the State’s Child Support Enforcement Function

Congress established the child support enforcement program within the Department of Health and Human Services in 1975. Public Law 93-647 required that states establish a single, separate organizational unit for child support enforcement. In Mississippi, the Department of Human Services’ Division of Child Support Enforcement is charged with this responsibility.

On August 22, 1996, the federal Personal Responsibility and Work Reconciliation Opportunity Act (PRWORA) restructured the administration of the states’ child support enforcement programs. PRWORA mandated that for states to be eligible for the Temporary Assistance to Needy Families block grants, they must operate their child support enforcement programs in a manner that meets federal requirements with respect to: a national new hire reporting system, paternity establishment, uniform interstate child support laws, computerized statewide collections, establishment of the centralized state disbursement unit, and penalties for parents that do not pay their required child support obligation amount.

MISS. CODE ANN. § 43-19-31 et seq. (1972) requires the Department of Human Services to operate a child support unit fulfilling the requirements in PRWORA.

Senate Bill 2588, 2009 Regular Session, requires that all child support payments paid through income withholding cases go through the Division of Child Support Enforcement effective July 1, 2009. This will bring the state into compliance with the PRWORA requirement and will increase the number of child support cases the agency must process.

Federal Guidelines for Child Support Enforcement

Section 454 (27) of the Social Security Act requires that the states use automated procedures, electronic processes, and computer technology to the maximum extent possible for the collection and disbursement of child support payments. The Guide for Auditing State Disbursement Units (2003), published by the U. S. Department of Health and Human Services’ Office of Child Support Enforcement, also requires that states establish control procedures to assure that the objectives of the program or division are accomplished. Federal regulations also require segregation of duties in states’ child support payment processes to reduce the potential for perpetrating and concealing fraud.

Mississippi’s DCSE receives the majority of its funding from the federal government (approximately sixty-five percent of its revenues in state Fiscal Year 2009). The federal government also provides the state with incentive funds, receipt of which is based on each state’s success in achieving federally prescribed program outcomes.

How the Division of Child Support Enforcement Processes Child Support Payments

Overview of the Process

Child support payments that the Division of Child Support Enforcement receives through electronic funds transfer (EFT) are handled directly by the Mississippi Enforcement Tracking of Support System, or METSS. Noncustodial parents may also submit child support payments to the division’s Central Receipting and Disbursement Unit either by income withholding through his/her employer or they may make personal payments via check, money order, or cash. The CRDU accepts payments sent through the U. S. Postal Service, the county offices, or on-site at a payment window at the state office in Jackson.

The CRDU utilizes the OPEX and PayConnection systems to collect, scan, and post child support payments. These payments are processed, allocated, and distributed to cases in METSS, and submitted to the debit card company that handles distribution of funds to custodial parents receiving child support payments by debit cards. (Some custodial parents receive child support payments through direct deposit or by check.) METSS tracks both the funds received by EFT and the CRDU and thus provides the basis for the noncustodial parent’s accounting of payments.

Because most child support payments flow through the CRDU and because of the amount of employee involvement associated with the unit’s procedures (thus increasing the potential for error and/or fraud), this report focuses primarily on payments processed through the CRDU.

The CRDU’s Child Support Payment Processing Procedures

Exhibit A tracks the flow of child support payments through the CRDU’s processing steps.

Conclusions Regarding the Central Receipting and Disbursement Unit

The CRDU meets minimum federal requirements for the timely disbursement of child support payments. However, the CRDU has managerial and operational problems, such as segregation of duties conflicts and problems with billing of employers for income withholding, that could potentially disrupt the CRDU’s distribution of payments to custodial parents.

Federal regulations require the CRDU to disburse child support to the custodial parent’s preferred payment option, such as a debit card or check, within two business days of receipt. In PEER’s statistical sample of child support payments received by the CRDU from June 1, 2008, through May 31, 2009, seventy-five percent of child support payments met the mandate of two business days, which is in compliance with minimum federal standards.

However, PEER noted several managerial and operational issues in the Central Receipting and Disbursement Unit that could delay or have the potential to disrupt the timely and accurate distribution of payments to custodial parents. These issues are summarized below.

• Segregation of duties conflicts—CRDU managers have consistently approved segregation of duties conflicts in an effort to disburse and deposit child support payments in a timely manner. Conflicts include workers performing more than one function on the same batch of payments, the same worker accepting payments at the payment window and then posting payments to cases, and the same worker making deposits as well as reconciling monthly bank statements. When a segregation of duties conflict occurs, it creates a situation in which the integrity of the system is circumvented. Such conditions create the potential for fraud or the concealment of fraud to occur.
• Problems with billing of employers for income withholding—Because the CRDU does not update its database of employer information in a timely manner, the unit has repeatedly sent bills to employers with names of individuals who are no longer employed and bills that do not list current employees whose income should be withheld for child support. Also, the format of the bills the CRDU sends to employers for withholding employees’ income for child support has perpetuated a practice of CRDU workers’ re-entering social security numbers for multiple subcases of a noncustodial parent, rather than entering a single total per social security number. This practice triggers false system flags requiring that payments be sent through the quality assurance process unnecessarily.
• Problems with accountability for unidentified collections that are not posted to the proper accounts—After the CRDU’s decision to move the responsibility for resolving unidentified collections (i. e., payments that cannot be posted to a noncustodial parent’s account) from the CRDU to the county offices, the balance of unidentified collections grew from $27,586 in November 2008 to $69,017 in September 2009.
• Failure to comply with federal requirements for bonding of CRDU employees who handle assets—Federal regulations require the Department of Human Services to ensure that every person who has access to or control over funds collected under the child support enforcement program be covered by a bond against potential loss resulting from employee dishonesty. The Department of Human Services does not comply with this requirement.

Conclusions: Related Child Support Enforcement Issues

The division’s managerial and operational problems outside the CRDU, such as the failure to ensure the accuracy of input of child support obligation information into METSS, also impact the timely and accurate distribution of child support payments.

PEER noted other conditions in the Division of Child Support Enforcement that could affect the timely and accurate disbursement of child support payments. These issues are summarized as follows:

• Data entry errors and failure to ensure the updating of court-ordered child support obligation amounts in METSS—Because the child support enforcement office in the county in which the custodial parent resides is the repository for the source documents (e. g., court orders, stipulated agreements) for a child support subcase, county child support enforcement workers are responsible for entering and updating obligation amounts into METSS. The Division of Child Support Enforcement does not require counties to implement a review or quality assurance procedure to compare obligation amounts in METSS to support documents.
• Noncustodial parents’ lack of ready access to account information—The Division of Child Support Enforcement does not make account information readily available to all noncustodial parents. Noncustodial parents who make payments through income withholding do not receive monthly invoices and must specifically request information on their accounts in order to determine account status or detect errors. Also, any noncustodial parent who wants a statement of accounting (which contains additional information on the account that is not found on the monthly invoice, such as arrearage and fee information) must specifically request such and the format of this statement is not easily understandable.
• Failure to report undistributable child support collections and interest as program income—A 2008 audit by the U. S. Department of Health and Human Services’ Office of Inspector General found that the Division of Child Support Enforcement did not have policies and procedures in place to identify and report program income from undistributable child support collections and interest earned on child support collections. Federal requirements state that a portion of program income must be returned to the federal government.
• No auditing of the CRDU—The Internal Audit Division of the Department of Human Services has never performed an audit of the CRDU. Given the importance of the CRDU for the collection and disbursement of child support payments, handling approximately $177 million in payments annually, good management practices dictate that the department be audited on a regular basis to measure the effectiveness of internal controls, the adherence to established policy and procedures, the accuracy of department records, and the timely and accurate disbursement of child support collections.
• Need for improvements in the customer service unit—DHS does not have a centralized customer service unit to handle questions and complaints received statewide regarding child support issues. DHS has established a Customer Service Unit (CSU) to receive calls from Hinds and Rankin counties, but all other calls are referred to the caller’s local county DHS office for assistance. Because the CSU does not maintain records necessary to determine the number of inquiries processed by CSU staff, the length of time required to address inquiries, or the nature of inquiries received, this information is not available to DCSE managers.
• Lack of updated policies and procedures—DCSE has not updated its policy and procedures since January 2001. Updated policies and procedures are necessary to ensure efficient and consistent department operations, including providing personnel with clear guidelines for their job responsibilities, establishing responsibility for tasks, proper handling and recording of agency records, processing documents consistently, and specifying approved departmental procedures after the implementation of new systems.

The Effect of DCSE’s Management and Operational Problems

The Division of Child Support Enforcement’s management and operational problems reduce its ability to monitor the accuracy of child support case information and ensure the timely and accurate distribution of child support payments.

Because the DCSE is responsible for the receipt and timely and accurate disbursement of child support payments, management and operational problems such as those noted in the report have the potential to impact DCSE’s ability to fulfill its responsibilities. As a result, noncustodial parents may pay more than legally mandated or children may receive less than is legally due to them.

As noted earlier, PEER’s review was initiated after receiving a complaint from a noncustodial parent alleging that he was submitting payments regularly, but his account balance was not decreasing. PEER reviewed the complainant’s file with DCSE officials. After reviewing supporting documentation, DCSE officials determined that worker error had resulted in the complainant’s overpayment of approximately $4,500 to one of the noncustodial parent’s subcases. The worker had failed to change the payment obligation amount in the METSS system to zero after notification of the emancipation date of the child, who lived in another state and was subject to emancipation laws differing from Mississippi’s. Thus the noncustodial parent had continued to make current child support payments for over a year and a half after the obligation to do so had ceased.

Recommendations

1. DHS management should amend agency policy with respect to the CRDU to include the following:
   
   
   1. A designated worker should make at least two trips to the post office each day (once in the morning and once in the afternoon) to collect child support payments. DHS management and the CRDU should jointly determine whether additional trips are necessary, according to circumstances such as busy times of the month or workflow.
   2. All payment instruments should be date stamped the day the payment enters the CRDU. The CRDU administrator or supervisor in charge should certify that all payments that entered the CRDU that day were stamped with the appropriate date.
   3. A reasonable afternoon cut-off time should be set for PayConnection batch payment processing, including the caveat that any payment that does not enter the PayConnection processing system by the designated time would be processed the next morning.
   4. In addition to the current PayConnection reports, segregation of duties conflicts that occur in the CRDU should be logged real time and information tracked should include: date, sequence, type of conflict, supervisor who approved the violation, and the reason for the violation. This would provide both a management tool and audit trail.
   5. DHS management should update the policy and procedures manual to include changes that have occurred in the CRDU since 2001.
   6. DHS management should require scheduled, periodic audits to the CRDU to include such areas as:
      
      
      • compliance with federal regulations of two-day processing of child support payments;
      • correct entry of court order amounts;
      • compliance with the federal regulations requirement of segregation of duties; and,
      • status of program income.
2. DHS management should update and amend employer bills in the following manner to ensure accurate remittance and posting of child support payments and preserve the integrity of the PayConnection “multiple postings to a social security number” quality assurance check:
   
   
   1. Establish a policy and practice to update the employer database on a scheduled basis of no less than twice a year.
   2. Designate which DHS personnel are responsible for updating the employer database.
   3. Reconfigure the employer bill to combine the amounts for all child support cases for a noncustodial parent under his/her social security number.
   4. Develop a uniform method for businesses to submit income withholding information (e. g., submitting withholding information on a CD-ROM).
3. DHS management should redirect the duties of the DCSE Financial Unit to focus on resolving unidentified child support payments. DHS managers should:
   
   
   1. Ensure that Financial Unit personnel document which employee researched a payment, whether research methods followed the established policies and procedures, and what final resolution was reached concerning the payment.
   2. DHS management should set a time frame during which these payments can be worked in the Financial Unit. After the time has been exhausted, payments should be transferred to the DHS controlled account for undistributable funds and documented in the Financial Unit log as such.
   3. DHS management should monitor unidentified payments that were resolved and determine if actions by employees in the county played a role in the payment’s falling into unidentified status and whether training could rectify future unidentified payment problems.
4. Ensure compliance with MISS. CODE ANN. Section 89-12-13 (1972) by developing and implementing policies and procedures to recognize and report as program income any child support collections that meet the state’s definition of abandoned property.
5. Continue to work toward transferring to the State Treasurer and reporting as program income any undistributable child support collections in accordance with federal and state requirements. Assign the funds to the State Treasury under the last known name associated with the payment.
6. The Division of Child Support Enforcement should comply with the federal regulation 45 CFR 302.19 (a) requiring a bond against potential loss resulting from employee dishonesty to cover every person who has access to or control over funds collected under the child support enforcement program.
7. DCSE should scan all court orders to establish an electronic file folder for wider access to legal documents governing child support cases.
8. DCSE should assign specific responsibility for inputting court orders to designated county employees and require second-party or supervisory review to examine and certify the correctness of court order entry and updating. Responsibility for accurate input and updating of court order information, as well as second-party or supervisory review of such information, should be included as part of designated county employees’ performance appraisals.
9. DHS officials should work with the Mississippi Supreme Court Advisory Committee on Rules regarding adoption of a new form containing the information required for input into METSS, including:
   
   
   • child support obligation;
   • spousal support obligation;
   • medical support obligation;
   • arrears obligation; and,
   • fees obligation.
10. DHS management should explore cost-effective ways of providing noncustodial parents whose income is automatically being withheld from their paychecks with a monthly method of viewing the application of child support payments and any arrearage balance. Such methods could include a monthly e-mailed statement generated by METSS or an online account that requires a password for access.
11. DHS management should amend the current statement of accounting to reflect amounts paid, exactly how those payments were applied, the result of any current obligation amounts not paid until the time the statement is prepared, and a true account balance that reflects up-to-date payments received and arrearage amounts accumulated.
12. The Division of Child Support Enforcement should improve the two-county Customer Service Unit’s methods of collecting and analyzing information. The DCSE should further define the types of calls received in the Customer Service Unit and maintain records necessary to:
    
    
    1. determine the disposition of inquiries;
    2. determine the length of time required by staff to respond to inquiries;
    3. prioritize and respond to calls based upon the urgency of the inquiry; and,
    4. summarize and analyze inquiries by type.
    After these improvements are made in the two-county Customer Service Unit, DHS management should perform an analysis to determine whether reallocating resources to establish a centralized, statewide Customer Service Unit would be feasible.

1  A noncustodial parent does not have primary care, custody, or control of the child and has an obligation to pay child support.

2  A child support case is comprised of the noncustodial parent, other biological parent (usually but not always the custodial parent), the custodial parent (who is usually but not always the other biological parent), and child or children of the noncustodial parent and the other biological parent. A child support subcase consists of one custodial parent and all the children associated with this one custodial parent that have the same program status.

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