Contents

• Introduction
• CSE Caseload
• Paternity Establishment
• Establishment of Child Support Orders
• CSE Collections
• CSE Administrative Expenditures
• Cost-Effectiveness of the CSE Program
• Conclusion

Summary

The Child Support Enforcement (CSE) program is a federal/state program that is designed to promote self-sufficiency of families in which one of the biological parents is living outside of the home. The program achieves its mission by trying to ensure that noncustodial parents meet their financial responsibility to their children. The CSE program provides several services on behalf of children including parent location, paternity establishment, establishment of child support orders, and collection and distribution of child support payments.

In FY1978, families who received cash welfare comprised 85% of the CSE caseload and 45% of CSE collections. By FY2015, they comprised only 10.5% of the CSE caseload and 5% of CSE collections. Using a more recent classification of the CSE caseload, in FY2015 current Temporary Assistance for Needy Families (TANF) families and Title IV-E foster care families comprised 10.5% of the CSE caseload and 3% of collections, and former TANF families and Title IV-E foster care families comprised 42.8% of the CSE caseload and 31% of collections. Families that had never received TANF or Title IV-E foster care comprised 46.7% of the CSE caseload and almost 66% of collections. This reflects the underlying premise of the CSE program: as child support becomes a more consistent and stable income source/support, former cash welfare families will not have to return to the cash welfare rolls, and families that never resorted to cash welfare will not have to do so.

In FY2015, the CSE caseload was 14.7 million families. The CSE program is estimated to handle about 60% of all child support cases; the remaining cases are handled by private attorneys, by collection agencies, or through mutual agreements between the parents. All of the data in this report are exclusively CSE program data.

Before a state can enforce/collect a child support obligation, paternity must be determined and a child support order must be established. During the period FY2011-FY2015, the number of paternities established or acknowledged fell 12% nationwide, from nearly 1.7 million to 1.5 million. During that same period, the number of cases with a child support order established dropped 1% nationwide, from 12.8 million to 12.6 million.

The CSE program is characterized by paradoxes. It collected only 20% of the child support obligations for which it had responsibility in FY2015 (i.e., 65% of all current collections and 7% of obligations that were past due). However, during the period FY1999-FY2015 child support payments collected by CSE agencies increased 80% nationally, from $15.9 billion to $28.6 billion. Child support collections have continued to increase even though the CSE caseload has declined. Although the number and percentage of CSE cases with collections have been increasing over time, the average monthly child support payment for families that actually receive one has been decreasing and is relatively small, amounting to $264 per month in FY2015. Although the national cost of the CSE program was $5.7 billion in FY2015, $5.26 in child support was collected for every $1 spent on CSE activities. The CSE program began as a welfare cost-recovery program; however, in FY2015 93% of CSE collections went to CSE families (rather than the federal government or the states); the comparable figure in FY1979 was 56%.

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The Child Support Enforcement Program: A Review of the Data

Introduction

The Child Support Enforcement (CSE) program is a federal/state program that is designed to promote self-sufficiency of families in which one of the biological parents is living outside of the home. The program achieves its mission by trying to ensure that noncustodial parents meet their financial responsibility to their children. States are responsible for administering the CSE program (directly or through local CSE agencies and family or domestic courts), but the federal government plays a major role in dictating the primary design features of state programs, funding state and local programs, monitoring and evaluating state programs, providing technical assistance, and giving direct assistance to states in locating absent parents and obtaining child support payments.

The CSE program was created by Congress in 1974 with two primary goals: (1) reducing public expenditures for actual and potential welfare recipients by obtaining ongoing support from noncustodial parents (i.e., welfare cost-recovery), and (2) establishing paternity for children born outside of marriage so that child support could be obtained. The December 1974 Senate Finance Committee report on the CSE legislation stated, "The problem of welfare in the United States is, to a considerable extent, a problem of the non-support of children by their absent parents."¹ It also stated that the result of a new federal-state CSE program would be to lower welfare costs to the taxpayer and to deter fathers from abandoning their families. The CSE program (Title IV-D of the Social Security Act) was enacted in January 1975 (P.L. 93-647).

All 50 states, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands operate CSE programs and are entitled to federal matching funds.² For every dollar a state spends on CSE expenditures, it generally receives 66 cents from the federal government. To qualify for federal matching funds, each state's CSE plan must be approved by the Office of Child Support Enforcement (OCSE), Department of Health and Human Services (HHS). States also are eligible to receive incentive payments, based on certain performance indicators.³

Since 1975, the federal administration of the CSE program has been in the OCSE, which was originally located in the Department of Health, Education, and Welfare (HEW), renamed the Department of Health and Human Services (HHS) in 1979. From the beginning, the OCSE has been required by law to review and approve state CSE plans, establish standards for effective state CSE programs, provide technical assistance to the states, assist them with reporting procedures, maintain records of program operations and child support expenditures and collections, audit state CSE programs, and prepare and submit an annual report to Congress. The annual report to Congress has always included collection, expenditure, and caseload data; Section 452(a)(10) of the Social Security Act stipulates that certain data must be included in the annual report.

The CSE program provides seven major services on behalf of children: parent location, paternity establishment, establishment of child support orders, review and modification of support orders, collection of support payments, distribution of support payments, and establishment and enforcement of medical support. CSE services are provided to both welfare and nonwelfare families. Collection methods used by state CSE agencies include income withholding;⁴ intercept of federal and state income tax refunds; intercept of unemployment compensation; liens against property; reporting child support obligations to credit bureaus; intercept of lottery winnings; sending insurance settlement information to CSE agencies; authority to withhold or suspend driver's licenses, professional licenses, and recreational and sporting licenses of persons who owe past-due support; and authority to seize assets of debtor parents held by public or private retirement funds and financial institutions. Moreover, federal law authorizes the Secretary of State to deny, revoke, or restrict passports of debtor parents. All jurisdictions also have civil or criminal contempt-of-court procedures and criminal nonsupport laws, and federal criminal penalties may be imposed in certain cases. Federal law also requires states to enact and implement the Uniform Interstate Family Support Act (UIFSA) and expand full faith and credit procedures, and it provides for international enforcement of child support.⁵

In FY2015, $28.6 billion was collected at a combined federal/state cost of $5.7 billion. Thus, in effect, $5.26 in child support was collected for every dollar spent. While the extensive reforms made to the CSE program in 1984, 1988, 1996, 1997, 1998, and 2006 have helped to significantly improve child support collections and increase the number of paternities established, the CSE program has generally been considered a highly respected and valuable program since its beginning in 1975. It has made significant progress in achieving its original goals of reducing public expenditures for actual and potential welfare recipients by obtaining ongoing support from noncustodial parents, and establishing paternity for children born outside of marriage so child support could be obtained for them.

Many commentators agree that the mission of the CSE program has changed over the years. It began as a welfare cost-recovery program, but the Child Support Enforcement Amendments of 1984 (P.L. 98-378) broadened the mission to reflect service delivery.⁶ The criteria for making incentive payments to the states were broadened in 1984 to include collections for nonwelfare families. Some commentators assert the service-delivery goal was reemphasized in 1996 legislation, which established the "family first" policy. To help ensure that former welfare recipients stay off the Temporary Assistance for Needy Families (TANF)⁷ rolls, the "family first" policy requires that such families are to receive any child support arrearage payments collected by the state before the state and federal governments retain their shares of collections.⁸ Reforms enacted in 2006 (P.L. 109-171) extended the "family first" policy by providing incentives to states to encourage them to allow more child support to go to both former welfare families and families still on welfare. Additionally, the sharp decline in the cash welfare rolls and reduced expenditures on cash welfare since the mid-1990s helped shift the program from recovering declining costs for a smaller population to collecting and paying child support to nonwelfare families. For the past 32 years (since the 1984 amendments), the CSE program and major changes or modifications to it have consistently had bipartisan congressional support.

This report examines CSE caseload, collection, and expenditure data over the period FY1978-FY2015 (FY1978 is the first year of complete data and the data for FY2015 are the most recent available). It also presents more detailed data on collections, expenditures, paternity establishment, child support order establishment, cost-effectiveness, and program financing impacts on the federal government and the states for various years during the period. All of the tables in this report are based on data from OCSE, obtained from the OCSE website. The information is taken from state-submitted reports on program status sent to OCSE quarterly for financial data and annually for statistical data. Readers should note that the 38-year trend data for CSE collections and caseload have been disaggregated into two categories: TANF cases and non-TANF cases. Before 1997, TANF cases were Aid to Families with Dependent Children (AFDC) cases and non-TANF cases were non-AFDC cases.⁹ In FY1999, OCSE started classifying the CSE caseload into three categories—current TANF assistance, former TANF assistance, and never TANF assistance. Also, note that the tables that display TANF cases, collections, or expenditures include Title IV-E foster care cases as well, even though they may not labeled as such.¹⁰

Table 1 presents a summary of child support program statistics for the nation as a whole over the 38-year span from FY1978 through FY2015. Child support payments¹¹ collected by CSE agencies increased from $1 billion ($3.5 billion in 2015 dollars)¹² to $28.6 billion (an eight-fold increase, adjusting for inflation).¹³ The number of children whose paternity was established (or acknowledged) through the CSE program increased by 1,237%, from 111,000 to 1.484 million; and the number of child support obligations established increased by 223%, from 315,000 to 1.016 million. The CSE caseload expanded from 4.146 million to 14.745 million, an increase of 256%. CSE expenditures also increased significantly, from $312 million ($1.042 billion in 2015 dollars) to $5.749 billion (a more than five-fold increase, adjusting for inflation). Expenditures per case increased from $75 ($250 in 2015 dollars) to $390 (a 56% increase, adjusting for inflation).

Figure 1 shows CSE collections and expenditures over the 38-year period from FY1978 through FY2015. The CSE program is estimated to handle about 60% of all child support cases; the remaining cases are handled by private attorneys, by collection agencies, or through mutual agreements between the parents. All of the data in this report are exclusively CSE program data.

Figure 1. Child Support Enforcement Program: Collections and Expenditures, FY1978-FY2015 (In constant 2015 dollars)

Source: Prepared by the Congressional Research Service (CRS), based on data from the Office of Child Support Enforcement (Annual Data Reports to Congress), U.S. Department of Health and Human Services. Note: The data were adjusted for inflation using the Consumer Price Index, Research Series for Urban consumers (i.e., converted to constant 2015 dollars using CPI-U-RS (all items). See Table A-4 for CSE collection and expenditure data in constant 2015 dollars.

CSE Caseload

The CSE program serves both TANF and non-TANF recipients. In FY2015, the CSE system handled 14.7 million cases, of which 6.9 million (47%) were families who had never been on TANF, 6.3 million (43%) were former-TANF families (i.e., no longer on TANF and therefore non-TANF cases), and 1.6 million (11%) were families who were receiving TANF assistance.

OCSE defines a CSE "case" as a noncustodial parent (mother, father, or putative/alleged father) who is currently or eventually may be responsible under law for support of a child or children receiving services under the CSE program. If the noncustodial parent owes support for two children by different women, it would be considered two cases; if both children have the same mother, it would be considered one case.

Families who receive TANF cash benefits are required to assign their child support rights to the state in order to receive TANF. In addition, such families must cooperate with the state if necessary to establish paternity and secure child support. Families receiving TANF cash benefits, Medicaid benefits, or whose children receive Title IV-E foster care payments are automatically enrolled (free of charge) into the CSE program.¹⁴ Collections on behalf of families receiving TANF cash benefits are used to reimburse state and federal governments for TANF payments made to the family (i.e., child support payments go to the state instead of the family, except for amounts that states choose to "pass through" to the family as additional income that does not affect TANF eligibility or benefit amounts). Other families must apply for CSE services, and states must charge an application fee that cannot exceed $25. Child support collected on behalf of nonwelfare families goes to the family (usually via a state child support disbursement unit). In addition, P.L. 109-171, effective October 1, 2006, required families who have never been on TANF to pay a $25 annual user fee when child support enforcement efforts on their behalf are successful (i.e., at least $500 annually is collected on their behalf).¹⁵

The CSE program defines a current assistance case as one in which the children are (1) recipients of cash aid under TANF (Title IV-A of the Social Security Act) or (2) entitled to Foster Care maintenance payments (Title IV-E of the Social Security Act). In addition, the children's support rights have been assigned by a caretaker to the state, and a referral to the state CSE agency has been made. A former assistance case is defined as one in which the children were formerly receiving TANF or foster care services. A never-assistance case is defined as one in which the children are receiving services under the CSE program but they are not currently eligible for and have not previously received assistance under TANF or foster care.

Figure 2 shows the trend in the CSE caseload, differentiated into TANF cases and non-TANF cases. It shows a sharp drop in TANF cases between FY1995 and FY2005 and then a slower decline through FY2015. As noted earlier, during the beginning years of the CSE program, AFDC cases were a large part and central focus of the program. After the enactment of P.L. 104-193 (the 1996 welfare reform law), there was a sharp drop in TANF cases overall and thereby TANF cases in the CSE program, given that TANF cases are automatically enrolled in the CSE program. The CSE caseload reached its peak in FY1998 with 19.4 million cases and has steadily fallen, with some fluctuations, since then. Even though TANF cases declined steadily after welfare reform, the number of children born to unmarried women did not reach its peak until 2008. Moreover, the percentage of births to unmarried women held steady at 41% from 2008 through 2013. In 2014, it dropped slightly to 40%.Thus, a full understanding of why the CSE caseload has fallen remains unclear. In FY2015, there were 14.7 million CSE cases (a reduction of 24% since FY1998).

The underlying data for Figure 2 (shown in Table A-2) indicate that AFDC cases comprised 85% of the CSE caseload in FY1978, but TANF dropped to about 10% of the caseload in FY2015. By the same token, non-AFDC cases represented only about 15% of the CSE caseload in FY1978, and non-TANF cases increased to almost 90% of the caseload in FY2015. Table A-2 also indicates that the CSE caseload increased 256% over the period FY1978-FY2015, from 4.146 million in FY1978 to 14.745 million in FY2015.

In FY1999, OCSE started reporting data in current assistance, former assistance, and never received assistance categories rather than TANF and non-TANF. The data indicate that the number and percentage of CSE families who currently receive TANF has decreased over time while the number and percentage of CSE families who formerly received TANF has increased. The data also show that the proportion of the CSE caseload composed of families who had never received TANF has also increased over the period FY1999-FY2015 (see Figure 3). The CSE caseload has been declining (with some upward fluctuations) since it reached its high point in FY1998.

In FY2015, the largest group of families (47%) who were participating in the CSE program were those who had never been on the TANF rolls (i.e., never-TANF families). Families who were formerly on TANF represented 43% of the CSE caseload, and families who were currently receiving TANF benefits represented about 10% (see Figure 3). Although the majority of the CSE caseload is comprised of non-TANF families, many of them at some point in their lives received TANF/AFDC. This is consistent with the expanded mission of the CSE program. The expectation is that as child support becomes a more consistent and stable income source/support, former TANF families will not have to return to the TANF rolls, and families that never resorted to the TANF program will never have to do so. In its strategic plan for the period FY2000-FY2004, the CSE agency stated:

It is our commitment to lead the child support program into the new century as a key component to assist families to become self-sufficient or to remain self-sufficient. It is our vision that child support is an important line of defense against children living in poverty.¹⁶

Figure 2. Child Support Enforcement Caseload, FY1978-FY2015

Source: Prepared by the Congressional Research Service (CRS), based on data from the Office of Child Support Enforcement (Annual Data Reports to Congress), U.S. Department of Health and Human Services.

Figure 3. Child Support Enforcement Caseload Composition, Selected Years

Source: Congressional Research Service, based on data from the Office of Child Support Enforcement (Annual Reports to Congress), U.S. Department of Health and Human Services.

Table 2 presents the three categories of CSE cases (i.e., TANF cases, former-TANF cases, and never-TANF cases) by state/jurisdiction for FY2015.

Paternity Establishment

A child born outside of marriage has a biological father but not a legal father. Legally identifying the father of a child is a prerequisite for obtaining a child support order. In divorce cases, the husband is generally deemed to be the father of any children born during the marriage. When a child is born to unmarried parents, a legal relationship between the father and child must be established before a court or administrative authority will order child support. This legal relationship is called paternity.

Federal law requires states to have procedures that permit the establishment of paternity for all children under the age of 18.¹⁷ Federal law also requires TANF applicants and recipients to cooperate in establishing paternity or obtaining support payments. Moreover, a penalty for noncooperation exists. If it is determined that an individual is not cooperating and does not qualify for any good cause or other exception, then the state must reduce the family's TANF benefit by at least 25% and may eliminate it entirely. In addition, federal law (1) requires that paternity be established for 90% of the CSE cases needing such a determination; (2) requires a simple civil process for establishing paternity; (3) requires an affidavit to be completed by men voluntarily acknowledging paternity and entitles the affidavit to full faith and credit in any state; (4) stipulates that a signed acknowledgment of paternity be considered a legal finding of paternity unless it is rescinded within 60 days, and thereafter may be challenged in court only on the basis of fraud, duress, or material mistake of fact; (5) provides that no judicial or administrative action is needed to ratify an acknowledgment that is not challenged; and (6) requires all parties to submit to genetic testing in contested paternity cases.

Under a state's simple civil process for establishing paternity, the state must ensure that the rights and responsibilities of acknowledging paternity are explained to both parents and that due process safeguards are afforded to both. The statute requires that voluntary acknowledgment procedures include hospital-based programs that focus on the period immediately before or after the birth of a child.¹⁸

The state has the power to establish paternity through court or administrative action if a father does not voluntarily admit it. In judicial cases, child support staff collects information and other evidence about the alleged father and refers the case to the state child support attorney (referred to as the IV-D attorney) for legal action. The IV-D attorney represents the state child support agency. A parent may also hire a private attorney to represent him or her. When the case goes to trial, the mother may be required to be present in court to testify about the father. If the custodial parent lives in a different state, the custodial parent may be allowed to present testimony telephonically.¹⁹

Figure 4 shows the number of paternities established or acknowledged in the CSE program during the period from FY1978 through FY2015 and the number of births to unmarried women during the period from FY1978 through FY2014. It indicates that the number of paternities established or acknowledged increased substantially from FY1978-FY1999, dropped in FY2000, fluctuated between FY2001 and FY2003, increased from FY2004 to FY2009, and has fallen in each of the years beginning with FY2010. During the period FY1978-FY2015, the number of paternities established or acknowledged nationwide increased 1,241% from 111,000 in FY1978 to 1,484,477 in FY2015 (see Table 3). From its high of 1,810,564 in FY2009, the number of paternities established or acknowledged fell 18% nationwide, from 1.8 million in FY2009 to about 1.5 million in FY2015.²⁰ It should be noted that in any given year, the CSE program establishes paternity for both babies born outside of marriage in the given year as well as for older children (up to age 18) who were born outside of marriage.

FY2003 was the first year in which more fathers were legally identified through a voluntary paternity acknowledgment process (862,000) than through the courts or administratively via the CSE agency (663,000). Paternity was established or acknowledged for 1.5 million children in the CSE program during that year.

Figure 4. Number of Paternities Established or Acknowledged and Births to Unmarried Women

Source: Prepared by the Congressional Research Service based on data from the Office of Child Support Enforcement (Annual Data Reports to Congress), U.S. Department of Health and Human Services and data from the National Center for Health Statistics (National Vital Statistics Reports), U.S. Department of Health and Human Services.

State performance on paternity establishment is calculated as a percentage of either (1) all births in a given year for which paternity is established, or (2) all cases in the state CSE program for which paternity is established. Table 4 uses all cases in the state CSE program for which paternity is established as the base. It shows the paternity establishment performance measure for FY2015. For the nation as a whole, the CSE paternity establishment percentage (PEP) was 95.62%. In other words, in FY2015 there were nearly 10.6 million children on the CSE rolls who had been born outside of marriage, and the CSE agencies had determined paternity for 10.1 million of them. In FY2015, the PEP ranged from a low of 69% in the District of Columbia to a high of 140% in Arizona. The reader should note that Table 4 indicates that for some states the PEP was greater than 100%. This is because paternity is established for more than just the children who were born outside of marriage in the specified year. Most states acknowledge that while they have made significant improvement in establishing paternity for newborns they are not performing nearly as well with respect to establishing paternity for older children.

Establishment of Child Support Orders

A child support order legally obligates noncustodial parents to provide financial support for their children and stipulates the amount of the obligation and how it is to be paid. It is usually established at the time of divorce, when an unmarried couple dissolves their relationship, or when a welfare case is initiated. Child support payments enable parents who do not live with their children to fulfill their financial responsibility to them by contributing to the payment of childrearing costs.

The child support order is established administratively by a state/county CSE agency or through the state courts. P.L. 100-485 required states generally to use their state-established guidelines in establishing child support orders. Child support guidelines are a set of rules and tables that are used to determine the amount of the child support order. They are designed to (1) protect the best interests of the children by trying to ensure that the child or children in question continue to benefit from the financial resources of both parents in situations in which the parents go their separate ways; and (2) make the calculation of child support fair, objective, consistent, and predictable (which in many instances has the added benefit of reducing conflict and tension between the parents).

Figure 5 shows the total (national) number of CSE cases with a child support order established during the period FY1991-FY2015. The figure shows that the number of CSE cases with a child support order increased through FY1996, fluctuated between FY1997 and FY1999, increased from FY2000 to FY2013, and decreased in both FY2014 and FY2015.The figure shows a drop in CSE cases with a child support order established in both FY1997 and FY1999, in both of these years the CSE caseload for the nation also declined. The number of cases with a child support order established increased by about 60% during that 25-year period, from almost 7.9 million in FY1991 to 12.6 million in FY2015 (see Table 5).

In FY1991, 59% of the 13,422,739 CSE cases had an established child support order. In FY2015, almost 86% of the 14,744,538 CSE cases had an established child support order.

Figure 5. Number of CSE Cases with Child Support Order Established, FY1991-FY2015

Source: Prepared by the Congressional Research Service, based on data from the Office of Child Support Enforcement (Annual Data Reports to Congress), U.S. Department of Health and Human Services.

Table 6 shows the number of CSE cases with child support orders established by a state from FY2011 to FY2015. The number dropped by 1.3%, from almost 12.8 million to 12.6 million. During the period, Florida established 18% fewer cases in FY2015 than in FY2011. Even so, the child support order establishment percentage for Florida for FY2015 was nearly 83%.²¹ In contrast, Texas established 19% more cases in FY2015 than in FY2011. The child support order establishment percentage for Texas for FY2015 was also nearly 83%.²²

CSE Collections

As noted earlier, for the nation as a whole child support payments collected by CSE agencies from noncustodial parents increased from $1 billion in FY1978 (when the CSE program was in its infancy) to $28.6 billion in FY2015, an increase of 718% if adjusted for inflation. (See Table A-4.) During that span of 38 years, the CSE program transformed from a welfare cost-recovery program into a program that helps strengthen families by securing financial support for children from their noncustodial parents on a consistent and continuing basis.

Child support collection methods used by CSE agencies include income withholding, interception of federal and state income tax refunds, interception of unemployment compensation, liens against property, security bonds, reporting child support obligations to credit bureaus, regular billings, delinquency notices, garnishment of wages, revocation of various types of licenses (e.g., drivers, business, occupational, recreational), attachment of lottery winnings and insurance settlements, and seizure of assets held by public or private retirement funds and financial institutions (see Figure 6). In FY2015, total CSE collections amounted to $34.1 billion, of which $28.6 billion was distributed on behalf of families in the CSE program. About $5 billion was received through the income withholding process on behalf of non-CSE families and about $0.6 billion was undistributed collections.²³ Income withholding accounted for about 72% of total collections received ($24.5 billion) in FY2015 (see Table 7). All jurisdictions also have civil or criminal contempt-of-court procedures and criminal nonsupport laws.

Figure 6. Child Support Collections Made by Various Enforcement Methods, Selected Years

Source: Prepared by the Congressional Research Service (CRS), based on data from the Office of Child Support Enforcement (Annual Data Reports to Congress), U.S. Department of Health and Human Services.

Although income withholding has been the primary source for obtaining child support payments, the broad array of child support collection/enforcement techniques has enabled states to provide some help to the entire spectrum of CSE families (i.e., current TANF families, former TANF families, and families that had never been on TANF/AFDC).

As mentioned earlier, in FY1999 OCSE started reporting data in categories designated as current assistance (i.e., child support collected on behalf of families that are currently receiving TANF cash assistance or Title IV-E foster care payments), former assistance (i.e., families that used to receive TANF assistance, AFDC benefits, or Title IV-E foster care), and never received assistance (i.e., families that never received AFDC, TANF, or Title IV-E foster care) rather than TANF and non-TANF. Table 8 indicates over the 17-year period from FY1999 through FY2015, child support collections for the nation as a whole decreased almost 62% for current TANF cases, increased almost 31% for former TANF cases, and increased almost 38% for families that had never been on TANF.²⁴

Table 9 shows that during the most recent five-year period, FY2011-FY2015, child support payments collected and distributed by CSE agencies increased almost 5% nationally, from $27.3 billion to $28.6 billion. Child support collections fluctuated among the states, increasing in 34 jurisdictions and decreasing in 20 jurisdictions during the period. They ranged from a 24% decrease in the Virgin Islands to a 25% increase in Texas. Interestingly, child support collections continued to increase even though the CSE caseload declined. During the period, the CSE caseload declined 7%, from 15.8 million to 14.7 million (see Table A-2).

Many families that receive CSE services do not receive any child support payments. This could be because paternity has not been established, a child support order has not been established, the noncustodial parent has not been located, the noncustodial parent is not working and has no income, or the noncustodial parent is incarcerated. Table 10 shows the number and percentage of CSE cases in which the CSE agencies collected child support payments from noncustodial parents for both of the years FY1999 and FY2015. In FY2015, about 34% of TANF families received child support collections. The comparable statistics for former TANF families and families that had never received TANF were 60% and about 69%, respectively.

Given that not all families in the CSE program actually receive child support payments, Table 11 shows average monthly child support collections per CSE case with a child support collection, by category of family, for FY1999 and FY2015. Table 11 accounts for inflation by converting the FY1999 figures into constant 2015 dollars. Table 11 indicates that the average monthly child support payment for families that actually received a payment has decreased over time for two of the three categories of families. Child support payments collected on behalf of TANF families decreased in real/constant dollars from $192 in FY1999 to $129 in FY2015. Child support payments collected on behalf of families that had never been on TANF decreased in constant dollars from $427 in FY1999 to $332 in FY2015. Child support payments collected on behalf of families that had formerly been on TANF increased slightly over the 17-year period from $189 in FY1999 to $197 in FY2015 (adjusted for inflation). Table 11 also shows that the average monthly child support payment for families who actually received a payment was relatively small, amounting to $264 in FY2015.

Also noteworthy is the large amount of child support arrearages that hamper the effectiveness of the CSE program. Child support arrearages refer to an accumulation of the past child support payments that were not paid by the noncustodial parent of a child in the manner that was ordered by the court or CSE agency. According to Census Bureau data, in 1999 and 2013 only about 45% of custodial parents received the full amount of child support owed.²⁵ Data from OCSE indicate that in FY1999, the CSE program collected only about 18% of the child support obligations for which it had responsibility if arrearage payments are taken into account (otherwise, 53%).²⁶ In FY2015, the CSE program collected only 20% of child support obligations for which it had responsibility if arrearage payments are taken into account (otherwise, 65%).²⁷

CSE Administrative Expenditures

Each state CSE agency operates under a state plan approved by the OCSE and based on the program standards and policy set by the federal government. The CSE State Plan sets the structure for state CSE agencies and their local counterparts to work with families to obtain support. States are required to track financial and statistical data on their programs.

The CSE program is funded with both state and federal dollars. States spend their own money to operate a CSE program; the level of funding allocated by the state and/or localities determines the amount of resources available to CSE agencies. The federal government reimburses each state for 66% of all allowable expenditures on CSE activities.²⁸ Thus for every $1 that a state spends on its CSE program, the federal government reimburses it 66 cents. The result is that, in effect, a state's net contribution of $.34 is nearly tripled.²⁹ The federal government's funding is "open-ended" in that it pays its percentage of expenditures by matching the amounts spent by state and local governments with no upper limit or ceiling. The federal government also provides states with an incentive payment to encourage them to operate effective programs.³⁰

Table A-3 shows that during the 38-year period from FY1978 through FY2015, CSE expenditures increased every year until FY2009. Total expenditures decreased from FY2009 to FY2011, remained unchanged in FY2012, decreased in FY2013, and then increased in FY2014 and FY2015. Still, the FY2015 level of CSE expenditures remained below the FY2009 level. Table A-4 indicates that accounting for inflation during the period FY1978-FY2015, total CSE administrative expenditures increased 452% in real (2015) dollars, from $1.042 billion to $5.749 billion. During FY1999 and FY2015, total CSE administrative expenditures were the same, $5.749 billion, if adjusted for inflation.³¹

Table 12 shows that during the most recent five-year period, FY2011-FY2015, total CSE expenditures for the nation as a whole increased by less than 2%, from $5.661 billion to $5.749 billion. Total CSE expenditures fluctuated among the states, increasing in 34 jurisdictions and decreasing in 20 jurisdictions during the period. They ranged from a 41% decrease in Kansas to an 84% increase in Massachusetts.

Table 13 shows monthly CSE administrative expenditures per CSE case for selected years during the period FY1978-FY2015. Average monthly CSE expenditures per case increased from $6 in FY1978 ($21 in 2015 dollars) to $32 in FY2015, a 52% increase, adjusting for inflation.³²

Cost-Effectiveness of the CSE Program

One measure of the CSE program's cost-effectiveness is obtained by dividing total state collections by total state administrative expenditures (costs).³³ This measure is referred to as the collections-to-costs ratio and/or the cost-effectiveness ratio. The CSE cost-effectiveness ratio is the amount of child support collected for each dollar expended (as defined in P.L. 105-200, the Child Support Performance and Incentive Act of 1998).

Figure 7 and Table 14 show the cost-effectiveness ratio for the nation for the period FY1999-FY2015. It shows that in FY2015, $5.26 in child support was collected for every dollar spent on CSE activities (i.e., national average). In other words, for every dollar spent by federal, state, and local governments, $5.26 was collected by the states from noncustodial parents for the financial support of their children (i.e., private funds). This was an increase of 28% over the FY1999 cost-effectiveness ratio of $4.11.

Figure 7. Cost-Effectiveness Ratio, FY1999-FY2015

Source: Table prepared by the Congressional Research Service based on data from the Office of Child Support Enforcement (Annual Data Reports to Congress), U.S. Department of Health and Human Services.

Table 15 displays the cost-effectiveness ratio by state for the most recent five-year data period, FY2011-FY2015. The table shows that there were wide differences among states in how much child support was collected for each dollar spent on the CSE program, ranging from $1.89 in Delaware³⁴ to $12.26 in Texas in FY2015. It also shows that during the period, the cost-effectiveness ratio fell by 43% in Massachusetts, from $9.45 to $5.40. In contrast, the ratio rose 68% in Kansas, from $3.45 to $5.80. The ratio increased about 3% nationally, from $5.12 to $5.26.

The CSE program generates both income and expenditures for the federal government and the states. States make expenditures to administer the program, but receive both partial reimbursement for these costs and incentive payments from the federal government. States also retain a share of collections made by noncustodial parents on behalf of TANF and federal foster care families. The federal government pays the above-mentioned share of state CSE expenditures and all incentive payments, but also retains a share of child support collections made on behalf of TANF and federal foster care families.

Based on OCSE data, state budgets (in aggregate) were positively affected by the CSE program for the first 24 years of its existence, in the sense that the income generated by the CSE program for the state—comprised of the federal share of state CSE expenditures (i.e., the amount of federal matching funds provided to the state), plus incentive payments to the states, plus the state share of child support collections made on behalf of TANF and federal foster care families—exceeded state CSE program costs. FY1999 was the last year in which in the aggregate, the income generated by the CSE program for states exceeded their outlays. In FY1999, only 13 states (including California) experienced increased income from operating a CSE program; the other states and jurisdictions operated at a "loss." In FY1999, state CSE income exceeded state CSE expenditures by $49.7 million nationally (see Table 16). In contrast, since FY2000 state CSE expenditures have exceeded CSE income.³⁵ In FY2015, in aggregate, state CSE expenditures exceeded state CSE income by $1.2 billion (see Table 19).³⁶

The primary explanation for the switch from state "gains" to "losses" during the last 17 years of CSE program operation is that nonwelfare collections are growing at a faster rate than welfare collections. Child support collections on behalf of former TANF and federal foster care families increased by almost 31% over the period FY1999-FY2015 and child support collections on behalf of families that had never received TANF or federal foster care increased almost 38% during that 17-year period, while child support collections on behalf of TANF and federal foster care families decreased by nearly 62% over the period (taking into account inflation, see Table 8). Note that while the state and federal governments share in a portion of TANF and federal foster care collections, nonwelfare collections go exclusively to the custodial parent via the state disbursement unit.

Conclusion

The CSE program is a highly complex, multifaceted program. Its purpose/mission has evolved over the years, from recovering welfare costs and producing income for the states to delivering services to custodial parents and promoting personal responsibility among noncustodial parents. This is not surprising given the changing composition of the CSE caseload, which is reflected in the decline in TANF and Title IV-E foster care families and the rise in former TANF and Title IV-E foster care families and families that have never received TANF or Title IV-E foster care. So far, it seems that the multiple purposes and broadened mission have not had a negative effect on the effectiveness of the CSE program.

The data highlighted in this report bring the CSE program into focus. They indicate that the CSE program has grown significantly. During the 38-year period from FY1978 through FY2015, CSE collections increased 8-fold to $28.6 billion (adjusting for inflation), program expenditures increased almost 6-fold to $5.7 billion (adjusting for inflation), the number of children whose paternity was established or acknowledged (through the CSE program) increased 13-fold to 1.5 million, the number of CSE cases with child support orders almost doubled to 12.6 million (from FY1991-FY2015), and the CSE caseload increased 3-fold to 14.7 million. From this viewpoint the CSE program is generally seen as being very successful.

The data presented also show that even though the CSE agency is second only to the Internal Revenue Service (IRS) in terms of its collection/enforcement apparatus, it has consistently collected only a small fraction of the child support obligations for which it has responsibility (e.g., 20% in FY2015). Although this percentage is higher if past-due child support payments (i.e., arrearages, which generally are hard to collect) are not considered in the equation, it is still relatively low at 65%. CSE data indicate that the program is collecting child support for a greater number and higher percentage of families, but the average monthly child support payment for families that actually received one is still relatively small, $264 per month in FY2015.

For the 10.6 million children in the CSE program in FY2015 who were born outside of marriage, the establishment of paternity is the first step in obtaining a child support obligation. FY2003 was the first year in which more fathers were legally identified through a voluntary paternity acknowledgment process (862,000) than through the courts or administratively via the CSE agency (663,000). Most states acknowledge that while they have made significant improvement in establishing paternity for newborns (primarily through voluntary paternity acknowledgment at hospitals when the child is born) they are not performing as well with respect to establishing paternity for older children. Nonetheless, in FY2015 the CSE program had established paternity for almost 96% of its caseload.

Although the CSE program exhibits improved performance, and in many areas outstanding performance, there is still more to be achieved. Congress has consistently had high expectations for the CSE program. Since its enactment in 1975, almost 50 laws have made changes to the CSE program. Although the CSE program generally garners bipartisan support, for most of its history changes to the program have been achieved in tandem with more controversial changes to other social programs.

This report points out that in FY2015, only about 3% of CSE collections ($808 million, see Table 8) were made on behalf of TANF families; about 33% of that amount actually went to the families and the rest was divided between the state and federal governments to reimburse them for TANF benefits to the families. Table 8 also indicates that nearly $9 billion was collected on behalf of former TANF families; about 90% of that amount went to the families and the rest was divided between the state and federal governments to reimburse them for the period in which the family received monthly TANF benefits. Overall, about 7% of CSE collections obtained in FY2015 were used to reimburse the states and the federal government for monthly TANF benefits paid to current and former TANF families.³⁷ This means that in FY2015, 93% of CSE collections ($26.6 billion) went to the families on the CSE rolls.³⁸ Thus, the data appear to indicate that the "family first" policy that was begun with the 1996 welfare law (P.L. 104-193) and extended with the Deficit Reduction Act of 2005 (P.L. 109-171) is being effectively implemented. ³⁹

The data presented in this report indicate that the CSE program is making great strides in ensuring that children get the support they are owed from their noncustodial parents. Nonetheless, the HHS Justifications for Appropriations for the Administration for Children and Families, which includes the CSE program, stated that current challenges affecting CSE program performance include the following:

• state program spending cuts and staffing reductions that have reduced overall program resources;
• high rates of unemployment and incarceration and stagnant earnings that constrain the ability of less-educated noncustodial parents to pay child support;
• an increase in self-employment and independent contractors, making it harder to collect child support through income withholding;
• a higher percentage of children born outside of marriage and in more complex families, contributing to the growing proportion of harder-to-serve child support cases that require more intensive case management; and
• obsolete statewide systems in most states, reducing worker productivity and increasing operational risks and costs.⁴⁰

Although sometimes overlooked, the CSE program is an integral component of welfare reform. It is not surprising that child support payments are now widely recognized as a very significant income source for single-parent families. The CSE program has the potential to impact more children and for longer periods of time than most other federal programs. In FY2014, it served 16.3 million children (nearly one in four children in the United States).

Appendix. Supplementary Tables